Insight 3D Financial Trends

Wed 06 March 2019

Zero Hedge

Posted by Bill Johnson in Hedge Funds   

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Zero Hedge or ZeroHedge is a mainly financial markets website, that presents both in-house analysis, and analysis from investment banks, hedge funds, and other investment writers and analysts. Zero Hedge, per its motto, is bearish in its investment outlook and analysis, often deriving from its adherence to the Austrian School of economics and credit cycles. While often labeled as a financial permabear, Zero Hedge is also seen as a source of “cutting-edge news, rumors and gossip in the financial industry”.Over time, Zero Hedge expanded into non-financial analysis, advocating what CNN Business called an anti-establishment and conspiratorial worldview, and which has been associated with alt-right views, and a pro-Russian bias. Other sources describe Zero Hedge as libertarian. Zero Hedge's non-financial commentary has led to a number of § Site bans by various global social media platforms, some of which have been overturned (e.g. 2019 Facebook ban), while others remain (e.g. 2020 Twitter ban).Zero Hedge in-house content is posted under the pseudonym “Tyler Durden”; the founder and main editor was identified as Daniel Ivandjiiski.

History and authorship

Zero Hedge's first post appeared on 9 January 2009 at 4pm, and the domain was registered on 11 January 2009. According to the Boston Business Journal, the website “publishes financial news and opinion, aggregated and original” from a number of writers “who purportedly hail from within the financial industry.” Almost all in-house articles are signed under the collective pseudonym, “Tyler Durden”, a character in the Chuck Palahniuk book and movie Fight Club.In September 2009, news reports identified Daniel Ivandjiiski, a Bulgarian-born, U.S.-educated, former hedge-fund trader, who was barred from the securities industry in September 2008 for earning US\$780 from an insider trade by FINRA, as the founder of the site, and reported that “Tyler Durden” was a pseudonym for Ivandjiiski. FINRA rulings show Ivandjiiski worked for 3 years at New York investment bank, Jefferies & Co., as well a number of hedge funds, the last of which was Wexford Capital LLC, a fund led by former Goldman Sachs traders. One female site contributor, who spoke to New York magazine in an interview arranged by Ivandjiiski, said “up to 40” people could post under the “Tyler Durden” pseudonym. The same New York magazine article, published on 27 September 2009, stated that Ivandjiiski's father was Krassimir Ivandjiiski, a Bulgarian publisher and editor of the website Strogo Sekretno (“Top Secret”), and monthly publication Bulgarian Confidential, since 1994.In a 29 April 2016 Bloomberg article “unmasking” Zero Hedge, the authors writing as “Tyler Durden” were revealed as Ivandjiiski, then age 37, Tim Backshall, age 45 (a known credit derivatives strategist, who had been on CNBC; an irony given Zero Hedge's strong aversion to CNBC), and Colin Lokey, age 32 (a Seeking Alpha staff writer). Lokey, the newest member, who joined in 2015, publicly revealed himself and the other two, when he left the site in April 2016. Ivandjiiski confirmed the three men “had been the only Tyler Durdens on the payroll” since Lokey joined in 2015. Lokey said he was paid \$6,000 per month, and received a bonus of \$50,000, earning over \$100,000 in 2015. According to Ivandjiiski, the blog generates revenue from online advertising (there is no subscription service).

Site bans

On 12 March 2019, Bloomberg reported that Facebook had banned users from sharing Zero Hedge posts three days earlier. MarketWatch, noting that Zero Hedge is a “frequent critic of Facebook”, reported that the ban was lifted later that day with Facebook saying that the ban was a “mistake with our automation to detect spam”. Business Insider, describing Zero Hedge as “a favorite of City and Wall Street traders, known for its anti-establishment and bearish slant on financial topics”, noted that Donald Trump Jr. and Nigel Farage raised objections to Facebook's censure of Zero Hedge.On 20 March 2019, Australian telecom company Telstra temporarily denied access to Zero Hedge, and other websites, as a result of the Christchurch mosque shootings.On 20 January 2020, Bloomberg News reported that Zero Hedge's Twitter account, which then had 670,000 followers, was “permanently suspended” from Twitter for “violating our platform manipulation policy”. Bloomberg reported that Zero Hedge had been informed by Twitter that the suspension was as a result of an article titled: “Is This The Man Behind The Global Coronavirus Pandemic?”, regarding a Chinese virologist at the Wuhan Institute of Virology, which was picked up in an article by BuzzFeed News, who made the complaint to Twitter.

Manifesto and views

At its creation in January 2009, Zero Hedge published the a manifesto on the objectives of the site.

Financial views

The most strongly held belief by Zero Hedge is in Austrian economics, and that economic cycles are really credit cycles, and that the quantitative easing (“QE”) by global central banks is a temporary and artificial asset-price support scheme, that makes the credit cycle even more extreme; and hence the site's strongly bearish views. As a result of this view, Zero Hedge supports assets that are outside of the central banking system, including precious metals and gold, and even cryptocurrencies. The site is strongly against Keynesian economics, and sees quantitative easing as a Keynesian “money printing trick”, and vilifies advocates of this approach, such as Paul Krugman in particular. The site praises writers with similar views, such Albert Edwards and John Hussman. Critics of Zero Hedge label the site a “permabear”, whose views missed the global recovery since 2013. Zero Hedge responds that the since 2013, global central banks have undertaken a continuous programme of quantitative easing (“QE”) (e.g. aggregate monthly easing has rarely dropped below the level of QE1 or QE2, see graphic opposite), and when QE1 and QE2 ended, markets collapsed. The site references Japan, whose market set new lows after each round of QE, from 1994-2013, and where the latest round of QE, started in 2013, has seen the BOJ become a dominant owner of the Nikkei 225.Zero Hedge maintains a number of financial views/theories which are considered conspiratorial, and/or hard-to-prove or unprovable; notable views include:

A connected theme from the above views is that central banks have nationalized capital markets, that prices are artificial and do not reflect economic theory, that U.S. financial institutions have profited from this, and that the manipulation of asset prices has driven wealth inequality in society and built up financial risks (due to the leverage against these prices). Zero Hedge often shows the chart of G3 balance sheets versus Amazon's share price (see graphic), concluding that U.S. taxpayer's money has been used by the U.S. FED to make U.S. taxpayers unemployed, as Amazon, despite making few profits, is one of the highest valued companies. Bearish macroeconomic views and conspiracy theories aside, Zero Hedge is noted as a source of detailed, but proprietary, research from Wall Street investment banks and institutions, on securities, which can be picked up by the financial media. Sometimes, the research is about other investment banks. It has also been a source of breaking news in the general capital markets industry. In Zero Hedge's early years, it was associated with exposing the unknown world of High-frequency trading (“HFT”), and the HFT techniques that Zero Hedge claimed amounted to market manipulation.Zero Hedge is known for personalized attacks on specific finance professionals, examples being newsletter writer and commodity analyst, Dennis Gartman (over 758 articles), Nobel Prize-winning economist, Paul Krugman (over 703 articles), and fund manager Whitney Tilson (over 325 articles), amongst others.

Non-financial views

While Zero Hedge's financial content is often referred to/quoted in the mainstream financial media (see above), its non-financial content has not been relied on by mainstream media. The 29 April 2017 unmasking article by Bloomberg, quoted former website staffer Colin Lokey as saying: “I can't be a 24-hour cheerleader for Hezbollah, Moscow, Tehran, Beijing, and Trump anymore. It's wrong. Period. I know it gets you views now, but it will kill your brand over the long run. This isn't a revolution. It's a joke.” Lokey told Bloomberg that he was pressured to frame issues in a way he felt was “disingenuous,” summarizing its political stances as “Russia=good. Obama=idiot. Bashar al-Assad=benevolent leader. John Kerry=dunce. Vladimir Putin=greatest leader in the history of statecraft.”In May 2016, Benjamin Wallace-Wells writing in The New Yorker magazine, in a follow-up piece to Bloomberg's 29 April 2016 article, associated the website with the alt-right, although the article did not specifically label Zero Hedge as alt-right, stating: “You could ask some of the same questions about the alt-right, the loosely assembled far-right movement that exists largely online, and that overlaps with both the Trump campaign and with the politics of Zero Hedge”. Wallace-Wells also noted that the site demonstrated a pro-Russian bias, stating the site had a “pointed” Russophilia.In a series of articles in June–July 2017, the Financial Times, covering an event organised by one of the site's bloggers, said that, “It probably didn't help that ZeroHedge was also used as a lead-in for a 2016 New Yorker piece about the alt-right, despite its financial focus and a political bent that is more Drudge than Richard Spencer.”On January 2020, when the site was removed from Twitter, Buzzfeed News described Zero Hedge as “pro-Trump” and “far-right”, while reporting on the removal, the Washington Post said that Zero Hedge “In recent years, the blog has amplified right-wing conspiracy theories on a range of topics”.

Traffic statistics

User growth

Rank2traffic, reported the following trend in historical sessions per month for Zero Hedge, since inception in 2009. 1 March 2009, undefined 1 April 2010, 1.16 million 1 February 2011, 4.54 million 1 January 2012, 11.0 million 1 February 2013, 12.0 million 1 January 2014, 20.0 million 1 January 2015, 18.0 million 1 January 2016, 17.0 million 1 January 2017, 33.0 million 1 January 2018, 40.0 million 1 August 2018, 37.7 millionRank2traffic statistics show Zero Hedge's traffic reached a mini-peak in sessions per month in October 2014 (at 22 million per month), which then fell to a mini-slump in June 2015 (at 13 million per month), but had since tripled by January 2018 (to 40 million per month).

User profile

In August 2018, site traffic analysis reported the following about Zero Hedge:

Twitter account

On 16 November 2017, Forbes listed it as one of its “100 Best Finance Twitter Accounts You Should Be Following,” with the Zero Hedge Twitter account being one of nine on the Forbes list with over 100,000 followers (Zero Hedge had 440,000 at the time), and ranked as the 7th largest following on the Forbes list.On 31 January 2020, Zero Hedge's Twitter account, which then had 670,000 followers, was “permanently suspended” from Twitter for “violating our platform manipulation policy” (see #Site bans).

Critical reception

Launch to 2014

In August 2009, under the pseudonym Tyler Durden, Ivandjiiski was interviewed on Bloomberg Radio on HFT. By September 2009, Zero Hedge had begun drawing more traffic than some established financial blogs, and Quantcast reported that the blog was getting 333,000 unique visitors a month (by 2018, it would be 40 million per month). In September 2009, journalist Joe Hagan wrote that Zero Hedge's founder was “a zealous believer in a sweeping conspiracy that casts the alumni of Goldman Sachs as a powerful cabal at the helm of U.S. policy.” In September and October 2009, Financial journalists Felix Salmon and Justin Fox characterized the site as conspiratorial. However, Justin Fox, went on to describe Ivandjiiski as “a wonderfully persistent investigative reporter” and credited him for successfully turning high-frequency trading “into a big political issue,” but also termed most of the writing on the website as “half-baked hooey,” albeit with some “truth to be gleaned from it.”In his book, Griftopia (2010), Matt Taibbi cited Zero Hedge as having accurately assessed the level of corruption in the banking industry. In January 2011, Zero Hedge was quoted in the Columbia Journalism Review regarding a JPMorgan-Ambac lawsuit: “JPM committed fraud through misrepresentation, then wilfully and maliciously traded against the entities it had sold misrepresented securities to.” In March 2011, Time magazine ranked Zero Hedge as 9th, in its 25 Best Financial Blogs, with nominator, Bloomberg's Paul Kedrosky, stating that “So while I don't read Zero Hedge regularly—it's too bearish, too conspiratorial and too much of an intellectual monoculture—I like knowing that it exists. Any time I'm feeling like things might just turn out O.K. on planet Economic Earth, I know where to turn to be disabused of that stupid idea.” Susanne Craig of The New York Times described Zero Hedge in October 2011 as “a well-read and controversial financial blog.”In December 2012, Bank of America, which had been criticized by the site in the past, blocked its employees' access to Zero Hedge from BOA servers.

2014 to 2018

In September 2014, the site was described by CNN Money as offering a “deeply conspiratorial, anti-establishment and pessimistic view of the world.”In November 2014, Dr. Craig Pirrong, Professor of Finance at the University of Houston, stated: “I have frequently written that Zero Hedge has the MO of a Soviet agitprop operation, that it reliably peddles Russian propaganda: my first post on this, almost exactly three years ago, noted the parallels between Zero Hedge and Russia Today.” In December 2013, Zero Hedge accused Dr. Pirrong of being a “paid-for-Professor”, who had "made a living of collecting “expert academic” fees by simply signing off on [wall street] memoranda", quoting a New York Times expose by David Kocieniewski into Dr. Pirrong.In September 2015, Nobel Prize-winning economist and New York Times columnist Paul Krugman described Zero Hedge as a scaremongering outlet that promotes fears of hyperinflation and an “obviously ridiculous” form of “monetary permahawkery.” In November 2012, Krugman had noted that Bill McBride of Calculated Risk, an economics blog, has treated Zero Hedge with “appropriate contempt”. Krugman has been one of the most vilified individuals on Zero Hedge, and the subject of over 703 articles (almost all negative) since inception, due to Krugman's advocacy of Keynesian economics.In April 2016, as part of its expose from the Colin Lokey interview, Unmasking the Men Behind Zero Hedge, Wall Street's Renegade Blog, Bloomberg Markets stated that since its founding in the middle of the financial crisis, “Zero Hedge has grown from a blog to an Internet powerhouse. Often distrustful of the 'establishment' and almost always bearish, it's known for a pessimistic worldview. Posts entitled 'Stocks Are In a Far More Precarious State Than Was Ever Truly Believed Possible' and 'America's Entitled (And Doomed) Upper Middle Class' are not uncommon.”In a May 2016 follow-up Bloomberg opinion piece, Noah Smith said: “Zero Hedge has become known as a source of cutting-edge news, rumors and gossip about the financial industry, as well as a haven for gold bugs, foes of the Federal Reserve and critics of high-frequency trading”; and also that: “But I've realized that the website is also something else—a kind of support group for financial industry workers who are worried about their own economic future in the face of sweeping changes in technology, regulation and demand”.A May 2016 piece by Benjamin Wallace-Wells for The New Yorker magazine, also following up on the April 2016 Bloomberg unmasking article, described Zero Hedge as, “a blog that combines analysis of the financial markets, emphasizing the essential corruption of Wall Street”. As discussed in § Non-financial views, the article also associated the site with the alt-right, and of being pointedly Russophile.On 16 November 2017, Forbes listed Zero Hedge as one of its “100 Best Finance Twitter Accounts You Should Be Following”; Zero Hedge was one of nine of these 100 Twitter accounts that had a following of over 100,000 on Twitter (Zero Hedge had 440,000). On 22 August 2018, Forbes also listed Zero Hedge as one of its “Top 17 Value Investing Blogs You Should Be Reading”


On 20 November 2019, NBC News reported Zero Hedge as the initial source of a “misleading claim about the head of the Ukrainian energy company at the heart of the House impeachment inquiry”, which went viral during the impeachment hearings. NBC said that “ZeroHedge apparently misconstrued the original Russian article from the Interfax-Ukraine News Agency, which did not mention an indictment. The Interfax-Ukraine News Agency operates as part of Interfax, a Russian news outlet”.In January 2020, after Zero Hedge had been removed from Twitter, Business Insider reported that “In the years after the financial crash, the site had a bonafide social presence and a solidified place among financial insiders”, and that “Since its rise to popularity among Wall Street insiders, Zero Hedge has since become known for sensationalist headlines and gruff take on the world's news”. Reporting on the affair, the Washington Post said that, “Zero Hedge launched in 2009, mostly featuring news and commentary about financial markets from a libertarian perspective. In recent years, the blog has amplified right-wing conspiracy theories on a range of topics”.


GEROVA Financial

On 27 March 2012, Daniel Ivandjiiski was named as a co-conspirator in a civil complaint regarding a “complaint for damages and equitable relief”. The complainant, Noble Investments, who described themselves as a seed-investor in GEROVA Financial Group (NYSE: GFC), alleged that Dalrymple Finance had, with Zero Hedge and others, engaged in a short and distort stock manipulation scheme, by publishing negative reports on GEROVA in January 2011. The complaint stated that, amongst other charges, the defendants made damaging accusations that major shareholders, the Galanis family, and GEROVA senior executives, were involved in a “pump and dump” scheme; it also made ad hominem attacks on both Daniel Ivandjiiski, and his then alleged father, Krassimir Ivandjiiski.Dalrymple replied: “Writing research on quoted companies and distributing that research to financial media outlets, is neither illegal and is a daily legitimate activity on Wall Street”. The complaint did not progress and there was no SEC investigation. GEROVA Financial's share collapsed in 2011, and never recovered. On 24 September 2015, the SEC charged a number of senior GEROVA executives and a few major investors in GEROVA with a “stock fraud scheme”, for which several, including the former company Chairman and President, Gary Hirst, received jail sentences in 2017.

See also

Krassimir Ivandjiiski Daniel Ivandjiiski Marc Faber John Hussman



External links

Zero Hedge: Official Website Tim Backshall: Fox Business, Credit Default Swaps and the Greek Debacle, 5 May 2011 Tim Backshall: CNBC, A Repricing of Risk, 1 March 2007 Colin Lokey: Seeking Alpha Account, Director of Contributor Success Daniel Krassimirov Ivandjiiski: FINRA, CRD#: 4445294 Broker Registration History Strogo Sekretno “Top Secret” (also known as, “Bulgarian Confidential”), Bulgarian paper run by Krassimir Ivandjiiski, father of Daniel Krassimirov Ivandjiiski