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Robinhood is limiting purchases of stocks: AMC, Blackberry, Nokia, and GameStop

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Re: Robinhood is limiting purchases of stocks: AMC, Blackberry, Nokia, and GameStop

#571

Post by hintymad »

wyldfire wrote: post #26

Can someone help me understand Robinhood's POV? This just seems so outrageous that there must be some sane rationale that I'm not seeing. Why do Robinhood, Reddit, Discord, etc feel like they have to respond to this? Whether the investments being made are responsible or not, it doesn't seem like it should be their place to intervene. If the hedge funds over-shorted GME and WSB recognized that and traded against that…

How is this not making people cynical, even for a person like me who does not own any share of GME? And isn't cynicism one of the greatest dangers to a system, for people stop trusting the system no matter what?

Re: Robinhood is limiting purchases of stocks: AMC, Blackberry, Nokia, and GameStop

#572

Post by joez »

I don't get how Robinhood can make this move. I see this move as a lose/lose. Anyone care to emphasize with them? Maybe they see themselves as saving the lay investor?

But then from a price action perspective, - If GME goes up, people are going to have the sentiment that Robinhood stopped them from making money to protect the fat cats - If GME goes down, people are going to blame RH.

Re: Robinhood is limiting purchases of stocks: AMC, Blackberry, Nokia, and GameStop

#574

Post by isatty »

djrogers wrote: post #446
EGreg wrote: post #435

Earlier quoted context omitted.

Hey, crowd, you are not allowed to buy up the stock like that! Someone is gonna get hurt on the way down! “Here let us help you” — closes down exchanges, panic sell — “isn’t that all better?” People with their money stuck and unable to cash out... so much better eh? I smell a huge class action lawsuit

Well, to be fair - they are at least allowing sales, just not purchases.

Which doesn't matter - averaging down is a valid strategy.

Re: Robinhood is limiting purchases of stocks: AMC, Blackberry, Nokia, and GameStop

#575

Post by simias »

zarkov99 wrote: post #57

Sure. Robinhood got a call from someone very powerful in their circle, politely asking them to stop the amateur plebes from interfering with their professional market manipulation. We are taking about people commanding titanic amounts of capital and (indirect) regulatory power. Robinhood then had the choice, do we make enemies out of these people or do we just screw, er, I mean protect, our customers? Unburdened by a…

While what you say is plausible, can't it also simply be that they saw a gigantic portion of their userbase making these incredibly risky bets and they were worried that it'd end up blowing in their face?

Re: Robinhood is limiting purchases of stocks: AMC, Blackberry, Nokia, and GameStop

#576

Post by rchaud »

nfriedly wrote: post #376
wyldfire wrote: post #26

Can someone help me understand Robinhood's POV? This just seems so outrageous that there must be some sane rationale that I'm not seeing. Why do Robinhood, Reddit, Discord, etc feel like they have to respond to this? Whether the investments being made are responsible or not, it doesn't seem like it should be their place to intervene. If the hedge funds over-shorted GME and WSB recognized that and traded against that…

A charitable guess is that Robinhood is trying to protect their users from buying at the height of this mania. There are people literally investing their rent money into GME, and it's almost inevitable that the price will come down at some point, the only question is when and how far.

The trade screen could just display a warning that the stocks are in question are experiencing high volatility, and require the user to click something to indicate that they understand the risks.

Re: Robinhood is limiting purchases of stocks: AMC, Blackberry, Nokia, and GameStop

#577

Post by lottin »

cactus2093 wrote: post #489
wyldfire wrote: post #26

Can someone help me understand Robinhood's POV? This just seems so outrageous that there must be some sane rationale that I'm not seeing. Why do Robinhood, Reddit, Discord, etc feel like they have to respond to this? Whether the investments being made are responsible or not, it doesn't seem like it should be their place to intervene. If the hedge funds over-shorted GME and WSB recognized that and traded against that…

One possible legitimate reason is the risk to Robinhood themselves. They allow margin trading and I think anybody would agree that buying GME at these crazy prices on margin is incredibly risky. If the traders can't pay, Robinhood or their bank/insurers are on the hook. Also even though the narrative here is Robinhood traders vs hedge funds, surely there are also a lot of shorts on Robinhood too, so there's more marg…

> However why not just disable margin trading on these stocks instead of shutting them off altogether?

Yes... or simply increase the margin.

Re: Robinhood is limiting purchases of stocks: AMC, Blackberry, Nokia, and GameStop

#578

Post by tfehring »

avs733 wrote: post #563
Aunche wrote: post #555

Earlier quoted context omitted.

This narrative doesn't make any sense. Hedge funds aren't a monolithic entity. Some hedge funds lost billions of dollars on shorts. Redditors made millions of dollars. Where do you think the rest of the money went to? That's right, other, more powerful, hedge funds. BlackRock held 9.2 million shares as of a few weeks ago.

not having a RH account, can you trade there on leverage? I imagine if a huge number of retail traders are ending up leveraged to high hell, RH may have ended up in an uncanny financial position because of this.

You can (and people frequently do) trade options on RH, which are inherently leveraged. But RH is just a broker - it’s not on the other side of the trades itself.

Re: Robinhood is limiting purchases of stocks: AMC, Blackberry, Nokia, and GameStop

#579

Post by cryptonym »

wyldfire wrote: post #26

Can someone help me understand Robinhood's POV? This just seems so outrageous that there must be some sane rationale that I'm not seeing. Why do Robinhood, Reddit, Discord, etc feel like they have to respond to this? Whether the investments being made are responsible or not, it doesn't seem like it should be their place to intervene. If the hedge funds over-shorted GME and WSB recognized that and traded against that…

"The Robin Hood effect is an economic occurrence where income is redistributed so that economic inequality is reduced. The effect is named after Robin Hood, said to have stolen from the rich to give to the poor."

So I think in Robinhood's POV, hedge funds are the poor.

Re: Robinhood is limiting purchases of stocks: AMC, Blackberry, Nokia, and GameStop

#580

Post by fallingknife »

cromka wrote: post #526
tim333 wrote: post #158

Earlier quoted context omitted.

From Schawb “It is not uncommon for us to place restrictions on some transactions in certain securities in the interest of helping mitigate risk for our clients,” from Massachusetts secretary of the commonwealth “It is very clear to anyone looking at the numbers that the whole marketplace is being manipulated here,” he said. I imagine Robinhood's thinking is similar

Apparently Citadel is in bed with Schwab/Ameritrade, too, who also halted trading: "The Verge meanwhile noted one hedge fund suffering amid the GameStop surge was Melvin Capital Management, which another hedge fund, Citadel, has since bailed out. Citadel's founder is Ken Griffin, who also founded Citadel Securities, a big investor in Robinhood that also works with TD Ameritrade and Charles Schwab." I suspect they sel…

And they were probably informed in advance that Robinhood was about to limit trading so they could short the stock at the exact right time.
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