Statement of SEC Regarding Recent Market Volatility • Hacker News Board

Re: Statement of SEC Regarding Recent Market Volatility

#291

Post by jiofih » Fri, Jan 29, 2021, 4:22 PM UTC

acover wrote: post #72

rich_sasha wrote: post #20

Earlier quoted context omitted.

From a distance, this is all a storm in a teacup. It's a small handful of stocks, and every single one in S&P500 is waaaay bigger, in terms of trading volumes and market cap. Anything can happen, but in finance terms, this is tiny so far.

The issue isn't GME market cap vs the S&P 500. It's that the clearing houses, exchanges and other intermediaries that guarantee every trade may go bankrupt due to the $15+ billion loss on options that they may have to cover.

Why do clearing houses have to cover losses, isn’t it the options seller on the other side that takes it?

Re: Statement of SEC Regarding Recent Market Volatility

#292

Post by jaywalk » Fri, Jan 29, 2021, 4:22 PM UTC

Rapzid wrote: post #222

TeMPOraL wrote: post #49

Earlier quoted context omitted.

It's in the SEC rules. "Although some short squeezes may occur naturally in the market, a scheme to manipulate the price or availability of stock in order to cause a short squeeze is illegal." From https://www.sec.gov/investor/pubs/regsho.htm . It's an open question whether this case is more of a natural occurrence or "a scheme to manipulate", given that it's all randos who found a Schelling point and are now hyping…

Interesting.. WSB was 100% orchestrating a short squeeze. They were telling anyone who would listen and in fact using it to rationalize what they were doing..

scheme (verb): make plans, especially in a devious way or with intent to do something illegal or wrong.

Discussing buying stock on a public forum is certainly not devious, and although the goal is to cause short positions to lose a bunch of money I would argue that it's neither illegal nor wrong.

Re: Statement of SEC Regarding Recent Market Volatility

#293

Post by nabla9 » Fri, Jan 29, 2021, 4:22 PM UTC

tompccs wrote: post #212

jancsika wrote: post #121

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"…

I am so sick of this 'stay in your lane' attitude. Time and time again, experts have been shown to have consensus opinions which are wildly off from reality. You can almost set your watch to how often an outsider will analyse a situation from first principles and make money off the 'experts', especially in the stock market. You're welcome to your opinion but this appeal to authority is seriously wearing thin. Pretty…

This is not outsider vs. establishment expert.

This is effort to learn vs. making hasty judgements issue.

I have studied several subjects over 100 - 1000 hours as an outsider, but that does not mean that I can criticize experts. I can ask pointed questions maybe. Being intellectually humble is good.

In this issue outsiders should at least read everything Matt Levine writes on the subject as a starting point.

Re: Statement of SEC Regarding Recent Market Volatility

#294

Post by wavefunction » Fri, Jan 29, 2021, 4:22 PM UTC

TameAntelope wrote: post #206

Miner49er wrote: post #165

Earlier quoted context omitted.

> 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 littl…

If you broaden your understanding of WSB's definition of winning beyond "making a profit" or "maintaining value" to "taking a loss but having an entertaining ride along the way" then they're winning and have no way to "lose." Now the SEC or Professional Capitalists making easy money may not want WSB to turn corners of the market into a volatile form of entertainment but it's completely legal AFAIK and illustrates the disparity between what is claimed about the stock market by the wealthy and powerful and what the stock market actually is. If a Wall Street clique-member replaced WSB and behaved the same way it would be fine, at least from a hyperventilating "we have to think of the children/retail investors" standpoint.

Re: Statement of SEC Regarding Recent Market Volatility

#295

Post by xapata » Fri, Jan 29, 2021, 4:22 PM UTC

iso1631 wrote: post #246

xapata wrote: post #240

Earlier quoted context omitted.

> a real doctor, nurse practitioner, and the CDC Sadly, many doctors and nurses are statistically illiterate. I know, because I (try to) teach them statistics. Remember, the Surgeon General of the CDC said that, "[masks] are NOT effective in preventing general public from catching #Coronavirus," perhaps in some misguided belief that avoiding panicked mask-buying was more important than a mask-wearing public. [Sorry f…

> The CDC was parroting the anti-mask blather of the Trump administration And the WHO were too?

Sorry, edited after you wrote this. I took out the reference to the Trump administration because it wasn't helpful to the main point of many doctors not being experts on epidemics.

Re: Statement of SEC Regarding Recent Market Volatility

#296

Post by TeMPOraL » Fri, Jan 29, 2021, 4:23 PM UTC

DanBC wrote: post #263

xapata wrote: post #240

Earlier quoted context omitted.

> a real doctor, nurse practitioner, and the CDC Sadly, many doctors and nurses are statistically illiterate. I know, because I (try to) teach them statistics. Remember, the Surgeon General of the CDC said that, "[masks] are NOT effective in preventing general public from catching #Coronavirus," perhaps in some misguided belief that avoiding panicked mask-buying was more important than a mask-wearing public. [Sorry f…

Can you link to the papers that were available in March 2020 that showed that masks are effective? Use any definition of "mask" and "effective" you want, but preferably effective should include some concept of "prevents spread of respiratory disease". Covid is a serious illness. Far too many people have been told, and believe, that they can continue their normal day to day life so long as they put mask on. This is un…

This is a pandora's box. My recollection of the events is this: around March 2020, there were some links to somewhat shoddy studies of effectiveness of masks in case of other diseases, but the official statement was that masks were not proven to be effective - but that's because there was no randomized control trial performed to check mask effectiveness against SARS variants, and how could there be?

This spins off into a whole discussion of how evidence-based medicine can lead you off the cliff when you follow its letter, and not spirit, because despite something being bloody obvious, there is no RCT proving that.

Re: Statement of SEC Regarding Recent Market Volatility

#297

Post by UncleMeat » Fri, Jan 29, 2021, 4:23 PM UTC

adriancr wrote: post #217

realmod wrote: post #187

Earlier quoted context omitted.

I also believed that most of the shorts were naked, but the director of S3partner clearly explained how this was not the case. One stock can be shorted multiple times which is what causes the SI% to be over 100%. A lends to B, B sells to C, C lends to D and so forth. Two shorters (B,D) but only 1 original stock. And Robinhoods closure of the trade seems reasonable in retrospect as well. If the clearing house required…

You can get more the 100% without naked shorts, sure, but is that legal?, does SEC allow that?, nobody is concerned that if there is a short squeeze there is no chance in hell to close out? (like we are seeing here) The point I tried to make was - this short was done to drive price down to zero (it can do that with that large of a position) in collusion with negative media reports from friends... That is manipulation…

Imagine an alternative universe. WSB decides that shorting some company they hate is a good idea. But wait, it has already been shorted up to 99% by hedge funds! No more shorting allowed. SEC rules.

Same backlash about a "rigged" system.

Re: Statement of SEC Regarding Recent Market Volatility

#298

Post by oramit » Fri, Jan 29, 2021, 4:23 PM UTC

dleslie wrote: post #116

dkrich wrote: 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…

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.

My Facebook feed is filled with people talking about this. These are friends I have know for years who have never mentioned stocks before but now are talking about "holding the line".

It is FOMO for sure, but the real emotions I get from talking with people are outrage and revenge. Everyone feels like the system (economic and political) is rigged against the public. The dopamine hit from sticking it to the man is palpable.

Re: Statement of SEC Regarding Recent Market Volatility

#299

Post by watwut » Fri, Jan 29, 2021, 4:23 PM UTC

iso1631 wrote: post #242

tompccs wrote: post #212

Earlier quoted context omitted.

I am so sick of this 'stay in your lane' attitude. Time and time again, experts have been shown to have consensus opinions which are wildly off from reality. You can almost set your watch to how often an outsider will analyse a situation from first principles and make money off the 'experts', especially in the stock market. You're welcome to your opinion but this appeal to authority is seriously wearing thin. Pretty…

From what I can tell almost no professional investers beat the market, almost nobody wins the lottery. Why should I listen to lottery players or professional wall street gamers?

Because while what you wrote is true, it is not really relevant to how Wall Street earns money. They are not earning money from beating the market.

Re: Statement of SEC Regarding Recent Market Volatility

#300

Post by NoOneNew » Fri, Jan 29, 2021, 4:23 PM UTC

dleslie wrote: post #116

dkrich wrote: 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…

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.

Everything on WSB states this is a bad investment plan and is more to bankrupt Melvin because they tried to bankrupt Gamestop. Short sellers have been using the down turned economy to collapse struggling companies that hire everyday people.

What's funny is how the HN community tries to defend the firms they've whined about for years. Is what's going on irrational? Yup. But it pulls back the curtain of what the financial firms do to the economy and their own manipulation tactics.