801–810 of 1001 posts
There are 100 cows. A hedge-fund believes that the milk consumption will go to zero, so they borrow the 100 cows for one month and sell them for $1 each. Then they borrow them again, and sell them once more for 90c. Certain that they will worth $0 at the end of the month A Redditor notices this. She knows that in a month's time, the hedge-fund will have to buy 200 cows, and there are only 100 available. Her plan is s…
There's a mantra among these people of "I just wanted to play video games, why couldn't you leave me alone?" The culture of a lot of redditors and internet trolls in general seems to be that they feel like they are the eternal punching bag of society. They were the punching bag in high school, they didn't get into a good school (or go to college at all), and now they're the punching bag of society as "incels" or "whi…
The real punching bag in our country is probably poor, minority single mothers.
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> How does this differ than other populist manipulation via social media? We've seen this technique used repeatedly in many domains. IMHO, it looks obviously the same in many ways. Are you sure you are up to date with what happened? My understanding, and in layman's terms, is that a hedge fund shorted more GME stocks than they are available. Redditors noticed and correctly thought that if they buy all the stocks avai…
> Make shorting illegal. Short sellers profit from exposing fraud (like those that researched Enron and Wirecard). Making the only market participants with financial incentive to put downward pressure on stock prices illegal seems like a bad idea.
Shorting is illegal in Australia, Germany, Italy, Spain, Portugal and a few other countries with large financial markets. The US has the most "open" policies on shorting in the world. Short selling was an extremely large contributor to the 1929 stock market crash.
There are 100 cows. A hedge-fund believes that the milk consumption will go to zero, so they borrow the 100 cows for one month and sell them for $1 each. Then they borrow them again, and sell them once more for 90c. Certain that they will worth $0 at the end of the month A Redditor notices this. She knows that in a month's time, the hedge-fund will have to buy 200 cows, and there are only 100 available. Her plan is s…
> Hedge-fund cries foul. Doesn't like being beaten in it's own game. Have any of the hedge funds actually cried foul?
Citron research (not a hedge fund, but one of the parties that had a large short position) put out the following video generally supporting redditors and wsb: https://www.youtube.com/watch?v=yS4yPsmaDDQ
Melvin Captital (Hedge fund that took a big hit), as far as I can tell, has not put out any substantial statement, but none of what I can find that they did put out is crying foul. Examples of what I can find include "The social media posts about Melvin Capital going bankrupt are categorically false", ""Melvin Capital has repositioned our portfolio over the past few days. We have closed out our position in GME (GameStop)"
The only statement I can find from Citadel (hedge fund that invested in Melvin) is from their CEO, saying "Gabe Plotkin and team have delivered exceptional results over the history of Melvin. We have great confidence in Gabe and his team".
Point72 (another hedge fund investing in Melvin to bail them out - and who already had $1 billion under management with Melvin) had their chairman say "I've known Gabe Plotkin since 2006 and he is an exceptional investor and leader. We are pleased to have the opportunity to invest additional capital and take a non-controlling revenue share in Melvin Capital,". I haven't found anything else.
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If you put $X in to AAPL, you can hedge against catastrophe by putting $X/10 in to an option to sell AAPL, which will limit your losses if the stock drops to 0 tomorrow. So in theory, they can be used sensibly. But in practice I think it's not the existence of the derivatives market, it's the size. Our economy is like a town with 1 farmer and 9 investors who spend all day wagering with each other on whether the farme…
> Our economy is like a town with 1 farmer and 9 investors who spend all day wagering with each other on whether the farmer will have a good crop. Objectively, that's not true. The finance industry is under 10% of GDP and under 5% of jobs.
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> Then they borrow them again, and sell them once more for 90c IANAL but I believe this is actually illegal and if so the hedge funds are in the red for doing this
There's really not any other way to get to shorted at 150% of the float, which was the GME reality. So... yes, likely illegal things happened by the hedge funds. Will the SEC investigate or fine them for it? Probably not, they'll probably get a(nother) bailout instead.
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I'm curious, if this is the case, why doesn't the market realize this and short sell like crazy right now, given it's clear the price isn't sustainable. That would then generate more negative price pressure and generally keep the whole thing from happening in the first place, no?
Market can remain irrational longer than your wallet can remain solvent or something like that.
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People who would like to rent out cows for other people to sell, and then pay back.
All those still need someone to ultimately buy a cow at some point, when everyone knows the value is zero. Or are the ones holding the cow the last ones that assumed they would be able to still sell a cow?
Being able to sell it on is one exit from this gamble; but also, simply having accrued more lending fees (over time) than the share cost to acquire. Mostly, it's some combination of the two.