Gamestop?

[jazz4cash]

The guy on Reddit that started the GME run is supposedly trading inside his Roth IRA.

That means he is NOT using Robinhood since they don’t offer IRAs.

 

[garyt]

Here's another article on Bloomberg explaining why Robinhood and other brokers restricted buy orders on some of the volatile stocks including Gamestop last week.

https://www.bloomberg.com/news/arti...revent-cascading-failures-q-a-with-larry-tabb

It's about the clearing house demanding the brokers, e.g. Robinhood, to put up more collateral. What I still do not understand is why the broker client's own cash in the account cannot be counted upon to guarantee the trade.

That may be true but while that was going on I tried buying GME and AMC on Fidelity just to see if I could. I kept getting error messages on those two stocks yet I could buy anything else. Coincidence?

 

[Running_Man]

OK I saw on Bloomberg channel that Robinhood, is banning 50 stocks from being purchased by more than one share. Coincidentally, Robinhood runs their order flow through Citadel, principals of which pumped 2 billion into Melvin Capital.

Ironically Citadel's Billionaire owner began his career trading stocks from his dorm room in college, using his connections at Harvard to build an empire worth 35 billion through squeezing financial value from Hedge fund plays. In particular he made it buy buying convertible preferred shares at what he thought was a discount and then pumping up the stock by COMMUNICATING with his Harvard students parents to buy the convertibles and shares, driving the price up and collecting on convertibles.

So I think Citadel knows this game very well. The owner earned 2 billion in compensation in 2020. The level of discontent at the media and hedge fund levels tells me that this could be exploiting very difficult issues for the most connected hedge funds and their investors, not the ridiculos notion that concern should be issued for people coming late to the party. The problem is not that millions of small investors may lose $2,000, it is that the debt need becomes beyond what even hedge funds can provide even at 0.5% interest. The non-existent interest rates have made many individuals fabously wealthy as strategies for beating 1/2 percent interest are in the wheel house it seems of even the average retail investor.


The online story in the NEW YORK POST that someone mortgaged their parent's house was a hoax.https://journaltimes.com/news/state-and-regional/watch-now-indiana-mans-joke-tweet-in-gamestop-market-saga-leads-to-false-national-story/article_1333f555-ffb5-5b9b-805e-f96721cba7c5.html

 

[Montecfo]

Here's another article on Bloomberg explaining why Robinhood and other brokers restricted buy orders on some of the volatile stocks including Gamestop last week.

https://www.bloomberg.com/news/arti...revent-cascading-failures-q-a-with-larry-tabb

It's about the clearing house demanding the brokers, e.g. Robinhood, to put up more collateral. What I still do not understand is why the broker client's own cash in the account cannot be counted upon to guarantee the trade.

It does make you wonder why. Perhaps there was not only motivation to limit liability buy also to protect hedge funds which are short these stocks.

 

[MRG]

OK I saw on Bloomberg channel that Robinhood, is banning 50 stocks from being purchased by more than one share. Coincidentally, Robinhood runs their order flow through Citadel, principals of which pumped 2 billion into Melvin Capital.

Ironically Citadel's Billionaire owner began his career trading stocks from his dorm room in college, using his connections at Harvard to build an empire worth 35 billion through squeezing financial value from Hedge fund plays. In particular he made it buy buying convertible preferred shares at what he thought was a discount and then pumping up the stock by COMMUNICATING with his Harvard students parents to buy the convertibles and shares, driving the price up and collecting on convertibles.

So I think Citadel knows this game very well. The owner earned 2 billion in compensation in 2020. The level of discontent at the media and hedge fund levels tells me that this could be exploiting very difficult issues for the most connected hedge funds and their investors, not the ridiculos notion that concern should be issued for people coming late to the party. The problem is not that millions of small investors may lose $2,000, it is that the debt need becomes beyond what even hedge funds can provide even at 0.5% interest. The non-existent interest rates have made many individuals fabously wealthy as strategies for beating 1/2 percent interest are in the wheel house it seems of even the average retail investor.


The online story in the NEW YORK POST that someone mortgaged their parent's house was a hoax.https://journaltimes.com/news/state...cle_1333f555-ffb5-5b9b-805e-f96721cba7c5.html

I saw a Redditor saying RH is still allowing you to purchase calls. He claims to be buying ATM calls and then exercising the call to purchase 100 shares.

 

[NW-Bound]

Here's another article on Bloomberg explaining why Robinhood and other brokers restricted buy orders on some of the volatile stocks including Gamestop last week.

https://www.bloomberg.com/news/arti...revent-cascading-failures-q-a-with-larry-tabb

It's about the clearing house demanding the brokers, e.g. Robinhood, to put up more collateral. What I still do not understand is why the broker client's own cash in the account cannot be counted upon to guarantee the trade.

That may be true but while that was going on I tried buying GME and AMC on Fidelity just to see if I could. I kept getting error messages on those two stocks yet I could buy anything else. Coincidence?

The article described that all brokers face higher collateral to handle trades of these volatile stocks.

As I mentioned in an earlier post, I tried to enter a buy order of GME on Merrill Edge, and was denied. Same with KOSS. I tried with Schwab, and it was OK then. Perhaps I should try again to see what happens now. By the way, as a test, I entered in a limit order of $1/share, because I did not intend to play this game.

I don't recall if the following was mentioned in the article I referenced above or another one yet, but Robinhood claimed to have more capital for collateral than other brokers, but it was still not enough due to their trading volume.

It does make you wonder why. Perhaps there was not only motivation to limit liability buy also to protect hedge funds which are short these stocks.

A reasonable suspicion. Robinhood's statement implied that the question should be put to the clearinghouse and not the brokers.

Some lawmakers have demanded a hearing. We will get a chance to know how all this stock trading/clearing works.

 

[tenant13]

There is nothing wrong with the little guy making money.

However, we all know where this ends - GameStop is not a $400 stock. When the euphoria wears off, and once again nobody really cares about GME, daily share volume goes back down below 5 million and the shares will be back well below $50. What do you think the little guy will be saying then? "It's rigged against us" as opposed to "What was I thinking buying GME at 25 or 50 times what it's really worth"?

It doesn't matter how it ends. If the market is truly free I should have the right to buy whatever meme stock I want for however much money I want to spend on it. Protecting me from myself feels patronizing, disingenuous and is not regulators (or hedge funds) job. Let them stick to the law.

 

[Out-to-Lunch]

It doesn't matter how it ends. If the market is truly free I should have the right to buy whatever meme stock I want for however much money I want to spend on it. Protecting me from myself feels patronizing, disingenuous and is not regulators (or hedge funds) job. Let them stick to the law.

But we do NOT HAVE a "truly free" market. There are any number of things that you are not allowed to do under current law.

 

[jim584672]

I am amazed how you all are getting sucked up into conspiracy theories. First of all RH has the right to limit which stocks you can trade, it is part of the account agreement. They don't need a justification. DTCC/NSCC doesn't give a rip about one Participant vs. another to protect one from another. The systems are set and collateral is based on a complex computerized criteria. Settlement and clearance doesn't even know who the accounts belong to, that info isn't there, it is held at the Broker level, not at DTCC/NSCC.

If RH has so little capital that they are borrowing money for clearance collateral than you probably don't want to risk your money with them. Why anyone does business with them is beyond me. Plenty of other brokers around.

Are these people getting talking points? Every statement has to have the obligatory "evil fat cat billionaire" verbiage. That is usually followed by some "facts" and inferences, with a twisted logic. Don't believe everything you read on the Internet.

 

[tenant13]

But we do NOT HAVE a "truly free" market. There are any number of things that you are not allowed to do under current law.

Yes. And those are the areas that should be addressed and/or regulated (I was trying to be facetious when I called our markets "free"). I'm not an expert on what constitutes market manipulation so I won't comment on WallStreetBets drama but I think that if want to join on the fun based on an open exchange of ideas that legally occurs on the internet, I should be allowed to do that. How is it different from watching CNBC's talking heads making investing suggestions? Specifically Jim Cramer telling his viewers to take their winnings and go home: https://www.cnbc.com/2021/01/29/cramer-tells-investors-to-take-home-run-and-sell-gamestop.html

 

[NW-Bound]

...DTCC/NSCC doesn't give a rip about one Participant vs. another to protect one from another. The systems are set and collateral is based on a complex computerized criteria. Settlement and clearance doesn't even know who the accounts belong to, that info isn't there, it is held at the Broker level, not at DTCC/NSCC...

I wonder if hedge funds also have problems buying shares. If they do, that shows the collateral limit applies to all brokers.

However, if they could buy, then people will say that it's not fair for people who are well-capitalized to have an advantage.

The fact of life is that people with money will always have an advantage. For example, they can retire early, take international travel, eat jamon iberico de bellota, etc...

 

[tenant13]

First of all RH has the right to limit which stocks you can trade, it is part of the account agreement.

This is very true. Putting conspiracy theories and fat cat millionaires aside, I think that a lot of people suddenly realized that what they considered "theirs" is controlled by centralized entities able to cut access to their money with a click of a mouse. Not a revelation to me but I just wonder if this recent drama will speed up adoption of DeFI, blockchain based decentralized stock trading and cryptocurrencies...

 

[NYEXPAT]

I just read that the instigator of the short squeeze on GME has cashed out $13 million. What? I thought every Redditor was exhorted to hold firm and to not sell, maybe even to buy more, in order to put maximum pressure on the shorts. He has been selling the shares to his comrades at outrageous prices?

Source?

 

[jim584672]

I wonder if hedge funds also have problems buying shares. If they do, that shows the collateral limit applies to all brokers.

However, if they could buy, then people will say that it's not fair for people who are well-capitalized to have an advantage.

The fact of life is that people with money will always have an advantage. For example, they can retire early, take international travel, eat jamon iberico de bellota, etc...

The collateral requirements are at the DTCC Participant level and applies to all Participants. A Hedge Fund can have accounts at different Participants at the same time. Just as you can have a RH, Schwab and Vanguard all at the same time, these are three different DTCC Participants.

 

[jim584672]

This is very true. Putting conspiracy theories and fat cat millionaires aside, I think that a lot of people suddenly realized that what they considered "theirs" is controlled by centralized entities able to cut access to their money with a click of a mouse. Not a revelation to me but I just wonder if this recent drama will speed up adoption of DeFI, blockchain based decentralized stock trading and cryptocurrencies...

When you buy stock in the US you actually are not even the legal owner. You are only the "owner" because you have contractual relationship with the broker and part of that relationship the broker acting on your behalf with regard to that security. Technically Cede & Co. is the legal owner of almost all securities in the USA.

 

[RobLJ]

Source?

I've been skimming WallstreetBets for entertainment off and on and Deep****ingValue posted on the reddit thread his account value several times. I think before/on Jan. 22 he had 1-2 million in cash gains from sale of part of his GME positions and later in the week he had 13 million cash, so he cashed out some of the options last week.
He still had anywhere from 15-+30 million last week in GME holdings alongside his cash gains. The value went up or down more than 8 million several times during the week. I can't find the reddit posts due to so many people joining and posting on WallstreetBets last week (several million), but here's a Twitter image of one of the posts from him I saw late last week. Given Friday's close, his GME would be considerably higher than Thursday's (assuming he did not cash out more). He bought calls starting in July amounting to a high 50k investment position.

https://twitter.com/x/status/1354909360183508994

 

[jim584672]

You do know it is easy to change info in a browser to show any number you want on a screen. How are people not more skeptical?

 

[RobLJ]

You do know it is easy to change info in a browser to show any number you want on a screen. How are people not more skeptical?

While DeepFingValue could be making it all up, he has been interviewed in the mainstream press this week and identified (sorry I didn't bookmark it). So I suspect this one is correct; he had been posting on his buys in GME calls since July on WSB, with screenshots. If it were a one-time post, I would be dubious like you. Obviously he is not representative of most kids/yewts on WSB. And it still could be fake, but I doubt it. My question is when does he sell the rest and what will be the reaction?

I own a small position in LUMN (formerly Centurylink) which shot up 25% early in the week, so I did a bit of investigation just curious whether it was related to the hi-jinks in GME. I don't know for sure, but I suspect so (it's back to where it was).
And this iindeed will end in tears for most of the ones who bought in the 100s or multiples, once the squeeze is over.


I think it was this article https://markets.businessinsider.com...y-reddit-stocks-wall-street-2021-1-1030022004 , although to your point the writer indicates that he was not able to authenticate the claims for value, so it still could be a hoax as you say.

 

[Music Lover]

The fact of life is that people with money will always have an advantage. For example, they can retire early, take international travel, eat jamon iberico de bellota, etc...

Some of them can also change the rules of the game when they're losing.

 

[Markola]

The way I see it,

Hedge Funds got squeezed by social media. Good! Maybe they’ll learn to be more careful when they short stocks.

Pension funds and their pensioners will lose out. Good! Pension fund managers might learn not to invest precious retirement funds in risky, high fee, unregulated hedge funds.

Reddit investors will certainly end up holding an empty bag. Good! Many of us, including me, moved into index funds after losing our shirts in the Dot Com mania. I bought ADC at $42, lost my nerve in the $30s and saw it fall to $2. It was a fabulous learning experience!

 

[Out-to-Lunch]

The way I see it,

Hedge Funds got squeezed by social media. Good! Maybe they’ll learn to be more careful when they short stocks.

Pension funds and their pensioners will lose out. Good! Pension fund managers might learn not to invest precious retirement funds in risky, high fee, unregulated hedge funds.

Reddit investors will certainly end up holding an empty bag. Good! Many of us, including me, moved into index funds after losing our shirts in the Dot Com mania. I bought ADC at $42, lost my nerve in the $30s and saw it fall to $2. It was a fabulous learning experience!

^^^^^ True! All true.

 

[JoeWras]

Time and perspective are weird things. I grew up with my Dad telling about his army experience during WWII in Europe. It seemed so distant to me. Sure, wars were happening, but only in Asian jungles, right? Then we get Balkans war.

For those of us who played with fire in the dot com era, it seems like yesterday. At the time "it was different." Right.

It is different now. Right? Well, the participants today weren't born in dot-bust.

Markola's "Good!" is spot on.

 

[dadu007]

This is DFV's January update, posted after market on Friday. (I don't know if I'm allowed to link to reddit directly, so I took a screenshot and marked out his NSFW username.) He was featured in the NYTimes yesterday, with a picture, and his real name: Keith Gill.
He is real. His gains are real. Yes, he cashed out $13 million, as in the screenshot. It would sure take a lot of work to fake two years of reddit posts. I suppose it's possible, but...why?

 

[Running_Man]

Wait until Silver opens it is going to be a real show

 

[RobLJ]

I'm reminded of the Hunt brothers and silver, back when I was in HS and only starting to pay attention to economics, only perhaps in reverse.

I went back to this article to make sure I was remembering that this occurred in the mid70s (as I thought I remembered).

https://www.investopedia.com/articles/optioninvestor/09/silver-thursday-hunt-brothers.asp