Stocks are not supposed to have over 100% short interest. Naked short selling is illegal. This set-up should never happen. Kudos to those who took advantage.
Irresistible to leave this moment alone - a thread to share some investment lessons:
1/ Size matters.
Melvin entered 2021 circa $12 billion in AUM and runs a highly levered balance sheet. That’s a lot of short exposure to move around if needed.
Stocks are not supposed to have over 100% short interest. Naked short selling is illegal. This set-up should never happen. Kudos to those who took advantage.
Keynes said “markets can be irrational longer than you can be solvent.” I suspect this won't take down any significant hedge fund, but it definitely hurts.
Academic finance teaches that “a short sale has unlimited downside and limited upside. Those events almost never play out, until they do.
On the short side, VW stock in 2008.
And on the long side (leveraged), CMBX in November 2008
Both traded to completely irrational levels for a time. True left tail events for those in the positions.
Peter Bernstein’s famous line about risk. A global pandemic leading to a soaring market? Negative interest rates? Online traders crushing monster hedge funds?
Beware those who think in certainties instead of probabilities. @AnnieDuke
We know the outcome of this with near certainty (99%+ probability). GME stock will fall back to a fundamental level when the weighing machine takes over from the voting machine. We have absolutely no idea when - a day, week, month, 5 years? No idea.
My understanding is that Gabe Plotkin is one of the very best investors (process, not outcome). I highly doubt #melvincapital missed much in advance. And yet, here we are. No rebates, volatility, untethered trading - shorting is brutal.
Melvin entered 2021 circa $12 billion in AUM and runs a highly levered balance sheet. That’s a lot of short exposure to move around if needed. And obviously, it's not alone in shorting stocks.
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The Dutch regulator and DNB as financial supervisor are a tough cookie to deal with. In essence they hyperregulate EU-rules into goldplated Dutch rules which go beyond what is prescribed in Europe.
All NL-customers at British banks may thus be kicked out on brexit.
Thread
/1
If we start with the capital requirements directive, it says attracting deposits is forbidden. In article 9.
https://t.co/RYl7SXligC
Now the translation of that rule into Dutch law is slightly expanded to not only prohibit attracting deposits, but to also prohibit, having those deposits under custody ('ter beschikking hebben').
That's not in EU law, but it is in our Dutch law.
https://t.co/PsbWfNY3PA
So if you wonder how this would work out for UK banks and Payment institutions servicing Dutch customers. Have a read at the technical explanation of DNB, the financial supervisor and their summarising table.
https://t.co/LL0fAnYkRJ
Passive servicing of Dutch is not allowed!
Any bank or PSP in the UK that continues to serve Dutch customers (as in retail customers, professional players are excepted) can thus be subject to fines and policing under Dutch law.
Meaning we not only have Accidental American issues in payments, but also Accidental Dutchies
All NL-customers at British banks may thus be kicked out on brexit.
Thread
/1
If we start with the capital requirements directive, it says attracting deposits is forbidden. In article 9.
https://t.co/RYl7SXligC
Now the translation of that rule into Dutch law is slightly expanded to not only prohibit attracting deposits, but to also prohibit, having those deposits under custody ('ter beschikking hebben').
That's not in EU law, but it is in our Dutch law.
https://t.co/PsbWfNY3PA
So if you wonder how this would work out for UK banks and Payment institutions servicing Dutch customers. Have a read at the technical explanation of DNB, the financial supervisor and their summarising table.
https://t.co/LL0fAnYkRJ
Passive servicing of Dutch is not allowed!
Any bank or PSP in the UK that continues to serve Dutch customers (as in retail customers, professional players are excepted) can thus be subject to fines and policing under Dutch law.
Meaning we not only have Accidental American issues in payments, but also Accidental Dutchies
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Recently, the @CNIL issued a decision regarding the GDPR compliance of an unknown French adtech company named "Vectaury". It may seem like small fry, but the decision has potential wide-ranging impacts for Google, the IAB framework, and today's adtech. It's thread time! 👇
It's all in French, but if you're up for it you can read:
• Their blog post (lacks the most interesting details): https://t.co/PHkDcOT1hy
• Their high-level legal decision: https://t.co/hwpiEvjodt
• The full notification: https://t.co/QQB7rfynha
I've read it so you needn't!
Vectaury was collecting geolocation data in order to create profiles (eg. people who often go to this or that type of shop) so as to power ad targeting. They operate through embedded SDKs and ad bidding, making them invisible to users.
The @CNIL notes that profiling based off of geolocation presents particular risks since it reveals people's movements and habits. As risky, the processing requires consent — this will be the heart of their assessment.
Interesting point: they justify the decision in part because of how many people COULD be targeted in this way (rather than how many have — though they note that too). Because it's on a phone, and many have phones, it is considered large-scale processing no matter what.
It's all in French, but if you're up for it you can read:
• Their blog post (lacks the most interesting details): https://t.co/PHkDcOT1hy
• Their high-level legal decision: https://t.co/hwpiEvjodt
• The full notification: https://t.co/QQB7rfynha
I've read it so you needn't!
Vectaury was collecting geolocation data in order to create profiles (eg. people who often go to this or that type of shop) so as to power ad targeting. They operate through embedded SDKs and ad bidding, making them invisible to users.
The @CNIL notes that profiling based off of geolocation presents particular risks since it reveals people's movements and habits. As risky, the processing requires consent — this will be the heart of their assessment.
Interesting point: they justify the decision in part because of how many people COULD be targeted in this way (rather than how many have — though they note that too). Because it's on a phone, and many have phones, it is considered large-scale processing no matter what.