man im learnin' new stuff

harkin just whipped a tattoo upside the customer panel's collective skulls

ha ive never been much for harkin but
the curmudgeonly old dccrat swayed me but good there

the customers panel is very impressive too dirt under the fingernails types
it seems just hedging their crop deliveries

this guy hainline agreed w/ harkin hainline i guess is a broker ceo guy
the 3 others breadbasket farmer types
all tho impresive to me
and all lost beaucoup dinero when corzine's toy went kablooey

harkin tho rattled off all the new finagling going on since deregulation
allowed more instruments to use than just us tres

and man did he hammer home his point

like i say ... im learning new things ... or at least being impressed by
a guy i used to peg being from 'the other side'

There is a discussion on TAE now about how to safely hide your cash. Think 4" PVC with end caps in the back yard, AKA "Backyard National Savings and Trust". Don't use a mason jar as they typically have metal caps. Thinkaboutit.

I used to program for casino applications. If you think you can play in a casino for any length of time and come out a winner ... you are the one they are looking for; have fun. What is the difference in the stock or commodity markets and a casino?

It seems there are multiple demands on underlying assets all over the place. How can this end well?

Listening to Corzine, he's dodging all knowledge and responsibility.

Isn't he ultimately responsible, regardless of his knowledge of lack thereof, due to SO?

If so, why isn't anyone from the committee bringing this up?

When the laws are written by K-street lobbyists this is the setup you get Flap. The SEC "rule" is an absolute DISGRACE. In addition, when things blow up, your interest is subordinated to those of the hacks over on Wall Street.

Yes he is, and the committee is full of dick-suckers who refuse to demand that the law be enforced.

MM,

I had an account with Vanguard and closed it a couple of years ago when I found out they do not carry SIPC insurance. There is no mention of it on their website so I called them to verify. NO INSURANCE. I took all my money out in the same phone conversaton. Although none of our money is safe in brokerages anymore, I certainly wouldn't have money in one with zero insurance.

How can justice ever be served in this nation when the Attorney General is a partisan animal?

This country needs a fourth branch of government, where the citizenry can directly bring cases (none of this standing or no standing malarkey) for possible referral to a multi-partisan team of special prosecutors that compete for resources like bounty hunters would.

In many cases (though not all) the laws we need are already there.

Jwm wrote..

Marvin, let us know how it goes with Scottade . I'm looking at doing the same with optionsxpress soon

My margin account at Scottrade has been deactivated. No questions from the local firm as why I was doing this. I didn't volunteer.

They did check that I didn't have any positions or open orders that require a margin account. My account still has its open call options, and options trading can be performed at any time.

LostInSpace wrote..

I had an account with Vanguard and closed it a couple of years ago when I found out they do not carry SIPC insurance.

I'm puzzled by this. I peeked at their website and found this:
https://personal.vanguard.com/us/whatweo....

Quote:

Securities in your brokerage account are held in custody by Vanguard Brokerage Services, a division of Vanguard Marketing Corporation. Vanguard Marketing Corporation is a member of the Securities Investor Protection Corporation (SIPC) which protects securities customers of its members up to $500,000 (including $250,000 for claims for cash subject to future adjustments for inflation). To obtain information about SIPC, including an explanatory SIPC brochure, please contact SIPC at www.sipc.org or 202-371-8300.

To offer greater protection and security, Vanguard Marketing Corporation has secured additional coverage from certain insurers at Lloyd's of London and London Company Insurers for eligible customers with an aggregate limit of $250 million, incorporating a customer limit of $49.5 million for securities and $1.9 million for cash. Coverage provided by SIPC and certain Lloyd's of London and London Company Insurers does not protect against loss of market value of securities. The policy provided by certain Lloyd's of London and London Company Insurers is subject to its own terms and conditions.

I believe you actually have to have a margin account to short stocks. I could be wrong, but it seems the last time I blew up an account, I had to have a margin account for that purpose. Of course, that is why I like futures, as you can blow them up really fast. It is also how I can understand an idiot like Corzine, except it is my money.

Etz, I think you missed what I meant. These bankers have been doing these kind of trades for years on sovereign debt and such. Usually it is very short term, arbitrage. I said he was stupid because he put such a long fuse on it and unlucky that it blew up, as they convinced the world the EFSF was in place and going to work. LTCM was run by Nobel Prize winners and they made the same mistake. Also, he wasn't going to make enough money to be worth blowing the outfit up nor facing all the scrutiny that would be the result. These guys belleve their own math.

I am reading that Black Swan book by Nassim Talub. I am probably going to have to read it again, because a lot of it is beyond my intellect to absorb at one time and my reading has been stretched out over a good period of time. I just got to the part where Talub brings up how Wall Street uses standard deviations and bell curves and their models are subject to blow up. I think it is like the idea of the enemy is throwing grenades on an acre of land and you are in a foxhole and there is a 99.5% chance one won't roll in your hole randomly. But, if the lay of the land is just right, several may roll in all at once. Truth is, how many times does one of these idiots make the same mistake the prior idiot made before you realize these guys own the casino and are too stupid to not roll craps at other people's casinos. And they call this talent?

Statistical models are nearly worthless when it comes to distributions beyond the second or third Sigma as very small changes in the assumptions lead to huge differences in odds, and there is simply no way to be good enough in the calculations to be able to accurately model it. Further, highly-improbable but disastrous outcomes cannot be adequately modeled using statistical tools at all since if "the" event happens you're still irrevocably ****ed, and that event could happen tomorrow morning.

You can take the Taleb argument and distill it down to the following:

Statistical models are ok out to the first, second, maybe third standard deviation. But the further you go out the less reliable they are, and the unreliability goes up as the square of the depth, approximately.

In other words beyond the second or third SD you're throwing darts -- nothing more.

The statistics that Mandelbrot demonstrated for markets do not have a finite second moment - which means the standard deviation or variance do not exist. The tails of the distribtion function dont fall off fast enough to outweigh the x^2 function used to calculate the second moment.

That means that all the nice things we associate with a Gaussian distribution dont apply to market price statistics. The central limit theorem does not hold. This theorem says combinations of independent events tend to a Gaussian. Sigma does not exist which means that terms like 2 sigma (~95%), 3 sigma (~99.7%) don't describe reality for these kind of non Gaussian market distributions.

The large tail probabilities for these market distributions means extreme events happen very often compared to Gaussian distributions.

Many distributions dont have a second moment. One of the more useful ones is the Cauchy distribution used to describe the physical laws of electromagnetic radiation.

Mandelbrot wrote an excellent book "The Misbehavior of Markets" that goes into much more detail. I happened to pick up a used copy. Taleb and Mandelbrot were close collaborators and much of Mandelbrot's work got popularized in "The Black Swan".

The VAR model assumes Gaussian statistics hold. Financial regulators have written VAR rules to be acceptable for risk management. Fools.

Well it's basically the same thing here - you can argue the converse, that "if only we had accurate models", but the problem is that you don't and can't.

The quants and other "bright guys" always are coming up with some model which does appear to work most of the time. It's wrong though -- that's the problem -- and they're too "smart" to know it's wrong. They find out when the tail shows up an inappropriate time.

FWIW, here's my .02 cents.

I've always known "financial services" are fronts for crooks. They attempt to confuse you with multiple degrees, fancy language, and obscure disclosures. Not all in the industry are crooked, many are just naive or stupid. The honest ones make money for you, while they make more for themselves by "managing" the excess cash you've earned, and providing access to tax "advantages".

So I've always invested 20% of my "excess cash" with professional "money managers", and did well. (until 2008)

80% of my "excess cash" went into something I know well - residential real estate, and I did much better than the 20% I let the "professionals" play with. (until 2008)

Re-hypothecation? In the disclosures? Really? Seriously?

If you put three mortgages on the same property (that's hypothecation multiple times, lol, it's a real estate term), you're a criminal and you go straight to jail.

But in the "financial world", it's legal, since the monkeys are in charge of guarding the bananas!

Screw it, it's pretty hard for me to get upset anymore.

What I do find amusing though, is those on TF who are just now figuring out that their entire industry, that they have spent their lives working in, is a totally corrupt con game.

You financial types are a little late to the party, and you didn't even dress properly! Those of us who have participated in earning an honest living (real estate), will continue to be greatly amused as your eyes are opened!

Quote:

Those of us who have participated in earning an honest living (real estate}, will continue to be greatly amused as your eyes are opened!

Thanks for the signature add, Halfbrite.

Antone, you are most welcome. I appreciate the recognition you provide that helping people acquire or dispose of real, tangible, hard assets, is more valuable to society than merely shuffling paper promises!

LOL Antone.

NAR has never been my favorite shill lobbying group - they are right up there with the aarp or the mortgage bankers association, or the pharmaceutical or banking lobbies.

MM,

Interesting about Vanguard. Maybe the person I talked to was an idiot or maybe they have gotten insurance subsequently. Who knows. A couple of years ago, I could not find anything on their website mentioning SIPC insurance so I believed the person at Vanguard who told me they didn't have coverage. Good luck in any case. We're all going to need it.

Genesis wrote..

The quants and other "bright guys" always are coming up with some model which does appear to work most of the time. It's wrong though -- that's the problem -- and they're too "smart" to know it's wrong.

My insights into statistics come from practicing EE (communications systems). Gaussian statistics work extremely well there and they model the real world well enough to reliably design deep space communications systems working through very marginal links. Similar statistics hold for the Poisson distribution used in queueing theory to model telephone and data networks.

I'm sure the "bright guys" that came up with VAR put in "assumptions" that had to hold for VAR statistics to work in the real world. I'm pretty sure what happened is that the kind of management/marketing/Fed pressure was applied to have the VAR model force-fed to the markets. Applying Mandelbrot's theories would not have resulted in enough leverage to suit the testosterone-driven investment banking world.

Long Term Capital Management was founded and run for a few years and made tons of money. Then one of the six-sigma events happened ; it was an emotional side effect of Russia defaulting on her bonds. Contagion spilled over into the orderly markets LTCM was playing in and some of their key assumptions were violated.

Taleb called LTCM's techniques "picking up nickels in front of steamrollers".

CME executive chairman Terry Duffy called bull****.

Corzine is sure to be in a pinch now.

Lostinspace,

I think you might not have been asking Vanguard the right question about SIPC insurance.

If you buy a security from a brokerage, the SIPC insures that you receive that security. The value of the security is not insured.

For example, if you buy 1000sh S&P 500 index etf VOO from Vanguard, the SIPC insures that you receive your 1000sh even if Vanguard goes BK.

Neither Vanguard nor the SIPC insure that the VOO security holds its value.

"Those of us who have participated in earning an honest living (real estate), will continue to be greatly amused as your eyes are opened!"

Wow, Halfbrite.

You are one delusional, self-serving, self-justifying, sociopath.

I expect this from a RRE Agent, but I have never seen it written so clearly.

Things must be getting a bit more stressful for you as your recent posts seem a touch more out of step with reality than previous.

Wow.

I mean, you ARE aware that the FIRE economy - the whole thing - is the problem, right?

FIRE stands for:
The Financial Types you write about.
Insurance companies and the rampant fraud.
And Real Estate. Corrupt from your NINJA client, through you, up the chain to the top.
[That's you buddy.]

You are, and continue to be, part of the problem taking down society.