Remember GME and BBBY are not meme stocks. They are heavily shorted stocks. Media labeled them meme stocks to make them sound like a joke a divert attention away for that Hedge funds are heavily shorting them. Look at investopedia definition of a meme stock, that’s not us.
BoE "There are "structural flaws" with pension funds' hedging strategies"
https://www.teletrader.com/boe-s-bailey-gilt-market-volatility-unprecedented/news/details/58744463?internal=1 "Bank of England Governor Andrew Bailey stated on Tuesday that the market volatility for long-dated United Kingdom government bonds is unprecedented and that it surpassed levels the central bank uses in stress tests. The BoE has seen a "serious crystallization of financial stability risk" in recent weeks, he said during an event organized by the Institute of International Finance (IIF) in Washington DC. There are "structural flaws" with pension funds' hedging strategies, he noted, warning the funds they have "three days left" to rebalance as the BoE will end its bond-buying scheme on October 14." And what do markets? AND WHY....
Hedge funds would have to start giving US regulators significantly more information about how they’re set up and their investment strategies under a Securities and Exchange Commission proposal set to be introduced on Wednesday. via Bloomberg
Translating Hedge Funds strategies to ETF for us Individual investors
Investing as an individual investor for over 8 years now, i realized one thing. The institutional investors move the markets. My most recent attempts are to follow hedge fund strategies and be at par with their returns, been doing that for around 4 years now. One major thing that distinguishes hedge funds from us investors is the tools available for investing. We cant get access to hedge fund tools and investments funds unless we have a net worth of $1Million+. So how do we invest like hedge funds? By using ETFs that resemble closely what an hedge fund asset class looks like. I am translating the below hedge fund strategies to ETFs:
Since Mark Cubans AMA in Feb '21, we have educated ourselves, chosen better brokers with higher liquidity sheets, DRS'ed over 10M shares that cannot be borrowed and we have exposed the strategies that hedge funds uses to bankrupt businesses. It's time for Round 2 of this boxing match.
Are the Strategies being used by Short Hedge Funds outlined in this paper: Could it explain why they can't significant drop price. What Drives the Price Convergence between Credit Default Swap and Put Option: Ka Kei Chan, Olga Kolokolova, Ming-Tsung Lin and Ser-Huang Poon∗ April 17, 2019
Conclusion CDS and DOOMP options provide protection against ﬁrm default. If the Law of One Price holds, the hazard rates implied by these two contracts written on the same underlying ﬁrm should be identical or very close, and any discrepancy between them should diminish over time, unless prevented by market frictions (Carr and Wu, 2011). In this paper we argue that these two markets are not perfectly integrated, however. They attract diﬀerent types of investors, with diﬀerent utility functions, levels of risk aversion, in- formation sets, and optimization horizons. Thus, the Law of One Price does not always hold. Instead, the consensus levels of hazard rates – the systematic components of implied hazard rates – prevail in each of the markets. We recover the systematic term structure of hazard rates using the ﬁtted values from the Nelson-Siegel term structure of implied hazards rates for 26 diﬀerent rating classes. Any deviations of individual hazard rates from their respective term structure form the idiosyncratic components of hazard rates. We show that cross-market deviations between the systematic components of hazard rates are greater when markets are less integrated and they are reduced when markets turn more similar. For example, the systematic deviations decrease for ﬁrms with high hazard rates, for which DOOMPs are more likely to be used as credit protections instruments, but they increase with option delta, as in such cases DOOMPs are more likely to behave like an ordinary option. The idiosyncratic deviations are related to market frictions, and increase when markets become less eﬃcient. For example, higher put bid-ask spread leads to higher idiosyncratic deviations. Despite partial market fragmentation, we document a time series convergence in hazard rates. This convergence is driven by two forces: a within-market convergence of individual hazard rates to their rating curves, and a between-market convergence of the curves. The overall convergence in hazard rates is observed only if both systematic and idiosyncratic deviations decrease, that is, when the markets become closer substitutes for each other and when the market frictions are low. We further exploit the possibility of using deviations in hazard rates and their components as trading signals for a cross-market arbitrage strategy in DOOMPs and CDSs (written on the same underlying). The Benchmark strategy trades on total deviations between two implied hazard rates, which is expected to deliver a positive average return in the Carr and Wu (2011) framework. Our Decomposition strategy requires that both systematic and idiosyncratic devia- tions between hazard rates have the same direction. Without transaction costs, both strategies produce statistically signiﬁcant positive returns. The return for the Decomposition strategy, however, is more than twice that of the Benchmark strategy, with only one ﬁfth of the trans- actions. If realistic transaction costs are incorporated, our results show a negative expected return for the Benchmark strategy, whereas using the Decomposition strategy it is still possible to achieve a positive return after the costs. Overall, our paper shows that despite the fact that theoretically DOOMPs and CDSs can both be seen as credit protection instruments, the interaction between their prices is more complex than suggested by the Law of One Price. The dynamics is characterised by a within- market convergence to the consensus prices, captured by the respective rating-based hazard rates curves, and betwen-market convergence of the consensus prices. Often, these two forces go in the opposite directions resulting in a much weaker convergence between the prices of the... Paper Name: What Drives the Price Convergence between Credit Default Swap and Put Option: New Evidence Ka Kei Chan, Olga Kolokolova, Ming-Tsung Lin and Ser-Huang Poon∗ April 17, 2019 Paper link : https://www.researchgate.net/publication/326471260_What_Drives_the_Price_Convergence_between_Credit_Default_Swap_and_Put_Option_New_Evidence TLDR: I Know these strategies to attempt to protect against short positions have been discussed before. This paper explains the process of trying to neautralise short positions through various strategies, and why the seasaw can't be kept balanced and stable for long, but also the factors which are causing market friction and more resultant rocking of the seasaw e.g. DRS, Stock split via dividen or financial uncertainty. If nothing else the Intro, findings and conclusion are worth reading over if nothing else. Previously posted as an image but caused the Flair to change. PS: DRS!
Hedge Funds HATE Him! Learn His ONE SIMPLE TIP to Improve Your Forex Strategy!
Every time you enter, exit or modify your trade - take a screenshot and annotate it.
Save them to a folder and review them regularly. When you look over them, you'll be able to easily draw conclusions and make modifications to your strategy based on them. For example, during my quarterly review yesterday I noticed that when X, Y and Z all happen at the same time I very rarely lose that trade. But when X and Y occur without Z, the trade has a negative expectation. So in the future, I'm not taking trades without Z present. Obviously this won't apply to everyone, but I think this is solid advice for most traders.
Intentional hostile take over of a company to prevent a short squeeze. This is a new strategy by hedge funds and market makers
I'm invested in a stock that no longer has 3 people, of which 2 were members on the board, the other was a CFO. All three of these individuals were forced to resign though the courts. The stock has 100% utilization, 20% SI, a merger in the works, valuation of the merging companies, and a good earnings report to be announced. Hedge funds are finding different ways to prevent short squeezes and bankrupt companies. This stock is a prime example of market manipulation with the use of insiders trying to destroy the company. They almost succeeded in doing this, but after two months of court the judge put a stop to it. The company can move forward now. The point of this is that your stocks are now being manipulated from inside and the crimes being committed are Bernie Madoff style. Don't think for a second your stock is being controlled just in the market. Hedge funds are going after the companies on the inside now. It's unbelievable the crimes that people will commit for money.
After reading a few white papers i recently started working on a project to create strategies that mimic hedge fund principles using financial instruments that are available to individual investors like ETFs. Hedge funds are for an exclusive group and comes with its own share of restrictions like higher capital investment, lock in period, high fees and only top 7-10 hedge funds actually beat the market returns over a 5year period. Im providing a list of strategies to checkout if anyone is interested in it:
Basic Sector Rotation
All WeatheAll Season
Papa Bear Portfolio
I am not sharing the links of the above strategies since i fear the mods will take it down, but a simple google should help you find them. Let me know if anyone wants the translated version of the above strategies to ETF based assets.
Forex scam alert: Beware of GQFX scams! They induce investors to transfer funds for hedging, then freeze their accounts on suspicion of money laundering, ask them to transfer authorized funds, and embezzle investors' funds step by step.
Hedge Funds market themselves as outperforming both bull and bear markets, primarily using short selling strategies. HFRI tracks the average performance of US-based Hedge Funds. As you look at the final column, note the S&P 500 annualised performance in the same 60 month period was: 13.91% 💩
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