151–160 of 410 posts
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I explained my understanding of Citadel and market-making here: https://news.ycombinator.com/item?id=25942593
Sounds like RH is required to ensure the Best Price for customers, but they were fined last month by the SEC for not doing that. https://www.sec.gov/news/press-release/2020-321
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Not sure what the founder of barstool sports actual experience is in this area. Or whoever else. Also, it's very easy to describe order flow in a disingenuous way (citadel sees the order before the market) that's technically true and will make people think it's front running. Did the experts say front running? Or did they say paid for orders and somebody else said front running?
Here's AOC discussing it https://www.msn.com/en-us/money/other/aoc-returns-to-twitch-... And here's a Vice article about it. They don't mention front running, but the outcome sounds the same, in that the customers are not paying the best price for the stock, since the middle man pockets some. https://www.vice.com/en/article/qjpnz5/robinhoods-customers-... Also, thread. Can't speak for the expertise of the author, but…
https://www.bloomberg.com/opinion/articles/2021-01-29/reddit...
>Market makers stand ready to buy or sell stock from or to customers; they try to buy for a bit less than they sell at, and pocket the spread. If you go out into the market and say “hey I’ll buy anyone’s stock for $10,” and a really smart hedge fund comes to you and sells you stock for $10, that’s probably bad. You’ve probably made a mistake. The hedge fund is selling you the stock for $10 because it knows it’s worth $8. This is called “adverse selection.”
>More subtly, if a really big mutual fund comes to you and sells you stock for $10, that also may be bad. The mutual fund is probably selling lots of stock, because it’s so big; it sells you a little, then sells a little more, then a little more, until it pushes the price down to $8. The mutual fund isn’t necessarily smart, but by virtue of being big and doing big trades, it moves the price; if you are on the other side of its trades, you get run over. This is also a kind of adverse selection: You buy at $10 and are stuck selling at $8. Part of the spread that market makers earn in public markets—the difference between their buying and selling prices—compensates them for adverse selection, the risk of being run over by a counterparty who knows something they don’t.
>Market makers, the textbook theory goes, would much rather trade with retail orders. Retail investors generally don’t know much, so if you buy stock from them you’re probably not making a mistake. And retail orders are generally small and uncorrelated: One investor buys a little, another comes along a moment later and sells a little, it’s all pretty random, and you’re not facing an avalanche of steady sell orders that push the price down. Trading with retail is so nice that market makers—wholesalers—will both give retail orders a tighter spread (pay more to buy their stock, charge less to sell stock to them) and pay their broker for the privilege of doing it.
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...or they lied. You're picking one answer and I'm picking a different one, either are just as likely.
One of them involves them deciding they'd rather be prosecuted by the SEC for lying than use the bailout for what they said they used it for, and the other involves some people on Reddit being wrong. I don't think "either are just as likely"
Where does the fine for that cap, though?
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The general assumption on WSB is that Melvin Capital is lying and that they haven't closed their positions. I haven't seen any evidence to suggest they've closed it, and have seen circumstantial evidence suggesting they have not. You don't spend money on ads saying "we no longer have a financial stake in this stock" unless you, you know, have a financial stake in this stock. Considering this is a hedge fund, I just a…
Given they lost 53 percent that does indicate the direction they closed a lot of it.
> On Wednesday Melvin said it had exited its bet against GameStop and repositioned its portfolio. Is this true? Louis Rossmann pointed out they would have a huge incentive to lie about this (to prompt people to sell and drive prices down).
> On Wednesday Melvin said it had exited its bet against GameStop and repositioned its portfolio. Is this true? Louis Rossmann pointed out they would have a huge incentive to lie about this (to prompt people to sell and drive prices down).
> On Wednesday Melvin said it had exited its bet against GameStop and repositioned its portfolio. Is this true? Louis Rossmann pointed out they would have a huge incentive to lie about this (to prompt people to sell and drive prices down).
No, it's not. According to S3 data they've not. They're running a massive smear compaign to convince the public otherwise.
If you have a link you'd be able to share that'd be awesome.
> On Wednesday Melvin said it had exited its bet against GameStop and repositioned its portfolio. Is this true? Louis Rossmann pointed out they would have a huge incentive to lie about this (to prompt people to sell and drive prices down).
No, it's not. According to S3 data they've not. They're running a massive smear compaign to convince the public otherwise.
And I suppose that's because short interest isn't going down? Aside from the fact that other short-interest sources (all unofficial, by the way) shows that short interest cooled down last week. it also ignores the fact that it's possible to close short positions by transferring to another fund. I'd imagine there's plenty of funds willing to short GME at $300.
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Or, maybe they're lying to discourage more calls? In any case, their best strategy is to claim they're out of the short position so really them saying so is useless information.
> Or, maybe they're lying to discourage more calls? Is this something they are legally allowed to lie about? If it is not, is this the sort of thing they can lie about anyway because unless an insider blabs no one would know, or is it one of those things that someone would be able to figure out from required SEC filing or other public records?
The best part about this whole situation is news companies having to translate crude reddit humour and logic in to something old people can understand. Seeing them trying to explain why billions of dollars move because of people who refer to themselves as retards who want to earn money to buy chicken tenders.
My favorite part is imagining the editorial debate that occurs at more traditional news media as to whether or not to cite a quote from someone with the user name /u/pm-me-videos-of-u-farting or /u/lickmydogsbutt