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

thinkingthrough.substack.com

411–420 of 475 posts

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

#411

Earlier quoted context omitted.

The line is blurry. There was an immediate and emphatic appeal to the regulators, and the way the SEC works is often by encouraging self regulation. The CEO of the NASDAQ even went on air to ask for more SEC regulation. This isn't unusual, it's pretty much how "government intervention" via the SEC, and a lot of other regulatory bodies, actually works.

So, the SEC is hands off and encourages self regulation, so any instance of self regulation is considered government intervention?

Look at the language of SEC (and other regulators outside of technical fields like pharma).

There are very occasional "landmark" regulations, often legislated, that are explicit. EG Sarbanes-Oxley.

Day-2-day, the SEC works mostly by signalling. They might make a policy declaration, or send letters to CEOs. They'll note things in periodic firm reviews. Publicly raise an eyebrow. Take action against or investigate one firm and publish findings. Rarely are specifically worded edicts issued.

Regulating bodies are designed to work largely through pressure instead of (ironically) through regulations. This is by design. Regulators are usually created in response to firms having won the loophole cat and mouse games, and the prohibitive complexity of actual regulations. If government wanted rules, they can just legislate directly instead of delegating to a regulator.

"Compliance" is often about staying away from trouble by playing a sort of guessing game. It doesn't mean that it's "hands off."

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

#412

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…

I just checked my TD Ameritrade account. I couldn't call up any information on GME.

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

#413

Earlier quoted context omitted.

I can't see how that's the case. They aren't going to suffer for this, let alone personally. Even if the fund tanks, they can set up a new one, probably with sympathetic money or just cruise off into the sunset with their millions.

They're so disconnected that losing billions doesn't matter? The problem is bigger than originally conceived then.

Its nice that more people are coming to this realization, though I'll admit that it's a bit funny that this, of all events, is what's making people realize that extreme wealth disparity is a problem.

The existence of billionaires isn't even good for the free market, let alone free society. In order for a market to be rational, the threat of losing money has to actually mean something, which it doesn't for the ultra-rich.

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

#414

Earlier quoted context omitted.

So, the SEC is hands off and encourages self regulation, so any instance of self regulation is considered government intervention?

Yes, when SEC asks for something it's considered governmental intervention even though they technically don't force it.

...Exactly. This is by design. It's what regulators are designed to do. Medical/pharma is an exception. Usually regulators are designed to wield pressure. For long term goals, they usually steer towards more explicit "industry standards" that they can back... but they rarely author them.

For shorter term and more operational issues, pressure is the main toolkit.

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

#415
post #143

Earlier quoted context omitted.

Even as an econometrician, I would never call it dumb. It's a virtual incarnation of Occupy Wall Street. These guys are probably spending less than those who protested several years ago did. Heck, you can buy a stock and still go to work. No need to forego weeks of labor.

I guess I find it really weird and unfocused and so mixed in with people who are greedy/stupid that the whole thing just seems absurd.

I think the absurdity is why it's grown as big as it has: a bizarre combination of conditions achieved critical mass and has exploded into this unplanned, unprecedented paroxysm of pure absurdity that nobody would have predicted because it's so irrational, so stupid, yet it's happening.

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

#416

Earlier quoted context omitted.

I’m not following your analogy here. If a bottle of “10-40W” oil is offered to me for free, but it really contains olive oil, it’s my fault for trusting the label? I mean, pragmatically speaking a buyer should be more wary of a situation like this. But motor oil is not the same thing as brokerages. It is very common for trades to be executed with no fee these days. It’s a market norm. It is not a market norm at AutoZ…

I'm saying the oil is not labelled 10-40W, but is actually 2-cycle motor oil and they put it in their car anyway. I'm an outsider, but that's how this appears to me. They weren't lied to, they misjudged—and mainly because of a lack of understanding. Traditionally, acting without understanding but still a high degree of confidence was called hubris. And it appears the institutional traders expressed hubris when they o…

That's more reasonable. However, the lawnmower or the Tercel are machines that have inherent limitations.

RH's decision here isn't an inherent limitation of their platform. It's an active decision they made. One they did not have to.

Also, what RH has done isn't harming just their own customers, but the entire market. People using Questrade or E-trade are finding that they have fewer buyers for their shares. If RH is going to act like a Tercel on the racetrack, they have no business entering the race in the first place. They're a danger to the other participants.

(BTW, analogies are fun. Thanks for the opportunity to torture them like this :)

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

#417
post #146
post #101

Earlier quoted context omitted.

So you're saying they're even dumber than they appear at first glance? Sorry, but pissing money away (or actually likely giving it to some Wall Street institution) to send some ill-defined "message" really can't be called anything but dumb.

Do you know how this whole thing started? It seems you're just coming in and dismissing the whole thing, when the person who started it with $50k is now sitting on gains of $50m and even people who bought in yesterday are up almost 2x.

even people who bought in yesterday are up almost 2x.

Not anymore, they're not. Such are equities when the price becomes detached from reality. Any moorings one wishes to try and tie the price to, those are gone now.

As they say, past performance is not an indicator of future gains.

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

#418
post #247
post #208

Earlier quoted context omitted.

And some people who can't really afford to buy Powerball tickets every week. And a few of them hit it big. Doesn't make it a rational choice from a purely economic perspective.

Do you see all trading on the stock market as speculative and basically gambling?

Seeing it that way makes budgeting for it a lot easier (for me): I fully expect the loss of any and all money I'd bring into a casino, treating it as an admittance fee paid in exchange for the thrill of the tiny possibility of winning big, whose occurrence would probably influence me to double down and inevitably lose everything.

I hope thinking this way about retail investing reduces the risk of YOLOing one's life savings on individual stocks.

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

#419
post #168
post #134

Earlier quoted context omitted.

Very paternalistic to assume that people are gambling away their grocery money and should be stopped now that the short squeeze has become much, much more likely. Meanwhile ANY other security also has the chance to go to 0, but RH doesn't stop you from buying.

I don't think he's arguing FOR stopping the trades. I think he's worried about the folks participating financial well being. We worry about that (people's retirement savings and so on) anytime we see market corrections, a given company go under, and etc... it's not an unusual concern.

That's elitism. Which is fine, it's a legitimate position, to believe that you have knowledge that others don't, and others should be protected from themselves. And the Law can step in to enforce this protection. You can apply that to stocks, "gambling", drugs, sex, porn, hate speech, misinformation, and everything else.

And there are a number of countries that have that philosophy in legal form. I'm glad to have a choice NOT to live in those countries and I suspect most on HN are similar.

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

#420

Earlier quoted context omitted.

> They are blocking buying, and only allowing selling GME, BB and others. How is this not evidence of a corrupted free market system? I can almost guarantee you that this decision was made to protect retail clients -- not as part of some conspiracy against them. It's very clear that retail is going to lose their shirts in the end of all of this, and by blocking new buy orders, the brokerage is effectively protecting…

You are right that a big part of retail will be left with enormous losses. But that doesn't in any way excuses brokers who manipulate price letting only SELL orders in

If they only allow sell orders, who is buying what is sold?
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