81–90 of 1001 posts
The duplicity of the media here is funny! Melvin has not closed out of its short position.
Is there any way for us to know for sure, other than them announcing their positions, or losses?
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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.
It serves that purpose, but is the market as it exists today the best way for society to achieve that purpose? K-shaped recoveries make me think "I wish there were a better way." But I'm an idiot. So my best idea right now is, "When a business issues stock, they also have to issue an additional 20% to the government, and then we need to keep the tax rate low-ish on dividends, but increase the tax rate on capital gain…
As it turns out, government is already entitled to N% of a company's profit, through corporate taxes. If you are greedy on behalf of the politicians and want N to be a bigger cut of that, that's one thing.
But if politicians want to boss companies around, they already have the option to go on record and pass neutral and generally-applicable laws to do that — and such laws are a fair sight better than the shady backroom deals that will go in when politicians start filling board seats with political apparatchiks. Do you want Donald Trump filling a board seat at Disney with someone like Jared Kushner? If you do, do you want Biden appointing his son Hunter to a board seat at Tesla? Can you imagine the insane conflicts of interest multiplied by the entire economy? It's bad enough already. We really, really don't need to glue together everything shady about big business with everything shadowy about government.
P.S. Oh, and the other thing is that people start raising capital and incorporating in ways that these confiscatory taxes and seizures of control that you propose just don't apply. More private equity, or just incorporating overseas.
P.P.S. Oh, it also favors the companies who don't need to raise capital on the markets: Apple can just take its cash hoarde and invest like crazy, while the next hot Silicon Valley player that would challenge them has to pay 20%.
Maybe Robinhood's mission of democratizing finance is succeeding. The locus of power is being sucked out of Wall Street into a lumbering giant in the hills. My question is: how isn't this the most useful outcome for the most people?
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You don’t actually understand option prices. Put-call parity. The reason why options are so expensive is because of high implied volatility. Both calls AND puts are expensive; as they always will be, because if they’re not balanced, a risk free arbitrage ensures. Here’s an article on why calls and puts must be the same price: https://robotwealth.com/why-arent-call-options-more-expensiv...
I think I do understand them, from a value-investor's perspective. If I buy an option, I actually intend to exercise it or hold it until expiration, not hedge with it. If I bought a GameStop put today, for the pricing in my post above, it would be because I was willing to make a strong bet that GameStop's intrinsic value in November would remain below $60/share and that I was fairly sure the market would return to it…
If you want an entertaining explanation of what's going on with GameStop's stock, I highly recommend these videos from Louis Rossmann: https://lbry.tv/@rossmanngroup:a/wallstreetbets-vs-citron-re... https://lbry.tv/@rossmanngroup:a/why-mainstream-media-s-slan... https://lbry.tv/@rossmanngroup:a/gamestop-shorts-lose-billio... https://lbry.tv/@rossmanngroup:a/gamestop-shorts-are-full-of... (That's how I learned about t…
"I just wanted to play video games, why couldn't you leave me alone?"
The culture of a lot of redditors and internet trolls in general seems to be that they feel like they are the eternal punching bag of society. They were the punching bag in high school, they didn't get into a good school (or go to college at all), and now they're the punching bag of society as "incels" or "white males" or whatever, and I think what you're seeing here in a big way is them fighting back.
A comedian named Tim Dillon somewhat accidentally NAILED the sentiment here: https://www.youtube.com/watch?v=-0pgEWcq_YQ (NSFW language).
I am loving every minute of this. The "professionals" gamble on the market all the time, front run, high frequency trade, and relentless tactics to get rich at the expense of the "retail" investors. Now they are upset that apps like Robinhood has provided unprecedented access to the markets. Their exclusive access to insane gambling nonsense is being torn down in real time. If Wall St can gamble and cause a global fi…
It's called 15USC78i "Manipulation of security prices" [1]. It is unlawful to transact just for the purpose of forcing others to transact. Going through a fund's 13F filings, and deliberately driving up the prices of put options they sold should fall squarely into that area. And there are more than enough posts on reddit of people stating that this is exactly what they are doing. At the scale this is happening now, there is no doubt that there are going to be legal repercussions.
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It isn't just retail that is going to get destroyed -- the option-sellers may not have enough capital to hedge effectively. A lot of parties are going to be harmed by this; it is an expensive tuition payment to the school of hard knocks. The most interesting technical thing about this fracas is the fact that WSB has managed to play the options-sellers off against the shorts to set this off. The kids have temporarily…
And (no one seems to be talking about this) but there's definitely a systemic cost. Going forward, how do you effectively manage the risk of one of your positions becoming a meme? This happening once is an interesting situation and I've certainly enjoyed watching it play out. If it happens repeatedly it will definitely start to undermine the investing public & market participant confidence in the market. That's certa…
It’s not like this is some random event that could happen to any position. There seem to be a number of factors in play, but it’s not random, and it’s not because a meme got popular.
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I tried to buy last night at $146, but I didn't get in before the market closed. Today I bought one single share at $360 and I feel like an idiot on multiple levels. Pure gambling, but it's fun.
I doubt you’d be feeling like an idiot if the short squeeze actually happens, sending the stock to wonderland ($$$$).
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…
Every thread about WSB has comments like this, pretending that tons of stupid kids haven't made fortunes rolling the dice on meme stocks. You ignore or misunderstand what's going on at your own peril.