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Suppose I have a machine that lets me see the near future, and I want to use this to get rich on the stock market. What is the best way to invest so that no one suspects that I'm doing something fishy?

EDIT: The point is to not just to have an excuse that people will believe, the point is to not draw any attention at all. Examples of what NOT to do include:

  • Obviously, if you invest everything in the single highest yield stock, you might be suspected of insider trading.
  • If you consistently pick the several highest yielding stocks, even if you aren't suspected of insider trading, people will take note that you are outperforming everyone else. (This is sort of what happened to the Magnetar trade.)

In either case, you get attention for your success. How does one avert that?

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    $\begingroup$ Buying lottery tickets with the winning number instead. $\endgroup$ – dot_Sp0T Jun 2 '17 at 21:29
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    $\begingroup$ invest in stocks that will also fail but not spectacularly fail. As in ones that start dropping enough to eventually sell your share at a deficit while still making money off the "winning" stocks. $\endgroup$ – Ian Jun 2 '17 at 21:33
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    $\begingroup$ So, ignoring the obvious causality issues associated with time travel, the real question becomes: what makes you think you will get caught? Who is going to believe that Millionaire Joe Shmoe won his fortune utilizing a time machine? It seems to me far more likely that people would attribute it to blind luck or "good" business sense. Enough people have made it big by just being in the right place at the right time I wouldn't expect a single person to say anything more than "Damn I wish I had his luck!" $\endgroup$ – MozerShmozer Jun 2 '17 at 21:41
  • $\begingroup$ What would you be CAUGHT doing? Investing your money and watching it grow over time? If that's illegal, I'm in big trouble, because that's what I do, the only difference is I have to live all those intervening years instead of going back to invest and then jumping forward to collect. $\endgroup$ – ozone Jun 2 '17 at 21:53
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    $\begingroup$ Paradox: Since you can see into the future, you will know exactly when any investigators will arrive at your office, the records they will seek, and the questions they will ask. This will affect the records you keep and the questions you are prepared to answer...which will change the future, which will change how you prepare, and so on. Please avoid destroying the universe for a meager stock profit. $\endgroup$ – user535733 Jun 2 '17 at 22:03

16 Answers 16

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Suppose I have a machine that lets me see the near future

First things first : secure this and have a discrete way to use it.

How near is near ?

investment strategy is dependent on how long terms your investment is for, but how suspicious your apparent success at picking investments will look is also dependent to some extent on how much time passes between buy and sell.

It also depends on how you deal with the sell part.

Selling at the peak every time will look suspiciously like you know too much.

Sell using conservative strategy that may not optimize your profit but will look like someone making reasonable profits consistently without having any suspiciously accurate judgment about when the price will peak.

Make the odd deliberate, but plausible, loss.

and I want to use this to get rich on the stock market. What is the best way to invest so that no one suspects that I'm doing something fishy ?

Be careful to avoid multiple investments which would have required you have insider information (in the absence of a time machine). Insider trading is illegal in many places and consistently seeming to have the inside track on private deals will make you look suspicious.

The authorities (and jealous investors) will be watching some deals more than others, so avoid high profile deals.

Also consider if you should invest directly in the stock market.

Again, depending on what "near future" means, choosing investment funds, rather than stocks, may be a better route. These avoid the problem of being a shareholder (and directly recorded as one), making it harder to target you as an insider trader.

Buying and selling shares is a public activity that's monitored closely. Perhaps better to e.g. act as a venture capitalist (depends on how far you can see into the future).

Holding stocks for a long time is a good strategy. Picking stocks when they're low and you know that (eventually) they'll rise is the ideal. Some people will call that luck, some will call it patient good judgment, but no one will think it's suspicious. This of course only works if your window is sufficiently far into the future to make that workable.

A "normal" investor will typically concentrate on one or two market sectors. It looks like expertise when you consistently pick winners in e.g. mining and concentrate on the mining sector. It looks like you're getting information from private sources, maybe illegally, when you can consistently invest successfully in different sectors.

Don't cherry pick the most profitable deals. It's tempting to do that, but it again makes you look like you're getting inside info. Simply pick deals that provide a solid, but not necessarily spectacular, growth.

Spread it around. Normal investors spread their portfolio around so as not to have all their eggs in one basket. You don't really need to do that as you have info from the future, but if you keep making successful everything-on-one-play deals you'll attract a lot of attention.

Do things that normal investors do : set stop-losses to trigger auto sells on stocks if they fall or rise above and below levels. Pick sensible values even if you know they're not relevant. This behavior makes you look look ordinary.

And, again, allow some plausible fails is desirable.

Spread bet. So this, as it, again looks like you're simply a cautious investor with good judgment who is afraid of loosing and has a backup plan. You don't actually need backup plan to minimize loss, but you do need to look like you do.

Avoid having friends who are in investment firms and banks. Nothing looks more suspicious than someone getting rich on a string of successful investments than someone with a string of friends in the banks and investment companies that handle IPOs and mergers and bank loans. If you have friends like these, never talk money with them. Never. Let's see the investigators get past "No, Bob has a rule - we're friends, no business talk, just fun.".

Last trick : do lots of "normal" market research. Just in case some nosy twerp starts asking questions, you want to be able to say, "why, I'm successful because I spend a lot of time researching companies and markets." Computers, accounts (you actively use !) with investment research firms that sort of thing.

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    $\begingroup$ Summarizing this excellent answer in 3 words: Don't Be Greedy. $\endgroup$ – WhatRoughBeast Jun 2 '17 at 23:06
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    $\begingroup$ @WhatRoughBeast : Could've saved myself a lot of typing if I'd thought of that expression. :-) $\endgroup$ – StephenG Jun 2 '17 at 23:41
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    $\begingroup$ discrete => discreet $\endgroup$ – Bob Jun 3 '17 at 12:00
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Set up a brokerage firm. Then you get paid to advise your clientele. With the time machine information, it becomes straightforward to know how to advise your clients with a mix a both winners and losers that are designed to slightly outperform your competition. This will allow you to collect commissions on both winning and losing trades in a large volume. More subtle than playing the market directly, but longer term more profitable and lower profile. Invest in computer big data and neural net learning. This will provide a longer term answer for outperforming markets, should the need eventually arise.

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    $\begingroup$ Right on. Dilution is the solution to pollution. The best way to obscure an illegitimate activity is a vast amount of legitimate activity. $\endgroup$ – Willk Jun 3 '17 at 18:06
  • $\begingroup$ Actually, this goes both ways. On the one hand, you produce a much bigger footprint, and will run into problems with your trades changing the market so that the predictions are no longer accurate. If you "know" that IBM is going to zoom, the act of large-scale selling will depress the market for IBM. On the other hand, you're making a lot of money for a lot of people, and as Bernie Madoff found out, this provides incentive not to look to closely. $\endgroup$ – WhatRoughBeast Jun 4 '17 at 16:17
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Just claim predictive models/ai/supercomputers/string theory/whatever buzzword you want. Currently there a some hedge fund investors who we know nothing about that do just that. Investing no longer involves a financial degree.

Quantum Group of Funds

Renaissance Technologies

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Well, I'm not an expert in the stock market or other financial rigmarole, but I've thought about such things myself often enough to have a solid answer. The best way to not get caught doing anything is to not be obvious about it.

So first of all, obviously don't pull this trick by investing in any companies you or anyone related/acquainted with you may be otherwise professionally involved with - this would lead to suspicions of insider trading, time machine notwithstanding.

Beyond that, the trick is to pick a great many stocks to invest small amounts in, which individually don't make a massive fortune, but together equate to one. Further obfuscate this by picking a diverse portfolio of industries/services these companies provide.

Finally, choose, along with a diverse and expansive portfolio, multiple brokers through which to work,which further fragments any seeming pattern of someone with foresight they shouldn't have.

A bonus would be to also, when liquidating these stocks into conventional funds, place them in a multitude of institutions rather than one or a few major banks.

It also probably wouldn't hurt to have collaborators whom can further spread things out.

It's worth pointing out just for the heck of it that Heisenberg and Schrodinger would have a thing or two to say about this whole idea but oh well.

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Don't invest in stocks yourself. Start an investment newsletter. Mix your "guaranteed" tips with twice as many random ones. The punters who buy the newsletter won't be able to tell the difference till it's too late - but that's not your problem!

Use the guaranteed tips as a selective advertisement of how good your newsletter is. (There's no risk in doing that - the entire financial services industry does exactly the same thing to separate fools from their money!)

Aim to get say 10,000 clients with an annual subscription of \$100 and your income is \$1M a year, for maybe one hour's work per week. That's not "being greedy" - it's just having a nice lifestyle.

Once that is up and running, launch a "special edition" for high net worth customers with a subscription price nearer \$10,000 a year than \$100. Make sure their returns are above average (but not too much above average) and they will do your marketing for you, for free. Everybody likes to talk about how clever they are financially!

Note, this approach bypasses the most obvious cause for suspicion: You only need to recommends stocks to buy. You don't ever need to tell your punters when to sell them because they reached their peak. If people sell them too soon and reduce their potential profit, or hold them too long and lose money, that makes no difference to you - you get the same subscription fees either way. Of course you can time your advertising to show good results, but you don't tell anyone whether those results will get better or worse in future. You can't be accused of having insider knowledge if you never use it!

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    $\begingroup$ This seems to go against the OP's "the point is to not draw any attention at all" $\endgroup$ – Xen2050 Jun 3 '17 at 10:00
  • $\begingroup$ If everybody gets good forecasting, forecasting is going to affect the market and it could fail to realize. Furthermore, if you are sending a subscription for thousands of clients, you can be sure that some of them are spreading it, hurting your market base. $\endgroup$ – Pere Jun 3 '17 at 13:27
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High-Frequency Electronic Trading

Long-term stock price trends are for chumps. The flash crash of May 6, 2010 lasted for about 36 minutes, during which trillions of dollars changed hands between various electronic trading firms. Even in the absence of large flash crashes like that one, there is a large amount of second -to-second volatility in stock prices, and if you could perfectly predict this, you could net millions of dollars in a matter of hours with only very limited initial capital. At these scales, insider trading is not even an issue - you're not going to buy the stock until a fraction of a second before the price starts going up anyway; it'd be equally plausible that your supercomputer AI cluster managed to predict it from trends, etc.

Depending on your specific time-travel technology, you could either attach your time machine directly to the high-frequency trading equipment and have it interact directly, or you could go back in time with a hard drive containing detailed stock market records and base your trades off of that; it's essentially the same thing.

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Shares are bad choice. It would be much better to use Forex. And take advantage of tiny changes between exchange rates of currencies. The positions are closed within a few hours, so even with very short precognition it would not look suspicious. The factors affecting such market (except maybe insiders in central banks) are mostly beyond risking being accused of insider trading. And if you made bets on exotic currencies... EUR/USD pair is for wimps... Try betting on relationship between Turkish lira to Korean won... who knows how they should behave and must suffer from paranoia if think that your insider knowledge could be so good.

(the only extra advice is not being to good... making also bad guesses is required...)

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The obvious answer is "stay under radar". How low should you stay?

If your time machine can see only few hours or days in advance, you would have to make your trades right before the big market moves. And big market moves usually happen after certain news breaking out - like earnings reports, merger&acquisition announcements, big deals made or gone bust. Most of those news are known beforehand to a group of individuals known as "insiders", and they are prohibited by law from trading or divulging this information to anybody. But some insiders always try. That's why all significant trades before big announcements are suspicious and authorities try to investigate them. My former company's president was caught red-handed with telling his friends and family what he wasn't supposed to tell and he went to jail for it.

"But I'm not the insider and I'm not getting any insider information!" - you say. That's right. But prepare for the authorities to knock on your door and ask you some questions.

However, if your time machine has a longer range, you don't need to rely on big market moves. You can enjoy gradual stock growth or decline. In case if anybody asks, claim a unique methodology, or a hunch, and everybody will think you are just a "normal" genius.

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Start a hedge fund. Form a committee. Members of the committee research stocks and form recommendations (buy, hold, sell). Recommendations with a majority vote get taken. So now you have a legitimate activity that generates stock trades. You want it to do a bit better, so change one trade a day. Arrange things so that you count the recommendations, which are anonymous. Only you know what the real result is. Each day report an incorrect result. Buying instead of selling. Or vice versa.

Over time, this single transaction will give you an edge. You'll make just a little more money than everyone else. Too much of an edge? Back off for a while and let the group make all its own recommendations.

Let someone else be the public face of the group. You're just the one that counts the votes. So even if someone thinks that the group is brilliant, they won't credit you. They'll credit the people who vote. You just quietly collect money in the background.

If asked why the vote needs to be anonymous, say that it's to prevent politicking. Each person should make their vote separately. People shouldn't be advocating their position. It's in the rules. No sharing your votes. Someone who breaks that rule gets kicked out of the group. After a few early examples, you should have a group that is committed to that. After all, the group works. It must be a good rule.

The ideal would be to take over a hedge fund that already operated this way, but you might have to start your own. Recruit people who like the idea of how the fund would work.

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Most of the answers share a common theme: don't be too greedy. If you keep your winning to a not-so-suspicious level you can get away with it.

But that's no good. What's the point of a time machine if it doesn't make you filthy rich? Beating the market only a little isn't going to cut it.

Instead of trying to win consistently a little over a long period of time, win big in a single transaction. Identify a stock that will over a surprising short period of time go from worth nothing to worth millions. Only do this once, and it will not look suspicious, it just looks like you got lucky.

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You'd be lost in the crowd

I'm not sure you would be detected. There's billions of people on the planet, and many of them are doing get-rich quick schemes... because they believe they work. I'd think more would look upon you with envy than skeptically. And besides, others have made literally billions of dollars without the aid of time machines, so why would anyone suspect you?

How much makes sense?

Another thing you should consider is exactly how much is plausible on a given day for various stocks to rise and fall. Reportings like to zoom in on those line graphs because it makes a very dramatic story, but they're not often spikying around by 100's of percentage points in mere days, if this article can be used as a rough upper/lower bound.

Maybe you'll discover in your research that the amounts one can earn in a day is not so implausible to attract attention.

People notice much less than you'd think

My grandma's neighbors once had a crack lab in their basement. Maybe it was meth. My neighbors could have millions of dollars under their mattress. Or they may not. I have no idea, and I'd bet most of the other people on the block don't either. It's not like we spend a lot of time inside other people's houses.

If you're not spending tons of cash in noticeable ways, then you won't be noticed.

"Suspected" is not "found guilty of"

Let someone suspect, and have the way your character deals with it be part of the story. Do they flaunt it? Do they ignore the investigation? Do they get extra paranoid?

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Dot_spot (or however you write it) actually made a very good remark:

Don't play the stocks. Play games of chance instead.

In the Schlock Mercenary webcomic, in the 2005 arc involving time travel, one of the characters played the stocks to make hundreds of millions from it. However, the character that brought him those stocks bought lottery tickets.

Lottery tickets are a much safer way to abuse time-travel of information:

Disadvantages of stock trading

  1. playing the stock market inherently changes the price these stocks are being traded at. This means that you buying these stocks may affect the price at which those stocks are being traded, leading to unpredictability in prices.
  2. Even if you can compensate for these stock changes, there is the possibility that your trades may disrupt the market. Suppose you get a prediction that a stock will double in value in 2 days and then goes down by 90% 2 days later. You end up buying shares now, which may actually lead to other people following your example, leading to the projected rise in value. Then, you sell it all at the peak, and even do some short selling, which is again a potential signal for other buyers to sell their own stocks, which again causes the drop in value. In the end, you're not insider trading, you're disrupting the market, and the price changes become a self fulfilling prophecy. But if you hadn't sold those shares after you bought them, the market may have remained stable.
  3. Making too much profit may attract unwanted attention from other people. People are always trying to find out how to make the most money through trading, and other people are always trying to figure out how to make the trading fair.

Advantages of lottery tickets:

  1. Lottery tickets are cheap. A ticket usually costs only a couple of USD or your regional equivalent.
  2. Lottery is stable. if you buy a lottery ticket, it's not going to magically change the winning numbers. Likewise, if your machine can really see the future, it can indeed spot the winning numbers and they'll always be those. You're not going to affect the future beyond potentially making someone else split the pot with you.
  3. Winning the lottery doesn't make you famous. In many countries, it's normal that the winner of the lottery remains anonymous to the general audience. However, being a master at stock trading is noticeable in the sector, leading to people tending to follow your lead.
  4. Winning the lottery is easy to disguise as a random event. If you can see a month into the future, you can simply setup a recurring lottery ticket purchase and hide your victory as getting lucky.
  5. Lotteries usually have higher winnings. A single ticket can give you hundreds of millions at once. Winning hundreds of millions on the stock market is not easy without attracting attention of the watchdogs.
  6. If you attract too much attention with the lottery, there are other measures that you can do. Go into a casino, go to the roulette table and put everything on black at the right time. Or gamble on sports outcomes. Do note that sports outcomes may draw unwanted attention from unsavory types, like match-fixing mobsters.
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  • $\begingroup$ Are you sure the lottery is stable? You have a bunch of lightweight balls bouncing against each other repeatedly - ANY change in the environment would affect them. $\endgroup$ – D M Jun 3 '17 at 17:18
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    $\begingroup$ @DM if physics is deterministic and the machine can indeed see the future, then there is no reason to assume that the numbers will change. After all, it is unlikely that anything I can do as someone who just plays the lottery to change the environment. My point is that buying a single share is more likely to affect the stock exchange than buying a single lottery ticket is for the winning lottery numbers. Unless the lottery is being tampered with, which would probably be a major scandal. $\endgroup$ – Nzall Jun 3 '17 at 18:58
  • $\begingroup$ Simply driving - or even walking - can affect traffic, which could affect the exact timing of a truck rumbling past the building where the numbers are drawn. It doesn't take much to affect bouncing ping-pong balls. But, I suppose, you're only out $2 or so if this does happen, making it rather safe. $\endgroup$ – D M Jun 3 '17 at 19:37
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    $\begingroup$ @DM Actually, what I'm saying is that you're not going to affect those random numbers in any way through your actions, because the time machine will already have taken those into account when calculating the future. However, this is going into the domain of predestination and a fixed future. If you have a way to see the future, the question is whether you see the future that IS going to happen no matter what, or a future that MAY happen depending on the actions taken. I think such a decision should be made by the author of the material, not the people helping the author with research. $\endgroup$ – Nzall Jun 3 '17 at 20:15
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Depending on how far into the future you can see, and how much control you have over what you can see, you could do whatever you want on the stock market and simply use the time machine to watch for blowback on yourself.

Keep tabs on your own personal life as well as the market details. If you see yourself getting an unwanted amount of attention in the future, change your strategy to avoid it. If you see yourself getting arrested, use the machine to find out how the authorities got onto you (and what they think you did) and then take steps to derail that investigation or set up evidence that disproves the allegations.

(Should be easy enough, because unless they're accusing you of using a time machine to predict the future, you're most likely innocent of the charges anyway.)

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Real Estate is your friend.

Heck, it might even make you president . . .

I assume that you want to make your money fairly fast (otherwise this question is too easy). The beauty of real estate is that single deals can make you hundreds of millions or even billions in a single deal, and no one blinks an eye. With a time machine you can easily buy a piece of Orlando farmland in, say, 1960, and wait for Mr. Disney. Or you can head to 1920, buy a little ranch in Texas, somewhere around Permian, I think, and wait for the oil drills. If you prefer a more hands-on approach, head to Manhattan in the 1930's - you can buy the whole island for a string of beads, I think - and sell in the post-war boom. And here's the thing . . . no one will suspect a thing, because fortunes are made on such "luck" all the time. About 10% of all billionaires made their fortune in real estate, and you probably haven't heard of any of them not named Trump.

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In either case, you get attention for your success.

You just said it yourself. You need to reduce "your success". Ideally both the "your" and the "success" part. And you can do something for the attention too.

Don't be greedy.

As you stated, it will be your success that attracts attention. So, in the beginning, sell stock at more than you bought - but less than the maximum it will attain. Be good, but far from perfect. Do not win 100 - win 150, lose 50. Ideally, win many small operations, lose a few big ones.

Distribute the "blame".

When you have money enough, hire several consultants and get lots of advice from them. Then follow exactly, but almost only, their good advice. Set them up for failure - when one of them won you too much, too long, start following their bad advice also. At that point, switch to another consultant. Apparently, it will be them that are "too successful" - and even then, none of them really too much.

Sometimes, do not follow advice you know to be good, and lose the possibility of raking in millions.

Distribute the happiness.

Sell advice to third parties. Not too good advice, but good enough to get good business.

Act.

Occasionally, buy some stock that is going to fail spectacularly and berate the mysterious consultants that guaranteed it was going to rise. Try unsuccessfully to sell the stock. Watch it rise back to the previous levels and more. Act as if you knew that it was going to soar and deny you ever cursed the brokers that suggested it. People will immediately slot you in the "lucky asshole" category, and even if you earn millions, they'll be sure that you're also losing a bunch, and simply hiding it well.

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I would take a "hide in plain sight" strategy:

If your time-machine can see 1 trading day into the future...

Start a day-trading blog.

Subscribe to several financial newspapers. Important: these must be paper subscriptions, to avoid leaving a digital trail of what you're going to do next.

Your typical day might run like this: Every morning, read the prediction off your time machine, then search your newspapers for positive articles that happen to match stocks that are going to go up (vice-versa for negative stories). Write a blog article about the stock you just read about from the paper. Post lots of charts, technical indicators, quote IBD ratings, etc. Trade the stock. When too many people start following your blog, take a losing streak to shake them off.

If your time-machine can see a month into the future...

Hire some people and start a monthly newsletter

Typical month:

  • Ask your staff to come up with trading ideas by the 5th of the month
  • Give your staff a deadline of the 10th for draft articles and the 15th for final articles. The 15th is the day you send the newsletter to print. Place trades on the 16th.
  • Read your time-machine prediction on the 5th the month when you are reviewing the staff's ideas (you do not tell your staff about this)
  • Find ways to make sure losing articles don't always get published

Read the biography of William O'Neal, founder of IBD.

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