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u/DeepFuckingValue and the GameStop Reddit mania

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Re: u/DeepFuckingValue and the GameStop Reddit mania

#481

Post by bostik »

rualca wrote: post #336
015a wrote: post #284

Earlier quoted context omitted.

The funds. There's an ocean of difference between "we finished the year down 98% but we met all of our obligations" and "we finished the year down 100%, and we also failed to meet our obligations". Those obligations include the repurchase and repayment of short-sold stocks sold by the brokerage. WSB wants a short squeeze. They got that. But, their theory is that it isn't over, and if they get the 10x+ returns in the…

> That's a real recipe for shutting down, and if that happens, there is no more short to squeeze. Everyone loses. It seems you didn't understood that for the WSB crowd the definition of winning is getting these funds to shut down, regardless of their personal losses. This is no longer about money. This is a protest against a rigged system.

In a sibling thread someone already coined the term "spite investing".

I'm personally into boring index and ETF vehicles, but I am stocking up on something right now: popcorn.

Re: u/DeepFuckingValue and the GameStop Reddit mania

#482

Post by Alupis »

runarberg wrote: post #475
ericd wrote: post #466

Earlier quoted context omitted.

"And I especially don’t like it when shareholders pocket parts of the profit that I made them without bringing anything of value to the company." Are you trolling? You do realize why those shares are out there, right? Because your company needed money, and those people gave your company their money to get started, grow, hire more people, etc. Is that not bringing something of value?

IMO no. I would have preferred it if my company would have used less predatory means of getting that money, something like taking a loan or simply saving up part of the profits for any future investments. The people that made the decision to sell the share still pay them selfs plenty of money, the shareholder’s reward is always coming from my paycheck, and I prefer it wouldn’t.

> And I especially don’t like it when shareholders pocket parts of the profit that I made them without bringing anything of value to the company.

> the shareholder’s reward is always coming from my paycheck, and I prefer it wouldn’t.

This is just untrue for nearly all public companies. Most companies do not pay dividends... and a stock price going up and being sold by some investor literally has nothing to do with your company.

In fact, the stock price is largely irrelevant to your company. It's only relevant to those who own the stock.

> I would have preferred it if my company would have used less predatory means of getting that money, something like taking a loan or simply saving up part of the profits for any future investments.

Issuing stock is basically a loan that they never have to pay back if they do not want to. They can always buy back their stock if they no longer feel it's worth while being a public company.

FWIW, publicly traded companies have earned far more everyday working people comfortable retirements and more, than any single privately-held company.

Re: u/DeepFuckingValue and the GameStop Reddit mania

#483

Post by recursive »

pb7 wrote: post #460
recursive wrote: post #449

Earlier quoted context omitted.

If I buy a stock of a company, how is that funding the company? Only the previous holder of the stock gets the money.

At some point, the previous holder of the stock was the company itself. That’s called an IPO. Additionally, companies frequently issue new shares to raise money. Tesla has done this multiple times in the past few years.

Most of the activity (all of it?) on the stock market seems unrelated to IPOs. Is there any particular reason stocks must be transferable?

Re: u/DeepFuckingValue and the GameStop Reddit mania

#484

Post by Alupis »

tartoran wrote: post #411
Alupis wrote: post #278

Earlier quoted context omitted.

You might be missing the issue here. A savings account will cost you money in the long term - ie. your purchase power will decrease every year because the interest paid on savings accounts does not even keep up with inflation. The longer and more money you have in a savings account, the less purchase power you actually have. Think of this like putting $100 into the account but only being able to spend $90 of it. Mult…

I think the parent is talking about an ideal situation in which saving accounts do actually pay off a nice interest that beats the inflation and sprinkle some extra profit on top. Not a lot but it is risk free. Isn’t the idea that banks make the money flow by circulating it around a good one? A saver who doesn’t need it now can park it in a bank and when their time to retire comes they get their actualized money plus…

The only way a bank could afford to pay enough interest on a savings account to meet inflation would be to... wait for it... invest that money in something that would beat the inflation rate.

We've just re-invented the stock market.

Re: u/DeepFuckingValue and the GameStop Reddit mania

#485

Post by boring_twenties »

recursive wrote: post #444
boring_twenties wrote: post #363

Earlier quoted context omitted.

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

If you make money on trades and then spend it on food, it certainly does seem like some kind of magic trick to me. Whatever money you earned must have been lost by someone else. Or does the amount of money increase when stocks go up? Whatever the confusion is, I have it too.

I make something and sell it to you for $5.

Tomorrow, you sell it to a third person for $10.

Who lost money here?

Re: u/DeepFuckingValue and the GameStop Reddit mania

#486

Post by recursive »

boring_twenties wrote: post #485
recursive wrote: post #444

Earlier quoted context omitted.

If you make money on trades and then spend it on food, it certainly does seem like some kind of magic trick to me. Whatever money you earned must have been lost by someone else. Or does the amount of money increase when stocks go up? Whatever the confusion is, I have it too.

I make something and sell it to you for $5. Tomorrow, you sell it to a third person for $10. Who lost money here?

Excellent question.

Really no one I think.

I'm definitely wrong about something though. I need to think about it some more to figure out what.

Re: u/DeepFuckingValue and the GameStop Reddit mania

#487

Post by jmalicki »

samename wrote: post #443
ivalm wrote: post #320

Earlier quoted context omitted.

There is nothing special about being short more than 100%, they short shares that are borrowed multiple times. But it also means the “long” interest is more than 200%. Even if you own equivalent of 100% of float there are still other shares that can be used to cover. The only issue starts if someone has lent out more than 100% of float and tries to simultaneously recall all of them.

It does create an issue for the company of the stock, though.

What issue is that?

Re: u/DeepFuckingValue and the GameStop Reddit mania

#488

Post by jmalicki »

fakedang wrote: post #470
troupe wrote: post #459

Earlier quoted context omitted.

> I hate letting my money sit in an account while smart kids can't afford college If you know of a smart kid that can't afford to go to college, you could make them a reasonable interest loan and it would be a win for both of you.

There's a YC idea there somewhere. Especially when a lot of family offices are looking at wealth preservation over volatility.

What is YC about it? It's called a predatory private student loan.

Re: u/DeepFuckingValue and the GameStop Reddit mania

#489

Post by ivalm »

samename wrote: post #443
ivalm wrote: post #320

Earlier quoted context omitted.

There is nothing special about being short more than 100%, they short shares that are borrowed multiple times. But it also means the “long” interest is more than 200%. Even if you own equivalent of 100% of float there are still other shares that can be used to cover. The only issue starts if someone has lent out more than 100% of float and tries to simultaneously recall all of them.

It does create an issue for the company of the stock, though.

Unless the company is trying to do a primary raise, which most companies do only once in a blue moon, the price of the stock is fairly irrelevant to the operations of the company.

Re: u/DeepFuckingValue and the GameStop Reddit mania

#490

Post by erikbye »

x3sphere wrote: post #299
ggggtez wrote: post #183

Earlier quoted context omitted.

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.

If they get out before crashes. Otherwise you could end up at zero again after being in for a decade. Maybe that was timed just with your retirement when you were about to make use of your now vanished gains.
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