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u/DeepFuckingValue and the GameStop Reddit mania

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Re: u/DeepFuckingValue and the GameStop Reddit mania

#181

Post by kinghajj »

runarberg wrote: post #157
gred wrote: post #133

Earlier quoted context omitted.

Honest question, do you not have a 401(k) or similar? I certainly have a vested interest in seeing a healthy, sustainable stock market over the long term. Not because I'm part of the 1%, but because my upper-middle class retirement depends on it.

idk. It seems like a savings account could do the trick. You can save a healthy retirement by putting a portion of your salaries in a savings account in your local credit union. As a bonus—while you are not using that money—other members of your credit union can use this savings in a form of a loan, to buy a home, start a business, etc. The idea of my retirement being at the will of some hedgefund manager is not appe…

> It seems like a savings account could do the trick. You can save a healthy retirement by putting a portion of your salaries in a savings account in your local credit union.

With interest rates as low as they are, savings accounts have a negative real return. The $1000 you save today would have substantially less purchasing power by the time you'd retire.

> As a bonus—while you are not using that money—other members of your credit union can use this savings in a form of a loan, to buy a home, start a business, etc.

Well, yes and no. Banks don't really directly lend out the money deposited in savings accounts, due to fractional reserve requirements.

> The idea of my retirement being at the will of some hedgefund manager is not appealing next to the idea of my retirement being used temporary to help my neighbors buying a house or start a business.

I don't get this. With an IRA or a personal taxed brokerage account, you aren't at the mercy of anyone: you can choose which companies & funds to invest in. Hedge funds are not the be-all-and-end-all of the stock market, most funds are mutual funds who invest conservatively. If you just mean that hedge funds can cause black swan events like what we're seeing with GME, then sure, that's a concern, but only for the short term. Long-term, the stock market tends to appreciate and substantially beat inflation. We can add regulations to prevent hedge funds from fucking things up, without tearing the entire system down.

Re: u/DeepFuckingValue and the GameStop Reddit mania

#182

Post by hntrader »

cauthon wrote: post #180
hntrader wrote: post #113

Earlier quoted context omitted.

I think this whole episode might cause the next market sell-off: (1) fund degrossing as the initial driver - already happening (2) everyone is being reminded of 99/00 mania (3) uncertain regulatory environment surrounding trading (4) worries of systemic risks created by bubble GME going higher is likely to trigger it more than it dropping off right now

What is fund degrossing?

Long short funds having to sell longs to cover losses on their shorts

Re: u/DeepFuckingValue and the GameStop Reddit mania

#183

Post by ggggtez »

jzoch wrote: post #89
ggggtez wrote: post #63

Earlier quoted context omitted.

Just because he's still in doesn't mean that it's actually worth $300 on the fundamentals. I could definitely see the argument that $20 was undervalued, but it's plain to see that the short-squeeze is now part of the calculation of value. There is no way that GameStop has an actual fundamental value of $300 per share. That price is clearly inflated, and in a few weeks will decrease, probably to somewhere above $20, b…

Trying to figure out the "fundamental" value of anything is a fools errand. Im not saying GME wont drop eventually but there is no value on fundamentals of everything. Look at all the short-sellers of TSLA who made the same mistake. These companies are valued on what the market decides and we all know "The market is irrational".

To be honest, this is kind of the problem I have to stock investing as a whole.

It sounds great to "invest on the fundamentals", but there doesn't appear to be a way for the average person to even comprehend what "the fundamentals" even are.

But there has to be at least one fundamental: If the company goes bankrupt, the stock is worth nothing. Gamestop is most certainly going to go bankrupt eventually. Their business model doesn't work for today's market.

No one is going to convince me that GameStop has a way to avoid that eventuality.

Re: u/DeepFuckingValue and the GameStop Reddit mania

#184

Post by blackrock »

tinyhouse wrote: post #62
yreg wrote: post #35

Earlier quoted context omitted.

Well if a stock market crash triggered by this is realistic (which I agree is), doesn't it make sense to hold a bit of GME for insurance? I understand that there's no guarantee one will be able to exit it successfully even if it flies so high that it crashes the market. However I don't see a better insurance for people who don't have access to options/inverse etfs and don't want to sell their stocks.

The problem for GME is that it will crash regardless if there's stock market crash or not. When a market crash happens you're much better off holding value stocks of solid companies. As of mr. DFV, I'm sure he'd like to close his position at the current price. But my guess is that he prefers to hold for his reputation. Since he already guaranteed more money than he would ever need, it's not a bad decision. The other…

Still waiting for TSLA to fall.

Re: u/DeepFuckingValue and the GameStop Reddit mania

#185

Post by bluedevil2k »

siculars wrote: post #176
amluto wrote: post #110

Earlier quoted context omitted.

I wouldn’t be terribly surprised if some big players have carefully arranged to have large short interest but to be hedged against large upswings. This could be an expensive position to carry, but it could be quite profitable if people thought they were squeezing an unsqueezable short.

There is no free money. The IV on options like long calls to hedge a short is astronomical. Line numbers I've never seen.

The prices on puts go up even when the price skyrockets - it’s crazy!

Re: u/DeepFuckingValue and the GameStop Reddit mania

#186

Post by runarberg »

kinghajj wrote: post #173
runarberg wrote: post #165

Earlier quoted context omitted.

Statistically, in a zero sum game, where all players are equally skilled and the winner of each transaction is determined at random. The more transaction made, the more the wealth accumulates. What this means is, that unless you are already one of the richest person on the stock markets, your most likely outcome is that you will loose money by participating. So—unless you are already rich—your optimal strategy is not…

The stock market--just like the economy--is not a zero-sum game. I don't know what to tell you. The S&P500 over the long term has consistently performed quite well, for many decades. Maybe if your picture of participating in the stock market involves day trading, sure, statistically the majority of people who try will break even or come out with a loss. But that's not what financial advisers recommend average people…

Thank you, but I prefer a savings account at my local credit union. I’m sure the interests will amount to something similar as what some random hedgefund manager can conjure by gaming the market.

If not, then I can live with it, knowing that what little interest I earned, at least it wasn’t earned by taking profits out of other workers. And in the best case scenario my savings got lent out to other members of my credit union that used it to buy homes or start businesses in my community.

Re: u/DeepFuckingValue and the GameStop Reddit mania

#187

Post by celsoazevedo »

kevincox wrote: post #56
devops000 wrote: post #10

Earlier quoted context omitted.

I hope one day we will see an IPFS link

https://ipfs.io/ipfs/QmTW7sdBbZ1BXau8Cmrpv5srf38GZi1AiWWBBkv... There you go. It's not perfect though because a lot of the links still point to live assets. But it captured the important bits.

> It's not perfect though because a lot of the links still point to live assets

SingleFile is good for this:

- https://addons.mozilla.org/en-US/firefox/addon/single-file/

- https://chrome.google.com/webstore/detail/singlefile/mpiodij...

- https://github.com/gildas-lormeau/SingleFile

Re: u/DeepFuckingValue and the GameStop Reddit mania

#188

Post by throwaway-571 »

kinghajj wrote: post #140
runarberg wrote: post #122

Earlier quoted context omitted.

> I would not be surprised if this is the beginning of another stock market crash. Good. Let it crash and burn. The stock market has never done anything for me. Shareholders making money out of my work is not exactly in my interests, nor is it in the interest of the majority of the world’s workers. My only wish is that this time around the stock markets will stay down after they burn, and be remembered in history as…

> The stock market has never done anything for me. I mean, it could, if you were to invest. > Shareholders making money out of my work is not exactly in my interests, nor is it in the interest of the majority of the world’s workers. So instead of, say, encouraging people to learn how to invest, and maybe even incentivizing firms to allocate shares to their employees, you'd rather just have the whole stock market burn…

Robinhood was founded on that idea, but it turns out it's kinda hard to deliver. When people where trying to invest into this rising stock they ran out of credit at their clearinghouse and had to stop their customers from trading.

Re: u/DeepFuckingValue and the GameStop Reddit mania

#189

Post by jojobas »

015a wrote: post #158
amluto wrote: post #110

Earlier quoted context omitted.

I wouldn’t be terribly surprised if some big players have carefully arranged to have large short interest but to be hedged against large upswings. This could be an expensive position to carry, but it could be quite profitable if people thought they were squeezing an unsqueezable short.

Right. My biggest concern with these plays, at this point, is that they're not taking into account the possibility of bankruptcy. There's a ton of "they have to buy it, if we hold all the shares then it'll go to the moon, 1k, 2k, 4k". (1) The sheer variety of financial vehicles available to professional investors is staggering, and while the initial DD was really good, we probably missed something at this point, and…

That's a great part of their sentiment - "I may not profit that much, but these fat cats will suffer". Also, bankruptcy still means a fair share in the assets of the bankrupted.

Re: u/DeepFuckingValue and the GameStop Reddit mania

#190

Post by bluedevil2k »

ggggtez wrote: post #63
tootie wrote: post #25

Earlier quoted context omitted.

It says as much in the article. He literally just thought GME was undervalued on its merits. He had no intention of creating a squeeze or punishing Melvin.

Just because he's still in doesn't mean that it's actually worth $300 on the fundamentals. I could definitely see the argument that $20 was undervalued, but it's plain to see that the short-squeeze is now part of the calculation of value. There is no way that GameStop has an actual fundamental value of $300 per share. That price is clearly inflated, and in a few weeks will decrease, probably to somewhere above $20, b…

You can check option pricing for the market-expected price in the future. The July options are pointing to an expected $40-$50 price point.
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