131–140 of 312 posts
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What is the common sense definition of “naked short selling”? I’d be shocked if the median American can even define short selling let alone naked short selling?
Selling a share without owning it first.
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Another irrelevant talking point. The whole point of inflation is to encourage investment as money is only worth something as it flows through the economy. You’re not supposed to save money under the mattress you’re supposed to save value by purchasing assets. A hundred years ago buying roughly speaking any asset would have preserved your entire wealth or created tons of new wealth. Wages have on average kept pace wi…
I respectfully disagree. The whole point of inflation is to monetize the crazy debt spirals by empires. Its why the romans did it, why the Germans did it, why the british did it , and its why we do it. It doesn't take an econ degree to know that. That was the reason the gold window was closed in the first place. If the whole point of inflation, mind you, is to encourage investment, then why does the fed react by spik…
The gold window was closed because gold was garbage money. A money supply you can’t adjust cannot respond to shocks and it can’t respond to changes in the economy or society. The crash in 2008 and again now would have been much much much worse without an ability to control supply. Inflation is defined in terms of supply and velocity. Velocity plummeted so supply was raised to offset and lo and behold the fed nailed its 2% inflation target in 2020 in spite of epic global chaos. Gold would have ruined us.
>>> wages have kept pace with inflation.
Wages are up 10% since 1963 on an inflation adjusted basis (https://www.google.com/amp/s/www.pewresearch.org/fact-tank/2...). Google is your friend.
Yes wealth inequality is a problem, that’s a fiscal and social issue not a monetary policy issue. Tax the rich.
>>>> slush fund
Nobody’s stealing anything. The inflation target is public and goaled on. Inflation has a purpose. You don’t like that purpose maybe because you don’t understand it maybe because you do, but it’s not theft. There is every chance we’d all be worse off under a 0% inflation environment because it would drastically reduce the liquidity that underlies the entire global economy.
Think about it: if poor people have no money and real salary has kept pace with inflation what wealth is inflation reducing? And if we use a 0-inflation or negative inflation currency, what’s to say wages wouldn’t stay flat or go down.
Again if you want to help the poor and narrow the gap, tax the rich, this inflation thing is just the game, and railing against it is tilting at the wrong windmills.
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> then it’s garbage in, garbage immutably recorded. This is the major weakness of proposals to put everything on the blockchain. In real-world scenarios, accidents happen. Records must be corrected. Voting is a great example. If we moved voting to the blockchain, it wouldn't automatically solve fraudulent voting problems. It would just record fraudulent votes on the blockchain. If your grandma accidentally loses her…
>If your grandma accidentally loses her private voting keys to hackers, do we just roll over and let the hackers vote as your grandma? Obviously not. It's not obvious to me why not. It's a trade-off. You put the responsibility on the user to keep their keys but you save a lot by not spending anything on solving fake or real issues like this. In this case if you want assurances like this you can trust a third party th…
In this case, someone losing their voting ability because of the system on a regular basis is not acceptable. That's the obvious why not. We want to make a system to count the people's votes. If it bars a voter from casting their vote, it's a failure.
Wow, how has nobody noticed this before? This looks seriously rotten: > Michigan-based entrepreneur Robert Simpson decided to see what would happen if he bought the entire stock of one company. Using a single broker, within a couple of days Simpson had paid a little over $5,000 for 1,285,050 shares in OTC bulletin board property-development company Global Links. According to Simpson, these shares were delivered into…
I think the more interesting part of the story (if I'm reading it right) is he paid $5000 to completely own a company with millions in assets.
Global Links was trading around 10c a share with ~350 million shares, for a market cap of around $35 million. They implemented a 350:1 reverse share split, which in theory should have resulted in them having a stock price of $35, 1.1 million shares, and a market cap of around $35 million.
For some reason, it took longer for this to shake out than expected; in the immediate aftermath it was reported that enormous quantities of Global Links stock was still trading, and the share price had actually declined to a 8 cents.
Presumably, some systems were reporting "old" numbers (pre reverse split) and some "new" numbers (post reverse split), and I'm sure an enormous amount of confusion resulted. And it was at this point Simpson reckons he bought 1.2 million shares for a bit over $5,000.
That's less than 1/3 of a cent per share, which seems wildly off (the share price was 10 cents pre reverse split, and would have been expected to be $35 afterwards), but given that it seems a lot of computer systems were not handling this correctly, who knows what he was told by his broker?
So...obviously Simpson did not purchase 110% of a company, and he definitely didn't do so for 0.01% of its market cap. I rather assume his broker had told him that he had done so, but that seems like fodder for a lawsuit between him and his broker over their buggy systems, but it doesn't tell us much else. It's possible he might have ended up owning 3.6k shares (about 1/3 of a percent of the company), but even that seems doubtful if it actually only cost him $5k.
Anyhow:
> I think the more interesting part of the story (if I'm reading it right) is he paid $5000 to completely own a company with millions in assets.
I think the better reading of that is some guy found a bug in a broker's system that caused it to tell him he'd done that, but it would have been obvious to all concerned that whether he'd ended up with 0 shares, ~140 shares, or ~3.5k shares, he definitely didn't have 1.2m shares, since they never even existed.
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No, they are evidence of people who woke up to find out that they owe you their shirt, in addition to six decades of indentured labour of their children, grand-children, and yet-to-be-born great-grandchildren... Deciding that maybe they aren't going to pay you right this instant. If you're shorting on margin, and the market moves too far before your position gets closed... Your position might get wiped out, your marg…
Whether the shorts were naked or not before this started, the shorts are unquestionably bankrupt with GME at or above $300. When shares are traded out from under a short, and there’s no where left to borrow them from, and the hedge funds can’t meet collateral requirements for their short interest, and the broker needs to liquidate their position but they come up about $20 billion dollars short... That’s when you have…
That is not correct.
You have no idea whether or not the shorts currently open, as of today, were opened when GME was worth $12, $50, or $400.
It's entirely possible that many of the $12 shorts closed when the stock first rallied.
> That’s when you have massive failure to deliver and the whole corrupt organism goes into CYA mode and tries to shut down buying and bring the stock price back in-line with their models.
The reason trading on shitty retail brokerages like RobinHood was shut down was because the clearinghouse collateral requirements went through the roof, and shitty retail brokerages like RobinHood weren't able to instantly come up with a couple of billion dollars to wire to the clearinghouses. (They did, eventually, which is why buys resumed on Friday.)
You get what you pay for with brokerages. They are an abstraction layer over a highly technical, 19th-century layer of physical settlement of stocks. When the market isn't going crazy, this abstraction works, with minimum collateral requirements. When the market is going crazy, this abstraction stops working, and their counterparties start demanding billions of dollars in collateral.
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> In the last 100 years nobody had lost a single penny to a bank run or default including 2008s WaMu default. Debasement of the currency, however, has been…high. So you didn't "lose" that dollar from a hundred years ago, it's just worth about a penny now. Where'd the other $0.99 go?
Another irrelevant talking point. The whole point of inflation is to encourage investment as money is only worth something as it flows through the economy. You’re not supposed to save money under the mattress you’re supposed to save value by purchasing assets. A hundred years ago buying roughly speaking any asset would have preserved your entire wealth or created tons of new wealth. Wages have on average kept pace wi…
- CPI(-U) is not a suitable measurement of inflation anymore since it discarded fixed basket goods somewhere in the 90s and that
- inflation measures with "old-school" fixed baskets report inflation rate in the range of 6-10%/year
- production of goods became much more efficient but instead of being reflected in cheaper prices it increased shareholder profits and wealth inequalities?
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His broker can recall the lent stock, so they'd recall it and have it sent to whoever bought it on their/his behalf. I worked on a computer system to handle all this for a while. It was front office so as well as buy/sell transactions we had to process lend/return and borrow/return actions to actually understand the company position. Within each of those are lend request messages with approval/declines etc.
I don't understand how this can work. The broker loans the share to person B. Person B sells the share to person C (as B wants to short the stock). How can the Broker recall the share: they have no relationship with the current owner of the stock. Even if the broker demanded B rebuy a share to return the stock, since the original guy owner all liquid shares, it would only take one other share holder to holdout to mak…
It is possible for short sellers to get caught as you describe (someone owns all the stock and they have bought 1 additional share and now wont sell). But it's very rare. It requires a few things to all happen at the same time:
* 1 person has to own all the stock. This in itself is very unusual. In many jurisdictions there are a whole bunch of extra requirements once you own more than X%.
* Someone has to want to short the company. If it's small enough to be owned entirely by 1 person, it's probably too small to attract short sellers or to be lent. Unless someone BOTH wants to short this small stock, AND happens to know the broker in question has some, no one knows who to ask to borrow it.
* They have to short it over 100%. This is unlikely, since a small company that's been bought entirely by 1 person, who is left to buy more? The market is one sided as apparently the only buyer is the guy holding 100% already (if anyone else bought those shares, they could sell them back to the shorter).
It's really really rare.
Technically the short seller defaults when they cannot source the stock, he has to absorb whatever losses he's caused the broker.
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You might take aa look at the SEC's December reports of fail-to-delivers, before the GME rocket lit: there were three days with over a million shares failed to be delivered, and several more weeks with over .5%. WSB had a post encouraging everyone to file a SEC report over this back then.
You should cite the posts and resources you've mentioned, because there are a variety of caveats that approximately all the posts on WSB misinterpret. People will fly by a comment like this and just repeat it without any fact checking. The very page you describe specifically states that you can't infer when failures to deliver occurred because the data is reported in aggregate with no age statistics. [1] Moreover fai…
> since 1992, there had been six investigations of Madoff by the SEC, which were botched either through incompetent staff work or by neglecting allegations of financial experts and whistle-blowers
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His broker lent the stock back out. This is one more way brokers make a living: charging rent for shares lent to shorts.
The broker needs your agreement to lend out stock. Generally that's only part of the agreement for margin accounts, not cash accounts.
If not then he either doesn't own all the stock or there is some fraud here. As it is, it's the simplest explanation and one he hasn't ruled out. So he needs to check there first. It's possible they lent it by mistake or he agreed as part of the 10,000 page T&C he signed when he joined...
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I can’t quite wrap my head around how this is possible. Are stock brokers allowed to just generate shares in their computer systems and then find a way later to actually obtain them? And when they do so, that might actually be from another broker who magicked them into existence?
Because actual delivery does not happen until settlement time three days later. The seller has until then to acquire the shares. Naked shorting is illegal. To short the shares the seller only has to perform a “locate” first. That involves contacting someone that has the shares and is willing to lend them. Skipping the locate step is illegal. They just don’t have to actually borrow them until delivery. Additionally, i…
Unless you're a market maker and thus exempt from the regulation, because your market making function requires buying and selling lots and lots of unsettled shares in order to provide liquidity.