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Efficient Market Hypothesis: Up 50%, Then Down 50% In 90 Minutes

Tyler Durden's picture




 

Remember that infamous business school in Illinois known for its farcical and utterly ridiculous hypothesis that the market is efficient? We disagree. Exhibit A: nationalized mortgage lender, Fannie Mae, and no news.

 
Fannie Mae has been in much demand in recent days. Having risen from $0.295 to $1.08, it smashed higher today to $1.47 (~50% surge from the close) only to plunge minutes later in a linearly spectacular way that only an efficient human could execute we are sure, to $0.55 (a 50% plunge from the close)...
 
 
and over the last few days... 'normal'
 
 

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Thu, 03/21/2013 - 11:30 | 3357245 Aziz
Aziz's picture

My ass is more informationally efficient than these "markets".

Thu, 03/21/2013 - 11:31 | 3357260 ACP
ACP's picture

Well, they are the most efficiently manipulated in the world...

Thu, 03/21/2013 - 11:49 | 3357382 Nothing To See Here
Nothing To See Here's picture

Who said these are still markets?

Thu, 03/21/2013 - 11:54 | 3357411 aint no fortuna...
aint no fortunate son's picture

just a little basic price discovery, the basis for all US capital markets

Thu, 03/21/2013 - 11:55 | 3357418 Divided States ...
Divided States of America's picture

Damn if i bought at 55 cents 15 minutes ago, I would have nearly doubled my money....What a fuckin joke.

Thu, 03/21/2013 - 15:05 | 3358598 Manthong
Manthong's picture

It’s gotta’ be meth..

Some traders are obviously way overclocked.

Thu, 03/21/2013 - 16:27 | 3359079 Squid-puppets a...
Squid-puppets a-go-go's picture

If they have 'stop losses', why not 'stop-gains' ?

Thu, 03/21/2013 - 18:12 | 3359547 mkhs
mkhs's picture

Why on earth would you want to stop gain?  Sp.ed.

Thu, 03/21/2013 - 13:52 | 3358120 kaiserhoff
kaiserhoff's picture

Just so.  If I had all of Lloyd's juice, I couldn't run stops any more efficiently than that.

Give the Devil his due.

Thu, 03/21/2013 - 11:31 | 3357261 Divided States ...
Divided States of America's picture

thats what penny stocks with not much liquidity do....

Thu, 03/21/2013 - 11:56 | 3357425 prains
prains's picture

MOAR momo

Thu, 03/21/2013 - 12:14 | 3357532 riley martini
riley martini's picture

 Bankrupt penny stocks used to only go one way regardless of liquidity and thats to .00 . GM had the same action before the plug was pulled .

Thu, 03/21/2013 - 13:54 | 3358135 kaiserhoff
kaiserhoff's picture

Pink sheets, Bitches.

We're all option traders now.

Thu, 03/21/2013 - 11:33 | 3357276 Dr. Richard Head
Dr. Richard Head's picture

That is debatable.  Both have shit exiting from it and both are getting wiped.

Thu, 03/21/2013 - 11:47 | 3357359 Doubleguns
Doubleguns's picture

Cyprus banks just cashed out. They closed on 3/15 I believe when the climb started. PPT and others helped push the price up till they cashed out.

Thu, 03/21/2013 - 11:50 | 3357386 Doubleguns
Doubleguns's picture

Consider it the new taxing method. If you bought this stock over the past few days....you were TAXED!!

Thu, 03/21/2013 - 11:53 | 3357401 101 years and c...
101 years and counting's picture

perfectly normal in the new normal.

Thu, 03/21/2013 - 11:53 | 3357403 squid virtuous
squid virtuous's picture

Markets are very efficient, as long as you have the news before the muppetz...

Thu, 03/21/2013 - 16:19 | 3359019 Catflappo
Catflappo's picture

Fluctuating, Normal Market Action

Thu, 03/21/2013 - 11:31 | 3357250 slaughterer
slaughterer's picture

I thought that last chart was the AAPL 2 year.   

Thu, 03/21/2013 - 11:31 | 3357259 Agent P
Agent P's picture

Table or Booth?

Thu, 03/21/2013 - 11:32 | 3357264 slaughterer
slaughterer's picture

But, but ... Warren is going to save FNMA....

Thu, 03/21/2013 - 11:32 | 3357268 francis_sawyer
francis_sawyer's picture

The market IS efficient [in transferring the earnings of your labor to wealthy European banking families]...

Thu, 03/21/2013 - 13:04 | 3357790 El Diablo Rojo
El Diablo Rojo's picture

This is the first time you took the time to distinguish these elitist evil European banking families from Jewish people. +1

Thu, 03/21/2013 - 13:48 | 3358091 francis_sawyer
francis_sawyer's picture

Yeah... because as we all know... Those "families" [let's use the number '100' as PAR, &, for shits & grins, &, for the sake of the argument, assume that the EXACT number of those "families" is 100]... By consequence ~ if there were an OVER-REPRESENTATION of those 'families' being jewish, it would tend to mirror the actual representation of people who call themselves JEWS [worldwide] which is less than 1%...

So I'm to assume that out of ALL the 'European Banking Families' in that 100=PAR model, [which is somewhat of an acknowledged FACT... even, apparently, by YOU]... LESS THAN ONE of them is jewish...

~~~

My 'dark horse' hedge money is on the evil Episcopalians...

~~~

I read recently that 47% of all 'American' BILLIONAIRES are of jewish descent... They must be REALLY REALLY SMART...

Thu, 03/21/2013 - 14:48 | 3358438 Panafrican Funk...
Panafrican Funktron Robot's picture

Just don't start calling them Khazars.  That will really get them pissy.  

Thu, 03/21/2013 - 15:01 | 3358569 francis_sawyer
francis_sawyer's picture

lol

Thu, 03/21/2013 - 11:33 | 3357273 BlueStreet
BlueStreet's picture

Efficiently unefficient, they were half right.  

Thu, 03/21/2013 - 11:33 | 3357277 Ancona
Ancona's picture

Looks like a nice game of "Pong"

Thu, 03/21/2013 - 11:36 | 3357294 buzzsaw99
buzzsaw99's picture

otcbb or pinks, meh

Thu, 03/21/2013 - 11:51 | 3357394 gjp
gjp's picture

why the fuck does this still even exist as a nominally private investment for people to game?

I know, same answer as for everything else, it's one big corrupt scam.

Thu, 03/21/2013 - 12:13 | 3357520 buzzsaw99
buzzsaw99's picture

every casino has a section where the hard core degenerates hang out

Thu, 03/21/2013 - 12:17 | 3357561 riley martini
riley martini's picture

  Why they still trade . Huge volume = transactional fees.

Thu, 03/21/2013 - 11:37 | 3357295 Dineroguru
Dineroguru's picture

it is efficent....but only in the semi-strong form though....yea....that's it!

 

Thu, 03/21/2013 - 11:37 | 3357297 DB Cooper
DB Cooper's picture

Looks like Ben tried to exit!

Thu, 03/21/2013 - 11:39 | 3357306 Schmuck Raker
Schmuck Raker's picture

Cue the SEC insider-trading investigation in 3,000,000....2,999,999.....2,999,998

Thu, 03/21/2013 - 11:42 | 3357337 adr
adr's picture

Somebody in congress just made a shitload of money and dumped every share at once.

Thu, 03/21/2013 - 11:43 | 3357344 Doubleguns
Doubleguns's picture

PPT cashing out. Gathering dry powder for next fiasco due soon.

Thu, 03/21/2013 - 11:44 | 3357355 toys for tits
toys for tits's picture

In real news Harry Reems just saved some of the SS fund.

 

http://entertainment.time.com/2013/03/21/the-clown-prince-of-porn-deep-t...

Thu, 03/21/2013 - 11:44 | 3357358 chunga
chunga's picture

FNMA - A Brief History

 

FRANKLIN RAINES [D] – FNMA CEO (1999 – 2004) Raines accepted “early retirement” from his CEO position while the SEC pretended to investigate accounting irregularities. Fannie’s own OHFHEO also accused him of abetting widespread accounting errors, including the shifting of losses, so he and his fellow execs could “earn” large bonuses. The WSJ reported back in 2008 that Raines was one of several cronies that received below market rates for mortgages from Countrywide. Raines alone receive loans for over $3 million while CEO of FNMA. Raines’ compensation for his “work” at FNMA - $90 million.

RAINES GRADE – F

DANIEL MUDD [R] – FNMA CEO (2005 – 2008) Before becoming CEO of FNMA, Mudd worked at the Office of the Secretary of Defense, was an advisor to Asia-Pacific Economic Corp., “served” on the board of the Council of Foreign Relations, “consulted” at the World Bank, and held many positions at GE Capital including president and CEO. Mudd was dismissed as CEO of FNMA when FHFA became conservator in 2008. In 2011 Mudd and other GSE execs were charged by SEC with securities fraud. After his career at FNMA Mudd became CEO of a NYC hedge fund named “Fortress”. Fortress invested in purchasing tax liens on delinquent property taxes from local governments under many benign corporate names such as “Pleasant Valley Capital” and “Travis Farm Investments”. Cozy. Mudd’s compensation for his “work” at FNMA - $80 million.

MUDD GRADE – F

NEEL KASHKARI [R] – FNMA CEO (Tenure is murky) Kashkari was a former investment banker for Goldman Sachs, was tapped by Hank “The Shank” Paulson to lend his skills over at TARP HQ, and now rather ironically, continues God’s work as a Managing Director at PIMCO. Kashkari’s compensation for his “work” at FNMA is also murky; I’ll just assume it was too much.

KASHKARI GRADE - F

HERB ALLISON [D] – FNMA CEO (2008 – 2009) The esteemed Mr. Allison was quickly whisked off to oversee the wildly successful TARP program. I didn’t find much on his compensation during his brief stint as FNMA CEO. Allison served in various positions at Merrill Lynch and became a member of the board in 1997. He was a director of the NYSE from 2003 – 2005.

ALLISON GRADE – F

MICHAEL WILLIAMS [?] – FNMA CEO (2009 – Jan 1, 2012) Mr. Williams is a 20 year veteran at FNMA. While “serving” as FNMA CEO, Williams managed to scrape by on less than $6 million in 2011 alone. This could and should be considered a hardship, given the complexities involved in purloining ~ $60 billion of Fed bailout money.

WILLIAMS GRADE – F

FANNIE’S MAJOR DANCE PARTNER, FREDDIE MAC, HAS ALSO PERFORMED VERY POORLY.

Charles (my friends call me “Ed”) Haldeman has announced his retirement plans but intends to be a good sport and stay on with insolvent FHLMC until another crony can be found to fill his wing-tips.

That might take a while. “Serving” as CEO of the ultimate backstops for the lion’s share of the MBS Ponzi is very stressful.

We’ll have to accept former Freddie exec David Kellermann’s testimony posthumously. Mr. Kellermann was found hanging by the neck in the basement of his posh Vienna, VA home in the affluent suburb of Washington. D.C. way back in April of 2009. It is presumed he had no help and local police have stated there was no evidence of foul play.

Maybe, just maybe, these treasonous monsters will be held accountable. Modern day Nuremberg Trials are in order; this time in front of an “International Financial Tribunal”.

Check them carefully for concealed cyanide tablets. There are no excuses for being a sociopath.

There is no cure. It’s terminal.

 

Thu, 03/21/2013 - 12:17 | 3357553 earleflorida
earleflorida's picture

good digging...

thanks

Thu, 03/21/2013 - 12:25 | 3357611 chunga
chunga's picture

don't mention it

Thu, 03/21/2013 - 13:05 | 3357798 hooligan2009
hooligan2009's picture

fraudie and funny!!!!

the closest? thing that exists for doing nothing other than spending tax dollars on getting fat and fatter

these guys should be in jail for wire fraud, embezzlement, racketeering and, if history is any guide, using government property as a brothel

there is not enough rope to hang these people; i recommend covering them in honey and pinning them to the desert floor in Tunisia in the path of fire ants.

Thu, 03/21/2013 - 11:50 | 3357391 poseidon
poseidon's picture

One ticker is all that is needed - NFLX.  How I would love to see actual break down of the trades for NFLX on a given day, who is buying and selling.  Stock is manipulated to hell. 

Thu, 03/21/2013 - 12:00 | 3357443 squid virtuous
squid virtuous's picture

put a market cover when it was @ 184.60 or so, got filled at 185.8333, check the 10:52 print... fukn criminals

Thu, 03/21/2013 - 14:52 | 3358479 Panafrican Funk...
Panafrican Funktron Robot's picture

It's amazing how much money is riding on Arrested Development helping them gain a huge amount of new subs, while keeping 100% of current subs.

I mean, I love the show, but it was canceled for a reason.  It really was too smart for the average American to "get".

Oh, fuck, I keep forgetting, fundamentals don't matter.

Thu, 03/21/2013 - 11:55 | 3357415 1eyedman
1eyedman's picture

EMH, MPT, econ 101, all begin with a major fallacy that underpins their whole thesis:  investors are rational

Thu, 03/21/2013 - 11:56 | 3357421 Doode
Doode's picture

Efficient market theorists at Booth should have asked Kellog marketing guys about the naming - it is the worst named theory out there. it implies that markets are perfect (based on colloquial naming), but in fact it means that all known information is priced in, which does not mean markets themselves are efficient. To be more specific there are various degrees of efficiency and to be more specific about that FNMA - please do some Brownian motion simulations of high var stocks. You will see that what happened there could happens and therefore does not violate the efficient market theory or for that matter Brownian motion theory of stock prices.

Thu, 03/21/2013 - 13:08 | 3357811 Clowns on Acid
Clowns on Acid's picture

Nice try Doodie.....I did a brownian motion simulation and then flushed the toilet. 

You pencilled neck feckin' geek. To use the price movement (manipulation) of FNMA and expose it to a brownina motion is clueless, blinders on, stoopid feckin shiite.

Efficient market theorists are called "theorists" because in theory - given the laws surrounding the trading of stocks in the US....all known information is contained in the exisiting stock price.

Now, with HFT trading and FED $$ going directly into banks....how efficiently is the price discovery mechanism working dbag?

If someone has techniology and Exchange rule based advantage or prior direct Fed liquidity to pump stocks, and can legally front run (as opposed to corporate insiders) investors.....is this what you mean by different degrees of efficiency?

Stoopid fuck...what the article is saying is that the Fed and its smirking pack of jackals in the banks have been very efficient in taking out any efficiency that might have existed.

Now go take a brownian motion and make sure you wash your hands....

 

Thu, 03/21/2013 - 14:54 | 3358495 Panafrican Funk...
Panafrican Funktron Robot's picture

Yeah, but the quarks are fully informed.  So, it's efficient and shit.  

Thu, 03/21/2013 - 13:09 | 3357812 Bob Sacamano
Bob Sacamano's picture

And the swings between more and less efficient (in terms of market pricing) is how one makes good money.  Swings are a good thing.  Use them. 

Thu, 03/21/2013 - 11:57 | 3357427 Cone of Uncertainty
Cone of Uncertainty's picture

That looks like a chart of Bernanke having an orgasm when he fucks barn yard animals.

Thu, 03/21/2013 - 11:57 | 3357429 Cone of Uncertainty
Cone of Uncertainty's picture

That looks like a chart of Bernanke having an orgasm when he fucks barn yard animals.

Thu, 03/21/2013 - 12:00 | 3357444 Downtoolong
Downtoolong's picture

Probably a lone algo stuck in an infinite loop trying to trade with itself.

Thu, 03/21/2013 - 13:05 | 3357799 Anonymouse
Anonymouse's picture

I think it was an algo recovering from a sign error

Thu, 03/21/2013 - 13:25 | 3357946 Dan The Man
Dan The Man's picture

that sounds so sad...sniff

Thu, 03/21/2013 - 12:14 | 3357531 SWCroaker
SWCroaker's picture

Just Wall-E and Eva playing tag in the rubble, long long after the humans all left...

Thu, 03/21/2013 - 13:36 | 3358017 Cacete de Ouro
Cacete de Ouro's picture

Fama and French spawned a monster in the shape of Dimensional Fuck Advisors, who bang on about EMH, like the musicians on the deck of the Titanic

Thu, 03/21/2013 - 13:42 | 3358059 dime2962
dime2962's picture

SO..... Do you miss the specialist yet?

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