
Fraud Is In Plain Sight - greatwave1
https://www.bloomberg.com/opinion/articles/2020-06-22/the-best-fraud-is-in-plain-sight
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greatwave1
Over the last few weeks there have been several stocks like Hertz that were
pumped up by retail investors for seemingly no reason.

I've been working on a dashboard to track trends among Robinhood users at
[https://www.quiverquant.com/sources/robinhood](https://www.quiverquant.com/sources/robinhood),
and [https://www.robintrack.net](https://www.robintrack.net) is a great
resource as well.

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Apocryphon
> A popular application of Ethereum, for a long while, was building pyramid
> schemes with names like “Ethereum Pyramid Scheme.” Is it a fraud, if you
> tell everyone up front that it’s a fraud?

> Similarly, here, Hertz was trying to trick retail shareholders into buying
> worthless stock by the simple expedient of offering the stock and saying,
> loudly and publicly and in official SEC disclosure documents, that it was
> worthless and no one should buy it. It’s a weird strategy! It almost worked.

So is everything reverse psychology now?

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perl4ever
I don't think it's as simple as that. The disclosure, as I recall, was along
the lines of "the stock _might_ be worthless", while not laying out any
scenario where it was not, to give people a chance to estimate the
probability.

It seemed to me like they were wilfully encouraging people to overestimate the
value of the stock by a large amount, even while saying it was risky. If you
ask for volunteers to jump out of a plane without a parachute, and disclose
that it might be hazardous to your health, and some might even not survive,
well, the implication that you _might_ survive it is not technically _wrong_.
There is historical precedent. But is it honest if people are going to
interpret it as a substantial chance?

