GameStop Is Rage Against the Financial Machine • Hacker News Board

Re: GameStop Is Rage Against the Financial Machine

#451

Post by arthurcolle » Wed, Jan 27, 2021, 10:40 PM UTC

cwhiz wrote: post #215

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.

>I'm struggling to even understand what a market with "no negativity" means. Just imagine basically... every single other market. The price of goods at Walmart is not based on your bet on supply and demand. If there are more buyers than sellers, the price goes up. If there are more sellers than buyers, the price goes down. If a business wants to raise money by issuing new shares, supply and demand will dictate the pr…

> The price of goods at Walmart is not based on your bet on supply and demand.

This is a specious argument. You literally could go out, borrow your friend's crate of 10,000 bananas, sell them on the open market, then wait for the price of bananas to crash, and then buy them back (maybe even the same crate!) and give them back to your friend, plus whatever the banana margin costs. Effectively, if you were to do this at scale, you would directly be influencing the price of goods at Walmart. Mechanically, this isn't how it works, and I don't think there are banana futures and options, but thinking that all derivatives activity is speculation is simply naïve.

On the GameStop excitement, all I have to say is...

"Apes, together.. strong."

Re: GameStop Is Rage Against the Financial Machine

#452

Post by swiley » Wed, Jan 27, 2021, 10:40 PM UTC

ahepp wrote: post #445

swiley wrote: post #432

Earlier quoted context omitted.

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.

I used to hang out in that subreddit before I deleted my account. Most of them are a) lurking b) goofing around with maybe a few hundred dollars (I was in that category) c) people from hedge funds

There was a tiny minority that did stupid things like buy $20k of options on credit cards but there's a minority of stupid people like that everywhere.

Re: GameStop Is Rage Against the Financial Machine

#453

Post by taigeair » Wed, Jan 27, 2021, 10:40 PM UTC

hnuser847 wrote: post #430

TuringNYC wrote: post #344

Earlier quoted context omitted.

This Reddit Post is very revealing: https://twitter.com/inactivist_/status/1354537152445521923/p...

That's the lamest take I've seen yet. They identified a short squeeze opportunity and exploited it. No Freudian analysis needed.

if you check out the forums, most of them have wives

Re: GameStop Is Rage Against the Financial Machine

#454

Post by hntrader » Wed, Jan 27, 2021, 10:40 PM UTC

TeMPOraL wrote: post #418

hntrader wrote: post #382

I'd like to know whether these retail investors see Gamestop as artwork or as speculation/investment. Artwork - they buy it not because of any intrinsic value or expectation of a dividend/capital gain, but because of reasons pertaining to subjective utility - childhood nostalgia, a desire to get symbolic revenge at hedge funds, entertainment value, or a desire to access gambling services in a country where online gam…

Observing from the sidelines, I think by this point it's option #3: doing it for teh lulz.

Which would be entertainment value, fitting into number 1 above (ie reasons unrelated to profit expectations)

Re: GameStop Is Rage Against the Financial Machine

#455

Post by trianglem » Wed, Jan 27, 2021, 10:41 PM UTC

reissbaker wrote: post #411

nightowl_games wrote: post #124

Earlier quoted context omitted.

> For them to win this they need to keep putting more money into the fire which pulls in bigger and bigger fish. 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…

"Melvin and Citadel can BUY GME themselves to mitigate the risk." Melvin buying GME is not "mitigating," it's closing the short position. If you close your short position high, you got screwed and you lost money. They did close it recently... At a massive loss. "I firmly believe that the hedge funds that held GME short positions have bought into GME to mitigate their exposure. They likely bought in algorithmically us…

No, if Melvin is buying calls they are not covering. They are making a profit they can use to mitigate their losses covering later.

Re: GameStop Is Rage Against the Financial Machine

#456

Post by pinky1417 » Wed, Jan 27, 2021, 10:42 PM UTC

elliekelly wrote: post #78

dannyw wrote: post #33

Earlier quoted context omitted.

You underestimate just how much concentrated retail volume is. I have had more than ten people ask me how to buy GME. Its on the front page of everything. Bitcoin’s nearly $1T market cap is more or less all retail. Plenty of WSB posts with multi million positions. Disclosure: I long GME.

> 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.

I don't even think the SEC would have to characterize the WSB commenters as a group, merely that "alone or with 1 or more persons" they caused trades that increased GME's price and that their goal was to cause others to buy/sell the stock. The real question is why wouldn't the SEC get involved!

15 U.S. Code § 78(i)(a)(2) - Manipulation of security prices

[It shall be unlawful...] ...to effect, alone or with 1 or more other persons, a series of transactions in any security registered on a national securities exchange, any security not so registered, or in connection with any security-based swap or security-based swap agreement with respect to such security creating actual or apparent active trading in such security, or raising or depressing the price of such security, for the purpose of inducing the purchase or sale of such security by others.

https://www.law.cornell.edu/uscode/text/15/78i

Re: GameStop Is Rage Against the Financial Machine

#457

Post by nullc » Wed, Jan 27, 2021, 10:44 PM UTC

kevinsundar wrote: post #450

freeone3000 wrote: post #359

Earlier quoted context omitted.

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.

That isn't how a stop-loss actually works. You aren't guaranteed execution above a particular price.

You could lock in gains using puts, but when you go and price out doing so you'll see exactly how much the market values the risk in the position.

Re: GameStop Is Rage Against the Financial Machine

#458

Post by bee_rider » Wed, Jan 27, 2021, 10:44 PM UTC

admax88q wrote: post #322

maigret wrote: post #308

Earlier quoted context omitted.

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.

And if it doesn't fall you lose money. You can't just reduce risk without also reducing gains.

But in the case of something like a pension, reducing risk is often the goal, right?

Re: GameStop Is Rage Against the Financial Machine

#459

Post by ordinaryradical » Wed, Jan 27, 2021, 10:45 PM UTC

melq wrote: post #434

jowsie wrote: post #426

Earlier quoted context omitted.

You sure about that? https://www.reddit.com/r/stocks/comments/l64xvw/gme_dedicate...

Couldn't they close their position and still have the short interest go up because of other investors opening new positions? If these institutions are going on record as closing their positions, when they actually havent, aren't they committing some sort of fraud?

If you follow this in more detail you will see they have already misled the public on their positions several times. But when the choice is between your fund’s bankruptcy and an SEC fine, people do crazy things.

Re: GameStop Is Rage Against the Financial Machine

#460

Post by alexfoo » Wed, Jan 27, 2021, 10:45 PM UTC

restingrobot wrote: post #440

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.…

You're forgetting the stock is 125% over shorted. There literally isn't enough stock for shorts to cover their current positions. That's why there is potential for infinite, (huge) gains as long as everyone holds.

According to Ortex it's back under 100% float to loan.