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GameStop Is Rage Against the Financial Machine

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Re: GameStop Is Rage Against the Financial Machine

#441

Post by criddell »

krustyburger wrote: post #362
criddell wrote: post #278

Earlier quoted context omitted.

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.

Oh, right. I never thought about those possibilities. They probably should investigate that stuff.

Re: GameStop Is Rage Against the Financial Machine

#442

Post by swiley »

silexia wrote: post #366
Traster wrote: post #347

Earlier quoted context omitted.

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?

Man I would have closed that position this morning if I were you. Holy crap.

Re: GameStop Is Rage Against the Financial Machine

#443

Post by croon »

jacksnipe wrote: post #93
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.

I'm generally sympathetic to the idea that financial derivatives are a great evil, and a huge part of what feels "broken" about the current system. However, consider futures, which are very similar to options. Futures were, as I understand it, popularized in Chicago as a way for farmers to be able to get money for their crop right now, at a fixed price. In this way, they could pass the risk -- and a little bit of the…

And in practice, how would that be different from incorporating and selling stocks to those investors, thus raising money now, and then growing in value as the crops are reaped?

Re: GameStop Is Rage Against the Financial Machine

#444

Post by throw0101a »

blhack wrote: post #57

Okay a serious question: at what point does it make sense for these hedge fund guys to just purchase reddit and shut it down? To be clear: I don't think that would work, but I think we're at the point where stuff like that is going to be tried. These guys are losing BILLIONS of dollars. Billions. Can they spend $1B to prevent the loss of $2B? (Is reddit worth more than $1B?) Other stuff I won't be surprised if we see…

> Okay a serious question: at what point does it make sense for these hedge fund guys to just purchase reddit and shut it down?

It would be irrelevant even if they could. The problem is/was not Reddit/WSB, but rather the positions that the hedge funds put themselves in.

Where are/were the PhDs in risk analysis at these places? How do you get into a position of shorts being >120% of the total float?

Take Willian Gibson's 'Law':

* The future is already here—it's just not evenly distributed.

And take the Efficient Market Hypothesis (EMH):

* The price of a security reflects all the available information about it.

And when you combine them you have the principle that the information is out there (too many short contracts), but it wasn't evenly distributed—yet.† Until someone noticed it, and it started to spread, and that caused people to change their positions in GME.

Shutting down Reddit, or any other random forum, isn't going to stop someone from noticing the shorts.

This is no different than what happened in The Big Short: some folks noticed discrepancies (e.g., mortgage delinquencies) and acted first, and as that information spread the market "corrected" its price. It's just that it ended up causing the Great Recession.

The spread of information isn't instantaneous either: at the very least it is limited by the speed of light. After that, it's limited by either (a) human attention spans, and/or (b) the machine learning systems that humans programmed in automated systems.

† Edit: I propose this phenomenon, if not labelled already, be called "Gibson's Market Corollary".

--

Now the price of GME is kind of meta though, in that it doesn't reflect on what's know about GameStop, but rather someone 'related' to GameStop.

Re: GameStop Is Rage Against the Financial Machine

#445

Post by ahepp »

swiley wrote: post #432
Traster wrote: post #347

Earlier quoted context omitted.

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.…

They won't lose their shirts, just the beer money they spent on a meme. Plenty of them really don't care.

you may be overestimating the responsibility of the people involved

I remember reading about people mortgaging their house to get into bitcoin, etc.

I don't know how the coming days will play out, but I'm quite confident when this is all over we'll be treated to stories in the NYT about how someone lost their life savings, alongside calls for regulation.

Re: GameStop Is Rage Against the Financial Machine

#446

Post by walleeee »

wesammikhail wrote: post #391
ta1234567890 wrote: post #384

This is a great example of how the stock market is not about fundamentals, just like Bitcoin, it’s all about popularity and perception. In the end, people don’t care if the “stock is really worth” the price, they only care if themselves or someone else are willing to pay the price, nothing else really matters.

You´re right in the short term. But in the long term the hope is that things average out and true value emerges as a function of countless transactions over years and years. Markets are a value ascribing heuristic machine. There is nothing about them that can deterministically point to objective value. However, the idea is that over a longer period of time, an approximation of true value emerges though wisdom of the…

> Markets are a value ascribing heuristic machine. There is nothing about them that can deterministically point to objective value. However, the idea is that over a longer period of time, an approximation of true value emerges though wisdom of the crowd.

It's a beautiful idea in principle. Ultimately the reality that emerges will reflect the underlying values of the society.

Really makes you wonder about our values, given that presently emerging realities include an increasingly inhospitable homeworld.

Re: GameStop Is Rage Against the Financial Machine

#447

Post by 0xffff2 »

kahrl wrote: post #313
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...

Short sellers illegally borrowed more stock that actually existed. They are the criminals here. Not the people discovering this and taking the criminals for everything they have.

It's entirely possible for short sellers to have legally borrowed more stock than is actually outstanding. There is no evidence that I've seen that they've done so illegally.

Re: GameStop Is Rage Against the Financial Machine

#448

Post by beervirus »

jscheel wrote: post #299
beervirus wrote: post #161

Earlier quoted context omitted.

> Right now there appear to be curbs on GME and AMC buy orders for TD Ameritrade and Schwab customers. Yes indeed. Ameritrade won't even let me exercise the calls I already own. It's ridiculous.

Are you trying to do an early exercise, or do you mean that they won't let you sell your calls? If you are trying to exercise, do you have the cash to cover, or are you trying to use margin to do it?

Early exercise, plenty of cash.

Re: GameStop Is Rage Against the Financial Machine

#449

Post by piva00 »

QuesnayJr wrote: post #294
piva00 wrote: post #173

Earlier quoted context omitted.

This is absolutely fucking ridiculous. Someone is getting fucked by their own leverage, they got caught, isn't that what the market is supposed to do? Kill the overleveraged non-sense to redistribute wealth to more efficient investments? It isn't a bank run to be blocked for the sake of society, this is just a bunch of rich people paying the price for risking too much... Boils my blood so deeply.

So you think GameStop shares are genuinely worth $375? GameStop traded around $20 a share for the past couple of years. You think that right now the company is worth almost 20 times what it was worth two years ago?

Where have I stated that?

Re: GameStop Is Rage Against the Financial Machine

#450

Post by kevinsundar »

freeone3000 wrote: post #359
Traster wrote: post #347

Earlier quoted context omitted.

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.…

It's also very hard to exit a falling position. It was hard to exit a rising position this morning -- the stock was on trading hold multiple times. By the time you notice it's falling, it's too late to sell

You can manage risk with stop-loss. Its not really that hard. You can use this to "lock-in" profits without selling.
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