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GameStop, 'Reddit rally' stocks slide more, Yellen vows scrutiny

reuters.com

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Re: GameStop, 'Reddit rally' stocks slide more, Yellen vows scrutiny

#31

Post by WA »

PartiallyTyped wrote: post #20

Retail can not move markets like that and if you genuinely disagree, take it from somebody like Dr. Michael Burry, in a recent tweet [1]: > The correlation coefficient between $GME and $SAVA today was 0.884648, nearly unity. Video game retailer on one side, biotech on the other. There should be no correlation but for.... Both traded multiple $billions. #BigMoney building you staircases and knocking castles down. This…

I think you're right. Maybe WSB pushed the price initially up to like $38 or whatever on low volume. Then the big players entered, because the narrative was right, price got pushed way up, retail bought more in a maniac frenzy around $300 and big players exited.

The idea that Robinhood users can move markets is kinda silly. It's been told again and again for 6-9 months now. But a back of the napkin calculation shows that it's not very plausible: Even if 100 million Americans put their $1,200 stimulus check into stocks, that'd be only $120 billion, which isn't that much of the daily volume of the stock market. And most of them probably don't sell/trade on a daily basis, they rather baghold TSLA, AAPL and then a bit of GME.

Re: GameStop, 'Reddit rally' stocks slide more, Yellen vows scrutiny

#32

Post by [deleted] »

hans1729 wrote: post #15
WA wrote: post #14

Earlier quoted context omitted.

Holding doesn't make the price. You gotta buy if you want to push the price. And nobody got any money for that anymore. The narrative is dead.

But the buyers were supposed to be the hedges, desperate to get rid of their short positions. Which is just another dimension: they surely bought more shorts at 300. But can they possibly have covered the majority of their positions? Because if not, this should go above 100 again, right?

[deleted]

Re: GameStop, 'Reddit rally' stocks slide more, Yellen vows scrutiny

#33

Post by WA »

DSingularity wrote: post #24
WA wrote: post #17

Earlier quoted context omitted.

Why? If I'm short GME, I'd just wait. Sure, I have to pay borrowing fees, but it doesn't matter if I hold for a week or a few months, if I'm sure it collapses 90% within a year. Of course, I'm oversimplifying stuff like risk management, margin calls etc. but generally speaking, what forces a hedge fund to liquidate its short position?

Where do they get their shares from? They borrow it from people who don’t own it. Those people may want to sell — especially in the event that the share price grows. And when that happens in sufficient volume time to put up because the exchange is not going to fail to deliver.

A lot of assumptions you're making here. Maybe many didn't do naked short selling. Maybe the lender didn't want to sell for whatever reason. You just assume that MOST shorts were forced to cover and I don't see why this should be the case.

Re: GameStop, 'Reddit rally' stocks slide more, Yellen vows scrutiny

#34

Post by [deleted] »

itronitron wrote: post #22
hans1729 wrote: post #15

Earlier quoted context omitted.

But the buyers were supposed to be the hedges, desperate to get rid of their short positions. Which is just another dimension: they surely bought more shorts at 300. But can they possibly have covered the majority of their positions? Because if not, this should go above 100 again, right?

A lot of people are saying that the hedge funds bought new shorts at 300 but if that is the case then who would have sold them at that price?

[deleted]

Re: GameStop, 'Reddit rally' stocks slide more, Yellen vows scrutiny

#35

Post by ckastner »

I've occasionally browsed WSB over the last few days, and it became just too depressing to read.

There are vast numbers of financially illiterate people pouring what little money they have into this pipe dream that a short squeeze can still be effected.

And these people are fueled by incessant bullshit that approaches, and in some cases even exceeds, the level of QAnon.

The facts of the matter are that (1) the cat was out of the bag last Wednesday and (2) since then, WSB has been playing poker with their cards face-up, calling every single raise thrown at them.

This is a hedge fund's dream come true. You have an army of saps still willing to pay you $60 for a stock that is worth $20 or so, and they simple won't stop.

Re: GameStop, 'Reddit rally' stocks slide more, Yellen vows scrutiny

#36

Post by dkarp »

Cookingboy wrote: post #16

On Reddit, especially /r/wsb, many people painted it to be a common folks vs. Wall Street hedge funds story. But I've always thought the reality was that it's a hedge funds vs. hedge funds story where plenty of big players made millions, if not billions last week, then shorted the stock at $3-400 and made millions more on the way down. The retail players were probably just caught between a group of 800lbs fighting go…

I used to work on an investment platform and we used to say that the ideal user logged in once, invested a whole bunch and then wasn’t seen again until they had more to invest. Daily active users and even monthly active users just shouldn’t be what an investment platform aims for. It’s not healthy to constantly check your investments

Re: GameStop, 'Reddit rally' stocks slide more, Yellen vows scrutiny

#37

Post by a254613e »

WA wrote: post #17
hans1729 wrote: post #15

Earlier quoted context omitted.

But the buyers were supposed to be the hedges, desperate to get rid of their short positions. Which is just another dimension: they surely bought more shorts at 300. But can they possibly have covered the majority of their positions? Because if not, this should go above 100 again, right?

Why? If I'm short GME, I'd just wait. Sure, I have to pay borrowing fees, but it doesn't matter if I hold for a week or a few months, if I'm sure it collapses 90% within a year. Of course, I'm oversimplifying stuff like risk management, margin calls etc. but generally speaking, what forces a hedge fund to liquidate its short position?

I'm not an expert, so someone please correct me if I'm wrong, but nothing forces them.

The theory was that if they have to spend $X per week, and that number is higher than what they would gain if they waited Y months, then they'll be "forced" to do it.

Re: GameStop, 'Reddit rally' stocks slide more, Yellen vows scrutiny

#38

Post by logimame »

hans1729 wrote: post #13
throwaway346434 wrote: post #5

Oof. Having sat in those communities and seeing media narratives - from reuters as well as others - about "reddit attention shifting to silver" despite a lack of that actually happening to the degree claimed, this is disappointing to see promoted. Objective facts: sentiment has changed, prices have decreased, people have likely lost money. Its frustrating to see a narrative - and not as far as I know out of the SEC t…

Yes, Reuter is immensively disappointing in this whole gig, starting with the doxxing of DFV. The media coverage is absolutely terrible, not only the silver-thing but also the silence on the SEC. It's truly disheartening

Wait, didn't DFV willingly did an interview with WSJ and made himself public? I never thought he was doxxed. (Or is it the situation where he did the interview with anonymity but somehow the WSJ messed it up like the case of SlateStarCodex? From looking at the contents of the interview it really doesn't seem like it.)

Re: GameStop, 'Reddit rally' stocks slide more, Yellen vows scrutiny

#39

Post by Cookingboy »

TheAdamAndChe wrote: post #23
Cookingboy wrote: post #16

On Reddit, especially /r/wsb, many people painted it to be a common folks vs. Wall Street hedge funds story. But I've always thought the reality was that it's a hedge funds vs. hedge funds story where plenty of big players made millions, if not billions last week, then shorted the stock at $3-400 and made millions more on the way down. The retail players were probably just caught between a group of 800lbs fighting go…

On robinhood, their only sin through this whole situation was poor communication. Several firms had to restrict trading of GME and several other stocks because of clearinghouse restrictions. Robinhood was the first to try to explain publicly why they had to do that, and they explained it absolutely horribly. With regards to treating investing like gambling, there's no real problem with that. There's definitely a mark…

> With regards to treating investing like gambling, there's no real problem with that. There's definitely a market for it, and it's why /r/Wallstreetbets exists.

There are also markets (pretty large ones too) for cocaine and hookers and human trafficking.

There is a difference between treating investment like gambling and teaching and encouraging new investors how to take unnecessary risks.

In fact, if not for the blatant hypocrisy of them doing this under this mission statement “democratizing finance”, I may be ok with how predatory they are.

Re: GameStop, 'Reddit rally' stocks slide more, Yellen vows scrutiny

#40

Post by Cookingboy »

dkarp wrote: post #36
Cookingboy wrote: post #16

On Reddit, especially /r/wsb, many people painted it to be a common folks vs. Wall Street hedge funds story. But I've always thought the reality was that it's a hedge funds vs. hedge funds story where plenty of big players made millions, if not billions last week, then shorted the stock at $3-400 and made millions more on the way down. The retail players were probably just caught between a group of 800lbs fighting go…

I used to work on an investment platform and we used to say that the ideal user logged in once, invested a whole bunch and then wasn’t seen again until they had more to invest. Daily active users and even monthly active users just shouldn’t be what an investment platform aims for. It’s not healthy to constantly check your investments

Robinhood doesn’t care at all for their users, after all they and their orders are the product it sells.
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