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Shorting and Indian capital markets

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Re: Shorting and Indian capital markets

#61

Post by CaptArmchair »

ZephyrBlu wrote: post #35
WJW wrote: post #15

Earlier quoted context omitted.

Eventually, either the Wall Street "hive mind" (really though, WS contains thousands of funds and many would be overjoyed to see some competitors fall) or the retail buyers of these companies will be proven wrong. What happens next is way more interesting than the current situation. Even if it turns out that GME can be short squeezed until there is not a single share shorted anymore, the retail investors will then co…

> There is no way everyone can get out at the top, so a lot of people will have to sell at very low prices. This is even true if the original thesis of "we can pump this stock to $1000" is true This is what I've been thinking about the whole time. They can definitely pump the stock if they keep HODLing, since sellers effectively set the price when the short positions have to be closed. Someone still has to be the bag…

Well, I opened up Reddit an hour ago. It's not just WSB, there's posts all over the place with tens of thousands of upvotes.

The thing that boggled my mind was plenty of people openly asking "Hey, I don't know anything about trading, but I want to join this and buy stock." and other people straight up telling them "Get the app from a broker (not RH!), open an account and buy $GME" (followed by a flurry of rocket and diamond hand emojis)

It is one thing to be told that markets can be irrational and emotional. It's a completely different thing to see it that playing out in real time on social media.

Re: Shorting and Indian capital markets

#62

Post by hollowcelery »

TeMPOraL wrote: post #53
xadhominemx wrote: post #43

Earlier quoted context omitted.

Buying GME is in fact not linked to destroying a hedge fund as the funds with large concentrated short positions exited the investment several days ago. The situation now is a bonanza for billionaires, as many have gone long the stock or are providing highly lucrative retail options market making services. The entire narrative about gme now being some sort of populist uprising is a sham perpetuated by those who want…

The loudest opinion on WSB currently is that the hedge funds didn't actually exit their shorts, but are lying about this, and, well, quoting from a random WSB post: "They didn’t exit any of their short positions! You can look it up!!! The fund sold their shares to other funds, which made the stock algorithm think the stock is being sold —> price goes down —> the found that bought sells those shares again to the fund…

> Shorts are still up 120% percent

This doesn't mean that the original funds didn't exit the positions. It's likely that there are many new participants who are taking short positions in the last few days because the stock is obviously overvalued.

Re: Shorting and Indian capital markets

#63

Post by pbronez »

WJW wrote: post #46
tikej wrote: post #42

Earlier quoted context omitted.

But aren’t the shorts for like 140% of the GME stock? That means if everyone holds with prices, sooner or later the shorters will have to buy ALL that stock anyway at nearly any price to cover for the losses and give back shorted stock.

There is a more likely alternative than paying "nearly any price", which is that the funds in question go bankrupt and default on any obligations remaining. At that point, anyone who hasn't sold yet will be left holding (call options on) stock worth maybe a tenth of its current price.

If the structurally possible outcomes are:

1) Shorts all come due and hedge funds pay all the retail investors big gains

2) hedge fund dies and defaults so retail get screwed

I’m pretty sure WSB would collectively declare victory. It’s a suicide mission for them.

Re: Shorting and Indian capital markets

#64

Post by ece »

ignoramous wrote: post #11

> While everyone is celebrating retail traders winning over a large hedge fund in this case, it rarely ever plays out this way. Most commonly, retail ends up losing money when there is excessive speculation. This is the only passage anyone with too much at stake (than they can afford) in this short needs to read. Other than that, I believe industry insiders / traders are missing the mark in that the current dynamic i…

A good hedge fund knows how to hedge the risky investments they make, and if they're just betting, they should know someone else might get the other side. It could be another fund/investor, but it's WSB this time.

I think there's a lesson here for people making massive short bets, and for hedge funds and anybody making a bet instead of an investment: that someone else might take the other side and have more power than you might think. This is all just betting at this point, with WSB still betting they can trigger even more of a short squeeze. If this has somehow crossed the line from "bet" to "investment" that starts affecting the rest of the economy, then the consequences should be interesting to watch. Trading on exchanges shouldn't be able to be restricted by someone like Robinhood, though they have other problems too.

Re: Shorting and Indian capital markets

#65

Post by threedots »

TeMPOraL wrote: post #53
xadhominemx wrote: post #43

Earlier quoted context omitted.

Buying GME is in fact not linked to destroying a hedge fund as the funds with large concentrated short positions exited the investment several days ago. The situation now is a bonanza for billionaires, as many have gone long the stock or are providing highly lucrative retail options market making services. The entire narrative about gme now being some sort of populist uprising is a sham perpetuated by those who want…

The loudest opinion on WSB currently is that the hedge funds didn't actually exit their shorts, but are lying about this, and, well, quoting from a random WSB post: "They didn’t exit any of their short positions! You can look it up!!! The fund sold their shares to other funds, which made the stock algorithm think the stock is being sold —> price goes down —> the found that bought sells those shares again to the fund…

I don't understand why people think Melvin would do this. Sure they might be prepared to flout SEC rules if they thought they could get away with it but whether they sold is trivially verifiable and they would be guaranteed to get caught. Exiting the position was probably also a precondition of the new investors putting money in.

The comment you pasted is incoherent rambling. It's honestly like something from a qanon forum. Even ignoring that prices don't work how they seem to think the mechanism they suggest for manipulating them doesn't make sense (it would also be very illegal and again trivial to verify for the SEC).

Re: Shorting and Indian capital markets

#66

Post by pbronez »

mschuster91 wrote: post #18
mensetmanusman wrote: post #16

I am glad they addressed the philosophical question of whether shorting the stocks should be illegal. I have more confidence in our equities markets because of the existence of short sellers. I’m glad to know there are people researching companies that are not being honest about their financials. If there were another way to incentivize finding these types of companies without short selling, I would be interested.

> If there were another way to incentivize finding these types of companies without short selling, I would be interested. In ye olde times before the invention and institutionalization of short selling and other financial instruments, this kind of research was the responsibility of the media (to raise the alarm) and the SEC/police (to investigate claims with the authority of the government, and prosecute offenders).…

Maybe? I think it’s really useful to give people an economic incentive to do socially useful things, like pointing out when a company is in an unsustainable position before it literally starts locking out workers.

Journalists are better spent digging into political situations that aren’t directly tradable.

Even if you think journalists should do the research and make results public instead of funds doing the research and keeping it private (until they reveal their conclusions through trading), I think you want shorting available as a RESPONSE to the reporting. Why would the companies change their behavior in response to negative press if they aren’t subjected to economic pain for ignoring it?

Re: Shorting and Indian capital markets

#67

Post by ScoutOrgo »

midasuni wrote: post #55
xadhominemx wrote: post #52

Earlier quoted context omitted.

It probably is over 100%. That’s unusually high but 100% short interest is not some sort of special number. Shorting works by borrowing a share and selling it to someone else. There’s no reason the same share could not be borrowed multiple times, as the shares are all fungible.

So if two people owned one share, they could simply pass it between each other until their shorts are covered?

Not passed, but bought since the underlying price will have changed.

Re: Shorting and Indian capital markets

#68

Post by pbronez »

wrkronmiller wrote: post #39
ZephyrBlu wrote: post #37

Earlier quoted context omitted.

Which I believe is due to them having shorted over 100% of the float making it impossible for the shares which were shorted to be purchased.

> There are 100 shares. A owns 90 of them, B owns 10. A lends her 90 shares to C, who shorts them all to D. Now A owns 90 shares, B owns 10 and D owns 90—there are 100 shares outstanding, but190 shares show up on ownership lists. (The accounts balance because C owes 90 shares to A, giving C, in a sense, negative 90 shares.) Short interest is 90 shares out of 100 outstanding. Now D lends her 90 shares to E, who shorts…

“It’s fine”

This situation sounds like a hideous volatile time bomb of complex exponential effects.

Re: Shorting and Indian capital markets

#69

Post by fock »

dmingod666 wrote: post #34
ignoramous wrote: post #11

> While everyone is celebrating retail traders winning over a large hedge fund in this case, it rarely ever plays out this way. Most commonly, retail ends up losing money when there is excessive speculation. This is the only passage anyone with too much at stake (than they can afford) in this short needs to read. Other than that, I believe industry insiders / traders are missing the mark in that the current dynamic i…

lol, when did the stock market reflect the fundamentals? Its post 2020, the whole economy had come to a standstill and the market was rallying like nothing happened. All this 'fundamentals' talk just sounds hollow.

it is. the whole market is overvalued. But while some parts of the market have some actual things, people want (highly educated workforce, machinery, land, supply chains...) Gamestop has nothing of this and yet is pushed to an even higher value.

Re: Shorting and Indian capital markets

#70

Post by TeMPOraL »

threedots wrote: post #65
TeMPOraL wrote: post #53

Earlier quoted context omitted.

The loudest opinion on WSB currently is that the hedge funds didn't actually exit their shorts, but are lying about this, and, well, quoting from a random WSB post: "They didn’t exit any of their short positions! You can look it up!!! The fund sold their shares to other funds, which made the stock algorithm think the stock is being sold —> price goes down —> the found that bought sells those shares again to the fund…

I don't understand why people think Melvin would do this. Sure they might be prepared to flout SEC rules if they thought they could get away with it but whether they sold is trivially verifiable and they would be guaranteed to get caught. Exiting the position was probably also a precondition of the new investors putting money in. The comment you pasted is incoherent rambling. It's honestly like something from a qanon…

> The comment you pasted is incoherent rambling.

That's most of WSB, though (after you exclude all the "+1" comments). I agree it's incoherent rambling, that's why gave up on trying to paraphrase it. I'm quoting it because this is the kind of stuff that gets reposted in every single thread there, and is indicative of the general atmosphere there.

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