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A Corner in Piggly Wiggly (1959)

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Re: A Corner in Piggly Wiggly (1959)

#41

Post by gruez »

ummonk wrote: post #19
gruez wrote: post #6

Earlier quoted context omitted.

>they will change the rules on you so they win anyway Are you referring to how several popular brokerages prevented customers from opening new positions? That's due to them unable to fulfill deposit requirements on such volatile stocks, not because of some conspiracy by wall st to "change the rules on you so they win anyway". see: https://www.bloomberg.com/opinion/articles/2021-01-29/reddit... , under heading "Why di…

I guarantee you the interests of institutions on the short side of the stock factored in to the decision to raise deposit requirements. And the Interactive Brokers chairman is explicit about why he chose to block buys.

> I guarantee you the interests of institutions on the short side of the stock factored in to the decision to raise deposit requirements.

Is there any evidence for this, other than the general feeling of "rich people are powerful, therefore they must have been some meddling by them"? The formula for determining the deposit requirements is publicly documented: https://twitter.com/kralctrebor/status/1354952686165225478, so the judgement call looks pretty straightforward to make.

Re: A Corner in Piggly Wiggly (1959)

#43

Post by will_pseudonym »

gruez wrote: post #41
ummonk wrote: post #19

Earlier quoted context omitted.

I guarantee you the interests of institutions on the short side of the stock factored in to the decision to raise deposit requirements. And the Interactive Brokers chairman is explicit about why he chose to block buys.

> I guarantee you the interests of institutions on the short side of the stock factored in to the decision to raise deposit requirements. Is there any evidence for this, other than the general feeling of "rich people are powerful, therefore they must have been some meddling by them"? The formula for determining the deposit requirements is publicly documented: https://twitter.com/kralctrebor/status/1354952686165225478…

And who sets the formula, who lobbies for laws to be passed to require it, who runs and owns the clearing houses? Hint: It's in the thread you linked.

> RH offered to open up stock market investing more broadly. They succeeded, clearly. But the regulations didn't change - there are still pro-Wall St, pro-incumbent rules and capital requirements. It's one of the most highly regulated industries in our nation. [0]

> So @aoc is right to ask how it can be that Robinhood stopped its clients from buying certain securities. And what she'll find is that the reason is that Dodd-Frank requires brokers like RH to post collateral to cover their clients' trading risk pre-settlement. [1]

> And it isn't the Fed or SEC who sets the rules. It's the Wall St owned central clearing entity itself, DTCC, that makes its own rules. So when the retail masses decided to squeeze the short-sellers, in the middle of crushing them, it was govt regulations which tripped them up. [2]

This last tweet in the thread was made about 13h ago, about a day after the previous last tweet in the thread. It's quite interesting, if you ask me.

> Update: the plot thickens ... @The_DTCC may have exercised its right to add additional margin charges for a set of these stocks. It's a Margin Liquidity Adjustment Charge. [3]

[0] https://twitter.com/KralcTrebor/status/1354952710202814470

[1] https://twitter.com/KralcTrebor/status/1354952711217807364

[2] https://twitter.com/KralcTrebor/status/1354952712400601099

[3] https://twitter.com/KralcTrebor/status/1355175395642003456

Re: A Corner in Piggly Wiggly (1959)

#44

Post by qwantim1 »

majormajor wrote: post #9
imgabe wrote: post #5

Gamestop made me think of this. The moral of the story is that when you beat Wall Street at their own game, they will change the rules on you so they win anyway. Something to be cautious about in the current situation.

There's a general moral of the story here that isn't specific to Wall Street. If you think you've got a magic hack for some system, don't forget that the system might not be immutable, and that many people will consider the spirit of the rules not just the letter of them (even if this means changing the letter of them). It's fairly similar to the risk of building a business by adding one feature to someone else's pla…

Like the US winning the revolutionary war with guerrilla warfare tactics that native americans used against them when trying to defend themselves.

Re: A Corner in Piggly Wiggly (1959)

#45

Post by chrisco255 »

smnrchrds wrote: post #32
klipt wrote: post #29

Earlier quoted context omitted.

Wasn't the blockchain forked? So technically there is still a version of Ethereum out there that makes it easy for hackers to steal your stuff, but for some reason nobody wants to use that version.

The bug was not in Ethereum, it was in the contracts. And before this incident, the philosophy of Ethereum was that "the code is the contract". The hacker did not breach the contract. They noticed a bug, or as one could say, a loophole, and used it to their benefit. I don't know what the mechanism of enforcement was. Whether it was a fork or something else, the net effect was that a) the history was rewritten, the co…

It was a fork. Ethereum Classic, the original chain, is still in operation, and in that fork, the DAO fix never happened. But since the DAO affected the core Ethereum developers and early proponents and backers of the system, all the talent stayed with the chain that corrected the issue. To me, that's a fair outcome. Forkability is a necessary feature, not a bug, of immutable blockchains. Just like it is for open source.

Re: A Corner in Piggly Wiggly (1959)

#46

Post by chrisco255 »

arcticbull wrote: post #36
klipt wrote: post #29

Earlier quoted context omitted.

Wasn't the blockchain forked? So technically there is still a version of Ethereum out there that makes it easy for hackers to steal your stuff, but for some reason nobody wants to use that version.

Plenty of people still use ETC lol. That's crypto for ya, though. This is such a great example, because it's an obvious case of "trustless for you but none for me thanks" -- if Vitalik believed that "code is law" was better than having the ability to amend the transaction, he'd just be on ETC dealing with the mess. If grandma's life savings gets stolen, well sucks for grandma. When it's Vitalik, well, it's time to fo…

I mean, it was up to the community at large to ultimately support the new fork. As an example, Bitcoin forked into Bitcoin Cash, but the community largely stuck with the main chain. It's really a market-driven decision which chains or forks thrive and which ones don't. At any rate, it's more and more expensive to do forks as a chain grows in maturity and adoption.

Re: A Corner in Piggly Wiggly (1959)

#47

Post by 082349872349872 »

koolba wrote: post #11
imgabe wrote: post #5

Gamestop made me think of this. The moral of the story is that when you beat Wall Street at their own game, they will change the rules on you so they win anyway. Something to be cautious about in the current situation.

> The moral of the story is that when you beat Wall Street at their own game, they will change the rules on you so they win anyway. They didn’t change the rules. The rules are clear that they’re allowed to change the rules anytime they want. That’s one of the rules.

I don't believe it's possible to come up with a fixed set of rules that protects against market manipulation in both directions: the more one attempts to manipulation-proof in one direction, the easier it gets to manipulate in the opposite.

Re: A Corner in Piggly Wiggly (1959)

#48

Post by 082349872349872 »

AnimalMuppet wrote: post #14

For an even earlier example, look at the Northern Pacific Railway: https://en.wikipedia.org/wiki/Northern_Pacific_Railway#Hill,...

In the next section, 'James J. Hill's philosophy of "community of interest," a loose affiliation or collusion among roads' reminds me of the https://en.wikipedia.org/wiki/Railroad_Commission_of_Texas .

Re: A Corner in Piggly Wiggly (1959)

#49

Post by ElFitz »

tines wrote: post #3

> The stock went up wildly, reaching a high of 124. At this point the Exchange suspended further trading & postponed the short sellers' delivery deadline. This resulted in eventual bankruptcy for Saunders & he was finally forced to step out of the Pigp]y [sic] Wiggly Company. Bizarre. What grounds did they have for doing this? Prima facie there are some similarities between this and the GME situation, I wonder if the…

The author expanded upon it in his book, Business Adventures.

Apparently, the only alternative was for short sellers’ to sell very large amounts of many other stocks, and the Exchange was afraid it would crash most of the other companies’ stocks.

The sentiment, from the book, appears to be that Saunders nearly caused a stock market crash all by himself, with his corner

Re: A Corner in Piggly Wiggly (1959)

#50

Post by gwnwest21 »

082349872349872 wrote: post #47
koolba wrote: post #11

Earlier quoted context omitted.

> The moral of the story is that when you beat Wall Street at their own game, they will change the rules on you so they win anyway. They didn’t change the rules. The rules are clear that they’re allowed to change the rules anytime they want. That’s one of the rules.

I don't believe it's possible to come up with a fixed set of rules that protects against market manipulation in both directions: the more one attempts to manipulation-proof in one direction, the easier it gets to manipulate in the opposite.

Wolfe Research firm is developing a tool that can scan large volumes of language text on subreddit forums like wallstreetbets and assess which stocks are being targeted by retail traders. The article is currently at Market Watch.
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