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If that makes me part of the ‘deep state’, so be it.
I have no idea why you're defending these fraudsters. Loads of shares get manipulated by the people at the top who make billions out of having a seat at the top table. It's a licence to print money, pure and simple. Yet when their own system and methods are used against them, you seem to think they are being treated unfairly. The fact that you think it's 'their market' is quite revealing. That's the whole bloody point, it shouldn't be their market and they shouldn't be able to make billions out of it for doing nothing. That's not 'deep state' it's just fraudsters lining their pockets in plain sight and buying off the politicians and regulators to protect themselves.
This is just an annoyance, not ‘the kids’ taking down ‘the man’ and putting civilisation at stake.
I don’t think all the Reddit Wall Street players are kids, neither are they particularly interested in being anti capitalist (in fact what they’re doing is completely aligned with capitalism.) they have loads of reasons for doing what they’re doing (some of which is “it’s a laff, to look how much money I lost)
That the market is reacting to them so vehemently is more revealing of that structure rather than a bunch of folk at home with a $500 side bet...
Engage brain before opening mouth.
Could you perhaps apologise for that? RobinHood's business model involves selling the order flow via larger institutions. Even if you don't believe they're *still* front-running and pocketing the spread after their [s]huge[/s] insanely small $700k fine for doing exactly that ( https://www.ft.com/content/dc3f8fb5-62e7-4774-98bb-28db801589ee), they will aggregate data on stop losses placed at the time of sale. I don't know whether they also gather data about stop losses placed at a later date.
The fact that you think it’s ‘their market’ is quite revealing.
There are lots of different markets out there which trade shares. No one is forced to use them, companies can choose to list or not and choose which market to list on (or have dual listings). Each market has its own rules and differ eg dual class share structures are permitted in some markets and not others.
There are lots of different platforms, eg RobinHood, each has its own rules and with margin trading, where they lend you money, they have their own rules on controlling how you spend their moeny.
No one is forced to use a market of a platform.
However, if you choose to do so, you play by their rules.
The markets are heavily regulated so are restriced by what they can and can't do by statute.
Yet when their own system and methods are used against them, you seem to think they are being treated unfairly.
In what way are they using their systems against them?
It’s a licence to print money, pure and simple.
The platforms make money out of each trade, so make money regardless of wether a client wins or looses. With margin trading it's much more complex as they leant the money to trade, so they have money at risk and will stop you getting into debt to them. They do this by limiting trades and selling your shares (bought with their money) automatically.
The markets charge fees to list on them and trade, so make money providing that service.
Traders can make millions and loose millions depending on how well the stocks they buy do, plenty of Hedge Funds loose, it's not the guarenteed cash cow people think it is. Just ask Crispin Odley.
it shouldn’t be their market and they shouldn’t be able to make billions out of it for doing nothing
Please give me an example of someone making billions out of doing nothing...
I have no idea why you’re defending these fraudsters
I'm just providing an alternate opinion / explanation. You don't have to agree with me.
I think the whole thing is just collective madness....
The markets are heavily regulated
but not that regulated that they put folk in prison, though, eh?
In what way are they using their systems against them?
By them I'm talking about the hedge funds and market makers. They routinely use their power to move share prices in their favour, either long or short. The small investors are doing exactly the same using their collective buying power. The only difference is that the small investors gain in this case translates to losses for the big funds holding the shorts. They f**** up, and were outmanoevred by a motley bunch of small-timers on an internet forum, and then they want to change the rules in their favour by forcing trading platforms to prevent buys which tips the market in their favour. It completely exposes the myth of 'free markets' and the monopolist greed of a tiny few at the top. And you want to defend them? Weird.
but not that regulated that they put folk in prison, though, eh?
There are plenty of people in jail for insider dealing / market manipulation / fraud.
However, it normally takes more than a few posts on Reddit to convict someone (even in the USA).
doesn't sound like anyone REALLY knows what they're doing, as no-one knows exactly how this will play out, not even the experts on here?My nephew is still holding apparently. I hope he knows what he’s doing.
and then they want to change the rules in their favour by forcing trading platforms to prevent buys which tips the market in their favour
Have any rules been changed?
I've read that some of the trading platforms, who are on the hook for massive losses due to margin trading, are restricting buys as they will end up having to unwind all the margin calls and could end up in debt as a result. Most of the trading on these platforms isn't the punters money, it's been leant to them.
Has the market explicitly banned buying GameStop shares?
There are plenty of people in jail for insider dealing / market manipulation / fraud.
Yeah, I mean, just look at the hundreds of people in the US they convicted after 2008...
https://ig.ft.com/jailed-bankers/
Their market, their rules
Christ this is smooth brain thinking.
doesn’t sound like anyone REALLY knows what they’re doing, as no-one knows exactly how this will play out, not even the experts on here?
Hardly rocket science.
Three possible scenarios.
1. Overnight GameStop transforms itself into the next Amazon, worth trillions and catches up with the share price. All Redditers are vindicated and become millionaires.
2. An endless stream of new traders keep joining RobinHood etc and push the price up for all eternity
3. At some point people realise they don't want to own shares in a crap company and try and sell, doesn't take a rocket scientist to realise the price will fall (a lot)
They discovered that, incidentally*, RobinHood is apparently 40% funded via Citadel LLC which owns Melvin Capital AND that Melvin took another short position minutes before the ban on buying new stock.
Does that not add a whole new layer to this?
The difference here being of course that the massive risky bet that the hedge funds took was exposed by research done by the wallstreetbets Reddit forum and subsequently their platforms for engaging in the market are being closed, whereas the hedge funds aren’t. This is simple market manipulation. You either read that as the market “protecting the little guys for their own benefit of course” or “protecting their own, against their own risky behaviour”
many folk are interpreting it as the latter rather than the former
Does that not add a whole new layer to this?
Probably not.
Going to be an interesting day today. Lots of short positions due to expire. If the price rockets as a result then who knows what will happen.
https://isthesqueezesquoze.com/
Hardly rocket science.
Three possible scenarios.
1. Overnight GameStop transforms itself into the next Amazon, worth trillions and catches up with the share price. All Redditers are vindicated and become millionaires.
2. An endless stream of new traders keep joining RobinHood etc and push the price up for all eternity
3. At some point people realise they don’t want to own shares in a crap company and try and sell, doesn’t take a rocket scientist to realise the price will fall (a lot)
You completely missed the 4th scenario.
4. Those holding short positions (the big bad hedge funds) are forced to buy shares to cover their shorts from WSB punters at vastly increased prices. When the sell off occurs, it's the hedge funders who are left with the worthless stock. Hedge fund balance goes down, loads of individuals profit. A (small) redistribution of wealth occurs.
I don't see 4. playing out exactly like that, but that's the bet that a lot of people have made.
When the sell off occurs, it’s the hedge funders who are left with the worthless stock.
The hedge funders don't end up holding the stock, they simply buy it at whatever price and immediately hand it back to the person they borrowed it from when they opened the short position. They are either able to hang onto cash they were handed earlier (profit) or directly lose cash at the moment they buy back (failure).
The actual value of the company may be the traditional way of viewing this scenario, but it is fairly irrelevant right now - it's a guide to where the price will eventually end up, but the only thing that matters is how long that takes and the points it reaches along the way. The shares have almost ceased to represent the company and its product, they are suddenly a wholly separate commodity in their own market, which happen to be both in great demand and exceptionally scarce at the same time.
The only things that drive price right now are the urgency of the need for them by the HFs, and the willingness or otherwise of the herd of individuals and institutions holding the shares to release them.
Engage brain before opening mouth.
Could you perhaps apologise for that?
I'm sorry for that, the language was out of order.
Vince
I’d be very suprised if anything illegal has happened
MEGALOLZ
I just see a lot of people jumping on a get rick quick bandwagon buying stock in a crap company for 100s times over the odds. That, to me, is collective madness. The fact the market (who run the platforms which enable all this) want to stop this madness, is absolutely fine by me
It's not as simple as that though - this is NOT just a random pumped up stock. The key is massive amount of shorting the hedge funds did last year, they did that in the usual assumption they could drive the price down with a little help from the financial rags and put out the usual stories about it being doomed. Normally that would have worked, the stock would have collapsed and they'd have made billions (with the company likely failing and any other stock owners losing it all).
However this exposure got noticed and WSB big hitters bought enough stock to start the price rising and then GME got a new CEO that has a genuine chance of turning the business around (who also acquired a lot of the shares so has a vested interest in it not falling to the shorters).
That in itself still might not have been enough to trap the hedge funds in their own greed but add to that the millions of small investors that jumped in recently (hopefully buying what they can afford to lose...) and those investors holding so the hedge fund short ladder and other tactics failed means the hedge funds are now massively exposed - unless they find away to drive the price down today (and keep it down for future short position expirations) they are going to get hit hard.
It's also a virtuous circle for the small investors in that the hedge funds are forced to buy stock to offset the potential losses (this is the gamma squeeze) and, if things go to plan, is what will send the stock price through the roof - not the buying of small investors causing an artificial pump. This is absolutely key to the whole thing and anyone saying this is a plain pump and dump and the small investors are going to lose everything doesn't understand what's going on.
Could the plan backfire still? Yes, but only if the small investors lose their nerve before the gamma squeeze really kicks in. Otherwise it would take some illegal collusion on a massive scale to prevent it.
You completely missed the 4th scenario.
4. Those holding short positions (the big bad hedge funds) are forced to buy shares to cover their shorts from WSB punters at vastly increased prices. When the sell off occurs, it’s the hedge funders who are left with the worthless stock. Hedge fund balance goes down, loads of individuals profit. A (small) redistribution of wealth occurs.
I thought a lot of the HFs had already closed their positions, sure I read that in the FT.
Unless all the people on RH etc have detailed knowlegde of when each HF sells it's shares etc they could still end up owning a load with the HFs having exited and the price still rising.
It won't be as neat as the HFs close out buying out all the redditors, with the redditors walking away rich and victorious. Loads will arrive late to the party and end up paying 100x over the odds for a crap stock (buying it off another Redditor etc).
Could the plan backfire still? Yes, but only if the small investors lose their nerve before the gamma squeeze really kicks in. Otherwise it would take some illegal collusion on a massive scale to prevent it.
I guess we'll see what further fraudulent tricks the funds have up their sleeves. Their brazen market fixing yesterday caused a lot of instability but ultimately failed. Are they going to repeat that or try something else?
they could drive the price down with a little help from the financial rags and put out the usual stories about it being doomed. Normally that would have worked, the stock would have collapsed and they’d have made billions (with the company likely failing and any other stock owners losing it all).
This isn't Apple. The hedge funds select the weak to be victims. GME is a dying business. Is it so wrong that someone would put it out of its misery?
I thought a lot of the HFs had already closed their positions, sure I read that in the FT.
Less than clear. Just the raw quantity of stock selling doesn't entirely support this.
Someone more cynical than me might suggest that putting the word out to your friends on the financial channels that HFs had closed positions would be a good tactic, if you wanted to persuade small investors that the short squeeze had either already happened or was unlikely to materialise. 🙂
I thought a lot of the HFs had already closed their positions, sure I read that in the FT.
This is all from the reddit so take it as you will:
Citron have covered most of their shorts but not all. Melvin claimed to have covered them also, but the sales volume doesn't represent this. Its still shorted to 100%+ percent.
This isn’t Apple. The hedge funds select the weak to be victims. GME is a dying business. Is it so wrong that someone would put it out of its misery?
Yep, at some point they'll realise they're just fighting each other over a crap stock and the HFs will have moved on elsewhere.
This is all from the reddit so take it as you will:
Given that the whole pyramid relies on people selling to the next fool in line, it's in everyone's (who owns the stock) interest to say that the HFs are hurting and you need to buy more to deliver the fatal blow. It's an emotive and effective narative, who wouldn't want to be David vs Goliath - stick it to 'The Man' etc.
The Man has probably already walked away......
There are lots of different platforms, eg RobinHood, each has its own rules and with margin trading, where they lend you money, they have their own rules on controlling how you spend their moeny.
No one is forced to use a market of a platform
Again you're missing the real issue - it wasn't just RobinHood that prevented Buys, a lot of platforms did. A small investor absolutely relies on these platforms for this sort of stock dealing, otherwise you'd need a broker and a whole lot of other hassle.
I'm using eToro, they don't operate in the same way as RobinHood with all the margin reinvesting crap, it's traditional buying and selling. However they are still a middle man in that the trades they offer are still virtual until they pass them on to their own broker/liquidity provider to actually make the trades (or at least cover them).
I was pissed off yesterday when eToro blocked Buys mostly because I was enjoying making small gains playing the rollercoaster the GME stock price is at the moment. I wanted to do that to cover my initial $500 holding so I can afford to hold that indefinitely (or loose it all). I looked at some other platforms and they'd all stopped Buys to.
After reading a bit more into it I accept in reality it was likely more to do with the stock illiquidity/volatility meaning eToro was too exposed trying to pass on the trades (and their liquidity provider stopped accepted buys on them as they were too exposed as well) - as opposed to the hedge funds paying them off to do it. It's not as clear cut with RobinHood though, especially given their biggest client is Citadel who are one of the most exposed short sellers.
Yes. The US unemployment situation is dire right now, that would be another 14,000+ out of work just so the rich can get slightly richer. Don't be a ****.GME is a dying business. Is it so wrong that someone would put it out of its misery?
@FuzzyWuzzy I think you are right. Most of the platforms that 'banned' trading GME were actually just refusing credit in effect.
This isn’t Apple. The hedge funds select the weak to be victims. GME is a dying business. Is it so wrong that someone would put it out of its misery?
I think its morally wrong to short the stock at 140% artificially driving the price to the ground.
On the business case, well its one cycle to early. Specially with new consoles that have just come out.
The Man has probably already walked away
No, the man has got his corrupt mates to come and pin the other guy's arms behind his back so he can pummel him with impunity.
It stinks.
I think its morally wrong to short the stock at 140% artificially driving the price to the ground.
On the business case, well its one cycle to early. Specially with new consoles that have just come out.
Wouldn't that be naked shorting and illegal anyway. We've already ascertained that it's a highly regulated industry with nothing even remotely dodgy going on 😀
Wouldn’t that be naked shorting and illegal anyway. We’ve already ascertained that it’s a highly regulated industry with nothing even remotely dodgy going on 😀
Yeah. You are right, its a run by choir boys lol.
Yes. The US unemployment situation is dire right now, that would be another 14,000+ out of work just so the rich can get slightly richer. Don’t be a ****.
Shorting doesn't fold business, nor does it cause job losses.
It's part of the process of the market finding the correct value of a company.
Calling out a poorly performing business for being poorly performing is a service to the market.
Long term, badly run businesses often go on to fail, but that's because they're badly run; not because some evil HF shorted them.
Again you’re missing the real issue – it wasn’t just RobinHood that prevented Buys, a lot of platforms did. A small investor absolutely relies on these platforms for this sort of stock dealing, otherwise you’d need a broker and a whole lot of other hassle.
I can see why they'd want to - most of the popular platforms allow margin trading, so the platform is taking the risk rather than the client. In a collective madness crowd swarm such at GameStop, they will have their own risk levels above which they can't go as when it comes crashing down, they will be massively out of pocket.
Have they been collectively leant on, who knows, but if the Fed has had a word and said stop this madness, fair call - it is just madness. It's not in the long term intetest of the market as an efficient method of allocating capital etc.
If you've ended up owning over priced stock in a crap company all I can say is 'WTF were you thinking when you bought it?'.
GME is a dying business. Is it so wrong that someone would put it out of its misery?
Does messing around with the stock price cause the business to fail? I don't think so.
Surely the business fails when they run out of cash and/or credit? Stock trading is just other people paying each other for shares in a business. The fact GameSpot made huge losses for ages and weren't able to adapt to a new market is what would cause it to fail and cost jobs.
I think in all this we are missing something really, really important
.
I’m sorry for that, the language was out of order.
Vince
Someone on the internet has admitted they were in the wrong! Never seen that before, nice one Vince.
A low stock price makes it vulnerable to a predatory buyer.
Calling out a poorly performing business for being poorly performing is a service to the market.
Shorting has nothing to do with whether a company is performing poorly or not. It's all to do with what the price is now compared to the price you expect it to be.
I theory it's simply a case of looking at the data and comparing that to the current stock price to find stocks that are currently overpriced. In theory.
In practice it's about doing whatever you can get away with to drive down the price of a stock any way you can.
You have a much higher degree of trust in the current capitalist system than most people do, you realise that? Bordering on naive, I would say.
You have a much higher degree of trust in the current capitalist system than most people do, you realise that? Bordering on naive, I would say.
I do understand the angsty Millenial complaints about big finance, but otoh what is the formal demand? No shorting allowed? What rules are to be changed?
Does messing around with the stock price cause the business to fail? I don’t think so.
Surely the business fails when they run out of cash and/or credit? Stock trading is just other people paying each other for shares in a business. The fact GameSpot made huge losses for ages and weren’t able to adapt to a new market is what would cause it to fail and cost jobs.
Driving a stock to the ground can hurt consumer confidence. It can also deprive it from fund raising abilities such as issues of shares (since they are worth less). Also it ****s over actual shareholders. The icing on the cake is the 140% short on the float.