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Contributing to a 401k, 403b, Conspiracy Hype

Originally posted on August 27, 2007

Over the weekend, something came across my RSS feeds that I’m still not entirely sure how to deal with, mainly because I’m stupid and because numbers make the back of my eyeballs burn with red hot intensity. So to put it simply, I’m too dumb to realize why this news doesn’t sit well with me. That totally made sense in my head.

My friends who put up with my sorry ass know me well know I’m always talking about the benefits of investing. They also know that the reason I say this is not because I’m a powersuit-wearing, slicked-back, coked-up cash addict. Though that sounds like a wicked Halloween costume. No, instead I just know that the little bit of money that I’m able to scrape together right now has performed rather well as investments, and that denying a tiny bit of immediate monetary pleasure will hopefully allow me to retire before I reach diaper status. Or return to, rather.

So on Sunday I noticed a thread on a trading forum where a group of individuals have gone berserk over a recent “mystery” buy. The little bit that I understand is that an unknown buyer made two transactions, and in and an out, essentially waging $4.5b on a minimum of a 30% drop in the US Market within the next four weeks. On the line are 65,000 contracts at $750.00 each for the SPX 700 “calls for open.” That sized trade controls 6.5 million shares at $750 each, which for those with a calculator is $4.5 billion. Whomever is offering these sales can only profit if the market drops between 30% and 50% within the next four weeks. If the market fails to drop in the predicted amount, this investor stands to lose over $1 billion. And that’s just for buying the contracts. That’s a helluva bet to take unless you have inside knowledge of something that my pea-sized brain doesn’t.

So flying around the internet are theories of why someone or some group would make such a gamble, with ideas ranging from a pre-planned terrorist attack on the US to Chinese investors looking to pull out their weight. Again, I’m far too simple minded to realize which of these theories carries any traces of truth and which are legitimate conspiracy theories, but I do realize the magnitude of the possibilities. The mere idea of someone having information of that gravity ahead of time is frightening to me.

I hope in the end that it is nothing, that it was a simple computer trading glitch that has gone uncorrected thus far. Because to think that it really could be one individual or entity knowingly preparing to make a veritable fortune at the sake of the financial futures of hard-working people like myself and all of us…that makes me sick to my stomach.

I need to go read up more on this and try to stop being a halfwit when it comes to anything involving numbers. And if any of you have any ideas, feel free to let me know. I’ll be guzzling coffee and trying to poke the burning feeling out of my eyes.



Comments

It could be a hoax too. Having not seen the actual trade info myself, I would be disinclined to believe it. The numbers just sound a little too outrageous.

said Darrell

That's secretly what I'm hoping, Darrell. I have to default to the knowledge of those who know more on this matter, and everyone I've spoken to says the same as you.

said Brian Faust

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