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WallStreetBets vs WallStreet: It's not about the money anymore

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Re: WallStreetBets vs WallStreet: It's not about the money anymore

#361

Post by AndrewStephens »

I have watched this mess from afar and the tone of the conversation has changed from "Hey, here is an opportunity to make some money off a mistake some hedge funds are making" to "Smash the system". Exhibit A - this idiotic article.

You cannot use the tools of the system to beat the system.

Here is the thing about hedge funds - they hedge. They hedge in the morning, hedge in the afternoon, eat some hedge for dinner and get in a few rounds of hedging in down at the hedge club before going to bed dreaming of hedges. The clue is in the name. They don't typically make huge loses or gains for a single stock, they are happy to make a consistent gain every day.

The vast majority of hedge funds are making stacks of small gains off this nonsense and anyone who doesn't cash out at the right time is going to be hosed. Do you know when the right time to cash out is? No? Sucks to be you.

Honestly I am worried. Mob investing has collapsed economies, brought down governments, and ruined more lives than can be counted during the last 150 years, and I don't see how this is different.

This is completely ridiculous and will all end in tears. I am actually glad that some pressure is being put on Reddit and the brokers to cool things off - there are opportunities to cash out big time but a lot of the small players are going to lose money.

Re: WallStreetBets vs WallStreet: It's not about the money anymore

#362

Post by rapsey »

bilekas wrote: post #295
bvirb wrote: post #225

Earlier quoted context omitted.

https://www.powercycletrading.com/what-is-a-high-short-inter... . > Short interest as a percentage of float above 20% is extremely high > A high NYSE short interest ratio means that the stock market as a whole is vulnerable to a “short-squeeze.” It could rise quickly if new economic data, political news, or other types of information are released that make investors more optimistic. GME was shorted 140%. No idea if 2…

I'm pretty stupid on this, but how does one short for +100% is that not naked shoring ?

They are naked shorting. This is why wsb is so eager to destroy them.

Re: WallStreetBets vs WallStreet: It's not about the money anymore

#363

Post by stevievee »

philip1209 wrote: post #246
bidirectional wrote: post #19

Once again, this insistence on viewing 'Wall Street' as a monolothic entity. The largest asset management firm on Earth holds over 9 million Gamestop stock, none of the big banks that received bailouts in 08 are affected by this, 99.9% of hedge funds are not affected by this, high frequency traders are probably making a bundle. Institutional money was long Gamestop before this story entered the public consciousness.…

A lens to look at this through is - "why is short selling allowed?" Advocates cite increased "liquidity." But, does society really benefit? Short-selling really just lets trading firms extract value from the failure of others. In that sense - professional trading firms that participate in short-selling could be grouped into a monolithic "Wall Street" in the sense that they are extracting value without a benefit for s…

Personally, I am not a fan of shorting but in addition to "liquidity" there is also "price discovery". Using excess leverage to short and floating 150% of the shares short is potentially a problem but the same would be true if it was the reverse (ie. buy or long positions). Price manipulation is the real problem here.

Given more capital and a reasonable amount of time, the short sellers in this instance will be correct. The value of the GameStop stock using commonly accepted valuation methods of our day is much lower than $300 or even $100 per share. Unfortunately brick-and-mortar companies with declining revenue and no visible growth prospects are valued differently than high flying tech stocks. Keep in mind that I understand the rules of the game dictate that shorts can be squeezed and the share does not have to trade at the commonly accepted valuation.

Re: WallStreetBets vs WallStreet: It's not about the money anymore

#364

Post by mcguire »

duxup wrote: post #132
kev_da_dev wrote: post #50

Earlier quoted context omitted.

How is disabling purchases and broker-wide outages not bolstering hedge funds? It's government intervention no matter how you look at it. Just because it's not a direct capital infusion does not make it any less bad

>It's government intervention no matter how you look at it. Is it? Do we have some information on that yet? Why does disabling purchases help?

It prevents more people from piling onto the short squeeze?

(It also prevents J. Naive Trader from buying into this train wreck and losing a bucket of money when the bottom falls out, which it will.)

Re: WallStreetBets vs WallStreet: It's not about the money anymore

#365

Post by 3saryHg6LP2e »

chollida1 wrote: post #314
dcolkitt wrote: post #51

Earlier quoted context omitted.

> high frequency traders are probably making a bundle. I've heard from a former colleague at a major HFT firm, that they hit their entire revenue target for the year, just in the past week.

Then one of two thing is true. 1) they are lying to you. Look at how much the stock has traded, Its alot but its nothing compared to how much SPY trades in a year. There just wasn't' anywhere near enough trading volume to make an entire year in one week even if they participated in every trade that Gamestop had this past week. 2) they lost money last year so any profit beats last year's pnl?

Or the spreads/volatility of GME is big/frothy enough that they can make much more per trade

Re: WallStreetBets vs WallStreet: It's not about the money anymore

#366

Post by dcolkitt »

chollida1 wrote: post #314
dcolkitt wrote: post #51

Earlier quoted context omitted.

> high frequency traders are probably making a bundle. I've heard from a former colleague at a major HFT firm, that they hit their entire revenue target for the year, just in the past week.

Then one of two thing is true. 1) they are lying to you. Look at how much the stock has traded, Its alot but its nothing compared to how much SPY trades in a year. There just wasn't' anywhere near enough trading volume to make an entire year in one week even if they participated in every trade that Gamestop had this past week. 2) they lost money last year so any profit beats last year's pnl?

GME has been trading at $2 spreads. SPY trades at $0.01 spreads.

Re: WallStreetBets vs WallStreet: It's not about the money anymore

#367

Post by guerrilla »

dcolkitt wrote: post #79
mancerayder wrote: post #55

They are blocking buying, and only allowing selling GME, BB and others. How is this not evidence of a corrupted free market system? A CEO of one company can call up his connections in retail trading platform firms, CNBC, and Nasdaq and protect his profits? Why is Reddit the scandal and not that? Reddit is full of rocket emojis and YOLO jokes. But what we see here, especially with the moralizing about gambling, is an…

Robinhood is a free service. The customers don’t pay anything. If the order internalizers decide to stop paying them for their order flow, then they have to route to the exchanges. which charge fees. Trading is still ongoing at the exchanges. It’s just the free platforms, where it’s shut down. If someone wanted guaranteed access to the exchange, then they shouldn’t have used a free broker. Are you saying that Robinho…

Same policy applies to paid Robinhood and other paid brokers.

Re: WallStreetBets vs WallStreet: It's not about the money anymore

#368

Post by KKKKkkkk1 »

bidirectional wrote: post #19

Once again, this insistence on viewing 'Wall Street' as a monolothic entity. The largest asset management firm on Earth holds over 9 million Gamestop stock, none of the big banks that received bailouts in 08 are affected by this, 99.9% of hedge funds are not affected by this, high frequency traders are probably making a bundle. Institutional money was long Gamestop before this story entered the public consciousness.…

Ultimately, a few medium-sized hedge funds were caught doing something stupid and the market has rightfully taught them a lesson. It's great that retail investors got in on a high-level play like this and made money.

Why is betting on the decline of an off-line video-game chain stupid? I'm surprised GameStop is even still in business.

Re: WallStreetBets vs WallStreet: It's not about the money anymore

#369

Post by Traster »

nfriedly wrote: post #66
jonplackett wrote: post #6

I’m seeing so much news about this but don’t understand what’s happening. Can someone do a recap?

Institutional investors were betting that GameStop (GME)'s stock price would fall, redditors were betting that it would rise. So far the redditors are winning. Early on, the bets had some basis in reality, but now it's become more of a speculation game. Yesterday, two of the big institutional investors decided to fold, effectively loosing 100% of their investments. Edit: or, potentially more. The same thing has start…

>Yesterday, two of the big institutional investors decided to fold, effectively loosing 100% of their investments.

They can lose much more than the total value they initially invested into the shorts, since they have to buy back at several multiples of the price of the stock at the point they bought and they had heavy borrow costs too. That's why the hedge funds are at risk of going bankrupt - because they aren't only liable for the value they invested but they're liable for the whatever cost it takes to buy back the stocks they shorted.

Re: WallStreetBets vs WallStreet: It's not about the money anymore

#370

Post by castlecrasher2 »

jsjsbdkj wrote: post #39
tenaciousDaniel wrote: post #8

As someone who is not very educated in finance, I'm curious how to interpret today's events. Is nasdaq/robinhood/everyone else transparently manipulating the market on behalf of hedge funds? Or are these standard mechanisms in place for preventing the stock market from swinging wildly out of control? I don't know if it's standard to completely block trading on one or more stocks.

WSB has basically recreated a "boiler room", which is an ages old scam where a small group of insiders would encourage people to buy stock, drive them value up, and then the insiders dump the stock. The key insight here is that for every person selling the stock and making millions, somoene has to be buying. There's a narrative about short squeezes forcing a small number of hedge funds to buy stock, but in practice m…

Do you not know the short-to-float context for GME? I suggest you read up on it; the retail movement isn't a pump-and-dump.
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