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Wall Street was the real winner of the GameStop saga

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Re: Wall Street was the real winner of the GameStop saga

#201

Post by xab32 »

netcan wrote: post #136
this_user wrote: post #121

Earlier quoted context omitted.

The purpose of stock markets is to find the "correct" price for a stock. To that end, it needs to be possible to express both bullish and bearish views. However, doing the latter is already more difficult because in order to short the stock, you need to borrow it first, and you need to pay for those borrowed shares for as long as you keep holding them. Furthermore, those borrows can be pulled at any time, forcing you…

>> The purpose of stock markets is to find the "correct" price for a stock. Is it? Who's purpose? The main purpose of an IPO is (was?) financing. IE, raising money for the company operations... like a bank loan, VC investment, etc. In practice, many of today's IPOs are companies that don't need to raise money (anymore). For those companies, their main purpose when doing an IPO is usually liquidity. IE, letting founde…

> Who needs this, and why?

Investors (as opposed to speculators) and anyone interested in general economic efficiency.

After the IPO, a stock ultimately represents a claim on a future revenue stream, and as such the "proper value" would be the (proportional) NPV of the company's future income. To the extent the market price doesn't reflect this, it represents inefficient allocation of investment resources.

Unlike bonds, an equity's future income is very hard to predict, so providing that pricing information, along with liquidity, is what ostensibly distinguishes Wall Street from a casino.

Personally, I don't care about short selling. I trace the root of the problem to the fact that dividends are taxed much more harshly than capital gains because capital gains don't incur taxes until sale, so they compound better. This incentivizes mature companies to retain earnings and grow through M&A (including of competitors), leading to this glorious present of megaconglomerates and oligopolies we are now living in. My prescription would be to incentivize dividends and discourage retained earnings so that some connection to reality is re-established in the market.

Another of the many problems with megaconglomerates, aside from them being anticompetitive, is that it is much harder to accurately predict the combined future income of 100 aggregated businesses than just one, so their very existence distorts prices all the more.

Re: Wall Street was the real winner of the GameStop saga

#202

Post by Bombthecat »

spelunker wrote: post #181
cirgue wrote: post #119

Earlier quoted context omitted.

WSB started as a canard to get more drunk tourists to the small stakes poker tables, in this analogy the poker table is low volume options where you can get a handful of robinhood investors to move the price and make a quick thousand bucks. It’s still that today, but larger players with more money figured out that they could do that too, and potentially on a larger scale. That’s what this has always been about. There…

Just like crypto! Hey, wanna buy into ShibaInuElonIsTheBestCoin? I hear it's gonna pump soon.

Shiba just pumped hard for no reason.. Really.. Market is still full of shit..

Re: Wall Street was the real winner of the GameStop saga

#203

Post by Bombthecat »

FractalParadigm wrote: post #78
WJW wrote: post #75

Earlier quoted context omitted.

> people can look for battered companies and severely profit from their accelerated demise Gamestop is one of those companies where the demise has been severely delayed IMO; they could've seen the future years ago but chose to stay with their legacy business of selling games in physical stores. Online game stores do what they do but with much lower costs and a much better business model. There are two ways forward fo…

GameStop has pivoted to some extent. It's incredibly rare that I go into one of their stores, but the last time I did it was less of a games store and more of a gaming merchandise store. Their acquisition of ThinkGeek and subsequent selling of those products in stores is satisfying a niche that nobody else (apart from maybe the mom & pop comic book store) seems interested in.

They are also opening a nft store, no?

Maybe they will offer a simoler api to nfts and transactions?

Re: Wall Street was the real winner of the GameStop saga

#204

Post by NovemberWhiskey »

nradov wrote: post #109
raxxorrax wrote: post #106

Earlier quoted context omitted.

Agreed. But I don't really believe that accelerating their demise is a large benefit to anyone aside the capital "investor" getting more money. The company has to do a reorientation, but that could be cut short by the stock market. Don't kid yourself that you are providing anything substantially important to further development.

The stock market can't cut a company short. Even if the stock price goes to $0, the company still exists with all of it's assets, contracts, and employees. The stock price only matters if they do a secondary offering, and to a lesser extent for equity based employee compensation.

I mean look at Citigroup.

C was $564.10 at the end of 2006. By early 2009 it was $10.20 - that's about a 98.2% reduction in the stock price. That's a much larger destruction of capital than GME ever was.

Re: Wall Street was the real winner of the GameStop saga

#205

Post by mcv »

tootie wrote: post #195
danuker wrote: post #41

Earlier quoted context omitted.

> remember to buy the dips As long as the dip is not permanent, say, due to a permanent change in the fundamentals. Then it might just keep dipping.

GME is still trading way, way above what the fundamentals say it should be. It was trading at $4 before the squeeze.

That doesn't mean that $4 was what it should be, though. I hope GME used the ridiculously high stock price to issue a bunch of new shares, so they have plenty of money to invest in whatever they want.

Re: Wall Street was the real winner of the GameStop saga

#206

Post by mcv »

jrochkind1 wrote: post #175
mcv wrote: post #139

Earlier quoted context omitted.

Both Gamestop and Tesla were just the market freaking out. The market often does that. Much of the stock market is more about what other investors will do than what the companies themselves will do. It's a bunch of noise on top of the actual value of the companies themselves. Of course sometimes it is the companies themselves, and then you need to pay attention. And because you rarely know in advance whether a dip is…

Right. So, you were taking a risk trying to buy in the dips and sell in the bumps, you were not following your own advice to "Always check if something changed about the company itself." Which is fine, it worked out for you. Of course, the bigger picture challenge is that -- modulo market freakouts -- everyone else is also "checking if something changed about the company itself", and that's already built into the mar…

Here's the thing, though: I think most of the time it is market freakout. Even if something did change about the company, quite often the market will freak out about it in one direction or another. I really think Warren Buffett is one of the few investors who really pays attention to the actual value of companies. Most investors just sail on hype.

Re: Wall Street was the real winner of the GameStop saga

#207

Post by NovemberWhiskey »

raxxorrax wrote: post #156
this_user wrote: post #121

Earlier quoted context omitted.

The purpose of stock markets is to find the "correct" price for a stock. To that end, it needs to be possible to express both bullish and bearish views. However, doing the latter is already more difficult because in order to short the stock, you need to borrow it first, and you need to pay for those borrowed shares for as long as you keep holding them. Furthermore, those borrows can be pulled at any time, forcing you…

> If anything, selling short needs to be made easier as it represents an essential corrective I disagree since that would give people decision making capabilities who are the least qualified to do so. > And this ultimately serves the greater good too You can believe that but you also don't have to. We don't have to lie to ourselves. Stocks are highly emotional and investors regularly overpay when they buy into hype.…

>I disagree since that would give people decision making capabilities who are the least qualified to do so.

It's unclear why investing in the belief something is overvalued demands a different or larger set of decision making capabilities than the belief is it undervalued.

Re: Wall Street was the real winner of the GameStop saga

#208

Post by candiddevmike »

xab32 wrote: post #201
netcan wrote: post #136

Earlier quoted context omitted.

>> The purpose of stock markets is to find the "correct" price for a stock. Is it? Who's purpose? The main purpose of an IPO is (was?) financing. IE, raising money for the company operations... like a bank loan, VC investment, etc. In practice, many of today's IPOs are companies that don't need to raise money (anymore). For those companies, their main purpose when doing an IPO is usually liquidity. IE, letting founde…

> Who needs this, and why? Investors (as opposed to speculators) and anyone interested in general economic efficiency. After the IPO, a stock ultimately represents a claim on a future revenue stream, and as such the "proper value" would be the (proportional) NPV of the company's future income. To the extent the market price doesn't reflect this, it represents inefficient allocation of investment resources. Unlike bon…

Is it crazy to think dividends should be a requirement for companies after so many years or face delisting? Along with flipping the taxes of capital gains vs dividends.

Re: Wall Street was the real winner of the GameStop saga

#209

Post by Dma54rhs »

CommieBobDole wrote: post #174
galcerte wrote: post #11

Earlier quoted context omitted.

Most discussion around $GME takes place on r/Superstonk these days anyways. Can't remember why it was banned from WSB. Something to do with the new mods I believe.

/r/superstonk used to show up in my feed on Reddit a lot, and it seemed like most of the highly-upvoted posts were elaborate explanations of how, any day now, there was going to be some sort of massive short squeeze that was going to cause $GME to hit a price of ten or twenty million dollars a share (at which point the outstanding shares of $GME would be worth more than everything else on earth combined), and everybo…

At least in some point it became so w Q-anon level conspiracy level that I had to stop following the subreddit. It was fun in the beginning.

Re: Wall Street was the real winner of the GameStop saga

#210

Post by iso1210 »

zinclozenge wrote: post #179
CommieBobDole wrote: post #174

Earlier quoted context omitted.

/r/superstonk used to show up in my feed on Reddit a lot, and it seemed like most of the highly-upvoted posts were elaborate explanations of how, any day now, there was going to be some sort of massive short squeeze that was going to cause $GME to hit a price of ten or twenty million dollars a share (at which point the outstanding shares of $GME would be worth more than everything else on earth combined), and everybo…

Superstonk has pretty much been a qanon-esque community since day 1. I still hold 10 shares of GME (bought at $220 oof) _just in case_. With that said, every now and then they come up with something that makes me do a double take. Right now they're obsessed with direct registering their shares. I'm guessing they think that if they can lock up the whole float they can force a short squeeze. Also if ryan cohen issues a…

Lets just assume the theories are right and that hedge funds have sold far more stock than is in existence, lets assume retail diamond hand HODLers buy every share there is and refuse to sell, for $10k or for $10M.

I can't find it now, but I'm sure there was an example of someone attempting the "buy the float" situation (not just Piggly Wiggly but another one more recent), and despite owning every share they were still being traded on the market. If I remember right it just carried on. Superstonk treat that as proof their theories are correct, I'd treat it as proof that even if they are right they won't get what they think they want.

Nor do they don't seem to account for the government stepping in and doing something like eminent domain and declaring the shares are worth a "more than fair price" and force-buying the shares at a fixed price of say $100/share, or even $500/share, or lets be crazy and call it $1000 per share - over twice as much as a share has ever traded for, and ending the situation.

I suspect a lot of people were waiting for 12 months before selling, as I believe that's preferable for tax purposes in the US, and that explains the high price until Christmas and then the more recent fall.

I also have 10 shares (bought at about $45). I have no idea about NFTs, but I feel like the potential risk is worth not selling for profit now. I don't think I'd buy any more at $100 though. If I could offset capital losses against income (which I believe you can in the US) I'd certainly buy more shares (although probably not in GME), but in the UK you can't, and I can't help but think the tap is going to be turned off on the US markets very soon so putting money into normal stocks isn't a great move either.

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