Comments by "seneca983" (@seneca983) on "The Plain Bagel" channel.

  1. ​ @ez4039 : "Goldman did them a favor extending credit when others wouldn’t." I think you misunderstood a bit. Goldman basically helped Greece to "cook the books" and pretend they had less debt than they actually had in order to meet the requirements to join the common currency.
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  2.  @mattbob1995  Is "Citron Research" some kind of reference? What exactly is it referring to? Life giving you lemons or something else?
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  3. "Its not the risky behavior that makes us upset, its the fact that they were subsequently bailed out." What hedge funds have been bailed out? If you mean they were bailed out by private actors rather than the government then I don't see a problem with that.
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  4. Have you seen Wallstreet Millennial's video on this subject? He considered investing in the Direxion Daily S&P 500 Bull 3X ETF. With historical data, it would even in the long run greatly outperform the SPY ETF despite volatility drag. It might be worse if only made a one-off investment and the timing was bad but with dollar-cost averaging you'd still be better of than with SPY. This got me thinking, would it be possible to make a leveraged ETF with long-term investing in mind? It could maybe contain stocks from multiple countries for better diversification and maybe weigh less volatile stocks more. Also, it might not need to fully rebalance daily to mitigate volatility drag.
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  5. That's basically how these particular bonds were structured. If they were senior to equity holders they wouldn't count as Tier 1 capital under Basel III rules. (Though I obviously haven't read the contracts for these specific bonds so I don't know if the Swiss regulator's decision falls within the stipulations of the contract.)
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  6.  @poisonpotato1  But conversely with dividends your ownership share of the company doesn't increase unless you reinvest the dividends you received by buying more shares of the same company. Theoretically for an individual investor, reinvesting the dividends into the same company is equivalent to a share buyback if the investor doesn't sell his shares. Also theoretically, receiving dividends and not reinvesting them is equivalent to a share buyback if the investor sells a portion of his shares that's equal as a percentage to the portion of the shares of the company that were bought back. So in both cases, the investor theoretically has the same option of getting cash or not getting cash (though in practice some investors are not active and will not consider those options). When things like taxes and trading costs are considered dividends and share buybacks may no longer be equivalent even for a more active investor who weighs the available options.
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  7.  @retiredrebel  "the English Royal Family had pirate origins" Which royal family are you talking about?
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  8.  @jcsjcs2  "A dividend is money in hand." Generally, one should expect dividends to cause the stock's price to fall by an amount roughly equal in size to the dividend. If that weren't the case there would be an arbitrage opportunity where you could buy stock right before the dividend ex date and sell it right after (or the opposite if the fall were bigger). If you really need cash in your hand you always have the option of selling. "And when I sell my shares at the higher price, I pay taxes as well." But if you're going to be holding on to the stock for a long time then it's better for you if the taxation gets delayed.
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  9.  @davidglad  "Stockholders getting paid ahead of ANY bondholders is unprecedented other than outright looting." No, these bonds are different. The contracts for these types of bonds contain stipulations that they can be wiped out or converted to stock based on certain events like the bank's core capital being eroded below certain limit or a decision by a regulator. They are not senior to equity holders. That's their whole purpose. Otherwise they wouldn't count as Tier 1 capital under Basel III rules.
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  10.  @danielcarrapa3632  I don't think that's right. There are different kinds of AT1 bonds. Some get converted to stock whereas some are just wiped out when the contingency criteria are met. From what I've read, the AT1 bonds issued by Credit Suisse were of the type that get wiped out.
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  11.   : Even if Goldman's primary purpose is to make money for its investors, we should be able to expect it to operate within certain ethical boundaries. Helping Greece defraud European institutions is at least a bit suspect.
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  12. In a certain sense, volatility drag is always negative. Let me explain. Assume that the value of the index moved continuously and that a leveraged ETF tied to that index were rebalanced at every infinitesimal moment meaning its price's logarithmic derivative were always 3 times that of the logarithmic derivative of the index's value. Such an ideal leveraged ETF would experience zero volatility drag. Its value growth would be raised to the 3rd power so if the index grew by a factor of 2 over some time period the value of the ETF would grow by a factor of 8. If the index grew by a factor of 10 over some period of time the ETF would grow by a factor of 1000. A real leveraged ETF that's balanced daily and not at each infinitesimal moment will always lag behind this kind of idealized ETF. The more the index moves between rebalancings the more the real leveraged ETF lags behind this ideal.
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  13.  @4CiiD3  "The least time you rebalance leverage, the least amount of volatility drag you will get." No, it's not how frequently you rebalance. Rather it's how much the price moves between rebalancings. The hypothetical ideal ETF rebalances at each infinitesimal moment so the price only moves an infinitesimal amount between rebalancings (assuming continuity which isn't realistic either) so there's no drag. "And when you say volatility drag is always negative... negative in what sense ?" I already explained that. The hypothetical ideal is that returns get raised to the 3rd power (with 3x leverage) if there's no volatility drag at all. Due to volatility drag, a real leveraged ETF will always lag behind this ideal. The less the index moves between rebalancings (i.e. the less there's day-to-day volatility if rebalancings happen daily) the closer the leveraged ETF will get to this ideal but it will never reach it. "Average return is still 3x index - costs no matter how you rebalance." It's (generally) not 3x over multiple days (assuming daily rebalancing).
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  14.  @DarthTrader707  It seems you didn't understand what I wrote. None of what you wrote about TQQQ contradicts what I wrote. "Since inception, TQQQ is up 147 times vs 8 times for the QQQ." Like I wrote, a hypothetical 3x leveraged ETF that is continuously rebalanced and suffers no volatility drag would raise the returns to a power of 3 (ignoring fees etc.). So in this case such ideal version would provide 8^3=512 returns. TQQQ will inevitably lag behind this ideal performance (in this case providing "only" 147 times returns) due to volatility drag. It can still greatly outperform the index if the volatility drag isn't too great.
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  15. That's good to hear.
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  16.  @NASSSSSER  You're the one making this (IMHO very overblown) claim of the US losing $7.5 trillion. If you want to argue for it, you should explain why or how the US would lose that much. That said, I can point to an academic paper which looks at the benefits (e.g. international seigniorage) the dollar's international role grants to the US. The result is that the benefits, while real, are fairly small compared to the size of the US economy. The paper is "Does the US dollar confer an exorbitant privilege?" by Robert N. McCauley.
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  17.  @NASSSSSER  "you should have asked how instead of refuting the claim without knowledge!" But I didn't do that without knowledge. Even if I didn't know your precise argument, I did already know that the benefit of the dollar's role on the US is much smaller than $7.5 trillion as detailed in the paper I cited in my previous comment. "they must pay with dollar currency, which forces all countries to keep huge amounts of dollar reserves" No, it doesn't. One of the advantages of the dollar is that it's very liquid. You can easily exchange other currencies for the dollar if you need to use dollars for payment. The reason why many central banks and other institutions hold dollar denominated reserves is completely different. And in any case, for most countries there isn't going to be a big change. The Saudis aren't going to want to receive their payment in e.g. Indian Rupees so most countries are still going to pay in dollars. And even if the dollar lost its reserve status, the lost benefit to the US isn't all that big as detailed in the paper I cited.
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  18. "Doesnt mean they know squat about finance and the stock market." On the other hand, at least Graham Stephan's investment advice seems to basically be "dollar cost average into low-cost index funds". I'd say it's good advice (though giving it doesn't require deep knowledge).
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  19.  @cliffsousa4184 : "They are also the ones who shorted MBS during 2008 recession." But this isn't actually harmful.
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  20.  @retiredrebel  At what point in history was the house of Windsor (previously known as the house of Sachsen-Coburg and Gotha) pirates?
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  21. They're not profitable for the capitalist class. Some individual capitalists may benefit if they have invested mostly in armament production or something. Most usually suffer losses, possibly enormous ones. The Rothschilds lost something like half of their fortune due to WWI.
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  22.  @cliffsousa4184 : Yeah, I agree selling bad CDOs and misleading investors (though credit raters share the guilt here as well). But the shorting part isn't harmful. In fact, the problem (at least in hindsight) was that people valued CDOs too highly. It would have been better if there had been more people shorting them.
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  23. That's not a good comparison. A government doesn't earn 100% of GDP as income and it usually doesn't have (sellable) assets as collateral for loans in contrast to, say, a family with a mortgage.
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  24. No, typically those assets are government bonds (though sometimes more "exotic" assets like corporate bonds are bought).
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  25. LMAO!
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  26. It's clearly a full scale invasion.
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  27. "Ukraine was about to join NATO." Not any time soon it wasn't. Maybe in the distant future.
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  28.  Luís Andrade  "dividends give you more flexibility" In theory, both options have the same flexibility for publicly traded stocks because an investor can always choose to buy/sell as much as he wants. "buy backs only happen when a company wants while dividends are the ones who happen regularly" Both dividends and buybacks have to be decided at the general meeting. Dividends are only regular if it's decided so. They don't happen any more automatically than buybacks. "A company consistently buying back its shares is a huge red flag" Why is it a huge red flag?
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  29.  @bultvidxxxix9973  "No, there will always be volatility drag. The reason is that you apply a linear factor to something that doesn't scale linearly." I'm not sure what you're referring to here. I only said a hypothetical ideal ETF that rebalances at every infinitesimal moment wouldn't experience volatility drag. In real life, that's not possible for various reasons (e.g. stock prices don't really move continuously.)
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  30.  Luís Andrade  "That's why dividends> buybacks" That doesn't make any sense. Debt-funded dividends should (in theory at least) be just as good or bad as debt-funded buybacks.
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  31.  @ProfAzimov  That may make more sense if there is a sufficiently profitable investment available but that's not always the case. Generally, it doesn't make sense for a business to invest ad infinitum. There are diminishing returns to investment and at some point the returns get too small.
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  32. "Banks are not restricted in credit creation by the amount of reserves they have" No, that's incorrect. They are restricted. In the US there's a 10% reserve requirement for banks which means that they can't more than 10x the deposits as their liabilities compared to the amount of reserves they have. If a bank is at that 10% limit and wants to make a new loan it needs to get new reserves from somewhere.
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  33.  @DaBlaccGhost  Those are certainly real and significant problems. However, the videos in question still both exaggerate the problem and give a too fast timeline.
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  34. What violation? "if Saudi Arabia abandons the ​​petrodollars, America will gradually lose 7.5$ Trillion" No, that's not the case.
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  35.  @apacheattackhelicopter8185  "And why does your article say that Russia defaulted for the first time since 1918? It has defaulted as recently as in 1998." What did the article say precisely? In any case, that year is probably given because it's the last time Russia defaulted on external debt. In 1998 Russia only defaulted on Rouble denominated debt but not on debt denominated in foreign currencies. Either the article failed to explain this fully or maybe you missed this detail.
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  36. "Besides making interest payments, is there any other problem with having say, 1 quadrillion in debt?" What do you mean "besides"? With that amount of debt and, say, 2% interest the payments would be almost 100% of the US economy.
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  37.  @nicholaspoulos7694  "I am asking for any other actual real problems I understand interest payments are a limiting factor in debt." Another problem is debt rollover. Debt eventually matures and the bondholders have to be paid the principal of the debt, not just the interest. Usually you have to issue new bonds to cover the maturing ones. If your ability pay is in doubt such rollover might become impossible because not enough investors dare to lend to you.
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  38.  @grimaffiliations3671  "The government has all of its debt denominated in its own currency, you cannot default on a currency you control." No, governments can and have defaulted on bonds denominated in their own currency. One example is Russia which defaulted on its Rouble denominated bonds (but not its foreign denominated bonds) in 1998. Government borrowing in its own currency does have the theoretical option of printing more money to avoid technically defaulting on its debt but often that would just be a worse option that a default.
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  39.  @schumanhuman  "In other words lending creates reserves" No, that's incorrect. It creates new deposit money but it doesn't create reserves.
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  40.  @schumanhuman  "inflation is negatively correlated with the total use of QE" Of course, because QE is used to fight disinflation/deflation. Similarly e.g. the use of antibiotics is positively correlated with bacterial infections but that doesn't mean that antibiotics don't help with those.
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  41. "Every is instrument that is volatile has volatility decay, non-leveraged ETFs have it too" No, the volatility drag is due to the daily rebalancing. Non-leveraged ETFs don't have to be rebalanced.
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  42.  @mariorossi7149  "If a index goes down by 10% and then goes up by 10%, it losts 1% of its value." That's just an artifact of the definition of percentage change, not a "real" phenomenon. If you multiply an index by a factor of 1.1 and then divide it by the same factor it'll end up where it was but a leveraged ETF following the index will lag behind.
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  43. You could make two arguments. 1) He probably knew (or should have known) that many of the WSB types of people are going to follow him if he doesn't explicitly warn against it or something. 2) The timing of the sale relative to when he has to report his stake makes it look like he wanted to mislead (in a broad/moral sense) investors as long as legally possible. I think one can at least make the argument that even if this isn't illegal it's a dick move.
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  44. If they caused a temporary dip in the stock price and then bought the dip (for more than just to cover any possible short position) that I think could very well fall under market manipulation.
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  45.  @grimaffiliations3671  OP didn't mention currency at all. He only talked about "monopoly on violence". Both Greece and Argentina retained the control of their police and armed forces.
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  46. What? Like an ETF where half of the content is cash and only half is stocks? What would be the point of that?
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  47. "if the s&p 500 crash by 63% it doesn‘t matter in what you are invested at all" I don't think that's true. I think what you're saying is that if S&P500 falls by that much then the world economy is in trouble and alternative investments would likely fall too. While that probably has some merit, you should still take into account that other investments can still fall by a different amount, possibly by a large margin.
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  48. Russia would still have been able to pay its debt by using the money it had been receiving from energy transactions but chose not to.
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  49.  @midlander8186  "The terms of the loan on which Russia "defaulted" required it to pay creditors in US dollars from a bank in New York City, specifically." I tried to search this info but I couldn't find such conditions stated anywhere. In any case, Russia only tried to pay it's foreign denominated bonds from its frozen forex reserves rather than from non-frozen funds and also stated that it wouldn't pay unless the forex reserves were unfrozen. "I believe Russia invited creditors to take payment in Russia in any currency" I'm under the impression that Russia only offered to pay them in roubles. Some of the Russian foreign denominated bonds have a clause that allows payment in roubles under certain circumstances but not all do.
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  50.  @trevors777  Sounds plausible.
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