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The Battle of GameStop

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Re: The Battle of GameStop

#361

Post by enigmo »

gchamonlive wrote: post #330
ollifi wrote: post #224

Earlier quoted context omitted.

/r/wsb is kind of insanity, but I’ve come to think that maybe young person can YOLO a bit against the odds somewhere in life. If something returns poorly on average, but has high payouts at the top it might just work out. Your life won’t be the average case but single sample. Lottery is too improbable but some other things ”no rational person would do” can be ok. Main thing is to get over with it soon and protect the…

I think I understood your use of the word `contempt` because it is similar to `contente` in my mother-langauge (portuguese). However, I don't believe `contempt` assumes the meaning of `satisfied`, instead it is defined as `having a strong feeling of disliking and having no respect for someone or something`. In any case, I have mixed feelings about in which direction society is heading. On the one hand, I think this g…

it's probably just a typo, in context this reads like `content` not `contempt`.

Re: The Battle of GameStop

#362

Post by PartiallyTyped »

nico_h wrote: post #344
PartiallyTyped wrote: post #277

Earlier quoted context omitted.

They owe more shares than there are available and they pay interest on said shares. Even if nobody sells, the interest gets accumulated and they are bleeding.

yeah, but how much can they bleed? Can they just give up, default and declare bankruptcy? And then all the people hoping for a short squeeze end up holding stock that is not worth much anymore?

They will get margin called, their assets will be liquidated and the stocks covered.

Re: The Battle of GameStop

#363

Post by TheAdamAndChe »

blackrock wrote: post #242
dvt wrote: post #6

> The same emotion that caused us to root for the thieves in Ocean’s 11 is what makes Wall Street Bets so enticing. Put frankly, Millennials are tired of getting fucked by the man. When you’re underemployed with $100,000 in student loan debt, your financial situation feels overwhelming. You really don’t want to take the advice of your parents or CNBC talking heads [5] to invest 10% of your salary for a 4% annual retu…

It’s even worse than this. The government feigns that they can’t do anything. And that everything is the result of the market. Meanwhile, they easily pass bills to increase their own pay, or find magic money to pay for their military wars. And then, after screwing up the 2008 crisis, they stopped building homes. And the homes that were foreclosed on, they allowed the rich corporations to buy them up for pennies on th…

Entry level homes in non-trendy areas are much cheaper. My home is about $110k.

Re: The Battle of GameStop

#364

Post by skeeter2020 »

willis936 wrote: post #335
sokoloff wrote: post #254

Earlier quoted context omitted.

You have an advanced degree in EE, paid for by work who valued that enough to pay for it, and don't expect to be able to clear $50K in student loans in 10 years. Are you still working in a job requiring that degree, because if so, that does seem like you're getting shafted (especially compared to the equivalent on the CS side of EE/CS).

Yes, I am. I’m working as an engineer on a physics project.

so this is a choice

Re: The Battle of GameStop

#365

Post by koheripbal »

TeMPOraL wrote: post #276
aeternum wrote: post #179

Earlier quoted context omitted.

If you believe that op played the game well, then he successfully took capital from less efficient companies and allocated it to new more efficient companies. This creates value.

Does anybody truly believe that this is a good thing? The stock market is detached from reality. It creates its own universe. The efficiency we're talking about here is self-referential - it's not efficiency in producing object-level value, it's efficiency in enriching participants of the stock market. Which depends as much on the company itself as it depends on the hype the funds and the shareholders can make around…

I find people who stand in disbelief of the markets often don't understand how they are working, and/or why they have and societal value.

Skepticism is healthy, but in this case, it's closer to ignorance.

The ability for corporations to go to the open market to secure capital is contingent upon a high liquidity of buyers and sellers present and actively participating.

The market doesn't exist without "primary" buyers and seller acting on behalf of their company to issue new stock (raising capital) or buying back stocks (returning capital (or via dividends)). Between these two types of transactions, there are participants that are constantly estimating the value of these share. If the price of the share deviates too far from what the company thinks it's worth, it will actually trigger one of those two events.

Options are just another more efficient mechanism to make these estimations on a specific timeframe. They allow traders to have a very specific thesis on what is mispriced and place a trade on it.

Without these trades, the market would lack liquidity, and companies would see an increase in their cost of new capital - which is bad for everyone because it means companies wouldn't invest in growth, equipment purchases, new jobs, etc...

Re: The Battle of GameStop

#366

Post by jameshart »

koheripbal wrote: post #359
jameshart wrote: post #334

Earlier quoted context omitted.

Market theory only says that the aggregate effect of market activity is to allocate capital efficiently. The claim is that it does so by broadly rewarding investors whose decisions maximize value creation, encouraging more such decisions in general over the long term. It does NOT say that any individual investment decision that produces a reward for the investor must necessarily have improved the allocation of capita…

> the way the rewards are allocated for playing... don’t matter too much. Of course they matter. If they didn't matter, then participants wouldn't participate. ...and if they didn't participate then the market would have less liquidity. ...and higher liquidity is ALWAYS a good thing. The health of a market can be characterized by the persistence of liquidity.

If a bunch of options traders provide liquidity services which the market values at $1m, the market will pay the options traders $1m.

If the options traders decide to armwrestle to decide which of them gets to keep the $1m, the market doesn’t care.

Re: The Battle of GameStop

#367

Post by gvhst »

pxue wrote: post #62
IIAOPSW wrote: post #15

I've wrote this elsewhere. The thing that's clicked for me after reading the comments on wsb is that populism, amplified by the modern internet, is going to radically change the finance world in a similar way to how it radically changed our political landscape. These people aren't just investing in GME to enrich themselves. They are doing it to spite the people who they percieve as rigging the game. They are doing it…

this is exactly it. people say the market is a melt up.. another bubble. but i think that's wrong. It's like the show Billions, actual wallstreet does what wsb is doing ALL THE TIME. You make money when someone else loses money, it's simple. Except this time, the money isn't staying in the fraternity, it's being distributed out to the common folks. Can't have that it seems.

I can assure you that most folks on wall street (speaking about most of the multi-manager hedge funds specifically) have significantly tighter risk limits than anyone on WSB. Frequently drawdowns of even 5-10% can get your sized reduce or get you fired. The YOLO attitude that WSB has is closer to the film "the wolf of wall street" than what actually happens.

While Billions is one of the more realistic shows about finance, it is far from accurate enough to be compared to real life.

Re: The Battle of GameStop

#368

Post by koheripbal »

katbyte wrote: post #102
shouldiquitamzn wrote: post #74

Earlier quoted context omitted.

No I made this money myself. In any time in basically the last decade, if you leveraged up on the SPY or QQQ, you are now retired. People are too risk averse, they will be stuck in a job forever

No you gambled and got lucky. Good for you that’s great, but please recognize it for what it is. You played the market and won, just like people play the lotto, and some of them win too.

Rolling a fair die once is gambling. Rolling an unfair die 1000 times, is a statistical investment.

Re: The Battle of GameStop

#369

Post by afiori »

TeMPOraL wrote: post #276
aeternum wrote: post #179

Earlier quoted context omitted.

If you believe that op played the game well, then he successfully took capital from less efficient companies and allocated it to new more efficient companies. This creates value.

Does anybody truly believe that this is a good thing? The stock market is detached from reality. It creates its own universe. The efficiency we're talking about here is self-referential - it's not efficiency in producing object-level value, it's efficiency in enriching participants of the stock market. Which depends as much on the company itself as it depends on the hype the funds and the shareholders can make around…

> it's efficiency in enriching participants of the stock market.

Proponents would say that it is efficienct in funding ideas that are more likely to succeed, with the partecipants in the stock market taking a commission for the transactions.

Re: The Battle of GameStop

#370

Post by PartiallyTyped »

intotheabyss wrote: post #352
PartiallyTyped wrote: post #259

Earlier quoted context omitted.

This is partially what happened in 2008. Hedgefunds overshorted the housing market and then everything went down.

Didn't hedgefunds "overlong" the housing market? They were borrowing on margin using housing debt as collateral, but the collateral turned out to be junk, so they got margin called when that collateral tanked (the CDOs), and banks with insufficient liquidity to cover the losses either collapsed or got bailed out. Essentially the housing market bubble was people going long using worthless collateral.

My understanding is that while the market crashed, certain people capitalised on the bubble breaking and kept shorting until it was ran to the ground.
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