New "Ponzi Scheme" Oil cotango?

[DaxDestroyer]

FT Alphaville had an interesting article today. Oil ETF creates a quasi "Ponzi Scheme"

Just incredible, but true.

Just found it here


Oil Cotango … explained | Riding the DAX

 

[everyonerich]

capitalism is exactly like ponzi/pyramid structure, what you gonna do about it?

 

[arabianights]

capitalism is exactly like ponzi/pyramid structure, what you gonna do about it?

what are you gibbering about?

I have no problems with ********, god knows I mostly post ******** myself, but you just come up with unmitigated crap clearly not having the first idea what you're talking about and it's bloody annoying

 

[everyonerich]

what are you gibbering about?

I have no problems with ********, god knows I mostly post ******** myself, but you just come up with unmitigated crap clearly not having the first idea what you're talking about and it's bloody annoying

put this in vertical line, therefore its like pyramid structure.

central bank ---> institutional bank ---> retail bank ----> hedge fund -------> institutional trader ----> small/retail trader

 

[Martinghoul]

Super interesting, thx a lot, Dax...

 

[elitejets]

put this in vertical line, therefore its like pyramid structure.

central bank ---> institutional bank ---> retail bank ----> hedge fund -------> institutional trader ----> small/retail trader

I am having trouble following your argument.
This article is about retail investors getting suckered in a crude ETF and how that ETF (USO) is manipulating the price of WTI.
Actually traders are winning here and the investing public are being screwed.
Thanks for the article

Nicola
Happy to be a crude trader :clover:

 

[DaxDestroyer]

put this in vertical line, therefore its like pyramid structure.

central bank ---> institutional bank ---> retail bank ----> hedge fund -------> institutional trader ----> small/retail trader

I'm not sure, whether you got the order right, but looking at the arrows :clap:

I understand, that "we" are at least at the top of the structure

 

[Lloydyd]

Um... I dont know much about this Ponzi scheme, but agree that capitalism is like a ponzi scheme, in that people buy/sell stocks/commodities on the basis of what they think it will be worth in a period of time. When people stop buying the scheme (stockmarket) collapses, and similar to the oil bubble 6 months ago it only worked because it kept drawing more and more people in, as soon as confidence fell out the market and people didnt want to buy, those with positions on oil lost big style. A ponzi is similar, as long as people think there is money to be made and keep investing then the scheme works fine, its only when nobody else wants to buy invest (buy) that it falls appart.

 

[DaxDestroyer]

Um... I dont know much about this Ponzi scheme, but agree that capitalism is like a ponzi scheme, in that people buy/sell stocks/commodities on the basis of what they think it will be worth in a period of time. When people stop buying the scheme (stockmarket) collapses, and similar to the oil bubble 6 months ago it only worked because it kept drawing more and more people in, as soon as confidence fell out the market and people didnt want to buy, those with positions on oil lost big style. A ponzi is similar, as long as people think there is money to be made and keep investing then the scheme works fine, its only when nobody else wants to buy invest (buy) that it falls appart.

Don't get me wrong, but if you REALLY think that way, what are you doing on a TRADING dedicated website?

 

[DaxDestroyer]

Fraud, wherever one looks

Futures traders charged in alleged $1.3 bln scam

http://www.marketwatch.com/news/story/CFTC-charges-futures-traders-alleged/story.aspx?guid={9A86FE3C-56D8-4D39-BA84-A2EEE41395F0}

 

[DaxDestroyer]

I can sort of see the point people are making in very very broad terms (if I squint a bit), but what you may find interesting is to take a look at the origin of the futures markets (early contracts for things like rice futures and tulip futures) as a hedging product and see if that changes your view (especially given the presence nowadays of derivatives as an all pervading dominant influence on the underlying cash markets that you are (basically) talking about in your simile.

GJ

Does that mean that you are a good trader? You can think yourself into the position of "everybody" and make sense of it, Gamma?

 

[DaxDestroyer]

WTF? I have certainly never claimed to be a 'good trader' mate.

This was a POSITIVE Comment You should know by now, that I don't try to be "funny" by teasing or flaming.

It was meant as I wrote. It is a positive trait of a good trader. I liked to see that