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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

#51

Post by kungito »

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?

My thoughts exactly. There is 0 chance they could buy a substantial amount of shorts from small players and anyone with a serious enough pile of cash would be insane to sell a short then. It really sounds like someone without basic understanding parroting a narrative

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

#52

Post by muldvarp »

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…

> Robinhood has always been extremely predatory at encouraging users to actively gamble with their investments

No, r/wallstreetbets was encouraging users to actively gamble with their investments, Robinhood was just allowing its users to make their own decisions, like any investment app for grown ups should.

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

#53

Post by pjc50 »

ckastner wrote: post #35

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 wa…

> fueled by incessant bullshit that approaches, and in some cases even exceeds, the level of QAnon.

To me, it doesn't seem that this is entirely coincidental with the aftermath of the storming of the Capitol; having lost one avenue for delusion-based marketing, everyone involved - mainstream and social media alike - had to find a new thing to hype.

Wonder what's next? Find out in a couple of weeks.

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

#54

Post by pjc50 »

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

There's a big problem with that, because marketing gambling to Americans is often illegal. Do people remember the poker boom and Pokerstars getting destroyed? https://en.wikipedia.org/wiki/United_States_v._Scheinberg

Like drugs, criminalisation outright creates problems. Like tobacco, allowing people to market addictions with serious adverse effects can't be allowed to continue indefinitely. This stuff should end up like tobacco in some countries: legal to sell, but not to market it, you have to ask for it.

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

#55

Post by shawabawa3 »

logimame wrote: post #38
hans1729 wrote: post #13

Earlier quoted context omitted.

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.)

Multiple newspapers published his identity before the wsg article

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

#56

Post by WA »

DSingularity wrote: post #48
WA wrote: post #31

Earlier quoted context omitted.

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…

I think you over estimate the liquidity at spot prices. If you tried to buy 120$ billion dollars of stocks in one day you will cause price changes. Now imagine if that was concentrated in the Robinhood top 100?

You're right, prices is affected by lower volume, especially in smaller stocks like GME. But I don't assume that $120 billion was all spend in a single day on a single stock.

> Now imagine if that was concentrated in the Robinhood top 100?

Well, probably not evenly distributed. Most goes to the top ten, most probably to AAPL, TSLA, FB, MSFT and other big names. I just wonder: once invested, do people actively trade all the time to cause so much volume?

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

#57

Post by WA »

insert_coin wrote: post #43
WA wrote: post #31

Earlier quoted context omitted.

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…

Robinhood users move markets because they generate “free” publicity literally worth billions, not because of the volume of their transactions. The excitement generated towards a stock, the momentum they build, is almost invaluable even if just for a few days, no matter your business or the price of your stock. Money can’t buy that.

Yes, but my point is: is it so unlikely that big players see the sentiment, hop on the train and actually drive up the price instead of retail?

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

#58

Post by WA »

DSingularity wrote: post #50
WA wrote: post #33

Earlier quoted context omitted.

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.

If they are borrowing a share then how is it naked short selling? To understand the scenario where a short is forced to cover imagine you are the exchange. You don’t own shares. You just match orders and move money around and so on. One of the things you do, for margin players, is lend short-sellers shares that others bought on margin from the exchange. You bought it on margin to sell it and the other guy bought it m…

Yes, this is one scenario where the short is forced to cover. What about this scenario:

Institutional investor A believes in GME and owns a lot of stock. They want to hold GME long-term. They don't care about price fluctuations, but they want to make a steady profit by lending out their shares. Institutional investor B believes GME is worth nothing, borrows the stock from A and sells it to whomever. The price goes up from $20 to $300. A doesn't care, the steady income from the lending fees is more valuable to them from a risk perspective and voting rights or whatever. B thinks this is a bubble and decides to sit it out. Where is the forced covering?

Edit: Can't answer to you anymore, because of tree size limit. So here:

> A has to continuedly prove that they have enough money to be able to eventually buy back the stocks to assure B that he will eventually get their stocks back. If they cannot show that, then they are forced to either raise more capital or return the stocks.

Good point. Not sure about the 'continuously' or if there can be individual short selling contracts between two parties that have different margin requirements. Maybe a call from B to A like "we will give you back your shares in a month when the bubble is over" works in the real world. Not for retail investors, but between big parties. I don't know much about this.

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

#59

Post by RamRodification »

a254613e wrote: post #45
RamRodification wrote: post #19

Earlier quoted context omitted.

I thought they did. They haven't?

They did, few hours ago - markets aren't open yet though. So today will be the first day on RH without restrictions since the price drop.

Thanks. Will be interesting to see how much of an effect that has at this point.

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

#60

Post by dagw »

WA wrote: post #58
DSingularity wrote: post #50

Earlier quoted context omitted.

If they are borrowing a share then how is it naked short selling? To understand the scenario where a short is forced to cover imagine you are the exchange. You don’t own shares. You just match orders and move money around and so on. One of the things you do, for margin players, is lend short-sellers shares that others bought on margin from the exchange. You bought it on margin to sell it and the other guy bought it m…

Yes, this is one scenario where the short is forced to cover. What about this scenario: Institutional investor A believes in GME and owns a lot of stock. They want to hold GME long-term. They don't care about price fluctuations, but they want to make a steady profit by lending out their shares. Institutional investor B believes GME is worth nothing, borrows the stock from A and sells it to whomever. The price goes up…

Where is the forced covering?

A has to continuedly prove that they have enough money to be able to eventually buy back the stocks to assure B that he will eventually get their stocks back. The more the price goes up the more money the have to show that they have. If they cannot show that, then they are forced to either raise more capital or return the stocks.

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