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Short sellers are in Nirvana with these creatures that had surged by hundreds or even thousands of percent in days after they announced a switch to "blockchain" in their business model or added "Blockchain" to their name. Their shares are now crashing.
I have written about a number of these outfits and their crazy share-price moves and their silly stock manipulation schemes on the way up. Now, not much later, here's an update on how they're doing on the way down.
This is a true gem. On January 9, the SEC halted trading in UBIA shares, citing two reasons: "accuracy" in UBI's disclosures and very funny trading activity. This froze the share price at $22. The trading halt came 11 days after I'd lambasted the shenanigans by the company and its executives. On Tuesday (January 23), shares trading resumed – and have since plunged to $8.25.
What caused the surge was the December 15 announcement – a mix of gobbledygook, hype, and silliness, as I called it – that it had acquired a "Blockchain-empowered solutions provider," etc. etc. What was not in the announcement was that the acquired "assets" belonged to a Singapore corporation that is 95% owned by Longfin's CEO and chairman. This was disclosed in the SEC filings, but no one betting on this crazy stuff reads SEC filings.
[...] For speculators that were able to get into and out of these scams in time, it worked. A 1,000% gain obtained in a few days by hook or crook is nothing to sneeze at. But it's ending in tears for those who got into these scams too late and whose despised fiat currency just ended up providing the exit grease for early speculators. And short sellers, the lucky ones that got the timing right, are laughing all the way to the hated legacy banks.
But not all will get the timing right. Short sellers, when they want to take profits, have to buy their shares back in order to cover their short position, and many of the stocks are thinly traded, and covering a big short position can cause shares to bounce violently. So there will be some serious snap-backs, which might take the fun out of shorting these stocks.
(Score: 0) by Anonymous Coward on Monday January 29 2018, @04:13AM (3 children)
They are easily parted...
(Score: 0) by Anonymous Coward on Monday January 29 2018, @06:09AM (2 children)
Up 1000% and then down 90%? Sounds like you'd still be ahead as long as you didn't buy in at the peak.
(Score: 5, Informative) by vux984 on Monday January 29 2018, @06:33AM (1 child)
"Up 1000% and then down 90%? Sounds like you'd still be ahead as long as you didn't buy in at the peak."
Barely ahead.
initial investment with a 1000% gain followed by 90% loss ==> initial investment x 11 x 0.1 ==> initial investment x 1.1
That's a net gain of 10%. And that's only if one bought right at the bottom, If one bought anywhere else, one would be under water.
(for example, suppose you bought in early but not at the bottom and still managed an 800% gain, followed by 90% loss. That's your initial investment x 9 x 0.1 ==> initial investment x 0.9 which is a 10% loss.
(Score: 3, Insightful) by maxwell demon on Monday January 29 2018, @09:16AM
Yeah, but it sounds like a great profit. And who cares about facts anyway these days? ;-)
The Tao of math: The numbers you can count are not the real numbers.
(Score: 2) by MichaelDavidCrawford on Monday January 29 2018, @05:27AM (7 children)
My much older and wiser friend asked me if I'd done any research or whether I just trusted them.
"I just trusted them. See, they have a very professional website."
I at first made bank on NAGA but then I bought it all back after its price dropped back down. I've gotten my comeuppance: it continued to go down and has stayed that way.
So far I'm still ahead a couple grand. I've been homeless, I'd be OK if I lost it all. While it would be a huge Pain In The Ass it really wouldn't get me down.
Yes I Have No Bananas. [gofundme.com]
(Score: 0) by Anonymous Coward on Monday January 29 2018, @12:23PM (5 children)
There is investment and there is speculation. The latter is gambling, the former is long-term money saving. If you have money to spare do speculate if you wish. If you are fed by others (directly and indirectly) please consider to act responsibly with your money. Save as much as you can but please do not throw it away like this.
(Score: 1) by anubi on Monday January 29 2018, @01:25PM (4 children)
Admit I got bit investing in oil&gas back in the 2007 timeframe ( peak-oil ).
I thought to the very best of my experience working in the field, working with geologists, had and read "Twilight in the Desert" by Matthew Simmons, and even had the President of the United States warning the public about the impending crisis [theglobalist.com]...
I was afraid to invest in gold, much less bitcoin, as I felt they were just as fiat as the USDollar. But fuel.... well, people will pay whatever it takes for that stuff. A gallon of water may be worth $1 in a store, but catch a 1%'er in the desert who needs it badly, and you could easily get a million dollars for it. I knew good and well how much a kilowatt hour of electricity peaked at during Gray Davis' / ENRON artificially created electrical energy shortage, and had a good clue as to what to expect. I knew the electrical energy shortage was bogus, created in Sacramento, by shake of hand and signature of pen between our elected politicians and the 1%ers standing to profit from the shortage.
But I had all indications that the peak oil thingie was real... and I also know that a helluva lotta oil goes into manufacturing plastics and fertilizers, so even if we got off of fossil fuels, it was still gonna take us a lot of time to wean ourselves off of oil. I could see where Matt Simmons was pointing out where all of our old oil fields were beginning to water out, and we had already found most of the big puddles of easy oil. I did not think Fracking would get us much rather than massaging the earth for a fart here and there - and an awful lot of pollution and water contamination to do it.
I figured oil was much more precious than even land, as we still have lots of arable land and agricultural advancements to prolong our food supplies, but if we did not have the mechanical energy to turn the shafts of our machinery, well I know I flat am not strong enough to turn those shafts. Those shafts stop... we die. Gold? I'd give someone a fine tool in exchange for some diesel fuel a helluva lot faster than I would surrender it for gold coin. I'd just as soon own a Ferrari out in the middle of the Congo - I'd bet on having the horse.
So, I bought the Peak Oil story, hook, line, sinker, boat, fisherman, motor, and tackle box.
I thought I was being extremely prudent.
If there is one thing I learned from the whole thing... I researched experts in the field [theoildrum.com]... geologists... Warren Buffet [youtube.com]... I have worked in this field, right alongside geologists which were observing the same thing, and even the President of the United States, one can be deluded into thinking these guys are telling the truth! Well, maybe they were just as deluded as I am. I know, having engineering training, that if I am crossing the desert, I am probably far more concerned with my fuel gauge than my speedometer.
I lost a lot of my retirement savings on this, thinking the USDollar was gonna crash because all we had backing THAT up was a bunch of banker's agreements about how much to inject, whereas there was just so much oil out there, and as we depleted it, the remaining amount had nowhere to go but up. I felt it was irresponsible of me to try to use such a fiat currency, even the USD, as a storage container for my retirement savings.
"Prove all things; hold fast that which is good." [KJV: I Thessalonians 5:21]
(Score: 1) by shrewdsheep on Monday January 29 2018, @01:52PM (1 child)
You acted responsibly, except for one thing: you did not spread the risk.
(Score: 1) by anubi on Tuesday January 30 2018, @04:17AM
I thought the risk was in keeping my resources denominated in something that could be printed in infinite quantity.
Or in putting my resources into anything that had no intrinsic worth.
I would rather own rhenium than gold, because rhenium is also in short supply, and is required for exotic defense systems.
Somehow, I can't get on board with the idea that gold has much value other than what other people think its worth, because in and of itself, it has few uses other than anticorrosive plating. And we already have in vaults orders of magnitude more of the stuff than we need.
I could live the rest of my life without ever seeing gold again... however I would notice a day without oil within minutes. If anything that van has taught me, its how much energy is in a gallon of fuel. I can't even push that thing with my own means.
"Prove all things; hold fast that which is good." [KJV: I Thessalonians 5:21]
(Score: 2) by pdfernhout on Tuesday January 30 2018, @01:49AM (1 child)
I spent (or lost?) a bunch of time circa 2009 or so struggling against the tidal wave of Peak Oil hysteria and other gloomsterism. Sorry I could not help you.
One example:
https://groups.google.com/forum/#!topic/postscarcity/kT-s_5w8_qs [google.com]
"Basically, it is a rough calculation that in about fifteen years, just four of the top British newspapers print enough surface area that they could power the entire world if they were printing Nanosolar PV panels instead of articles about how we are all doomed from Peak Oil. :-)"
And another:
https://wiki.p2pfoundation.net/backups/p2p_research-archives/2009-August/004123.html [p2pfoundation.net]
"I'm forwarding something I wrote privately in response to someone who cites William Catton about human dieoffs (from a different conversation than p2p); this is partially in response to Michel's point on many people panicking
about resource issues. I'll concede we may be doomed from panic or speculators. But, that has nothing to do with any underlying physical problems."
tl;dr -- we have lots of ongoing political and ideological problems that may well doom us like from nuclear war, bioengineered plagues, killer robots, or mean AI -- but no serious resource problems if we cooperated.
Ironically, the usual justification for using our abundance of advanced technologies to create the nukes, plagues, drones, and artificial meanness which could create artificial scarcity out of our abundance at the touch of a button is essentially always, at the root cause, the erroneous meme that there is not enough to (reasonably fairly) go around.
See also: "Wealth Inequality in America" https://www.youtube.com/watch?v=QPKKQnijnsM [youtube.com]
The biggest challenge of the 21st century: the irony of technologies of abundance used by scarcity-minded people.
(Score: 2, Insightful) by anubi on Tuesday January 30 2018, @03:36AM
Yeh.... I had read Jared Diamond's "Collapse" book, and my understanding of history seems like civilizations rise and fall like an oscillator...
I felt the first derivative was already into the negative region.
I was quite pessimistic. Its not the underlying physical plant that has me so concerned, rather, like all the civilizations that I have studied before me, its the control layer. Civilizations start out with many poor people toiling - and they start building infrastructure - but its not long before an "elite" emerge, and soon very few people are actually doing work, while the "elite" perform the same service a tick does to a dog. Basically, they tax it and suck it dry.
Their redeeming quality is they have the social skills to team with other ticks ( members of Government ), to have their wishlists codified into law to keep the "little people" out of their ballpark. Like interpretations of patent and copyright.
The dog eventually dies - then the ticks have nothing to tax, no-one to do the work, no more dogblood, and they die - then the cycle restarts.
Already, in the USA, I am seeing firsthand how little a craftsperson is worth, compared to someone who works in the permission-granting layers.
I live not far from a riverbed full of people, some of whom I have had some interesting conversations. Some of these people seem to be quite intelligent, but completely stripped of resources to do anything. ( Admittedly, I use the word "some", because "most" seem wrapped up in drugs and intoxicants, completely mentally burned out, and are about as useful as a tick on a dog. )
I honestly thought the dog was gonna die during the last "recession".
Thanks for the links... interesting reading!
"Prove all things; hold fast that which is good." [KJV: I Thessalonians 5:21]
(Score: 2) by Wootery on Tuesday January 30 2018, @03:00PM
I don't understand this position at all. Does your religion prevent you from diversifying your investments?
(Score: 2, Informative) by khallow on Monday January 29 2018, @07:58AM (3 children)
This is a bit off topic, but I have spoken before of the diminishing returns on great wealth where as huge levels of wealth increase, the opportunities and yields of those opportunities do not. Snap-back is an example of one of the bigger effects that make this so. With a small amount of wealth, betting against pump-and-dump schemes by shorting the stock (a high risk activity since one needs to acquire shares of the stock at any price at a future time to cover your sale of nonexistent stock) can be highly profitable. But too much money in shorts and then you become the mover of the stock price rather than the underlying fundamentals of the company.
This happens in general. A big investor can be the biggest news in a market and markets invariably act in a direction adverse to the activity that the big investor was engaged in. While there is some opportunity for market manipulation (make big purchase, reveal to public that you made big purchase, and then sell purchase to resulting bump in price of the security), this usually acts contrary to the interests of the big investor (for example, start buying, have the security rise in price while still holding too little of the security, and end up paying more to complete the desired purchase).
(Score: 2) by JoeMerchant on Monday January 29 2018, @02:37PM (1 child)
I wonder how many people involved in thinly traded alt-coins have any concept how a thinly traded market works...
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(Score: 1) by khallow on Monday January 29 2018, @03:23PM
(Score: 2) by Virindi on Tuesday January 30 2018, @12:41AM
Informative.
The more trade volume there is in a given thing, the less effect there is to the price when you buy or sell that thing. Any trade has a negative effect on the market price.
If you short, the price goes down during your sale. If you buy shares, the price goes up during your buy. When covering a short, the price goes up during your buy.
If your trades are small enough, the effect is essentially lost in the noise, but the definition of "small enough" is based on trade volume. Even big name stocks tend to have volume which only allows "millions" (not tens, hundreds, or billions) before effects are noticed.
There is an alternative though: whole-market indexes. Those things have so much volume that the richest people in the world could do big trades and barely be noticed. But, you'd have to have an idea about what the whole market will do.