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Statement of SEC Regarding Recent Market Volatility

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201–210 of 906 posts

Re: Statement of SEC Regarding Recent Market Volatility

#201

Earlier quoted context omitted.

The FOMO is palpable. There's a hurried rush of small investors hoping to turn their meagre savings into a big win, backed by the anxiety that if they don't try then they'll forever regret missing their one and only chance at a comfortable life. This sort of event would be less likely if America's wealth disparity weren't so grotesquely skewed.

It boggles the mind people think hedge funds can't profit off a mad rush like this...

> It boggles the mind people think hedge funds can't profit off a mad rush like this...

How exactly would they do it? Shorting it again would involve calling the top for a stock whose price recently has been unpredictable, but very high.

Writing options seems nuts for something this volatile. I guess they could "buy volatility" with a straddle but again what would the numbers have to be on this where they turn a profit? It's not like the rest of the market is underestimating the volatility, it's evident to everyone.

Re: Statement of SEC Regarding Recent Market Volatility

#202

Earlier quoted context omitted.

The FOMO is palpable. There's a hurried rush of small investors hoping to turn their meagre savings into a big win, backed by the anxiety that if they don't try then they'll forever regret missing their one and only chance at a comfortable life. This sort of event would be less likely if America's wealth disparity weren't so grotesquely skewed.

It boggles the mind people think hedge funds can't profit off a mad rush like this...

hedge funds put in some money. They lost. Yeah. But automated trading solutions quickly flip things around. If they are smart. Losing money is literally part of what they do. Some they lose some they win. The success is winning a bit more than you lose, and very frequently.

Re: Statement of SEC Regarding Recent Market Volatility

#203
post #75

There’s a long history of similar occurrences that follow along a common line: whatever appears to support individual investors will be the path taken by politicians and regulatory bodies. Right now it appears that the public wants to be able to trade on their terms because there is this narrative that the little guy is finally sticking it to the big bad hedge funds. In reality there is probably very little truth to…

>nobody blames the speculators The hedge funds are the speculators in this case. They're playing a dangerous game where you can short more stock than what actually exists. Why this is allowed? Who the fuck knows.

It's quite difficult to stop without blocking all shorts.

Re: Statement of SEC Regarding Recent Market Volatility

#205
post #161

A Moment in the Life of an HN Genius: 1. Reads a technical document outside their domain. 2. Feels dumb because they don't have a grasp on any of the concepts. 3. Too busy to use the very internet which some of them probably helped build to magically render learning materials to the screen in front of them at zero marginal cost. 4. Sees the word "manipulation" 5. Substitutes the laymen's definition of "manipulation"…

That is pretty accurate even for many software and tech related discussions here (it’s a big field with lots of specialties).

Yes, it's a reductionist argument that can apply to literally anything. Let's just delete all user discussions on the internet, and only allow PhD granted experts to discuss things on panels where they must provide primary sources for everything.

Or you could simply point out when someone is wrong, and explain why, assuming you are an expert. Then we all learn.

Re: Statement of SEC Regarding Recent Market Volatility

#206
post #75

There’s a long history of similar occurrences that follow along a common line: whatever appears to support individual investors will be the path taken by politicians and regulatory bodies. Right now it appears that the public wants to be able to trade on their terms because there is this narrative that the little guy is finally sticking it to the big bad hedge funds. In reality there is probably very little truth to…

> Right now it appears that the public wants to be able to trade on their terms because there is this narrative that the little guy is finally sticking it to the big bad hedge funds. In reality there is probably very little truth to this. The fact that buying was limited yesterday is evidence that the little guy is actually winning here. Trading was stopped to save the hedge funds, because if they go under or lose to…

I cannot stress this strongly enough -- the fact that buying was limited yesterday is not evidence that the little guy is actually winning.

As has been explained in multiple other places, the limitations were as a result of Robinhood et. al. being unable to cover the risks involved in providing instant trading capabilities for a stock as volatile as the ones that got restricted. That has nothing to do with "the little guy is winning" whatsoever, and in fact may indicate that "the little guy" is about to lose his shirt, due to lack of predictability.

Trading was not stopped "to save the hedge funds". This is an outright lie that needs to be squashed. Stop saying this. I don't mean to be rude, but the narrative you're spreading is actively dangerous and not supported by any of the facts we have available to us.

Re: Statement of SEC Regarding Recent Market Volatility

#207
post #154

Earlier quoted context omitted.

Robinhood says that they basically couldn't fulfil the buy orders because they ran out of money, or couldn't fulfil the orders without breaking the rest of the platform. I imagine whatever the reason there's going to be lawsuits.

They over a day to say that. Instead, they decided it was clearer to say "we're temporarily restricting trading due to volatility". If what you said really was the issue... Why not just say that? They're a startup. They'd be forgiven. Why hide behind vagueness?

I do agree that they bungled the whole thing badly, but I also think they were probably trying to prevent a run on their accounts when they were already cash strapped.

Re: Statement of SEC Regarding Recent Market Volatility

#208

Earlier quoted context omitted.

Whatever else happens, Robinhood should not survive this. They clearly violated their customers' trust, so their customers should leave them. And I will be completely unsurprised if when the dust settles it turns out they acted illegally. Also, they suck at lying.

You may want to check what happened to certain brokers on Jan 15th 2015 before you start chucking accusations out. It’s clear you don’t understand how these brokers work and how they interface with the broader market.

Is this the Swiss Franc thing?

Re: Statement of SEC Regarding Recent Market Volatility

#209
post #75

There’s a long history of similar occurrences that follow along a common line: whatever appears to support individual investors will be the path taken by politicians and regulatory bodies. Right now it appears that the public wants to be able to trade on their terms because there is this narrative that the little guy is finally sticking it to the big bad hedge funds. In reality there is probably very little truth to…

Re: Subtleties.

I disagree. I think a big part of why this whole thing is fascinating is the depth. Yesterday morning, financial press were blathering generalities pinning WSB as market manipulators and calling for regulation to stop them. That is, stop retail investors trading at a scale that moves markets. IE, the stuff that insiders get away with regularly.

Between yesterday afternoon and now, millions of people have been catching up on the detailed mechanics of stock trade execution. There's a mad dash from reporter to get interviews with brokers, clearing house operators & such.

Note that the maneuver itself was analyzed in detail, and in public. That's what allowed big names like Cuban, Musk, various politicians and such to take a side and comment on it intelligibly.

Ultimately, whoever is holding these meme stock shorts needs to buys stock to cover their positions. I acknowledge that brokers had legitimate/legal/normative reasons to stop retail buys. But, it's also true that they created a window where short sellers could buy without competition from retail investors. Maybe brokers are covered legally against market manipulation charges because clearing houses were genuinely short on liquidity. But, (1) that doesn't change what happened and (2) Isn't this the regulator's job?

The reason people are cheerleading is because of these shenanigans. "Rigged" gets thrown around often, usually it's devoid of subtlety. This time, it's detailed. We can debate the details and construction of the rig. Truths fly around reddit for an afternoon, and are discarded the following day.

Few people cheerleading because they want a no regulation, pre-depression stock market. They just aren't willing to accept a rigged system. In any case, who are the speculators here? Short sellers like Melvin or Redditors? Short sellers future-sold 140% of the stock... hoping for a crash and potentially creating one. Redditors recognized this by looking at publicly available information and discussing it in the open.

Re: Statement of SEC Regarding Recent Market Volatility

#210
post #167

Earlier quoted context omitted.

> there is this narrative that the little guy is finally sticking it to the big bad hedge funds. In reality there is probably very little truth to this. Which part has little truth to it? The big hedge funds are apparently losing money (billions!) on Gamestop, unless that's being mis-reported. Some of the "little guys" (reddit people) definitely were a part of the reason for that.

The big hedge funds are apparently losing money (billions!) A few hedge funds (of different sizes) are indeed losing billions. A few other hedge funds have taken the opposite side of this bet and are making money. The vast majority of hedge funds have no position in this stock and are completely unaffected. In addition a bunch of HFT shops and similar making a lot money off the volatility and order flow all this has…

I mean, some hedge funds are making money, sure. But the point is that, collectively, billions of wealth have so far been transferred from institutional investors to regular investors.
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