GameStop Is Rage Against the Financial Machine • Hacker News Board

Re: GameStop Is Rage Against the Financial Machine

#11

Post by vmception » Wed, Jan 27, 2021, 4:47 PM UTC

jdjfktkrnj wrote: post #3

So, do people still think Efficient Market Hypothesis is a thing? If this doesn't prove that the stock market is just a video game, which decoupled from economic reality a long time ago... We've now entered the age of the meme stock market.

Quantum Market Hypothesis

In one dimension, the new GME management (which did occur) does a secondary market offering directly into liquidity, recapitalizing themselves which changes all the fundamentals. This wouldnt be known information because the expectation of no liquidity, but now that there is liquidity it creates new information

Re: GameStop Is Rage Against the Financial Machine

#12

Post by tempsy » Wed, Jan 27, 2021, 4:47 PM UTC

ping_pong wrote: post #4

It's really not. Because eventually retail is going to get destroyed. Yes, some hedge funds have lost their shirts, but those are the first ones who were in the short before the squeeze. The hedge funds and more importantly day trading shops making money right now are the ones who saw the activity and are goosing the stock price right now. I don't know if people realize that there are thousands of day trading shops w…

that isn’t what the article is saying. it’s arguing that the short squeeze is less about pure profit making, though of course that’s part of it, but more about actively trying to hurt hedge funds who are naked short selling and potentially forcing them to liquidate as a sort of populist driven “payback” against the elite.

Re: GameStop Is Rage Against the Financial Machine

#13

Post by mttddd » Wed, Jan 27, 2021, 4:47 PM UTC

jdjfktkrnj wrote: post #3

So, do people still think Efficient Market Hypothesis is a thing? If this doesn't prove that the stock market is just a video game, which decoupled from economic reality a long time ago... We've now entered the age of the meme stock market.

I guess it is not the efficient market in the sense of valued according to the underlying financials. But to me at least it is "efficient" in the sense that the price is now basically tied to supply and demand. You have a stock that has >100% of outstanding shares short and a ton of people buying and holding the stock intentionally to prevent those users from covering the shorts. If nobody wants to sell you a share at 100$ you have to offer more and the more you offer the more in the hole other shorts become. This is the market punishing people who thought they were getting easy money by shorting the hell out of a dying company.

Re: GameStop Is Rage Against the Financial Machine

#14

Post by Edmond » Wed, Jan 27, 2021, 4:49 PM UTC

jdjfktkrnj wrote: post #3

So, do people still think Efficient Market Hypothesis is a thing? If this doesn't prove that the stock market is just a video game, which decoupled from economic reality a long time ago... We've now entered the age of the meme stock market.

This is a reductive take, there is the idealized model of the market that the efficient market hypothesis refers to and there is the real one, which can get quite messy.

The market does serve a real purpose, ie deploying capital and providing liquidity.

Re: GameStop Is Rage Against the Financial Machine

#15

Post by ISL » Wed, Jan 27, 2021, 4:50 PM UTC

jdjfktkrnj wrote: post #3

So, do people still think Efficient Market Hypothesis is a thing? If this doesn't prove that the stock market is just a video game, which decoupled from economic reality a long time ago... We've now entered the age of the meme stock market.

In the short term, the market is a popularity contest. In the long term, the market is a weighing machine.

If you look at the option chains, it is clear that traders value GameStop in the long run far below the current trading price.

https://www.nasdaq.com/market-activity/stocks/gme/option-cha...

A November 2021 "put" at the present market price of ~$360, the right to sell GameStop stock in November at $360, is selling for about $300.

For comparison, a January 2022 put at Microsoft's present market price of ~$235 is selling for ~$30.

GameStop is presently a cafeteria food-fight. It will end, a lot of people will be sad, everyone will remember the story, and GameStop stock will eventually better-correlate with business performance.

Edit: Indeed, the fact that one can buy puts for so cheap is interesting, as GameStop is probably "worth" $30 or less at present. However, is it worth risking $300 to perhaps make $30 while food is flying around? Not for me.

Re: GameStop Is Rage Against the Financial Machine

#16

Post by ping_pong » Wed, Jan 27, 2021, 4:51 PM UTC

tempsy wrote: post #12

ping_pong wrote: post #4

It's really not. Because eventually retail is going to get destroyed. Yes, some hedge funds have lost their shirts, but those are the first ones who were in the short before the squeeze. The hedge funds and more importantly day trading shops making money right now are the ones who saw the activity and are goosing the stock price right now. I don't know if people realize that there are thousands of day trading shops w…

that isn’t what the article is saying. it’s arguing that the short squeeze is less about pure profit making, though of course that’s part of it, but more about actively trying to hurt hedge funds who are naked short selling and potentially forcing them to liquidate as a sort of populist driven “payback” against the elite.

It's all about making money. WSB was about hurting the hedge funds or screwing the system. And to be clear, I know wsb because I was one of the first group of subscribers of wsb way way back, but quit it because it wasn't engaged in what I thought was trading strategies, but a lot of shitposting.

But they didn't cause this crazy short squeeze. It's the other hedge funds and day trading shops that are causing this because they see weakness and an easy way to day trade to crazy profits.

Re: GameStop Is Rage Against the Financial Machine

#17

Post by schnevets » Wed, Jan 27, 2021, 4:52 PM UTC

vmception wrote: post #11

jdjfktkrnj wrote: post #3

So, do people still think Efficient Market Hypothesis is a thing? If this doesn't prove that the stock market is just a video game, which decoupled from economic reality a long time ago... We've now entered the age of the meme stock market.

Quantum Market Hypothesis In one dimension, the new GME management (which did occur) does a secondary market offering directly into liquidity, recapitalizing themselves which changes all the fundamentals. This wouldnt be known information because the expectation of no liquidity, but now that there is liquidity it creates new information

The only way this could get stupider is if GME took their impressive new warchest and bought/merged with Valve, pulling a unicorn into the stock market. At that point, reddit would have memed a brick and mortar retailer into a SPAC.

Re: GameStop Is Rage Against the Financial Machine

#18

Post by jdjfktkrnj » Wed, Jan 27, 2021, 4:53 PM UTC

dangoldin wrote: post #8

jdjfktkrnj wrote: post #3

So, do people still think Efficient Market Hypothesis is a thing? If this doesn't prove that the stock market is just a video game, which decoupled from economic reality a long time ago... We've now entered the age of the meme stock market.

“The market can remain irrational longer than you can remain solvent.” - supposedly John Maynard Keynes

r/WSB likes to rephrase this as "we can remain retarded longer that they can remain solvent"

Re: GameStop Is Rage Against the Financial Machine

#19

Post by tempsy » Wed, Jan 27, 2021, 4:53 PM UTC

ping_pong wrote: post #16

tempsy wrote: post #12

Earlier quoted context omitted.

that isn’t what the article is saying. it’s arguing that the short squeeze is less about pure profit making, though of course that’s part of it, but more about actively trying to hurt hedge funds who are naked short selling and potentially forcing them to liquidate as a sort of populist driven “payback” against the elite.

It's all about making money. WSB was about hurting the hedge funds or screwing the system. And to be clear, I know wsb because I was one of the first group of subscribers of wsb way way back, but quit it because it wasn't engaged in what I thought was trading strategies, but a lot of shitposting. But they didn't cause this crazy short squeeze. It's the other hedge funds and day trading shops that are causing this bec…

nah you’re underestimating their power to move names in small cap stocks with high short interest.

Re: GameStop Is Rage Against the Financial Machine

#20

Post by AdmiralAsshat » Wed, Jan 27, 2021, 4:54 PM UTC

> These points doubtless make me appear to be a complacent shill for the financial industry, talking down to the rubes. For the record, I’m still angry about the way workers were ripped off in Britain more than three decades ago, and about the way the little guy ended up bearing the brunt for the financial implosions of 2000 and 2008. But it looks horribly to me as though the same thing is going to happen again — and I don’t think the answer to today’s many ills is to empower poor people to bankrupt themselves with margin accounts and derivatives.

Who is this hurting, exactly? The author is making it sound like messing up the short stock is somehow hurting "the little guy" in the long run, and I wouldn't see that happening unless:

a) Gamestop is somehow in a bunch of mutual funds tied to employee pensions/401k's

b) The "little guy" refers to the Reddit traders that are making a killing right now, with the expectation that eventually the stock price will crash again.

As best I can figure, most of the /r/ guys are doing this as a form of trolling and aren't expecting to get rich off it or pour their live-savings into it. And again, as best I can figure, the only people this "hurts" are the ones who were originally shorting the stock. So if this comes down to guys on Reddit pissing in Wall Street's cornflakes, it's hard for me to feel sympathetic for Wall Street.