GameStop Is Rage Against the Financial Machine • Hacker News Board

Re: GameStop Is Rage Against the Financial Machine

#671

Post by pjanoman » Thu, Jan 28, 2021, 1:27 AM UTC

admax88q wrote: post #315

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…

> 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…

This seems to be a little bit different than other financial crashes where the "little guys" lost out -- in previous situations, most went in trusting that they wouldn't be gambling their savings away because of some financial trust. Now, however, most people are purchasing GME not because they've looked at the underlying value of GameStop and realized it's value, but because they're guessing the price will go up, but deep down know that someone will be left buying high and selling really low.

Not sure exactly what to call it, but it seems to be a difference in consent to gamble $$, if that makes sense.

Re: GameStop Is Rage Against the Financial Machine

#672

Post by [deleted] » Thu, Jan 28, 2021, 1:28 AM UTC

wolverine876 wrote: post #663

There are so many assumptions in this narrative that have no foundation. (Neither repetition and emotion are signals of truth; the inflammation and use of those things is a good signal that some manipulation is going on and that facts are lacking.) * The 'little guy' is powering this movement. We don't know who is leading it and who is pushing it. We do know that social media is often used for mass manipulation, lead…

[deleted]

Re: GameStop Is Rage Against the Financial Machine

#673

Post by wolverine876 » Thu, Jan 28, 2021, 1:28 AM UTC

astrange wrote: post #669

wolverine876 wrote: post #666

Earlier quoted context omitted.

Can you provide some factual basis for these claims? We can type out claims without foundation endlessly; the Internet demonstrates that well; what we need is real knowledge and facts.

Are there any claims in that post?

I'm not making claims, if that's what you mean. The burden of proof is on the person I was replying to.

Re: GameStop Is Rage Against the Financial Machine

#674

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

astrange wrote: post #669

wolverine876 wrote: post #666

Earlier quoted context omitted.

Can you provide some factual basis for these claims? We can type out claims without foundation endlessly; the Internet demonstrates that well; what we need is real knowledge and facts.

Are there any claims in that post?

Yeah. It read just as a simplified explainer of shorting.

Re: GameStop Is Rage Against the Financial Machine

#675

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

wolverine876 wrote: post #663

There are so many assumptions in this narrative that have no foundation. (Neither repetition and emotion are signals of truth; the inflammation and use of those things is a good signal that some manipulation is going on and that facts are lacking.) * The 'little guy' is powering this movement. We don't know who is leading it and who is pushing it. We do know that social media is often used for mass manipulation, lead…

Where is the anger? On social media I see mostly people who sort of gleefully think the chaos is funny.

Re: GameStop Is Rage Against the Financial Machine

#676

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

wolverine876 wrote: post #666

noncoml wrote: post #654

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 s…

Can you provide some factual basis for these claims? We can type out claims without foundation endlessly; the Internet demonstrates that well; what we need is real knowledge and facts.

No claims, just explaining how shorts work.

Re: GameStop Is Rage Against the Financial Machine

#677

Post by yudlejoza » Thu, Jan 28, 2021, 1:29 AM UTC

noncoml wrote: post #654

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 s…

Thanks. Great explanation.

I don't get the over 100 percent part though. Is it required to squeeze the short (i.e., beat hedge-fund at this game)? Wouldn't hedge-fund still need to purchase 100 cows even if they only borrowed once?

Because as I understand, the way it works is that:

- You borrow 100 cows.

- You sell them immediately.

- You wait for the cow price to drop.

- Now you buy 100 cows, netting a profit. (but they need to buy back those 100 cows here, and they only borrowed once).

- Now you return those 100 cows to the lender.

Re: GameStop Is Rage Against the Financial Machine

#678

Post by AlexCoventry » Thu, Jan 28, 2021, 1:29 AM UTC

noncoml wrote: post #654

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 s…

I agree. The anger seems like an ancillary phenomenon. People seem to be buying because they think it's a sure thing that the asset price will increase. Maybe anger at shorters helps justify exploiting their error, but it's not the primary motive.

Re: GameStop Is Rage Against the Financial Machine

#679

Post by throwaway0a5e » Thu, Jan 28, 2021, 1:32 AM UTC

eindiran wrote: post #552

delaaxe wrote: post #547

Earlier quoted context omitted.

Whenever a human places a trade, the counterparty is almost always an algorithm or some kind of automated market maker

But behind the algorithm there is a human trader with motivations and market knowledge who is commanding it; the fact that the buyer is, in some technical sense, an algorithm doesn't seem very relevant to me.

Sure there are some closely managed algorithms but I think you underestimate how many algorithmic traders are ML shops that don't do anything other than "whatever makes the number biggest at the end of the day"

Re: GameStop Is Rage Against the Financial Machine

#680

Post by anm89 » Thu, Jan 28, 2021, 1:32 AM UTC

wolverine876 wrote: post #666

noncoml wrote: post #654

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 s…

Can you provide some factual basis for these claims? We can type out claims without foundation endlessly; the Internet demonstrates that well; what we need is real knowledge and facts.

What are you defining as "these claims"?