Statement of SEC Regarding Recent Market Volatility(sec.gov)
sec.gov
Statement of SEC Regarding Recent Market Volatility
https://www.sec.gov/news/public-statement/joint-statement-market-volatility-2021-01-29
905 comments
Okay kids, story time.
After the crash of 2008, I spent some time working with Dick Fuld. Yes, the former head of Lehman Brothers. Yes, the one people describe as “disgraced,” among other terms. Here’s the irony, though — Dick was one of the only people I encountered at that level of business/finance who wasn’t a scumbag. Unlike so many virtue-signaling Silicon Valley darlings, the guy behind the curtain was an honorable dude. And again, that’s a direct account from someone who has no vested interest or a book to sell or anything of that sort.
Dick and I worked closely together, one on one. After enough time, after he trusted me, I finally got to ask him about what the hell actually happened. The man had a ton of PTSD — and probably still does — but eventually it became clear that the real story was completely, utterly, unbelievably stupid.
Yes, Lehman was doing a bunch of stupid stuff, and the management under Dick were behaving like cowboys. But at the end of the day, that was the entire market at that time. What sunk Lehman was, in the end, a decision by all of the other big banks and the regulators that they’d let Lehman die because of something that might be best summarized as “lol idk sorry Dick but we’re just gonna let you go and let the Fed bail the rest of us out sorry bro lol.” Like really. That’s how it went behind those closed doors in the lairs of the lizards that control the universe. Lehman had already suffered near-death in 1994 — the world has now forgotten that Dick was the hero that saved the firm back then — and now it was to be made a sacrificial lamb for everyone else’s benefit.
Why am I telling you this story? What is the point? Well, what I am trying to say is that these supposed “adults in the room” who are so much smarter and better than the the “retail investors” are pretty much the same sort of immature, self-centered children as the other side. The difference is, they’ve got the regulators and the politicians in their pockets. So when they say “lol oops” and literally blow up the global economy to save face, nothing happens to them. But for some reason when it’s the retail guys, a moral panic ensues.
In my eyes, the Internet-connected retail investor is learning the power of what I call “massively multiplayer liquidity.” Yes, there’s some growing pains, but let’s not kill this wild new phenomenon before we learn what it can do. Because, from what I’ve seen from the other side of things, I doubt these self-styled “retards” will ever end up as depraved and corrupt as the people they’re disrupting.
Play ball, kids. And as Dick always used to say, “don’t get left with nothing other than a ham sandwich.”
After the crash of 2008, I spent some time working with Dick Fuld. Yes, the former head of Lehman Brothers. Yes, the one people describe as “disgraced,” among other terms. Here’s the irony, though — Dick was one of the only people I encountered at that level of business/finance who wasn’t a scumbag. Unlike so many virtue-signaling Silicon Valley darlings, the guy behind the curtain was an honorable dude. And again, that’s a direct account from someone who has no vested interest or a book to sell or anything of that sort.
Dick and I worked closely together, one on one. After enough time, after he trusted me, I finally got to ask him about what the hell actually happened. The man had a ton of PTSD — and probably still does — but eventually it became clear that the real story was completely, utterly, unbelievably stupid.
Yes, Lehman was doing a bunch of stupid stuff, and the management under Dick were behaving like cowboys. But at the end of the day, that was the entire market at that time. What sunk Lehman was, in the end, a decision by all of the other big banks and the regulators that they’d let Lehman die because of something that might be best summarized as “lol idk sorry Dick but we’re just gonna let you go and let the Fed bail the rest of us out sorry bro lol.” Like really. That’s how it went behind those closed doors in the lairs of the lizards that control the universe. Lehman had already suffered near-death in 1994 — the world has now forgotten that Dick was the hero that saved the firm back then — and now it was to be made a sacrificial lamb for everyone else’s benefit.
Why am I telling you this story? What is the point? Well, what I am trying to say is that these supposed “adults in the room” who are so much smarter and better than the the “retail investors” are pretty much the same sort of immature, self-centered children as the other side. The difference is, they’ve got the regulators and the politicians in their pockets. So when they say “lol oops” and literally blow up the global economy to save face, nothing happens to them. But for some reason when it’s the retail guys, a moral panic ensues.
In my eyes, the Internet-connected retail investor is learning the power of what I call “massively multiplayer liquidity.” Yes, there’s some growing pains, but let’s not kill this wild new phenomenon before we learn what it can do. Because, from what I’ve seen from the other side of things, I doubt these self-styled “retards” will ever end up as depraved and corrupt as the people they’re disrupting.
Play ball, kids. And as Dick always used to say, “don’t get left with nothing other than a ham sandwich.”
> “lol idk sorry Dick but we’re just gonna let you go and let the Fed bail the rest of us out sorry bro lol.” Like really. That’s how it went behind those closed doors in the lairs of the lizards that control the universe.
Says Dick Fuld. I doubt that's true, though, because at the time Lehman was going under, they didn't know that all the other banks were going with them. Remember, the bailouts didn't come until a few weeks later when the money market funds broke the buck triggering $trillions of withdrawals in what would essentially be a financial system wide run on the bank. The regulators didn't like the idea that a failing bank should be bailed out (as they shouldn't), and they couldn't find a merger partner like they did with Bear Stearns, so they let it fail. The bailouts didn't come until they realized that the fallout from Lehman's failure would bring down the whole system. Yeah, Dick Fuld wasn't really any different than any of the CEO's that got a bailout, but to cast him as the good guy among the group is ridiculous.
Says Dick Fuld. I doubt that's true, though, because at the time Lehman was going under, they didn't know that all the other banks were going with them. Remember, the bailouts didn't come until a few weeks later when the money market funds broke the buck triggering $trillions of withdrawals in what would essentially be a financial system wide run on the bank. The regulators didn't like the idea that a failing bank should be bailed out (as they shouldn't), and they couldn't find a merger partner like they did with Bear Stearns, so they let it fail. The bailouts didn't come until they realized that the fallout from Lehman's failure would bring down the whole system. Yeah, Dick Fuld wasn't really any different than any of the CEO's that got a bailout, but to cast him as the good guy among the group is ridiculous.
The unforeseen side effects of what was meant to be a very orderly and master-planned wind-down of one bank for the benefit of all the others — that speaks to the exact point I was making about the ridiculous notion that these are mature, all-knowing, all-wise adults.
As far as good and bad people, well... The senior $LARGE_CONSUMER_BANK Vice-President who told me how much he loved the profit he was making off the overdraft fees he thought were “an honest service” to his poorest customers, with a huge smile on his face, was definitely a lot more evil than Dick.
But look, if you’ve had direct experiences with a bunch of the CEOs and senior execs at these firms, feel free to provide a counter! If you’re basing things on journalist accounts, however, you’re going to be in for a surprise when you learn who pays their bills and takes them on trips...
As far as good and bad people, well... The senior $LARGE_CONSUMER_BANK Vice-President who told me how much he loved the profit he was making off the overdraft fees he thought were “an honest service” to his poorest customers, with a huge smile on his face, was definitely a lot more evil than Dick.
But look, if you’ve had direct experiences with a bunch of the CEOs and senior execs at these firms, feel free to provide a counter! If you’re basing things on journalist accounts, however, you’re going to be in for a surprise when you learn who pays their bills and takes them on trips...
> mature, all-knowing, all-wise adults.
The market is incredibly complex. If you thought that executives can foresee the downstream effects of a given market event because they are "all-knowing, all-wise", then of course you are an idiot.
But nobody you were arguing with even remotely thinks this. Of course, there is uncertainty. There was never going to be a "very orderly" draw-down, but the issues from the moral hazard of propping up Lehman were (and remain) a big consideration when considering bailouts.
The market is incredibly complex. If you thought that executives can foresee the downstream effects of a given market event because they are "all-knowing, all-wise", then of course you are an idiot.
But nobody you were arguing with even remotely thinks this. Of course, there is uncertainty. There was never going to be a "very orderly" draw-down, but the issues from the moral hazard of propping up Lehman were (and remain) a big consideration when considering bailouts.
> But nobody you were arguing with even remotely thinks this.
The SEC thinks this, the linked statement suggests believe they can foresee rapid and severe losses that normal traders can't. Someone in this argument likely agrees with the SEC.
The SEC thinks this, the linked statement suggests believe they can foresee rapid and severe losses that normal traders can't. Someone in this argument likely agrees with the SEC.
[deleted]
I find this refreshing actually.
What reason? Because it demystifies the room. It pulls the veil off and we get to see behind the curtain.
Strangely enough, I had a fleeting thought that this is why few firms went under and most got bailed out. I actually had this thought after watching the Big Short or another Wall Street movie about the 2008 crash. I thought that it was strange that Lehman was the odd one out and it struck me as a frat party. Only the cool kids survive.
@numair, you sound very candid and forthright. I appreciate it. I find it's difficult for people to mask their tone and reading this honest tone is refreshing. I wish you success in your endeavors.
What reason? Because it demystifies the room. It pulls the veil off and we get to see behind the curtain.
Strangely enough, I had a fleeting thought that this is why few firms went under and most got bailed out. I actually had this thought after watching the Big Short or another Wall Street movie about the 2008 crash. I thought that it was strange that Lehman was the odd one out and it struck me as a frat party. Only the cool kids survive.
@numair, you sound very candid and forthright. I appreciate it. I find it's difficult for people to mask their tone and reading this honest tone is refreshing. I wish you success in your endeavors.
Wall Street 2 effectively has an enactment of the scene where they all throw the one firm under the bus.
> the management under Dick were behaving like cowboys
Exactly. and that's why they went under. Let's look at all possibilities :
- Maybe Dick knew that the management under him was behaving like cowboys, and tried to stop it. Then that's sad, but so far no one seem to have given any tangible proof that this was the case.
- Maybe Dick knew the that the management under him was behaving like cowboys, and did not tried to stop it. And he got what he deserved.
- Maybe Dick just did not realize that the management under him was behaving like cowboys. Then the company he was a part of got what it deserved for putting that man - who was not competent enough to realize what was going on - in a position of power.
- Maybe Dick did not realize that the management under him was behaving like cowboys. But the "company policy" prevented him from acting. Then he should have left. You don't reach such positions without playing the game.
Maybe Lehman was not the only one doing all of that. But Lehman was definitely one. As such they maybe should not have been the only one to die, but they definitely deserved what they got. I don't buy the "I was a clueless nice guy that got caught in the middle of it" story. He's not sorry he did it, he's only sorry he got caught, otherwise he would just have left sooner.
Exactly. and that's why they went under. Let's look at all possibilities :
- Maybe Dick knew that the management under him was behaving like cowboys, and tried to stop it. Then that's sad, but so far no one seem to have given any tangible proof that this was the case.
- Maybe Dick knew the that the management under him was behaving like cowboys, and did not tried to stop it. And he got what he deserved.
- Maybe Dick just did not realize that the management under him was behaving like cowboys. Then the company he was a part of got what it deserved for putting that man - who was not competent enough to realize what was going on - in a position of power.
- Maybe Dick did not realize that the management under him was behaving like cowboys. But the "company policy" prevented him from acting. Then he should have left. You don't reach such positions without playing the game.
Maybe Lehman was not the only one doing all of that. But Lehman was definitely one. As such they maybe should not have been the only one to die, but they definitely deserved what they got. I don't buy the "I was a clueless nice guy that got caught in the middle of it" story. He's not sorry he did it, he's only sorry he got caught, otherwise he would just have left sooner.
The problem with a conscience is that it gives you a tell, that others without one can use against you when they're in need of a scapegoat.
As someone once told me when I lamented that I don't talk to a certain person more often, they stopped me and pointed out that the phone system works in both directions. There are two people not talking to each other, not just me.
Dick participated, he could have blown the whistle, and he didn't, so he deserves a share of the guilt. He is not innocent. But if you didn't build the house of cards, then it's not your fault, it's the group's fault. If you colluded to remove people who would have said something, then you get more of a share of the blame. Anyone could have blown the whistle, not just you. Even if it's obvious that you are the most likely whistleblower, there could have been others. (And if you were the most obvious, you can't anonymously tip someone off because everyone will know it's you, so you're doubly screwed.)
One of the things slimeballs have intuited for millenia is that if you really believe something crazy, nobody is going to pick up that you're lying because you believe it. You've lied to yourself, and then fastidiously avoided looking at the lie so that you can maintain your innocence, and your profit stream. You're guilty as sin, with extra sins piled on top.
As someone once told me when I lamented that I don't talk to a certain person more often, they stopped me and pointed out that the phone system works in both directions. There are two people not talking to each other, not just me.
Dick participated, he could have blown the whistle, and he didn't, so he deserves a share of the guilt. He is not innocent. But if you didn't build the house of cards, then it's not your fault, it's the group's fault. If you colluded to remove people who would have said something, then you get more of a share of the blame. Anyone could have blown the whistle, not just you. Even if it's obvious that you are the most likely whistleblower, there could have been others. (And if you were the most obvious, you can't anonymously tip someone off because everyone will know it's you, so you're doubly screwed.)
One of the things slimeballs have intuited for millenia is that if you really believe something crazy, nobody is going to pick up that you're lying because you believe it. You've lied to yourself, and then fastidiously avoided looking at the lie so that you can maintain your innocence, and your profit stream. You're guilty as sin, with extra sins piled on top.
> The problem with a conscience is that it gives you a tell.
We should encourage conscientious people to play more poker, I guess.
We should encourage conscientious people to play more poker, I guess.
They do. And they're called suckers for a reason.
Well in poker there is an implicit contract that everyone there knows what they are in for (or should, anyways), so there should be nothing hanging on their conscience (for some categories of philosophical systems around conscientiousness)
Can someone explain why my perspective is wrong on hedgefunds please?
My understanding is that the GFC happened because the whole economy was levered to hell. At the risk of referencing the big short, there was a scene in that film where a stripper has levered herself up so much she owns five home. The reason the GFC happened was in reality because average people were levered up on real estate and couldn't afford their repayments.
I fully understand that the financial system also took on too much risk and many understood those risks, but the narrative that hedgefunds are entirely to blame for the GFC, and that they were the only ones being irresponsible with leverage, is surely wrong?
If the blame was with anyone it should be the regulators... Why were individuals and hedgefunds able to take so much risk? In the absent of regulation individuals and hedgefunds should be expected to take maximum risk for their own gain. Just like how WSBs did when they were all exploiting the infinite leverage glitch.
Another thing that I don't think is true here is that the government is only there for the hedgefunds... If this last year has proven anything it's that the government is perfectly wiling to bail out individuals if they feel it's necessary to save the economy. And if the financial system is so rigged against individuals then isn't it odd how those individuals seem to be so able to destroy the hedgefunds with relative ease from a free smart phone app?
I'm not trying to be edgy, I genuinely don't understand why people seem to blame hedgefunds for every inequality problem in society.
My understanding is that the GFC happened because the whole economy was levered to hell. At the risk of referencing the big short, there was a scene in that film where a stripper has levered herself up so much she owns five home. The reason the GFC happened was in reality because average people were levered up on real estate and couldn't afford their repayments.
I fully understand that the financial system also took on too much risk and many understood those risks, but the narrative that hedgefunds are entirely to blame for the GFC, and that they were the only ones being irresponsible with leverage, is surely wrong?
If the blame was with anyone it should be the regulators... Why were individuals and hedgefunds able to take so much risk? In the absent of regulation individuals and hedgefunds should be expected to take maximum risk for their own gain. Just like how WSBs did when they were all exploiting the infinite leverage glitch.
Another thing that I don't think is true here is that the government is only there for the hedgefunds... If this last year has proven anything it's that the government is perfectly wiling to bail out individuals if they feel it's necessary to save the economy. And if the financial system is so rigged against individuals then isn't it odd how those individuals seem to be so able to destroy the hedgefunds with relative ease from a free smart phone app?
I'm not trying to be edgy, I genuinely don't understand why people seem to blame hedgefunds for every inequality problem in society.
You want to blame the regulators but imho any system that relies solely regulators is going to be fragile. The regulators always have a chance of being captured by the industry or just plain incompetent.
We have a culture of people not feeling the negative repercussions of "bad actions". Buying multiple homes was irresponsible, mortgage brokers immediately selling every loan is a moral hazard and Wall street levering up on CDOs were all problems. All of them deserve blame BUT the hedge funds and mortgage brokers got bailouts and the home buyers didnt. That smells like BS to me and anger at the people that allowed that to happen, hedge funds and bankers included, looks justified to me
We have a culture of people not feeling the negative repercussions of "bad actions". Buying multiple homes was irresponsible, mortgage brokers immediately selling every loan is a moral hazard and Wall street levering up on CDOs were all problems. All of them deserve blame BUT the hedge funds and mortgage brokers got bailouts and the home buyers didnt. That smells like BS to me and anger at the people that allowed that to happen, hedge funds and bankers included, looks justified to me
> All of them deserve blame BUT the hedge funds and mortgage brokers got bailouts and the home buyers didnt. That smells like BS to me and anger at the people that allowed that to happen, hedge funds and bankers included, looks justified to me
What bail outs are you referring to? Are you talking about the TARP program? Because didn't most of that go to banks (not hedge funds) and wasn't that actually a net benefit to tax payers? I'm not asking rhetorically, I'm honestly just not that well informed on the details of the TARP program being from the UK and having not been old enough to have direct experience of the GFC.
I do agree that more should have been done to help those struggling with mortgage debt, but again it's weird to blame hedge funds for this. To blame the hedge funds you would first have to assume they planned to take down the global economy, and then secondly assume that they have some level of responsibly over the government's decision to purchase toxic assets from the banks. It was the government who took the tax payer's money and gave it to the banks.
It's also not like all hedge funds were involved in the GFC either. I guess I don't really understand what Melvin Capital did that was so bad that people now want to bankrupt the company. Being angry at certain individuals and companies for taking on the excessive risk that caused the GFC is understandable, but being angry at all hedge funds or all of "Wall Street" is silly. A lot (and I'd assume most) of these companies are perfectly responsible and acting within the law.
And to be honest it's worse than just targeting random Hedge Funds, a lot of the posts I've seen on Reddit seem to be complaining about capitalism and the financial system in the general. I think this is partly why I'm feeling the need to question what and who we're angry at here. I want to make sure we're justified when we're bankrupting these companies and making their employees redundant. A mob as big as this without a clear target should worry everyone.
What bail outs are you referring to? Are you talking about the TARP program? Because didn't most of that go to banks (not hedge funds) and wasn't that actually a net benefit to tax payers? I'm not asking rhetorically, I'm honestly just not that well informed on the details of the TARP program being from the UK and having not been old enough to have direct experience of the GFC.
I do agree that more should have been done to help those struggling with mortgage debt, but again it's weird to blame hedge funds for this. To blame the hedge funds you would first have to assume they planned to take down the global economy, and then secondly assume that they have some level of responsibly over the government's decision to purchase toxic assets from the banks. It was the government who took the tax payer's money and gave it to the banks.
It's also not like all hedge funds were involved in the GFC either. I guess I don't really understand what Melvin Capital did that was so bad that people now want to bankrupt the company. Being angry at certain individuals and companies for taking on the excessive risk that caused the GFC is understandable, but being angry at all hedge funds or all of "Wall Street" is silly. A lot (and I'd assume most) of these companies are perfectly responsible and acting within the law.
And to be honest it's worse than just targeting random Hedge Funds, a lot of the posts I've seen on Reddit seem to be complaining about capitalism and the financial system in the general. I think this is partly why I'm feeling the need to question what and who we're angry at here. I want to make sure we're justified when we're bankrupting these companies and making their employees redundant. A mob as big as this without a clear target should worry everyone.
I agree with you that the regulators are to blame, but wall street (regulators, ratings agencies, banks, funds) seem to consistently break the law with no consequence. All of these are largely responsible for the deregulation that allowed these financial instruments to become legal. We need consequences or this system will remain broken, I think. Fraud is a crime that many lower class people consistently go to prison for. It's times like these that I personally realize that MLK was right when he said the system we have in place is not justice, it makes a mockery of justice. These people/institutions continue to get richer without repercussions, and ready to benefit during the recovery from every crash meanwhile poor people get shafted.
> To blame the hedge funds for this you would first have to assume they planned to take down the global economy
No, you absolutely don't. Consider criminal charges - they differentiate between intentional harm, reckless harm and negligent harm, but they all blame the guy being charged.
No, you absolutely don't. Consider criminal charges - they differentiate between intentional harm, reckless harm and negligent harm, but they all blame the guy being charged.
Sorry I should have been more specific – I don't understand why people are blaming the hedge funds for bail outs. If you're going to blame anyone for the TARP program surely it would be the government?
I do get why people are angry at those who recklessly over leveraged, although I would still argue that this is more of regulatory issue. If you allow people to take reckless financial risks some percentage of people will always do it.
It's also no reason to be angry at hedge funds as a collective, in the same way it would be silly to be angry at all mortgage owners (past & present) for the GFC.
However, if you're saying it's fine to blame the individual hedge funds involved in the GFC for reckless harm and negligence then I would would tend to agree, but that doesn't appear to be what's happening.
I do get why people are angry at those who recklessly over leveraged, although I would still argue that this is more of regulatory issue. If you allow people to take reckless financial risks some percentage of people will always do it.
It's also no reason to be angry at hedge funds as a collective, in the same way it would be silly to be angry at all mortgage owners (past & present) for the GFC.
However, if you're saying it's fine to blame the individual hedge funds involved in the GFC for reckless harm and negligence then I would would tend to agree, but that doesn't appear to be what's happening.
I think maybe lay people are using hedge funds as a catch all for market participants in securities / equities. Everyone was buying CDOs, banks, pension funds, sovereign wealth funds, hedge funds etc
When an individual is over leveraged the individual is at risk. When a bank (loosely speaking; financial entity, what have you) is over leverage, the customers are at risk.
If a bank falters more people are going to be upset. That's just the nature of the situation.
If a bank falters more people are going to be upset. That's just the nature of the situation.
In our society many domains (finance being one) are now too massive, complex and quickly 'working' and evolving for anybody (even a group) to understand enough to predict more-or-less accurately, let's say to do better than random picks in a set of possible outcomes descriptions for the next 5 years.
One of the effects is that there is no real pilot onboard anymore. Some people are dressed and talking as pilots and some of them may believe they (and their teams) understand and control, but I think most feign.
The huge 'kinetic energy' of all those systems let them roll forward more and more out-of-control, until some mishap reveals our lack of knowledge.
One of the effects is that there is no real pilot onboard anymore. Some people are dressed and talking as pilots and some of them may believe they (and their teams) understand and control, but I think most feign.
The huge 'kinetic energy' of all those systems let them roll forward more and more out-of-control, until some mishap reveals our lack of knowledge.
> seem to blame hedgefunds for every inequality problem in society.
Ah, if that is your core question, that one is easy. Because most people can't think about so complex questions properly (or are unwilling, lazy, or haven't been taught), and they simplify the world into emotional picture, for example blame someone. Then it's just a question of finding who to blame, today a popular answer is "rich hedge funds".
Ah, if that is your core question, that one is easy. Because most people can't think about so complex questions properly (or are unwilling, lazy, or haven't been taught), and they simplify the world into emotional picture, for example blame someone. Then it's just a question of finding who to blame, today a popular answer is "rich hedge funds".
Riiiiiiiiiiiiiiiiiiiiiiiiiiiightttttt
https://www.politico.com/magazine/story/2019/08/02/joe-biden...
TL;DR Biden is literally bought, paid for and supported by hedge funds (as is every other politician).
This whole "you people are crazy this is fine" mentality has got to end, we are in WAY corrupt times.
https://www.politico.com/magazine/story/2019/08/02/joe-biden...
TL;DR Biden is literally bought, paid for and supported by hedge funds (as is every other politician).
This whole "you people are crazy this is fine" mentality has got to end, we are in WAY corrupt times.
There were people who wanted to regulate derivatives but Alan Greenspan and his cronies fought them and killed the idea of regulation.
Dick Fuld has said that several times publicly, there are interviews with the FCIC where he said that there was a conspiracy against LEH, and almost every part of the meetings at the NY Fed are public knowledge...you have no behind the scenes knowledge (you sound like every person: I met X who did Y terrible thing, he isn't actually a bad guy, I am going to ignore all the public information about X and prioritise my super special "insider" knowledge).
I will ask you a different question: if LEH was so strong, why didn't the Koreans invest? Why didn't BARC invest before BK? The issue, again and again and as explained at massive length in several books, they had very shaky funding, they had a lot of stuff that no-one knew how to value, they insisted to everyone that this stuff was very very valuable...it was not. If the real estate was so valuable, why couldn't they sell it? Every single person who I have ever met in the same position (I have met many) is in denial...that is why they are in that position. Fuld made numerous mistakes that can be summarised as: he thought he had pocket aces, he had 72o.
Asking Dick Fuld for opinions on Dick Fuld is not smart.
I will ask you a different question: if LEH was so strong, why didn't the Koreans invest? Why didn't BARC invest before BK? The issue, again and again and as explained at massive length in several books, they had very shaky funding, they had a lot of stuff that no-one knew how to value, they insisted to everyone that this stuff was very very valuable...it was not. If the real estate was so valuable, why couldn't they sell it? Every single person who I have ever met in the same position (I have met many) is in denial...that is why they are in that position. Fuld made numerous mistakes that can be summarised as: he thought he had pocket aces, he had 72o.
Asking Dick Fuld for opinions on Dick Fuld is not smart.
I am not going to go too far into this but, I was in meetings with Dick and senior executives from the other banks. The “lol sorry bro” attitude wasn’t just Dick’s way of telling the story.
...I am not sure that I disputed that. What I said was: the reason why LEH didn't get bailed out was because the stock was worthless, and mgmt mismanaged that from day one (even towards the end, LEH was trying to sell its real estate at book...this isn't hard). And then Fuld went around telling everyone he should have got bailed out (btw, if you went into a meeting with other banks and started telling them they should give you money for nothing...do you think that wouuld have went down well?).
>>> "massively multiplayer liquidity.”
Interestingly we might have another name for it - democracy went through similar growing pains as the people took power from the grown ups in the room.
Worked out mostly ok :-)
Interestingly we might have another name for it - democracy went through similar growing pains as the people took power from the grown ups in the room.
Worked out mostly ok :-)
This "wild new phenomenon" is just boring old market manipulation. The only thing new about it is that the perpetrator is a subreddit instead of a licensed broker/dealer or other regulated entity.
The appropriate thing to do is for the SEC to subpoena Reddit and RobinHood, correlate trades with posts to prove intent to manipulate the price (which IS illegal), and charge every individual with market manipulation.
Just like any other individuals guilty of market manipulation (Libor riggers, Navinder Sarao, etc).
Robinhood should probably also be investigated for abetting this, although it's a gray area.
The appropriate thing to do is for the SEC to subpoena Reddit and RobinHood, correlate trades with posts to prove intent to manipulate the price (which IS illegal), and charge every individual with market manipulation.
Just like any other individuals guilty of market manipulation (Libor riggers, Navinder Sarao, etc).
Robinhood should probably also be investigated for abetting this, although it's a gray area.
Charge everyone with market manipulation the same way that everyone who caused the 2008 recession was charged? Sincere question, because if they decide to charge individual investors who commented on a Reddit thread with market manipulation after my generation witnessed the downfall of the economy due to sheer lies and blatant manipulation by banks, with no major charges against anyone of importance, I, at least, will be very angry.
I am not against charging certain actors in the 2008 crisis with fraud and manipulation either.
The 2008 recession is not really a comparable event to the current GME short squeeze. It was rather a broad series of events, most of which were unfortunately legal, some of which were probably not.
In that case I would be in favour of charging the ratings agencies with fraud, and possibly the financial regulators with gross incompetence.
Edit: I don't see it as "big guys vs small guys". I see it as "law abiding people vs not".
So my reaction is not "its unfair to prosecute the little guy," but rather "we didnt get those criminals but at least we can get these criminals."
The 2008 recession is not really a comparable event to the current GME short squeeze. It was rather a broad series of events, most of which were unfortunately legal, some of which were probably not.
In that case I would be in favour of charging the ratings agencies with fraud, and possibly the financial regulators with gross incompetence.
Edit: I don't see it as "big guys vs small guys". I see it as "law abiding people vs not".
So my reaction is not "its unfair to prosecute the little guy," but rather "we didnt get those criminals but at least we can get these criminals."
Do you think that something like "Elon Musk tweets the word 'bitcoin'" can/should actually be charged as market manipulation?
What about people selling their newsletter of stock tips?
What about printing an article in Bloomberg suggesting that XYZ is undervalued/overvalued for $reasons?
What about some nobody on reddit posting to wsb to say let's go to $321!
What about being paid to tell clients what you think they should invest in?
What about telling other users on reddit for free what you think they should invest in?
I'm not sure I see a clear line in there to call any of it illegal.
I'm not sure I see a clear line in there to call any of it illegal.
I feel like this question is a trap, but I'm bored, so I'll give it a shot.
First off, not all "market manipulation" is illegal. If it was, a company announcing a new product would be "market manipulation", because it impacts the stock price. But I think you're right that the line is definitely grey in a lot of situations. And really, that's why we have courts.
> Do you think that something like "Elon Musk tweets the word 'bitcoin'" can/should actually be charged as market manipulation?
If Elon Musk had just bought a whole bunch of bitcoin, then tweeted it out, and then sold his newly acquired bitcoin, then yes. He 100% knows that what he tweets affects markets, and attempted to directly benefit from it. If you want to argue that he doesn't know that his tweets affect the market, the SEC has already determined that it does based on the "TSLA private at 420" situation.
> What about people selling their newsletter of stock tips?
Market manipulation requires actual market manipulation. I dno't believe that "attempted market manipulation" counts (but I may be wrong). All of these newsletter attempts fail, so there's nothing to really charge.
If any of these newsletters actually have a measurable effect, or if the person sending them is buying-sending-selling (at a profit), then yes, it is market manipulation.
> What about printing an article in Bloomberg suggesting that XYZ is undervalued/overvalued for $reasons
This is kind of what Bloomberg does, and they typically have arguments in both directions (which I think kind of evens it out). That being said, true information, with real evidence, is not illegal market manipulation. DFV's initial "due diligence" and legitimate bull case are not illegal market manipulation.
> What about some nobody on reddit posting to wsb to say let's go to $321!
Now you're getting grey. I'm not qualified to answer. This answer will likely be very similar to whether or not something is "inciting a riot", and will be super context-dependent.
But note that this is different than saying "GME is going to $1000 because of <totally false and made up reasons>" (especially if you already have a position, and if you make a profit as a result of the market that you influenced. Remember, if you don't actually influence the market, then it doesn't count.
But whether or not you succeeded in influencing the market can easily be determined after-the-fact. Just because you get away with it in the moment, doesn't mean no one will look back.
> What about being paid to tell clients what you think they should invest in?
If this is your job, you are likely licenced in some way, and the rules are likely different.
> What about telling other users on reddit for free what you think they should invest in?
I think the answer here is the same as the WSB-specific question
---
Feel free to disagree with me, these are just my opinions, and again, context matters.
First off, not all "market manipulation" is illegal. If it was, a company announcing a new product would be "market manipulation", because it impacts the stock price. But I think you're right that the line is definitely grey in a lot of situations. And really, that's why we have courts.
> Do you think that something like "Elon Musk tweets the word 'bitcoin'" can/should actually be charged as market manipulation?
If Elon Musk had just bought a whole bunch of bitcoin, then tweeted it out, and then sold his newly acquired bitcoin, then yes. He 100% knows that what he tweets affects markets, and attempted to directly benefit from it. If you want to argue that he doesn't know that his tweets affect the market, the SEC has already determined that it does based on the "TSLA private at 420" situation.
> What about people selling their newsletter of stock tips?
Market manipulation requires actual market manipulation. I dno't believe that "attempted market manipulation" counts (but I may be wrong). All of these newsletter attempts fail, so there's nothing to really charge.
If any of these newsletters actually have a measurable effect, or if the person sending them is buying-sending-selling (at a profit), then yes, it is market manipulation.
> What about printing an article in Bloomberg suggesting that XYZ is undervalued/overvalued for $reasons
This is kind of what Bloomberg does, and they typically have arguments in both directions (which I think kind of evens it out). That being said, true information, with real evidence, is not illegal market manipulation. DFV's initial "due diligence" and legitimate bull case are not illegal market manipulation.
> What about some nobody on reddit posting to wsb to say let's go to $321!
Now you're getting grey. I'm not qualified to answer. This answer will likely be very similar to whether or not something is "inciting a riot", and will be super context-dependent.
But note that this is different than saying "GME is going to $1000 because of <totally false and made up reasons>" (especially if you already have a position, and if you make a profit as a result of the market that you influenced. Remember, if you don't actually influence the market, then it doesn't count.
But whether or not you succeeded in influencing the market can easily be determined after-the-fact. Just because you get away with it in the moment, doesn't mean no one will look back.
> What about being paid to tell clients what you think they should invest in?
If this is your job, you are likely licenced in some way, and the rules are likely different.
> What about telling other users on reddit for free what you think they should invest in?
I think the answer here is the same as the WSB-specific question
---
Feel free to disagree with me, these are just my opinions, and again, context matters.
Not a trap so much as a way to get your opinions clearly stated in a way that I could follow, instead of back and forthing to define the boundaries.
> If you want to argue that he doesn't know that his tweets affect the market, the SEC has already determined that it does
The SEC found that as CEO his public statements are considered official announcements, but that doesn’t really say anything about him “being able to affect the market” in general. I believe that would not actually be market manipulation because he was telling the truth - the regulations require fraud or misstatement (lies). They don’t technically require statements to have evidence or even be true, because people can be wrong.
> But note that this is different than saying "GME is going to $1000 because of <totally false and made up reasons>"
Exactly. Telling other people to invest in something because you believe they can make money at it is not market manipulation so long as you believe what you are telling them.
Where people think WSB could get into trouble is actually purchasing the shares - because what is perhaps illegal is the act of making a trade to drive up the price for short sellers and make them buy back stock - and some of them may have said things that show this intent.
However this version of manipulation is a very unclear concept - the plain reading of the law makes general trading to make money basically illegal, so it has been heavily interpreted by the courts and there is actually a circuit split on whether any otherwise valid trade can be illegal because of intent.
https://projects.iq.harvard.edu/files/financialregulation/fi...
> If you want to argue that he doesn't know that his tweets affect the market, the SEC has already determined that it does
The SEC found that as CEO his public statements are considered official announcements, but that doesn’t really say anything about him “being able to affect the market” in general. I believe that would not actually be market manipulation because he was telling the truth - the regulations require fraud or misstatement (lies). They don’t technically require statements to have evidence or even be true, because people can be wrong.
> But note that this is different than saying "GME is going to $1000 because of <totally false and made up reasons>"
Exactly. Telling other people to invest in something because you believe they can make money at it is not market manipulation so long as you believe what you are telling them.
Where people think WSB could get into trouble is actually purchasing the shares - because what is perhaps illegal is the act of making a trade to drive up the price for short sellers and make them buy back stock - and some of them may have said things that show this intent.
However this version of manipulation is a very unclear concept - the plain reading of the law makes general trading to make money basically illegal, so it has been heavily interpreted by the courts and there is actually a circuit split on whether any otherwise valid trade can be illegal because of intent.
https://projects.iq.harvard.edu/files/financialregulation/fi...
> is not market manipulation so long as you believe what you are telling them.
I believe there is also thought that this concept could get some people in trouble.
There are a fair number of "sounds right but actually aren't" accusations floating around about GME (along with complete garbage[0]); if you know that these are false statements when syaing them (which in some cases is definitely provable), then you could be in a bind.
[0] I think the most striking example of "complete garbage" that I've seen (but unfortunately can't find any more) is a set of claims that Microsoft is going to acquire GameStop to turn all GameStops into XBox E-Sports lounges. I mean, could it theoretically happen, yes, but I don't think that anyone believes that at all. That's the kind of boiler-room style shit that used to be considered clear-cut fraud.
I believe there is also thought that this concept could get some people in trouble.
There are a fair number of "sounds right but actually aren't" accusations floating around about GME (along with complete garbage[0]); if you know that these are false statements when syaing them (which in some cases is definitely provable), then you could be in a bind.
[0] I think the most striking example of "complete garbage" that I've seen (but unfortunately can't find any more) is a set of claims that Microsoft is going to acquire GameStop to turn all GameStops into XBox E-Sports lounges. I mean, could it theoretically happen, yes, but I don't think that anyone believes that at all. That's the kind of boiler-room style shit that used to be considered clear-cut fraud.
Yea, there's definitely an area in the middle where people don't believe what they're saying so much as convince themselves that they don't know for sure it's not true. The idea of searching wsb for the ones you could prove in court were lying seems like more work than benefit, though.
What a very convenient point of view for the people above the law. I hope they're passing some of their gains on to you.
I voted for Obama twice. But his failure to properly prosecute the bad actors in 2008 was one of the biggest failures of his presidency in my opinion.
However:
1) It's still not too late to go after those people. Some NY DA should make his career on this.
2) The biggest financial crime ever has been the years of unmitigated QE which has consistently taken money from the income-earning class and handed it to the wealthy asset holding class. This is a bigger travesty than all other financial crimes. Not clear what to do about it, there is nobody you can vote for who thinks it should end.
However:
1) It's still not too late to go after those people. Some NY DA should make his career on this.
2) The biggest financial crime ever has been the years of unmitigated QE which has consistently taken money from the income-earning class and handed it to the wealthy asset holding class. This is a bigger travesty than all other financial crimes. Not clear what to do about it, there is nobody you can vote for who thinks it should end.
I believe you don't give enough credit to the scope of this pump and dump.
2008 was, more or less, a local US problem. Very few outsiders had their money in it. This one has the rest of the world's money involved as well.
And that, in my opinion, moves the center of gravity of that issue into different territory. Resentment.
Some involved in that raid are in it for the pain it causes those hedge funds, not for the money ( no matter how little true believers there are ).
If US punishes those kids, that resentment will only grow, and it'll grow among those not in US. The growth of us vs them mentality is the last thing anyone needs
its funny how its always a certain class of people "we didn't get", the answer isn't to shrug your shoulders and say oh well.
It's not too late to get those people too.
> intent to manipulate the price (which IS illegal)
Is it "illegal price manipulation" even if it's done completely out in the open for everyone to see? (I'm seriously asking this question).
I feel like laws governing market manipulation imagine secret collusion among actors that one might reasonably assume are either competing with one another or pursuing their interests independently.
But in this case, the actors are entirely transparent with their motives. Anyone can go see what they're up to. Figuring out why these stocks suddenly went through the roof required no formal investigation at all, as far I know; it didn't take long to figure out why it was happening.
I also wonder whether those motives are even an issue here. Certain people in the system might be legally bound to be truthful with their clients, they might be required to pursue their clients' interests faithfully, and so forth. But isn't it true that as an individual investor, I am perfectly free to invest in stocks based on my horoscope, my initials, random throws at a dartboard, or anything else?
In other words, are the "lulz" illegal here? Is it illegal to not be "serious" with the market (whatever that means)?
Let's suppose there's a massive oil spill tomorrow. Everyone goes on reddit and says, "Hey, let's destroy this company by executing the following actions with the following securities . . ." (let's assume this is possible for a moment). Is that "market manipulation?" Is that illegal? Is that "abusive" (as the SEC puts it)? After all, in that case, they are trying to abuse the company for reasons they regard as entirely rational and reasonable, and they're doing it for all to see.
[edits for grammar and clarity]
Is it "illegal price manipulation" even if it's done completely out in the open for everyone to see? (I'm seriously asking this question).
I feel like laws governing market manipulation imagine secret collusion among actors that one might reasonably assume are either competing with one another or pursuing their interests independently.
But in this case, the actors are entirely transparent with their motives. Anyone can go see what they're up to. Figuring out why these stocks suddenly went through the roof required no formal investigation at all, as far I know; it didn't take long to figure out why it was happening.
I also wonder whether those motives are even an issue here. Certain people in the system might be legally bound to be truthful with their clients, they might be required to pursue their clients' interests faithfully, and so forth. But isn't it true that as an individual investor, I am perfectly free to invest in stocks based on my horoscope, my initials, random throws at a dartboard, or anything else?
In other words, are the "lulz" illegal here? Is it illegal to not be "serious" with the market (whatever that means)?
Let's suppose there's a massive oil spill tomorrow. Everyone goes on reddit and says, "Hey, let's destroy this company by executing the following actions with the following securities . . ." (let's assume this is possible for a moment). Is that "market manipulation?" Is that illegal? Is that "abusive" (as the SEC puts it)? After all, in that case, they are trying to abuse the company for reasons they regard as entirely rational and reasonable, and they're doing it for all to see.
[edits for grammar and clarity]
If I post "Hey I think there is unrecognized value in this stock and I've bought the stock and a bunch of weekly calls. Here's an image of my account holdings." is that market manipulation? If I go on my youtube channel and explain my reasoning is that market manipulation?
In both cases I guess you could say "Yes." and I might agree, but I do not believe it rises to the level of illegality.
I could see the SEC looking at this, deciding that it represents collusion and should not be allowed and clawing back the "ill gotten" gains.
Blockchain based settlement anyone?
In both cases I guess you could say "Yes." and I might agree, but I do not believe it rises to the level of illegality.
I could see the SEC looking at this, deciding that it represents collusion and should not be allowed and clawing back the "ill gotten" gains.
Blockchain based settlement anyone?
100% this. Price manipulation to trigger a short squeeze is explicitly illegal. https://www.sec.gov/investor/pubs/regsho.htm section 7.
Anyone who told others to buy and hold with promises of short covering and higher prices is party to market manipulation, and it is absolutely, definitely illegal. Whether they'll be able to unmask and charge people behind the anonymity of WSB is another question though.
Anyone who told others to buy and hold with promises of short covering and higher prices is party to market manipulation, and it is absolutely, definitely illegal. Whether they'll be able to unmask and charge people behind the anonymity of WSB is another question though.
> a scheme to manipulate the price or availability of stock in order to cause a short squeeze is illegal.
A good lawyer can argue that these people are exercising their first amendment right of free speech. They are not reporting false data and most of these people commenting have "average" net worth not millions/billions.
Its also very hard to prove to a jury that a message from such an average joe on a message board is enough to form a "scheme" with million other readers on wsb.
A good lawyer can argue that these people are exercising their first amendment right of free speech. They are not reporting false data and most of these people commenting have "average" net worth not millions/billions.
Its also very hard to prove to a jury that a message from such an average joe on a message board is enough to form a "scheme" with million other readers on wsb.
[deleted]
Anyone who promised to provide someone anything in return for buying may have done something illegal, but anyone who shared their genuinely held beliefs on what would happen in the future did not do anything illegal unless they are a market broker etc.
And, anyone who bought shares or told someone to buy shares with the intent of driving up the price also did something illegal - but it's something that is done constantly and considered a fundamental part of the market, either as an attack on a company in the classic hedge fund short->bankruptcy or, more benignly, like buying up shares of a takeover target slowly so people don't notice you are interested and buy it, which would raise the price.
And, anyone who bought shares or told someone to buy shares with the intent of driving up the price also did something illegal - but it's something that is done constantly and considered a fundamental part of the market, either as an attack on a company in the classic hedge fund short->bankruptcy or, more benignly, like buying up shares of a takeover target slowly so people don't notice you are interested and buy it, which would raise the price.
How can that even be remotely true. Virtually every comment there explicitly states it does not constitute financial advice.
It's funny, somehow when users click "agree" to hundred page document Terms of Service, they are held to the letter of it, yet clearly and simply saying "this is not financial advice" doesn't count.
And that disclaimer that gets posted on Facebook all the time isn't legally binding.
That gets posted to remind people that WSB is a bunch of random people on the internet. They have no duty to anyone.
That gets posted to remind people that WSB is a bunch of random people on the internet. They have no duty to anyone.
What isn't market manipulation?
Seriously, market manipulation goes on all the time at grandiose scales and at small scales. This time, it's probably a handful of people who had critical mass and the mass is following suit.
If you analyze and act on a market based on an analysis, you are manipulating the market, period. HFT for example happens at time scales never conceived before and are almost undoubtedly market manipulation. The only way not to manipulate the market is to not interact with it.
It really becomes this arbitrary pointing game where subjectivity is thrown into play and favors are called as to who is or isn't breaking the rules. Yes, there are some more established less arbitrary examples of manipulation strategies, but if anyone thinks for a second these are the limit of options available to manipulate investor perceptions, they're naive.
And to spin this further, in the world of growing disinformation or selective information herding campaigns by foreign governments and political organizations swaying elections in the US, how do you deal with those sorts of targeted campaign strategies that are almost undoubtedly, in my opinion, used to manipulate markets as well?
If we can't pinpoint actors threatening the fundamental security of our nation, how do we hope to deal with this in regulating financial systems where blatant abuse is left to pass already.
Seriously, market manipulation goes on all the time at grandiose scales and at small scales. This time, it's probably a handful of people who had critical mass and the mass is following suit.
If you analyze and act on a market based on an analysis, you are manipulating the market, period. HFT for example happens at time scales never conceived before and are almost undoubtedly market manipulation. The only way not to manipulate the market is to not interact with it.
It really becomes this arbitrary pointing game where subjectivity is thrown into play and favors are called as to who is or isn't breaking the rules. Yes, there are some more established less arbitrary examples of manipulation strategies, but if anyone thinks for a second these are the limit of options available to manipulate investor perceptions, they're naive.
And to spin this further, in the world of growing disinformation or selective information herding campaigns by foreign governments and political organizations swaying elections in the US, how do you deal with those sorts of targeted campaign strategies that are almost undoubtedly, in my opinion, used to manipulate markets as well?
If we can't pinpoint actors threatening the fundamental security of our nation, how do we hope to deal with this in regulating financial systems where blatant abuse is left to pass already.
Indeed, just like Matt Levine says everything is potentially securities fraud, everything is probably also market manipulation.
Bank analysts are constantly putting out "ratings" on stocks, price targets, etc. Articles all over the internet and tv are saying to buy this stock or that.
What I find strange is that if all the WSB subreddit just put their money into their own wsb-fund that just bought up all the heavy shorted stocks and did exactly the same thing, they'd call the fund manager a genius.
Market manipulation and pump and dump schemes should refer to the spread of dishonest information in order to move a stock price. But things like short-interest is a public number and the hedge funds self-admitted to being short these stocks--it's not like they went around saying "I got a secret tip that a hedge fund is very short this stock, let's buy it".
Shouldn't it be obvious that just taking the opposite trade to a hedge fund can't be market manipulation, unless taking the same side as a hedge fund would also be market manipulation?
Bank analysts are constantly putting out "ratings" on stocks, price targets, etc. Articles all over the internet and tv are saying to buy this stock or that.
What I find strange is that if all the WSB subreddit just put their money into their own wsb-fund that just bought up all the heavy shorted stocks and did exactly the same thing, they'd call the fund manager a genius.
Market manipulation and pump and dump schemes should refer to the spread of dishonest information in order to move a stock price. But things like short-interest is a public number and the hedge funds self-admitted to being short these stocks--it's not like they went around saying "I got a secret tip that a hedge fund is very short this stock, let's buy it".
Shouldn't it be obvious that just taking the opposite trade to a hedge fund can't be market manipulation, unless taking the same side as a hedge fund would also be market manipulation?
Since when is intent to manipulate the stock price illegal by itself?
If that were true the hedge funds that shorted GME and then released their reports on why they thought it was going to go down would have been operating illegally already.
Or, more generally, any CEO making public statements about their company performance.
Pretty sure you need some extra spice to make it illegal, such as falsifying information.
If that were true the hedge funds that shorted GME and then released their reports on why they thought it was going to go down would have been operating illegally already.
Or, more generally, any CEO making public statements about their company performance.
Pretty sure you need some extra spice to make it illegal, such as falsifying information.
> Yes, Lehman was doing a bunch of stupid stuff, and the management under Dick were behaving like cowboys. But at the end of the day, that was the entire market at that time. What sunk Lehman was, in the end, a decision by all of the other big banks and the regulators that they’d let Lehman die because of something that might be best summarized as “lol idk sorry Dick but we’re just gonna let you go and let the Fed bail the rest of us out sorry bro lol.” Like really. That’s how it went behind those closed doors in the lairs of the lizards that control the universe. Lehman had already suffered near-death in 1994 — the world has now forgotten that Dick was the hero that saved the firm back then — and now it was to be made a sacrificial lamb for everyone else’s benefit.
I thought everyone knew this? It was an open secret that former GS CEO and Sec. Treasury Hank Paulson threw Lehman under the bus only because he was tight with Blankfein and was on bad terms with Fuld. Not to mention, Lehman was a much smaller sonofabitch challenging all the big banks.
I thought everyone knew this? It was an open secret that former GS CEO and Sec. Treasury Hank Paulson threw Lehman under the bus only because he was tight with Blankfein and was on bad terms with Fuld. Not to mention, Lehman was a much smaller sonofabitch challenging all the big banks.
Thank you for your sentiment; I was unsure of the point initially but you really drove home to the concept of retail investors actualizing their significance in this new market.
Of course, I'd like to both as you personally and additionally air out a sentiment of the ease of access being delivered to retail investors. What was once prohibitive has now been given to the individual. Do you have any sentiments that you're willing to share on that notion?
As an additional thought; personally, I can't believe the behavior of some of the brokers that have come to light recently. RobinHood who, as they said in a tweet in 2016 "let the people invest" and now, in 2021 we see how true they maintain their values by restricting the very same people they sought to empower by disallowing trading on their platform. It is despicable.
Of course, I'd like to both as you personally and additionally air out a sentiment of the ease of access being delivered to retail investors. What was once prohibitive has now been given to the individual. Do you have any sentiments that you're willing to share on that notion?
As an additional thought; personally, I can't believe the behavior of some of the brokers that have come to light recently. RobinHood who, as they said in a tweet in 2016 "let the people invest" and now, in 2021 we see how true they maintain their values by restricting the very same people they sought to empower by disallowing trading on their platform. It is despicable.
> I doubt these self-styled “retards” will ever end up as depraved and corrupt as the people they’re disrupting.
But they sure would like to be. I've seen WSB. The entire system is selecting for sociopoaths.
But they sure would like to be. I've seen WSB. The entire system is selecting for sociopoaths.
But it sure is a lot of fun.
Bear Stearns declined to participate in the Fed-organized bailout of LTCM. Ten years later, the Fed declined to participate in any bailout of Bear Stearns.
The Fed had no legal authority to bail out Bear Stearns because Bear Stearns was an i-bank.
The only two i-banks that got help from the Fed were Morgan and Goldman, and they only got it by converting to commercial bank holding companies first. So really, no i-banks got help from the Fed.
The only two i-banks that got help from the Fed were Morgan and Goldman, and they only got it by converting to commercial bank holding companies first. So really, no i-banks got help from the Fed.
Rick may not have been a scumbag, but he walked from the deal that could have saved the bank.
He conveniently left out the fact that Lehman was the only bank that wasn’t helpful during the collapse of Long Term Capital Management, not that it changes anything. Basically the other banks and the NY Fed decided to send a fuck you for not cooperating ten years prior.
What do you mean by not helpful. From the wikipedia on LTCM,
- The contributions from the various institutions were as follows:
- $300 million: Bankers Trust, Barclays, Chase, Credit Suisse First Boston, Deutsche Bank, Goldman Sachs, Merrill Lynch, J.P.Morgan, Morgan Stanley, Salomon Smith Barney, UBS
- $125 million: Société Générale
- $100 million: Paribas and Lehman Brothers
- Bear Stearns and Crédit Agricole declined to participate.
https://en.wikipedia.org/wiki/Long-Term_Capital_Management#1...
- The contributions from the various institutions were as follows:
- $300 million: Bankers Trust, Barclays, Chase, Credit Suisse First Boston, Deutsche Bank, Goldman Sachs, Merrill Lynch, J.P.Morgan, Morgan Stanley, Salomon Smith Barney, UBS
- $125 million: Société Générale
- $100 million: Paribas and Lehman Brothers
- Bear Stearns and Crédit Agricole declined to participate.
https://en.wikipedia.org/wiki/Long-Term_Capital_Management#1...
This tracks with Matt Taibbi’s Griftop (why they let Lehman die).
Ah so Dick was the scapegoat. I've been in similar situations. I've been asked to lie to our clients. I think I wrote about that here before I got downvoted and people tried to doxx me to find out which company it was.
when I refused to go along they turned me into a scapegoat. THIS is why I had to do what I had to do.
when I refused to go along they turned me into a scapegoat. THIS is why I had to do what I had to do.
but Moooom, my brother was also kicking the puppy, why am I the one being punished, so unfair!!1
Yeah that sounds a lot like a story a sore loser would tell. It also sounds a lot like something the recently evicted President would say.
> "these supposed “adults in the room” who are so much smarter and better than the the “retail investors” are pretty much the same sort of immature, self-centered children as the other side. The difference is, they’ve got the regulators and the politicians in their pockets."
Absolutely.
Dick and Trump are examples of scapegoats. Throw someone under the bus publicly, so you can continue doing what you're doing while the public is busy staring at the spectacle.
Absolutely.
Dick and Trump are examples of scapegoats. Throw someone under the bus publicly, so you can continue doing what you're doing while the public is busy staring at the spectacle.
I don't know how it's possible to spin someone who made many public statements disrupting our society's pandemic response from a position of high authority as a mere "scapegoat", but at this point I'm no longer amazed.
There’s a long history of similar occurrences that follow along a common line: whatever appears to support individual investors will be the path taken by politicians and regulatory bodies.
Right now it appears that the public wants to be able to trade on their terms because there is this narrative that the little guy is finally sticking it to the big bad hedge funds. In reality there is probably very little truth to this. However, support for the individual investor plays extremely well which is why you see politicians from both sides joining forces on this issue. A rumor makes it halfway around the world while the truth is still putting its pants on. Nobody is interested in the subtleties around these issues where there almost certainly should be regulations in place or at least warnings from those who do actually know better. But late in bull markets when speculation is running wild those who try to be the voice of reason are run over by the masses until they shut up and go away.
Galbraith wrote about this in the 1950’s and if you read his account of the 1929 crash the parallels are eerily similar. Nobody wants to be told they aren’t making money due to skill but because they’re caught up in a dangerous bubble. In the aftermath of a crash when tremendous sums are lost, nobody blames the speculators, they always find another scapegoat- the regulators, the brokerages, the hedge funds- whomever. It doesn’t matter so long as the speculator is held up as a victim. I expect this to end no differently.
Right now it appears that the public wants to be able to trade on their terms because there is this narrative that the little guy is finally sticking it to the big bad hedge funds. In reality there is probably very little truth to this. However, support for the individual investor plays extremely well which is why you see politicians from both sides joining forces on this issue. A rumor makes it halfway around the world while the truth is still putting its pants on. Nobody is interested in the subtleties around these issues where there almost certainly should be regulations in place or at least warnings from those who do actually know better. But late in bull markets when speculation is running wild those who try to be the voice of reason are run over by the masses until they shut up and go away.
Galbraith wrote about this in the 1950’s and if you read his account of the 1929 crash the parallels are eerily similar. Nobody wants to be told they aren’t making money due to skill but because they’re caught up in a dangerous bubble. In the aftermath of a crash when tremendous sums are lost, nobody blames the speculators, they always find another scapegoat- the regulators, the brokerages, the hedge funds- whomever. It doesn’t matter so long as the speculator is held up as a victim. I expect this to end no differently.
The FOMO is palpable.
There's a hurried rush of small investors hoping to turn their meagre savings into a big win, backed by the anxiety that if they don't try then they'll forever regret missing their one and only chance at a comfortable life.
This sort of event would be less likely if America's wealth disparity weren't so grotesquely skewed.
There's a hurried rush of small investors hoping to turn their meagre savings into a big win, backed by the anxiety that if they don't try then they'll forever regret missing their one and only chance at a comfortable life.
This sort of event would be less likely if America's wealth disparity weren't so grotesquely skewed.
Everything on WSB states this is a bad investment plan and is more to bankrupt Melvin because they tried to bankrupt Gamestop. Short sellers have been using the down turned economy to collapse struggling companies that hire everyday people.
What's funny is how the HN community tries to defend the firms they've whined about for years. Is what's going on irrational? Yup. But it pulls back the curtain of what the financial firms do to the economy and their own manipulation tactics.
What's funny is how the HN community tries to defend the firms they've whined about for years. Is what's going on irrational? Yup. But it pulls back the curtain of what the financial firms do to the economy and their own manipulation tactics.
Here's what oh-so-many people are missing: the gigantic volume in these stocks is no longer coming from the WSB YOLO bros who know they'll lose money but think that's worth it to stick it to hedge funds. That may well be who was getting into the stock on Monday and Tuesday. But now it is people who saw the story on Good Morning America, having never previously heard of WSB or Robinhood, who don't care about hedge funds or any of that, but just got the impression from the news that hey this stock is going way up and that must mean it is a way to make a quick buck. And those are the people who are actually going to get screwed, not the hedge fund managers, who will be just fine.
And what about all the people who watch MSNBC and CNBC and Cramer, do they need to stop pushing stops as good or bad too? They tell lots of people "who don't care about hedge funds or any of that, but just got the impression from the news that hey this stock is going way up and that must mean it is a way to make a quick buck" too.
None of this could have happened if they weren't shorting GME at 143%+ of float. They were greedy, this is the consequence. In 2006-2008, they ALL were greedy and so the government had to bail them out. No lessons were learned. If the SEC wants to do something, remove these instruments that allow infinite leverage and collapses.
None of this could have happened if they weren't shorting GME at 143%+ of float. They were greedy, this is the consequence. In 2006-2008, they ALL were greedy and so the government had to bail them out. No lessons were learned. If the SEC wants to do something, remove these instruments that allow infinite leverage and collapses.
They were greedy, they over leveraged their positions, and when the market called them out on it exactly like it’s supposed to, they just turned the market off. Im almost surprised someone hasn’t been arrested for that move yet.
We let big players partake in risky things like shorting GME above 100% float because we don't care if they lose. It's the same reason we allow them to invest in companies like Theranos. They know the risks they were getting into and will still be fine without a extra 0 in their bank account. Regular followers of WSB are aware of the risks as well, so I'm fine with them attempting a short squeeze. The problem is that they're encouraging regular people to join their crusade against hedge funds who are most likely going to time the market incorrectly. What's worse is that most of the world, including politicians are cheering them on.
Except hedgefunds only trade money from accredited investors, i.e. people who can afford to lose a lot of money. They also typically aren't swayed by TikTok videos and short explainers of how shorts work designed to hype up GSE. The point is that Robinhood investors are being exploited.
Can you explain how you're disagreeing with me?
I disagreed with the statement about WSB users knowing what they're doing. Upon closer reading I think our larger points are the same. All over the internet I'm seeing sleazy promotions for GameStop stock targeted at young people who are inexperienced with trading. Anyone left holding GameStop stock when this ends will lose a lot, i.e. most of WSB.
Then you haven't been paying attention to WSB. WSB knows full well they will lose everything. We call it Loss Porn and it gets us going. When you see 5,6,7 figures in losses you get desensitised to it. It's a casino, yes we sometimes make money, we call that the first time, you know, the first one is free.
Besides the jokes and the memes, Chamath went on CNBC and argued that WSB provided very good due diligence in some instances. Yes a lot of it is utter garbage, no doubt, but when there are specialists there able to call each other out, you get to see good analysis.
Besides the jokes and the memes, Chamath went on CNBC and argued that WSB provided very good due diligence in some instances. Yes a lot of it is utter garbage, no doubt, but when there are specialists there able to call each other out, you get to see good analysis.
What a lot of you are missing is that this isn't happening within your little WSB playground anymore. It's just a regular stock frenzy now, it's not even really all that relevant anymore how it started.
I agree, unequivocally, my comment was meant to point the parent comment is filled with ignorance.
Haven't been paying attention... It must not be in the news, right? This is more of a niche interest, not getting any attention. Hard to pay attention to. You really have to be focused on WSB subreddit to know what's going on, right? It's really a few key people understand it. Anyways, yeah, GameStop is a great company with a great stock and some evil hedgefund is going to lose billions for trying to manipulate the price!
And that is a straw-man, I never claimed any of what you are accusing. You have nothing to say, so you twist the words. Quite sad actually to see this in Hackernews of all places.
I claimed that if you have your information about WSB from anyone but yourself, you have most likely been duped in some way or another and that is evident by how you talked about WSB, full of ignorance.
> Anyways, yeah, GameStop is a great company with a great stock and some evil hedgefund is going to lose billions for trying to manipulate the price!
Nobody said GME is a great company. What are the odds the proletariat on reddit throwing money into the fire pit in an attempt to hurt the rich is attempting to con you, and what are the odds somebody who stands to lose billions and already lost is?
gmedd.com, or you know, do your own DD.
I claimed that if you have your information about WSB from anyone but yourself, you have most likely been duped in some way or another and that is evident by how you talked about WSB, full of ignorance.
> Anyways, yeah, GameStop is a great company with a great stock and some evil hedgefund is going to lose billions for trying to manipulate the price!
Nobody said GME is a great company. What are the odds the proletariat on reddit throwing money into the fire pit in an attempt to hurt the rich is attempting to con you, and what are the odds somebody who stands to lose billions and already lost is?
gmedd.com, or you know, do your own DD.
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No one who has been in WSB for a while wants the publicity, believe me. No one who has been around views this as some noble moral crusade. But WSB went from <1M subs in 2019 to 2M by end of 2020, to 6M now. We didn’t magically orchestrate it, they flocked to WSB after every media outlet in the world mentioned it for a week+ straight since Gamestop happened. Its an open forum and we don’t decide who joins, or when, or what they post. When 4M new people show up in a sub of 2M in a week, its Theseus’ ship twice over at warp speed.
Yep, this is my point, not that it's necessarily WSB's fault that a bunch of regular people are jumping on a bandwagon and going to get screwed, just that it is happening and is bad. I think it is more the fault of mainstream news editors and Elon Musk than of WSB regulars.
You're mushing together two separate issues. Shorting GME at 100+ is not in itself a problem. (There's an argument that it dilutes the stock, makes it harder for the underlying company to turn around, because market sentiment is already against them, see investment reflexivity theory, etc.)
There's a problem with bailing out big companies again and again. While not bailing out small investors (directly).
The other problem is that there's no real defense against CNBC/Twitter amplified end-user stupidity: https://www.youtube.com/watch?v=lMUtU0tOmNE
Every stock trading app/site/service requires submitting tons of "risk declaration" forms. (Sure, all of it is next next finish. It's the EULA/TOS all again, but with money.) And that's the problem.
There's a problem with bailing out big companies again and again. While not bailing out small investors (directly).
The other problem is that there's no real defense against CNBC/Twitter amplified end-user stupidity: https://www.youtube.com/watch?v=lMUtU0tOmNE
Every stock trading app/site/service requires submitting tons of "risk declaration" forms. (Sure, all of it is next next finish. It's the EULA/TOS all again, but with money.) And that's the problem.
I haven’t watched Cramer regularly in a long time, but unless he changed, this isn’t what he does.
He has an entertainment component, but fundamentally encourages people to educate themselves and manage a portfolio of stocks who choose to do so.
The mob bullshit we’re seeing now is just the new normal - brigades of internet idiots, motivated by profit or ignorance to run around like a drunken monkey. It’s no different than the political drama we’ve seen fomented by irresponsible social media like Twitter, Facebook, Reddit, etc.
He has an entertainment component, but fundamentally encourages people to educate themselves and manage a portfolio of stocks who choose to do so.
The mob bullshit we’re seeing now is just the new normal - brigades of internet idiots, motivated by profit or ignorance to run around like a drunken monkey. It’s no different than the political drama we’ve seen fomented by irresponsible social media like Twitter, Facebook, Reddit, etc.
CNBC / Cramer type stuff is pretty bad too IMO, but way less mainstream than network news talking about how a single stock is a rocket ship and making all these regular joes (just like you!) oodles of cash.
Greed is really only a problem when your actions ultimately hurt someone else.
In general, shorting stocks is a beneficial action because it helps prevent shares from becoming overvalued.
So, yea, the fact that GME had 143% of its shares shorted is a function of greed. But, no, greed in this case was not a problem so long as GME's share price was fairly valued.
In general, shorting stocks is a beneficial action because it helps prevent shares from becoming overvalued.
So, yea, the fact that GME had 143% of its shares shorted is a function of greed. But, no, greed in this case was not a problem so long as GME's share price was fairly valued.
Is "fair value" an objective metric in this context?
Yea, it's objective in the sense that it's the net present value of all future cash flow. Many unknowns in that formula, of course.
So it's WSB fault that the news outlets spun the narrative to confuse people?
Sorry, but hasn't the news spinning and generally misconstruing news stories to the benefit of their advertisers and financiers agendas been the issue the past few years?
Sorry, but hasn't the news spinning and generally misconstruing news stories to the benefit of their advertisers and financiers agendas been the issue the past few years?
What narrative? I've seen every possible article on the topic in the last two days. Every single narrative exists. Brilliant retail investors. David and Goliath. Idiotic YOLOing. Claims that Robinhood, etc are in cahoots to sabotage people. Claims that this isn't about the money and actually it is about screwing the rich. The squeeze is illegal/legal. The trading halts are illegal/legal.
There is clearly no coordinated agenda among news agencies here. It is a compelling story and a bunch of people wrote their hot takes on the topic.
There is clearly no coordinated agenda among news agencies here. It is a compelling story and a bunch of people wrote their hot takes on the topic.
What about my comment seems to say that it is WSB's fault? I didn't comment on whose fault it is and I don't care, I just think pretty much everyone is acting like the only two parties involved are WSB memers and hedge funds. And maybe that was true for awhile. But it isn't now, there are lots of unsophisticated people who have bought into the frenzy and in a few months all the stories will be about how those people got screwed. Meanwhile, both the WSB folks and the hedge funds will be doing just fine.
Nobody cares about the people who are "unsophistocated people who have bought into the frenzy", especially if they get screwed. Further, they shouldn't care about them because anyone who doesn't understand what's going on deserves to get whatever happens to them. Stock trading is high risk, high reward, and that should be clear to everyone.
The problem is that hedge funds constantly benefit from a much lower risk due to market structures designed to stabilize the market. Many of the WSB people are willing to risk a big large loss in order to reveal this flaw of the system. Many of them will not be fine, and, if they're successful, some hedge funds will be bankrupt and all of them will be scared moving forward.
The problem is that hedge funds constantly benefit from a much lower risk due to market structures designed to stabilize the market. Many of the WSB people are willing to risk a big large loss in order to reveal this flaw of the system. Many of them will not be fine, and, if they're successful, some hedge funds will be bankrupt and all of them will be scared moving forward.
> Nobody cares about the people who are "unsophistocated people who have bought into the frenzy", especially if they get screwed.
This is in fact exactly who most people care about, in this situation. It may not be who the extremely-online people that this board is mostly comprised of care about, but they are not most people.
> Further, they shouldn't care about them because anyone who doesn't understand what's going on deserves to get whatever happens to them.
This is directly at odds with how markets are regulated, because there is a long history of this thinking leading to widespread scams and cons.
This is in fact exactly who most people care about, in this situation. It may not be who the extremely-online people that this board is mostly comprised of care about, but they are not most people.
> Further, they shouldn't care about them because anyone who doesn't understand what's going on deserves to get whatever happens to them.
This is directly at odds with how markets are regulated, because there is a long history of this thinking leading to widespread scams and cons.
The news has a long history of prevaricating. “Remember the Maine.” It is only recently that folks are waking up to what Chomsky spent a lifetime explaining. The awakening is accelerating. Assange and Snowden, the naked media lying in the 2020 election, and now Wall Street manipulation is being exposed. We never had a reckoning after 2008. If this becomes an infinite runaway squeeze. Who will get bailed out?
That's quite plausible, but where could we look to see if that was true?
I know people at work joining Slack conversations about this and asking how to set up an account and how to buy the stock, while fully admitting they don't know anything about stock and have never bought any before. From their comments, it seems like they just want to throw their money at this since it seems like a good bet.
Yep, of course that's what is happening. There is a story all over the news that reads to most people as exactly this: "this stock is going up and making everyone rich, you are missing out".
> But now it is people who saw the story on Good Morning America
Most of those people don't own stock and don't know how to buy stock.
And I would guess most of them tune out stories about stocks going up or down like they tune out commercial breaks or the business segment of news shows.
Most of those people don't own stock and don't know how to buy stock.
And I would guess most of them tune out stories about stocks going up or down like they tune out commercial breaks or the business segment of news shows.
They don't know how to buy stock until they see the mainstream news say "download this app called Robinhood in order to buy this stock that will make you rich", which is why Robinhood rocketed to the top of the app store charts this week.
Most people do not tune out stories of the form "do this simple thing to get rich". It's the same reason endless coverage of the lottery gets good ratings.
Your mental model of how stock bubbles work is not accurate.
Most people do not tune out stories of the form "do this simple thing to get rich". It's the same reason endless coverage of the lottery gets good ratings.
Your mental model of how stock bubbles work is not accurate.
Why would shorting Gamestop mean making it to go bankrupt? The falling stock price of a company doesn't cause a company to go bankrupt, the causality is in the other direction. Putting downward pressure on price is useful only if you want to do a hostile takeover.
Because Gamestop is a business that is in the process of adapting to changing market conditions, which generally requires capital, and when market analysts go big on shorting in public it depresses stock price, and issuing stock is a major common method by which businesses raise capital.
As another example, lots of people assume Elon Musk got mad at short sellers because he took it personally, when in fact they were fucking with his ability to raise money he needed to ramp up production and meet manufacturing goals.
These things don't happen in a vacuum. Large funds making public bets against a company have a material impact on that company's liquidity.
As another example, lots of people assume Elon Musk got mad at short sellers because he took it personally, when in fact they were fucking with his ability to raise money he needed to ramp up production and meet manufacturing goals.
These things don't happen in a vacuum. Large funds making public bets against a company have a material impact on that company's liquidity.
Short-sellers are part of the free market. They are how the equation balances itself when trying to find the "true value" of a concern, or at least an approximation thereof.
Obviously the person who owns stock, or is set to earn billions when the share price reaches a certain level is going to be adversarial to someone whose actions result in the share price being depressed - even if that is the fair value.
> Large funds making public bets against a company have a material impact on that company's liquidity.
There are always bigger fish - and if the public bet is wrong, someone can, and will earn money at the funds' cost.
Edit: shareholders dislike shorts the same way employers dislike employees sharing salary information; it's a losing proposition for them, but a fair one.
Obviously the person who owns stock, or is set to earn billions when the share price reaches a certain level is going to be adversarial to someone whose actions result in the share price being depressed - even if that is the fair value.
> Large funds making public bets against a company have a material impact on that company's liquidity.
There are always bigger fish - and if the public bet is wrong, someone can, and will earn money at the funds' cost.
Edit: shareholders dislike shorts the same way employers dislike employees sharing salary information; it's a losing proposition for them, but a fair one.
I would like you to show me where this free market is, because it certainly isn't NYSE. The minute anything unexpected happens we're hit with trading halts, brokers riding the line of insolvency, SEC investigations, and congressional freakouts.
> Short-sellers are part of the free market
Not when they get to simply turn off the half of the market moving against them they aren't.
Not when they get to simply turn off the half of the market moving against them they aren't.
This narrative that GameStop is actually a good company and it's turning around despite all the short interest is pure bologna. Worse, it's intentionally misleading and often espoused by people who have a financial interest in the company. It's crazy to see people in this forum, who are typically tech forward, hype up the business model of selling physical copies of video games.
This is a common reaction to people who haven't followed Gamestop for a while. Cohen and RC Ventures bought in a while ago and have been pushing for the company to pivot out of the brick-and-mortar focus. This is why 'people who have a financial interest' are talking this way. Everyone involved recognized this would be an expensive proposition. Then the short sellers showed up.
I think focusing on how it hurt GameStop isn’t the right perspective here. I think it’s more about how greedy and over-leveraged the short holders were. When average Joe goes crazy over-leveraged, the entire world says “well duhh, you took a risk and now you have to pay.” But when a hedge fund does it, they get to just make a call to turn the market off for a few hours and try to bail out their shorts? The hypocrisy is stunning.
"Over leveraged" typically means you traded too much on credit in proportion to how much collateral you have, not that the trade is risky. A very large short position is reasonable for a company that is likely to go out of business.
I understand what over leveraged means. This was /also/ an incredibly risky short to start. I’m not convinced that GameStop was ready to go out of business. Struggling, sure, pandemic and all that, and that would justify a put position, but the market also reacted exactly how it’s allowed to and called out a short positions bluff.
NoOneNew(2)
I think what really turned up the anger level on this specific instance is that they just turned the market off when it didn’t go their way. That’s just such a colossal breach of trust.
> What's funny is how the HN community tries to defend the firms they've whined about for years.
Aren't you over-generalizing just slightly? Even in a post with many comments, only a small number of community members (if this is a community at all) post anything. And not a huge number vote, either.
Aren't you over-generalizing just slightly? Even in a post with many comments, only a small number of community members (if this is a community at all) post anything. And not a huge number vote, either.
I noticed this recent trend of stuff turning annoying political in that sub. There is so much trash being posted now drowning out useful DD. I think at the end of the day, the original WSB crowd cares way less about political statements and solely making money.
Correct me if my understanding is wrong, but more than a political statement, this seems to be indeed a way to make the most money possible. Political tones are a satisfying sprinkle for many, but what everyone understands there is the more they hold, the higher the value gets. We will be able to judge by the result shortly.
According to the best evidence, Melvin has no short position (they may even actually be long now). So the entire WSB narrative is a lie being used to pump up the stock. The subtleties matter here.
My Facebook feed is filled with people talking about this. These are friends I have know for years who have never mentioned stocks before but now are talking about "holding the line".
It is FOMO for sure, but the real emotions I get from talking with people are outrage and revenge. Everyone feels like the system (economic and political) is rigged against the public. The dopamine hit from sticking it to the man is palpable.
It is FOMO for sure, but the real emotions I get from talking with people are outrage and revenge. Everyone feels like the system (economic and political) is rigged against the public. The dopamine hit from sticking it to the man is palpable.
That would be useful if they were actually sticking it to the man. But that isn't what's happening here. What's happening is a big bubble where most of these regular people are gonna lose lots of money while the hedge funds end up closing out their position for a manageable loss and come out just fine.
For sure. This is a terrible way to "stick it to the man" and i've encouraged everyone i've talked to about this to stay far away. Unfortunately emotions have really taken hold. Greed is a hard one to talk people down from but doable. Anger and outrage pretty much impossible.
... not to mention the few smarter hedge funds and mutual funds that quickly jumped in an out of this and made substantial gains, leaving everyone who thinks they are "holding the line" even more "on the line".
Ehh, the short ratio is still over 100%, and I guarantee you those aren't retail investors. So plenty of institutional investments to stick it to left.
You don't know when those shorts got in. The price is clearly too high now, so it makes sense that sophisticated investors (probably other hedge funds) would be entering short positions at the recent prices. And those recent entrants will not be squeezed unless the price goes up by another ludicrous amount, which it is less likely to do now that the initial surge of enthusiasm is running its course. So lots of retail traders who got into the frenzy late with normal stock purchases at these absurd prices will get screwed during the inevitable crash, while the recent shorters will make a killing.
I see it too and I think the idea of making money is mixed up in the concept of revenge, like “finally I’m going to trick Wall Street out of some money instead of the other way around.” But it’s not going to happen that way for most people.
I see the idea parroted a lot that if everyone holds the line, the shorts will have to buy every outstanding share of GME stock at whatever inflated price it’s at. They won’t, though. The bubble will pop.
I see the idea parroted a lot that if everyone holds the line, the shorts will have to buy every outstanding share of GME stock at whatever inflated price it’s at. They won’t, though. The bubble will pop.
Even if it was true, much of the anti-Wall Street sentiment is a scapegoat for their avarice.
It strikes me that the outrage is free-floating and waiting to be weaponised by whoever finds the words to trigger it and point it at a target. Until very recently this was the pro-Trump faction; having stormed the Capitol and got some of their leaders arrested that has gone quiet. So there must be a new disinformation magnet on the internet - and this is it.
> These are friends I have know for years who have never mentioned stocks before but now are talking about "holding the line".
That's what radicalization sounds like.
> These are friends I have know for years who have never mentioned stocks before but now are talking about "holding the line".
That's what radicalization sounds like.
Radicals aim for the root of the problem.
In these times it’s revealing that there seems to be a severe lack of solidarity and trust. In a crisis it is paramount that everyone does their best and that the strong carry the weak. That’s a very fundamental property of a community. But instead the inequality rises and many fear for their livelihoods. This erodes trust and can turn fear into anger.
At some point in the future there will be the last straw. It might be the financial crisis, the environment, war or everything at the same time. The kinds of problems cannot be explained away; excuses and lies won’t help. Only a sharp turn towards solidarity and sustainability can avert it.
In these times it’s revealing that there seems to be a severe lack of solidarity and trust. In a crisis it is paramount that everyone does their best and that the strong carry the weak. That’s a very fundamental property of a community. But instead the inequality rises and many fear for their livelihoods. This erodes trust and can turn fear into anger.
At some point in the future there will be the last straw. It might be the financial crisis, the environment, war or everything at the same time. The kinds of problems cannot be explained away; excuses and lies won’t help. Only a sharp turn towards solidarity and sustainability can avert it.
That's not the sense I'm getting at all. Oh im sure there are those involved who fit the description. But for most, it isn't about making money at all. Its about financial warfare with "the man".
The overwhelming majority of examples I have seen so far are only concerned with causing hedges funds to collapse and to put brokers out of business, personal losses be damned.
And I see little reason to doubt this. Everyone knows Gamestop is a company with an obsolete business model, a bad reputation and little chance of turning things around. Everyone knows that there is little to no chance of making any money on holding. But $500 isn't a lot of money. 3 million people each putting $500 in to GME is. Obviously there are some who are putting in far more. Current market cap is $24 billion. Its coming from somewhere. I suspect once this is all over we will find that some major players got involved as well and put a lot of money into GME to topple their rivals. But that isn't the main narrative and most of the people buying in are doing so to make a statement.
This has started a discussion. A lot of people are getting a 101 education on how the stock market really works and they are learning just how little it actually has to do with real value and the economy. I predict there will be serious public pressure for regulatory reform. People are going to want to make shorting and high speed trading illegal.
The overwhelming majority of examples I have seen so far are only concerned with causing hedges funds to collapse and to put brokers out of business, personal losses be damned.
And I see little reason to doubt this. Everyone knows Gamestop is a company with an obsolete business model, a bad reputation and little chance of turning things around. Everyone knows that there is little to no chance of making any money on holding. But $500 isn't a lot of money. 3 million people each putting $500 in to GME is. Obviously there are some who are putting in far more. Current market cap is $24 billion. Its coming from somewhere. I suspect once this is all over we will find that some major players got involved as well and put a lot of money into GME to topple their rivals. But that isn't the main narrative and most of the people buying in are doing so to make a statement.
This has started a discussion. A lot of people are getting a 101 education on how the stock market really works and they are learning just how little it actually has to do with real value and the economy. I predict there will be serious public pressure for regulatory reform. People are going to want to make shorting and high speed trading illegal.
> A lot of people are getting a 101 education on how the stock market really works and they are learning just how little it actually has to do with real value and the economy.
I don’t see how you can draw this conclusion from these events. If this level of price volatility was commonly caused by market participants, then it would be such big news when it happens. They’re not common at all, they represent a small number of events where a small number of shares were traded overvalue for very short periods of time. Nobody is concerned that stocks are overvalued because short squeezes are just happening all the time. Squeezes are also short sellers getting punished for trying to profit off somebody else’s losses, which as far as I can tell most people think is very morally righteous. The only time they’re controversial is when intervention occurs to rescue the short seller.
I don’t see how you can draw this conclusion from these events. If this level of price volatility was commonly caused by market participants, then it would be such big news when it happens. They’re not common at all, they represent a small number of events where a small number of shares were traded overvalue for very short periods of time. Nobody is concerned that stocks are overvalued because short squeezes are just happening all the time. Squeezes are also short sellers getting punished for trying to profit off somebody else’s losses, which as far as I can tell most people think is very morally righteous. The only time they’re controversial is when intervention occurs to rescue the short seller.
It's kind of depressing when you look at these crazy success stories of lottery winners. You realize even a small bet at the right time could be life-changing.
Let's say instead of buying a Latte every working days at starbucks over the last five years you had invested it in tesla stocks. Or maybe for every starbucks latte you drank, you invested the same amount in ETF and in Tesla (pay 3 latte, drink one). Where would your life be? Would you still be at your 9-to-5 or would you go work for that non-profit? Or would you just be lazing around on the sofa or at the beach sipping pina-coladas?
Anyway, sometimes it takes a lot of energy to deal with the KIMO (Know I Missed Out).
Let's say instead of buying a Latte every working days at starbucks over the last five years you had invested it in tesla stocks. Or maybe for every starbucks latte you drank, you invested the same amount in ETF and in Tesla (pay 3 latte, drink one). Where would your life be? Would you still be at your 9-to-5 or would you go work for that non-profit? Or would you just be lazing around on the sofa or at the beach sipping pina-coladas?
Anyway, sometimes it takes a lot of energy to deal with the KIMO (Know I Missed Out).
Totally know what you mean. What I do is just assume I'm going to have to work until I die, and keep angling toward work I tolerate better. I try to invest wisely, maintain a few months of cash savings, etcetera, but don't think about it otherwise. Money is imaginary and anything could happen to it at any moment.
If once in a while I want to use some of my disposable income to spin a roulette wheel or buy GME, and can keep it under control, I see no problem. If I win, it's a nice surprise. But if I don't feel like playing, of course I won't win anything.
Despite having watched it since Monday or before, I don't think about what I could've won on GME this week any more than what I could've won at some dog track. I decided not to play, and that's that. My life continues on as normal.
If once in a while I want to use some of my disposable income to spin a roulette wheel or buy GME, and can keep it under control, I see no problem. If I win, it's a nice surprise. But if I don't feel like playing, of course I won't win anything.
Despite having watched it since Monday or before, I don't think about what I could've won on GME this week any more than what I could've won at some dog track. I decided not to play, and that's that. My life continues on as normal.
It's funny, because I was visiting Gamestop's website last November trying to find a Pink 3DS and remember thinking, 'oof, Gamestop's website is in bad shape'.
When I get the FOMO urge I think about how BBY just sucks as a store, how much better Netflix is than AMC, and how airlines regularly go bankrupt.
I believe that GameStop has a future as they have a lot of mind share and goodwill. But they need to get rid of their brick and mortar stores.
When I get the FOMO urge I think about how BBY just sucks as a store, how much better Netflix is than AMC, and how airlines regularly go bankrupt.
I believe that GameStop has a future as they have a lot of mind share and goodwill. But they need to get rid of their brick and mortar stores.
The idea behind buying those companies wasn't that they had a lot of a future, it was that they had more of a future than their price estimated.
The best analysis is always against the company itself:
- SBUX instead of buying Starbucks
- MO instead of buying cigarettes (see The Millionaire Next Door for this analysis)
- LVMH instead of buying LV, M, or H
- NVDA instead of buying video cards and AAA games
- CVS instead of shopping at convenience stores
- SBUX instead of buying Starbucks
- MO instead of buying cigarettes (see The Millionaire Next Door for this analysis)
- LVMH instead of buying LV, M, or H
- NVDA instead of buying video cards and AAA games
- CVS instead of shopping at convenience stores
This doesn't seem to be saying anything about those companies though. It's just that you will do better financially if you invest money instead of spending it.
Well...yeah.
Well...yeah.
Many just want to screw the hedge funds, finally it's their blood in the water.
The "their" in your sentence can be read as ambiguous as to which parties its referring to, aptly.
With crud like rwsb posters asking if letting their deep in-the-money calls expire unassigned will screw the funds more-- it may well be the case that it isn't fund blood in the water that you see in this feeding frenzy, at least not anymore.
With crud like rwsb posters asking if letting their deep in-the-money calls expire unassigned will screw the funds more-- it may well be the case that it isn't fund blood in the water that you see in this feeding frenzy, at least not anymore.
Absolutely. Many view this as a donation to a political cause that has tangible outcomes. The ROI is watching hedge funds implode.
I bunged in $50 into GME this morning because why the hell not. If pubs ever reopen I can spend another $50 on a round of drinks with mates and legitimately say "we took on the wall street parasites". The truth doesn't matter, the end doesn't matter, the tale is the reward.
I don't get this. I can't imagine the professional investor class is still blindly following their shorts. They're all out by now, aren't they? If the "little guys" are making money I tend to think it's coming from other little guys.
The truth of the matter is that hedge funds and institutions are quietly the ones actually pumping these stocks. Reddit likes to paint a narrative that they are in control, but when their messiah has 50MM max of securities and options, meanwhile single trades are going through worth over 700MM, the narrative just doesn't make sense. This is a battle of Wall Street vs Wall Street with some retailers playing along as pawns. Most likely, starry eyed retailers are going to be the ones holding the bag when it all comes down because they're playing a game without even knowing who they're up against.
As for the shorts, Melvin and Citron are out but new shorters get in every day. The higher the price goes the more incentive there is to short. Most will probably lose money as the bubble inflates. But a few will make out like kings when it pops.
As for the shorts, Melvin and Citron are out but new shorters get in every day. The higher the price goes the more incentive there is to short. Most will probably lose money as the bubble inflates. But a few will make out like kings when it pops.
The "short" (haha) answer is that we just don't know what the funds have done during the last week. They're incentivized to mislead the public about closing their positions. But the technical reasons the gamma squeeze happened and possible short squeeze today could happen still make sense: the equity has oversubscribed short interest and a skyrocketing price.
I'm kind of amazed how little transparency there is in the stock market. Everyone seems to be guessing. The unequal amount of information for regular people is really unfair and seems like an easy situation for corruption to take place
Believe it or not there is strong evidence that more shorts are being added.
Consider a potential attitude that Citadel is going to get away with this blocking. I mean, maybe ... just maybe ... they'll get an SEC fine of a few hundred million (while protecting many hedge funds from billions in losses). In a worst case scenario a sacrificial scapegoat or two goes to a minimum security country club or house arrest for 6 months/1 year. But that will take a few months/years to come to pass and public sentiment will be much less hot. So they're probably gonna force the price down to unwind existing shorts.
So, since there is a potential that the price will be pushed down due to the above ... doesn't it make sense to open a new short position?
Consider a potential attitude that Citadel is going to get away with this blocking. I mean, maybe ... just maybe ... they'll get an SEC fine of a few hundred million (while protecting many hedge funds from billions in losses). In a worst case scenario a sacrificial scapegoat or two goes to a minimum security country club or house arrest for 6 months/1 year. But that will take a few months/years to come to pass and public sentiment will be much less hot. So they're probably gonna force the price down to unwind existing shorts.
So, since there is a potential that the price will be pushed down due to the above ... doesn't it make sense to open a new short position?
No. Apparently other hedge funds got in line behind Melvin with even more aggressive shorts.
Why would you short when you can buy a put option?
Your gain in delta (due to the stock moving) will be offset by your loss in vega (due to the volatility coming off after the impending crash). Option fair value is a function of both underlying price and volatility, which is currently at unprecedentedly high values.
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IV crush
Of course! Many are living hand-to-mouth in dismal conditions and unable to afford basic necessary expenses, while they see robber barons making a killing by putting thousands of already-poor people out of work.
Hating the hedge funds is rational, for many.
Hating the hedge funds is rational, for many.
When hindsight points out the opportunities that you overlooked which would have giving you that comfortable life it infects all future decision making.
Is there a spoiler tag on HN ? These ones still hurt:
There is a lot of thing one could have done "for the LULz" but decided to browse HN, Imgur or Reddit instead.
- Bitcoin. I heard about it when it was still possible to mint it on CPU, but chose to run SETI@Home instead.
- Bitcoin when it was at merely $9000.
- Ethereum when it was going under $1.
- Dogecoin like anytime before yesterday (up 6x or something today).
- #GME when options where pennies on the dollar, or even the stock at $20 in early January.
- $Tesla in January, February, March of 2020 or anytime before the split.
- $Tesla instead of putting down $1000 to reserve a slot to buy a model 3 at its announcement, put it in the stock, or even better, in long dated calls.
- $Amazon or $Apple last march or anytime before that.
- $SPCE after it crashed in March (a WSB hyped stock)
There is a lot of thing one could have done "for the LULz" but decided to browse HN, Imgur or Reddit instead.
- Bitcoin. I heard about it when it was still possible to mint it on CPU, but chose to run SETI@Home instead.
- Bitcoin when it was at merely $9000.
- Ethereum when it was going under $1.
- Dogecoin like anytime before yesterday (up 6x or something today).
- #GME when options where pennies on the dollar, or even the stock at $20 in early January.
- $Tesla in January, February, March of 2020 or anytime before the split.
- $Tesla instead of putting down $1000 to reserve a slot to buy a model 3 at its announcement, put it in the stock, or even better, in long dated calls.
- $Amazon or $Apple last march or anytime before that.
- $SPCE after it crashed in March (a WSB hyped stock)
The key to managing this FOMO for me is really committing emotionally to the concept of hindsight bias.
We remember the winners we missed way more than the losers, because the winners are still present in our lives today, whereas the losers never became noteworthy (because they lost).
But it’s extremely difficult to tell them apart ahead of time. So current me needs to give past me a pass... past me failed at something that is very difficult; no shame in that. Wistful regret, maybe, in a “what if...” kind of way, but I think everyone has those in their life, and not just about money.
We remember the winners we missed way more than the losers, because the winners are still present in our lives today, whereas the losers never became noteworthy (because they lost).
But it’s extremely difficult to tell them apart ahead of time. So current me needs to give past me a pass... past me failed at something that is very difficult; no shame in that. Wistful regret, maybe, in a “what if...” kind of way, but I think everyone has those in their life, and not just about money.
A mental exercise I do to manage FOMO is to try and remember duds that I pondered might be the next BTC. Admittedly, it's hard because the brain really tries to forget about those. Keeping a diary is probably the key here.
And then you get the ones like Dogecoin that were supposed to be a dud, and it's still around more than 5 years later and just had a massive spike today until RH decided to restrict the use of instant deposits to buy it.
Can't have the poors making money!
Can't have the poors making money!
I have this unsupported idea that after I get a win I won't be as hard on myself for past errors. Like the 3 BTC I had to sell when it was at $3k.
Dogecoin is ... Just _why_?
There's no limit on the number of coins. Mining is designed to be forever-easy. The coin is _designed_ for rapid deflation.
Why are people treating it as anything other than the joke it was intended to be?
There's no limit on the number of coins. Mining is designed to be forever-easy. The coin is _designed_ for rapid deflation.
Why are people treating it as anything other than the joke it was intended to be?
> There's no limit on the number of coins. Mining is designed to be forever-easy. The coin is _designed_ for rapid deflation.
Yes, but the increase in coins is constant. So as a percentage of available supply, the inflation rate approaches 0%.
Right now, there are 128,000,000,000 DOGE in circulation. The block target for Doge is 1 minute, with a reward of 10,000 DOGE, which gives a yearly minting of 5,256,000,000 doge, which gives and inflation rate of 4.11%. Next year, another 5.256T gets added, which is an inflation of 3.94%.
And of course, since it's a cryptocurrency, there are bound to be permanent losses in the supply because of people losing their wallet files. This is difficult to track because even with a public ledger, there's no way to be sure if unspent DOGE is simply not being spent, or if the private key to spend it was lost.
Yes, but the increase in coins is constant. So as a percentage of available supply, the inflation rate approaches 0%.
Right now, there are 128,000,000,000 DOGE in circulation. The block target for Doge is 1 minute, with a reward of 10,000 DOGE, which gives a yearly minting of 5,256,000,000 doge, which gives and inflation rate of 4.11%. Next year, another 5.256T gets added, which is an inflation of 3.94%.
And of course, since it's a cryptocurrency, there are bound to be permanent losses in the supply because of people losing their wallet files. This is difficult to track because even with a public ledger, there's no way to be sure if unspent DOGE is simply not being spent, or if the private key to spend it was lost.
You can still make money of a joke if you are quick enough! Just @-mention Elon and here you go.
I really have no idea, but your question suggests its own answer: fiat currencies are also designed for eternal inflation (I think you swapped inflation with deflation) and many people consider that a boon.
The problem is the word inflation vs deflation.
When too much fiat is printed, it decreases its value and is called inflation.
But when assets lose value, it is called deflation.
So, do you call cryptocurrency a fiat currency or a speculative asset? Because falling value will happen, it will be just termed inflation or deflation.
When too much fiat is printed, it decreases its value and is called inflation.
But when assets lose value, it is called deflation.
So, do you call cryptocurrency a fiat currency or a speculative asset? Because falling value will happen, it will be just termed inflation or deflation.
Live long enough and there'll be plenty more. I'll have more regret over that girl I never spoke to.
Yeah, but (don't) think about where your life would be today if you had done those thing earlier. It's like you knew the winning numbers to the Powerball and just didn't tick the numbers at the shop. It just sometimes when life gets you down these thoughts just poke at you.
Same thing with the girl one never talked to.
Same thing with the girl one never talked to.
At least Doge has a small transaction fee. 2¢ For Doge vs like $7 for Bitcoin. Might actually be useful as a currency like Satoshi intended in his paper (lower transaction cost than credit cards). But of course those low fees are because it’s not popular.
You can rest easy knowing that most of these things provide practically no utility to anyone (or even negative utility), and they are simply speculative bubbles.
I feel $SPCE still has a lot of potential upside.
We are going to find out what will happen soon. As looking at the trade volumes people seem to have stopped selling or buying looking at the stock prices and the trades it looks like hf traders rather than retail
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The rally will continue as long as there are buyers given the price and the neural pathways have been fully mapped out.
What I'm worried about is that there were more than one Melvin Capital with several banks now involved who do not own enough shares to cover the shorts.
Which means we are literally witnessing a money printer go brrr situation where as long as there are people buying in due to FOMO or some us-vs-them politics, the prices will rally.
The most shocking part is how exposed not only the brokers are but now the banks are also exposed. We are literally seeing a repeat of 1929.
https://www.history.com/news/1929-stock-market-crash-warning...
What I'm worried about is that there were more than one Melvin Capital with several banks now involved who do not own enough shares to cover the shorts.
Which means we are literally witnessing a money printer go brrr situation where as long as there are people buying in due to FOMO or some us-vs-them politics, the prices will rally.
The most shocking part is how exposed not only the brokers are but now the banks are also exposed. We are literally seeing a repeat of 1929.
https://www.history.com/news/1929-stock-market-crash-warning...
It boggles the mind people think hedge funds can't profit off a mad rush like this...
I mean do people really believe Robinhood traders are moving billions of dollars of stock a day? Most admit that they aren’t selling and buying at higher and higher levels. That translates to very little cash to buy more. There is absolutely no way that these moves can be attributed to retail traders or short squeezes. The narrative that these are retailers causing every significant move higher and with every move the shorts are losing more and more is actually causing this bubble.
Let's say the average bet is 1-5k into this the average Robinhood user invests around 5k), it only takes 200k-1M buying in to move $1B into the stock. When you start with a $200M market cap on a heavily shorted stock, you easily end up where we are today
Average bet being 1-5k feels optimistic by an order of magnitude...
The entire account value of normal RH users in the range of 1-5k
Most people just joining don't have 1k to just throw at a lottery ticket, and remember that until today RH allowed fractional shares of GME
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But you know, that's not even it...
The other day GME did 20 Billion in volume in a single trading day. More than the S&P 500.
I don't understand how people think retail can account for that.
The entire account value of normal RH users in the range of 1-5k
Most people just joining don't have 1k to just throw at a lottery ticket, and remember that until today RH allowed fractional shares of GME
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But you know, that's not even it...
The other day GME did 20 Billion in volume in a single trading day. More than the S&P 500.
I don't understand how people think retail can account for that.
And doing it every day? Even now that the stock is $350 a share? If they are able to do that I have to question the “little guy” tag.
Matt Levine's email today estimates retail investors to be about 30% of total volume (with actual data from Citadel), but retail was net selling on Tuesday, Wednesday, and Thursday. So theoretically retail is enough to move the price if they were truly united, but that isn't actually the case. It's just not sexy to say "I bought in for a couple days and am taking my gains" in a public forum.
Why do you think "hedge funds" are not? The small ones that were caught in a bad position at the beginning? Sure, they probably didn't.
But most other funds, or trading desks, or market makers, or brokerages (etc) are most likely printing money right now.
But most other funds, or trading desks, or market makers, or brokerages (etc) are most likely printing money right now.
... what? My comment is literally saying hedge funds (like Citadel...) are profiting off this.
You're right, I misread. My apologies.
> It boggles the mind people think hedge funds can't profit off a mad rush like this...
How exactly would they do it? Shorting it again would involve calling the top for a stock whose price recently has been unpredictable, but very high.
Writing options seems nuts for something this volatile. I guess they could "buy volatility" with a straddle but again what would the numbers have to be on this where they turn a profit? It's not like the rest of the market is underestimating the volatility, it's evident to everyone.
How exactly would they do it? Shorting it again would involve calling the top for a stock whose price recently has been unpredictable, but very high.
Writing options seems nuts for something this volatile. I guess they could "buy volatility" with a straddle but again what would the numbers have to be on this where they turn a profit? It's not like the rest of the market is underestimating the volatility, it's evident to everyone.
Volatility makes the HFT's money. Hundreds of millions of shares are flying around the past few days. Thats not from a bunch of people buying and holding. They make money on fractions of a percent swings. They can make a lot of money on 50% swings.
The other thing is, the price WILL go down eventually. Even if not today. A fund with billions of dollars can afford to sit on a short of GME at $400 for a long time. Longer than the upward pressure will last. The narrative was that the short squeeze will happen today, and prices will skyrocket. You only had to be in it for a little while. Now the narrative is changing, and it will maybe be next week, or even farther out. Sure the meme is to hold forever, but anyone holding any amount that will maybe make a difference are going to see that life changing number and sell eventually.
The other thing is, the price WILL go down eventually. Even if not today. A fund with billions of dollars can afford to sit on a short of GME at $400 for a long time. Longer than the upward pressure will last. The narrative was that the short squeeze will happen today, and prices will skyrocket. You only had to be in it for a little while. Now the narrative is changing, and it will maybe be next week, or even farther out. Sure the meme is to hold forever, but anyone holding any amount that will maybe make a difference are going to see that life changing number and sell eventually.
One of my neighborhood friends is a HFT guy and he says he makes bank off fractions of a dollar. Not all trading is equal obviously. But he said sometimes it's like 3,4,5 decimals places deep that he is watching the stock prices and trading
I would be completely out of my depth implying I understand all the creative ways different hedge funds make money, but there's a lot more tricks in the bag than "short it" and "write options"
Just look at Citadel... how much money do you think they've made off early access to majority of retail orders for GME as RH exploded?
And how much more money will they make on an ongoing basis after this from all the new users?
The volume has been insane, someone is making money besides retail investors, and they won't be the ones left holding the bag after the musical chairs stop...
Just look at Citadel... how much money do you think they've made off early access to majority of retail orders for GME as RH exploded?
And how much more money will they make on an ongoing basis after this from all the new users?
The volume has been insane, someone is making money besides retail investors, and they won't be the ones left holding the bag after the musical chairs stop...
‘People’ don’t know what hedge funds do.
hedge funds put in some money. They lost. Yeah. But automated trading solutions quickly flip things around. If they are smart. Losing money is literally part of what they do. Some they lose some they win. The success is winning a bit more than you lose, and very frequently.
> This sort of event would be less likely if America's wealth disparity weren't so grotesquely skewed.
Highly unlikely. It doesn’t matter how rich the rich are if you’re poor and want to gamble your way out. The problem is with poverty, which is completely unrelated to wealth disparity.
One you can fix by making life worse for everyone, the other you can fix by making life better for the poor.
Highly unlikely. It doesn’t matter how rich the rich are if you’re poor and want to gamble your way out. The problem is with poverty, which is completely unrelated to wealth disparity.
One you can fix by making life worse for everyone, the other you can fix by making life better for the poor.
> This sort of event would be less likely if America's wealth disparity weren't so grotesquely skewed.
Maybe, but I'm pretty well off (at least compared to the rest of the country) and I still feel the same way. It's primal if you ask me.
Maybe, but I'm pretty well off (at least compared to the rest of the country) and I still feel the same way. It's primal if you ask me.
WSB is trying to create a short squeeze by buying call options to crush the shorters.
RoaringKitty found the stock underpriced in 2019 and then managed to turn 50k into 13M in 1.5 years + and is still holding 22M in stock and calls.
RoaringKitty found the stock underpriced in 2019 and then managed to turn 50k into 13M in 1.5 years + and is still holding 22M in stock and calls.
"That's just, like, your opinion man"
Re: Subtleties.
I disagree. I think a big part of why this whole thing is fascinating is the depth. Yesterday morning, financial press were blathering generalities pinning WSB as market manipulators and calling for regulation to stop them. That is, stop retail investors trading at a scale that moves markets. IE, the stuff that insiders get away with regularly.
Between yesterday afternoon and now, millions of people have been catching up on the detailed mechanics of stock trade execution. There's a mad dash from reporter to get interviews with brokers, clearing house operators & such.
Note that the maneuver itself was analyzed in detail, and in public. That's what allowed big names like Cuban, Musk, various politicians and such to take a side and comment on it intelligibly.
Ultimately, whoever is holding these meme stock shorts needs to buys stock to cover their positions. I acknowledge that brokers had legitimate/legal/normative reasons to stop retail buys. But, it's also true that they created a window where short sellers could buy without competition from retail investors. Maybe brokers are covered legally against market manipulation charges because clearing houses were genuinely short on liquidity. But, (1) that doesn't change what happened and (2) Isn't this the regulator's job?
The reason people are cheerleading is because of these shenanigans. "Rigged" gets thrown around often, usually it's devoid of subtlety. This time, it's detailed. We can debate the details and construction of the rig. Truths fly around reddit for an afternoon, and are discarded the following day.
Few people cheerleading because they want a no regulation, pre-depression stock market. They just aren't willing to accept a rigged system. In any case, who are the speculators here? Short sellers like Melvin or Redditors? Short sellers future-sold 140% of the stock... hoping for a crash and potentially creating one. Redditors recognized this by looking at publicly available information and discussing it in the open.
I disagree. I think a big part of why this whole thing is fascinating is the depth. Yesterday morning, financial press were blathering generalities pinning WSB as market manipulators and calling for regulation to stop them. That is, stop retail investors trading at a scale that moves markets. IE, the stuff that insiders get away with regularly.
Between yesterday afternoon and now, millions of people have been catching up on the detailed mechanics of stock trade execution. There's a mad dash from reporter to get interviews with brokers, clearing house operators & such.
Note that the maneuver itself was analyzed in detail, and in public. That's what allowed big names like Cuban, Musk, various politicians and such to take a side and comment on it intelligibly.
Ultimately, whoever is holding these meme stock shorts needs to buys stock to cover their positions. I acknowledge that brokers had legitimate/legal/normative reasons to stop retail buys. But, it's also true that they created a window where short sellers could buy without competition from retail investors. Maybe brokers are covered legally against market manipulation charges because clearing houses were genuinely short on liquidity. But, (1) that doesn't change what happened and (2) Isn't this the regulator's job?
The reason people are cheerleading is because of these shenanigans. "Rigged" gets thrown around often, usually it's devoid of subtlety. This time, it's detailed. We can debate the details and construction of the rig. Truths fly around reddit for an afternoon, and are discarded the following day.
Few people cheerleading because they want a no regulation, pre-depression stock market. They just aren't willing to accept a rigged system. In any case, who are the speculators here? Short sellers like Melvin or Redditors? Short sellers future-sold 140% of the stock... hoping for a crash and potentially creating one. Redditors recognized this by looking at publicly available information and discussing it in the open.
Yesterday premarket when Robinhood announced the cessation of trading in these ultra volatile stocks, was there a deep analysis of what led them to that decision? A measured consideration of why they might do that?
Of course not. Immediately a false narrative was created that citadel forced them to do it under threat that they would stop their order flow. Had any politician or public figure merely suggested we let the CEO of Robinhood explain the decision, they would’ve been dragged by the Twitter mob. Just look at how Steve Cohen, Lee Cooperman and John Fortt were shamed for raising what I believed to be perfectly legitimate questions. But nobody is interested in legitimate questions when it’s hive mind mob rule which is what always takes hold in a bubble. In fact the vilification of naysayers is one of the tell tale signs of a speculative bubble.
To answer the last question who are the speculators here, shorts or wsbers? Both. But what I’m talking about are the speculators who are simply buying this up with the expectation they will make huge gains like deep fucking value. They can say all they want about how they don’t care about potential losses and this is something bigger. Total nonsense. Let’s see who gets blamed and who plays the victim if we get a crash.
It’s an interesting world when Mark Cuban and chamath palyhapitia can be portrayed as champions of the little guy when they have made billions of dollars at their expense. Chamath takes a SPAC public every Tuesday. Who do we think are buying these up? Warren Buffett? Didn’t Cuban make his fortune selling a worthless business to Yahoo? These guys are using this entire thing to build their own popularity.
Of course not. Immediately a false narrative was created that citadel forced them to do it under threat that they would stop their order flow. Had any politician or public figure merely suggested we let the CEO of Robinhood explain the decision, they would’ve been dragged by the Twitter mob. Just look at how Steve Cohen, Lee Cooperman and John Fortt were shamed for raising what I believed to be perfectly legitimate questions. But nobody is interested in legitimate questions when it’s hive mind mob rule which is what always takes hold in a bubble. In fact the vilification of naysayers is one of the tell tale signs of a speculative bubble.
To answer the last question who are the speculators here, shorts or wsbers? Both. But what I’m talking about are the speculators who are simply buying this up with the expectation they will make huge gains like deep fucking value. They can say all they want about how they don’t care about potential losses and this is something bigger. Total nonsense. Let’s see who gets blamed and who plays the victim if we get a crash.
It’s an interesting world when Mark Cuban and chamath palyhapitia can be portrayed as champions of the little guy when they have made billions of dollars at their expense. Chamath takes a SPAC public every Tuesday. Who do we think are buying these up? Warren Buffett? Didn’t Cuban make his fortune selling a worthless business to Yahoo? These guys are using this entire thing to build their own popularity.
Of course mid-sprint reporting is all over the place. That said, so has the financial press and insiders. In fact, during an interview of NASDAQ's CEO, the suggestion was floated that this is the Russians or something. That rumour was dropped by professional journalists and insiders. In fact, the regular, non financial press had a far more curious response than the financial press... they even read reddit.
Going back to "Citadel rumour.." It certainly was off the cuff and certainly doesn't encompasse everything. That said, RH is financially dependant on Citadel and Citadel is in a position to benefit from RH's decision.
Whatever you think of Cuban, these people are being drawn in for the same reason you and I are talking about it. It's saucy.
I think your "vilification of naysayers" point is off-mark. This is not about whether or not GME bets make money. The whole saga is a naysaying of sorts. Naysaying to the rigging.
I suspect I'm probably on the same side as you regarding the larger point. Speculation, HFT, etc are negatives to be curtailed not expanded. But, the "me but not thee" way that financial markets have been structured is an outrage.
The "revenge for 08'" stuff is symbolic. But, the symbolism is fairly subtle. The firms being protected from long tail risk (right, wrongly or even essentially are, again, being shielded from long term risk on bets only they have access to. This includes clearing houses and market makers. The "systemic risk" is the risk that these guys lose money. Stability is premised on them not losing money.
Going back to "Citadel rumour.." It certainly was off the cuff and certainly doesn't encompasse everything. That said, RH is financially dependant on Citadel and Citadel is in a position to benefit from RH's decision.
Whatever you think of Cuban, these people are being drawn in for the same reason you and I are talking about it. It's saucy.
I think your "vilification of naysayers" point is off-mark. This is not about whether or not GME bets make money. The whole saga is a naysaying of sorts. Naysaying to the rigging.
I suspect I'm probably on the same side as you regarding the larger point. Speculation, HFT, etc are negatives to be curtailed not expanded. But, the "me but not thee" way that financial markets have been structured is an outrage.
The "revenge for 08'" stuff is symbolic. But, the symbolism is fairly subtle. The firms being protected from long tail risk (right, wrongly or even essentially are, again, being shielded from long term risk on bets only they have access to. This includes clearing houses and market makers. The "systemic risk" is the risk that these guys lose money. Stability is premised on them not losing money.
> Just look at how Steve Cohen, Lee Cooperman and John Fortt were shamed for raising what I believed to be perfectly legitimate questions.
Leon got shamed not for his commentary on the speculation around the stock, but for the complete failure-to-read-the-room commentary on his taxes, commenting on marginal tax rates and "fair shares" as "bullshit":
> "This fair share is a bullshit concept. It’s just a way of attacking wealthy people, and I think it’s inappropriate," Cooperman said Thursday. “We’ve all got to work together and pull together.”
Leon got shamed not for his commentary on the speculation around the stock, but for the complete failure-to-read-the-room commentary on his taxes, commenting on marginal tax rates and "fair shares" as "bullshit":
> "This fair share is a bullshit concept. It’s just a way of attacking wealthy people, and I think it’s inappropriate," Cooperman said Thursday. “We’ve all got to work together and pull together.”
... He also blamed stimulus cheques. Especially nasty considering that the corporate stimulus, just prior, had a similar effect on market price inflation.
It was beyond "not reading the room." He literally believes that only the people like him are responsible enough to play the market, or even have money at all.
It was beyond "not reading the room." He literally believes that only the people like him are responsible enough to play the market, or even have money at all.
Maybe if Robinhood had done literally anything to not appear like they were colluding with their customer Citadel people wouldn't have constructed "false narratives". Its some impressive mental gymnastics to see a broker lock out all of their retail investors (remember, you were completely free to liquidate your position) and offer almost no explanation, and blame the investors for being hasty and jumping to conclusions.
And for that matter, calling these narratives false seems premature. As far as I know there hasn't been any actual investigation by regulators into the reason Robinhood took those steps (although multiple politicians from across the spectrum have called for one). It seems many public figures would love to give Robinhood the opportunity to explain themselves
And for that matter, calling these narratives false seems premature. As far as I know there hasn't been any actual investigation by regulators into the reason Robinhood took those steps (although multiple politicians from across the spectrum have called for one). It seems many public figures would love to give Robinhood the opportunity to explain themselves
> Its some impressive mental gymnastics to see a broker lock out all of their retail investors (remember, you were completely free to liquidate your position) and offer almost no explanation, and blame the investors for being hasty and jumping to conclusions.
People don’t seem to realize that brokerages do this all the time to limit their risk. If you have less than $25k in a trading account for example, a brokerage is mandated by law to not allow day trading (that is entering and exiting the same position on the same day). Do you know what happens if you do? You are labeled a pattern day trader and you can only exit positions. Actually the fact that they were letting people exit trades was a big clue to me that this was risk mitigation while this collusion with citadel narrative was making the rounds.
People don’t seem to realize that brokerages do this all the time to limit their risk. If you have less than $25k in a trading account for example, a brokerage is mandated by law to not allow day trading (that is entering and exiting the same position on the same day). Do you know what happens if you do? You are labeled a pattern day trader and you can only exit positions. Actually the fact that they were letting people exit trades was a big clue to me that this was risk mitigation while this collusion with citadel narrative was making the rounds.
The motivation is one thing, the end result is that it created a slanted playing field where one party was blocked from buying, but not selling, and the other party (the losing short side) could do either unrestricted. Not only that, but it was pre emptive. We can talk all day about GME, but the handful of other names like BB hadn't even reached that point. There was simply a risk of a short squeeze and we slanted the field here, too, enough time for the losing side to mitigate their risk.
Conspiracy or no, the end result is so far from your day trading 25K minimum example. Your example is a rule that already existed going in, rather than a rule that changed temporarily to convenience one side for a day.
Conspiracy or no, the end result is so far from your day trading 25K minimum example. Your example is a rule that already existed going in, rather than a rule that changed temporarily to convenience one side for a day.
> Actually the fact that they were letting people exit trades was a big clue to me that this was risk mitigation while this collusion with citadel narrative was making the rounds.
Ok let's say I'm a retail investor using RH. Why should I need to divine what my brokerage is doing from Twitter posts and Reddit? My should I need to wait hours for their explanation that comes in the form of a handwavey blog post?
Ok let's say I'm a retail investor using RH. Why should I need to divine what my brokerage is doing from Twitter posts and Reddit? My should I need to wait hours for their explanation that comes in the form of a handwavey blog post?
You shouldn’t, and I’m not defending RH’s handling of a PR crisis, which is never easy and one that every successful company eventually encounters at some point. I don’t use RH personally. My guess is they had problems with collateral obligations but didn’t have their arms around the problem so the immediate solution was to pull the plug until they could get their affairs in order. This by the way isn’t the first time they’ve had these problems. A lesser known story in wsb lore was ironyman who a few years ago opened so many box spreads before RH knew what was happening that he turned an initial $500 account into a $50,000 loss. That should never be able to happen obviously but RH was ill prepared. It’s clear in hindsight that something like what’s happening now or worse was almost inevitable. They seem to take move fast and break things to another level. The problem is that when you don’t dot your i’s in the stock market you can be fine for years and then one day get carried out in a casket. I surely would never consider using RH at any point.
My point was that a mob formed instantly with false narratives about what was happening. It’s clear now that these moves are entirely due to risk mitigation and that it had nothing to do with collusion with Citadel to cheat people. So the conversation has shifted from outright collusion to cheat retail investors to one of terrible communications.
My point was that a mob formed instantly with false narratives about what was happening. It’s clear now that these moves are entirely due to risk mitigation and that it had nothing to do with collusion with Citadel to cheat people. So the conversation has shifted from outright collusion to cheat retail investors to one of terrible communications.
But why did RH lie about it then? That's the smoke that most people see.
>> (2) Isn't this the regulator's job?
Is the regulator in this case the SEC, the exchange, or some other party?
Is the regulator in this case the SEC, the exchange, or some other party?
The narrative that retail investors have stuck it to hedge funds is laughable.
Who do they think is selling counter party is?
All they’ve managed to do transfer wealth from one hedge fund to another. And eventually when this pops they have transferred wealth from themselves to other winning hedge funds.
Who do they think is selling counter party is?
All they’ve managed to do transfer wealth from one hedge fund to another. And eventually when this pops they have transferred wealth from themselves to other winning hedge funds.
the enemy of my enemy is my friend, my friend.
> there is this narrative that the little guy is finally sticking it to the big bad hedge funds. In reality there is probably very little truth to this.
Which part has little truth to it?
The big hedge funds are apparently losing money (billions!) on Gamestop, unless that's being mis-reported. Some of the "little guys" (reddit people) definitely were a part of the reason for that.
Which part has little truth to it?
The big hedge funds are apparently losing money (billions!) on Gamestop, unless that's being mis-reported. Some of the "little guys" (reddit people) definitely were a part of the reason for that.
The big hedge funds are apparently losing money (billions!)
A few hedge funds (of different sizes) are indeed losing billions. A few other hedge funds have taken the opposite side of this bet and are making money. The vast majority of hedge funds have no position in this stock and are completely unaffected.
In addition a bunch of HFT shops and similar making a lot money off the volatility and order flow all this has caused.
A few hedge funds (of different sizes) are indeed losing billions. A few other hedge funds have taken the opposite side of this bet and are making money. The vast majority of hedge funds have no position in this stock and are completely unaffected.
In addition a bunch of HFT shops and similar making a lot money off the volatility and order flow all this has caused.
I mean, some hedge funds are making money, sure. But the point is that, collectively, billions of wealth have so far been transferred from institutional investors to regular investors.
But the point is that, collectively, billions of wealth have so far been transferred from institutional investors to regular investors.
Perhaps, but for every dollar that gets transferred to a small handful of regular investor, I suspect at least 10, if not a 100, is probably being transferred to different institutional investors.
I just don't buy the Wall Street vs The People narrative. This is Wall Street vs Wall Street with The People picking up scraps from the battle field and hoping they don't get stepped on.
Perhaps, but for every dollar that gets transferred to a small handful of regular investor, I suspect at least 10, if not a 100, is probably being transferred to different institutional investors.
I just don't buy the Wall Street vs The People narrative. This is Wall Street vs Wall Street with The People picking up scraps from the battle field and hoping they don't get stepped on.
Also, how much of that has been realised vs just being paper gains/losses? I'm not convinced the original hedge fund shorters have really closed out all their positions at a loss. Or maybe they've closed out some of their shorts at a loss, then entered the short again at a higher point and are now poised to make even more money on the (inevitable) way down.
Conversely, a few investors that bought cheap might have made huge returns - if they sold at inflated prices (passing the hot potato to the next greater fool). If they didn't sell, then the paper gains will vanish.
Conversely, a few investors that bought cheap might have made huge returns - if they sold at inflated prices (passing the hot potato to the next greater fool). If they didn't sell, then the paper gains will vanish.
Not it hasn’t. Retails hasn’t yet sold and the market doesn’t have the demand to hold sell off at the current price. The billions paid by hedgefunds went as pure profit to the big FIs like blackrock. When all this done and financial disclosures come out. The winners will be the big financial firms who have already made their money selling stocks at this inflated price.
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Hedge funds are not homogeneous and the majority of them had no position whatsoever in any of the meme stocks. Some were long meme stocks.
https://www.google.com/amp/s/www.marketwatch.com/amp/story/l...
A Korean fund made a billion dollars on a 12 million dollar GmE investment and they were only the 7th largest holder of GME shares. The wsb narrative of this sticking it to Wall Street is just false.
I personally think it’s a narrative propped up intentionally by wsb insiders for their own gain. This is just a modern distributed boiler room. Retail traders always pay in those scenarios.
https://www.google.com/amp/s/www.marketwatch.com/amp/story/l...
A Korean fund made a billion dollars on a 12 million dollar GmE investment and they were only the 7th largest holder of GME shares. The wsb narrative of this sticking it to Wall Street is just false.
I personally think it’s a narrative propped up intentionally by wsb insiders for their own gain. This is just a modern distributed boiler room. Retail traders always pay in those scenarios.
> it’s a narrative propped up intentionally by wsb insiders for their own gain.
Yes, in particularly the passionate pleas to buy in more and HODL, stick it to the man, stick it to the evil shorts. While enabling the early longs to cash out profitably.
Bit like Bitcoin, really.
Yes, in particularly the passionate pleas to buy in more and HODL, stick it to the man, stick it to the evil shorts. While enabling the early longs to cash out profitably.
Bit like Bitcoin, really.
It's the same hustle. I've been clicking through some of the usernames that are posting.
I've been noticing some interesting patterns. Accounts that seem to have been abandoned for months or years are commenting all of a sudden.
Makes me think some of these very similar looking frantic lunatic posts are part manufactured.
It'll take a good effort to show it conclusively
I've been noticing some interesting patterns. Accounts that seem to have been abandoned for months or years are commenting all of a sudden.
Makes me think some of these very similar looking frantic lunatic posts are part manufactured.
It'll take a good effort to show it conclusively
Interesting - who knows, could even be professional foreign trolls, only interested in encouraging volatility a.k.a. instability.
It's this false dynamic, as if the people working at funds don't browse the internet.
>> The big hedge funds are apparently losing money
Some are losing money. But that is nothing new. Hedge funds die every day ... on paper. But which brokerage houses are going under? Other hedge funds are doing fine, likely profiting on this. The fact that a few are held out as victims sounds, to me, like the other funds just stoking the panic. I don't see any non-paper houses closing over this. This is Gamestop, not the mortgage crisis.
Some are losing money. But that is nothing new. Hedge funds die every day ... on paper. But which brokerage houses are going under? Other hedge funds are doing fine, likely profiting on this. The fact that a few are held out as victims sounds, to me, like the other funds just stoking the panic. I don't see any non-paper houses closing over this. This is Gamestop, not the mortgage crisis.
> The big hedge funds are apparently losing money (billions!) on Gamestop, unless that's being mis-reported.
There are thousands of hedge funds, just because a handful have been caught with their trousers round their ankles doesn’t mean the others aren’t profiting from current volatility.
There are thousands of hedge funds, just because a handful have been caught with their trousers round their ankles doesn’t mean the others aren’t profiting from current volatility.
That retail is behind a massive short squeeze that is solely responsible for these moves. At this point shorts from significantly lower levels have almost certainly been covered, if for no other reason out of simple necessity. At this point what started as a short squeeze has ballooned into a false narrative that retail is sticking it to shorts when in reality it’s almost certainly HFT traders pushing this stock up and down by now. Retail simply doesn’t have enough cash to move a stock like this especially when by their own admission they aren’t selling any shares!
Certain hedge funds are losing money. I am sure some others are having a great time with this.
(Disclaimer I do NOT know what I'm talking about, just repeating what I saw on Twitter)
It seems like they've all closed their shorts already, most of them did on like day 2 I believe.
In addition, other hedge funds have been on the winning side of this trade. Some of the orders for GME last few days have been absolutely massive, not coming from retail.
It seems like they've all closed their shorts already, most of them did on like day 2 I believe.
In addition, other hedge funds have been on the winning side of this trade. Some of the orders for GME last few days have been absolutely massive, not coming from retail.
I believe the statements were worded in such a way to try to make people believe that the short squeeze was no longer in play, but the short interest in fact never changed and maybe even went up. I believe they were also worded in a way to be technically correct (for example if they had multiple short positions, e.g. naked short calls, if they "closed their short position" that could mean they chose their smallest/cheapest short position to close and it would be technically correct).
The data doesn't back up the broader (and presumably intended) interpretation of their statements.
In my (inexpert) opinion THAT is the definition of market manipulation.
The data doesn't back up the broader (and presumably intended) interpretation of their statements.
In my (inexpert) opinion THAT is the definition of market manipulation.
> I believe the statements were worded in such a way to try to make people believe that the short squeeze was no longer in play, but the short interest in fact never changed and maybe even went up.
I've seen this "claim" all over the internet. It's not true. The statements released by Melvin Capital were unambiguous and of course short interest on Gamestop is going to go up when it surges to such high prices.
I've seen this "claim" all over the internet. It's not true. The statements released by Melvin Capital were unambiguous and of course short interest on Gamestop is going to go up when it surges to such high prices.
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There was a CNBC post about Citron and Melvin closing shorts but it was retracted.
No, it wasn't. Melvin has definitely closed, although Citron may still be in partially.
Why are so many people repeating the same misleading talking points over and over?
Why are so many people repeating the same misleading talking points over and over?
> Melvin has definitely closed, although Citron may still be in partially.
Source?
Source?
The original CNBC article that was never retracted.
Do you mean this one?
https://www.cnbc.com/2021/01/27/hedge-fund-targeted-by-reddi...
"the hedge fund’s manager told CNBC’s Andrew Ross Sorkin."
So this is completely based on a phone call and Melvin Capital can just claim that Andrew Sorkin misunderstood them.
There's no public statement from Melvin Capital, which makes me suspect that they were indeed just trying to manipulate public perception, they could have just not talked to journalists about their positions, which is their official policy.
https://www.cnbc.com/2021/01/27/hedge-fund-targeted-by-reddi...
"the hedge fund’s manager told CNBC’s Andrew Ross Sorkin."
So this is completely based on a phone call and Melvin Capital can just claim that Andrew Sorkin misunderstood them.
There's no public statement from Melvin Capital, which makes me suspect that they were indeed just trying to manipulate public perception, they could have just not talked to journalists about their positions, which is their official policy.
Who do you think is selling GME shares to retail investors for dollars on the penny?
This whole thing is disgusting. Once the euphoria had subsided, people will realize that the hedge funds have come out as bandits, having traded nickles for dollar bills.
This whole thing is disgusting. Once the euphoria had subsided, people will realize that the hedge funds have come out as bandits, having traded nickles for dollar bills.
Two hedge funds isn’t “the big hedge funds”. A lot more people are going to make money not by taking the right position, but because they are the market, and they get paid whenever a ton of retail investors decide to come in and buy GME based on memes.
> The big hedge funds
Which ones? Citadel/Melvin/Citron (is this all the same one?) and which others?
Which ones? Citadel/Melvin/Citron (is this all the same one?) and which others?
Not a financial expert however, Citadel is a market maker rather than just a hedge fund like Melvin.
Money is lost when a retail investor holds onto their shares not just when the stock price rises.
Money is lost when a retail investor holds onto their shares not just when the stock price rises.
As much as there's a backlash of "it's ok when hedge funds do it" the GME situation is still an absolutely massive distortion. The company is still worth the same $11/share it was a few months ago. Maybe $20 if you think the new leadership will improve sales. It's not better because it's little guys doing it. It's still abusive.
In 1929 a series of events took place, and some of it took a while to happen (like Ford shutting down for a few months) that pretty much (not completely) eliminated retail accounts from both the stock market and actually from banking. Much of the public swore off checking and savings accounts, never mind owning stocks.
It seems like the big money is changing its clothes to pose as children in order to get priority on the life boats ("Women and children first!").
The social circle of firms closely connected to this ruin of Robinhood and which had been short GME are the speculators. Short for longer than intraday == speculative. Short as a market maker for an hour or two is good for efficient clearing.
It's on the guys with the big money to gather their fortitude and ride this out in the most-trust-inducing ways they can. I think the big money is naive if they think it could be otherwise.
One more thing, I am reminded that a lot of the time, a retail investor will buy something, a weak stock, and ride it down to zero out of misguided optimism. Conducting margin calls on zero notice is going to be toxic to such people and I don't think the finance world really wants that money to leave the market for good.
It seems like the big money is changing its clothes to pose as children in order to get priority on the life boats ("Women and children first!").
The social circle of firms closely connected to this ruin of Robinhood and which had been short GME are the speculators. Short for longer than intraday == speculative. Short as a market maker for an hour or two is good for efficient clearing.
It's on the guys with the big money to gather their fortitude and ride this out in the most-trust-inducing ways they can. I think the big money is naive if they think it could be otherwise.
One more thing, I am reminded that a lot of the time, a retail investor will buy something, a weak stock, and ride it down to zero out of misguided optimism. Conducting margin calls on zero notice is going to be toxic to such people and I don't think the finance world really wants that money to leave the market for good.
I take much of what you say a reasonable wisdom, but the idea of retail investors buying weak stocks on margin and riding them to zero seems far fetched. They shouldn't be buying on margin anyway and if it goes to zero, they're going to get the margin call no matter what.
So they get the margin call partway down, they pay in to keep the stock because they have told all their friends they are long that mess, and out of pride continue to ride it down.
... so Citidel can make money up/down and sideways, front running like a real robbing hood.
The very high and very speculative participation by retail investors is scaring me. I'm reminded of the story of the hedge fund manager who was getting a shoe shine, and the shoe shine boy was giving him stock tips. He closed out his positions and correctly called the top of the bubble[1]. I don't know if the story is true, and it is just an anecdote anyway. But historically this kind of activity does mark the end of bull markets.
At the same time I keep hearing that the stock market is actually undervalued on average given current interest rates - and those aren't going to change anytime soon.
Definitely things are frothy and there are bubbles in some stocks, but maybe this market still has legs - at least while the fed is buying 120 billion of debt each month.
[1] I found it, it was Joe Kennedy in 1929: https://archive.fortune.com/magazines/fortune/fortune_archiv...
At the same time I keep hearing that the stock market is actually undervalued on average given current interest rates - and those aren't going to change anytime soon.
Definitely things are frothy and there are bubbles in some stocks, but maybe this market still has legs - at least while the fed is buying 120 billion of debt each month.
[1] I found it, it was Joe Kennedy in 1929: https://archive.fortune.com/magazines/fortune/fortune_archiv...
> In reality there is probably very little truth to this.
The whole premise of your argument is based on ‘probably’
The whole premise of your argument is based on ‘probably’
What an excellent post.
Many might be FOMOing, but few want to be told that they're too dumb to be given this power. Clearly the experts themselves don't know when they bite too much (as seen in 2008) lets spare the common adult some decency and allow them to bankrupt themselves if they wish to do so. America was a great place precisely because of this freedom
Nope, the narrative has been building for the last two days that this was all perpetrated by fascist white supremacist deplorables... so it is no mystery which side Democrats will pick. Republicans will do the same for more classically stereotypical reasons.
>nobody blames the speculators
The hedge funds are the speculators in this case. They're playing a dangerous game where you can short more stock than what actually exists. Why this is allowed? Who the fuck knows.
The hedge funds are the speculators in this case. They're playing a dangerous game where you can short more stock than what actually exists. Why this is allowed? Who the fuck knows.
I think this "is allowed" for the same reason that I can borrow a book from you, sell it on Amazon, and when you ask for your book back, buy a copy of that same book on Amazon and give it to you - but in the meantime, the person who bought your book from me can lend it to yet another person, who does the same as me.
In other words, this works simply because stocks can be sold and borrowed, and they don't carry provenance with them. To stop this, you'd have to do the equivalent of DRMing books and revoking the first sale doctrine. Which I imagine would turn shorting into a much more complex market mechanic than it is today.
(Disclaimer: the extent of my expertise on stock markets is me knowing how to spell "stonks".)
In other words, this works simply because stocks can be sold and borrowed, and they don't carry provenance with them. To stop this, you'd have to do the equivalent of DRMing books and revoking the first sale doctrine. Which I imagine would turn shorting into a much more complex market mechanic than it is today.
(Disclaimer: the extent of my expertise on stock markets is me knowing how to spell "stonks".)
Security ownership is the killer app for blockchain.
No. Way too little throughput (unless we slow down trading considerably, which is a good idea in itself, IMHO).
Re: throughput, I think nanosecond resolution for trades is bad policy. 5 or 10 minute windows are better.
Shorting more stock than what actually exists is not really that different from shorting less stock than what actually exist.
Imagine you short 50% of the outstanding shares.
Now there are 50% more long positions than outstanding shares.
It's not substantially different from having 100% or 150% more long positions than outstanding shares.
Imagine you short 50% of the outstanding shares.
Now there are 50% more long positions than outstanding shares.
It's not substantially different from having 100% or 150% more long positions than outstanding shares.
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You could stipulate, though, that the outstanding short position mustn't exceed the net position, or equivalently that the total long positions can't exceed twice the net position. Why not? (This would require new regulation, but not be impossible, I think.)
If the total long or short positions exceed the underlying economics by a lot, you create all sort of weird incentives for manipulation, as can be seen in the CDS market sometimes.
If the total long or short positions exceed the underlying economics by a lot, you create all sort of weird incentives for manipulation, as can be seen in the CDS market sometimes.
You could stipulate whatever you wanted, but there is nothing special about that threshold in particular.
I fully agree that derivatives can create all sort of problems in many cases, including when the nominal amount of the positions is much higher than the actual amount of the underlying.
I fully agree that derivatives can create all sort of problems in many cases, including when the nominal amount of the positions is much higher than the actual amount of the underlying.
Agreed fully. The 2x long, -1 short limit is just a neat, natural limit that one could discuss, and might be easier to enforce than other (similarly arbitrary) limits.
I'm not against that, but it's not trivial to implement either.
Would require to set up a central registry or so, yeah. (Or finally a use case for blockchain!!!1!!! :-)
Not sure it would be worth it, I think historically excessive shorting has rarely been a problem, except for a few colourful episodes like these.
Not sure it would be worth it, I think historically excessive shorting has rarely been a problem, except for a few colourful episodes like these.
It's quite difficult to stop without blocking all shorts.
Why? My broker doesn't let me trade unsettled funds, even though I've made a sale and they're "in my account." How hard would it be to create a restriction that says you're not allowed to double-loan the obligation to return a share borrowed in a short sale?
Because when you buy a share on the market there is no notion of it being "a true share that someone sold to you" or "a borrowed share that someone sold to you". The only way to prevent double-lending is to prevent all lending.
How do you know that the stock was loaned in the first place? If there is a way to know is there a way I can buy the original non-borrowed one - this should be worth more money because I can borrow it to someone else.
It sounds simple, but the details make it hard.
It sounds simple, but the details make it hard.
Your broker lends your share out.
I borrow it.
I sell it to Tom.
I borrow the share from Tom's broker.
Tom's broker and I both have no idea it's "the" "same" share I borrowed.
Boom, 200% short interest on "that" share.
I borrow it.
I sell it to Tom.
I borrow the share from Tom's broker.
Tom's broker and I both have no idea it's "the" "same" share I borrowed.
Boom, 200% short interest on "that" share.
End all speculative finance.
That’s where we ended up after 1929, until the current billionaire class removed all the guard rails.
Nobody deep on SV stocks and unicorn chasing wants to admit they’re in the bubble too. Why does society owe floating a coder bros data science project?
Anything not science is a meme. That billionaires should exist is a meme. This is social philosophy, not truth. And it’s gamed.
America is a bubble in time and it’s having a real (environmental) impact on the future.
Billionaires are not experts. They’re rich and can pay the fines and schmooze. That is not expertise. It’s selling “free market” and manipulating it based on a meme that speculative finance expertise is real. All it is is social engineering of the masses to accept deflation of their economic position.
That’s where we ended up after 1929, until the current billionaire class removed all the guard rails.
Nobody deep on SV stocks and unicorn chasing wants to admit they’re in the bubble too. Why does society owe floating a coder bros data science project?
Anything not science is a meme. That billionaires should exist is a meme. This is social philosophy, not truth. And it’s gamed.
America is a bubble in time and it’s having a real (environmental) impact on the future.
Billionaires are not experts. They’re rich and can pay the fines and schmooze. That is not expertise. It’s selling “free market” and manipulating it based on a meme that speculative finance expertise is real. All it is is social engineering of the masses to accept deflation of their economic position.
Bad take. We need capital markets to effectively value and fund different business efforts (unless you want to do things Soviet-style). And no matter how much fundamental analysis you do, some things remain unknown; all finance is in some way speculative. There are rough patches, but you need to take the bad to get the good.
A serious outsider question - are shorts an essential part of capital markets? Or do they at least provide some valuable service to the markets?
They aren’t essential, but they are actually useful. There have been some experiments with banning shorts, but they lead to larger spreads on longs because market participants have to hedge by going risk-off on longs instead of shorting affirmatively. Shorts can create moments of volatility, but they improve overall trading liquidity and reduce frictional cost of capital.
Yes. A short is a way to tell the market you are wrong about value, and by doing so push the value down to more reasonable levels.
Of course they are. If you believe a stock is undervalued, you buy it. If I believe the same stock is overvalued, I sell it. That's how price discovery happens. If only people who already hold the stock are allowed to sell it, then price discovery is impeded.
No, we don’t.
We need to let people build their communities without tethering agency to outsiders who control the flow of imaginary capital.
Pretending a value in a database is real ownership of something is insane and continues to lead humanity towards fascism to protect the oligopoly at the top of the meme pyramid.
You’re selling an appeal to authority that is a complete mirage, only existing in your head because of years of reinforcement.
We need to let people build their communities without tethering agency to outsiders who control the flow of imaginary capital.
Pretending a value in a database is real ownership of something is insane and continues to lead humanity towards fascism to protect the oligopoly at the top of the meme pyramid.
You’re selling an appeal to authority that is a complete mirage, only existing in your head because of years of reinforcement.
People can seek capital from whomever they want. But it’s also true that outside capital is useful. If my community has lots of resources and no ideas about how to use them, then the world is better off if I take my resources and find an under-resourced entrepreneur in a less wealthy part of the world to invest in. That’s what capital represents.
...and then you have a bunch of money and resources, and your community has nothing because you took it all out. Then your community wants to redistribute the wealth (because they see how unfair the results were to them), you and your followers scream "COMMUNIST!" at them, and we wind up in a right-wing authoritarian situation instead.
That's what happens when capital runs amok.
That's what happens when capital runs amok.
Please stop believing you are telling me something that I do not already know.
I’ve been following finance for decades.
American communities are under financed because of capital extraction to improve margins. It’s a mathematical fact which carries far more weight than your hand wavy generalizations.
The extraction has decimated US communities, empowered slave labor across the globe, and entrenched power in hedge funds.
Do the actual research instead of parroting cable news sound bites.
The same pattern happened when manufacturing was pulled from cities to rural areas 100 years ago. This time the capital was pulled from rural areas and sent overseas simply to improve profit. We can decimate the planet on any continent. We do it in Asia to externalize real costs and boost financial margins.
You’re talking in a pure emotional abstract.
I’ve been following finance for decades.
American communities are under financed because of capital extraction to improve margins. It’s a mathematical fact which carries far more weight than your hand wavy generalizations.
The extraction has decimated US communities, empowered slave labor across the globe, and entrenched power in hedge funds.
Do the actual research instead of parroting cable news sound bites.
The same pattern happened when manufacturing was pulled from cities to rural areas 100 years ago. This time the capital was pulled from rural areas and sent overseas simply to improve profit. We can decimate the planet on any continent. We do it in Asia to externalize real costs and boost financial margins.
You’re talking in a pure emotional abstract.
Please don't post flamewar comments like this and particularly don't cross into making personal swipes.
https://news.ycombinator.com/newsguidelines.html
https://news.ycombinator.com/newsguidelines.html
> "I’ve been following finance for decades."
But apparently not HN community. Your user was created 1d ago. :P
But apparently not HN community. Your user was created 1d ago. :P
Building rep with you all is not a priority of mine
I’ve got positions in stocks that go back to the 90s, AAPL @ $5/share, etc.
I’m doing fine in real world terms. Rep in a database that can be shutdown whenever is not something to protect
I’ve got positions in stocks that go back to the 90s, AAPL @ $5/share, etc.
I’m doing fine in real world terms. Rep in a database that can be shutdown whenever is not something to protect
Ok. Loook . If you have something constructive to share, then share it and everyone will benefit and discuss the merits of your opinions and facts.
.. What the point of being a poser? Applesauce for 5$ — don’t mean a hhhhill of beans to me.
.. What the point of being a poser? Applesauce for 5$ — don’t mean a hhhhill of beans to me.
> Right now it appears that the public wants to be able to trade on their terms because there is this narrative that the little guy is finally sticking it to the big bad hedge funds. In reality there is probably very little truth to this.
The fact that buying was limited yesterday is evidence that the little guy is actually winning here.
Trading was stopped to save the hedge funds, because if they go under or lose too much, the clearinghouse has to front that. If the clearinghouse goes under the whole market will crash.
The fact that buying was limited yesterday is evidence that the little guy is actually winning here.
Trading was stopped to save the hedge funds, because if they go under or lose too much, the clearinghouse has to front that. If the clearinghouse goes under the whole market will crash.
I cannot stress this strongly enough -- the fact that buying was limited yesterday is not evidence that the little guy is actually winning.
As has been explained in multiple other places, the limitations were as a result of Robinhood et. al. being unable to cover the risks involved in providing instant trading capabilities for a stock as volatile as the ones that got restricted. That has nothing to do with "the little guy is winning" whatsoever, and in fact may indicate that "the little guy" is about to lose his shirt, due to lack of predictability.
Trading was not stopped "to save the hedge funds". This is an outright lie that needs to be squashed. Stop saying this. I don't mean to be rude, but the narrative you're spreading is actively dangerous and not supported by any of the facts we have available to us.
As has been explained in multiple other places, the limitations were as a result of Robinhood et. al. being unable to cover the risks involved in providing instant trading capabilities for a stock as volatile as the ones that got restricted. That has nothing to do with "the little guy is winning" whatsoever, and in fact may indicate that "the little guy" is about to lose his shirt, due to lack of predictability.
Trading was not stopped "to save the hedge funds". This is an outright lie that needs to be squashed. Stop saying this. I don't mean to be rude, but the narrative you're spreading is actively dangerous and not supported by any of the facts we have available to us.
> limitations were as a result of Robinhood et. al. being unable to cover the risks involved in providing instant trading capabilities for a stock as volatile as the ones that got restricted.
Yes RH had to cover more, because the clearinghouse was also starting to be stretched by the risk from the violatility. If the hedge funds go down, the clearinghouse wouldn't have been able to front their cash, and they would've gone down as well.
You're also missing the point that the clearinghouse firms didn't just ask for more money from brokers. In many cases they told brokers to step selling these securities.
There's increased risk on both sides, but the long side is at least finite (and probably there's not much margin). The short side is not. The unknown risk the clearinghouse needs to worry about is the short (hedge fund) side.
Yes RH had to cover more, because the clearinghouse was also starting to be stretched by the risk from the violatility. If the hedge funds go down, the clearinghouse wouldn't have been able to front their cash, and they would've gone down as well.
You're also missing the point that the clearinghouse firms didn't just ask for more money from brokers. In many cases they told brokers to step selling these securities.
There's increased risk on both sides, but the long side is at least finite (and probably there's not much margin). The short side is not. The unknown risk the clearinghouse needs to worry about is the short (hedge fund) side.
> short (hedge fund) side.
The claim that "the hedge funds" operate in unison and/or are all short is probably the largest misconception about this whole situation. Very "us vs. them" and also very wrong.
The claim that "the hedge funds" operate in unison and/or are all short is probably the largest misconception about this whole situation. Very "us vs. them" and also very wrong.
[deleted]
Here's the thing, though - and please correct me if I'm wrong: it's not just Robin Hood. Many other trading apps blocked GME buys yesterday and today, and some of them are blaming this on banks and brokerages upstream of the apps.
That to me looks like the clearing houses themselves are worried, which means the whole thing poses a risk (even if easily mitigated) to the greater market.
That to me looks like the clearing houses themselves are worried, which means the whole thing poses a risk (even if easily mitigated) to the greater market.
What you're saying may be true. But then I don't know why Robinhood wouldn't say that in their first statement addressing why they disabled buying [1].
[1]: https://blog.robinhood.com/news/2021/1/28/keeping-customers-...
[1]: https://blog.robinhood.com/news/2021/1/28/keeping-customers-...
They’re poor communicators, or thought saying nothing would be better than saying they’d run out of money to cover counterparty risk.
If you broaden your understanding of WSB's definition of winning beyond "making a profit" or "maintaining value" to "taking a loss but having an entertaining ride along the way" then they're winning and have no way to "lose."
Now the SEC or Professional Capitalists making easy money may not want WSB to turn corners of the market into a volatile form of entertainment but it's completely legal AFAIK and illustrates the disparity between what is claimed about the stock market by the wealthy and powerful and what the stock market actually is. If a Wall Street clique-member replaced WSB and behaved the same way it would be fine, at least from a hyperventilating "we have to think of the children/retail investors" standpoint.
Your "facts" are basically corporate PR statements from corporations that have a huge entrenched reason to distort the truth and have changed stories multiple times. I'd say your eagerness to accept RH's version of the truth as 100% credible is far more actively dangerous than what you responded to.
Some variation of "If you owe a bank thousands, you have a problem, but if you owe a bank millions, the bank has a problem" probably applies here.
If crazy retail investors can bankrupt Robinhood or other over-leveraged brokerage firms, that's also a win for the little guys.
I don't think many HN posters with their stable, extremely well-paid technology careers can truly empathize with the strain of aggressive nihilism on display at WSB.
"I'm only gambling with my future, so nothing to lose."
If crazy retail investors can bankrupt Robinhood or other over-leveraged brokerage firms, that's also a win for the little guys.
I don't think many HN posters with their stable, extremely well-paid technology careers can truly empathize with the strain of aggressive nihilism on display at WSB.
"I'm only gambling with my future, so nothing to lose."
Then the clearinghouse should fail, rather than the private actors saved.
Once one accepts that "socialized risk and private profits" isn't acceptable, then one must also accept that either we must allow even the too big to fail actors to fail, or we must not accept any actor to be too big to fail at all.
If public money is used to rescue a bank or clearinghouse, then the public should own it. A government institution can buy any failing bank/clearing house/ if it's so vital, and then the public owns it. Buying a commercial bank or clearing house at cents for the dollar and then selling it again in better times isn't necessarily a bad idea. It's certainly a better idea in terms of moral hazard than simply "bailing out" banks without ownership.
Once one accepts that "socialized risk and private profits" isn't acceptable, then one must also accept that either we must allow even the too big to fail actors to fail, or we must not accept any actor to be too big to fail at all.
If public money is used to rescue a bank or clearinghouse, then the public should own it. A government institution can buy any failing bank/clearing house/ if it's so vital, and then the public owns it. Buying a commercial bank or clearing house at cents for the dollar and then selling it again in better times isn't necessarily a bad idea. It's certainly a better idea in terms of moral hazard than simply "bailing out" banks without ownership.
There was no bailout here of the clearinghouses, and in fact your line of argumentation supports them. If you want institutions to be able to avoid getting liquidated for cents on the dollar or bailed out by the government, you need to also allow them to defend themselves in times of trouble. The clearinghouses are doing just that by forcing brokerages to get higher reserves.
This is not David vs Goliath. This is Goliath vs Goliath. A reddit mob armed with Macbook Pros and iPhone 11s does not equal 'the little guy.'
Interesting that you assign expensive Mac products to WSB members. The most that can be said is that they likely have a mobile phone of some time.
[deleted]
"The Commission will closely review actions taken by regulated entities that may disadvantage investors or otherwise unduly inhibit their ability to trade certain securities. In addition, we will act to protect retail investors when the facts demonstrate abusive or manipulative trading activity that is prohibited by the federal securities laws. Market participants should be careful to avoid such activity."
This should scare the crap out of Robinhood from what happened yesterday.
This should scare the crap out of Robinhood from what happened yesterday.
Robinhood says that they basically couldn't fulfil the buy orders because they ran out of money, or couldn't fulfil the orders without breaking the rest of the platform. I imagine whatever the reason there's going to be lawsuits.
Whatever else happens, Robinhood should not survive this.
They clearly violated their customers' trust, so their customers should leave them.
And I will be completely unsurprised if when the dust settles it turns out they acted illegally.
Also, they suck at lying.
They clearly violated their customers' trust, so their customers should leave them.
And I will be completely unsurprised if when the dust settles it turns out they acted illegally.
Also, they suck at lying.
As has been stated elsewhere, it is easier to recover from alienating customers than it is from running afoul of the SEC. They ran a very real risk of being forcibly shut down by regulators if they didn't slow trading.
I don’t agree. See Tesla. Elon frakked up with the SEC but not his customers (or his fans) and so Tesla a couple years later is on top of the world. I doubt Robinhood will survive this. They built their whole brand around rallying for the little guy at the expense of the fat cats. It’s literally their name.
Tesla isn't an investing firm. They don't even really have much in the way of acquisitions yet. Tesla would have to do something pretty blatant to really piss off the SEC. Elon's $420 tweet was greeted with a slap on the wrist precisely because "you're new here, aren't you?".
The better analogy would be if SpaceX pissed off the FAA.
The better analogy would be if SpaceX pissed off the FAA.
Tesla actually made an official statement on their website about going private within 24 hours of the tweet. That's what reduced it to a slap on the wrist.
Ask and ye shall receive
https://www.msn.com/en-us/news/technology/elon-musk-e2-80-99...
https://www.msn.com/en-us/news/technology/elon-musk-e2-80-99...
That's an absolutely awful argument. Elon Musk rich so don't have to bother with the SEC?
Nope. The question was whether it’s worse (in terms of recovery time) to crap on the SEC or your customers, and in which case you’ll recover faster. Elon frakked with the SEC and rightfully had to pay a price for it. But they recovered quickly. I don’t think Robinhood will.
The best thing is to not frak with either the SEC or your customers. And that’s probably always an option, even if it might mean sacrifice.
The best thing is to not frak with either the SEC or your customers. And that’s probably always an option, even if it might mean sacrifice.
I don't agree. I think they provide a valuable service they should stay whole IF they can fix their capital issue and make their customers whole. You didn't forsee what was happening and neither did I because it was unprecedented. If not let them sink, someone will provide a similar service and learn from it. The SEC shouldn't be in the market of shutting down companies because a new phenomenon happened, let the market do that, unless something illegal has occurred.
I don't think the SEC should shut them down.
I think they should go bankrupt because their customers leave them for one of their many more reliable and trustworthy competitors.
I think they should go bankrupt because their customers leave them for one of their many more reliable and trustworthy competitors.
iamacyborg(4)
>They clearly violated their customers' trust, so their customers should leave them.
They did? That might be the case according to the Popular Narrative (that the Hedge Funds phoned them and said "shut it down"), but reality is that they couldn't front the deposits for the customer's trades, due to the insane volatility. In that case it's less violating their customers' trust and more having a product that couldn't handle extreme circumstances well. They are a discount brokerage after all, some compromises had to be made.
They did? That might be the case according to the Popular Narrative (that the Hedge Funds phoned them and said "shut it down"), but reality is that they couldn't front the deposits for the customer's trades, due to the insane volatility. In that case it's less violating their customers' trust and more having a product that couldn't handle extreme circumstances well. They are a discount brokerage after all, some compromises had to be made.
The narrative doesn't matter. It's a PR problem. Lots of people wanted to buy GME, then RH suddenly cut them off, offered no reasonable explanation, and then their CEO went on the news to just spew some content-free noise. Sure, there were reasons behind this ban, perhaps good reasons - but they weren't explained by RH, and RH to this moment didn't even admit to the cause of the problem.
Sounds like solid ground for loss of user trust to me.
See also: https://news.ycombinator.com/item?id=25957097.
Sounds like solid ground for loss of user trust to me.
See also: https://news.ycombinator.com/item?id=25957097.
The CEO said they couldn't cover deposits. He only started spewing nonsense when the obvious question about RH having liquidity issues came up. He didn't lie to retail RH clients, but he may have lied to RH investors. Then again, it's funded by private equity, so it's likely they know all this.
All of this makes sense given the emergency cash infusion of 1B RH got this week.
All of this makes sense given the emergency cash infusion of 1B RH got this week.
They over a day to say that. Instead, they decided it was clearer to say "we're temporarily restricting trading due to volatility". If what you said really was the issue... Why not just say that? They're a startup. They'd be forgiven. Why hide behind vagueness?
I do agree that they bungled the whole thing badly, but I also think they were probably trying to prevent a run on their accounts when they were already cash strapped.
It's a highly regulated industry. Brokers can't just take actions. Perhaps they hit some regulatory corner case and nobody knows how the SEC is going to react.
I'm somewhat out of the loop. If RH is low on money due to lending it out, then they have to stop lending. But the decision was to stop allowing buy orders on GME if I read and remember that correctly. What's the issue? Don't investors deposit money into their RH accounts and then purchase the stock from that money, giving RH a commission? That should be good for RH, so I'm not getting this. I probably just miss some info, hope I'm not asking a stupid question.
Source?
"Abusive or manipulative trading activity that is prohibited by the federal securities laws."
Is that aimed at "professional hedge funds" or self-proclaimed "autists" in an internet forum?
Is that aimed at "professional hedge funds" or self-proclaimed "autists" in an internet forum?
It is aimed at the people who shut down buying GME, then tried to create a downward trend at unusual low volumes to try to scare the wallstreet bets crowed into abandoning their positions in GME to allow short positions to recoup their gigantic losses.
It failed mind you. The shorts are still bleeding and the GME hold is continuing though just at a slightly reduced price.
Retail investors who have bought GME can afford to wait out the antics of hedge funds, but those funds are on borrowed time to try to turn the loss of a century into some kind of win, or they are done for good. Ask yourself, who do you think is trailing the borders of legality? A teen who goes “hmm GME at 100$? Sure why not, I’ll take 10” or the hedgefond manager calling all his friends to stop trading because his fund is going bankrupt on a stupid bet he made that he would have gotten away with if it wasn’t for those meddling kids.
It failed mind you. The shorts are still bleeding and the GME hold is continuing though just at a slightly reduced price.
Retail investors who have bought GME can afford to wait out the antics of hedge funds, but those funds are on borrowed time to try to turn the loss of a century into some kind of win, or they are done for good. Ask yourself, who do you think is trailing the borders of legality? A teen who goes “hmm GME at 100$? Sure why not, I’ll take 10” or the hedgefond manager calling all his friends to stop trading because his fund is going bankrupt on a stupid bet he made that he would have gotten away with if it wasn’t for those meddling kids.
This is QAnon/Kraken/Dominion level crankery. The MAGA types are happy to believe in voter fraud conspiracy theories with no evidence because they hate the Democratic party, and here you are doing literally the exact same thing here except replacing "Deep State" with "hedgefond managers".
People like you make fun of the QAnon-types but you're just as willing to indulge in deranged evidence-free conspiracy theorizing as long as it accommodates your ideological priors.
People like you make fun of the QAnon-types but you're just as willing to indulge in deranged evidence-free conspiracy theorizing as long as it accommodates your ideological priors.
Shorting more than 100% of the stock is excessive and irresponsible. That figure is not a conspiracy theory: it is public information that the SEC releases monthly.
Whether hedge fund managers did make a call to their buddies is not the only thing in question here (although the SEC will surely determine the truth). Shorting a stock drives the price down and, while this is no less legal than buying a stock, the question is whether shorting 136% of the stock counts as outright manipulation. Reddit kids have done nothing but pop an artificial bubble, they did not participate in manipulation; as the hedge fund managers and their buddies claim.
> QAnon
I have yet to see the baby cookbook or other evidence of their ridiculous claims.
Whether hedge fund managers did make a call to their buddies is not the only thing in question here (although the SEC will surely determine the truth). Shorting a stock drives the price down and, while this is no less legal than buying a stock, the question is whether shorting 136% of the stock counts as outright manipulation. Reddit kids have done nothing but pop an artificial bubble, they did not participate in manipulation; as the hedge fund managers and their buddies claim.
> QAnon
I have yet to see the baby cookbook or other evidence of their ridiculous claims.
The parent commenter claimed that brokerages were colluding to drive the price of GME down to benefits the shorts. That is QAnon-level evidence-free conspiracy theorizing. The clearing houses were demanding more collateral and brokerages couldn't afford or didn't want to put it up.
> whether shorting 136% of the stock counts as outright manipulation
I refer you to the snarky top comment about how all the Dunning-Kruger victims who claim manipulation do not actually know what manipulation is. Shorting a stock is not manipulation and neither is lots of people deciding to short a stock. 136% of the stock is shorted because a lot of people were shorting it, not because Some Guy decided to single-handedly short 136% of the float.
> Reddit kids have done nothing but pop an artificial bubble
So GameStop was an artificial bubble at $10 but not at $500? Really?
> whether shorting 136% of the stock counts as outright manipulation
I refer you to the snarky top comment about how all the Dunning-Kruger victims who claim manipulation do not actually know what manipulation is. Shorting a stock is not manipulation and neither is lots of people deciding to short a stock. 136% of the stock is shorted because a lot of people were shorting it, not because Some Guy decided to single-handedly short 136% of the float.
> Reddit kids have done nothing but pop an artificial bubble
So GameStop was an artificial bubble at $10 but not at $500? Really?
IB claimed to have hiked margin to 100% which is a reasonable response. However, I have heard from many sources that they in fact rejected buy orders even with cash - which, if true, and I have every reason to believe so, makes any explanation about margins and technical reasons seem ridiculous.
There is surely some deeper non public reason that every single retail broker - but no single institutional broker - stopped accepting GME buys but kept honoring sells. It might or might not be a call from hedge fund buddies, but it is still likely illegal.
When I was working at a hedge fund, I once executed a few hundred mil notional on a supposedly anonymous exchange, taking advantage of an obvious counterparty mistake.
Within 10 minutes, I got a call from said counterparty, telling me that next time I do that, they’ll make sure I’m kicked off the exchange.
Anonymous my ass. Legal my ass. And yet, it happened - I’m sure I wasn’t the first or the last - the other side kept making those mistakes. I stopped taking advantage of them. This kind of behavior is rampant in Wall Street. Only difference is it has been done now in the open, very visibly, and with thousands - perhaps tens of thousands - identifiable victims.
There is surely some deeper non public reason that every single retail broker - but no single institutional broker - stopped accepting GME buys but kept honoring sells. It might or might not be a call from hedge fund buddies, but it is still likely illegal.
When I was working at a hedge fund, I once executed a few hundred mil notional on a supposedly anonymous exchange, taking advantage of an obvious counterparty mistake.
Within 10 minutes, I got a call from said counterparty, telling me that next time I do that, they’ll make sure I’m kicked off the exchange.
Anonymous my ass. Legal my ass. And yet, it happened - I’m sure I wasn’t the first or the last - the other side kept making those mistakes. I stopped taking advantage of them. This kind of behavior is rampant in Wall Street. Only difference is it has been done now in the open, very visibly, and with thousands - perhaps tens of thousands - identifiable victims.
> So GameStop was an artificial bubble at $10 but not at $500? Really?
Did I claim that? I wouldn't touch GME with a barge pole.
Did I claim that? I wouldn't touch GME with a barge pole.
> actions taken by regulated entities
That's clearly not about random people commenting on an internet forum.
It may still be about specific people commenting on an internet forum, but those people would know it's about them.
That's clearly not about random people commenting on an internet forum.
It may still be about specific people commenting on an internet forum, but those people would know it's about them.
It’s aimed at both, presumably. It’s not like hedge funds have never gotten in trouble for abusive trading practices.
The problem is that when hedge funds get in trouble they do not go to jail, are not prohibited from doing business and the penalties (fines) are ineffectively weak.
Given the track record of holding the powerful accountable is terrible, I don’t think this is directed at hedge funds but is a warning to the little people.
Given the track record of holding the powerful accountable is terrible, I don’t think this is directed at hedge funds but is a warning to the little people.
> The problem is that when hedge funds get in trouble they do not go to jail
Criminal prosecution is held to a much higher evidentiary standard than civil fines. Almost all market related crimes, including manipulation and insider trading, require mens rea. Proving state of mind beyond a shadow of a doubt is really difficult to do. Especially when the defendant is sophisticated enough to know the law and have access to high-quality legal advice.
Any US Attorney would absolutely love to have the feather in his cap of sending a billionaire hedge fund manager or investment banker to prison. Hell, the reason Rudy Giuliani is a household name is because he managed to do that. But no prosecutor is going to bring a case that he has no chance of winning.
Given that it makes much more sense to target enforcement with civil fines rather than criminal prosecution. You can tie up your resources to fight expensive, hard to prosecute criminal cases. Or you can quickly settle for reasonable fines, and cover many more cases with the same set of limited resources.
Criminal prosecution is held to a much higher evidentiary standard than civil fines. Almost all market related crimes, including manipulation and insider trading, require mens rea. Proving state of mind beyond a shadow of a doubt is really difficult to do. Especially when the defendant is sophisticated enough to know the law and have access to high-quality legal advice.
Any US Attorney would absolutely love to have the feather in his cap of sending a billionaire hedge fund manager or investment banker to prison. Hell, the reason Rudy Giuliani is a household name is because he managed to do that. But no prosecutor is going to bring a case that he has no chance of winning.
Given that it makes much more sense to target enforcement with civil fines rather than criminal prosecution. You can tie up your resources to fight expensive, hard to prosecute criminal cases. Or you can quickly settle for reasonable fines, and cover many more cases with the same set of limited resources.
It’s common for hedge funds (and more importantly, the people who run them) to be prohibited from doing business. “Barred from the securities industry” is the term typically used if you’re looking for examples.
True.
But why does this sort of thing seem to be the norm? https://en.m.wikipedia.org/wiki/S.A.C._Capital_Advisors
But why does this sort of thing seem to be the norm? https://en.m.wikipedia.org/wiki/S.A.C._Capital_Advisors
This.
It's clear that everyone should be lawyering up depending on what positions they had when they started pumping this idea to the masses. That said, I'm a big believer in "a fool and his money". If there are hedge funds or retail investors out there who, perhaps, didn't understand all the risks of what they were doing, protecting them from their folly only causes more problems in the future.
As horrible as this sounds, now is the time to let everyone fail. Hard. If we don't, no lessons will be learned.
It's clear that everyone should be lawyering up depending on what positions they had when they started pumping this idea to the masses. That said, I'm a big believer in "a fool and his money". If there are hedge funds or retail investors out there who, perhaps, didn't understand all the risks of what they were doing, protecting them from their folly only causes more problems in the future.
As horrible as this sounds, now is the time to let everyone fail. Hard. If we don't, no lessons will be learned.
IANAL, but to me it seems like it would be very difficult to convict retail investors of investing in a stock they believe has value and then telling other people they invested in a stock they believe has value. Unless there are chat records of a few redditors coordinating an astroturf campaign while twirling their mustaches or whatever, I don’t see how this could be aimed at retail.
Regulated entities who have access to tools or information not available to retail investors, or who applied financial pressure to manipulate access to the markets, or did not disclose conflicts of interest...that seems like a much easier case to make.
Regulated entities who have access to tools or information not available to retail investors, or who applied financial pressure to manipulate access to the markets, or did not disclose conflicts of interest...that seems like a much easier case to make.
It's also not as if hedge funds are employing thousands of welders or craftsmen. These are high risk financial strategies by people who qualify as professional traders - "I didn't know" isn't an excuse anymore. If they lose the game, they get to eat their losses.
We will probably see a few retail traders get burned, and I suspect anyone wanting to do trading in the future is going to have to fill out more disclaimers.
We will probably see a few retail traders get burned, and I suspect anyone wanting to do trading in the future is going to have to fill out more disclaimers.
Maybe not hedge funds but I estimate that the majority of what laypeople call "hedge funds" are not hedge funds. There are tons of firms that just run money for ordinary people. At my old firm they have shorted blackberry in thousands of individual margin accounts, and those accounts are losing money on paper and might have to realize losses in order to rebalance their risk.
I'd have some questions if my low risk or medium risk investment firm was making large shorts. Shorts are very risky for a whole bunch of reasons - which is also why they can be high value. Don't get me wrong, I'm sure every high risk fund can find at least one pensioner invested in them, but if your firm is well known for shorting then you can't pretend to be anything but high risk/high reward.
These aren’t large positions and that is the point. If a short position that was 2% of your account suddenly becomes 10% of it, now you have a problem, and the problem wasn’t caused by a wrong investment thesis, it was caused by a mob of kids online.
[deleted]
The big traders probably have friends in high places, so I suspect they're going after WSB and not wall street who caused the issues in the first place.
I know of cases from the Danish market where the financial service authorities went for people who had tried driving the price up in a pump and dump scheme for a small penny stock. Using internet forums and a couple of trading accounts.
They made a few thousand dollars and got months in jail for it.
The problem with wsb is that it has gotten so big and there are too many involved at this point.
They made a few thousand dollars and got months in jail for it.
The problem with wsb is that it has gotten so big and there are too many involved at this point.
It's not really that the government can't go after WSB. Sure they're not going to prosecute 2 million degenerates, but it's not like they can't round up 50 of the big names to make a statement.
It's that there's really no appetite in the federal government for going after retail traders. Retail trading as an industry took a very long time to build and ham-fisted enforcement could tank it harder than a few lawsuits ever could.
Make no mistake, this was going to happen eventually. There's infinite ability to gather information, infinite ability to share it. Retail collusion was inevitable. The people who built the industry knew it was going to happen. They prepared for it. Everyone, including the SEC, knew it was only a matter of time before something like this happens.
Denmark did that because there's much greater financial regulatory capture than there is here.
It's that there's really no appetite in the federal government for going after retail traders. Retail trading as an industry took a very long time to build and ham-fisted enforcement could tank it harder than a few lawsuits ever could.
Make no mistake, this was going to happen eventually. There's infinite ability to gather information, infinite ability to share it. Retail collusion was inevitable. The people who built the industry knew it was going to happen. They prepared for it. Everyone, including the SEC, knew it was only a matter of time before something like this happens.
Denmark did that because there's much greater financial regulatory capture than there is here.
Yes. This stuff (market manipulation using internet hype) is so easy to do that they need to make an example.
I am very certain that most of retail traders who buy GME at 400 will end up losing money.
I am very certain that most of retail traders who buy GME at 400 will end up losing money.
With the amount of media attention WSB has been gaining, this is setting itself up for "Wall Street versus The People" situation. It may be politically tough to go against the retailers now, particularly mid-pandemic and with all the other political comorbidities US is suffering from.
It's been that for a while. Lots of people on social media have been framing it as another Occupy Wall Street, except this time they've figured out how to make the elites hurt. There's plenty of people who don't care how much they lose when it bursts, because Wall Street is set up to lose more.
This is not about "Wall Street versus The People" or WallStreet vs Retail (small investors) it is about federal securities laws. And you know where the law is? In court. I think court needs to decide whether what is WSB doing illegal or legal.
I think court needs to decide whether what is WSB doing is* illegal or legal.
If after bubble pops it's shown that an elite group of WSB traders made huge profits while a large amount of retail traders lost their entire investment, I think there's going to be plenty of public appetite for nailing the market manipulators to the wall.
There is no "probably." It is well-known that people leave their civil servant jobs at regulatory industries, after putting in their time, and bring their know-how and connections to big banks and hedge funds in return for cushy salaries.
Worked in a broker in Australia, our head of compliance is a former ASIC (the Australian regulator) employee.
There is an NPR (National Public Radio) show called "This American Life" and several years back it had an episode devoted to this. They interviewed regulators. The big banks, for instance, will have an office on site for a regulator. The pull is to "go native" at some point.
Why would the SEC punish Robinhood for not having enough collateral to trade very volatile stocks.
IANAL but some possible reasons:
1. For lying about that reason to customers
2. for not shutting down all trading on their app (allowing sells of GME without manipulated the market, even if blocking sells would also have bad effects)
3. For allegedly tipping off Citadel before shutting off GME trading (unconfirmed but they will likely investigate this claim)
1. For lying about that reason to customers
2. for not shutting down all trading on their app (allowing sells of GME without manipulated the market, even if blocking sells would also have bad effects)
3. For allegedly tipping off Citadel before shutting off GME trading (unconfirmed but they will likely investigate this claim)
Yeah it's worth investigating if they are at fault somewhere.
But many people seem to think that the SEC will punish them simply because they stopped allowing people to buy more GME.
But many people seem to think that the SEC will punish them simply because they stopped allowing people to buy more GME.
I think everyone knows it wasn't simply that though, hence the outrage.
Information I've seen is they selectively applied that ruling.
"Big fish" were still able to get an account manager to process their trades while the button buy was disabled for everything else.
There's also a seeming conflict of interest with Citadel's involvement in both RH and Melvin.
"Big fish" were still able to get an account manager to process their trades while the button buy was disabled for everything else.
There's also a seeming conflict of interest with Citadel's involvement in both RH and Melvin.
Hopefully it's more than posturing and that there will be action taken to back up this statement.
It specifies trading activity. I read this as a warning to WSB, not their brokerages.
No. WSB is not "a regulated entit[y]" that "disadvantage[d] investors or otherwise unduly inhibit[ed] their ability to trade certain securities". Robinhood is and did.
That's the first part but the second part is a separate statement against market manipulation generally. In the law, manipulation is forbidden to anyone, not just brokers and dealers.
I'd say you might be wrong on both counts:
1. preventing people from buying GME at, whatever, $300 might not have been disadvantaging them, and
2. it might not have been unduly inhibiting their ability to trade, but duly so.
1. preventing people from buying GME at, whatever, $300 might not have been disadvantaging them, and
2. it might not have been unduly inhibiting their ability to trade, but duly so.
You are so biased because you think GME is overvalued at $300.
Your bias even makes you defend Robinhood’s action to disable cash accounts buying certain stocks as DULY.
Wow
Your bias even makes you defend Robinhood’s action to disable cash accounts buying certain stocks as DULY.
Wow
People who are anti-robinhood thinks it’s a message to RH.
Those who are anti-WSB thinks it a warning to WSB.
Those who are anti-WSB thinks it a warning to WSB.
Might be both.
It definitely is. The next sentence specifies market participants which would include both WSB and hedge funds.
Quant firms made more money then WSB did trading on the momentum I'm sure. Do you really think retail was the only one pumping?
> actions taken by regulated entities
WSB isn't regulated, that is companies like Robinhood
WSB isn't regulated, that is companies like Robinhood
> we will act to protect retail investors when the facts demonstrate abusive or manipulative trading activity
Specifically calls out retail investors (i.e. WSB). I read it the opposite way, but I can see how it could be interpreted as a warning to both.
Specifically calls out retail investors (i.e. WSB). I read it the opposite way, but I can see how it could be interpreted as a warning to both.
It boils down where and who did the manipulation?
140% shorts, including naked shorts from Melvin?
RH stopping buys but allowing sells?
Conclusive proof that Citidel put their finger on the scales to force RH's actions?
WSB's members constantly chanting hold/diamond hands/ride to the moon?
There's a lot at play, and further examination will make for a good post mortem...
140% shorts, including naked shorts from Melvin?
RH stopping buys but allowing sells?
Conclusive proof that Citidel put their finger on the scales to force RH's actions?
WSB's members constantly chanting hold/diamond hands/ride to the moon?
There's a lot at play, and further examination will make for a good post mortem...
There's a weird aspect of meme-as-protection. It's hard for a regulating entity to cite memes and seemingly offensive speech.
WSB is not a regulated entity, but presumably Robinhood is.
The "trading activity" is in the "in addition" sentence, it doesn't have to refer exclusively to regulated entities.
[deleted]
In other news there are reports of men in $4,000 suits with shovels and pick axes working above New York's many fiber optic lines.
And their investors...this could (not will, could) end up being a fairly easy case for piercing Robinhood's corporate veil.
Good on the SEC for stating they stand with retail investors, even if it ends up being hollow it sure is nice to hear them say it.
Good on the SEC for stating they stand with retail investors, even if it ends up being hollow it sure is nice to hear them say it.
Absolutely not. On what theory? And on what grounds? There's no such thing as "a fairly easy case for piercing the corporate veil".
Lack of separation? If it turns out they did take any direction on this from anyone holding a short position in GME I would imagine RH is fully and completely screwed, as are their investors.
this is all hypothetical, which is why I used the word if. If they did what WSB is accussing them of, which I think is probably doubtful, RH is in really really big trouble...
this is all hypothetical, which is why I used the word if. If they did what WSB is accussing them of, which I think is probably doubtful, RH is in really really big trouble...
There's been some speculation that what WSB are doing could be market manipulation or otherwise illegal. The fact that this statement only mention retail investors in the context of protecting them makes me suspect that the SEC's not going for it.
I don't think it's fair here to assume that by "retail investors" the SEC means all retail investors. Retail is not one giant group.
It is possible for one group of retail (lets say the original WSBs crowd) to take illegal action that harms other retail investors.
Taking action to protect the mass of retail does not mean that all of retail is immediately in the clear.
It is possible for one group of retail (lets say the original WSBs crowd) to take illegal action that harms other retail investors.
Taking action to protect the mass of retail does not mean that all of retail is immediately in the clear.
Third paragraph:
> In addition, we will act to protect retail investors when the facts demonstrate abusive or manipulative trading activity that is prohibited by the federal securities laws. Market participants should be careful to avoid such activity.
"Market participants" here is referring to retail traders. Don't make the mistake of thinking that just because you're the little guy, you're exempt from the law. It's like how the capitol rioters were sure they were on the side of America but the FBI (and half of America) sees things very differently.
A lot of government regulation is about protecting the little guy from other slightly more unscrupulous little guys. "The public" is not a monolithic entity - folks can and do screw each other over even when purporting to be part of the same mass movement.
> In addition, we will act to protect retail investors when the facts demonstrate abusive or manipulative trading activity that is prohibited by the federal securities laws. Market participants should be careful to avoid such activity.
"Market participants" here is referring to retail traders. Don't make the mistake of thinking that just because you're the little guy, you're exempt from the law. It's like how the capitol rioters were sure they were on the side of America but the FBI (and half of America) sees things very differently.
A lot of government regulation is about protecting the little guy from other slightly more unscrupulous little guys. "The public" is not a monolithic entity - folks can and do screw each other over even when purporting to be part of the same mass movement.
Could be? It's an open, publicly-documented market manipulation event. How can there be any question about it? You might decide that this kind of manipulation is OK due to it's stated goals, but that doesn't make it not manipulation.
Which is one take, certainly. But the problem is once you say that this is a market manipulation event you run into other issues.
Is going on CNBC and talking about the strength of a company that you invested in market manipulation? Before this blew up you certainly had more reach.
Is posting "research" or holding a conference call and telling people a company is garbage while you have the company shorted market manipulation? What about when you short a company and sell a ton of shares to induce panic? What about algorithms that are created to trade shares to reach a certain profitable price based on internal holdings/analysis?
Here's another thing - if WallStreetBets was incorporated into a hedge fund and took a huge long position is that market manipulation? It seems to me the main difference is that they aren't behind closed doors talking privately in a legal fiction called a company that is really the problem here...
You have to define what you mean by manipulating the market and apply that equally under the eyes of the law. The fact that this was done publicly makes it all the more interesting. Had it been done behind closed doors (like so many things are on Wall Street) it would have been an open and shut case, but it wasn't.
So sure, let's say it's a market manipulation event. Ok. Can you tell me what isn't a market manipulation event?
Is going on CNBC and talking about the strength of a company that you invested in market manipulation? Before this blew up you certainly had more reach.
Is posting "research" or holding a conference call and telling people a company is garbage while you have the company shorted market manipulation? What about when you short a company and sell a ton of shares to induce panic? What about algorithms that are created to trade shares to reach a certain profitable price based on internal holdings/analysis?
Here's another thing - if WallStreetBets was incorporated into a hedge fund and took a huge long position is that market manipulation? It seems to me the main difference is that they aren't behind closed doors talking privately in a legal fiction called a company that is really the problem here...
You have to define what you mean by manipulating the market and apply that equally under the eyes of the law. The fact that this was done publicly makes it all the more interesting. Had it been done behind closed doors (like so many things are on Wall Street) it would have been an open and shut case, but it wasn't.
So sure, let's say it's a market manipulation event. Ok. Can you tell me what isn't a market manipulation event?
If wallstreetbets was a hedge fund and they bought all of GME to cause a short squeeze then that is market manipulation - this has been settled [0].
[0] - https://www.sec.gov/news/press-release/2013-159
Edit: litigated to settled
[0] - https://www.sec.gov/news/press-release/2013-159
Edit: litigated to settled
If WSB was a hedge fund they just have to buy some of GME - not all or even too much. Other hedge funds could buy some too.
Just have a "dinner conversation" about it.
Just like you and a few hedge funds can get together and collectively short GameStop and other companies... as they are doing now.
There's no rule that I know of that says only one entity can make a specific investment.
-edit-
Don't forget that hedge funds ARE on the other side of this trade. WSB and retail do not have the ability to move this solely on their own. I wonder how long until they're on CNBC/Bloomberg "we saw a great opportunity in the market and executed our position well". If it's market manipulation - was it market manipulation to even have heard about WSB and entered the trade? WSB is a nice scapegoat for the real money that caught these hedge funds in a bad position. Didn't take long before WSB became alt-right, white supremacist, market manipulators... etc.
Just have a "dinner conversation" about it.
Just like you and a few hedge funds can get together and collectively short GameStop and other companies... as they are doing now.
There's no rule that I know of that says only one entity can make a specific investment.
-edit-
Don't forget that hedge funds ARE on the other side of this trade. WSB and retail do not have the ability to move this solely on their own. I wonder how long until they're on CNBC/Bloomberg "we saw a great opportunity in the market and executed our position well". If it's market manipulation - was it market manipulation to even have heard about WSB and entered the trade? WSB is a nice scapegoat for the real money that caught these hedge funds in a bad position. Didn't take long before WSB became alt-right, white supremacist, market manipulators... etc.
> Just have a "dinner conversation" about it.
This would be illegal I think.
This would be illegal I think.
It isn't. Hedge fund managers have "idea dinners" with dozens of their friends all the time to discuss what plays they are thinking... they frequently also bring in guests that represent companies, or even politicians/former politicians to discuss lobbying strategies to keep this exact type of collusion and market manipulation legal for them.
But as soon as a bunch of the dreaded "retail investors" start doing it in the open, Wall Street calls on K Street to save them.
But as soon as a bunch of the dreaded "retail investors" start doing it in the open, Wall Street calls on K Street to save them.
That's amazing. So they basically found a legal protocol to do things that would otherwise be illegal, and institutions like judges and the SEC just let that happen?
This is well known the be common practice and very much not punished.
It could be argued that r/wallstreetbets is a public forum. Anyone can join. Think of it like a virtual conference room.
If I walk into this room and yell “Everybody buy GME to screw the hedge funds” am I engaging in market manipulation? There is no formal or informal agreement to do so if someone says “ok great idea” and go buys GME.
Besides how are they going to enforce the laws? Match IPs to ISPs and extradite all the thousands if not millions of people across the world who bough stock? If a fine is issued do they just divide it up by the number of people who commented in wallstreetbets and held stock? Or is every person fined individually?
How is this worse than the sell walls that hedge funds use to deflate a share price?
The truth of the matter is the SEC dropped the ball. They were probably too busy having a wank while on pornhub [0].
In December as soon as the share price started to rise GME was placed on the NYSE threshold securities list for large numbers of “failure to deliver”. Keep in mind it had entered this same list earlier in the year. Followers of wallstreetbets were suspicious and believed that illegal naked short selling was occurring so they informed the SEC [1].
Then a few weeks later the stock rose 10% then 50% the next day leaving the call options ITM on a Friday afternoon. What did the SEC do? They sat on their hands over the weekend instead of suspending trading of the stock and performing an investigation.
[0] https://abcnews.go.com/amp/GMA/sec-pornography-employees-spe... [1] https://www.reddit.com/r/wallstreetbets/comments/kr98ym/gme_...
If I walk into this room and yell “Everybody buy GME to screw the hedge funds” am I engaging in market manipulation? There is no formal or informal agreement to do so if someone says “ok great idea” and go buys GME.
Besides how are they going to enforce the laws? Match IPs to ISPs and extradite all the thousands if not millions of people across the world who bough stock? If a fine is issued do they just divide it up by the number of people who commented in wallstreetbets and held stock? Or is every person fined individually?
How is this worse than the sell walls that hedge funds use to deflate a share price?
The truth of the matter is the SEC dropped the ball. They were probably too busy having a wank while on pornhub [0].
In December as soon as the share price started to rise GME was placed on the NYSE threshold securities list for large numbers of “failure to deliver”. Keep in mind it had entered this same list earlier in the year. Followers of wallstreetbets were suspicious and believed that illegal naked short selling was occurring so they informed the SEC [1].
Then a few weeks later the stock rose 10% then 50% the next day leaving the call options ITM on a Friday afternoon. What did the SEC do? They sat on their hands over the weekend instead of suspending trading of the stock and performing an investigation.
[0] https://abcnews.go.com/amp/GMA/sec-pornography-employees-spe... [1] https://www.reddit.com/r/wallstreetbets/comments/kr98ym/gme_...
If you actually read that link that case is so extraordinarily different than the reality of what’s happening today I don’t know how you can argue this in good faith.
> I don’t know how you can argue this in good faith
I'm not an expert and am rather dumb.
What do you think the differences are?
Differences:
* One hedge fund versus a multitude of investors
* Owning all the securities vs only a portion
The similarities are:
* Intentionally buying all the stock to cause a short squeeze
* Explicitly recalling borrowed shares to cause a short squeeze
To be clear, I'm not arguing that what wallstreetbets is doing is illegal but something fairly similar is. I thought an actual example of market manipulation was relevant to the conversation.
I'm not an expert and am rather dumb.
What do you think the differences are?
Differences:
* One hedge fund versus a multitude of investors
* Owning all the securities vs only a portion
The similarities are:
* Intentionally buying all the stock to cause a short squeeze
* Explicitly recalling borrowed shares to cause a short squeeze
To be clear, I'm not arguing that what wallstreetbets is doing is illegal but something fairly similar is. I thought an actual example of market manipulation was relevant to the conversation.
A short squeeze in and of itself is not illegal. The squeezers were not prosecuted in 2008 when they held onto VW even though it briefly became the most valuable stock in the world. Seeing an opportunity to advantage oneself of a bad short position is just trading, nothing fancier than that.
The Falcone case is much more complicated because it was a single person buying the entirety of the market. Much weirder mechanics at play. Squeezes are always carried out through the self-interest of uncoordinated parties, be they retail investors or firms.
The Falcone case is much more complicated because it was a single person buying the entirety of the market. Much weirder mechanics at play. Squeezes are always carried out through the self-interest of uncoordinated parties, be they retail investors or firms.
Note that the comment I replied to introduced the idea of treating wallstreetbets as a single hedge fund.
> if WallStreetBets was incorporated into a hedge fund and took a huge long position is that market manipulation?
So your main point of contention with me for bringing up unrelated information was already brought up.
> if WallStreetBets was incorporated into a hedge fund and took a huge long position is that market manipulation?
So your main point of contention with me for bringing up unrelated information was already brought up.
well, the case reached a settlement so i would not say it was litigated in the sense of establishing case law or legal precedent.
it's interesting- it reads as though harbinger bought bonds and demanded delivery. can you imagine it! asking to take possession of the thing you just bought is painted as manipulation!!!
it's interesting- it reads as though harbinger bought bonds and demanded delivery. can you imagine it! asking to take possession of the thing you just bought is painted as manipulation!!!
You realise that all of this stuff has specific rules. There are specific rules about posting research, there are specific rules about media (newspapers and TV), there are specific rules about algorithms (I will answer your questions: no, no, no, no...the last question is...odd, if you know about sure-win algos then you must be very rich).
And all of this stuff has happened before, it happened in 2000, lots of people went on bulletin boards, and some ended up going to jail for market manipulation. The difference between doing it publicly and privately is huge, that is a necessary component of market manipulation (generally speaking, market manipulation isn't very effective if you don't have anyone to baghold for you).
And all of this stuff has happened before, it happened in 2000, lots of people went on bulletin boards, and some ended up going to jail for market manipulation. The difference between doing it publicly and privately is huge, that is a necessary component of market manipulation (generally speaking, market manipulation isn't very effective if you don't have anyone to baghold for you).
I'm certainly no expert in the rules at play here, but I can't fathom how posting on a public forum and saying "let's all go buy $GME and screw these hedge fund guys!" would not be absolutely protected by the First Amendment. There's no fraud or anything like that, and you're not posting anything false or misleading about the company.
If a bunch of people feel like it's a good idea and want to join in, then it is what it is.
If a bunch of people feel like it's a good idea and want to join in, then it is what it is.
Because there is the first amendment...and there is securities fraud. You are saying: anything that anyone says at any time has no legal consequence because of the first amendment...no.
Misleading stuff is being posted on wsb. And some people are likely not being honest about what they are doing (i.e. telling people to buy when they are selling). This is how pump and dumps work. If you buy a stock worth $5 for $300...your only option is to sell to someone who knows nothing. That is what it is happening now.
The stuff about hedge funds only came later, it is funny that people are citing this now (as ever, financial markets and ex-post rationalisations...human reasoning is amazing). All this stuff about revolutions against bankers, and the wealthy, and politicans leaping onto it...lol. The funniest thing about this is that people who have the least knowledge believe they need protection the least...and when this blows up, they will still say it is rigged. Oh well. Plus ca change.
Misleading stuff is being posted on wsb. And some people are likely not being honest about what they are doing (i.e. telling people to buy when they are selling). This is how pump and dumps work. If you buy a stock worth $5 for $300...your only option is to sell to someone who knows nothing. That is what it is happening now.
The stuff about hedge funds only came later, it is funny that people are citing this now (as ever, financial markets and ex-post rationalisations...human reasoning is amazing). All this stuff about revolutions against bankers, and the wealthy, and politicans leaping onto it...lol. The funniest thing about this is that people who have the least knowledge believe they need protection the least...and when this blows up, they will still say it is rigged. Oh well. Plus ca change.
I'm more of a "spirit of the thing" than "this is what the text says" kind of guy.
I'd argue that those things aren't fundamentally different than anything going on via WSB (assuming no bot accounts saying buy buy buy or something similar).
I think the difference is that for these other items there's nobody around to measure the impact.
I'd argue that those things aren't fundamentally different than anything going on via WSB (assuming no bot accounts saying buy buy buy or something similar).
I think the difference is that for these other items there's nobody around to measure the impact.
No. If you do any of those things wrong then you will get charged.
There aren't bot accounts. There are people telling other people to buy who are probably selling (there is a reason why DFV isn't posting anything but account updates). No conpsiracy theory around bots, the people manipulating the market are there, they are posting on a public forum. It doesn't get more cut and dry.
There aren't bot accounts. There are people telling other people to buy who are probably selling (there is a reason why DFV isn't posting anything but account updates). No conpsiracy theory around bots, the people manipulating the market are there, they are posting on a public forum. It doesn't get more cut and dry.
I just don't see a difference in manipulating the markets through official channels versus unofficial channels. If CNBC wants to have me or reddit user r/deepfuckingvalue (Keith Gill) on their platform instead of WSB sure I'll give them some stock picks too.
There's a bit of nuance. We're using the word "manipulation" to mean two different things -- one is the colloquial meaning, and yes it's very obvious that the price was manipulated in that sense. As far as the legal definition of manipulation is concerned though, we haven't necessarily met all the requirements.
Applying this logic, perhaps we can get "professional" stock ... manipulators off the TV. CNBC can go away entirely. Marketing speak would be replaced with value charts. Ban all forums that discuss specific stock values.
Then prevent people from buying stocks in groups. Mutual funds, ETFs, etc... all of these abstractions on abstractions, we can throw them away. The more abstractions we throw away, the closer we get to what all this should actually be meant to serve; people.
Then prevent people from buying stocks in groups. Mutual funds, ETFs, etc... all of these abstractions on abstractions, we can throw them away. The more abstractions we throw away, the closer we get to what all this should actually be meant to serve; people.
People are free to purchase stock how they want to. If those people collect together and discuss potentially profitable strategies for trading who is to stop them? Do you think its possible youve fallen ill to the rhetoric that this is bad purely because the rich people didn't get their way?
I have a general, all-purpose opposition to financial trading that’s about exploiting weird market structure tricks to screw people over rather than expressing beliefs about the value of the underlying things being traded. Institutional traders too often get away with doing that kind of thing, and I’m hardly losing sleep over the particular targets of this campaign, but we can’t let the takeaway here be “it’s fine as long as retail investors get to play too”.
The issue with that argument is that it's really not “it’s fine as long as retail investors get to play too," it's “it’s fine until retail investors get to play too”
The point is that it's not fine. The institutional investors who have historically said it was fine were wrong. If the average retail investor comes away thinking scummy tactics are cool now that you and I can use them, it'll be a disaster for the cause of real financial reform.
It's hypocritical to only now be concerned with "scummy tactics" when the little people found a way to turn them on the big money. No one seemed to really care until hedge funds started losing billions due to a situation they created.
I'm just not sure what to tell you here. I'm not gonna support unethical trading practices because other people might have hypocritical reasons to oppose them. Again, it's not just this one event; I really am worried that the SEC will be unable to implement market reforms here because Robinhood traders argue it's their turn to exploit the system.
Imagine calling the simple act of buying a stock "exploiting weird market structure tricks to screw people over"
The SEC has some case studies on this that are really itneresting...
https://www.sec.gov/files/Market%20Manipulations%20and%20Cas...
The idea that there has to be behind the scenes coordination (i.e., non-publically available communication/information) runs pretty clearly through all of them, but IANASEC
https://www.sec.gov/files/Market%20Manipulations%20and%20Cas...
The idea that there has to be behind the scenes coordination (i.e., non-publically available communication/information) runs pretty clearly through all of them, but IANASEC
>Could be? It's an open, publicly-documented market manipulation event.
Strange question, what's the bar for market manipulation? For example if a company took out debt to buy their own stock in order to drive up the price would that count?
Strange question, what's the bar for market manipulation? For example if a company took out debt to buy their own stock in order to drive up the price would that count?
If the company were to issue a statement that they believed their actions would raise the share price, then yes.
https://www.law.cornell.edu/uscode/text/15/78i
https://www.law.cornell.edu/uscode/text/15/78i
So do everything up to specifically stating the effect that you want, and it’s not market manipulation? This is the “emperor’s new clothes” absurdity of this whole system.
The whole fucking market has been manipulated by various parties this year, most notably by the Federal Reserve, yet there’s only a moral panic when some firefighter from Long Island gets a little taste?
The whole fucking market has been manipulated by various parties this year, most notably by the Federal Reserve, yet there’s only a moral panic when some firefighter from Long Island gets a little taste?
[deleted]
Stock buy back is perfectly fine and its authorization is usually announced in a press release. Hiding that you are taking new debt to do just about anything would be illegal.
Persuading people that they should invest in X company for Y reason is not market manipulation. People who take a short position frequently announce their short publicly, with the express aim of achieving their goals.
Matt Levine did a pretty good job explaining why it probably doesn't fit the traditional definition of market manipulation in his newsletter on Tuesday[1], see the second section titled "But is it securities fraud?"
[1]https://www.bloomberg.com/opinion/articles/2021-01-26/will-w...
[1]https://www.bloomberg.com/opinion/articles/2021-01-26/will-w...
Whether or not it is market manipulation, who do you think the SEC could realistically go after here?
Maybe one or two specific individuals, but you're right in general. That's the part that frightens me the most here. The tactics that are being used are equivalent to the ones used by sideshow street racers and political riots: if we get thousands of individuals to break the law at the same time and place then law enforcement will be ineffective.
It certainly _feels_ like an organized riot, but I'm not 100% sure that it is. In a riot, there are organizers and instigators, and then there is a mob who follows them. Here, I'm not really sure that the organizers exist: the closest thing I can see is the Reddit user DeepFuckingValue, and all they do is post screenshots of their position in GME without futher comment. And have been doing so for the best part of a year.
The mob seems to have largely formed itself.
The mob seems to have largely formed itself.
Have you heard of sock puppet accounts? Rogue agents? :-)
Reddit or any future platform hosting WSB and the like, same logic that took Parlor out of biz.
> Could be? It's an open, publicly-documented market manipulation event.
And required the coordination of a 18th century war to pull off. It's one thing if this was "led" by an individual, organization, etc. but it wasn't. It was the wisdom of the crowds who played by the very same rules that the hedge funds play.
> You might decide that this kind of manipulation is OK due to it's stated goals
Where did every stock holder publicly state their case? If Jim Cramer says "i think you should buy AAPL" and everyone does it, is that manipulation?
> How can there be any question about it?
Easy. If it were illegal, who would prosecute?
And required the coordination of a 18th century war to pull off. It's one thing if this was "led" by an individual, organization, etc. but it wasn't. It was the wisdom of the crowds who played by the very same rules that the hedge funds play.
> You might decide that this kind of manipulation is OK due to it's stated goals
Where did every stock holder publicly state their case? If Jim Cramer says "i think you should buy AAPL" and everyone does it, is that manipulation?
> How can there be any question about it?
Easy. If it were illegal, who would prosecute?
> It's an open, publicly-documented market manipulation event.
I understand that if someone publicly give you a financial strategy that is sound and it is not based on a ponzi then it is a recommendation.
I understand that if someone publicly give you a financial strategy that is sound and it is not based on a ponzi then it is a recommendation.
[deleted]
I can't find any documentation that a short squeeze is illegal. Can you?
It's in the SEC rules.
"Although some short squeezes may occur naturally in the market, a scheme to manipulate the price or availability of stock in order to cause a short squeeze is illegal."
From https://www.sec.gov/investor/pubs/regsho.htm.
It's an open question whether this case is more of a natural occurrence or "a scheme to manipulate", given that it's all randos who found a Schelling point and are now hyping each other up. I think it's fair to say it's unprecedented.
"Although some short squeezes may occur naturally in the market, a scheme to manipulate the price or availability of stock in order to cause a short squeeze is illegal."
From https://www.sec.gov/investor/pubs/regsho.htm.
It's an open question whether this case is more of a natural occurrence or "a scheme to manipulate", given that it's all randos who found a Schelling point and are now hyping each other up. I think it's fair to say it's unprecedented.
"scheme to manipulate" is the keyword here, patting each other on the back for riding market volatility on a forum about stocks isn't neither novel nor illegal.
it would be quite different if they were to coordinate the sale moment or the sale prices; for the latter, I don't see much coordination beyond memes, for the first SEC might have a point and there's many posts walking a thin line suggesting friday will be the day.
however this is a billion dollar operation which include many players and wide interference by multiple actors ranging from unclear to blatant business relationships; I wouldn't be surprised by anonymous plants joining wsb trying to stir up a movement and coordinate sales/prices to create a solid case where there is just a feeble suspicion; and as a matter of fact there has been quite many fresh accounts (either low karma, no posts in a long time, no posts at all etc) joining in just to propose to hold until a certain price or date is reached.
it would be quite different if they were to coordinate the sale moment or the sale prices; for the latter, I don't see much coordination beyond memes, for the first SEC might have a point and there's many posts walking a thin line suggesting friday will be the day.
however this is a billion dollar operation which include many players and wide interference by multiple actors ranging from unclear to blatant business relationships; I wouldn't be surprised by anonymous plants joining wsb trying to stir up a movement and coordinate sales/prices to create a solid case where there is just a feeble suspicion; and as a matter of fact there has been quite many fresh accounts (either low karma, no posts in a long time, no posts at all etc) joining in just to propose to hold until a certain price or date is reached.
If the SEC isn't going to litigate the naked short selling that preceded this, it's really hard to not cry hypocrisy.
Is there any actual evidence of naked short selling? The only evidence I've seen people raising is that the total value of the shorts was over 100%, but that can happen completely legitimately if the people who buy from short sellers allow the stock to be sold short a second (or third, fourth, ...) time.
While shorts were really high, GME also consistently had insane failure to deliver rates and was regularly on the threshold securities list.
I don't get why loaning out an already loaned stock is legal. Short selling should be limited to first gen loans. Otherwise it's like Beavis and Butthead in the Candy Store episode where they keep loaning the same dollar back and forth.
You seem to be under the impression that a stock can’t be shorted more than 100% without naked short selling. This is not true.
Interesting.. WSB was 100% orchestrating a short squeeze. They were telling anyone who would listen and in fact using it to rationalize what they were doing..
scheme (verb): make plans, especially in a devious way or with intent to do something illegal or wrong.
Discussing buying stock on a public forum is certainly not devious, and although the goal is to cause short positions to lose a bunch of money I would argue that it's neither illegal nor wrong.
Discussing buying stock on a public forum is certainly not devious, and although the goal is to cause short positions to lose a bunch of money I would argue that it's neither illegal nor wrong.
You could argue that but you’d be clearly wrong on American law and jurisprudence. If the goal is to cause other market participants to lose, that it specifically against the letter of the law.
If I were the short-sellers I'd be a bit aggrieved at the SEC not going after WSB here.
People keep saying that the hedge funds 'knew what they were getting into', and are therefore fair game. But they could well have thought that they were protected by this regulation. It's unlucky for them that they got squeezed by loveable retail investors rather than another hedge fund that the SEC would have no qualms about prosecuting.
In the debate between the free market vs regulation, the worst possible outcome is to have people thinking they are protected by regulation when they in fact aren't.
People keep saying that the hedge funds 'knew what they were getting into', and are therefore fair game. But they could well have thought that they were protected by this regulation. It's unlucky for them that they got squeezed by loveable retail investors rather than another hedge fund that the SEC would have no qualms about prosecuting.
In the debate between the free market vs regulation, the worst possible outcome is to have people thinking they are protected by regulation when they in fact aren't.
The shorters should form a class action and sue wall street bets, I'm sure a 5 dollar check in 3 years and a year of free stonk advice will cover it right?
Wall street bets is not an organization, and does not really even have a defined membership, and I've never heard of a court case with a class as a defendant. But I suppose that would be a really amusing circus show. Class of shorters vs class of buyers.
[deleted]
Everyone always told me, "don't invest what you can't afford to lose" and that risk mitigation is paramount.
Potentially tanking your firm on a gamble seems reckless and totally ignores the fundamentals of trading.
Potentially tanking your firm on a gamble seems reckless and totally ignores the fundamentals of trading.
Oh dear, those poor hedge funds.
This worldview seems like one of the biggest problems facing America right now.
We should strive for equal rules and justice for all, rather than first deciding how likeable or sympathetic the parties involved are and then changing the interpretation of rules to favor the group we perceive as being inherently more deserving of our favoritism.
We should strive for equal rules and justice for all, rather than first deciding how likeable or sympathetic the parties involved are and then changing the interpretation of rules to favor the group we perceive as being inherently more deserving of our favoritism.
The rules were written, and have been interpreted with certain perceptions of 'who is deserving'. To claim that they weren't is at best ignorant.
Ever think that they just like the stock?
It kinda feels like that to me. The nostalgia value of owning 1 share of GameStop is pretty important considering the joy that going to that store brought to me as a child. I can totally understand if 20 million people also want in, especially given the idea that we're fighting against a short position to cause a squeeze. It's like a dumb feel-good movie where we had a bake-sale and everyone buys a cookie for an unreasonable price to help our favorite local grocery store avoid bankruptcy by the evil liquidators who want to turn it into a Walmart.
That's the thing: there is NO QUESTION as to the motives of the r/wsb traders. They are overtly conspiring to raise the price of shares in order to force specific parties to buy it. That's manipulation!
It's manipulation, but is it illegal manipulation?
Remember, it's perfectly legal for a hedge fund to open a short position, and then release a big expose of the company that tanks its stock price.
For a prominent recent example: https://hindenburgresearch.com/nikola/
Remember, it's perfectly legal for a hedge fund to open a short position, and then release a big expose of the company that tanks its stock price.
For a prominent recent example: https://hindenburgresearch.com/nikola/
[deleted]
>force specific parties to buy it
I think they forced themselves to buy it by taking the short position they did.
I think they forced themselves to buy it by taking the short position they did.
Is it illegal to corner the market on a product because you know someone else is going to need to buy it, so you can charge them a lot because they must buy from you? It seems like what is being done is pretty much this; just for a large definition of "you".
Yes, it is broadly illegal to corner or attempt to corner any market, and the law directs the CFTC to step in and and void commodities contracts or take whatever other actions it deems appropriate when it finds that a market has been destabilized. See 7 USC 12a(9).
Interesting. Thanks for the pointer to the details, too.
May be for some of them. People invest for all sorts of reasons besides the "fundamentals", you know.
Tell me: what do you think Melvin's intentions were for shorting a dying company's stock for several billion?
Tell me: what do you think Melvin's intentions were for shorting a dying company's stock for several billion?
To raise cash? Shorting a company in terminal decline, but that will never die and will live on the pink sheets forever, is a great way to take a gain without ever having to pay the taxes.
And you just described a form of market manipulation. Except that we can't know Melvin's true motives because for some weird reason, hedge funds don't have to make their methodologies public.
So why are you getting mad that retail investors are engaging in the same practices that hedge funds can do with impunity?
So why are you getting mad that retail investors are engaging in the same practices that hedge funds can do with impunity?
No? Your folk definition of "manipulation" isn't furthering this discussion.
A SEC investigation will take time. I wouldn't judge much based on their general initial statement.
Well... they will start by redefining "market manipulation" to encompass all activity they now consider disruptive (also suitably redefined). This is America today.
There's no need for SEC to redefine market manipulation - IMHO the "pumping" activity of at least some WSB activists would perfectly match the existing legal definition of market manipulation as written to prevent historical "boiler room" type activities.
On the other hand, in these discussions I have seen a bunch of assertions that what the shorting hedge funds or HFTs are doing is "market manipulation" - now that is an attempt to redefine market manipulation to something entirely different than what it is/was.
On the other hand, in these discussions I have seen a bunch of assertions that what the shorting hedge funds or HFTs are doing is "market manipulation" - now that is an attempt to redefine market manipulation to something entirely different than what it is/was.
Your point? Can disruptive ever be good? Other than in SV jargons?
Good for who? Why does an event have to be good or bad?
Doesn't "retail investors" refer to any individual, non-professional, investor? Sounds like to me the SEC is warning any party involved in this, RH and WSB included.
crowd sourcing / gig working a pump n dump instead of running a boiler room operation.
Just add gig work to anything and rules no longer apply.
Just add gig work to anything and rules no longer apply.
It's harder to pursue this if there were hundreds of thousands involved. Maybe they'll go for the people who organized this, or the one who profited massively for it. But I don't see it possible to sue a million person.
what are you talking about? the real fraud and market manipulation was perpetrated by Robinhood and Shitadel when they shut peoples’ ability to buy the stock while still allowing it to be sold. They know this is illegal but they were betting on the fines being less than the losses. They need to be taught a real lesson. Those responsible for this intentional, flagrant violation of the most basic free market principles should go.to.jail.
If anything Robinhood allowing people to continue buying volatile assets while not being able to meet their clearing house's requirements would be something to run them afoul of the SEC.
[deleted]
The map isn't supposed to be the terrain; Generating wealth isn't the same as generating money, and the stock market seems to exist almost entirely for the latter, at the cost of the former.
We're in a situation where playing in the market is a better strategy than using the market for its legacy purposes (you know, buying partial ownership in companies) and the number of financial tools created specifically to exploit the ability of wealth to generate additional wealth vastly out match everything else.
Anyway I've got paperhands and bailed on my positions days ago by following some old WSB advice that's actually worth while - "take your profits when you want to"
We're in a situation where playing in the market is a better strategy than using the market for its legacy purposes (you know, buying partial ownership in companies) and the number of financial tools created specifically to exploit the ability of wealth to generate additional wealth vastly out match everything else.
Anyway I've got paperhands and bailed on my positions days ago by following some old WSB advice that's actually worth while - "take your profits when you want to"
What are the odds of a flash crash in the next week as a result of this activity? The system of banks and market makers and clearing houses is a always way more coupled than the the owners let on... history shows they don't know how to risk manage these sorts of situations.
Newest from the front lines, Freetrade (UK trading app) just blocked buy orders for US stocks... but they explicitly pin it on "a sudden and unexpected decision by our FX provider, and their bank"[0]. In another statement, they also express their deep unhappiness about it[1].
Assuming they're being honest - and I see no reason to doubt it - it's refreshing, compared to Robin Hood's communications, and more importantly it highlights your point. The "backend" of the market seems way more coupled than I imagined it is.
--
[0] - https://twitter.com/freetrade/status/1355161107699273729
[1] - https://old.reddit.com/r/wallstreetbets/comments/l7u3ag/free...
Assuming they're being honest - and I see no reason to doubt it - it's refreshing, compared to Robin Hood's communications, and more importantly it highlights your point. The "backend" of the market seems way more coupled than I imagined it is.
--
[0] - https://twitter.com/freetrade/status/1355161107699273729
[1] - https://old.reddit.com/r/wallstreetbets/comments/l7u3ag/free...
> The "backend" of the market seems way more coupled than I imagined it is.
Exactly. Overlay this on the backdrop of a frothy, juiced up market and a bunch of angry people on their phones (I bought a few GME out of spite at $360 after considering it way back at $15)... one little push could cause the market to throw a rod, I feel. These people run the system at max RPM with minimal oil as it is.
Exactly. Overlay this on the backdrop of a frothy, juiced up market and a bunch of angry people on their phones (I bought a few GME out of spite at $360 after considering it way back at $15)... one little push could cause the market to throw a rod, I feel. These people run the system at max RPM with minimal oil as it is.
Corrobating on this, same thing happened on my side that all US financial products (apart from regular deposits, cheque (or check?) and loans including credit cards) were suspended "beyond our control", so there is some action taken by US-based fincacial companies due to this (either because of laziness or genuine worry that they might be punished).
Nota bene: I do hold some Nokia stocks, but it is from (Nasdaq) Helsinki and not from NYSE and it was already in my possesion waay before these brouhaha. I don't hold any other stocks that were affected, including stocks for GameStop.
Nota bene: I do hold some Nokia stocks, but it is from (Nasdaq) Helsinki and not from NYSE and it was already in my possesion waay before these brouhaha. I don't hold any other stocks that were affected, including stocks for GameStop.
From a distance, this is all a storm in a teacup. It's a small handful of stocks, and every single one in S&P500 is waaaay bigger, in terms of trading volumes and market cap.
Anything can happen, but in finance terms, this is tiny so far.
Anything can happen, but in finance terms, this is tiny so far.
The issue isn't GME market cap vs the S&P 500. It's that the clearing houses, exchanges and other intermediaries that guarantee every trade may go bankrupt due to the $15+ billion loss on options that they may have to cover.
I'd be very worried about Robin Hood's solvency, since they let people trade on margins, and retail investors are presumably difficult to get debts out from. I seriously doubt they underwrite their own options, more likely they just sell some broker's options.
Otherwise... sure some funds might lose a lot of money. But a lot of money for a fund (and it's investors). I wouldn't say we're seeing anything like systemic risk. If nothing else, Redditors' pockets are only so deep, and there's only so much meme stocks they can buy.
So where does it leave us? Perhaps Robin Hood might go under (though it looks like they learnt their lesson and got some cash, so maybe not). Some funds went under, and maybe some other will too. But generally, funds are not major systemic risk. They are speculative money. It's been going on for long enough that clearing houses requested the higher margins already. I don't think banks have any real skin in this game.
What was so terrible about 2008 financial crash, from the technocratic point of view, was that it was banks that were affected, and they are, among other things, the very plumbing of the financial system we all depend on.
Of course life can prove me wrong :) but I'm not remotely worried atm.
Otherwise... sure some funds might lose a lot of money. But a lot of money for a fund (and it's investors). I wouldn't say we're seeing anything like systemic risk. If nothing else, Redditors' pockets are only so deep, and there's only so much meme stocks they can buy.
So where does it leave us? Perhaps Robin Hood might go under (though it looks like they learnt their lesson and got some cash, so maybe not). Some funds went under, and maybe some other will too. But generally, funds are not major systemic risk. They are speculative money. It's been going on for long enough that clearing houses requested the higher margins already. I don't think banks have any real skin in this game.
What was so terrible about 2008 financial crash, from the technocratic point of view, was that it was banks that were affected, and they are, among other things, the very plumbing of the financial system we all depend on.
Of course life can prove me wrong :) but I'm not remotely worried atm.
Yeah everyone says short sales have "infinite loss potential", but at some point the lender will recognize that those shares aren't coming back.
Why do clearing houses have to cover losses, isn’t it the options seller on the other side that takes it?
Clearing houses cover any shortage of money due to one party not paying up. So if someone sells an option on an exchange, then doesn't pony up, the clearing house must. And if too many people don't pony up, the clearing house is in trouble.
Except it is far more complicated. Does Robin Hood allow the selling options? That would seem ridiculously stupid if it does, but let's say yes. The clearing house has nothing to do with the seller, or in fact probably with Robin Hood. It will be dealing with Robin Hood's dealer, probably a big bank (think JP Morgan or the like), and there's a cascade of who-owes-who.
Robin Hood clients ought to pay to Robin Hood if they owe money on short options, but if they fail, then Robin Hood must cover that to the broker. The broker wants to make sure it doesn't lose any money on trading with Robin Hood, because if it does, it still needs to make good to the exchange. And only if the broker fails, then the clearing house gets involved.
If you can only buy options on Robin Hood (or, in any case, cannot be short), then there isn't much of an issue there. The issue would arise if the broker cannot pay the option payouts, but that's very unlikely. Banks deal with option trading all the time, and spend lots of money on hedging their exposure to the underlying stock. This is essentially a solved problem, and the scale of what's going on is way too small to stress that.
Except it is far more complicated. Does Robin Hood allow the selling options? That would seem ridiculously stupid if it does, but let's say yes. The clearing house has nothing to do with the seller, or in fact probably with Robin Hood. It will be dealing with Robin Hood's dealer, probably a big bank (think JP Morgan or the like), and there's a cascade of who-owes-who.
Robin Hood clients ought to pay to Robin Hood if they owe money on short options, but if they fail, then Robin Hood must cover that to the broker. The broker wants to make sure it doesn't lose any money on trading with Robin Hood, because if it does, it still needs to make good to the exchange. And only if the broker fails, then the clearing house gets involved.
If you can only buy options on Robin Hood (or, in any case, cannot be short), then there isn't much of an issue there. The issue would arise if the broker cannot pay the option payouts, but that's very unlikely. Banks deal with option trading all the time, and spend lots of money on hedging their exposure to the underlying stock. This is essentially a solved problem, and the scale of what's going on is way too small to stress that.
Let's say you are buying an option contract on an exchange. You don't know who is selling to you and whether they can actually pay you when the time comes. In order to solve this issue, intermediates act as a guarantor of all transactions allowing investors to treat each seller the same. This lets investors only care about price instead of "who".
I am not an expert, I only have very surface knowledge and don't know the exact chain of intermediaries for each market but I know one such guarantor is the Chicago mercantile exchange.
https://www.cmegroup.com/clearing/risk-management.html
I am not an expert, I only have very surface knowledge and don't know the exact chain of intermediaries for each market but I know one such guarantor is the Chicago mercantile exchange.
https://www.cmegroup.com/clearing/risk-management.html
If that's the case I'm kinda confused why trading platforms keep banning trades in these particular meme stocks?
In the case of Robinhood:
> On Thursday, Robinhood was forced to stop customers from buying a number of stocks like GameStop that were heavily traded this week. To continue operating, it drew on a line of credit from six banks amounting to between $500 million and $600 million to meet higher margin, or lending, requirements from its central clearing facility for stock trades, known as the Depository Trust & Clearing Corporation.
> On Thursday, Robinhood was forced to stop customers from buying a number of stocks like GameStop that were heavily traded this week. To continue operating, it drew on a line of credit from six banks amounting to between $500 million and $600 million to meet higher margin, or lending, requirements from its central clearing facility for stock trades, known as the Depository Trust & Clearing Corporation.
Because they are forced to carry collateral to make the trades happen, and need more collateral for more volatile stocks.
Because of the volatility of the stock, I believe. 100->300->200->300 in the space of no time at all. You could've watched the stock just jump all over the place in real-time, pretty much.
What's small for the whole market isn't necessarily small for Robin Hood.
It's not out of the question that Robin Hood could go under as a result of these shenanigans. Just very unlikely that would trigger any serious fallout downwind.
It's not out of the question that Robin Hood could go under as a result of these shenanigans. Just very unlikely that would trigger any serious fallout downwind.
It's down to minutiae in the collateral brokers have to post to ensure that the clearing house doesn't eat losses. Trades on Wednesday aren't settled until Friday, so if a brokerage firm dies in the interim they have an obligation to complete a bunch of trades that they might not have cash for, and unwinding that exposes counterparties to the price moves in the interim. RH users have been buying a lot of meme stocks that move a lot in price, so they have to put up vast amounts of funds to ensure that nobody else suffers losses if they were to back out of the unsettled trades.
I’d be very careful about making this assumption. There is always bleed over in unexpected ways. When these stocks spiked on Wednesday the market as a whole came down hard. Perception is extremely important and if people start to fear that brokerages could be insolvent or just lose faith in the valuations of stocks as a whole it could definitely effect the entire market.
I follow the markets, and the market does a hard mini-crash about once every two weeks. You don't notice it as a buy-and-hold investor, but it raises the hackles of many short-term traders.
GME has the market cap of a S&P300 sized company right now.
It's not because of this stock. The question is quite reasonable because some funds were overexposed into it, and the funds are much larger.
the inverse correlation between the S&P and GME style stocks looks strong over the last couple days.
>What are the odds of a flash crash
Barely more than zero because there are market circuit breakers now and broker dealers are supposed to be limiting order flow so that HFTs can't be submitting huge numbers of orders that are massively far away from what the security is trading at. Of course some broker dealers play much faster and looser than others but if shit really hits the fan the circuit breaker catches it.
Barely more than zero because there are market circuit breakers now and broker dealers are supposed to be limiting order flow so that HFTs can't be submitting huge numbers of orders that are massively far away from what the security is trading at. Of course some broker dealers play much faster and looser than others but if shit really hits the fan the circuit breaker catches it.
In the mentioned stocks? Very high.
However for the broader market; GME and friends are tiny.
Ristricting trading is a way of managing risk.
However for the broader market; GME and friends are tiny.
Ristricting trading is a way of managing risk.
The last giant crash was triggered by a single party (Bear Stearns) running out of credit. Do not underestimate the events that could follow if this volatility destabilizes a large market participant.
> The last giant crash was triggered by a single party (Bear Stearns) running out of credit.
It was waaaaaay more complex than that, the Bear Stearns thing was one of many worldwide symptoms (not cause) of a widespread problem.
There is nothing to compare between this GME event and 2008 crisis (even though there are plenty of other issues that could lead to one)
https://en.wikipedia.org/wiki/Financial_crisis_of_2007–2008
It was waaaaaay more complex than that, the Bear Stearns thing was one of many worldwide symptoms (not cause) of a widespread problem.
There is nothing to compare between this GME event and 2008 crisis (even though there are plenty of other issues that could lead to one)
https://en.wikipedia.org/wiki/Financial_crisis_of_2007–2008
That was the point of my original post. Not that current events are comparable to historical events as far as the mechanism of crisis is concerned... but that stresses like the ones today have a way of uncovering new and interesting failure modes which people collectively wrote off as unlikely.
That is why I said it was triggered by, not caused by.
There's definitely going to be some impact on other stocks, as at the very least, retail trading apps overcompensate and block buys on other stocks (including Freetrade for all the US stocks right now). Hard to quantify the magnitude of the impact, though.
The clearinghouses and brokers likely won't let it happen. They'll step in and stop buying again if that's what it takes.
But if they are stopped from doing that, then it certainly could happen. I think the odds are greater then most might give it credit.
But if they are stopped from doing that, then it certainly could happen. I think the odds are greater then most might give it credit.
Zero. They actually learned their lessons from the past decade and have guard rails in place.
"Likewise, issuers must ensure compliance with the federal securities laws for any contemplated offers or sales of their own securities."
If GameStop management was thinking of selling some shares to the public (or directly to those who really need shares to cover their shorts) at some crazy price they'll have to be careful.
AMC was lucky to have a lot of convertible debt outstanding which has been converted without any action on their part.
If GameStop management was thinking of selling some shares to the public (or directly to those who really need shares to cover their shorts) at some crazy price they'll have to be careful.
AMC was lucky to have a lot of convertible debt outstanding which has been converted without any action on their part.
American Airlines announced their intention to do just that yesterday. I wonder what the SEC will have to say about it.
Is it my imagination, or did this SEC statement not actually, you know, actually say anything, except "we're the SEC, and we're going to do the thing that it's our job to do"?
extreme stock price volatility has the potential to expose investors to rapid and severe losses and undermine market confidence
It's not the SEC's role to protect investors from risk or losses, rapid or otherwise, and saying that the recent activity "undermines confidence" is just another way of saying "increases risk", which is not their job. They should ensure confidence by guarding against fraud, but not to protect against losses by institutions that never thought that activist investors would work against their own interests.
This isn't really manipulation that we're seeing: it's people betting against the institutions that themselves bet against companies combined with a fair bit of FOMO.
It's not the SEC's role to protect investors from risk or losses, rapid or otherwise, and saying that the recent activity "undermines confidence" is just another way of saying "increases risk", which is not their job. They should ensure confidence by guarding against fraud, but not to protect against losses by institutions that never thought that activist investors would work against their own interests.
This isn't really manipulation that we're seeing: it's people betting against the institutions that themselves bet against companies combined with a fair bit of FOMO.
Protecting investors is literally the first part of the SEC's three part purpose statement.
The SEC came into existence because retail investors lost huge amounts of money in the 20's in speculative bubbles. The same thing is going to happen here so the SEC is literally doing what it was set up to do.
The SEC came into existence because retail investors lost huge amounts of money in the 20's in speculative bubbles. The same thing is going to happen here so the SEC is literally doing what it was set up to do.
Don't cherry pick the portion of my statement you want to criticize: I did not say it wasn't the role of the SEC to protect investors.
I said it's not their role to protect investors from loss. Clearly it has a role in protecting investors by requiring disclosures that allow informed decision making, policing fraud, etc.
I said it's not their role to protect investors from loss. Clearly it has a role in protecting investors by requiring disclosures that allow informed decision making, policing fraud, etc.
> Nevertheless, extreme stock price volatility has the potential to expose investors to rapid and severe losses and undermine market confidence.
Well, it has also the potential to expose investors to rapid gains. ¯\_(ツ)_/¯
Well, it has also the potential to expose investors to rapid gains. ¯\_(ツ)_/¯
I can’t help but think about Bill Ackerman when I see stories about stock shorting and their dangers. Isn’t this exactly what Bill Ackerman did? He shorted Herbalife and then went on TV (there’s even a Netflix documentary) And he lost. How is that not market manipulation? What if Ackerman did not have a position in the company, would it not be market manipulation then? It seems like what Reddit did was stand on a soapbox in the public square and say buy the stock,
In summary, just a vague "we are watching" statement.
My attention was caught by this paragraph:
> In addition, we will act to protect retail investors when the facts demonstrate abusive or manipulative trading activity that is prohibited by the federal securities laws. Market participants should be careful to avoid such activity. Likewise, issuers must ensure compliance with the federal securities laws for any contemplated offers or sales of their own securities.
I'm no stock player, so I may not be reading the implied meaning correctly. But on the face of it, it seems at least as recognizing WSB-driven buyers as valid players in this match.
(However, it's an open question whether they consider WSB's attempt at short squeeze as an organic thing, or a coordinated stock manipulation. The latter, as I understand it, is strictly illegal.)
> In addition, we will act to protect retail investors when the facts demonstrate abusive or manipulative trading activity that is prohibited by the federal securities laws. Market participants should be careful to avoid such activity. Likewise, issuers must ensure compliance with the federal securities laws for any contemplated offers or sales of their own securities.
I'm no stock player, so I may not be reading the implied meaning correctly. But on the face of it, it seems at least as recognizing WSB-driven buyers as valid players in this match.
(However, it's an open question whether they consider WSB's attempt at short squeeze as an organic thing, or a coordinated stock manipulation. The latter, as I understand it, is strictly illegal.)
What did you expect them to do? Go around arresting people? Stop trading on every market? Say that Robinhood is no longer allowed to trade?
It's a giant government body that overseas a very large tender market of money, they can't just make rash decisions. They need to review, see how it plays out in the longer term, and see how the government is going to want to adjust.
I don't think technically anything (minus the robinhood/other people restricting buying, and even that who knows) that's going on is really "wrong-doing" on the surface. Everything seems to be by the book.
So they'll need to dig deep into the stock and find evidence and provide that evidence to the body that reviews stuff.
You probably won't hear of any changes for months if not years if at all.
It's a giant government body that overseas a very large tender market of money, they can't just make rash decisions. They need to review, see how it plays out in the longer term, and see how the government is going to want to adjust.
I don't think technically anything (minus the robinhood/other people restricting buying, and even that who knows) that's going on is really "wrong-doing" on the surface. Everything seems to be by the book.
So they'll need to dig deep into the stock and find evidence and provide that evidence to the body that reviews stuff.
You probably won't hear of any changes for months if not years if at all.
I think this part is pretty clear:
"In addition, we will act to protect retail investors when the facts demonstrate abusive or manipulative trading activity that is prohibited by the federal securities laws. Market participants should be careful to avoid such activity."
"In addition, we will act to protect retail investors when the facts demonstrate abusive or manipulative trading activity that is prohibited by the federal securities laws. Market participants should be careful to avoid such activity."
It's something at least. You have to give SEC some time to investigate.
I don't understand the current lessons being drawn by the public from this situation.
I don't think shorting stocks (even to 140% of its float) is a bad thing. And, the hedge fund managers that shorted GME don't deserve to be bankrupt.
Shorting stocks, in general, is a beneficial action for the market because it helps prevent shares from becoming overvalued.
The problem that GME highlighted is that it's too easy to purposefully trigger a short squeeze.
One possible solution seems to be that the SEC should make it easier to borrow shares to short a stock. And, in so doing, they should make it harder to purposefully trigger a short squeeze.
There's nothing wrong with greed if it doesn't hurt others...The SEC's ultimate goal should be to have a fair and efficiently priced market at all times. In this case, it seems like the party that needs to be protected is the hedge funds....What am I missing?
I don't think shorting stocks (even to 140% of its float) is a bad thing. And, the hedge fund managers that shorted GME don't deserve to be bankrupt.
Shorting stocks, in general, is a beneficial action for the market because it helps prevent shares from becoming overvalued.
The problem that GME highlighted is that it's too easy to purposefully trigger a short squeeze.
One possible solution seems to be that the SEC should make it easier to borrow shares to short a stock. And, in so doing, they should make it harder to purposefully trigger a short squeeze.
There's nothing wrong with greed if it doesn't hurt others...The SEC's ultimate goal should be to have a fair and efficiently priced market at all times. In this case, it seems like the party that needs to be protected is the hedge funds....What am I missing?
is this satire?
A lot of cynical takes here, projecting the worst intentions of the government.
To me this seems:
A) remarkably hands-off, patient. “The market seems to be working.”
B) A reminder to newbies that there ARE laws, so don’t be stupid as your investing journey continues.
C) If anyone should be on the edge of their seats it’s regulated entities who may have manipulated markets by putting their thumb on the scales.
To me this seems:
A) remarkably hands-off, patient. “The market seems to be working.”
B) A reminder to newbies that there ARE laws, so don’t be stupid as your investing journey continues.
C) If anyone should be on the edge of their seats it’s regulated entities who may have manipulated markets by putting their thumb on the scales.
"Our core market infrastructure has proven resilient under the weight of this week’s extraordinary trading volumes"
Most of the retail investors couldn't buy specific stocks on most exchanges for some time (tastytrade, ib, rh etc). I wouldn't call that "resilient".
Most of the retail investors couldn't buy specific stocks on most exchanges for some time (tastytrade, ib, rh etc). I wouldn't call that "resilient".
Not knowing how hard it is to provide the service fo their "core market infrastructure," I couldn't tell if it was just a self-complimentary way to boast or genuine technical feet.
Regardless, the prominence of the note was strange and set an immediate defensive tone.
What made it really odd was the arc of tone to "Market participants should be careful to avoid such activity." An elegant threat.
Regardless, the prominence of the note was strange and set an immediate defensive tone.
What made it really odd was the arc of tone to "Market participants should be careful to avoid such activity." An elegant threat.
We have 5 nines uptime on all our non crashed systems!
It seems like Robinhood, when it stopped trading on GME, decided to literally transfer money from the WSB retail traders to the funds who were short on the stock. But if Robinhood needed to halt trading in order to just survive as a brokerage, (and could demonstrate so), would that justify its behavior? Does anyone know more about laws and regulations concerning brokerages here?
>It seems like Robinhood, when it stopped trading on GME, decided to literally transfer money from the WSB retail traders to the funds who were short on the stock.
what?
what?
Preventing purchase orders would cause the stock price to go down.
The funds short the stock gain wealth from the stock price declining.
Holders of the stock lose wealth. Clients who want to buy "lose" the opportunity to gain wealth.
The suspension of the ability to buy into the hype absolutely hurt the long folks (mostly retail WSB types) and helped the short folks (the big hedge funds which are short GME).
The funds short the stock gain wealth from the stock price declining.
Holders of the stock lose wealth. Clients who want to buy "lose" the opportunity to gain wealth.
The suspension of the ability to buy into the hype absolutely hurt the long folks (mostly retail WSB types) and helped the short folks (the big hedge funds which are short GME).
There's nothing all that new about this. Read "Extraordinarily Popular Delusions and the Madness of Crowds", which is over a century old. It describes all the classics - a pump and dump, a Ponzi scheme, a pyramid scheme, a "bubble", "tulipomania", etc - from the first time they appeared on a large scale.
These are mostly 19th century tricks. That's when finance and newspapers got big enough to make them work at scale. The SEC was established after the 1929 bubble got so big it took down the whole country.
Meanwhile, the latest thing on Reddit is pumping Dogecoin.
In all these things, the people who get in late and don't get out early are the losers. It's zero-sum, after all.
These are mostly 19th century tricks. That's when finance and newspapers got big enough to make them work at scale. The SEC was established after the 1929 bubble got so big it took down the whole country.
Meanwhile, the latest thing on Reddit is pumping Dogecoin.
In all these things, the people who get in late and don't get out early are the losers. It's zero-sum, after all.
Observation:
When a startup seeking a C round does it, it's -disruption - moving fast and breaking things - seizing market advantage by nimbly circumventing slow-moving or antiquated regulation.
When a nihilistic stan does it, it's - <various pejoratives> - <motivated by ignorance or abuse or amorality of various types>
Argumentation over terminology, expertise, etc., is secondary,
to the ways in which this is about power, which informs every aspect of how, why, who, and what. Including the language used and appeals made by those who have it, traditionally have it, and defend it, against those who do not.
Many of the details being argued over are interesting mostly because argument over such details is another tool of the powerful.
When a startup seeking a C round does it, it's -disruption - moving fast and breaking things - seizing market advantage by nimbly circumventing slow-moving or antiquated regulation.
When a nihilistic stan does it, it's - <various pejoratives> - <motivated by ignorance or abuse or amorality of various types>
Argumentation over terminology, expertise, etc., is secondary,
to the ways in which this is about power, which informs every aspect of how, why, who, and what. Including the language used and appeals made by those who have it, traditionally have it, and defend it, against those who do not.
Many of the details being argued over are interesting mostly because argument over such details is another tool of the powerful.
[deleted]
There is really only one simple concept needed to understand what the SEC cares about.
When a big hedge fund is selling a stock short, they can do so without even borrowing it. As a result, the buyer ends up not owning it and the stock fails to deliver - called a fail.
There are a lot of easy penalities that could be applied here. Reprice based on lowest price in intervening period prior to deliver. Provide a 10% rebate per day if not delivered T+3, up to perhaps a 200% rebate. Etc.
But instead, nothing happens, the fail to deliver just continues. I took a look at Gamestop on the fail to deliver list. It's been there forever.
I don't trade, but the whole fail to deliver game seems rotten.
https://en.wikipedia.org/wiki/Failure_to_deliver
When a big hedge fund is selling a stock short, they can do so without even borrowing it. As a result, the buyer ends up not owning it and the stock fails to deliver - called a fail.
There are a lot of easy penalities that could be applied here. Reprice based on lowest price in intervening period prior to deliver. Provide a 10% rebate per day if not delivered T+3, up to perhaps a 200% rebate. Etc.
But instead, nothing happens, the fail to deliver just continues. I took a look at Gamestop on the fail to deliver list. It's been there forever.
I don't trade, but the whole fail to deliver game seems rotten.
https://en.wikipedia.org/wiki/Failure_to_deliver
The response is pretty weak. The system was gamed for so long and small companies were driven out of existence.
They are pretty saying, let's see how this plays out and we figure out after the fact what to do.
As a programmer and an aspiring amateur quant myself I always ponder upon the possibilities of more people starting & managing mini hedge funds (e.g. with a starting captial of 200~500k?) with a mix of fundementals + algo-trading with multi-agent simulations, game-theoretic modelling, etc.
As more platforms like ploygon.io, alpaca.markets emerge as well as more DeFi stuff gaining tractions, I really hope in the next 10 years regulations, etc, in the financial space would leave more rooms for smaller players to thrive.
As more platforms like ploygon.io, alpaca.markets emerge as well as more DeFi stuff gaining tractions, I really hope in the next 10 years regulations, etc, in the financial space would leave more rooms for smaller players to thrive.
I look forward to Michael Lewis's next book on the subject.
> The Commission will closely review actions taken by regulated entities that may disadvantage investors or otherwise unduly inhibit their ability to trade certain securities. In addition, we will act to protect retail investors when the facts demonstrate abusive or manipulative trading activity that is prohibited by the federal securities laws.
Hopeful sentences for the ones who long GME. How often does the initial statement SEC makes actually matter?
Hopeful sentences for the ones who long GME. How often does the initial statement SEC makes actually matter?
> extreme stock price volatility has the potential to expose investors to rapid and severe losses
Isn't that the definition of extreme stock volatility? Extreme height volatility has the potential to expose you to severe falls.
> extreme stock price volatility has the potential to ... undermine market confidence.
Confidence in what, exactly?
> As always, the Commission will work to protect investors, to maintain fair ... markets,
I don't see what's fair about the stock market.
Isn't that the definition of extreme stock volatility? Extreme height volatility has the potential to expose you to severe falls.
> extreme stock price volatility has the potential to ... undermine market confidence.
Confidence in what, exactly?
> As always, the Commission will work to protect investors, to maintain fair ... markets,
I don't see what's fair about the stock market.
The problem with experts is that they often accept things and normal that the general public finds unacceptable. The SEC experts probably see a lot of "Normal" level of manipulation and improper activity that folks outside the industry would find wholly unacceptable and would like reformed. This happens to a lot industries where bad behavior is normalized and ignored by both players and regulators.
I am naive here, can someone explain what is the economic utility of a stock market ?
For example, its easy to understand utility of food, cloths, car, house, money. But I am not able to find a reason about stock market existence for day-to-day trading, where secondary stocks are traded daily after IPO. It seems none of the day-to-day trading money/profit ever goes back to business to help them to improve that business.
For example, its easy to understand utility of food, cloths, car, house, money. But I am not able to find a reason about stock market existence for day-to-day trading, where secondary stocks are traded daily after IPO. It seems none of the day-to-day trading money/profit ever goes back to business to help them to improve that business.
Secondary markets provide liquidity for primary investors which makes making primary investments much more attractive. A stock market is just a highly organized kind of secondary market. How many VC investors there would be if they could never sell, or if they could only sell at prices which were random? Without a secondary market all investments would be permanent and that would make investing much less attractive.
Secondary markets also provide important capital allocation benefits. They make it easier for good companies to raise additional capital (e.g. via a rights issue) or buy other businesses (using their shares). They also provide an important benchmarking role allowing non-listed companies to price transactions on the basis of listed company valuations.
Secondary markets also provide important capital allocation benefits. They make it easier for good companies to raise additional capital (e.g. via a rights issue) or buy other businesses (using their shares). They also provide an important benchmarking role allowing non-listed companies to price transactions on the basis of listed company valuations.
[deleted]
"Our core market infrastructure has proven resilient under the weight of this week’s extraordinary trading volumes." - this is flat out false. The market infrastructure was supposedly unable to handle the desired buy volumes under high volatility on meme stocks, resulting in multiple retail brokerages disabling purchases of the meme stocks.
Protecting the individual investor usually looks like limiting our ability to participate in the market.
This statement seems like a big ball of nothing. Basically the SEC is aware of what's happening (how could they not be?) and maybe they'll do something about it or maybe they'll decide that it's all within the law.
A Moment in the Life of an HN Genius:
1. Reads a technical document outside their domain.
2. Feels dumb because they don't have a grasp on any of the concepts.
3. Too busy to use the very internet which some of them probably helped build to magically render learning materials to the screen in front of them at zero marginal cost.
4. Sees the word "manipulation"
5. Substitutes the laymen's definition of "manipulation"
6. Builds a fantasy World of Wall Street from first principles around that definition
7. Argues their fantasy first-principles Wall Street against other participants' fantasy first-principles Wall Street
8. Everyone leaves sync'd on the fantasy of feeling smarter than when they arrived.
1. Reads a technical document outside their domain.
2. Feels dumb because they don't have a grasp on any of the concepts.
3. Too busy to use the very internet which some of them probably helped build to magically render learning materials to the screen in front of them at zero marginal cost.
4. Sees the word "manipulation"
5. Substitutes the laymen's definition of "manipulation"
6. Builds a fantasy World of Wall Street from first principles around that definition
7. Argues their fantasy first-principles Wall Street against other participants' fantasy first-principles Wall Street
8. Everyone leaves sync'd on the fantasy of feeling smarter than when they arrived.
"Please don't sneer, including at the rest of the community."
"Be kind. Don't be snarky."
https://news.ycombinator.com/newsguidelines.html
If you know more than others, that's wonderful. Please share some of what you know so the rest of us can learn. None of what you wrote here helps anyone learn—it just puts others down, makes you sound supercilious, and makes the community worse. A comment like this stuck at the top of a thread, letting off fumes and polluting the environment with meta nastiness, is one of the worst things that can happen on HN. No one intends it to happen—I'm sure you had no such intention, nor did the upvoters, but it's the default that we co-create on the internet unless we consciously do otherwise.
https://hn.algolia.com/?dateRange=all&page=0&prefix=true&sor...
If you just pour acid on stuff that you scorn, it may get heavily upvoted because everyone is feeling anger and scorning others is a way to relieve that feeling—but you can't pour acid without pouring it on the commons, which is extremely fragile. By getting upvoted, the damage you cause is amplified 1000x. People posting here need to take care of the commons, the same way none of us would pour toxins into a mountain lake, leave campfires burning in a dry forest, or litter in a city park.
I totally get how frustrating, nay maddening it is when others are wrong and ignorant on the internet and self-satisfied about it. But being a good citizen on HN means learning to tolerate the pressure and metabolize the irritation this activates in you. Then you can come back to the commons with a response that builds it up—for example with interesting, relevant information—rather than tearing it further apart.
Our brains are hard-wired to weight painful impressions—like internet comments that seem dumb or wrong—much more heavily than pleasurable ones, like comments we agree with. This makes it feel like HN is dominated by wrongness and dumbness and meanness to a greater extent than it actually is. We all need to become more aware of this mechanism (especially by observing our own reactions more closely) so we don't destroy this place by making the mistake of feeling like it's already been destroyed. The truth is that it's hovering precariously in between.
https://hn.algolia.com/?dateRange=all&page=0&prefix=true&sor...
https://hn.algolia.com/?dateRange=all&page=0&prefix=false&so...
https://news.ycombinator.com/item?id=23308098
"Be kind. Don't be snarky."
https://news.ycombinator.com/newsguidelines.html
If you know more than others, that's wonderful. Please share some of what you know so the rest of us can learn. None of what you wrote here helps anyone learn—it just puts others down, makes you sound supercilious, and makes the community worse. A comment like this stuck at the top of a thread, letting off fumes and polluting the environment with meta nastiness, is one of the worst things that can happen on HN. No one intends it to happen—I'm sure you had no such intention, nor did the upvoters, but it's the default that we co-create on the internet unless we consciously do otherwise.
https://hn.algolia.com/?dateRange=all&page=0&prefix=true&sor...
If you just pour acid on stuff that you scorn, it may get heavily upvoted because everyone is feeling anger and scorning others is a way to relieve that feeling—but you can't pour acid without pouring it on the commons, which is extremely fragile. By getting upvoted, the damage you cause is amplified 1000x. People posting here need to take care of the commons, the same way none of us would pour toxins into a mountain lake, leave campfires burning in a dry forest, or litter in a city park.
I totally get how frustrating, nay maddening it is when others are wrong and ignorant on the internet and self-satisfied about it. But being a good citizen on HN means learning to tolerate the pressure and metabolize the irritation this activates in you. Then you can come back to the commons with a response that builds it up—for example with interesting, relevant information—rather than tearing it further apart.
Our brains are hard-wired to weight painful impressions—like internet comments that seem dumb or wrong—much more heavily than pleasurable ones, like comments we agree with. This makes it feel like HN is dominated by wrongness and dumbness and meanness to a greater extent than it actually is. We all need to become more aware of this mechanism (especially by observing our own reactions more closely) so we don't destroy this place by making the mistake of feeling like it's already been destroyed. The truth is that it's hovering precariously in between.
https://hn.algolia.com/?dateRange=all&page=0&prefix=true&sor...
https://hn.algolia.com/?dateRange=all&page=0&prefix=false&so...
https://news.ycombinator.com/item?id=23308098
It's a humorous injunction that could be gainfully posted at the top of most controversial threads. Nothing wrong with warning people against bias and groupthink. Especially when the matter is deeply technical and outside of most participants'expertise.
From my perspective it's more important to protect the commons from going up in flames.
Generic warnings about "bias and groupthink" have no helpful effect anyway, let alone snarky putdowns of others. Apart from adding off-topic noise, they polarize the audience into a "like and agree" tribe and a "dislike and disagree" tribe. Then the two go after each other in increasingly nasty and unthoughtful ways.
If you actually want to reach people you have to do it differently. If you (I don't mean you personally, but all of us) don't actually want to reach people, but just to vent bile, that's not what this site is for, and there are other places to do it.
https://news.ycombinator.com/newsguidelines.html
Generic warnings about "bias and groupthink" have no helpful effect anyway, let alone snarky putdowns of others. Apart from adding off-topic noise, they polarize the audience into a "like and agree" tribe and a "dislike and disagree" tribe. Then the two go after each other in increasingly nasty and unthoughtful ways.
If you actually want to reach people you have to do it differently. If you (I don't mean you personally, but all of us) don't actually want to reach people, but just to vent bile, that's not what this site is for, and there are other places to do it.
https://news.ycombinator.com/newsguidelines.html
been loving HN for 8 years (n coming!) mostly due to the self-constraints commentators here generally have on the amount of meta-nastiness they (accidentally/intentionally) leak out
and as the population grows am hugely thankful for the moderation too
and as the population grows am hugely thankful for the moderation too
I feel like “resist the urge to post claims about concepts outside your domain/grasp” is clear, actionable advice that improves the community. What if you spent more time policing that, instead of policing of tone of people trying to make it better? Take care of the commons earlier, and then these type of posts wouldn’t be necessary.
I’m not sure why you would question the intentions of the upvoters - do you believe they don’t understand how the upvote system works? It seems clear they had every intention of promoting OP’s message and forcefulness with which it was delivered.
I’m not sure why you would question the intentions of the upvoters - do you believe they don’t understand how the upvote system works? It seems clear they had every intention of promoting OP’s message and forcefulness with which it was delivered.
There are other ways to make such points which don't break the site guidelines. You're ignoring the damage to the community that I'm writing about, which is much more important. Massive, low-information, vicious flamewars are the biggest existential threat to the community.
I don't believe that either the commenter or the upvoters wanted an off-topic flamewar to be pinned at the top of the most popular thread on HN's front page. That would be malice! Outcomes like this happen on the internet, not by deliberate malice, but because a large number of small contributions—usually made without much attention, and without thinking of the overall health of the community—compound into a damaging outcome.
I don't believe that either the commenter or the upvoters wanted an off-topic flamewar to be pinned at the top of the most popular thread on HN's front page. That would be malice! Outcomes like this happen on the internet, not by deliberate malice, but because a large number of small contributions—usually made without much attention, and without thinking of the overall health of the community—compound into a damaging outcome.
Dang, I like you dang.
Everyone’s brain is a time series database of experience, with a variety of heuristic shorthand’s built in. Presuming they should all consume and process information the same way is arrogant.
Perhaps take some of your own advice; one comment in this thread has not damaged HN.
Consider; for me OP did not leave as painful an impression as the helicopter parenting and scolding that followed. Trigger the Streisand Effect at your own risk.
Perhaps take some of your own advice; one comment in this thread has not damaged HN.
Consider; for me OP did not leave as painful an impression as the helicopter parenting and scolding that followed. Trigger the Streisand Effect at your own risk.
I don't think I disagree with any of that. But if you're implicitly arguing that more of the GP would be just fine for HN, then I do have to disagree.
Moderation comments are an unfortunate evil. To some extent they do the very things we're scolding others for. I don't feel very good about that and I'd love to find a better way—especially because they're even more tedious to write than they are to read. https://hn.algolia.com/?dateRange=all&page=0&prefix=false&so... Unfortunately, the system doesn't regulate itself with community and software mechanisms alone. There needs to be a moderation mechanism as well, i.e. humans who are giving the system their primary attention and giving feedback to it. I'd never claim that the way we do it is the only way or the best way, just that it's better than nothing.
While I have you: could you please stop creating accounts for every few comments you post? We ban accounts that do that. This is in the site guidelines: https://news.ycombinator.com/newsguidelines.html.
You needn't use your real name, of course, but for HN to be a community, users need some identity for other users to relate to. Otherwise we may as well have no usernames and no community, and that would be a different kind of forum. https://hn.algolia.com/?sort=byDate&dateRange=all&type=comme...
Moderation comments are an unfortunate evil. To some extent they do the very things we're scolding others for. I don't feel very good about that and I'd love to find a better way—especially because they're even more tedious to write than they are to read. https://hn.algolia.com/?dateRange=all&page=0&prefix=false&so... Unfortunately, the system doesn't regulate itself with community and software mechanisms alone. There needs to be a moderation mechanism as well, i.e. humans who are giving the system their primary attention and giving feedback to it. I'd never claim that the way we do it is the only way or the best way, just that it's better than nothing.
While I have you: could you please stop creating accounts for every few comments you post? We ban accounts that do that. This is in the site guidelines: https://news.ycombinator.com/newsguidelines.html.
You needn't use your real name, of course, but for HN to be a community, users need some identity for other users to relate to. Otherwise we may as well have no usernames and no community, and that would be a different kind of forum. https://hn.algolia.com/?sort=byDate&dateRange=all&type=comme...
I’m not the only one that lives here that visits HN. It seems the house internet is blocked from signing up. I use my phone in privacy mode. Internet points don’t mean much.
Honestly though, Reddit/HN without a comment section would be great. Let messenger systems handle propagation.
irc.ycombinator.com would probably be much easier to moderate and be a lot healthier for everyone too.
Honestly though, Reddit/HN without a comment section would be great. Let messenger systems handle propagation.
irc.ycombinator.com would probably be much easier to moderate and be a lot healthier for everyone too.
Personally, I think smart people just do this. When I got sick with COVID I cannot begin to describe the number of people who became doctors during this unprecedented time, only to send me outdated comments, articles, and speculation.
All of these people thought they were smarter than the instruction I received from a real doctor, nurse practitioner, and the CDC. These were smart people, though, and mostly (but not limited to) highly educated engineers.
All of these people thought they were smarter than the instruction I received from a real doctor, nurse practitioner, and the CDC. These were smart people, though, and mostly (but not limited to) highly educated engineers.
I agree in principle. Then in real life example you will have real doctors and nurses giving conflicting advices and having wildly different viewpoints on the details.
The easy to point to example is how a lot of doctors viewed masks at the beginning of the pandemic. Or how trickle down economics is also endorsed by experts. Or experts opinions on mental health drugs. And so many other subjects where it won’t be hard to find an expert on the dumb side of the argument.
I think we should rely on experts, but we can’t dismiss people’s doubts or research just with a “I’ve seen a real doctor” slight of hand.
The easy to point to example is how a lot of doctors viewed masks at the beginning of the pandemic. Or how trickle down economics is also endorsed by experts. Or experts opinions on mental health drugs. And so many other subjects where it won’t be hard to find an expert on the dumb side of the argument.
I think we should rely on experts, but we can’t dismiss people’s doubts or research just with a “I’ve seen a real doctor” slight of hand.
Conflicting doesn't mean that one, or both, opinions are wrong. There is more than solution to every problem.
"how a lot of doctors viewed masks at the beginning of the pandemic"
Ok, so I've looked into the history of this a little, and most of the mask mythology seems misunderstood.
Prior to 2020, most medical professionals believed most viruses, and corona viruses particularly, could not be transported as aerosols. This was a subject of research where the data had not come in.
About late March, it began to appear that the virus could be an aerosol. Hard results did not come in until April and May, and many in the field discovered they had egg on their faces.
Conflicting advice is to be expected with new information.
Ok, so I've looked into the history of this a little, and most of the mask mythology seems misunderstood.
Prior to 2020, most medical professionals believed most viruses, and corona viruses particularly, could not be transported as aerosols. This was a subject of research where the data had not come in.
About late March, it began to appear that the virus could be an aerosol. Hard results did not come in until April and May, and many in the field discovered they had egg on their faces.
Conflicting advice is to be expected with new information.
My frustration is that, here in Canada at least, there is still an outdated way of talking about the virus as if it's a surface / hand sanitation issue, and much of the public policy (especially around school openings, etc.) still seems to be ignorant of the absolutely essential role that shared air has in transmission. Public authorities have failed to really drive home the reality of the virus, and instead we get sanitation theatre, a pantomime of virus control, and parents clambering to get schools reopened (while the numbers plummet since they've been closed after Christmas)
Example, a local wine shop in my small town where you are not allowed to touch the bottles, but I see the staff inside with their masks off when there's no customers in the store.
Frankly, I think people really just don't _want_ to believe it's aerosol transmitted. Because the consequences for public policy would be so drastic; no malls, no factories, no schools, etc. should really be open if you admit it.
Example, a local wine shop in my small town where you are not allowed to touch the bottles, but I see the staff inside with their masks off when there's no customers in the store.
Frankly, I think people really just don't _want_ to believe it's aerosol transmitted. Because the consequences for public policy would be so drastic; no malls, no factories, no schools, etc. should really be open if you admit it.
It’s possible that it’s just been so long since we had a bad respiratory pandemic that medical advice assumes everything is food poisoning and norovirus, where cleaning surfaces actually does matter.
But it’s also possible they’d have to admit grandma-type adages about opening the windows actually work and office buildings don’t let you do this anymore.
But it’s also possible they’d have to admit grandma-type adages about opening the windows actually work and office buildings don’t let you do this anymore.
If you go to ontario public health website and read their summaries on current covid papers, you'll note that the vast majority of papers come to the conclusion that schools have almost no impact on the spread of covid.
But no, keep applying youre second grade logic: spreads through air-> indoor places unsafe-> CLOSE EVERYTHING.
That's not to say some of it isn't security theater (ie my parents were washing cookie boxes with soap some a couple of months ago), but those measures aren't being driven by the public health, but rather the unrelenting fear mongering of the media.
But no, keep applying youre second grade logic: spreads through air-> indoor places unsafe-> CLOSE EVERYTHING.
That's not to say some of it isn't security theater (ie my parents were washing cookie boxes with soap some a couple of months ago), but those measures aren't being driven by the public health, but rather the unrelenting fear mongering of the media.
Do you have sources for your claims?
I've also looked into it a little and come to the opposite conclusion. Here is one study from Singapore in 2014 that showed surgical and n95 have about a 68% and 95% efficacy respectively at preventing SARS transmission https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4293989/ Masks have also been shown to provide protection against the common cold (many strains of which are also coronaviruses) and seasonal flus https://www.livescience.com/7661-masks-protect-colds-flu.htm...
In the absence of more specific information about SARS-COV-2 early in the pandemic, surely it would have made sense to default to using the preventative measures that were known to be effective at controlling SARS and other known respiratory diseases? Especially when these measures come with no real risks.
It's true that they didn't know with 100% certainty, and China's misinformation about human to human spread in the beginning and not allowing the CDC team in early to investigate certainly didn't help either. Maybe these experts, including Dr Fauci, the CDC, and WHO, just made what turned out to be very bad judgement calls and they honestly thought that masks wouldn't prevent the spread of the disease. But by far the likeliest explanation in my mind is that these institutions knowingly lied to the public in an attempt to manipulate people into not buying masks, and I still find that to be absolutely unconscionable.
I've also looked into it a little and come to the opposite conclusion. Here is one study from Singapore in 2014 that showed surgical and n95 have about a 68% and 95% efficacy respectively at preventing SARS transmission https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4293989/ Masks have also been shown to provide protection against the common cold (many strains of which are also coronaviruses) and seasonal flus https://www.livescience.com/7661-masks-protect-colds-flu.htm...
In the absence of more specific information about SARS-COV-2 early in the pandemic, surely it would have made sense to default to using the preventative measures that were known to be effective at controlling SARS and other known respiratory diseases? Especially when these measures come with no real risks.
It's true that they didn't know with 100% certainty, and China's misinformation about human to human spread in the beginning and not allowing the CDC team in early to investigate certainly didn't help either. Maybe these experts, including Dr Fauci, the CDC, and WHO, just made what turned out to be very bad judgement calls and they honestly thought that masks wouldn't prevent the spread of the disease. But by far the likeliest explanation in my mind is that these institutions knowingly lied to the public in an attempt to manipulate people into not buying masks, and I still find that to be absolutely unconscionable.
Here's my previous comment: https://news.ycombinator.com/item?id=25738200
https://bmcinfectdis.biomedcentral.com/articles/10.1186/s128... [2019]
"In summary, despite the various mechanistic arguments about which organisms can be potentially airborne and therefore aerosol-transmissible, ultimately, the main deciding factor appears to be how many studies using various differing approaches: empirical (clinical, epidemiological), and/or experimental (e.g. using animal models), and/or mechanistic (using airflow tracers and air-sampling) methods, reach the same consensus opinion. Over time, the scientific community will eventually form an impression of the predominant transmission route for that specific agent, even if the conclusion is one of mixed transmission routes, with different routes predominating depending on the specific situations. This is the case for influenza viruses, and is likely the most realistic."
https://bmcinfectdis.biomedcentral.com/articles/10.1186/s128... [2019]
"In summary, despite the various mechanistic arguments about which organisms can be potentially airborne and therefore aerosol-transmissible, ultimately, the main deciding factor appears to be how many studies using various differing approaches: empirical (clinical, epidemiological), and/or experimental (e.g. using animal models), and/or mechanistic (using airflow tracers and air-sampling) methods, reach the same consensus opinion. Over time, the scientific community will eventually form an impression of the predominant transmission route for that specific agent, even if the conclusion is one of mixed transmission routes, with different routes predominating depending on the specific situations. This is the case for influenza viruses, and is likely the most realistic."
How does this address the assertion that there's already been research out of Asia that says masks are effective against these kind of viruses?
Honestly, I'm not sure what you're asking. Some kind of admission that the US health field ignored research because "eww, icky Asians?" Evidence that the US health experts knew of the research but are Snidely Whiplash-ish, mustache-twirling evil? As far as I can tell, they're just as confused as any other scientist trying to do their best, with the additional constraint that they have to provide an answer to a question and that any nuance in that answer will be ignored anyway.
The link I posted is to a 2019 paper discussing how and why some viruses are considered airborne transmissible such that masks would help. (Single papers don't usually settle complex questions, right?)
cactus2093's links are to a paper discussing the difficulty of getting people to use masks correctly and a science popularization article describing an unnamed study from the University of New South Wales and an unidentified CDC study. The first link does include references about the utility of masks, to articles titled "Risk of transmission of airborne infection during train commute based on mathematical model", "Knowledge about pandemic influenza and compliance with containment measures among Australians", "Physical interventions to interrupt or reduce the spread of respiratory viruses: systematic review", "Professional and home-made face masks reduce exposure to respiratory infections among the general population", and "A schlieren optical study of the human cough with and without wearing masks for aerosol infection control", but those don't seem to imply the issue is settled. The second link does go on to say, "While some governments are already stockpiling masks for use in emergencies, MacIntyre said these guidelines had been implemented without evidence to support them. "We now have provided that evidence," she said," but it's difficult to evaluate the last sentence.
The link I posted is to a 2019 paper discussing how and why some viruses are considered airborne transmissible such that masks would help. (Single papers don't usually settle complex questions, right?)
cactus2093's links are to a paper discussing the difficulty of getting people to use masks correctly and a science popularization article describing an unnamed study from the University of New South Wales and an unidentified CDC study. The first link does include references about the utility of masks, to articles titled "Risk of transmission of airborne infection during train commute based on mathematical model", "Knowledge about pandemic influenza and compliance with containment measures among Australians", "Physical interventions to interrupt or reduce the spread of respiratory viruses: systematic review", "Professional and home-made face masks reduce exposure to respiratory infections among the general population", and "A schlieren optical study of the human cough with and without wearing masks for aerosol infection control", but those don't seem to imply the issue is settled. The second link does go on to say, "While some governments are already stockpiling masks for use in emergencies, MacIntyre said these guidelines had been implemented without evidence to support them. "We now have provided that evidence," she said," but it's difficult to evaluate the last sentence.
You said
> Prior to 2020, most medical professionals believed most viruses, and corona viruses particularly, could not be transported as aerosols. This was a subject of research where the data had not come in.
cactus2093 replied
> I've also looked into it a little and come to the opposite conclusion. Here is one study from Singapore in 2014 that showed surgical and n95 have about a 68% and 95% efficacy respectively at preventing SARS transmission https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4293989/ Masks have also been shown to provide protection against the common cold (many strains of which are also coronaviruses) and seasonal flus https://www.livescience.com/7661-masks-protect-colds-flu.htm...
There's two ways I can see you interpreting this.
1) You are being extremely narrow in your focus and saying that you are talking specifically about viruses being transmitted as aerosols (although the overarching topic here is about whether or not masks are effective). And thus, since there was no research specifically about this, then there's no reason to recommend masks. This doesn't address the point that there's research that shows masks are effective against similar kinds of viruses.
2) You actually are talking about effectiveness of masks and saying that viruses could not be transmitted via aerosol was to say that because they are not shown to be transmitted via aerosol, then there's no evidence that masks would work, in which case, again, we're back to the issue that there was research prior to 2020 that showed masks are effective against similar kinds of viruses.
So the question remains, are you wrong about your assertion that
> Prior to 2020, most medical professionals believed most viruses, and corona viruses particularly, could not be transported as aerosols. This was a subject of research where the data had not come in.
and if not, what are we missing about what you're trying to say?
> Some kind of admission that the US health field ignored research because "eww, icky Asians?"
There was certainly the perception that Asians wearing masks was ridiculous. Whether or not this perception extended to American experts and influenced their conclusions is unknown to me.
> Prior to 2020, most medical professionals believed most viruses, and corona viruses particularly, could not be transported as aerosols. This was a subject of research where the data had not come in.
cactus2093 replied
> I've also looked into it a little and come to the opposite conclusion. Here is one study from Singapore in 2014 that showed surgical and n95 have about a 68% and 95% efficacy respectively at preventing SARS transmission https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4293989/ Masks have also been shown to provide protection against the common cold (many strains of which are also coronaviruses) and seasonal flus https://www.livescience.com/7661-masks-protect-colds-flu.htm...
There's two ways I can see you interpreting this.
1) You are being extremely narrow in your focus and saying that you are talking specifically about viruses being transmitted as aerosols (although the overarching topic here is about whether or not masks are effective). And thus, since there was no research specifically about this, then there's no reason to recommend masks. This doesn't address the point that there's research that shows masks are effective against similar kinds of viruses.
2) You actually are talking about effectiveness of masks and saying that viruses could not be transmitted via aerosol was to say that because they are not shown to be transmitted via aerosol, then there's no evidence that masks would work, in which case, again, we're back to the issue that there was research prior to 2020 that showed masks are effective against similar kinds of viruses.
So the question remains, are you wrong about your assertion that
> Prior to 2020, most medical professionals believed most viruses, and corona viruses particularly, could not be transported as aerosols. This was a subject of research where the data had not come in.
and if not, what are we missing about what you're trying to say?
> Some kind of admission that the US health field ignored research because "eww, icky Asians?"
There was certainly the perception that Asians wearing masks was ridiculous. Whether or not this perception extended to American experts and influenced their conclusions is unknown to me.
"There's two ways I can see you interpreting this.
"1) You are being extremely narrow in your focus and saying that you are talking specifically about viruses being transmitted as aerosols (although the overarching topic here is about whether or not masks are effective). And thus, since there was no research specifically about this, then there's no reason to recommend masks. This doesn't address the point that there's research that shows masks are effective against similar kinds of viruses.
"2) You actually are talking about effectiveness of masks and saying that viruses could not be transmitted via aerosol was to say that because they are not shown to be transmitted via aerosol, then there's no evidence that masks would work, in which case, again, we're back to the issue that there was research prior to 2020 that showed masks are effective against similar kinds of viruses."
Backing up a bit...
As far as I've seen, there are three primary routes for infection for respiratory diseases: 1) contaminated surfaces, 2) (large) droplets produced mostly by coughing or sneezing, and 3) (small) aerosol particles produced by normal activities like breathing and speaking.
The normal measures against 1) are avoiding touching possibly contaminated surfaces, washing your hands, and not touching your eyes, mouth, etc. And roughly speaking, that's about all you can do.
The normal measures against 2) are staying distant (i.e. 6ft) and keeping interactions short because the droplets do not remain airborne long, and covering your face when you cough or sneeze. Masks would certainly be helpful in the case of 2), but not especially so because a) the normal measures work fairly well, b) most people do not want to wear a mask[1], c) many people who do wear a mask do not do so correctly, and d) the supplies of medical grade masks were (are?) sketchy. (Both of the links provided are specifically aimed at b) and c), no?)[2] A study of 1000 students at an Australian university is interesting, but the advantage of a) don't necessarily overwhelm b), c), and d).
There are no normal measures against 3). The only useful measures are to avoid all contact with potential carriers, significantly improve indoor ventilation and air filtration (aerosols remain airborne for a very long time), and properly using medically-effective masks when interactions are required. Transmission by asymptomatic carriers is primary, hard epidemiological evidence of 3).
According to (https://www.ncbi.nlm.nih.gov/pmc/articles/PMC7322154/), asymptomatic carriers were reported at the end of January and significant confirmation appeared about March (https://wwwnc.cdc.gov/eid/article/26/7/20-1595_article). Shortly after that (April 3), the CDC recommended masks (https://www.bmj.com/content/369/bmj.m1422).
From your limited choices, my closest meaning is your 1). But,....
Now, put yourself in the place of someone making an official policy recommendation in, say, February or early March. You don't have hard evidence that masks are required, but you do understand that they will provide some marginal benefit. On the other hand, ensuring that masks are worn consistently and correctly is an uphill struggle (as we have seen over the last year). Further, the supply of medical grade masks where their use is required, hospitals for example, is not infinite. Oh, and you want to make the minimally invasive recommendation you can, because you actually aren't out to cause as much damage as possible by, say, killing the economy. Beyond that, you know that at some point you are going to be facing pandemic fatigue, where people stop taking the situation seriously and then things get very bad (as in last summer, last fall, and earlier this winter). What do you do?
As it turns out, they were wrong about some of their assumptions. Being wrong happens. It is not proof of an evil conspiracy or even of a conspiracy of stupidity. It's people who are pretty good at what they do, making what they think are the best choices, and being wrong.
Suggested Reading
https://www.bmj.com/content/369/bmj.m1422
https://news.ycombinator.com/item?id=25616014 (No, really, "The Plague Year" in the New Yorker is probably the best history of the pandemic so far, and explicitly touches on a lot of these issues---including medical professionals saying, "yeah, we were wrong.")
[1] I am talking about the US specifically, not Taiwan, Japan, or anywhere where mask wearing is more common socially.
[2] Everyone wearing pressurized, highly filtered contamination suits at all times would prevent essentially all cases of respiratory disease transmission. But no one is going to push that idea without a really, really good reason.
PS: While writing this, I ran across https://www.sciencedirect.com/science/article/pii/S019665532..., which is the first solid, halfway data-backed estimate of the prevalence of asymptomatic carriers: 1.82%
"1) You are being extremely narrow in your focus and saying that you are talking specifically about viruses being transmitted as aerosols (although the overarching topic here is about whether or not masks are effective). And thus, since there was no research specifically about this, then there's no reason to recommend masks. This doesn't address the point that there's research that shows masks are effective against similar kinds of viruses.
"2) You actually are talking about effectiveness of masks and saying that viruses could not be transmitted via aerosol was to say that because they are not shown to be transmitted via aerosol, then there's no evidence that masks would work, in which case, again, we're back to the issue that there was research prior to 2020 that showed masks are effective against similar kinds of viruses."
Backing up a bit...
As far as I've seen, there are three primary routes for infection for respiratory diseases: 1) contaminated surfaces, 2) (large) droplets produced mostly by coughing or sneezing, and 3) (small) aerosol particles produced by normal activities like breathing and speaking.
The normal measures against 1) are avoiding touching possibly contaminated surfaces, washing your hands, and not touching your eyes, mouth, etc. And roughly speaking, that's about all you can do.
The normal measures against 2) are staying distant (i.e. 6ft) and keeping interactions short because the droplets do not remain airborne long, and covering your face when you cough or sneeze. Masks would certainly be helpful in the case of 2), but not especially so because a) the normal measures work fairly well, b) most people do not want to wear a mask[1], c) many people who do wear a mask do not do so correctly, and d) the supplies of medical grade masks were (are?) sketchy. (Both of the links provided are specifically aimed at b) and c), no?)[2] A study of 1000 students at an Australian university is interesting, but the advantage of a) don't necessarily overwhelm b), c), and d).
There are no normal measures against 3). The only useful measures are to avoid all contact with potential carriers, significantly improve indoor ventilation and air filtration (aerosols remain airborne for a very long time), and properly using medically-effective masks when interactions are required. Transmission by asymptomatic carriers is primary, hard epidemiological evidence of 3).
According to (https://www.ncbi.nlm.nih.gov/pmc/articles/PMC7322154/), asymptomatic carriers were reported at the end of January and significant confirmation appeared about March (https://wwwnc.cdc.gov/eid/article/26/7/20-1595_article). Shortly after that (April 3), the CDC recommended masks (https://www.bmj.com/content/369/bmj.m1422).
From your limited choices, my closest meaning is your 1). But,....
Now, put yourself in the place of someone making an official policy recommendation in, say, February or early March. You don't have hard evidence that masks are required, but you do understand that they will provide some marginal benefit. On the other hand, ensuring that masks are worn consistently and correctly is an uphill struggle (as we have seen over the last year). Further, the supply of medical grade masks where their use is required, hospitals for example, is not infinite. Oh, and you want to make the minimally invasive recommendation you can, because you actually aren't out to cause as much damage as possible by, say, killing the economy. Beyond that, you know that at some point you are going to be facing pandemic fatigue, where people stop taking the situation seriously and then things get very bad (as in last summer, last fall, and earlier this winter). What do you do?
As it turns out, they were wrong about some of their assumptions. Being wrong happens. It is not proof of an evil conspiracy or even of a conspiracy of stupidity. It's people who are pretty good at what they do, making what they think are the best choices, and being wrong.
Suggested Reading
https://www.bmj.com/content/369/bmj.m1422
https://news.ycombinator.com/item?id=25616014 (No, really, "The Plague Year" in the New Yorker is probably the best history of the pandemic so far, and explicitly touches on a lot of these issues---including medical professionals saying, "yeah, we were wrong.")
[1] I am talking about the US specifically, not Taiwan, Japan, or anywhere where mask wearing is more common socially.
[2] Everyone wearing pressurized, highly filtered contamination suits at all times would prevent essentially all cases of respiratory disease transmission. But no one is going to push that idea without a really, really good reason.
PS: While writing this, I ran across https://www.sciencedirect.com/science/article/pii/S019665532..., which is the first solid, halfway data-backed estimate of the prevalence of asymptomatic carriers: 1.82%
> But by far the likeliest explanation in my mind is that these institutions knowingly lied to the public in an attempt to manipulate people into not buying masks,
As I remember it, the advice wasn't "don't wear masks," the advice was "stay home." If they said "go buy masks," that would mean leaving your house to get a mask, which would directly contradict the more important advice of staying home. Also if they said wear a mask when you leave the house it would have been interpreted as "it's ok to go on with normal events as long as we have masks" which wasn't the message they were trying to send, either. The message was stay home, and at the time it was probably the right message, and not a lie.
As I remember it, the advice wasn't "don't wear masks," the advice was "stay home." If they said "go buy masks," that would mean leaving your house to get a mask, which would directly contradict the more important advice of staying home. Also if they said wear a mask when you leave the house it would have been interpreted as "it's ok to go on with normal events as long as we have masks" which wasn't the message they were trying to send, either. The message was stay home, and at the time it was probably the right message, and not a lie.
Yeah, no. People could have worn masks they already had, ordered masks online if any were available, the market for home-made masks would have emerged like it ended up doing later. And even if people did go out to buy masks, people were already going out on essential trips like the grocery store, pharmacy, and continuing to go to work for many people. Making one trip to buy a mask and then wearing that mask on all other essential trips for the next few weeks would have been a big net win even if you did have to go into a store to buy that mask.
> As I remember it, the advice wasn't "don't wear masks," the advice was "stay home."
There was “stay home” but also “stop buying masks because you are stopping medical, first responder, etc. personnel from getting them and they aren't useful for the general public” during the initial PPE supply shortage and hoarding.
This wasn't a lie, AFAICT, but Aa statement that was completely correct public health statement in the context it was given that was widely interpreted as an individual health statement.
There was “stay home” but also “stop buying masks because you are stopping medical, first responder, etc. personnel from getting them and they aren't useful for the general public” during the initial PPE supply shortage and hoarding.
This wasn't a lie, AFAICT, but Aa statement that was completely correct public health statement in the context it was given that was widely interpreted as an individual health statement.
> was completely correct public health statement in the context it was given that was widely interpreted as an individual health statement.
There was no misunderstanding, the message was "don't wear a mask unless you're sick, masks don't help the wearer they only help keep a sick person from spreading it to others around them". That was just a lie at the time, we didn't know that for sure and we had every reason to suspect the opposite.
There was no misunderstanding, the message was "don't wear a mask unless you're sick, masks don't help the wearer they only help keep a sick person from spreading it to others around them". That was just a lie at the time, we didn't know that for sure and we had every reason to suspect the opposite.
> There was no misunderstanding, the message was "don't wear a mask unless you're sick, masks don't help the wearer they only help
I've heard lots of people say that was the message, but it wasn't the one I heard and it's not the one I find in any of the documented statements from public health officials.
I've heard lots of people say that was the message, but it wasn't the one I heard and it's not the one I find in any of the documented statements from public health officials.
I definitely remember a lot of talk from experts saying non-surgical masks don't work and that surgical masks should be saved for medical professionals.
> Prior to 2020, most medical professionals believed most viruses, and corona viruses particularly, could not be transported as aerosols.
That’s most American medical professionals. And they mostly seemed to believe you would get yourself sick faster by touching your eyes after taking the mask off wrong, or that masks provided 0% protection unless you wore an N95 with a fit test, or that if they didn’t lie about them being useless people would steal them from hospitals. They certainly didn’t believe they were truly useless, since they were all wearing them for procedures.
Actually, wasn’t the excuse for suddenly being like “face masks are good actually” that they didn’t know COVID had asymptomatic spread before then? That’s even worse than not knowing it spread through aerosols.
> This was a subject of research where the data had not come in.
By using the technique of “not assuming all of Asia is primitive and superstitious”, it was easy to figure out what to do without an RCT. Note there isn’t evidence that surgical masks help during surgery either.
That’s most American medical professionals. And they mostly seemed to believe you would get yourself sick faster by touching your eyes after taking the mask off wrong, or that masks provided 0% protection unless you wore an N95 with a fit test, or that if they didn’t lie about them being useless people would steal them from hospitals. They certainly didn’t believe they were truly useless, since they were all wearing them for procedures.
Actually, wasn’t the excuse for suddenly being like “face masks are good actually” that they didn’t know COVID had asymptomatic spread before then? That’s even worse than not knowing it spread through aerosols.
> This was a subject of research where the data had not come in.
By using the technique of “not assuming all of Asia is primitive and superstitious”, it was easy to figure out what to do without an RCT. Note there isn’t evidence that surgical masks help during surgery either.
Yeah, I think what a lot of people going on TV failed to really express is that there was so much unknown about this new virus, that this is the best information we have to go on RIGHT NOW. And then when that changed, they didn't make it explicit enough that they were changing their advice based on NEW DATA. Partially this is just the soundbite driven media, where even if it was explained, that often doesn't make the 10 second clip replayed.
My company had a zoom conference with a very well respected British doctor, he won something more or less equivalent to a nobel prize in mediciine, and he told my company, on May 4th, that masks are not necessary. This was already a bit head scratching, but what I feel he probably meant, but certainly did not explicitly say- is that its not a priority for an individual to wear a mask when there are shortages for front line workers.
But mix a changing message with an inbred resistance to being told what to do and the inconvenience of a mask, and this comes out the end for many as "They don't know what they are talking about these "experts!", I don't need to listen to them, they can't get their story straight!" and here we are...
My company had a zoom conference with a very well respected British doctor, he won something more or less equivalent to a nobel prize in mediciine, and he told my company, on May 4th, that masks are not necessary. This was already a bit head scratching, but what I feel he probably meant, but certainly did not explicitly say- is that its not a priority for an individual to wear a mask when there are shortages for front line workers.
But mix a changing message with an inbred resistance to being told what to do and the inconvenience of a mask, and this comes out the end for many as "They don't know what they are talking about these "experts!", I don't need to listen to them, they can't get their story straight!" and here we are...
> My company had a zoom conference with a very well respected British doctor, he won something more or less equivalent to a nobel prize in mediciine, and he told my company, on May 4th, that masks are not necessary. This was already a bit head scratching, but what I feel he probably meant, but certainly did not explicitly say- is that its not a priority for an individual to wear a mask when there are shortages for front line workers.
This comes off as blatantly lying to us for our harm, not "they don't know what they're talking about". If someone lies to you and knowingly puts your life at risk through the lie, it's very rational not to believe anything they say in the future. This is not mere mixed messages.
If government and/or experts want to have non-negative credibility, they are going to have to start consistently telling the whole truth.
This comes off as blatantly lying to us for our harm, not "they don't know what they're talking about". If someone lies to you and knowingly puts your life at risk through the lie, it's very rational not to believe anything they say in the future. This is not mere mixed messages.
If government and/or experts want to have non-negative credibility, they are going to have to start consistently telling the whole truth.
> Then in real life example you will have real doctors and nurses giving conflicting advices and having wildly different viewpoints on the details.
Exactly. Real life example - someone I know asked her doctor about getting the Moderna covid vaccine while pregnant. The doctor not only said it was ok, but also verbally recommended it and gave her a written paper to help her get the vaccine. She was able to get it a couple days ago. Then yesterday the World Health Organization announced that pregnant women should not be getting the Moderna vaccine because they were not included in the trials.
So who’s right here? It’s hard to trust a “real doctor” when something like this happens.
It also happens that, doctors in particular, barely see you for 5-15min, that is not enough time for them to fully understand what is going on with you and your whole history. It’s only enough time for them to make a quick judgement based on their pattern matching abilities from their own experience and then give, an educated, recommendation. But they are not really vested in you in particular, you are just one more, and if their recommendations don’t work for you, they usually don’t really care and won’t go down the rabbit whole with you, at the most they’ll just refer you to someone else.
Exactly. Real life example - someone I know asked her doctor about getting the Moderna covid vaccine while pregnant. The doctor not only said it was ok, but also verbally recommended it and gave her a written paper to help her get the vaccine. She was able to get it a couple days ago. Then yesterday the World Health Organization announced that pregnant women should not be getting the Moderna vaccine because they were not included in the trials.
So who’s right here? It’s hard to trust a “real doctor” when something like this happens.
It also happens that, doctors in particular, barely see you for 5-15min, that is not enough time for them to fully understand what is going on with you and your whole history. It’s only enough time for them to make a quick judgement based on their pattern matching abilities from their own experience and then give, an educated, recommendation. But they are not really vested in you in particular, you are just one more, and if their recommendations don’t work for you, they usually don’t really care and won’t go down the rabbit whole with you, at the most they’ll just refer you to someone else.
But that ... that's not exactly incompatible. The WHO makes very simple blanket statements that are safe in general.
A doctor usually looks at an individual. (And we know a lot of pregnant women got infected with COVID. We know that hospitalization was higher for them, but also that mortality is the same - https://www.cdc.gov/mmwr/volumes/69/wr/mm6925a1.htm?s_cid=mm... , so the immune reaction should be the same too)
The real problem is that it's impossible for a non-expert to gauge the expertise of any of these entities (your full-sized real-life walking-talking doctor who you know for a deacade, the WHO and anyone in between). Even simply asking many questions is just the illusion of getting informed (not just because there's rarely any time for proper answers as you mentioned), but because the answers are biased, so this naturally biases the next question too. (Unless there's enough time and effort to go through years of science and try to falsify whatever theory is being communicated with very targeted questions, it's close to useless/futile effort.)
> But they are not really vested in you in particular, you are just one more,
Yep. Agreed. Also usually primary care physicians are better at "bedside manner" and pattern matching than at real medical science. (Because it's not really their job to have 20 doctorates in every subfield of biology.)
A doctor usually looks at an individual. (And we know a lot of pregnant women got infected with COVID. We know that hospitalization was higher for them, but also that mortality is the same - https://www.cdc.gov/mmwr/volumes/69/wr/mm6925a1.htm?s_cid=mm... , so the immune reaction should be the same too)
The real problem is that it's impossible for a non-expert to gauge the expertise of any of these entities (your full-sized real-life walking-talking doctor who you know for a deacade, the WHO and anyone in between). Even simply asking many questions is just the illusion of getting informed (not just because there's rarely any time for proper answers as you mentioned), but because the answers are biased, so this naturally biases the next question too. (Unless there's enough time and effort to go through years of science and try to falsify whatever theory is being communicated with very targeted questions, it's close to useless/futile effort.)
> But they are not really vested in you in particular, you are just one more,
Yep. Agreed. Also usually primary care physicians are better at "bedside manner" and pattern matching than at real medical science. (Because it's not really their job to have 20 doctorates in every subfield of biology.)
>Or how trickle down economics is also endorsed by experts.
Trickle-down economics is not explicitly endorsed by anyone, because it's a pejorative. That's like saying "totalitarianism is popular in some countries"; you might think those countries are totalitarian, but they don't.
Trickle-down economics is not explicitly endorsed by anyone, because it's a pejorative. That's like saying "totalitarianism is popular in some countries"; you might think those countries are totalitarian, but they don't.
Indeed. Even then, as a term, it refers to a specific regan-era tax policy.
What many on the left assume it means, is a sincere description of growth "raising the tide"; and how ridiculous an idea that is.
Of course the tide has risen to an unprecedented degree in human history both since the term "trickle down" was invented; and moreso, over the last 40 years.
What many on the left assume it means, is a sincere description of growth "raising the tide"; and how ridiculous an idea that is.
Of course the tide has risen to an unprecedented degree in human history both since the term "trickle down" was invented; and moreso, over the last 40 years.
Even then, as a term, it refers to a specific regan-era tax policy.
The term was coined by Will Rogers about 90 years ago.
The term was coined by Will Rogers about 90 years ago.
The usage goes further back then that. The first use was in 1896 by William Jennings Bryan in his Cross of Gold speech:
https://en.wikipedia.org/wiki/Trickle-down_economics
https://en.wikipedia.org/wiki/Trickle-down_economics
Except the tide you're describing is global, and the policy in question was domestic, and wages and assets within the middle and lower economic classes have indeed stagnated in relation to almost every other economic indicator within the country, which is why "many on the left" consider this argument to be invalid.
This just isn't the case. And it dramatically isn't the case.
This is a side effect of using the same category terms, but not talking about the underlying distributions.
Eg., in the UK, 80% of the country were industrial working class or poorer until 1980s; and middle class only started at top 5%.
Today, the "industrial working class" level of wealth, is the bottom 20% at the very most.
So if you hold the class terms fixed, "middle class" it seems the 80s top 5% has "stagnated", only to fail to mention, it now 60% of the country.
If you hold the distributions constant, the wealth level acheived in the top 5% in 1980s is now a majority of the population.
This is a side effect of using the same category terms, but not talking about the underlying distributions.
Eg., in the UK, 80% of the country were industrial working class or poorer until 1980s; and middle class only started at top 5%.
Today, the "industrial working class" level of wealth, is the bottom 20% at the very most.
So if you hold the class terms fixed, "middle class" it seems the 80s top 5% has "stagnated", only to fail to mention, it now 60% of the country.
If you hold the distributions constant, the wealth level acheived in the top 5% in 1980s is now a majority of the population.
> you might think those countries are totalitarian, but they don't.
"You" in the above is a specific individual.
"They" in the above is undefined and extremely imprecise.
For various definitions of "they", your statement could be true, false or somewhere in between.
"You" in the above is a specific individual.
"They" in the above is undefined and extremely imprecise.
For various definitions of "they", your statement could be true, false or somewhere in between.
The problem, to me, isn't peoples curiosity or attempting to broaden their horizons. I think the outcomes of this are largely good; it encourages discerning people to exercise caution and makes for good light conversation. Where things get off the rails is when people believe their tentative research or association with a domain makes them authoritative in some sense.
I read the same waffling about masks you did, the information I read (since it was inconsistent) led me to believe that I should wear masks more than directed. I did this out of an abundance of caution because at the time early research eerily concluded that not much is known about the longer term effects of this virus, there was stark contrast in the symptoms various people had, and that there were layers to exercising prevention. I acted in a similar manner when I limited my social circle.
The difference in the way, I think, these people used much of the same information that I did is that it became authoritative to them. After they'd read enough articles straight from the CDC it made them feel qualified to interpret them. I'm reminded of one guy who demanded I get another PCR test before he hung out with me, even after I hadn't experienced a fever for 10+ days. For some context, when I got sick I came back negative on both tests I was given. I was later told my viral load was not high enough on those days, ironically these also happened to be some of the worst days of the virus. It was only after I lost taste and smell that the doctors realized I had COVID. My friend cited all the reading he had done as evidence that I just wouldn't accept his "perspective". When I asked the doctor about getting both PCR and an antibody test she responded, "Do you have an actual reason? We already knew you were sick." In reality, the time which I would've been contagious had long passed, yet my friend couldn't get it out of his mind that transmission was a possibility.
Another example is a friend whose brother had gotten COVID a few months back. His symptoms were certainly worse than mine. Where I didn't experience much trouble breathing, he did among other things. I went on a walk one day because it was one of the days in between being sick that I had some energy and wasn't overcome with brain fog. I shared that I was exhausted after this short walk and that I'd probably stave off a walk for a few days to see where I was at. She chastised me for going on a walk, explaining that her brother had been told not to exercise for three to six months, and that it seemed as if I was taking COVID as a joke. What I realized after googling this specific treatment plan is that it's usually given to people with some form of cardiomyopathy and other conditions (none of which I have.) I am now about 3 weeks removed from having COVID and I'm back to riding my bike, which is consistent with what my doctor told me. My doctor told me recovery has a lot of variables and I'll need to go at the pace that I'm comfortable with and listen to my body. Regular checkups should help to that end as well.
The theme among these people is when I tried to explain what doctors had told me and why I was going to stick to what they were saying (more generalized as drawing boundaries) I was met with harsh rejection. The key here is that authoritative sources were no longer respected. The fact of the matter is that doctors do take a bit to arrive at consensus and that can be frustrating to a public opinion that is waiting on them for their own sanity, but just because you landed on the correct conclusion a couple times (or even a more conservative solution that kept you equally safe) does not make you an authoritative source. So, I'm not going to tell people to stay in their own lane but you can't just go lecture people based on your own understanding. That's when you forget that all of this information you gather outside of your own domain is good for exercising caution and light conversation.
I read the same waffling about masks you did, the information I read (since it was inconsistent) led me to believe that I should wear masks more than directed. I did this out of an abundance of caution because at the time early research eerily concluded that not much is known about the longer term effects of this virus, there was stark contrast in the symptoms various people had, and that there were layers to exercising prevention. I acted in a similar manner when I limited my social circle.
The difference in the way, I think, these people used much of the same information that I did is that it became authoritative to them. After they'd read enough articles straight from the CDC it made them feel qualified to interpret them. I'm reminded of one guy who demanded I get another PCR test before he hung out with me, even after I hadn't experienced a fever for 10+ days. For some context, when I got sick I came back negative on both tests I was given. I was later told my viral load was not high enough on those days, ironically these also happened to be some of the worst days of the virus. It was only after I lost taste and smell that the doctors realized I had COVID. My friend cited all the reading he had done as evidence that I just wouldn't accept his "perspective". When I asked the doctor about getting both PCR and an antibody test she responded, "Do you have an actual reason? We already knew you were sick." In reality, the time which I would've been contagious had long passed, yet my friend couldn't get it out of his mind that transmission was a possibility.
Another example is a friend whose brother had gotten COVID a few months back. His symptoms were certainly worse than mine. Where I didn't experience much trouble breathing, he did among other things. I went on a walk one day because it was one of the days in between being sick that I had some energy and wasn't overcome with brain fog. I shared that I was exhausted after this short walk and that I'd probably stave off a walk for a few days to see where I was at. She chastised me for going on a walk, explaining that her brother had been told not to exercise for three to six months, and that it seemed as if I was taking COVID as a joke. What I realized after googling this specific treatment plan is that it's usually given to people with some form of cardiomyopathy and other conditions (none of which I have.) I am now about 3 weeks removed from having COVID and I'm back to riding my bike, which is consistent with what my doctor told me. My doctor told me recovery has a lot of variables and I'll need to go at the pace that I'm comfortable with and listen to my body. Regular checkups should help to that end as well.
The theme among these people is when I tried to explain what doctors had told me and why I was going to stick to what they were saying (more generalized as drawing boundaries) I was met with harsh rejection. The key here is that authoritative sources were no longer respected. The fact of the matter is that doctors do take a bit to arrive at consensus and that can be frustrating to a public opinion that is waiting on them for their own sanity, but just because you landed on the correct conclusion a couple times (or even a more conservative solution that kept you equally safe) does not make you an authoritative source. So, I'm not going to tell people to stay in their own lane but you can't just go lecture people based on your own understanding. That's when you forget that all of this information you gather outside of your own domain is good for exercising caution and light conversation.
I saw plenty of smart people ahead of institutions and real doctors on masks and to some extents other aspects of the pandemic.
Yes, in general if you don't know much on a topic you'd on average do best if you listen to the experts but you can outperform that if you can identify the right kind of smart people with a good track record.
Yes, in general if you don't know much on a topic you'd on average do best if you listen to the experts but you can outperform that if you can identify the right kind of smart people with a good track record.
"Right kind of people" have no accountability to their advice. A doctor can't really just hazard a guess without actual facts to base them in or risk losing their ability to practice and/or reputation. "Right kind of people" can be and are often plenty wrong about things but it fades into obscurity and they are never held accountable.
Of course they are right sometimes but on many issues with a binary choice (should or shouldn't wear masks) that's a 50% chance.
In the long run you want to be able to discern hearsay, opinion, and rumors from facts and accountability to them.
You see it today when inquiring if a pregnant woman should get the vaccine. Doctors won't really advise you because although they maybe feel it's totally safe if you're far enough along, they would be held accountable if something happened. They can be "pretty sure" about things, but that isn't enough. Meanwhile, "very smart person" on Twitter can reference a bunch of content from unaccountable people that says it's safe and come off as an expert when they aren't. It's easy to be "right" when you don't have skin in the game and especially so when no one is going to hold you to account for all the times you were wrong or misinformed.
Of course they are right sometimes but on many issues with a binary choice (should or shouldn't wear masks) that's a 50% chance.
In the long run you want to be able to discern hearsay, opinion, and rumors from facts and accountability to them.
You see it today when inquiring if a pregnant woman should get the vaccine. Doctors won't really advise you because although they maybe feel it's totally safe if you're far enough along, they would be held accountable if something happened. They can be "pretty sure" about things, but that isn't enough. Meanwhile, "very smart person" on Twitter can reference a bunch of content from unaccountable people that says it's safe and come off as an expert when they aren't. It's easy to be "right" when you don't have skin in the game and especially so when no one is going to hold you to account for all the times you were wrong or misinformed.
Last spring I was briefly lectured by a maskless doctor who said I shouldn't bother with the mask I was wearing at an appointment. I shrugged and kept my mask on. A month or two later I saw him again. He was wearing a mask that time and didn't complain about mine.
That doctor didn't just avoid guessing. He gave unsolicited advice, on limited information, that turned out to be exactly wrong and somewhat dangerous.
That doctor didn't just avoid guessing. He gave unsolicited advice, on limited information, that turned out to be exactly wrong and somewhat dangerous.
It sounds like that doctor has lost some reputation to you now. It’s hard for people to say “I don’t know” for some reason.
>A doctor can't really just hazard a guess without actual facts to base them in or risk losing their ability to practice and/or reputation.
No, but one doctor might base advice on one study he saw another on a different one. Having skin in the game helps but it is also well documented that doctors might be overly cautious due to risk of litigation and thus sometimes chose suboptimal courses of action.
>Of course they are right sometimes but on many issues with a binary choice (should or shouldn't wear masks) that's a 50% chance.
No, this isn't a real coinflip. There's evidence for and against things like this, and some people have learned better than others how to evaluate such evidence and can definitely do better than 50%.
No, but one doctor might base advice on one study he saw another on a different one. Having skin in the game helps but it is also well documented that doctors might be overly cautious due to risk of litigation and thus sometimes chose suboptimal courses of action.
>Of course they are right sometimes but on many issues with a binary choice (should or shouldn't wear masks) that's a 50% chance.
No, this isn't a real coinflip. There's evidence for and against things like this, and some people have learned better than others how to evaluate such evidence and can definitely do better than 50%.
I saw plenty of smart people ahead of institutions and experts on hydroxychloroquine here on HN. They were wrong.
Smart people with a good track record are generally called "the experts".
Smart people with a good track record are generally called "the experts".
That is the single most frustrating part of the pandemic for me:
* There was preliminary evidence from the experts it might work.
* At some point Trump got wind of this and mentioned it.
* The media, in an effort to portray Trump as wrong, went on a crazy cherry-picking campaign to show HCQ as completely ineffective. "HCQ does not work" was the prevailing sentiment for almost the entire past year because of this, even though evidence was still coming out it does work under certain circumstances.
* Now that Trump is out of office, our understanding of HCQ is shifting back to exactly what that preliminary evidence said that Trump repeated.
* There was preliminary evidence from the experts it might work.
* At some point Trump got wind of this and mentioned it.
* The media, in an effort to portray Trump as wrong, went on a crazy cherry-picking campaign to show HCQ as completely ineffective. "HCQ does not work" was the prevailing sentiment for almost the entire past year because of this, even though evidence was still coming out it does work under certain circumstances.
* Now that Trump is out of office, our understanding of HCQ is shifting back to exactly what that preliminary evidence said that Trump repeated.
* https://www.thelancet.com/journals/lanrhe/article/PIIS2665-9...
"They included 30 569 patients with systemic lupus erythematosus or rheumatoid arthritis who were already taking hydroxychloroquine in the 6 months before what was considered as the start of the pandemic in England and 164 068 patients with these rheumatic diseases who did not use hydroxychloroquine. The study found no significant difference in standardised cumulative COVID-19 mortality associated with hydroxychloroquine use (0·23% among hydroxychloroquine users and 0·22% among non-users) with an adjusted hazard ratio of 1·03 (95% CI 0·80–1·33)."
* https://www.acc.org/latest-in-cardiology/clinical-trials/202...
"Among patients exposed to patients with SARS-CoV-2, hydroxychloroquine, administered within a median duration of 2 days as post-exposure prophylaxis, did not reduce the incidence of SARS-CoV-2 or COVID-19 infection within 14 days, compared with placebo (vitamin C)."
* https://www.nih.gov/news-events/nih-research-matters/hydroxy...
"Researchers assessed each patient’s condition 14 days after being assigned to a treatment group. They used a seven-category scale ranging from one (death) to seven (discharged from the hospital and able to perform normal activities). The results showed no significant difference between the hydroxychloroquine and placebo groups. The scientists also found no differences in any of 12 additional outcomes, which included mortality 28 days after assignment to a treatment group or time to recovery. Based on the data, they concluded that hydroxychloroquine was not an effective treatment."
* https://jamanetwork.com/journals/jama/fullarticle/2772921
"Several published rigorous studies have demonstrated similar findings. In the well-conducted clinical trials published to date, hydroxychloroquine has been evaluated in a wide variety of populations, ranging from patients with severe illness2-4 to individuals at risk of severe acute respiratory syndrome coronavirus 2 (SARS-CoV-2) infection, in whom the drug was used as primary prophylaxis5; these studies failed to show any beneficial effect of the drug. This raises the question: How did medicine get to the point where so many studies were conducted assessing the possible benefit of hydroxychloroquine, that led to nearly identical findings, and have been published in major journals?"
* https://www.nejm.org/doi/full/10.1056/NEJMoa2022926
"Among patients hospitalized with Covid-19, those who received hydroxychloroquine did not have a lower incidence of death at 28 days than those who received usual care."
* https://www.cdc.gov/mmwr/volumes/69/wr/mm6935a4.htm
"New prescriptions by specialists who did not typically prescribe these medications (defined as specialties accounting for ≤2% of new prescriptions before 2020) increased from 1,143 prescriptions in February 2020 to 75,569 in March 2020, an 80-fold increase from March 2019."
* https://www.aljazeera.com/economy/2021/1/27/oklahoma-attempt...
"Oklahoma tries to return $2m worth of hydroxychloroquine"
Under what circumstances does it work?
"They included 30 569 patients with systemic lupus erythematosus or rheumatoid arthritis who were already taking hydroxychloroquine in the 6 months before what was considered as the start of the pandemic in England and 164 068 patients with these rheumatic diseases who did not use hydroxychloroquine. The study found no significant difference in standardised cumulative COVID-19 mortality associated with hydroxychloroquine use (0·23% among hydroxychloroquine users and 0·22% among non-users) with an adjusted hazard ratio of 1·03 (95% CI 0·80–1·33)."
* https://www.acc.org/latest-in-cardiology/clinical-trials/202...
"Among patients exposed to patients with SARS-CoV-2, hydroxychloroquine, administered within a median duration of 2 days as post-exposure prophylaxis, did not reduce the incidence of SARS-CoV-2 or COVID-19 infection within 14 days, compared with placebo (vitamin C)."
* https://www.nih.gov/news-events/nih-research-matters/hydroxy...
"Researchers assessed each patient’s condition 14 days after being assigned to a treatment group. They used a seven-category scale ranging from one (death) to seven (discharged from the hospital and able to perform normal activities). The results showed no significant difference between the hydroxychloroquine and placebo groups. The scientists also found no differences in any of 12 additional outcomes, which included mortality 28 days after assignment to a treatment group or time to recovery. Based on the data, they concluded that hydroxychloroquine was not an effective treatment."
* https://jamanetwork.com/journals/jama/fullarticle/2772921
"Several published rigorous studies have demonstrated similar findings. In the well-conducted clinical trials published to date, hydroxychloroquine has been evaluated in a wide variety of populations, ranging from patients with severe illness2-4 to individuals at risk of severe acute respiratory syndrome coronavirus 2 (SARS-CoV-2) infection, in whom the drug was used as primary prophylaxis5; these studies failed to show any beneficial effect of the drug. This raises the question: How did medicine get to the point where so many studies were conducted assessing the possible benefit of hydroxychloroquine, that led to nearly identical findings, and have been published in major journals?"
* https://www.nejm.org/doi/full/10.1056/NEJMoa2022926
"Among patients hospitalized with Covid-19, those who received hydroxychloroquine did not have a lower incidence of death at 28 days than those who received usual care."
* https://www.cdc.gov/mmwr/volumes/69/wr/mm6935a4.htm
"New prescriptions by specialists who did not typically prescribe these medications (defined as specialties accounting for ≤2% of new prescriptions before 2020) increased from 1,143 prescriptions in February 2020 to 75,569 in March 2020, an 80-fold increase from March 2019."
* https://www.aljazeera.com/economy/2021/1/27/oklahoma-attempt...
"Oklahoma tries to return $2m worth of hydroxychloroquine"
Under what circumstances does it work?
To be fair, professional medical advice was especially low-quality in the early days of the pandemic. What was important was public health messaging, picking some lowest-common-denominator messages and having everyone repeat them. It wasn't hard to be better informed than that.
>> To be fair, professional medical advice was especially low-quality in the early days of the pandemic.
They primarily suffer from dogma IMHO. For example, now they know people with breathing difficulty should be kept in prone position. I dont know if that applies outside of Covid19, but I thought it was really interesting to see them learn it. Like "oh, what we'd normally do is bad but this variation is good".
Medicine also suffers from a fear (justified) of litigation. If they dont follow accepted practices they may get sued if someone dies. The funny thing with Covid was watching that fear when there was no accepted treatment. Seeing them say "The FDA hasn't approved that for covid" when they hadn't approved anything at all yet.
They primarily suffer from dogma IMHO. For example, now they know people with breathing difficulty should be kept in prone position. I dont know if that applies outside of Covid19, but I thought it was really interesting to see them learn it. Like "oh, what we'd normally do is bad but this variation is good".
Medicine also suffers from a fear (justified) of litigation. If they dont follow accepted practices they may get sued if someone dies. The funny thing with Covid was watching that fear when there was no accepted treatment. Seeing them say "The FDA hasn't approved that for covid" when they hadn't approved anything at all yet.
> Medicine also suffers from a fear (justified) of litigation.
very US-centric. Medical litigation in many others parts of the world doesn't work in the same way, and isn't a driving force in the way medicine is practiced.
very US-centric. Medical litigation in many others parts of the world doesn't work in the same way, and isn't a driving force in the way medicine is practiced.
I absolutely agree with the main thrust of your comment, but I want to point out that in unprecedented times specifically, the odds that a smart non-expert is more correct than an expert are substantially higher than in normal times.
... but still not particularly high.
Engineers, in particular, have a reputation for being experts on everything.
perceived :D
I think "self-perceived expert" fits well.
"When Knowledge Knows No Bounds: Self-Perceived Expertise Predicts Claims of Impossible Knowledge" - Stav Atir, Emily Rosenzweig, David Dunning
https://journals.sagepub.com/doi/abs/10.1177/095679761558819...
"When Knowledge Knows No Bounds: Self-Perceived Expertise Predicts Claims of Impossible Knowledge" - Stav Atir, Emily Rosenzweig, David Dunning
https://journals.sagepub.com/doi/abs/10.1177/095679761558819...
> a real doctor, nurse practitioner, and the CDC
Sadly, many doctors and nurses are statistically illiterate. I know, because I (try to) teach them statistics. Remember, the Surgeon General of the CDC said that, "[masks] are NOT effective in preventing general public from catching #Coronavirus," perhaps in some misguided belief that avoiding panicked mask-buying was more important than a mask-wearing public.
[Sorry for insulting our healthcare heroes, but ... evidently y'all haven't been responsible for teaching them evidence-based medicine. It ain't easy.]
Sadly, many doctors and nurses are statistically illiterate. I know, because I (try to) teach them statistics. Remember, the Surgeon General of the CDC said that, "[masks] are NOT effective in preventing general public from catching #Coronavirus," perhaps in some misguided belief that avoiding panicked mask-buying was more important than a mask-wearing public.
[Sorry for insulting our healthcare heroes, but ... evidently y'all haven't been responsible for teaching them evidence-based medicine. It ain't easy.]
Can you link to the papers that were available in March 2020 that showed that masks are effective?
Use any definition of "mask" and "effective" you want, but preferably effective should include some concept of "prevents spread of respiratory disease".
Covid is a serious illness. Far too many people have been told, and believe, that they can continue their normal day to day life so long as they put mask on. This is untrue, and this advice has driven mass infection and death.
Use any definition of "mask" and "effective" you want, but preferably effective should include some concept of "prevents spread of respiratory disease".
Covid is a serious illness. Far too many people have been told, and believe, that they can continue their normal day to day life so long as they put mask on. This is untrue, and this advice has driven mass infection and death.
This is a pandora's box. My recollection of the events is this: around March 2020, there were some links to somewhat shoddy studies of effectiveness of masks in case of other diseases, but the official statement was that masks were not proven to be effective - but that's because there was no randomized control trial performed to check mask effectiveness against SARS variants, and how could there be?
This spins off into a whole discussion of how evidence-based medicine can lead you off the cliff when you follow its letter, and not spirit, because despite something being bloody obvious, there is no RCT proving that.
This spins off into a whole discussion of how evidence-based medicine can lead you off the cliff when you follow its letter, and not spirit, because despite something being bloody obvious, there is no RCT proving that.
My favorite example:
“Parachute use to prevent death and major trauma related to gravitational challenge: systematic review of randomised controlled trials“
https://www.ncbi.nlm.nih.gov/pmc/articles/PMC300808/
“Parachute use to prevent death and major trauma related to gravitational challenge: systematic review of randomised controlled trials“
https://www.ncbi.nlm.nih.gov/pmc/articles/PMC300808/
> but that's because there was no randomized control trial performed to check mask effectiveness against SARS variants, and how could there be?
The argument was not "we can't do tests because this is new", the argument was "we've got dozens of studies across a range of settings and respiratory diseases (which we expect to act similarly to covid) and we struggle to see any benefit, until we drop the quality of the research down".
The argument was not "we can't do tests because this is new", the argument was "we've got dozens of studies across a range of settings and respiratory diseases (which we expect to act similarly to covid) and we struggle to see any benefit, until we drop the quality of the research down".
IIRC the argument was "we can't say it works because we have no relevant tests at all". That's what I remember from March, but I may be misremembering.
> link to papers
No, I can't. Can you link to papers that show flossing is effective? Probably not, but the mechanism is so obvious that essentially all dentists will tell you to floss. Further, mask-wearing was already a well-established practice in medical settings to prevent the spread of respiratory disease from practitioners to patients.
> believe that they can continue their normal day to day life so long as they put [a] mask on. This is untrue
Combined with some coordination on travel restrictions and quarantines, it seems Taiwan has been able to keep that normal day-to-day life for the majority of Taiwanese.
https://www.wbur.org/hereandnow/2021/01/08/taiwan-covid-19-p...
No, I can't. Can you link to papers that show flossing is effective? Probably not, but the mechanism is so obvious that essentially all dentists will tell you to floss. Further, mask-wearing was already a well-established practice in medical settings to prevent the spread of respiratory disease from practitioners to patients.
> believe that they can continue their normal day to day life so long as they put [a] mask on. This is untrue
Combined with some coordination on travel restrictions and quarantines, it seems Taiwan has been able to keep that normal day-to-day life for the majority of Taiwanese.
https://www.wbur.org/hereandnow/2021/01/08/taiwan-covid-19-p...
And let's not forget WHO actively advising against travel restrictions.
https://www.reuters.com/article/us-china-health-who/who-chie...
https://www.reuters.com/article/us-china-health-who/who-chie...
> Further, mask-wearing was already a well-established practice in medical settings to prevent the spread of respiratory disease from practitioners to patients
We don't see much benefit there, either. See the "clean surgery" papers.
We don't see much benefit there, either. See the "clean surgery" papers.
The evidence would have to be overwhelming that it's not helpful, because the prior is so strong.
> flossing evidence
That was a thing a few years back: https://www.health.harvard.edu/blog/tossing-flossing-2016081...
That was a thing a few years back: https://www.health.harvard.edu/blog/tossing-flossing-2016081...
Yes, exactly like that.
> We concluded that household use of face masks is associated with low adherence and is ineffective for controlling seasonal respiratory disease.
"Do masks work, if you use the right type of mask and wear it properly?" isn't particularly controversial (the answer is probably "yes") but it's a stupid question because we don't care about optimal use, we care about real world use. And in the real world people might improperly wear a mask and go outside when they're symptomatic.
We don't have much good quality evidence for that, but here's a study that showed people were prepared to do things like wear masks, but were less prepared to self-isolate or book a test if they had symptoms: https://www.medrxiv.org/content/10.1101/2020.09.15.20191957v...
> We concluded that household use of face masks is associated with low adherence and is ineffective for controlling seasonal respiratory disease.
"Do masks work, if you use the right type of mask and wear it properly?" isn't particularly controversial (the answer is probably "yes") but it's a stupid question because we don't care about optimal use, we care about real world use. And in the real world people might improperly wear a mask and go outside when they're symptomatic.
We don't have much good quality evidence for that, but here's a study that showed people were prepared to do things like wear masks, but were less prepared to self-isolate or book a test if they had symptoms: https://www.medrxiv.org/content/10.1101/2020.09.15.20191957v...
The sentence following the one you quote says:
"However, during a severe pandemic when use of face masks might be greater, pandemic transmission in households could be reduced."
Later: "Although our study suggests that community use of face masks is unlikely to be an effective control policy for seasonal respiratory diseases, adherent mask users had a significant reduction in the risk for clinical infection. [...] Adherence with treatments and preventive measures is well known to vary depending on perception of risk and would be expected to increase during an influenza pandemic. [...] Therefore, although we found that distributing masks during seasonal winter influenza outbreaks is an ineffective control measure characterized by low adherence, results indicate the potential efficacy of masks in contexts where a larger adherence may be expected, such as during a severe influenza pandemic or other emerging infection."
"However, during a severe pandemic when use of face masks might be greater, pandemic transmission in households could be reduced."
Later: "Although our study suggests that community use of face masks is unlikely to be an effective control policy for seasonal respiratory diseases, adherent mask users had a significant reduction in the risk for clinical infection. [...] Adherence with treatments and preventive measures is well known to vary depending on perception of risk and would be expected to increase during an influenza pandemic. [...] Therefore, although we found that distributing masks during seasonal winter influenza outbreaks is an ineffective control measure characterized by low adherence, results indicate the potential efficacy of masks in contexts where a larger adherence may be expected, such as during a severe influenza pandemic or other emerging infection."
I've posted links before, and I'll try to find them when I'm not on my phone. But you're right.
It was an open question, but the general opinion before 2020 was that masks would not be particularly useful. Sketchy results started appearing in March with better days in April and May. Several experts said, "we were wrong."
Medical grade masks are very useful. Others are less so. But they primarily prevent you from giving the virus to others.
It was an open question, but the general opinion before 2020 was that masks would not be particularly useful. Sketchy results started appearing in March with better days in April and May. Several experts said, "we were wrong."
Medical grade masks are very useful. Others are less so. But they primarily prevent you from giving the virus to others.
This comment from early March links to several.
https://old.reddit.com/r/Coronavirus/comments/fdf5fq/we_are_...
https://old.reddit.com/r/Coronavirus/comments/fdf5fq/we_are_...
There's been ongoing debate about the effectiveness of masks to prevent the spread of the influenza virus for years now. There were a lot of studies after the H1N1 pandemic since mask wearing was "recommended" but to my knowledge no state or federal mask mandate was put in place.
Here's a paper from 2010 after the H1N1 pandemic.
Face masks to prevent transmission of influenza virus: a systematic review https://www.cambridge.org/core/journals/epidemiology-and-inf...
Our review highlights the limited evidence base supporting the efficacy or effectiveness of face masks to reduce influenza virus transmission. An important concern when determining which public health interventions could be useful in mitigating local influenza virus epidemics, and which infection control procedures are necessary to prevent nosocomial transmission, is the mode of influenza virus transmission between people and in the environment.
The interesting thing is everything they recommend, we've adopted during COVID, including physical barriers and front line workers additional PPE equipment:
Physical barriers would be most effective in limiting short-distance transmission by direct or indirect contact and large droplet spread, while more comprehensive precautions would be required to prevent infection at longer distances via airborne spread of small (nuclei) droplet particles [19]. In healthcare settings, stringent precautions are recommended to protect against pathogens that are transmitted by the airborne route, including the use of N95-type respirators (which require fit testing), other personal protective equipment including gowns, gloves, head covers and face shields, and isolation of patients in negative-pressure rooms
There's five additional studies referenced in the MedPub doc: https://pubmed.ncbi.nlm.nih.gov/20092668/
A current Danish study concluded masks don't reduce the spread of the virus:
Effectiveness of Adding a Mask Recommendation to Other Public Health Measures to Prevent SARS-CoV-2 Infection in Danish Mask Wearers https://www.acpjournals.org/doi/10.7326/M20-6817
In this community-based, randomized controlled trial conducted in a setting where mask wearing was uncommon and was not among other recommended public health measures related to COVID-19, a recommendation to wear a surgical mask when outside the home among others did not reduce, at conventional levels of statistical significance, incident SARS-CoV-2 infection compared with no mask recommendation.
People are already debunking this Danish study but here's a CDC study showed even when people do wear masks, they were still getting sick:
Community and Close Contact Exposures Associated with COVID-19 Among Symptomatic Adults ≥18 Years in 11 Outpatient Health Care Facilities — United States, July 2020 https://www.cdc.gov/mmwr/volumes/69/wr/pdfs/mm6936a5-H.pdf
In the 14 days before illness onset, 71% of case-patients and 74% of control participants reported always using cloth face coverings or other mask types when in public,” the report stated.
In addition, over 14 percent of the case-patients said they “often” wore a face covering and were still infected with the virus. The study also demonstrates that under 4 percent of the case-patients became sick with the virus even though they “never” wore a mask or face covering.
Personally I feel like masks aren't stopping the spread mainly because people either use one or two masks continually without cleaning them daily, or put them on dirty surfaces thinking its ok and then putting them back on, or simply not wearing them over their nose. Masks would probably be effective if people wore them properly and only used them once. Hoping 300 million people all follow those simple rules is a bit hopeful to say the least.
Here's a paper from 2010 after the H1N1 pandemic.
Face masks to prevent transmission of influenza virus: a systematic review https://www.cambridge.org/core/journals/epidemiology-and-inf...
Our review highlights the limited evidence base supporting the efficacy or effectiveness of face masks to reduce influenza virus transmission. An important concern when determining which public health interventions could be useful in mitigating local influenza virus epidemics, and which infection control procedures are necessary to prevent nosocomial transmission, is the mode of influenza virus transmission between people and in the environment.
The interesting thing is everything they recommend, we've adopted during COVID, including physical barriers and front line workers additional PPE equipment:
Physical barriers would be most effective in limiting short-distance transmission by direct or indirect contact and large droplet spread, while more comprehensive precautions would be required to prevent infection at longer distances via airborne spread of small (nuclei) droplet particles [19]. In healthcare settings, stringent precautions are recommended to protect against pathogens that are transmitted by the airborne route, including the use of N95-type respirators (which require fit testing), other personal protective equipment including gowns, gloves, head covers and face shields, and isolation of patients in negative-pressure rooms
There's five additional studies referenced in the MedPub doc: https://pubmed.ncbi.nlm.nih.gov/20092668/
A current Danish study concluded masks don't reduce the spread of the virus:
Effectiveness of Adding a Mask Recommendation to Other Public Health Measures to Prevent SARS-CoV-2 Infection in Danish Mask Wearers https://www.acpjournals.org/doi/10.7326/M20-6817
In this community-based, randomized controlled trial conducted in a setting where mask wearing was uncommon and was not among other recommended public health measures related to COVID-19, a recommendation to wear a surgical mask when outside the home among others did not reduce, at conventional levels of statistical significance, incident SARS-CoV-2 infection compared with no mask recommendation.
People are already debunking this Danish study but here's a CDC study showed even when people do wear masks, they were still getting sick:
Community and Close Contact Exposures Associated with COVID-19 Among Symptomatic Adults ≥18 Years in 11 Outpatient Health Care Facilities — United States, July 2020 https://www.cdc.gov/mmwr/volumes/69/wr/pdfs/mm6936a5-H.pdf
In the 14 days before illness onset, 71% of case-patients and 74% of control participants reported always using cloth face coverings or other mask types when in public,” the report stated.
In addition, over 14 percent of the case-patients said they “often” wore a face covering and were still infected with the virus. The study also demonstrates that under 4 percent of the case-patients became sick with the virus even though they “never” wore a mask or face covering.
Personally I feel like masks aren't stopping the spread mainly because people either use one or two masks continually without cleaning them daily, or put them on dirty surfaces thinking its ok and then putting them back on, or simply not wearing them over their nose. Masks would probably be effective if people wore them properly and only used them once. Hoping 300 million people all follow those simple rules is a bit hopeful to say the least.
[deleted]
> Hoping 300 million people all follow those simple rules is a bit hopeful to say the least.
There seems to be something different about the US population than, say, the Taiwanese population regarding mask usage. I don't have a good explanation for it, because I think blaming "culture" is lazy research.
There seems to be something different about the US population than, say, the Taiwanese population regarding mask usage. I don't have a good explanation for it, because I think blaming "culture" is lazy research.
Sympathetic response is a thing.
One has to balance that with awareness they’re talking out their ass.
One has to balance that with awareness they’re talking out their ass.
I am so sick of this 'stay in your lane' attitude. Time and time again, experts have been shown to have consensus opinions which are wildly off from reality. You can almost set your watch to how often an outsider will analyse a situation from first principles and make money off the 'experts', especially in the stock market.
You're welcome to your opinion but this appeal to authority is seriously wearing thin. Pretty much the only field which hasn't been embarrassed by an outsider of late is physics, and even that might not last forever (I remember the smugness with which Stephen Wolfram is routinely dismissed from having non-consensus views of physics).
Progress almost always comes from non-consensus outsiders. This whole website is supposed to be a testament to that!
You're welcome to your opinion but this appeal to authority is seriously wearing thin. Pretty much the only field which hasn't been embarrassed by an outsider of late is physics, and even that might not last forever (I remember the smugness with which Stephen Wolfram is routinely dismissed from having non-consensus views of physics).
Progress almost always comes from non-consensus outsiders. This whole website is supposed to be a testament to that!
Point #3 doesn't seem consistent with the idea that this is just a "stay in your lane" attitude. "Lurk before you leap" might be a better phrase. You've got to do at least a little homework before you can understand a technical topic well enough to make sense of what you're reading.
I am less familiar with finance, but I see this all the time when HN discusses legal matters. The conversation is almost pure noise, because it's dominated by people who have so little knowledge of the topic in question that they don't even recognize a term of art when they're seeing one. Which, in turn, engenders fundamental misunderstandings, and so the whole conversation ends up being a sort of large-scale trainer battle at the gym that specializes in strawman-type Pokémon.
Imagine if a discussion of programming were dominated by non-programmers who are seemingly willfully ignorant that, in the context, the word "functional" does not mean "designed to be practical and useful, rather than attractive."
I am less familiar with finance, but I see this all the time when HN discusses legal matters. The conversation is almost pure noise, because it's dominated by people who have so little knowledge of the topic in question that they don't even recognize a term of art when they're seeing one. Which, in turn, engenders fundamental misunderstandings, and so the whole conversation ends up being a sort of large-scale trainer battle at the gym that specializes in strawman-type Pokémon.
Imagine if a discussion of programming were dominated by non-programmers who are seemingly willfully ignorant that, in the context, the word "functional" does not mean "designed to be practical and useful, rather than attractive."
This seems like a strawman. The OP isn't arguing against outsider/non-expert discussion. He's just satirizing HN's specific tendencies to spin off of a headline/article first glance into a let-me-teach-you-something fan fiction vs fan fiction argument.
That's a tendency for all headlines/articles, not just those on HN
A agree that is what OP is doing. Disagree that we can dismiss all HN comments unless they are experts in said field.
[deleted]
> The OP isn't arguing against outsider/non-expert discussion.
Yeah, he's just strawmanning and shaming a hypothetical group for the applauses of a circlejerk.
Yeah, he's just strawmanning and shaming a hypothetical group for the applauses of a circlejerk.
Please don't respond to bad comments by making the thread even worse. That's taking this place in exactly the wrong direction.
https://news.ycombinator.com/newsguidelines.html
https://news.ycombinator.com/newsguidelines.html
> Time and time again, experts have been shown to have consensus opinions which are wildly off from reality
No, it's just that it's not interesting when an expert is right about their domain expertise so we don't talk about it.
The issue is people getting skewed by this and then inferring that it must mean, on average, that their outsider opinion is as valid as experts, but really, it's not.
No, it's just that it's not interesting when an expert is right about their domain expertise so we don't talk about it.
The issue is people getting skewed by this and then inferring that it must mean, on average, that their outsider opinion is as valid as experts, but really, it's not.
If a physicists tells me something about how the solar system works, they don't have much reason to lie to me.
If RobinHood tells me how clearing houses work, they have a huge reason to lie to me.
Given what we say in cases like Enron, Bear Stearns, I am shocked and dismayed at the eagerness of Hacker News contributors to so readily accept whatever Robinhood tells them as 100% gospel.
Where were all these experts on clearing houses a week ago, warning of this exact risk? Because plenty of people had opinions on Gamestop, that maybe the SEC would halt trading altogether etc, but not a single person mentioned this clearing house liquidity issues until it happened. And I still really can't get a good explanation for why if I had 10k in my non-margin account that cleared over a year ago I can't use that to buy a stock(or withdraw for that matter, though hopefully that's temporary). OR, if people were allowed to sell stock, who were they selling to?? Clearly SOMEONE was allowed to buy! A lot of misdirection around things like margin accounts.
Robinhood didn't give any real explanation until many hours later. But they're apparently just "poor communicators." Amazing how a billion dollar company filled with conflicts of interest making a totally unprecedented restriction that actively helps their hedge fund investor simply can't possibly be committing any sort of fraud.
Because nobody's ever committed fraud before, a Robinhood press release must be treated as the "facts". This is insanity . Robinhood are not the "experts" in this case, their version of truth is probably the least reliable of all parties.
If RobinHood tells me how clearing houses work, they have a huge reason to lie to me.
Given what we say in cases like Enron, Bear Stearns, I am shocked and dismayed at the eagerness of Hacker News contributors to so readily accept whatever Robinhood tells them as 100% gospel.
Where were all these experts on clearing houses a week ago, warning of this exact risk? Because plenty of people had opinions on Gamestop, that maybe the SEC would halt trading altogether etc, but not a single person mentioned this clearing house liquidity issues until it happened. And I still really can't get a good explanation for why if I had 10k in my non-margin account that cleared over a year ago I can't use that to buy a stock(or withdraw for that matter, though hopefully that's temporary). OR, if people were allowed to sell stock, who were they selling to?? Clearly SOMEONE was allowed to buy! A lot of misdirection around things like margin accounts.
Robinhood didn't give any real explanation until many hours later. But they're apparently just "poor communicators." Amazing how a billion dollar company filled with conflicts of interest making a totally unprecedented restriction that actively helps their hedge fund investor simply can't possibly be committing any sort of fraud.
Because nobody's ever committed fraud before, a Robinhood press release must be treated as the "facts". This is insanity . Robinhood are not the "experts" in this case, their version of truth is probably the least reliable of all parties.
Maybe not apples-to-apples, but... I worked on Lehman's Tokyo electronic trading desk in 2008. When we went bankrupt, it wasn't our clients, or even the exchanges which stopped our trading. It was our clearing banks.
Interestingly, we weren't cutoff uniformly in all markets. NY desk was trading about 75% of regular volume for 4 days into the bankruptcy before someone (SEC?) told them to knock it off.
There's a lot going on in Robinhood's back office and legal teams of which we are not aware. While I'm as pissed as anyone that they shutoff trading, I'm open to the idea that the shutoff was for far more mundane reasons than collusion with Citadel and Point 72.
Interestingly, we weren't cutoff uniformly in all markets. NY desk was trading about 75% of regular volume for 4 days into the bankruptcy before someone (SEC?) told them to knock it off.
There's a lot going on in Robinhood's back office and legal teams of which we are not aware. While I'm as pissed as anyone that they shutoff trading, I'm open to the idea that the shutoff was for far more mundane reasons than collusion with Citadel and Point 72.
“I’m as pissed as anyone that they shut off trading,”
Robinhood did not halt trading or shut off trading.
Robinhood prevented _buying_ Gamestop and only allowed selling.
That’s entirely different. It can only do one thing - drive the price down which is market manipulation. It’s supposed to be illegal.
Robinhood did not halt trading or shut off trading.
Robinhood prevented _buying_ Gamestop and only allowed selling.
That’s entirely different. It can only do one thing - drive the price down which is market manipulation. It’s supposed to be illegal.
Playing devil's advocate, it's possible that the lawyer/clearing bank/regulator gave the instruction to cutoff all trading in the name, and cutting off only buys was the lesser of bad options. (Had they also cutoff selling, it would have been even worse!)
Reading the SEC's letter (in the OP), you can clearly see the SEC wants everyone to sell out of their position and make this whole thing go away. RH no doubt has an army of lawyers and compliance people whose entire jobs/careers is to predict what the regulator wants and proactively be their lapdog. (The regulators meanwhile are completely free to be Monday-morning quarterbacks and retroactively assess fines to anyone, despite providing no concrete guidance of what to do in an unprecedented situation like this one.)
Reading the SEC's letter (in the OP), you can clearly see the SEC wants everyone to sell out of their position and make this whole thing go away. RH no doubt has an army of lawyers and compliance people whose entire jobs/careers is to predict what the regulator wants and proactively be their lapdog. (The regulators meanwhile are completely free to be Monday-morning quarterbacks and retroactively assess fines to anyone, despite providing no concrete guidance of what to do in an unprecedented situation like this one.)
Robinhood's collateral requirements increase when their users buy stock, and decrease when their users sell stock.
If they hit their collateral limits, they have two options.
1. Stop all trading for a few days, as the trades settle, the funds clear, and the collateral requirements drop. Cue millions of pissed users who want to close their positions, but can't.
2. Only stop trades that increase their collateral requirements - buys.
There's also option 3 which is 'immediately get kicked off the settlement networks and go into bankruptcy, because they are trading past their collateral requirements.'
Which of these three options would manipulate the stock price less, and screw over fewer people, in your estimate?
If they hit their collateral limits, they have two options.
1. Stop all trading for a few days, as the trades settle, the funds clear, and the collateral requirements drop. Cue millions of pissed users who want to close their positions, but can't.
2. Only stop trades that increase their collateral requirements - buys.
There's also option 3 which is 'immediately get kicked off the settlement networks and go into bankruptcy, because they are trading past their collateral requirements.'
Which of these three options would manipulate the stock price less, and screw over fewer people, in your estimate?
They did halt both buying and selling of net new positions. They did not halt adjustments of existing positions (calls & shorts).
This was actually a very fair, by-the-books standard trading halt. It just happened to benefit the short sellers who had been squeezed because they could easily find people willing to sell.
You definitely could still buy GME if you found some extremely random call option holder who needed to sell to cover their position. This would not be changing a net new position, just like selling to someone looking to cover a previous short, and this was never blocked - it’s just there was no volume for this, nobody owned calls and needed to sell.
This was actually a very fair, by-the-books standard trading halt. It just happened to benefit the short sellers who had been squeezed because they could easily find people willing to sell.
You definitely could still buy GME if you found some extremely random call option holder who needed to sell to cover their position. This would not be changing a net new position, just like selling to someone looking to cover a previous short, and this was never blocked - it’s just there was no volume for this, nobody owned calls and needed to sell.
[deleted]
I don't take what Robinhood says at face-value because they have proven to be a sketchy-ass brokerage. That said, I still find their statements infinitely more valuable than baseless conspiracy theories floating around. Why would Citadel risk jeopardizing their lucrative relationship with Robinhood just so they might be able to successfully manipulate the market?
I don't think anyone is saying "we don't need to investigate". They're saying "let's find evidence before we assume malintent".
The internet mob does not wait for pesky delays of "evidence"!
[deleted]
If RobinHood tells me how clearing houses work, they have a huge reason to lie to me.
If there are enough mechanisms of "Crony Capitalism" at play, to cause most of the trading apps in existence to halt trading, this is definitely something that needs to be investigated.
Likewise, if there are enough of these crony mechanisms involving collusion between Facebook, Twitter, Square, Stripe, and Visa targeting people, this also warrants investigation. It seems to be part and parcel the same sort of thing.
People have been calling stuff like this out since the 80's!
https://en.wikipedia.org/wiki/Manufacturing_Consent
If there are enough mechanisms of "Crony Capitalism" at play, to cause most of the trading apps in existence to halt trading, this is definitely something that needs to be investigated.
Likewise, if there are enough of these crony mechanisms involving collusion between Facebook, Twitter, Square, Stripe, and Visa targeting people, this also warrants investigation. It seems to be part and parcel the same sort of thing.
People have been calling stuff like this out since the 80's!
https://en.wikipedia.org/wiki/Manufacturing_Consent
Of course, an outsider can't simply declare something to be true by dint of being an outsider. You need to reason it. Or, in the market, bet on it, and you'll see who wins out. But experts should be held to the same standard.
> Or, in the market, bet on it, and you'll see who wins out.
This is a fine way to settle debates about the health/viability of a publicly traded company, but it doesn't help much when the point of contention is a question of law.
This is a fine way to settle debates about the health/viability of a publicly traded company, but it doesn't help much when the point of contention is a question of law.
The other issue is that it tends to be underspecified whether a discussion is about law or policy.
Someone comes in and describes from first principles what a reasonable system would look like, and then someone else haughtily chastises them because that isn't how the existing system works. But if you read it as they intended it, i.e. as a policy proposal rather than a legal opinion, then the fact that it isn't the existing system is the point. The intention is to change the system to make it that way and the desired response is either support or a criticism of the mechanics of the proposal rather than its basis in existing law.
Someone comes in and describes from first principles what a reasonable system would look like, and then someone else haughtily chastises them because that isn't how the existing system works. But if you read it as they intended it, i.e. as a policy proposal rather than a legal opinion, then the fact that it isn't the existing system is the point. The intention is to change the system to make it that way and the desired response is either support or a criticism of the mechanics of the proposal rather than its basis in existing law.
On the other hand, many people who reason from first principles fall into two fallacies:
First, they believe that their system is how the world should work, and therefore how it would work if only someone, somewhere, weren't interfering. The result is conspiracy theories.
Second, they have not fully thought out the consequences, or don't care about them, and dismiss the historical consequences of similar systems in the past. Reasoning with people who ignore evidence in favor of their theorizing is difficult.
First, they believe that their system is how the world should work, and therefore how it would work if only someone, somewhere, weren't interfering. The result is conspiracy theories.
Second, they have not fully thought out the consequences, or don't care about them, and dismiss the historical consequences of similar systems in the past. Reasoning with people who ignore evidence in favor of their theorizing is difficult.
I can only applaud this succinct diagnosis of the difficulty in dealing with online debate.
Offline debates tend to be even worse. You usually don't have time to read it at your pace, whoever talks to you will keep making sounds, etc.
[deleted]
> an outsider can't simply declare something to be true by dint of being an outsider.
you must be new to the internet.
you must be new to the internet.
The non-consensus outsiders who make progress have done the reading. They know what the consensus is, they know all the concepts and the jargon, and they disagree about something. Your post can be interpreted to mean "my ignorance is just as good as your knowledge". That's anti-vax thinking and argument. That is not a way to make progress.
I would frame this on two axis:
1) outsider vs establishment
2) expert vs layperson
My opinion (see below for how I have defined these)
Outsider expert > establishment expert for public ally challenging and overturning norms
Any expert > layperson on the basic facts (ignoring statistical aberrations, of course)
“Outsider” being unconstrained by norms, not afraid to be cast out of a long established peer group
“Expert” has deep grasp of contemporary facts, second and third order consequences, puts in controls to remove cognitive biases, deep curiosity and healthy scepticism.
“Layperson” being someone who is probably intelligent, but grasps quickly onto unfamiliar concepts and data and makes heuristic calls based on limited data.
My opinion (see below for how I have defined these)
Outsider expert > establishment expert for public ally challenging and overturning norms
Any expert > layperson on the basic facts (ignoring statistical aberrations, of course)
“Outsider” being unconstrained by norms, not afraid to be cast out of a long established peer group
“Expert” has deep grasp of contemporary facts, second and third order consequences, puts in controls to remove cognitive biases, deep curiosity and healthy scepticism.
“Layperson” being someone who is probably intelligent, but grasps quickly onto unfamiliar concepts and data and makes heuristic calls based on limited data.
So Michael Mauboussin is kinda of my obsession in this area. Basically, if it's a field with a lot of luck involved in outcomes, don't trust the experts (finance and economics). If it's heavily skill based (chess), trust the experts.
Note the Dunning Kruger effect too!
The non-consensus outsiders who make progress have done the reading. They know what the consensus is, they know all the concepts and the jargon, and they disagree about something.
http://www.paulgraham.com/say.html
http://www.paulgraham.com/say.html
Pretty well captured by that old comedy sketch "The expert" [1]
I dare say that most people here on HN have been hit by upper management telling them to do something stupid or impossible. I'd even wager that most have had them get defensive when you try to explain why doing X isn't a good idea.
That's effectively what I see when someone criticizes "experts" broadly and generally. I've long accepted that there are many individuals that know a lot more about subjects I know little about. While I have a pretty good read on things related to computers, I'm more than willing to admit that I'm not an expert in science, medicine, climatology.
So who should I trust? Should I trust the youtuber that's "Found" the secret that the "so called experts" are trying to hide from the public? Or should I look to the actual experts actually working in the field and take their word for it? Or do I take the harder route and try and build understanding on the subject on my own?
I certainly have tried to expand my personal understanding in general. However, what I've found is that by and large the experts actually know what they are talking about. You should generally trust them. The place where I've found a LOT of misinformation is the "skeptics" that hurl doubt without evidence while denigrating "experts". That is the place where I've found outright lies.
Evidence of such BS artists include Flat earthers, Anti-vaxxers, and climate change deniers. Those are all flat out wrong positions. There's mountains of evidence and experts against each of those positions and mostly lies or misrepresentation in favor.
[1] https://www.youtube.com/watch?v=BKorP55Aqvg
I dare say that most people here on HN have been hit by upper management telling them to do something stupid or impossible. I'd even wager that most have had them get defensive when you try to explain why doing X isn't a good idea.
That's effectively what I see when someone criticizes "experts" broadly and generally. I've long accepted that there are many individuals that know a lot more about subjects I know little about. While I have a pretty good read on things related to computers, I'm more than willing to admit that I'm not an expert in science, medicine, climatology.
So who should I trust? Should I trust the youtuber that's "Found" the secret that the "so called experts" are trying to hide from the public? Or should I look to the actual experts actually working in the field and take their word for it? Or do I take the harder route and try and build understanding on the subject on my own?
I certainly have tried to expand my personal understanding in general. However, what I've found is that by and large the experts actually know what they are talking about. You should generally trust them. The place where I've found a LOT of misinformation is the "skeptics" that hurl doubt without evidence while denigrating "experts". That is the place where I've found outright lies.
Evidence of such BS artists include Flat earthers, Anti-vaxxers, and climate change deniers. Those are all flat out wrong positions. There's mountains of evidence and experts against each of those positions and mostly lies or misrepresentation in favor.
[1] https://www.youtube.com/watch?v=BKorP55Aqvg
If an old, grey haired scientist tells you something is possible, he's probably right. If he tells you something is impossible, he's probably wrong.[1] But if a hundred scientists tell you something, they might be wrong but it's still the way you want to put your money.
[1] As the saying goes.
[1] As the saying goes.
> [1] As the saying goes.
It's from Arthur C. Clarke.
https://www.goodreads.com/quotes/155962-when-a-distinguished...
It's from Arthur C. Clarke.
https://www.goodreads.com/quotes/155962-when-a-distinguished...
Experts are almost always right, assuming their assumptions are infallible. The skeptic's criticism is often not directed at the expert's conclusions but their axioms.
Red lines with green ink --> use a thermochromic ink, change the temperature.
7 lines all perpendicular to each other --> sure, in 7+ dimensions.
Solve the climate crisis --> geo-engineering.
Red lines with green ink --> use a thermochromic ink, change the temperature.
7 lines all perpendicular to each other --> sure, in 7+ dimensions.
Solve the climate crisis --> geo-engineering.
The Expert sketch is all dramatic and frustrating, I rather like the Mitchell and Webb spoon design sketch for a quieter view of the problems of designing and communicating
https://www.youtube.com/watch?v=Hu9nhExp5KI
(y'know, if you're faced with something which seems obvious, and the expert is struggling, why? And should you simply trust them and give up? Why is the extra "explanation" just the same thing repeated again and again? How difficult it is to say "I still don't understand" after several of these explanations. And then at the end it's less clear whether the request is reasonable, if you use spoons as a proxy for other things).
(y'know, if you're faced with something which seems obvious, and the expert is struggling, why? And should you simply trust them and give up? Why is the extra "explanation" just the same thing repeated again and again? How difficult it is to say "I still don't understand" after several of these explanations. And then at the end it's less clear whether the request is reasonable, if you use spoons as a proxy for other things).
I certainly have tried to expand my personal understanding in general. However, what I've found is that by and large the experts actually know what they are talking about.
Right. It's the expert's blind spots that contain the best nuggets of value.
Right. It's the expert's blind spots that contain the best nuggets of value.
Yep exactly. For every one outsider that gets it right, how many are wrong? I'd wager, quite a bit
Expertise is not a Boolean. I'd trust a qualified physicist to make useful predictions about quantum devices, an EE to model an analog circuit, and a structural engineer to design a bridge that doesn't fall down.
But financiers, bankers, and economists have a much less convincing record - and that's after you filter out the ones who have been caught breaking the law.
But financiers, bankers, and economists have a much less convincing record - and that's after you filter out the ones who have been caught breaking the law.
I always hear these sorts of criticisms of economists and financiers but I just don't think they hold water overall. Usually when I hear econ get flak the conversation rapidly devolves into criticisns of the abstract fairness of a solution rather then its priorities and effectiveness within the context. You see this constantly in the US when politicians from either side talk about the bank bailouts, the national debt, minimum wage, immigration, etc. Suddenly, rather than having anything resembling a sober and informed discussion about the topic and the current expert consensus, everyone just starts soapboxing about fatcats and entitlement while larping as intellectuals as they promote fringe 'theories' that happened to coincide with their political objectives. Meanwhile the actual economists and their suggestions get either drowned out or misrepresented.
Very well said, thank you. That was my objection, too. Outsider is a meaningful distinction in that they're still a domain expert (or something), just not inline with the standard.
What the OP comment was citing wasn't that. Rather, it was people like me - reading that document, not knowing the terms but assembling some form of self reinforced "knowledge".
There's a difference between very well informed outsiders which rival experts and random people. Thinking I know more about vaccines and the dangers than researchers, doctors, etc is moronic. I have no foundation to be making that decision, and beyond the obvious "free will" arguments, i shouldn't.
What the OP comment was citing wasn't that. Rather, it was people like me - reading that document, not knowing the terms but assembling some form of self reinforced "knowledge".
There's a difference between very well informed outsiders which rival experts and random people. Thinking I know more about vaccines and the dangers than researchers, doctors, etc is moronic. I have no foundation to be making that decision, and beyond the obvious "free will" arguments, i shouldn't.
I think bullets 3 and 5 were the main point of that comment. It wasn't well-said, but it is in fact valuable to spend a moment to get familiar with the jargon a person is using, even if that jargon happens to have homonyms with a different field's jargon. That effort is what allows us to "swim out of our lanes" as you might say.
Fair enough, it's more the condescending attitude that rubs me up the wrong way. And if the words regulators use mean to them different things than they mean to everyone else (the people whom the regulations are ostensibly supposed to protect), that's probably interesting in itself! If you are charged with 'theft' under a law that defines 'theft' in a very different way to how you or your peers would define it, that's probably going to be a problem. So I'm all for a discussion on what the jargon actually means, if anyone has any insights beyond making general snipes at the HN community.
Theft is a pretty good example, actually.
In many US states, the legal definition of "assault" is much different than the battery most people picture.
Robbery is not larceny.
Burglary is not larceny.
Your peers probably don't know what robbery actually is.
In many US states, the legal definition of "assault" is much different than the battery most people picture.
Robbery is not larceny.
Burglary is not larceny.
Your peers probably don't know what robbery actually is.
This is spot on accurate,
Yet my next thought was in the "forest vs trees" direction which as far as I can tell as someone with homemade popcorn watching both this thread, and the "meme stock" story (saw that phrase last night),
I will suggest that as in the case of the peers' ignorance of specific legal definitions,
it's the thought or thrust that is usually being grappled with, and the dimension of argument is usually not e.g. about the specific crimes some person might be guilty of or not, but rather the fact of their wrongdoing. Where "wrong" is not a legal concept full stop.
So too in the case of the GME thing, if not this thread; I suspect that there is a lot of implicit meta-argumentation going on,
and that some of what I see in this thread appears to be missing (or more likely, dis-missing) that, to engage in "tree" level quibbling.
(All said, I do agree words and their meaning matter; and that when we want to use them informally, because specificity in some domain is not germane to our argument, we would do well to be explicit about that...)
Yet my next thought was in the "forest vs trees" direction which as far as I can tell as someone with homemade popcorn watching both this thread, and the "meme stock" story (saw that phrase last night),
I will suggest that as in the case of the peers' ignorance of specific legal definitions,
it's the thought or thrust that is usually being grappled with, and the dimension of argument is usually not e.g. about the specific crimes some person might be guilty of or not, but rather the fact of their wrongdoing. Where "wrong" is not a legal concept full stop.
So too in the case of the GME thing, if not this thread; I suspect that there is a lot of implicit meta-argumentation going on,
and that some of what I see in this thread appears to be missing (or more likely, dis-missing) that, to engage in "tree" level quibbling.
(All said, I do agree words and their meaning matter; and that when we want to use them informally, because specificity in some domain is not germane to our argument, we would do well to be explicit about that...)
OP isn't asking us to defer to experts - he's arguing there are laypersons not doing enough research before forming an entire theory of how an industry works.
This is not outsider vs. establishment expert.
This is effort to learn vs. making hasty judgements issue.
I have studied several subjects over 100 - 1000 hours as an outsider, but that does not mean that I can criticize experts. I can ask pointed questions maybe. Being intellectually humble is good.
In this issue outsiders should at least read everything Matt Levine writes on the subject as a starting point.
This is effort to learn vs. making hasty judgements issue.
I have studied several subjects over 100 - 1000 hours as an outsider, but that does not mean that I can criticize experts. I can ask pointed questions maybe. Being intellectually humble is good.
In this issue outsiders should at least read everything Matt Levine writes on the subject as a starting point.
Non-consensus outsiders who later succeed are usually still experts in the field, not people who are completely unaware that parts of a field exist or people who joined up in the past few hours.
> Time and time again, experts have been shown to have consensus opinions which are wildly off from reality. You can almost set your watch to how often an outsider will analyse a situation from first principles and make money off the 'experts', especially in the stock market.
When? Who? Are you talking about, say, Dr. Burry and the mortgage bubble? Because he was definitely an 'expert' already.
When? Who? Are you talking about, say, Dr. Burry and the mortgage bubble? Because he was definitely an 'expert' already.
Dr. Burry was trained as a medical doctor and started investing on the side.
Definitely not one of the anointed "experts" who followed the too-common family connections, Ivy League, and i-banking VP path.
Definitely not one of the anointed "experts" who followed the too-common family connections, Ivy League, and i-banking VP path.
His undergrad degree was in economics from UCLA. He never practiced medicine and started his own hedge fund soon after medical school.
https://en.wikipedia.org/wiki/Michael_Burry
https://en.wikipedia.org/wiki/Michael_Burry
> Time and time again, experts have been shown to have consensus opinions which are wildly off from reality. You can almost set your watch to how often an outsider will analyse a situation from first principles and make money off the 'experts', especially in the stock market.
> Progress almost always comes from non-consensus outsiders. This whole website is supposed to be a testament to that!
Even granting that these statements are accurate (which plenty of sibling comments are willing to dispute) I don't think these statements suggest that "Stay in your lane" is bad advice.
Why? It's a question of distributions. For any given task/field there are a lot more laypeople than experts. Consider the following simple model where we quantify some arbitrary ability score. If lay people's scores are normally distributed with a low mean and expert's scores are normally distributed with a high mean we can still see the best lay person beating all the experts simply because there are so many more of them.
"You don't know more than the 'experts'" is good advice for almost everyone even if there are counterexamples.
There's a separate problem I think you're trying to point at where in some fields credentials don't correlate as well with expertise as one would hope. But even if credentials are an imperfect proxy for expertise, they are probably better than just trusting your gut in the absence of any expertise of your own.
> Pretty much the only field which hasn't been embarrassed by an outsider of late is physics, [...]
This seems an idiosyncratic take on the current state of science to me. I've seen plenty of examples of a field being embarrassed by insiders (e.g. the replication crisis of psychology) or seen great results from experts who were not particularly recognized by the system as set up (see Yitang Zhang's work on the twin prime conjecture). What I don't think I've seen is a field's dogma being overthrown by a complete outsider. For the sake of my own calibration, I'd welcome any examples of this.
> Progress almost always comes from non-consensus outsiders. This whole website is supposed to be a testament to that!
Even granting that these statements are accurate (which plenty of sibling comments are willing to dispute) I don't think these statements suggest that "Stay in your lane" is bad advice.
Why? It's a question of distributions. For any given task/field there are a lot more laypeople than experts. Consider the following simple model where we quantify some arbitrary ability score. If lay people's scores are normally distributed with a low mean and expert's scores are normally distributed with a high mean we can still see the best lay person beating all the experts simply because there are so many more of them.
"You don't know more than the 'experts'" is good advice for almost everyone even if there are counterexamples.
There's a separate problem I think you're trying to point at where in some fields credentials don't correlate as well with expertise as one would hope. But even if credentials are an imperfect proxy for expertise, they are probably better than just trusting your gut in the absence of any expertise of your own.
> Pretty much the only field which hasn't been embarrassed by an outsider of late is physics, [...]
This seems an idiosyncratic take on the current state of science to me. I've seen plenty of examples of a field being embarrassed by insiders (e.g. the replication crisis of psychology) or seen great results from experts who were not particularly recognized by the system as set up (see Yitang Zhang's work on the twin prime conjecture). What I don't think I've seen is a field's dogma being overthrown by a complete outsider. For the sake of my own calibration, I'd welcome any examples of this.
It's not about staying in your lane, it's about being more aware of your ignorance. What you notice, over and over, is the people talking the loudest about most things have very little real idea about whatever they're talking about. The truth is almost always more boring than the most attention-grabbing theory, this bias found all over for the non-expert with the big opinion needs to stop.
People with the stock industry conspiracy theories are doing the exact same thing as voter fraud people. That is, people with almost no information are forming theories about a secret cabal of the powerful keeping them down.
The reality which is becoming obvious is that trades were at several brokerages were halted because of capital requirements for brokerage firms. The capital requirements for some of these meme stocks changed, the stocks were very broadly held at these brokerages, and they simply didn't have the capital on hand where it needed to be to cover the requirements. That's (1) a lot more boring, and (2) a lot more complicated than a conspiracy about market fixing, so it doesn't get attention outside of people who actually know.
People with the stock industry conspiracy theories are doing the exact same thing as voter fraud people. That is, people with almost no information are forming theories about a secret cabal of the powerful keeping them down.
The reality which is becoming obvious is that trades were at several brokerages were halted because of capital requirements for brokerage firms. The capital requirements for some of these meme stocks changed, the stocks were very broadly held at these brokerages, and they simply didn't have the capital on hand where it needed to be to cover the requirements. That's (1) a lot more boring, and (2) a lot more complicated than a conspiracy about market fixing, so it doesn't get attention outside of people who actually know.
Planck's Principle: "Science advances one funeral at a time" [0]
[0] https://en.wikipedia.org/wiki/Planck%27s_principle
[0] https://en.wikipedia.org/wiki/Planck%27s_principle
The existence of outsiders disproving consensus opinion with a more-correct contrarian one does not mean every outsider with a contrarian opinion is right.
But there's really an entire class of people who have no clue what they're talking about weighing in on things that they clearly do not understand.
It's one thing to study this in your own time and make meaningful contributions. It's another to assume that simply because you have an opinion, it's somehow valid.
It's one thing to study this in your own time and make meaningful contributions. It's another to assume that simply because you have an opinion, it's somehow valid.
I think it is useful, as it can imply that the experts have some explaining to do.
In this particular instance something seems to be fundamentally broken.
In this particular instance something seems to be fundamentally broken.
>> Progress almost always comes from non-consensus outsiders.
Don't confuse cause and effect. This doesn't mean all anti-consensus ideas are genius and progress. Most are still just junk. See the "all big thinks initially looked like toys" meme for another example.
Don't confuse cause and effect. This doesn't mean all anti-consensus ideas are genius and progress. Most are still just junk. See the "all big thinks initially looked like toys" meme for another example.
From what I can tell almost no professional investers beat the market, almost nobody wins the lottery. Why should I listen to lottery players or professional wall street gamers?
Almost no doctors beat terminal cancer. Im going to try this crystal healing method...
I'll take it you've never gotten a bad diagnosis from a doctor. Those too are disastrous, gets put in your medical record, and local doctors will agree for the sole sake of not refuting another local doctor.
But jumping to crystals? Seriously?
But jumping to crystals? Seriously?
Which, if accompanied by an empathic and engaged healer who manages to fully invoke the power of whatever is that drives the placebo effect, just might stand a chance of being more effective (in certain cases).
The warnings on UK spread betting companies are amusing.
The broker I used to work at has a big disclaimer on all their marketing stating that 77.9% of retail clients lose money when trading with them.
Doesn't stop people signing up thinking they can beat the market...
The broker I used to work at has a big disclaimer on all their marketing stating that 77.9% of retail clients lose money when trading with them.
Doesn't stop people signing up thinking they can beat the market...
Because while what you wrote is true, it is not really relevant to how Wall Street earns money. They are not earning money from beating the market.
Hey, it's not market manipulation when you're an academic or part of the oligarchy of experts with invested positions. These people are to be cherished and flaunted on news media to state their "unbiased" opinion of market movements. It's manipulation when you're an average joe telling other average joes to stick it to a firm that's trying to bankrupt another company that's struggling through the pandemic.
One could argue that the whole situation came about because outsiders (Reddit users) caught the "experts" (hedge funds) with their pants down.
Market experts have been caught with their pants down many times before because of the actions of uninformed investors.
In 1999, the rational move would be to short tech stocks as they were over valued, but those who tried it lost lots of money because they didn't factor in how crazy investors were at driving up the price.
You can technically be right but still end up losing everything.
In 1999, the rational move would be to short tech stocks as they were over valued, but those who tried it lost lots of money because they didn't factor in how crazy investors were at driving up the price.
You can technically be right but still end up losing everything.
This harkens back to the extremely worn threadbare quote "The market can stay irrational longer than you can stay solvent."
Redditors made millions of dollars. A couple hedge funds lost billions. Where did the rest of the money go to? Other institutional investors. Nearly 10% of Gamestop is held by a mutual fund where experts try to pick undervalued stocks.
https://money.cnn.com/quote/shareholders/shareholders.html?s...
https://money.cnn.com/quote/shareholders/shareholders.html?s...
When it comes to how the authorities will act, is one of the few places that appeals to authority are absolutely reasonable.
What do the regulations and laws actually mean and how are they actually in real life enforced historically? Oh yeah appeal to authority. We're literally talking about the authorities.
Laws and regulations -- and business arrangements and customs -- aren't some kind of objective external thing to be observed scientifically from first principles. That's the whole error. Like if you can show a logical flaw you can prove they are't really so because they must be logical! They are socially constructed and the result of human action, by people with the power to do so, for particular ends. They are continually re-constructed by human action, they are constructed by the powerful.
What do the regulations and laws actually mean and how are they actually in real life enforced historically? Oh yeah appeal to authority. We're literally talking about the authorities.
Laws and regulations -- and business arrangements and customs -- aren't some kind of objective external thing to be observed scientifically from first principles. That's the whole error. Like if you can show a logical flaw you can prove they are't really so because they must be logical! They are socially constructed and the result of human action, by people with the power to do so, for particular ends. They are continually re-constructed by human action, they are constructed by the powerful.
> I remember the smugness with which Stephen Wolfram is routinely dismissed from having non-consensus views of physics
The guy is disliked for taking too much credit for things, not for "having non-consensus views" - which is sort of the opposite problem.
The guy is disliked for taking too much credit for things, not for "having non-consensus views" - which is sort of the opposite problem.
He is disliked for different things by different people.
See https://www.scientificamerican.com/article/physicists-critic... for scientists dismissing his theories of physics.
See https://www.scientificamerican.com/article/physicists-critic... for scientists dismissing his theories of physics.
Maybe, but I was talking about ppl on HN
People on HN are merely a (rather biased) sample of people in the world. Just as people in general can dislike him for different reasons, people on HN do as well.
I respect him for his work in programming. I dislike him for assuming that success makes him correct in whatever theories he comes up with in physics. Particularly when he has failed to produce any testable predictions.
I respect him for his work in programming. I dislike him for assuming that success makes him correct in whatever theories he comes up with in physics. Particularly when he has failed to produce any testable predictions.
[deleted]
The non experts who do this are almost always people who have spent significant amounts of time familiarizing themselves with the literature.
It is fairly obvious that this is not the case for most people in threads about GME.
It is fairly obvious that this is not the case for most people in threads about GME.
That’s not at all the attitude I read in gp.
Being cognizant of our (humans’) fantastic, ego-bolstering tendencies is a good thing.
Being cognizant of our (humans’) fantastic, ego-bolstering tendencies is a good thing.
There's an important difference between "stay in your lane" and "keep your mouth shut until you know what you're talking about".
Sometimes opening your mouth and saying the wrong thing is the quickest way to improve your understanding. Starting with an incorrect premise and then talking/arguing things out until your understanding comes more in line with reality is a pretty healthy tact. Essentially Agile development, just applied more broadly.
i think overall people are feeling a little burned by trump's anti-filter and rampant conspiracy theories that have taken hold recently and as such are retreating to respect for status and authority.
there is some good to come of it, but i do wonder if the baby is being thrown out with the bathwater. true experts can handily defeat nonsensical arguments in their fields and unusual viewpoints can enrich their thinking.
there is some good to come of it, but i do wonder if the baby is being thrown out with the bathwater. true experts can handily defeat nonsensical arguments in their fields and unusual viewpoints can enrich their thinking.
i think it's an appeal to not spouting answers when you should be asking questions
Does medical advice fall into this consensus trap?
If so...relative to today?
If so...relative to today?
It is a good example of it, eg anything American doctors would’ve told you about wearing face masks was wrong until it wasn’t (and the CDC director is still telling people not to wear N95s), they still give terrible diet advice like telling diabetics to eat more carbs, and so on. Doctors are quite bad at making reasonable decisions when they don’t have an RCT in front of them.
> CDC director is still telling people not to wear N95s
This is an interesting point. The statement I read from her is saying that N95s are hard to wear for long periods of time, so people will wear them improperly. So the overall adherence is higher with cloth coverings and have a net higher benefit.
She’s not saying “don’t wear n95s” she’s saying “we don’t recommend it because...”
This is an important distinction.
Also N95s have to be fit tested to be effective. So randos buying N95s and wearing them will frequently not work.
This is an interesting point. The statement I read from her is saying that N95s are hard to wear for long periods of time, so people will wear them improperly. So the overall adherence is higher with cloth coverings and have a net higher benefit.
She’s not saying “don’t wear n95s” she’s saying “we don’t recommend it because...”
This is an important distinction.
Also N95s have to be fit tested to be effective. So randos buying N95s and wearing them will frequently not work.
> Also N95s have to be fit tested to be effective. So randos buying N95s and wearing them will frequently not work.
That was the excuse doctors were giving me in March that they all suddenly dropped. Are N95s without perfect fits worse than cloth masks, which don't have fit tests either? Are they better than no masks? Was Facebook wrong to stock up on N95s for employees during wildfire season?
> So the overall adherence is higher with cloth coverings and have a net higher benefit.
This is one of the worst things public health experts seemed to just be totally wrong about. They were obsessed with "risk compensation", where if you make things safer in the wrong way people will act riskier so it doesn't help. But this doesn't actually seem to happen.
That was the excuse doctors were giving me in March that they all suddenly dropped. Are N95s without perfect fits worse than cloth masks, which don't have fit tests either? Are they better than no masks? Was Facebook wrong to stock up on N95s for employees during wildfire season?
> So the overall adherence is higher with cloth coverings and have a net higher benefit.
This is one of the worst things public health experts seemed to just be totally wrong about. They were obsessed with "risk compensation", where if you make things safer in the wrong way people will act riskier so it doesn't help. But this doesn't actually seem to happen.
> Are they better than no masks?
This is the important question. Well are they? I’ve seen a lot of people wearing N95s and almost every one of them are wearing them incorrectly. Is this better than a cloth mask? I don’t know. But having huge gaps on the bridge of one’s nose where air flows is really bad to reduce risk. And my favorite is seeing them work with beards that prevent a seal.
I can’t find any tests of cloth mask vs bad n95. Saying “common sense” as the reason is not a compelling reason to try to get 300M people doing something.
This is the important question. Well are they? I’ve seen a lot of people wearing N95s and almost every one of them are wearing them incorrectly. Is this better than a cloth mask? I don’t know. But having huge gaps on the bridge of one’s nose where air flows is really bad to reduce risk. And my favorite is seeing them work with beards that prevent a seal.
I can’t find any tests of cloth mask vs bad n95. Saying “common sense” as the reason is not a compelling reason to try to get 300M people doing something.
>Also N95s have to be fit tested to be effective. So randos buying N95s and wearing them will frequently not work.
I don't think this is true. No box of 3M N95 masks I've ever bought has said anywhere "failure to fit test this mask renders it ineffective." 3M Aura masks have an instruction video on how to maximize the fit, but thats just a bit on how best to adjust the little metal bit that clamps around the nose.
An ill-fit N95 that might not be perfectly adjusted to conform is still way better than a cloth mask which isn't intended to seal at all.
I don't think this is true. No box of 3M N95 masks I've ever bought has said anywhere "failure to fit test this mask renders it ineffective." 3M Aura masks have an instruction video on how to maximize the fit, but thats just a bit on how best to adjust the little metal bit that clamps around the nose.
An ill-fit N95 that might not be perfectly adjusted to conform is still way better than a cloth mask which isn't intended to seal at all.
Not completely ineffective, but ineffective at filtering the designed 95%. Here’s NIOSH’s page [0] defining fit testing and why it’s important. You don’t see this warning because it’s on NIOSH’s site, just like you don’t see the definition of all the stuff and just have the certification is for your test.
Some masks are just incompatible with some faces, it’s greaT that Aura’s have an instruction video, that doesn’t mean it will work for all people.
> An ill-fit N95 that might not be perfectly adjusted to conform is still way better than a cloth mask which isn't intended to seal at all.
I think you’re probably right. But I don’t know of a study that tests this because N95s are measured as conforming to spec, not when they are worn improperly without a seal at the nose and chin. I hope we get some info on this.
The Dirextors (and Fauci’s) comments weren’t about this though, they mentioned how N95s are uncomfortable and thus hard to wear consistently. Try wearing an N95 for 6 hours of school. Especially without training. I think the recommendation for cloth masks is because of the ability for people to wear them.
So the recommendation is not based around optimal standards of use, but around likely use.
This doesn’t mean that N95s don’t protect people. I wear them in public. I’m just trying to correct GP’s criticism that someone the CDC director’s comments are incorrect or illogical.
[0] https://www.cdc.gov/niosh/npptl/topics/respirators/disp_part...
Some masks are just incompatible with some faces, it’s greaT that Aura’s have an instruction video, that doesn’t mean it will work for all people.
> An ill-fit N95 that might not be perfectly adjusted to conform is still way better than a cloth mask which isn't intended to seal at all.
I think you’re probably right. But I don’t know of a study that tests this because N95s are measured as conforming to spec, not when they are worn improperly without a seal at the nose and chin. I hope we get some info on this.
The Dirextors (and Fauci’s) comments weren’t about this though, they mentioned how N95s are uncomfortable and thus hard to wear consistently. Try wearing an N95 for 6 hours of school. Especially without training. I think the recommendation for cloth masks is because of the ability for people to wear them.
So the recommendation is not based around optimal standards of use, but around likely use.
This doesn’t mean that N95s don’t protect people. I wear them in public. I’m just trying to correct GP’s criticism that someone the CDC director’s comments are incorrect or illogical.
[0] https://www.cdc.gov/niosh/npptl/topics/respirators/disp_part...
thank you for your candid and informative reply
i always find it fascinating to hear people's take on science and medicine
especially when conclusions that have weight reach politically hazardous territory
i always find it fascinating to hear people's take on science and medicine
especially when conclusions that have weight reach politically hazardous territory
Yup. Your average PCP/internist is good at one thing: analyzing your symptoms and directing you toward someone who actually can help you.
Not saying that a yearly check-up isn't beneficial (it is), just that they shouldn't be prescribing Type 2 diabetes medications on the spot (and getting kickbacks) and instead should tell the patient to stop stuffing their faces so much.
Not saying that a yearly check-up isn't beneficial (it is), just that they shouldn't be prescribing Type 2 diabetes medications on the spot (and getting kickbacks) and instead should tell the patient to stop stuffing their faces so much.
Well, the advice specifically is more like "dear Type 2 diabetics, don't forget that if you eat less than 200g of carbs every day, you'll die of heart attacks from that evil saturated fat".
Oh boy let's not get started on physicists this week!
> I am so sick of this 'stay in your lane' attitude.
To my mind, I'm doing the equivalent of chiding front-end beginners for not spending a few minutes reading the part of the ecmascript spec that describes the language's primitive values. (Or at least a primer that covers the names of those types.) That spec is free, and I can probably find the relevant section faster than I can type this sentence.
Actually, it took me a minute and a half-- it's in section 6.1.6: "ECMAScript Language Types" of the ECMAScript 2020 spec.
It doesn't take much longer to skim that section and start a mental model with at least the name for each primitive type.
Armed even with that superficial knowledge, a beginner is less likely to make mistakes in communication with others. E.g., they are less likely to read a tutorial on symbols, confuse it with a tutorial on strings, and/or waste the author's time asking a question about strings.
Someone who hasn't read the spec (or at least a primer) might assume that those words are synonyms, or perhaps that "symbol" refers to the content, or has something to do with unicode code points, or has the same relationship and single and double quotes in ecmascript.
I have no doubt such a beginner can concoct all kinds of interesting definitions for "symbol" from first principles. Perhaps in some cases their own idiosyncratic misunderstanding describes some "alternate ecmascript" language that has superior features to the real ecmascript. That we can so easily construct these alternate realities is cool in and of itself and is an obvious part of the learning process.
What isn't cool is when a critical mass of commenters who don't know and won't learn the basic terminology pretend to have a discussion about a topic which in reality each comment is in it's on parallel universe of idiosyncratic terminology. Especially on this topic, it's extremely likely that one's idiosyncratic, uneducated take is going to be immensely more boring and fruitless when compared to accurate and well-informed takes on what played out in the stock market over the past week.
I look forward to posting something like this the next time the topics of macroeconomics or unions come up.
To my mind, I'm doing the equivalent of chiding front-end beginners for not spending a few minutes reading the part of the ecmascript spec that describes the language's primitive values. (Or at least a primer that covers the names of those types.) That spec is free, and I can probably find the relevant section faster than I can type this sentence.
Actually, it took me a minute and a half-- it's in section 6.1.6: "ECMAScript Language Types" of the ECMAScript 2020 spec.
It doesn't take much longer to skim that section and start a mental model with at least the name for each primitive type.
Armed even with that superficial knowledge, a beginner is less likely to make mistakes in communication with others. E.g., they are less likely to read a tutorial on symbols, confuse it with a tutorial on strings, and/or waste the author's time asking a question about strings.
Someone who hasn't read the spec (or at least a primer) might assume that those words are synonyms, or perhaps that "symbol" refers to the content, or has something to do with unicode code points, or has the same relationship and single and double quotes in ecmascript.
I have no doubt such a beginner can concoct all kinds of interesting definitions for "symbol" from first principles. Perhaps in some cases their own idiosyncratic misunderstanding describes some "alternate ecmascript" language that has superior features to the real ecmascript. That we can so easily construct these alternate realities is cool in and of itself and is an obvious part of the learning process.
What isn't cool is when a critical mass of commenters who don't know and won't learn the basic terminology pretend to have a discussion about a topic which in reality each comment is in it's on parallel universe of idiosyncratic terminology. Especially on this topic, it's extremely likely that one's idiosyncratic, uneducated take is going to be immensely more boring and fruitless when compared to accurate and well-informed takes on what played out in the stock market over the past week.
I look forward to posting something like this the next time the topics of macroeconomics or unions come up.
Great response! I agree.
>I am so sick of this 'stay in your lane' attitude.
And I am so sick of the HN-trademark "I'm smarter than the average bear" arrogance that you display here. Pick an article about nuanced subjects like COVID vaccines, the 737 Max, the law in general. Guaranteed the comments section here has dozens of people incorrecting each other about semantics of these subjects in which they are not domain experts.
Everyone's entitled to their opinion, but your opinion is worth less than that of a domain expert.
And I am so sick of the HN-trademark "I'm smarter than the average bear" arrogance that you display here. Pick an article about nuanced subjects like COVID vaccines, the 737 Max, the law in general. Guaranteed the comments section here has dozens of people incorrecting each other about semantics of these subjects in which they are not domain experts.
Everyone's entitled to their opinion, but your opinion is worth less than that of a domain expert.
The comment above you is lamenting not even looking up what the stuff means before commenting. That has nothing to do with insider vs outsider.
Haha, of course you're The Type of Guy who worships Wolfram.
You know he's a total crank right.
You know he's a total crank right.
Personal attacks are not cool here regardless of how wrong another comment is or how much you disagree with someone.
https://news.ycombinator.com/newsguidelines.html
https://news.ycombinator.com/newsguidelines.html
> I am so sick of this 'stay in your lane' attitude.
Is that you, Michael Gove.
> You're welcome to your opinion but this appeal to authority is seriously wearing thin.
It is you, Michael Gove.
> Progress almost always comes from non-consensus outsiders.
Certainly the spread of COVID19 in the UK and US is evidence that something can spread with the encouragement of "non-consensus outsiders".
Is that you, Michael Gove.
> You're welcome to your opinion but this appeal to authority is seriously wearing thin.
It is you, Michael Gove.
> Progress almost always comes from non-consensus outsiders.
Certainly the spread of COVID19 in the UK and US is evidence that something can spread with the encouragement of "non-consensus outsiders".
Please do not post in the flamewar style to HN, regardless of how wrong a comment is or you feel it is. We're trying for something different here.
https://news.ycombinator.com/newsguidelines.html
https://news.ycombinator.com/newsguidelines.html
> 3. Too busy to use the very internet which some of them probably helped build to magically render learning materials to the screen in front of them at zero marginal cost.
I will say that I’m not too busy for this at the moment, and getting to my very basic level of understanding has required me to sort through, at the very least, a fairly decent chunk of reference material and reading interpretations and explanations online.
Like, here’s some things I’ve been grappling with understanding recently:
How do settlement risk, clearing brokers, and clearinghouses work? Why does buying an ordinary stock carry so much settlement risk?
Why do market makers buy stock for delta hedging? How do they figure out how much stock to buy?
To make an analogy, it feels like I’m some kid in chemistry class who just learned how to draw bond diagrams, and then I watch a video of someone talking about how they figured out the structure of some chemical using Raman spectroscopy.
I will say that I’m not too busy for this at the moment, and getting to my very basic level of understanding has required me to sort through, at the very least, a fairly decent chunk of reference material and reading interpretations and explanations online.
Like, here’s some things I’ve been grappling with understanding recently:
How do settlement risk, clearing brokers, and clearinghouses work? Why does buying an ordinary stock carry so much settlement risk?
Why do market makers buy stock for delta hedging? How do they figure out how much stock to buy?
To make an analogy, it feels like I’m some kid in chemistry class who just learned how to draw bond diagrams, and then I watch a video of someone talking about how they figured out the structure of some chemical using Raman spectroscopy.
So maybe I can help a little with the above:
- prior the 1980s, when you bought a stock a physical stock certificate was passed back and forth between your broker and the broker selling the stock
- as you can imagine, as trading volumes increased this became unmanageable. In fact, at one point, the exchanges would close every Wednesday just to give people time to catch up on all of the exchange of certificates
- everyone, rightly, agreed that there needed to be a better way and the idea of a clearing house emerged. In this model, all of the physical certificates lived in one place. Ownership was tracked via a central "database" (originally not electronic). This made it MUCH easier to transfer ownership aka "settle". This is very similar to how gold is traded e.g. the NY Fed holds it for other countries etc
- An added benefit of a clearing house: it's easy to see how much everyone owns of everything. e.g. if one party is over leveraged or has gone extremely short, in theory, the clearing house can choose to not deal with that party or, more flexibly, request additional capital etc.
Here is also a specific example about settlement risk:
- let's say you report all of your trades to your clearing broker (think of them as a mini-clearinghouse)
- a data file gets lost or corrupted and the clearing broker says "Wait! Something is wrong! We are not letting you trade until we get this figured out!"
- EVEN IF YOU ARE CORRECT and they are wrong, you now have market risk because you may be holding a position that is losing you money. So much money in fact that it might drive you out of business.
The above is an actual answer to a settlement expert when asked "What is your nightmare scenario?". This in turn, could have ripple effects to other clearing brokers and trading firms and is generally all part of "settlement" or "clearing' risk.
Source: have worked in fintech trading for many years.
- prior the 1980s, when you bought a stock a physical stock certificate was passed back and forth between your broker and the broker selling the stock
- as you can imagine, as trading volumes increased this became unmanageable. In fact, at one point, the exchanges would close every Wednesday just to give people time to catch up on all of the exchange of certificates
- everyone, rightly, agreed that there needed to be a better way and the idea of a clearing house emerged. In this model, all of the physical certificates lived in one place. Ownership was tracked via a central "database" (originally not electronic). This made it MUCH easier to transfer ownership aka "settle". This is very similar to how gold is traded e.g. the NY Fed holds it for other countries etc
- An added benefit of a clearing house: it's easy to see how much everyone owns of everything. e.g. if one party is over leveraged or has gone extremely short, in theory, the clearing house can choose to not deal with that party or, more flexibly, request additional capital etc.
Here is also a specific example about settlement risk:
- let's say you report all of your trades to your clearing broker (think of them as a mini-clearinghouse)
- a data file gets lost or corrupted and the clearing broker says "Wait! Something is wrong! We are not letting you trade until we get this figured out!"
- EVEN IF YOU ARE CORRECT and they are wrong, you now have market risk because you may be holding a position that is losing you money. So much money in fact that it might drive you out of business.
The above is an actual answer to a settlement expert when asked "What is your nightmare scenario?". This in turn, could have ripple effects to other clearing brokers and trading firms and is generally all part of "settlement" or "clearing' risk.
Source: have worked in fintech trading for many years.
Thanks for the background info. Why can't the database be updated ~instantly though? Is it just because of legacy systems that handle settlement in periodic (daily?) batches?
Also, couldn't a broker eliminate this risk by just making assets "unavailable to trade" until they've been settled? Granted, I understand why brokers wouldn't want to do that under normal circumstances, but it seems like something they should be able to enable when liquidity becomes a problem.
To me, "Your cash can't be spent yet because the TSLA sale you just made hasn't settled" would seem a lot more understandable than "We're halting GME purchases".
Also, couldn't a broker eliminate this risk by just making assets "unavailable to trade" until they've been settled? Granted, I understand why brokers wouldn't want to do that under normal circumstances, but it seems like something they should be able to enable when liquidity becomes a problem.
To me, "Your cash can't be spent yet because the TSLA sale you just made hasn't settled" would seem a lot more understandable than "We're halting GME purchases".
> Why can't the database be updated ~instantly though? Is it just because of legacy systems that handle settlement in periodic (daily?) batches?
The legacy systems reason is a big one. There are banks with mainframes built in the 80's as part of the critical infrastructure. Another reason is that everyone doesn't communicate directly with the main clearing house. e.g. brokers clear with other brokers who then clear with the clearing house etc.
> To me, "Your cash can't be spent yet because the TSLA sale you just made hasn't settled" would seem a lot more understandable than "We're halting GME purchases".
There have been interesting solutions to disputes. e.g. I think it was NYMEX that had a rule for floor traders along the lines of "If Trader A and Trader B have a clearing issue, NEITHER of them gets to trade till it is taken care of." Given that these traders traded with each other multiple times a day coupled with they were making no money during this dispute, both parties were incentivized to come to an agreement.
The legacy systems reason is a big one. There are banks with mainframes built in the 80's as part of the critical infrastructure. Another reason is that everyone doesn't communicate directly with the main clearing house. e.g. brokers clear with other brokers who then clear with the clearing house etc.
> To me, "Your cash can't be spent yet because the TSLA sale you just made hasn't settled" would seem a lot more understandable than "We're halting GME purchases".
There have been interesting solutions to disputes. e.g. I think it was NYMEX that had a rule for floor traders along the lines of "If Trader A and Trader B have a clearing issue, NEITHER of them gets to trade till it is taken care of." Given that these traders traded with each other multiple times a day coupled with they were making no money during this dispute, both parties were incentivized to come to an agreement.
Thanks for the crystal-clear example.
Not an expert myself, but I've been interested in the field for a while.
The clearinghouse ultimately moves the security and money to their right place, and allows brokerages to let each side move on faith that everything will be right once the dust settles. On settlement risk, a key point is that there usually isn't a huge amount of risk. This is why DTCC is nearly imperceptible for retail players. In this case, the volume and short situation is so extreme that clearinghouses are getting antsy that there may not be enough of the securities available to actually make good in the end, so they're twisting arms at brokerages and requiring they have 100% of it on-hand so that there's no surprises when they go to officially give the buyer their security and the seller their money. This is obviously very expensive, which is why brokerages started limiting buying of volatile securities, have had to take out money to get 100% hedge on these trades, and why RH is allowing trading of volatile securities but only in volumes of 5.
Market makers buy stock for delta hedging because if they don't, they could get caught out and either deliver at a loss or not be able to deliver at all. Figuring out how much you need is a trick of the trade; if you or I knew what their strategy was, their position could be in danger.
The clearinghouse ultimately moves the security and money to their right place, and allows brokerages to let each side move on faith that everything will be right once the dust settles. On settlement risk, a key point is that there usually isn't a huge amount of risk. This is why DTCC is nearly imperceptible for retail players. In this case, the volume and short situation is so extreme that clearinghouses are getting antsy that there may not be enough of the securities available to actually make good in the end, so they're twisting arms at brokerages and requiring they have 100% of it on-hand so that there's no surprises when they go to officially give the buyer their security and the seller their money. This is obviously very expensive, which is why brokerages started limiting buying of volatile securities, have had to take out money to get 100% hedge on these trades, and why RH is allowing trading of volatile securities but only in volumes of 5.
Market makers buy stock for delta hedging because if they don't, they could get caught out and either deliver at a loss or not be able to deliver at all. Figuring out how much you need is a trick of the trade; if you or I knew what their strategy was, their position could be in danger.
Speaking as a long term value investor who is mostly noshing po'corn and watching, I have a couple of questions:
Don't the settlement worries provide evidence of naked shorts? (Naked shorts being selling a share without being sure the share would be available at settlement? And naked shorts illegal?)
Wouldn't the normal procedure be to halt all trading until the issues had cleared up? As opposed to allowing positions to be closed, but not opened?
Don't the settlement worries provide evidence of naked shorts? (Naked shorts being selling a share without being sure the share would be available at settlement? And naked shorts illegal?)
Wouldn't the normal procedure be to halt all trading until the issues had cleared up? As opposed to allowing positions to be closed, but not opened?
Naked shorts are not impossible, especially if you're talking about naked call options. They're comparatively rare (being illegal just means you get fined if you get caught, it's really "not that serious" for a big player), and small timers aren't allowed to participate, but they're not impossible. An even bigger point than that is that the short doesn't necessarily have to be naked in the legal sense for you to fail to deliver, especially when a security has gone completely Texas like GME has.
This situation is rare. Halting all trades is very scary for all parties involved. It's way worse for just about everybody than asking brokerages to have 100% collateral is.
This situation is rare. Halting all trades is very scary for all parties involved. It's way worse for just about everybody than asking brokerages to have 100% collateral is.
Whenever I read about a topic that I don't know much about, part of me is always wondering if the writer is throwing all these exotic words and greek letters in there because they are really an essential to understanding the topic, or because they just want to over-complicate it to sound smart and blow their own horn.
On one hand we have Occam's Razor: "the simplest solution is almost always the best." On the other we have "For every complex problem there is an answer that is clear, simple, and wrong." How does one know which to apply?
On one hand we have Occam's Razor: "the simplest solution is almost always the best." On the other we have "For every complex problem there is an answer that is clear, simple, and wrong." How does one know which to apply?
I don’t know how you could possibly reason about options without understanding delta, and gamma makes sense to me too since it’s just the derivative of delta as the underlying value changes.
As a math person, I’ve never heard “gamma” to mean the derivative of a change (a delta). For example, I was always taught that speed is v=delta-x/delta-t (distance over time). I’ve never heard gamma to mean that.
Speaking as a math major, gamma means, like, a million different things. It’s just a letter. There are only 26 latin letters, 24 greek letters, the capitals, and then a few oddities like blackboard bold, fraktur, cursive, etc. You run out pretty quickly and end up reusing letters.
Just like pi means different things in different contexts. It might be a permutation, projection, a function which counts prime numbers, or it might be half the period of sin. I might write π(10) = 4, or π ≈ 3.14…, or for π in P, etc. I might say that π is the right inverse of ι, in other words π∘ι = id, and point to some digram with a bunch of arrows.
Delta is not just “a change” in this context. It is specifically the rate of change of an option’s value with respect to the value of the underlying security. Just like pi, delta and gamma mean different things in different contexts.
Just like pi means different things in different contexts. It might be a permutation, projection, a function which counts prime numbers, or it might be half the period of sin. I might write π(10) = 4, or π ≈ 3.14…, or for π in P, etc. I might say that π is the right inverse of ι, in other words π∘ι = id, and point to some digram with a bunch of arrows.
Delta is not just “a change” in this context. It is specifically the rate of change of an option’s value with respect to the value of the underlying security. Just like pi, delta and gamma mean different things in different contexts.
Financial markets and derivatives are just complicated.
There seem to be a lot of moving parts, and a lot of possible outcomes.
There seem to be a lot of moving parts, and a lot of possible outcomes.
Two books that I might recommend for others that are interested are:
Trading and Exchanges: Market Microstructure for Practitioners (cost of this on Amazon seems to have more than doubled since I bought it 11 years ago)
Algorithmic Trading and DMA: An introduction to direct access trading strategies
Trading and Exchanges: Market Microstructure for Practitioners (cost of this on Amazon seems to have more than doubled since I bought it 11 years ago)
Algorithmic Trading and DMA: An introduction to direct access trading strategies
> Why do market makers buy stock for delta hedging? How do they figure out how much stock to buy?
From https://www.bloomberg.com/opinion/articles/2021-01-25/the-ga...:
The market maker has sold you an option that goes up in value as the stock goes up. The more the stock goes up, the more the market maker owes you. It hedges this by buying something else that goes up in value as the stock goes up—specifically, stock. Its option pricing model—the Black-Scholes formula or a related model—tellsit how much stock to buy; that output is a number called “delta” and ordinarily expressed as a percentage. Delta is the sensitivity of the option price to the stock price; the higher the delta, the more the option behaves like stock. The more in-the-money the option—for a call option, the higher the stock price is relative to the strike price—the higher the delta will be. A loose, nontechnical, incorrect but still sometimes helpful way to think about delta is as “the probability that an option will end up in the money.” A 100-delta option is so far in the money that it is sure to convert into stock, so it's just stock. A 0-delta option is so far out of the money that it can’t possibly convert into stock, so it’s just worthless. A 50-delta option is roughly at-the-money—a $50-strike call when the stock is trading at $50—and could go either way. The more stock-like an option is, the more stock the market maker will buy to hedge it. Here,Bloomberg’s OV page computes a 37.57% delta for the Jan. 29 $50 call as of last Tuesday; I rounded up for ease of use.
If you are remotely interested in these kinds of things I can heartily recommend reading Matt Levine (https://www.bloomberg.com/opinion/authors/ARbTQlRLRjE/matthe...). He's at the same time educating and entertaining and what is more leaves out all the bile and negativity that is connected to these topics in other places. Gamestop is covered in recent issues.
From https://www.bloomberg.com/opinion/articles/2021-01-25/the-ga...:
The market maker has sold you an option that goes up in value as the stock goes up. The more the stock goes up, the more the market maker owes you. It hedges this by buying something else that goes up in value as the stock goes up—specifically, stock. Its option pricing model—the Black-Scholes formula or a related model—tellsit how much stock to buy; that output is a number called “delta” and ordinarily expressed as a percentage. Delta is the sensitivity of the option price to the stock price; the higher the delta, the more the option behaves like stock. The more in-the-money the option—for a call option, the higher the stock price is relative to the strike price—the higher the delta will be. A loose, nontechnical, incorrect but still sometimes helpful way to think about delta is as “the probability that an option will end up in the money.” A 100-delta option is so far in the money that it is sure to convert into stock, so it's just stock. A 0-delta option is so far out of the money that it can’t possibly convert into stock, so it’s just worthless. A 50-delta option is roughly at-the-money—a $50-strike call when the stock is trading at $50—and could go either way. The more stock-like an option is, the more stock the market maker will buy to hedge it. Here,Bloomberg’s OV page computes a 37.57% delta for the Jan. 29 $50 call as of last Tuesday; I rounded up for ease of use.
If you are remotely interested in these kinds of things I can heartily recommend reading Matt Levine (https://www.bloomberg.com/opinion/authors/ARbTQlRLRjE/matthe...). He's at the same time educating and entertaining and what is more leaves out all the bile and negativity that is connected to these topics in other places. Gamestop is covered in recent issues.
And then there's another guy writing smug 8-point steps! Truly the pinnacle of hacker news culture.
Please don't respond to a bad comment by making the thread even worse. This is also in the site guidelines, which include a very clear statement of what to do instead:
"Don't feed egregious comments by replying; flag them instead."
https://news.ycombinator.com/newsguidelines.html
"Don't feed egregious comments by replying; flag them instead."
https://news.ycombinator.com/newsguidelines.html
Honestly disappointing that trolling is the top comment here. This is the kind of thing that we should hold each other above doing.
The comment isn't without substance but yeah, could have had better delivery
tbh I thought I'd have to go to n-gate to get this take on recent discussions...
You're fined for violating the Prime Directive!
That said, when I saw that top comment I thought for a second I've confused the domains, this sounded like something taken straight from there.
That said, when I saw that top comment I thought for a second I've confused the domains, this sounded like something taken straight from there.
In general it's good for people to be more aware of the fact that, outside of a few narrow technical domains, HN users are no less foolish, uninformed, and irrational as you those will find anywhere else on the internet.
Source: HN expert, to my continual shame.
Source: HN expert, to my continual shame.
>> 6. Builds a fantasy World of [X] from first principles around that definition
That is most every online discussion these days. I would only add "first principals learned at highschool and/or undergrad". The real scientists/lawyers/doctors with deep backgrounds in fields, the ones who dare to talk online, stand out like sore thumbs.
That is most every online discussion these days. I would only add "first principals learned at highschool and/or undergrad". The real scientists/lawyers/doctors with deep backgrounds in fields, the ones who dare to talk online, stand out like sore thumbs.
I don’t know where this perspective comes from. Reading the SEC note suggests that they are actively investigating or looking to actively investigate to see if there was market manipulation. No conclusions made as of yet.
When the market wildly diverges from steady state operations, this is an entirely reasonable thing for the SEC to do. An unstable market hurts the average person far more than a stable one.
When the market wildly diverges from steady state operations, this is an entirely reasonable thing for the SEC to do. An unstable market hurts the average person far more than a stable one.
Yeah it is essentially just a boilerplate post that just says "We heard and are looking into it" essentially. It will probably be months to years after the event for them to conclude who if anyone rose to the level of illicit market manipulation or other offenses and who would be responsible. Robinhood was at risk of being fined by the SEC for their infamous infamous leverage glitch as opposed to the users. (Not sure if it ended in a real fine as the media lost interest post patch.)
Natural human behavior that smart people fall into just as easily as anyone else. Go read any HN thread on airplanes, education, or war...
That is pretty accurate even for many software and tech related discussions here (it’s a big field with lots of specialties).
Yes, it's a reductionist argument that can apply to literally anything. Let's just delete all user discussions on the internet, and only allow PhD granted experts to discuss things on panels where they must provide primary sources for everything.
Or you could simply point out when someone is wrong, and explain why, assuming you are an expert. Then we all learn.
Or you could simply point out when someone is wrong, and explain why, assuming you are an expert. Then we all learn.
You could interpret it as an insightful observation rather than an argument to delete all comments.
> Or you could simply point out when someone is wrong, and explain why, assuming you are an expert. Then we all learn.
That’s pretty rare in online discussion, especially the kind with voting. The most popular argument wins, not the most correct one.
That’s pretty rare in online discussion, especially the kind with voting. The most popular argument wins, not the most correct one.
Yeah you're not wrong. I think HN is pretty good here though - we do have genuine experts (on tech) that correct people. That's why I value HN so much - I learn a lot even when I make stupid, wrong comments.
I didn’t mean to imply anything about who should be permitted to post or the subject matter of posts. My apologies that it came across that way. I simply meant it as an observation.
I could explain, as you suggest, and so could other experts. In my experience the likelihood of a response with denials, shifting goalposts or similar is much higher than an acknowledgement and gratitude for education. I’ll pass, but others might enjoy the challenge.
I could explain, as you suggest, and so could other experts. In my experience the likelihood of a response with denials, shifting goalposts or similar is much higher than an acknowledgement and gratitude for education. I’ll pass, but others might enjoy the challenge.
We shouldn't make fun of people for not knowing things, but it's perfectly okay to make fun of people for being narcissistic enough to think they are experts on a topic and arguing fervently based on their shallow and distorted understanding of the topic and hand when they are clearly not.
I think it would be helpful if folk highlighted when they don't know an area and are not experts. I think this is a better way to do it because it is clear that the person is trying to learn rather than spouting nonsense. Also, it takes a lot of effort to correct people, and when emotions are high this is a painful process. The RH post was a great example of this.
I've commented on some of the RH posts and got downvoted because people didn't like the facts (and I think maybe took it personally too). I've worked in Finance long enough professionally to know that I don't understand this fully and few people do. I do know enough to know when the comments are nonsense though.
I think that some of these issues comes down to respect and also arrogance. Imagine going into a new field and after 30 seconds deciding that you know everything (the Dunning–Kruger effect?)! Have a little bit of respect for those in the field and listen. Feel free to comment/ask, but don't spout 'facts' without checking and I think we'd all move forward faster.
I've commented on some of the RH posts and got downvoted because people didn't like the facts (and I think maybe took it personally too). I've worked in Finance long enough professionally to know that I don't understand this fully and few people do. I do know enough to know when the comments are nonsense though.
I think that some of these issues comes down to respect and also arrogance. Imagine going into a new field and after 30 seconds deciding that you know everything (the Dunning–Kruger effect?)! Have a little bit of respect for those in the field and listen. Feel free to comment/ask, but don't spout 'facts' without checking and I think we'd all move forward faster.
Replying to myself to avoid edits.
The other reason that listening and not spouting fiction is a good idea is that it is a lot of effort correcting people d that effort could otherwise be spent elsewhere. Folk have good will, but there's a finite amount that shouldn't be wasted! Once that's run out they look to use their time effectively. Correcting you /again/ won't be up high on the list.
The other reason that listening and not spouting fiction is a good idea is that it is a lot of effort correcting people d that effort could otherwise be spent elsewhere. Folk have good will, but there's a finite amount that shouldn't be wasted! Once that's run out they look to use their time effectively. Correcting you /again/ won't be up high on the list.
Can we not write posts like this? The air of superiority without actually offering any insight doesn't contribute to interesting discussion.
So, the HN "Genius" is just like most other people on the internet? I think the problem isn't with the HN "Genius", it's you expecting people on HN to not behave like people.
Stop putting STEM workers on a pedestal. We're still just people. Like everyone else.
Stop putting STEM workers on a pedestal. We're still just people. Like everyone else.
I have to admit, this wasn't me to a tee, but I did initially believe manipulation of any kind - whether you do so to push the price up or down is illegal. My basis for this was from several friends who have been financial planners for 10+ years and two have lived off day trading for more than 15 years.
Then I had a few people tell me, "Nope, its called a "short squeeze" and totally legal. Then I had to go back and do some research on how short squeezes work. Then I found several instances where this had happened, just not nearly as public because of social media.
The small amount of research opened my eyes to the fact even though something may seem illegal, in the finance world, there's a lot of gray areas and details most people will never know about until something like this happens.
Then I had a few people tell me, "Nope, its called a "short squeeze" and totally legal. Then I had to go back and do some research on how short squeezes work. Then I found several instances where this had happened, just not nearly as public because of social media.
The small amount of research opened my eyes to the fact even though something may seem illegal, in the finance world, there's a lot of gray areas and details most people will never know about until something like this happens.
The flood of articles about this topic hitting the front page, and the flood of comments on those articles full of conspiratorial thinking, have been surprising.
Even during the election, the controversy following the election, and the Capitol riot, the front page didn't get taken over by a flood of articles. Something is different this time. It was not good. I hope it won't happen again.
The moderators on this site do great work, and I'm sure this caught them by surprise and they did their best. I hope a controversy like the one that happened with WSB and Robin Hood in the past few days will not be able to take over this site to such an extent again.
Even during the election, the controversy following the election, and the Capitol riot, the front page didn't get taken over by a flood of articles. Something is different this time. It was not good. I hope it won't happen again.
The moderators on this site do great work, and I'm sure this caught them by surprise and they did their best. I hope a controversy like the one that happened with WSB and Robin Hood in the past few days will not be able to take over this site to such an extent again.
Your criteria for moderating/censorship is that the post suggests a conspiracy? Are you not worried the scope might be wider than intended and the net cast snag ideas tagged as conspiracies that aren't or are later discovered to not be?
Or is the criteria that it's a negative and implicates mainstream institutions?
I'm asking an honest question in good faith because I'm nervous at people conflating fringe ideas and extremist ideology with merely non mainstream ideas or suggestions.
Or is the criteria that it's a negative and implicates mainstream institutions?
I'm asking an honest question in good faith because I'm nervous at people conflating fringe ideas and extremist ideology with merely non mainstream ideas or suggestions.
There were quite a few stories about this on the front page (many of which were duplicates), and a frenzy of posters positing conspiracy theories in the comments to those posts -- stuff like accusing Robin Hood of being paid off by hedge funds, general conspiracies about market manipulation and rigging, and trolls posting WSB-style content.
If I want to see a flood of fake news and conspiracy theories there are plenty of other places to go. HN is not supposed to be the kind of site where that happens. Somehow the norms that prevented that from happening before on this site, even during times of extreme political controversy, have been broken.
If I want to see a flood of fake news and conspiracy theories there are plenty of other places to go. HN is not supposed to be the kind of site where that happens. Somehow the norms that prevented that from happening before on this site, even during times of extreme political controversy, have been broken.
I don't think it was that bad. Also, do you have a better option?
Cynical?
Thoughtful people who have been on this planet for decades build up a world view based on the countless examples of actors on the world stage behaving the way that they do. A single article or internet search is not how we are informed.
Thoughtful people who have been on this planet for decades build up a world view based on the countless examples of actors on the world stage behaving the way that they do. A single article or internet search is not how we are informed.
> Builds a fantasy World of Wall Street from first principles around that definition
Haven't politicians and regulators been doing the same thing for ever?
Can't a normal person challenge that?
Why should we blindly follow the narrative of the politicians and regulators?
Haven't politicians and regulators been doing the same thing for ever?
Can't a normal person challenge that?
Why should we blindly follow the narrative of the politicians and regulators?
"let's not discuss anything because we aren't experts or even amateurs in _____________. HN discussion is therefore useless and I declare the site be taken down immediately, post haste"
Do you have any metrics to back this up?
Or is this your own fantasy you've built up...
Or is this your own fantasy you've built up...
I get the point. They way it's delivered is just so passive agressive.
[deleted]
It's because "ze nerds" have rebuilt multiple industries that were "too hard to understand", because they work bottom-up, from first principles and reject gatekeepers. They 've even created an entire substitute version of the 'conomy which currently most people are mocking, but soon will be using daily.
You are both constructing a strawman and appealing to authority. Are you going for fallacy Bingo?
True (and funny) but, there's a lot of actual learning happening too. Nothing like limit testing to understand a system.
Number 2 is obviously false, a HN commenter would never have enough self-awareness to feel dumb.
[deleted]
This is absolutely perfect.
When someone tells you not to believe what you read on the internet, on the internet.
my favorite topics this gets applied to are physics and rocket science.
it's amazing how many HN physics comments start with "my theory"
it's amazing how many HN physics comments start with "my theory"
SirSavary(7)
You got a good point. SV types like HM tend to be textbook examples of Dunning-Kruger in action.
1. Read Wikipedia on another field 2. Decide, based on that knowledge, that the field is “ripe for disruption” 3. Usually fail miserably if parasitic ad tech isn’t the core business model
Even politicians show more humility than these people. It’s as if typing into a computer makes them think they are omniscient high priests. Most of them even have the gall to call themselves engineers. We don’t call machinists engineers, and most programmers are digital machinists.
1. Read Wikipedia on another field 2. Decide, based on that knowledge, that the field is “ripe for disruption” 3. Usually fail miserably if parasitic ad tech isn’t the core business model
Even politicians show more humility than these people. It’s as if typing into a computer makes them think they are omniscient high priests. Most of them even have the gall to call themselves engineers. We don’t call machinists engineers, and most programmers are digital machinists.
> Builds a fantasy World of Wall Street from first principles
or what experts call "a model"
or what experts call "a model"
> Too busy to use the very internet which some of them probably helped build
I didnt know Vincent Cerf, Tim Berners-Lee et al were HN users.
I didnt know Vincent Cerf, Tim Berners-Lee et al were HN users.
Congrats, you hit the Smarty's Catch 22--thinking you found the error in the smart people's oversimplified reasoning with oversimplified reasoning and then throwing stones.
/ducks
/ducks
Please don't respond to a bad comment by breaking the site guidelines yourself. That just makes this place even worse.
https://news.ycombinator.com/newsguidelines.html
https://news.ycombinator.com/newsguidelines.html
Yeah. Common sense no longer makes sense. Let me write a technical document stating how killing half of population is justified, but it is not for laymen to understand.
Depends on whether your document's field is microbiology and "population" commonly refers to lethal viruses that we want eradicated, or it is sociology and population specifically refers to humans.
Which is exactly the parent's point. Don't assume words mean the exact same thing from one field to another.
Which is exactly the parent's point. Don't assume words mean the exact same thing from one field to another.
Could someone please explain briefly, where the problem is if someone small investers start investing in a trade? Yes, my question sounds as if it was from someone who doesn't get the whole story.
[deleted]
to ensure that regulated entities uphold their obligations to protect investors
This is the "out" for RH. They'll claim (they already have) that they were protecting their investors
This is the "out" for RH. They'll claim (they already have) that they were protecting their investors
GME's market cap (~$25B) is more than the entire AUM of Robinhood (~$20B). It's a game of chicken between pros at this point.
What an absolutely nothing and unspecific statement. It could be the description on Wikipedia explaining the responsibility of the SEC.
I generally find protests trite and idiotic, however if Yellen sides with hedge funds on this, and / or bails them out I'm going to find the nearest "peaceful" protest in NYC and bring as many people as I know.
"the Commission will work to protect investors"
Ha, ha ha, ha ha ha...
Ha, ha ha, ha ha ha...
Zz 4 :. 1
WtA few rants that i tried answering to someone before him removing post.
Free speech is allowed.
Prosecuting people for free speech is impossible.
A bunch of imbeciles posting on forums is similar to a bunch of imbeciles on CNBC arguing that price is too high.
A hedge fund with 12 billion dollars shorting 140% of a stock and then using media to drive price to 0 is illegal. Also more then idiotic since they caused the whole problem to begin with. Without their greed there would be no short squeez, gamestop would have been at 50-60 or whatever fair market value instead of suppressed 5-6 dollars a long time ago.
The only illegal thing initially was hedge funds.
They then got punished and went to do other illegal things like wash sales, stopping people from buying, collusion with supposedly neutral market makers.
Whatever happens I hope the people above go broke first, investors that got conned go after their personal belongings for breaking fiduciary and afterwards spend a long time in jail.
Free speech is allowed.
Prosecuting people for free speech is impossible.
A bunch of imbeciles posting on forums is similar to a bunch of imbeciles on CNBC arguing that price is too high.
A hedge fund with 12 billion dollars shorting 140% of a stock and then using media to drive price to 0 is illegal. Also more then idiotic since they caused the whole problem to begin with. Without their greed there would be no short squeez, gamestop would have been at 50-60 or whatever fair market value instead of suppressed 5-6 dollars a long time ago.
The only illegal thing initially was hedge funds.
They then got punished and went to do other illegal things like wash sales, stopping people from buying, collusion with supposedly neutral market makers.
Whatever happens I hope the people above go broke first, investors that got conned go after their personal belongings for breaking fiduciary and afterwards spend a long time in jail.
I also believed that most of the shorts were naked, but the director of S3partner clearly explained how this was not the case. One stock can be shorted multiple times which is what causes the SI% to be over 100%. A lends to B, B sells to C, C lends to D and so forth. Two shorters (B,D) but only 1 original stock.
And Robinhoods closure of the trade seems reasonable in retrospect as well. If the clearing house required a higher collateral to clear trades on those tickers due to their volatility and RH did not have the liquidity to provide it then blocking the purchase of those tickers seems fair.
I can't really see anything illegal about the actions of the traders or the brokerages like Robinhood and Webull.
And Robinhoods closure of the trade seems reasonable in retrospect as well. If the clearing house required a higher collateral to clear trades on those tickers due to their volatility and RH did not have the liquidity to provide it then blocking the purchase of those tickers seems fair.
I can't really see anything illegal about the actions of the traders or the brokerages like Robinhood and Webull.
I'm not a domain expert, but it would seem that whether or not something was sold naked is ultimately determined in the instant that you are obligated to deliver -- not doing so is a Failure to Deliver, which is when your problem actually starts.
The SEC has 170k recorded FTDs for GME in the second half of December 2020: https://www.sec.gov/data/foiadocsfailsdatahtm
GME has been on the NYSE Threshold list for months: https://www.nyse.com/regulation/threshold-securities
Multiple WSB users were aware of this public data and that GME had high FTD rates in significantly more favourable circumstances at least as early as October 2020: https://old.reddit.com/r/wallstreetbets/comments/j0ckgf/reg_... https://old.reddit.com/r/wallstreetbets/comments/jbvwek/fail...
There was no reason to not be ass-naked or close to it on the high end of GME call contract writing a few months ago. They've probably covered (at least partially) by now, but that doesn't mean it hasn't happened.
The SEC has 170k recorded FTDs for GME in the second half of December 2020: https://www.sec.gov/data/foiadocsfailsdatahtm
GME has been on the NYSE Threshold list for months: https://www.nyse.com/regulation/threshold-securities
Multiple WSB users were aware of this public data and that GME had high FTD rates in significantly more favourable circumstances at least as early as October 2020: https://old.reddit.com/r/wallstreetbets/comments/j0ckgf/reg_... https://old.reddit.com/r/wallstreetbets/comments/jbvwek/fail...
There was no reason to not be ass-naked or close to it on the high end of GME call contract writing a few months ago. They've probably covered (at least partially) by now, but that doesn't mean it hasn't happened.
> I'm not a domain expert, but it would seem that whether or not something was sold naked is ultimately determined in the instant that you are obligated to deliver
No, this is not true. When you sell short (with some exceptions for market makers), you are obligated to "find" shares to borrow (called "locates"). Usually your broker arranges this; any shares that you borrow cannot be lent to someone else. If you do not have any borrowed shares (as recorded by the broker), that is considered a "naked short sell".
No, this is not true. When you sell short (with some exceptions for market makers), you are obligated to "find" shares to borrow (called "locates"). Usually your broker arranges this; any shares that you borrow cannot be lent to someone else. If you do not have any borrowed shares (as recorded by the broker), that is considered a "naked short sell".
No idea why you're getting downvoted -- whether or not you're able to do it depends on if you are one of those exceptions and that is an important part I missed in my original post. I was referring to market makers, as I think it goes without saying that a retail investor or small firm will not be allowed to do something like write a naked or near-naked call, but you know what they say about assumptions.
> you are obligated to "find" shares to borrow
Unless you know... you just dont. Or you are big enough to have an exception.
Whats the punishment?, how will they find you? (you dont need to disclose shorts)
Unless you know... you just dont. Or you are big enough to have an exception.
Whats the punishment?, how will they find you? (you dont need to disclose shorts)
E.g. A lends a share to B, B sells to C, C lends to D.
Now say another shorter, X, needs to cover their short and thus buys a share from C, now for this trade to settle C has to recall their share from D and then give it to X, who would then use it to cover their short. If D now fails to give back the share to C, then the trade between C-D is FTD which would then cause X trade with its borrower to be FTD since X needs C's share to settle it.
So they could have locates but still fail to settle. Though, I'm not unequivocally excluding that some naked shorts may have happened. I just find it more plausible than hedge funds and brokerages allowing huge amounts of naked shorts, which are already illegal.
So they could have locates but still fail to settle. Though, I'm not unequivocally excluding that some naked shorts may have happened. I just find it more plausible than hedge funds and brokerages allowing huge amounts of naked shorts, which are already illegal.
You can get more the 100% without naked shorts, sure, but is that legal?, does SEC allow that?, nobody is concerned that if there is a short squeeze there is no chance in hell to close out? (like we are seeing here)
The point I tried to make was - this short was done to drive price down to zero (it can do that with that large of a position) in collusion with negative media reports from friends... That is manipulation. And they got caught with their pants down.
I'm also not convinced on no naked shorts, we'll see...
As for robinhoods closure of trade, they only disabled buy, not sale... as for reason, are you speculating? I did not see any clearing house comment. This was brought up by Cuomo as well in interview.
As for illegal on robinhoods part, we'll see, there will likely be an investigation. Especially since they are owned by the company that bailed Melvin Capital out.
The point I tried to make was - this short was done to drive price down to zero (it can do that with that large of a position) in collusion with negative media reports from friends... That is manipulation. And they got caught with their pants down.
I'm also not convinced on no naked shorts, we'll see...
As for robinhoods closure of trade, they only disabled buy, not sale... as for reason, are you speculating? I did not see any clearing house comment. This was brought up by Cuomo as well in interview.
As for illegal on robinhoods part, we'll see, there will likely be an investigation. Especially since they are owned by the company that bailed Melvin Capital out.
> You can get more the 100% without naked shorts, sure, but is that legal?, does SEC allow that?
Yes. As someone lending out a share (for someone else to short), you can't know whether the person you bought it from had borrowed it to sell it to you.
Let's say you bought a share of stock. Can you lend it to someone for them to short sell? Of course. You own the share, regardless of how many people it passed through to get to you.
Yes. As someone lending out a share (for someone else to short), you can't know whether the person you bought it from had borrowed it to sell it to you.
Let's say you bought a share of stock. Can you lend it to someone for them to short sell? Of course. You own the share, regardless of how many people it passed through to get to you.
The same director noted that the SI%, according to their way of calculating*, is actually at 55% (still very high). And like the poster below stated, one cannot really know the difference between a borrowed and "ordinary" stock .
Webull came out and clearly stated that their clearinghouse had issues with putting up collateral for the tickers and thus had to shut them down [0]. And while Robinhood has not come out directly and said it was due to liquidity, one can easily gather that from the statements they put out, the new funding they needed, and lastly the fact that DTCC required higher collateral for those tickers.
[0] https://www.wsj.com/articles/gamestop-trading-restrictions-b...
* It includes all tradeable share. So in the case of the example, normal SI% states 2:1, two shorters and one original share. Their way is 2:3 which is, 2 shorters (B,D) and 3 longs (A,C,E)
Webull came out and clearly stated that their clearinghouse had issues with putting up collateral for the tickers and thus had to shut them down [0]. And while Robinhood has not come out directly and said it was due to liquidity, one can easily gather that from the statements they put out, the new funding they needed, and lastly the fact that DTCC required higher collateral for those tickers.
[0] https://www.wsj.com/articles/gamestop-trading-restrictions-b...
* It includes all tradeable share. So in the case of the example, normal SI% states 2:1, two shorters and one original share. Their way is 2:3 which is, 2 shorters (B,D) and 3 longs (A,C,E)
> And while Robinhood has not come out directly
So you were speculating on robinhood reason.
> The same director noted that the SI%, according to their way of calculation, is actually at 55%
Thanks, I'll check that out, weird since there are contradicting stories likely due to that short positions are not disclosed.
So you were speculating on robinhood reason.
> The same director noted that the SI%, according to their way of calculation, is actually at 55%
Thanks, I'll check that out, weird since there are contradicting stories likely due to that short positions are not disclosed.
Imagine an alternative universe. WSB decides that shorting some company they hate is a good idea. But wait, it has already been shorted up to 99% by hedge funds! No more shorting allowed. SEC rules.
Same backlash about a "rigged" system.
Same backlash about a "rigged" system.
You are aware everyone else except retail was allowed to buy right?
You are aware hedge funds did just that after doing wash sales to trigger stop losses.
It was funny at one point bid ask spread was 120-5000
You are aware hedge funds did just that after doing wash sales to trigger stop losses.
It was funny at one point bid ask spread was 120-5000
Yes that's what I'm saying. The same narrative ("wtf, they are allowed to short but I'm not") arises in my scenario.
your scenario means everyone is disallowed from shorting. Equal measure to market condition. You see it being different from disallowing just retail buying?
Oh and that already exists when there are no shares to borrow. (in theory as they can naked short)
Oh and that already exists when there are no shares to borrow. (in theory as they can naked short)
>Free speech is allowed.
>Prosecuting people for free speech is impossible.
Are you suggesting that pump and dumps legal because "free speech"?
>A hedge fund with 12 billion dollars shorting 140% of a stock and then using media to drive price to 0 is illegal.
What is the relevant legislation preventing someone from shorting "too much"? Furthermore, prior to this debacle I certainly haven't heard of GME in the media aside from some passing references. Therefore I'm skeptical of your narrative that the hedge funds were somehow using the media to crash GME prices.
>Prosecuting people for free speech is impossible.
Are you suggesting that pump and dumps legal because "free speech"?
>A hedge fund with 12 billion dollars shorting 140% of a stock and then using media to drive price to 0 is illegal.
What is the relevant legislation preventing someone from shorting "too much"? Furthermore, prior to this debacle I certainly haven't heard of GME in the media aside from some passing references. Therefore I'm skeptical of your narrative that the hedge funds were somehow using the media to crash GME prices.
> Are you suggesting that pump and dumps legal because "free speech"?
Where's the pump and dump?, This is a short squeeze due to Melvin Capitals 140% short and people buying due to initially Cohen joining. Same as for VW a long time ago. Now it's just because people want to buy... Hell I did so as well at recent prices as I think with a nice stock offering GME can get to a 500 fair market value easily. Que in some partnership with Tesla for 'TeslaStop' gaming while charging and they'll be good.
> What is the relevant legislation preventing someone from shorting "too much"?
Look it up under market manipulation. A oversized hedge fund overselling a stock will certainly be able to set the price where they want and then profit.
Where's the pump and dump?, This is a short squeeze due to Melvin Capitals 140% short and people buying due to initially Cohen joining. Same as for VW a long time ago. Now it's just because people want to buy... Hell I did so as well at recent prices as I think with a nice stock offering GME can get to a 500 fair market value easily. Que in some partnership with Tesla for 'TeslaStop' gaming while charging and they'll be good.
> What is the relevant legislation preventing someone from shorting "too much"?
Look it up under market manipulation. A oversized hedge fund overselling a stock will certainly be able to set the price where they want and then profit.
>Where's the pump and dump?
Whether this specific instance counts as a pump and dump is irrelevant. The point is that it's illegal and "free speech" isn't a valid defense. Furthermore, comments elsewhere in this thread have mentioned that intentionally causing a short squeeze is also illegal.
>Look it up under market manipulation. A oversized hedge fund overselling a stock will certainly be able to set the price where they want and then profit.
And the same isn't true of the people in WSB gobbling up GME?
Whether this specific instance counts as a pump and dump is irrelevant. The point is that it's illegal and "free speech" isn't a valid defense. Furthermore, comments elsewhere in this thread have mentioned that intentionally causing a short squeeze is also illegal.
>Look it up under market manipulation. A oversized hedge fund overselling a stock will certainly be able to set the price where they want and then profit.
And the same isn't true of the people in WSB gobbling up GME?
> And the same isn't true of the people in WSB gobbling up GME?
If people like the stock and buy it what can you do about it?, prevent them from buying same as robinhood?
These individual investors are not putting in market moving ammounts.
This is different from a hedge fund dumping a stock, driving price down then bankrupting a company.
If people like the stock and buy it what can you do about it?, prevent them from buying same as robinhood?
These individual investors are not putting in market moving ammounts.
This is different from a hedge fund dumping a stock, driving price down then bankrupting a company.
Essentially none of what is written in your "rants" is factually accurate, unless by calling it out you meant to make clear that these were emotional ramblings unrelated to reality.
Neutral analysts on CNBC providing commentary is pretty different than someone with a financial stake trying to pump up a stock they own to maximize their profit.
There is no evidence that any of the major funds involved in shorting have done anything illegal.
There's nothing illegal about a wash sale, wash sales are just a minor technicality around how cost basis is calculated for tax purposes.
People figured out they could exploit a fund that was overexposed in a trade and did so. We don't need all the conspiracies and class warfare. Greedy retail traders took some money from some greedy hedge funds, that's the whole story, it doesn't need to be more than that.
Neutral analysts on CNBC providing commentary is pretty different than someone with a financial stake trying to pump up a stock they own to maximize their profit.
There is no evidence that any of the major funds involved in shorting have done anything illegal.
There's nothing illegal about a wash sale, wash sales are just a minor technicality around how cost basis is calculated for tax purposes.
People figured out they could exploit a fund that was overexposed in a trade and did so. We don't need all the conspiracies and class warfare. Greedy retail traders took some money from some greedy hedge funds, that's the whole story, it doesn't need to be more than that.
> Neutral analysts on CNBC
This is amusing, check out interview with Chamath then everything else covered. It's even more amusing when Cramer of all people was the voice of reason.
> There is no evidence that any of the major funds involved in shorting have done anything illegal.
We will see through class action lawsuit against robinhood and SEC investigations.
> There's nothing illegal about a wash sale,
Used the wrong term, I meant the massive sell order (while people were not allowed to buy) trading halt, sell order again, trading halt, a few times to trigger stop losses then price magically goes back up where it was and the sell orders evaporated...
> it doesn't need to be more than that.
Disagree, some investigations are warranted as to how this was allowed to happen. (I'm assuming investors in hedge fund arent happy either at 3 billion loss that we know of) As well as general practices and the dirty tactics employed recently
This is amusing, check out interview with Chamath then everything else covered. It's even more amusing when Cramer of all people was the voice of reason.
> There is no evidence that any of the major funds involved in shorting have done anything illegal.
We will see through class action lawsuit against robinhood and SEC investigations.
> There's nothing illegal about a wash sale,
Used the wrong term, I meant the massive sell order (while people were not allowed to buy) trading halt, sell order again, trading halt, a few times to trigger stop losses then price magically goes back up where it was and the sell orders evaporated...
> it doesn't need to be more than that.
Disagree, some investigations are warranted as to how this was allowed to happen. (I'm assuming investors in hedge fund arent happy either at 3 billion loss that we know of) As well as general practices and the dirty tactics employed recently
"Neutral analysts on CNBC providing commentary"
lol. okay.
lol. okay.
> A hedge fund with 12 billion dollars shorting 140% of a stock
I am fairly sure that one fund shorting 140% would have the SEC on your back (that would count as market manipulation).
A comment somewhere mentioned that Melvin had shorted 14%.
Does anyone have some facts here?
I am fairly sure that one fund shorting 140% would have the SEC on your back (that would count as market manipulation).
A comment somewhere mentioned that Melvin had shorted 14%.
Does anyone have some facts here?
> A comment somewhere mentioned that Melvin had shorted 14%.
How did they lose 3 billion at 65$ with just 14%?
I call bullshit on that :)
How did they lose 3 billion at 65$ with just 14%?
I call bullshit on that :)
I mean you can just do the maths, no? They probably had a few hundred million position (maybe larger) with an entry cost under <10$. There may be some puts in there too which will have been a total loss.
Ok, let's assume they shorted at 10$, they lost 3 Billion at 65$ (and say they closed the position)
So, the stock needed to be bought back was worth 3 billion at 65$, reduce the 10$ per share it was shorted at and you get 3000M/55 = 54M shares.
Total stock float of GME is ~64M, so the short % was ~80%
You see how it's way off of the 14%? (and close to impossible to close out of?)
If they did not get out then they would be very bankrupt right now.
So, the stock needed to be bought back was worth 3 billion at 65$, reduce the 10$ per share it was shorted at and you get 3000M/55 = 54M shares.
Total stock float of GME is ~64M, so the short % was ~80%
You see how it's way off of the 14%? (and close to impossible to close out of?)
If they did not get out then they would be very bankrupt right now.
If they bought in at 10 and sold between 50-100 if they owned 14% of the free float they would have lost 0.5-1bn. That assumes they didn't increase exposure as the price went up and it ignores the borrow cost.
They then lost a bunch of money on options the exact amount of which we don't know. They also lost a whole bunch of money on other positions going against them which we don't know but can guess at.
To get to a 3bn loss (which btw is just a guessed number based on how much new capital they took)you probably only need to assume they are down around 10% on the rest of the short book (ex GME) which under the circumstances is entirely plausible. That assumes they run something like 200% gross exposure with an evenly balanced book with 12.5bn aum.
I'm not sure where the conspiracy is here. 3bn is a huge number to lose in a week but it looks roughly right given what happened and it's not exactly unprecedented either.
They then lost a bunch of money on options the exact amount of which we don't know. They also lost a whole bunch of money on other positions going against them which we don't know but can guess at.
To get to a 3bn loss (which btw is just a guessed number based on how much new capital they took)you probably only need to assume they are down around 10% on the rest of the short book (ex GME) which under the circumstances is entirely plausible. That assumes they run something like 200% gross exposure with an evenly balanced book with 12.5bn aum.
I'm not sure where the conspiracy is here. 3bn is a huge number to lose in a week but it looks roughly right given what happened and it's not exactly unprecedented either.
This is what I don't get, they are a hedge fund, even balanced book as you say, 200% gross exposure.
By your calculations they lost 0.5-1b from GME. That means 2b from somewhere else in the market.
Questions I'd have:
- even balanced book in my mind means they hedge risk and shouldn't lose across the board 30% in a week otherwise they are incompetent... and they seem far from that.
- with that in mind, how would they lose 2b in the rest of the market?, that means they dont hedge properly.
- As for GME, they didnt do proper risk management but that seems the only place they got blindsided. (Still surprising they had no insurance for a short squeeze...)
- Overall the stated losses were 30% of portfolio in a week... with only GME moving... you can see why I assume it was more then 14% and your logic seems flawed.
By your calculations they lost 0.5-1b from GME. That means 2b from somewhere else in the market.
Questions I'd have:
- even balanced book in my mind means they hedge risk and shouldn't lose across the board 30% in a week otherwise they are incompetent... and they seem far from that.
- with that in mind, how would they lose 2b in the rest of the market?, that means they dont hedge properly.
- As for GME, they didnt do proper risk management but that seems the only place they got blindsided. (Still surprising they had no insurance for a short squeeze...)
- Overall the stated losses were 30% of portfolio in a week... with only GME moving... you can see why I assume it was more then 14% and your logic seems flawed.
It is very difficult to not read this in the most cynical tone imaginable.
Apparently when retail investors win it's "Manipulative trading activity"... I'm so glad Bitcoin and DeFi was invented in my lifetime and I can be protected by maths and computer science instead of a three letter agency.
Yeah that’s nice, so at least you can be involved in something where there is no doubt of large scale unfettered manipulation. I guess that certainty is a plus for some.
Do you have any proof of that large scale unfettered manipulation other than some random posts from salty boomers like yourself?
I thought the “beauty” of Bitcoin is that it is free.. unshackled, unregulated. So in your mind how is that not an open invitation for powerful and well funded interests to manipulate it? I think the simpler question is why wouldn’t it be manipulated?
Yea, unfortunately they isn't really the case right now as cash is still king and crypto is another gamble. Not to mention, who do you think could buy better hardware? Us or them?
There isn't really such thing as decentralized. Its just the authority gets shifted around but the same issues can still show up.
There isn't really such thing as decentralized. Its just the authority gets shifted around but the same issues can still show up.
Crypto is a technology not a gamble. It attracts gamblers but it's a technology and it's already 12 years old. I could say that an open decentralized permissionless network that has moved trillions of dollars for the last 12 years is resilient enough for me.
You could say the exact same thing about the US stock market, except it's moved orders of magnitude more money.
The risk may not be in the same spots as traditional markets, but it's there. Return doesn't come without risk, it comes because of the risk.
The risk may not be in the same spots as traditional markets, but it's there. Return doesn't come without risk, it comes because of the risk.
The US stock market is an institution run by suits not a technology. I mean boomers like you might think that the internet and usps are the same thing because they both move messages around but they are not.
Whatever pressure is needed to stop the masses from understanding the power they have when working together. Although GameStop is small fries in comparison to other larger stocks, if that many people are willing to get together to vote with their dollars, that should scare wallstreet. And sure, this is "organized" but how is this any different than analysts with large audiences making calls and directing a large number of investors in the direction they want? Or hedge funds publishing their shorts and masses reacting based on that, affecting the stock. The hypocrisy. If they're going to regulate the people to this extent, they better regulate and actually enforce the regulations on wallstreet. Can't just protect one side.
(Sorry for the annoying repetition:) Large threads are paginated. To see all the comments, you'll need to click More at the bottom of each page, or do this sort of thing:
https://news.ycombinator.com/item?id=25957748&p=2
https://news.ycombinator.com/item?id=25957748&p=3