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Shorting and Indian capital markets

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Re: Shorting and Indian capital markets

#121

Post by lovich »

simonh wrote: post #94
lovich wrote: post #27

Earlier quoted context omitted.

>rejecting the fundamentals I think what is missing in many people's analysis is that there is a new fundamental value in this situation. Buying GME shares is now linked to destroying a hedge fund and ruining some billionaire's days. For many people, and I include myself in this group, that has a real tangible value that outweighs the actual dollar amount it costs to buy a few GME shares. When the leaders of these br…

So what you're saying is you and thousands like you don't mind risking losing money because you think it's worth it to stick it to the man. Who do you think is making money off all the trades you're losing on? Doh! Some billionaires will lose money - actually they already did a few days ago when they exited. Some others will make a few millions or billions. Robinhood looks like they've got some explaining to do. Just…

That might be a compelling argument if they weren’t making money off of us in the first place.

When the choice is status quo vs actually hurting some of them even if the rest get the status quote, it’s an easy choice.

>Just another day on Wall Street

If this was true then none of the current events this thread is discussing would be occurring. You don’t need to destroy all of your enemies, you just need to prove you’re a credible threat to make the rest be wary

Re: Shorting and Indian capital markets

#122

Post by creamyhorror »

pgAdmin4 wrote: post #115

I am naive here, can someone explain what is the economic utility of a stock market ? For example, its easy to understand utility of food, cloths, car, house, money. But I am not able to find a reason about stock market existence for day-to-day trading, where secondary stocks are traded daily after IPO. It seems none of the day-to-day trading money/profit ever goes back to business to help them to improve that busine…

I thought about this long ago.

The answer is that the casino-like activity of the secondary market provides a great incentive to companies to primary-list. This engine drives business formation through the valuations it can provide to companies. And companies can issue more shares to raise more capital from the very liquid casino. So it's helpful in that way.

Re: Shorting and Indian capital markets

#123

Post by threedots »

lovich wrote: post #117
threedots wrote: post #65

Earlier quoted context omitted.

I don't understand why people think Melvin would do this. Sure they might be prepared to flout SEC rules if they thought they could get away with it but whether they sold is trivially verifiable and they would be guaranteed to get caught. Exiting the position was probably also a precondition of the new investors putting money in. The comment you pasted is incoherent rambling. It's honestly like something from a qanon…

It’s not trivially verifiable for the average person and the average person is used to the rich just flaunting the law with trivial or no consequences. Saying “but that would be against the rules!” means almost nothing for the rich. This is one of the downsides of not having a strong rule of law and the rule of law has been degrading steadily in the US

It's trivial for the SEC

I don't know if you're implying the SEC is in cahoots with the hedge funds, and not just any hedge fund but one associated with SAC/Cohen whom the SEC went to war with. I'm sympathetic to your general point but as someone who has spent his whole career in the financial markets that seems vanishingly unlikely to be the case here.

Re: Shorting and Indian capital markets

#124

Post by twic »

cardiffspaceman wrote: post #120
twic wrote: post #38

Earlier quoted context omitted.

To expand on this a little for anyone interested, the problem with classical market-making is that you only make money as long as the trades are crossing back and forth around a stationary price. If the market moves suddenly, you end up losing money. In your example, if a huge sell comes in at 10, and the market then moves down to 8 bid, 9 offered, the market maker has a position they bought at 10, but can only sell…

The market needs the retail investors but if bad things happen to retail investors often enough, they will retire from the fray. Enjoy your always-toxic trades.

Retail traders might be scared off, unfortunately, but retail investors will keep coming.

Re: Shorting and Indian capital markets

#125

Post by Threeve303 »

bhawks wrote: post #87
Threeve303 wrote: post #41

This is a financial version of the social media effect we have seen spreading misinformation and causing people to act in real life. All of the ingredients are there. 1) Use social media to organize motivated groups of people 2) Align the mob to a target that is inherently disliked. Hedge funds and wall street more generally. 3) Cause world wide market volatility. In this case, it's moving institutional investors out…

You lost me at 3 - how can having hidden structural problems be a desirable position to be in? Hedge funds entered a crowded trade that has unlimited downside without an exit strategy. They are not naive and although they're obviously upset I doubt they're shocked about what happened. They went in with confidence thinking they knew the 'market' (aka other hedge funds) and discounted the possibility of a short squeeze…

Investors have been known to want increased volatility because playing it right increases profit. If you can target that volatility to specific industries or companies, all the better.

If a foreign adversary was using bots or social media manipulation to drive up this behavior, perhaps they could target the right companies in the market to reveal structural weakness. Similar to how the 2016 election interference happened. Though that is getting much more on the conspiratorial side.

Re: Shorting and Indian capital markets

#126

Post by Threeve303 »

hippich wrote: post #93
Threeve303 wrote: post #41

This is a financial version of the social media effect we have seen spreading misinformation and causing people to act in real life. All of the ingredients are there. 1) Use social media to organize motivated groups of people 2) Align the mob to a target that is inherently disliked. Hedge funds and wall street more generally. 3) Cause world wide market volatility. In this case, it's moving institutional investors out…

Re "spreading misinformation" - not sure which pieces you are specifically talking about. In case of r/WSB I doubt anyone has any illusions what it is about. It is done either for lulz or as a form of protest/activism. In a way - it is form of speech.

If bots can hype up conspiracies to target political opponents then why not try it with something in finance?

Basically, astroturf these campaigns to target specific companies in the market. You only need a small dedicated core then the herd follows. As we have seen time and again with social media manipulation.

Re: Shorting and Indian capital markets

#127

Post by lovich »

threedots wrote: post #123
lovich wrote: post #117

Earlier quoted context omitted.

It’s not trivially verifiable for the average person and the average person is used to the rich just flaunting the law with trivial or no consequences. Saying “but that would be against the rules!” means almost nothing for the rich. This is one of the downsides of not having a strong rule of law and the rule of law has been degrading steadily in the US

It's trivial for the SEC I don't know if you're implying the SEC is in cahoots with the hedge funds, and not just any hedge fund but one associated with SAC/Cohen whom the SEC went to war with. I'm sympathetic to your general point but as someone who has spent his whole career in the financial markets that seems vanishingly unlikely to be the case here.

He got what, banned from supervising a hedge fund for 2 years for insider trading? If the punishment he received from the SEC constitutes "war" in the financial markets then I don't think you understand the viewpoint that sees the the SEC as handing out trivial punishments.

Re: Shorting and Indian capital markets

#128

Post by ZephyrBlu »

R0b0t1 wrote: post #116
ZephyrBlu wrote: post #35

Earlier quoted context omitted.

> There is no way everyone can get out at the top, so a lot of people will have to sell at very low prices. This is even true if the original thesis of "we can pump this stock to $1000" is true This is what I've been thinking about the whole time. They can definitely pump the stock if they keep HODLing, since sellers effectively set the price when the short positions have to be closed. Someone still has to be the bag…

>Someone still has to be the bagholder and end up holding near worthless stock at the end of this though. The hedgefunds are filling this niche. Trading slowed yesterday because brokers were afraid of going bankrupt.

That was because of liquidity issues.

There's no guarantee hedge funds will be the ones who end up holding stock at the end of this.

Re: Shorting and Indian capital markets

#129

Post by threedots »

lovich wrote: post #127
threedots wrote: post #123

Earlier quoted context omitted.

It's trivial for the SEC I don't know if you're implying the SEC is in cahoots with the hedge funds, and not just any hedge fund but one associated with SAC/Cohen whom the SEC went to war with. I'm sympathetic to your general point but as someone who has spent his whole career in the financial markets that seems vanishingly unlikely to be the case here.

He got what, banned from supervising a hedge fund for 2 years for insider trading? If the punishment he received from the SEC constitutes "war" in the financial markets then I don't think you understand the viewpoint that sees the the SEC as handing out trivial punishments.

There is a big difference between handing out light punishments and actively colluding. In the case of Cohen, his light punishment is because they were never able to find the smoking-gun evidence they needed to put him away properly on criminal charges despite a massive effort to do so so they settled for what they could get. It's not enough to be guilty (hi OJ), and Cohen was guilty as sin I don't doubt it.

Re: Shorting and Indian capital markets

#130

Post by lovich »

threedots wrote: post #129
lovich wrote: post #127

Earlier quoted context omitted.

He got what, banned from supervising a hedge fund for 2 years for insider trading? If the punishment he received from the SEC constitutes "war" in the financial markets then I don't think you understand the viewpoint that sees the the SEC as handing out trivial punishments.

There is a big difference between handing out light punishments and actively colluding. In the case of Cohen, his light punishment is because they were never able to find the smoking-gun evidence they needed to put him away properly on criminal charges despite a massive effort to do so so they settled for what they could get. It's not enough to be guilty (hi OJ), and Cohen was guilty as sin I don't doubt it.

If the punishments are smaller than the rewards from breaking the rules, then they have no effect on stopping the behavior. They are functionally a small cost of doing business.
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