“It failed to merge out of a lane that was ending (there was no one on my left) and made no attempt to slow down or turn until it had already hit the curb. Big fail on my part, obviously.”
These isolated populations have higher incidence of genetic diseases. From the Wikipedia page you cited:
There are instances of health problems attributed to endogamy, including glaucoma. In addition, there is a very high (42%) incidence of asthma among the population, and research by Noe Zamel of the University of Toronto has led to discoveries about the genetic nature of the disease. Three of the original settlers of the island had asthma.
Not mentioned in any of the coverage I've seen (or the interview with Vanguard's new CEO in the WSJ) is Fidelity.
Fidelity used to be known for actively managed funds, but has been eating Vanguard's indexing lunch for the past 10 years or so. Part of this relates to its dominance in workplace accounts, but Vanguard hasn't helped itself with some bad customer-facing software updates and a perception that its service levels are poor compared to Fidelity.
One other differentiation that Vanguard has is that it is owned by the fund holders
“Vanguard set out in 1975 under a radical ownership structure. Our company is owned by its funds, which in turn are owned by Vanguard’s fund shareholders. We focus on meeting the investment needs of our clients.”
So in short, vanguard is customer-owned, where fidelity is owned by mostly the founding family (the Johnson’s).
Even so, I think the incentives are still for the Vanguard management to make as little profit as possible so that they can compete and have more funds under management. Controlling more billions of dollars of stock shares is kind of its own reward and brings many opportunities for enrichment, and if they don't have to worry about making money for shareholders, they can pretty much always engineer the lowest fees.
Yes, in theory the fund-owned structure should mean they can charge lower fees than profit driven competitors. However, if competitors are doing things like zero fee funds as loss leaders, or have a banking side to diffuse costs, then it gets less clear.
Even if you don't touch a dime of it, "had $X million in funds under management" is good for your next job. In business better to be the CEO of an ailing billion dollar business and drive it into the ground than actually do a good job managing a firm 1/10th the size.
Starting end of Nov 2024, Vanguard is actually beginning to roll out proxy voting capabilities to fund holders (in the US). This looks to be the beginning of deeper proxy voting capabilities, but not much information out there yet.
Would you rather be a dairy cow on a farm owned collectively by the dairy cows, or owned by one billionaire family? Is it that hard to see how that's immediately a huge positive even if you can't identify individual instances of the billionaire abusing their position?
Having seen companies go bust and then the employees discovered their pension was invested in now worthless company stock I oppose all schemes to get people to invest in their own company without having significant control over the direction. (I didn't directly see this - it was before I was born but I meet a relative who worked there for 20 years) Pension laws now do not allow pensions to invest in company stock like that. Everyone I know who has worked for an employee owned company talks about how much $$$ they have in the company now - none have any other retirement plan and I can't help but think how bad they would be hurt if things went wrong.
If you are not Cxx level at a company or at least in a high role with a reasonable shot of getting to a Cxx position in the near future don't put your money in the company you work for. Diversity is important in investing and the company you work for is the least diverse of all investment options since you could lose both your savings and your paycheck at the same time.
Agreed. If you feel that your company is a good forward-looking investment for whatever reason (appreciation/dividends), it doesn't hurt to keep some holdings--from RSUs or otherwise. Though with transaction costs what they are somewhat per this article/discussion, the right question should probably be "If I had the money in cash, would I buy these shares." Employee stock purchase makes things a bit more complicated depending on the exact terms. Post dot-bomb I got a lot more conservative in terms of holding company stock from RSU/ESPP after a decade with a couple of private firms which doubtless cost me some money but I think I took a reasonable approach overall.
Bad analogy. There are many dimensions in which my experience as a dairy cow may be affected by ownership.
In the case of an investment fund, there's really just customer service and rate of return. If I have a good experience in those dimensions, why should I be concerned with ownership structure?
This is academic. I have equal control over both, which is to say none whatsoever. Capacity to influence a company falls to the following (in order)
1. Executives
2. Large shareholders (usually institutional and rarely individuals)
3. Customers
4. Employee unions (if present)
The tech industry is an anomaly where 1 and 2 largely overlap, but this is not true in most industries. Unless you are super rich, you will never be able to have more influence over a large company than you do in the role of a pissed off customer ready to take his money elsewhere.
TBH, I trust vanguard more, even if their website is absolutely worse. There's a saying, 'if you're not the customer, you're the product'. I expect trades on those index funds are getting 'front run' much like robinhood is getting front run. You might have a lower ER but your nav might effectively be higher when buying and lower when selling.
Of course, I'm a 'buy and hold' investor so this doesn't really effect me much, but it's the principle of the matter.
Fidelity uses those funds as marketing, and they make up for it with all the other services and funds they offer. It's intentional, and it's working.
Vanguard is more and more becoming a group that just wants to run ETFs and if you want to use them, they're making it harder and harder. They recently dumped all their 401(k) and similar plans from being in-house to some other provider.
Saves costs, makes support annoying.
Of course, you can use a Fidelity account to own Vanguard ETFs if you wanted.
> Fidelity uses those funds as marketing, and they make up for it with all the other services and funds they offer. It's intentional, and it's working.
> Vanguard is more and more becoming a group that just wants to run ETFs and if you want to use them, they're making it harder and harder. They recently dumped all their 401(k) and similar plans from being in-house to some other provider.
If this is true, then it must for individuals.. My company moved a little over a year ago TO vanguard for 401ks
>Of course, you can use a Fidelity account to own Vanguard ETFs if you wanted.
Which I would highly recommend if you ever want to change brokers. the fidelity ZERO products are great but can only be held at fidelity while VOO shares can be transfered to any broker.
I presume the main advantage of transferring shares is to avoid taxation on realised gains. Secondary is to avoid transaction fees?
I sold and bought recently (because transfer looked like paperwork hassle to me): had a small transaction cost, and the main disbenefit was losing transaction history e.g. buy date was now reset; it was tax neutral for me either way.
It's not clear to me exactly what they have moved, but two of my (very old) Simple IRA accounts got forcefully moved without my approval, and a 401k rollover into a self-managed IRA is still around. Not sure what the difference was exactly.
There’s not really much money to be made front running someone’s deposit into an index fund that’s gonna sit there for the next 40 years. It works on RH because generally those users are transacting much more frequently and in much less liquid things like options.
Front running customer purchases is not the concern. In the running of an index fund there’s many levers you can pull to create revenue streams that don’t show up on expense ratios.
Funny business can absolutely be pulled during rebalancing.
Another big one is securities lending income. Vanguard pays that out to investors which effectively creates negative expense ratios in certain funds. Index funds from other issuers don’t necessarily share that securities lending income with customers.
It's not about front-running investments _in_ passive index funds, it's about front-running investments _by_ passive index funds, which, of course, ultimately comes out of the investors' wallets.
As a practical matter, since dealing in mutual funds' shares is settled after market, "front running" these transactions would be problematic. (Impossible, I'd say?)
I trust Fidelity. I used to work there years ago. It is a conservatively run place, careful with changes, which is a good thing when managing large amount of money. The tech and web interface might not be the shiniest, but I'd rather have my money there than vanguard/schwab, etc...
If you know the index rules, it's fairly simple to calculate the turnover it is going to generate when it rebalances and subsequently the impact the rebalance is going to have on prices. This is a fairly well known behavior and a lot of players have been doing this for a long time. Basically every index of any significance is already being monitored and rebalancing effects are "front-run" this way.
I put the word in quotes, because this is a perfectly legitimate way of front running. The major indices are all public, and anyone can take a crack at this. In other words, if I announce to the world a month in advance that on a specific day and a very specific time of the day (at the closing auction) I'm going to buy X amount of specific stocks and sell Y amount in other stocks, I can't blame people for using that information against me.
Predict or react to index changes faster than the funds that are compelled to follow the index.
But you can't front run shares of mutual funds; they always trade at close of business at NAV.
You could potentially front run ETFs, but if you're worried about that, you can use limit orders and get the price you want or not transact. As long as you use a competent broker that offers limit orders.
> A form of front-running in index funds is common and isn't illegal.
> Index funds track a financial index by mirroring the index's portfolio. The composition of the index changes periodically to balance it accurately as the stocks that make it up change dramatically in price or as stocks are added or removed from the index. That forces the fund's managers to buy or sell some components of the index.
Then investopedia is wrong. Front running is a very specific thing, a) it requires private information, b) requires trading on behalf of someone and c) requires a fiduciary duty to the person
If we use that expansive definition of "front running", is it "front running" if I buy stocks trying to squeeze short sellers? What about if I thought people would buy/sell telsa stocks because of musk's role in the culture wars, and tried to get ahead of that? Is "front running" just buying low and selling high?
Well, let's not call a short squeeze by another name.
Otherwise, I wouldn't call those things front running, as there's no indication of imminent activity.
If a material increase in lending rates on a heavily shorted stock was announced, and you bought because you were pretty sure the shorts would be buying to close, that could be front running, yeah.
I dunno about market moves based on Elon's role in the culture wars, but maybe if he did something in particular.
In general, buy on the rumor, sell on the news could qualify as front running under this definition, but I think I'd want to narrow it a bit to working to trade ahead of perceived imminent and definite trades. Most of the illegal front running is trading ahead of specific trades in response to seeing those orders.
>Most of the illegal front running is trading ahead of specific trades in response to seeing those orders.
Any evidence this is actually happening, rather than something like "this ETF rebalances every quarter, they're unbalanced, and are expected to rebalance in this way", or "this company is probably going to get included in the S&P 500 because it's doing really well"? What makes this sort of "front running" less acceptable than buying because "I like the stock", or trading on technical analysis?
Trading ahead of index funds when an index change is announced is front running in my book, but it isn't illegal front running; but I don't consider it less acceptable than buying because the graph makes a funny shape.
All 3 examples you provided are for people trading on material nonpublic information. In other words, some guy working at an asset manger knew they were going to execute trades on behalf of a client, and then made his own trade ahead of that. That's textbook front running, no denying it, but that's not anywhere close to what's happening with "ETF rebalancing" or PFOF. It's perfectly legal, for instance to speculate on whether TSLA or whatever is going to make it into the S&P 500 and "front run" that. It's also not clear why such trades would be immoral or unfair.
>Wygovsky repeatedly traded in his family members’ accounts held at brokerage firms in the United States ahead of large trades that were executed on the same days in the accounts of his employer’s advisory clients.
>Polevikov had access to real-time, non-public information about the size and timing of his employers' securities orders and trades, and used that information to secretly trade on, and ahead of, his employers' trades.
> but that's not anywhere close to what's happening with "ETF rebalancing" or PFOF. It's perfectly legal, for instance to speculate on whether TSLA or whatever is going to make it into the S&P 500 and "front run" that. It's also not clear why such trades would be immoral or unfair.
I never said trading a stock ahead of it being added or removed to the S&P 500, or between the announcement of it being added or removed and index funds actually purchasing it is illegal, immoral, or unfair, or less acceptable than any other trade.
Just that it's front running. And then you asked if there were examples of illegal front running, so I provided those --- which aren't examples of trading ahead of index funds, because trading ahead of index funds isn't illegal.
I'm not really sure what you're asking at this point.
In finance, nothing is illegal if the profits outweigh the fines.
Citaldel paid handsomely for order-flow information from Robinhood. They made a lot of money off retail traders. They paid a fine IIRC equivalent to a few day's profits.
If you are curious about a brokers position on PFOF you can look up their disclosures. SEC Rule 605, 606 and 615 are the search terms you want when looking these up. Fidelity has a similar disclosure on this as Vsnguard, which is that they don’t engage in PFOF except for some options markets.
Robinhood got in trouble for false advertising about PFOF not because they engaged in it, because again, PFOF is not front running and not illegal.
PFOF isn't (typically) illegal, a better word might be "controversial". There's nothing free in this life: the zero commission brokers are making it up somehow.
While the studies on how PFOF effects execution quality are varied, this summary [1] from Wharton seems fairly balanced. It's not as simple as citing NBBO and moving on.
Personally I'm suspicious of the practice mostly because of the pretty clear conflicts of interest that it creates. Again, this is controversial, but the people arguing it's ok are for the most part making money from it.
PFOF is not front running. Market making is not front running. Full stop. This fact is only controversial if you fundamentally misunderstand what market makers do.
There's a lot of confused comments on this thread. "Front running" in the strictest sense means illegal trading that involves taking advantage of trades that you know will happen and you have a responsibility not to exploit. "Front running" is also used informally to mean legally trading prior to trades that you anticipate happening. Studying the rules of an index and buy a stock just before its added to the index and index funds are required to buy it is "front running" in the second sense.
It’s pretty easy to learn how fidelity and others make money on fee-free index funds. Perhaps something to look into before accusing them of committing a crime.
Considering someone or some activity to be criminal, and accusing them of being a criminal, are two completely different things.
I consider most financial institutions to be criminal because it is always their clear intention to circumvent the spirit of the law as closely as possible. The intention is to reap the benefits of breaking the law, without the risk of consequence. When the pitchforks come, these are going to be the criminals being chased down the street.
By the same token, I do not consider a parent who writes a bad check for groceries to be a criminal.
The client generally saves money in the PFOF situation. They benefit, their broker benefits, and the market maker they deal with benefits. The only loser is the abstract rest of the market being able to get fewer penny shavings.
What in particular do you see as against the spirit of the law?
To use an absurd example just to make it incredibly obvious why what you said doesn't make sense, would that hold up if the fine if caught was $10 trillion dollars?
Then shareholders would demand executives have skin in the game and suffer if a company got the death penalty like you describe. Would likely lead to a much better world. Golden parachutes would not be a thing if shareholders got liquidated like that.
I don't think vanguard's core customer base cares about what hungry competitors are doing to entice them to move. Just look at Robinhood: they offered the biggest financial incentive for users to switch of any broker in the industry and I doubt many vanguard customers took them up on that. Stability, trust, and low fees are all buy and hold investors at Vanguard really care about.
I have accounts at both, and my perception is that Vanguard is pretty much exclusively low cost, but Fidelity does have some very competitive options if you can find them. They just also have a lot of overpriced junk.
Fidelity’s technology and customer service does generally seem better. Although they were completely baffled when their app refused to run on a rooted phone with an error message along the lines of “your account is frozen” after I logged in. (It wasn’t, and worked fine after I realized that was the issue and put it on the deny list.)
Overall, I trust Vanguard more, but both have their strong points.
The overpriced junk is wedged into bespoke employer 401k programs that are managed by the brokers. There is usually only one or two low fee options hiding in the list and you have to be savvy to find them. Most employer 401k programs suck because they (custodian) are agreeing to the fund composition based on price to them. If you are lucky you might not end up in John Hancock or Transamerica. Yuck!
Matt Levine has a bit about the best customer service your broker can provide is not picking up the phone in a crisis.
Bad UX is, intentionally or not, consistent with Vanguard's long-term index investing philosophy. Call us? Use our website? Whatever it is you are trying to do, you probably shouldn't be doing that.
It's interesting everyone's saying the UX is bad. I've had consistently good interactions with Vanguard's support over the years. I regularly get to talk to an actual human without waiting more than 10-20 minutes, and they're very helpful about getting things done and giving even basic advice about tradeoffs in different investing options.
The website isn't amazing, but I don't feel like it's terrible either. There's much worse 401k/IRA providers out there.
It’s hard to beat Fidelitys offer right now. They give you a 2-3% checking account. A 2% cash back credit card, access to their low cost funds and a decent enough website. All in one place.
Other brokerages are better at their niche but the fidelity package is quite competitive
Fidelity has great features, but is hamstrung by their awful execution.
The app is clunky, slow, and looks like something from the 90s. Just logging in takes an average of 10-15 seconds. The credit card is serviced by Elan, who is awful, but aside from that, the UX is abysmal. It feels like it redirects no less than 8 times to get to the credit card page. My phone won't even load it, so I have to do it on my computer.
It's so frustrating to me because I feel like they're 90% of the way there and just need a bit of UX work. But I've had that feeling for years now, with no real progress made, so am slowly moving away. If you don't touch your money often, it's probably fine - great even, but it became too frustrating for me in the end as an everyday use account.
FWIW, I've been using the card since late 2019 and had zero issues with it. There aren't a lot of 2% cards that just straight give you 2% cash back w/o any hoops[1]. The Fidelity card is no muss no fuss for me. 2% just magically appears in my designated Fidelity account at the end of the month.
I have not had to interact with Elan customer service, so I can't speak to that. I also don't care about the Fidelity mobile app (I use fidelty.com from my laptop). I haven't had any issues using fidelty.com to manage the card.
I've had to replace the card once or twice for various reasons and never had any issues. It's a good enough offer that I'm not likely to jump through hoops or create some big other account to improve on. I'm not down to a single account but I've simplified things and diversified.
I used this card for a few months before usbank launched their smartly card, at which point I moved 100k from fidelity to a usbank IRA and now enjoy 4% cash back.
One benefit to Mutual Funds is that you can do things like reinvest dividends, or investment plans. It's not a fundamental advantage that a mutual fund has, but no brokers that I am aware of would let you do those things with an ETF. So if you have long term "forget it" account, with ETFs it will accumulate cash from dividends. And the tax benefit of ETFs doesn't really help in a tax advantaged account (e.g. retirement). Finally, theoretically at least, when you buy an ETF there is an explicit "transaction cost". Even when they don't charge you a commission, there's a bid ask spread. Mutual funds trade at NAV both ways (unless of course there's an external transaction cost separately disclosed).
It used to be you could buy fractions of a mutual fund, but not ETFs. Recently, brokerages have started allowed you to do fractional ETFs as well though.
There are some minor advantages to funds left, especially in taxable. Some of the funds do their best to allocate certain costs to the ETFs so that ends up more favorable tax-wise.
The real main advantage of funds vs ETFs is they don't bounce around in price every millisecond.
We tried using vanguard. The UX/UI was so bad we went through the work of transferring everything to fidelity. They've got a pretty decent app.
Vanguard has so much friction on what should be very simple and common tasks.
There's no excuse for that. I can say pretty confidently that cutting fees won't be enough. They need a total rewrite of all their customer facing software and web stuff, and they probably need to revamp their customers service as well. They screwed up my wife's name and she tried for months and months to fix it before giving up.
Vanguard recently made two horrible mistakes: 1. a typical "Grand UI Redesign" that made the site worse and removed a bunch of previously working features, and 2. They made all their users "migrate" their accounts from one type to another, a process that I found to be error prone and clunky.
For 1, all of us software people have seen companies do this over and over, and it always sucks. For 2, why they couldn't do whatever backend migration they needed to do without having it disrupting retail customers, I have no idea.
Both of those point to a software organization way below where it needs to be competence-wise.
Vanguard's grand UI redesign was poorly done. At the time each team was responsible for some software product, and had a good ownership model. The issue imo was that the internal UI component library was poorly made and funded, and that the UX team was very old (most of the people were lifers that were hired in the 90s, no real experience in UI/UX,etc.) So people were just making the designs they were given. The Grand UI Redesign was a single new team that just made a heavy Angular UI application for the major areas, forcing product teams to be backend only. This caused discontinuity and didn't really fix the core issue.
I've had the same Vanguard accounts for 15 years (Rollover IRAs, Roth IRAs, non-retirement) and I don't remember having to migrate anything. If something was migrated, I wasn't even aware it happened.
That's because Vanguard is a buy and hold philosophy. They have previously stated that they designed their site for the bulk of the users. Those users log in just to check their balances in the 5 or fewer funds/ETFs that they hold. So instead of building something that would be reasonably easy for everyone, they built something that was easy for their primary (aging) user base. It's the same sort of mentality how they don't allow inverse ETFs, they aren't going to offer any crypto related stuff, etc.
At some point you need to realize your gains—perhaps to rebalance a portfolio, or to pay for an expense, or because you’re retiring and now it’s time to enjoy the profits of your buying and holding. And a lot of people elect specific-lot cost basis accounting to minimize tax burden.
I did some rebalancing recently, and couldn't find it. You can sort by capital gain per lot, which isn't very helpful if your lots are vastly different sizes. Thankfully I don't have that many lots, and had plenty of capital loss carryover to offset the gains, so it doesn't matter that much, but it's annoying, and it's probably the straw that's going to get me to actually move to a better brokerage. (which I guess is fine for Vanguard, if I'm at a different brokerage, it reduces Vanguard's costs)
> They need a total rewrite of all their customer facing software and web stuff,
They've done that. And now you can't sort by capital gain/loss per share when picking lots to sell.
They're also almost done forcing everyone into the brokerage side, which is less flexible with some things like reinvestment of dividends. On the nice side, it includes foreign dividend info on the 1099s so you don't have to find a separate document to get those percentages.
It is to me too! I would never do that normally. It's just that it was THAT bad.
It took me MONTHS to figure out how to sell a particular fund to buy another one. Somehow every time I tried to do it, it failed. I kept coming back to it over and over and different things went wrong. It was also very difficult to figure out the status of an order.
It was literally that clunky, and I've been trading for decades. I run multiple businesses, I know how these things work, but their UI was awful.
Twice I've been unsure how to move move money with their site and twice I've contacted their customer service center who was more than happy to guide me through the process.
This particular one was only a few thousand dollars worth, and so the issue just never reached a high enough priority for me to invest the time to call ciatomer service.
I just kept checking it once in a while when i had a few seconds to spare.
Vanguard's website revamp in the past three years was disappointing because in the past, I can visit just one (landing) page and get almost all of the info I need about my holdings + actions I could take on them and my accounts. Now, I have to click through a myriad of pages to do what I want. Plus, in Firefox browser at least, if you want to 'Exit' the order and some other pages, it simply doesn't work, so I have to type the 'vanguard.com' in the browser's URL field and ping it again.
This is an example of not breaking what was not broken (or at least, keep most of what was useful instead of replacing everything with "new and cool" stuff just because <no reason?>).
> Vanguard's website revamp in the past three years was disappointing because in the past, I can visit just one (landing) page and get almost all of the info I need about my holdings + actions I could take on them and my accounts.
It's so bad. I don't even like logging in anymore. Padding/whitespace everywhere, no more alternating row colors. I despise mobile-first UIs. The old one many have looked dated but it was more information dense without being overwhelming.
The downside, as I understand it, is that Fidelity Zero doesn’t offer ETFs, and that the Fidelity Zero mutual funds can’t be transferred to other brokerages. Depending on your preferences their expense ratios might justify the vendor lock-in, but Vanguard ETFs are hard to beat IMO.
I tend to only use the zero funds in tax advantaged accounts. Primary example, I needed to move an HSA to avoid a $20/month fee from the idiots at Health Equity when I switched jobs. Moved it immediately to Fidelity since they offer an HSA account and used the zero funds.
If I were to ever need to move the HSA money elsewhere, they can sell the funds to transfer, since it's not a taxable event, that's fine by me.
I won't buy the zero funds for my brokerage account though, I stick with Vanguard ETFs.
I wonder what the tax efficiency looks like when comparing a zero fee fund to its low fee ETF counterpart. Is it possible an ETF under 5 or even 10 basis points is still a better deal if it's tax efficient (taxable accounts only)?
Fidelity's "Zero" funds are great, but only for specific scenarios IMO. They can't be held outside Fidelity accounts, so what happens if you get caught up in some KYC nonsense and Fidelity closes your account? Are you forced to liquidate and incur capital gains? There are also some embedded tax efficiencies inherent to ETFs, like 351 exchanges, which aren't popular now, but may become popular in the future. TBH, this mainly applies to taxable accounts. For nontaxable accounts, Zero funds don't have much downside.
> They can't be held outside Fidelity accounts, so what happens if you get caught up in some KYC nonsense and Fidelity closes your account?
This literally happened to me. I'm banned from Fidelity for some unknown (AML presumably) reason but have no other issues with any brokerage, bank, or exchange.
Fortunately I just held a bunch of ETFs, so it was straightforward. But it does happen.
The zero fund I am familiar with (FZILX) has a once-a-year dividend schedule which I'm sure nets them a lot of money, vs paying out more frequently. If you want to unload, you can only do it once a year without throwing away your earned dividend.
You have to hold the fund on the ex-dividend date...
Pays out once in Dec. If you buy in Feb and sell in Oct, you're not getting your dividend although you earned most of it... If you had VTI, you'd get 3 of them.
I'd also thought your idea sounded like it made sense, sort of like how a trader can attempt dividend stripping, but looks like the user baking cleared that up.
They raise a good point, which I've never considered before. This could be considered a form of dividend arbitrage based on the difference in scheduling between the component dividends vs the fund dividends, based on the knowledge that a non-zero amount of fund holders will exit the fund before the once a year dividend date, but not before the fund earned dividends based on the fund components.
Many funds do make revenue with share lending. I don't know that there's enough lending to get expenses below zero, at least as of yet, though.
Also, sometimes the lending revenue is just added to the fund, rather than being used to offset expenses. The end result is the same, but the accounting numbers look different.
As a result, when comparing two index funds that track the same index, you should look at actual total returns rather than quoted expense ratios.
I started using E-trade because of this instead of transferring my vested stock to Vanguard. Already had an account so it was zero effort to convert to my usual funds as ETFs which has the bonus of being transferable between brokerages unlike mutual funds.
Do you mean that you sold mutual funds at Vanguard, and used the cash to buy ETFs at eTrade? This means you had to pay tax on capital gains, right? Or is there some trick I don't know about, vis-a-vis converting mutual funds into equivalent ETFs, without a taxable event?
Many Vanguard mutual funds offer ETF as a share class of the fund. For those funds, shares in the traditional share classes can be exchanged for ETF shares, if you hold them at Vanguard.
But not all of the funds have an ETF share class. And if you hold Vanguard mutual funds elsewhere, you'd need to transfer them in-kind to Vanguard to convert.
Yeah, as a litmus test of how much they care about their customers try to call in and get something done.
Vanguard will throw you into an automated labyrinth with the only exit being a poorly-trained rep in india or pakistan that has no real understanding of what you're trying to do.
Their website is complete trash compared to the other big two. Often down, you can only check your balance, etc.
Fidelity will within a matter of a couple of minutes connect you with someone that seems too good to be true. Knowledgeable, friendly, going out of their way to help you, they follow up on what they say (like calling you back, etc).
Once I got a taste of how Fidelity treats people and their broader set of products I moved everything over.
I'm wondering if I'm on some very different account/plan than everyone else. Any time I've ever called Vanguard, I've gotten a super well trained rep without much of a wait or a call tree. I also had good interactions with Fidelity when I used them.
Were you on a plan run through an employer? Or individual?
Also, that page seems to be talking about like... financial advisor services. Most of the time I was just calling in to ask for help rolling over a 401k or something. I don't think I've ever called for actual investment advice of the sort that they seem to gate behind certain account sizes.
I'm wondering if it's something where company-sponsored plans sometimes have bad CS support because their support contracts are paid/arranged separately from if you just have a personal account. Or if some company plans have better support because they pay for it?
It's really annoying that people here are talking about "Zero" fee funds as if they were zero-fee funds. As far as I can tell "Zero" means less than 0.05% fees.
No, zero means a 0% expense ratio and no minimums, as listed for the four funds at the top of https://www.fidelity.com/mutual-funds/investing-ideas/index-.... Unlike most other funds, these are captive to Fidelity so if you ever do an ACATS transfer they have to be liquidated.
It's an interesting reversal and highlights the power of competition - as a young part-time employee in college, my employer automatically contributed a few hundred dollars for me to a 403(b) type of retirement savings account. Fidelity was the custodian and after I left the job, it imposed a substantial monthly fee that eventually ate all of the money in the account, leaving me with zero. I always remember that episode when dealing with Fidelity.
Having dealt with Baker & Taylor in the past, this doesn't surprise me in the least. It was one of the most technologically backwards companies I've ever dealt with. Purchase orders and reconciliations were still managed with paper, PDFs, and emails as of early 2020 (when I closed my account). I think at one point they even had me faxing documents in.
A bit tangential but one of my favorite early amzn stories is when a small group from Ingram (at the time, the other major US book distributor) came to visit us in person (they were not very far away ... by design).
It was clear that they were utterly gobsmacked that a team of 3 or 4 people could have done what we have done in the time that we had done it. They had apparently contemplated getting into online retail directly, but saw two big problems: (a) legal and moral pushback from publishers who relied on Ingram just being a distributor (b) the technological challenge. I think at the time their IT staff numbered about 20 or so. They just couldn't believe what they were seeing.
Good times (there weren't very many of those for me in the first 14 months) :)
New Englander here. I've owned two Priuses (2004 and 2010) and both have been surprisingly able to handle winter weather quite well. Not as good as my Outback, but in light to medium conditions and driven by an experienced winter driver they performed admirably.
The older one made it through a major blizzard in rural road and interstate driving across 4 states, albeit at a reduced rate of speed (45 mph, which drove up the MPG to 52, a record for that car).
We still drive the 2010 model. I'm hoping that Subaru will get its act together on hybrid by the time we have to retire the Prius, but I would definitely get another Toyoya hybrid.
It's amazing how some of the smaller, passing shots from his films stick with you. I haven't seen Elephant Man for decades but the scene at the beginning when he's at a freak show and his handler is forcing him to turn around for the audience still haunts me. Same for many of the scenes in Wild At Heart.
It's a hard business to make money in.
Shorting tends to be intrinsically harder because the market goes up over time and Americans are generally optimists. Plus the last 2 years we've seen 20+% market moves upwards.
Despite it being a necessity for functioning markets, when you are short, seemingly everyone is against you - business management, regulators, media, etc.
Not surprised to see them bow out. Chanos did so last year.
This is one of the reasons frauds go on so much longer than you'd expect - no one wants to hear the truth.
People have this idea that short sellers are market manipulators who conspire to wipe out innocent day traders' life savings and trigger mass layoffs with the stroke of a pen (hence the term "financial terrorism," which is absolutely comical in its hyperbole but used with complete sincerity by the anti-short crowd), but like tines said, it's a risky business that requires lots of research that frequently goes nowhere with limited upside and uncapped potential losses. The amount of times they and other short sellers publish damning evidence on a company only for the stock to shoot back as soon as the company releases a "nothing to see here" non-response really shows the difficulty in making money in the space (and how much people want to bury their heads in the sand).
Given the regulatory environment we are heading into, I expect short selling will become an even riskier business since the SEC isn't going to be prosecuting fraud anymore (or rather, they'll be doing even less than they are now), making it much easier to sic the lawyers on firms like Hindenburg. Even though this isn't their stated reason for bowing out, I wouldn't be surprised or hold it against them if it was a factor.
I think the prospect of an impending SEC or other investigation is only one factor in stocks losing value.
They highlight inflated sales and financial irregularities like a chain of companies that engage in self-dealing, but are portrayed as independent to hide their real ownership, and so on.
If you believe what they say, your faith in the company is shaken because they're pulling a con job on you to invest in them and believe their story. If the SEC investigates that just supports the claim that it's a con.
If they don't investigate - for whatever reason - it doesn't mean that it's not a con and you won't lose all of your money believing it.
So a change in the regulatory environment is only one element.
For example, the Modhi/Adani thing is outside the reach of the SEC. And after watching a piece on it, apparently shorting it was amazingly tricky, and they had to go through some Singaporean markets to arrange a short position.
Matt Levine always has the good stuff, but he had commentary on a profile of Jim Chanos (the lesson not necessarily being specific to Chanos) that always sticks with me.
The profile that discussed the idea that the real sort of 'secret sauce' was that the combination of Chanos' main funds were like 190% long, and then 90% the short stuff he wan known for.
On its surface, nothing crazy for long/short funds, the notable part was that basically all the effort was on the short side, and the long side was implied to be very humdrum. And the short book had like negative returns over a long period.
It just struck me as a really elegant (if extreme) example of what uncorrelated returns can do if you do somehow have some edge over time.
And I'm not sure what Hindenburg's holistic picture is, but whether rightly or wrongly now I usually assume most of the kind of very public shorts operate similarly.
I was never really on board with the "short sellers are evil" train of thought, but I did believe, "oh these very public short sellers only short things, they just go around all the time thinking everything is awful".
And my assumption now is that they are like, kind of really theatric long/short funds.
Matt had some line like if you extremely good at something, you can get rich doing it, even if it loses money. As long as it's not correlated.
I’d wager a big part of how they make money is as SEC whistleblowers. It’s not as huge of money as shorting is - but it’s typically a single digit percentage of the recovered fines. Considering these guys nailed a company that defrauded people of $3 BILLION dollars, they’d net $30 mil from turning that company in even if the payout is only 1%.
The SEC has a policy of paying out part of recovered fines as bounties to whistleblowers to align incentives. If your company is doing something sketchy, you get a payout by doing the right thing.
I’m not a lawyer but I think that mechanism works just as well if you’re an external reporter of fraud. SEC makes money and pays you for your diligent forensic auditing.
where did you get 1% from, its a really good bounty system to clean up the markets and you get to be anonymous if you use a lawyer, the trick is to get the SEC to prioritize it. They are now inundated after some large payouts made the news in financial circles
Do you have any evidence/links that discuss this? I'd be surprised that they'd get any whistleblower fees, because they themselves aren't actually the whistleblower. E.g. a whistleblower usually refers to actual insiders with private knowledge that then "blow the whistle". In Hindenburg's case, they basically just did research anyone is capable of doing (although in many cases, after they became known, they did have whistleblowers reach out to them).
> Shorting tends to be intrinsically harder because the market goes up over time and Americans are generally optimists
Also, with shorting the best you can do is double your money (if the stock goes to 0), while you can lose an unlimited amount (as there’s no cap on a rising stock); whereas with going long, you can only lose all your money (again, if it goes to 0), but you can gain an unlimited amount.
This is incorrect. The way shorting works is you borrow a stock (and keep paying premium for the duration) and sell it
Premiums are usually small, so you can make many multiples of paid premium
And since their business model is releasing the findings, which in turn makes the stock drop, they can time their short position very well and don't need to pay premiums for long
I think you misunderstood what I meant by "your money" in "double your money" (and I was unclear). You can only earn the value of the stocks you borrow. When trading long, the gain is unlimited.
According to Investopedia, "the Federal Reserve Board requires all short sale accounts to have 150% of the value of the short sale at the time the sale is initiated" so it's the same principle as going long with margin. You can leverage yourself but there's a limit.
Yes, but borrowing short is fundamentally leveraged. As long as the stock doesn't increase in value, you don't need much of your own cash to secure it - because you're holding the cash from selling it.
But, of course, that gets ugly when the stock goes up; that's when you have to start putting your own money in against the borrow.
Isn't this a bit like arguing that you can make infinite money by borrowing infinite money and going long? You have to maintain margin requirements which limits how many shares you can borrow so again, you can really only double your money (not even double, iiuc your account has to have 150% of the value of your short), unless there's something I'm not seeing.
> your account has to have 150% of the value of your short
yep, people who aren't professional traders, and don't actually have an account with a broker to do shorting with, and dont know the margin requirements.
The thing is, a broker will _never_ put themselves at risk of losing money. If they offer you a shorting service, they require a method to make themselves whole. If you short, they will guess some sort of margin of safety for said short (calculated based on the liquidity of the stock) - if it's very liquid, the margin could be lower, but for illiquid stocks, it's even higher. This margin of safety is what the broker will use to close your short position if the market moves against you - you don't get a choice in the matter. You don't even have access to those funds from the sale of the short - the broker holds onto it until the short is closed.
uhh, no. When trading long your gain is limited by the depth of the order book. Stock price isn't relevant if there are 3 buyers out there looking to buy 2 shares each and you're sitting on 100,000 shares
The song remains the same - the stock can only go to zero. The upside of a put is effectively capped at (strike price minus stock price) * 100. Going long via shares or calls is unlimited.
Right, but the price of the put is much less than the price of the stock, and the price of the put is the denominator.
Right now, Walmart is at $91.34, and you can buy a put at $88 expiring on 24th January for $0.18 [1]. If you buy one, and the stock goes to zero by then, you spent $0.18 and gained $88, a 488x return. January 2026 at $86.67 is $5.35 - a mere 16x return.
You'd spend $0.18 per share, yes, but the option's price is $18, not $0.18. So your return would be roughly 4.1x, not 488x. Remember options contracts are counted in hundreds, so $0.18 is the price per share, not per contract.
If you're going to work it out per options contract, then you spend $18, and get to sell 100 shares at $88. 100 * $88 / $18 is still 488x.
(This number is large because Walmart is not going to go bust in the next few days! It serves to illustrate the arithmetic, but maybe it's not the most realistic example.)
> Shorting tends to be intrinsically harder because the market goes up over time and Americans are generally optimists.
... and the market can stay irrational longer than you can stay solvent.
I remember once I tried shorting a stock, of a market leader in my area. I knew the field well enough to see that they were trying to fudge some numbers and their quarter was _not_ as good as they had claimed it to be.
But sadly the market didn't see this and the stock went up. E*Trade started pushing me to cover my positions, and eventually I ended up losing a 5-figure sum (nothing earth-shattering, but still a good chunk of my cash).
After I had bought it all back, slowly the market realized what I had seen and the stock dropped as I had expected. Unfortunately I did not have the deep pockets to stick around long enough; all I was left with was a hole in the wallet and a hard lesson learned.
They are planning to release their methodology. Buried in the article:
> Beyond my own desire for relief, it also feels selfish to keep the knowledge we’ve accumulated trapped within our small team. I have more than enough. In the past several years we’ve been flooded with thousands of messages from many of you asking how we do what we do, or whether you can join the team. I read them all and I’ve been trying to figure out how to respond in a way that can answer everyone—so over the next 6 months or so I plan to work on a series of materials and videos to open-source every aspect of our model and how we conduct our investigations.
What they do isn't anything new or revolutionary. Short sellers have existed ever since public markets have existed. See Muddy Waters Research, Citron Research, Kynikos Associates, Pershing Square (famous for their crusade against Herbalife), Gotham Research, all of the Big Short folks. And these are just the active ones.
You need to have a very thick skin, because the shorted will come at full force against you.
I have read somewhere (long ago forgot where) that the only country this can work is America; in other countries, he would need to be scared for his actual life. Adani, for example, is in bed with India government.
Blogger for more than 20 years. I love writing and I can't stop. Last year I published 60 or 70 original posts on my two business-focused blogs, and maybe 10 on my personal blogs.
In terms of finding an audience, it starts with being a good writer and having very original outlooks or information to share. Sometimes, that entails stating something provocative or that goes against the hot takes spouted by everyone else.
I've found that using multiple platforms to market your blog posts - and also expanding into other types of creative content, such as videos or newsletters - is the best way to build awareness.
Repurposing content is important. Some great blog posts started out as my own HN comments that seemed to resonate or I thought deserved a wider audience. I'm currently working on a project to turn about 35 blog posts (which originally were published on my niche business newsletter) into a book.
Awareness also requires regular cross-promotion - video descriptions have a direct link to the blog, and social media accounts might mention a single post a half-dozen times over the course of a year.
I spend a lot of time and effort on it, but I like to do it and there are real benefits for my business.
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