

Two Conspiracy Theories - Garbage
http://dilbert.com/blog/entry/two_conspiracy_theories/

======
patio11
"Our hedge fund is using existing technology to steal your money."

This is absolutely certain to be true, also goes for mutual funds, and it
happens in the plain sight of almost every investor.

Hedge funds typically get two and twenty: two percent of your investment per
year. Twenty percent of all gains. Apply this incentive structure to any
sufficiently large pot of money and you make out like a bandit. Investors, not
so much. Thankfully, if you have enough money to invest in a hedge fund you
have enough money to pay someone who knows this to explain it to you.

Actively managed mutual funds charge a management fee, typically in the
neighborhood of 1.5 ~ 2% a year. (These are, thankfully, coming down.) This
compares to 0.2% a year for index funds. Since actively managed mutual funds
do not add value -- another secret in plain sight -- this will, over time,
result in approximately half of the investors' gains accruing to the money
manager. Most investors just pick whatever their broker recommends (brokers
_shudder_ ) or pick the default choice for their retirement plan, which is
generally set via splitting that huge fee with whomever is tasked to do the
recommendation.

Buy cheap index funds (or, if that strikes you as complicated, open an account
with Vanguard and get one of their targeted retirement date options -- they'll
work out the math for you).

~~~
jeffmiller
Agreed about mutual funds.

Hedge funds charge high fees, but a subset of them provide a product you can't
get anywhere else: returns orthogonal to other investments. Sophisticated
investors pay happily for it. What's being stolen?

~~~
khafra
> returns orthogonal to other investments.

What does the interest accrue in instead of money? Complex money with real
part 0?

~~~
sebg
I think what jeffmiller meant was that an investors returns from a hedge fund
investent should have very little to no correlation to other investments the
investor has made.

~~~
T-hawk
Or more generally, that hedge funds can be structured for their returns to
bear little to no relation to the stock market as a whole. They do this by
making highly leveraged bets in both directions. (Buy an option for 10 cents
on a stock that rises from $4.00 to $4.10. Bam, 100% profit. Or 100% loss if
the stock does not rise at all.) This action is called hedging, giving hedge
funds their name.

The dirty secret is that hedge funds do not work long term. The stock market
goes up on average over time. A hedge fund that does not correlate with the
stock market has no guarantee or even reasonable expectation of doing so. The
stock market rises over time because its constituent companies create wealth,
by building or manufacturing things. Hedge funds have no such underlying
creator of wealth. The only way a hedge fund makes money is to find a bigger
fool. For every highly-leveraged gain, somebody else lost the same amount by
possessing or acting on less information.

Some hedge funds actually do achieve consistent gains by technical means, as
the original article touches on. They can have the fastest computers closest
to the exchange trading centers, that can beat other investors to attractive
offers by fractions of seconds and/or pennies. There's no secret cabal
conspiracy there though. Profit is the only motive; any apparent manipulation
is just the result of everybody acting in self interest.

------
jeromec
Mr. Adams says he's a fan of conspiracy theories, but I don't think so, since
he suggests conspiracy theories are typically "any wild story" engineered to
sound feasible. This definition goes against the whole reason for including
the word "theory" which is supposed to suggest underlying assumptions are at
least in part based on observations. He unwisely paints such theories as black
or white in terms of how feasible they are, without acknowledging that the
truth of many popular conspiracy theories may (often likely) fall somewhere
between completely false or true.

Take his first example of a small group of rich people secretly running the
world. Have people in the past conspired to influence outcomes at a local town
or city wide level? Certainly. How about a larger scale than this, such as at
a state or country level? Again, in many places, most certainly. Could that
scale be increased even larger? Are there super wealthy people with power and
influence? Certainly. When viewing things this way this "unlikely" theory
becomes a lot more feasible, and the truth is probably somewhere between zero
intentional conspiring, and one evil mastermind with an underground hundred-
monitor supercomputer.

What about aliens abducting people? I don't know about implanting chips in
people's necks, which Mr. Adams seems to have thrown in to conveniently push
this theory into the complete nonsense pile. I've always heard simply about
alien abductions. Now, most credible sane scientists will tell you that it's
more likely than not there is alien life in the universe. If we've now
established alien life likely exists, we can also reason that it's possible
that some alien life is further evolved and advanced than humans. In my
opinion, the first place the abduction theory breaks down is the likelihood of
any actual contact with aliens in existence (the universe is a really, really
big place). I would say that's unlikely enough to effectively kill the
abduction theory completely. However, if one lets the mind wander and play
then maybe sufficiently advanced life forms could have discovered a way to
leap through spacetime akin to the Starship Enterprise's warp speed ability.
Sure, that's still a huge stretch, but it does give a bit more entertaining
feasibility to this abduction theory Mr. Adams has so completely dismissed.

To me _that's_ how a true fan of conspiracy theories entertains them. ;)

~~~
loup-vaillant
I agree about the few rich people running the world. I'd even be surprised if
no such group were at least trying to. The catch is, it's probably not secret:
our financial system for instance is basically designed to put all the money
in the pockets of bankers (wild oversimplification). Finance is complicated
and boring (for most people), but it's not secret. "Not secret" has a strong
tendency to imply "no big deal" (scarcity bias), so we don't pay attention.
This is frighteningly brilliant: the absence of actual secrecy (and
conspiracy) tend to _enhance_ the de-facto secrecy (and conspiracy).

Minor point about the aliens: if aliens had FTL interstellar travel, they
would have built a galactic civilization before they found us. Such a
civilization would be visible from Earth. See
<http://hanson.gmu.edu/greatfilter.html> for more details on these
speculations. So, there may be more avenues to the abduction theory, but this
one is closed.

~~~
loewenskind
>Such a civilization would be visible from Earth.

How can you possibly know this? We don't know how big the universe is. Maybe
they're on "the other side"?

~~~
khafra
They would be visible from Earth because they would be _everywhere_. Even if
some members of a galactic-expansion-capable civilization did not want to
expand enough to exploit all available resources, they would be quickly out-
competed by the ones who did want to.

~~~
notahacker
The universe is a big and mysterious place. It's doubtful whether the all-
pervasive influence of human civilisation on earth would be that evident to a
sentient barnacle anchored to an isolated islet far from inhabited land.

~~~
loup-vaillant
> _The universe is a big and mysterious place._

Sounds like a Deeply Wise Curiosity Stopper. OK, it's all speculation, but
it's still reasonable to expect visible changes, like Dyson spheres.

And the barnacle certainly _would_ detect us. We changed the _weather_. We use
_planes_ all over the place. At the very least, it would detect Iridium
Flashes, which are hardly natural. (OK, that would take a _scientist_ sentient
barnacle, but humanity does science anyway.)

~~~
notahacker
Depends on the scientist sentient barnacle's frame of reference; I'm sure it
could posit naturalistic explanations for weather changes and distant things
that move across the horizon and flash light at us. I'm not saying it's
impossible for us to observe the activity of extraterrestrial lifeforms (that
would be absurd), simply that traces of intergalactic activity might not be
immediately obvious; surely one of the side-effects of a Dyson sphere, for
instance, would be to render the star almost undetectable to our telescopes.

~~~
barry-cotter
_surely one of the side-effects of a Dyson sphere, for instance, would be to
render the star almost undetectable to our telescopes._

No. A Dyson sphere would just emit a lot less radiation in the region that we
happen to perceive as "visible". This is a special case of "Stealth is (close
to) impossible in Space"

<http://www.projectrho.com/rocket/spacewardetect.php>

[http://scienceblogs.com/builtonfacts/2010/03/while_doing_som...](http://scienceblogs.com/builtonfacts/2010/03/while_doing_some_poking_around.php)

[http://scienceblogs.com/builtonfacts/2010/03/stealth_in_spac...](http://scienceblogs.com/builtonfacts/2010/03/stealth_in_space_pt_2.php)

<http://tvtropes.org/pmwiki/pmwiki.php/Main/StealthInSpace>

------
pigbucket
#1 Sounds plausible, but I know nothing of it; 60% confidence seems a little
high to me on conspiracy theory # 2, at least with respect to the following
leaked items, which are perhaps not especially surprising, but are a little
more than "baaarely embarrassing":

1\. US pressuring Germany not to pursue criminal investigation of US agents'
kidnapping and torture of German national (who happened to be innocent, but
that's not especially relevant)

<http://harpers.org/archive/2010/11/hbc-90007831>

2\. US allegedly obstructing Spanish investigations of torture of Spanish
subjects at Gitmo and use of Spanish facilities for extraordinary rendition
program.

<http://harpers.org/archive/2010/12/hbc-90007836>

3\. US diplomats spying on foreign diplomats, including the UN Sec. Gen.,
(although some do seem to think this is all _de rigueur_ ).

[http://www.guardian.co.uk/world/2010/nov/28/us-embassy-
cable...](http://www.guardian.co.uk/world/2010/nov/28/us-embassy-cables-
spying-un)

~~~
philwelch
Number 1 was an open secret even before the leak. The leak was more of a
reminder that Khalid el-Masri was extraordinarily rendered to Afghanistan (the
matter has been the subject of a Wikipedia article for years), not anything
new.

Number 2 is pretty much more of the same. Number 3 is pretty much _de
rigueur_.

~~~
pigbucket
Re: 1. The only reference in the Wikipedia entry to the pressuring of the
German govt. by the US consists of this line: "On February 6, 2007, U.S.
officials warn the German Government not to issue international warrants."
This line was added to the article a few days ago. Its cited source is a
document leaked by Wikileaks.

Re: 2. According to Harpers, and its reading of _El Pais_ and _Público_ ,
what's newly revealed by the released cables is "a large-scale, closely
coordinated effort by the State Department to obstruct ... criminal
investigations"

Re: 3. Espionage may be expected, even accepted. What is or should be
embarrassing for the US is its employment of State Dept. diplomats for the
purpose of espionage.

------
joshes
The problem with his Wikileaks theory, in my opinion, is that he fails to
account for the fact that only ~0.1% of the cables have been released at this
stage. The philosophy behind a staggered release? As stated by Wikileaks and
Assange, _releasing them in waves will allow the public and the press to
digest all of the material in a paced, stable manner_. This implies that
subsequent waves will have important, valuable information that _needs_ to be
digested and processed.

I have seen this "US Government is behind cable leak" theory a good deal in
the past few days and I do not believe that it holds any water. I think that
it's reaching, to be quite frank.

~~~
JWLong
Please expound upon _why_ it doesn't hold water...

~~~
vog
He did so, in the first paragraph.

------
brc
1) is partially right. The extra volatility is probably caused by trading
programs, but they are intentionally installed, not a virus. 2) I actually
came up with this one myself. I even posted it in a former comment on HN. I
draw a parallel to the Zimmerman cable, which the British intercepted and had
to find a way of leaking to achieve their aims.

Conspiracy theory is an overloaded term, though, it doesn't have to be
outlandish. Any group of people can conspire to achieve something.

------
roadnottaken
_"[From the Stuxnet virus] we learned that experts can indeed create
undetectable viruses..."_

But Stuxnet _was_ detected... viruses are not magic.

~~~
philwelch
Yes! 100% of observed instances are, in fact, observed!

~~~
ovi256
Oups, accidental downvote, sorry.

------
Tarski
It seems the author needs to brush up on Bayes' theorem, i.e. before giving a
percentage confidence in a given theory, you need to consider the likely hood
of the theory not occurring.

    
    
      #1 Analysts explain it away by saying, for example, 
      "The market was hoping for even better news than the 
      good news they got." A simpler explanation is that the 
      market is being manipulated.
    

This a false assumption, as I would say it is more likely that the analysts
got it wrong. If analysts could predict the stock market with near 100%
accuracy, then it wouldn't be a high risk investment option would it?

    
    
      #2 The lack of bombshells in the Wikileak materials 
      looks mighty suspicious to me
    

It is also wrong to assume that because no remarkable secrets have been
exposed, that any have been leaked in the first place. This is a statement of
pure fantasy based on no logic or facts.

------
bugsy
Mr. Adams analysis is most certainly correct.

In addition I offer the following word: Diebold

------
katovatzschyn
This is as good as any place to say prediction; number 2-2 is also on my mind.
I believe possible motive is to begin justification of military
action/expansion vs Iran. I wager by Q3-4 2011 or Q1 2012 considerable
military action thus begins.

------
dejb
I'm all on board with #2 and if it's true I think you yanks should be proud of
having intelligence agencies that actually live up to their name.

------
zoomzoom
Number one is probably not even so far fetched - social engineering is a more
likely vector than an actual virus, though. Ie...bailouts etc.

------
RyanMcGreal
Conspiracy #3: Both conspiracies were secretly orchestrated by shoptrade.us to
promote their viral blog comment marketing campaign.

------
davidj
thank god he suggested #2. I suggested the same thing here on HN and got
downvoted a grip. Funny thing I was upvoted until about 3-4 then I was swiftly
downvoted to -3 or whatnot.

~~~
fod
Government probably thought you were getting too powerful

------
InclinedPlane
How much money did the US government dump into hedge funds to keep them from
collapsing because they were "too big" (read: too well-connected) to fail?
Doesn't sound like they have secret magic to steal money, else they wouldn't
have been in trouble.

As for the recent underwhelmingly US diplomatic memo leaks, that has an easy
and logical explanation. These memos were merely secret information, about on
the level of a ... memo inside any corporation. That is why security was so
lax on them to allow so many of them to be accessible to low rank personnel.
More important information is kept more secret with a tighter reign on who has
access and how many people have access.

~~~
brown9-2
I think he's referring to the thousands of small (in comparison) hedge funds
out there rather than the giant investment banks that received TARP funds.

------
joe_the_user
Theory #3: "Theory #2 was place in front of theory #1 to make it look bad and
so discredit an otherwise very plausible argument."

Theory #4 - vice-versa!

