Gamestop?

[jim584672]

LOL...those Hedge boys better be careful about what they wish for, in reality the last thing they want are more regulations. Or anybody asking questions about the way they do things.

Hedge funds put their positions on and go on CNBC, that is legal. Idiot Redditors start planting false crap on Reddit to drive a short squeeze, and implore others to invest, while they hold positions, that is illegal. It isn't a new regulation. I hate the Occupy Wall Street crapola of "evil billionaires", "the 1%", etc. it is pure bunk.

 

[Out-to-Lunch]

Would it be too much to expect the hedge funds simply not to touch a hot stove again?

I have no beef with necessary governmental regulation of markets. It just seems to me that this isn't one of the cases where it is "necessary." (Although I could be wrong about that! ).

IMHO, shorting is a tool that helps the functioning of free markets. HOWEVER, see Ko'olau's Law, which we all have read many times: "Anything which can be used can be misused. Anything which can be misused will be." So this saga has revealed a hazard to firms that adopt short positions beyond what is safe to them. Perhaps no government intervention is necessary.

EDIT TO ADD: After posting this, I read some posts on the Gamestop thread. My comments above were aimed only at the short-position actions. I don't know what to say about the pump-and-dump aspect of WSB for firms like Koss that are not heavily shorted.

 

[Time2]

Hedge funds put their positions on and go on CNBC, that is legal. Idiot Redditors start planting false crap on Reddit to drive a short squeeze, and implore others to invest, while they hold positions, that is illegal. It isn't a new regulation. I hate the Occupy Wall Street crapola of "evil billionaires", "the 1%", etc. it is pure bunk.

I started from your position of this is wrong, but the more I heard, I changed to why can't the little guys make money too.

Planting the false crap is a problem, but urging others to pile on because of the shorts, not a problem that concerns me.

 

[ivinsfan]

Hedge funds put their positions on and go on CNBC, that is legal. Idiot Redditors start planting false crap on Reddit to drive a short squeeze, and implore others to invest, while they hold positions, that is illegal. It isn't a new regulation. I hate the Occupy Wall Street crapola of "evil billionaires", "the 1%", etc. it is pure bunk.

Ok are we now talking ethical or legal. Why do you think the BB go on CNBC and pump a dump on a stock they have a short position in? For the greater good.

My DH says about the CBOT and Wall street boys, It's not that they don't have enough money, the problem is they want ALL the money.

Not seeing how the Reddit boys look like idiots this week.

 

[Fermion]

funds borrow shares against retail stock holders holdings without their direct consent (it is buried in the pages of disclosures you autosign) so they can short sell them.

I don't feel very sorry for their losses.

 

[Sunset]

I find the issue of naked shorts by hedge funds (or anyone) annoying.
I own stocks and if I want a margin account (allows me to borrow $$ to buy stocks at an interest rate) I have to allow unknown person to borrow MY stock for free.


I don't get paid any interest from them borrowing my stock.
Their act of borrowing and shorting my stock, hurts my investment in the stock, putting downward pressure on it.

An analogy would be: I buy a car , and yet people are allowed to come and borrow my car without paying me. The act of borrowing my car makes it worth less on the market.

It's a pretty Crooked/Fixed system allowing the borrowing of stocks to short them.

It would not be quite so bad if I was paid interest at the rate I'm charged when I borrow on margin.

 

[target2019]

The Reddit folks pumping these stocks better be careful. Spreading false information to drive up a stock is illegal. They are calling on the SEC to come down on Robinhood. The SEC more likely comes down on them for running a pump and dump scheme.

I confess to not understanding much about this phenomena, but I did read 100 reddit posts r/wallstreetbets!

I was not seeing much said about selling. In fact, the mantras I recall were "to the moon," and comparable thoughts. Those who did sell were donating the gains to charitable causes.

I am interested in seeing how this plays out, as trading rules will surely change due to this plot.

 

[Winemaker]

My only concern to all of this; will the hedge/mutual funds dump their other existing non shorted holdings in order to cover their positions? Is that what's triggering the past few down days this week?

 

[njhowie]

I started from your position of this is wrong, but the more I heard, I changed to why can't the little guys make money too.

Planting the false crap is a problem, but urging others to pile on because of the shorts, not a problem that concerns me.

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"?

 

[njhowie]

My only concern to all of this; will the hedge/mutual funds dump their other existing non shorted holdings in order to cover their positions? Is that what's triggering the past few down days this week?

It's had some effect. Folks bigger concerns should focus on "Which pension funds were invested in these hedge funds that got clobbered"?

 

[Time2]

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"?

I'm with you, at some point a lot of the little guys will be getting burned. You can't pay $300 for a $10 stock, that has no growth story.

 

[JoeWras]

I confess to not understanding much about this phenomena, but I did read 100 reddit posts r/wallstreetbets!

I was not seeing much said about selling. In fact, the mantras I recall were "to the moon," and comparable thoughts. Those who did sell were donating the gains to charitable causes.

I am interested in seeing how this plays out, as trading rules will surely change due to this plot.

The thing about Reddit, and even boards like this one, are that you really don't know.

Nobody is going to want to say: "I sold, you suckers! Thanks for the $500,000." They'll get karmed to oblivion. Actually, that may have happened and you don't see the posts since they were downvoted to oblivion.

It is better to virtue signal and say you are "doing it for the children". OK, Boomer, rather "Doing it for charity."

Are they? Who knows? Some are, but who really knows?

Idealism runs high right now and many are holding. From here, let's watch it play out. It is a great social experiment for sure. We're fond of talking about living below our means and self sacrifice. These kids want to do a communal sacrifice. History shows it rarely holds up. Let's find out.

 

[pb4uski]

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"?

Just like musical chairs except the market will take 1/2 of the chairs away in short order an alot of people will be screwed when the value of their shares reverts to true value based on fundamentals.

Though I would argue that something similar is happening with the broad market as low interest rates have made other investments so unattractive that stocks hae been bid up over their fundamental value.

 

[target2019]

The thing about Reddit, and even boards like this one, are that you really don't know.

Nobody is going to want to say: "I sold, you suckers! Thanks for the $500,000." They'll get karmed to oblivion. Actually, that may have happened and you don't see the posts since they were downvoted to oblivion.

It is better to virtue signal and say you are "doing it for the children". OK, Boomer, rather "Doing it for charity."

Are they? Who knows? Some are, but who really knows?

Idealism runs high right now and many are holding. From here, let's watch it play out. It is a great social experiment for sure. We're fond of talking about living below our means and self sacrifice. These kids want to do a communal sacrifice. History shows it rarely holds up. Let's find out.

Yeah. Anonymous posts from r/ being discussed by the anonymous here. Throw in 15 minutes of Dave Ramsey for good measure.

 

[Fermion]

I'm with you, at some point a lot of the little guys will be getting burned. You can't pay $300 for a $10 stock, that has no growth story.

Hey, if an auto company can expand their market cap to more than all other similar companies combined in just a few months, I don't see why a game company couldn't reinvent themselves with access to billions in capital!

 

[target2019]

I think this is in jest:

After massive short squeezes in GameStop, BlackBerry, and several other stocks, a furious Warren Buffett reportedly snapped at his assistant while demanding a print-out of r/WallStreetBets this morning.

https://hard-money.net/furious-warr...istant-get-him-print-out-of-wall-street-bets/

 

[Music Lover]

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"?

The rules will be changed to protect the big players. No one cares about the little guy. This has to be stopped so it doesn't happen again, that's the real priority.

 

[Koolau]

The rules will be changed to protect the big players. No one cares about the little guy. This has to be stopped so it doesn't happen again, that's the real priority.

Follow the money.

Money talks, YKW walks, etc. etc.

The Golden Rule - He who has the gold makes the rules.

Etc. YMMV

 

[Jerry1]

So our local paper has a headline about a local company being a heavily shorted stock and to keep an eye on it. I’m guessing buy now that most heavily shorted stocks are being watched if not already bought up by speculators. However, it did cross my mind to buy a few shares on Monday.

 

[MuirWannabe]

I was thinking of taking a small position in BLUE (blue bird bio) as they have a 14% short interest.



I wonder what the formula is for short interest vs reddit pumpability?

Why can’t we do the same thing the Reddit boys are doing? Only we’re not investing our parents allowance money.
Everyone start buying BLUE on Monday!

 

[CSdot]

Hedge funds put their positions on and go on CNBC, that is legal. Idiot Redditors start planting false crap on Reddit to drive a short squeeze, and implore others to invest, while they hold positions, that is illegal. It isn't a new regulation. I hate the Occupy Wall Street crapola of "evil billionaires", "the 1%", etc. it is pure bunk.

I am not a Redditor, so that site is all new to me, but I am finding this whole drama fascinating.

I spent the last week reading the WSB section on Reddit and even I can tell that many of the "false crap" posts on WSB are from brand new posters. Possibly people who side with Wall Street, newly joining to post and sway public opinion. Point being, I wouldn't be so quick to beatify the hedge fund reps that go on CNBC, or to paint all WBB Redditors as "Idiot" pump and dumpers.

Between the WSB's folks and the well connected hedge fund billionaires, I don't know who ends up winning when the dust settles. Maybe the little guy gets to make a few dollars? Maybe the connected hedge fund billionaires get their friends at the SEC to unwind the trades and roll back the clock so they can keep their money? Remember the movie the Big Short? The SEC attorneys were interested in keeping the door open for a possible lucrative jump from government to private sector. Art imitates life or life imitates art.

That said, I do know the IRS will be the big winner no matter who comes out ahead when the dust settles. If the little guys turn their $500 investment into $500,000, the IRS will get 40%. If the little guy invests his entire net worth and loses it all, the IRS says they can only carry forward $3,000 in losses per year to offset future gains (what an awful and unfair tax law). Whether the Hedge Funds win or lose, they have the carried interest loophole. As Leona Helmsley famously said:

https://www.brainyquote.com/quotes/leona_helmsley_126543

 

[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.

... if Lehman were to default (which it did) on all of its trades, then all of the folks on the other side of Lehman’s trades would send in their securities to Lehman, but wouldn’t get paid. Then the brokers who didn’t get paid wouldn’t be able to afford to pay for the securities that they bought. So you would have cascading failures.

So to ensure this doesn’t happen, they have clearinghouses. The clearinghouse takes the other side of the trade and guarantees settlement even if someone like Lehman goes bust....

Depository Trust & Clearing Corp. -- actually National Securities Clearing Corp., which is owned by DTCC -- upped the capital that is needed to guarantee those trades. Now the broker can’t guarantee those trades with the clients’ cash -- a la MF Global -- the broker needs to pledge their own capital. And given the massive trading in GameStop, AMC, the amount of capital was really substantial. And Robinhood and a few others just didn’t have the capital. So Robinhood needed to borrow $1 billion to cover their clients’ settlement.

 

[NW-Bound]

I am not a Redditor, so that site is all new to me, but I am finding this whole drama fascinating.

I spent the last week reading the WSB section on Reddit and even I can tell that many of the "false crap" posts on WSB are from brand new posters. Possibly people who side with Wall Street, newly joining to post and sway public opinion. Point being, I wouldn't be so quick to beatify the hedge fund reps that go on CNBC, or to paint all WBB Redditors as "Idiot" pump and dumpers...

I don't see anyone here "beatifying" hedge funds.

What I myself and other posters have said is that Redditors who try to "stick it to the Man" would better be sure that they themselves are not fooled by the pump and dumpers, who are certainly not idiots.

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?

 

[tominboise]

That said, I do know the IRS will be the big winner no matter who comes out ahead when the dust settles. If the little guys turn their $500 investment into $500,000, the IRS will get 40%. If the little guy invests his entire net worth and loses it all, the IRS says they can only carry forward $3,000 in losses per year to offset future gains (what an awful and unfair tax law). Whether the Hedge Funds win or lose, they have the carried interest loophole. As Leona Helmsley famously said:

https://www.brainyquote.com/quotes/leona_helmsley_126543

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

 

[NW-Bound]

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

Smart! He is no idiot.