Comment by mcoliver
6 hours ago
Simultaneously they are opening up 0DTE options on certain stocks starting with large market caps but don't be surprised when this expands. Currently this was limited to large etfs like SPX. They are also extending trading hours towards 24/7 and eventually 365.
How they square increasing liquidity with delaying information is insane.
I know there is a lot of manipulation to make quarterly numbers and the tax code is convoluted but if companies reported dollars in and dollars out live to shareholders at least we would have an idea of how the company is doing in a general sense. And over time would learn the flow of the company and be able to make informed predictions on the overall health of the company. More information is usually better than less with very few exceptions.
If they want to delay the earnings call to every 6 months to talk about the business I have no problems with that.
> if companies reported dollars in and dollars out live to shareholders at least we would have an idea of how the company is doing in a general sense.
Goodhart's law is knocking on your door right now.
Help me understand what you are saying here. For those that don't know this one is "a measure becomes a target, it ceases to be a good measure".
I'm not advocating for a single metric that can be gamed. A business is fundamentally about dollars in and dollars out. Maybe add receivables in there and a few other metrics from the P&L. I'm not trying to be prescriptive here on purely cash in and out.
I do think there is a low friction way that companies could report daily certain metrics that over time would give their shareholders a sense of the company's health and trajectory.
Dollars/receivables in and dollars/deliverables out is just a question of rate, unless I'm missing something.
If a 10 billion dollar company has a per-second dollar out/in rate of $1,000,000 due to actual organic business, a company with $2,000,000 can set up an LLC it buys and sells from, and legally 'swap' $1,000,000 a second back and forth in services "bought and sold" to mimic the appearance of the $10B company, to generate business interest/confidence/investment.
That's an extreme example, but the point is that real-time money flow has nothing to do with the actual 'health' of a company.
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SPY is an ETF and SPX is an index. The distinction is material.
/ES does not trade between 5pm and 6pm ET. SPX options aren't marked until 8:15 PM ET.
It's more plausible that large caps see MWF, then MTWHF possibly.
Good additional info. I used a shortcut I figured most people would understand without getting into the weeds.
you get off on using acronyms few people in your professional circle understand?
Can you enumerate some examples of when it having less information is better than having more?
It’s a common complaint of value investors that boards (especially in this post-Sarbox world) are solely focused on quarterly earnings reports, to the detriment of long term strategy. One way to talk about the added and persistent value of some companies is to note that many of them have powerful, recalcitrant, or somehow anti-quarterly-cadence founders: buffet, zuck, you could make a list.
Delisting and going private is always an option if you want to go at your own pace and talk to your investors 1:1.
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I mean those personalities are also hyperfocused on share price.
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When your decisions are driven by fear, anxiety and FOMO, knowing less can lead to fewer irrational reactions.
That’s why people hide information from bad bosses.
For the company it doesnt work well, you’re leaking too much info to competitors
Maybe. I'l am also not saying they need to say where the dollars came from, went to, or what they were for. Aggregate daily flows. Could you do some deductive reasoning to make an informed guess especially when large sums are involved? Perhaps.
I am also of the (perhaps wrong) opinion that the majority of the important stuff leaks anyways, just not on a level playing field.
If everyone is legally required to share it then we're all in the same boat.
There are multiples examples that are easy to see once you realise presenting information has a cost.
For example having daily morning 2 hour long stand ups provide more information for everyone involved. It's also worse for productivity and work atmosphere.
Homework - What does Shannon Information Theory say about too much info beyond channel capacity?
Sure but I should add I'm not saying this should be done in place of current reporting. It should be done in addition to. I'm advocating for more transparency augmented with periodic storytelling. Over time that noise becomes the pulse of the company.
Wrt Shannon, the channel capacity today vastly exceeds that of 1934 when quarterly reporting became standard. Give me more data and a filter any day over a once every 6 month black box. 6 month reporting is undersampling.
How do we discuss Shannon if you dont tell us what your channel capacity is and how you compute it?
I give up, what does it say?
This is a manipulation enabler. I’m surprised no one is mentioning this, but it’ll allow companies like SpaceX and Tesla to avoid scrutiny. The other changes the SEC and NASDAQ are rushing all have donors behind them. That’s how this openly corrupt administration works but it’s also how America has generally operated in the past, only to a smaller degree.
>This is a manipulation enabler.
One facet of the Trump administration that still manages to surprise me is now some action that is nakedly corrupt, or stupid, or destructive will be undertaken, and people will scramble to come up with explanations for why it might be done in good faith, or as part of some clever plan. We've been watching Donald Trump operate in national politics for over a decade (and seen him in business for far longer). Why on Earth would anyone ever give him the benefit of the doubt at this point?
> it’s also how America has generally operated in the past
It's not. That's why we have the rules that they are recinding, and why the US has long had among the the most transparent, safest, and liquid markets in the world.
Saying that 'it's always been this way' is a really concerted effort to bury one's head in the sand.
I was talking about the broader way things work, not necessarily for the SEC specifically - although they’re also subject to this phenomenon. Lobbying in America, and the revolving door between industry and government agencies, is a core part of American politics and economics. Long before the Trump administration.
Maybe just allow "insider trading".
No legitimate business needs to settle trades more than once a day.