Barry Ritholtz writes for Bloomberg View about the New York high school student who duped New York magazine reporter Jessica Pressler into believing he had amassed a $72 million portfolio by investing during lunch breaks.
Ritholtz writes, “But in thinking about this episode, I started jotting down questions I might’ve asked the whiz-kid trader if I’d been confronted with the story:
— Could you provide some context? If you made $72 million, what did you start with and who provided you with capital?
— Did you begin with $10,000 or $100 million? Without context we have no idea what the performance was — and that would be the case even if the $72 million figure was true.
— How did you put together such a spectacular trading record while going to high school? When did you find time to do analysis and trade? Did you put in trade orders between classes?
— How does a random kid beat the best-equipped, fastest and smartest algorithms, run by firms with effectively unlimited resources to pursue trading profits?
“We could go on about financials for a while. But here’s a broader point: there will always be ways to verify a financial transaction — trade documentation, assets held at custodians, audits from accountants, monthly statements from brokers. Yes, the kid may have provided the reporter with a facsimile of a bank statement. But the absence of proof of winning trades should have been a gigantic red flag.”
