91–100 of 132 posts
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The market rallied because it accurately predicted there would be a strong economic recovery in 2021/2022.
That is not true, it hasn't accurately predicted anything. 96% of 2021 and 2022 haven't happened yet.
The market prediction doesn't mean it's going to happen - but it's likely. If the market prediction turns out to be wrong, then there'd be a correction in price (aka, another crash).
>>"In some of these stocks, the total quantity of stocks shorted (stocks borrowed and sold + using derivatives) is much more than the free float or the total number of shares held publicly. " So, they short more stocks that exist. OK, I will not ask why this is allowed, but how is this done?
Stock [purchased by] A [lends to] B [shorts to] C [lends to] D [shorts to] E ... There's one stock, but when people count shorts, they're counting the [shorts to] edges. That 140% ratio is essentially the (amount of [shorts to] edges) / (amount of stock in circulation).
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…
> 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…
Who do you think is making money off all the trades you're losing on? Doh!
Some billionaires will lose money - actually they already did a few days ago when they exited. Some others will make a few millions or billions. Robinhood looks like they've got some explaining to do. Just another day on Wall Street.
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That is not true, it hasn't accurately predicted anything. 96% of 2021 and 2022 haven't happened yet.
That's why it's called a prediction, and not a record. The market prediction doesn't mean it's going to happen - but it's likely. If the market prediction turns out to be wrong, then there'd be a correction in price (aka, another crash).
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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.
It should all be convoluted by policy, settle dates, brokers selling and later replacing stock in margin accounts, etc. But basically anyone involved in buying GameStop stock itself is playing in the options market with insufficient evidence of understanding, and brokers are supposed to interfere with that.
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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?
For a retail business that earns single digit profit margins with no moat, no employed talent, and no real assets, I can only assume once the supply curve starts moving, it will move fast as everyone tries to exit.
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>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...
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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.
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.
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“It’s fine” This situation sounds like a hideous volatile time bomb of complex exponential effects.
That's a bit overblown. Dog piling into a single stock is one thing. An entire market (that was) primed to collapse (housing) is another.