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The Irony in the GameStop Story

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Re: The Irony in the GameStop Story

#91

Post by gajotron »

maxerickson wrote: post #80
drewcon wrote: post #50

Earlier quoted context omitted.

No I do understand that. And I’m suggesting that is a bad thing. It’s also illegal, which seems to have been left out of all the conversations. “ The rush by short sellers to cover produces additional upward pressure on the price of the stock, which then can cause an even greater squeeze. Although some short squeezes may occur naturally in the market, a scheme to manipulate the price or availability of stock in order…

What's the standard for manipulation? If retail investors publicly coordinate buys is that manipulation? What if they pool their assets and appoint a controller? ("make their own managed fund").

the standard (as a regulated person) is intention - you don't even have to succeed at moving the price in order to be guilty of market abuse/manipulation

Re: The Irony in the GameStop Story

#92

Post by gajotron »

jakelazaroff wrote: post #46
briefcomment wrote: post #23

Earlier quoted context omitted.

I'm pretty sure bringing up fundamentals is intentional FUD. Nobody is investing in any of these because of fundamentals. It's the public vs hedge funds and GME et al is the battlefield. The more people take part and have strong hands, the more the losses will be democratized, on the way to the real desired outcome against naked shorting hedge funds. I don't mind losing a couple hundred bucks investment for this.

I get furious whenever I hear the talking heads say “fundamentals”, as if 140% of the stock being held in short positions makes sense. It’s a credentialist argument. Whatever we say the stock is worth is fundamentally correct, and if you disagree, well, you’re just an unsophisticated investor who shouldn’t be allowed to participate in the market.

If 140% of the market cap is sold short, it means the longs own 280% of the market cap - that makes no 'sense' either.

Re: The Irony in the GameStop Story

#93

Post by yowlingcat »

PragmaticPulp wrote: post #19
gonzo41 wrote: post #4

Earlier quoted context omitted.

Gotta say I agree, after hearing non crap news for a year. It's nice to see a hedge fund eat their hat.

I think the sentiment will shift when people realize that some of these hedge funds invested people's pension money, or university endowments, or any other number of people's funds. WSB has promoted a cartoonish version of Wall Street where hedge funds only hold rich, evil people's money. That's not really how this works. A lot of people are also going to be disappointed to learn that some Wall Street firms profited…

> when people realize that some of these hedge funds invested people's pension money, or university endowments, or any other number of people's funds.

What if, rather than make the sentiment shift in the direction you think it's going, it actually makes people more upset for hedge funds gambling away main street's money irresponsibly? It's almost as if those who treat other people's money as a casino shouldn't get sympathy from those other people.

Re: The Irony in the GameStop Story

#94

Post by SilasX »

JW_00000 wrote: post #86

This story is constantly being framed as "the angry mob" vs "Wall Street hedge funds". But surely other professional investors ((hedge) funds, high frequency traders, algorithmic traders) are also jumping on the bandwagon, to (1) eliminate a competitor and (2) make a profit themselves on the way. I read yesterday that (at least one platform for) algorithmic traders have been monitoring subreddits like /r/WallStreetBe…

So much this. I've been rolling my eyes at the "fight the power" narrative, since I assume there are other hedge funds or shadowy figures taking the other side of the bet, and stoking the short squeeze.

Re: The Irony in the GameStop Story

#95

Post by heartbreak »

swader999 wrote: post #79
heartbreak wrote: post #56

Earlier quoted context omitted.

The assumptions in that 4chan screenshot are putting in a lot of work.

Who backs each party isn't that hard to verify. The only assumption is the copy cat trading of Melvin's strategy which seems fairly safe to make.

Well, one assumption is that the exposure is actually a meaningful number to an investment bank.

Re: The Irony in the GameStop Story

#96

Post by cannabis_sam »

JW_00000 wrote: post #86

This story is constantly being framed as "the angry mob" vs "Wall Street hedge funds". But surely other professional investors ((hedge) funds, high frequency traders, algorithmic traders) are also jumping on the bandwagon, to (1) eliminate a competitor and (2) make a profit themselves on the way. I read yesterday that (at least one platform for) algorithmic traders have been monitoring subreddits like /r/WallStreetBe…

> Then what was the point?

I mostly agree with your analysis, and I don’t have any money invested in GME (I usually do private investments). But at the same time, I think there is incredible value in exposing how much of a lie “the free market” is...

Re: The Irony in the GameStop Story

#97

Post by jakelazaroff »

tom_mellior wrote: post #90
jakelazaroff wrote: post #27

Earlier quoted context omitted.

Why is now when we start caring about that, though? I don’t think the current position of GME is a reasonable one, but neither is the situation in which 140% of its shares have been shorted. And it’s not just academic: that makes it difficult for the business to grow. The hedge funds are literally trying to suffocate it into bankruptcy. And yet no one raised the alarm then. No one worried about retail investors with…

> now that they [=hedge funds]’re losing Are they, though? Sure, some of them lost. But there are others that will only get stronger if some competitors are eliminated (a point also made by https://news.ycombinator.com/item?id=25957142 ). And even the ones that lost big so far can get back into the frenzy. Buying on the way up... or shorting near the top. Here is my take on the "irony" of the situation: Hedge funds c…

Right, it's pretty easy to make the case that a lot of the winners are already big players on Wall Street. The biggest example seems to be Citadel, which got to play both sides by trading on Robinhood's order flow and also investing in Melvin at a steep discount.

My point remains, though: where was the concern before the r/wallstreetbets saga? GME was at ~$4 last summer and made it up to ~$20 by the end of last year. If the hedge funds were right and it was massively overvalued, where was the concern for retail investors taking out long positions back then? And conversely, if the hedge funds were wrong, where was the concern for the GameStop workers?

We can go back and forth about the winners and losers, but it's pretty clear that no one really cared about the "ordinary people" before some hedge funds got caught with their pants down.

Re: The Irony in the GameStop Story

#98

Post by jakelazaroff »

gajotron wrote: post #92
jakelazaroff wrote: post #46

Earlier quoted context omitted.

I get furious whenever I hear the talking heads say “fundamentals”, as if 140% of the stock being held in short positions makes sense. It’s a credentialist argument. Whatever we say the stock is worth is fundamentally correct, and if you disagree, well, you’re just an unsophisticated investor who shouldn’t be allowed to participate in the market.

If 140% of the market cap is sold short, it means the longs own 280% of the market cap - that makes no 'sense' either.

I only have a casual knowledge of this so sorry if these are dumb questions — doesn't it mean the longs own 240% (original 100% + 140% short sold)? Also, isn't it the case that the longs will own >100% if there are any short positions?

Re: The Irony in the GameStop Story

#99

Post by drewcon »

jakelazaroff wrote: post #46
briefcomment wrote: post #23

Earlier quoted context omitted.

I'm pretty sure bringing up fundamentals is intentional FUD. Nobody is investing in any of these because of fundamentals. It's the public vs hedge funds and GME et al is the battlefield. The more people take part and have strong hands, the more the losses will be democratized, on the way to the real desired outcome against naked shorting hedge funds. I don't mind losing a couple hundred bucks investment for this.

I get furious whenever I hear the talking heads say “fundamentals”, as if 140% of the stock being held in short positions makes sense. It’s a credentialist argument. Whatever we say the stock is worth is fundamentally correct, and if you disagree, well, you’re just an unsophisticated investor who shouldn’t be allowed to participate in the market.

I don't think it's credentialist. It's not short for no reason. Even a layman can piece together GS business model doesn't have much life left and so the stock ought to have downward pressure. Hedge funds are pursing that strategy. You may disagree but it's a rational argument with a rational arbitrage. They may be wrong, but such as life.

On the other hand, WSB is basically saying, "So what? We don't care about the argument, we don't care about the true value here, we're just exploiting a market dynamic (probably illegally), and collectively interfering with the ability of hte market to price this efficiently, and we just want the number on the price to move so we can cash out."

The history of financial markets is littered with the bodies of unsophisticated investors participating for non-fundamental reasons. Tulips, .com, real estate bubble. Every mania in history follows this pattern of being driven more by the emotion and inertia of the game vs. the underlying fundamentals, this looks no different to me.

Re: The Irony in the GameStop Story

#100

Post by jakelazaroff »

drewcon wrote: post #99
jakelazaroff wrote: post #46

Earlier quoted context omitted.

I get furious whenever I hear the talking heads say “fundamentals”, as if 140% of the stock being held in short positions makes sense. It’s a credentialist argument. Whatever we say the stock is worth is fundamentally correct, and if you disagree, well, you’re just an unsophisticated investor who shouldn’t be allowed to participate in the market.

I don't think it's credentialist. It's not short for no reason. Even a layman can piece together GS business model doesn't have much life left and so the stock ought to have downward pressure. Hedge funds are pursing that strategy. You may disagree but it's a rational argument with a rational arbitrage. They may be wrong, but such as life. On the other hand, WSB is basically saying, "So what? We don't care about the…

You don't take a position based on a company's business model, you do it based on whether you think a stock will go up or down. That's it. Business model is one signal, as is the current stock price.

Hedge funds took short positions because in their model, given GameStop's business and whatever other factors, the stock was due to drop. That's valid, but it's no more valid than the WSB model that the price would skyrocket because overexposed hedge funds would be forced to close their short positions. What is the fundamental argument that GME was overpriced at $20?

Also, "unsophisticated investors" are not the only ones participating for non-fundamental reasons. When Citadel pays for order flow from Robinhood and then gets out in front of those trades, they're not trading based on fundamentals, they're trading based on momentum. Is that not also interfering with the ability of the market to price GME efficiently?

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