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Roaring Kitty to testify on GameStop alongside hedge fund managers

reuters.com

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Re: Roaring Kitty to testify on GameStop alongside hedge fund managers

#111

Post by TheAlchemist »

sillysaurusx wrote: post #10

It's interesting watching /r/wallstreetbets oscillate between "We did nothing wrong!" to "Well okay, some people were doing some things that were wrong, but hopefully no one will notice." https://www.reddit.com/r/wallstreetbets/comments/lj8djx/day_... (I don't personally believe that anyone did anything that should be prosecuted here, but what I believe is irrelevant to courts.) There is one thing that (in my un-humb…

“Therefore that's why all the exchanges had to suspend GME training”

As far as I know, no exchange suspended trading in GME. It’s only some brokerage, due to collateral requirements and risks involved, that imposed limits on their clients.

People should educate themselves about investing and trading before starting. I blame Robinhood for this circus - it’s pure gamification - I guess 90% of guys trading on it don’t understand what they doing, let alone what’s really happening when they hit this “buy” button. This is the point that should be investigated - do we really want people to be able to loose all their money in a matter of days and sometimes hours, trading options with leverage ?

Re: Roaring Kitty to testify on GameStop alongside hedge fund managers

#112

Post by sideway »

stereolambda wrote: post #66

Older RoaringKitty YT spreadsheet videos (before he became all about GME and before much of anyone watched his streams) are interesting to watch for a person casually interested in finance. They are very nerdy in discussing his approach to investing, tools etc. and don't present any clear recipes. He had/probably still has a biggish public portfolio of stocks and seemed to base it on financial analysis applying the v…

> ...applying the value investing style. I thought this style is pretty much dead, because market efficiency has increased compared to the times when Benjamin Graham analysed securities by hand

Do you mean the manual part has gone out of style or fundamental analysis altogether?

My knowledge on finance/accounting is extremely limited and after watching some of his videos back in November, I took for granted that this is how this type of investors operate.

Re: Roaring Kitty to testify on GameStop alongside hedge fund managers

#113

Post by donmcronald »

xorcist wrote: post #95
csours wrote: post #25

Earlier quoted context omitted.

They didn't change the rules of the game. The volatility and risk changed, thus the collateral requirements changed. Note: I am not a financial professional. I'm not sure if anyone from wsb should be prosecuted; but I will say that if another hedge fund had tried to do what wsb did, it would have been clearly and unambiguously illegal market manipulation. I do think it is quite likely there were some financial profes…

Can someone please explain the situation to someone with no competence how these markets work? As far as I understand, no one is allowed to trade on stock exchanges directly. Everyone has to go through a broker. Orders has to be settled in 2 days. So there are counterparty risks involved in both steps here. Is this where there was a problem? But the retail trading platform takes zero financial risk as long as they do…

The DTC changed the collateral requirements to 100%. The WeBull CEO said that. That requires way more cash on hand to handle settlements compared to the norm which I think is 2-3%.

IMHO the DTC and prime brokers are all pals playing in the same fixed game. My baseless assumption is they’re manipulating the market by selling uncovered shorts to each other and since everyone is in on it / accustomed to it, no one ever comes to collect so there’s no risk of having to cover their uncovered shorts. They could be shorting 2000% of the float and no one would know if all the trading happens between complicit participants with the sole intent of driving share prices down.

Re: Roaring Kitty to testify on GameStop alongside hedge fund managers

#114

Post by stereolambda »

sideway wrote: post #112
stereolambda wrote: post #66

Older RoaringKitty YT spreadsheet videos (before he became all about GME and before much of anyone watched his streams) are interesting to watch for a person casually interested in finance. They are very nerdy in discussing his approach to investing, tools etc. and don't present any clear recipes. He had/probably still has a biggish public portfolio of stocks and seemed to base it on financial analysis applying the v…

> ...applying the value investing style. I thought this style is pretty much dead, because market efficiency has increased compared to the times when Benjamin Graham analysed securities by hand Do you mean the manual part has gone out of style or fundamental analysis altogether? My knowledge on finance/accounting is extremely limited and after watching some of his videos back in November, I took for granted that this…

What I mean is this flowchart:

use a financial model like Discounted Cash Flow for finding companies that are "objectively" severely undervalued -> buy them -> wait X years until they reach their "fair price" that you calculated at the start -> sell for a profit

Aswath Damodaran has some online academic content on valuation in that style.

The main problem nowadays is the "severely undervalued" part. People in general know too much to severely undervalue companies. The RoaringKitty's GME thesis was based on strong fundamentals, but also on his contrarian belief that they can still flourish despite being a brick-and-mortar business. It's interesting to see if he was right, but it's still a gamble. Anyway, the Reddit frenzy turned the whole story of his GME thesis into the craziness that we all know.

(Another problem is market reaching the "fair price", good luck with that?)

edit: Okay, so to better answer your question, RK at the beginning said that he is inspired by value investing but he doesn't apply it purely. As to fundamental analysis, I think most people do it but rarely use it in the specific way outlined above.

Re: Roaring Kitty to testify on GameStop alongside hedge fund managers

#115

Post by nemothekid »

jimminy wrote: post #77
3001 wrote: post #71

Earlier quoted context omitted.

Charles Schwab did not implement restrictions.They had a banner until last week saying that when you log in.Stop spreading misinformation

> “The bottom line is that clients are still able to trade in GME, but we’ve put some restrictions on certain types of transactions in the interest of helping mitigate risk for our clients,” Schwab said Wednesday in a statement.[0] They very much did 3 weeks ago. Not to the same degree as the smaller brokerages, but they still put limitations on margin trading, and restrictions on options. [0] https://www.thinkadviso…

Schwab’s restrictions came down to:

1. Increased margin requirements for GME 2. Restrictions on naked strategies

Both of these are pretty much acceptable on a very volatile stock. They never prevented you from buying the stock or options. I think including Schwab or TD in this is near misinformation because 99% of users wouldn’t make use of the features that Schwab ended up restricting

Re: Roaring Kitty to testify on GameStop alongside hedge fund managers

#116

Post by emteycz »

sillysaurusx wrote: post #44
voiper1 wrote: post #36

Earlier quoted context omitted.

If they required 100% collateral, why did that mean Robinhood stopped trades? Why couldn't they allow trades with 100% settled funds?

I highly recommend https://youtu.be/4RS4JIEVyXM?t=60 -- I didn't understand any of this myself till watching that. (Still don't! But I'm less confused.) My understanding is that the clearing firm informs everyone "Hey, we no longer support opening positions in three stocks specifically: GameStop, AMC, and KOSS." Literally everyone, including Robinhood, was forced to only allow people to sell GME. Somehow Fidelity was…

No, buying worked on many brokers.

Re: Roaring Kitty to testify on GameStop alongside hedge fund managers

#117

Post by lrem »

dagmx wrote: post #17
tape_measure wrote: post #2

RoaringKitty is also known as DeepFuckingValue. This name is probably more well known to the general public, but Reuters does not mention it.

Outside of WSB memes, how well known is DFV as a monicker vs roaring kitty. To the regular person, both are not household names. To anyone who is really invested in the story, they'd know both. The very small niche of people who know one but not the other isn't worth Reuters having to include profanity (not that I object to profanity).

To anyone, like me, who has observed this from a safe distance : DFV is a widely-reported username. Like, you'd read it in a short news piece about the whole debacle. This post is the first time I see "Roaring Kitty".

Re: Roaring Kitty to testify on GameStop alongside hedge fund managers

#118

Post by javagram »

boublepop wrote: post #80
csours wrote: post #25

Earlier quoted context omitted.

They didn't change the rules of the game. The volatility and risk changed, thus the collateral requirements changed. Note: I am not a financial professional. I'm not sure if anyone from wsb should be prosecuted; but I will say that if another hedge fund had tried to do what wsb did, it would have been clearly and unambiguously illegal market manipulation. I do think it is quite likely there were some financial profes…

Institutional investors did do what people suspect wsb of doing. Retail investors where net sellers of GME during this event. The short squeeze happened because other institional investors went in hard under cover of the WSB memes. https://www.cnbc.com/2021/02/05/gamestop-mania-may-not-have-...

> Institutional investors did do what people suspect wsb of doing.

Buying based on observing market conditions or seeing the posts in reddit wouldn’t have been questionably legal afaik. Only actively coordinating e.g. through posts on Reddit or phone calls or a Smoky back room could be argued to be market manipulation I think? If they were posting in Reddit to feed the squeeze that’s when stuff may get problematic.

Re: Roaring Kitty to testify on GameStop alongside hedge fund managers

#120

Post by javagram »

heidar wrote: post #70
estaseuropano wrote: post #64

Earlier quoted context omitted.

HN is about hacker news, there are various viewpoints. Not everyone has to believe in the long-disproven invisible hand. I think crypto is a dangerous destabilising factor. If not reigned in, it will come crashing down on all of us when it begins to destroy the public finances of (first) smaller countries and enables he usual suspects to evade all taxes, store value in non-localisable assets, etc.

I’m not sure I follow. People/governments can use crypto and continue paying taxes, I don’t see the connection here.

One of the main features of crypto is that it enables tax evasion. No need to worry about carrying suitcases of cash, gold or jewels onto an airliner anymore and getting caught when you want to move money across a border without a recorded transaction.

Supposedly that’s one reason it’s big in China since miners can generate coins to move wealth outside of the country more easily than moving their Chinese fiat.

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