Divination & derivatives: The Delphi Oracle & the Discord Server (on how trading gurus are like false prophets, pt. 3)
On the structural kinship between ancient prophecy, content creators, and modern market calls along with what happens when the faithful lose everything.
“The oracle at Delphi neither speaks nor conceals, but gives a sign.” — Heraclitus
Send me money, send me green, heaven you will meet
Make a contribution and you’ll get a better seat
Bow to Leper Messiah — Metallica, Master of Puppets (1986)
In Part 1, I showed you how an iron condor (four options contracts arranged in a specific configuration) is structurally identical to a Celtic Cross tarot spread (ten cards arranged in a specific configuration).
In Part 2, I introduced you to Gerolamo Cardano, the gambling addict and astrologer who invented probability theory, to illustrate how his work underpins the financial models running on Bloomberg terminals today and how those models are structurally identical to astrological natal charts.
Part 3 is about what happens in fortune telling and fortune making when the prophecy fails and nobody blames the oracle. Here’s the plan - first I’ll show you how ancient prophecy worked at Delphi as the structure is identical to how trading gurus operate today. Then I’ll explain why this is happening now to regular people instead of just hedge funds. After that, I’ll walk you through how trading mirrors religion by weaving together three spectacular financial blowups from the last thirty years. Finally, I’ll show you why trading and divination systems fail in structurally identical ways.
Pay attention to the heavy lifting the word unfalsifiable is doing this round as it’s going to matter.
Pythia and the Discord server: not a Wes Anderson film, but merely ancient history
Have you ever seen a woman sitting on a tripod over a crack in the earth while she inhales fumes rising from the ground as she speaks in tongues?
Unfortunately, if you have seen this at Black Rock City during Burning Man, I’m sorry to be the one to tell you this, but that’s just derivative gauche behavior appropriating Greek culture since this already happened back in ancient Greece at the Oracle of Delphi. The oracle, the literally high priestess, was known as Pythia.
Kings and generals traveled for months to hear her prophecies, waiting in a line like people do for Berghain, all eagerly hoping for a chance to get past the door guy and get inside so they may experience god or something like it. In Pythia’s case, they came for divination to hear her predictions on subjects like marriages and war (actually, those may be closer together than not, subject-wise), or more mundane things, like crop harvests. Pythia spoke ambiguously, so you could also say she’s the origin of vagueposting.
For example, when some guy named Croesus of Lydia asked whether he should attack Persia, the oracle said if he did, a great empire would fall. Croesus attacked. An empire fell. It was his own. No one told him about Persian emotional jihad, apparently. Oops, my bad wouldn’t really cut it here because Pythia’s prophecy was never technically wrong. It was just the interpretation of it.
How could such a thing ever happen? The way the oracle of Delphi worked is Kubrickian when I write it out. After inhaling the fumes, Pythia would enter a trance state and speak through babbles, moans, and uttered fragments. She never spoke clearly or definitively, so the priests of Apollo would then interpret her utterances into hexameter verse and deliver the prophecy to the solicitor.
Notice how this works as a system - the oracle speaks ambiguously, priests deliver the message, the solicitor receives the wisdom to interpret as they see fit. Prophecy, by systemic design, becomes unfalsifiable. If the prophecy seems wrong, well, much like Shaggy’s 2000 hit, it wasn’t me. It was the solicitor’s understanding that was wrong, the interpretation of that wisdom received.
Now consider modern trading gurus and their takes on financial positions. They say things like “We could see movement in either direction.” “Watch this closely.” “The market is at an inflection point.” These statements sound like predictions, but they are not predictions. They are ambiguous nothing burgers, and regardless of whatever happens, the guru can claim they called it (or not.) This works because their followers interpret, enter positions, tithe hundreds if not thousands of dollars annually for access to the Discord server or wherever the oracle speaks, as worship at the temple of greed never sleeps.
Should they lose money, the failure is never the system but their execution, their understanding, their position sizing, their interpretation of what their guru said. It was them, not the guru, just like Pythia’s takes were unfalsifiable and ultimately subject to the solicitor’s interpretation. The Delphi’s structure had the oracle, priest, follower, and an unfalsifiable outcome. It worked in ancient Greece and it works now. But why is it reaching regular people instead of just hedge funds and banks?
The guru economy
Before 2013, if you wanted to trade stocks, you paid commission on every trade, something like $10 per transaction as standard, which adds up and maintains inaccessibility. Then Robinhood launched and in 2015 had commission-free trading, meaning anyone could gain access friction free super easily from their phones in pocket, $10 fee be damned. By 2019, every major brokerage had followed. Suddenly the barriers to stock entry for retail investors were gone, but more pressingly, so were those for options (which is where the real gambling happens. If you’d like a refresher on options, read Part 1).
Brokerages started handing out options like candy to virtually anyone who checked a few boxes on a form. You didn’t need to prove you understood what you were doing. No one really reads the terms of service, right? You just needed to click that you understood the risks. Click click. By 2020, Robinhood reported that options trading made up more than half their transaction-based revenue.
Then came the SPX 0DTE explosion. SPX is the ticker symbol for options on the S&P 500 index, which tracks the 500 largest companies in America. In 2022, the CBOE (Chicago Board Options Exchange, the exchange that actually runs this game) added Tuesday and Thursday expirations, making SPX options available every single trading day. Same-day bets became possible every day of the week.
Enter social media and the new business models it created in the form of influencers, like the trading guru.
Someone alleges they’ve made money trading, builds a following on Twitter or YouTube or TikTok showing their wins, screenshots galore of green lines tumbling across the screen in directions that soothe the mind, wen moon, line go up, proof of concept achieved. Then they launch a paid channel via Discord or Slack or Substack or Patreon or Distacktreon, where they charge X amount a month for access. They post their trades in real time, and their followers copy them at their own discretion.
The grift and genius of guru gains is obvious: the guru makes money whether the followers win or lose. The subscription fee is theirs regardless. No one is clawing it back. Part 1’s VIP, Captain Condor, charged around $5,500 per member. With 1,000+ members, that’s potentially millions yearly in revenue. When everything blew up, that subscription money didn’t disappear like his followers lost theirs.
What makes this particularly nefarious is the lack of penalty or recourse. No oversight or duty of care is legally required of a trading guru as it would, for example, be in a hedge fund. In a hedge fund, the manager has fiduciary duty and regulatory oversight. In an exchange-traded fund (ETF), you can sue if they do something wrong. But trading gurus? They live in the liminal gray zone of content creation as education where they are not managing money but just sharing what they do. Subscribers, solicitors, and supplicants are given information, and what they do with that information is their own choice. If and when accounts go to zero, that’s their problem.
The guru has no downside. Win, and the guru’s a genius. Lose? Well, trading is risky, this is education not financial advice, you knew that, see you next month. The guru absorbs all the reward, the followers absorb all the risk, and the prosperity gospel of finance barrels towards the orgastic future that recedes before us, eludes us then and now, but that’s no matter as tomorrow the followers will run faster, stretch out their tips on massive alpha farther, and one fine morning… so they beat on, bets against the current, borne back ceaselessly into past due balances. Or margin at zero. Whatever. You get the point. And yes, I wanted to quote that line from The Great Gatsby because whenever I think about trading gurus and the kinds of people who follow them or fall upwards in life somehow, I remember a guy I once briefly went out with who unironically described himself as a golden retriever wanting a golden retriever life. He knew the quote by heart and would recite it. This was something he was very sincerely proud of.
The congregation tithes for the guru, so reach out and touch faith, as free trades, easy options, and social media gurus explain how the trading temple moved from Delphi to Discord. But what happens when the prophecy fails?
The temple of trade via sacred texts, judas priests, rituals, and trials of adversity
Pythia and her purple haze proclamations may read as archaic, but if you understand the mechanics, the history of spectacular trading blowups stops looking like a series of freak accidents and starts looking like what it is: the faithful discovering their oracle was just a woman on a tripod inhaling fumes.
Every trading religion requires the same elements via sacred texts, priests to interpret them, rituals that bind the community, and a test of faith when everything goes wrong. To prove this isn’t just one guy on Twitter, I’ll weave together three spectacular trading disasters from the past thirty years: Long-Term Capital Management (1998), Karen the Supertrader (2016), and the collapse of XIV (2018). It’s the same liturgical structure for each just with different congregations.
Firstly, in the temple of trading, there must be a text which serves as a source of truth that is mathematically or historically irrefutable.
At Long-Term Capital Management (LTCM), the scripture was mathematical. Its prophets were Myron Scholes and Robert Merton, gods of quantitative finance who would win the Nobel Prize in 1997, right before the 1998 collapse. Their formulas calculated that the kind of loss they eventually suffered should happen only once every several billion years. The universe is 13.8 billion years old. Their sacred text said they were safer than the age of everything.
Karen “The Supertrader” Bruton, a retired executive from a limestone company, claimed to have turned $100,000 into tens of millions selling options. “I have a high level of confidence in what we do,” she told the media, “because it’s proven, and we do it over and over and over.” For Karen, the backtest was the gospel. Finally, a woman learning from the confidence of mediocre men. We love to see it, baby.
XIV, an Exchange Traded Note (ETN), printed money when the market stayed calm. Its believers had a simpler gospel that volatility stays low. For years, the thesis was the text. Finance forums filled with converts calling it the “infinite money glitch.” Why would volatility spike? It hadn’t in years. Line go up, up, up.
Secondly, sacred texts require interpretation, which is how the priesthood enters stage left in the trading temple.
LTCM’s partners were the ultimate authority. When Scholes and Merton spoke, banks competed to lend them money on favorable terms, with the fund controlling over $100 billion in assets. The priesthood clad in navy suits had never been more credentialed.
For XIV, the priest was also a bank in Credit Suisse which issued the product, carrying institutional imprimatur. If a global bank offered it, surely someone had done the math. Surely it was legitimate.
As for Karen, the media acted as the authority anointing her “The Supertrader,” interviewing her repeatedly, sanctifying her story. A suburban woman, not a Wall Street guy, beating the markets, a bastion of the democratization of finance. Even after the Securities and Exchange Commission charged her with over $50 million in fraud, the priesthood defended the oracle, with media outlets calling Karen very “special”.
Thirdly, ritual binds a community and create the illusion of control through participation.
LTCM’s partners pored over models daily, tending the most sophisticated quantitative operation in history. Karen traded her formula “over and over and over”, turning repetition into ritual as confirmation of truth. XIV holders checked positions, watched the VIX, celebrated premium rolling in, posted gains to forums, meticulously memorializing every morsel. Every documented win brought people together, since after all, a community needs to reinforce its behavior. I mean, consider it - why else does the USC alumni network exist? It’s not like anyone would hire them otherwise, let’s be real.
Speaking of USC, failure comes to mind. In case a prophecy failing, what does a loyal believer do? Do you leave? Or do you dig in?
Whenever I ask myself what the Titanic event of finance is, I oscillate between LTCM in 1998 and the global financial crisis in 2008. With the former, Russia defaulted on its debt, triggering market movements the Nobel models said were basically impossible. LTCM lost $4.6 billion in four months. The New York Fed had to lock 14 banks in a room to broker a rescue, and the banks put up $3.6 billion of their own money. Why would 14 banks voluntarily rescue a hedge fund? Because they were LTCM’s counterparties. If LTCM exploded, their balance sheets would crater too. Save the hedge fund or watch yourself die. Some choice, eh?
What made LTCM different from a grift, however, is that by 1997, the partners were pushing outside investors out of the fund to make room for their own money. When it collapsed, they lost everything alongside everyone else. The faith was real, human, all too human.
Now, Karen’s fund suffered millions in losses when volatility spiked in 2014. Instead of reporting them, she used accounting maneuvers to defer losses, collecting over $6 million in fees on profits that didn’t exist. She did this while funding a charity for banana farms in Honduras. One wonders if she encountered George Sr. Bluth there.
With XIV, all it took was one day. On February 5, 2018, volatility spiked and XIV lost 96% of its value. Recall that XIV was an ETN, not an ETF. In an ETF, you own assets. An ETN is essentially an IOU from a bank. Credit Suisse exercised an acceleration clause and the product ceased to exist, literally disappearing overnight. The believers woke up and their temple had vanished.
Remember what I said about unfalsifiability at the beginning? Market conditions were unprecedented. You didn’t follow the rules exactly. Black swan event. 6 or 10 sigma or whatever event.
When LTCM blew up, the lesson wasn’t that mathematical modeling of human behavior is hubris but oh, they used too much leverage. When Karen was charged, the lesson wasn’t selling naked options is structurally dangerous, but she was a fraud. When XIV vanished, the lesson wasn’t shorting volatility is a suicide pact with the market, but did you read the prospectus?
The system is never wrong, reader. It’s the believer who misinterpreted. The oracle still speaks truth. You just heard it wrong. It’s a you problem.
This is unfalsifiability with predictions being structured so that failure can never be attributed to the system itself.
Pythia inhaled fumes and spoke in tongues. Trading gurus inhale Zyn and speak in Discord. Pythia had priests interpret her babbling. Trading gurus have YouTube videos explaining their calls. The faithful traveled months and paid tribute for prophecy. The faithful now pay sometimes $5,500 annually for access.
The structure hasn’t changed in 2,500 years, though the technology has. When everything collapses, when accounts liquidate, when the temple vanishes overnight, the oracle will never admit the system failed.
Happy trading.
