Disclaimer: I am not a financial advisor. This entire post represents my personal views and opinions, and should not be taken as financial advice (or advice of any kind whatsoever). I encourage you to do your own research, take anything I write with a grain of salt, and hold me accountable for any mistakes you may catch. Also, full disclosure, I hold a net long position in GME, but my cost basis is very low (average ~$67--I have to admit, the drop today was too tasty so my cost basis went up from yesterday)/share with my later buys averaged in), and I'm using money I can absolutely lose. My capital at risk and tolerance for risk generally is likely substantially different than yours. In this post I will go a little further and speculate more than I'd normally do in a post due to the questions I've been getting, so fair warning, some of it might be very wrong. I suspect we'll learn some of the truth years from now when some investigative journalist writes a book about it. Thank you everyone for the comments and questions on the
first and
second post on this topic.
Today was a study in the power of fear, courage, and the levers you can pull when you wield billions of dollars...
Woops, excuse me. I'm sorry hedge fund guys... I meant trillions of dollars--I just briefly forget you control not just your own but a lot of other peoples' money too for a moment there.
Also, for people still trading this on market-based rationale (as I am), it was a good day to measure the conviction behind your thesis. I like to think I have conviction, but in case you are somehow not yet familiar with the legend of DFV, you need to see these posts (fair warning, nsfw, and some may be offended/triggered by the crude language). The last two posts might be impressive, but you should follow it in chronological order and pay attention to the evolution of sentiment in the comments to experience
true enlightenment.
Anyway, I apologize, but this post will be very long--there's just a lot to unpack.
Pre-Market
Disclaimer: given yesterday's pre-market action I didn't even pay attention to the screen until near retail pre-market. I'm less confident in my ability to read what's going on in a historical chart vs the feel I get watching live, but I'll try.
Early in the pre-market it looks to me like some momentum traders are taking profit, discounting the probability that the short-side will give them a deep discount later, which you can reasonably assume given the strategy they ran yesterday. If they're right they can sell some small volume into the pre-market top, wait for the hedge funds try to run the price back down, and then lever up the gains even higher buying the dip. Buy-side here look to me like people FOMOing and YOLOing in at any price to grab their slice of gainz, or what looks to be market history in the making. No way are short-side hedge funds trying to cover anything at these prices.
Mark Cuban--well said! Free markets baby!
Mohamed El-Erian is money in the bank as always. "upgrade in quality" on the pandemic drop was the best, clearest actionable call while most were at peak panic, and boy did it print. Your identifying the bubble as the excessive short (vs blaming retail activity) is
money yet again. Also, The PAIN TRADE (sorry, later interview segment I only have on DVR, couldn't find on youtube--maybe someone else can)!
The short attack starts, but I'm hoping no one was panicking this time--we've seen it before. Looks like the momentum guys are minting money buying the double dip into market open.
CNBC, please get a good market technician to explain the market action. Buy-side dominance, sell-side share availability evaporating into nothing (look at day-by-day volume last few days), this thing is now at runaway supercritical mass. There is no changing the trajectory unless you can change the very fabric of the market and the rules behind it (woops, I guess I should have knocked on wood there).
If you know the mechanics, what's happening in the market with GME is not mysterious AT ALL. I feel like you guys are trying to scare retail out early "for their own good" (with all sincerity, to your credit) rather than explain what's happening. Possibly you also fear that explaining it would equate to enabling/encouraging people to keep trying to do it inappropriately (possibly fair point, but at least come out and say that if that's the case). Outside the market, however...wow.
You Thought Yesterday Was Fear? THIS is Fear!
Ok short-side people, my hat is off to you. Just when I thought shouting fire in a locked theater was fear mongering poetry in motion, you went and took it to 11. What's even better? Yelling fire in a theater with only one exit. That way people can cause the financial equivalent of stampede casualties. Absolutely brilliant.
Robin Hood disables buying of GME, AMC, and a few of the other WSB favorites. Other brokerages do the same. Even for people on 0% margin. Man, and here I thought I had seen it all yesterday.
Side note: I will give a shout out to TD Ameritrade. You guys got erroneously lumped together with RH during an early CNBC segment, but you telegraphed the volatility risk management changes and gradually ramped up margin requirements over the past week. No one on your platform should have been surprised if they were paying attention. And you didn't stop anyone from trading their own money at any point in time. My account balance thanks you. I heard others may have had problems, but I'll give you the benefit of the doubt given the DDOS attacks that were flyiing around Robin Hood. Seriously WTF. I'm sure it was TOTALLY coincidence that your big announcements happen almost precisely when what has to be one of the best and most aggressive short ladder attacks of all time starts painting the tape, what looked like a DDOS attack on Reddit's CDN infrastructure (pretty certain it was the CDN because other stuff got taken out at the same time too), and a flood of bots hit social media (ok, short-side, this last one is getting old).
Taking out a large-scale cloud CDN is real big boy stuff though, so I wouldn't entirely rule out nation state type action--those guys are good at sniffing out opportunities to foment social unrest.
Anyway, at this point, as the market dives, I have to admit I was worried for a moment. Not that somehow the short-side would win (hah! the long-side whales in the pond know what's up), but that a lot of retail would get hurt in the action. That concern subsided quite a bit on the third halt on that slide. But first...
A side lesson on market orders Someone printed bonus bank big time (and someone lost--I feel your pain, whoever you are).
During the face-ripping volatility my play money account briefly ascended to rarified heights of 7 figures. It took me a second to realize it, then another second to process it. Then, as soon as it clicked, that one, glorious moment in time was gone.
What happened?
During the insane chop of the short ladder attack, someone decided to sweep the 29 Jan 21 115 Call contracts, but they couldn't get a grip on the price, which was going coast to coast as IV blew up and the price was being slammed around. So whoever was trying to buy said "F it, MARKET ORDER" (i.e. buy up to $X,XXX,XXX worth of contracts at any price). This is referred to as a sweep if funded to buy all/most of the contracts on offer (HFT shops snipe every contract at each specific price with a shotgun of limit orders, which is far safer, but something only near-market compute resources can do really well). For retail, or old-tech pros, if you want all the contracts quickly, you drop a market order loaded with big bucks and see what you get... BUT, some clever shark had contracts available for the reasonable sum of... $4,400, or something around that. I was too stunned to grab a screencap. The buy market order swept the book clean and ran right into that glorious, nigh-obscene backstop limit. So someone got nearly $440,000 PER CONTRACT that was, at the time theoretically priced at around $15,000. $425,000 loss... PER CONTRACT. Maybe I'm not giving the buyer enough credit.. you can get sniped like that even if you try to do a safety check of the order book first, but, especially in low liquidity environments, if a HFT can peak into your order flow (or maybe just observes a high volume of sweeps occurring), they can end up front running your sweep, pick off the reasonable contracts, and slam a ridiculous limit sell order into place before your order makes it to the exchange. Either way, I hope that sweep wasn't loaded for bear into the millions. If so... OUCH. Someone got cleaned out.
So, the lesson here folks... in a super high volatility, low-liquidity market, a market order will just run up the ladder into the first sell order it can find, and some very brutal people will put limit sells like that out there just in case they hit the jackpot. And someone did. If you're on the winning side, great. It can basically bankrupt you if you're on the losing side. My recommendation: Just don't try it. I wouldn't be surprised if really shady shenanigans were involved in this, but no way to know (normally that's crazy-type talk, but after today....peeking at order flow and sniping sweeps is one of the fastest, most financially devastating ways to bleed big long-side players, just sayin').
edit *so while I was too busy trying not to spit out my coffee to grab a screenshot,
piddlesthethug was faster on the draw and captured this:
https://imgur.com/gallery/RI1WOuu Ok, so I guess my in-the-moment mental math was off by about 10%. Man, that hurts just thinking about the guy who lost on that trade.*
Back to the market action..
A Ray of Light Through the Darkness
So I was worried watching the crazy downward movement for two different reasons.
On the one hand, I was worried the momentum pros would get the best discounts on the dip (I'll admit, I FOMO'd in too early, unnecessarily raising my cost basis).
On the other hand, I was worried for the retail people on Robin Hood who might be bailing out into incredibly steep losses because they had only two options: Watch the slide, or bail. All while dealing with what looked to me like a broad-based cloud CDN outage as they tried to get info from WSB HQ, and wondering if the insta-flood of bot messages were actually real people this time, and that everyone else was bailing on them to leave them holding the bag.
But I saw the retail flag flying high on the 3rd market halt (IIRC), and I knew most would be ok. What did I see, you ask? Why, the glorious $211.00 /
$5,000 bid/ask spread. WSB Reddit is down? Those crazy mofos give you the finger right on the ticker tape. I've been asked many times in the last few hours about why I was so sure shorts weren't covering on the down move. THIS is how I knew. For sure. It's in the market data itself.
edit So, there's feedback in the comments that this is likely more of a technical glitch. Man, at least it was hilarious in the moment. But also now I know maybe not to trust price updates when the spread between orders being posted is so wide. Maybe a technical limitation of TOS I'll admit, I tried to one-up those bros with a 4206.90 limit sell order, but it never made it through. I'm impressed that the HFT guys at the hedge fund must have realized really quickly what a morale booster that kind of thing would have been, and kept a lower backstop ask in place almost continuously from then on I'm sure others tried the same thing. Occasionally $1,000 and other high-dollar asks would peak through from time to time from then on, which told me the long-side HFTs were probably successfully sniping the backstops regularly.
So, translating for those of you who found that confusing. First, such a high ask is basically a FU to the short-side (who, as you remember, need to eventually buy shares to cover their short positions). More importantly, as an indicator of retail sentiment, it meant that NO ONE ELSE WAS TRYING TO SELL AT ANY PRICE LOWER THAN $5,000. Absolutely no one was bailing out.
I laughed for a minute, then started getting a little worried. Holy cow.. NO retail selling into the fear? How are they resisting that kind of price move??
The answer, as we all know now... they weren't afraid... they weren't even worried. They were F*CKING PISSED.
Meanwhile the momentum guys and long-side HFTs keep gobbling up the generously donated shares that the short-side are plowing into their ladder attack. Lots of HFT duels going on as long-side HFTs try to intercept shares meant to travel between short-side HFT accounts for their ladder. You can tell when you see prices like $227.0001 constantly flying across the tape. Retail can't even attempt to enter an order like that--those are for the big boys with privileged low-latency access.
The fact that you can even see that on the tape with human eyes is really bad for the short-side people.
Why, you ask? Because it means liquidity is drying up, and fast.
The Liquidity Tide is Flowing Out Quickly. Who's Naked (short)?
Market technicals time. I still wish this sub would allow pictures so I could throw up a chart, but I guess a table will do fine.
| Date | Volume | Price at US Market Close |
| Friday, 1/22/21 | 197,157,196 | $65.01 |
| Monday, 1/25/21 | 177,874,00 | $76.79 |
| Tuesday, 1/26/21 | 178,587,974 | $147.98 |
| Wednesday, 1/27/21 | 93,396,666 | $347.51 |
| Thursday, 1/28/21 | 58,815,805 | $193.60 |
What do I see? I see the shares available to trade dropping so fast that all the near-exchange compute power in the world won't let the short-side HFTs maintain order flow volume for their attacks. Many retail people asking me questions thought today was the heaviest trading. Nope--it was just the craziest.
What about the price dropping on Thursday? Is that a sign that the short-side pulled a miracle out and pushed price down against a parabolic move on even less volume than Wednesday? Is the long side running out of capital?
Nope. It means the short-side hedge funds are just about finished.
But wait, I thought the price needed to be higher for them to be taken out? How is it that price being lower is bad for them? Won't that allow them to cover at a lower price?
No, the volume is so low that they can't cover any meaningful fraction of their position without spiking the price parabolic almost instantly. Just not enough shares on offer at reasonable prices (especially when WSB keeps flashing you 6942.00s).
It's true, a higher price hurts, but the interest charge for one more day is just noise at this point. The only tick that will REALLY count is the last tick of trading on Friday.
In the meantime, the price drop (and watching the sparring in real time) tells me that the long-side whales and their HFT quants are so certain of the squeeze that they're no longer worried AT ALL about whether it will happen, and they aren't even worried at all about retail morale to help carry the water anymore.
Instead, they're now really, really worried about how CHEAPLY they can make it happen.
They are wondering if they can't edge out just a sliver more alpha out of what will already be a blow-out trade for the history books (probably). You see, to make it happen they just have to keep hoovering up shares. It doesn't matter what those shares cost. If you're certain that the squeeze is now locked in, why push the price up and pay more than you have to? Just keep pressing hard enough to force short-side to keep sending those tasty shares your way, but not so much you move the price. Short-side realizes this and doesn't try to drive price down too aggressively. They can't afford to let price run away, so they have to keep some pressure on at the lowest volume they can manage, but they don't want to push down too hard and give the long-side HFTs too deep of a discount and bleed their ammo out even faster. That dynamic keeps price within a narrow (for GME today, anyway) trading range for the rest of the day into the close.
Good plan guys, but those after market people are pushing the price up again. Damnit WSB bros and Euros, you're costing those poor long-side whales their extra 0.0000001% of alpha on this trade just so you can run up your green rockets... See, that's the kind of nonsense that just validates
Lee Cooperman's concerns.
On a totally unrelated note, I have to say that I appreciate the shift in CNBC's reporting. Much more thoughtful and informed. Just please get a good market technician in there who will be willing to talk about what is going on under the hood if possible. A lot of people watching on the sidelines are far more terrified than they need to be because it all looks random to them. And they're worried that you guys look confused and worried--and if the experts on the news are worried....??!
You should be able to find one who has access to the really good data that we retailers can only guess at, who can explain it to us unwashed masses.
Ok, So.. Questions
There is no market justification for this. How can you tell me is this fundamentally sound and not just straight throwing money away irresponsibly?? (side note: not that that should matter--if you want to throw your money away why shouldn't you be allowed to?) We're not trading in your securities pricing model. This isn't irrational just because your model says long and short positions are the same thing. The model is not a real market. There is asymmetrical counterparty risk here given the shorts are on the hook for all the money they have, and possibly all the money their brokers have, and possibly anyone with exposure to the broker too! You may want people to trade by the rules you want them to follow. But the rest of us trade in the real market as it is actually implemented. Remember? That's what you tell the retailers who take their accounts to zero. Remember what you told the KBIO short-squeezed people? They had fair warning that short positions carry infinite risk, including more than your initial investment. You guys know this. It's literally part of your job to know this.
But-but-the systemic risk!! This is Madness!
...Madness?
THIS. IS.
THE MARKET!!! *Retail kicks the short-side hedge funds down an infinity loss black hole\*.
Ok, seriously though, that is actually a fundamentally sound, and properly profit-driven answer at least as justifiable as the hedge funds' justification for going >100% of float short. If they can be allowed to gamble INFINITE LOSSES because they expect to make profit on the possibility the company goes bankrupt, can't others do the inverse on the possibility the company I don't know.. doesn't go bankrupt and gets a better strategy from the team that created what is now a $43bn market cap company (CHWY) that does exactly some of the things GME needs to do (digital revenue growth) maybe? I mean, I first bought in on that fundamental value thesis in the 30s and then upped my cost basis given the asymmetry of risk in the technical analysis as an obvious no-brainer momentum trade. The squeeze is just, as WSB people might say, tendies raining down from on high as an added bonus.
I get that you disagree on the fundamental viability of GME. Great. Isn't that what makes a market?
Regarding the consequences of a squeeze, in practice my expectation was maybe at worst some kind of ex-market settlement after liquidation of the funds with exposure to keep things nice and orderly for the rest of the market. I mean, they handled the VW thing somehow right? I see now that I just underestimated elite hedge fund managers though--those guys are so hardcore (I'll explain why I think so a bit lower down).
If hedge fund people are so hardcore, how did the retail long side ever have a chance of winning this squeeze trade they're talking about? Because it's an asymmetrical battle once you have short interest cornered. And the risk is also crazily asymmetrical in favor of the long side if short interest is what it is in GME. In fact, the hedge funds essentially cornered themselves without anyone even doing anything. They just dug themselves right in there. Kind of impressive really, in a weird way.
What does the short side need to cover? They need the price to be low, and they need to buy shares.
How does price move lower? You have to push share volume such that supply overwhelms demand and price therefore goes down (man, I knew econ 101 would come in handy someday).
But wait... if you have to sell shares to push the price down.. won't you just undo all your work when you have to buy it back to actually cover?
The trick is you have to push price down so hard, so fast, so unpredictably, that you SCARE OTHER PEOPLE into selling their shares too, because they're scared of taking losses. Their sales help push the price down for free! and then you scoop them up at discount price! Also, there are ways to make people scared other than price movement and fear of losses, when you get right down to it. So, you know, you just need to get really, really, really good at making people scared. Remember to add a line item to your budget to make sure you can really do it right.
On the other hand..
What does the long side need to do? They need to own as much of the shares as they can get their hands on. And then they need to hold on to them. They can't be weak hands either. They need to be hands that will hold even under the most intense heat of battle, and the immense pressure of mind-numbing fear... they need to be as if they were made of... diamond... (oh wow, maybe those WSB people kind of have a point here).
Why does this matter? Because at some point the sell side will eventually run out of shares to borrow. They simply won't be there, because they'll be safely tucked away in the long-side's accounts. Once you run out of shares to borrow and sell, you have no way to move the price anymore. You can't just drop a fat stack--excuse me, I mean suitcase (we're talking hedge fund money here after all)--of Benjamins on the ticker tape directly. Only shares. No more shares, no way to have any direct effect on the price whatsoever.
Ok, doesn't that just mean trading stops? Can't you just out-wait the long side then?
Well, you could.. until someone on the long side puts 1 share up on a 69420 ask, and an even crazier person actually buys at that price on the last tick on a Friday. Let's just say it gets really bad at that point.
Ok.. but how do the retail people actually get paid?
Well, to be quite honest, it's entirely up to each of them individually. You've seen the volumes being thrown around the past week+. I guarantee you every single retailer out there could have printed money multiple times trading that flow. If they choose to, and time it well. Or they could lose it all--this is the market. Some of them apparently seem to have some plan, or an implicit trust in certain individuals to help them know when to punch out. Maybe it works out, but maybe not. There will be financial casualties on the field for sure--this is the bare-knuckled capitalist jungle after all, remember? But everyone ponied up to the table with their own money somehow, so they all get to play in the big leagues just like everyone else. In theory, anyway.
And now, Probably the #1 question I've been asked on all of these posts has been:
So what happens next? Do we get the infinity squeeze? Do the hedge funds go down?
Great questions. I don't know. No one does. That's what I've said every time, but I get that's a frustrating answer, so I'll write a bit more and speculate further. Please again understand these are my opinions with a degree of speculation I wouldn't normally put in a post.
The Market and the Economy. Main Street, Wall Street, and Washington
The pandemic has hurt so many people that it's hard to comprehend. Honestly, I don't even pretend to be able to. I have been crazy fortunate enough to almost not be affected at all. Honestly, it is a little unnerving to me how great the disconnect is between people who are doing fine (or better than fine, looking at my IRA) versus the people who are on the opposite side of the ever-widening divide that, let's be honest, has been growing wider since long before the pandemic.
People on the other side--who have been told they cannot work even if they want to, who wonder if congress will get it together to at least keep them from getting thrown out of their house if they have to keep taking one for the team for the good of all, are wondering if they're even living in the same reality.
Because all they see on the news each day is that the stock market is at record highs, or some amazing tech stocks have 10x'd in the last 6 months. How can that be happening during a pandemic? Because The Market is not The Economy. The Market looks forward to that brighter future that Economy types just need to wait for. Don't worry--it'll be here sometime before the end of the year. We think. We're making money on that assumption right now, anyway. Oh, by the way, if you're in The Market, you get to get richer as a minor, unearned side-effect of the solutions our governments have come up with to fight the pandemic.
Wow. That sounds amazing. How do I get to part of that world?
Retail fintech, baby. Physical assets like real estate might be a bit out of reach at the moment, but stocks will do. I can even buy fractional shares of BRK/A LOL.
Finally, I can trade for my own slice of heaven, watching that balance go up (and up--go stonks!!). Now I too get to dream the dream. I get to feel connected to that mythical world, The Market, rather than being stuck in the plain old Economy. Sure, I might blow up my account, but that's because it's the jungle. Bare-knuckled, big league capitalism going on right here, and at least I get to show up an put my shares on the table with everyone else. At least I'm playing the same game. Everyone has to start somewhere--at least now I get to start, even if I have to learn my lesson by zeroing my account a few times. I've basically had to deal with what felt like my life zeroing out a few times before. This is number on a screen going to 0 is nothing.
Laugh or cry, right? I'll post my losses on WSB and at least get some laughs.
Geez, some of the people here are making bank. I better learn from them and see if they'll let me in on their trades. Wow... this actually might work. I don't understand yet, but I trust these guys telling me to hold onto this crazy trade. I don't understand it, but all the memes say it's going to be big.
...WOW... I can pay off my credit card with this number. Do I punch out now? No? Hold?... Ok, getting nervous watching the number go down but I trust you freaks. We're still in the jungle, but at least I'm in with with my posse now. Market open tomorrow--we ride the rocket baby! And if it goes down, at least I'm going down with my crew. At least if that happens the memes will be so hilarious I'll forget to cry.
Wow.. I can't believe it... we might actually pull this off. Laugh at us now, "pros"!
We're in The Market now, and Market rules tell us what is going to happen. We're getting all that hedge fund money Right? Right?
Maybe.
First, I say maybe because nothing is ever guaranteed until it clears. Secondly, because the rules of The Market are not as perfectly enforced as we would like to assume. We are also finding out they may not be perfectly fair. The Market most experts are willing to talk about is really more like the ideal The Market is supposed to be. This is the version of the market I make my trading decisions in. However, the Real Market gets strange and unpredictable at the edges, when things are taken to extremes, or rules are pushed beyond the breaking point, or some of the mechanics deep in the guts of the Real Market get stretched. GME ticks basically all of those boxes, which is why so many people are getting nervous (aside from the crazy money they might lose). It's also important to remember that the sheer amount of money flowing through the market has distorting power unto itself. Because it's money, and people really, really, really like their money--especially when they're used to having a lot of it, and rules involving that kind of money tend to look more... flexible, shall we say.
Ok, back to GME. If this situation with GME is allowed to play out to its conclusion in The Market, we'll see what happens. I think all the long-side people get the chance to be paid (what, I'm not sure--and remember, you have to actually sell your position at some point or it's all still just numbers on your screen), but no one knows for certain.
But this might legitimately get so big that it spills out of The Market and back into The Economy.
Geez, and here I thought the point of all of this was so that we all get to make so much money we wouldn't ever have to think and worry about that thing again.
Unfortunately, while he's kind of a buzzkill,
Thomas Petterfy has a point. This could be a serious problem.
It might blow out The Market, which will definitely crap on The Economy, which as we all know from hard experience, will seriously crush Main Street.
If it's that big a deal, we may even need Washington to be involved. Once that happens, who knows what to expect.. this kind of scenario being possible is why I've been saying I have no idea how this ends, and no one else does either.
How did we end up in this ridiculous situation? From GAMESTOP?? And it's not Retail's fault the situation is what it is.. why is everyone telling US that we need to back down to save The Market?? What about the short-side hedge funds that slammed that risk into the system to begin with?? We're just playing by the rules of The Market!!
Well, here are my thoughts, opinions, and some even further speculation... This may be total fantasy land stuff here, but since I keep getting asked I'll share anyway. Just keep that disclaimer in mind.
A Study in Big Finance Power Moves: If you owe the bank $10,000, it's your problem...
What happens when you owe money you have no way to pay back? It's a scary question to have to face personally. Still, on balance and on average, if you're fortunate enough to have access to credit the borrowing is a risk that is worth taking (especially if you're reasonably careful). Lenders can take a risk loaning you money, you take a risk by borrowing in order to do something now that you would otherwise have had to wait a long time or maybe would never have realistically been able to do otherwise. Sometimes it doesn't work out. Sometimes it's due to reasons totally beyond your control. In any case, if you find yourself there you have no choice but to dust yourself off, pick yourself up as best as you can, and try to move on and rebuild. A lot of people had to learn that in 2008. Man that year really sucked.
Wall street learned their lessons too. Most learned what I think most of us would consider the right lessons--lessons about risk management, and the need to guard vigilantly against systemic risk, concentration of risk through excess concentration of leverage on common assets, etc. Many suspect that at least a few others may have learned an entirely different set of, shall we say, unhealthy lessons. Also, to try to be completely fair, maybe managing other peoples' money on 10x+ leverage comes with a kind of pressure that just clouds your judgement. I could actually, genuinely buy that. I know I make mistakes under pressure even when I'm trading risk capital I could totally lose with no real consequence. Whatever the motive, here's my read on what's happening:
First, remember that as much fun as WSB are making of the short-side hedge fund guys right now, those guys are smart. Scary smart. Keep that in mind.
Next, let's put ourselves in their shoes.
If you're a high-alpha hedge fund manager slinging trades on a $20bn 10x leveraged to 200bn portfolio, get caught in a bad situation, and are down mark-to-market several hundred million.. what do you do? Do you take your losses and try again next time? Hell no.
You're elite. You don't realize losses--you double down--you can still save this trade no sweat.
But what if that doesn't work out so well and you're in the hole >$2bn? Obvious double down. Need you ask? I'm net up on the rest of my positions (of course), and the momentum when this thing makes its mean reversion move will be so hot you can almost taste the alpha from here. Speaking of momentum, imagine the move if your friends on TV start hyping the story harder! Genius!
Ok, so that still didn't work... this is now a frigging 7 sigma departure from your modeled risk, and you're now locked into a situation that is about as close to mathematically impossible to escape as you can get in the real world, and quickly converging on infinite downside. Holy crap. The fund might be liquidated by your prime broker by tomorrow morning--and man, even the broker is freaking out. F'in Elon Musk and his twitter! You're cancelling your advance booking on his rocket ship to Mars first thing tomorrow... Ok, focus--this might legit impact your total annual return. You need a plan, and you know the smartest people on the planet, right? The masters of the universe! Awesome--they've even seen this kind of thing before and still have the playbook!! Of course! It's obvious now--you borrow a few more billion and double down again first thing in the morning. So simple. Sticky note that Mars trip cancellation so you don't forget.
Ok... so that didn't work? You even cashed in some pretty heavy chits too. Ah well, that was a long shot anyway. So where were you? Oh yeah.. if shenanigans don't work, skip to page 10...
...Which says, of course, to double down again. Anyone even keeping track anymore? Oh, S3 says it's $40bn and we're going parabolic? Man, that chart gives me goosebumps. All according to plan...
So what happens tomorrow? One possible outcome of PURE FANTASTIC SPECULATION... End of the week--phew. Never though it'd come. Where are you at now?... Over $9000
\)!!! Wow. You did it boys, and as a bonus the memes will be so sweet.
\)
side note: add 8 zeros to the end... Awesome--your problems have been solved. Because...
..
BOOM
Now it's
EVERYONE's problem.
Come at me, Chamath,
THIS is
REAL baller shit.
Now all you gotta do is make all the hysterical retirees watching their IRAs hanging in the balance blame those WSB kids. Hahaha. Boomers, amirite? hate when those kids step on their law--I mean IRAs. GG guys, keep you memes. THAT is how it's done.
Ok, but seriously, I hope that's not how it ends. I guess we just take it day by day at this point.
Apologies for the length. Good luck in the market!
Also, apologies in advance for formatting, spelling, and grammatical errors. I was typing this thing in between doing all kinds of other things for most of the day.
Edit getting a bunch of questions on if it's possible the hedge funds are finding ways to cover in spite of my assumptions. Of course. I'm a retail guy trying to read the charts and price action. I don't have any special tools like the pros may have.
submitted by There is a general understanding among ETH investors that the enhancements from ETH 2.0, EIP-1559 and L2 solutions will result in a sustainable monetary policy with near 0% issuance and the potential for Ether to become a deflationary asset. What is even more interesting is that the net return of ETH as a SoV becomes superior to BTC the moment that issuance is lower than the staking yield. In other words, even if BTC had already ceased issuance, it offers no mechanism to provide yield to long term holders with a negligible risk exposure as ETH does. There is an execution risk that Ethereum will not deliver on what is currently planned, but if it does then what I have explained will become a reality.
You cannot separate BTC/ETH's payment rails from their respective monetary policies. As you are probably aware, issuance is just a subsidy, and without it the network will need to operate as a profitable business with a cash-flow that is entirely dependent on network fees. We are observing a situation that is causing a degradation of the utility of the Bitcoin network. What I mean by that is that the incentive for users to transact directly on the network is being diminished because of the tokenization into ETH and by the introduction of custodians (like Paypal) and traditional banking services who will soon be entering this space. If these trends continue, I suspect that the only activity that will end-up happening on-chain will be done by whales sporadically transacting to hodle and the occasional settlement from institutions. Bitcoin seems fast and frictionless, but that is because you are comparing it to something in the physical world. In digital terms Bitcoin emulates the friction of operation that is found with gold: it is difficult and expensive to move it, securing it yourself is not trivial, and it does not make for a great medium of exchange. I don't think this will be a good dynamic to generate enough transaction fees. That is of course my subjective interpretation of it, but regarding this particular situation it is nearly impossible to make objective assertions at this point. It is possible to assert that, in the digital world, the expectation of frictionless money would entail near instant transactions with negligible cost and without the relative risk/paranoia of dealing with nuclear waste and having a hacker watching your every move waiting for you to make a mistake to snatch it away. Digital money would also need to interact with other digital assets, preferably defined and operated within the same ecosystem. Ethereum is steaming ahead on all ends.
Ethereum is fostering a digital economy (this is a very important part of understanding the value of Ethereum, but I will not be exploring it in this post) with DeFi at its center. It is currently generating about three times as much trx fee revenue as Bitcoin. L2 solutions are going live as we speak, and it appears that they will be much more practical and provide better UX when compared to the Lightning Network. This will help to amplify L1 block space value and push revenue even higher. That will be followed by EIP-1559, which will burn transaction fees. Mining is currently excessively profitable and the hash rate cannot keep up. This means the financial incentive can be reduced and by burning trx fees we achieve the equivalent of an issuance reduction, while stabilizing mining revenue. Eventually the transition to PoS will dramatically cut the operational cost of the network. That means that Ethereum as a business will become more profitable and less reliant on the issuance subsidy. Finally, we will see the introduction of sharding which will scale L1 by up to 1,000 times, compounding the effect of L2 solutions and making it feasible for the network to operate as a platform for new use cases. A solution to the hackenuclear waste security situation is being explored via social recovery wallets. It is still in the early stages of research and design, but it is important to realize that the Ethereum community recognizes it as a problem and is working on a solution.
There is a lot more that can be said about the BTC vs ETH debate and I am working on a full write up that explores each individual element in more detail. Regardless, it is important to pay attention to this trend: the smartest people in this space are shifting their point of view and realizing Ethereum's potential. Raoul Pal is a seasoned investor, extremely bright and open minded. He started with Bitcoin, but it did not take him long to understand the value proposition of Ethereum. Lyn Alden is a brilliant investor and mental powerhouse who initially did not think investing in Ethereum could be justified, but she is also
starting to shift her view and now understands that it has a justifiable risk/reward ratio to be included in a portfolio (although she is not personally invested in Ethereum). She has plenty of negative things to say about it, however it appears that she recognizes this is not a black and white situation. I have a feeling she will be revising her analysis on Ethereum again in the future with a more optimist view, but maybe that is just wishful thinking.
The crypto space has a few analogies that have been used to describe technical/economic mechanisms that are somewhat tricky to understand: mining, Ethereum's gas, and the analogy between ether and oil. Crypto "mining" is not like real world mining. It's purpose is not to extract resources, but it is rather a decentralized mechanism to process transactions. Newly minted BTC tokens are not "mined", they are minted by the protocol and awarded to operators. Furthermore, it is impossible to change the total mining output of the network... adding/removing miners does not affect the mining output. If you are new to crypto, you can read a more detailed explanation of mining
here. ETH's "gas" is not like fuel (it cannot even be stored). It is just a computational metric that is more akin to the distance a car must travel, but not what actually makes it move. The fuel is electricity and it must be paid for with ether. When you transact you are also paying for the "car" which is the use of all active mining hardware/validators for a fraction of a second. And ether is just money.
If you put too much weight on these simplified analogies, you will not understand the economic actuality behind them. This is a source confusion in the crypto space, and it is used to support false narratives. From an economic perspective, ether is money. Once you understand this, you will know that the narrative that BTC and ETH are not competing because they are different things is analogous to saying fax machines do not compete with the internet.
The beautiful thing about ether is that it is actually not "just money". It is a mixture of a scarce monetized commodity, money, bond and tech stock.
- Monetized Commodity: Ether is becoming more scarce and will continue to do so with the transition to proof-of-stake and EIP-1559. Ethereum does not have a supply cap, but it does have a roadmap for a sustainable security model and if it achieves a positive cashflow then it will not only eliminate issuance, it can become deflationary. An argument can be made about potential issues with Bitcoin's sustainability in the long run.
- Currency: Ether is used as a unit of account and medium of exchange to pay for every activity in Ethereum. It is also used in the same way for venture capital related to ICOs, and Ether is also used as collateral in the DEFI space and new monetary uses will continue to emerge. It is an immature form of money, just like Bitcoin is an immature form of gold. Some people prefer to say that Ether is just a utility token. However, a utility token is just a narrowly scoped form of money. Not only is Ether's scope within its digital economy growing, by next year users will be able to pay millions of merchants with Ether through Paypal. We have never seen the adoption of a new form of money grow organically. New forms of money have always been imposed by authorities. What would the organic growth of money look like? It would look like Ether.
- Ethereum's digital economy: Ethereum has limitless use cases and it is already generating economic activity with real world usefulness. Ether's value will benefit from acting as the native monetary asset for Ethereum. As Ethereum's economic activity grows, the velocity and/or value of ether must also increase.
- Bond: With proof-of-stake you need to lock up Ether to receive a yield in return. It is similar to how bonds work.
- Tech Stock: Ethereum provides a service. That service is paid with ether. The network is controlled by holding ether that is staked. The more valuable the service provided by Ethereum becomes, the more users will be willing to pay for transactions and the more valuable the protocol and the Ether token become. Cloud based services is the entire business model of many companies. The network will be entirely operated by stakers who happen to be the recipients of transaction fees. It is not exactly the same as holding a stock, but there are a lot of parallels.
- Full reserve banking model: This is a bit of a stretch, but it is a potential end-game for Ethereum. It can serve as the base infrastructure and reserve asset for a full reserve banking system. In a nutshell: a consortium of banking companies can be formed to standardize a framework to hold and stake Ether under custody in exchange for wrapped Ether. Customers deposit Ether, banks exchange it for wETH and stake the original ETH. Resting balances of wEther on customer accounts can receive a cut of the staking rewards. Banks get their profit model, customers get to spend wrapped Ether with traditional banking services and potentially receive a share of the staking yield. Customers could also have access to a yield curve based on variable reserve requirements. This would allow banks to create money (which is actually good for the economy when it is done with moderation), but for the first time ever customers would have the choice of how much risk exposure they are comfortable with. This dynamic could help to establish a form of democratic check and balances system that discourages moral hazard. Ether could become a godsend to banks in the land of negative yields. It's a pipe dream, but not entirely impossible. Don't forget that the US OCC has essentially given banks the green light to take the first steps in this direction (US banks have been approved to use the Ethereum blockchain for their operations AND they can become validators... yup this happened).
EDIT 1: Adding an analogy to explain why ether is money: Let’s say I have a car with a 14-gallon fuel tank and I want to take it on a road trip. The car is not aware of the price of gasoline, and it would not travel any farther if the price of gas would double the next day. That’s because the intrinsic utility of oil has nothing to do with its monetary value. The car needs gas because of its particular physical properties and how the ICE is designed to utilize it. If I want to drive from point A to point B and it takes a full tank to get there, it will take that full tank no matter what happens to the monetary properties of gas/oil. This is fundamentally different from how Ethereum uses ether.
Ethereum (the network) is not trying to be money, but it utilizes ether exclusively for its monetary properties and not because it can be magically burned by an imaginary engine of sorts. It costs money to participate in the network as a miner, and their engagement is financially incentivized with ether. Block space is a scarce resource, therefore participants who wish to transact use ether to bid for it. These interactions are utilizing ether as a monetary medium of exchange. In the long run, as the price of ether goes up, the ether denomination of gas prices goes down. That happens because no one is using ether as gas/oil, and it is actually being used as money. In the short run you may see the opposite occurring because of the dynamic between the portion of block space demand that is inelastic and the demand for ether.
EDIT 2: Revisiting key concepts to explain how they will become price catalysts. - Wide adoption of L2 solutions: these will amplify the base layer block space value while encouraging further network adoption by a significant reduction of fees. A successful integration with DeFi protocols will dismiss the "Ethereum killers" theory and consolidate market confidence.
- EIP-1559: reduce excessive financial incentives to miners by burning transaction fees. This will also discourage miners from attempting to artificially raise fees via spam.
- Sharding: scale L1 bandwidth, compounding the effect of L2 solutions, further consolidating Ethereum's dominance in the DeFi space, making it feasible to introduce new use cases and eventually increase trx fee revenue.
- The switch from PoW to PoS: discontinuing PoW will eliminate the operating costs related to mining and will allow for a reduction of issuance. Money that was previously allocated to buying mining equipment will be redirected to the acquisition of Ether. Staking Ether will remove it from circulation for extended periods of time. Operating cost will be negligible, allowing validators to withhold most of the Ether revenue. This will be the greatest bull market catalyst in the history of cryptocurrencies and it will eclipse the effect of BTC halvenings.
Bitcoin maximalists will be nay-saying all the way through and past a market cap flip. Do not get caught up in their narrative. If you are not sure, then it is better to rebalance your portfolio proportionally to market caps. If none of these things happen and Ethereum turns out to be a failure, then you would only have reduced your gains by 20%. Otherwise, ETH will be making you mountains of money.
EDIT 3: Ethereum killers Ethereum killers remind me a lot of Tesla killers, but a lot worse. People need to understand that cryptocurrency platforms targeting financial Dapps are fighting the equivalent force of a black-hole when it comes to Ethereum’s network effect and user retention in this space.
Bigger players, with bigger money, are entering this market and they will not settle for anything other than the top dog. This pattern reinforces Ethereum's position as the premium financial system, which ends up attracting even bigger players and resulting in the black-hole effect. To make matters even more complicated, financial apps are more valuable when they are surrounded by a rich and diverse variety of digital assets and other natively defined Dapps. There is not much you can do with your money in a ghost town.
It is VERY difficult to build this type of environment up because the platform and dapps must also have established full trust from their user base. This is not to say there is no space for other networks to grow, but just don’t get your hopes high that they will be taking Ethereum’s stronghold as a financial system. There are other use cases that do not require the amount of decentralization and security offered by Ethereum, and the networks that can focus on these are the ones who will be able to coexist with in the long-run. Gaming, ERP interoperability and supply chain are good examples of such use cases. Remember that alternatives with cheap transactions have existed for a while and they have barely touched ETH's dominance (EOS, NEO, VET, QTUM, IOTA, LSK, STRAT, ARK and dare I say... TRON).
EDIT 4: Refuting critiques about dynamic monetary policy If an argument can be made that the financial incentives to operators (miners/stakers) are excessive or insufficient then an argument can be for the implementation and execution of a dynamic monetary policy.
I don't think an arbitrarily picked issuance schedule determined during the genesis of a new highly complex system is likely to be efficient through its lifecycle. Bitcoin's monetary policy provides the certainty of stability and protection from abuse, but it sacrifices the possibility of efficiency and jeopardizes longevity. It would be like if a captain of a ship would point it in the direction of its final destination, set the throttle, then fall back to his cabin for a nice bottle of chianti and hope that the ship would arrive safely. There would be no one at the helm to navigate the seas, no one to make sure it stayed on route, no one to avoid the storms or to take advantage of currents. In my opinion it is a pretty bad approach to something as critical as monetary policy.
With respect to Ethereum's dynamic monetary policy: I don't see any evidence to suggest developers have been enriching their pockets by keeping issuance at the levels they are. Developers are stakeholders and the Ethereum fund holds a lot of ether - debasing ether is against their self interest. There is a great misunderstanding that the one's who are adjusting issuance are the recipients of the new tokens. Is there any documented case of this happening?
EDIT 5: Addressing Bitcoin's immutable monetary policy The idea that Bitcoin's monetary policy cannot be changed is a myth. It is a false narrative that takes for granted that the issuance subsidy will no longer be necessary at some point, but there is no way to objectively assert this. There is no divine power preventing the monetary policy from being changed. If the security model for Bitcoin was jeopardized because of insufficient cash flow to miners, then Bitcoin's monetary policy would be the first thing on the chop board to go in order to remedy the situation.
EDIT 6: Five years ago naysayers were screaming about how everything that is being done TODAY in the Ethereum network would never work. Now they are calling Ethereum a scam, or that is is a platform for degenerate gamblers, or that the fees are too high and therefore it is useless, or that it can't scale, or that something else better is just around the corner to take its place.... you know... basically all the things that traditional bankers have to say about Bitcoin, maxis are saying about Ethereum.
EDIT 7: The greater the impact a new technology can have on society, the more difficult it is to comprehend its potential. Ethereum has the potential to have a dramatic impact on human civilization. It could take decades for it to be fully realized, but it would change the world in ways that we cannot possibly imagine today. If it happens, the moon will be just a pit-stop.
EDIT 8: Thank you so much for all the awards! Ethereans understand this stuff, and I could feel the frustration in the air every time someone said that Ethereum is not money, or that ETH and BTC are completely different things, or all the other bs attacks that are in great part founded on a lack of understanding of how BTC and ETH actually work. I would love to hear what guys like Raoul Pal, Pomp, Michael Saylor and Fernando Ulrich (for my Brazilian friends) would have to say about some of the things that have been written here. If you know a way to get their attention, then please do it.
EDIT 9: Clarification about Lyn Alden's opinion of Ethereum
EDIT 10: I am still working on a much more ambitious write up. It is focused on economic aspects of money, monetary systems and global asset markets. I still have not incorporated any of the information written here, but I eventually will merge it together. One of the main new ideas that I am exploring is challenging the notion that money has no intrinsic value and that scarcity is the most important attribute of money. I think I make a compelling argument to demonstrate that facilitating economic activity is more important, and how Ethereum has a big edge over Bitcoin in this regard. Here is the
link to the WIP doc.
TLDR: Ethereum is not stopping at the moon... it is not stopping on Mars... it is going straight out of the Milky Way galaxy in search for alien life... but you should own some BTC just in case the spaceship malfunctions during launch.
Throwaway for obvious reasons...
So I will start this story by saying that I don't think I am a good person, and a story with some collateral damage. But this is a story about one bad person getting revenge on another bad person.
Backstory: I[34m, now] was raised by a single mom because dad passed away when I was younger, but I had many male role models in older brothers and he left behind a generous life insurance policy, so I largely had a good upbringing. However, I was not ever very social and from my early teens I spent a lot of time in front of my computer. This habit got worse as I went to college and it resulted in me spending 80% of my time gaming, working, reading, or whatever on a screen. As a result, I was not very attractive and quite obese at the age of 20. For these reasons, I never really dated and did not even lose my virginity until I met my exfiance. On top of this, I was raised very religious because my mom became really religious after the death of my father so I always thought it was a bad idea to "play the field". The only thing I had going for me was that I had become somewhat proficient in several coding languages and expanded on these in college. I would not say that I am a good IT person or coder, but with a little bit of coding knowledge and a lot of creativity you can create residual income streams and I had a decent job in IT where I could work from home 3 days a week. At the age of 24, I was still overweight and a social reject, but through my mom I met a woman from her "bible study" that would eventually become ex-fiance[36f, now]. We hit off and started dating. She had a 2 year old son at the time and they became the only thing in my world that I cared about. It did not take me long to get physical (LOL) all those years of pretending I was "saving myself" went out the window when I finally had the chance to lose it. To be honest, she really broke me out of the shell I had become more sociable within a couple months of meeting her. I even took on a fatherly role for her son and within 6 months of dating she got pregnant. Being the religious person I was, I immediately proposed and wanted to marry before the birth of the baby. Then she dropped a bombshell on me.... she was still legally married.... to a guy in prison. This did not bother me too much as she had always talked about her troubled past and I thought I would be the one to save her from it anyways so I just took this as it came with the territory. She began the divorce proceedings shortly and we planned to get married as soon as those were finished. I was riding high after the baby was born and I thought I had really carved a place for myself in the world. I even started losing weight and spent less time online than ever. She was always kind to me and I thought we let each other know everything we were thinking... boy was I wrong.
There were a few red flags that I was too love struck to see. 1.) She told me early on that the only reason she got involved with my church was that she was on probation and had pending court cases and thought it would help her case. 2.) Despite me earning a comfortable 6 figure income with side projects and my main IT job, she insisted that she keep her part time job and my mom had to help me take care of the kids to deal with it. 3.) She knew WAY TOO MANY PEOPLE - like what suburban mom with a secretarial job has 200 contacts in her phone? 4.) We kept delaying our marriage due to sick relatives or other issues (although she did go through with the divorce to the prison guy)
Then something happened that shook me out of her spell. She got pregnant for a second time and this time with twins. We had only been with eachother for ~4 years and we were about to have 4 kids. 2 more than I thought I would ever have. She claimed she was on birth control at the time, so we were not using condoms. Anyways, after the twins were born I started seeing my doctor about a vasectomy and my exfiance encouraged it. I wanted to get some swimmers frozen before the the operation because we could completely change our minds in 5 years. So I go in for the visit and the doctor comes out to tell me that my sperm count was low and they were mostly immobile, but this problem might be temporary and I should try to eat a healthier diet and stuff for a few weeks and come back. When I came to the second appointment and the same problem arose, the doc started doing some investigating, but you know where this is going. SO... the doctor says that its likely that I am infertile (this turned out to not be completely true, as I now have a child that I KNOW is biologically mine, but it still propelled the following events.) I mentioned that I had 3 biological children and the doctor looked anxious and started talking, but I was in shell shock and did not really know what he was saying. I think I left the doctors office before they were even done with me. I did not even get in my car, I just walked until it started to get dark and eventually called an Uber to get home. My fiance was worried and already asleep inside and I just lied to her and told her my car broke down, phone died, and I was at the mechanic late and forgot to let her know. I fell asleep and woke up the next day and immediately got on the computer to research similar stories and started to give myself false hope. The first post I read was about how fertility assessments are not true and I should 100% get a test. I thought for sure this would show the doctor was wrong, but I got the test back and within a week I knew the kids were not mine.
The first person I told was my mom, I went to her house and cried for the first time in my adult life. She consoled me and then told me a story that I was never meant to hear. Essentially, I am the product of an affair myself and that dad actually died from an overdose on pain meds after he found out. Well, I don't know why the f#$% my mom thought this would comfort me, but in reality it just gave me an unhealthy view of women for a while. After the story and calming down, she insisted that I "man up" and honor my commitment to these kids because "I am the only father those kids had ever known". Up to this point I had always been a pushover, and I really considered her words to me for about 24-hours before I completely snapped. I called my fiancé and told her I had to stay the night at my moms house because of a family issue and she offered to make us dinner which I declined. At this point, the twins are about 6 months, the boys are 2.5 years and ~5 years old. I won't lie and say that I felt nothing for these kids, but it was hard to look them in the face and I knew I was done being their father. I knew this would tear them up and damage them, but I couldn't stand to hear them say "dadda" to me because every time it was like a knife in my heart. I kept my cool and did not expose anything and my mom did not say anything I assume because she thought I was "manning up". I spoke to an attorney, because I wanted to get myself off the birth certificates of these children and I thought I could seamlessly slip out of this situation because we were not married. Unfortunately, after going through the paperwork and financials, since I had tangled much of our finances and I "took on a fatherly role" I would be responsible for at least the boys child support and she would get equity in the house and my side businesses. Basically, the lawyers said that I would likely be on the hook for something like 25% of my income for many years to come. I pretty much ghosted my lawyers after paying them their initial fee, because I did not like the idea of state-enforced cucking.
The revenge starts here. I started to make a plan to disappear and leave them all with as little as possible. The start of this was destroying all of my passive income streams and getting myself fired. Getting myself fired was easy, but it got a bit cringe, basically did some of the stuff from office space, smashed an office printer in the courtyard, didn't do anything while working from home except send memes to coworkers, but I did not do anything to clients because my boss was actually a friend of mine, but my office mates had a good time watching this. After this, I did not even try to file for unemployment and began living off our savings. My exfiance let me handle all the financials despite both of our names being on everything, so she did not notice our accounts slowly draining of money and the financials going to chaos because I left her checking account filled with a few thousand (credit card debt skyrocketed because I stopped paying our cards LOL). I sat there for months wondering if I should end it and follow in the footsteps of my would-be father, but ultimately decided against it. I got ancestory test kits for the kids in an effort to find who their actual father was, because I was hoping to get them away from my ex, but this resulted in even weirder findings. Essentially the oldest child was a cousin/half-brother to his siblings and so the prison guy's brother must have gotten her pregnant, also I did not see any family members from the test that I thought would be a good fit. So that was the end of that investigation. I also tried to distance myself from my mom, as I had become disgusted by what she did to my dad and her newfound cheater allegiance with my ex. I formulated a plan to get away, FAR AWAY, from everything by just vanishing on a "hiking trip". I really hyped up this hiking trip and claimed I would be in the (insert location here) for a week alone with my thoughts in the trails. Before the trip I took the then ~6 year old out for ice cream and cried for the second time in my adult life. The 6 year old was obviously distraught over seeing his "dad" cry and started trying to calm me down. I guess I was crying that I had to leave him, and I told him I was sorry dozens of times but I think he was just confused about the situation. I was more concerned about losing him, because I knew he was not my child and I was able to form a bond anyways.
I left that afternoon and actually made my way to the lodge and checked in. Now the next part I will mostly skip because I am not sure if it was legal or illegal or whatever but cut to 6 months later and I have a new name and live in a new city where I was able to restart my IT career and was slowly working toward my old income status again. I started stalking my ex on facebook and other social-media. I won't lie, it was cathartic to say the least. The chaos of them trying to get into accounts must have been hell and she figured out that our comfortable finances were not so comfortable after all. Begging for money on facebook is sooooo trashy. Once again I won't mention the legal stuff, but a lot of people went looking for me and I considered phoning the police to let them know that I was okay, but decided against it (eventually had to pay a hefty fine for this, but it was well worth it). I worked on myself for a long time and got into great shape. Lost my religion and descended into a hedonistic lifestyle. I became unrecognizable. I continued stalking this woman for about a year when I heard she was dating a new guy and got pregnant almost immediately. Of course, my mom was still in her life taking care of my "supposed children" while she was doing god knows what. Then on the one year anniversary of me leaving she posted a memorial page... for me. This made me decide that my revenge was not quite done and I decided to call up my brother and let him know I was alive. My brother and I had drifted over the past 10 years, but he was blood and was always there when I was younger. I told him why I did what I did and we caught up and I asked him not to tell anyone yet and he agreed. But then he told me about my mom and my ex-fiance suing my insurance company to honor my life insurance. Somehow, she had managed to keep up this policy going despite its hefty cost. The payout would be substantial (7 figures) and she would be awarded the premiums that she had paid since my alleged death if she won.
Well I am not the kind of uncivilized person that would defraud an insurance company so I started my plans! I drove the 1000mile journey to my old city when I heard she had an upcoming hearing and listened to "highway to hell" half the way down.
I went to the court early and sat down. Now at this time I had grown a beard, lost 60 pounds and generally looked good. I looked so different that my fiance and mother passed right by me in the court without giving me a second look. I thought they would be meeting in a big court room and I was already planning to barge in and yell something about objecting and being a cringelord like usual. But they ended up going to a small room with some lawyers from the insurance company. I decided frick it and knocked on the door several times until they opened it. They were all confused to see this scraggly dressed man with a beard and I simply said "I believe you are trying to settle the issue of whether I am dead". My exfiance realized it was me almost immediately and let out a gasp or something. But the lawyers were just confused. Everyone ended up stepping outside the room and a whirlwind erupted and the bailiffs were called over. MY ex screamed and slapped me and they had to actually put handcuffs on her! This was a big deal for the insurance company I guess and the lawyer's boss/client actually showed up and asked for statements and everything. Even a detective showed up and I started to regret coming but I gave my statement and did not really lie about anything, but I was vague about where I was currently living. I ended up staying in town for almost a month, and it was a crazy month in a cheap motel. I showed evidence of my ex's cheating to anyone who cared and I tried to meet with the kids, but the youngest did not know me and the then 7 year old told me to "fuck myself", which is fair I guess. The police were pissed off and started civil litigation for the costs of searching for me, a detective or soemthing actually flew in from another state to question me. Luckily this whole time I did not get arrested for anything as I did not want my fingerprints being linked to my new name an such. Essentially I had to pay a large fine and immediately paid the fine in cash to the surprise of the police. As far as I was concerned I was done with this town. My ex-fiance served me a civil lawsuit for multiple different things and my mom helped, but I was a leaf in the wind long before anything came of it. I am back in my new city and never plan to go back. I stopped spying on them after a few months of ruining her insurance plans and moved on with my life. This happened some years ago and I am much better off now, but I am tired now and need to go to sleep. If there is interest I will let you know what happened with me after all this.
UPDATE:
Hello everyone, thank you for taking interest in my life. I only want to do 1 update and lay it all out. Mostly I just wanted to let people know where I went with my life, because a lot of people seem interested. I might answer a few questions in the comments if someone has a burning question.
I am not going to say anything about how to disappear because we can't discuss potential crimes on this board, but look up the case of how **Jack Barsky a former KGB spy entered the US and obtained credentials. Literally millions of undocumented immgrants do this to be able to work for companies in the US as well. Uncle Sam just wants those taxes paid. I'm not sure about the details of the insurance investigation and how they were looking for me, but I never got so much as a phone call from them before I met them in person.
I have no intention to try to seek revenge anymore, because I believe "violent delights have violent ends" now. As far as I am concerned, my ex-fiance's life is hard enough and anything else I did would just hurt the kids. After everything blew up with my ex, I left the town and did not reach out to my brother anymore and even stopped checking up on the situation with my Ex. Having no family and friends and starting over in the world is lonely and terrifying, but equally exciting and hopeful.
So how did I reset my life upon reaching a new city? Well I had a lot of money in cash that I used to stay in a motel for a few months while I got all my documents in order and looked for work. Because I thought that my home computer would be searched when I went missing, I could not really plan much of this stuff beforehand. I realized that without a college degree linked to your name, it was difficult to find a job with my skillset. So I decided to just make my own company and post advertisements about setting up custom dispatch software, editing videos and presentations, among other tasks. I only received a few different jobs doing this and it did not even pay my living expenses. After I did a few jobs for the same company, I made friends with a project manager and got hired at a reasonable salary. To this day, my finances are only about 70% of what I was making before, but I am happy with what I have.
I spent a lot of time finding people with similar stories on the internet and eventually got involved with a Men Going Their Own Way (MGTOW) group. We basically just talked shit about women all the time and the positive feedback loop made me a pretty resentful/misogynistic person. I went so far as making fake accounts to harrass women online, so I don't want to go into anymore details because I am a bit embarrassed and remorseful now. I got on Tinder and started hooking up with women to make up for lost time. Throwing money around and lying to them became a way of life for me and I would cheat on basically every woman I got with because I thought they were all doing it too. I got caught and I would pretend like I didn't understand why they were mad with me until they left or tried to forgive me just for me to do it again. Not proud of this either.
A couple of years ago one of the women that I was sleeping with regularly got pregnant and came to me all excited with the news. Now I immediately accused her of cheating and threw her out of my apartment and there was just a look of shock on her face. Remember, I thought I was infertile so in my mind I just put another THOT in her place. I continued to mock her for a bit and even messaged my MGTOW buddies about what I did. I openly confessed to cheating on her and showed her proof. I agreed to a paternity test while she was still pregnant just because I didn't want her to get the courts involved and I was shocked with the result. I cried and tried to hug her and she screamed threw some papers at me and told me she never wanted to see me again. I went home and drank, happy that I was going to be a dad(for real this time) but sad who I had become. Like I said, I don't want you to root for me because I am not a good person.
For the remainder of the pregnancy, she would not even speak to me long enough for me to explain my actions, but I totally understood why. When the baby was born(a girl), I showed up to the hospital to sign the birth certificate and at the same time met with her lawyer (which turned out to be her sister) to go over child support stuff that we had already spoke about. I went for a "hail marry" and offered to sign any paper they wanted if she would just have coffee with me for 30 minutes to explain things (She wanted full custody and generous payments). I never got a lawyer because I just wanted to make amends and I thought a lawyer would throw up obstacles to try to protect me or my finances.
I met with her for coffee and to my surprise she let me speak uninterrupted for almost 20 minutes. I did not completely tell her the truth about my past, but she understood why I wanted a paternity test, but did not excuse my behavior in mocking her, throwing her out, and cheating. I signed the papers, but begged her to let me see my daughter and be part of her life. She said that I was unstable and that I needed intensive therapy before that would ever happen. Of course I obliged to the therapy.
I learned a lot in therapy and did a lot of research about the fallout of cheating and whatnot. Turns out there are a lot of women who had been hurt by cheaters and homewreckers too(duh) and that my view of women was toxic to say the least. I cut it off with my MGTOW buddies because I thought that atmosphere would be a detriment to my progress. I don't want to attack that group, because I think there are some good people in that group that are just broken and looking for answers. I think having a baby girl was a real punch in the gut to stop treating women so poorly.
I was finally able to see my daughter when she was 7 months old and began supervised visits every other weekend. I had dutifully paid the child support and made every attempt to talk to her mother and try to make amends. One night after our daughter we got drunk and started kissing which turned into sex. When we woke up the next morning she was emberassed and just asked me to leave, but she made it seem like she kind of wanted to make things work. It took a long time but we moved in together after she lost her job to Covid19 and are currently living together. Her family hates me and this has held us back from marriage talk or anything. Hell, I skipped our daughter's 2nd birthday celebration because her lawyer-sister didn't want to see me. I hope this turns out well for me, and I know I already have better than I deserve. For now, the pandemic has me working from home and my girl takes care of our daughter and makes me food and such. She is still suspicious of me and comes into my office to see what I am doing regularly, but I don't mind. For now, I'm just going to try to be there for my daughter and try to make it up to her mom. I'm still trying to think of things I can do or say but for now I am still in zoom therapy and just doing my best. I don't think I can ever really tell anyone everything, which is why I decided to tell the strangers of reddit. I am sorry for those people that thought I was a hero in my initial post.
Please don't let your hatred boil inside you friends, I almost missed out on something great and I may still miss out if I am not careful. This is going to be the only update, unless I come back years from now to tell you all what happened. Best of luck to everyone.
Small edit: Someone corrected me that the spy I was thinking of was Jack Barsky not Yuri Besmenov!
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