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GameStop Is Rage Against the Financial Machine

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Re: GameStop Is Rage Against the Financial Machine

#361

Post by adrr »

fredophile wrote: post #330
admax88q wrote: post #315

Earlier quoted context omitted.

> 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. The reddit traders are only making a killing if they're selling these inflated positions. At some point somebody will be left holding the bag, odds are it will be a bunch of people from wallstreetbets and other retail investors that are late to the party. There's…

It's a short squeeze. The guys left holding the bag are people that are covering their short positions in the company. The average retail investor is not shorting stocks.. There will probably also be some people that try to jump on the trend too late but that isn't who is being hurt right now.

They paid the price when the stock increased in price being forced to buy shares at higher price to cover.

Stock is going to normalize and go back down. Retail investors bought the stock at $50+, they are posting screenshots to WSB. When people start liquidating their position, you need a buyer on the other end of the transaction. And you’ll end up with a collapse in the price as there are way more sellers than buyers. Someone is going to be holding the bag and it’s going to be anyone who purchased above $50. It’s going to be similar scenario of a failed merger and merger arbitrage guys trying unravel their positions.

Re: GameStop Is Rage Against the Financial Machine

#362

Post by krustyburger »

criddell wrote: post #278
elliekelly wrote: post #78

Earlier quoted context omitted.

> Plenty of WSB posts with multi million positions. This is interesting. I wonder what percent of outstanding shares of $GME WSB commenters collectively own and whether the SEC could make the case they're operating as a "group" for disclosure purposes.

What is there to disclose when the group is entirely open for anybody to see?

Not sure if you’re serious, but there may be much more to the subreddit than meets the eye and regulators would probably be interested in:

1. Back channel communications and coordination between users.

2. User identities, including how many participating Reddit accounts are operated by the same individuals as alt accounts.

Re: GameStop Is Rage Against the Financial Machine

#363

Post by lainga »

cbozeman wrote: post #136
unethical_ban wrote: post #72

So, can someone explain rationally how options/derivatives are actually useful to the economy, rather than a market manipulation and gambling mechanism? In the traditional, elementary school understanding of stock, people buy into a company because they want part ownership, and the stock goes up as the company does well and has solid financial strength. Derivatives seem to be an unnecessary accelerator.

They're not useful. They're a means of wealth extraction disguised under whatever load of bullshit someone wants you to believe. I'll even prove it to you. Ask someone with skin in the Wall Street game to explain this stuff to you, not mathematically, but in layperson's terms, so simple that a young child could understand it. They either won't be able to do it, or they won't do it. You'll get one of two answers, "It'…

> I'll even prove it to you.

OK, I'm listening, what's the proof?

Re: GameStop Is Rage Against the Financial Machine

#364

Post by sjy »

Miner49er wrote: post #295
kart23 wrote: post #285

Can anyone tell me why SEC won't just step in, suspend trading, and force some kind of resolution? Its obvious that the market has been effectively broken by the short sellers. It might just make the redditors more angry and likely to hit other shorted stocks, and possibly cause markets to decline, but its the best applicable solution i see. https://www.sec.gov/oiea/investor-alerts-and-bulletins/ib_tr...

It's not like this is the first time a short squeeze has happened. Has the SEC stepped in for other squeezes? If they were gonna step in, it should have been when naked shorting was occurring, not now.

It looks like there was a listed short squeeze fund, SQZZ [1], which closed in 2018 only for lack of investors [2], so the SEC doesn't seem to have a fundamental problem with the strategy.

[1] https://www.sec.gov/Archives/edgar/data/1559109/000089109215...

[2] https://www.etfstrategy.com/active-alts-closes-contrarian-sh...

Re: GameStop Is Rage Against the Financial Machine

#365

Post by [deleted] »

AdmiralAsshat wrote: post #20

> 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…

[deleted]

Re: GameStop Is Rage Against the Financial Machine

#366

Post by silexia »

Traster wrote: post #347
fredophile wrote: post #330

Earlier quoted context omitted.

It's a short squeeze. The guys left holding the bag are people that are covering their short positions in the company. The average retail investor is not shorting stocks.. There will probably also be some people that try to jump on the trend too late but that isn't who is being hurt right now.

The second that the shorts have covered the price isn't going to drop to $90, it's going to drop back to $20 and most of the WSBers who were holding out for $2000 will lose their shirts. The shorts are going to lose, no doubt. But once they've lost, the stock price is probably $20. A lot of WSBers are going to be holding stock at that point, and possibly on margin. And that stock is going to be a crappy retail stock.…

I sold a GME call option with a strike price of $320 and expiration in July today for $200. A pump and dump by novices is easy money if you know how to play it. Everyone knows this is going to crash, the question is when?

Re: GameStop Is Rage Against the Financial Machine

#367

Post by kart23 »

rjbwork wrote: post #292
kart23 wrote: post #285

Can anyone tell me why SEC won't just step in, suspend trading, and force some kind of resolution? Its obvious that the market has been effectively broken by the short sellers. It might just make the redditors more angry and likely to hit other shorted stocks, and possibly cause markets to decline, but its the best applicable solution i see. https://www.sec.gov/oiea/investor-alerts-and-bulletins/ib_tr...

The forced resolution will be to force the shorts to cover. Screwing people that took the other side of the trade because the short sellers screwed up doesn't really make any sense to me.

yes, the resolution would entail that. its not about screwing people, its about fixing something thats broken. Isn't that what happened in 2008? Banks made stupid decisions, and government bailed them out for it. Obviously more complicated and probably higher stakes, but the crisis essentially boils down to that. Don't see why it can't happen here.

Re: GameStop Is Rage Against the Financial Machine

#368

Post by greatpatton »

dheera wrote: post #233
amalter wrote: post #194

Earlier quoted context omitted.

Hard no! I want scams and shady schemes uncovered. What a disappointment that Herbalife wasn't brought down by the shorts. I'm struggling to even understand what a market with "no negativity" means. We want to evaluate firms with a critical eye. If they are mis-valued, that serves no one.

> We want to evaluate firms with a critical eye. If they are mis-valued, that serves no one. Hard disagree here. Sometimes mis-valuing firms serves a LOT of people. There are many firms who could create value if only they had more capital to work with. As an example, it's very possible that a company hard hit by COVID could recover if they got fresh capital and used it to explore new business models that are quaranti…

Exactly! from who the short are getting their money when they crash a company stock like Wirecard? Not from the company management who did it but from other shareholders, and most of the time "retail" shareholder.

They are running to the ground company that may survive with a fresh injection of capital, and destroying company that suddenly cannot raise more capital or have no more collateral for a loan.

Moreover they are this hedge fund are manipulating information to the level of a troll farm. I was a shareholder of AMD when they where starting to release the Zen architecture. Every other week, they were sending report of "problems" with the new architecture, or even basic feature behaving normally. Hedging is ok, but betting as they do is not. And when they get burned I celebrate!

Re: GameStop Is Rage Against the Financial Machine

#369

Post by DennisP »

maigret wrote: post #308
Apocryphon wrote: post #59

Earlier quoted context omitted.

You’re not wrong, but are there pension funds that include revenue made from shorting stocks? Seems like a reckless practice if there are.

Shorts are often (usually) a legit way to reduce risk - if the stock falls, you’re not losing everything. But that’s less entertaining to report about, so you rarely read about this in the non-technical news.

Yes but those aren't naked shorts. You don't get short interest in 140% of the total shares available from people hedging their holdings. That did happen with GME and it's what the r/WSB people picked up on.

Re: GameStop Is Rage Against the Financial Machine

#370

Post by freeone3000 »

nightowl_games wrote: post #251
boringg wrote: post #218

Earlier quoted context omitted.

> This isn't true. The institutions with Short Exposure are connected to the institutions who buy Robinhood data and perform high frequency trading on those orders. Citadel and Melvin can BUY GME themselves to mitigate the risks. It is likely that a substantial amount of GME is being held by the institutions who had short exposure. It's basic risk mitigation. -- They would have to do this at great cost and loss (rumo…

Fair assessment. I am just pushing back at the narrative that this is a "win" for the little guy and a "loss" for wall street. Retail investors putting money into the market _at all_ is a net win for wall street _every time_ imo.

What's the other side, though? Putting it into savings, at 0.5%? Forex?

The game is rigged against you, but you're still better off if you play.

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