Show HN: Making passive investing safer and better for everyone
With all due respect, you are barking up the wrong tree.<p>Fundamentally, anything exposed to the stock market is no longer a real investment. Here is why, there are mechanics using options contracts to facilitate the market-maker manipulating the security price either up or down just to prevent a loss. It has to do with how double legged contracts are handled at the market-maker level. Its different than at the individual level (market makers can make synthetic shares).<p>This allows attacks on companies regardless of their actual fundamentals, where the market-maker takes up the risk as part of its normal operations, and then when a well timed media package is dropped, the market maker ends up holding the bag which usually involves them no longer delta-hedging and having to buy at the market price and it swinging up, or writing and rolling out contracts further out in time (and getting preferential treatment by OCC during clearing of companies placed in receivership). A combination of this mechanic, well timed news package, and shorting allows more shares to be sold than are actually in existence.<p>The market mechanics say there is only one direction you can go when there are more sellers than buyers. These mechanics ensure there can always be more sellers than buyers simply by purchasing a large number of options contracts. The buying of the contracts is one step removed, but it forces the market maker all the same when its a sufficiently large number of orders.<p>There are also loopholes in financial reporting that materially misreport the actual financial state of companies, which you never find out until you are out the money. For example bond ETFs don&#x27;t have to report changes in value related to the underlying asset if they intend to hold it to maturity. Its up to them to decide whether you need this information for you.<p>No amount of due dilligence will prepare you against these counterparty-risk outcomes that inevitably lose your life savings. It hasn&#x27;t happened to me, but it has happened to family members who now no longer have retirements to fall back on.<p>Index funds for passive investing are also at the mercy of the index&#x27;s rules. For example, look at what happened with Gamestop, Tesla, and a few others whose price managed to hold steady long enough for the weighted indexes to rebalance (S&amp;P 500, Russel, etc).<p>Gamestop fundamentally does not have solid fundamentals to warrant their stock price, and who is subsidizing that? The index fund holders whose rules say they need to rebalance to a weighted amount every term based on price.<p>Anything with stock market exposure presents un-mitigatable counterparty risk. If a bank can go under (FRC) without any policing action taken, anything is fair game.<p>The private market (stock market) now is just a slot machine, and the Casino house always wins. Why should you trust your life savings to crooks?<p>If the market structure were going to change for the better, it would have happened by now, and instead we are seeing repeats of designed and structured events that result in loss to the general public in a plausible way. The stock market is risky after all, but how many financial advisors do you know actually warn their clients specifically about these shortcoming?<p>None that I know, that makes the vast majority of people in this space crooks. Its their job to know and educate their clients about specific risks, and they don&#x27;t because if they did they&#x27;d be out of a job. Moral hazard.<p>I&#x27;m not a financial advisor, but I am a savvy investor who has done reasonably well considering, I have seen nothing that addresses these issues.<p>Make no mistake, participating in the market in the first place is ethically tainting even if you don&#x27;t know about this stuff. Ignorance is not a defense.<p>All in all, the market is nothing more than a clever way to steal money, and that&#x27;s about it. No real price discovery happens.<p>Incidentally, you can also artificially control pricing using the same mechanics.<p>If you think that isn&#x27;t the case, you may want to examine counter-party risk for a non-independently audited COMEX, who disclaims responsibility for reported (eligible) contracts that get exchanged between the major players in a net-0 delta hedge, which spot prices may be based off.<p>Standard Disclaimer: This isn&#x27;t financial advice, this has been my experience.