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u/DeepFuckingValue and the GameStop Reddit mania

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Re: u/DeepFuckingValue and the GameStop Reddit mania

#361

Post by incognition »

radihuq wrote: post #208

Anyone here work in Wall Street? I'd be curious to hear what the discourse is currently like in the Wall Street community

Not a CFA like DFV, and not financial advice but here goes.

A way to assess what any stock is valued is to take the DCF, but since it's nearly black box to the shareholder for growth companies (no dividend), treat any interest payments on outstanding short float as part of the DCF. That means there's a growth directly associated with capitalization. so it makes sense that the capitalization becomes untethered with the business. Google’s ROE is about 12%, so 6-7% on the cap isnt great, but it’s not nothing either. The other side is if the short interest decreases that would collapse the cap sharply, but the longer the shorts wait, the less lucrative and difficult it could get.

Edit. Cost to borrow is at 50%! https://www.reddit.com/r/wallstreetbets/comments/l88i21/s3_s...

Re: u/DeepFuckingValue and the GameStop Reddit mania

#362

Post by SuoDuanDao »

alasdair_ wrote: post #202
hehehaha wrote: post #191

Earlier quoted context omitted.

No, it’s zero sum.

It’s zero sum until a too big to fail actor is in danger, then new money is created and the game ceases to be zero sum.

well really, at that point everyone's purchasing power is diminished, so the game remains zero sum relative to anything outside itself.

Re: u/DeepFuckingValue and the GameStop Reddit mania

#363

Post by boring_twenties »

runarberg wrote: post #212
xienze wrote: post #205

Earlier quoted context omitted.

> You can save a healthy retirement by putting a portion of your salaries in a savings account in your local credit union. You must be joking. My credit union is offering .1% on savings, and it’s not like they’re some extreme outlier, rates are incredibly low across the board. You are actively harming your future by doing this, you aren’t even keeping up with inflation!

No I’m not joking, nor am I harming my future. I don’t have to make an optimal amount of growth on my savings to afford my retirement. There is no harm in owning less money then if I had used them to swindle more workers out of their profits on the open markets. In fact, every dollar you make as a result of not working is a dollar somebody else worked for and didn’t get. You are harming workers by earning money on th…

I am not able rightly to apprehend the kind of confusion of ideas that could provoke such a comment.

Re: u/DeepFuckingValue and the GameStop Reddit mania

#364

Post by rubinelli »

shyn3 wrote: post #115
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".

Wsb can remain irrational longer than the market can remain solvent. That was a comment by a poster which I find funny.

Funny, but it suggests the market hasn't learned anything from 2008.

Re: u/DeepFuckingValue and the GameStop Reddit mania

#365

Post by chordalkeyboard »

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…

To put it bluntly, this is because of the Federal Reserve. Fundamentals refers to the ability to generate a steady return of profit. This goes back to Graham and Dodd, “value investing” (“the intelligent investor” and “security analysis”) and the perspective of a long term investor where all investments are fungible according to their risk adjusted rate of return.

But since the government can’t fund itself on revenue, but relies on the central bank printing money, all this new currency flows into the economy and into the stock portfolios of the upper classes, which inflates the price of the stock faster than the business can generate a profit. Which means all the old value investing stuff doesn’t tell you how to make the most money anymore. So the “fundamentals” have changed and no one knows exactly what they are.

Re: u/DeepFuckingValue and the GameStop Reddit mania

#366

Post by trianglem »

chillacy wrote: post #178
raziel2701 wrote: post #22

On wsb u/deepfuckingvalue showed he still holds 50,000 shares and 500 deep ITM call options. He has secured a profit of $13.8 million dollars, and his remaining open position is valued at $45 million. I would caution people to not quickly fall into the "if he's still in, I'm still in" meme. He has secured a $14 million bag, regardless if the stock goes to zero he's already secured a life changing amount of money, he…

> militant activism via buying stock as a means to sticking it to the man. > beginning of another stock market crash Hmm sounds like it's working then.. Going off of the resentment against the 'elites' in wsb comments to the tune of "I started broke and I'll go broke again but if the rich go broke..."

But it’s no longer effecting just the rich. It’s working people with pensions and 401ks... and this better not mess up the decade long sweet bull market for a handful of millionaires.

Re: u/DeepFuckingValue and the GameStop Reddit mania

#367

Post by fractionalhare »

chordalkeyboard wrote: post #357
fractionalhare wrote: post #249

Earlier quoted context omitted.

Yes, exactly. When a hedge fund is getting its face ripped off because its shorts are up 50 - 200%, it will liquidate its longs to cover. The rotational dynamics of many funds doing that at once can drive the price down on traditionally stable stocks that everyone owns. In a worst case scenario that could trigger a massive selloff which would crash the market. This is compounded by the fact that funds will defensivel…

> This market is terrifying. I think this represents an upgrade from being chased by tigers. Sedentaryism, metabolic syndrome, being fired by the machine, sweatshops, homelessness, addiction, those are downsides from foraging aboriginal lifestyle. But being terrified of losing money is different than being terrified of getting literally eaten.

Well sure, I'd definitely rather short Gamestop and watch my short thesis get delegitimized in real time than literally run from a hungry tiger.

Re: u/DeepFuckingValue and the GameStop Reddit mania

#368

Post by smattiso »

aeternum wrote: post #280
dcolkitt wrote: post #72

Earlier quoted context omitted.

The difference is the supply of bitcoin is fixed. Whereas a company can issue shares at any time. Obviously if the market cap stays at $30 billion for a long time, Gamestop management is going to start spending their overvalued stock like drunken sailors. First it'll be just to plug up the money their operations are constantly losing. Then they'll start going on acquisition sprees, giving out giant compensation packa…

GME issuing shares would be the smart thing to do. The primary goal of a stock market is really to allow exactly that. The market determines the cost of capital for each company, thereby influencing the allocation of capital in society. The question then becomes how efficiently the company can put that capital to use.

If they do that it's instant bankruptcy for GameStop. Nobody will ever shop there again. Period. It's over.

Re: u/DeepFuckingValue and the GameStop Reddit mania

#369

Post by Lt_Riza_Hawkeye »

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?

They can. Think of it like a torrent file and a webseed. You can freely use torrents to distribute your content, but if everyone who has ever downloaded it goes offline, any new downloaders will be stuck at 0% forever.

The only add on here is that you can pay some service in filecoin to keep seeding your torrent forever.

Re: u/DeepFuckingValue and the GameStop Reddit mania

#370

Post by city41 »

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…

A simple index fund will outperform interest earned from a savings account by quite a bit.
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