Hacker News new | past | comments | ask | show | jobs | submit | asdasdsddd's comments login

1. Crazy graph format lol

2. I thought management fees were supposed to pay for comp?

3. Buying SPY wins again?

4. I don't really care about rich people getting ripped off, but I wonder if any of my money leaks into these funds


I think you need to consider time horizons when analyzing these funds. You can buy SPY and it will win. Unless there is a market crash when you hit retirement age, in which case you are screwed until the market recovers. If you don't mind the risk, go 2x levered and you will do even better. [0]

Many institutions and HNW and UHNW individuals prioritize consistency over absolute growth. They would rather make 6-8% a year and reduce downside risk than optimize for gains. Multi-strat funds like this one are catering to people who want that product.

[0] - https://citeseerx.ist.psu.edu/document?repid=rep1&type=pdf&d...


2x leaves at the mercy of margin calls, which inconveniently come at the moment where you least want to sell (right after a huge crash). Getting margin called after a 50% crashes leaves you with $0, as an example.

A 50% market crash would be brutal even without leverage, but at least no one would force you to sell.


You can achieve 2x leverage without the risk of margin calls by buying ETFs like SPUU (or SPXL, UPRO if you want 3x leverage).

That's a really bad idea, those rebalance daily, so you are basically betting against short-term volatility (if spy goes down 10% in a day then up 10% the next, you are down 1% on spy, on a 2x levered etf you are down 4% or 4x the loss). Also both fees and slippage are really terrible on all levered ETFs

If you really want to do 2x lever its probably best to just buy 6 month or 1 yr dated ITM calls. They're quite cheap and very liquid on SPY.


And yet UPRO (3X SPY) has significantly outperformed 3X the S&P 500 since inception (since June 2009 UPRO is +8000% vs SPY +700%.

The reason is exactly what you described actually. If the underlying exhibits positive momentum, generally trending up instead of oscillating back and forth, the daily balancing works for you instead of against you and the ETF outperforms the target multiple of the underlying.

Yes, if your S&P returns over 3 days are +10%, -10%, +10% then SPY is up 8.9% while UPRO is up 18% (2X, not 3X).

On the other hand if your S&P returns over 3 days are +10%, +10%, +10% then SPY is up 33% while UPRO is up 120% (4X, not 3X).

The big levered ETFs have reasonable volume and limited slippage for any volume retail investors would be trading. Fees are like 0.9% which all things considered isn't bad - given their vast outperformance.

I'm not saying go all in on these, what I'm saying is that your analysis of the levered funds is missing some important details which show up on a quick backtest. If you understand the products and what bet you're making with them, they can be quite reasonable to hold long term - despite popular misconceptions.

> If you really want to do 2x lever its probably best to just buy 6 month or 1 yr dated ITM calls. They're quite cheap and very liquid on SPY.

Respectfully those are much more expensive and if you're near the money quite non-linear. You're going to have to pony up pretty close to the price of just buying the index again to get 2X exposure if you're deep ITM. Near the money you'll need several options to get 2X - and you'll need to delta rebalance. You'll also get eaten alive by theta decay.

To avoid having to pony up a ton of collateral or get eaten by theta, you may as well just buy more SPY on margin - or save yourself the hassle and get an /ES=F or /MES=F.

If you insist on trying to trade the S&P 500 with options (especially if your expiration is only 6-12m away) use SPX or XSP -- not SPY. They're cash-settled European index options, so no early exercise to worry about, no dividends to worry about and they get 60/40 capital gains treatment no matter how long you hold them for.


+1, the criticism of “if s&p goes up and come back down, leveraged investments lose” is just insufficient as a criticism. It examines only one case. I’m probably 30% in SPUU for years now, and would like to hear real criticisms — do you have any real criticisms to share? I legitimately have found so little competent commentary on it, and I think I understand the risk I’m taking, but don’t want to miss an opportunity to get considered input.

> I’m probably 30% in SPUU for years now, and would like to hear real criticisms — do you have any real criticisms to share?

I'm no expert. But it seems like writing out of the money options: it's "free money" until the market suddenly moves against you, and you get your head chopped off. When that inevitably happens, the loss has a good chance of more than wiping out all your prior gains.


Not to “fight“, but just to add to the conversation:

I agree it is taking on more risk, although potentially less than with out-of-the-money options. To lose 99% of spuu’s value the sp500 would have to drop 50% in one day, or 35% for three days in a row, or 20% for nine days in a row, etc with infinite similar cases. It’s not a rigorous argument, but I think those examples give a feel for how common/rare that occurrence would be — I think these particular cases have never happened since the sp500 started.

But it’s certainly riskier-than-traditional in either case


> To lose 99% of spuu’s value the sp500 would have to drop 50% in one day...

Which is exceedingly unlikely because of the circuit breakers. A level 3 breaker is triggered after a 20% decline and halts trading for the remainder of the day.


Oh wow good point! The existence of breakers lurked in the back of my mind, but I didn’t realize the implication there. That is nice.

Not that a 60% 1-day decline would be welcome by many investors :P

They picked a great time to launch it!

Not sure it would've gone so well had it happened in 2007


Finance SWE here, sorry if what I say is wrong. Please correct me if that's the case.

>And yet UPRO (3X SPY) has significantly outperformed 3X the S&P 500 since inception (since June 2009 UPRO is +8000% vs SPY +700%.

Isn't this just hindsight bias? You market time to right after 2008 crash. Those two dates are probably the best possible because from 2009->2020 we had an 11 year uninterrupted bull run. If you bought in 2020-2021 you would have been screwed for 3 years at the least. If you bought 10x levered out of the money spy calls every 6 months and roll the winnings since 2009 you probably can get even higher, but probably you don't want to do that.

>Respectfully those are much more expensive and if you're near the money quite non-linear. You're going to have to pony up pretty close to the price of just buying the index again to get 2X exposure if you're deep ITM. Near the money you'll need several options to get 2X - and you'll need to delta rebalance. You'll also get eaten alive by theta decay.

Isn't this for retirement saving? IE where we have big chunks of cash we won't see for 20 years, so you can buy like 2 contracts and its good enough. You'd have to pony up 2x to get the underlying index fund anyways, so you might as well just buy deep ITM calls (which right now are hovering at a premium of 3% for strike of 315$ on spy).

+1 for European options, I forgot you can buy those on index funds, is the liquidity enough on deep OTM calls to be worth it though?

>To avoid having to pony up a ton of collateral or get eaten by theta, you may as well just buy more SPY on margin - or save yourself the hassle and get an /ES=F or /MES=F. I thought margin / borrowing costs for future etfs is some ridiculous 8-12%. Pretty bad if you have no alpha except beta go up!


> Isn't this just hindsight bias? You market time to right after 2008 crash.

Yes absolutely, I just picked when the product launched.

I wanted to point out to parent that the daily balancing isn't just a bad thing, it can be a good thing - it depends on how the underlying performs. You are right it cuts both ways though and you may have to sit in them for years to break even. Note UPRO actually somehow pays a dividend.

> If you bought 10x levered out of the money spy calls every 6 months and roll the winnings since 2009 you probably can get even higher, but probably you don't want to do that.

What do you mean by 10X leveraged calls? Like 10-delta? What was the spread between implied and realized volatility over that period? Ultimately your options outcomes are really based on realized volatility exceeding implied volatility (otherwise you break even or lose).

> Isn't this for retirement saving? IE where we have big chunks of cash we won't see for 20 years, so you can buy like 2 contracts and its good enough.

Parent said contracts that expire in 6 or 12 months on SPY. That means short term capital gains at expiry, and using SPY instead of SPX means you have to deal with early exercise and dividends.

Since you can't buy contracts too far out in time, so you have to sell, roll or exercise. In a tax advantaged account maybe that matters less. Was your proposed strategy to roll? If so, how far before expiry, and to what level?

> You'd have to pony up 2x to get the underlying index fund anyways, so you might as well just buy deep ITM calls (which right now are hovering at a premium of 3% for strike of 315$ on spy).

Over what duration? We need that to figure out the rough APR of the implied borrowing you're doing.

> +1 for European options, I forgot you can buy those on index funds...

On indexes not index funds! SPX option notional value is literally the S&P 500, in index points, times $100. They're big. XSP option notional value is basically the S&P 500, in index points, times $10.

> I thought margin / borrowing costs for future etfs is some ridiculous 8-12%. Pretty bad if you have no alpha except beta go up!

I was suggesting the underlying futures contract rather than a futures ETF. /ES is big, /MES is much smaller.


... "permanently high plateau" and all that...

You have to pay interest when you invest on margin and a margin call can wipe you out. Investing on margin is serious riverboat gambling, not retirement saving.

I always see this "excuse". Our fund isn't focused on alpha; we minimize beta. It's just unclear to me whether this is shown out in the data.

I think they usually say that they are focused on alpha while minimizing beta, i.e. don't compare us to the S&P or other indices because we are market neutral. And in my experience, the large, old firms that I am personally familiar with do in fact have beta very close to 0 in their main funds, so on that front at least some firms do deliver.

This doesn't necessarily make the product a good idea even for people who can get an allocation, however. For example, because most (all?) market-neutral firms engage in active trading, a US UHNW person living in a high-tax state will generally have to pay around 50% of each year's gains in taxes. These taxes will have to be paid whether or not they did or were even allowed to withdraw any money from their investments that year, so a gain of let's say 12% becomes 6%, which may have to come out from some other source.


> have to pay around 50% of each year's gains in taxes.

> ...will have to be paid whether or not they did or were even allowed to withdraw any money from their investments that year

That's crazy.

I would've thought the hedge fund would be able to hide the capital gains tax (as they're a trader, and should be exempted from capital gains taxes), so you as an investor only pays capital gains tax when you withdraw.

This also implies that the investor doesn't get to carry forward capital losses, or use it to offset their own outside capital gains.


Anecdotally (can't say how I know), many firms did very well in the 2020-2021 Covid crash, also its quite cheap to say buy 50 million in far OTM puts to guard against black swan events. It's far more likely that a slow slide in SPY will show some Beta correlation than anything else.

Ok so in defense of their voronoi graphs, if they used a segmented bar or pie chart instead, you wouldn't be able to see the small quantities clearly, and if they used circles of different sizes, it would be easy to mistake the radii as the measured quantity instead of the area. Similar issue arises with lengths/widths if you use rectangles. Their visualization nudges you to compare areas which is a good feature imo.

> and if they used circles of different sizes, it would be easy to mistake the radii as the measured quantity instead of the area

No, if the measured quantity is represented as the radius, everyone will assume it's the area, and you've designed a very bad graph. If the measured quantity is represented as the area, everyone will assume it's the area, and you're fine. The area is what you can see.


Just put regular columns next to each other.

> it would be easy to mistake the radii as the measured quantity instead of the area

Humans perceive the area as the measured quantity even when radius is the intended, so this isn’t going to be a problem.


Hedge funds aren't necessarily about getting max gains - they can be about decorrelating some of your investments (hence the hedge). So maybe buying SPY would have worked , but people with their money in hedge funds probably already have a bunch of investments correlated with SPY.

> they can be about decorrelating some of your investments (hence the hedge).

As a tangential caution to readers: Remember that where you work is something you want to diversify for: Put a bit more into things that won't go bust around the same times you lose your job.


That's no longer true and hasn't been for a long time. While the name comes from that concept, the "hedge fund" is now just any fund marketed to accredited investors.

I've seen plenty of attempts at cramming down multidimensional data into less dimensions, but this is the first time I've ever seen the opposite!

Does this graph format have a name? Google isn’t turning up anything for me.

Resembles an unhelpfully simple

https://www.amcharts.com/voronoi-treemap/


Yeah, I was about to post that it looked like some hybrid of a voronoi diagram and a treemap. More about those diagram types that can be combined in this manner:

https://en.wikipedia.org/wiki/Voronoi_diagram

https://en.wikipedia.org/wiki/Treemapping


This has to be a meme. Costco is peak hypercapitalism lol.

Could you say more?

It's a 500B company that undercuts everyone else with incredible efficiency, just like Amazon. It's an example of how capitalism can be great. If you really want to get of out of capitalism, you can just buy directly from farmers or grow your own food.

The whole thing about no ethical consumption under capitalism is a just a way to enjoy the conveniences of capitalism on a moral high ground. It's totally doable, you just might not enjoy it haha.


I guess the angle I was coming at it from is that they pay their employees a living wage. I need to buy toilet paper from somewhere, and between Amazon and Costco I would much rather give my money to Costco.

The secret is buying a bidet so you dont need to buy from either ever again!

Hell, just buy from Wallyworld where you get low, low prices and pseudo-socialism with their employees on the food stamps.

The camel's gotta get its nose in the tent somehow.


This has to be the least interesting paper I've ever read with the most surface level thinking.

> • Simple→Tool Call: Inaccuracy propagated to inappropriate tool selection.

> • Multi-step: Cascading errors compound risk of inaccurate or irrelevant outcomes.

> • Fully Autonomous: Unbounded inaccuracies may create outcomes wholly unaligned with human goals.

Just... lol


Holy shit, what a scam...

Perpetual stew feels like a gimmick but stew does taste better on day 2 and 3 for sure.

I agree that the perpetual part is kind of gimmicky, but having a stew for a week or two and stretching it out with additional ingredients can be a big time saver and, as you said, in some ways it gets better with time as it's cooked more.

Slightly different, but many of the best ramen broths are the kind that keep going for ages, so there's definitely more to it than just a gimmick.

The president is fascist because he's, checks notes... , relinquishing governmental power by shutting down agencies? I think the only thing people have been habituated to is the enormity of the government; go back to any other point in history, was the government this big in terms of independent agencies, employee/contractor count, budget/debt as percentage of gdp?

Sure the spoils system was bad, but the current iteration where you have hundreds of independent agencies that cannot be fired breathing down your neck with statutory power is fucking insane.


He's not shutting down agencies to relinquish governmental power.

He's shutting them down to strengthen his own power.


Explain how shutting down USAID due to documented fraudulent spending strengthens the president’s power. I can’t think of a single way myself, but maybe I’m overlooking something?

If he gets away with shutting down USAID by fiat then it makes it clear that he can go outside the bounds of law and demand anything of the executive branch.

The next step might be going to the DOJ and telling them to detain, let's say, Ilhan Omar on suspicion of treason. This illegal demand will have much more force because anyone refusing it will know that they stand on their own and have no recourse through the courts or congressional oversight.


Explain "documented fraudulent spending", who is making these claims, what evidence they've presented, and what groups have checked that evidence.

Off the top of my head and easily verifiable from their own website, how about funding "revolutions" in foreign countries? https://web.archive.org/web/20060130080730/http://www.usaid....

What power has he gained.

He's apparently gained the power to arbitrarily shut down federal agencies, for one.

That's circular reasoning.

Joke's on you, circular reasoning works well when people accept it!

> The president is fascist because he's, checks notes... , relinquishing governmental power by shutting down agencies?

You do know the president is not supposed to have that power, right? His job is to execute the law, which as currently written requires those agencies to exist.


Yes and FDR also skirted around constitutionality and even threatened to pack the courts to ram his reforms in. I don't agree with everything the president is doing, but the rail we are going down is just doomed. What is your proposition to stop interest from eating 100% of the federal budget. We just paid 1T of interest, do you think that is going to decelerate?

>>What is your proposition to stop interest from eating 100% of the federal budget. We just paid 1T of interest, do you think that is going to decelerate?

How is that related to shutting down agencies?


Because those agencies are funded by the federal budget. We are literally going into a deficit to send money to other countries. Do you realize how insane that is? And don't tell me this is just a small part of the federal budget. Oh its just a couple billion here and there. That's a lot of money that could go towards not being in debt. This level of fiscal irresponsibility is basically taxation without representation on the unborn.

>>We are literally going into a deficit to send money to other countries. Do you realize how insane that is?

You mean the international development fund that's being raided right now? You know that it exists because US realized that it's cheaper(as in - LESS money spent overall) to help countries develop, so that US is less likely to engage militarily with whatever conflict happens in those countries eventually? It's part of being a global hagemony - it's not insane, it's just good business strategy. Out of all people, Musk and his cohort should be able to see this.

>>That's a lot of money that could go towards not being in debt.

The whole idea is that you'd be in more debt if you didn't do this, because you'd spend another trillion dollars on yet another conflict somewhere because people got fed up with having no access to fresh water and food and now there's a war that US just "has to" intervene in. Aid money is meant to explicitly prevent this.


> so that US is less likely to engage militarily with whatever conflict happens in those coutries eventually

Or you know, we can stop getting into wars? Did our adventures in the middle east advance US interests?

> It's part of being a global hagemony

It's called overextension and almost every historical power declined due to internal rot coupled by continuously getting into conflicts, which, wouldn't you know, drained the treasury.


>>Or you know, we can stop getting into wars?

Ah yes, "just stop". I mean, but all means - please do.

>> Did our adventures in the middle east advance US interests?

They made a few american corporations extremely rich and justified balooning the military expenditure. Whether that's in US interests or not - you decide.

>>It's called overextension

It's part of projecting your might as a superpower. The same reason why American taxpayers are paying billions of dollars to station troops in Eastern European countries - not out of charity but because it's explicitly in American interests to do so. International Aid is the same - "we're giving you money now so that we don't have to spend more money fighting with/against you(cross out one) in the future". "stop getting into wars" has the same energy as "just stop tipping" or "just stop spending so much money on the military" - imagine how quickly your entire national debt would be wiped out if you did that!


> because it's explicitly in American interests to do so

Please elaborate, and be precise because every interventionist argument is like, "but our trading partners, but our allies" but always fails to link exactly how that improves the lives of Americans. So tell me exactly what we are afraid of. If its trade tell me exactly what the comparative advantage is or what the resource we need is. And if its defense, tell me exactly what the threat vectors are, not just, "the island chains".

We've doing truly stupid things in the name of bullshit concepts like "containment" which led us into Vietnam, or "stabilizing the region" which led us into the middle east.

We can start with the Burmese scholarships that gives 300k per student; please tell me exactly what the American interests are.


>>So tell me exactly what we are afraid of

That's your(American) argument, not mine. When I ask why is America building anti-missile batteries and stationing their troops in my country, the answer is "because it furthers their interests". There is of course always some bullshit of "because it improves our security" - but everyone knows that's not true. They are here because they want to project they are a superpower and therefore have bases all over the world, not because they love us.

>>We can start with the Burmese scholarships that gives 300k per student

Well I had to look it up, and apparently this is what Trump said about it:

"We also blocked $45 million for diversity scholarships in Burma. Forty-five — that’s a lot of money for diversity scholarships in Burma. You can imagine where that money went," Trump said.

I wish he was more specific. What is he insinuating, exactly?

>> please tell me exactly what the American interests are.

Having a population of burma(a historically very active conflict area) that is well educated and more likely to oppose the military Junta? Of course no one will ever say that openly, it's "humanitarian aid".


> Having a population of burma(a historically very active conflict area) that is well educated and more likely to oppose the military Junta

Ok so you haven't told me how this furthers Americans interests, that's pretty much every BS power projection argument I've heard for my entire life.

> When I ask why is America building anti-missile batteries and stationing their troops in my country,

Depending on your country, I'm ok with removing the batteries :)


Hey, if I told you I happened to be an expert in this field, hypothetically, and I said this was a vast oversimplificaiton, would you be willing to listen to an expert?

Or do you not trust experts at this point time?


I'm pretty open minded so if you have a detailed answer, I would love to hear it. Just to be clear, I'm not a fan of hand wavy answers around like "stabilizing" or "soft power" because I feel like vague language masquerades corruption and misuse of funds. What I want to know are the direct causal links between our money and our interests.

> Or do you not trust experts at this point time?

I work alongside highly skilled experts in my job and I've never heard them say anything remotely like this when someone disagrees with them, so I'm pretty skeptical that you actually are one. This sounds more like something that a rebellious high-schooler would say


I’m not a foreign policy expert.

The question is if an expert could change your view.

And by your response I suspect the answer is yes.


Found the normal German citizen in 1943

Nobody is denying that the US budget / finances are in dire need of cleaning up, but the approach taken is a hostile and forced takeover of essentials like foreign aid, education, medicaid, etc. People will die because of this approach and its short sightedness will have a bigger negative impact on the US economy and international relationships than it will gain them from reduced costs.

> I don't agree with everything the president is doing, but the rail we are going down is just doomed. What is your proposition to stop interest from eating 100% of the federal budget. We just paid 1T of interest, do you think that is going to decelerate?

So, for you, an acceptable solution to "the budget is too big," is "let's rip up the Constitution?"

If Trump wants to veto budget bills and demand certain cuts in exchange of passage, that's fine, totally within his power, and would probably work.


It is a weird concept for the libertarian mind, but sometimes the goverment power is used to protect people freedoms and rights.

> It is a weird concept for the libertarian mind

"Be kind. Don't be snarky. Converse curiously; don't cross-examine. Edit out swipes."

"When disagreeing, please reply to the argument instead of calling names."

"Please don't sneer, including at the rest of the community."

https://news.ycombinator.com/newsguidelines.html


Yes and we managed to do that for 150 years with a fraction of the current government size.

You think we protected everyone's rights in 1874?

Many things like childcare, elder care, or healthcare have significantly changed over the last 150 years and now people have much less slack[0] to go back to the old ways.

Anyway I care little about the size of a government as it is the result of many perverse incentives (vetocracy, companies pushing for both deregulations and regulatory capture, late stage capitalism trying to make almost everyone poor and/or unstable) but the latest generation of attacks on the size of the government feel a lot like a Embrace Extend Extinguish on social safety nets so that predatory industries like healtcare insurance can better extract wealth from the lower classes

[0] https://slatestarcodex.com/2020/05/12/studies-on-slack/


Do you think inequality has risen or decreased as the size of the government increased? Regulatory capture can only exist with the existence of unchecked regulatory power. I personally work in a space that is insanely difficult to new entrants because of the thousands of regulations you need to comply to (90% are garbage btw). If tmrw, our industry had a regulation reform, the entrenched players would die overnight.

> Do you think inequality has risen or decreased as the size of the government increased?

I would say inequality decreased as the size of the government increased, and inequality increased as the size of the government decreased from its 1967 peak, yes. The New Deal was the single greatest reduction in inequality in national history.


I am not arguing for or against size of the government, nor I am arguing long term strategies, I am saying that ripping out wellfare programs is a rugpull on a lot of people

Inequality has generally gone down as time goes by.

Because regulations cut both ways. They stop bad actors and they stop innovators.

Innovators thrive at the start of an industry, later once its commoditized, its going to be driven by people who want to cut corners. See enshittification.

Regulations put a ceiling on harm by bad actors.

Either we need industries that do not obey such laws of physical reality and entropy, or we need to accomodate for the most probable occurrence efficiently.

You will always have examples of failures of these regulations, the measure of their efficiency is from the counterfactual losses and gains.


... there's a lot of people who aren't landing-owning white men who would disagree with you.

So you are saying if the founding fathers had 100 agencies then slavery wouldve been abolished?

I'm saying your premise is so hilariously ahistorical it deserves mocking.

This is also the attitude that makes every dumbass think they are above the law.


The law and law enforcement employees are not the same.


That makes no sense, the integral of the tax credit is always the total value of the asset so it doesn't matter unless there are relevant tax brackets here? Businesses can also carryforward losses right?


This is a boomer take. Technology in music has evolved over time and people continue to enjoy old and new music nonetheless, whether it's created from samples on a computer or performed live at a bar, despite the fact that people decry every generation that the next generation's music is not real music.


Seems like a lot of Californians are feeling insecure about this kind of news. Maybe its time to re-evaluate why this is happening instead of lashing out. California is a beautiful state with great weather, it has some of the most important trade and transit hubs in the west, and a robust education system. There's no reason we can't turn this around, almost all of our issues are governance related problems.


Meta isn't incorporated in California.


The angry people in the comments aren't from delaware.


It's a legal relocation, not a physical one.


Join us for AI Startup School this June 16-17 in San Francisco!

Guidelines | FAQ | Lists | API | Security | Legal | Apply to YC | Contact

Search: