Social media ‘echo chamber’ can help fuel volatility, report says
Stock-market volatility resulting from a surge in first-time investors who congregate on social media could pose a risk to the U.S. financial system, the Federal Reserve said in its biannual financial stability report released Monday.
The report noted that new trading platforms that offer zero-commission trading, fractional shares and flashy and engaging graphics have helped recruit a generation of young traders to the stock market, and the size of this new demographic makes it important for regulators to monitor.
“Social media can contribute to an echo chamber in which retail investors find themselves communicating most frequently with others with similar interests and views, thereby enforcing their views, even if these views are speculative or biased,” the report said.
The Fed reported that so far, wild swings in the prices of popular meme stocks, including GameStop Corp. GME, +2.53% and AMC Entertainment Holdings Inc. AMC, +8.06% have had a “limited” impact on financial stability so far, it is an area of the market that should be “monitored” because new, younger equity investors tend to have higher debt levels and often invest in options, two factors that could amplify losses in a downturn.
“Episodes of hightened risk appetite may continue to evolve with the interaction between social media and retailer investors may be difficult to predict,” the report warned. “A potentially destabilizing outcome could emerge if elevated risk appetite among retail investors retreats rapidly to more moderate levels.”
The Fed suggested that financial institutions calibrate for the potential increased volatility that the meme stock phenomenon could endanger and that “more frequent episodes of higher volatility may require further steps to ensure the resilience of the system.”
Other vulnerabilities to the financial system outlined in the report include high valuations for stocks and real estate, which remain elevated relative to corporate earnings and rents. The Fed noted, however, that “despite rising housing valuations, little evidence exists of deteriorating credit standards or highly leveraged investment activity in the housing market.”
On the positive side, businesses and households have seen their debt relative to income decline in recent months, as federal stimulus and a rapid recovery from the COVID-19 recession has helped bolster balance sheets.
The Fed also pointed to in
... keep reading on reddit ➡Ok, quick little analysis here Apes, to go into a bit of detail on what we ALL already know.
MSM spins shit.
Today we will be picking on Barrons.com with their Article titled:
Fed Says Meme Stocks Pose Risks to Financial Stability
Source:
https://www.barrons.com/articles/fed-meme-stocks-financial-stability-51636420320
--------------------------------------------------------------------------------------------------------------------------------
Before we jump in... take a second to Follow me on Twitter here: https://twitter.com/BadassTrader69
And check out some Youtube Videos I made here: https://www.youtube.com/channel/UCYjNfatgzl-TRm-ffNfnZdQ
Why am I begging for followers and views?
Because it means more people will see my content! Duh...
---------------------------------------------------------------------------------------------------------------------------------
Ok, Paragraph 1. As a Journalist, this is their opportunity to try suck you into the article, so they are going to try and get the juicy stuff in before providing some background. Here's what Barron's had to say to try and draw in its readers:
>The Federal Reserve said stock market volatility linked to a surge in new investors who share tips on social media and invest in meme stocks could be a risk to the financial system, according to the central bank’s latest twice-yearly financial stability report.
The points to reference from this paragraph:
- Market Volatility LINKED to a surge in new investors could be a risk to the financial system
- And we share TIPS
Well lets take a look at this twice-yearly financial stability report shall we?
QUICK CTRL F for the word "Tips"
https://preview.redd.it/slmn6244nly71.png?width=413&format=png&auto=webp&s=2b9a85eaf2bb4ea8a4f0f0ac09ff7b44f188aceb
Hmm... NO RESULTS FOUND!! But how could that be MSM? You SAID they are sharing tips according to the FED???
Maybe it was just 1 Tip they shared was it?
(Insert just the tip jokes)
https://preview.redd.it/iibvfpj8nly71.png?width=414&format=png&auto=webp&s=dad004895dccc72cbf9e5251a245cba5857531db
Ahhh.... 6 results! NOW we are getting somewhere...
BUT WAIT... each o
... keep reading on reddit ➡It’s pretty cool the Financial Times references Ross Coulthart’s In Plain Sight to make their point that UAP carry portfolio risk.
Here’s the full article.
>News of the Omicron variant has over the last two weeks courted chaos in markets as prices have moved to account for the prospect of further economic closures. Even so, there was no broader financial meltdown.
>Omicron was a shock, but it wasn’t a total shock. This is because most investment professionals had factored the possibility of a new and disruptive variant derailing the global recovery firmly into their world view.
>As the late former US secretary of defence, Donald Rumsfeld, might have dubbed it, Omicron was a known unknown coming to light. Something we know we do not know. In this case the known was the risk of a new variant; the unknown how bad it would be or when it might emerge. For the most part that meant the risk could, at least to a certain degree, be modelled and accounted, for sparing markets the worst turmoil.
>Far more concerning for markets is the concept of unknown unknowns -- another Rumsfeldian classification. These are things we haven’t even imagined happening. “If one looks throughout the history of our country and other free countries, it is the latter category that tend to be the difficult ones,” Rumsfeld famously opined on the matter.
>Today’s known knowns and known unknowns include the continuing fallout from the Covid pandemic. They also include harder to define risks like a potential Western confrontation with either China or Russia. But none of these have the potential to jolt markets the way a major unknown unknown suddenly becoming a known unknown has.
>What’s curious, then, is the degree to which markets have thus far ignored what is becoming the transformation of one of the greatest unknown unknowns of all time into a known unknown.
>We are, of course, talking about the growing seriousness with which both Pentagon officials and Congress have starting taking the phenomenon of so-called Unidentified Aerial Phenomena (UAP) -- more colloquially known as UFOs.
>For markets, the important thing about these developments is the increasingly fervent admissions by high-level security officials that while the phenomena are real, they remain unexplainable even to the most sophisticated militaries in the world.
>The slow and steady release of official military footage of UAPs started earlier this year wh
... keep reading on reddit ➡Most of us in the Air Force have at least a secret clearance. Some of us in the Air Force are looking at living in an RV or going on WIC because it has gotten twice as expensive to feed and house our dependents. It's been a while since I've furiously clicked through that dumb cyber awareness challenge, but I'm pretty sure there's an entire section in there on how financial stress is a major risk factor for insider threats. I wouldn't be surprised if there's someone out there who if a foreign intelligence agent offered $$$$ three years ago for some information, they'd tell them to fuck off, but if they got offered $$$$ now, they might at least entertain the idea.
Pretty sure there's a reason security clearances are so valuable on the outside.
EDIT: Just in case I need to make this clear, but I'm not telling people to go sell state secrets. Don't do that, it's bad.
Original question in previous comment: "Is now (after SGB price dump) a good time to get the loan from Flare Finance?"
Any time with a low SGB price is a decent time for starting the loan due to the low interest rate to start one, the delegator rewards when SGB is in a contract, and the dFLR from staked CAND getting you more SGB and CAND, which gets you more SGB anyway. Kind of like delayed increase in buying power by leveraging the loan. Those rewards offset the fact you cant mint as much CAND at a low price of SGB due to decreased buying power from the price being lower.
If you get the loan at a higher price, you get more CAND, but have to worry more about liquidation, and would have to make adjustments as the price changes
Here are my thoughts on how to view the overall opportunities when SGB is at a high price, intermediate price, and low price.
When the SGB price is super high: Your SGB is most powerful and gets you the most CAND, so is a decent time to get a loan initially. CAND is best to be in if you think the SGB price will go down, since it will retain its value and allow you to trade it for more SGB if the price drops. And while you wait for the price to drop, it can be staked to earn more value in other assets (WSGB, dFLR, CAND and SGB from dFLR).
Technically, if you think SGB got pumped to a bubble, with a super high price and is about to crash hard, you may want to just exhange directly from SGB to CAND without doing the loan since youre at highest risk of a major price drop which could liquedate you, losing all collateral.
That being said, having the loan collateral, on top of the equivalent CAND value you mint, is a major advantage if you dont expect a high risk of liquedation. Having the loan, to then have the collateral WSGB, is beneficial as youd still get delegator rewards from the collateral, which you wouldnt if you just directly exchange SGB for CAND on FlareX.
When you think the SGB price is high: Liquidity pool is prolly the most rewarding, since you have to have both CAND and SGB to get LP tokens, and it forces you to exchange SGB for CAND which would retain its value during a price drop. Then the LP tokens get you more dFLR to stake, and if SGB price drops, you have the opportunity to pull LP tokens out. If you did, you can then exchange the LP tokens for CAND and SGB, but itll be more SGB than you put in originally, since the lower SGB price means you get more of them back out. Conversely if the price of SGB rises a
... keep reading on reddit ➡To whom it may concern,
I have a thesis supported by evidence that systemically destabilizing risks currently exist in the US financial market. I am writing this open letter to call attention to these risks as the open exposure can result in catastrophic and uncontainable losses throughout the financial system. I have experience managing financial risk on an institutional level to give credibility to these claims. I am not a financial advisor. The rest of this letter will be describing a historical comparison to GME and certain dynamics of option trading in GME over the last two weeks. I will provide evidence substantiating my thesis and the supporting claims.
First, I would like to call attention to the history of Overstock (NASDAQ:OSTK). Similar to the recent trading in GME, over a decade ago OSTK was a heavily shorted stock with persistent failure to delivers (FTDs). OSTK was the target of manipulative and illegal short selling made possible by regulatory loopholes and abusive option trades known as "married puts" and "reverse conversions". Economist John Welborn of The Haverford Group published a detailed study on Oct 9, 2007 highlighting abuses of exceptions to SEC Reg SHO where deceptive trading deemed as bona-fide by market makers enabled "naked", unborrowed shorting of OSTK. Evidence is provided showing market makers engaged in non bona-fide speculation leaving open position exposure. This was made possible through married puts and reverse conversion trades. The study describes these trades as the following -
>" In a married put, a short seller purchases put options from an options market maker who then [naked] shorts the same amount of stock back to the short seller as a hedge. If the stock sold is not a threshold security, then the options market maker may fail and never deliver. A married put can be disguised as a market-neutral reverse conversion."
Over the last year, the trading in GME stock has had many similarities to the trading activity in OSTK between 2004-2007. These similarities include large and persistent FTDs, high short interest, and suspicious option trading likely tied to married put and reverse conversion trades. For instance, after Robinhood and other brokers took unprecedented action in January to restrict their customers ability to buy GME and other equities, public documents from class action lawsui
... keep reading on reddit ➡
As I understand it, there is some financial risk the founders do have when they start their business. But the employees also have a risk of losing employment as well but don't risk money directly. I'm kinda all over with this this subject.
They wouldn’t do that tho cuz it’s illegal. Wait…. It is illegal… right? To sell something that you don’t own and didn’t borrow? https://www.marketwatch.com/story/meme-stocks-like-gamestop-amc-pose-risks-to-financial-stability-fed-says-11636406879?mod=home-page
In 2010 investor and founder of the Baupost Group Seth Klarman described key lessons from the financial crisis which were either never learned or else immediately forgotten by most market participants. With him at the helm the Baupost Group has averaged around 18% and that since 1982 - a spectacular return. Some of these lessons are very relevant today.
>Do not trust financial market risk models. Reality is always too complex to be accurately modeled. Attention to risk must be a 24/7/365 obsession, with people – not computers – assessing and reassessing the risk environment in real time. Despite the predilection of some analysts to model the financial markets using sophisticated mathematics, the markets are governed by behavioral science, not physical science.
What's your take on where the stock market going in 2022?
Hi everyone, I'd like to know if it is wise to get any online finance course or certificate (What course would you recommend to learn?). I currently work as a data analyst for a small network company but I'm thinking about moving to the financial sector. I mostly work with SQL queries (mysql, postgresql and oracle), python programming (writing algorithms, monthly predictions), etc.
Thanks in advance.
I definitely am partial to GS for the clout and the work but the compensation package here is making the decision harder. I eventually want to be a consultant for World Bank / ADB after many years in GS if I take the role (if that helps).
Recently moved on to the 2nd interview for this position after a recruiter reached out to me. As a senior approaching graduation I was stoked, but reading into it. It seems like such a hated position from what I have read on here and other forums.
Why is that? I have applied at so many places ironically only Deloitte and another company have reached back out, not really spoiled for choice here haha
