The Dark Side of Hedge Funds

An interesting vid detailing the growth in power and influence of the top hedge funds.

I blogged earlier about the incredible wealth generated by the top hedge fund managers.

As can be expected, areas that produce great wealth attract all kinds of people and all moral temperaments.

So what happens when a hedge fund decides to ignore ethics and the law in pursuit of greater gains? They will be eventually pursued by the Government, but as hedge funds are so enormously wealthy and can afford the best legal team in the world, who will win is not so easily determined.

In a world where the law has determined that unlimited campaign contributions are allowed, those with more wealth have increasing influence over political outcomes for better or worse.

An author discusses her book about the inside world of hedge funds and what happens when the US Government went after one of the Top Hedge fund owners for insider trading.

Here’s the shortened version: Interview 1

Here’s the chock full of details interview: Interview 2

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Former Waitress & School Drop Out Says Making £100K/yr Trading: Legit or Scam?

I just read an article about a woman who changed her career from being a waitress to successful trader and according to the article, is on track to make £100K pounds this year, and all this from taking a Forex trading class.

If true, this is a stupendous achievement and she deserves all the high praise and credit. However, I noticed several red flags when reading the article that make me think all is not as it seems and it may be an elaborate advertisement to pay $$$ for a trading class.

First off, learning how to successfully trade is an endeavor that many try, but only a choice few succeed. The odds against reaching the point of being able to trade for a living have been reported as low as 3% and that even the best odds are at ~20%, as in out of 100 people who attempt trading, only 20 will succeed in not losing money and even fewer will be able to achieve high returns on a consistent basis. So the odds of someone just casually walking in and trying and succeeding at trading are very slim.

Next, while many trading courses are offered for sale for prices that range from a few hundred to tens of thousands of dollars, the internet is full of sorrowful tales of those who spent big bucks on these classes, only to not gain any new skills and still not be able to successfully trade. Personally speaking, I have yet to meet anyone successful at trading that got their skills from a class rather than being self taught or having been lucky enough to have a friend/relative as a mentor.

The vast bulk of trading classes are mostly set to lure in the “get rich quick” type of folks who are looking for shortcuts to success. As we know in life – there are very few if any shortcuts in achieving highly sought after goals/rewards. So I have a high amount of skepticism that a school drop out can take a trading class on a whim and instantly find such huge success.

The pictures included in the article also stand out as red flags in that they mostly show conspicuous lavish spending- as if to set the mood that she is now living a life of luxury and easy living.

The typical tell-tale sign of “potential scam” is when trading “guru’s” show pictures of ostentatious wealth, suggesting that “you too can have this lifestyle if you pay for their course/training”. In reality, successful traders and those from other professions don’t go around showing off their wealth.

Like I said earlier, if the story is legit, then congratulations are in order, but I get more of a vibe that this is really a commercial for paying $$$ for a Forex class rather than a genuine financial success story.

Article: Link

USA: Meritocracy or Plutocracy?

The US is famously known as a meritocracy that produces many rags to riches success stories.

However, studies show that the country is becoming more and more plutocratic over time.

The report from Georgetown University is the latest study that confirms this trend. It shows that the strongest indicator of future success isn’t one’s intelligence or inherent/developed talents, but the wealth of the parents/family one is born into.

Smart but poor kids are less likely to achieve wealth by age 25 and also have a lower chance of graduating from college than a below average child of wealthy parents.

The rich kids have a built in safety net in their parents wealth to get extra tutoring help and cover all college costs. They can make mistakes and recover with their parents resources to assist. Poor kids have far less safety buffers, if any, and any mistakes or failures can have dramatic consequences. They may not win enough scholarship money to pay for all college expenses, or be able to afford special tutoring for areas they may need help in. They don’t have the same financial luxury of surviving mistakes.

This is the reason why social scholastic programs are needed to help financially disadvantaged kids reach their full potential. Who knows how many great inventions or discoveries have been held back due to lack of opportunity for the ones who would have achieved them?

Article: Link

Wall Street for Generation Z

I saw this commercial for “Fortune Street”, an investing game- and got sufficiently amused by the pair of older adults being talked down to and outclassed by a kid just barely 10 years old, if even that. 😄

It made me think of the latest group of young guns, called “Gen Z”, kids born from the mid 1990’s – early 2000’s

This is the generation that is growing up in the age of super cheap trading apps like Robinhood and new investment products like Bitcoin and other crypto currencies.

The latest software and interfaces make trading appear more like a game than ever.

Wisconsin Man Wins $768 Million Powerball Lottery

The value of this lottery jackpot may be only about half the size of the winner of the Oct 23, 2018 $1.5 Billion Mega Millions winner, but it’s MUCH more interesting because this time the win is from a State that doesn’t allow winners to remain anonymous so much more details are available about the winner. 👍

The winning number was drawn on Mar 27, 2019 and the winning ticket was bought on a whim because he was just feeling particularly lucky that day.

Prior to the lottery win, his financial goal was building up his savings to $1000. Goal achieved, and how! 🤑🤑🤑

As also to be expected, he quit his job shortly after learning that he won.

Here’s the broadcast interview of the day he went to the Lottery Commission to claim his prize:

Article: Link

Mega Record Super Jackpot Winner Claims Prize

The Mega Millions Lottery reached a record sum of $1.5 Billion due to a string of weeks with no one getting all the winning numbers before a single ticket in South Carolina came away the winner when the numbers were drawn on Oct 23, 2018.

There was great mystery into who possessed the winning ticket, which grew even more when it was revealed that South Carolina is a State that allows lottery winner to remain anonymous.

The ticket winner remained mum for months. Lottery winners have six months to claim their prize before the ticket expires. This March, the ticket winner came forward to claim the prize and asked to remain anonymous.

What we know is it was a single person that won, making it the largest single jackpot payout in US history. 💰💰💰

Rather than annual payments, the winner chose to get the “lump-sum” of payment of $877,784,124.

Can you imagine winning that much money? Overnight, your entire life, and those of your immediate family and loved ones completely changes. 🤑 🤑 🏦

The winner likely took the extra time before claiming the win to get their household and financial plans in order- a very good move before embarking on this amazing new chapter their life. 💲💲💲

Article 1: Link1

Article 2: Link2

Top Hedge Fund Managers of 2018- Bringing Home the Bank $$$

The art of trading on both the retail and professional level is clearly very difficult to master as seen by the extremely high rates of failure and/or low performance seen by the majority of those attempting it.

But if one can reach the rare air of true comprehension and competency of this esoteric skill set, you can attain the ability to make the market your ATM money printing press. There is no other field or industry where an individual can earn so much on a yearly basis.

 

Imagine you being James Simmons, who earned $1.6 Billion last year. Your earnings are higher than the GDP of many countries, more than several generations of combined lifetime earnings of most families, and that was just for 1 year!

The “pauper” of the list is Izzy Englander, who only managed to scrape up $340 million for the year.

These folks live in another world than we do.

 

Article 1: Link

Article 2: Link

 

 

 

Child Becomes Millionaire by Simply Playing with Toys

Outside of inheriting money or winning the lottery, one of the keys to achieving wealth is to come up with new ideas, or recycle old ones to appear new and hope it can trigger a trend. Ironically, these are ideas that many typically wouldn’t even consider because they don’t seem promising. The first big idea like this is “The Pet Rock”, which most of us would consider the idea of people paying good money to buy a rock as a pet to be pretty absurd, and yet it became a big seller and made the inventor a millionaire.

The above example shows you don’t have to be a super genius and create a new type of computer or telephone like Steve Wozniak or Steve Jobs. You just need to have that magic mix of creativity coupled with entrepreneurial drive.

A modern example of this is all those taking advantage of social media, and in this case, a family that posts videos of their kid opening and playing with new toys. Now think about it, most people would think showing videos of your kids to others would be boring to non family and only done to trapped audiences such as at home parties. But Ryan’s parents thought otherwise and created a YouTube Channel devoted to their son experiencing new toys to play with. That decision turned out to be a good one, as their channel ranks #1 in earnings at $22 Million for 2018.

Ryan is now in the enviable position of being financially independent years before he actually knows what that means, or even cares. 😁

 

Article: https://www.forbes.com

 

Bad Decision Theater: DON’T Tell Roommates You Won the Lottery BEFORE You Turn in the Ticket

Piles and stacks of money – coins and US dollars

Imagine this- you purchase a lottery ticket and find out you won. What do you do next? Tell all your friends, neighbors, and family, or keep it to yourself and perhaps only those closest to you until you are able to turn in the ticket and claim the prize?

Logic says we live in a world where people will threaten your life just from the daily amount of money in your purse or wallet, how much more for a tidy lottery payout- so it’s best you keep news of winnings on the down-low at least until your winnings are secured.

This gentleman committed bad decision #1 when he won a scratcher lottery ticket, and decided to share the good news with his roommates that he won $10,000 prior to turning the ticket in.

The next day he goes to a lottery office to turn the ticket in, but there’s a problem- the ticket he has isn’t a winning ticket. He then realized that one of his roommates must have replaced his winning ticket with a losing one while he slept. This immediately brings up bad decision #2 – why would you let the winning ticket be apart from you to allow someone to pull the “old switcheroo”? Clearly this guy is trusting/naive to a fault. 🙄

The guy then posts a criminal complaint with the lottery office, and the winning ticket number is flagged so that it will get extra scrutiny if/when someone turns it in.

Sure enough, it wasn’t long before one of the roommates attempted to turn in the lottery ticket, and the lottery ticket is actually much more that $10,000. This brings up bad decision #3 – failing to learn to read correctly or being able to identify number values as noted in print. The guy whose ticket was stolen thought it was for $10,000, but he was off by 3 factors of 10- the ticket was worth $10 million!!! 😲

Since the ticket had been flagged as stolen, the criminal roommate was arrested when he tried to cash in the ticket. Then they reviewed the store video recording to confirm the victim was actually the rightful owner of the ticket.

So the story has a good ending, but I’d be worried about the guy holding onto his money with a track record of so many bad decisions…

 

Article details: Link

 

Texas Bank ATM Gets Holiday Spirit and Doles Out Free Money

If you used a particular ATM is Houston on Nov 27, you would have been surprised to see that your withdrawal request resulted in the bank giving you much more money that you requested without adding it to your account debit.

Was the machine suddenly possessed by a spirit of generosity? Not quite… The actual reason was an ATM service technician incorrectly restocked the machine and placed a stack of $100’s in the dispenser that deals out $10’s. So whenever anyone received what the bank thought was $10, it was actually $100.

Of course, to no ones surprise, once word got out that the ATM was giving out $100 for each $10 withdrawal, that ATM became quite popular and was swarmed by people.🤑

The bank eventually caught on and took the ATM out of service, but in a surprise move, rather than trying to reclaim the excess money distributed to those ATM users, issued a statement that everyone who participated in that windfall could keep the money.  A Christmas miracle! 💰💰

Article: https://www.sacurrent.com/the-daily/archives/2018/11/27/human-error-at-bank-of-america-atm-leads-to-free-money-for-houston-residents