Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Shorting and Indian capital markets

zerodha.com

Post reply on HN
Print view View original

81–90 of 132 posts

Re: Shorting and Indian capital markets

#81

Post by grey-area »

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 suspect many of these posters are not driving themself off a cliff, but others.

They’ll keep pumping while they have an incentive to do so, and the gullible will follow after, but many of the original ‘hold’ advocates must be planning to exit before the inevitable end, leaving the bag in the hands of a greater fool.

Re: Shorting and Indian capital markets

#82

Post by JumpCrisscross »

swiley wrote: post #54
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.

Put options let you take a bearish position without short selling. IMO it's a way less crazy way to do that.

> Put options let you take a bearish position without short selling

Put options can’t be written at scale without shorting.

Re: Shorting and Indian capital markets

#83

Post by HappySweeney »

ZephyrBlu wrote: post #36
PeterisP wrote: post #31

Earlier quoted context omitted.

"There is no way everyone can get out at the top" - this is the big issue here - as far as I understand, the position of WallStreetBets is that there are (were?) so many shorts of GME compared to the shares on market that they would be required to buy all that stock and everyone can get out at the top. I don't feel certain about this (especially since if any of the funds actually go bankrupt, they would default on th…

I'm pretty sure a mass buying of the stock would drive the price right into the floor. So the first few people will get an extremely high price because like you said, the shorts are forced to buy, but as the sell off begins the price will plummet.

> I'm pretty sure a mass buying of the stock would drive the price right into the floor.

Could you explain this? Doesn't increased demand drive the price upwards?

Re: Shorting and Indian capital markets

#85

Post by batmenace »

lovich wrote: post #27
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…

>rejecting the fundamentals I think what is missing in many people's analysis is that there is a new fundamental value in this situation. Buying GME shares is now linked to destroying a hedge fund and ruining some billionaire's days. For many people, and I include myself in this group, that has a real tangible value that outweighs the actual dollar amount it costs to buy a few GME shares. When the leaders of these br…

Destroying a hedge fund is also not a 'fundamental value', no matter how satisfying it might sound. Also, as I've said before, often the largest investors in hedge funds are pension funds or similar pooled vehicles, so screwing an investment fund like this doesn't always just stick it to the rich guys...

Re: Shorting and Indian capital markets

#86

Post by tylermauthe »

batmenace wrote: post #85
lovich wrote: post #27

Earlier quoted context omitted.

>rejecting the fundamentals I think what is missing in many people's analysis is that there is a new fundamental value in this situation. Buying GME shares is now linked to destroying a hedge fund and ruining some billionaire's days. For many people, and I include myself in this group, that has a real tangible value that outweighs the actual dollar amount it costs to buy a few GME shares. When the leaders of these br…

Destroying a hedge fund is also not a 'fundamental value', no matter how satisfying it might sound. Also, as I've said before, often the largest investors in hedge funds are pension funds or similar pooled vehicles, so screwing an investment fund like this doesn't always just stick it to the rich guys...

Of course the rich guys will use human shields to protect themselves as you are indicating. They will demonize this action as the work of jokers who just want to see the world burn. If your pension fund was relying on short selling, you had a terrible pension fund! The only place where blame should lie for any outcomes of this is squarely in the lap of luxury. Any average investors who were burned by this should be pointing their fingers at the hands that promised to feed them and have repeatedly failed to do so.

Re: Shorting and Indian capital markets

#87

Post by bhawks »

Threeve303 wrote: post #41

This is a financial version of the social media effect we have seen spreading misinformation and causing people to act in real life. All of the ingredients are there. 1) Use social media to organize motivated groups of people 2) Align the mob to a target that is inherently disliked. Hedge funds and wall street more generally. 3) Cause world wide market volatility. In this case, it's moving institutional investors out…

You lost me at 3 - how can having hidden structural problems be a desirable position to be in? Hedge funds entered a crowded trade that has unlimited downside without an exit strategy. They are not naive and although they're obviously upset I doubt they're shocked about what happened. They went in with confidence thinking they knew the 'market' (aka other hedge funds) and discounted the possibility of a short squeeze.

This type of risk taking behavior must have the associated consequences, otherwise there is no reason to stop behaving this way at larger and larger scales. Moral hazard - again a finance / trading 101 concept - just like shorting can result in infinite loss.

Re: Shorting and Indian capital markets

#88

Post by sneeze-slayer »

dualthro wrote: post #49
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…

How come I continue to see posts talking about the short float for GME being in excess of 100%? disclosure: I have no investment in GME, but am hoping to see some hedge funds suffer

Matt Levine gave a pretty good explanation a few days ago how short interest can be greater than 100% of float in his newsletter Money Stuff: https://www.bloomberg.com/opinion/articles/2021-01-25/the-ga...

Re: Shorting and Indian capital markets

#89

Post by chii »

batmenace wrote: post #85
lovich wrote: post #27

Earlier quoted context omitted.

>rejecting the fundamentals I think what is missing in many people's analysis is that there is a new fundamental value in this situation. Buying GME shares is now linked to destroying a hedge fund and ruining some billionaire's days. For many people, and I include myself in this group, that has a real tangible value that outweighs the actual dollar amount it costs to buy a few GME shares. When the leaders of these br…

Destroying a hedge fund is also not a 'fundamental value', no matter how satisfying it might sound. Also, as I've said before, often the largest investors in hedge funds are pension funds or similar pooled vehicles, so screwing an investment fund like this doesn't always just stick it to the rich guys...

You can redefine it, or give it a different name other than "fundamental value", but the point is that these buyers from wsb may be paying to play the game, not for financial profit, but for the lolz. Like house-odds gambling (which, has negative "fundamental value"), people still do it.

Now, as for whether there are enough of these crazy types to actually push the price of GME up this much - i'm skeptical. I suspect that it's a battle between different hedge funds who first caught on to this small group of crazies on wsb, and saw an opportunity.

Re: Shorting and Indian capital markets

#90

Post by chii »

foolmeonce wrote: post #57
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.

No one actually wants the underlying stock, so it is really just a bet on the value at the moment they theoretically need to hand over the stock between the parties in the contract. I think the parties would just be exchanging money in lieu of stock and whoever bought the actual stock will have Gamestop stock, so after the utility for screwing the naked shorts goes away, people who bought in the rush will probably lo…

> I think the parties would just be exchanging money in lieu of stock

but stocks are marked to market - the lender of the stock will ask back the market value, which if it was being pumped, is going to be high. If the shorts are settled by cash, it's not only not going to make a difference to the bottom line of those shorting, it will also not change the price of the stock.

Post reply on HN