SATs are the least unfair metric we have for university admissions. And eliminating them will almost inevitably make the system less fair. With that said, I'm not sure righteous (if justified) anger is going to fix this. There's a good chance this could be challenged in court, or by certain employers.
I work in Manhattan and commute to my office every day by subway. The story exaggerates a bit. In general it is and feels pretty safe during the day and during normal commuting hours. And banks tend to be VERY risk averse when it comes to safety and security.
However, the city just doesn't feel as safe as it did a few years ago. Part of this is that there are fewer people out and about than there used to be (because of Covid). But the trend predates the pandemic and I know a number of women, colleagues and otherwise, who have been followed or don't feel safe walking around alone at night anymore. There is definitely a problem, though I'm hopeful the new mayor will improve things.
Capital gains default to being taxed at the same rate as income in this country (as they should be). There are exceptions for certain long term capital gains, and for qualified dividends.
The rationale for this is that corporate profits are already taxed. The effective tax rate is about 25% for US corporations. For income from corporate profits to be taxed at the same rate as normal income, it should be taxed at a lesser rate once it's been distributed via dividends or buybacks (which is how the system is set up).
Changing the system would have several negative effects. It would encourage companies to take on leverage. Interest expenses are deductible for the purposes of corporate taxes. While interest earnings are and have always been taxed as ordinary income. So companies would likely shift their balance sheets to compensate. It would also make short term speculative trading more attractive for US citizens (and lord knows we have enough of that). And lead to greater foreign ownership of US equities, which is not necessarily desirable.
There are certainly fairly indefensible aspects of the US tax code. This just isn't one of them.
There's also an interesting argument that it's less distortionary to tax wage income than investment income. Because wages (and especially the variation thereof) are substantially driven by unearned human capital endowments.
You're right. That's a slightly misleading way to put it, and I have revised my original post. My point was that the "default" method of taxation is the same as ordinary income. Long term capital gains and qualified dividends are legally an exception to that rule. Though I don't think it diminishes my broader point.
The problem (other than double taxation)is that people whose wealth is predominantly held in a diversified portfolio will be able to avoid this sort of tax much more easily than people who have more concentrated holdings.
Someone who sells a $2 million business is rich, but they aren't that rich. The rules for houses and incentive equity compensation are complex. But this would generally be bad for people who get equity compensation in companies whose value is very volatile (read early stage startup workers). This is very problematic for Silicon Valley's current economic model.
You never know. But this would make building or joining early stage companies in the US dramatically less attractive. Especially for people who have the option of living abroad. I think that would be incredibly bad.
The UAW failed to unionize Volkswagen's Chattanooga plant despite neutrality on the part of the company. Unionization drives in the South routinely fail by 2:1 margins. As happened here. Implicitly blaming "dirty tricks" for the failure of unionization in the South is not intellectually honest.
These employers almost invariably pay more than the median wage in their region. $15/hour with benefits is pretty good money in Bessemer. It's fundamentally very difficult to organize workers if they feel they're being treated fairly under the existing regime.
Honestly I don't know. A warehouse associate at Amazon makes ~25% more than a stocker at Walmart does (though Amazon is probably a somewhat harder job). To me, knowing very little about the specifics of labor organizing, Walmart seems like a more logical target. Though that's been very unsuccessful historically. Maybe there's someone experienced in the field on here who could explain how they do target selection?
I know amazon is a very organized and advanced company, but you can be sure that one thing walmart has invested in and stays on the cutting edge of is union busting. I would wager they are operating on a different level than amzn when it comes to union busting and union avoidance.
Had a friend that was a butcher at walmart back when there was talk of unionizing. It was a walmart in a small town and the moment even a rumor of unions started spreading, walmart was flying in corporate jets full of lawyers and psychologists and educators to make sure that no one unionized.
I guess they decided the risk was too great so they shut down their meat packing section in every store across America. I believe to this day, there are no butchers in walmarts. They bring in the meat pre-cut and pre-packed. Probably by a wholly owned subsidiary that they can easily shut down if things ever go sideways.
I don't think this is right at all. I would be surprised if Alfred Winslow Jones or Warren Buffet (who were some of the earliest "hedge fund" managers) were significantly influenced by Bachelier's ideas. Buffet is famously neither especially quantitative in his investment style nor a believer in EMH.
Financial "technology" pretty seldom actually originates in academia. It's more common that academics formally describe or justify something that market practitioners are already doing. The piece briefly mentions Bachelier doing this. There's good evidence that option prices were (relatively) efficient several decades before Black-Scholes was discovered. And Jones arguably came up with the notion of "beta" before CAPM was a thing. The only real exception I can think of is factor investing.
This might seem kind of petty. But the notion that academia drives (or should drive) finance is not a benign myth. The LTCM crisis and the 2008 GFC were arguably caused by the uncritical application of ideas developed in the academy. I expect more.
Took the words out of my hands. I feel like few people are as mindful of the raw fundamental financial metrics of companies. As you said, that's just not the same math PhD type technical stuff that hedge funds and others work on.
As far as I know Ed Thorp also made a lot of money after B-S was published. So it doesn't necessarily follow that B-S made the market more efficient. Also, doesn't his discovering B-S before it's publication and using it to make money support what I'm saying?
Honestly this is a terrible look for Fintech. There's no conspiracy here. The legacy brokers who are way more tied to "Wall Street" have handled this a lot a better. These problems are being caused by incompetence at Robinhood. Someone needs to be held accountable.
Yes. AMC is reportedly contemplating selling stock, and it's certainly possibly GME could do something similar. Though they'd do it at the best price they can get.
I'm not sure they are. But, if they are wrong, it would likely be because of a handful of things.
*All the below are hypothetical scenarios, I have no specific reason to suspect any of them will or won't happen. This is not financial advice. Trade at your own risk.
1) Hedge funds may have been buying GME alongside WSB. Once the shorts stop out, the funds will know before WSB does. And get out ahead of them. The size of the position suggests this is a possibility.
2) GME management will announce an equity offering. This is arguably the economically/financially correct thing to do. And is also aligned with management's incentives. With more shares in the market, the shorts would no longer be squeezed.
3) GME has become too volatile to easily manage counter-party risk via daily margin posting. This makes options and cash equities much harder to transact. Which is what we saw yday. This could limit the ability of non-professionals to access the market. Killing the squeeze.
4) Robinhood could face solvency (or the perception thereof) issues. This could cause a rush to close out accounts while people still can. Generally, even having to deny you have a liquidity problem is a bad sign.
5) Some truly massive player or a group of them (Citadel and Melvin are only middle size fish) will come in and crush the longs. Gamma works in both directions.
6) The index funds that currently hold the stock will make an exception to their usual rules and sell it because the market is so clearly dislocated. Or alternatively the providers could kick out GME. This would again significantly reduce the squeeze.
7) The regulators will set the stock to liquidation only. The exchanges have the power to do this. And this is the sort of situation that said powers are contemplated for.
So there's quite a bit that could potentially go wrong. And so a good chance that the squeeze participants could lose their investments. Part of the problem is that it isn't clear just how large the short positions really are at this point. While I have zero sympathy for the hedge funds on the other end of this trade, if you live by the sword you die by the sword, the regulators may decide this presents a systemic issue. In which case they're going to shut it down.
I don't see 2) happening when it would actually bail out greedy traders that shorted GME like crazy in the first place (with the obvious intention to run it into the ground, regarding the short interest of ~140%).
It is however very interesting how all this plays out and I think many people will have learned a lot afterwards.
It wouldn't exactly bail them out. It would in effect crystalize massive losses. And, were I asked to advise the GME board, I would tell them it's in the best interest long term of the company at this point (because it is). It would also have the benefit of effectively cashing out all the GME longs at once. Otherwise, there'll be a frenzy on the way out the door, and the most connected/sophisticated people will beat the retail traders.
Also, you can't run a company into the ground by shorting it. A firm's stock price has no inherent effect on its day to day operations. There are plenty of operating companies that are bankrupt. Equally so, GME doesn't benefit from the run up in its stock price at all. The only time the market price actually effects a company is when its time to raise or return capital. So the only way GME will actually benefit from this episode is if it sells stock.
The idea that the board approving the sale of shares at this massively overinflated price "bails out the shorts" ignores what duty boards and companies have to shareholders.
Gamestop selling shares at this price would, all else equal, be the best thing for gme to do for the company's future prospects.
That being said, I don't know who was long by accident going into this (eg an investor who saw gme as a value or deep value investment) who didn't already sell because this is the accidental win of a lifetime.
Wouldn't you make the company e.g. more vulnerable to a hostile takeover by running the stock price into the ground? As mentioned in many threads there was no inherent reason to think that GME would bankrupt any time soon.
I agree that GME don't really benefit by the current stock price. However the benefit from the publicity for sure. What would they lose by sitting this out? It for sure be better for their image than creating "a way out" for the traders sitting on their shorts. You say the will still pay a price.. sure but what price they will pay if GME does nothing is still open.
TLDR I am not convinced that this would be their best play. It at least would have a massive loss of image for their customers(many of which currently are invested).
That's actually pretty much what happened. Ryan Cohen was able to do what he did (buy a lot of stock and get a board seat) because the stock price was low. But that arguably saved the company. Change of control isn't inherently bad. And it often leads to incompetent CEOs being fired.
The firm has an opportunity raise a ton of capital very cheaply that it can use to fund productive investments. That's good for the firm, and its good for the people who work there.
I have no sympathy for the short sellers. They're paid a lot of money to understand the game they're playing. And if they lose, that's too f*cking bad. But the same goes for WSB. If they're gonna be pissed off that the company makes what is unequivocally the right decision for the firm, then they're just as hypocritical as the short sellers.
