GameStop Is Rage Against the Financial Machine • Hacker News Board

Re: GameStop Is Rage Against the Financial Machine

#651

Post by EGreg » Thu, Jan 28, 2021, 1:09 AM UTC

fennecfoxen wrote: post #558

throw0101a wrote: post #506

Earlier quoted context omitted.

> 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. So basically like almost every other trade? Every buyer needs a seller and vice versa. If you're active in the market, why do you think you're right on any particular trade and the person on the other end is wrong?† * If you're buying, why is the other…

> So basically like almost every other trade? No; most trades are traded because you expect when you're "left holding the bag" that bag will have money in it.

Are you saying bubbles never form and the market value equals the underlying value of every asset? No speculators? Please.

And these guys aren’t even taking money from those late to the party, so much as from the short sellers (vultures) who were happy to see the company go into the ground.

Elon Musk hates short sellers with a passion. They try to sabotage a business.

When trading is halted on a stock that is in freefall, I can understand that. But here they are halting a stock that is rising based on short squeezing! Honestly 148% naked shorting by private hedge funds should be illegal, and you’re gonna tell me that the government should side with the short sellers against a crowd of everyday people who are INVESTING INTO A COMPANY THEY LIKE?

How exactly is wall street the little guy? They snap their fingers and get trillion dollar bailouts instantly. Regular people barely get a $1200 check. And now even speculative SHORT POSITIONS are supposed to be protected??

This sounds like how a casino finds out that a game has a loophole and then tells people they can’t actually keep their winnings. And the fourth wall is broken. Apparently hedge funds can short any stock and if regular people notice and beat them back, then it’s the speculative hedge fund that’s trying to kill the company, that should just go ahead eh. How dare regular folks threaten the tried and true methods of speculation?

Re: GameStop Is Rage Against the Financial Machine

#652

Post by Asooka » Thu, Jan 28, 2021, 1:09 AM UTC

wolverine876 wrote: post #629

How does this differ from other populist manipulation via social media? We've seen this technique used repeatedly in many domains. IMHO, it looks obviously the same in many ways. It's very effective and we should have anticipated that it would be used to move markets. I expect people on HN to recognize it. The question is, what will we do about it? It's tearing society apart and now it looks to damage our economy too…

You could restrict how much one stock can be shorted. This situation should have never arisen - it only happened because one firm was holding on to a ridiculous amount of risk. They gambled, someone noticed and posted about it. Either you restrict how much one can gamble with stocks, or you accept that allowing infinite profit carries infinite risk. Anything else is in effect saying "only the rich are allowed to exploit market conditions and get richer", which is obscene.

Re: GameStop Is Rage Against the Financial Machine

#653

Post by base698 » Thu, Jan 28, 2021, 1:10 AM UTC

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?

Seems like a great recipe for $gme to hit $1000 and have it excercised against you.

Re: GameStop Is Rage Against the Financial Machine

#654

Post by noncoml » Thu, Jan 28, 2021, 1:14 AM UTC

There are 100 cows.

A hedge-fund believes that the milk consumption will go to zero, so they borrow the 100 cows for one month and sell them for $1 each.

Then they borrow them again, and sell them once more for 90c. Certain that they will worth $0 at the end of the month

A Redditor notices this. She knows that in a month's time, the hedge-fund will have to buy 200 cows, and there are only 100 available.

Her plan is simple. Buy all 100 cows, and at the end of the month, when the hedge fund will have to buy the cows back(twice), she will be able to dictate the price.

Hedge-fund cries foul. Doesn't like being beaten in it's own game.

Milk consumption doesn't even matter.

Re: GameStop Is Rage Against the Financial Machine

#655

Post by mckirk » Thu, Jan 28, 2021, 1:15 AM UTC

Cyph0n wrote: post #575

JumpCrisscross wrote: post #556

Earlier quoted context omitted.

There is a third factor: a generation of investors who have never really lost money in the market.

I don’t think it’s about that at all. If you follow the subreddit at all, you’d see that WSB investors have been losing immense amounts for a long time now. I think the primary thing that baffles the more traditional investing establishment is how irrational WSB investors actually are.

Amazingly, it seems actually possible that WSB can remain irrational longer than some Hedge Fonds can stay solvent.

Re: GameStop Is Rage Against the Financial Machine

#656

Post by nathanasmith » Thu, Jan 28, 2021, 1:15 AM UTC

kqr wrote: post #212

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.

This is part of the game, though. The hardest part of gambling is not coming up with the big winning bet -- it's getting whatever counterparty to pay you once you've won. It's always been this way, in sports, in horses, and on Wall Street. People come up with all sorts of reasons to not pay you and you have to shape your strategy around this. Aaron Brown talks about how being a successful gambler is not about a few h…

>The hardest part of gambling is not coming up with the big winning bet -- it's getting whatever counterparty to pay you once you've won.

Isn't that the truth. I know crypto is hated on here but just as an anecdote, I've traded on a lot of exchanges in the last few years and I almost wince whenever I make a really great trade that 5 or 10x's because as sure as the day is long inside of an hour my account will get frozen and I'll have to submit documentation, answer a bunch of questions, or whatever else to get my account unfrozen and access to the funds. It's almost like they're saying thanks for your business and we don't mind you getting lucky but don't get too lucky.

Re: GameStop Is Rage Against the Financial Machine

#657

Post by strken » Thu, Jan 28, 2021, 1:15 AM UTC

JohnHaugeland wrote: post #597

throw0101a wrote: post #568

Earlier quoted context omitted.

You can expect whatever you want. What actually happens is something else. On any given trade you can end up with something worth more or less than what you started with. Even if you sell and cash out, you may end up "losing" because things went on to perform better than you expected and the person/entity on the other end of the trade knew something you didn't. The market owes you nothing.

You're loudly and carefully missing the point. The expectation is that investment is done to derive ownership of something with actual value. This is a public pump and dump scheme masquerading as a righteous uprising. Nobody said the market owed anyone anything. Save the sophism. Idiots are getting bilked, those are the answer to your question, and they still exist even if you want to re-define around them. This is i…

I'm not convinced this is any less moral than e.g. George Soros famously exploiting Britain's central bank[0], HFT firms building their own microwave towers to do arbitrage and totally-not-front-running a fraction of a second faster[1], or basically anything other strategy that's lauded as brilliant when a rich man does it.

[0] https://www.forbes.com/sites/steveschaefer/2015/07/07/forbes...

[1] https://www.bloomberg.com/news/features/2019-03-08/the-gazil...

Re: GameStop Is Rage Against the Financial Machine

#658

Post by germinalphrase » Thu, Jan 28, 2021, 1:17 AM UTC

noncoml wrote: post #639

wolverine876 wrote: post #629

How does this differ from other populist manipulation via social media? We've seen this technique used repeatedly in many domains. IMHO, it looks obviously the same in many ways. It's very effective and we should have anticipated that it would be used to move markets. I expect people on HN to recognize it. The question is, what will we do about it? It's tearing society apart and now it looks to damage our economy too…

> How does this differ than other populist manipulation via social media? We've seen this technique used repeatedly in many domains. IMHO, it looks obviously the same in many ways. Are you sure you are up to date with what happened? My understanding, and in layman's terms, is that a hedge fund shorted more GME stocks than they are available. Redditors noticed and correctly thought that if they buy all the stocks avai…

How did they notice that the hedge fund had overextended their short position by so much? Is such information part of some required reporting?

Re: GameStop Is Rage Against the Financial Machine

#659

Post by sjg007 » Thu, Jan 28, 2021, 1:18 AM UTC

vincentmarle wrote: post #413

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…

> At some point somebody will be left holding the bag The same applies to Bitcoin, though, for the past 10 years. Someone's holding the bag at $30K as we speak... Gamestop can (theoretically) go the same way.

Bitcoin is basically a universal hedge.

Re: GameStop Is Rage Against the Financial Machine

#660

Post by fredliu » Thu, Jan 28, 2021, 1:19 AM UTC

JumpCrisscross wrote: post #556

fredliu wrote: post #98

Earlier quoted context omitted.

Great explanation. IMO the GameStop phenomenon is the result of the combination of democratization of trading through software (Robinhood no fee trading, doing it on your cellphone) + social media enabled mass scale online community building (around some previously fringe niche). Any area that is subject to this kind of combination of change could face similar situation where the old institutions guarding the area wo…

There is a third factor: a generation of investors who have never really lost money in the market.

I think there have always been potential "investors" that never really lost money because they were never investors in the first place. Lots of Robinhood, r/wsb users/members are 1st time traders because Robinhood significantly lower the barrier to entry for investing, and they don't feel as alone and scary once found an online community similar to themselves.