Crime does pay and quite handsomely
The stock market scams edition
Have you lost your job due to COVID? Are you unhappy with your existing job? Is your salary too low in your existing job?
If your answer to any of these questions is yes, then you've come to the right place. Global income redistribution (crime) is one of the fastest-growing sectors globally and offers exciting opportunities with 5-100x the salary of traditional 9 AM-6 PM jobs. This blog is a leading professional publication catering to honest, talented budding income redistributors. Some people prefer to call such people criminals and scamsters. But, I’ve never been a fan of these terms.
Throwing a bomb on a small fire
So, let's say it's one of those days where you're bored, and you decide to watch a movie at a theatre next to your house. Your bad luck, a Salman Khan movie is airing, and immediately, you have suicidal thoughts. But suddenly, you remember that you had invested in Suzlon at Rs 307.20 and Google the stock price to see that it is trading at Rs 7.50. So, given that you're a retail investor, you decide to postpone your suicide until you break even.
So, you grit your teeth and decide to watch the Sallu movie titled Cycle Chain, Light Bulb, Mixer Grinder, Pant Zip or something. As you sit down and wait for the movie to start, you notice the fire alarms on the walls. In the middle of the crowded theatre, you decide to start screaming "fire, fire". There's no fire. You're just shouting about the fire alarm, minus the world "alarm". Why? Well, because you're bored and want some cheap thrills.
But lucky for you, it's a Sallu movie. Fortunately, the people who generally watch them have extremely high IQ scores of 3000-8000 points. So they decide to ignore you and watch the movie, and nothing happens.
Now imagine if the biggest financial newspaper in India decides to do the same. This is exactly what happened last week with Adani Group stocks. On June 14th, Economic Times (ET) ran a story that NSDL had frozen the demat accounts of 3 FPIs with substantial holdings of Adani Group stonks.
National Securities Depository Ltd (NSDL) has frozen the accounts of three foreign funds — Albula Investment Fund, Cresta Fund and APMS Investment Fund — which together own over ₹43,500 crore worth of shares in four Adani Group companies. These accounts were frozen on or before May 31, as per the depository’s website.
But just like you in the theatre, ET was bored, wanted some kicks and started screaming "fire, fire" but skipped the "alarm" part. But unlike your case, people got scared and started running helter-skelter. As a result, all Adani stocks hit lower circuits on Monday, and they've had a rough time with the stocks down between 5-18% for the week.
But, here's what happened. Just like your prank, there was indeed a fire, and the demat accounts of the 3 FPIs were frozen. But like you decided not to mention the word "alarm", ET was feeling lazy on that Monday and decided not to dig deeper. The demat accounts of the three FPIs, namely Albula Investment Fund, Cresta Fund, and APMS Investment Fund, were frozen. But the thing is, these FPIs had multiple demats, and some were frozen because of a SEBI investigation from 2016, But the demats with Adani stonks weren't. Good prank ET😂👏👏
The National Share Depository Ltd (NSDL) on Tuesday clarified that the freezing of the accounts of the three foreign funds — Albula Investment Fund, Cresta Fund, and APMS Investment Fund — was not related to the Adani Group but to a June 2016 case.
But a senior NSDL official said the depository had frozen accounts of the funds that hold certain other securities and not those holding Adani company shares, adding that freeze was "not new".
Adani stonks are as high as a Punjabi guy. Gautam Adani has been on a debt-fuelled acquisition binge of infrastructure assets from ports to solar and wind farms. This, coupled with the low public float, led to a sharp run-up in the stonks. But the fundamentals seem shaky, and this was causing a lot of nervousness among investors.
And ET, with its prank, threw a big bomb in a small fire.
Wait, wait. If you're angry that I haven't said anything so far about making honest money from honest scams, wait, deep breaths, I got you.
ET has shown a wonderful new way of making money. See, now we know, stock prices fall on bad news, especially in stocks where investors are worried. It doesn't matter if the news is true or not. Truth has always been a matter of opinion.
So, by spreading rumours, either positive or negative and holding positions beforehand in the stocks, you can make quite a bit of money. So here's how in 8 easy steps:
Step 1: Prepare a list of all financial journalists. Remove people who don't drink
Step 2: Find out the bar where the journos who like to drink much like to hang
Step 3: Start buying them free drinks and befriend them
Step 4: Create a few news sites and blogs. Publish articles titled "Google is planning to acquire Suzlon to increase its ESG score". Send some WhatsApp, Telegram messages and post on Monecontrol message boards
Step 5: Get a few journos really drunk and show them these articles
Step 6: Buy Suzlon
Step 7: Journos are mostly lazy. Very few do fact checks, and they'll publish articles that Google is buying Suzlon
Step 8: Sell your Suzlon stocks. Become Rich. Buy yacht. Get a tummy tuck and botox injection!
That's all it takes to be rich!
As a budding criminal, here's why the success rates of these type of scams will only increase in the future. Like we all know, traditional media is dying. It won’t die but will remain dying. In India, post the pandemic, thousands of journalists have been laid off. This is just the beginning of the end for traditional media companies, and It's going to get a lot worse.
While print circulation seems to be holding up, advertising revenues are shrinking fast, with 80-90% of it going to Google, Facebook and Amazon (yes, Amazon is an ad giant you didn't know). Online editions aren't replacing this lost revenue. It's the same globally. Over 16,000 journalists were laid off in the US last year alone.
Journalists who still have jobs have seen pay cuts. Media organizations aren't investing because they aren't making money. Facebook and WhatsApp are quickly becoming the dominant news source for people replacing traditional news outlets and publications.
In response, most major publications have some, most or all of their content behind paywalls. Of the publishers who don't, the vast majority of them are considering it. If you've been following the troubles of the news industry, you'd have come across the term "news deserts". This was coined in response to the thousands of local news publications that have shut down across the world due to which large geographies are without news coverage.
Though the term was mostly used in a local news context, even countries are kinda, sorta becoming news deserts. With falling revenues, shrinking newsrooms and looming consolidation, the quality of news, both local and national, is going down the toilet. Publications and journalists will increasingly come under more pressure to generate clicks, eyeballs and ad revenues. And this will create an incentive for them to publish more and more clickbaity, salacious and factually challenged news.
And the other thing is, the rest of the quality publications are behind paywalls. Meaning they won't be consumed by the masses but rather small audiences. Take a look at the chart, for example. Paid publications like ET Prime itself and Morning Context had published deeply reported pieces on the shaky fundamentals and issues with the Adani Group. But since a lot of people don't read them, the stocks didn't react and kept going up🚀 until this week when ET Print and online published a free story.
The fact that the media is in trouble is good news for you as an income redistributor (budding criminal). You can get people to publish fake news, move stocks and keep making money. I'm 100% sure, in 5-10 years, you can even get a news story published that Netflix is acquiring Gitanjali Gems and that Mehul Choksi will replace Reed Hastings as the CEO.
It's an exciting time to be a criminal in the financial markets. I wish all you budding young talented, honest income redistributors (criminals) the best of luck.
A scam made in the heavens
Ok, let's say you don't want to do all the hard work of finding alcohol-addicted journalists, getting them drunk and manipulating them into publishing a story that Google is acquiring Suzlon. Are you wondering if there's an easier income redistribution scheme (scam) to run? Are you kidding me? How can you even think of insulting me with a question like that? This is a professional newsletter for professional scammers. But, of course, there is a way! All you have to do is look toward the stars.
Ever since I was 7 years old, people have been telling me that I was extremely wise. It turns out it was true, and I'm really wise. In all my wiseness, here's what I've figured. Most investors and traders are gullible idiots and suckers. Most of them don't have what it takes to make money in the markets. But greed is a cruel seductress, and it keeps seducing these suckers. So people keep trying to get rich quick in the markets and fail miserably.
So typically, this is how it goes. A guy sees someone make a quick buck trading, gets seduced, decides to start trading, lose money, give up, watch CNBC for tips, go to a temple, lose more money, give up again, consult an astrologer, borrow money, find online tipsters, start trading, try black magic, lose money, find seminar guys, borrow more money, and lose it all and discover index funds. Most suckers keep donating their money for as long as they can.
But the stock and F&O tipster market, even though large and profitable, is quite crowded. As a budding scamster, it's hard to break into it. You need a new shiny hook to grab the attention of these suckers. Of late, using astrology to predict stock and Bitcoin prices has emerged as a lucrative opportunity.
Stock market astrology is nothing new. Several visionary fraudsters have been doing it for a long time. But building a large and profitable fraud enterprise was hard. But thanks to YouTube, Instagram, and Tik Tok, being a stock market astrologer fraudster guru is easier than ever.
Take the case of Maren Altman. At just 22, she already has over a million followers on Tik Tok and 1.3 lakh subscribers on YouTube. So she quite smartly figured out that this Crypto is a growth area and started posting Bitcoin and crypto astrological predictions:
In early January, Maren read bitcoin’s chart, using its creation date, Jan. 3, 2009. “New moon in Capricorn, January 13th, looks big for bitcoin,” Maren says in the video. “Little before that … Saturn will join the bitcoin Mercury exact by degree on January 11th, which looks like some corrections with Mercury and Saturn. It could be news about something that leads to a drop momentarily. But with this new moon, sun moon Pluto, right on top of bitcoin’s Jupiter, this is like atomic-level new beginning.”
Though Maren claims in the video that she isn’t offering financial advice, many of the comments on the post suggest some take it that way. “Looks like it’s invest o’clock,” one user wrote. “Ik this isn’t financial advice but can you do some finance tiktoks because i trust you and i wanna invest,” read another comment.
Not just Maren, meet Crypto Damus, the Nostradamus of crypto. He's built a thriving business charging $100 for his Astro crypto research. And then meet Mahendra Sharma, who is also known as Astro Jim Simmons. He's apparently made 13228% with 90% accuracy using Astro nature cycles.
So, if you need an easier way to scam people being an Astro guru like MJ Bharat, who's built a successful business, is a lucrative opportunity.
The key to MJ's success is his charisma. That and his ability to successfully convince gullible idiots that the bullshit he is saying is actually useful. Just check the comments in the video.
As long as human greed exists, there will be an endless supply of gullible idiots. As an aspiring scamster, their gullibility is your margin.
Pivot until you make...away with all the money!
Ok, what if I told you there was an amazing new way to make money where people literally beg you to take their money? So, here's what you need to pull this income redistribution scheme (scam). A grand idea, I'm not talking neo-bank grand, I'm talking curing cancer and asteroid mining grand. Then target a venture capitalist who buys bullshit more than numbers, like Softbank. The next thing is important, so pay attention.
You need to give a speech. You need to give a speech so rousing and so inspirational that it'll make Masayoshi San wet his adult diapers a little. A speech so great that it has to make Masayoshi Son's left kidney tremble with joy. So much joy that he has to excuse himself in the middle of the pitch to pass off those two kidney stones that were stuck in his left kidney since he heard Adam Neuman pitch We Work. In the end, Masa should get up, take out his wallet and throw $2 billion at you like you're a hot male stripper from Bihar.
And then, you can give yourself a fat salary and run the company to the ground like Katerra, for example, and cash out. Michael Marks raised over $2 billion, promising to revolutionize the construction industry. Katerra initially started off trying to streamline the construction material supply chain by cutting out the middleman and going directly to the factories, but the model didn't work. So it then pivoted to manufacturing pre-fab houses and buildings:
I’m sure the construction world looked astonishingly primitive, and modernizing it became another key part of Katerra’s value proposition. Instead of laboriously constructing buildings one at a time, by hand, buildings would be built the way everything else was built - prefabricated in a factory, designed specifically to be manufactured as efficiently as possible. Instead of designing buildings from scratch every single time, Katerra would have building products: standard, off the shelf buildings that could be customized for a client’s needs, the same way mass produced cars offer a wide variety of trim options.
The company filed for bankruptcy after several acquisitions, 3457689 pivots, and $2 billion down the drain. This was such a spectacular failure that Masa regretted investing. Masa has a lot of regrets. So it takes something special. From happily passing kidney stones to cold regret, that takes some doing.
We have lots of regrets, making bad investments or missing great companies. WeWork is going to become profitable in the next several quarters. So, I hope that we’ll be able to regain some of the investment we made there. But there are companies that went bankrupt, like Greensill and Katerra. You also have to look at the companies we missed.
Masayoshi Son
Take the other example of Juicero. It raised $118.5 million to make a juice maker for $400. And to make the juice, they sold a subscription of fruits on top of it😂
A startup called Juicero sells a $400 machine for making fresh-squeezed juice. Customers buy the machine and then they get a subscription to special Juicero bags of unsqueezed fruit. You put a bag into the machine and push a button, and in a couple of minutes you have a cup of fresh-squeezed juice. But a pair of Bloomberg reporters discovered something hilarious: Squeezing the bags with your hands works about as well as doing it with the machine. You don’t really need a $400 machine at all.
Vox
Even If you sell a pitch that you want to reimagine how people fart, Softbank will give you $100 million. You can then pretend to run the company for a year or two, take a nice fat salary, raise more money, destroy the company and retire in Chunar.
Rabbit holes
The travails of traditional media and how it lost its plot is a really interesting rabbit hole. Traditional media worldwide is in trouble. In the US, local news is in serious trouble. Over 2100 papers have shut down in the past 5 years. National news titles are no better, and there has been widespread consolidation which has led to concentration among just 5-6 large conglomerates.
Digital media outlets like Buzzfeed, Vice among others, were touted as the next big. They raised millions in venture funding, but very few digital-first publishers have succeeded. Several outlets like Mic, Mashable, Awl, Think Progress, parts of Huff Post, among others, have shut down or have been acquired for peanuts.
Even in India, the story is no different. Several leading online ad-supported publications ranging from ET, Mint, Business standard to Moneycontrol have erected paywalls. General news, too, has been hurting. Flailing revenues, stagnating circulation, declining ad revenues are the norm. Quality has gone down the toilet and has continued going down.
Indian much, much like the US, has the same issue of concentration which is making things worse.
There have been some interesting new developments in the media landscape at large globally. On the one hand, in the past few years, several subscription-only publications like The Ken, Morning Context, ET Prime, The Capable in India have cropped up. Worldwide, major publishers like NYT, WSJ, FT and The Economist have found success with paywalls. But the smaller publishers have not.
On the other hand, there's been a bit of an unbundling of traditional media. Several high profile journalists have quit and started their own paid newsletters and podcasts on Substack and other platforms.
The other issue seems to be growing distrust or conflicts with media and certain powerful groups and players. This has led to some interesting ways in how these people deal with media. The latest development involved the famed venture capital firm Andreessen Horowitz launching its own techno-optimist media publication. This was the culmination of a series of conflicts with traditional media outlets like NYT and WSJ over how it was covered. a16z is far from the only company wanting to go direct. This is just one of the latest rifts between the powerful and the media.
I've just glossed over a lot of things in the interest of brevity. There are thousands of other issues, and the sordid tale of media trouble is a super interesting rabbit hole to go down. A few of the thousands of interesting media focussed publications:
Neiman Lab
Digiday
CJR
Poynter
The Drum
What's New In Publishing
The Fix
Publisher Weekly
Freddie DeBoer
Simon Owens
Newsonomics
The Rebooting
Dave Nemetz
Good reads
Our research so far has revealed that, on the one hand, gold seems to have done well when stocks and bonds have performed poorly, especially in inflationary environments. On the other hand, it has had mediocre returns and extreme drawdowns (close to 80%) historically. To improve returns, then, investors seeking exposure to gold could try to (a) estimate the direction of inflation to capture the gold rally while (b) setting up downside protection mechanisms from major drawdowns.
2. Passive growth makes it harder to generate alpha
Since the 2008 financial crisis, alpha opportunities are relatively few. As a result, active mutual funds have been unable to recoup the costs of active management, leading to relatively poor risk-adjusted performance. Compared to their low-cost counterparts, active funds rank low based on alpha and also based on total return. Moreover, with few alpha offsets to their costs, active fund performance is more tightly related to expenses, leading to an increase in performance persistence and a tighter relation between performance and investor flows.
3. How Software Is Eating the Car
Consulting firm Deloitte Touche Tohmatsu Limited estimates that as of 2017, some 40% of the cost of a new car can be attributed to semiconductor-based electronic systems, a cost doubling since 2007. It estimates this total will approach 50% by 2030. The company further predicts that each new car today has about $600 worth of semiconductors packed into it, consisting of up to 3,000 chips of all types.
4. Recapping Last Week's Stock Market Boxing Match
Does payment for order flow put brokers in a position where conflicts of interest can happen? In some cases, yes. Are retail investors currently getting better execution than anyone else in the market? Yes. Would lit markets be healthier if retail flow was executed on exchange? Yes. Would transaction costs likely go up if that happened? I believe so. The equity market is extremely complex & leaves plenty of room for subjectivity. There’s never a clear-cut proposal that would immediately fix every problem or benefit every party.
5. Don’t Pay Gambling Debts By Insider Trading
Yes yes yes if you have never traded options before, buying a ton of put options just before a bad earnings announcement does raise an obvious red flag, but so does sending your insider buddy a screenshot of your profits! So does taking pictures of the pile of hundred-dollar bills that you got as a payoff for your insider-trading tip!
6. Well-Behaved Bubbles Often Make History
But even though the term “bubble” is usually pejorative, the right kind of bubble, at the right time, can exert a powerful positive effect on the world. A bubble is an objectively irrational shared belief in a better potential future … but that doesn’t just describe someone bidding up asset prices; it also describes anyone who chooses to build that kind of future. (And it’s not a coincidence that the other social sense of “bubble” is a filter bubble — a fact- and criticism-proof barrier that keeps a set of people convinced against all external evidence that they’re right.)
7. How the 1 percent’s savings buried the middle class in debt
Disparities in income and wealth have fueled ever more saving by the top 1 percent. But while many economists think more saving leads to productive investment, Sufi, Princeton’s Atif Mian, and Harvard’s Ludwig Straub make a different argument. They find that these savings are largely unproductive, being remade by the financial system into household and government debt. And their research outlines a cycle whereby the savings of the top 1 percent fuel the debt and dissavings of the lower 90 percent, which in turn leads to more savings at the top.
8. Money Without Borders: A Peek Inside Wise
Most companies pursue scale efficiencies, but few share them. Wise explicitly states that its pricing is set not to maximize profits but to maximize customer savings – a number it pegs at £1 billion in the last financial year. Its mission is that its currency exchange services should eventually be free.
Start with the financial gymnastics. At SoftBank’s highest levels, close to Mr Son, is a group of traders who worked at Deutsche Bank at a time when the German lender was famous for its appetite for risk-taking. Chief among them is Mr Misra, who heads sbia, the part of SoftBank running the Vision Fund. “There are people at the Vision Fund whose entire raison d’être is financial engineering,” says a person who knows SoftBank well. “Complexity is their best friend—if they want to get from a to b they will go through all the letters of the alphabet to get there.”
10. Quantitative Asset Allocation Approaches That Go Beyond Stocks and Bonds
But the phrase “best stretch ever” also is an indication that we are not likely to see the same type of performance in the next 40 years from the portfolio as we did in the previous 40, especially given that stocks are expensive and bonds yields are low.
Remains of the week
Capitalism after Covid. Small investor is ideally suited to parasitism. Bankruptcy resolutions see 80% average haircuts. Prepare for a bull run. Meme investing. What happens in an IPO?. Losses 'the Size of Countries'. Plaid, Visa, and the deal. Norm MacDonald. Private Equity’s Mid-Life Crisis.
Some people who have low IQ say crime doesn’t pay. Make them feel dumb by sharing this newsletter with them
So, how did you like reading all my amazing, super double awesome get rich schemes? Let me know by leaving a comment.
Awesome. Love your writing.