Octopus Overlords

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ProShares UltraPro Short QQQ (the “Fund”) seeks investment results for a single day only, not for longer periods. A “single day” is measured from the time the Fund calculates its net asset value (“NAV”) to the time of the Fund’s next NAV calculation. The return of the Fund for periods longer than a single day will be the result of each day’s returns compounded over the period, which will very likely differ from three times the inverse (-3x) of the return of the NASDAQ-100 Index® (the “Index”) for that period. For periods longer than a single day, the Fund will lose money when the level of the Index is flat over time, and it is possible that the Fund will lose money over time even if the level of the Index falls. Longer holding periods, higher index volatility, inverse exposure and greater leverage each exacerbate the impact of compounding on a fund’s returns. During periods of higher Index volatility, the volatility of the Index may affect the Fund’s return as much as or more than the return of the Index.

The Fund is different from most exchange-traded funds in that it seeks inverse leveraged returns relative to the Index and only on a daily basis. The Fund also is riskier than similarly benchmarked exchange-traded funds that do not use leverage. Accordingly, the Fund may not be suitable for all investors and should be used only by knowledgeable investors who understand the potential consequences of seeking daily inverse leveraged investment results. Shareholders should actively manage and monitor their investments, as frequently as daily.

Carpet_pissr wrote:Has anyone read "Flash Boys" by Michael Lewis? Just saw an interview with him on the Daily Show the other night...seems like a fascinating read about people who are trading (legally) milliseconds before your trades go through, and make money off that knowledge.

I'm going to pick it up at some point when I catch up on my reading backlog a bit.

LawBeefaroni wrote: Haven't read it yet but I'll probably get it soon.

High frequency ("flash") trading is another money syphon of the financial markets. They print free money off the backs of investors. But it's kind of a necessary evil if we all want real time trading.

It's the era of black boxes. Some of the guys who make them, besides being insanely well compensated, are guarded as closely as nuclear scientists during the Cold War.

noxiousdog wrote: By the same token, it's pretty easy to avoid being taken. Just put in a limit order and an "all or nothing". It's really just billionaires taking money from millionaires.

noxiousdog wrote:And I do think there's a good argument to be made that it significantly increases liquidity. The 12 cent spreads of 20 years ago are gone.

LawBeefaroni wrote: Take my option orders today. B/A was like $3.8/$4.70 (a fairly deep ITM call, so bigger spread). I put in a $4.50 ask limit order for 3 contracts and instantly there were 70 at the ask. I went to $4.50 and instantly there were 110 at the ask. I went to $4.40 and they all moved with me again. All with the underlying issue not moving more than a few pennies both ways. That's just computers running code. I'm not saying it cost me anything, but it's crazy to see them move like that, all triggered by 3 puny contracts.

noxiousdog wrote:

LawBeefaroni wrote: Take my option orders today. B/A was like $3.8/$4.70 (a fairly deep ITM call, so bigger spread). I put in a $4.50 ask limit order for 3 contracts and instantly there were 70 at the ask. I went to $4.50 and instantly there were 110 at the ask. I went to $4.40 and they all moved with me again. All with the underlying issue not moving more than a few pennies both ways. That's just computers running code. I'm not saying it cost me anything, but it's crazy to see them move like that, all triggered by 3 puny contracts.

They could just as easily be day traders watching real time data, especially in that set up. I'm not sure the flash traders would waste their time with that and their money is at risk in the process.

noxiousdog wrote: But I think what Flash Boys is talking about is more of the following:
Seller wants to buy 200,000 shares @ $25 for example. The Flash guys see it come in and immediately buy 10,000 @ $25.015, and that gets the order filled. Seller has to reprice his limit to $25.02. Rinse, wash, repeat, until Flash guy leaves the price alone and starts selling the shares he bought. The algorithms in play can determine risk/reward relationships.

LawBeefaroni wrote:I just ordered the book since the 100 or so copies at the library are all out or on hold.

noxiousdog wrote:I saw the 60 minutes episode. But this isn't really new news. It's just gone mainstream.

I think it's a much much smaller issue than Congress can legally insider trade.

El Guapo wrote:

noxiousdog wrote:I saw the 60 minutes episode. But this isn't really new news. It's just gone mainstream.

I think it's a much much smaller issue than Congress can legally insider trade.

Didn't Congress pass a law recently prohibiting congressional insider trading?

Looks like they at least partially repealed that law.

HFT industry gross revenues are around a billion a year, maybe less now, down from $5 billion a few years ago.
As of 2012 it was running around a twentieth of a cent per share they traded.
That's "revenue" in the investment bank sense: the gross profit they
made on trades, sells minus buys, before all expenses and taxes.
They have a lot of expenses and taxes.

US annual stock market volume is on the rough order of $30 trillion a year.
Since this is a small envelope we're using, let's assume that essentially all the HFT is in that US pool.

So, their haul is around 0.0035% of the face value of each trade on average.
For it to cost you $100 you'd have to trade about $3m in stock, but only
if you further assume that this drag due to HFT was entirely in addition
to the losses you were already sustaining from market makers.
I imagine some of it is displacement: barracudas eating some of the sharks' food.

Carpet_pissr wrote:FWIW, HFT is not the same as flash trading, from the limited amount of reading I have done on the subject.

It certainly is a polarizing topic though, with reputable sources on both sides of the issue arguing that it's either extremely helpful, or a danger to the financial world as we know it.

Sheesh. Stupid internet, with its opposing opinions! Just give me the facts, dammit (and preferably a well-reasoned conclusion)!

LawBeefaroni wrote:A friend of mine who is a Lewis fan, and who also happens to run IT for a trading firm, has already read it and called it a giant commercial for IEX.

Carpet_pissr wrote:AMZN sale! I picked up some at $319 a couple weeks ago.

Got hit this morning (-9%), but for the best possible reasons, IMO. Downgraded on continued high spending on investment in technology, content, etc (basically growth).

It worries me less than the analysts I guess (for the long term play I am expecting it to be still)...buying more here.

Carpet_pissr wrote:I'm still waiting on Tesla to get really knackered so I can buy.

52 wk range: $50.62 - $265.00

Doh!

Carpet_pissr wrote:At almost 10% down after great results, I have no choice but to double my position in Amazon. Good night.

Tesla will have to wait...

noxiousdog wrote:

Carpet_pissr wrote:At almost 10% down after great results, I have no choice but to double my position in Amazon. Good night.

Tesla will have to wait...

What kind of margins will Amazon ever be able to manage?

Carpet_pissr wrote: Low margins have always been part of their strategy - and they've done ok with it to date.

...

Who knows what the future will bring, but they are an innovator like Apple, and I expect them to continue to shake the market up and move new products. The argument about razor thin profit margins has been around since before their IPO. I wonder what the analysts that doubted they would be able to make it on such low margins, say about it today? Just a matter of time?

Don't get met wrong, I completely get the argument, and it's logical. It's just proven to be wrong...so far.

Also see: content (media)

However, although Bezos is worth a lot of money on paper and Amazon is one of Wall Street’s most beloved stocks, the company does not actually clear that much money. Rather than pocketing a massive profit, Amazon invests the vast majority of the money it makes back into the business.

“In the long run, if you take care of customers, that is taking care of investors,” Bezos said when pressed on why he doesn’t concentrate on profits. He also said that he won’t raise prices even when market analysts tell him to because it “erodes trust.”
3. Amazon wants to take over the world

“Anything you want on Earth, you’re going to get from us,” an Amazon vice president told Charlie Rose. And they mean it.

All that money Amazon is putting back into their business is going toward building distribution centers all over the world in an effort to achieve their goal of same-day delivery. Being able to deliver on the same day an order is placed will allow Amazon to expand their selection of products. They’ve even started delivering groceries in select cities. Amazon now uses more trucks than planes because they’ve built so many distribution facilities.

noxiousdog wrote:That still doesn't mean he can increase margins, but good luck.

ed: I'm not even sure he wants to.

Pyperkub wrote:

noxiousdog wrote:That still doesn't mean he can increase margins, but good luck.

ed: I'm not even sure he wants to.

I was looking for an article I'd read about someone who had left Amazon (I think) a few months back who really corroborated the investment vs margins thesis most of the investors buy into, but I couldn't find it.

For me, it's a very long term position (and not a particularly huge one either ~ 25 shares currently). I also love what they've done in the B2B Cloud space with AWS - their dominance of that market was what really pushed me to buy in the first time. I probably still have a larger position in Costco however (been DRIP'ing, so I haven't tabulated the entire position lately)...

LawBeefaroni wrote:And it's off another 4% (-$12.80 to $291). Like I said, $280 and I start looking but I don't see any reason to rush to add/buy right now.