AMC, GameStop Give Hedge Fund Mudrick Capital $200M in Gains • Hacker News Board

Re: AMC, GameStop Give Hedge Fund Mudrick Capital $200M in Gains

#271

Post by ditonal » Wed, Feb 03, 2021, 8:26 PM UTC

dougmwne wrote: post #262

ditonal wrote: post #212

Earlier quoted context omitted.

Conspiracies happen so frequently on Wall St that “conspiracy theories” should be closer to a priori assumption than irrational fringe ideas. Were people skeptical of Moodys A+ ratings of subprime mortgages conspiracy theorists? And that’s far from the only example of financial fraud . There’s a lot of money at stake. Citadel is most of Robinhoods revenue, they put money on the opposite side of the trade via Melvin,…

I have been seeing people on WSB claim that the stock price shown on the ticker is "manipulated by the hedgies" and asking when the real stock price is going to finally appear. This is pretty similar to Q people asking when it will be revealed that 45 is still the president. That one absolutely fits my definition of "wild conspiracy theory." In terms of more popular accusations of wrongdoing among brokerages as they…

I’m certainly not denying there’s plenty of misinformation and far fetched theories floating around. I think there’s a big middle ground between “accept every half brained idea on Reddit” and “take a 300 word corporate blog post at face value.”

It is a fact that the relevant ticker symbols were hidden in Robinhood UI during the restrictions. This could simply be because the UI always hid symbols with restrictions, but that would be a strange decision in the first place (why not just always show the tickers info?) and in context is another oddity worth looking into.

My suggested middle ground is, call for investigation. Maybe there’s no smoking gun but if, for example, it was uncovered that a huge amount of institutional short covering took place during the restrictions that would be more hints that foul play occurred and justify more investigation.

In the future, if we don’t get answers , well connected players can manipulate markets by blaming opaque clearing house requirements unless more transparency is added.

My concern is that by being too dismissive of calls for investigation, we lose the political steam to at least try and get better answers that we deserve.

Re: AMC, GameStop Give Hedge Fund Mudrick Capital $200M in Gains

#272

Post by JumpCrisscross » Wed, Feb 03, 2021, 8:27 PM UTC

ditonal wrote: post #212

dougmwne wrote: post #85

Watching HN get caught up in this Gamestop bubble over the past week has been eye-opening to me about the community. The kind of information being spread around WSB was fully ridiculous. Wild conspiracy theories, financial advice with no basis in reality, astroturfing, and mob behavior. There has been an incredible amount of bleed-over between the garbage I've seen posted on WSB and the things posted in these HN thre…

Conspiracies happen so frequently on Wall St that “conspiracy theories” should be closer to a priori assumption than irrational fringe ideas. Were people skeptical of Moodys A+ ratings of subprime mortgages conspiracy theorists? And that’s far from the only example of financial fraud . There’s a lot of money at stake. Citadel is most of Robinhoods revenue, they put money on the opposite side of the trade via Melvin,…

> there’s more than enough conflict of interest and unprecedented behavior to call for an investigation

Fair. I don't think anyone is reasonably calling for investigations to be halted. At the very least, there is public education required.

But there is a difference between saying "whoah, that's weird" and the combination of trading on it, encouraging others to trade on it, spreading one's hypothesis with zero facts and calling everyone who points out the issues with one's argument [1] a shill. There was a lot of the latter.

[1] With respect to why "fully cleared non-margin cash accounts" got restricted, it's because the bottleneck was clearing collateral. Not Robinhood's margin risk. Clearinghouses don't care about how a trade was financed. They care about the risk of (a) the broker going under and (b) the collateral being insufficient to settle the trades. When their risk limits get hit, the broker has to reduce flow and/or pony up.

Re: AMC, GameStop Give Hedge Fund Mudrick Capital $200M in Gains

#273

Post by tedunangst » Wed, Feb 03, 2021, 8:30 PM UTC

romwell wrote: post #243

ditonal wrote: post #212

Earlier quoted context omitted.

Conspiracies happen so frequently on Wall St that “conspiracy theories” should be closer to a priori assumption than irrational fringe ideas. Were people skeptical of Moodys A+ ratings of subprime mortgages conspiracy theorists? And that’s far from the only example of financial fraud . There’s a lot of money at stake. Citadel is most of Robinhoods revenue, they put money on the opposite side of the trade via Melvin,…

Thank you so much for spelling this out. I have no dog in that race, but with everything you said, and politicians from AOC to Ted Cruz calling for an investigation, calling the allegations of wrongdoing "conspiracies" is simply being in denial.

Neither AOC nor Cruz would benefit from saying there's no need for an investigation. And Elizabeth Warren, who you'd think would be most on top of this, published a list of reasonable questions and people immediately attacked her for defending the hedge funds.

Re: AMC, GameStop Give Hedge Fund Mudrick Capital $200M in Gains

#274

Post by JumpCrisscross » Wed, Feb 03, 2021, 8:35 PM UTC

PartiallyTyped wrote: post #256

JumpCrisscross wrote: post #246

Earlier quoted context omitted.

> there had been sequences of trades with batches of 100 shares sold at continuously smaller values with very little difference between one batch and the next and the difference was in 3rd and 4th decimals This sounds like the interaction between run-of-the-mill execution algorithms. Bidding algo is likely a market maker putting out small quotes (100 shares is a standard lot) and adjusting down (up) the price each ti…

Thank you for elaborating. Do you have any links that further elaborate or perhaps suggestions for papers/books in algo trading?

> Do you have any links that further elaborate or perhaps suggestions for papers/books in algo trading?

One of the things I'm realizing from all this is there aren't many good, succinct sources on market microstructure. It's complicated. But it's not that complicated. (It's just usually boring.)

The best I can recommend is how I learned it. Start with a respected paper [1]. Trace through the references until you find something you understand. Then work your way forward.

[1] https://www.smallake.kr/wp-content/uploads/2016/03/optliq.pd...

Re: AMC, GameStop Give Hedge Fund Mudrick Capital $200M in Gains

#275

Post by lasftew » Wed, Feb 03, 2021, 8:36 PM UTC

PragmaticPulp wrote: post #2

I expect a lot of Redditors will be very disappointed when they realize just how much money hedge funds made, on average, out of this episode. The WSB moderators really did everyone a disservice by letting obvious misinformation flood the subreddit. It’s hard to view the later stages of the GameStop phenomenon as anything other than a Reddit-fueled pump and dump scheme.

Money was made by fools at the expense of greater fools. Short-term trading is a zero-sum game, always has been, always will be.

Except for the HFT firms and market makers, who basically own the Robinhood flow and who thrive in foolish volatility. Guess who's paying so that r/WSB bros pay zero commisions? It's not the Red Cross.

Re: AMC, GameStop Give Hedge Fund Mudrick Capital $200M in Gains

#276

Post by notfbi » Wed, Feb 03, 2021, 8:38 PM UTC

randomdata wrote: post #87

gowld wrote: post #56

Earlier quoted context omitted.

It's wrong to conflate largeness with richness. John Simon's personal $1B fund is far more rich than a 10000-member $100B pension fund.

A personal investor wouldn't be appropriately called a hedge fund, though. A hedge fund is, by definition, funded by a pool of investors. We are talking about hedge funds here.

Op was surely referring to [Jim] Simons' medallion fund and those like it - where it's closed except to family/friends, and in Simon's case fellow colleagues', personal funds, where often a single founder holds a bulk of the interest.

Re: AMC, GameStop Give Hedge Fund Mudrick Capital $200M in Gains

#277

Post by [deleted] » Wed, Feb 03, 2021, 8:48 PM UTC

dougmwne wrote: post #262

ditonal wrote: post #212

Earlier quoted context omitted.

Conspiracies happen so frequently on Wall St that “conspiracy theories” should be closer to a priori assumption than irrational fringe ideas. Were people skeptical of Moodys A+ ratings of subprime mortgages conspiracy theorists? And that’s far from the only example of financial fraud . There’s a lot of money at stake. Citadel is most of Robinhoods revenue, they put money on the opposite side of the trade via Melvin,…

I have been seeing people on WSB claim that the stock price shown on the ticker is "manipulated by the hedgies" and asking when the real stock price is going to finally appear. This is pretty similar to Q people asking when it will be revealed that 45 is still the president. That one absolutely fits my definition of "wild conspiracy theory." In terms of more popular accusations of wrongdoing among brokerages as they…

[deleted]

Re: AMC, GameStop Give Hedge Fund Mudrick Capital $200M in Gains

#278

Post by tl » Wed, Feb 03, 2021, 9:03 PM UTC

JumpCrisscross wrote: post #139

dougmwne wrote: post #85

Watching HN get caught up in this Gamestop bubble over the past week has been eye-opening to me about the community. The kind of information being spread around WSB was fully ridiculous. Wild conspiracy theories, financial advice with no basis in reality, astroturfing, and mob behavior. There has been an incredible amount of bleed-over between the garbage I've seen posted on WSB and the things posted in these HN thre…

> HN likes to believe it is evidence based and rational instead of emotional and greedy To offer a hopeful counterpoint, informed comments and rebuttals were honestly engaged with throughout the fiasco. There was active learning, from somewhat experts seeing cracks that hadn't been so apparent before, to novices seeing the magnificent and horrifying complexity behind our abstractions. I don't see that on Reddit. I do…

/r/wallstreetbets went from less than 2 million to over 8 million in a single week, so their mods had to deal with a lot of bot spam resulting in some legitimate discussion getting destroyed in the process. The over-reaction got tempered as the community pointed out that any anti-GME settlement was being silenced. /r/investing and /r/stocks behaved about how you'd imagine HN behaves.

Re: AMC, GameStop Give Hedge Fund Mudrick Capital $200M in Gains

#279

Post by yibg » Wed, Feb 03, 2021, 9:04 PM UTC

WA wrote: post #101

dcolkitt wrote: post #66

Earlier quoted context omitted.

There's a simple lesson. Buy and hold a low-fee index fund. Stop trying to pick stocks. And for God's sake stop trying to day trade stocks. Deviating from buy-and-hold indexing is mathematically a zero-sum game. Winning this game is also one of the most monetarily rewarding games on Earth. It's extremely unlikely that you're anywhere near good enough to win this game. If you don't know who the fool at the table is, i…

Not as simple. With buy and hold of index funds, you limit your upside. There is close to zero chance to make 1,000% within a year. Stock picking has potentially a bigger downside, but also more upside. This being a zero-sum game doesn’t matter, if you have either an edge or are simply lucky. So instead of saying it’s all bullshit, it probably makes more sense to put 90% in index funds but expose yourself to a bigger…

same can be said for investing in lotteries. Also more upside, and if you're lucky, well that's all you need. So why not put 90% of your money into index funds and use the remaining 10% to buy lottery tickets?

Re: AMC, GameStop Give Hedge Fund Mudrick Capital $200M in Gains

#280

Post by yibg » Wed, Feb 03, 2021, 9:08 PM UTC

PartiallyTyped wrote: post #270

dcolkitt wrote: post #66

Earlier quoted context omitted.

There's a simple lesson. Buy and hold a low-fee index fund. Stop trying to pick stocks. And for God's sake stop trying to day trade stocks. Deviating from buy-and-hold indexing is mathematically a zero-sum game. Winning this game is also one of the most monetarily rewarding games on Earth. It's extremely unlikely that you're anywhere near good enough to win this game. If you don't know who the fool at the table is, i…

I disagree. The lesson here is 1) figure out the memestocks before they become memes, 2) buy low and depending on memefication potential sell high. At some point I was > 1200% with GME, but, I got greedy. I could have made bank in nearly every swing but hindsight is 20/20. The goal is to outpace the market even with small amounts while investing most of the portfolio at safer stocks/long term plays. Ended up my GME s…

I don't see how those lessons are actionable? I mean yes to make money in stock picking all you have to do is buy low and sell high. Question is can you do that consistently enough to make a better return than index funds?