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u/DeepFuckingValue and the GameStop Reddit mania

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Re: u/DeepFuckingValue and the GameStop Reddit mania

#291

Post by tootie »

ggggtez wrote: post #183
jzoch wrote: post #89

Earlier quoted context omitted.

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…

You can literally just look at the P/E ratio and the yield on google finance. 50 years ago that was all you needed to know.

Re: u/DeepFuckingValue and the GameStop Reddit mania

#293

Post by jMyles »

ranger207 wrote: post #260
eruleman wrote: post #132

Earlier quoted context omitted.

via Filecoin: "In short: IPFS addresses and moves content, while Filecoin is an incentive layer to persist data." https://docs.ipfs.io/concepts/faq/#ipfs-and-filecoin

Are they separate layers? Could I use IPFS in my own project, or is it intrinsically tied to Filecoin?

Of course you can. There is no substance to this line of reasoning except that PL publishes both.

It's like saying speculating on py-umbral (a standalone open source project) because we use it to build NuCypher (a blockchain-dependent open source project).

Re: u/DeepFuckingValue and the GameStop Reddit mania

#294

Post by thekyle »

runarberg wrote: post #186
kinghajj wrote: post #173

Earlier quoted context omitted.

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 cred…

At today's interest rates it seems like you're probably going to lose a lot of money to inflation. At the very least why not buy government bonds?

Alternatively based on your posts it seems like maybe you would like investing in a ESG fund.

https://www.investopedia.com/terms/e/environmental-social-an...

Re: u/DeepFuckingValue and the GameStop Reddit mania

#295

Post by pishpash »

toomuchtodo wrote: post #241
lifeformed wrote: post #207

Earlier quoted context omitted.

I thought bankruptcy would still mean the brokers are on the line for the money?

They are. That’s what collateral, broker risk management, and (if the broker fails) DTCC is for, to derisk counterparty failure risk. Someone is paying up.

Sure the collateral holders pay up. But if they need to get liquidated to service the debt, watch out.

Re: u/DeepFuckingValue and the GameStop Reddit mania

#296

Post by harryh »

heimatau wrote: post #242
misiti3780 wrote: post #31

I'm honestly confused by the press around this event. I get it, /DFV started a short squeeze and got rich, that is great for him. I don't support naked shorting, it should probably be illegal (if it is not already) and it looks that was part of the reason this happened. Everyone has been suspecting for a while (especially here) that a lot of volatility in stocks like TSLA etc was due to Robinhood. As of 5:33 EST, I'm…

> it's crushing a few hedge funds that happened to hold short positions in a few stocks You haven't noticed that the big three indexes are DOWN ~2% today? They were down 2% when this first took off. [If you want to split hairs...go for it but...the correlation is very strong, news cycles are soaking it up and the White House talks about monitoring the situation. This is not a light matter] This is bigger than just a…

Yes indeed. The stock market has dropped to levels not seen since...early January. The economy is truly crippled!

Re: u/DeepFuckingValue and the GameStop Reddit mania

#297

Post by PeterisP »

lifeformed wrote: post #207
015a wrote: post #158

Earlier quoted context omitted.

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…

I thought bankruptcy would still mean the brokers are on the line for the money?

There are two crucial differences. The first one is where the money goes. If they would cover the short, they buy the stocks for a large price on the open market and give the stocks back to the people who loaned them the stock in the first place - so the money goes to people who are currently holding that stock and would be willing to sell at that high price.

On the other hand, if they go bankrupt, then their assets are used to compensate (as much as possible) to everyone they owe in cash - not (as previously expected) in that stock. So the expected huge future purchase of the shorted stocks never happens, and all the WSB people who are holding the stock get to keep it or sell it to each other, as all that compensation money does not flow to the market for GME stocks as it would be if the shorts were actually covered. The brokers would be liable, and they might have insurance that might be liable, but all that liability would be cash-denominated and (as far as I understand - if I'm mistaken, please correct me) would not obligate anyone to buy any GME stocks.

The second big difference is in the timing. The current price is driven by short-term expectations, a hope that somebody is going to (or would be forced to) buy large quantities of that stock soon. If one of the shorting hedge funds goes bankrupt, then any settlement for that will take many months, and that money won't influence the market for that time.

Re: u/DeepFuckingValue and the GameStop Reddit mania

#298

Post by pishpash »

ggggtez wrote: post #183
jzoch wrote: post #89

Earlier quoted context omitted.

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…

"Gamestop" is a string of letters. Unless it has a pile of unrestructurable liabilities, what's forcing it to become bankrupt vs. being a startup?

Re: u/DeepFuckingValue and the GameStop Reddit mania

#299

Post by x3sphere »

ggggtez wrote: post #183
jzoch wrote: post #89

Earlier quoted context omitted.

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…

That's why most people should just stick to index funds.

Re: u/DeepFuckingValue and the GameStop Reddit mania

#300

Post by cwhiz »

tootie wrote: post #86
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.

GME is absolutely going to crash and everyone knows it. There was a mod post just today reminding everyone to be ready. The stock is worth $10-20 on it's merits and that's where it will land. We just don't know when. The chance of this as a contagion that brings down indexes seems very unlikely.

“Merits”

The stock is worth what people think it’s worth. If people keep buying and holding, then it is worth what it is worth.

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