Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Roaring Kitty to testify on GameStop alongside hedge fund managers

reuters.com

Post reply on HN
Print view View original

171–180 of 216 posts

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

#171

Post by quickthrowman »

IgorPartola wrote: post #139
sillysaurusx wrote: post #129

Earlier quoted context omitted.

But also because of this specific crowd it seems a good chunk of them are not selling on the idea that if you buy at $300 and sell at $50, you definitely lose. So close! You're almost completely correct, but remember that a loss is considered a win on wsb, because you get to post loss porn. Can't spell trader without retard. https://www.reddit.com/r/wallstreetbets/comments/ljde34/rip/ Your comment is excellent. But I…

That’s a really interesting take. The way they seek the lowest common denominator of communication does seem to create a strong sense of community. What I mean by dangerous is this: as more people flock there more capital will enter the market through that gate. And that’s a lot of money to be directed by whims of a fickle and undereducated community that tends to ride whatever is popular at the time. This time they…

> What happens when they do this to a different company like say Amazon? Anything good/bad?

What do you mean? AMZN has 3 million of 500 million shares sold short, less than 1% short interest. It would take one day for shorts to cover at average volume. Shares are also $3,277 as of Friday’s close, a lot of WSB people can barely afford one or two shares.

They cannot do this to a company like Amazon because the short interest isn’t there and the share price is too high. A weekly at the money call is $3,250 right now. WSB doesn't have enough capital to buy the shares or options.

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

#172

Post by fractionalhare »

playingchanges wrote: post #158
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…

Interestingly from what I’ve read it seems like the hedge fund community overall views the GME event as fair play. ‘Maybe Melvin got burned but they should have known better’, kind of attitude.

The hedge fund community isn't really homogenous that way. Basically all the long/short equity hedge funds with appreciable AUM lost significant money in January, because most of them were short the...well, obvious short candidates, like AMC, GME and BBBY. Other kinds of funds which trade on monentum or which shorted near the top tick made an absolute killing.

Personally I don't think it's unfair when any fund loses money - that's the game. I do think it's unfair Melvin in particular has outsized attention. The only reason Melvin is in the spotlight now is because the WSB zeitgeist just happened upon Melvin's public short and fixated on it without looking at other funds' 13Fs showing the same position. Melvin was far from the only fund short GME. This in turn led the media outlets to hyperfocus on Melvin, which has in turn led the mainstream lay community to hyperfocus on Melvin.

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

#173

Post by youeseh »

TheAlchemist wrote: post #111
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 u…

Two types of limiting happened:

Some brokerages put a complete stop on trading the share - no buying or selling. Fair enough.

Others (this includes Robinhood, which I believe had the largest number of GME shareholders) stopped allowing purchases but continued to allow selling. One of their excuses is that they didn't want to take people's ability to exit their positions. This of course, played into the hands of anyone trying to cover their short, as it artificially increased the number of sellers compared to buyers.

Finally, Robinhood allegedly closed out positions of people who'd purchased GME "on margin" - the thing is, if you sell a share in company A, and buy a share in company B on the same day, you might be buying shares in company B on margin, because it takes two days to settle company A's share sale. So, even though you may think you bought shares of company B fair and square, RH could still have closed your margin position.

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

#174

Post by bsanr2 »

anfogoat wrote: post #156
jdhn wrote: post #140

Earlier quoted context omitted.

>Yes, this effectively puts options out of reach to small investors, but... maybe that's a good thing. What a fantastic way to ensure that only The Right People (TM) can make money off of anything else other than trading shares.

> What a fantastic way to ensure that only The Right People (TM) can make money off of anything To be fair though, this is why the regulators exist. And they've got their post government careers to worry about so they will have to do something behind this supposed calamity. But don't worry, like the owner who crams their cat into a brightly colored sweater, they're doing it to protect you.

This argument is equivalent to supporting the IRS going after small-time tax cheats because the big boys - with billions in public revenue lost by their fraud every year - are "too difficult" to prosecute.

Regulators exist to prevent the most dire threats to a system - the system being the American economy, not simply financial markets (and their profits). They should act like it.

If a crisis manufactured by Wall Street hubris and capitalized upon by retail traders functionally crashes the system by way of a massive wealth transfer, so be it. Regulators should be concerned with the setting up of the earthshaking domino set in the first place, not with taking a chainsaw to the hand that goes to knock everything over.

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

#175

Post by bsanr2 »

emteycz wrote: post #73
ivalm wrote: post #63

Earlier quoted context omitted.

Can you point to a GME like price action of a non-penny stock ticker? Of course we both know the answer is no. Things shot up, things shot down, of course people who bought the hype lost money. There is nothing surprising here.

Evidently you don't know what you're talking about - of course I can. $VW 2008, $ACB 2019, $TLRY 2018 to name a few. There is much more, simply go through tickers on D1 chart and you'll see.

My first contact with the stock market was learning about some stock that had ballooned 1200% and crashed the next day. This was in 1999 or 2000.

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

#176

Post by sooheon »

stereolambda wrote: post #114
sideway wrote: post #112

Earlier quoted context omitted.

> ...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…

> 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

The math for discounting future cash flows may be objective, but every investor will come up with a different estimate of future cash flows. People in general don't "know too much to severely undervalue companies", because this implies future risks and growth are knowable. People may know how to read balance sheets, but very few are any good at forecasting risks and growth.

What's missing from your flow chart is "produce a quantifiable thesis for growth/risk that gives you a current valuation, judge the precision of this valuation and the uncertainty of the price/value gap closing, make your bet".

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

#177

Post by ivalm »

emteycz wrote: post #73
ivalm wrote: post #63

Earlier quoted context omitted.

Can you point to a GME like price action of a non-penny stock ticker? Of course we both know the answer is no. Things shot up, things shot down, of course people who bought the hype lost money. There is nothing surprising here.

Evidently you don't know what you're talking about - of course I can. $VW 2008, $ACB 2019, $TLRY 2018 to name a few. There is much more, simply go through tickers on D1 chart and you'll see.

Evidently you don’t understand difference in the size of this run up?

VW, the mother of short squeezes driven on unexpected Porsche purchase went from $200 to $1000, eg 5x

$ACB had no short squeeze, they had some run ups, with biggest in 2018 of $66 to $194

$TLRY peaked at $300 with historic low of $21 and it took months.

$GME went from $4.2 to $482 in about 5 months, none of the previous tickets you mentioned moved literally >100x. Even in 2021 GME went from $17, so over 25x in one month, this has no precedent. It leaves VW and TLRY entirely in the dust, they are not even close.

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

#178

Post by oa335 »

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…

The clearinghouse requiring more margin should definitely be investigated, but it’s not unreasonable. Robinhood offers margin accounts, and may have lent money to all the traders by GME at 300-400 dollars, over 10 times what it was trading at previously. It was completely plausible that Robinhood could have gone bankrupt, which means the clearing firm would have been on the hook for all of that money.

In my opinion, what needs to be investigated more is the “payment for order flow” business.

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

#179

Post by ivalm »

bsanr2 wrote: post #175
emteycz wrote: post #73

Earlier quoted context omitted.

Evidently you don't know what you're talking about - of course I can. $VW 2008, $ACB 2019, $TLRY 2018 to name a few. There is much more, simply go through tickers on D1 chart and you'll see.

My first contact with the stock market was learning about some stock that had ballooned 1200% and crashed the next day. This was in 1999 or 2000.

GME went up more than %10000 (100x) in 5 months. The geometric difference between GME and some 10x stock is the same as difference between 10x and no growth.

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

#180

Post by bdonlan »

xorcist wrote: post #168
gruez wrote: post #137

Earlier quoted context omitted.

>Is this where there was a problem? But the retail trading platform takes zero financial risk as long as they don't allow their customers to trade on credit (which is an entirely different issue). From matt levine: >This means that the seller takes two days of credit risk to the buyer. I see a stock trading at $400 on Monday, I push the button to buy it, I buy it from you at $400. On Tuesday the stock drops to $20. O…

Yes, so I take it to mean that indeed the retail trading platform (the actual term may be something else), takes zero financial risk. The broker that the retail trading platform uses to access the trading exchange takes this risk. But the counterparty risk here is quantifiable (by way of audits of said retail trading platform) which usually in society makes it a case for insurance, not security payments. That is my q…

In the financial industry collateral is normally used as the primary means of mitigating counterparty risk as it avoids adding an additional counterparty that you then have to evaluate for creditworthiness, and you have to pay them money instead of just temporarily handing over collateral and getting it back 100% later on.

That being said the collateral doubles as a sort of insurance; if one party's collateral is insufficient to cover the loss, the excess is spread across other market participants. This is one reason why client funds can't be used for this collateral.

Post reply on HN