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Statement of SEC Regarding Recent Market Volatility

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Re: Statement of SEC Regarding Recent Market Volatility

#491

Post by tlholaday »

alexpotato wrote: post #303
klodolph wrote: post #245

Earlier quoted context omitted.

> 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. I will say that I’m not too busy for this at the moment, and getting to my very basic level of understanding has required me to sort through, at the very least, a fairly decent chunk of reference material and reading interpretations and explanatio…

So maybe I can help a little with the above: - prior the 1980s, when you bought a stock a physical stock certificate was passed back and forth between your broker and the broker selling the stock - as you can imagine, as trading volumes increased this became unmanageable. In fact, at one point, the exchanges would close every Wednesday just to give people time to catch up on all of the exchange of certificates - ever…

Thanks for the crystal-clear example.

Re: Statement of SEC Regarding Recent Market Volatility

#492

Post by floor2 »

seigando wrote: post #148
OscarCunningham wrote: post #96

Earlier quoted context omitted.

If I were the short-sellers I'd be a bit aggrieved at the SEC not going after WSB here. People keep saying that the hedge funds 'knew what they were getting into', and are therefore fair game. But they could well have thought that they were protected by this regulation. It's unlucky for them that they got squeezed by loveable retail investors rather than another hedge fund that the SEC would have no qualms about pros…

Oh dear, those poor hedge funds.

This worldview seems like one of the biggest problems facing America right now.

We should strive for equal rules and justice for all, rather than first deciding how likeable or sympathetic the parties involved are and then changing the interpretation of rules to favor the group we perceive as being inherently more deserving of our favoritism.

Re: Statement of SEC Regarding Recent Market Volatility

#493

Post by bluGill »

electrondood wrote: post #280
richardwhiuk wrote: post #203

Earlier quoted context omitted.

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

Why? My broker doesn't let me trade unsettled funds, even though I've made a sale and they're "in my account." How hard would it be to create a restriction that says you're not allowed to double-loan the obligation to return a share borrowed in a short sale?

How do you know that the stock was loaned in the first place? If there is a way to know is there a way I can buy the original non-borrowed one - this should be worth more money because I can borrow it to someone else.

It sounds simple, but the details make it hard.

Re: Statement of SEC Regarding Recent Market Volatility

#494

Post by FabHK »

kgwgk wrote: post #391
FabHK wrote: post #381

Earlier quoted context omitted.

Agreed fully. The 2x long, -1 short limit is just a neat, natural limit that one could discuss, and might be easier to enforce than other (similarly arbitrary) limits.

I'm not against that, but it's not trivial to implement either.

Would require to set up a central registry or so, yeah. (Or finally a use case for blockchain!!!1!!! :-)

Not sure it would be worth it, I think historically excessive shorting has rarely been a problem, except for a few colourful episodes like these.

Re: Statement of SEC Regarding Recent Market Volatility

#495

Post by cardiffspaceman »

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…

In 1929 a series of events took place, and some of it took a while to happen (like Ford shutting down for a few months) that pretty much (not completely) eliminated retail accounts from both the stock market and actually from banking. Much of the public swore off checking and savings accounts, never mind owning stocks.

It seems like the big money is changing its clothes to pose as children in order to get priority on the life boats ("Women and children first!").

The social circle of firms closely connected to this ruin of Robinhood and which had been short GME are the speculators. Short for longer than intraday == speculative. Short as a market maker for an hour or two is good for efficient clearing.

It's on the guys with the big money to gather their fortitude and ride this out in the most-trust-inducing ways they can. I think the big money is naive if they think it could be otherwise.

One more thing, I am reminded that a lot of the time, a retail investor will buy something, a weak stock, and ride it down to zero out of misguided optimism. Conducting margin calls on zero notice is going to be toxic to such people and I don't think the finance world really wants that money to leave the market for good.

Re: Statement of SEC Regarding Recent Market Volatility

#496

Post by oasisbob »

tompccs wrote: post #244
xapata wrote: post #223

Earlier quoted context omitted.

I think bullets 3 and 5 were the main point of that comment. It wasn't well-said, but it is in fact valuable to spend a moment to get familiar with the jargon a person is using, even if that jargon happens to have homonyms with a different field's jargon. That effort is what allows us to "swim out of our lanes" as you might say.

Fair enough, it's more the condescending attitude that rubs me up the wrong way. And if the words regulators use mean to them different things than they mean to everyone else (the people whom the regulations are ostensibly supposed to protect), that's probably interesting in itself! If you are charged with 'theft' under a law that defines 'theft' in a very different way to how you or your peers would define it, that'…

Theft is a pretty good example, actually.

In many US states, the legal definition of "assault" is much different than the battery most people picture.

Robbery is not larceny.

Burglary is not larceny.

Your peers probably don't know what robbery actually is.

Re: Statement of SEC Regarding Recent Market Volatility

#497

Post by dgb23 »

pjc50 wrote: post #431
oramit wrote: post #298

Earlier quoted context omitted.

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 pal…

It strikes me that the outrage is free-floating and waiting to be weaponised by whoever finds the words to trigger it and point it at a target. Until very recently this was the pro-Trump faction; having stormed the Capitol and got some of their leaders arrested that has gone quiet. So there must be a new disinformation magnet on the internet - and this is it. > These are friends I have know for years who have never m…

Radicals aim for the root of the problem.

In these times it’s revealing that there seems to be a severe lack of solidarity and trust. In a crisis it is paramount that everyone does their best and that the strong carry the weak. That’s a very fundamental property of a community. But instead the inequality rises and many fear for their livelihoods. This erodes trust and can turn fear into anger.

At some point in the future there will be the last straw. It might be the financial crisis, the environment, war or everything at the same time. The kinds of problems cannot be explained away; excuses and lies won’t help. Only a sharp turn towards solidarity and sustainability can avert it.

Re: Statement of SEC Regarding Recent Market Volatility

#498

Post by remolacha »

ants_a wrote: post #481
remolacha wrote: post #410

Earlier quoted context omitted.

Bad take. We need capital markets to effectively value and fund different business efforts (unless you want to do things Soviet-style). And no matter how much fundamental analysis you do, some things remain unknown; all finance is in some way speculative. There are rough patches, but you need to take the bad to get the good.

A serious outsider question - are shorts an essential part of capital markets? Or do they at least provide some valuable service to the markets?

They aren’t essential, but they are actually useful. There have been some experiments with banning shorts, but they lead to larger spreads on longs because market participants have to hedge by going risk-off on longs instead of shorting affirmatively. Shorts can create moments of volatility, but they improve overall trading liquidity and reduce frictional cost of capital.

Re: Statement of SEC Regarding Recent Market Volatility

#499

Post by bluGill »

ants_a wrote: post #481
remolacha wrote: post #410

Earlier quoted context omitted.

Bad take. We need capital markets to effectively value and fund different business efforts (unless you want to do things Soviet-style). And no matter how much fundamental analysis you do, some things remain unknown; all finance is in some way speculative. There are rough patches, but you need to take the bad to get the good.

A serious outsider question - are shorts an essential part of capital markets? Or do they at least provide some valuable service to the markets?

Yes. A short is a way to tell the market you are wrong about value, and by doing so push the value down to more reasonable levels.

Re: Statement of SEC Regarding Recent Market Volatility

#500

Post by iamacyborg »

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?

The warnings on UK spread betting companies are amusing.

The broker I used to work at has a big disclaimer on all their marketing stating that 77.9% of retail clients lose money when trading with them.

Doesn't stop people signing up thinking they can beat the market...

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