Streetwise Professor

February 27, 2012

Some Zero Hedge Questions

Filed under: Politics,Regulation — The Professor @ 9:37 pm

Zero Hedge has largely avoided any serious scrutiny for the past several years, after some critical stories in New York magazine and on Felix Salmon’s blog.  I wonder if that’s about to change.

While waiting for serious reporters to subject ZH to the same kind of critical inquiry that ZH routinely aims at its myriad enemies, I have a few questions that might be worth exploring:

1. Do ZH writers have positions in the market?  Any market?
2. Do they disclose positions when they write stories related to their positions, or post tweets related to their positions?
3. Is the SEC at all curious about a hugely influential, and possibly market moving/market influencing site in which someone banned from the securities industry is deeply involved? (Daniel Ivandjiiski, banned from the industry for insider trading denies being a “founder” of ZH, but this sounds weasel-like, depending on the definition of “founder.”  He is the only publicly identified writer for the site.)
4. Is the fear of SEC scrutiny why ZH is registered and hosted in Switzerland? If that’s not the reason-what is?

I have many more questions, but that will do for now.

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  1. […] Streetwise Professor has a few questions for Zero […]

    Pingback by FT Alphaville » Further reading — February 28, 2012 @ 2:21 am

  2. Woah! Here we go. Looks like ZH is starting to concern the mainstream press. Why now if after all they’ve been around for several years? Looks like they may be on to “something” right? Like maybe theyre starting to concern parts of the mainstream press who have a vested interest in ensuring the status quo perhaps? …Its about to get ugly.

    Comment by MattC — February 28, 2012 @ 4:23 am

  3. Of course they have positions in the market and of course they will use their platform to influence price movement. Isn’t that the case with virtually every “expert” on Bloomberg/CNBC (not to mention El Erian who seems to be a full time journalist these days).

    Comment by hedonistbot — February 28, 2012 @ 5:27 am

  4. Why on earth should I care?
    Hope they have positions and make big fat money!

    Comment by minusonegee — February 28, 2012 @ 7:32 am

  5. Zero Hedge Conflict policy:

    You should assume that at all times we are so totally just talking our book it would shock and awe you like the unexpected, early-morning arrival of a cluster of BGM-109C Tomahawks (were you a believer in the importance of “optics” that is).

    If we make a off-hand remark about New Zealand sheep herders it’s because we are long New Zealand West Island Cold Kut (NZ-WICK) Wool futures and Kiwi brand Condoms (“For it’s pleasure”). If we are joking around about Cliff Asness, it’s because we have developed a synthetic short of ARQ. If we jest about Joe Sixpack, it’s because we are trying to hype our cheap-American-beer holdings so we can exit quickly. Basically, we are telling you about a position we believe in strongly enough to invest in.

    The reality is, critical readers should read analytic posts and the rest of Zero Hedge with the blanket assumption that the author is totally “conflicted.” (Phrased more logically, that the author stands to benefit from being right- imagine that).

    For those of you less prone to understand the above: we’re a collective of writers. It should be assumed, in concert with our statement that blankets that we’re not an advisory institution of any light, in any capacity, but rather a news organization, that we own any and all of the securities, bonds, liabilities, or instruments that we’re talking about. In so assuming, you’re putting yourself in a defense position; we accept no responsibility for anything traded-on because of this website. We’re here to make you think, not to make you trade; we wish you the best in the former.

    Comment by dwb — February 28, 2012 @ 8:17 am

  6. Go on ZH and announce you think the price of gold or silver will fall and then be prepared for all the abuse. I don’t bother taking what these guys have to say at face value anymore since they strike me as a bunch of bitter posters sacked by one financial company or another. These guys need to seriously get a life. It must be tough being so negative all day.

    Comment by mcarthur — February 28, 2012 @ 8:19 am

  7. @ dwb

    Well put Sir!!!

    Comment by MattC — February 28, 2012 @ 9:51 am

  8. What a strange rant from a Chicago U. PHD. Even stranger that FTA chooses to post it.

    I have no affiliation with Zero Hedge at all. I’m an outside contributor who has been permitted to post articles on their site. From that experience I can tell you that if a writer wanted to get something in front of the “deciders” on Wall Street, or better yet, the “deciders” in D.C., then this Emag is the place to go.

    Just so you know Professor, the SEC has people reading every word at Zero Hedge. That’s also true for the FBI, CIA, Federal Reserve, Home Land Security and the Treasury Department. No one (including me) who writes critical things about government policy, world events, markets or big companies avoids this scrutiny. Adding to the list of “watchers” are the dozens of countries who are doing the same. All of those nice folks don’t need you to make suggestions about how to restrict the flow of information. They’re way ahead of you.

    Many big companies and government agencies already restrict access to my site. The same is true for ZH (and others). After all, no one wants to hear a negative view. Right, Professor? It’s best for guys like you to choose what is available, right?

    Find something important to write about.

    Bruce Krasting

    Comment by Bruce Krasting — February 28, 2012 @ 10:37 am

  9. Streetwise prof does raise some interesting questions about ZH. More generally, though, the biggest conflict of interest in terms of writers and bloggers concerns the housing market. If a writer owns a house, they will most likely spin the story in their favour. If they don’t, they will most likely talk it down. The collective impact can be huge: most newspaper writers at least are probably owners. Rules or guidelines concerning disclosure of this particular kind of conflict would probably produce the greatest bang for buck.

    Comment by Nicholas Shaxson — February 28, 2012 @ 11:38 am

  10. With any service such as ZH, the Regan motto of trust but verify is the least or lowest level of protection one must take. That said, ZH will gain legitimacy with some of the public and the media to the extent:

    1. it confirms or expands the biases of the media,
    2. It is occasionally right, or at least interesting.

    Indeed if ZH wants to succeed it must follow the two rules above if it is to succeed as a propaganda tool. Assuming, and this is a real stretch, that this stuff is presented in good faith, the best we should view this as is an opinion to be considered: Marxists often can give valuable insight, but their biases and prescriptions are ridiculous, as in “Have a cold? Cut off your head.” Personally, I view it as a propaganda outfit of an individual, like many blogs and needs to be viewed with more than the usual suspicion.

    Comment by sotos — February 28, 2012 @ 12:31 pm

  11. As a long time member of a Chicago exchange and occasional blogger I ran across ZH when they were just a few weeks old, I’ve always assumed that they are very conflicted members of the trading community talking their positions and that some of the writers and contributors are downright ignorant. That said, they’ve done some interesting work.

    Comment by Matches Malone — February 28, 2012 @ 1:26 pm

  12. Some influx of unfamiliar commenters here. I guess SWP might be onto something.

    Comment by LL — February 28, 2012 @ 3:29 pm

  13. Most of the reading public is not equipped to know when the ZH folks are talking their book. They cannot differentiate between self-serving tripe and legit insight into what’s going on, which, giving credit where credit’s due, comes from being in the markets. It’s another instance of being able to distinguish BS from real insight … unfortunately, even the most market-savvy folks cannot always get this right.

    Comment by markets.aurelius — February 28, 2012 @ 5:56 pm

  14. I’m a scientist by trade who stumbled across ZH in their infancy while trying to understand what was causing our economy to melt down. It has been a wild ride with a steep learning curve. Being data-driven, I appreciate that ZH frequently links back to primary source material. I have spent a lot of time researching finance in order to better understand the material presented. Sure, they toss their readers red meat, sensationalized stories with some regularity, but I love tucking into the more wonky analyses that requires having many tabs open to understand/verify the underlying data. Krasting is one of the more informative contributors. ZH has more substance than the tightly held, mainstream media outlets who are also talking their book. Any one who takes anything at face value these days deserves whatever they get from that choice…

    Comment by Dantzler — February 28, 2012 @ 8:39 pm

  15. Aren’t inside traders the only ones to make money anyway?

    Comment by So? — February 28, 2012 @ 10:56 pm

  16. Zerohedge explains why it locates its servers in Switzerland

    “………We have also taken pains to avoid litigation prone jurisdictions in placing our hardware and data assets……..”

    Comment by Andrew P — February 29, 2012 @ 6:55 am

  17. If your criticism of ZH are based principally upon the fact that these guys are:

    1) frequently wrong,
    2) only occassionally right,
    3) fail to cite credible sources,
    4) fail to cite credible data,
    5) have position in this, that, the other,
    6) have personal biases, and
    7) have an ax to grind,

    …then welcome to the wider world of financial “journalism”, such as it is.

    While much of what they publish is garbage, so too is nearly *everything* published by Paul Krugman, Larry Summers, Jimmy Cramer, Robert Reich, Andy Sorkin, and other assorted liars, cheats & journalists.

    Comment by Tim — February 29, 2012 @ 7:53 am

  18. If you were to eliminate from the media everyone who talked their own book, there would be no financial media. You have to assume that everyone, whether it be Warren Buffet on CNBC or Bruce Krasting on ZH, is talking their own book. Caveat Emptor.

    Comment by Larry E — February 29, 2012 @ 8:19 am

  19. God forbid the SEC do any serious investigating of obvious chicanery among leading financial institutions. But if Zero Hedge gets a little too “uppity,” then clearly it’s time to bring the smackdown! Personally, I can’t imagine how anyone would have a problem with that approach.

    Comment by Ulysses S. Rant — February 29, 2012 @ 11:49 am

  20. Aren’t inside traders the only ones to make money anyway?

    Yes, that’s pretty much correct.

    Congressmen consistently outperform the market, you’d be better off throwing darts at a board than listening to “experts.” Go figure.

    Comment by Sublime Oblivion — February 29, 2012 @ 3:34 pm

  21. “Some influx of unfamiliar commenters here. I guess SWP might be onto something.”

    Comment by LL — February 28, 2012 @ 3:29 pm

    Yes LL they’re not the usual suspects shouting for j-h-d against Russia while plotting you know what against Zerohedge and all perceived other wreckers…er, Kremlin plants in the body politic.

    And SWP, your filters aren’t as good as PJM’s. They’ve apparently dropped the ban hammer on Senor Equis permanently after he asked them how much money they’d taken to smear Ron Paul fanatically prior to the Iowa caucuses and to ignore the Maine GOP’s flagrant cheating.

    Bruce Krasting if you stick around here long enough you will find a host who:

    Asserts the U.S. should keep shoveling money into Pakistan’s gaping maw, at least so long as American boots are on the ground in Afghanistan, anything to avoid a kopek going to the hated Russkies.

    Among other charming statements he’s made in the past.

    Comment by Mr. X — February 29, 2012 @ 7:23 pm

  22. And hopefully the attack on ZH has nothing to do with their fondness for Dr. Ron, who’s surpassed Obama for the first time in a Rasmussen poll that shows the other GOP challengers losing to the incumbent:

    But repeat after me all SWPers, he can’t win, he can’t win, he can’t win…

    Comment by Mr. X — February 29, 2012 @ 7:55 pm

  23. follow them on twitter but if I read everything and believed it I would shoot myself.

    Comment by Jeff — February 29, 2012 @ 10:52 pm

  24. […] Good questions from Craig. When I have a position and write about it, I am transparent. I also list all my investments on my about me page. I love when Stocktwits people tweet something about a stock or commodity, and then reveal what position they have. Gives the market transparency and credibility. If someone consistently tweets winners only, they are lying and you shouldn’t follow them. […]

    Pingback by Thursday Breakfast Links | Points and Figures — March 1, 2012 @ 4:59 am

  25. You amuse.

    The fact that a windbag like you actually gets paid to educate people, is why I fear for the future of America.

    After no prosecutions for 2008 and MF Global, you now think it is time to start investigating Zerohedge.

    Odd that you spend so much time on Zerohedge, but no time on something like Business Insider, seems to me Blodget deserves at least as much ink as Zerohedge.

    Of course since you think Zerohedge is some sort of KGB backed government disinformation operation, one wonders about your level of paranoia:
    We were trying to make sense of it, when a thought struck me: “ZH i a Soviet-bloc influence operation. These operations would plant disinformation in publications around the world. Most of the publications were obscure, often in Third World countries. The disinformation would be mixed in with legitimate reporting. The goal of these operations was to put disinformation into circulation via more obscure publications, knowing that more reputable publications higher up the media food chain would frequently pick up the planted stories and run them. Some of the stories would work their way to the very top of the food chain, winding up in publications like the NYT and the WaPo and particularly in major European newspapers.”
    For the benefit of other commentators this author is THINKS that

    Comment by Lucy — March 1, 2012 @ 1:02 pm

  26. Missed LL’s comment first time round.

    Some influx of unfamiliar commenters here. I guess SWP might be onto something.

    It’s a good symbol of the paranoid idiocy that infests much of the comments areas on this blog. It absolutely *must* be a nefarious dastardly plot to out-sockpuppet SWP as opposed to random people coming in from, say, the FT link to this piece.

    Comment by Sublime Oblivion — March 2, 2012 @ 1:23 am

  27. @ 25 — Hell yes! Our host is fine with zero, zip, nada about the greatest theft of customer funds in American history b/c as he says, the wheels of justice turn slowly. Well how slowly SWP? Five months now and counting…

    “The fact that a windbag like you actually gets paid to educate people, is why I fear for the future of America.

    After no prosecutions for 2008 and MF Global, you now think it is time to start investigating Zerohedge.

    Odd that you spend so much time on Zerohedge, but no time on something like Business Insider, seems to me Blodget deserves at least as much ink as Zerohedge.”

    Well, Blodget can’t be linked to the worldwide Communist goldbug conspiracy. And I thought Lenin said the fastest way to destroy a nation was to debase its currency, or something like that, according to John Maynard Keynes. Now apparently if you like gold you’re a Red.

    Comment by Mr. X — March 5, 2012 @ 1:53 am

  28. I thought Putin fag Mr.X was leaving?

    Comment by Andrew — March 5, 2012 @ 2:02 pm

  29. I didn’t want to react on earlier ZH-related post(s), but here’s my opinion: no one forces you to believe or even read what’s on it.
    Case closed. Oh, as someone said, I hope they made a fraction of the amount TBTF’s earned by manipulating the markets.
    This is the worst post I’ve ever read on this blog.

    Comment by NK — March 8, 2012 @ 8:26 am

  30. Ah but NK having the Fed print trillions and shovel it to the TBTFs is ‘free market’ while Zerohedge is clearly a Commie Putinist plant. Didn’t you get the talking point SWP got from The Man Central?

    Comment by Mr. X — March 8, 2012 @ 4:58 pm

  31. Like many folks who are having their fifteen minutes, Zerohedge, its contributors and posters take themselves pretty seriously. As with most paranoids, they see or hear Black Helicopters following them, and actually believe that large, bureaucratic, semi-competent organizations (with three letter acronyms) give a hoot what they or their followers say or think. Even Bruce Krasting (above) insinuates that acronymic organizations care about Zerohedge, when far more likely is that some otherwise bored public servants are killing office time using office computers (revealing the ISPs) to access the site. “Love me or hate me; just don’t ignore me.”

    Though it would probably deflate a lot of the loons on Zerohedge, nobody is watching them. The term ‘delusions of grandeur’ fits, because so many regulars who comment on Zerohedge are delusional, and the same ones also think their own opposition to everything mainstream makes them of particular interest to the powers that be. They are flattering themselves. More likely is that the PTB know, if they even give it a moment’s thought, these loons are for the most part lonely and impotent shut-ins the sum total of their contribution to society being to rail against it.

    Comment by Rifac Hijazi — April 28, 2012 @ 9:42 pm

  32. […] links: Some ZeroHedge questions – Streetwise […]

    Pingback by FT Alphaville » Noah Smith is a moron and he’ll get cancer soon, etc — July 9, 2012 @ 4:02 am

  33. ZH is a joke

    They are occupied by a bunch of OWS and Tea Party nutcases , who smoke pot all day and worship satan

    Comment by Tin Foil Hat — July 9, 2012 @ 10:06 am

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