Monday, May 13, 2024

Would manipulating stocks by spreading conspiracy theories about stock manipulation be considered meta-fraud?

Even by meme stock standards, Trump Media is an insane story.

For starters, as James Surowiecki points out "His company has $4 million in revenue, and it lost $58 million last yr, and it was valued at $9 billion, making it arguably the most overvalued company in history."

Then there was the disintegration of the company's auditor, the kind of revelation that would normally make people reexamine a high-flying stock, but as the inimitable Matt Levine points out, with Trump Media this sort of thing doesn't matter. 

(From his newsletter)

 

The funniest job in public accounting is now open:

The Securities and Exchange Commission accused the auditor of Donald Trump’s social-media company of massive fraud affecting hundreds of companies and more than 1,500 regulatory filings.

BF Borgers CPA PC and its founder, Benjamin Borgers, will be permanently suspended from practicing and appearing as accountants before the SEC, and will pay a total of $14 million in fines to settle the probe, the SEC said in a Friday release.

“Ben Borgers and his audit firm, BF Borgers, were responsible for one of the largest wholesale failures by gatekeepers in our financial markets,” Gurbir Grewal, the SEC’s enforcement chief, said in a statement. “Borgers and his firm completely abandoned that role, but thanks to the painstaking work of the SEC staff, Borgers and his sham audit mill have been permanently shut down.” …

Trump Media & Technology Group Corp. became a public company in March. Trump Media “looks forward to working with new auditing partners in accordance with today’s SEC order,” a representative for the company said.

I’m kidding, the job isn’t actually open; last week Trump Media “engaged Semple, Marchal & Cooper, LLP (‘SMC’) as BF Borgers’ replacement.” Here is the SEC’s press release; here is the order shutting down Borgers; here is the SEC staff statement on what to do if you are a pubic company that used Borgers and now needs to find a different auditor. [2]

I have said before that, since Trump Media’s financial statements don’t matter — to its shareholders, to its managers, to its stock price, to its value proposition for its promoters — it doesn’t especially matter that Trump Media used a “sham audit mill.” Still it’s not, you know, good. When it turns out that a company has a fake auditor, that raises some questions. I guess not that many questions. When Trump Media went public, I would not have guessed that it employed a fake auditor, because I was not aware that that was a thing. But if someone’s going to employ a fake auditor, why not Trump Media.

But the fun doesn't stop there. One of the safety valves that keep the upward pressure from getting too high on these stocks is shorting. Grifters trying to inflate stock bubbles hate short sellers. The classic case being Elon Musk who has demonized them to the point of antichrist status, but Trump Media seems to have hit upon a new innovation in that direction.

Trump Media is making a point of telling its shareholders how to prevent their stock from being loaned to short sellers — who bet the price of the shares will drop.

The short-selling-prevention tips posted Wednesday on Trump Media’s website come as its DJT stock has fallen sharply in price since it began being public trading on March 26 — and as short sellers have taken a keen interest in the owner of the Truth Social app despite relatively high fees to finance such trades.

“It certainly shows concern” about short selling of Trump Media stock, said Kevin Murphy, a business professor at the University of Southern California who is an expert on executive compensation.

“I haven’t seen it before,” Murphy said when asked how common it is for companies to give shareholders instructions on how to thwart short sellers.

“Managers who ... think the stock is undervalued aren’t going to be overly concerned about short sellers,” he said.

 

It's possible that the anti-shorting measures have had an impact. The stock has gained back most of the ground it lost in the first half of April.

 

Then again, that might have more to do with this.


From CNBC:

Shares of Trump Media shot up more than 9% on Wednesday, hours after the company revealed it was urging House Republican committee leaders to investigate possible “unlawful manipulation” of its stock.

The stock boost also came one day after a deadline passed for former President Donald Trump, the company’s majority owner, to become eligible for an additional 36 million “earnout” shares. That stake was worth more than $1.3 billion as of the share price at 3:25 p.m. ET.

It was unclear what spurred the sudden rise of Trump Media, which began the trading day down nearly 5% before turning positive later Wednesday morning.

The company’s CEO, Devin Nunes, in a letter Tuesday asked the GOP chairs to probe “anomalous trading” of the stock in order to gauge the extent of the alleged manipulation and “whether any laws including RICO statutes and tax evasion laws were violated.”

The request doubles down on Nunes’ claim that Trump Media, which trades under the ticker DJT, is the apparent victim of “naked” short selling, the practice of selling a company’s shares without first borrowing them for that purpose.

Trump Media, which began trading on the Nasdaq on March 26 after completing a lengthy public merger, was far and away the most expensive U.S. stock to short as of early April.

 I'm not going to try to unravel this or comment any further except to share a quote that meme stocks always bring to mind.

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Friday, May 10, 2024

Deferred Thursday Tweets -- Not sure if presidential brain worms are the weirdest news of the week. Welcome to 2024.






Why would anyone bother doing a deepfake of RFK jr. What can you come up with that will top the real thing?


The possibility that RFK Jr might end up taking more votes from Trump than from Biden has been gaining traction. I'm not going to comment on that except to say it has apparently gotten under someone's skin.


Lots to unpack here with multiple layers of irony.

You could argue that Operation Warp Speed is the greatest accomplishment of the Trump presidency. The fact that his base won't let him brag about it remains arguably the most striking example of what we've been calling feral disinformation.

Now Trump is actually trying to position himself as the most anti-vax candidate despite the fact that, though the issue is passionately held by a substantial segment of the MAGA base, it polls terribly with the general public, not to mention being evil.

Other election news...

For a while, you couldn't pick up a copy of the New York Times quoting some random self-identified Democrat talking about how worried they were about Biden. Now we're hearing similar stories about Trump, but they aren't coming from the NYT.



Elsewhere.



If I were Alex Jones and had the gift of prophecy, I probably would have have known that lying about Sandy Hook would work out badly for me.


The "where Trump failed to bring that to fruition" kinda undercuts the attempted anti-Biden spin.



We'll be talking more about this in a future post.





 

Probably not what Nixon had in mind when he said to run to the center in the general.


In Scott's defense, people in Florida do have reason to be upset about inflation.

Another thing the new iPad can't do.

 

Noem reminds me of this great Mitchell and Webb sketch.



Elsewhere in actual dictator news.

 

Great moments in marketing.




I love these "(but we're not a cult)" asides from Altman and Andreessen. After telling us how their proposals will solve all of our problems and create a utopia, they realize how they sound and assure us they aren't utopians promising to solve all of our problems.





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Thursday, May 9, 2024

And while we're on the subject of tech revisionism...

Here's another repost about 21st century journalists retconning the late 19th century narrative. Based on feed back to the original, I've added some relevant details.


Thursday, March 22, 2018

Tech revisionism and the myth of the killer app

I'm wondering if anyone else there occasionally has a "blogger moment." It is similar to a "senior moment," but it involves either thinking you posted something that you didn't or failing to remember you posted something that you did. I had one of these this morning when I went looking for what I'd written at the time about this egregious piece of tech revisionism by NPR's Laura Sydell.
Years later, an Edison assistant wrote: "We were sitting around. We'd been working on the telephone — yelling into diaphragms. And Edison turned to me, and he said, 'If we put a needle or a pin on this diaphragm, it'll vibrate, and if we pull a strip of wax paper underneath it, it should leave marks. And then if we pull that piece of paper back, we should hear the talking.' "

Yet, no one knew what to do with this invention. It took 20 years to figure out that music was the killer app.

[I should have been more emphatic about the timeline. Dates matter in this story. 

Edison began his career as an inventor in Newark, New Jersey, with the automatic repeater and his other improved telegraphic devices, but the invention that first gained him wider notice was the phonograph in 1877. This accomplishment was so unexpected by the public at large as to appear almost magical. Edison became known as "The Wizard of Menlo Park."

Those early cylinders only lasted for a few plays, had very poor sound quality and could not be mass produced, worthless as a commercial medium for prerecorded music.]

Even a cursory check of the historic record would show that the ability to record and reproduce (since that's what we mean when we talk about "recording" technology) spoken words, music, etc. was instantly hailed as a major discovery, that people immediately saw the potential, particularly for music, and that there was from day one an enormous push by a wide range of inventors and engineers to get the technology commercially viable.

These illustrations from the October 12, 1889 issue of Scientific American illustrate the point.




[And it would be years after this before Edison's engineers were able to mass produce a commercially viable prerecorded record.]

[Speaking of premature attempts to capitalize on technology.]

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Wednesday, May 8, 2024

Dispatches from Georgia

I was having a long distance conversation with a friend from Atlanta recently. Like me, he spins way too much time watching television and following politics (making for, as you would imagine, some deeply nerdy conversations). When the subject turned to the presidential campaign, he made a couple of observations

First, there had been a dramatic change in the lawn sign distribution of various neighborhoods. My friend has lived in Atlanta for well over 20 years now so he knows the red spots and the blue spots. Driving through neighborhoods that in the past couple of elections would have had a Trump sign in nearly every yard, he noticed only a handful. There were even a few "Republicans for Biden/Harris" signs around. By comparison, the spots where one expected to see Democratic signs had as many as normal if not a few more.

This isn't particularly surprising. Biden has field offices up and running in most if not all competitive states. At last report, Trump had none. We've known this for a while, but it's interesting to see how this translates to the ground level.

Just as striking was the disparity in television spots. He has seen well over a dozen ads for Biden / Harris and exactly zero for Trump.

This too is not surprising. The Democrats are having a very good year for fundraising. The Republicans are not. Furthermore, a substantial amount of the money they are raising has been earmarked for Trump's legal costs.

I don't care much for the phrase "must win state." Barring cases like California and New York for the Democrats or Texas and possibly Florida for the Republicans, it is possible to come up with not too outlandish paths to victory excluding any one of the swing states. That said, Georgia has got to be one of the top priorities for the Trump campaign, and if they don't have a presence there, you have to wonder what they're doing.

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Tuesday, May 7, 2024

Six years ago in the blog, but probably more relevant with the rise of the techno-optimists

This is the one thing you always need to remember about tech visionaries: if you go back far enough, you can find some actual geniuses, but even their stories are mostly lies.

Monday, January 29, 2018

Tesla and the New York Times – – adding a historical component to the hype-and-bullshit tech narrative

This New York Times piece ["Tesla the Car Is a Household Name. Long Ago, So Was Nikola Tesla" by John F. Wasik DEC. 30, 2017 ] is so bad it might actually be more useful than a better written article (such as this Smithsonian profile) would have been. Wasik provides us with an excellent example of the way writers distort and mythologize the history of technology in the service of cherished conventional narratives.

The standard tech narrative is one of great men leading us into a period of extraordinary, unprecedented progress, sometimes exciting, sometimes frightening, but always unimaginably big and just around the corner. In order to maintain this narrative, the magnitude and imminence of the recent advances is consistently overstated while the technological accomplishments and sophistication of the past is systematically understated. Credit for those advances that did happen is assigned to a handful of visionaries, many of the tragic, ahead-of-their-time variety.

These historical retcons tend to collapse quickly when held up against actual history. This is especially true here. Tesla always generated a great deal of sensationalistic coverage (more often than not intentionally), but more sober contemporary sources consistently viewed him as both a brilliant and important innovator and also an often flaky and grandiose figure, a characterization that holds up well to this day. This was the man who invented the induction motor; he was also the guy who claimed to hear interplanetary radio messages in his lab.

John F. Wasik plays the  ahead-of-their-time card extensively throughout the article.

He envisioned a system that could transmit not only radio but also electricity across the globe. After successful experiments in Colorado Springs in 1899, Tesla began building what he called a global “World System” near Shoreham on Long Island, hoping to power vehicles, boats and aircraft wirelessly. Ultimately, he expected that anything that needed electricity would get it from the air much as we receive transmitted data, sound and images on smartphones. But he ran out of money, and J. P. Morgan Jr., who had provided financing, turned off the spigot.

…

Tesla’s ambitions outstripped his financing. He didn’t focus on radio as a stand-alone technology. Instead, he conceived of entire systems, even if they were decades ahead of the time and not financially feasible.

Tesla failed to fully collaborate with well-capitalized industrial entities after World War I. His supreme abilities to conceptualize and create entire systems weren’t enough for business success. He didn’t manage to build successful alliances with those who could finance, build and scale up his creations.
Tesla’s achievements were awesome but incomplete. He created the A.C. energy system and the basics of radio communication and robotics but wasn’t able to bring them all to fruition. His life shows that even for a brilliant inventor, innovation doesn’t happen in a vacuum. It requires a broad spectrum of talents and skills. And lots of capital.

The trouble with this part of the narrative is that Tesla's Great White Whale (long-distance wireless power transmission) was simply a bad idea. It was not financially feasible because it was not feasible period. We've had over a century to consider the problem, not to mention more powerful tools and a far greater understanding of the underlying physical forces, and we can say with near absolute confidence that, even if long-distance wireless power transmission is developed in the future, it will not use Tesla's approach. No amount of funding, no degree of public support would have changed the outcome of this part of the story.

Just to be clear, even bad ideas can require brilliant engineering. That was certainly the case here, just as it was with other dead ends of the era such as mechanical televisions and steam powered aircraft. Even to this day, demonstrations of Tesla's system are impressive to watch.


[Tesla understood the value of celebrity.]

Just as the if-only-he'd-had-the-money argument collapses under scrutiny, so does the lone-visionary-ahead-of-his-time narrative. If you dig through contemporary accounts, you'll find that Tesla was very much representative of the scientific and research community of his time in most ways. Both in terms of the work he was doing and the ideas he was formulating about the role of technology, he had lots of company.

Wasik consistently downplayed the work of Tesla's contemporaries, sometimes subtly (saying that the Supreme Court ruled in his favor in a 1943 patent dispute when in fact, he was one of three inventors who had their prior patents restored by the decision), sometimes in a comically over-the-top fashion as with this description of Tesla's remote-controlled torpedo.

Shortly after filing a patent application in 1897 for radio circuitry, Tesla built and demonstrated a wireless, robotic boat at the old Madison Square Garden in 1898 and, again, in Chicago at the Auditorium Theater the next year. These were the first public demonstrations of a remote-controlled drone.

An innovation in the boat’s circuitry — his “logic gate” — became an essential steppingstone to semiconductors. [This is a somewhat controversial claim. We'll try to come back to this later – MP]

Tesla’s tub-shaped, radio-controlled craft heralded the birth of what he called a “teleautomaton”; later, the world would settle on the word robot. We can see his influence in devices ranging from “smart” speakers like Amazon’s Echo to missile-firing drone aircraft.

Tesla proposed the development of torpedoes well before World War I. These weapons eventually emerged in another form — launched from submarines.

Just to be clear, Tesla was doing important and impressive work, but as one of a number of researchers pushing the boundaries of the field of radio.

From Wikipedia:
In 1894, the first example of wirelessly controlling at a distance was during a demonstration by the British physicist Oliver Lodge, in which he made use of a Branly's coherer to make a mirror galvanometer move a beam of light when an electromagnetic wave was artificially generated. This was further refined by radio innovators Guglielmo Marconi and William Preece, at a demonstration that took place on December 12, 1896, at Toynbee Hall in London, in which they made a bell ring by pushing a button in a box that was not connected by any wires. In 1898 Nikola Tesla filed his patent, U.S. Patent 613,809, named Method of an Apparatus for Controlling Mechanism of Moving Vehicle or Vehicles, which he publicly demonstrated by radio-controlling a boat during an electrical exhibition at Madison Square Garden. Tesla called his boat a "teleautomaton"


The part about proposing the "development of torpedoes well before World War I" is even stranger. The self-propelled torpedo had been in service for more than 30 years by 1898, and remote-controlled torpedoes (using a mechanical system based on trailing cables, but still having considerable range and speed) had been in use for over 20.

It makes for a good story to credit Tesla as the lone visionary who came up with robotics and remote control by himself but was just too far ahead of his time to sell the world on that vision, but the truth is that lots of smart people were working along these lines (like Leonardo Torres y Quevedo)  and pretty much everybody saw the potential value.

Tesla's ideas about remote-controlled torpedoes would take years to be implemented because it would take years for the technology to catch up with his rhetoric. You can read a very good contemporary account from Scientific American that spelled out the issues.

We've talked a lot here at the blog about about the mythologizing and bullshit that are pervasive in the 21st century technology narrative. It's worth noting that those same popular but dangerously false narratives color our perception of the past as well.



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Monday, May 6, 2024

Waze Hallucinations

]Kaiser Fung WAZE weighs in here.]

 

I suspect everyone reading this has had moments while driving where their phone has taken them off what seemed to be the quickest and most obvious route. The natural assumption at those times is that the navigation system knows something that we do not, such as a traffic slowdown just beyond the next hill.

For a long time, I thought that way too, until a few years ago when, while still looking for an apartment close to work, I found myself making the daily drive from South Central LA to an office building across from the Burbank Airport.

I was living just off of the 110 interstate, so the shortest and generally fastest route was to take it up to the five then take that to Burbank. Not only was that the most obvious route, it was generally what my phone would recommend when I first got in the car. Occasionally, though, particularly going through downtown, my phone would tell me to get off of the interstate and jump onto surface streets. This can be a smart move under certain circumstances, there has to be a substantial loss in highway speed to justify the detour onto surface streets when you have a more or less direct shot on the freeway.

Rather than fighting my way across lanes of traffic to make an exit under these circumstances when there appeared to be no slowdown in traffic ahead of me, I started ignoring these suggestions, and I discovered that in pretty much every case, there was no slowdown, my original time to arrival remained more or less accurate, and I almost certainly would have lost time doing what I was told.

Since then, I will start out a trip by checking the times on the different routes according to my phone or laptop and pick the one the algorithm recommends, but if I am familiar with the streets between me and my destination, I will usually ignore these last minute suggestions. 

I'm not saying the navigation systems are always wrong or even that simple and intuitive routes consistently beat them. Sometimes it turns out that my phone was right and I was wrong, that traffic that was moving fine suddenly snarls up and I probably would have been better off jumping on residential streets for a weird double dogleg.

What I am saying is the algorithms are sometimes clearly wrong, and, more importantly, wrong in an interesting way. It's not hard to imagine a system producing sub-optimal routes due to a lack of data or the need to reduce complexity and computation time, but those things should tend to produce very different mistakes than the ones we're seeing. In the cases I described, the algorithm is generating convoluted routes sending us to streets with little (and sometimes virtually no) real-time data, routes that would be difficult to justify without plugging major slowdowns into the algorithm, slowdowns we know don't exist. That's the part that raises the cool questions.

I know we have someone in the audience who has worked with these or some other related system. What's going on?

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Friday, May 3, 2024

Should we take Goldwater seriously but not literally?

As I said before, I don't want to make too much of this analogy, but you could do multiple of these ads just on Trump's abortion quotes.

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Thursday, May 2, 2024

Thursday Tweets -- "Where's Cricket?"




We'll start with a few for the cheap seats.


Anyone else old enough to remember this one?

And my personal favorite.

What's more important about this story (and let's be honest with ourselves, perhaps more entertaining) is the way it illuminates the intra-party hatred in the GOP.








That last one joins a number of other right-wing figures who seem to be getting nervous about the election.

 

Bit of irony given the source here.

 

More Dems in relative array tweets...






Which brings us back to Arizona and finding a nontoxic message on abortion.




But not just abortion.


I moved the Gaza tweets to another post, but this one is really more about the MAGA mindset.


Not actually breaking, but worth repeating.




The conservative movement did a chilling job co-opting evangelicals, but there are a few principled hold-outs.


New official beverage of the RFK jr. campaign.


Remember when we warned you about Musk?

And the other population collapse tech-bros?

Enough of that. Let's talk about some more interesting things for a while.



This got me to thinking about films where virtually the entire cast was nominated for an Oscar, particularly Sleuth (though Alec Cawthorne was totally screwed by the nominating committee).






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Wednesday, May 1, 2024

Anti-tax mania

This is Joseph.

Canada recently proposed an increased capital gains tax:
Under the proposal, the inclusion rate for annual capital gains realized above $250,000 for individuals would be taxed at a rate of two-thirds, up from the current 50 per cent. Any gains under that bar would continue to be taxed at the 50 per cent rate.

It is projected to affect 0.13% of Canadians. Keep in mind that this means you pay the marginal tax rate on an extra 16% of the capital gains tax. So for a person in Ontario, with a top marginal tax rate, that'd be an extra $85K on a $1.25 million capital gain. 

This has a lot of exclusions:

The tax system also provides a lifetime capital gains exemption in the instance of an individual selling their small business or a qualifying farm or fishing property. That exemption will remain and budget 2024 proposes expanding it to $1.25 million of eligible capital gains, up from just over $1 million currently.

The budget also proposes a new carve out for entrepreneurs, protecting the sell-off of some shares in specific instances. This incentive would apply to up to $2 million in capital gains per individual over a lifetime, and would see proceeds taxed at an inclusion rate of 33.3 per cent.

Selling a primary residence will remain excluded from capital gains taxes under the proposal.

So it doesn't apply to an owner-occupied house or the  first lifetime million dollars of a small business (like a medical practice). So basically a way to make capital gains a much less tax protected vehicle for very wealthy Canadians. The case that most people give is cottages that were bought 30 years ago when they were inexpensive and now they will sell for over $250,000. 

To be honest, is this a big deal? I don't know -- buying a rapidly appreciating asset with great timing seems like a really good example of a public good to tax. Further, the real issue is the huge cost of real estate in Canada. California has 181K people without housing. Canada has 235K people without housing. Maybe the issue is the high cost of real estate and making it a slightly worse investment seems to only help?  

But it is impressive how loud the complaints have been. Now I agree Canada is a high tax country with a lot of bad tax policy, but it is curious how a tax razor focused on the wealthy gets so much blowback. And, yes, if you are generating more than $250K in capital gains, after the lifetime exemption of $1 million, it is unlikely that you are in any other category. 

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