I’m Tired of Bullshit in Finance

I have a confession to make: I’m dying to do a career change. Over time, and over a relatively short amount of time, I’ve really come to hate finance and anything that comes with it. Generally speaking, I hate the utter incompetence of almost every single person involved in the financial world.

Perhaps the thing that pisses me off more than anything else are misleading, if not blatantly false. articles in finance. Today, it seems that almost every single article I read about the financial world is riddled with bullshit, lies and plain and simply false information. It’s not even complicated misinformation, it’s the kind of thing anyone who ever studied finance can point out as wrong right now.

Take this extract for instance, from a reliable source if there is any such thing (Reuters):

Trading data showed that managed short positions in WTI crude contracts, which would profit from a further fall in prices, are at a record high, implying that many traders expect further falls.


This is blantantly false on so many levels it’s not even funny. Just because the short positions increase on a product does not mean that people expect it to fall, far from it.

For example, someone might short oil to hedge his bet. He may be holding a lot of oil companies and wants to protect himself from losses, for instance. Let’s say you own a lot of Exxon Mobile, but have started to become concerned about potential losses should oil go lower. Let’s say you do not want to sell your shares of Exxon Mobile for whatever reasons (tax reason, dividend, etc.). You could open a short position on oil and get protection; as oil drops and Exxon with it (presumably), your oil short would return some of your lost money to you.

Similarly, you might short as part of a complex strategy. For instance, you might short oil and go long on gas; if both fall, you won’t lose money and if both rises, you won’t lose any money neither. You are basically betting that the gap between the two will widen. In any event, it does not mean that you are particularly pessimistic on oil.

Of course, looking at one product does not tell the whole picture. Let’s say you expect the gap between WTI and Brent to widen; you could short WTI and buy the Brent. If both fall, again, you aren’t losing money and vice versa.

Lastly, the dollar amount also matters; shorting 100 contracts of a $30 product is not the same as shorting 100 contracts of a $100 product. Therefore, it’s normal that there are more positions as the price of the product falls. In any case, the article makes no mentions of any of those elements. It doesn’t even mention, for example, that just because more people take a position, this position will be proven right. Just because people bet that a product will fall has absolutely zero impact on the actual outcome. Imagine if you could manipulate the market that way: you short a product and it falls. While this may work with obscure stocks, it just cannot happen with such a widely product.

In any event, this paragraph from a reuters article, nothing less, is not just misleading, it’s a complete lie.

Next, take this stupid article from CBC, nothing less:

And with oil producers unwilling to publicly make moves to reduce the supply of oil, traders don’t appear to see crude rising back above $50 per barrel any time soon.

On Monday, the first futures contract that shows oil above $50 expires in the second half of 2017. Crude oil for December 2017 delivery (which is more liquid than othe


This is blatantly false.

There is no other way to put it. It’s just wrong, it’s a basic “Finance 101” mistake.

Futures price never reflect expectation of the underlying asset, i.e. they show absolutely no prediction about where a product is going, whether it’s going up or down.

In fact, a future is priced according to the following formula:



F(t,T) is the price of a future with maturity T, priced at time t.

S(t) is the price of the underlying product at time t

r is the risk-free rate

C(T,T) is the storage cost of the product from t to T, i.e. if it costs $1 a month and you want the price in 10 months, C=$10

As you see here, nowhere in this formula do you see “S(T)” which would be the expected price of the underlying asset at T. A future is priced solely on the price of the underlying asset TODAY.

Say oil is at $30 today (t=0) and costs $1 per month to store. Say r=100%, i.e. the risk-free rate is 100%. In that case, the price TODAY of the future in T=1 year, in 1 year, would be:

F(0,1)=$30 * (1+100%)^(1-0)+12*$1


That’s it. It’s no more complex than that. Nowhere in this equation do you actually consider the spot price a year from now.

I see this mistake made all the time and every time, it pisses me off. It’s such a basic mistake that anyone who makes it should be banned from finance forever.

Overall, the more I read on finance, the more depressed I get. How come these idiots, with their mistake-filled bullshit, get far more readers and viewers than me? These guys are listed on reuters, CBC, and don’t even get me started on the bullshit Fool.com and the like. They get thousands of viewers yet no one dare to point the gross inaccuracies in their posts? Do they even care?

I spend a lot of time on this website to make sure I offer quality work and research. I do get readers, of course, and I am grateful for it, but far fewer than those guys “Why Canadian Housing is about to crash 75% - or more!” Yes, guys, the safest housing market in the world will plummet for no reason, of course. I wrote an article on clickbait bullshit already, but if you want to know how it makes me feel - it makes me feel furious! These guys make thousands from advertising - hell, they don’t even need to trade - from their rushed crap while my articles struggle to get any visibility. If at least what they posted made sense.

What am I doing wrong, readers? Help me here.


10 Responses to I’m Tired of Bullshit in Finance

  1. Chuck January 12, 2016 at 10:31 am #

    Financial news — like all news — is meant for the rubes.

    Mad Money doesn’t even pretend to do any real thinking, so there’s absolutely no reason to watch it. Except people do.

    The middle and professional classes save a lot of money the snake oil salesmen get to work. Different styles of financial news are on offer, just like you can choose between 12 brands of peanut butter. Meaningless choice between indistinguishable products. None of the financial news contains real due diligence, because that requires hard thinking. You can’t build an audience that way, so you get nonsense financial news segmented by the identity politics of the audience.

    It’s no different in other fields. Remember how Nate Silver humiliated all the pundits a few elections ago with a basic bayesian model? In the end it doesn’t matter. Pundits gotta pundit. Or take news coverage of scientific breakthroughs. 90% of it is headline grabbing garbage. Good science is boring, niche and inaccessible to the layperson. In the news: “Will DNA splicing be the next breakthrough in Artificial Intelligence?”. It’s garbage by necessity. You need mass appeal in order to get big which means you can’t cover anything correctly or in depth.

    • F.S. Comeau January 12, 2016 at 3:21 pm #

      You are right on every point. I just guess I’m trying to offer more than that overall. Shame that in our world, the idiots win.

      • Lope January 12, 2016 at 3:42 pm #

        Keep persevering buddy, you put out quality work that a couple friends and I appreciate. Your readership will grow…. I bought UWTI today! (I was unable to short DWTI due to my limited account capabilities) Hoping for a quick jump, I understand the massive decay but I should be ok at this level for a 20% gain

        • F.S. Comeau January 12, 2016 at 6:03 pm #

          You have to understand, I don’t see oil recovering significantly in the short term. I see it rebounding slowly tho, hence the idea behind my short.

  2. RyanM January 13, 2016 at 4:33 am #

    New investor here. Just found your site this evening and have been reading nonstop since (it’s 3:30 AM). I have a law/politics background, and I’m not sure whether to be relieved it’s not just in my field that everyone is criminally stupid, or even more distraught. Hang in there, this information is valuable and your work is appreciated.

  3. Anonymous January 14, 2016 at 10:15 am #

    Economics major here. I love you Comeau, you’re our only hope.

  4. Jura January 27, 2016 at 8:41 am #

    Engineering grad and trader here.

    Every couple of months, I google the phrase “technical analysis is bullshit”. Looks like it paid dividends this time, as this site is a great find.

    The prose here perfectly reflects my cynicism and contempt for the asset management industry and the voluminous pile of ill-conceived and excrement-laden forecasting and analysis it regurgitates on a daily basis. I seriously wonder if they truly believe their own bullshit. And don’t get me started on the financial media…

    Keep up the good work, F.S. Comeau!

  5. Nate K February 16, 2016 at 5:15 pm #

    Another gem here, 99% of the financial news is either reported by people who don’t understand what’s going on or it’s being promoted by companies with their own interests in mind.

    Appreciate the time and effort you put into this, it’s some of the best I’ve found so far!

  6. Tony February 29, 2016 at 2:38 pm #

    Please keep writing articles! Informative and hilarious. Thanks for the breath of fresh air!

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