Discord bans r/WallStreetBets server, subreddit went private for a while • Hacker News Board

Re: Discord bans r/WallStreetBets server, subreddit went private for a while

#931

Post by tsimionescu » Thu, Jan 28, 2021, 1:50 PM UTC

WanderPanda wrote: post #862

bko wrote: post #832

Earlier quoted context omitted.

> And how to do it? You get people to invest in a stock that is expected by the industry to go belly up. A lot of the people involved aren't just buying and holding. They're specifically buying/selling short dated out of the money options in order to move the price. Some understand the market microstructure and the various levers they have to make the price move using what is effectively leverage. > Seriously. It's t…

Why is the solution always to either shut something down or to regulate? Why is educating people to act more responsibly never ever considered an option?

If you believe what is happening is wrong, it needs to be regulated so that it doesn't happen. If you believe it's not wrong, it shouldn't be either regulated nor educated against.

Now, if you do believe it's wrong and it should be educated against, how would this work? Do you think that this is wrong beacsue people are going to lose money? Maybe then it makes some sense to give better education, but this is obviously a special moment and it's hard to educate people so that they don't engage in a social phenomenon. Not to mention, a lot of educated people may be making some pretty educated bets and winning a lot of money; other educated people may just be 'paying' money for a cause that they believe in.

Re: Discord bans r/WallStreetBets server, subreddit went private for a while

#932

Post by spacemanmatt » Thu, Jan 28, 2021, 1:51 PM UTC

krageon wrote: post #782

simplecto wrote: post #762

Earlier quoted context omitted.

25 years ago there were know-it-alls expressing sentiments like yours. “The internet is a fad” It is just nerdy men in their basements.

That's not what they said at all.

It was only 2006 when I worked at a company making ASIC-based network security products and had a coworker whose actual description of the threat profile was "kids who live in their parents basements, need to see the sun more"

Re: Discord bans r/WallStreetBets server, subreddit went private for a while

#933

Post by TheRealDunkirk » Thu, Jan 28, 2021, 1:52 PM UTC

SubiculumCode wrote: post #103

ve55 wrote: post #14

And they chose today as the best possible time to enact this ban? Really? I really think they should have put more thought into the timing of this decision; a lot of users are going to be upset and will suddenly start to realize that a single company has a monopoly on their online social life (this may seem like an exaggeration, but it feels quite true to me colloquially, especially if you're a younger US male and/or…

Discord, a monopoly?

Yeah, I'm getting really tired of people saying "not a monopoly" when we're discussing de facto monopolies. Especially in the short term, and for knee-jerk reactions. Do you think any Discord competitor is going to welcome /r/wsb with open arms after that move? Ergo: monopoly.

Re: Discord bans r/WallStreetBets server, subreddit went private for a while

#934

Post by parsimo2010 » Thu, Jan 28, 2021, 1:52 PM UTC

bcruddy wrote: post #914

bko wrote: post #869

Earlier quoted context omitted.

I'm not arguing that shutting down or regulating is the best solution, but it is the most likely outcome. How would one go about educating people? There's been a lot of ink spilled on this story and it seems to have captured the public's imagination. Not all of the reporting is accurate, but all the major media outlets get out the point that this is essentially reckless market manipulation by a group of loosely bande…

How is borrowing then selling 140% of the available shares legal? How is that not market manipulation? This is the market at work. This was taken too far and the market has a method for correcting this behavior and we're seeing it now. The difference is retail is going to win AND there's no backroom deal to be made to stop the bleeding. We NEED financial reform but we need to look at what allowed this situation in th…

You seem to be hinting at the idea that naked short selling should be illegal, which it has been for over a decade. So here’s a minor clarification for you: The short interest (140% or more for GME) is calculated on the public float. There is a significant chunk of GameStop shares that are not publicly accessible, but could be borrowed against (the shares do exist). If you consider the total outstanding shares of GME, then only 99% or so of the company was shorted. So it’s a crazy high amount, but there is no proof that any (actually illegal) naked short selling was occurring. So long as the people holding the non-public portion allowed their shares to be borrowed, then nothing illegal is going on. If, in the unlikely situation that EVERYONE needed to close their short positions at once, these non-public shares could actually be sold if the owner wanted to. Of course, they could dictate a really high price if the public market volume isn’t enough to close out the short positions in the standard three day period.

The reason that short interest is calculated on public float is because that makes the most sense for normal situations. We just happen to have stumbled into one of those unusual situations.

Re: Discord bans r/WallStreetBets server, subreddit went private for a while

#935

Post by bane » Thu, Jan 28, 2021, 1:54 PM UTC

I'm really curious in how much money was needed to pump the price the stock up this much. If it's relatively little, it really points to a flaw in the stock market system.

Re: Discord bans r/WallStreetBets server, subreddit went private for a while

#936

Post by llampx » Thu, Jan 28, 2021, 1:56 PM UTC

Anon1096 wrote: post #470

SpicyLemonZest wrote: post #273

Earlier quoted context omitted.

There wouldn't be anything wrong with that. There'd be a lot right with it, honestly - I would be trumpeting it as a clear victory of the little guy over snobby funds who don't think anyone else can understand finance. But what's happening right now is almost certainly a pump and dump with a short squeeze as a facade. I've seen a lot of commenters who seem to be grievously misled about the actual mechanics of a short…

I agree with this post. Although the narrative being spun on WallStreetBets and co wants you to believe in a short squeeze, it doesn't seem like any shorts were actually squeezed. This morning, Melvin Capital and Citron successfully exited their positions in Gamestop. Had there been a true squeeze, the whole point would have been to prevent an easy exit and force them to cause the price to balloon out of control. By…

Do you believe CNBC or where are you getting your info that they have covered all their shorts?

Re: Discord bans r/WallStreetBets server, subreddit went private for a while

#937

Post by einpoklum » Thu, Jan 28, 2021, 1:56 PM UTC

baybal2 wrote: post #899

bko wrote: post #832

Earlier quoted context omitted.

> And how to do it? You get people to invest in a stock that is expected by the industry to go belly up. A lot of the people involved aren't just buying and holding. They're specifically buying/selling short dated out of the money options in order to move the price. Some understand the market microstructure and the various levers they have to make the price move using what is effectively leverage. > Seriously. It's t…

> And there will be more laws made targeting individuals engaging in this sort of activity (basically coordinating with groups of people). These laws will not be legal under US law, because US congress is not permitted to make a law abridging an act of speaking, or expressing an idea, or opinion. > Finance is highly regulated and arbitrarily so. The level of arbitrariness of legal process in legal systems of ex-UK co…

> The level of arbitrariness of legal process in legal systems of ex-UK colonies is in league of its own in the world, and USA is particularly prominent at that.

Can you post a link to some comparison of arbitrariness of ex-UK legal systems and other systems?

Re: Discord bans r/WallStreetBets server, subreddit went private for a while

#938

Post by fractionalhare » Thu, Jan 28, 2021, 1:58 PM UTC

lordnacho wrote: post #897

fractionalhare wrote: post #893

Earlier quoted context omitted.

30% has not been lost on a single name. It's publicly available information that every known short by the fund (particularly those with high short interest) is now being targeted, and is up tens to hundreds of percent in the past couple of days.

Fair enough, I hadn't considered I might be reading a skewed view of what the PnL distribution was. However it's still not a great look that the firm can be put in such a position. It's not actually an excuse that events are unprecedented. Thanks for your input. I've worked during such crises myself and it's stressful.

Yeah I'd like to caution that approximately everything reported about this is basically incorrect, even from reputable media. That includes PnL stuff but equally applies to...well, all the other stuff. I can't even count the number of conspiracies I've seen repeated.

I get that hedge funds are categorically unsympathetic characters in this play. But people are so angry that fact checking doesn't seem to matter. It doesn't help that a lot of things financial mechanics are esoteric and not commonly known, or that most people don't know the difference between hedge funds, banks, market makers and brokers.

Re: Discord bans r/WallStreetBets server, subreddit went private for a while

#939

Post by bko » Thu, Jan 28, 2021, 1:59 PM UTC

ballenf wrote: post #879

bko wrote: post #832

Earlier quoted context omitted.

> And how to do it? You get people to invest in a stock that is expected by the industry to go belly up. A lot of the people involved aren't just buying and holding. They're specifically buying/selling short dated out of the money options in order to move the price. Some understand the market microstructure and the various levers they have to make the price move using what is effectively leverage. > Seriously. It's t…

> ... this isn't going to end well for the average consumer. My prediction is reddit will shutdown wsb because that's what reddit does. And there will be more laws made targeting individuals engaging in this sort of activity (basically coordinating with groups of people). This may hurt newsletters and other financial venues. The large hedge funds will be fine, we might see a few bailouts, and life will go on. I total…

> If the new regs enshrine the current reality in law then maybe there'll be more hope for fundamental reform.

This is a sideshow. Feds or regulatory body will crack down, we'll just accept another banned community that is "a threat to our democracy" and we'll move on. I don't think what is essentially financial de-regulation is a movement that's going to pick up steam some time soon. There's vagueness in securities laws and this will continue. Meanwhile banks will periodically be sued for tens of billions that will fill the coffers of attorney generals, justice departments and various state regulators [0]

> Isn't that the whole point WSB is making?

Yes, partly. I think much of it is about having some fun and having a sense of community.

[0] https://www.wsj.com/articles/big-banks-paid-110-billionin-mo...

Re: Discord bans r/WallStreetBets server, subreddit went private for a while

#940

Post by jug » Thu, Jan 28, 2021, 2:00 PM UTC

bko wrote: post #832

jug wrote: post #777

It does feel like a watershed moment regarding hedge funds. This is the first time netizens capitalize on hedge fund short favorites and it has been surprisingly easy to cause an absolute catastrophy in the order of billion losses for them. I heard Melvin Capital may even have gone bankrupt? And how to do it? You get people to invest in a stock that is expected by the industry to go belly up. Seriously. It's that eas…

> And how to do it? You get people to invest in a stock that is expected by the industry to go belly up. A lot of the people involved aren't just buying and holding. They're specifically buying/selling short dated out of the money options in order to move the price. Some understand the market microstructure and the various levers they have to make the price move using what is effectively leverage. > Seriously. It's t…

> Finance is highly regulated and arbitrarily so.

But how can you regulate that people get together and buy stock? They need... 1) Internet bulletin board. That's it. The barrier of entry is just so damn low, and that's in part also why this has happened. In hindsight I'm surprised it hasn't happened before but I suppose Covid-19 brought this on.

I think it would be easier to regulate something that at least takes a certain amount of investment in terms of insight or knowledge, but here you can just take any random heavily shorted company and like... get people on a popular board to buy stocks over a day.

This time, sure, it was Reddit and the subreddit may be suspended. Next time it'll be a Discord or Telegram board or something. It's just... so easy