>2. It went as described in the article - for the capital I allocated to Didact, I beat the market (SPY) by ~20% since inception.
This seems extremely hard to believe. You should be running a multi-billion $ Quant fund if this is the case. The idea that you would try to push this as a newsletter rather than just taking investor money and becoming a billionaire literally makes the story seem farcical.
Yeah... you're full of shit. You didn't turn 40k of your own money into 100m of your own money. You're leaving out a funding round, inheritance, money laundering, or the whole story is just BS from the start.
> What just amazed me is how gullible all the investors were, and how they didn't do due diligence, hire outside experts, or anything. Weird.
If you look at the investors, with few exceptions, they were _not_ sophisticated VC firms with experience in the area. Most of them were, for want of a better classification, elderly rich people. This should probably, in retrospect, have been a huge red flag.
>Appreciate your point of view. First of all, there seems to be a lot of skepticism around this project and I found that surprising.
Really? You made a crazy claim with no details at all.
Here's my assumptions on this thing:
1. Your algorithmic strategy is only performed on a small selection of stocks, that you have semi-randomly picked, aka not a part of your system.
2. These stocks have had a crazy run.
3. When the NSE had troubles in Nov. and Dec. your conservative stop losses triggered and you stayed out of the market.
4. Your decision on when to re-enter the market was a personal decision, not a part of your system.
5. You have given this thing more money to invest with than we are being led to believe.
Which ones did I miss on?
I gotta be honest, it really does seem like a nice little way to plug you business but I don't believe you're lying. I think you're overstating its performance by leaving out details and were lucky to get that performance in the first place.
> ? It was public that FTX money came from running a crypto exchange, but that FTX's CEO (SBF) secretly diverted customer funds to his hedge fund (Alameda) doesn't seem like something people would have discovered in due diligence.
I'm guessing algebra is difficult for journalists.
> Major investors, with lots of money on the line, also didn't catch this.
Major investors had all the incentives to keep the scam going as they stood to make big money from the scam.
Journalists should have the incentives to expose the scams, except they were not in this ( and probably some other ) case because they were either getting money from the scam or were trying to be the best cheerleaders possible in hope of getting money from the scam.
I was thinking the same, but then again, the investment is rather low, so it is a lot easier to dump that investor, if values don't align in the future. I might be reading it all wrong, but it also seems like the money comes from 42 different investors, making it even easier to part ways.
> He claimed to have ~$50mm under management @ his previous hedge fund. It was more like $1.6mm
The number of people who think the leverage their account gives them - and he could have easily had 20x-50x leverage - means that is money under management is surprising.
> I replied, “I don’t think our investors would accept this.” (We’d been hoping to raise new money at a $150M valuation, and had floated this to potential new investors. There’d been some interest, though no serious takers.)
> And then, my terrible mistake, a moment that I’ve regretted ever since: “Actually, I know we’re worth three times as much.” /14
I don't see how it's reasonable at all to pounce on this as a lie if you mean it in the sense of having a strong belief and say this when asked to clarify.
> What part of "I have secured funding for taking Tesla private" was accurate and honest?
We don't know. He might have chosen to not disclose his discussions with other people.
> If he had not secured funding, how was his statement not deceptive?
He might have meant it in earnest. For fraud, surely he must have had the intention to profit from it personally at the expense of shareholders?
> And if you sold shares based on his statement,
Who would have done that and with what reasoning? Why would you sell for a lower price if you believed you'd get $420 very soon? That's a silly notion.
> a fraudulent pyramid scheme
A pyramid scheme is by definition a system where most (i.e. the last) investors get screwed, i.e. they don't make a profit.
> I am not a financial advisor and this is not financial advice.
Okay as soon as I read this I knew I shouldn't be expecting much, but...
> My understanding of your belief is that you think Melvin would not lie due to there being a large risk associated with lying.
This really isn't just lying a little bit, and isn't just a large risk. If you're running a fund like this, purposely making materially false statements like this would be akin to jumping out of a plane without a parachute and somehow hoping for the best, while 5M angry redditors are purposely trying to make sure you crash into the hardest thing possible. This position of "well maybe he's lying, you can't definitively prove he's not!" position is so bonkers that it's closer to a conspiracy theory than an actual opinion.
> One might also assume that Melvin would not be dumb enough to short over 100% of GME stock.
This has been discussed in depth elsewhere. You're understanding of this concept is fundamentally flawed. Frankly, even if it wasn't, you're suggesting that a single firm shorted more than 100%? Or that both Melvin Capital and Citron both shorted more than 100%, and that somehow added up (with your misunderstanding) to 140%?
> Hmm her fund has gotten totally clobbered since early 2021. If she were truly privy to insider info, why would her fund do so bad?
The claim is she knew about this information based off the timing of the trade. It’s not evidence but it’s certainly suspicious.
It does not follow that she would necessarily know enough other information to perform well. That’s a much higher bar, especially when tech has been pretty deep in the red.
A better comparison would be a stock brokerage that took your money to buy specific stocks on your behalf but then did something totally different, including “investing” in illiquid assets.
If they had just bought the stock you requested, then they could just liquidate your stock at market price when you said you want to sell.
This was not the situation that FTX was/is in.
Instead, the way FTX allocated money/assets was suspicious (at best) if not flat out irresponsible and deceptive.
Also, FTX was not and is not a bank, and the idea that this is levering in the same way regulated banks lever is laughable.
This seems extremely hard to believe. You should be running a multi-billion $ Quant fund if this is the case. The idea that you would try to push this as a newsletter rather than just taking investor money and becoming a billionaire literally makes the story seem farcical.
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