GameStop Is Rage Against the Financial Machine • Hacker News Board

Re: GameStop Is Rage Against the Financial Machine

#121

Post by boringg » Wed, Jan 27, 2021, 5:25 PM UTC

jaywalk wrote: post #110

psim1 wrote: post #99

Earlier quoted context omitted.

This kind of market folly also has an effect on long-term investments, e.g. retirement funds. What is there to love? I hate that unshowered basement-dwellers are coordinating to screw around with the market and potentially my retirement money. Get an honest job, guys.

As if the guys at hedge funds shorting stocks to drive companies out of business have more "honest" jobs.

Seriously those guys claim they are holding companies accountable and the market efficient. They are just sleazy stock traders. Grinds my gears people try and defend them through efficient capital markets when you see the garbage reports they put out there to manipulate the market for their positions.

Re: GameStop Is Rage Against the Financial Machine

#122

Post by p_l » Wed, Jan 27, 2021, 5:25 PM UTC

unethical_ban wrote: post #72

So, can someone explain rationally how options/derivatives are actually useful to the economy, rather than a market manipulation and gambling mechanism? In the traditional, elementary school understanding of stock, people buy into a company because they want part ownership, and the stock goes up as the company does well and has solid financial strength. Derivatives seem to be an unnecessary accelerator.

The most traditional version of the stock market is that a company issued shares in order to gain cash for investment, with shareholders essentially fronting the risk for a portion of the pie. If it things went well, there would be dividends, then you addition of trading shares to someone other than the originating company.

Can't say much on derivatives and others, at least futures made sense as way of fronting money for agriculture :/

Re: GameStop Is Rage Against the Financial Machine

#123

Post by jeffreyrogers » Wed, Jan 27, 2021, 5:25 PM UTC

psim1 wrote: post #99

cwhiz wrote: post #68

I am loving every minute of this. The "professionals" gamble on the market all the time, front run, high frequency trade, and relentless tactics to get rich at the expense of the "retail" investors. Now they are upset that apps like Robinhood has provided unprecedented access to the markets. Their exclusive access to insane gambling nonsense is being torn down in real time. If Wall St can gamble and cause a global fi…

This kind of market folly also has an effect on long-term investments, e.g. retirement funds. What is there to love? I hate that unshowered basement-dwellers are coordinating to screw around with the market and potentially my retirement money. Get an honest job, guys.

It shouldn't unless those funds are invested in hedge funds (some are, but usually only a few percent of their total assets). Day-to-day volatility shouldn't affect them that much.

Re: GameStop Is Rage Against the Financial Machine

#124

Post by nightowl_games » Wed, Jan 27, 2021, 5:25 PM UTC

boringg wrote: post #23

ping_pong wrote: post #4

It's really not. Because eventually retail is going to get destroyed. Yes, some hedge funds have lost their shirts, but those are the first ones who were in the short before the squeeze. The hedge funds and more importantly day trading shops making money right now are the ones who saw the activity and are goosing the stock price right now. I don't know if people realize that there are thousands of day trading shops w…

I don't think you understand what's happening here. There's only so much volume available as a result of the short positions. WSB et al are putting in money on a long hold. As a result that drives up the price. Yeah gamma's are in for sure making money. There are some people who have made multiple millions. One individual sitting at $31M currently on a $50k investment. Some retail will lose, but wall street instituti…

> For them to win this they need to keep putting more money into the fire which pulls in bigger and bigger fish.

This isn't true. The institutions with Short Exposure are connected to the institutions who buy Robinhood data and perform high frequency trading on those orders. Citadel and Melvin can BUY GME themselves to mitigate the risks. It is likely that a substantial amount of GME is being held by the institutions who had short exposure. It's basic risk mitigation.

The high frequency traders who have the Robinhood data are making money on every Buy GME order and will make money on every sell when this bubble collapses.

It is wrong to present this as a populist uprising.

This is an incredible fluctuation, a hilarious anomaly, but it is nothing more than that. It will have no lasting impact.

I firmly believe that the hedge funds that held GME short positions have bought into GME to mitigate their exposure. They likely bought in algorithmically using robinhood data and are making money off of retail right now.

My message to the people here: /r/wallstreetbets is not a gameshark. You are still playing their game. You are still playing a rigged game and you are still losing.

Re: GameStop Is Rage Against the Financial Machine

#125

Post by koheripbal » Wed, Jan 27, 2021, 5:26 PM UTC

xorx wrote: post #117

cwhiz wrote: post #68

I am loving every minute of this. The "professionals" gamble on the market all the time, front run, high frequency trade, and relentless tactics to get rich at the expense of the "retail" investors. Now they are upset that apps like Robinhood has provided unprecedented access to the markets. Their exclusive access to insane gambling nonsense is being torn down in real time. If Wall St can gamble and cause a global fi…

Yes, but retail is going to get destroyed in the end. The power elite always get what they want. Right now there appear to be curbs on GME and AMC buy orders for TD Ameritrade and Schwab customers. If you have to pull strings with your drinking buddy from Dartmouth to blow up a bunch of propertyless zoomers in order to prevent a margin call on the account you've leveraged to buy your house in the Hamptons, then that'…

Very likely is that the SEC is making phone calls to the big trading firms. Firms don't restrict transactions like this much voluntarily.

They are going to call the Reddit CEO and have wsb shut down under the threat of SEC enforcement actions.

Looks like the wsb discord is down.

Re: GameStop Is Rage Against the Financial Machine

#126

Post by jdjfktkrnj » Wed, Jan 27, 2021, 5:26 PM UTC

unethical_ban wrote: post #72

So, can someone explain rationally how options/derivatives are actually useful to the economy, rather than a market manipulation and gambling mechanism? In the traditional, elementary school understanding of stock, people buy into a company because they want part ownership, and the stock goes up as the company does well and has solid financial strength. Derivatives seem to be an unnecessary accelerator.

A nice mind-blowing true exemple I've read is you buy gas futures (cheap), you sell electricity futures (expensive) and you use the profit to build a power plant which turns gas into electricity.

Re: GameStop Is Rage Against the Financial Machine

#127

Post by Scoundreller » Wed, Jan 27, 2021, 5:26 PM UTC

ping_pong wrote: post #26

tempsy wrote: post #19

Earlier quoted context omitted.

nah you’re underestimating their power to move names in small cap stocks with high short interest.

That's absurd. People in WSB probably bought low and haven't sold at all or sold on the way up. Look at the volume. Who is shorting at these prices with this kind of activity? Who has the money to keep buying at $350 to propel the stock to $400? Definitely not WSB. I know plenty of people dipping their toes in and buying 10 or 20 shares for fun right now. But there's 55M shares trading at all time highs. That's not r…

> But there's 55M shares trading at all time highs.

One thing that’s different is commission-free trades. Plenty of folks buying and selling 10 shares at a time a dozen times/day “to profit off volatility”.

Doesn’t explain everything, but retail can put through more volume than ever before.

Just checked GME spread though, and it’s about $1.50 or about 0.5%, so the market makers must be happy with that and the volume.

Re: GameStop Is Rage Against the Financial Machine

#128

Post by krok » Wed, Jan 27, 2021, 5:26 PM UTC

arafa wrote: post #101

Am I missing something in the Gamestop news that isn't "hedge fund gambles billions on naked shorts and loses"? That seems like a real blunder on their part. In other contexts we would just call this gambling, I think. Shorts have infinite liability, not hedging them is not something I can get behind.

You are missing something - these aren't naked shorts. The fact that more than the whole float is out on loan does not imply that naked shorting is going on.

Re: GameStop Is Rage Against the Financial Machine

#129

Post by jeffreyrogers » Wed, Jan 27, 2021, 5:26 PM UTC

mdoms wrote: post #111

this_user wrote: post #87

Earlier quoted context omitted.

> I see no reason why "retail" traders can't fuck around on Robinhood and cause some meme stocks to explode. It's called 15USC78i "Manipulation of security prices" [1]. It is unlawful to transact just for the purpose of forcing others to transact. Going through a fund's 13F filings, and deliberately driving up the prices of put options they sold should fall squarely into that area. And there are more than enough post…

There's a pretty simple defense here. "I saw the posts on reddit and wanted to get in on the upward swing". Efficient markets at work. Unless you can tie real identities to the reddit posts there's not much to be done.

I don't think what they're doing violates the law[0], but they could easily subpoena Reddit and find out who the users are if they wanted to.

[0]: too complicated to get into here, but basically my interpretation of the law is that you need to be making trades that you intend to cancel or revert immediately in order for it to apply to you, and what these traders are doing is instead speculating on the price going up and hoping to cause the shorts to liquidate their positions, thus further driving the price up. Not spoofing to create fake demand.

Re: GameStop Is Rage Against the Financial Machine

#130

Post by this_user » Wed, Jan 27, 2021, 5:27 PM UTC

nceqs3 wrote: post #109

this_user wrote: post #87

Earlier quoted context omitted.

> I see no reason why "retail" traders can't fuck around on Robinhood and cause some meme stocks to explode. It's called 15USC78i "Manipulation of security prices" [1]. It is unlawful to transact just for the purpose of forcing others to transact. Going through a fund's 13F filings, and deliberately driving up the prices of put options they sold should fall squarely into that area. And there are more than enough post…

Steve Cohen and Gabe Plotkin both traded on inside information at SAC (Gabe was cc'ed on several of the communications). Why are they not in jail? Ohhhh because the justice system only impacts the 99%.

That's some nice whataboutism, but that doesn't mean this isn't exactly the kind of market manipulation for which the Securities Act of 1933 was written.