Robinhood is limiting purchases of stocks: AMC, Blackberry, Nokia, and GameStop(twitter.com)
twitter.com
Robinhood is limiting purchases of stocks: AMC, Blackberry, Nokia, and GameStop
https://twitter.com/KHOUStephanie/status/1354781130021609478
1,736 comments
Can someone help me understand Robinhood's POV? This just seems so outrageous that there must be some sane rationale that I'm not seeing.
Why do Robinhood, Reddit, Discord, etc feel like they have to respond to this? Whether the investments being made are responsible or not, it doesn't seem like it should be their place to intervene.
If the hedge funds over-shorted GME and WSB recognized that and traded against that bad analysis, then that's great! If the pendulum swung the other direction and WSB is trading into some momentum, how is that any different than the hedge funds doing the same with shorts? Why should Robinhood pick a winner (siding against their own customers)?
Why do Robinhood, Reddit, Discord, etc feel like they have to respond to this? Whether the investments being made are responsible or not, it doesn't seem like it should be their place to intervene.
If the hedge funds over-shorted GME and WSB recognized that and traded against that bad analysis, then that's great! If the pendulum swung the other direction and WSB is trading into some momentum, how is that any different than the hedge funds doing the same with shorts? Why should Robinhood pick a winner (siding against their own customers)?
I don't think this was Robinhood's choice.
Robinhood doesn't actually execute any trades. They sell user's trade orders to Citadel, a trade executor. Citadel then buys the shares on the market, and sells them to Robinhood for a slight markup. It's how Robinhood offers trades for $0 fees. You pay pennies more per share, but don't have to spend $5 per trade.
Citadel, and other trade executors, are refusing to buy shares for retail traders. Coincidentally, Citadel also bailed out Melvin fund for their short position in GME. So, Citadel has an interest in not letting the price go up any further. And citadel controls trade execution for dozens of firms.
This is definitely illegal. But Citadel is betting that the resulting SEC fines from this illegal manipulation will be less than the loss they would get if they didn't suppress the price.
Robinhood doesn't actually execute any trades. They sell user's trade orders to Citadel, a trade executor. Citadel then buys the shares on the market, and sells them to Robinhood for a slight markup. It's how Robinhood offers trades for $0 fees. You pay pennies more per share, but don't have to spend $5 per trade.
Citadel, and other trade executors, are refusing to buy shares for retail traders. Coincidentally, Citadel also bailed out Melvin fund for their short position in GME. So, Citadel has an interest in not letting the price go up any further. And citadel controls trade execution for dozens of firms.
This is definitely illegal. But Citadel is betting that the resulting SEC fines from this illegal manipulation will be less than the loss they would get if they didn't suppress the price.
> Citadel also bailed out Melvin fund for their short position in GME. So, Citadel has an interest in not letting the price go up any further.
Citadel bailed out Melvin Capital. Not its position. Melvin doesn't have a short position anymore.
Melvin made a stupid bet. Citadel bailed them out. Private sector bailouts aren't free: Citadel got its pound of flesh. Even if they bought the entire portfolio, that portfolio no longer includes GameStop shorts.
If Citadel's asset management and market making arms are colluding, that is illegal. But it's the most complicated and stupid explanation of the bunch. Market makers stop quoting for all kinds of reasons. If I were still on my options market making desk, I'd be pulling the plug on this. My traders would yell at me. This is what you make money on in market making! But the risks of loss go up with volatility, and the costs of gamma getting away can be nasty.
The chances that a fund the size of Citadel has any strong opinion on the direction of GameStop stock is vanishingly low. The chances that they stopped quoting in the name, as did almost every other market maker, and thereby broke Robinhood's system, which doesn't--to my knowledge--directly interface with exchanges to any significant degree, is high.
Citadel bailed out Melvin Capital. Not its position. Melvin doesn't have a short position anymore.
Melvin made a stupid bet. Citadel bailed them out. Private sector bailouts aren't free: Citadel got its pound of flesh. Even if they bought the entire portfolio, that portfolio no longer includes GameStop shorts.
If Citadel's asset management and market making arms are colluding, that is illegal. But it's the most complicated and stupid explanation of the bunch. Market makers stop quoting for all kinds of reasons. If I were still on my options market making desk, I'd be pulling the plug on this. My traders would yell at me. This is what you make money on in market making! But the risks of loss go up with volatility, and the costs of gamma getting away can be nasty.
The chances that a fund the size of Citadel has any strong opinion on the direction of GameStop stock is vanishingly low. The chances that they stopped quoting in the name, as did almost every other market maker, and thereby broke Robinhood's system, which doesn't--to my knowledge--directly interface with exchanges to any significant degree, is high.
> Melvin doesn't have a short position anymore.
Source? If I was caught in a short squeeze, this is exactly the kind of announcement I would circulate to prevent the price from going any higher.
Source? If I was caught in a short squeeze, this is exactly the kind of announcement I would circulate to prevent the price from going any higher.
Citadel din't bail them out and they didn't close the positions, if they did, the "bailout" would be a complete writeoff -- why would Citadel do that?
Citadel probably gave them the cash to avoid a margin call, knowing they can later manipulate the market and the shorts would payoff in the end, and Citadel would get their share of the spoils.
Otherwise a bailout makes no economical sense, Citadel is not the FED, they can't print money just to cover someone elses losses.
Citadel probably gave them the cash to avoid a margin call, knowing they can later manipulate the market and the shorts would payoff in the end, and Citadel would get their share of the spoils.
Otherwise a bailout makes no economical sense, Citadel is not the FED, they can't print money just to cover someone elses losses.
> if they did, the "bailout" would be a complete writeoff
What? No it wouldn't.
Melvin faced cash calls. To raise cash fast they could (a) get it from their LPs (fat chance), (b) raise it from someone else or (c) sell other assets. The last option is a fire sale. You figure out what the fire sale discount would be, say it's 50%, and then use that to get (b).
I don't know what the terms of the bailout were. If I were structuring, I'd make it a loan with a super-high interest rate triply collateralized by their remaining assets. If they pay it back, I get the super high interest rate. If they default, I get the rest of their assets for 33¢ on the dollar. Between those two, the latter is frankly the higher-payoff scenario. (I would also require all short positions be closed out within N days, with the borrower's investors bearing the losses.)
What? No it wouldn't.
Melvin faced cash calls. To raise cash fast they could (a) get it from their LPs (fat chance), (b) raise it from someone else or (c) sell other assets. The last option is a fire sale. You figure out what the fire sale discount would be, say it's 50%, and then use that to get (b).
I don't know what the terms of the bailout were. If I were structuring, I'd make it a loan with a super-high interest rate triply collateralized by their remaining assets. If they pay it back, I get the super high interest rate. If they default, I get the rest of their assets for 33¢ on the dollar. Between those two, the latter is frankly the higher-payoff scenario. (I would also require all short positions be closed out within N days, with the borrower's investors bearing the losses.)
Are you saying that Citadel just lent someone money to close short positions worth a very significant percentage of their total assets? (Melvin having 11 bilion in total assets and Citadel giving them 3 billion).
That's what I was pointing out! Melvin did not close their shorts(as they said they did), they just got more rope from Citadel, and Citadel was willing to do just that knowing they can manipulate the market.
The narative of Melvin was "Citadel gave us 3 billion dollars, we closed our shorts at a loss, you won wsb, aren't you happy, you won, now leave us alone and stop buying".
That's what I was pointing out! Melvin did not close their shorts(as they said they did), they just got more rope from Citadel, and Citadel was willing to do just that knowing they can manipulate the market.
The narative of Melvin was "Citadel gave us 3 billion dollars, we closed our shorts at a loss, you won wsb, aren't you happy, you won, now leave us alone and stop buying".
> Citadel just lent someone money to close short positions worth a very significant percentage of their total assets?
Yes. Those other assets are presumably uncorrelated to this short position. If they were fire sold, depending on the assets, they could have gotten 20¢ or 30¢ on the dollar.
That discount gives Melvin the incentive to borrow, even at exorbitant rates. It protects the rest of the portfolio. With the bailout, the GameStop loss is capped and eaten by LPs. That sucks. But it sucks less than eating that loss and selling off the rest of the portfolio for peanuts.
> Melvin did not close their shorts(as they said they did)
You're alleging securities fraud. This may be the case! But we have zero evidence of it. And if Citadel and Point72 invested $3bn to aid and abet securities fraud, that would be quite stupid.
Yes. Those other assets are presumably uncorrelated to this short position. If they were fire sold, depending on the assets, they could have gotten 20¢ or 30¢ on the dollar.
That discount gives Melvin the incentive to borrow, even at exorbitant rates. It protects the rest of the portfolio. With the bailout, the GameStop loss is capped and eaten by LPs. That sucks. But it sucks less than eating that loss and selling off the rest of the portfolio for peanuts.
> Melvin did not close their shorts(as they said they did)
You're alleging securities fraud. This may be the case! But we have zero evidence of it. And if Citadel and Point72 invested $3bn to aid and abet securities fraud, that would be quite stupid.
> You're alleging securities fraud.
I stare at this crap all day and I've seen no indicator that Melvin has closed a large percentage of their position, let alone all of it. I will 100 percent allege securities fraud.
I stare at this crap all day and I've seen no indicator that Melvin has closed a large percentage of their position, let alone all of it. I will 100 percent allege securities fraud.
They got away with worse in 2008?
No "they" didn't. Wall Street is not a homogenous thing. You're thinking of banks in particular, which are about as different from hedge funds categorically as Facebook and Salesforce. Sure they're both tech companies with software products, but they have entirely different business models.
I believe GP was specifically referring to Citadel, nee SAC: https://popular.info/p/the-merry-adventures-of-robinhood
You may be confusing SAC / Point72 with Citadel.
Genuinely curios, what type of assets can only be liquidated 33 cents on the dollar?
And what is the likelyhood Melvin had such a significant proportion of their portfolio in such assets?
And what is the likelyhood Melvin had such a significant proportion of their portfolio in such assets?
Junk bonds. Packages containing failed/failing mortgages. Unsecured medical debt.
Good grief, can you imagine trying to sleep at night with a portfolio of unsecured medical debt? "Pay me for your cancer treatment!"
If you want to feel good, buy it for pennies and then forgive it. 100$ to you can be several thousand to someone owing the debt.
You can do exactly this through: https://ripmedicaldebt.org
This would be a good NFP strategy until US gets universal healthcare
@hanklazard best me to it
@hanklazard best me to it
The type of assets that you need to sell in the next hour, of such a magnitude that there are only a few buyers.
Think about it, you're staring at a mob of people willing to buy the stock at absurd prices... Why would you announce that you've closed your shorts instead of keeping quiet and profiting of the mob?
The answer is they didn't close it, they were trying to get the mob to back off.
And no, it technically wouldn't be fraud, they were very careful with their words...
The answer is they didn't close it, they were trying to get the mob to back off.
And no, it technically wouldn't be fraud, they were very careful with their words...
Here's the source --
Citadel, Point72 to Invest $2.75 Billion Into Melvin Capital Management - WSJ [0]
Read As: Melvin no longer has a short position. Citadel (edit: or like someone else said, a 3rd party) does. Citadel will handle this. Melvin is in time out.
We'll figure out who holds the chips in a few weeks time when filing deadlines are due. Thus it's dark.
Thus explains the perfectly executed short ladder today - could only be pulled off by someone with more dry powder than Melvin - but if you look at the Level II data, this is going to take a long, long time.
[0]https://www.wsj.com/articles/citadel-point72-to-invest-2-75-...
Citadel, Point72 to Invest $2.75 Billion Into Melvin Capital Management - WSJ [0]
Read As: Melvin no longer has a short position. Citadel (edit: or like someone else said, a 3rd party) does. Citadel will handle this. Melvin is in time out.
We'll figure out who holds the chips in a few weeks time when filing deadlines are due. Thus it's dark.
Thus explains the perfectly executed short ladder today - could only be pulled off by someone with more dry powder than Melvin - but if you look at the Level II data, this is going to take a long, long time.
[0]https://www.wsj.com/articles/citadel-point72-to-invest-2-75-...
> the perfectly executed short ladder today
I missed this. What's this referencing?
I missed this. What's this referencing?
Selling back and forth at a lower and lower price while WSB couldn’t buy to keep the price up
> while WSB couldn’t buy to keep the price up
Yes which could be called the crime of these brokers
Yes which could be called the crime of these brokers
[deleted]
> If I was caught in a short squeeze, this is exactly the kind of announcement I would circulate to prevent the price from going any higher
That would be securities fraud.
That would be securities fraud.
Well surely that never happens. No large organization has ever committed securities fraud in order to make or save billions.
I hope you have a better reason why that's not likely than "but that's illegal." Them actively committing securities fraud seems to be the most likely occurrence from where I'm sitting.
I hope you have a better reason why that's not likely than "but that's illegal." Them actively committing securities fraud seems to be the most likely occurrence from where I'm sitting.
> No large organization has ever committed securities fraud in order to make or save billions.
Who would save billions? For how long?
Let's assume the statement is fraudulent. Before the statement was made, Melvin's LPs were set to get hosed. Melvin's general partners, the ones making the statements, have a lot of egg on their faces. But they didn't do anything wrong. They keep their money and houses and yachts. And in all likelihood, after a few months, craft a lessons-learned pitch and raise more money.
After the statement, they have engaged in fraud. Not only is criminal prosecution a risk. All those deep-pocketed LPs can now sue the general partners, personally, for breach of fiduciary duty.
Add to that the Citadel bailout, which removed the risk of the fund going under, and there is no reasonable explanation for lying about closing out the short. If you wanted to show resilience, you'd say something like "we've fully hedged our shorts with long-dated puts, reducing our expected profit but capping our losses."
Who would save billions? For how long?
Let's assume the statement is fraudulent. Before the statement was made, Melvin's LPs were set to get hosed. Melvin's general partners, the ones making the statements, have a lot of egg on their faces. But they didn't do anything wrong. They keep their money and houses and yachts. And in all likelihood, after a few months, craft a lessons-learned pitch and raise more money.
After the statement, they have engaged in fraud. Not only is criminal prosecution a risk. All those deep-pocketed LPs can now sue the general partners, personally, for breach of fiduciary duty.
Add to that the Citadel bailout, which removed the risk of the fund going under, and there is no reasonable explanation for lying about closing out the short. If you wanted to show resilience, you'd say something like "we've fully hedged our shorts with long-dated puts, reducing our expected profit but capping our losses."
This will probably be my least popular post ever, but the explanation needs to get out there for why Robinhood stopped trading on GME.
Selling a stock short is NOT illegal. It is a perfectly valid type of investment according to the SEC:
“D. Are short sales legal? Although the vast majority of short sales are legal, abusive short sale practices are illegal. For example, it is prohibited for any person to engage in a series of transactions in order to create actual or apparent active trading in a security or to depress the price of a security for the purpose of inducing the purchase or sale of the security by others. Thus, short sales effected to manipulate the price of a stock are prohibited.”
Basically – you can’t short sell a stock to manipulate the price down so you can buy a lot more of it later. If you believe a stock is overpriced and short sell it, that is legal. That is exactly what tons of retail traders and hedge funds do every day, including on Gamestop.
On the other hand, manipulating a stock price upwards to cause a short squeeze IS illegal according to the same SEC article:
“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.”
Unprecedented numbers of people on Reddit, Twitter, and elsewhere collaborated to intentionally create a short squeeze on GME in the last week. No one talked about a fundamental case why Gamestop the company was worth a lot of money and would be successful in the future; instead everyone made the argument that due to a very high short interest of 100%+, that a short squeeze would send the price “to the moon”. That is illegal according to the SEC.
Multiple brokerages, especially Robinhood, probably had their attorneys tell them that “Hey, you are aiding and abetting illegal activity by enabling a short squeeze and could be liable criminally or civilly if you continue to allow this blatant illegal activity on your platform”. So they decided to stop it by only allowing people to close their positions rather than open new ones in support of the short squeeze.
Another strong reason is that if the short squeeze caused the GME stock to go to 5000 in a sudden leap, tons of traders (both retail and professional) could instantly go broke, and then the brokerage (Robinhood) would be left holding the bag. For example, picture a retail investor with a Robinhood account had sold call options in the amount of $100,000 and their account was worth $200,000. If the price gapped from 300 to 5000 and those options were exercised, that trader could have a loss of $10,000,000. He would lose the value of his account, $200,000… but the brokerage would have to make up the rest of the settlement and take a loss of $9,800,000. Now multiply that by thousands of accounts…. no brokerage wants to take the risk of being bankrupted, so they shut it down.
The two strong reasons Robinhood and other brokers stopped trading was to prevent legal liability from enabling illegal activity on their platform, and for wanting to avoid potentially massive banktuptcy from traders unable to cover their losses.
Selling a stock short is NOT illegal. It is a perfectly valid type of investment according to the SEC:
“D. Are short sales legal? Although the vast majority of short sales are legal, abusive short sale practices are illegal. For example, it is prohibited for any person to engage in a series of transactions in order to create actual or apparent active trading in a security or to depress the price of a security for the purpose of inducing the purchase or sale of the security by others. Thus, short sales effected to manipulate the price of a stock are prohibited.”
Basically – you can’t short sell a stock to manipulate the price down so you can buy a lot more of it later. If you believe a stock is overpriced and short sell it, that is legal. That is exactly what tons of retail traders and hedge funds do every day, including on Gamestop.
On the other hand, manipulating a stock price upwards to cause a short squeeze IS illegal according to the same SEC article:
“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.”
Unprecedented numbers of people on Reddit, Twitter, and elsewhere collaborated to intentionally create a short squeeze on GME in the last week. No one talked about a fundamental case why Gamestop the company was worth a lot of money and would be successful in the future; instead everyone made the argument that due to a very high short interest of 100%+, that a short squeeze would send the price “to the moon”. That is illegal according to the SEC.
Multiple brokerages, especially Robinhood, probably had their attorneys tell them that “Hey, you are aiding and abetting illegal activity by enabling a short squeeze and could be liable criminally or civilly if you continue to allow this blatant illegal activity on your platform”. So they decided to stop it by only allowing people to close their positions rather than open new ones in support of the short squeeze.
Another strong reason is that if the short squeeze caused the GME stock to go to 5000 in a sudden leap, tons of traders (both retail and professional) could instantly go broke, and then the brokerage (Robinhood) would be left holding the bag. For example, picture a retail investor with a Robinhood account had sold call options in the amount of $100,000 and their account was worth $200,000. If the price gapped from 300 to 5000 and those options were exercised, that trader could have a loss of $10,000,000. He would lose the value of his account, $200,000… but the brokerage would have to make up the rest of the settlement and take a loss of $9,800,000. Now multiply that by thousands of accounts…. no brokerage wants to take the risk of being bankrupted, so they shut it down.
The two strong reasons Robinhood and other brokers stopped trading was to prevent legal liability from enabling illegal activity on their platform, and for wanting to avoid potentially massive banktuptcy from traders unable to cover their losses.
> No one talked about a fundamental case why Gamestop the company was worth a lot of money and would be successful in the future; instead everyone made the argument that due to a very high short interest of 100%+, that a short squeeze would send the price “to the moon”.
All of this started on Reddit because someone made a case for their fundamentals.
Here is their Reddit account: https://www.reddit.com/user/DeepFuckingValue/
Here is their YouTube account: https://www.youtube.com/c/RoaringKitty/videos
He is considered a legend by all of the people on WSB (of which I am not one) for it and kicked the whole thing off.
My question is.. how does a guy on Reddit and YouTube giving a fundamental analysis of why he valued a stock, and millions of people seeing value and buying it, differ from something akin to Mad Money?
All of this started on Reddit because someone made a case for their fundamentals.
Here is their Reddit account: https://www.reddit.com/user/DeepFuckingValue/
Here is their YouTube account: https://www.youtube.com/c/RoaringKitty/videos
He is considered a legend by all of the people on WSB (of which I am not one) for it and kicked the whole thing off.
My question is.. how does a guy on Reddit and YouTube giving a fundamental analysis of why he valued a stock, and millions of people seeing value and buying it, differ from something akin to Mad Money?
DFW made his fundamentals case months ago and had a real (if possibly mistaken) case at that point.
In the last week though, after the massive increase in GME's stock price, the arguments on WSB have all been about the planned short squeeze and gamma squeeze to convince people to hold on or buy more.
In the last week though, after the massive increase in GME's stock price, the arguments on WSB have all been about the planned short squeeze and gamma squeeze to convince people to hold on or buy more.
Interesting, all I see is comments about them liking the stock. The negative comments I’ve seen relate to the assumed market manipulation tactics.
Taking the last week out of context makes little sense, because the last week is just a snowball that started on the 11th of January 2021, when Ryan Cohen and two of his friends from Chewy joined GameStop’s board, after building up a 13% stock position in the company over the course of the last few months. They believe that GameStop can be reimagined as a force in online retailing:
https://www.bloomberg.com/news/newsletters/2021-01-25/money-...
This is crowd sourcing to create a coordinated attack like DDOS-ing, but how did we get here? Over-shorting. How did we get there? Hedge fund data sharing dinners? So this seems more like a swing back in the other direction. I presume when the dust settles the SEC will claw back these "illegal" gains from the individual investors. Too bad trades aren't settled via blockchain.
> Unprecedented numbers of people on Reddit, Twitter, and elsewhere collaborated to intentionally create a short squeeze on GME in the last week.
You're missing a party in that analysis. For this party, maybe it was a stupid idea for them to try and short sell in a market where the fed had pumped trillions into the economy and market activity, retail and otherwise, is at an unprecedented level of froth. But with that said, they are supposed to be professionals. It seems to be within reason to expect them to be able to hedge against the risk of a bunch of amateurs deciding to protest buy a piece of their childhood against being raided by Wall Street, no?
After all, "irrationally" holding assets that have sentimental value and allocating a large portion of whatever surplus earnings you have to it is a well known American tradition. Whatever the socioeconomic bracket, people have traditionally found ways to support causes and brands that they hold dear. Shouldn't large institutional clients be asking these fund managers why they're poking a beehive right now, and whether it might just be a little unnecessarily risky?
You're missing a party in that analysis. For this party, maybe it was a stupid idea for them to try and short sell in a market where the fed had pumped trillions into the economy and market activity, retail and otherwise, is at an unprecedented level of froth. But with that said, they are supposed to be professionals. It seems to be within reason to expect them to be able to hedge against the risk of a bunch of amateurs deciding to protest buy a piece of their childhood against being raided by Wall Street, no?
After all, "irrationally" holding assets that have sentimental value and allocating a large portion of whatever surplus earnings you have to it is a well known American tradition. Whatever the socioeconomic bracket, people have traditionally found ways to support causes and brands that they hold dear. Shouldn't large institutional clients be asking these fund managers why they're poking a beehive right now, and whether it might just be a little unnecessarily risky?
Robinhood has no stake in whether or not individual trader actions are legal, and the entire distinction between legal and illegal here is based on being able to determine individual trader's motives. Robinhood is acting illegally by your own argument by manipulating the price and availability of a stock.
Basically there was a good fundamental analysis with due diligence that GameStop was over shorted and priced under value. Some people thought it was a good analysis and started buying. When more people buy... the price goes up.
As the price goes up more people started to believe the thesis and piled in. At some point this just becomes momentum training which last I knew was legal.
It seems like you have taken a very narrow and biased view of the law that fits the narrative you like.
As the price goes up more people started to believe the thesis and piled in. At some point this just becomes momentum training which last I knew was legal.
It seems like you have taken a very narrow and biased view of the law that fits the narrative you like.
I found this interesting/believable https://tinyurl.com/y64hzsl6 on WSB concerning RH refusing additional buys of GME.
nawgz(2)
It's one thing to commit securities fraud. It's another to do it, blatantly and openly, as part of the biggest news story of the week.
People panic.
Especially when they're staring at billions of losses and maybe all it takes to save them is a carefully worded public statement that they think they can later argue is technically truthful.
Especially when they're staring at billions of losses and maybe all it takes to save them is a carefully worded public statement that they think they can later argue is technically truthful.
[deleted]
[deleted]
To be clear, they didn't "announce" they closed their positions. They whispered it to a CNBC news anchor on the phone.
There's no announcement, just a sourced rumor, and no proof they closed their trades when they said they did.
There's no announcement, just a sourced rumor, and no proof they closed their trades when they said they did.
Not if you ask one of your buddies at CNBC to announce it, and when caught they just say oops my bad, it was based on incorrect info.
How have they exited their short position when the short interest is still ~130% though?
The higher the price goes, the more incentive for new people to buy short, who aren't subject to the same pressure to get out fast that the ones who've been there longer were.
Doing this all in such a publicly-coordinated way on Reddit means you're wide open to people trying to directly play against your goals.
So much of the "proof" of things around this seems to be making big assumptions about who is on the other side that the aggregate numbers don't seem to indicate one way or another.
Doing this all in such a publicly-coordinated way on Reddit means you're wide open to people trying to directly play against your goals.
So much of the "proof" of things around this seems to be making big assumptions about who is on the other side that the aggregate numbers don't seem to indicate one way or another.
> How have they exited their short position when the short interest is still ~130% though?
Lots of people are short? I know at least half a dozen people who bought puts over the last few days. Those puts hedge into shorting the same way calls turn into buying.
Lots of people are short? I know at least half a dozen people who bought puts over the last few days. Those puts hedge into shorting the same way calls turn into buying.
Hmm. There seems to be a lot of unknowns right now. Do you think the information about how this all went down will come out once it's over?
I'd say most of the wallstreetbets traders still believe Melvin has their position, but you're saying otherwise. Though the still extremely high short interested doesn't seem to make sense if the big losers already exited...
I'd say most of the wallstreetbets traders still believe Melvin has their position, but you're saying otherwise. Though the still extremely high short interested doesn't seem to make sense if the big losers already exited...
> Do you think the information about how this all went down will come out once it's over?
I do. This will make partners out of a solid suite of securities lawyers around the country. But we won't have clear answers for at least another 6 months.
I do. This will make partners out of a solid suite of securities lawyers around the country. But we won't have clear answers for at least another 6 months.
High short interests make a lot of sense right now, you have a shitty company with a market cap above 50% of the S and P 500 trading at multiples higher than IP rich tech companies like Apple. The stock is overvalued many times over regardless of whether you use sentiment or NPV’s. The more overpriced a stock becomes the more bears will join the marketplace, that’s inevitable. Most hedge funds take losses once the price goes about 30% over their position, most early bears definitely went above this but there is little chance they are still holding. That means that these new shorts are likely to have set prices in the $250 plus range, where the potential returns are astronomical and the little guys trying to stick it to the man are likely to foot the vast majority of the Bill whilst making the man and a small number of early buyers a shit load of money
If the early bears have already exited I would have expected the price to jump higher though.
Also, from what people are saying on WSB, there's no liquidity left in the market which is why some platforms halted trading for $GME.
If the early shorts were all out I wouldn't expect a lack of liquidity, since more recent short positions wouldn't be under as much pressure.
I'm a complete noob, but it seems like literally no one can agree on what's happening and why even though there seem to be valid arguments on all sides.
Also, from what people are saying on WSB, there's no liquidity left in the market which is why some platforms halted trading for $GME.
If the early shorts were all out I wouldn't expect a lack of liquidity, since more recent short positions wouldn't be under as much pressure.
I'm a complete noob, but it seems like literally no one can agree on what's happening and why even though there seem to be valid arguments on all sides.
Do we have real time access to the short interest numbers? My impression is those came from a report that comes out every two weeks?
Not real time, but theres this wallstreetbets post from yesterday.
https://www.reddit.com/r/wallstreetbets/comments/l642ms/upda...
https://www.reddit.com/r/wallstreetbets/comments/l642ms/upda...
Posted before Melvin capital claimed they had closed their position?
If you look at the comments it seems like the Reddit post was after the announcement from Melvin, because people are accusing them (Melvin) of lying.
But also possible the underlying data was collected by EOD the day prior. Point is it's not a very clear data source IMO. Would be nice if real time short interest was public info.
How is it legal for it _not_ to be? Keeping that information hidden drastically incentivizes naked short selling -- and there is an exploit for naked shorts that will be incredibly difficult to prevent going forward ... no -- the exploit does not really rely on collective action -- it relies on the perception of collective action -- which is definitely fake able in an automated way with current technologies.
Naked shorts at this scale are gonna have to go away and no one will have more incentive to reach that goal than main street wall street ... ideally they can and should do this in a way that simply involves making more information public ...
Naked shorts at this scale are gonna have to go away and no one will have more incentive to reach that goal than main street wall street ... ideally they can and should do this in a way that simply involves making more information public ...
Yeah I don't buy this at all. There isn't enough stock for them to close their position.
> There isn't enough stock for them to close their position
Tens of billions of dollars of GameStop have been bought and sold over the past few days. If you can buy GameStop to go long, you can buy it to cover a short.
Note that there isn't a limit on rehypothecation. A share sold short by Bob can be used by Anna to cover her pre-existing short.
Tens of billions of dollars of GameStop have been bought and sold over the past few days. If you can buy GameStop to go long, you can buy it to cover a short.
Note that there isn't a limit on rehypothecation. A share sold short by Bob can be used by Anna to cover her pre-existing short.
I am not highly knowledgeable on this, but... even if it's the same share that Anna sold to Bob short in the first place?
Yes, even if it's the same share that Anna sold to Bob short in the first place. That's how you get short interest > 100%. The market doesn't care, it only cares that a share was sold from Anna to Bob and then from Bob to Anna. The individual shares are completely fungible. (They don't actually exist, they're just numbers in a contract.)
Wow. That's incredible.
> Tens of billions of dollars of GameStop have been bought and sold over the past few days.
Yes, at prices that are several multiples above the price they shorted at.
Yes, at prices that are several multiples above the price they shorted at.
I don’t believe Melvin has public investors that could claim to have traded Melvin’s shares on the basis of Melvin’s misleading statements.
And I am quite certain that there is no obligation that you have to truthfully tell the world your position in any one security.
So, I’d like someone with legal training to make a case for security fraud.
(It might still be market manipulation or some such).
And I am quite certain that there is no obligation that you have to truthfully tell the world your position in any one security.
So, I’d like someone with legal training to make a case for security fraud.
(It might still be market manipulation or some such).
>That would be securities fraud.
Naked shorting to drive down the price is also securities fraud. And yet...
Naked shorting to drive down the price is also securities fraud. And yet...
If the alternative is bankruptcy and the destruction of your legacy, would you risk it?
> That would be securities fraud.
Are you saying that they wouldn't commit securities fraud?
Weather or not Melvin has the position, you can look at the borrow rates and short interest. Someone is balls deep in shorts and they have to cover one of these days.
Yeah I don't believe it. Or they transferred it to a complicit 3rd party who will eventually benefit.
[deleted]
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> The chances that a fund the size of Citadel has any strong opinion on the direction of GameStop stock is vanishingly low.
I find it exceedingly unlikely that Citadel has no opinion on the value of a stock that could make or break a firm they just lent massive amounts of money to.
It's also very unlikely that Melvin didn't have a short position anymore. I think that was a lie, knowing the SEC fine would be less than what they otherwise would lose. We'll see - maybe. Or maybe TPTB will cover this up.
I find it exceedingly unlikely that Citadel has no opinion on the value of a stock that could make or break a firm they just lent massive amounts of money to.
It's also very unlikely that Melvin didn't have a short position anymore. I think that was a lie, knowing the SEC fine would be less than what they otherwise would lose. We'll see - maybe. Or maybe TPTB will cover this up.
> The chances that a fund the size of Citadel has any strong opinion on the direction of GameStop stock is vanishingly low
I didn't touch this in the first place, but once it was clear it was a short squeeze, nope, not gonna play that game. Just sit back and enjoy the show.
I didn't touch this in the first place, but once it was clear it was a short squeeze, nope, not gonna play that game. Just sit back and enjoy the show.
A short squeeze is nice if you get caught in in by accident as a stock owner. During the Volkswagen short squeeze a lot of lower level employees at Volkswagen were suddenly able to fully pay back their mortgage. Isn't that cute?
I doubt many gamestop employees got to do that this week, but there was a similar, smaller drama also going on with a Blackberry short squeeze, and that might have gotten a few extra mortgage payments taken care of.
>Melvin doesn't have a short position anymore.
This makes no sense, if gme isn't shorted then why then break the law and restrict buying it?
And it does feel like they are restricting buys. Seems unlikely that all the trading platforms that rely on citadel coincidentally decided they wanted to hedge against volatility by restricting user buys.
This makes no sense, if gme isn't shorted then why then break the law and restrict buying it?
And it does feel like they are restricting buys. Seems unlikely that all the trading platforms that rely on citadel coincidentally decided they wanted to hedge against volatility by restricting user buys.
I am ashamed to have written this comment. I didn't know about clearing houses and shouldn't have been so arrogant in a field I'm not familiar with. Funnily enough I put my money where my mouth was and profited, but that was just luck. Whatever.
> Melvin doesn't have a short position anymore.
Untrue, the number of shares short is still 70 million. Nothing changed.
Untrue, the number of shares short is still 70 million. Nothing changed.
They aren’t the only people with short positions. They could’ve exited and others picked it up.
I’ve no dog in this race; just thought I should point that out
I’ve no dog in this race; just thought I should point that out
The question is, would there be any consequence if he lied about it? Given the huge amount of losses, it’s not unreasonable for one to lied about closing their position in hopes of the price falling down.
I wonder... couldn't people do this over and over again?
how long can citadel and/or other entities hold?
how long can citadel and/or other entities hold?
No, or rather, only if MM's like Citadel over-short like they did here. It's a rare catch by retail that they were overextended, and retail pounced on the opportunity, just like the MM's do against retail all the fucking time, but now that the little guys are doing the fucking, it's all fetch me my smelling salts and call the sheriff!
Retail didn't do jack to the market makers and Melvin capital isn't a market maker.
So many people here who have no idea what the hell is going on, and yet are so confident.
So many people here who have no idea what the hell is going on, and yet are so confident.
Melvin capital is a market maker, it's in the list at least... You might check yourself before acting so high and mighty. 1 is the reference for wikipedia. 2 is just another source in case you doubt. By the way, Citadel is also on that list. Retail did do something to Citadel and Melvin... so wrong on both counts.
1. https://web.archive.org/web/20070228050751/http://www.alphat...
2. https://www.level2stockquotes.com/market-makers-m-list.html
1. https://web.archive.org/web/20070228050751/http://www.alphat...
2. https://www.level2stockquotes.com/market-makers-m-list.html
Melvin securities is a completely different company than Melvin capital.
Retail did nothing to Citadel securities.
Retail did nothing to Citadel securities.
Welp I guess I can eat crow on this one then. You are right it seems.
This entire GME WSB thing is a bunch of people wanting to feel important. That's why there's so much high-and-mighty talk even though the facts of the matter are..pretty boring.
The facts are supremely boring. Fund gets caught with bad luck. Fund blows up. Life goes on.
Even the amount of billions being transferred here are not interesting.
Even the amount of billions being transferred here are not interesting.
It stops being boring when brokers start directly interfering with the volume by changing what traders are allowed to do in the middle of a trading day.
I'd say this is a vast oversimplification of the situation, don't you agree?
Citadel is probably having a very busy, but very good day today.
I wonder whether Citadel was the / a major lender for the shares in the first place. That would explain a lot. But even then, I doubt that there was foul play.
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I certainly get pulling the plug on options, but I don't understand how the volatility in $GME would lead a market maker to simply stop quoting the underlying stock altogether. If the price starts flying around you just widen your spread. If there's too much pressure on the buy side and you can't keep your position neutral, you just raise your offering price until you're not selling shares at too fast a rate anymore.
> I don't understand how the volatility in $GME would lead a market maker to simply stop quoting the underlying stock altogether. If the price starts flying around you just widen your spread.
People after the financial crisis liked to talk about fat tails. Risk models assuming narrow tails, reality having a taste for extreme events. This is a fat-tail event. We don't have great models for stocks as volatile and as correlated as GME is right now. Which means for even cash equities trading, we don't have a great sense around what the appropriate spread should be.
Market making has sometimes been described as vacuuming up nickels in front of bulldozers. These are bulldozin' times. You don't want to fill a bunch of sell orders in GME right before it gaps down 80%.
People after the financial crisis liked to talk about fat tails. Risk models assuming narrow tails, reality having a taste for extreme events. This is a fat-tail event. We don't have great models for stocks as volatile and as correlated as GME is right now. Which means for even cash equities trading, we don't have a great sense around what the appropriate spread should be.
Market making has sometimes been described as vacuuming up nickels in front of bulldozers. These are bulldozin' times. You don't want to fill a bunch of sell orders in GME right before it gaps down 80%.
I mean, we can see that this idea that the stock is too risky to quote is not true because there is a two-sided market in it right now, which can be traded on multiple platforms. The only actually existing peculiarity here is that Robinhood is not allowing customers in possession of 100% margin to open a new long position.
> we can see that this idea that the stock is too risky to quote is not true because there is a two-sided market in it right now
On exchanges. Those are buyers and sellers as well as market makers. Robinhood connects to a subset of the latter.
On exchanges. Those are buyers and sellers as well as market makers. Robinhood connects to a subset of the latter.
> Those are buyers and sellers as well as market makers.
Nope, pretty much just market makers.
Nope, pretty much just market makers.
Hopefully others realize that downvotes on HN do not change the reality of how market makers function.
Today it opened at $265, hit a high of $483 and dropped to a low of $112. At 2:00 pm it was $226, 2:05pm it was $431, and then came back down to $237 at 2:15pm. That sort of volatility is, I think, unprecedented which means the market makers don't have good risk models. So you're right that they could be cleaning up here with a large spread. But that profit comes at unknown levels of risk.
An internalizer must match displayed NBBO at the exchanges. If it can’t, it has to route to the exchange, pay exchange fees, and on top of that still pay for the order flow.
Normally internalizers have no problem competing with spreads on the exchanges, because retail flow is much less toxic than the sophisticated traders in the public venues. But with GME, the retail investors are running the show.
Therefore it no longer makes sense for internalizers to pay for this order flow.
Normally internalizers have no problem competing with spreads on the exchanges, because retail flow is much less toxic than the sophisticated traders in the public venues. But with GME, the retail investors are running the show.
Therefore it no longer makes sense for internalizers to pay for this order flow.
I don't think it's an issue of Citadel not quoting GME. In my understanding, Robin Hood is allowing purchases to close a short position, so there exist quoted prices, they just don't want people expanding a long position.
If this is coming from Robin Hood, they could make the (very weak) argument that they are protecting their retail customers from themselves, but if it's coming from Citadel, it just looks like market manipulation to me.
If this is coming from Robin Hood, they could make the (very weak) argument that they are protecting their retail customers from themselves, but if it's coming from Citadel, it just looks like market manipulation to me.
I don't think it's coming from RobinHood; eToro is also blocking buys and they have the message "We have made this change following a notification from our liquidity provider that they have set $GME to close only status".
I got similar email from tasty. They said Apex clearing won't allow any new positions on meme stocks.
Given that it's not just RH, but nearly all, if not all, brokers that outsource order flow like RH...I think it's safe to assume it wasn't RH decision.
Given that it's not just RH, but nearly all, if not all, brokers that outsource order flow like RH...I think it's safe to assume it wasn't RH decision.
You're making assumptions that it was the liquidity provider who pulled the plug and not the much more likely option that it was Robinhood pulling the plug for liability reasons.
Tastytrade also restricted trade in the same manner. They send a mail to all customers and made it very clear that it was Apex Clearing who forced their hand. It is very unlikely that something different happened at Robinhood.
No, I'm granting that as the parent's premise. And what liability reasons would Robinhood have to disallow buying an NYSE listed stock with 100% cash?
They've already been sued by retail investors who have lost their cash in the past and courts have already shown themselves to be somewhat partial to "the gamified interface just made me spend $1k I could barely afford because it was so fun!" arguments that RH is liable.
This is a much bigger deal, some (not hedge fund!) people are going to lose a crapton of money on it, and people are probably going to sue them once that happens.
You can see this discussed elsewhere in the thread.
This is a much bigger deal, some (not hedge fund!) people are going to lose a crapton of money on it, and people are probably going to sue them once that happens.
You can see this discussed elsewhere in the thread.
> for liability reasons
For trying to get some positive media coverage, after being constantly bashed and blamed by them for the uneducated retail trader boom.
For trying to get some positive media coverage, after being constantly bashed and blamed by them for the uneducated retail trader boom.
Market makers on exchanges generally have a contractual uptime obligation if I am not mistaken, but I'm not sure that applies when talking about payment for order flow.
Gme has been freezing up for a few seconds to fifteen minutes at a time for days now. Sounds like a breach to me, unless someone else ordered a halt. Robinhood itself was responsive, as were other stocks.
Those are due to exchange LULD halts. Not brokerages.
>Melvin doesn't have a short position anymore.
That's not at all verified. Short interest is still well over 100% of float. The only thing you are going off is a poorly sourced CNBC report with wishy washy language from Plotkin.
That's not at all verified. Short interest is still well over 100% of float. The only thing you are going off is a poorly sourced CNBC report with wishy washy language from Plotkin.
Citadel is blocking trades on these stocks where Melvin Capital holds shorts for any platform that uses them; Robinhood is just the most prominant among small retail traders.
Citadel "bailed out Melvin Capital" because Citadel essentially owns Melvin and so their loss is our loss sort of situation. Melvin Capital stated they had closed out their short position on GameStop, but those are huge losses to cover no one knows how true that is. There is a lot of rumor that Citadel/Melvin Capital re-bought short positions yesterday before Citadel restricted trades to manipulate the market. If this is true it is highly illegal, but this effectively allow Citadel/Melvin to make back their losses if they can force market prices down.
TL/DR, Citadel/Melvin are breaking the law, all the retail traders are getting fucked, but when this is done Citadel/Melvin ends up having more cash than ever.
Citadel "bailed out Melvin Capital" because Citadel essentially owns Melvin and so their loss is our loss sort of situation. Melvin Capital stated they had closed out their short position on GameStop, but those are huge losses to cover no one knows how true that is. There is a lot of rumor that Citadel/Melvin Capital re-bought short positions yesterday before Citadel restricted trades to manipulate the market. If this is true it is highly illegal, but this effectively allow Citadel/Melvin to make back their losses if they can force market prices down.
TL/DR, Citadel/Melvin are breaking the law, all the retail traders are getting fucked, but when this is done Citadel/Melvin ends up having more cash than ever.
I'm just not really sure I understand the narratives being thrown around right now, and I'd like to think I understand the economy somewhat
Melvin Capital closed out their short position yesterday with a large loss - and Citadel helped cover that loss.
As far as I know, Citadel and Melvin Capital no longer are holding any short positions in Gamestop. So what do they have to gain, by your narrative, from suppressing the price?
Citadel is probably making bank off of this actually, like a lot of other sell-side firms.
Melvin Capital closed out their short position yesterday with a large loss - and Citadel helped cover that loss.
As far as I know, Citadel and Melvin Capital no longer are holding any short positions in Gamestop. So what do they have to gain, by your narrative, from suppressing the price?
Citadel is probably making bank off of this actually, like a lot of other sell-side firms.
Yesterday, there was a 140% short position on Gamestop.
Today, there is still a 122% short position on Gamestop. There are still many funds hedged against GME. Melvin might have had one of the larger positions, but there are many more funds with this position. Source: https://finviz.com/quote.ashx?t=GME
As you say, they would make money by running the orders, regardless if GME goes up or down. So - why would they stop? It is most likely that Citadel is still exposed to other funds holding short positions in GME.
Today, there is still a 122% short position on Gamestop. There are still many funds hedged against GME. Melvin might have had one of the larger positions, but there are many more funds with this position. Source: https://finviz.com/quote.ashx?t=GME
As you say, they would make money by running the orders, regardless if GME goes up or down. So - why would they stop? It is most likely that Citadel is still exposed to other funds holding short positions in GME.
> So - why would they stop?
There is literally no evidence that Citadel has stopped serving GME orders. That is entirely the conjecture of this thread and ignores the much more likelier option that it was Robinhood that limited the stocks.
Why wouldn't you short GME after the price has risen so high? I'm sure there are plenty of hedge funds shorting now at a much higher price.
Hell, I shorted AMC yesterday and have made quite a bit off of that already.
There is literally no evidence that Citadel has stopped serving GME orders. That is entirely the conjecture of this thread and ignores the much more likelier option that it was Robinhood that limited the stocks.
Why wouldn't you short GME after the price has risen so high? I'm sure there are plenty of hedge funds shorting now at a much higher price.
Hell, I shorted AMC yesterday and have made quite a bit off of that already.
>Why wouldn't you short GME after the price has risen so high?
Because the stock is already over 100% short and an army of retail investors is purchasing it
Because the stock is already over 100% short and an army of retail investors is purchasing it
So? If you had shorted GME yesterday, you would make a bunch now that the price has collapsed.
What if the price goes up further? It's already rebounded 50% from the short ladder/blatant robinhood manipulation. Why put yourself on the hook for something during a black swan event?
> Why put yourself on the hook for something during a black swan event?
Because that is also often when it is a good time to make money.
It's entirely unsurprising to me that short pressure on the stock would increase after this.
Because that is also often when it is a good time to make money.
It's entirely unsurprising to me that short pressure on the stock would increase after this.
Lots of individual retail investors, including myself, take short positions on a regular basis. People keep saying that all the short positions are held by hedge funds, but in reality there's a lot of individual investors that have short positions too.
The risk to a company that processes trades is that many of these retail investors accounts would turn negative and the company that processes the trades would take giant losses they did not plan for. To prevent that, they stop processing trades.
The risk to a company that processes trades is that many of these retail investors accounts would turn negative and the company that processes the trades would take giant losses they did not plan for. To prevent that, they stop processing trades.
retail investors are a very small minority of short positions. hedge funds do most of the shorting in the market
They didn't tell you how much of the position they closed out on. They can say "they closed their position" even if they only closed out on 1% of it.
How likely is it for them to close their position when the price hit so high? That would be a huge loss. Why not wait a bit, make a few desperate phone calls and leverage their power before that?
Because of the expiration date of the short they sold and uncertainty over whether the price would continue to increase.
If you have to buy by EOD Friday and the price starts skyrocketing Thursday, you might want to buy a little earlier even if it means eating a huge loss, because you don't know if that skyrocket will continue into the next day.
e: Why is that downvoted?
If you have to buy by EOD Friday and the price starts skyrocketing Thursday, you might want to buy a little earlier even if it means eating a huge loss, because you don't know if that skyrocket will continue into the next day.
e: Why is that downvoted?
Shorts aren't options, they don't have expiration dates. You can hold a short indefinitely just by paying interest on the borrowed share value when you entered the position. You can even keep the short from being forcibly closed during a squeeze by providing more collateral.
Put options do expire, but the worst case for puts is that they expire worthless. Regular shorts can have unbounded losses.
https://www.investopedia.com/ask/answers/05/shortmarginrequi...
Put options do expire, but the worst case for puts is that they expire worthless. Regular shorts can have unbounded losses.
https://www.investopedia.com/ask/answers/05/shortmarginrequi...
I have to admit I'm missing something in this story. If the shorts do not have to sell, what's the endgame for WSB? Is it just the margin requirements will be too high, thus forcing lots of them to close their position? I see lots of references to the short squeeze happening tomorrow, so there must be something that force people to settle their position tomorrow?
What happens when the party you borrowed the stock from, seeing the new high price, wants to sell it to cash in on the fever? Can they not force close the position if the price moved up by some threshold?
Sorry I misspoke.
Melvin Capital's short position was in the form of puts, I think.
Since they would expire worthless, better to sell them when it is skyrocketing than to wait and see it skyrocket further and lose all of your money.
Melvin Capital's short position was in the form of puts, I think.
Since they would expire worthless, better to sell them when it is skyrocketing than to wait and see it skyrocket further and lose all of your money.
>Melvin Capital's short position was in the form of puts, I think.
This is incorrect.
This is incorrect.
Source? Here's mine [0]
[1]: https://www.institutionalinvestor.com/article/b1q8swwwtgr7nt...
[1]: https://www.institutionalinvestor.com/article/b1q8swwwtgr7nt...
https://www.cnbc.com/2021/01/27/hedge-fund-targeted-by-reddi...
You don't need an "emergency infusion of 3 billion dollars" if you just bought put options that are now deep OTM. As you mentioned, the total downside is capped at 100%.
They clearly had real exposure and serious panic. If they were using put options they were leveraged or had non-standard terms (not the same as typical retail investors)
You don't need an "emergency infusion of 3 billion dollars" if you just bought put options that are now deep OTM. As you mentioned, the total downside is capped at 100%.
They clearly had real exposure and serious panic. If they were using put options they were leveraged or had non-standard terms (not the same as typical retail investors)
"Melvin’s most recent filing showed that it held 5.4 million puts on GameStop, valued at more than $55 million — an increase of 58 percent during the third quarter."
If it were just puts, then their exposure to a run-up would have been 55 million, not billions. Puts can only go to zero. The filing merely hinted that they were shorting the stock because they also had some puts on it.
Think about it, if you buy a $9 put for $10, the most you could lose is $10 when the stock goes way above $9. The unlimited loss scenario with options is writing (selling) a naked call, where you receive a premium but if the stock price rises above the strike price your loss rises.
Melvin's position must have been mostly short equity. Perhaps only a few million shares of a $3 stock.
If it were just puts, then their exposure to a run-up would have been 55 million, not billions. Puts can only go to zero. The filing merely hinted that they were shorting the stock because they also had some puts on it.
Think about it, if you buy a $9 put for $10, the most you could lose is $10 when the stock goes way above $9. The unlimited loss scenario with options is writing (selling) a naked call, where you receive a premium but if the stock price rises above the strike price your loss rises.
Melvin's position must have been mostly short equity. Perhaps only a few million shares of a $3 stock.
The other commenter is right that shorts have unlimited risk, and put option are defined, but they can technically be short by selling calls which would make them expire-able.
But honestly I doubt it was even possible to be short so much with options alone on such a low cap company (as it was before this blew up)
But honestly I doubt it was even possible to be short so much with options alone on such a low cap company (as it was before this blew up)
Is it wrong to call selling calls short selling? Regardless, I think it was puts that they were buying (so sorta the contrapositive).
I don’t buy it. They’d try some tricks before capitulating. And look, it worked. Since RH stop allowing buys the price went down
> They didn't tell you how much of the position they closed out on. They can say "they closed their position" even if they only closed out on 1% of it.
There is no ambiguity in what "closing the position" means. Stating on CNBC that you have closed the position when in fact you only bought shares to cover 1% of your short would put you in jail.
Your mental model for how the world works is wrong.
There is no ambiguity in what "closing the position" means. Stating on CNBC that you have closed the position when in fact you only bought shares to cover 1% of your short would put you in jail.
Your mental model for how the world works is wrong.
Serious question: Has anyone ever been jailed for publicly saying they've closed a short position but not actually closing it all?
Is it equally illegal to say on CNBC that you closed it out, but to email your investors and tell them you didn't?
Is the legal issue that you're misleading your investors or that you're manipulating the market? Both?
Is it equally illegal to say on CNBC that you closed it out, but to email your investors and tell them you didn't?
Is the legal issue that you're misleading your investors or that you're manipulating the market? Both?
The thing the SEC is going to take issue with is lying to investors. Investors have a right to know what's going on with their money.
And despite how it seems from outside Wall Street, hedge funds are definitely scared of the SEC. Banks worry less because their money is sourced differently. Hedge funds have to worry about legal action not just for the fines but also for scaring their investors. When individual investors are so large it only takes a few redemptions to significantly impact AUM.
And despite how it seems from outside Wall Street, hedge funds are definitely scared of the SEC. Banks worry less because their money is sourced differently. Hedge funds have to worry about legal action not just for the fines but also for scaring their investors. When individual investors are so large it only takes a few redemptions to significantly impact AUM.
The same way that tweeting "funding secured" puts you in jail?
Musk didn't even make any profit from that (he didn't sell) and he still was fined $20 million and had to give up his Tesla board chair.
Recall that when that was said, it was being said by an executive and director of a public company.
[deleted]
If Melvin Capital got out, then why was the stock still 140% shorted after that announcement? I thought that 11% of the shorted stock was from Melvin Capital, it doesn't make sense that there was no significant change in that figure.
I am not trying to conspire, genuinely curious.
I am not trying to conspire, genuinely curious.
> If Melvin Capital got out, then why was the stock still 140% shorted after that announcement? I thought that 11% of the shorted stock was from Melvin Capital, it doesn't make sense that there was no significant change in that figure.
Source?
Also potentially new shorters getting in? I shorted AMC yesterday and have made quite a bit today.
Source?
Also potentially new shorters getting in? I shorted AMC yesterday and have made quite a bit today.
with the stock price through the roof other funds (and retail investors) see it as a good opportunity to short.
> As far as I know, Citadel and Melvin Capital no longer are holding any short positions in Gamestop. So what do they have to gain, by your narrative, from suppressing the price?
If this is accurate then your question makes sense. Why? But how do we know this is real though? They could play games as well and I'm sure they do. Stock trading is gambling.
If this is accurate then your question makes sense. Why? But how do we know this is real though? They could play games as well and I'm sure they do. Stock trading is gambling.
Citadel securities does not "play games", they aren't YOLO-ing on a GME short. They are happy to model the market so they can hedge better than their competitors and make money off of the bid-ask spread.
Melvin Capital has already stated they have closed out their position, think it would probably be fraud if they hadn't.
Melvin Capital has already stated they have closed out their position, think it would probably be fraud if they hadn't.
>> Melvin Capital has already stated they have closed out their position, think it would probably be fraud if they hadn't.
IANAL but I doubt this would be fraud -- they arent a public corporation making statements about themselves. They did have LPs, but i'm not sure what restrictions there are around speaking -- would anyone know?
IANAL but I doubt this would be fraud -- they arent a public corporation making statements about themselves. They did have LPs, but i'm not sure what restrictions there are around speaking -- would anyone know?
IANAL also, but I would imagine that they would need to represent themselves accurately to their investors at the very least. Perhaps they could be telling their investors something different privately?
Yes, hedge funds send their LPs private "Investor Letters" with a lot more detail. Not sure who the public statement was meant for, but it might have been meant to discourage the public from taking opposing positions.
You wouldnt communicate to your LPs via CNBC or Twitter.
You wouldnt communicate to your LPs via CNBC or Twitter.
You may work on some fancy model but at the end of the day you are taking a risk and there is a possibility to lose in the worst possible way. Call it games, YOLO or hedge better than competitors.
Maybe, the problem was just transferred to someone else so they can remove it from their statements. And now that someone is trying to deal with this. Unless we have trustable source with all the details on how that position has been closed, I don't think it's safe to assume anything.
Maybe, the problem was just transferred to someone else so they can remove it from their statements. And now that someone is trying to deal with this. Unless we have trustable source with all the details on how that position has been closed, I don't think it's safe to assume anything.
> you are taking a risk and there is a possibility to lose in the worst possible way. Call it games, YOLO or hedge better than competitors.
Sure, there is some risk in liquidity provisioning, but I think you are really not understanding what market makers do and conflating it with hedge funds.
Sure, there is some risk in liquidity provisioning, but I think you are really not understanding what market makers do and conflating it with hedge funds.
> Melvin Capital has already stated they have closed out their position, think it would probably be fraud if they hadn't.
Two points:
Two points:
1. As I understood it, they closed *A* position, not their whole position, and announced that in the hopes it would deflate the stock price so Melvin doesn't crater.
2. And what, exactly, would be the punishment for this fraud, assuming they even get prosecuted and convicted? Can you put a dollar figure on it? Now put a dollar figure on how much they would lose if they didn't make that announcement, and compare the two numbers.Iirc they only stated that they closed "a" position. Others have run with that in a horrid game of telephone.
"Melvin Capital has repositioned our portfolio over the past few days. We have closed out our position in GME (GameStop)"
You recall incorrectly. I encourage you to Google before commenting your recollections, it's quite easy to find.
You recall incorrectly. I encourage you to Google before commenting your recollections, it's quite easy to find.
Which "spokesman" made that statement? Pretty easy to deny no?
"Melvin Capital has repositioned our portfolio over the past few days. We have closed out our position in GME (GameStop)," the spokesman said in a statement. [1]
[1] https://www.usnews.com/news/top-news/articles/2021-01-27/hed...
"Melvin Capital has repositioned our portfolio over the past few days. We have closed out our position in GME (GameStop)," the spokesman said in a statement. [1]
[1] https://www.usnews.com/news/top-news/articles/2021-01-27/hed...
They have every incentive to lie
Where's your source?
Literally just google the sentence I posted, it's been reproduced on a number of reputable outlets.
Have they closed out their position? They said via CNBC that they have "closed a position", that's basically the quote that's making the rounds.
remember they don't have to report if they opened another one.
If they opened another one, it would be at the much higher price and thus fine.
couple hours after sister company of their major stakeholder (as of monday) disables purchases of the same stock for retail.
this stinks.
this stinks.
If SEC decides at some point that this was pump-and-dump scheme (even crowdsourced), the Citadel may become liable for enabling that scheme, even if they do not run it themselves.
It seems unlikely to me that Citadel would be liable. They're just processing bulk transactions -- they have no direct contact with customers. You could just as well blame the NYSE.
They were just processing bulk transactions.
If it's true they refused to process for certain securities for their downstream clients, then I believe "When?" and "Why?", specifically in relation to other actions, become legally relevant questions.
If it's true they refused to process for certain securities for their downstream clients, then I believe "When?" and "Why?", specifically in relation to other actions, become legally relevant questions.
I think it is much more likely that Robinhood is liable than the liquidity provider for Robinhood.
>Melvin Capital closed out their short position yesterday with a large loss
This is something many people are claiming is false. As far as I can find, Melvin have not issues any formal statement on the matter - this claim is purely based on a CNBC "source".
This is something many people are claiming is false. As far as I can find, Melvin have not issues any formal statement on the matter - this claim is purely based on a CNBC "source".
Wow. Just wow. As RH user myself, I did not have a clue I was actually doing business (indirectly) with Citadel.
I'll be closing my RH account soon. For now, I'll be holding the line on GME.
I'll be closing my RH account soon. For now, I'll be holding the line on GME.
Everyone who buys options is doing business with citadel. They're the originator of most options. HFT firms are inescapable because their very reason for existing is to provide the market with the best prices.
Additionally, I speculate that Citadel/RH/IBKR and any other brokers that stopped buys on GME/AMC had sign-off from regulators (SEC etc.) where the fines they will surely incur would be limited to non-existent.
Not only hedge funds and brokers colluding against the retail investors, but the government as well. Yeah...sounds about right.
Not only hedge funds and brokers colluding against the retail investors, but the government as well. Yeah...sounds about right.
I am curious about holding GME. Is your plan to keep it long term? If not what are you plans to unwind your positions? Certain price point? Certain time frame?
I think a majority of people riding this don’t care where the money goes - they just want to stick it to the man.
Which IMO is silly. Institutional investors hold 160% of GME’s float. For every institutional investor wanting it to tank there are others who want to see it rise. It’s not like the institutions all agree or anything - “The man” is on both sides of this.
They are collecting interest from hedgefunds for the short positions and collecting interest from brokerages for capital they provide for margin accounts. They win no matter what.
If you plan on continuing trading, it is going to be difficult to avoid doing business indirectly with Citadel, they are a major market maker.
> This is definitely illegal.
I think there must be laws that say the CEO and the board must get prison terms (preferably life, with no possibility of parole) for these crimes.
No, I will not listen to hogwash like "you shouldn't be responsible for the actions of people you hire". BS. They report to you. Even if they did it on their own, why didn't you reverse it? If you are not responsible for the actions of your employees or contractors, don't hire them. Close down. See if I care.
I think there must be laws that say the CEO and the board must get prison terms (preferably life, with no possibility of parole) for these crimes.
No, I will not listen to hogwash like "you shouldn't be responsible for the actions of people you hire". BS. They report to you. Even if they did it on their own, why didn't you reverse it? If you are not responsible for the actions of your employees or contractors, don't hire them. Close down. See if I care.
Why are Americans so crazy for absurdly long penal punishments?
Because nothing happened when wall street bankrupted the country by gambling and needed to be bailed out in 2008, and then paid themselves huge bonuses.
Very few people actually got punished, but a lot changed since 2008. Executives were forced to step down. Several major players went bankrupt and many more lost 95%+ of their valuations. Anecdotally, I hear that companies are taking compliance much more seriously. HN would call the surveillance at banks today Orwellian if they were more knowledgable about it.
Oh no people had to step down? They fucked up, lost their company loads of money and gasp got fired?!
Like. I understand your point but a lot of people really don't think that is punishment really
Like. I understand your point but a lot of people really don't think that is punishment really
Even if they lost their job, they are still incredibly wealthy. That's not any sort of repercussion, at all. Its nothing.
These people who are gambling with peoples lives and livelihoods just to get richer need to start going to jail.
Nothing will change until proper punishments are handed out that makes people reconsider being a greedy, selfish, morally reprehensible piece of shit.
These people who are gambling with peoples lives and livelihoods just to get richer need to start going to jail.
Nothing will change until proper punishments are handed out that makes people reconsider being a greedy, selfish, morally reprehensible piece of shit.
I think it's generally because most Americans would be looking at ridiculously long prison sentences for common actions if they got caught (like possession) and because the US's general view is that there isn't anything in the world that can't be cured by throwing more prison time at it.
Really? Where in America are you looking at a "ridiculous" long prison sentence in 2020 for possession?
The war on drugs sucked, but it was still mostly a war against dealers.
The war on drugs sucked, but it was still mostly a war against dealers.
Not if you were black and used crack. And pretty much any prison for posession and use is rediculous, if its a problem for the user it is a mental health issue and prison is the wrong treatment. And of course the limits on what determines if you're a dealer is set low enough, and carrier laws meant that many users were getting prosecuted like dealers. And what defines a "dealer" since someone doing a group buy for three friends is significantly less socially problematic than someone trafficking drugs across the border.
Afaik there is a recording of Nixon saying that they want to use drug penalties to go after black people and hippies. A lot of times those racially biased outcomes are the product of many unrelated parts of a big and complicated system, but in this case the top of executive government seemed pretty deliberate about this.
There is no such recording. A reporter who interviewed an aide of Nixon for his autobiography claimed that that aide said that (but he only claimed so after the aide had died).
I don't know about blacks or hippies, but Last Week Tonight played an Oval Office tape of Nixon wanting to target marijuana laws because those in favor (of legalization) were Jewish.
https://youtu.be/BcR_Wg42dv8?t=153
https://youtu.be/BcR_Wg42dv8?t=153
There is indeed no such recording - but calling the official an "aide" is a bit inaccurate, the official in question was the domestic policy chief[1] - rather than a random secretary that claims to have overheard something.
That all said, for all of the negative PR Nixon has received over the years he was a rather progressive and surprisingly egalitarian executive who has been praised by Indian Country Today[2] and appears to have stuck pretty close to his quaker upbringings. I think a lot of people conflate Nixon and Regan - which is pretty ridiculous when you look at the policies those two presidents actually pursued during their terms... And even more folks are getting second hand vibes from Nixon's infamous presidential debate[3] which pitted a rather uncharismatic man against JFK and led to a pretty obvious outcome.
1. https://www.vox.com/2016/3/22/11278760/war-on-drugs-racism-n...
2. https://indiancountrytoday.com/archive/barack-obama-and-rich...
3. https://www.youtube.com/watch?v=-9cdRpE4KKc Just FYI - if you've never seen this I'd suggest giving it a go sometime. Given recent politics it's almost fantastical to listen to two folks come into a debate focused on the issues and minimizing the ways they attacked each other.
That all said, for all of the negative PR Nixon has received over the years he was a rather progressive and surprisingly egalitarian executive who has been praised by Indian Country Today[2] and appears to have stuck pretty close to his quaker upbringings. I think a lot of people conflate Nixon and Regan - which is pretty ridiculous when you look at the policies those two presidents actually pursued during their terms... And even more folks are getting second hand vibes from Nixon's infamous presidential debate[3] which pitted a rather uncharismatic man against JFK and led to a pretty obvious outcome.
1. https://www.vox.com/2016/3/22/11278760/war-on-drugs-racism-n...
2. https://indiancountrytoday.com/archive/barack-obama-and-rich...
3. https://www.youtube.com/watch?v=-9cdRpE4KKc Just FYI - if you've never seen this I'd suggest giving it a go sometime. Given recent politics it's almost fantastical to listen to two folks come into a debate focused on the issues and minimizing the ways they attacked each other.
I think the important bit is that the chief/aide/whatever didn't claim to have overheard anything at all, rather someone who talked to them claimed that they said Nixon had said that.
Hard to laud Nixon in my view, he was pretty clearly a racist man and was the originator of the "welfare queen" rhetoric (and the corresponding cuts in SNAP, etc.).
Hard to laud Nixon in my view, he was pretty clearly a racist man and was the originator of the "welfare queen" rhetoric (and the corresponding cuts in SNAP, etc.).
Boomers hated Nixon because he undermined the Vietnam peace process for personal political gain elongating the war that they then had to go to the trouble of dodging the draft (as long as they were rich enough).
We can be as cynical as we like about boomers and then going on to be Reagan voters, it doesn't change Nixon and Kissenger's status as unprosecuted war criminals.
I'm not overly familiar with Quaker orthodoxy, I'd be surprised if dropping bombs killing 500k Cambodians is consistent with it. Nixon wasn't all bad because no human is, even he who must not be named was kind to (some) children, we're told.
Not all bad can still be utterly horrific.
We can be as cynical as we like about boomers and then going on to be Reagan voters, it doesn't change Nixon and Kissenger's status as unprosecuted war criminals.
I'm not overly familiar with Quaker orthodoxy, I'd be surprised if dropping bombs killing 500k Cambodians is consistent with it. Nixon wasn't all bad because no human is, even he who must not be named was kind to (some) children, we're told.
Not all bad can still be utterly horrific.
I must have misremembered then. There are so many recordings of Nixon saying offensive things that I can't keep them all straight.
I of course agree. It is ridiculous. I also grew up in one of the cities that was the center of the so-called "crime epidemic." We've definitely improved on sentencing since 30 years ago.
I just don't think it is accurate to say that people are getting super long sentences for possession anymore and I don't think it is right to use that as justification for longer sentences for other people.
I just don't think it is accurate to say that people are getting super long sentences for possession anymore and I don't think it is right to use that as justification for longer sentences for other people.
Well #1: yes the are. #2: drug addiction is a mental health problem (and not all drug use is addiction) and any sentence for possession is too much.
yes the are what?
#2: I completely agree.
#2: I completely agree.
yes theY are [still getting super long sentences]
three strikes laws still exist, it is still possible to push possession into felony territory. if there's a gun anywhere near the arrest you can probably tack on firearms charges, etc.
if you're reasonably white and middle class those extras will be ignored for a lighter sentence. if you're black or for whatever other reason they just don't like you then they'll tack those extras on and three strikes you.
there is a lot of "prosecutorial discretion" still, and if you dig into it hard enough that's a code word for racially biased prosecution. the fact that they we reasonable with you or your college buddies who got busted with some MDMA or something is not the same experience that lower income black people get.
three strikes laws still exist, it is still possible to push possession into felony territory. if there's a gun anywhere near the arrest you can probably tack on firearms charges, etc.
if you're reasonably white and middle class those extras will be ignored for a lighter sentence. if you're black or for whatever other reason they just don't like you then they'll tack those extras on and three strikes you.
there is a lot of "prosecutorial discretion" still, and if you dig into it hard enough that's a code word for racially biased prosecution. the fact that they we reasonable with you or your college buddies who got busted with some MDMA or something is not the same experience that lower income black people get.
For financial crimes?
Because nothing ever happens to the rich when all you do is take a bit of their money away. They have so much that they will get it back merely for being wealthy, and as we just saw with the recent pardons, they won't even serve their entire sentence even when they're stealing the life savings of hundreds.
Because nothing ever happens to the rich when all you do is take a bit of their money away. They have so much that they will get it back merely for being wealthy, and as we just saw with the recent pardons, they won't even serve their entire sentence even when they're stealing the life savings of hundreds.
Apparently in America there are huge prisons owned by private companies, traded on stock market of course.
With this scenario one can quite easily imagine that incarcerating more and more inmates for maximally long periods of time could be something that is wanted and desired.
Where are you from that you don't have bloodlust for those that wronged you?
What else can you do to a ceo? Fines mean nothing.
> Fines mean nothing.
Fines can mean something, if scaled correctly:
https://en.wikipedia.org/wiki/Day-fine
Fines can mean something, if scaled correctly:
https://en.wikipedia.org/wiki/Day-fine
A shorter jail sentence? Somehow I feel like there is perhaps a less harsh punishment than life in prison but perhaps worse than a fine.
These people are leveraging everything in their power to fuck over millions to save themselves money. We put them away for 5 years and they still come out billionaires in the end, why wouldn't they do it?
These people are already billionaires or large multi millionaires.
If I had a billion dollars and could get 2 billion dollars but I'd go to jail for 5 years, I would absolutely NOT do that thing.
If I had a billion dollars and could get 2 billion dollars but I'd go to jail for 5 years, I would absolutely NOT do that thing.
A jail sentence for such a well positioned white collar criminal is probably comparable to a retreat lodge. Such an institution certainly doesn't have prison bars and a fenced perimeter because it is low security and has a special privilege.
So what - somehow somewhere someone will have the power to jail these white collar criminals for their entire life, but they don't have the power to make a 5 year jail sentence more uncomfortable?
Your objection doesn't even make sense.
Your objection doesn't even make sense.
Recommended listening while you read my rant: white trash anthem - blood for blood lyrics[0]
https://youtu.be/ghybm4Y6C7w
Here's my perspective.
I spent my childhood around kids from broken families, most of whom had parents in prison on long sentences for nonviolent drug charges. I saw lots of my friends lose their houses in the 00s. I entered a job market that treats just about everyone as disposable; unworthy of training, investment, benefits, time off, bathroom breaks, ppe, or a livable wage.
Wall sts focus on the short term has been like napalm on these issues and made fixing them political suicide. I don't say this lightly; wall st has enslaved America for profit.
>The Top 1% of Americans Have Taken $50 Trillion From the Bottom 90% [1]
The proletariat is showing their heads and nipping at the ankles of everyone. Some are misguided, but beating a hedge fund at their own game, trying to convince boomers that black lives matter enough to not be executed by police, or Medicare for All or forgiving student loan debt are all extremely well studied solutions to systemic issues in America that will not be meaningfully addressed until the root problems are addressed: money in politics, racism, trickle down economics, class inequality, asset inflation, health care, employee rights, war on drugs, etc, etc, etc.
This specific incident was a fluke of luck that required ridiculously overpaid bros in cushy hedge fund jobs to count past 100% while shorting gme/nok/AMC which is playing with the lives and livelihood of the people that work in each of those companies. Needless to say, but watching billionaires repeat '08 with gamestop, amc, and Nokia ruffled a lot of feathers. Gme especially brought out some whales with money to burn in the chase of infinite gains.
Maybe this was an elaborate psyop to manipulate people into doing things they wouldn't. If so, great job, if not, well maybe the fat cats on wall st and in Congress should come around my hood and experience the hopelessness for themselves, that's an open invitation for as long as this account is active for any billionaires or US politicians not already arguing against the same issues I am to come and walk in my shoes.
Hopefully this incident spurs some change in wall st and the culture there. Congress certainly doesn't have the courage to.
[0] http://www.darklyrics.com/lyrics/bloodforblood/outlawanthems... [1] https://time.com/5888024/50-trillion-income-inequality-ameri...
https://youtu.be/ghybm4Y6C7w
Here's my perspective.
I spent my childhood around kids from broken families, most of whom had parents in prison on long sentences for nonviolent drug charges. I saw lots of my friends lose their houses in the 00s. I entered a job market that treats just about everyone as disposable; unworthy of training, investment, benefits, time off, bathroom breaks, ppe, or a livable wage.
Wall sts focus on the short term has been like napalm on these issues and made fixing them political suicide. I don't say this lightly; wall st has enslaved America for profit.
>The Top 1% of Americans Have Taken $50 Trillion From the Bottom 90% [1]
The proletariat is showing their heads and nipping at the ankles of everyone. Some are misguided, but beating a hedge fund at their own game, trying to convince boomers that black lives matter enough to not be executed by police, or Medicare for All or forgiving student loan debt are all extremely well studied solutions to systemic issues in America that will not be meaningfully addressed until the root problems are addressed: money in politics, racism, trickle down economics, class inequality, asset inflation, health care, employee rights, war on drugs, etc, etc, etc.
This specific incident was a fluke of luck that required ridiculously overpaid bros in cushy hedge fund jobs to count past 100% while shorting gme/nok/AMC which is playing with the lives and livelihood of the people that work in each of those companies. Needless to say, but watching billionaires repeat '08 with gamestop, amc, and Nokia ruffled a lot of feathers. Gme especially brought out some whales with money to burn in the chase of infinite gains.
Maybe this was an elaborate psyop to manipulate people into doing things they wouldn't. If so, great job, if not, well maybe the fat cats on wall st and in Congress should come around my hood and experience the hopelessness for themselves, that's an open invitation for as long as this account is active for any billionaires or US politicians not already arguing against the same issues I am to come and walk in my shoes.
Hopefully this incident spurs some change in wall st and the culture there. Congress certainly doesn't have the courage to.
[0] http://www.darklyrics.com/lyrics/bloodforblood/outlawanthems... [1] https://time.com/5888024/50-trillion-income-inequality-ameri...
> I don't think this was Robinhood's choice.
They sure made it sound like it was their choice. https://blog.robinhood.com/news/2021/1/28/keeping-customers-...
They sure made it sound like it was their choice. https://blog.robinhood.com/news/2021/1/28/keeping-customers-...
Exactly, while WeBull firmly pointed the finger at their market makers, Robinhood is treating it's customers like children and telling us they're banning trades for our own good while secretly collaborating with Wall Street in the background. They are a disgrace to the name "Robinhood."
Tastytrade wrote very clearly that it was Apex Clearing that forced their hand.
[deleted]
Exactly this. They know there will be lawsuits and they know there might be SEC fines, but they are betting that those two will total up to be less than the billions it would cost them to cover a short position at $500-$600 per share.
The question I have is, can this be prosecuted criminally and can those in charge be threatened with actual jail time from this?
The question I have is, can this be prosecuted criminally and can those in charge be threatened with actual jail time from this?
But I don't think they are expecting the backlash that this had received. As a Robinhood user I am making it clear that this is not okay by withdrawing all of my funds and cancelling my Gold account, and I hope others will do the same.
Citadel Securities is not Citadel Investments.
This is important, because they operate on different sides of this:
Citadel Securities is the market maker that is interested in Robinhood's flow.
Citadel Investments is the hedge fund that bailed out Melvin.
Now, whether it's good that they're connected, and up to what extent they should be allowed to is an important question.
Even if there had been some kind of illegal collusion, it doesn't seem likely that stopping trading would have helped Melvin to cover their short position, which they ended up doing.
There is probably no conspiracy here.
Even if there had been some kind of illegal collusion, it doesn't seem likely that stopping trading would have helped Melvin to cover their short position, which they ended up doing.
There is probably no conspiracy here.
> This is definitely illegal. But Citadel is betting that the resulting SEC fines from this illegal manipulation will be less than the loss they would get if they didn't suppress the price.
It's not really a bet when they're 50% certain they can get away with no fine, 99% certain the SEC fine will be < 10% of the profit, and 100% certain the fine won't be > 100% of the profit.
It's not really a bet when they're 50% certain they can get away with no fine, 99% certain the SEC fine will be < 10% of the profit, and 100% certain the fine won't be > 100% of the profit.
> Citadel then buys the shares on the market, and sells them to Robinhood for a slight markup
This would be front running and is fundamentally not how citadel or other MM function.
This would be front running and is fundamentally not how citadel or other MM function.
I guess I understand where you are coming from, but they way I understand it is that RH submits a bulk order for a stock and gets a quote from the MM, which the MM thinks is appropriate. The MM then adjusts its own portfolio accordingly, buying/selling the underlying stock at its own pace.
So, more or less as described, but the order is a little different, right?
So, more or less as described, but the order is a little different, right?
Market makers fulfill a bunch of orders, they then have until end of day to get into a delta neutral position. They prefer to trade against retail traders because retail traders are typically uncorrelated, which means that vast majority of trades cancel out (but MM still collects the bid-ask spread on the trades!). When you make markets for counter-parties that include big institution there is always a risk that the "small" trades you're fulfilling will be very correlated (because a big institution is actually breaking-up and feeding you a big trade). This is called adverse selection and will force MM to start buying to get to a neutral position (which means that the bid-ask spread they are collecting will have to be paid to some other seller).
What Citadel and others are doing is they are saying to RH "your order flow is uncorrelated and we'd like to make markets for it, we will charge your users slightly lower bid-ask spread (price improvement for user) and we will also give you a slice of the bid-ask spread we do collect, in return the uncorrelated nature of the orders will ensure that we won't have to do much trades in order to maintain a neutral position."
This proposition is actually good for
1. RH users (they get price improvement relative to NBBO)
2. RH (they get to make money and get a user base)
3. Participating market makers (they get much steadier cash flow from MM activity).
It is bad for
1. Big institutions, they get to pay larger spread than they would if the market was more diluted by retails
2. Non-participating MM (they increase the bid-ask spread to make sure it's still worth their time but there is more volatility and it's a competitive market so mis-pricing the spread is a real problem).
Also, current GME shenanigans are net good for MM since MM is a business that makes money on volume, not direction.
What Citadel and others are doing is they are saying to RH "your order flow is uncorrelated and we'd like to make markets for it, we will charge your users slightly lower bid-ask spread (price improvement for user) and we will also give you a slice of the bid-ask spread we do collect, in return the uncorrelated nature of the orders will ensure that we won't have to do much trades in order to maintain a neutral position."
This proposition is actually good for
1. RH users (they get price improvement relative to NBBO)
2. RH (they get to make money and get a user base)
3. Participating market makers (they get much steadier cash flow from MM activity).
It is bad for
1. Big institutions, they get to pay larger spread than they would if the market was more diluted by retails
2. Non-participating MM (they increase the bid-ask spread to make sure it's still worth their time but there is more volatility and it's a competitive market so mis-pricing the spread is a real problem).
Also, current GME shenanigans are net good for MM since MM is a business that makes money on volume, not direction.
That's interesting because Ken Griffin started Citadel and has made huge investments in Melvin. Feels sketchy.
Can most brokers route trades directly through the market or use another market maker if something like this happens?
I assumed Citadel would actually be cleaning up market making GME with all the trading and volatility, but maybe the trades are too coordinated. What they're paying for is order flow from unsophisticated investors; they don't want to deal with hedge funds and the games they play. Maybe these trades are close enough to something a hedge fund would do, so the orders aren't worth it?
I assumed Citadel would actually be cleaning up market making GME with all the trading and volatility, but maybe the trades are too coordinated. What they're paying for is order flow from unsophisticated investors; they don't want to deal with hedge funds and the games they play. Maybe these trades are close enough to something a hedge fund would do, so the orders aren't worth it?
> directly through the market
There is nothing but the market makers.
> I assumed Citadel would actually be cleaning up market making GME with all the trading and volatility, but maybe the trades are too coordinated
I suspect they are still making bank. The demand for liquidity has increased, so there is a higher premium on liquidity provision.
There is nothing but the market makers.
> I assumed Citadel would actually be cleaning up market making GME with all the trading and volatility, but maybe the trades are too coordinated
I suspect they are still making bank. The demand for liquidity has increased, so there is a higher premium on liquidity provision.
>Citadel, and other trade executors, are refusing to buy shares for retail traders.
Any evidence on this? RH said the opposite:
>To be clear, this was a risk-management decision, and was not made on the direction of the market makers we route to. We’re beginning to open up trading for some of these securities in a responsible manner.
Any evidence on this? RH said the opposite:
>To be clear, this was a risk-management decision, and was not made on the direction of the market makers we route to. We’re beginning to open up trading for some of these securities in a responsible manner.
Rumor mill says that the White House and Sequoia called RH to force their hand. Honestly, I wouldn't expect anything less. I say this because 2% drawdown of the stock market didn't happen for zero reason. It happened because these fools are leveraged up to their ass (metaphor) and the bet cost them severely. And it's cheaper to take the bad PR while salvaging your fuck up. These people act in a different set of rules and that's not okay.
IMHO, I'm concerned about this because this is a 1st amendment problem. Let grown adults gamble. Let them be responsible for their dumb actions (hedge and retail alike). If someone is 'too big to fail' then they are 'too big to exist'.
IMHO, I'm concerned about this because this is a 1st amendment problem. Let grown adults gamble. Let them be responsible for their dumb actions (hedge and retail alike). If someone is 'too big to fail' then they are 'too big to exist'.
> I'm concerned about this because this is a 1st amendment problem. Let grown adults gamble.
Gambling isn't even legal in most states. Good luck arguing that.
Gambling isn't even legal in most states. Good luck arguing that.
> Gambling isn't even legal in most states. Good luck arguing that.
What States are you not allowed to short or long? Using your logic, this is cognitive dissonance. How free people spend their money is an act of speech, PACs and SuperPACs are emboldened by this current legal fact.
What States are you not allowed to short or long? Using your logic, this is cognitive dissonance. How free people spend their money is an act of speech, PACs and SuperPACs are emboldened by this current legal fact.
No, you specifically said it's a first amendment problem and to let adults gamble. If it was a first amendment problem, gambling wouldn't be illegal in most states.
> No, you specifically said it's a first amendment problem and to let adults gamble. If it was a first amendment problem, gambling wouldn't be illegal in most states.
Maybe you need explicit help to understand my position. If hedge funds can short/long stocks, there should be nothing preventing a retail investor from doing the same.
As for it being speech, well, corporations are people and PAC/SuperPAC political donations (read: blackbox donations) are speech. These are current USA facts.
From there, I extrapolate that it would be unfair to regulate Main Street instead of Wall Street. This wouldn't be such a massive problem if Wall Street wasn't allowed so much leverage (and short 140% of the company shares...how is that even legal. That's literally fraud). I can't sell you 100% of my property and then sell 40% to someone else.
It's that simple, stop obstructing discourse.
Maybe you need explicit help to understand my position. If hedge funds can short/long stocks, there should be nothing preventing a retail investor from doing the same.
As for it being speech, well, corporations are people and PAC/SuperPAC political donations (read: blackbox donations) are speech. These are current USA facts.
From there, I extrapolate that it would be unfair to regulate Main Street instead of Wall Street. This wouldn't be such a massive problem if Wall Street wasn't allowed so much leverage (and short 140% of the company shares...how is that even legal. That's literally fraud). I can't sell you 100% of my property and then sell 40% to someone else.
It's that simple, stop obstructing discourse.
If that is the case, then it leads one to wonder why Robin Hood wouldn't come out and say so to avoid all the blowback they're getting. I suppose the obvious answer is that they don't want to burn bridges with Citadel.
> You pay pennies more per share
To clarify: you will never pay more than market price (i.e. you will never have to pay more than the best order sitting on the book). Citadel or whoever will only internalize your order if they're willing to offer you a better price than market price. Otherwise RH is obligated to match your order with the best price currently available.
They are willing to do this because they would prefer not to leave orders sitting on the books, and there's a fee for taking orders off the books which they would prefer not to pay.
To clarify: you will never pay more than market price (i.e. you will never have to pay more than the best order sitting on the book). Citadel or whoever will only internalize your order if they're willing to offer you a better price than market price. Otherwise RH is obligated to match your order with the best price currently available.
They are willing to do this because they would prefer not to leave orders sitting on the books, and there's a fee for taking orders off the books which they would prefer not to pay.
This is theoretically true, but there have been numerous SEC enforcement actions based on this not happening.
The loss is provably infinite, the fine should be too.
Citadel != Citadel Securities.
Most clearing firms aren’t clearing GME or AMC anymore. It’s not just RH.
Most clearing firms aren’t clearing GME or AMC anymore. It’s not just RH.
Same owners at the end of the day.
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Fix: fines should be 2x more than just taking the loss on the chin.
The weird thing is that Citadel Securities and Citadel are different entities. Citadel Fund went to the rescue of Melvin Capital and Citadel Securities stopped the buying trades. Suspicious eh?
I think it is probably illegal but SEC fines are so light they are just considered part of the price of doing businesses. If the SEC did something more reasonable like charge 5% o revenue for a year then these companies would sit up and take notice.
Who wins from a more limited market? It seems to me suspending trades locks people from selling as much as it locks them from buying, and short sellers should be happy to have a more liquid market,not less.
According to the RH blog post they are allowing people to close their position, just not open or expand one.
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wow, this is a very apt explanation.
the best financial advice I ever got was to never ignore conflicts of interest.
the best financial advice I ever got was to never ignore conflicts of interest.
"... the resulting SEC fines from this illegal manipulation ..."
Plus time in prison.
Plus time in prison.
in futures, your refusing to execute an order for risk management is not illegal. as well as slamming you out of stupid positions. i can only hope equities execution houses are as coherent
"Coincidentally"
thanks for explaining your a hero
> Can someone help me understand Robinhood's POV?
Robinhood is a margin-lending options-trading broker. If a customer falls down on a trade, it is ultimately liable. If a retail customer loses money and makes a FINRA complaint that Robinhood induced them to buy through its gameified interface, it is liable. Risk and compliance likely made this call.
Also, Robinhood makes its revenue from market makers. They are the customers. Clients are not. So when trading these equities gets unprofitable, they will pull the plug. (Though anecdotally, everyone I know on the sell side in equities and equity derivatives is making a killing on this.)
What I can guarantee is nobody shorting GameStop got Robinhood to pull the plug.
Robinhood is a margin-lending options-trading broker. If a customer falls down on a trade, it is ultimately liable. If a retail customer loses money and makes a FINRA complaint that Robinhood induced them to buy through its gameified interface, it is liable. Risk and compliance likely made this call.
Also, Robinhood makes its revenue from market makers. They are the customers. Clients are not. So when trading these equities gets unprofitable, they will pull the plug. (Though anecdotally, everyone I know on the sell side in equities and equity derivatives is making a killing on this.)
What I can guarantee is nobody shorting GameStop got Robinhood to pull the plug.
> If a customer falls down on a trade, it is ultimately liable.... Robinhood induced them to buy through its gameified interface
Why would robinhood be any more liable than other online traders like Fidelity or etrade?
> What I can guarantee is nobody shorting GameStop got Robinhood to pull the plug.
How can you guarantee that? Robinhood likely routes most of it's trades through citadel, which has informed partners it will not be fulfilling GME or AMC or BB trades.
And it turns out Citadel is also a hedge fund that has massive short positions on GME.
Why would robinhood be any more liable than other online traders like Fidelity or etrade?
> What I can guarantee is nobody shorting GameStop got Robinhood to pull the plug.
How can you guarantee that? Robinhood likely routes most of it's trades through citadel, which has informed partners it will not be fulfilling GME or AMC or BB trades.
And it turns out Citadel is also a hedge fund that has massive short positions on GME.
> Why would robinhood be any more liable than other online traders like Fidelity or etrade?
Every brokerage house ultimately vouches for their clients.
Robinhood has extra exposure because clients could claim its interface induced them to overtrade.
> Robinhood likely routes most of it's trades through citadel
Do we have a source for this?
Also, Citadel just made money bailing out Melvin Capital. The short squeeze let them buy assets at dimes on the dollar. Assets which do not include GameStop shorts.
> which has informed partners it will not be fulfilling GME or AMC or BB trades
Former market maker. When trading got crazy we'd take profits. When it got inexplicable, we'd pull the plug. If we didn't, risk would. In this case, there is the additional factor of political risk--you don't want to be making millions of dollars off GameStop at its peak when that's going to cost you tens of millions of legal fees in front of Congress.
A simple explanation for Robinhood's behavior might be that their customers, the market makers, backed away from paying for this order flow.
All this said, I'd be highly pissed if my broker did this to me. But Robinhood customers have known since the beginning they weren't the customer.
Every brokerage house ultimately vouches for their clients.
Robinhood has extra exposure because clients could claim its interface induced them to overtrade.
> Robinhood likely routes most of it's trades through citadel
Do we have a source for this?
Also, Citadel just made money bailing out Melvin Capital. The short squeeze let them buy assets at dimes on the dollar. Assets which do not include GameStop shorts.
> which has informed partners it will not be fulfilling GME or AMC or BB trades
Former market maker. When trading got crazy we'd take profits. When it got inexplicable, we'd pull the plug. If we didn't, risk would. In this case, there is the additional factor of political risk--you don't want to be making millions of dollars off GameStop at its peak when that's going to cost you tens of millions of legal fees in front of Congress.
A simple explanation for Robinhood's behavior might be that their customers, the market makers, backed away from paying for this order flow.
All this said, I'd be highly pissed if my broker did this to me. But Robinhood customers have known since the beginning they weren't the customer.
>> Robinhood likely routes most of it's trades through citadel
>Do we have a source for this?
Yes.
https://cdn.robinhood.com/assets/robinhood/legal/RHS%20SEC%2...
>Do we have a source for this?
Yes.
https://cdn.robinhood.com/assets/robinhood/legal/RHS%20SEC%2...
Citadel Securities is a market maker. Do you have any evidence that Citadel has un-hedged "massive short positions on GME"?
I find it nuts how this has transformed into a populist thing.
I find it nuts how this has transformed into a populist thing.
If you buy a share of GME from Citadel Securities, that may typically result in an immediate unhedged short position at Citadel, if they weren't already holding it.
Normally, a market maker might then close it by buying a share from someone trying to sell. But in a massively one-way market like GME, it's quite likely that they build up a large enough unhedged massive short position that they say "no, we're not taking on any more risk" and communicate that to Robin Hood.
Normally, a market maker might then close it by buying a share from someone trying to sell. But in a massively one-way market like GME, it's quite likely that they build up a large enough unhedged massive short position that they say "no, we're not taking on any more risk" and communicate that to Robin Hood.
They immediately hedge it. If the market for GME is "one-way" (it's not, people are shorting), they might also hedge the sale by buying more exotic financial instruments and correlates of the GME price.
> they say "no, we're not taking on any more risk" and communicate that to Robin Hood.
Maybe, although they would probably do that when their ability to hedge started breaking down, not when they'd already acquired massive short positions.
More likely, to me, is that they would just increase the bid-ask price spread continuously as their ability to hedge degrades.
> they say "no, we're not taking on any more risk" and communicate that to Robin Hood.
Maybe, although they would probably do that when their ability to hedge started breaking down, not when they'd already acquired massive short positions.
More likely, to me, is that they would just increase the bid-ask price spread continuously as their ability to hedge degrades.
> They immediately hedge it
This assumes continuous liquidity. Dangerous assumption to make in choppy markets.
It is not uncommon for markets to gap up or down discontinuously. You look at the market and see bid 899 at 901, buy some shares for 898, offer them at 890 and find the market is now 125 at 901.
This assumes continuous liquidity. Dangerous assumption to make in choppy markets.
It is not uncommon for markets to gap up or down discontinuously. You look at the market and see bid 899 at 901, buy some shares for 898, offer them at 890 and find the market is now 125 at 901.
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They would have different risk profiles depending on what their clients are actually doing. RH probably has much greater net exposure than Fidelity since they have a greater share of meme investors in their customer base. Fidelity definitely has a less gameified interface as well.
Corporate risk controls are also not a hard science, different risk teams can and do come to different conclusions on the same issue.
Corporate risk controls are also not a hard science, different risk teams can and do come to different conclusions on the same issue.
Every brokerage house has this problem. If their client goes bankrupt, then the brokerage house has to eat the loss.
> What I can guarantee is nobody shorting GameStop got Robinhood to pull the plug.
Not sure how you could possibly gaurantee that. Also given that Robinhood edit got a huge chunk of cash from a shorter makes that pretty weird to "guarantee"[1]
[1] https://cdn.robinhood.com/assets/robinhood/legal/RHS%20SEC%2..., https://news.ycombinator.com/item?id=25945258
Not sure how you could possibly gaurantee that. Also given that Robinhood edit got a huge chunk of cash from a shorter makes that pretty weird to "guarantee"[1]
[1] https://cdn.robinhood.com/assets/robinhood/legal/RHS%20SEC%2..., https://news.ycombinator.com/item?id=25945258
> given that Robinhood got 40% of their revenue from a shorter
I'm seeing one tweet from Adam Hackney claiming this [1]. Do we have a real source?
[1] https://twitter.com/mindmeld_me/status/1354807424998281217
I'm seeing one tweet from Adam Hackney claiming this [1]. Do we have a real source?
[1] https://twitter.com/mindmeld_me/status/1354807424998281217
Yes, Robinhood disclosed that Citadel's MM desk accounted for the largest portion of their payment for order flow income in their rule 606 disclosures. But still a bad take because Citadel stands to make much more money on further trading, and Citadel's hedge fund likely has the capital to outlast retail.
https://cdn.robinhood.com/assets/robinhood/legal/RHS%20SEC%2...
https://cdn.robinhood.com/assets/robinhood/legal/RHS%20SEC%2...
Let me be clear: if I were sales at Robinhood, Citadel MM is a huge client.
But Citadel MM is more likely to pull the plug on making markets in a name for risk reasons than to benefit a hedge fund position. To say nothing of the fact that Citadel got to bail out Melvin Capital, which is traditionally a profitable trade.
But Citadel MM is more likely to pull the plug on making markets in a name for risk reasons than to benefit a hedge fund position. To say nothing of the fact that Citadel got to bail out Melvin Capital, which is traditionally a profitable trade.
I am agreeing with you that there is not much merit to a conspiracy that Citadel asked Robinhood to pull out.
In particular, I believe Citadel would gain more from continued trading on Robinhood than they would lose from their hedge fund positions.
In particular, I believe Citadel would gain more from continued trading on Robinhood than they would lose from their hedge fund positions.
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The same shorter is making money hand over fist on market making due to increased volatility, volume, and unsophisticated investors.
Exatcly volatility is the name of the game. They do not care about the direction as long as it moves and if it moves a lot twice as good.
Market makers always win.
Market makers always win.
This is most likely the answer. They are taking on a lot of risk allowing this type of trading behavior. They likely don't have suitable risk infrastructure developed to feel like they have a handle on it, so they shut it down.
If it was the answer, then RH could have instead only forbidden margin trades and restricted to cash.
Additionally, other retail brokers selling to Citadel Capital have done the exact same (Schwab comes to mind, but not only).
Other brokers however (fidelity), have not. If the short squeeze is to happen tomorrow, this seems an unlikely coincidence that those retail brokers affiliated with Citadel Capital tool positions that would ultimately deflate the stock.
I don't see how GP can assure that no short sellers is behind those moves.
Additionally, other retail brokers selling to Citadel Capital have done the exact same (Schwab comes to mind, but not only).
Other brokers however (fidelity), have not. If the short squeeze is to happen tomorrow, this seems an unlikely coincidence that those retail brokers affiliated with Citadel Capital tool positions that would ultimately deflate the stock.
I don't see how GP can assure that no short sellers is behind those moves.
Why can't they just stop the people on margin from buying gme? That would be reasonable. But if it's your money, I don't see how it's risky for RH.
> if it's your money, I don't see how it's risky for RH.
FINRA arbitration, and the FINRA complaint process, is highly sympathetic to retail clients. When these clients lose money on GME et al, there will almost certainly be a class-action lawsuit for some fraction of their collective losses. And Robinhood's lawyers will almost certainly recommend they settle. That is the risk, beyond margin lending and options settlement, they are seeking to mitigate.
(Also, when that money is lost, there is a decent chance Robinhood will be fined by half the regulators on this planet for inducing people to overtrade through its gameified interface or something like that.)
FINRA arbitration, and the FINRA complaint process, is highly sympathetic to retail clients. When these clients lose money on GME et al, there will almost certainly be a class-action lawsuit for some fraction of their collective losses. And Robinhood's lawyers will almost certainly recommend they settle. That is the risk, beyond margin lending and options settlement, they are seeking to mitigate.
(Also, when that money is lost, there is a decent chance Robinhood will be fined by half the regulators on this planet for inducing people to overtrade through its gameified interface or something like that.)
RH makes money by selling data to investment firms, not off individual trades/fees.
If their customers - the firms that pay them, not app users - see the RH platform as a threat to their business they could pull the plug[0]. Or if this prompts regulators to examine RH and similar products.
The risk isn't in the outcomes of options/trades; its risk to their business model.
[0] RH's customer are actually market makers, who by and large will be profiting heavily off of this.
If their customers - the firms that pay them, not app users - see the RH platform as a threat to their business they could pull the plug[0]. Or if this prompts regulators to examine RH and similar products.
The risk isn't in the outcomes of options/trades; its risk to their business model.
[0] RH's customer are actually market makers, who by and large will be profiting heavily off of this.
> If their customers - the firms that pay them, not app users - see the RH platform as a threat to their business
This point has been made repeatedly elsewhere but it bears repeating. Market makers are getting rich off this trading. Robinhood's customers are not hurting from this.
This point has been made repeatedly elsewhere but it bears repeating. Market makers are getting rich off this trading. Robinhood's customers are not hurting from this.
Point taken.
Still, as far as risk to RH is concerned - if this kicks off a change via their customers, regulators, or legal action the change is probably not in their favor.
Still, as far as risk to RH is concerned - if this kicks off a change via their customers, regulators, or legal action the change is probably not in their favor.
One issue is a lot of retail people bought GME options. If those expire in the money, these people will be on the hook to buy 100s of shares of GME and likely don't have the cash on hand to purchase the shares (which leave RH holding the bag).
On one hand, you could say RH shouldn't let people buy options if RH doesn't believe those people can pay up when the option expires. On the other hand, you have people buying options who maybe don't understand that you need cash to buy the shares if the option expires in the money.
On one hand, you could say RH shouldn't let people buy options if RH doesn't believe those people can pay up when the option expires. On the other hand, you have people buying options who maybe don't understand that you need cash to buy the shares if the option expires in the money.
If you bought options, you don't have to exercise them. They could expire worthless.
That's whay Schwabb did and what any serious broker would do if there's volatility. If you have cash you should always be allowed to play if you are not doing anything illegal. If it's dangerous, it's your cash not theirs.
Robinhood takes on a lot of risk when their customers buy GME?
The risk to Robinhood is GME crashing by more than the amount of the margin. A large brokerage that has been through crashes before has systems in place, and can spread the remaining risk around. If a large portion of your customers are invested in a handful of stocks, their risk becomes your risk. Also, other customers of Robinhood who have cash that is in an uninsured account are also at risk even if they are not invested in GME.
Then why not shut down margin purchases of GME, but not cash purchases?
There was some speculation that they didn't have that capability. Brokerage firms should have the ability to restrict margin trading in particular stocks, but what if Robinhood couldn't, at least not on short notice?
There could is also the concern about new accounts trading in GME with funds that might be suspect. It's a risk you don't want to take if you don't know your customers and the bubble is ready to burst at any moment.
There could is also the concern about new accounts trading in GME with funds that might be suspect. It's a risk you don't want to take if you don't know your customers and the bubble is ready to burst at any moment.
It does because they let them buy on margin.
Interactive Brokers hiked the long margin to 100% (and short to 300%) which is a reasonable way for a broker to behave.
Killing the ability to buy is not.
Interactive Brokers hiked the long margin to 100% (and short to 300%) which is a reasonable way for a broker to behave.
Killing the ability to buy is not.
IB doesn't allow you buy GME even w/o margin account.
I don't think that is correct. They stopped options trading in it not 100% cash backed stock buying or 300% cash backed shorting. I think their position is fairly reasonable and as an account holder there I don't want people going crazy on leverage on this amount of volatility.
That's what they advertise via Twit. But if you try to buy even 1 stock of GME on non margin account (our own money only) it doesn't allow you to do that. I have a screenshot for that if you want. And customer support line is overloaded as expected.
Got email from IB that you cannot open new positions on GME this morning.
Probably not even long positions and probably just purely for liability reasons to stay away from the mess when shit hits the fan
ok that is unfortunate I didn't go all the way through with trying to actually buy. I'm a long time customer and they were definitely better before they went public
aggregate customer exposure means that massive simultaneous losses by retail traders following the herd can mean losses for RH, which they want to prevent.
Even when they're not buying on margin GME is in a short term bubble that will soon pop and leave millions of their users worse off than before. There probably was some internal logic of "protecting" folks from themselves whether we agree with that or not.
Did they stop people from selling in March when the World was panicing about Covid, despite most people assuming the stock market would rebound?
The answer is no.
The answer is no.
> most people assuming the stock market would rebound
No, people / pundits / the media were widely proclaiming that the healthcare system would be overrun and the next great economic depression was upon us. Most people assumed the stock market would continue to fall.
No, people / pundits / the media were widely proclaiming that the healthcare system would be overrun and the next great economic depression was upon us. Most people assumed the stock market would continue to fall.
Quite a bit of difference from markets being influenced by outside events and the market being influenced by your gamified platform.
Buy high, sell never. Everyone who bought the stock has already written it off as a complete loss. Everyone is banking on being worse off than before. They still buy it for the entertainment value and Robinhood denied them that.
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> Robinhood is a margin-lending options-trading broker. If a customer falls down on a trade, it is ultimately liable. If a retail customer loses money and makes a FINRA complaint that Robinhood induced them to buy through its gameified interface, it is liable. Risk and compliance likely made this call.
This is a very tenuous argument. By law, options customers in the US have to receive an information packet and accept an Options Agreement, wherein it's clear that they could lose 100% of their premium outlay (or more). Options trading is approved based on levels; not every account can buy options, and not every options account can sell naked options.
If we are assuming good faith from RH, maybe they are trying to prevent margin-call suicides. But I don't assume good faith from RH.
Not to mention that they turned off all opening trades -- not just large trades, margin trades, or options trades.
This is a very tenuous argument. By law, options customers in the US have to receive an information packet and accept an Options Agreement, wherein it's clear that they could lose 100% of their premium outlay (or more). Options trading is approved based on levels; not every account can buy options, and not every options account can sell naked options.
If we are assuming good faith from RH, maybe they are trying to prevent margin-call suicides. But I don't assume good faith from RH.
Not to mention that they turned off all opening trades -- not just large trades, margin trades, or options trades.
Robinhood didn't pull the plug. Tastyworks did the same and they said they were more or less forced by Apex Clearing. Here is CEO of interactive brokers also admitting to the reasons: https://www.youtube.com/watch?v=7RH4XKP55fM
You could also imagine that they have concern about the volume causing issues on their servers. A literal thundering herd might mean owners of GME can't sell during the collapse which would put robinhood in a bad situation
> A literal thundering herd might mean owners of GME can't sell
I can assure you there are very few cattle, bison, or caribou near the exchange.
I can assure you there are very few cattle, bison, or caribou near the exchange.
I strongly dislike nits like this. I don't think this clarifies what I was saying or provides any value. I also don't find it humorous.
While writing, I was thinking of the thundering herd problem and imagined that individual users is more literal (than many processes), more like the thing for which the problem was named.
If I'm not not mistaken, I think you can also refer to a group of humans literally as a herd. But I very rarely think such prescriptivism (saying one should not use terms inappropriately) provides value, especially on a word that is so far past being used correctly with any consistency.
While writing, I was thinking of the thundering herd problem and imagined that individual users is more literal (than many processes), more like the thing for which the problem was named.
If I'm not not mistaken, I think you can also refer to a group of humans literally as a herd. But I very rarely think such prescriptivism (saying one should not use terms inappropriately) provides value, especially on a word that is so far past being used correctly with any consistency.
Hedgefunds are real Robinhood customers buying their order flow. They go belly up Robinhood looses their actual source of income plus Robinhood lent them a ton of stock to short so they are on the hook too.
> Hedgefunds are real Robinhood customers buying their order flow
Market makers buy order flow. Hedge funds don't. The only major hedge fund affiliated with a market maker is Citadel.
Melvin and Citron placing shorting GME is an anomaly in the hedge fund world. Most institutional short views are expressed through options and structured products. (Market makers convert those options into shorts, the same way they convert calls into stock purchases.)
Market makers are making tonnes of money on this. It's the low-information non-directional trading their models are built for. (Source: former options market maker. My former colleagues are making annual targets in a week.)
Some hedge funds are getting screwed. But that is mostly over. Few funds' risk tolerances let them extend a 10x loss on an outright short. With respect to their puts, their maximum loss is the premium. That's generally baked into the risk model ex ante.
The only sophisticated parties holding the bag are brokers. Margin loans at risk. Uncovered options sales at risk. Most significantly, when the scheme inevitably crashes, almost-inevitable class-action lawsuits from clients claiming to have been misled by their interfaces.
Market makers buy order flow. Hedge funds don't. The only major hedge fund affiliated with a market maker is Citadel.
Melvin and Citron placing shorting GME is an anomaly in the hedge fund world. Most institutional short views are expressed through options and structured products. (Market makers convert those options into shorts, the same way they convert calls into stock purchases.)
Market makers are making tonnes of money on this. It's the low-information non-directional trading their models are built for. (Source: former options market maker. My former colleagues are making annual targets in a week.)
Some hedge funds are getting screwed. But that is mostly over. Few funds' risk tolerances let them extend a 10x loss on an outright short. With respect to their puts, their maximum loss is the premium. That's generally baked into the risk model ex ante.
The only sophisticated parties holding the bag are brokers. Margin loans at risk. Uncovered options sales at risk. Most significantly, when the scheme inevitably crashes, almost-inevitable class-action lawsuits from clients claiming to have been misled by their interfaces.
>Market makers are making tonnes of money on this. It's the low-information non-directional trading their models are built for. (Source: former options market maker. My former colleagues are making annual targets in a week.)
Aren't these market makers sitting on a ton of stock to cover call positions?
They may have picked up a lot of pennies these last two weeks, but the bulldozer is getting bigger and faster. This is a truly unprecedented situation and I doubt they have confidence that their models can handle it.
Aren't these market makers sitting on a ton of stock to cover call positions?
They may have picked up a lot of pennies these last two weeks, but the bulldozer is getting bigger and faster. This is a truly unprecedented situation and I doubt they have confidence that their models can handle it.
Market makers aggregate their risk exposure across all of their holdings and put limits on how large those exposures get.
> Aren't these market makers sitting on a ton of stock to cover call positions?
The whole purpose of delta hedging is to make them immune to the first-order effects of market moves. The first-order derivative of the value of everything they hold with respect to price moves in any one stock is constantly kept near zero.
In the old days, many options traders would put off hedging their books until near the closing bell. Smart equities traders would watch the options market to see which way the traders would be rushing to hedge in the cash equities market. These days, there are systems that automatically hedge out the positions throughout the day.
> Aren't these market makers sitting on a ton of stock to cover call positions?
The whole purpose of delta hedging is to make them immune to the first-order effects of market moves. The first-order derivative of the value of everything they hold with respect to price moves in any one stock is constantly kept near zero.
In the old days, many options traders would put off hedging their books until near the closing bell. Smart equities traders would watch the options market to see which way the traders would be rushing to hedge in the cash equities market. These days, there are systems that automatically hedge out the positions throughout the day.
And Citadel is responsible for 40% of Robinhood revenue and oh surprise Citadel is in the hole on the money sunk into Melvin.
> The only major hedge fund affiliated with a market maker is Citadel.
How many shares of Melvin Capital were bought by Citadel when they injected $2.75B? Is there a way to know how exposed they are?
Isn't there a conflict of interest in them floating a hedge fund losing money due to flow orders they are buying (or, potentially, not buying anymore)?
How many shares of Melvin Capital were bought by Citadel when they injected $2.75B? Is there a way to know how exposed they are?
Isn't there a conflict of interest in them floating a hedge fund losing money due to flow orders they are buying (or, potentially, not buying anymore)?
So as a platform Robinhood wants to make money from trading options, but it will shut down the platform when it sees too much risk for itself? If so, would this damage the trust to Robinhood?
Yes but
a) most of the platforms are doing the same
b) it's hard to imagine that with half of RH currently holding GME they're not going to come out of this having gained more in users than they lose over trust issues
a) most of the platforms are doing the same
b) it's hard to imagine that with half of RH currently holding GME they're not going to come out of this having gained more in users than they lose over trust issues
So FYI, the Reddit WSB "shutdown" was temporary and on purpose (by the mod admins) to clean up the page a bit. It was private for an hour or two and back up.
Discord, not so. Looking at the financial backers of Discord, you can pretty quickly draw a link to the short sellers. Presumably some phone calls or dinners were had last night and strings were pulled to shut the discord down.
Discord, not so. Looking at the financial backers of Discord, you can pretty quickly draw a link to the short sellers. Presumably some phone calls or dinners were had last night and strings were pulled to shut the discord down.
What you are describing would be Discord engaging in (potentially illegal) market manipulation.
This will be somewhat difficult to prove because the WSB discord (for the hour I was in it) was more or less a walking terms of service violation, near totally consisted of "ironic" racial slurs and "ironic" racist memes, n/f-word everywhere.
It was clearly taken over by folks intending to have it shut down because it did not look like that prior to this GME bet gaining media attention. There is a lot of extremely questionable things happening around this event leading me to think that some very wealthy people are trying to prevent their shorts getting blown up at all costs. Even on HN I’ve been seeing weird posts on these threads.
>It was clearly taken over by folks intending to have it shut down because it did not look like that prior to this GME bet gaining media attention.
That's one theory. Another would be that the gaining media attention caused an influx of users to join a group that equates itself to 4chan, causing moderation issues.
That's one theory. Another would be that the gaining media attention caused an influx of users to join a group that equates itself to 4chan, causing moderation issues.
WSB is about the memes, I don't think it's at all similar to 4chan (especially not /b/) and I think it is dangerous for you to assassinate the character of the community in such a dismissive way.
I'm not personally associated (not a member on the boards) but I've seen a lot of discussions float my way over the years and if it became that way now it's unlikely to be from 4chan itself (or a community like it).
But your insinuation here gives credence to many that the internet is eating itself, when it's much more likely to be manipulation from those who stand to lose.
I'm not personally associated (not a member on the boards) but I've seen a lot of discussions float my way over the years and if it became that way now it's unlikely to be from 4chan itself (or a community like it).
But your insinuation here gives credence to many that the internet is eating itself, when it's much more likely to be manipulation from those who stand to lose.
Their tagline is (or was at least) 'if 4chan found a bloomberg terminal'.
I say this as someone who frequented both communities at one time or another: they are very very very alike. I wouldn't be surprised if this who thing is a charade to take money from 'normies' as much a wall street.
I say this as someone who frequented both communities at one time or another: they are very very very alike. I wouldn't be surprised if this who thing is a charade to take money from 'normies' as much a wall street.
Ive been watching the community for atleast 4 years now, and for the most part it's is just random people that use options to gamble (i.e. wild shots at trying to make money but they do have some knowledge). Either way, while terms like retard, autist, and gay are used frequently I've yet to see any racism or any xenophobia whatsoever in the community. And any insinuation of it is usually shut down fast. And While they use that mantra I think WSB is very unlike 4chan (although my exposure to 4chan is extremely limited) and its racism/hate speech.
I don't think "While mocking people with disabilities and homophobia is frequent, I have yet to see any racism or xenophobia" is the defense you think it is.
> I don't think "While mocking people with disabilities and homophobia is frequent, I have yet to see any racism or xenophobia" is the defense you think it is.
I think that it's a bit of a stretch to say that the language they use means they're mocking people with disabilities or homophobia. Using words ironically just to be edgy is completely different from believing others to be inferior or an invasive entity to be defended against. That's very apparent when you talk to, say, an angsty teenager versus an actual ethnonationalist or even just your garden variety civic nationalist.
They might use the same words, but mean them in completely different ways, and actually be expressing very different things. I think that as it pertains to the internet, certain dialects of edgy, slang filled english are as close to a global lingua franca as can be considered possible. You can't paint all of these people with the same brush. Aside from speaking the same dialect of english, they use it to express very different thoughts, no less diverse or varied as those who speak other ones. This nuance will get missed if you overliteralize what they say and take it at face value.
I think that it's a bit of a stretch to say that the language they use means they're mocking people with disabilities or homophobia. Using words ironically just to be edgy is completely different from believing others to be inferior or an invasive entity to be defended against. That's very apparent when you talk to, say, an angsty teenager versus an actual ethnonationalist or even just your garden variety civic nationalist.
They might use the same words, but mean them in completely different ways, and actually be expressing very different things. I think that as it pertains to the internet, certain dialects of edgy, slang filled english are as close to a global lingua franca as can be considered possible. You can't paint all of these people with the same brush. Aside from speaking the same dialect of english, they use it to express very different thoughts, no less diverse or varied as those who speak other ones. This nuance will get missed if you overliteralize what they say and take it at face value.
The defense is "while there is mocking of disabilities and gay sexuality, there is not racism and xenophobia". Regardless, its in good fun. There is no intention of actually disparaging those groups. There are plenty of posts about donations to Autism research and other charities.
Stop moving goal posts its a bad look.
Stop moving goal posts its a bad look.
I don't think anyone is moving goal posts. The people who think those words aren't ok have never cared about intent or whether or not you've donated money to the cause.
Yeah, I read my comment and thought about it, and I fully understand that those words are not acceptable but I feel like its not as severe and most of the time they are calling themselves gay and such, but I fully understand that it still is unacceptable.
This is how 4chan started as well - there's then a steady progression from the ironic mode, to ironic "racism", to ironic racism, to "ironic" racism, to racism.
I think it's similar to old school 4chan, mostly chaotic neutral in alignment. Today's 4chan is little more than a far-right forum.
This one is probably closer to my guess, it would be difficult to moderate half a million new users in a day with an existing mod base, and you can't really just hand out permissions to random memers saying "I'll help moderate" without risking that some nonzero amount of them will just cause havoc anyway.
Yes. The only thing I'd suggest is to call for volunteers from "sane" subreddits that seem to have a good moderation policy and reasonable moderators.
The problem there is that the above people are already likely quite busy, and don't want to take on an additional (unpaid) burden by trying to clean up a sub they don't really care about.
The problem there is that the above people are already likely quite busy, and don't want to take on an additional (unpaid) burden by trying to clean up a sub they don't really care about.
Eh, that blatant offensive nature is a 4chan holdover, which WSB proudly embraces. Plenty of millennials are former /b/ browsers, now in their 30s and some with plenty of disposable income.
I've struggled with this in some friend groups, particularly after having a child diagnosed with an autism spectrum disorder.
I've struggled with this in some friend groups, particularly after having a child diagnosed with an autism spectrum disorder.
So "it was funny until it was relevant to me personally, then it wasn't"?
Strong moral backbone ya got there.
Strong moral backbone ya got there.
You've just described the premise of growing into an adult. Congratulations.
Not really? Children frequently demonstrate the same behavior. Laugh at the kid with X problem until you have a problem yourself, and now you dislike bullies.
Growing older and realizing in general that things you did when you were younger are bad is fine and dandy, and indeed is "growing up".
But only deciding things are bad when they personally effect you has nothing to do with growing older and is not a good look. It's just selfish myopia.
Being an adult with a consistent moral framework is about being able to say "this is right or wrong", regardless of if it effects you personally or not. If you only notice something is bad when it happens to you, then that's basically what kids do automatically.
Growing older and realizing in general that things you did when you were younger are bad is fine and dandy, and indeed is "growing up".
But only deciding things are bad when they personally effect you has nothing to do with growing older and is not a good look. It's just selfish myopia.
Being an adult with a consistent moral framework is about being able to say "this is right or wrong", regardless of if it effects you personally or not. If you only notice something is bad when it happens to you, then that's basically what kids do automatically.
Adolescence vs adulthood is the timeline here.
Consider this: you read this anecdote and thought “I’m going to belittle this guy.”
Says a lot about _your_ morals.
Consider this: you read this anecdote and thought “I’m going to belittle this guy.”
Says a lot about _your_ morals.
Huh, that's strange, because the comment I read said:
> ...particularly after having a child diagnosed with an autism...
Which to me says the dichotomy in particular is "before autism personally affected me" and "after autism personally affected me".
Calling people "autists" as a joke is either problematic and worth calling out or it isn't. You being personally affected doesn't change that. At least that is what I would argue is required from a consistent moral framework.
Don't think that says much about my morals, just that I like them to be consistent / not myopic.
Think about the thread we're posting in. This is basically about a company/industry that was like "these retail investors don't need protecting, they're adults and can make their own decisions, even if it means losing money", until those retails investors started costing them money with their adult decisions, at which point they change their mind and decide "actually they need protecting from themselves".
The way you phrased your comment, it sounded like you did the same, just swap out financial shenanigans for name-calling.
> ...particularly after having a child diagnosed with an autism...
Which to me says the dichotomy in particular is "before autism personally affected me" and "after autism personally affected me".
Calling people "autists" as a joke is either problematic and worth calling out or it isn't. You being personally affected doesn't change that. At least that is what I would argue is required from a consistent moral framework.
Don't think that says much about my morals, just that I like them to be consistent / not myopic.
Think about the thread we're posting in. This is basically about a company/industry that was like "these retail investors don't need protecting, they're adults and can make their own decisions, even if it means losing money", until those retails investors started costing them money with their adult decisions, at which point they change their mind and decide "actually they need protecting from themselves".
The way you phrased your comment, it sounded like you did the same, just swap out financial shenanigans for name-calling.
> I've struggled with this in some friend groups, particularly after having a child diagnosed with an autism spectrum disorder.
Can you elaborate this some more? Are you saying that you've struggled with this because people take that 4chan attitude they grew up with into their IRL lives and are assholes to your son with ASD?
Can you elaborate this some more? Are you saying that you've struggled with this because people take that 4chan attitude they grew up with into their IRL lives and are assholes to your son with ASD?
What needs to be elaborated? Question feels voyeuristic.
Figuring out just how they're assholes in real life helps understand and contextualize the problem better. Are they oblivious, or dropping offensive memes at his kid, etc?
Does it really matter? If you reach your mid-30s and haven't figured out that mocking someone with ASD is wrong, I'm not going to waste my time educating you. I'll simply cut you out of my life, gradually or all at once.
The royal "you", not you specifically.
The royal "you", not you specifically.
?? I asked the question more because I was just curious if there are legitimately like mid-30 year old groups of friends that haven't grown out of this "4chan attitude" of using the n-word, calling people "autists", etc.
I didn't ask out of a sense of voyeurism. More like a, "dang, is this something I need to watch out for when I get older?"
I didn't ask out of a sense of voyeurism. More like a, "dang, is this something I need to watch out for when I get older?"
This is precisely it. A willful ignorance when referring to awkward people as "autists" along with tasteless WSB quotes.
Essentially, yes. Whether it's playful or not, a lot of the memes on a place like WSB are incredibly demeaning.
Cheers. And yes, I'm totally aware of how awful and toxic those parts of the internet are, but usually those toxic and awful people hide it more when you talk to them in real life.
I’ve found many who are very outspoken in these communities have little to no filter in real life.
most of that is self aware deprecation from other autists. frankly being able to joke and shittalk with eachother makes it a lot easier to deal with having autism and everything that comes with it.
However Discord would have known about this "bad" behaviour for a long time and it wasn't a coincidence that they finally decided to apply a ban hammer, so it's a very weak cover story. Also, racial slurs? You're the first I've heard of racist slurs - I had only heard of people calling themselves/the group retards and autists - meant in an endearing, self-deprecating humour kind of way. I've seen no instances of racism on /r/wallstreetbets - I really doubt on their Discord they'd be allowing racism though.
As usual, the ToS are applied selectively, serving merely as a justification for arbitrary behavior.
It's just so blatantly obvious. It reminds me that the final layer of competition is governance, and these "unicorns" funded by the VC-finance industrial complex are going to lose out in the end when eventually good actors come into play.
For the several years I've been following, I've never once seen the n word or anything close to racist memes.
They do make a lot of autism jokes (mostly pointed at themselves) and plenty of f bombs, but neither of which is generally seen as ban-hammer-levels of problematic (whether or not it is is up to you)
They do make a lot of autism jokes (mostly pointed at themselves) and plenty of f bombs, but neither of which is generally seen as ban-hammer-levels of problematic (whether or not it is is up to you)
Are you certain? I haven’t seen a single racial slur on r/wsb. I’m sure there are plenty of r/f-s but I have seen any n bombs.
I legitimately don't know which f-word you're referring to. This is where we are.
If that's the only criteria lot of social media sites would get hit
How?
> Looking at the financial backers of Discord, you can pretty quickly draw a link to the short sellers.
Mind elaborating on this?
Mind elaborating on this?
https://www.reddit.com/r/wallstreetbets/comments/l6n4ay/the_...
Quote:
Quote:
Discord has had significant investment from private equity funds including FirstMark Capital, Greenoaks Capital Partners, Index Ventures, IVP, Greylock Partners, Benchmark, Accel, General Catalyst, Ridge Ventures, Spark Capital, and Tencent Holdings. At least one of these firms has invested with Point72 Ventures, which recently helped Melvin Capital.The connection is pretty conspiratorial. By that logic every company in the valley could be heavily influenced to shutdown products for different people if it as any connection to a VC (which is pretty much every company).
I think discord probably made some calculations on its own as opposed to pressure from Melvin/Point72. Though in this day and age it seems that the truth ends up being stranger than fiction.
I think discord probably made some calculations on its own as opposed to pressure from Melvin/Point72. Though in this day and age it seems that the truth ends up being stranger than fiction.
> By that logic every company in the valley could be heavily influenced to shutdown products for different people if it as any connection to a VC (which is pretty much every company).
Well, yes...?
Well, yes...?
Love how often these comments just boil down to straight denial. "This couldn't possibly be happening!"
Exactly. These companies are losing literal billions. Actual wars in real life have been fought over less. Yet they couldn't possibly be exerting any influence over the companies they own. That would be illegal.
And they would surely be caught and word would get out if they did do it.
And then what? Will they be fined even half of what they stand to lose? Or be fined a "record-breaking" 5 million
Surprise also how much conspiracy is being upvoted here.
Well, we are discussing market manipulation. Which can be considered a conspiracy crime, right?
I think you've gotta take selection effects into account. The deep comments section of the Nth Robinhood/Gamestop post is going to be disproportionately full of people who are unhappy with Robinhood and willing to believe lots of nasty things about them.
Which then has a spiraling effect in that other disaffected people will read those comments and believe what they want to believe. Similar to the conspiracy theories in the election. However I do think there has been some super shady stuff done with robinhood that doesn't take that much to believe that there is a conspiracy/collusion is at play. It's hard to believe that they are altruistically de-risking their clients when they sell doge coin.
those are all silicon valley investment firms. they don't have any kind of direct relationship with hedge funds that specialize in short selling.
this is essentially saying "discord has investors, and the stock market also has investors, so they're colluding". there isn't a real connection here
this is essentially saying "discord has investors, and the stock market also has investors, so they're colluding". there isn't a real connection here
So your telling me that 0 of the partners in those SV firms above have the phone numbers of 0 these short selling hedge funds partners in their phones right now?
I'm on the fence whether someone influential actually called the CEO of Discord and asked to have it shut down. I'm 99% certain these people know each other. It's not a could the call be made its more of a was it made.
I'm on the fence whether someone influential actually called the CEO of Discord and asked to have it shut down. I'm 99% certain these people know each other. It's not a could the call be made its more of a was it made.
I never said this wasn't possible. though it's just as likely as anyone calling anyone.
practically, short selling hedge funds and silicon valley investors don't run in the same circles. yeah, they're socially connected but they have separate networks and cultures. conflating the two because they both involve investing isn't accurate
practically, short selling hedge funds and silicon valley investors don't run in the same circles. yeah, they're socially connected but they have separate networks and cultures. conflating the two because they both involve investing isn't accurate
>though it's just as likely as anyone calling anyone.
That's a stretch. I think the point here is that some parties can save billions of dollars in losses, and makes them a little more likely hypothetically. Im all for dealing with the facts, but the facts are just looking at the '08 crisis a lot of Wall st funds have a track record of bending rules for profit. It's not out of this world to imagine 12 years later that the same culture exists
That's a stretch. I think the point here is that some parties can save billions of dollars in losses, and makes them a little more likely hypothetically. Im all for dealing with the facts, but the facts are just looking at the '08 crisis a lot of Wall st funds have a track record of bending rules for profit. It's not out of this world to imagine 12 years later that the same culture exists
Don't they all have the same LPs?
Behind all of these nefarious entities is CALPERS, etc. just trying to keep your pension fund solvent.
Behind all of these nefarious entities is CALPERS, etc. just trying to keep your pension fund solvent.
The theory is that Discord’s investors are putting pressure on them to shutdown the wild & crazy investment decisions they don’t like. It’s hard to say what is actually happening.
One of Robinhood's main business partner is Citadel (RH sells their order flow to Citadel). Citadel is also the firm that has bailed out Melvin Capital, one of the hedge funds that took a huge short position in GME.
Probably just a coincidence.
Probably just a coincidence.
I follow the bitcoin crowd a bit. Everyday they issue claims like 'bitcoin was made to free us from wealthy people games' it felt echo chamber / tinfoil at times. This isn't hurting their theories.
Wealthy people games exist in bitcoin as well. Especially now with all the institutional investment and futures markets. I say this as a long-time bitcoin fanboy as well.
It is not the same. Wall Street is playing with other people money mostly pensions and funds borrowed from the state.
This is the only relevant thread in this ongoing class war.
Fine, it's not on the same level, but it sure does fuck with the crypto markets.
yeah can be to
They're right that wealthy people game the financial system.
They're insane (or self-interested) to pretend the same doesn't happen in cryptocurrencies.
They're insane (or self-interested) to pretend the same doesn't happen in cryptocurrencies.
maybe, were crypto exchanges forced to stop trades before ?
Crypto exchanges going down during times of high volume is definitely a thing, yes. For example:
https://www.coindesk.com/coinbase-redoing-infrastructure-to-...
> During the recent bitcoin bull run, Coinbase has struggled to keep itself up during stretches of heavy volume, leading to snarky comments on Twitter and Reddit that it’s only news when the exchange doesn’t go down during peak periods. Given the exchange has filed preliminary documents for a public listing of the company’s shares, fixing its infrastructure has undoubtedly taken on an even greater urgency.
https://www.coindesk.com/coinbase-redoing-infrastructure-to-...
> During the recent bitcoin bull run, Coinbase has struggled to keep itself up during stretches of heavy volume, leading to snarky comments on Twitter and Reddit that it’s only news when the exchange doesn’t go down during peak periods. Given the exchange has filed preliminary documents for a public listing of the company’s shares, fixing its infrastructure has undoubtedly taken on an even greater urgency.
Going down is one degree lower than officially displaying a 'you cannot buy <security>' on your app. I know DDoS smell bad but it's not the same. And mind you I lost profits on the latest DDoS.
Don't forget that crypto exchanges have none of the properties of cryptocurrencies themselves, in terms of censorship resistance and cryptographic guarantees. Since fiat currencies are involved and these are businesses operating in countries with laws, they have to enforce whatever the government wants to require of them. They can absolutely halt trading, or freeze funds or assets on their platform at any time.
DEXes, however, can be designed so that no person can halt trading or freeze your funds (usually you trade out of your own wallet anyway). A DEX is just a computer program running on the Ethereum blockchain. Once deployed, the blockchain is immutable, and it just sits there accepting orders.
This is just shifting who's getting the unreasonable, unnecessary transfer of wealth weighted towards the earlier adopters.
I keep seeing this pop up everywhere; Citadel != Citadel Securities
You keep saying that but they are literally sub companies of the same larger conglomerate. Their CEO and founder is the same person, he is also both of their primary shareholders.
Same group of companies, the distinction is completely irrelevant.
One’s a market maker + bank, one’s a fund. I understand it’s against the grain to hold this opinion, probably because it’s inherently not conspiratorial, but they do different things and regulated/managed entirely differently.
They are still owned by the same group of people, with conflicting interests: one side supports a trading platform, the other side just bailed out a moribund fund and needs to make that money back.
What side do you think wins given the huge hole left in Citadel after propping up Melvin?
What side do you think wins given the huge hole left in Citadel after propping up Melvin?
Companies do not make decisions.
People owning these companies make decisions.
Mitsubishi Electric != Mitsubishi.
And Alphabet != Google! /s
The way to make money in a bubble like this is to sell right before the pop.
At some point the word will go out that it’s over—“we won”—and everyone will rush to sell their GME and take profits.
It’s not possible for all those people to succeed. Broker apps like Robinhood will be absolutely overwhelmed with sell orders, many of which will run into technical problems and/or no counter parties. A lot of people are going to be pissed off and blame the brokers.
People buying in late will have the most to lose and maybe the least understanding of what is going on. I mean, this story was a “breaking news” red banner on WashingtonPost.com yesterday. Not everyone buying GME today understands the social movement /r/wsb angle.
Ultimately brokers are worried about getting sued by people or companies who lose a lot of money in ways that will look preventable in hindsight.
Edit to add: the 2008 financial crisis was caused by financial firms selling a lot of crazy mortgages to people who could not afford them unless housing prices went up forever. When the crisis hit, the firms got the blame, not their customers. Companies learned that helping their customers shoot themselves in the foot can come back to bite them, even if it was all legal and what customers wanted at the time.
At some point the word will go out that it’s over—“we won”—and everyone will rush to sell their GME and take profits.
It’s not possible for all those people to succeed. Broker apps like Robinhood will be absolutely overwhelmed with sell orders, many of which will run into technical problems and/or no counter parties. A lot of people are going to be pissed off and blame the brokers.
People buying in late will have the most to lose and maybe the least understanding of what is going on. I mean, this story was a “breaking news” red banner on WashingtonPost.com yesterday. Not everyone buying GME today understands the social movement /r/wsb angle.
Ultimately brokers are worried about getting sued by people or companies who lose a lot of money in ways that will look preventable in hindsight.
Edit to add: the 2008 financial crisis was caused by financial firms selling a lot of crazy mortgages to people who could not afford them unless housing prices went up forever. When the crisis hit, the firms got the blame, not their customers. Companies learned that helping their customers shoot themselves in the foot can come back to bite them, even if it was all legal and what customers wanted at the time.
>Companies learned that helping their customers shoot themselves in the foot can come back to bite them, even if it was all legal and what customers wanted at the time.
What a dismissive, awful, terrible way to phrase this.
Having parents that were nearly the victims of one of those upside down mortgages, it's not that simple. They didn't ask for a 400k mortgage. They asked for a home they could afford. When the bank, that they have trusted their entire life, says, 'you can afford this much per month', they had no reason to question that.
They're unsophisticated people, who trusted the system not to fuck them. And that's precisely what it tried to do.
While I get that people need to take control of their own money, when the people responsible for looking after your money, the actual, literal bank tells you you're good, why wouldn't you believe them?
What a dismissive, awful, terrible way to phrase this.
Having parents that were nearly the victims of one of those upside down mortgages, it's not that simple. They didn't ask for a 400k mortgage. They asked for a home they could afford. When the bank, that they have trusted their entire life, says, 'you can afford this much per month', they had no reason to question that.
They're unsophisticated people, who trusted the system not to fuck them. And that's precisely what it tried to do.
While I get that people need to take control of their own money, when the people responsible for looking after your money, the actual, literal bank tells you you're good, why wouldn't you believe them?
> when the people responsible for looking after your money, the actual, literal bank
The bank doesn’t have a fiduciary duty to mortgage customers.
If someone wants someone responsible for looking after money and large purchases, they need a fiduciary financial advisor, not their bank.
The fact that people think the bank is supposed to look after money is part of the problem. The bank is just a vault. Not only are they not responsible for helping someone pick a mortgage and house, they aren’t even competent to do so.
I can’t imagine some retail bank even employing people who could competently assess individual debt/income ratios.
The training is that individuals should have financial literacy enough to know what banks do and don’t do well. And to recognize cross-marketing.
I knew tons of people who made dumb decisions in the 00s and bought way too much house. The bank letting them was part of the problem. But people being stupid was a big part too. I knew families making $50k/year buying $400k houses and refinancing every six months for cash out to pay the mortgage. The bank shouldn’t have done that. But people were really stupid to do this once much less multiple times.
The bank doesn’t have a fiduciary duty to mortgage customers.
If someone wants someone responsible for looking after money and large purchases, they need a fiduciary financial advisor, not their bank.
The fact that people think the bank is supposed to look after money is part of the problem. The bank is just a vault. Not only are they not responsible for helping someone pick a mortgage and house, they aren’t even competent to do so.
I can’t imagine some retail bank even employing people who could competently assess individual debt/income ratios.
The training is that individuals should have financial literacy enough to know what banks do and don’t do well. And to recognize cross-marketing.
I knew tons of people who made dumb decisions in the 00s and bought way too much house. The bank letting them was part of the problem. But people being stupid was a big part too. I knew families making $50k/year buying $400k houses and refinancing every six months for cash out to pay the mortgage. The bank shouldn’t have done that. But people were really stupid to do this once much less multiple times.
Loughla is right, it was reasonable for customers to trust their banks on scoping a mortgage. Not because of some technical fiduciary status, but because banks had a history of being conservative with mortgage underwriting, and because it would seem to be in the banks' best interest to be conservative with mortgage underwriting.
But some banks thought they could lower their underwriting standards and get away with it because they could shift the risk to larger financial entities by selling the mortgages. And a lot of non-banks got in on the mortgage underwriting game for the same reason.
And bank customers liked it. Who doesn't like to be told that you're in better financial shape than you thought? That should be good news.
My point above was not to defend what banks did, but to point out that, even though banks were in the legal right to lower their underwriting standards, it did not work out well for them or their customers (or anyone else, really). And a lot of the downside came later, in the form of bad reputations, burdensome regulations, etc.
But some banks thought they could lower their underwriting standards and get away with it because they could shift the risk to larger financial entities by selling the mortgages. And a lot of non-banks got in on the mortgage underwriting game for the same reason.
And bank customers liked it. Who doesn't like to be told that you're in better financial shape than you thought? That should be good news.
My point above was not to defend what banks did, but to point out that, even though banks were in the legal right to lower their underwriting standards, it did not work out well for them or their customers (or anyone else, really). And a lot of the downside came later, in the form of bad reputations, burdensome regulations, etc.
Most buyers didn’t get mortgages from their retail bank, they got them through mortgage brokers.
Maybe there were lots of hapless old people who were misled by some bank they mistakenly trusted for years.
I don’t think so, the many examples I personally knew from that period were getting loans from specialized banks that set up mortgage shops, like Washington Mutual.
The book (and movie) The Big Short digs into this how regular people were overextending.
To clarify, the banks were bad actors by offering and participating. But reasonable people were avoiding the situation until the whole system tipped over. Someone borrowing at 40% debt to income or higher should never have done that, even if they trusted their local banker who was saying it was fine. Finance requires personal responsibility and people need education to help make these decisions (and they shouldn’t get this help from someone with a vested adversarial financial interest).
Maybe there were lots of hapless old people who were misled by some bank they mistakenly trusted for years.
I don’t think so, the many examples I personally knew from that period were getting loans from specialized banks that set up mortgage shops, like Washington Mutual.
The book (and movie) The Big Short digs into this how regular people were overextending.
To clarify, the banks were bad actors by offering and participating. But reasonable people were avoiding the situation until the whole system tipped over. Someone borrowing at 40% debt to income or higher should never have done that, even if they trusted their local banker who was saying it was fine. Finance requires personal responsibility and people need education to help make these decisions (and they shouldn’t get this help from someone with a vested adversarial financial interest).
> I can’t imagine some retail bank even employing people who could competently assess individual debt/income ratios.
They would have terrible sales numbers and get fired in the first month. Wells Fargo's training was that the more financial instruments a customer had with the bank the better.
They would have terrible sales numbers and get fired in the first month. Wells Fargo's training was that the more financial instruments a customer had with the bank the better.
I understand you. Many of the people seeing news stories or social media posts today about buying GameStop are also unsophisticated. Brokers may be thinking it is in their self-interest to not just execute every buy order in an obviously inflated stock.
If you agree that a bank should engage in paternalism and tell people what they can and cannot afford then why shouldn't Robinhood also engage in paternalism and tell people what stock they can or cannot buy?
> Broker apps like Robinhood will be absolutely overwhelmed with sell orders
Shouldn't be possible. Most of the messages to the orderbook, by orders of magnitude, would be market makers doing add/cancel, which isn't something that comes from RH anyways.
How often is one particular user going to send in an order? 10 times a day if they're particularly busy? Doesn't touch the sides. The internet facing gateways can be scaled up easily if that's even needed, they aren't latency sensitive. The inside towards the exchange can be made extremely fast.
I've built systems that do this.
Shouldn't be possible. Most of the messages to the orderbook, by orders of magnitude, would be market makers doing add/cancel, which isn't something that comes from RH anyways.
How often is one particular user going to send in an order? 10 times a day if they're particularly busy? Doesn't touch the sides. The internet facing gateways can be scaled up easily if that's even needed, they aren't latency sensitive. The inside towards the exchange can be made extremely fast.
I've built systems that do this.
Robinhood experienced several outages in March 2020 because of large volumes of trading.
[1] https://www.cnbc.com/2020/03/09/robinhood-app-down-again-dur...
[1] https://www.cnbc.com/2020/03/09/robinhood-app-down-again-dur...
A system could be built to handle this. Robinhood's likely hasn't been considering the notable outages they've had.
I'm on schwab. I had a hard time executing my sell. Luckily got it around $450 haha. But only 1 share for fun. I think I had to try like 8 times for it to go through. I also had a hard ish time canceling pre-market limit orders.
> caused by financial firms selling a lot of crazy mortgages to people who could not afford them unless housing prices went up forever. When the crisis hit, the firms got the blame, not their customers.
This is not totally correct.
2008 was caused by banks giving out extremely risky mortgages (the banks knew they were risky mortgages) and then packaging them up into giant bundles and magically calling them AAA stable real estate investments and selling them forward to other banks/pensions/401ks.
Banks are responsible for assessing the risk on a mortgage, not the customer.
This is not totally correct.
2008 was caused by banks giving out extremely risky mortgages (the banks knew they were risky mortgages) and then packaging them up into giant bundles and magically calling them AAA stable real estate investments and selling them forward to other banks/pensions/401ks.
Banks are responsible for assessing the risk on a mortgage, not the customer.
> many of which will run into technical problems
If a broker has a technical problem processing a trade, they deserve to be blamed.
If a broker has a technical problem processing a trade, they deserve to be blamed.
Seeing a comment like this on HN shows the risk here. If people here don’t understand the difficulty in scaling to meet huge spikes in demand, how are ordinary retail investors supposed to understand it?
It’s one thing to handle “a trade.” It’s another thing to handle everyone trying to trade at exactly the same second. We already saw broker apps have issues this week just on handling the buy volume. The sell volume will be far higher.
And I mentioned counterparties too. Even if the technology works, you can’t sell if everyone else is selling too.
It’s one thing to handle “a trade.” It’s another thing to handle everyone trying to trade at exactly the same second. We already saw broker apps have issues this week just on handling the buy volume. The sell volume will be far higher.
And I mentioned counterparties too. Even if the technology works, you can’t sell if everyone else is selling too.
I spent many years building exactly this technology. It's hard, but it is (or should be) table stakes for the industry.
The risk of not finding a counterparty to which to sell is different - and real - which is why I did not disagree with that aspect of your post.
The risk of not finding a counterparty to which to sell is different - and real - which is why I did not disagree with that aspect of your post.
Multiple online brokers had outages this week and blamed volume. Whether or not it should be possible, it seems possible.
Didn't Parlor just get shutdown because they did not moderate their user base comments fast enough?
If we hold a social media company liable for not being able to scale fast enough shouldn't a company offering financial services be held to at least that level of standard?
If we hold a social media company liable for not being able to scale fast enough shouldn't a company offering financial services be held to at least that level of standard?
>When the crisis hit, the firms got the blame, not their customers. Companies learned that helping their customers shoot themselves in the foot can come back to bite them, even if it was all legal and what customers wanted at the time.
Maybe it wasn't intended, but this comes across as particularly harsh victim-blaming.
Yes, the firms got some blame (and a bailout), the customers lost their homes.
Edit: I now see the retraction/clarification you just posted to another commenter. Cheers.
Maybe it wasn't intended, but this comes across as particularly harsh victim-blaming.
Yes, the firms got some blame (and a bailout), the customers lost their homes.
Edit: I now see the retraction/clarification you just posted to another commenter. Cheers.
> Not everyone buying GME today understands the social movement /r/wsb angle.
I mean read the top comments in the top WSB posts today. It ain’t about sticking it to the man. It’s about making money, fast.
I mean read the top comments in the top WSB posts today. It ain’t about sticking it to the man. It’s about making money, fast.
Agree. My cynical mind like to think that there are a lot more people there who just want to make a quick buck and maybe get rich quick. Those people, who most likely bought GME early on, are hyping up the "hold strong on GME" motto and they will silently leave the fools to hold the burden. Whether it's sticking it to the Wall Street or not (actually, it's only affecting maybe a handful of hedge funds on Wall Streets; the big guys on Wall Streets are probably making a lot of money from this "movement"), A LOT of average Joe's will lose money here as well.
> When the crisis hit, the firms got the blame, not their customers. Companies learned that helping their customers shoot themselves in the foot can come back to bite them, even if it was all legal and what customers wanted at the time.
That is a pretty gross oversimplification and completely dismisses the variety of "companies" that had a hand.
Subprime lending was just the foundation, but it took investors to investors to buy those securities, and ratings agencies to assign favorable risk ratings to those securities.
That is a pretty gross oversimplification and completely dismisses the variety of "companies" that had a hand.
Subprime lending was just the foundation, but it took investors to investors to buy those securities, and ratings agencies to assign favorable risk ratings to those securities.
>People buying in late will have the most to lose and maybe the least understanding of what is going on. I mean, this story was a “breaking news” red banner on WashingtonPost.com yesterday. Not everyone buying GME today understands the social movement /r/wsb angle.
Actually that is impossible. This is a short squeeze. If you forget to sell your share then the short sellers are fucked because they still have to buy yours.
Actually that is impossible. This is a short squeeze. If you forget to sell your share then the short sellers are fucked because they still have to buy yours.
I know there's a lot of conspiracy around wall st screwing over the little guy here, I suspect the truth is more mundane. When the music stops a LOT of people will be left holding the bag and will lose a great deal of money. There are people putting their parents life savings into GME at $300/share. It's insane, and nothing but pure gambling at this point. I suspect regulators are extremely concerned at the risk people are exposing themselves to.
While you're right that eventually the music will stop, this thread is about direct intervention. There isn't a way I see that the intervention protects retail at all. By its nature it ensured a full crash and retail didn't see it coming.
A full crash is ensured by the fact that the stock is massively, massively overvalued. If they are taking steps to prevent it from becoming even more overvalued, the upshot should be less money getting lost overall.
Possibly, you are only part of the crash if you have to buy at the top which, from my understanding, would be the short sellers as it is driven to a 1 time spike. There would be bag holders from not having limits set correctly and all but that's the risky play.
Doing this way ensures that retail loses, 100%. Only a retail app was blocked.
It is the asymmetry, I can't see a valid reason for unilateral action from RH here.
Doing this way ensures that retail loses, 100%. Only a retail app was blocked.
It is the asymmetry, I can't see a valid reason for unilateral action from RH here.
I don't see this ending well for (some of) the Robinhood crowd. Wall Street has deeper pockets. Robinhood manages $20B in total. A small-ish hedge fund has like, a few billion dollars AUM. There are many such hedge funds, and a couple dozens much larger ones.
A couple funds with large short positions have popped, but short interest hasn't budged; they were just quietly replaced by other funds. At this point probably every hedge fund who trade equities is short GME. If your position is not too large and you have enough cash you can just keep meeting the margin calls and collect your free money when the bubble bursts.
(And stop loss orders don't save you if the crash happens fast enough.)
A couple funds with large short positions have popped, but short interest hasn't budged; they were just quietly replaced by other funds. At this point probably every hedge fund who trade equities is short GME. If your position is not too large and you have enough cash you can just keep meeting the margin calls and collect your free money when the bubble bursts.
(And stop loss orders don't save you if the crash happens fast enough.)
> At this point probably every hedge fund who trade equities is short GME.
I agree. Anybody who doesn't think that the algorithms have locked onto GME is stupid or hopelessly naive.
You're not punishing Wall Street, they've already priced you in and are waiting to take all your money.
Suckers.
"One of these days in your travels, a guy is going to show you a brand-new deck of cards on which the seal is not yet broken. Then this guy is going to offer to bet you that he can make the jack of spades jump out of this brand-new deck of cards and squirt cider in your ear. But, son, do not accept this bet, because as sure as you stand there, you're going to wind up with an ear full of cider."
I agree. Anybody who doesn't think that the algorithms have locked onto GME is stupid or hopelessly naive.
You're not punishing Wall Street, they've already priced you in and are waiting to take all your money.
Suckers.
"One of these days in your travels, a guy is going to show you a brand-new deck of cards on which the seal is not yet broken. Then this guy is going to offer to bet you that he can make the jack of spades jump out of this brand-new deck of cards and squirt cider in your ear. But, son, do not accept this bet, because as sure as you stand there, you're going to wind up with an ear full of cider."
One possible legitimate reason is the risk to Robinhood themselves. They allow margin trading and I think anybody would agree that buying GME at these crazy prices on margin is incredibly risky. If the traders can't pay, Robinhood or their bank/insurers are on the hook. Also even though the narrative here is Robinhood traders vs hedge funds, surely there are also a lot of shorts on Robinhood too, so there's more margin risk from those too.
However why not just disable margin trading on these stocks instead of shutting them off altogether? I don't really know enough to say. Maybe there are additional risks somewhere unrelated to margins? Or maybe the upstream market makers are forcing their hand. Or maybe it's some combination of reasons, including pressure from people who are on the losing sides of these bets.
> Why should Robinhood pick a winner (siding against their own customers)
As others have often pointed out, Robinhood is in some ways analagous to social media companies. Their end users are not their customers, because it's a free service. The customers are the businesses on the other end, in Robinhood's case the market makers who are paying for the right to front-run trades. If this is no longer profitable for them due to crazy volatility, they can apparently stop allowing trades at any time.
However why not just disable margin trading on these stocks instead of shutting them off altogether? I don't really know enough to say. Maybe there are additional risks somewhere unrelated to margins? Or maybe the upstream market makers are forcing their hand. Or maybe it's some combination of reasons, including pressure from people who are on the losing sides of these bets.
> Why should Robinhood pick a winner (siding against their own customers)
As others have often pointed out, Robinhood is in some ways analagous to social media companies. Their end users are not their customers, because it's a free service. The customers are the businesses on the other end, in Robinhood's case the market makers who are paying for the right to front-run trades. If this is no longer profitable for them due to crazy volatility, they can apparently stop allowing trades at any time.
> The customers are the businesses on the other end, in Robinhood's case the market makers who are paying for the right to front-run trades.
Front-running is super illegal. You're referring to payment for order flow (PFOF), in which a sell-side party like Citadel pays Robinhood for the right to route your order to the exchange. But there's a catch: Citadel is allowed to take the other side of your trade without routing it to an exchange, but it legally has to match the exchange price or cut you a discount. If Citadel can't do either, your order MUST be routed to an exchange.
PFOF makes up a somewhat negligible source of revenue for no-fee/discount brokerages. The bulk of revenue comes from a much more mundane source: interest rate spreads. Earn X% interest on customer cash deposits while providing customers less than X% interest on their deposits.
If your order isn't making its way to an exchange, PFOF isn't your problem, and you shouldn't be day trading. Your real problem is that the professionals think you over-bid/under-asked to such an extent that they're willing to cut you a deal just to take the other side of your trade. Unless you're a professional options trader, betting against professional market makers will cost you a lot more money than the imaginary transaction costs would have.
(This is just a summary of an old HN favorite: https://www.kalzumeus.com/2019/6/26/how-brokerages-make-mone...)
Front-running is super illegal. You're referring to payment for order flow (PFOF), in which a sell-side party like Citadel pays Robinhood for the right to route your order to the exchange. But there's a catch: Citadel is allowed to take the other side of your trade without routing it to an exchange, but it legally has to match the exchange price or cut you a discount. If Citadel can't do either, your order MUST be routed to an exchange.
PFOF makes up a somewhat negligible source of revenue for no-fee/discount brokerages. The bulk of revenue comes from a much more mundane source: interest rate spreads. Earn X% interest on customer cash deposits while providing customers less than X% interest on their deposits.
If your order isn't making its way to an exchange, PFOF isn't your problem, and you shouldn't be day trading. Your real problem is that the professionals think you over-bid/under-asked to such an extent that they're willing to cut you a deal just to take the other side of your trade. Unless you're a professional options trader, betting against professional market makers will cost you a lot more money than the imaginary transaction costs would have.
(This is just a summary of an old HN favorite: https://www.kalzumeus.com/2019/6/26/how-brokerages-make-mone...)
> Or maybe the upstream market makers are forcing their hand.
I'm not a lawyer, but to me, that seems like it would be very very illegal.
I'm not a lawyer, but to me, that seems like it would be very very illegal.
I agree, with how much regulation is there is in every other aspect of the markets, I am surprised there is not more explicit process around just shutting off trades they don't like.
> However why not just disable margin trading on these stocks instead of shutting them off altogether?
Yes... or simply increase the margin.
Yes... or simply increase the margin.
Well I think we're in such uncharted territory here that it would be difficult to trust any risk model, so just increasing the margin may be hard to get right.
From Schawb
“It is not uncommon for us to place restrictions on some transactions in certain securities in the interest of helping mitigate risk for our clients,”
from Massachusetts secretary of the commonwealth
“It is very clear to anyone looking at the numbers that the whole marketplace is being manipulated here,” he said.
I imagine Robinhood's thinking is similar
“It is not uncommon for us to place restrictions on some transactions in certain securities in the interest of helping mitigate risk for our clients,”
from Massachusetts secretary of the commonwealth
“It is very clear to anyone looking at the numbers that the whole marketplace is being manipulated here,” he said.
I imagine Robinhood's thinking is similar
> "It is very clear to anyone looking at the numbers that the whole marketplace is being manipulated here"
I don't get this.
I didn't know anything about short selling a few days ago and maybe now is a bad time to learn... but my understanding is that short selling is only legal because it disincentivizes bubbles caused by artificial overestimation of a company. Investors took it too far and short sold over 100% of the stocks in a company, ironically creating ideal conditions for a bubble. As soon as GameStop's stock turned upward, the rampant short selling resulted in a demand for more than 100% the supply of GameStop's stock, resulting in a meteoric rise in price.
But how is this market manipulation? The rise in stock price has nothing to do with an artificial overestimation of GameStop's value. It's just fundamental supply and demand. If anything, the short sellers are the ones who manipulated the market when they started shorting over 100% of the stock supply.
Like I said, I'm a complete noob when it comes to the stock market. Maybe I'm misunderstanding something?
I don't get this.
I didn't know anything about short selling a few days ago and maybe now is a bad time to learn... but my understanding is that short selling is only legal because it disincentivizes bubbles caused by artificial overestimation of a company. Investors took it too far and short sold over 100% of the stocks in a company, ironically creating ideal conditions for a bubble. As soon as GameStop's stock turned upward, the rampant short selling resulted in a demand for more than 100% the supply of GameStop's stock, resulting in a meteoric rise in price.
But how is this market manipulation? The rise in stock price has nothing to do with an artificial overestimation of GameStop's value. It's just fundamental supply and demand. If anything, the short sellers are the ones who manipulated the market when they started shorting over 100% of the stock supply.
Like I said, I'm a complete noob when it comes to the stock market. Maybe I'm misunderstanding something?
No. You aren't misunderstanding anything. That's exactly what happened.
The "problem" here, is that the little guys noticed. Michael Burry and some unknown YouTuber saw this over a year ago and started buying GameStop, and making a case for people to buy GameStop.
This is very easy to understand. The wrong people are losing money. And that can't be allowed. That's all you need to know for this to make sense.
The "problem" here, is that the little guys noticed. Michael Burry and some unknown YouTuber saw this over a year ago and started buying GameStop, and making a case for people to buy GameStop.
This is very easy to understand. The wrong people are losing money. And that can't be allowed. That's all you need to know for this to make sense.
I'm not an expert but it seems to me that this whole 100% thing is a total red herring. If I (A) have 50 shares in GME, I let you (B) borrow them and short sell them to person (C), person (C) now owns them, you (B) can borrow them from person (C) and short sell them to person (D). Suddenly you've short sold the same stock twice.The only issue for you is that you now need to buy back 100 stock to pay off what you've borrowed, which you could do buying the stock from person (D), giving it back to person (C), buying them frmo person (C) and giving it back to person (A).
The only issue comes if someone notices that you've done this, pushes the price up to the point where you have to exit your position because your broker won't let you hold this short position that you can't afford to pay for. At that point you must exit, which drives the price up even further because you're creating demand for the stock.
What's important to notice about this is that the second you're no longer short the stock, no one has any incentive to hold the stock. So it'll return to $20 and all those super smart boys on WSB who were holding out for $2000 have thousands of shares of a worthless retail stock that they probably bought on margin and are going to lose everything.
The only issue comes if someone notices that you've done this, pushes the price up to the point where you have to exit your position because your broker won't let you hold this short position that you can't afford to pay for. At that point you must exit, which drives the price up even further because you're creating demand for the stock.
What's important to notice about this is that the second you're no longer short the stock, no one has any incentive to hold the stock. So it'll return to $20 and all those super smart boys on WSB who were holding out for $2000 have thousands of shares of a worthless retail stock that they probably bought on margin and are going to lose everything.
Yes. When the dust settles there are still 70M almost worthless original shares that will be held by someone.
But in the meantime, there are 70M short shares that need to be rebought from the 140M original+loaned shares. The idea is that forcing closing out the short position will allow you to sell some at sky high prices, hopefully enough to cover the loss from the rest of the shares that must be inevitably bagheld.
100% of float or 100% of outstanding are not super significant inflection points, just very large ratios.
But in the meantime, there are 70M short shares that need to be rebought from the 140M original+loaned shares. The idea is that forcing closing out the short position will allow you to sell some at sky high prices, hopefully enough to cover the loss from the rest of the shares that must be inevitably bagheld.
100% of float or 100% of outstanding are not super significant inflection points, just very large ratios.
Not necessarily. Those shorts exist for a reason: someone thought that gamestop was a bad company. If they are right then the short position won't need to be bought back because at some point the bankruptcy court will decide that the share holders get nothing. At this point all trades on the stock are legally halted and so the IOUs are legally meaningless - anyone who owned stock gets nothing.
Of course the above depends on the short holders to: be right; have the capital to not have to cover their shorts; and be willing to hold on for the ride. I'm not making bets on any of the above.
Of course the above depends on the short holders to: be right; have the capital to not have to cover their shorts; and be willing to hold on for the ride. I'm not making bets on any of the above.
Hi everyone, thank you for joining our Gamestop company all hands, I'd like to introduce our new CEO and majority shareholder, soon-to-be bankrupt guy from reddit.
People conspiring to push prices in one direction is a clear cut market manipulation and I believe a criminal offence in most jurisdictions.
It's fine to have lots of people buying something, but if they discuss how they can coordinate to hurt short sellers or something like that, particularly on a public forum, despite not being a lawyer I am fairly confident this is prosecutable.
Market trading regulations are full of fine lines where the wrong side can land you in jail. For instance the difference between front-running and pre-hedging / anticipating market liquidity is basically the intent and the information the trader has. The actions are indistinguishable.
It's fine to have lots of people buying something, but if they discuss how they can coordinate to hurt short sellers or something like that, particularly on a public forum, despite not being a lawyer I am fairly confident this is prosecutable.
Market trading regulations are full of fine lines where the wrong side can land you in jail. For instance the difference between front-running and pre-hedging / anticipating market liquidity is basically the intent and the information the trader has. The actions are indistinguishable.
They can halt trading of the stock all they want. All exchanges do [0]
But the crazy part is that they only halted one side of the trade... the buy orders. That is manipulation.
Personally, this cost me £1k on Nokia. I went from +£700 to -£1000 over the course of about 30 mins, because the market was pulled from under me.
[0] https://www.nyse.com/trade-halt-current
But the crazy part is that they only halted one side of the trade... the buy orders. That is manipulation.
Personally, this cost me £1k on Nokia. I went from +£700 to -£1000 over the course of about 30 mins, because the market was pulled from under me.
[0] https://www.nyse.com/trade-halt-current
Exchanges halt trading, is Robinhood an exchange?
>But the crazy part is that they only halted one side of the trade... the buy orders. That is manipulation.
Exactly, I mean you could make the argument to stop selling: "The current price is being manipulated and is too high so we stopped our customers from selling if they mistime the market. We will resume selling when prices return to normal."
Edit to add from /wsb:"If you try to sell you will get fucked because who are you going to sell it to if nobody can buy it?"
I hope there is some meaningful action by the SEC. It would be interesting to have all the trades reversed to the point when buying was stopped.
>But the crazy part is that they only halted one side of the trade... the buy orders. That is manipulation.
Exactly, I mean you could make the argument to stop selling: "The current price is being manipulated and is too high so we stopped our customers from selling if they mistime the market. We will resume selling when prices return to normal."
Edit to add from /wsb:"If you try to sell you will get fucked because who are you going to sell it to if nobody can buy it?"
I hope there is some meaningful action by the SEC. It would be interesting to have all the trades reversed to the point when buying was stopped.
>> helping mitigate risk for our clients
It's cute when they phrase it like that, though everyone understands that it should be "chosen clients that make us most money"
It's cute when they phrase it like that, though everyone understands that it should be "chosen clients that make us most money"
Apparently Citadel is in bed with Schwab/Ameritrade, too, who also halted trading:
"The Verge meanwhile noted one hedge fund suffering amid the GameStop surge was Melvin Capital Management, which another hedge fund, Citadel, has since bailed out. Citadel's founder is Ken Griffin, who also founded Citadel Securities, a big investor in Robinhood that also works with TD Ameritrade and Charles Schwab."
I suspect they sell them the trading data just like Robinhood does, to help them front-running the retail traders.
https://theweek.com/speedreads/963627/robinhood-halts-tradin...
"The Verge meanwhile noted one hedge fund suffering amid the GameStop surge was Melvin Capital Management, which another hedge fund, Citadel, has since bailed out. Citadel's founder is Ken Griffin, who also founded Citadel Securities, a big investor in Robinhood that also works with TD Ameritrade and Charles Schwab."
I suspect they sell them the trading data just like Robinhood does, to help them front-running the retail traders.
https://theweek.com/speedreads/963627/robinhood-halts-tradin...
And they were probably informed in advance that Robinhood was about to limit trading so they could short the stock at the exact right time.
In this case, the "restrictions" seem clearly aimed at retail investors, and intended to help those with short positions.
But trading Tesla is OK? Oh wait that's a darling of WS, so it's OK. /s
> Why do Robinhood, Reddit, Discord, etc feel like they have to respond to this?
Indeed. There's a lot of talk about Section 230 lately, and how "precious" it is to freedom of speech. That law protects them from culpability against hosting legally-dubious things like this market move -- and any malfeasant commenting about it -- but none of the big platforms are acting like it exists. They're just censoring anyway, because they are either embarrassed, or are getting their strings pulled. Either stand behind Section 230, or admit you're just censoring things for duplicitous reasons of politics, money, or the rabble.
Indeed. There's a lot of talk about Section 230 lately, and how "precious" it is to freedom of speech. That law protects them from culpability against hosting legally-dubious things like this market move -- and any malfeasant commenting about it -- but none of the big platforms are acting like it exists. They're just censoring anyway, because they are either embarrassed, or are getting their strings pulled. Either stand behind Section 230, or admit you're just censoring things for duplicitous reasons of politics, money, or the rabble.
Section 230(c)(2) explicitly protects service providers who remove content that they deem to be “otherwise objectionable.”
Robinhood’s actual customer is Citadel. Citadel was funding the short sells, investing directly into Melvin Capital, for example.
Robinhood did not act against its customers. Its users are their product, which it sells to Citadel. As you see now, this is way more than an edgy quip: when its free you are the product.
Robinhood did not act against its customers. Its users are their product, which it sells to Citadel. As you see now, this is way more than an edgy quip: when its free you are the product.
I just want to know how do you know for sure what those guys have been doing. Have they exposed all their trades? Are you saying that they were so stupid to not have hedged it?!
This is a hedge fund's game as it is for WSB.
It is the regular traders that have shorted via option that are losing money just the same. They are the most likely bag holders because they they don't hedge.
Don't assume all parties are truthful.
This is a hedge fund's game as it is for WSB.
It is the regular traders that have shorted via option that are losing money just the same. They are the most likely bag holders because they they don't hedge.
Don't assume all parties are truthful.
Which is invested in Melvin, Citadel (the hedge fund) or Citadel Securities (the market maker, and Robinhood's customer)?
Obviously I'm speculating but one of the largest investors in Robinhood's last round was a hedge fund.
As others have pointed out, Citadel's market making arm is their largest source of revenue + Citadel's hedge fund recently invested a large amount in Melvin Capital to help shore up Melvin's capital base after their loss.
Unfortunately unless Robinhood insiders leak or post their rationale behind this decision, we'll never really know what happened behind closed doors.
As others have pointed out, Citadel's market making arm is their largest source of revenue + Citadel's hedge fund recently invested a large amount in Melvin Capital to help shore up Melvin's capital base after their loss.
Unfortunately unless Robinhood insiders leak or post their rationale behind this decision, we'll never really know what happened behind closed doors.
To some degree, they have a legal responsibility due to the "suitability standard" (link below) to do this. While they aren't recommending GME and the others per se, they certainly profit from the order flow as well as new account sign-ups. People may be making money now, but those who lose their shirts -- especially if the RH platform crashes when they try to exit a position -- are going to be angry. Preventing purchases in the first place is a way to keep those people from litigating, and to demonstrate to regulators that RH didn't attempt to profit from a mad dash toward unsuitable investments.
https://www.finra.org/rules-guidance/rulebooks/finra-rules/2...
Their platform is probably inundated with open orders on these few names, as the price is all over the place. They had outages back in March 2020 and presumably there's a risk of the same if everyone tries to close their positions at the same time (eg, if u/deepf**ingvalue announces that he has exited).
https://www.finra.org/rules-guidance/rulebooks/finra-rules/2...
Their platform is probably inundated with open orders on these few names, as the price is all over the place. They had outages back in March 2020 and presumably there's a risk of the same if everyone tries to close their positions at the same time (eg, if u/deepf**ingvalue announces that he has exited).
This is just a guess, but I imagine the hedge funds that own shares of these platforms are pulling some strings. That's a bit conspiratorial, but is it really that unbelievable?
It’s not unbelievable, but it does sound like a breach of fiduciary duties to side with investors against your clients.
Is what RH doing legal for a brokerage?
Is what RH doing legal for a brokerage?
> Is what RH doing legal for a brokerage?
At this point, nobody cares - Reddit found a repeatable distributed exploit that cannot be patched, and the financial system's self-preservation instinct kicked in.
At this point, nobody cares - Reddit found a repeatable distributed exploit that cannot be patched, and the financial system's self-preservation instinct kicked in.
The big short was the same thing. The VW short squeeze too. This is nothing new. The fix is to just close your short position.
I love that movie it shows them 'fixing the House' / messing them around in other ways. ratings houses refusing to downgrade MBS rates and the banks that wrote Burry's trade refused to execute until they also were on the right side.
> Whether the investments being made are responsible or not, it doesn't seem like it should be their place to intervene.
The entire history of the retail investing is unsophisticated investors shooting themselves in the foot and then turning around and suing everyone who allowed them to shoot themselves in the foot. It's obvious to everyone watching that for every retail investor who buys in at $10 and cashes out at the top there are going to be 20 other traders who FOMO in at $300 or $500 and then hodls all the way down to $10. People have a stated preference for Freedom to take risks but a revealed preference for paternalism (they start suing everyone around them for not "protecting" them from themselves when risks go bad). You can't blame companies for rationally responding to the legal liability they think they will incur if they let more retail traders pile onto meme stocks.
The entire history of the retail investing is unsophisticated investors shooting themselves in the foot and then turning around and suing everyone who allowed them to shoot themselves in the foot. It's obvious to everyone watching that for every retail investor who buys in at $10 and cashes out at the top there are going to be 20 other traders who FOMO in at $300 or $500 and then hodls all the way down to $10. People have a stated preference for Freedom to take risks but a revealed preference for paternalism (they start suing everyone around them for not "protecting" them from themselves when risks go bad). You can't blame companies for rationally responding to the legal liability they think they will incur if they let more retail traders pile onto meme stocks.
>Why should Robinhood pick a winner (siding against their own customers)?
Robinhood operates a lot like Facebook. The "Gold" subscriptions and margin interest are tiny portions of their actual revenue. We are not their customers, we are the product. They offer free trades in exchange for selling order flow data to hedge funds, which in turns allows them to manipulate the markets. Of course they would protect their actual customers.
Robinhood operates a lot like Facebook. The "Gold" subscriptions and margin interest are tiny portions of their actual revenue. We are not their customers, we are the product. They offer free trades in exchange for selling order flow data to hedge funds, which in turns allows them to manipulate the markets. Of course they would protect their actual customers.
This is the correct take.
If you thought free brokerage accounts with no-fee transactions was too good to be true... you were right! There was a catch, and this is it.
If you thought free brokerage accounts with no-fee transactions was too good to be true... you were right! There was a catch, and this is it.
You know the adage usually applied to Facebook, "If you're not paying for anything, you aren't the customer, you're the product" ? . Daytraders and WSBers and other small fish like you and me aren't Robinhood's customers. Robinhood's customers are Citadel and companies like them who pay Robinhood for order flow from the uninformed masses. Keeping that in mind, here is the simple answer to your question:
https://twitter.com/justinkan/status/1354853920762253315?s=2...
https://twitter.com/justinkan/status/1354853920762253315?s=2...
>Can someone help me understand Robinhood's POV?
This is a small part of the picture but RH lost a lot of money due to WSB advertising and exploiting the 'infinite money glitch' so it likely didn't take much convincing to act against WSB.
Though ironically it took them months to close the glitch which was their fault and a day to stop the action on WSB's picks.
https://markets.businessinsider.com/news/stocks/robinhood-fi...
This is a small part of the picture but RH lost a lot of money due to WSB advertising and exploiting the 'infinite money glitch' so it likely didn't take much convincing to act against WSB.
Though ironically it took them months to close the glitch which was their fault and a day to stop the action on WSB's picks.
https://markets.businessinsider.com/news/stocks/robinhood-fi...
A charitable guess is that Robinhood is trying to protect their users from buying at the height of this mania.
There are people literally investing their rent money into GME, and it's almost inevitable that the price will come down at some point, the only question is when and how far.
There are people literally investing their rent money into GME, and it's almost inevitable that the price will come down at some point, the only question is when and how far.
The trade screen could just display a warning that the stocks are in question are experiencing high volatility, and require the user to click something to indicate that they understand the risks.
It is likely that they have lend out the $GME shares to a hedge fund that went short, if this hedge fund goes bankrupt and the stock price continues to rise they will be in serious trouble.
Robinhood makes most of its money by selling "dumb money" order flows to bigger Wall Street firms: https://fortune.com/2020/07/08/robinhood-makes-millions-sell...
It seems plausible to me that some of Robinhood's real paying customers have asked them to tame their unruly product.
It seems plausible to me that some of Robinhood's real paying customers have asked them to tame their unruly product.
As far as I understand it robinhood makes (most of their?) money from selling their order flow to hedge funds.
Which is not remotely illegal, and most brokers do the same thing, except they used to charge people to buy and sell as well but now just make money from order flow. In fact market makers have always been involved in stock sales to ensure a fluid market; none of this is new. What is new is that buying and selling stocks costs you nothing, so there is no barrier to anyone to put money in or take it out. While everyone thinks it's a great thing, it's no different that allowing free communication in exchange for your personal data (ie Facebook) instead of requiring you to pay to communicate via mail or phone or plan things in person. Free always has a cost; in this case free involve scads of money changing hands with the folks at the end holding the bag, and anyone can pump the market to ensure they make a profit, and someone else takes a loss.
The theory isn't "it's illegal", the theory is "someone at their main source of revenue might call them up and pressure".
It's not a question of legality, it's one of incentives.
Similar to Google or Facebook, if I get the service for free, the service-providers' incentives may be aligned against me in favour of their paying customers.
Similar to Google or Facebook, if I get the service for free, the service-providers' incentives may be aligned against me in favour of their paying customers.
Nah, it’s likely net interest that is the largest portion.
Yes. Hedge funds profit from every trade on RH.
I am not an expert on this.. but here is a theory. Broker's are incentivized to have the short squeeze stop.
Someone please correct me if I am (or how I am) wrong with the following:
Bob is a broker.
Jack comes along buys 100 shares of X.
Bob lends those 100 shares of X to Amy to sell short.
Amy sells it short. Price shoots up.. Amy says “oh crap.. Sorry bill. Simply cannot buy back those shares. I am bankrupt. I physically do not have the money to do so.
Jack will still expect Bob the broker to make sure his 100 shares of X are there one way or the other.
Bob the broker has to buy back those shares it lent out to Amy so that Jack the account holder is still able to sell/trade their shares.
Someone please correct me if I am (or how I am) wrong with the following:
Bob is a broker.
Jack comes along buys 100 shares of X.
Bob lends those 100 shares of X to Amy to sell short.
Amy sells it short. Price shoots up.. Amy says “oh crap.. Sorry bill. Simply cannot buy back those shares. I am bankrupt. I physically do not have the money to do so.
Jack will still expect Bob the broker to make sure his 100 shares of X are there one way or the other.
Bob the broker has to buy back those shares it lent out to Amy so that Jack the account holder is still able to sell/trade their shares.
There are a couple of charitable explanations for Robinhood acting this way.
One is that most Robinhood users probably under-estimate how quickly they can sell if the price turns around quickly. There might not be enough willing buyers for all of the Robhinhood users who might be looking to get out at the same time.
Another thing is that I'm not a lawyer, but they could be worried that if the SCC finds the discussions on Reddit constitute a conspiracy to manipulate the market, and it's primarily being executed through their platform, and they're aware of the conspiracy and take no action...
One is that most Robinhood users probably under-estimate how quickly they can sell if the price turns around quickly. There might not be enough willing buyers for all of the Robhinhood users who might be looking to get out at the same time.
Another thing is that I'm not a lawyer, but they could be worried that if the SCC finds the discussions on Reddit constitute a conspiracy to manipulate the market, and it's primarily being executed through their platform, and they're aware of the conspiracy and take no action...
Every short seller is a buyer. That's why people keep buying the stock. There are more buyers than sellers.
But what happens when all that liquidity provided by squeezed shorts dries up when either they all capitulate or the price starts to come back down?
I'm just guessing here, but another thought is that since Robinhood apparently want to IPO in the near-mid term future, they would rather take the “bad press” now, than take it in a month when it’s “Gambling allowed on Robinhood ruins lives as Robinhood makes record profit”
"The Robin Hood effect is an economic occurrence where income is redistributed so that economic inequality is reduced. The effect is named after Robin Hood, said to have stolen from the rich to give to the poor."
So I think in Robinhood's POV, hedge funds are the poor.
So I think in Robinhood's POV, hedge funds are the poor.
>Why should Robinhood pick a winner (siding against their own customers)?
Because Robinhood's actual customer is Citadel, not the retail people making the trades.
Citadel gave $2.7BN to Melvin Capital a couple of days ago. It stands to lose that money if Melvin (and Citron etc.) can't fully cover their short positions.
A good way to make the stock price go down and allow Citadel to make money, is for RH to only allow selling and not buying of GME.
It's utterly appalling market manipulation.
Because Robinhood's actual customer is Citadel, not the retail people making the trades.
Citadel gave $2.7BN to Melvin Capital a couple of days ago. It stands to lose that money if Melvin (and Citron etc.) can't fully cover their short positions.
A good way to make the stock price go down and allow Citadel to make money, is for RH to only allow selling and not buying of GME.
It's utterly appalling market manipulation.
> Why should Robinhood pick a winner (siding against their own customers)?
They're not siding against their customers. The median Robinhood trader that buys in at $350 is going to be left holding the bag when the price drops back down to $10. You can argue whether or not the paternalism is good or bad, but this is obviously going to on net stop more people from losing money than making money.
They're not siding against their customers. The median Robinhood trader that buys in at $350 is going to be left holding the bag when the price drops back down to $10. You can argue whether or not the paternalism is good or bad, but this is obviously going to on net stop more people from losing money than making money.
I think it's BS to stop people trading but...
You can make a good argument that WSB are engaged in market manipulation. RobinHood don't want to be the broker for that for a whole myriad of reasons.
You can make a good argument that WSB are engaged in market manipulation. RobinHood don't want to be the broker for that for a whole myriad of reasons.
I would love to see a good argument there, because while that argument is easy to accept at face value, when I dig deeper at the concept of what market manipulation is, I fail to find behavior that the majority of WSB is engaging in that fits that criteria.
Where are the fraudulent statements causing price pumps? None of the prominent due diligence the community has provided that started this run has been found to be untrue. Their thesis still stands: GME was undervalued and shorts were vulnerable to a squeeze.
Where are the fraudulent statements causing price pumps? None of the prominent due diligence the community has provided that started this run has been found to be untrue. Their thesis still stands: GME was undervalued and shorts were vulnerable to a squeeze.
I've no idea if it meets the legal definition of price manipulation (we'd have to review the finra records which aren't public). And even then, it might not be the SEC etcs opinion that they want this fight.
That said, WSB have been really clear that they're cornering the market to drive up the price. The fact they've done it by coordinating 1001 little retail accounts makes no difference. Short squeezes are always pretty dodgy. This one is openly a conspiracy to move a market.
Shorters got themselves in a dumb position. It seems to me someone is rigging the market to get them out of it. But that doesn't change the core action here: let's conspire to corner the market and force an artificially high price.
That said, WSB have been really clear that they're cornering the market to drive up the price. The fact they've done it by coordinating 1001 little retail accounts makes no difference. Short squeezes are always pretty dodgy. This one is openly a conspiracy to move a market.
Shorters got themselves in a dumb position. It seems to me someone is rigging the market to get them out of it. But that doesn't change the core action here: let's conspire to corner the market and force an artificially high price.
> But that doesn't change the core action here: let's conspire to corner the market and force an artificially high price.
First, I recommend you look up the meaning of conspiracy in the dictionary: "a secret plan by a group to do something unlawful or harmful."
Tell me, where was the secret plan? Everything on WSB happened in the open, in plain view of millions of people.
Second, the market is not even what's cornered here. It's the hedge fund owners who shorted gamestop (fully understanding the risks this entailed), who are cornered. They are the ones who are driving the price up as they try to cover their short positions.
First, I recommend you look up the meaning of conspiracy in the dictionary: "a secret plan by a group to do something unlawful or harmful."
Tell me, where was the secret plan? Everything on WSB happened in the open, in plain view of millions of people.
Second, the market is not even what's cornered here. It's the hedge fund owners who shorted gamestop (fully understanding the risks this entailed), who are cornered. They are the ones who are driving the price up as they try to cover their short positions.
>Conspiracy has been defined in the United States as an agreement of two or more people to commit a crime, or to accomplish a legal end through illegal actions. A conspiracy does not need to have been planned in secret to meet the definition of the crime.
https://en.wikipedia.org/wiki/Conspiracy_(criminal)#United_S...
One of the dodgiest things in English Common law is the low low bar for conspiracy (see also Joint Venture).
I think we actually agree about the cornering part don't we? I say the shares are cornered, you say the hedge funds but it amounts to the same thing. I definitely agree the hedge funds are looking fucked and deservedly so.
https://en.wikipedia.org/wiki/Conspiracy_(criminal)#United_S...
One of the dodgiest things in English Common law is the low low bar for conspiracy (see also Joint Venture).
I think we actually agree about the cornering part don't we? I say the shares are cornered, you say the hedge funds but it amounts to the same thing. I definitely agree the hedge funds are looking fucked and deservedly so.
> I think we actually agree about the cornering part don't we? I say the shares are cornered, you say the hedge funds but it amounts to the same thing. I definitely agree the hedge funds are looking fucked and deservedly so.
I think we agree on this.
> an agreement of two or more people to commit a crime, or to accomplish a legal end through illegal actions.
Are you saying, though, that publishing advice or suggestions on a forum to buy a certain stock is a crime, or is illegal? That kind of stuff happens all the time in newspapers and television shows. Wall Street insiders have coordinated buying and selling for generations.
So did giving the advice become a crime by virtue of the fact that so many people decided to act on it?
I think we agree on this.
> an agreement of two or more people to commit a crime, or to accomplish a legal end through illegal actions.
Are you saying, though, that publishing advice or suggestions on a forum to buy a certain stock is a crime, or is illegal? That kind of stuff happens all the time in newspapers and television shows. Wall Street insiders have coordinated buying and selling for generations.
So did giving the advice become a crime by virtue of the fact that so many people decided to act on it?
I would say Yes AND then some to the question about the legality of advice.
Offering financial advice is a regulated activity. You should have a license and qualifications and insurance and whole crap of other stuff. You may need to declare conflicts of interest.
Advising others to buy a share you hold in the hope the price will go up (or to sell something you're short etc) is a crime. This is why you'll see or hear disclaimers from all sorts of outlets either stating the comments are not advice or declaring holdings etc. The A16Z podcast is a good source of this.
So advising people is not in any way a safe, legal activity for random commenter. "it was advice" isn't a defense here unless you're registered, qualified, insured and declared your holdings and intent to trade.
I'm not saying people don't do it anyway, or that the sec actively hunts ever reddit account that says "I like tesla". They don't. But the SEC gets to choose what it pursues so if it wants to make an example of this or to quash WSB influence or to help its friends in hedge funds, who knows?
Such is the murky nature of financial regulation.
That was the "yes" part. I would add this as "and then some":
Advise or comentory is saying "we should buy GME because its a good company, well run, profitable, undervalued, due for a change in fortune" etc. That's just an opinion or a statement of certain facts.
Saying "if we all buy it, we can break the market and force the price up" goes beyond advise. It is explicitly intended to change the price. In this case, the commenter isn't discussing whether the company is good or not. The company the shares are in doesn't matter. Instead, they're using their size to bully others and drive the price in the direction they choose rather than on reflecting the companies prospects.
That's what WSB (or rather some of its users) explicitly said they were doing. That's what they then congratulated each other on doing. We even sort of agree on this point: they cornered it. It didn't happen by accident, people didn't say "GME is a great buy". They were explicit from day 1: "GME doesn't matter, but we can form a group and coordinate to change its price and make a profit".
Now again, maybe the SEC don't care. Maybe they're too lazy to pursue it or they also think hedge funds do it (much more covertly) so fair is fair. Maybe they don't want the political blowback that comes with this. I don't really care to be honest with you, good luck to the little guy.
But it seems pretty easy to me to make the case at least that this is market manipulation, that it succeeded, that it was intentional etc
When 1 big hedge fund does this, or a few work together, it's just as bad. But they're at least quite about it. They'll discuss it offline in unrecorded meetings. They do it slowly. They're careful not to do it too often. WSB have posted about it and blasting the market. That makes it harder to ignore.
The core concept here is that you should buy or sell stock because you believe the company will succeed or fail going forwards. Doing it to drive the price is an abuse of size. It doesn't matter really who you are, how many you are, or whether someone else is shorting the stock etc.
It also doesn't matter if others are manipulating the price, you don't get to "manipute it back".
Again, I think it's hilarious they did this. I admire it in a dumb way. I'm not calling for prosecutions. I think it's very concerning that execution only brokers took it upon themselves to step in (I'd like an inquiry there).
Im just saying, they did conspire and they did manipulate the stock price. <shrugs>
Thanks for reading this and the other comment. I hope I haven't ranted too much. It's been a pleasure reading your comments!
Offering financial advice is a regulated activity. You should have a license and qualifications and insurance and whole crap of other stuff. You may need to declare conflicts of interest.
Advising others to buy a share you hold in the hope the price will go up (or to sell something you're short etc) is a crime. This is why you'll see or hear disclaimers from all sorts of outlets either stating the comments are not advice or declaring holdings etc. The A16Z podcast is a good source of this.
So advising people is not in any way a safe, legal activity for random commenter. "it was advice" isn't a defense here unless you're registered, qualified, insured and declared your holdings and intent to trade.
I'm not saying people don't do it anyway, or that the sec actively hunts ever reddit account that says "I like tesla". They don't. But the SEC gets to choose what it pursues so if it wants to make an example of this or to quash WSB influence or to help its friends in hedge funds, who knows?
Such is the murky nature of financial regulation.
That was the "yes" part. I would add this as "and then some":
Advise or comentory is saying "we should buy GME because its a good company, well run, profitable, undervalued, due for a change in fortune" etc. That's just an opinion or a statement of certain facts.
Saying "if we all buy it, we can break the market and force the price up" goes beyond advise. It is explicitly intended to change the price. In this case, the commenter isn't discussing whether the company is good or not. The company the shares are in doesn't matter. Instead, they're using their size to bully others and drive the price in the direction they choose rather than on reflecting the companies prospects.
That's what WSB (or rather some of its users) explicitly said they were doing. That's what they then congratulated each other on doing. We even sort of agree on this point: they cornered it. It didn't happen by accident, people didn't say "GME is a great buy". They were explicit from day 1: "GME doesn't matter, but we can form a group and coordinate to change its price and make a profit".
Now again, maybe the SEC don't care. Maybe they're too lazy to pursue it or they also think hedge funds do it (much more covertly) so fair is fair. Maybe they don't want the political blowback that comes with this. I don't really care to be honest with you, good luck to the little guy.
But it seems pretty easy to me to make the case at least that this is market manipulation, that it succeeded, that it was intentional etc
When 1 big hedge fund does this, or a few work together, it's just as bad. But they're at least quite about it. They'll discuss it offline in unrecorded meetings. They do it slowly. They're careful not to do it too often. WSB have posted about it and blasting the market. That makes it harder to ignore.
The core concept here is that you should buy or sell stock because you believe the company will succeed or fail going forwards. Doing it to drive the price is an abuse of size. It doesn't matter really who you are, how many you are, or whether someone else is shorting the stock etc.
It also doesn't matter if others are manipulating the price, you don't get to "manipute it back".
Again, I think it's hilarious they did this. I admire it in a dumb way. I'm not calling for prosecutions. I think it's very concerning that execution only brokers took it upon themselves to step in (I'd like an inquiry there).
Im just saying, they did conspire and they did manipulate the stock price. <shrugs>
Thanks for reading this and the other comment. I hope I haven't ranted too much. It's been a pleasure reading your comments!
Are they banning people from trading the stock or trading the stock on margin? On margin would be reasonable, if the volatility of the stock becomes very high, the broker is taking a credit risk on its client it may not want (plus suitability consideration). It may also make sense to restrict access to certain stocks if they are deemed too complicated/dangerous to retail investors. But I doubt the suitability would be a function of a market movement.
Or is the platform assuming that its clients are doing market manipulation by coordinating on reddit to push the price up, and wants no part to a crime being committed.
Just speculating, but can think of some reasonable reasons.
Or is the platform assuming that its clients are doing market manipulation by coordinating on reddit to push the price up, and wants no part to a crime being committed.
Just speculating, but can think of some reasonable reasons.
They're not letting you open new positions in the stock or options on the stock. You can only close your existing position. Guaranteed way to make the price go down.
To be honest I ignored the whole topic until today.
But in my opinion the rationale is obvious: you buy a stock, that means you provide that company with liquidity that they can use to operate and grow their business. I guess especially in the startup scene VCs and investors are in high regard since they believe in the future value and perhaps also the product of a company.
Example: imagine I'm a hedge fund and put so much money into company x that the stock moves up. The company probably thinks I gonna fund their business for a few years (remember, stocks are long-term investments). Stock rises, they do a few risky choices. Suddenly I pull back my money. That would suck.
I think options and futures have reasonable functions, especially to stabilize investments and raw material purchase. But speculation can easily get unreasonable, you basically speculate with the liquidity/credit of other companies that actually care what they do. The irony is that futures have been invented to stabilize food production, I think since almost 1000 years. But probably you don't want a large hedge fund play with this stuff.
Also to put on another perspective. People are crazy about fairness on markets, even the super free US market has strict cartel laws. On the other hand large funds like Blackrock are so large, they have government-like powers. They even have the power to decide whether companies should stay or steer away from coal energy. That's even worse than a monopoly.
https://www.spglobal.com/marketintelligence/en/news-insights...
But in my opinion the rationale is obvious: you buy a stock, that means you provide that company with liquidity that they can use to operate and grow their business. I guess especially in the startup scene VCs and investors are in high regard since they believe in the future value and perhaps also the product of a company.
Example: imagine I'm a hedge fund and put so much money into company x that the stock moves up. The company probably thinks I gonna fund their business for a few years (remember, stocks are long-term investments). Stock rises, they do a few risky choices. Suddenly I pull back my money. That would suck.
I think options and futures have reasonable functions, especially to stabilize investments and raw material purchase. But speculation can easily get unreasonable, you basically speculate with the liquidity/credit of other companies that actually care what they do. The irony is that futures have been invented to stabilize food production, I think since almost 1000 years. But probably you don't want a large hedge fund play with this stuff.
Also to put on another perspective. People are crazy about fairness on markets, even the super free US market has strict cartel laws. On the other hand large funds like Blackrock are so large, they have government-like powers. They even have the power to decide whether companies should stay or steer away from coal energy. That's even worse than a monopoly.
https://www.spglobal.com/marketintelligence/en/news-insights...
Disgusting level of manipulation. If you can only close positions the only people who can buy are short sellers closing their positions.
Well with a name like Robinhood I can at least see why they might be a tad hot under the collar on the legal department today.
What's played out over the last week has been an epic battle between David and Goliath. Goliath is winning... per usual.
Translation: big business interests and wall street hedge funds win out. Of course, lots of retail guys and gals and r/wsb folks are losing their shirts today. It would have been next week if it didnt happen today.
Translation: big business interests and wall street hedge funds win out. Of course, lots of retail guys and gals and r/wsb folks are losing their shirts today. It would have been next week if it didnt happen today.
Their customers aren't their users - it's the institutions paying them for order flow.
I'm going to start spreading this around. It's a comment by someone else who points to an interview of the WeBull CEO and why they had issues. It's pretty clear that this is a process issue, not necessarily a RobinHood is evil issue.
https://news.ycombinator.com/item?id=25950191
Link to the video from the OP. https://finance.yahoo.com/video/heres-why-robinhood-restrict...
https://news.ycombinator.com/item?id=25950191
Link to the video from the OP. https://finance.yahoo.com/video/heres-why-robinhood-restrict...
Could either be govt/NASDAQ forced something or a major investor/VC in Robinhood is putting the pressure because they have other investments or vested interests in the hedge funds getting hurt.
[deleted]
Rh wants to go public and relies on Citadel. Both major reasons why Rh does the larger funds' bidding. Rh's trading for the people angle is a bunch of BS
[deleted]
Execution risk that they can’t handle. When you buy/sell stock on Robinhood, they hold execution risk until they net out your position by transacting a large enough order on the market. In this situation they don’t know how to manage the execution risk on these trades, so they are losing money, so they don’t want to do them.
> (siding against their own customers)?
You misunderstand who their customers are. Who you're calling customers are users. Their customers, the ones who pay them, are the dark pools and other trade routers, or whatever they are called, who pay RH for routing trades thorough them.
You misunderstand who their customers are. Who you're calling customers are users. Their customers, the ones who pay them, are the dark pools and other trade routers, or whatever they are called, who pay RH for routing trades thorough them.
This prevents over leveraged YOLOs to go bankrupt, which prevents RH to hold their bags
"Can someone help me understand Robinhood's POV? This just seems so outrageous"
You are a mall owner and 25 000 people are stampeding through your mall causing a ruckus which will in the end create no value for anyone.
This is speculative mania with no basis in any kind of market reality, people are actively acting against the best interests of the participants, especially the companies themselves.
The lack of understanding here is what is 'shocking'.
BlackBerry, Robin Hood, Citadel, NASDAQ - nobody wants to be part of this.
It's ridiculous that people think they are somehow 'doing good' or even have some kind of inalienable right to own shares in a company on whatever terms.
This is a 'market riot' nobody wants to be involved but the rioters.
CFOs are all very nervous right now and I wouldn't doubt if some of the target companies have asked for protection.
You are a mall owner and 25 000 people are stampeding through your mall causing a ruckus which will in the end create no value for anyone.
This is speculative mania with no basis in any kind of market reality, people are actively acting against the best interests of the participants, especially the companies themselves.
The lack of understanding here is what is 'shocking'.
BlackBerry, Robin Hood, Citadel, NASDAQ - nobody wants to be part of this.
It's ridiculous that people think they are somehow 'doing good' or even have some kind of inalienable right to own shares in a company on whatever terms.
This is a 'market riot' nobody wants to be involved but the rioters.
CFOs are all very nervous right now and I wouldn't doubt if some of the target companies have asked for protection.
>Why should Robinhood pick a winner (siding against their own customers)?
If you consume a free product you aren't the customer, the person who pays the provider money is.
If you consume a free product you aren't the customer, the person who pays the provider money is.
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It's not just Robinhood, I'm on Schwab and they blocked trading GME this morning (didn't try it but SELL might still be open)
Well probably to stop people buying at $500. If at any point it crashes to $100 it's going to make people more upset.
Robinhood allows free trades. With all the new customers loging in and just buying a few stocks, they have to acquire lots of new shares. When this is all over, a lot of retail investors are going to be left holding the bag, and will likely not be continuing customers.
The opposite is true:
The idea behind these trades is that they will not in fact suffer any losses because they bought in after the naked shorts brought the stock down to a low valuation. If they keep the stock high enough, long enough, the naked shorts will have to buy back the stock at much higher prices than the price was when this short squeeze was started. That's why short squeezes are a thing in the first place. This is no different than what Carl Icahn did to herbalife and Bill Ackman.
When companies keep these people from implementing their strategy, they expose these individuals(their own customers) to potential huge losses.
The idea behind these trades is that they will not in fact suffer any losses because they bought in after the naked shorts brought the stock down to a low valuation. If they keep the stock high enough, long enough, the naked shorts will have to buy back the stock at much higher prices than the price was when this short squeeze was started. That's why short squeezes are a thing in the first place. This is no different than what Carl Icahn did to herbalife and Bill Ackman.
When companies keep these people from implementing their strategy, they expose these individuals(their own customers) to potential huge losses.
look at GME today, a lot of late arrivals have just lost a lot of money. they are probably not professional traders
That's not how this works. Of course the play is bad if you completely ignore that the key part of the play is that short sellers and call contract writers are contractually obligated to buy pretty much regardless of the price. Whether or not it pans out this way for most retailers is yet to be seen, but the mechanism is sound and the risk is in not having data available to you on what the outstanding short interest is.
It's not a loss until you sell, and a key date to sell (tomorrow, when tens of thousands of 1/29 calls expire) hasn't happened yet.
It's not a loss until you sell, and a key date to sell (tomorrow, when tens of thousands of 1/29 calls expire) hasn't happened yet.
Once the short positions are covered, shouldn't we expect the price instantly fall to its original level, modulo retail bagholders still buying due to fog of war?
And... The price is in freefall in the last minutes of trading today.
And... The price is in freefall in the last minutes of trading today.
Largely correct. The only thing I would add is that I wouldn't be surprised at all if it landed a fair bit above where it started, because there being short interest 140% of the float has a pretty chilling effect on people looking at investing. You would see that and either think the shorters are morons in an insanely risky position, or they know something you don't and are _absolutely certain_ that the company is going to implode. This time the former is true, the vast majority of the time, the latter is.
Fog of War is the important bit here. The big difference between this and a pump and dump is that the FOW here is retail investors not having great SI data. In theory, a retail investor could still make this work in a "safe" way (safe used very liberally); it would be a hell of a maneuver for everyone with a short position to somehow close their position in a single day before Joe Retailer is able to get any word on what the outstanding SI is. In a pump and dump, your FOW/missing information is when the party working to pump the price decides the gig is up, which is effectively impossible to know unless you are that party.
A lot of retail investors with four days of experience under their belt are going to lose their ass by trying to suss out their exit intuitively, but for those that did their homework, this could work. For many, it already has. The argument that this needs to stop because uneducated retail investors can get burned can be reduced to absurdity -- "retail traders can vaporize their life savings by going long on a company facing imminent bankruptcy, so they shouldn't be allowed to trade with even the most rudimentary of instruments."
Price being in freefall doesn't affect the huge number of people that were in well under that, the way this strategy is working, or that people somehow still think that going short on this is anything other than a lottery ticket play because of "muh fundamentals."
Fog of War is the important bit here. The big difference between this and a pump and dump is that the FOW here is retail investors not having great SI data. In theory, a retail investor could still make this work in a "safe" way (safe used very liberally); it would be a hell of a maneuver for everyone with a short position to somehow close their position in a single day before Joe Retailer is able to get any word on what the outstanding SI is. In a pump and dump, your FOW/missing information is when the party working to pump the price decides the gig is up, which is effectively impossible to know unless you are that party.
A lot of retail investors with four days of experience under their belt are going to lose their ass by trying to suss out their exit intuitively, but for those that did their homework, this could work. For many, it already has. The argument that this needs to stop because uneducated retail investors can get burned can be reduced to absurdity -- "retail traders can vaporize their life savings by going long on a company facing imminent bankruptcy, so they shouldn't be allowed to trade with even the most rudimentary of instruments."
Price being in freefall doesn't affect the huge number of people that were in well under that, the way this strategy is working, or that people somehow still think that going short on this is anything other than a lottery ticket play because of "muh fundamentals."
Better to educate instead of ban then. So long as people have the facts, let them make their own decisions. At this point a number of people are probably just in on this because they love the idea of sticking it to a hedge fund or two.
Lots of people saying "you can lose a ton of money"
If you buy 10 shares at $200, that's $2k out of your bank acount, and it's gone, just like if you bought a car.
How do you lose more than that? I'm not talking about shorting and stuff, just buying shares, hoping it goes up, and selling it later.
If you buy 10 shares at $200, that's $2k out of your bank acount, and it's gone, just like if you bought a car.
How do you lose more than that? I'm not talking about shorting and stuff, just buying shares, hoping it goes up, and selling it later.
Are buyers of these stocks really exposed to more downside risk than the buyers of the way OTM options they sell to retail investors freely?
Only those that got in late and then chose to sell at a lower price than cost.
However, and here is the problem - when the price does come down (likely after the shorts capitulate) , it will literally be a stampede to finally get out. It is unknown how sell orders will be processed... if at all at that point. So the later you get in the more likely you are to be burned, in the disordely unwinding scenario.
Early adopters will be ok. Holders and latecomers will not.
However, and here is the problem - when the price does come down (likely after the shorts capitulate) , it will literally be a stampede to finally get out. It is unknown how sell orders will be processed... if at all at that point. So the later you get in the more likely you are to be burned, in the disordely unwinding scenario.
Early adopters will be ok. Holders and latecomers will not.
My point is, why is Robinhood still selling options that have a 95% chance to expire worthless, if their actual motivation is to protect their investors from high-risk trades?
Reddit and discord are afraid they'll be implicated in what is a classic pump and dump. Robinhood only exists because the SEC has chosen to look the other way concerning the pattern day trading rule which clearly is in jeopardy if big money starts complaining.
How is this a classic pump and dump ?
This is a short squeeze: the stock is shorted to the limit, and from the stock price, the shorters entered their positions "uncovered", so their risk is extremely high, and their losses are potentially infinite.
The WSB crowd and probably others noticed this, and bought the stock, knowing that it was going to become more valuable over time once the shorters had to close their positions.
They were right, and the shorters are loosing so much money that they are willing to buy back the stock at astronomical prices to limit their losses, which drives the price up even more.
The WSB crowd just need to hold until the stock is at the maximum price that the short sellers can pay, right before the short sellers default. That's the actual value of the stock right now.
If the stock climbs too much, and the short sellers default, the stock is worthless.
TBH, this is the short sellers own fault. They made the assumption that the market was "fair", and that they were going to buy back the shares for cheap when they needed them as a consequence.
That assumption was wrong.
This is a short squeeze: the stock is shorted to the limit, and from the stock price, the shorters entered their positions "uncovered", so their risk is extremely high, and their losses are potentially infinite.
The WSB crowd and probably others noticed this, and bought the stock, knowing that it was going to become more valuable over time once the shorters had to close their positions.
They were right, and the shorters are loosing so much money that they are willing to buy back the stock at astronomical prices to limit their losses, which drives the price up even more.
The WSB crowd just need to hold until the stock is at the maximum price that the short sellers can pay, right before the short sellers default. That's the actual value of the stock right now.
If the stock climbs too much, and the short sellers default, the stock is worthless.
TBH, this is the short sellers own fault. They made the assumption that the market was "fair", and that they were going to buy back the shares for cheap when they needed them as a consequence.
That assumption was wrong.
It's a classic pump and dump because there's just no reason to believe that this is what's happening. There was a short squeeze at one point, but all of the funds known to hold large short positions had closed their positions by Wednesday morning; the value since then was most likely driven entirely by speculation.
In particular, I've seen a lot of speculators spreading the idea that margin calls will force everyone shorting Gamestop to buy stock at market price on Friday. This is wrong, and pretty unequivocally so, but I've had multiple friends come to me and explain that this is why they bought some.
In particular, I've seen a lot of speculators spreading the idea that margin calls will force everyone shorting Gamestop to buy stock at market price on Friday. This is wrong, and pretty unequivocally so, but I've had multiple friends come to me and explain that this is why they bought some.
This makes no sense - if they had closed their short positions of millions of shares and had the squeeze happen, the share price would have spiked far higher than it is now.
Why is that so? Trading volume was over 175 million each of Friday, Monday, and Tuesday. Do we have some way of knowing exactly what the price should be when they exit?
Robinhood would not put themselves in such a precarious position if they had already exited - also as for the price target of when they actually do start covering their shorts, they are still currently short more than the available amount of shares on the market - the current trading range of around 200-300 cannot be the squeeze.
You’re misunderstanding what a short squeeze means. There’s no singular “the squeeze” - no specific point in time where everyone who holds a short position has to simultaneously obtain the underlying stock. If everyone who wants out of their short position has gotten out, there’s no guarantee that any further squeeze will be forthcoming.
I don't think you understand - the assumption that they already got out doesn't hold because shorted shares/float data is publicly accessible[1]. Now I'm sure what happened today allowed them to cover some of their losses partially, but not even close to all of it.
[1]: https://finviz.com/quote.ashx?t=GME
[1]: https://finviz.com/quote.ashx?t=GME
You definitely don't know what you're talking about. Have you even seen the finra data or even S3?
By this logic the stock should be shorted even more than it currently is. Why did short sellers close their position if that is the case? Your story is not consistent at all.
What? RH enforces the PDT rule, as does every other US broker. SEC is not looking the other way there at all.
> Robinhood only exists because the SEC has chosen to look the other way concerning the pattern day trading rule
This is simply not true at all.
I've had my trading on RH restricted specifically because of the PDT rule. As in, I was about to make a trade, and the site told me that the trade would cause a restriction because of pattern day trading.
This is simply not true at all.
I've had my trading on RH restricted specifically because of the PDT rule. As in, I was about to make a trade, and the site told me that the trade would cause a restriction because of pattern day trading.
Because RH's real customers are the hedge funds that buy their trading data.
It's users are the product.
I'm sure this started with a call from a "concerned" board member.
It's users are the product.
I'm sure this started with a call from a "concerned" board member.
Serious question: Since RobinHood is a private company, does the "if you don't like it, you can build your own platform" argument apply here? Or does that only apply selectively when it benefits partisan politics?
This is the natural evolution when censorship as we've recently seen is given a pass.
This is the natural evolution when censorship as we've recently seen is given a pass.
Censoring speech and regulating stock trading are categorically different. This doesn't cut across political lines as much as it does lines of class
Yes, but that still has absolutely nothing to do with a private company having the right to make their own business decisions.
The ACTUAL different is that since it doesn't cut across political lines, you want to treat the situation differently.
The ACTUAL different is that since it doesn't cut across political lines, you want to treat the situation differently.
When markets move rapidly, and in GME’s case we are T-1 from opex, brokerages cannot manage risks effectively. They could actually be exposed quite a bit. With something like GME (probably an 8 sigma event) it could actually put Robinhood out of business.
It seems to me it's because "market makers" are a thing. Market making activities create billions in profits. But we are seeing the flaw in the market making algorithms.
Do we need market makers to let us always take a position in every single option when no real market for that option exists? I would argue no. It's completely artificial and they profit from it. If companies want to be market makers and profit from every single transaction, they need to be prepared to take a loss when the math doesn't swing their way.
Do we need market makers to let us always take a position in every single option when no real market for that option exists? I would argue no. It's completely artificial and they profit from it. If companies want to be market makers and profit from every single transaction, they need to be prepared to take a loss when the math doesn't swing their way.
MM is different from RH. RH would actually need to get collateral (or raise money) to allow its customers to trade GME at this volatility. I really think the anger should be directed at Wall Street and the Fed for creating a frothy investment environment and not doing anything about it. RH OTOH is trying to be a disruptive player.
I understand that RH is not a MM. So then why does RH have to manage its risk from the holdings of it's own customers?
I am not a finance professional but I thought RH is just like a custodian and facilitator of trades. It's not on the other side of any of these trades. It never holds any positions. Why does it have to manage its risk and why does a GME event create extra risk for RH?
I thought this kind of risk is only for the MM's like Citadel.
I am not a finance professional but I thought RH is just like a custodian and facilitator of trades. It's not on the other side of any of these trades. It never holds any positions. Why does it have to manage its risk and why does a GME event create extra risk for RH?
I thought this kind of risk is only for the MM's like Citadel.
I think this explains it: https://news.ycombinator.com/item?id=25951475
It's one of the things:
1. SEC is protecting the little guy and being paternalistic
2. Institutional collusion
However, 1. could be likely because this GME frenzy is reducing confidence in the overall market. S&P500 lost 100 pts this week. By stifling buys, they
1. SEC is protecting the little guy and being paternalistic
2. Institutional collusion
However, 1. could be likely because this GME frenzy is reducing confidence in the overall market. S&P500 lost 100 pts this week. By stifling buys, they
If they were just blocking margin trading or trades with unlimited risk that would be one thing. But this smacks of either paternalism or trying to manipulate the market. I hope they lose a lot of customers (or product depending on your POV).
It's absolutely paternalism, IMO. I'm less sure whether I think it's a good thing or not (because I think people buying new positions in GME at this point are unlikely to end up happy about that in mid-Feb.)
I'm all for "let 'em play" in general but this is not going to end well for a lot of folks...
I'm all for "let 'em play" in general but this is not going to end well for a lot of folks...
I ended up buying a couple stocks late in the game, fully expecting to lose the money. First, it's not my retirement or long-term cash, more of a hobby. And that hobby quickly turned into sending a message after watching those rich SOBs literally cry about being hurt by the free market, and then try and end/manipulate it to their advantage.
I missed the boat, but I'm cheering all of this on from the sidelines.
You are probably an outlier. Look at the average newbie on WSB. Look at the upvoted posts and comments. It is pure mania at this point.
I promise a ton of people are convinced this is their ticket and throwing in far more than play money.
I promise a ton of people are convinced this is their ticket and throwing in far more than play money.
I keep hearing this argument, but Robinhood's actions will directly cause those people to lose money. By only allowing to sell the stock, most people will hop out or hedge which will tank the price. If they let it play out, then they can blame the market for the outcome.
i wish i could triple up vote this. This morning it seemed to be mostly rising (I saw up to like $470 when I was selling) right until I saw tweets about the blocking of buying and it tanked.
And the same people Robinhood was trying to "save from themselves" weren't able to buy the dips, but the hedge funds could recoup the losses from the shorts in that time frame.
I have seen a lot of people throw in fractions of a share or less than 10 shares. What you might have observed is the law of large numbers. When you have 4 million people putting in fuckyou money some of them actually have a few hundred thousand to spare and those get voted up.
Why are you so quick to assume that people don’t know what they are doing?
Is it so hard to believe that at this point buying GME is more about activism than making profit?
“When you ain't got nothing, you got nothing to lose”
Is it so hard to believe that at this point buying GME is more about activism than making profit?
“When you ain't got nothing, you got nothing to lose”
> Why are you so quick to assume that people don’t know what they are doing?
Screenshot lists floating around the internet yesterday pointing out exactly what buttons in your app to hit in order to buy GME options is the first piece of evidence that makes me that thing, perhaps, a large number of people don't know (or understand) what they're actually doing.
Screenshot lists floating around the internet yesterday pointing out exactly what buttons in your app to hit in order to buy GME options is the first piece of evidence that makes me that thing, perhaps, a large number of people don't know (or understand) what they're actually doing.
OP means even among those who have never invested before, there are a lot of people who want to buy GME to support the cause, not caring if they lose a bit of money in the end.
People who believe that they can only buy GME via specifically Robinhood, I'm not sure I see them as sophisticated investors or even "understand what they're doing".
I think that people should be able to spend their money however they want. I also don't mind when regulators say "liquor stores are blocked from having one-day specials the day that welfare benefits are paid."
If Robinhood believes that their customers are better served by blocking certain transactions, I trust Robinhood to make that call (and suffer the goodwill or ill-will that results).
I think that people should be able to spend their money however they want. I also don't mind when regulators say "liquor stores are blocked from having one-day specials the day that welfare benefits are paid."
If Robinhood believes that their customers are better served by blocking certain transactions, I trust Robinhood to make that call (and suffer the goodwill or ill-will that results).
Of course the motivation of Robinhood is to "better serve their customers". However, their customers are not retail investors.
Timing. I looked into getting into this game to see if I could make some cash day trading (at the level of one unit of stock -- NOT my life savings).
My investment firm required time to set things up, and it won't be ready in time for this game.
If Robinhood can shut down trades for 24 hours, that's enough to have a huge impact, not just on the market, but on people's individual finances, as they move elsewhere.
Footnote: If I had been successful, I'd be up $200 right now based on the strategy I planned. But I'm not naive enough to think that's anything beyond luck and volatility.
My investment firm required time to set things up, and it won't be ready in time for this game.
If Robinhood can shut down trades for 24 hours, that's enough to have a huge impact, not just on the market, but on people's individual finances, as they move elsewhere.
Footnote: If I had been successful, I'd be up $200 right now based on the strategy I planned. But I'm not naive enough to think that's anything beyond luck and volatility.
This hit mainstream this week. There are people out there now buying stock based on a Reddit thread because they think it will get them some quick cash.
I am pretty much in like with the OP in that this is definitely paternalism, and I have no idea if it's good or bad. People were going to get screwed because of this, but I don't think Robinhood or other online trading apps stopped buy's to protect these people.
I am pretty much in like with the OP in that this is definitely paternalism, and I have no idea if it's good or bad. People were going to get screwed because of this, but I don't think Robinhood or other online trading apps stopped buy's to protect these people.
> Is it so hard to believe that at this point buying GME is more about activism than making profit?
Go read the top comments in the top WSB threads and tell me which it is.
This is all about getting rich quick with a thin veneer of activism slapped on top.
That might not have been the case a few days ago, I don’t know because I only got into the loop yesterday... but if it was 90% activism on Monday... is probably 10% activism today.
I wouldn’t touch that stock using “for real” money with a 50 foot pole.
Go read the top comments in the top WSB threads and tell me which it is.
This is all about getting rich quick with a thin veneer of activism slapped on top.
That might not have been the case a few days ago, I don’t know because I only got into the loop yesterday... but if it was 90% activism on Monday... is probably 10% activism today.
I wouldn’t touch that stock using “for real” money with a 50 foot pole.
When Melvin Capital sold a metric ton of naked shorts on GameStop, no one was there to tell them it wouldn't end up well. It was certainly a risk, but not really a bad one going on fundamentals. They just failed to predict the mob mentality of retail investors.
Of course, those retail investors who got in on Thursday, Friday, or Monday; that seemed like a bad purchase. So bad that Melvin double-downed on their naked short position. There's no way the stock could go up. The fundamentals aren't there. But it did. A lot. And those retail investors made a ton of money.
So, we're at today, where you're saying that it would be a bad time to invest because it won't end well. You, and to some degree Robinhood, are making a prediction on the stock market. You may be right; you may be wrong; but you're definitely not certainly right or certainly wrong. You're making the same mistake anyone who tries to pick stocks does; you're just doing it in reverse.
Of course, those retail investors who got in on Thursday, Friday, or Monday; that seemed like a bad purchase. So bad that Melvin double-downed on their naked short position. There's no way the stock could go up. The fundamentals aren't there. But it did. A lot. And those retail investors made a ton of money.
So, we're at today, where you're saying that it would be a bad time to invest because it won't end well. You, and to some degree Robinhood, are making a prediction on the stock market. You may be right; you may be wrong; but you're definitely not certainly right or certainly wrong. You're making the same mistake anyone who tries to pick stocks does; you're just doing it in reverse.
If I were running Robinhood, I'd be inclined to continue to allow trading*, but perhaps with a popup message with language that legal approved to suggest that people should be certain of what they were doing when creating new positions in high-vol securities and would have 100% margin requirements on high-vol securities now. So, I agree with you that I'd, on balance, prefer to see trading open in these names. I think people should do what they want with their money, even if I think it's stupid and likely to end badly.
At the same time, parabolic moves like this have never once in the history of markets been sustained over a long period of time. It's possible that this will be the first one ever, but I am indeed making a prediction that it will not be. You are correct that I might be wrong about that.
* - All this assumes that my clearing firm would continue clearing the orders, which is uncertain at the moment. If my clearing firm won't book the orders, I literally can't do anything except cajol, plead, or sue them.
At the same time, parabolic moves like this have never once in the history of markets been sustained over a long period of time. It's possible that this will be the first one ever, but I am indeed making a prediction that it will not be. You are correct that I might be wrong about that.
* - All this assumes that my clearing firm would continue clearing the orders, which is uncertain at the moment. If my clearing firm won't book the orders, I literally can't do anything except cajol, plead, or sue them.
> And those retail investors made a ton of money.
A few that got in early and have liquidated their position made a ton of money.
Those HODLers? They might have paper profits now, but long term not so sure.
A few that got in early and have liquidated their position made a ton of money.
Those HODLers? They might have paper profits now, but long term not so sure.
I'm not sure an app that allows you to put your entire account balance into options trades is engaging in good-faith paternalism by preventing people from buying a particular stock.
It’s pretty hypocritical for a casino to say that you are welcome to keep playing our table games and lose your money to us slowly but you aren’t allowed to sit down at that table full of poker sharks because we are worried you’ll lose your shirt.
Casinos LITERALLY do this though, with segregated/exclusive higher stakes games. You only get to play the ultra high stakes poker if you set it up yourself or get invited
That is fine, if it is done before the play begins. What's happening here is being kicked out of the game when you're winning.
Who's getting kicked out while they're winning?
No one holding GME is having their holdings seized.
No one holding GME is prevented from selling (by Robinhood; periodic circuit breakers do inject halts for everyone during periods of high volatility/price movement, which are rules set in place before [this] play began)
No one is prevented from opening an account at the many dozen other brokerages who are happy to transact in GME.
No one holding GME is having their holdings seized.
No one holding GME is prevented from selling (by Robinhood; periodic circuit breakers do inject halts for everyone during periods of high volatility/price movement, which are rules set in place before [this] play began)
No one is prevented from opening an account at the many dozen other brokerages who are happy to transact in GME.
Your take is so wrong. There is friction in opening accounts, funding it, etc. If all your investment money is in RH, it takes a week to move money out.
And the simple fact that millions of people on RH are locked out of buying totally fucks the people holding the stock. "You can sell but not buy"?
Who is buying? The institutions.
Do not attempt to justify this.
And the simple fact that millions of people on RH are locked out of buying totally fucks the people holding the stock. "You can sell but not buy"?
Who is buying? The institutions.
Do not attempt to justify this.
RH is a business and can make their own decisions. If you are not happy with how they service you as a client, you can take them to court. They do not owe you anything more than what's in the contract you have with them.
What about people that already lost money because of this movement? On the other side, on the sell side there might be lots of people who were holding waiting for a higher price that was driven down by the blocking of new purchases, cratering their gains. Is that right by the rules of the game?
Well in this case I think the gamblers are going to take all their business elsewhere if the casino doesn't change its ways.
The stockmarkets aspire to be more than a casino and actually a way for people to invest money and productive enterprises to raise it. If you want a casino try crypto.
I don’t think that’s the case, but even if it is for the stock markets broadly it isn’t for Robinhood. It’s not vanguard.
how about for paying gold customers who specifically want to engage int PM/AH trading? i know robinhood isn't a pro level platform but come on, this feels exactly like blatant manipulation.
They have blocked 7/10 most mentioned stocks in r/wallstreetbets from being purchased. It isn't just Robinhood, also Revolut and others. Then they launched a short attack, with nobody willing to buy besides themselves, they tanked the stock.
It doesn't get more obvious than this.
It doesn't get more obvious than this.
It's absolutely market manipulation. RH gets sells order flow to Citadel, who bailed out Melvin Capital.
Someone high up at RH got their arm twisted to help their buddies close their shorts.
Someone high up at RH got their arm twisted to help their buddies close their shorts.
Maybe someone higher up could be losing lots, much more than what Robinhood could be valued during the IPO but that would be USD 12 bi...
Lost this customer! They canceled my literal 4$ but in gme, which was more of a statement than an investment on my part.
I'm pretty happy they are doing it. This is really in the best interest of the average Robinhood user trying to buy GME right now. Maybe they shouldn't completely ban it, but there should be at least very extreme warnings about why its a terrible idea to buy.
Dude it's my fuckin' money. I don't need or want protection. Maybe I want to buy a couple hundred dollars of meme stonks solely because it's funny. Is that not allowed?
I imagine the paternalism argument would be something like "currently GME is part of a ponzi scheme, and you would be defrauded by making this purchase".
It's a ponzi scheme where early stage investors are forced to buy the products of late stage investors.
It’s their fucking trading platform if they want to defend people from investing in a Ponzi scheme is that not allowed.
I just wish they'd say that they have a vested interest in the ponzi scheme failing rather than telling me I'm not smart enough to make the decision to throw my money away.
And that's really what this is all about.
And that's really what this is all about.
It's probably a liability concern on their part, but they also want people to have money to trade in the future too. If Robinhood users had any chance of actually making a bunch of money on this it would only be in Robhinhoods interest to allow people to continue buying. (if their users have more money in the future they will trade more)
really? really?
this is stock investing 101. don’t invest what you cannot afford to lose. i find it condescending and insulting that they are claiming to protect the users.
this is stock investing 101. don’t invest what you cannot afford to lose. i find it condescending and insulting that they are claiming to protect the users.
Informing your customers is one thing. Blocking them in "their" own interest is a ridiculous overstep. We make platforms and tools to empower users, not to force them down whatever path we deem best for them.
But there are tons of overpriced stocks out there. Where do you draw the line? TSLA? AAPL? S&P 500?
It's not about making money, it's about sending a message, and we can send a message with our money. Not their business how we burn it.
It isn't. People buy it to laugh, not to make money.
"Robinhood got about 40% of their revenues from one of the hedge funds that just took a dive on Gamestop. Highly recommend an investigation. This smells like collusion to protect the rich insiders."
https://twitter.com/mindmeld_me/status/1354807424998281217
https://twitter.com/mindmeld_me/status/1354807424998281217
Is there a source for the 40% figure? It seems to allude that the fund in question is Citadel.
First, I believe that number comes from this article[0], which doesn't tell the whole story. Did some research and found some more info with the help of this article[1]. In Q1, Citadel paid $12,583,220.60 to fulfill orders from Robin Hood[2]. I can't put together the total percentage of their order fulfillment revenue, but this website seems to suggest 91 million[3], but if you add up the totals from[2] they don't sum to 91 million--so I can't quite determine the percentage of revenue it works out to, but it appears Citadel is their biggest order fulfillment client.
[0] https://www.bloomberg.com/news/articles/2018-10-15/robinhood...
[1] https://fortune.com/2020/07/08/robinhood-makes-millions-sell...
[2] https://cdn.robinhood.com/assets/robinhood/legal/RHS%20SEC%2...
[3] https://www.businessofapps.com/data/robinhood-statistics/
[0] https://www.bloomberg.com/news/articles/2018-10-15/robinhood...
[1] https://fortune.com/2020/07/08/robinhood-makes-millions-sell...
[2] https://cdn.robinhood.com/assets/robinhood/legal/RHS%20SEC%2...
[3] https://www.businessofapps.com/data/robinhood-statistics/
Not revenue, but RH publishes their order flow percentages, which shows Citadel is at the top. Here's one from last year: https://cdn.robinhood.com/assets/robinhood/legal/RHS%20SEC%2...
Yeah it must be, they gave funds to Melvin Capital which took a beating on GME, and make money off Robinhood's customer flow.
Giving funds to Melvin so they can close their short != having a short position in GME
There are like 30 comments getting this confused in this thread.
There are like 30 comments getting this confused in this thread.
This sounds a little pedantic to me. Citadel has exposure to a short position in GME due to their deal.
> Citadel has exposure to a short position in GME due to their deal
No, they don't. It's not pedantic - Citadel literally does not have a short position or exposure to a short position in GME.
No, they don't. It's not pedantic - Citadel literally does not have a short position or exposure to a short position in GME.
If you lend money to someone, especially someone on the brink of insolvency, then you are buying whatever they are. Of course, Citadel can be on both or any number sides but they still take on exposure in that direction.
You're missing that they lent the money specifically so they were no longer exposed to the short position.
Yeah this is the central argument and I don't think we have a clear answer yet.
Citadel the hedge fund and Citadel the market maker are separate companies.
They do share ownership though. But the alleged conspiracy above is unlikely for other reasons.
FWIW, Robinhood posted a statement on their blog[1].
Two snippets:
>In light of recent volatility, we are restricting transactions for certain securities to position closing only, including $AMC, $BB, $BBBY, $EXPR, $GME, $KOSS, $NAKD and $NOK.
Also:
>We fundamentally believe that everyone should have access to financial markets.
Cognitive dissonance to the hilt :)
[1]https://blog.robinhood.com/news/2021/1/28/keeping-customers-...
Two snippets:
>In light of recent volatility, we are restricting transactions for certain securities to position closing only, including $AMC, $BB, $BBBY, $EXPR, $GME, $KOSS, $NAKD and $NOK.
Also:
>We fundamentally believe that everyone should have access to financial markets.
Cognitive dissonance to the hilt :)
[1]https://blog.robinhood.com/news/2021/1/28/keeping-customers-...
At least for GME the stock is still rising uncontrollably. If the WSB crowd who mainly uses Robinhood can't buy then who is pushing the price up?
I feel like we're bordering on religion here (which means it doesn't have to be grounded in logic) and its possible that people who were rewarded for holding bitcoin have happily added an extra punt to this campaign. If you can click all the buttons to deal with crypto then I don't imagine its too hard to trade without Robin Hood.
I thought I was done with $GME. I've made money on 3 legs up at this point. But seeing Robinhood do what they did, I closed all my positions, will be withdrawing all of my cash and closing my account ASAP.
I opened a TD Ameritrade account this afternoon and bought a few shares of $GME on principle.
I opened a TD Ameritrade account this afternoon and bought a few shares of $GME on principle.
I'm really out of my depth here but my understanding is at a certain point short sellers start getting forced to buy at whatever price, pushing the stock up further?
If you are short you have to put up more and more collateral as the price goes up. So yes, eventually you may be forced to buy to cover your short, if don't have enough cash you are able or willing to tie up as collateral. This can create a feedback loop as short-sellers buy and drive the price further up, forcing other short-sellers to buy, etc., the so-called short squeeze. I have no idea if this is happening now.
That is exactly what is happening right now.
People are flooding robinhood competitors
Most or many of RH's competitors have similar restrictions, however. Hints that the ratio of 'big money' going long was on the rise, and/or short sellers closing their positions. Also, foreign money potentially.
WeBull and a few others had a temporary halt on buys due to their clearing house, but have since resolved and rescinded their limitations. Other brokerages have never stopped allowing buys and longs (but restricted shorts and some margin activity).
Wow. First the Discord ban and then this - clearly the billionaire hedge fund managers have been busy pulling strings overnight.
Limiting it so you can't buy, you can only sell... Very clearly helping the hedge funds here.
Limiting it so you can't buy, you can only sell... Very clearly helping the hedge funds here.
Citadel is one of the "cheater" funds along with Melvin, Point72 (previously SAC Capital Advisers) and Maplelane (ex-Galleon Group). They all have connections to insider trading of some sort since it was legal to know stuff like earnings beforehand, etc. before reg FD in 2001, and the seeds from that age are still there in these funds. They certainly aren't the type to be below doing something like this.
Citadel could also be absolutely fucking themselves if they end up in discovery over this. It could mean the end of this era of funds. Many would be glad to see them go.
Citadel could also be absolutely fucking themselves if they end up in discovery over this. It could mean the end of this era of funds. Many would be glad to see them go.
The head of NASDAQ even suggested a Tradimg Halt so institutions can adjust to combat retail investors better!
We're close to reaching a "let them have cake" point of elite arrogance.
Every day of 2021 I'm thinking those people with the guillotine were less crazy.
Those elites making the rules and the power plays need to remember: "Those who make peaceful revolution impossible will make violent revolution inevitable." John F Kennedy
Elites: better leave some safety valves in the system. People have been getting angry in the last year.
Elites: better leave some safety valves in the system. People have been getting angry in the last year.
People have been getting angrier since 2008. Lots of those that were young and suffered through are adults now, the ones that were adults are getting older and everyone is still pissed off about what happened.
I definitely feel I'm getting squeezed, even though I've increased my salary quite a lot since 2005, including moving continents to pretty good jobs in Europe. I can feel the squeeze in society, with friends that even in a rich nation with a good salary still don't look very brightly into the future. Climate disasters incoming, also propelled up by the elites (or at least delaying action against, inaction is an attack in this case).
People were tired, now a lot are tired, bored, unemployed and angry.
I definitely feel I'm getting squeezed, even though I've increased my salary quite a lot since 2005, including moving continents to pretty good jobs in Europe. I can feel the squeeze in society, with friends that even in a rich nation with a good salary still don't look very brightly into the future. Climate disasters incoming, also propelled up by the elites (or at least delaying action against, inaction is an attack in this case).
People were tired, now a lot are tired, bored, unemployed and angry.
We were already on that point at least since the bank bailouts.
More like "Let them have shortcake". This is absolutely ridiculous.
A long halt would be bad for shorts, since they would be stuck paying the 125% annualized borrow for the duration of the halt.
And practically a halt doesn't _really_ affect the prices.
And practically a halt doesn't _really_ affect the prices.
Luckily, I used my Vanguard account instead of making a Robinhood.
Now people are moving away from Robinhood is it only a matter of time before the other platforms do the same?
Even european brokers now forbid buying gamestop/AMC.
I don't think Vanguard will, since they have a limit on orders per day precisely to stop people from, well, day-trading.
[deleted]
[deleted]
Brokers are worried about their legal exposure at this point.
They could face lawsuits from investors in Melvin and other hedge funds, who will allege that the brokers knew they were facilitating intentional financial harm. It doesn’t matter if these are likely to fail; they are expensive lawsuits to defend against and therefore may result in settlements.
And they could face class action litigation from trial lawyers representing retail investors who lose money when the bubble finally bursts. Again, maybe the brokers will win these suits but they are expensive and bad for the brand. “I used Robinhood and lost my life’s savings” is not the news story they want to see 2 months from now. (Edit to clarify: class action litigators have PR strategies to feed these stories to reporters, hoping bad press will convince their target to settle.)
They could face lawsuits from investors in Melvin and other hedge funds, who will allege that the brokers knew they were facilitating intentional financial harm. It doesn’t matter if these are likely to fail; they are expensive lawsuits to defend against and therefore may result in settlements.
And they could face class action litigation from trial lawyers representing retail investors who lose money when the bubble finally bursts. Again, maybe the brokers will win these suits but they are expensive and bad for the brand. “I used Robinhood and lost my life’s savings” is not the news story they want to see 2 months from now. (Edit to clarify: class action litigators have PR strategies to feed these stories to reporters, hoping bad press will convince their target to settle.)
"Intentional financial harm" is not illegal, otherwise shorting stocks would be illegal. There is also no court precedence for normal market maneuvers that happen to have a significantly negative outlook on a company. Imagine if Gamestop sued TD Ameritrade for facilitating short market orders for Goldman Sachs? It would be a joke. Same thing for if Melvin sues--they over exposed themselves and paid for it.
There's nothing here that's illegal. Insider Trading, Pump and dump schemes, etc all require coordinated distribution or communication of false and/or non-public information. What's happening with GME is happening in the public, in full view of everyone, with a goal of exploiting a hedge fund that overexposed itself through a short squeeze. Short squeezes are legal, and have a large storied history over the last couple decades.
There's nothing here that's illegal. Insider Trading, Pump and dump schemes, etc all require coordinated distribution or communication of false and/or non-public information. What's happening with GME is happening in the public, in full view of everyone, with a goal of exploiting a hedge fund that overexposed itself through a short squeeze. Short squeezes are legal, and have a large storied history over the last couple decades.
Good point. Hedge funds pay for things that are ostensibly public, but with very high entry points, to understand the market - witness satellite surveilling of Chinese factory activity, Walmart parking lots, laying private fiber.
WSB was the very definition of public information, open social media.
WSB was the very definition of public information, open social media.
> They could face lawsuits from investors in Melvin and other hedge funds
Wait until Robinhood sees the class action lawsuit
Wait until Robinhood sees the class action lawsuit
Class action lawsuits never tend to work out that well for the little guy. Lawyers get rich and the Goliath pays essentially a fine.
Class action lawsuits are about people punishing companies because the government won't levy a harsh enough penalty. I never took part in a class action because I wanted "a payday," I take part in them because I want the company punished.
Shouldn't they have an arbitration clause in there somewhere? Maybe that would open them to a Thousand Papercut bleeding when everyone activate the arbitration clause at once.
Wouldn’t forced arbitration in the TOS prevent that?
> who will allege that the brokers knew they were facilitating intentional financial harm
Is it possible to make such an allegation in a way that doesn't also plausibly describe parts of the everyday behavior of a hedge fund?
Is it possible to make such an allegation in a way that doesn't also plausibly describe parts of the everyday behavior of a hedge fund?
> They could face lawsuits from investors in Melvin and other hedge funds, who will allege that the brokers knew they were facilitating intentional financial harm.
That'd be a gutsy move from a firm that takes a big short position and then publicly bashes a stock.
That'd be a gutsy move from a firm that takes a big short position and then publicly bashes a stock.
Wonder if I should cash in my BTC on Robinhood. If they go under then I lose everything right?
As I understand it, the hedge funds had naked shorts. That's illegal. If they did, what is happening to them serves them right.
Even if they didn't, a "short squeeze" is perfectly legal. If the short sellers think the stock is overpriced, and there's others that think its underpriced, then both sides are placing their bets and will deal with the result, either by making or losing a lot of money.
This is not a "pump and dump", this is an unco-ordinated short squeeze. A bunch of people decided to take the short sellers on.
Whether everyone involved understands the risk of a short squeeze to them by going long is a prime case of "caveat emptor". They're not even buying calls, they're actually buying the stock.
The short sellers are being squeezed mercilessly and will eventually have to bail out. At that point the stock will tank back to a more realistic position and the people that went long too late and didn't exit will also lose lots of money.
Of course, they won't crystalize those losses until they sell.
Even if they didn't, a "short squeeze" is perfectly legal. If the short sellers think the stock is overpriced, and there's others that think its underpriced, then both sides are placing their bets and will deal with the result, either by making or losing a lot of money.
This is not a "pump and dump", this is an unco-ordinated short squeeze. A bunch of people decided to take the short sellers on.
Whether everyone involved understands the risk of a short squeeze to them by going long is a prime case of "caveat emptor". They're not even buying calls, they're actually buying the stock.
The short sellers are being squeezed mercilessly and will eventually have to bail out. At that point the stock will tank back to a more realistic position and the people that went long too late and didn't exit will also lose lots of money.
Of course, they won't crystalize those losses until they sell.
> If the short sellers think the stock is overpriced, and there's others that think its underpriced, then both sides are placing their bets and will deal with the result, either by making or losing a lot of money.
I don't think it's really a case of people disagreeing on the real value of GameStop stock. Framing it like this ignores important facts.
This stock was trading around $4 in August, around $20 in the beginning of January, and is almost at $400 right now. People can have legitimate disagreements about what the true value is: $5 per share? $10? $20? $40?
But no way anyone sincerely believes GameStop is worth $400/share. People who are buying right now at (or near) that price point are either doing so because they believe the short squeeze will drive the price up even further (Redditors), or because they have to deliver stock they sold short (investment funds). So all parties agree that the stock is overpriced, and people have been buying knowing this fully well.
I don't think it's really a case of people disagreeing on the real value of GameStop stock. Framing it like this ignores important facts.
This stock was trading around $4 in August, around $20 in the beginning of January, and is almost at $400 right now. People can have legitimate disagreements about what the true value is: $5 per share? $10? $20? $40?
But no way anyone sincerely believes GameStop is worth $400/share. People who are buying right now at (or near) that price point are either doing so because they believe the short squeeze will drive the price up even further (Redditors), or because they have to deliver stock they sold short (investment funds). So all parties agree that the stock is overpriced, and people have been buying knowing this fully well.
Yeah, so... what? Which laws dictate that stock needs to be traded at “fair price”?
I didn't say there is such a law. I'm just saying it's not a case of
"two sides disagreed on the true value of the company". It's not so symmetric.
One side was selling short because they believed (not unreasonably) that GameStop's core business is in trouble and is likely to go bankrupt (or at least more likely to lose value than gain it).
The other side was buying long not because they believed GameStop was likely to reinvent itself, but only because they noticed a lot of funds had sold it short and saw a short squeeze coming. They wouldn't have bought at the current stock price if the other guys hadn't sold short.
One side was selling short because they believed (not unreasonably) that GameStop's core business is in trouble and is likely to go bankrupt (or at least more likely to lose value than gain it).
The other side was buying long not because they believed GameStop was likely to reinvent itself, but only because they noticed a lot of funds had sold it short and saw a short squeeze coming. They wouldn't have bought at the current stock price if the other guys hadn't sold short.
A stock is worth what people will pay for it. That’s it. Sure, there are models you can use to come up with a seemingly reasonable valuation, but that’s just a tool you use to make a wild ass guess.
Exactly. I think gold is worthless because it's just a lump of metal that doesn't do anything useful. But apparently there's enough people that like shiny metal and therefore it's worth a lot. GME might just be an aesthetic purchase more than anything.
A trivia snippet I like is that aluminum used to be more valuable than gold for a period of time in the 1800s.
https://www.npr.org/2019/12/05/785099705/aluminums-strange-j...
https://www.npr.org/2019/12/05/785099705/aluminums-strange-j...
A stock is worth what people are willing to pay for it...
A stock is worth what people are willing to sell it for
> But no way anyone sincerely believes GameStop is worth $400/share.
In February 1997 AAPL was worth 15 cents per share. You could have overpaid by 100x at the time and you'd still be up 9.4x after 24 years (not counting dividends), which is an annualized gain of almost 10%.
Maybe Ryan Cohen taking a big stake in Gamestop is their Steve Jobs moment, who knows?
Disclosure: long GME
In February 1997 AAPL was worth 15 cents per share. You could have overpaid by 100x at the time and you'd still be up 9.4x after 24 years (not counting dividends), which is an annualized gain of almost 10%.
Maybe Ryan Cohen taking a big stake in Gamestop is their Steve Jobs moment, who knows?
Disclosure: long GME
That's my point. Nobody believed AAPL was worth $15/share in 1997. Nobody believes GameStop is worth $400/share today.
The motivations for buying are different.
The motivations for buying are different.
My point is that if AAPL had shot up to $15/share when Jobs came back, and people bought in then at $15 and held, they'd currently have a YoY gain of 10%
So? Is Tesla worth 10x what it was worth last year? I don't think so. Same for almost any tech stock.
Part of the reason it was trading so low was supposedly because the short sellers were suppressing the price, simply by way of being very publicly short the stock. It was clearly undervalued because of this, which is why people like /u/DFV (the guy who turned $53k in to 10's of millions) bought in about 18 months ago.
There is no evidence to indicate they had naked shorts. They were most likely short, but not naked short.
The short interest was above 100%, so there was naked shorting going on, although no direct evidence linking it to hedge funds (but they would've been most of the short float, so probably yes).
Short interest being above 100% does not require naked shorting.
Edit: A better example @ https://www.bloomberg.com/opinion/articles/2021-01-25/the-ga...
Edit: A better example @ https://www.bloomberg.com/opinion/articles/2021-01-25/the-ga...
Good point. Learned something there.
This is interesting, can individual brokerages refuse to trade individual securities or to only allow them to be sold. Unless the SEC authorized these actions I think it arguably makes the brokerages liable for losses and is arguably market manipulation. Transferring securities positions between brokers is relatively costly and time consuming - takes at least a day and there is usually a $40-70 fee - so is a temporary but significant road block.
Robinhood may be wanting to keep their name out if the papers but unless every brokerage does this it will just move elsewhere. Just like the US was going to limit oil futures because they thought institutions were driving up gas costs - then Dubai announced they would continue to trade without restrictions, US dropped that idea like a hot potato because they would rather have high gas prices then have Dubai become the world hub for oil trading.
Robinhood may be wanting to keep their name out if the papers but unless every brokerage does this it will just move elsewhere. Just like the US was going to limit oil futures because they thought institutions were driving up gas costs - then Dubai announced they would continue to trade without restrictions, US dropped that idea like a hot potato because they would rather have high gas prices then have Dubai become the world hub for oil trading.
What, really? In Germany transferring securities is free, but it takes weeks or months for all securities and the correct prices to be transferred.
In my experience, in the US it's free but it is often a pretty cumbersome and manual process that takes at least days, if not weeks. It's certainly not a click a few buttons on a website sort of thing. The last time I did this I had to physically mail a form and have a couple of different phone conversations.
what losses can you prove? It's not like you were blocked from selling at the high, the high was blocked from being reached. And this applies whether you have a rh account or not.
Opportunity loss. When I worked IT in brokerages we always had to reimburse traders for missed opportunity from technology issues -- which was abused, whenever trades went against them they would claim their UI was unresponsive and we'd have a programmer scour the logs with millisecond timestamps to prove the UI did respond and how quickly, then cross reference with the tradebook to see if its a trade that would likely be executed immediately or not etc. Often times the resolution is that the trader clicked trade at this timestamp, the order was sent at this timestamp, the exchange acknowledged at this timestamp, but you tried to buy 10000 shares at X price and only Y were available, so the trade did not execute immediately or not at all.
Edit: Class action lawsuit was just filed for loss of opportunity - https://news.ycombinator.com/item?id=25945052
Edit: Class action lawsuit was just filed for loss of opportunity - https://news.ycombinator.com/item?id=25945052
Ah cool so does this mean that all the other stocks are safe and will only make me money? Very cool of Robin Hood to protect me from ever being exposed to any risk like this. It’s just really cool to know that they remove the ones that can lose me money.
Very cool of robinhood to protect me by tanking my stock position simply because it’s as odds with their wallet. What a fucking sham of a company and if there isn’t some serious legal repercussions of it, then I don’t know what even would qualify as “market manipulation”.
Robinhood determined that you're too poor to mess with the market. Sorry about that!
This whole thing is such bullshit.
This whole thing is such bullshit.
Tomorrow they are going to prevent you from selling stocks that are in the money.
So only big shot hedge funds are allowed to manipulate the market and get away with it? How dare the common man shift the balance of power, that too by playing totally within the rules!?
Seriously, if a fund did this, they'd be patting themselves on the back, and would have had little to no backlash from their brokers.
Seriously, if a fund did this, they'd be patting themselves on the back, and would have had little to no backlash from their brokers.
Question: Why shouldn't everyone pull their money out of Robinhood asap?
Thesis: Suppose a sufficiently large number of people believe that the market is going to crash one day. Robinhood has just shown us that it will consider locking up everyone's accounts and prevent a sell off while the rest of the market cleanly exits after cutting their losses.
Robinhood investors will be left holding the bag once Robinhood reopens trading for the plebians.
Thesis: Suppose a sufficiently large number of people believe that the market is going to crash one day. Robinhood has just shown us that it will consider locking up everyone's accounts and prevent a sell off while the rest of the market cleanly exits after cutting their losses.
Robinhood investors will be left holding the bag once Robinhood reopens trading for the plebians.
I think because we are dealing with sentiments. There would be a price point that will trigger a run-off but it still seems to be sustained by the "fuck you" message and playing chicken.
The problem here is that game theory completely mess the incentives, everyone needs to play chicken (or buy out the ones selling) or everyone loses on potential profit. But if just a few people trigger a sell out, everyone loses.
It's a very strange Mexican stand-off and my take is that is held, for now, by anger and excitement to see what happens when the shorts have to cover. When the shorts start buying and driving the price up we will see how many are able to hold (and up to what point).
This is quite fascinating to me, game theory would predict this shouldn't have happened with so many different players with conflicting interests.
The problem here is that game theory completely mess the incentives, everyone needs to play chicken (or buy out the ones selling) or everyone loses on potential profit. But if just a few people trigger a sell out, everyone loses.
It's a very strange Mexican stand-off and my take is that is held, for now, by anger and excitement to see what happens when the shorts have to cover. When the shorts start buying and driving the price up we will see how many are able to hold (and up to what point).
This is quite fascinating to me, game theory would predict this shouldn't have happened with so many different players with conflicting interests.
I'm linking a comment to someone who kind of addresses this. I've also linked the interview below. It's an interview of the WeBull CEO and why they had issues. It's pretty clear that this is a process issue, not necessarily a RobinHood is evil issue.
Long story short, the clearing house (similar to when you buy a house) assesses risk and assigns terms based on that. The risk got so high that RobinHood couldn't cover it or their clearing house couldn't cover it anymore.
Whether or not the clearing houses are in bed with these brokerages remains to be seen.
I was also pitchforks out earlier today, and willing to move to webull all my stocks, but then I did more digging and this seems more reasonable. RobinHoods press release was garbage tho.
https://news.ycombinator.com/item?id=25950191
Link to the video from the OP. https://finance.yahoo.com/video/heres-why-robinhood-restrict...
Long story short, the clearing house (similar to when you buy a house) assesses risk and assigns terms based on that. The risk got so high that RobinHood couldn't cover it or their clearing house couldn't cover it anymore.
Whether or not the clearing houses are in bed with these brokerages remains to be seen.
I was also pitchforks out earlier today, and willing to move to webull all my stocks, but then I did more digging and this seems more reasonable. RobinHoods press release was garbage tho.
https://news.ycombinator.com/item?id=25950191
Link to the video from the OP. https://finance.yahoo.com/video/heres-why-robinhood-restrict...
What upsets me is the fact that selling isn't halted. If only buying is halted, it's obviously going to cause the stock to plummet. Retail investors who bought AMC, GameStop, Nokia, or Blackberry are going to fear losing a lot of money and sell. If everyone does that, the stock price decreases. It's obvious manipulation in favor of hedge funds shorting the stocks. I really hope Robin Hood gets hit with a class action lawsuit. I don't want to sound greedy because I'm losing money, but the way this is being dealt with is beyond unfair. Losing money for a stupid decision is fine by me, but joining a movement like this and having it shut down by force is absolute bullshit. How can hedge funds be allowed to manipulate the market but we can't come together to fight them?
I too bought those shares with the anticipation that the price will go up due to the hype generated. I made a careful decision to do so by estimating that the traffic on /r/wsb will increase because of the news coverage, which causes people to buy those shares. I don't live in the states and don't use Robinhood, but a local broker that charged me a good bit for US stock trading.
Robinhood halting trading tanked the price in afterhours immediately, and it will likely crash further on opening because of this. As a result, I too will lose money.
Sure that's what you get with market gambling and speculation but I find it ridiculous that this company now singlehandled crashed the stock and results in losses for global independent investors like myself.
Being able to only sell shares and not buy is directly playing towards the hedge funds. It will drive the price down and positions might get closed. If what reddit did was market gambling and manipulation, what robinhood is now doing is the same, just in the opposite direction.
Robinhood halting trading tanked the price in afterhours immediately, and it will likely crash further on opening because of this. As a result, I too will lose money.
Sure that's what you get with market gambling and speculation but I find it ridiculous that this company now singlehandled crashed the stock and results in losses for global independent investors like myself.
Being able to only sell shares and not buy is directly playing towards the hedge funds. It will drive the price down and positions might get closed. If what reddit did was market gambling and manipulation, what robinhood is now doing is the same, just in the opposite direction.
I think you should file a complaint to your local financial authorities.
Interactive Brokers now blocking purchase call and put options (even to institutional investors!) on $GME, you can only close a position.
On the other side, Robinhood is asking for account to be funded with cash to execute the calls at expiration, or else they will liquidate your position :|
On the other side, Robinhood is asking for account to be funded with cash to execute the calls at expiration, or else they will liquidate your position :|
This is much more signifiant than Robinhood because IBKR is one of the most professional trading platforms available for retail investors.
Some more info:
https://twitter.com/IBKR/status/1354792600004386818
Some more info:
https://twitter.com/IBKR/status/1354792600004386818
I just tested it with IBKR and was able to create a call buy order (exp 1/29, $500 strike) for a single contract.
Info: Market was closed so the order wasn’t executed but it was accepted by the order system before i cancelled it.
Info: Market was closed so the order wasn’t executed but it was accepted by the order system before i cancelled it.
I don't know IBKR's system, but most OMSs will accept an order unless it's blatantly wrong such as invalid stock. It's the execution engine that really enforce the rules.
I have a message: "Transactions in this instrument are limited to closing-only trades" @ Jan29'21 300 CALL GME.
Tested IBKR today - I was able to place a simple Limit order for GME stock which was good till close but when I refreshed to view my list of orders it shows as Cancelled.
Tried it twice, did the same thing each time.
Tried it twice, did the same thing each time.
It's not only about options. You can't buy even 1 stock of GME on non margin account. I don't understand how it has anything to do with IB risk management.
That last sentence is extremely scary. Do you have a source?
https://www.reddit.com/r/wallstreetbets/comments/l6plv0/robi... (unless I misunderstood something)
this is a risk management move for RH, nothing else
If it's just risk management, why IB doesn't allow to buy 1 GME stock on non margin account?
When AOC and Ted Cruz are agreeing that something smells fishy... it's probably fishy
https://twitter.com/tedcruz/status/1354833603943931905
https://twitter.com/tedcruz/status/1354833603943931905
If Robin Hood was allowing people to sell but not to buy, and most other Citadel involved brokerages were doing the same, who was able to purchase the massive volume of shares being sold? If it turns out that it was only allowing large hedge funds with massive short exposure then it means that they were artificially reducing price to bail them out and the very real expense of the retail investors that were suddenly and inexplicably bag holders on a stock that could not be longed.
If this is true, then this is a Bernie Madoff level crime and I hope that those responsible get similar sentences. Tens / Hundreds of thousands of retail investors were involved in the WSB long, all of these people potentially suffered damages, some of them significant. Its fine to say only invest what you can lose but in your risk analysis I am sure that the market maker intentionally committing fraud to force you to dump your shares probably did not factor in.
If this is true, then this is a Bernie Madoff level crime and I hope that those responsible get similar sentences. Tens / Hundreds of thousands of retail investors were involved in the WSB long, all of these people potentially suffered damages, some of them significant. Its fine to say only invest what you can lose but in your risk analysis I am sure that the market maker intentionally committing fraud to force you to dump your shares probably did not factor in.
> If Robin Hood was allowing people to sell but not to buy, and most other Citadel involved brokerages were doing the same, who was able to purchase the massive volume of shares being sold?
I think you answered yourself, but you may want to consider that RH is not the only trading platform out there.
I think you answered yourself, but you may want to consider that RH is not the only trading platform out there.
Worth pointing out that nearly every major trading firm has blocked buying of Gamestop and AMC stock today. I really am hoping to see legal action against the entire industry for literal stock manipulation. This isn't limiting purchasing, it's full-on stopping and only allowing selling. That's insane.
I don't know how stocks work.
Could you explain how it's possible to stop buying and allow selling? In order to execute a sell order, there would have to be a corresponding buy order? Do they do this by allowing new buy / sell orders, but only if they're at a lower price?
Could you explain how it's possible to stop buying and allow selling? In order to execute a sell order, there would have to be a corresponding buy order? Do they do this by allowing new buy / sell orders, but only if they're at a lower price?
cwkoss more or less covered it, but they stopped buying for "retail" investors, but wall street could still buy. They basically literally said "okay enough of you normies, only professionals get to trade GME or AMC today".
The unsaid part here is "and we'll probably make a ton of money during this since the retail investors were all buying". There's a rumor that Citadel doubled down on shorting the stock today and made a killing when it dropped from $450 -> under $200 today when trading was blocked. That could probably outweigh a good deal of the losses from Melvin today, though it's unclear who is still holding the bag on shorts.
That's why this ban for retail traders is so crazy and blatant...
The unsaid part here is "and we'll probably make a ton of money during this since the retail investors were all buying". There's a rumor that Citadel doubled down on shorting the stock today and made a killing when it dropped from $450 -> under $200 today when trading was blocked. That could probably outweigh a good deal of the losses from Melvin today, though it's unclear who is still holding the bag on shorts.
That's why this ban for retail traders is so crazy and blatant...
There are different sorts of access to the markets. Some companies literally operate the market, others have direct access to trade on that market, others sell indirect access to other people.
The companies blocking buy orders are all in the indirect access business.
The companies blocking buy orders are all in the indirect access business.
It is unprecedented for buying to be stopped for retail investors while still allowing buying from institutional investors.
Yep, as of last night RH had also delisted 1/29 options for GME. 2/6 options are still available, which maybe points to RH hoping/thinking this all unwinds in the next few days.
Sign me up for the class action...
Sign me up for the class action...
Don't the ToS include a waiver of taking any legal action against RH, class action suits in particular, and a binding arbitration clause in case you really want to make some noise?
Just because something's in a TOS doesn't make it legally enforceable, especially if you've got enough money collectively for expensive lawyers.
According to the Supreme Court, forced arbitration is fine to have in a TOS. The past couple years there's been more awareness of it, it's one of the nastiest sneak moves in history to take people's rights away en masse. You don't find out until you get in a position where you've been harmed and you go to hold them accountable using the legal system: Surprise! You have to settle in this thing where the defendant pays all the participants. Here's your $200 check for your $200,000 claim, see you next time.
Which is why I find the story about Postmates and its efforts to avoid mass arbitration very funny.
False. There’s no way out of a forced arbitration agreement that bans class actions. The courts always defer to arbitration, even when arbitrability is in question. It’s a ridiculous judicially made trap.
If they're able to coordinate a short squeeze, they can easily coordinate demand for thousands of arbitration requests.
And we know what happened to DoorDash when they tried to play that game: https://www.reuters.com/article/us-otc-doordash/this-hypocri...
And we know what happened to DoorDash when they tried to play that game: https://www.reuters.com/article/us-otc-doordash/this-hypocri...
Yes, but that’s not a class action.
Yes the idea is to use their insistence of arbitration against them by forcing them to pay for thousands of arbitration cases.
Everyone should utilize this strategy. We’ve been advocating for it for 6 years. AAA keeps upping its fees. Want to attack the system? Attack forced individual arbitration.
Agreed. A few more high profile en masse individual arbitration is the way to end the practice entirely.
I think it will cause them to think twice but the only real way to end it is legislation. The FAA was never intended to apply to consumer disputes or eliminate the ability of people to group together to make a claim. It's all a construct of the courts and corporate-friendly judges and needs adjustment.
Well, in this case the ToS will be a contract one needs to "digitally sign" in order to open an RH account. RH would simply claim that its customers didn't have to accept the terms, regardless of how bs those were. I'm not a lawyer, though.
Is having a clause like that in your ToS legal?
In the US, yes, a terms of service can force binding arbitration.
IANAL but I believe that some clever lawyers have used this to the advantage of the victims by essentially creating a DOS attack on the company, flooding it with binding arbitration claims.
https://www.nytimes.com/2020/04/06/business/arbitration-over...
https://www.nytimes.com/2020/04/06/business/arbitration-over...
And the CFPB had made a rule outlawing it for financial firms and then the Republican senate killed it with the Congressional Review Act.
Almost certainly. Don't expect the SEC to step in here, either.
Not a fan of the Reddit wsb movement but not sure this is a justified move by Robinhood. You gotta let things play out by the rules of the game
This move by RH is changing the rules of the game
Not just a rules change, I’m pretty sure an illegal rules change. Volume manipulation is stock manipulation according to the SEC.
I don't think the title of this post does the story justice.
The buy UI widget under GameStop's stock symbol has been replaced with: "This stock is not supported on Robinhood."
It seems the ability to buy the stock has been completely removed, however they left in the ability to sell.
That is much different than "limited" because other platforms only prevented options trading but still allowed purchasing it with funds you already have.
The buy UI widget under GameStop's stock symbol has been replaced with: "This stock is not supported on Robinhood."
It seems the ability to buy the stock has been completely removed, however they left in the ability to sell.
That is much different than "limited" because other platforms only prevented options trading but still allowed purchasing it with funds you already have.
You can't even look at the stock on RH, it's like it doesn't exist. Same with Nokia, AMC, etc.
And all this with no explanation whatsoever. It would be one thing if they put out a press release or something to explain themselves but the fact that they did it on the sly stinks to high heaven.
And all this with no explanation whatsoever. It would be one thing if they put out a press release or something to explain themselves but the fact that they did it on the sly stinks to high heaven.
I’m fuming, and about as angry as I’ve been in years because of this. Robinhood opened up a bunch of levered trading to amateurs, that was fine! Allowing folks to buy stocks that are making their business partners lose cash: we’re protecting the little guy.
If you work at Robinhood and you continue working at Robinhood I don’t know how you’ll continue to sleep at night.
If you work at Robinhood and you continue working at Robinhood I don’t know how you’ll continue to sleep at night.
Their paychecks can buy some very nice mattresses.
RH has been a scam since day one, the very principle of it is virtue signaling to the common man to sell his data to front run his trades.
I'm sure none of these people will lose a wink of sleep.
RH has been a scam since day one, the very principle of it is virtue signaling to the common man to sell his data to front run his trades.
I'm sure none of these people will lose a wink of sleep.
yeah Robin Hood was a creepy cynical marketing play from the start. good on them for convincing young people that they were a good choice despite being objectively worse than all other brokers. it's the free market at work! go use another broker if you dont like RH, trading fees have plummeted everywhere it's a years-long trend due to market regulation changes and HFT and low interest rates
Here's the part of this that is actually worse than it seems at first:
RH is making it so you can ONLY sell the stocks. You can't buy them.
So who is on the other side of the trade? Definitely not anybody on RH. But the thing is: a lot of the retail buy side of this is coming from RH. Like RH just gutted the buyers and handed them to the sellers. It's unbelievable how corrupt this looks.
RH is making it so you can ONLY sell the stocks. You can't buy them.
So who is on the other side of the trade? Definitely not anybody on RH. But the thing is: a lot of the retail buy side of this is coming from RH. Like RH just gutted the buyers and handed them to the sellers. It's unbelievable how corrupt this looks.
Someone remind me again how this is even legal? You can SELL but not BUY, thus automatically suppressing all stock values?!
Its a private company providing a service for FREE. YOU ARE THE PRODUCT. Just like twitter, they are allowed to control what happens on their platform, and they make no guarantee about reliability or free trade.
This is not even accurate in the smallest sense. This is a brokerage firm. It is heavily regulated by financial law.
They are not "allowed to control what happens on their platform." in the sense of Twitter. They have a fiduciary responsibility to their clients and the reliability of their platform is actually part of their ability to operate as a brokerage.
The service being free or not has NO impact on the rules they operate under as a brokerage.
They are not "allowed to control what happens on their platform." in the sense of Twitter. They have a fiduciary responsibility to their clients and the reliability of their platform is actually part of their ability to operate as a brokerage.
The service being free or not has NO impact on the rules they operate under as a brokerage.
Sure, it's regulated, but which regulation states they have a fiduciary duty to you?
Given they are currently arguing in court they have no such duty, but only to act in their customers best interest, perhaps this isn't sufficiently clear to them.
Given they are currently arguing in court they have no such duty, but only to act in their customers best interest, perhaps this isn't sufficiently clear to them.
https://cdn.robinhood.com/assets/robinhood/legal/Robinhood%2...
Read section 16.
Read section 16.
It is surprising how few people are arguing the “private company can do what they want” angle here. I wonder how the balance will look next time big tech bans a bunch of conservatives.
Zooming out above the vitriol, a few thoughts:
1) There’s a deep irony in calling yourself Robinhood - literally a guy who stole from the rich to pay the poor - and taking a move like this.
2) The 2008 financial crisis continues to have deep reverberations and has played a role in a lot of the upheaval over the past decade.
3) The Medium is the Message. This one probably deserves an essay, but if McCluhan were alive today he’d probably say that what’s really happening is society is getting buffeted against the waves of new mediums.
1) There’s a deep irony in calling yourself Robinhood - literally a guy who stole from the rich to pay the poor - and taking a move like this.
2) The 2008 financial crisis continues to have deep reverberations and has played a role in a lot of the upheaval over the past decade.
3) The Medium is the Message. This one probably deserves an essay, but if McCluhan were alive today he’d probably say that what’s really happening is society is getting buffeted against the waves of new mediums.
It's interesting to see the outrage about this. Everyone who has done a bit of research into this kind of broker knew this. It's the only way to get the commissionless trading they advertise with.
Just another case of "If you are not paying for it, you're not the customer; you're the product being sold".
Just another case of "If you are not paying for it, you're not the customer; you're the product being sold".
(This comment was originally a reply to "Robinhood makes most of its money selling customer orders (2020)" https://news.ycombinator.com/item?id=25946626, but we've merged it into the main thread.)
I see little outrage about this. The outrage is about illegally manipulating the market in broad daylight by preventing retail investors from purchasing a stock.
Is a user expected to tolerate illegal activity because the businesses customer demands it of them? If you have any doubt what Robinhood is doing is illegal (setting aside that it's clearly morally reprehensible), then I encourage you to read the suit that was just filed https://www.courtlistener.com/recap/gov.uscourts.nysd.553175...
Is a user expected to tolerate illegal activity because the businesses customer demands it of them? If you have any doubt what Robinhood is doing is illegal (setting aside that it's clearly morally reprehensible), then I encourage you to read the suit that was just filed https://www.courtlistener.com/recap/gov.uscourts.nysd.553175...
"The outrage is about illegally manipulating the market in broad daylight by preventing retail investors from purchasing a stock."
There's a difference between preventing someone from buying a stock and telling them you're not going to assume the risk of making a market for them, which is what's going on here. You cannot force Citadel to make a market for your orders.
They happen to result in the same situation, but the implications are completely different.
There's a difference between preventing someone from buying a stock and telling them you're not going to assume the risk of making a market for them, which is what's going on here. You cannot force Citadel to make a market for your orders.
They happen to result in the same situation, but the implications are completely different.
> You cannot force Citadel to make a market for your orders.
That depends on the market maker contract Citadel has with the brokerage(s) and the exchange(s). Although, I don't think the contracts with exchanges are very tight; I don't know about the contracts with brokerages. IIRC, Nasdaq had (has?) a special order type for market makers who didn't want to actually make a market that would put in bid and ask at exactly the maximum contractually allowed spread away from last trade, and withdraw and replace them when any trades did occur; making it much harder to actually trade with the market maker.
That depends on the market maker contract Citadel has with the brokerage(s) and the exchange(s). Although, I don't think the contracts with exchanges are very tight; I don't know about the contracts with brokerages. IIRC, Nasdaq had (has?) a special order type for market makers who didn't want to actually make a market that would put in bid and ask at exactly the maximum contractually allowed spread away from last trade, and withdraw and replace them when any trades did occur; making it much harder to actually trade with the market maker.
Citadel would never ever put themselves in a situation where they contractually have to assume an unpredictable level of risk
There's plenty of outrage about payment for order flow; see every thread about payment for order flow. The SEC argument that RobinHood was misleading about it rings a bit true to me; but payment for order flow isn't the problem there and isn't what the SEC was upset about; it's the split between the brokerage and price improvement.
As a retail investor, I'm a little squeemish that firms want to pay me to trade with me, but given the National Best Bid and Offer requirements, I don't see what the downside is for me. It's like accepting a deal at the electronics store that's listed as 'no resellers.'
As a retail investor, I'm a little squeemish that firms want to pay me to trade with me, but given the National Best Bid and Offer requirements, I don't see what the downside is for me. It's like accepting a deal at the electronics store that's listed as 'no resellers.'
> I see little outrage about this. The outrage is about illegally manipulating the market in broad daylight by preventing retail investors from purchasing a stock.
There's outrage about both. This story wouldn't be submitted and upvoted if this was common knowledge and accepted practice.
There's outrage about both. This story wouldn't be submitted and upvoted if this was common knowledge and accepted practice.
And forcefully selling peoples' shares now as well.
> forcefully selling peoples' shares
Is this a reference to margin calls?
Is this a reference to margin calls?
https://twitter.com/555Sunny/status/1354854993946406917/phot...
Still not sure if this is across the board or just the larger shareholders. I'd imagine robinhood is trying to limit their risk vs. the risk of the investor.
Still not sure if this is across the board or just the larger shareholders. I'd imagine robinhood is trying to limit their risk vs. the risk of the investor.
I'm not sure I trust this tweet but if it is true this is literal fraud. That would mean the end of Robinhood as a company.
There is a difference between a normal margin call and manipulating rules on your platform to force margin calls for the benefit of Citadel. I hope Kenneth C. Griffin joins Mike Milken in a list of crooks who actually got convicted.
if RobinHood can just pay whatever fine and continue operating as normal, then it's effectively legal for any entity of RobinHood's wealth.
It’s like if non-tech people suddenly find out Salesforce uses AWS and Microsoft Office suite.
If you're one of the big and established brokerages you can provide commission-less trading through other means - portfolio management fees, doing bank things.
For the smaller guys like RH though your point still stands.
For the smaller guys like RH though your point still stands.
Not really, the outrage is over a short of GME being a customer. If the headline was about Firm XYZ without a short in GME paying $100M it wouldn't be as newsworthy.
You don't get to pick to which advertiser your data is sold either. You're just along for the ride with no hands on the wheel.
I'm not defending business models built upon selling their users' data. I'm just saying that this is no surprise, and it was pretty inevitable to happen sooner or later.
I'm not defending business models built upon selling their users' data. I'm just saying that this is no surprise, and it was pretty inevitable to happen sooner or later.
> the outrage is over a short of GME being a customer
Do we have any evidence Citadel is materially net short GME?
They bailed out Melvin Capital. But Melvin Capital announced that they closed out their short position. And bailing out Melvin Capital isn't the same thing as assuming their positions.
Do we have any evidence Citadel is materially net short GME?
They bailed out Melvin Capital. But Melvin Capital announced that they closed out their short position. And bailing out Melvin Capital isn't the same thing as assuming their positions.
Please provide evidence they have closed their short other than them talking their portfolio.
Is there any concrete reason to suspect they're lying? Obviously none of us have directly seen Melvin's books, but there's a point where the contrary hypothesis just becomes unfalsifiable.
Until they release their statements we have no way of knowing.
If you want to take what they say at face value, go for it, but I don't believe them.
If you want to take what they say at face value, go for it, but I don't believe them.
You can believe everything they put in writing. You just have to read it correctly.
> But Melvin Capital announced that they closed out their short position. And bailing out Melvin Capital isn't the same thing as assuming their positions.
Yeah, arm's length transactions are a means of providing truth to falsity, and perfectly crafted statements are in the same category.
The only thing missing from these press releases is "to the best of my knowledge"
Yeah, arm's length transactions are a means of providing truth to falsity, and perfectly crafted statements are in the same category.
The only thing missing from these press releases is "to the best of my knowledge"
> arm's length transactions are a means of providing truth to falsity, and perfectly crafted statements are in the same category
Bailouts aren't arms-length transactions. They're highly involved.
Melvin Capital isn't just a GameStop short. It has billions of other assets. But not all of those are liquid. Margin calls require liquidity, and Melvin didn't have many options other than fire selling the rest of their portfolio and taking a private bailout at exorbitant terms (but less egregious than the losses they would have incurred in a fire sale).
From Citadel's perspective, why on earth would they assume the short positions? They're in the red. That is Melvin's investors' problem. The second-order problem, that of avoiding a fire sale of remaining assets, is what the bailout prevented.
With respect to Melvin, I'm blown away that these trades were executed as unhedged shorts.
Bailouts aren't arms-length transactions. They're highly involved.
Melvin Capital isn't just a GameStop short. It has billions of other assets. But not all of those are liquid. Margin calls require liquidity, and Melvin didn't have many options other than fire selling the rest of their portfolio and taking a private bailout at exorbitant terms (but less egregious than the losses they would have incurred in a fire sale).
From Citadel's perspective, why on earth would they assume the short positions? They're in the red. That is Melvin's investors' problem. The second-order problem, that of avoiding a fire sale of remaining assets, is what the bailout prevented.
With respect to Melvin, I'm blown away that these trades were executed as unhedged shorts.
> From Citadel's perspective, why on earth would they assume the short positions? They're in the red. That is Melvin's investors' problem. The second-order problem, that of avoiding a fire sale of remaining assets, is what the bailout prevented.
Because:
> With respect to Melvin, I'm blown away that these trades were executed as unhedged shorts.
Because that ^ will take down a prime, and if it's your prime because you're buddies with your mentee... no sir. And to cap it off, dominos fall everywhere because of the Index Fund phenomenon if there's no longer 'liquidity' from these guys.
Side note: You're smart as hell, I can tell from the few times we've interacted on this forum, and I appreciate the thoughtful responses. We need to figure out a way to trade info and get a beer.
Edit: this could become a run on the banks, but instead it would be a run on equities... which is equity cost of capital worse than just withdrawing your dollars.
Because:
> With respect to Melvin, I'm blown away that these trades were executed as unhedged shorts.
Because that ^ will take down a prime, and if it's your prime because you're buddies with your mentee... no sir. And to cap it off, dominos fall everywhere because of the Index Fund phenomenon if there's no longer 'liquidity' from these guys.
Side note: You're smart as hell, I can tell from the few times we've interacted on this forum, and I appreciate the thoughtful responses. We need to figure out a way to trade info and get a beer.
Edit: this could become a run on the banks, but instead it would be a run on equities... which is equity cost of capital worse than just withdrawing your dollars.
[deleted]
During today's short ladder immediately after Robinhood removed the ability to buy shares...
• There was 443k shares sold in a single batch at $120 at 11:24:36 AM EST. • There was 347k shares sold in a single batch at $140 at 11:19:09 AM EST.
Someone took a total loss of $300M from the price an hour prior OR that is a $100M short sale.
• There was 443k shares sold in a single batch at $120 at 11:24:36 AM EST. • There was 347k shares sold in a single batch at $140 at 11:19:09 AM EST.
Someone took a total loss of $300M from the price an hour prior OR that is a $100M short sale.
Most likely it's a large long position who is capitulating or being margin called (stopped out) by their broker. I don't think a short seller with that kind of capital would ever chase a steep drop like that.
You are probably right!
Justin Kan (YC) just posted this: https://twitter.com/justinkan/status/1354861575916515330?s=2...
Justin Kan (YC) just posted this: https://twitter.com/justinkan/status/1354861575916515330?s=2...
RH are scummy but reloading just beforehand seems way too risky by citadel and more like a made-up for attention story.
RH goes down. Minutes later there is a ladder driving the price down $100s. Minutes later someone longs $100M position. Take it how you see it. And agree about the risk.
It could've been one of the many trading desks inside Citadel who saw the news early, through publicly available sources (e.g. the RH website), and put on a short position within a few seconds. So the story about Citadel shorting the top could be be simultaneously true and legal/normal. Definitely needs an investigation though.
Hm, actually Citadel has access to all RH trades before they go in effect as part of their partnership so I guess their traders would know when buys stop coming at the earliest possible time without any breaking of the firewall.
Still, if that's what happened the tweet is still inaccurate and likely made-up for attention
Still, if that's what happened the tweet is still inaccurate and likely made-up for attention
(This comment was originally a reply to "Robinhood makes most of its money selling customer orders (2020)" https://news.ycombinator.com/item?id=25946626, but we've merged it into the main thread.)
What a complete spit in the face of their users. If you work at robinhood, take a look at your company values and know that they are willing to wipe out any of those during investor pressure.
Robinhood sells their order flow to Citadel.
Citadel is financing Melvin Capital's GME short. The financing terms are private but whether they just lent them funds to cover the margin calls or actually hold their short positions until the storm passes for a fee, it is absolutely in their interest to prevent GME from continuing to skyrocket. Drawing a collusion between Citadel and RH isn't that far-fetched but I obviously have no insider knowledge of this.
Most brokerages sell their order flow and Citadel trades 25% of the equities market in the US, from memory. Schwab, which also sells order flow to Citadel, requires 200% margin to go long GME which makes no sense since at most, you can lose 100% of your bet.
This is not what free markets are supposed to be like.
Citadel is financing Melvin Capital's GME short. The financing terms are private but whether they just lent them funds to cover the margin calls or actually hold their short positions until the storm passes for a fee, it is absolutely in their interest to prevent GME from continuing to skyrocket. Drawing a collusion between Citadel and RH isn't that far-fetched but I obviously have no insider knowledge of this.
Most brokerages sell their order flow and Citadel trades 25% of the equities market in the US, from memory. Schwab, which also sells order flow to Citadel, requires 200% margin to go long GME which makes no sense since at most, you can lose 100% of your bet.
This is not what free markets are supposed to be like.
Because it’s not a free market. It’s a controlled market where market makers have all the power and they plainly flex it. I’m pretty disgusted with this as a whole. As others have pointed out in this thread, these funds have no problem margin calling the little guy but when they get in danger of losing their ass they can just bail out and hit the “off” button on the whole stock? Complete bullshit honestly.
I could see how a regulator can peg Wall Street Bets as some vague case of market manipulation, but this is a whole new level. They're closing the public out of the public markets. There's really no formal argument to support this. What, the stock price is overvalued because of concentrated investments propping it up? That's pretty much most of the market.
One of the things people don't realize is that all these short squeezed companies get put into a very hard position. CEOs at these companies don't want a situation like this, as it damages the company's reputation, CEO of Tilray has talked about it when Tilray got squeezed for two months.
He said something interesting “My advice to those CEOs would be that, at times like this, your company is not your stock and your stock is not your company”.
Another things we need to realize is that there are people who will be losing their life savings or getting into debt. It doesn't matter if someone with high networth loses 1% of their wealth, but it does matter if someone in middle class loses 100% of their savings or worse bought these stocks with debt and now need to pay high interest on the losses. There have been painful situations where losses like these have caused people to have heart attacks, mental health issues and suicide.
Brokers, apps, platforms don't want their names associated with such painful situations.
He said something interesting “My advice to those CEOs would be that, at times like this, your company is not your stock and your stock is not your company”.
Another things we need to realize is that there are people who will be losing their life savings or getting into debt. It doesn't matter if someone with high networth loses 1% of their wealth, but it does matter if someone in middle class loses 100% of their savings or worse bought these stocks with debt and now need to pay high interest on the losses. There have been painful situations where losses like these have caused people to have heart attacks, mental health issues and suicide.
Brokers, apps, platforms don't want their names associated with such painful situations.
If brokers like RH don't want their name associated with regular-joe-lost-everything-trading suicides, then they surely will not allow regular Joes to buy GME stock right before they manipulate the stock price to crash... No wait, that's exactly what they did.
I called out Robinhood months ago in this old thread:
https://news.ycombinator.com/item?id=24188407
basically its a shitty company that sells your orders so hedgefunds (citadel etc.) can then buy the same stocks at a lower price[1] and you always end up paying more, they were fined 65M for doing this see here[1]. A total scam and hopefully congress and the SEC come down hard on this company.
[1] - https://modernconsensus.com/technology/robinhood-high-freque... [2] - https://www.cbsnews.com/news/robinhood-sec-fine-65-million/
basically its a shitty company that sells your orders so hedgefunds (citadel etc.) can then buy the same stocks at a lower price[1] and you always end up paying more, they were fined 65M for doing this see here[1]. A total scam and hopefully congress and the SEC come down hard on this company.
[1] - https://modernconsensus.com/technology/robinhood-high-freque... [2] - https://www.cbsnews.com/news/robinhood-sec-fine-65-million/
All retail brokerages sell order flow to the wholesale brokerages, it is part of the market structure.
Rule 606 disclosures enumerate each brokerage's arrangement: eg. https://cdn.robinhood.com/assets/robinhood/legal/RHS%20SEC%2... from https://robinhood.com/us/en/about/legal/
Fidelity: https://clearingcustody.fidelity.com/app/literature/item/990... from https://clearingcustody.fidelity.com/app/item/RD_13569_21696...
Rule 606 disclosures enumerate each brokerage's arrangement: eg. https://cdn.robinhood.com/assets/robinhood/legal/RHS%20SEC%2... from https://robinhood.com/us/en/about/legal/
Fidelity: https://clearingcustody.fidelity.com/app/literature/item/990... from https://clearingcustody.fidelity.com/app/item/RD_13569_21696...
Robinhood -> best picked name ever.
Steal from the poor, give to the rich :)
And all the while the poor where believing it was the other way around.
Steal from the poor, give to the rich :)
And all the while the poor where believing it was the other way around.
This is messed up. The only the stock exchange (NASDAQ/NYSE) should be able to halt a stock. We need a "stock neutrality" for trading platforms.
Robinhood claim that they are protecting investors assumes that they don't understand the risks of stock investing. Did the shorts understand the risks of shorting a stock over 100%?
Robinhood claim that they are protecting investors assumes that they don't understand the risks of stock investing. Did the shorts understand the risks of shorting a stock over 100%?
Same with TD Ameritrade. Fidelity seems to still allow trading for now.
I guess the simultaneous outage wasn’t coincidental. Fidelity did not suffer and outage. I could be wrong but Vanguard was fine too
EDIT
Robinhood's customer(s) are hedge funds like Citadel. I believe it was Citadel who offered Melvin Capital a lifeline. I wonder what the rationale is for TD Ameritrade, and the others?
I guess the simultaneous outage wasn’t coincidental. Fidelity did not suffer and outage. I could be wrong but Vanguard was fine too
EDIT
Robinhood's customer(s) are hedge funds like Citadel. I believe it was Citadel who offered Melvin Capital a lifeline. I wonder what the rationale is for TD Ameritrade, and the others?
I know some language nerds who like to debate about whether certain aspects of language should be descriptive (dictionaries document how real people use language) or prescriptive (very smart people know the correct way to spell/use words, and that should be imparted to the less knowledgeable).
In that light, I'd always seen the stock market as purely descriptive - the price of a stock can be completely detached from the valuation or profits of a company, it's purely the price that someone in the market is willing to pay.
This feels like an attempt to make the stock market prescriptive - "we know that these retail traders are wrong for trading at such lofty prices, we need to fix this".
Spoiler alert: Descriptivism always wins.
In that light, I'd always seen the stock market as purely descriptive - the price of a stock can be completely detached from the valuation or profits of a company, it's purely the price that someone in the market is willing to pay.
This feels like an attempt to make the stock market prescriptive - "we know that these retail traders are wrong for trading at such lofty prices, we need to fix this".
Spoiler alert: Descriptivism always wins.
The elites of this world should meditate on it, because on the same logic: populism always wins.
Step 0: Citadel pays Robinhood for order flow. Citadel gets to see RH's orders a few milliseconds before they're filled. Citadel may choose to front-run some of those trades.
Step 1: RH's customers and WallStreetBets start manipulating $GME. This is happening in the open.
-- https://twitter.com/toxic/status/1353890766800621569
Step 1: RH's customers and WallStreetBets start manipulating $GME. This is happening in the open.
-- https://twitter.com/toxic/status/1353890766800621569
Dueling Twitter posts:
https://twitter.com/matt_levine/status/1354129838806872073?s...
I’m gonna go with Matt Levine over a Twitter rando, especially since the step 0 notes something that is explicitly illegal (front running)
https://twitter.com/matt_levine/status/1354129838806872073?s...
I’m gonna go with Matt Levine over a Twitter rando, especially since the step 0 notes something that is explicitly illegal (front running)
Front running is illegal indeed. But it would be possible to use Robinhood's order flow data to detect momentum and decide to hold a position from that. Small difference but the effect is the same
I don't want to sound too dramatic, but that is the beginning of the end for robinhood. Why would you use it after this ?
Schwab, Fidelity, and others now offer free trades on equities and ETF’s, so if that’s all you’re doing, there’s no reason to stay. That said, RH still has the best fee for options trading ($0.00 vs $.65 for Schwab/Fidelity).
why would you ever use it? to experience random outages and poor execution?
Hacker news often gets very skeptical about blockchain-related projects. But I think Uniswap and similar "automatic market makers" are showing us a glimpse of how things will work. It's an unstoppable exchange with no middlemen. Anybody can access, anybody can trade, anybody can pool their money to facilitate these trades and nobody can say "no, you cannot".
This is unbelievable. If there ever was a time to be outraged. This is naked corruption as usual hiding under the shabbiest veil of virtue. RobinHood traders can bankrupt and kill themselves, and that is fine, we will continue prodding them to trade more often, but once we get a call from one our hedge fund buddies, moaning about the rubes stopping him from raping another company, we will shut the rabble down.
What matters is the lower 50% (aka the poor) get to see, for a brief moment, how the machine really works. WallSt will get their way this time, but I doubt those people will just live as usual with the gained knowledge.
We all collectively saw Wall St. dip into our pockets in 2008 yet here we are, aren't we?
I believe the government and taxpayers made money on the bailout, see sources like: https://projects.propublica.org/bailout/
The financial institutions got themselves in a bad spot, and instead of failing they were helped out, but they paid it back with interest.
Hey, crowd, you are not allowed to buy up the stock like that! Someone is gonna get hurt on the way down!
“Here let us help you” — closes down exchanges, panic sell — “isn’t that all better?”
People with their money stuck and unable to cash out... so much better eh?
I smell a huge class action lawsuit
“Here let us help you” — closes down exchanges, panic sell — “isn’t that all better?”
People with their money stuck and unable to cash out... so much better eh?
I smell a huge class action lawsuit
Well, to be fair - they are at least allowing sales, just not purchases.
How convenient that people are now "allowed" to close their positions, now that the number of counterparties to that trade is dramatically reduced...
That's worse. Institutional investors want people to sell. It's in their advantage. It quite clearly a one way benefit for banning purchase but not selling.
Who do you sell to if purchases aren't allowed?
other brokers still allow buying of gamestop stock. This is purely robinhoods decision to block trading using their app. There is no official market wide block.
The problem is that much of the buy demand seems to be on the retail side. But the retailers have shut that down, so you're left selling to a portion of the market that has the lease demand for what you're selling.
Most other major retail brokers are also locking out GME, AMC, and co.
For example Interactive Brokers and Revolut have followed suit. I believe Ameritrade is also restricting trading.
For example Interactive Brokers and Revolut have followed suit. I believe Ameritrade is also restricting trading.
Which doesn't matter - averaging down is a valid strategy.
To be fair - this would be called illegal market manipulation (pushing stocks in a downward direction)
notacoward(4)
netsharc(2)
It could also be RobinHood trying to avoid their traders bankrupting and killing themselves by restricting them from buying gamestop etc. shares at 10x what they are worth.
They are artificially reducing the buying volume. Anyone that bought GameStop recently on their platform is now stuck holding the bag or selling for less than it currently would be worth if they were not artificially reducing the buying demand. How do you think people that bought in over $300 feel now that Robinhood has done this? They made a decision knowing about the volatility and that it is likely to go up further due to short squeeze. Now RobinHood has changed the game in after-hours with no warning.
How could that possibly work, ever? If RH can stop me from making a trade they deem bad, why don't they just trade on my behalf? This is nonsense. Any pretense of caring for their users could be faked by simply putting a banner up on the forbidden securities. They do not care one iota beyond being able to generate fodder for the hedge funds who pay their bills.
A stock market trading app, for consumers, trying to protect consumers by... not letting them buy stocks? If Robin Hood cared about consumers, they probably wouldn't have given them credit that they could then go buy options with.
[deleted]
That's indeed what they are claiming but it's pretty clearly just the easiest excuse they can give no matter the reason. Similar to how it's the easiest reason for discord to say they are banning wsb because of bad language.
https://blog.robinhood.com/news/2021/1/28/keeping-customers-...
https://blog.robinhood.com/news/2021/1/28/keeping-customers-...
Robinhood explicitly disavows itself of that responsibility. Quoting from their literature:
> If you are interested in opening an account where you do not receive recommendations or advice about whether to buy or sell investments or investment strategies or account monitoring, and you make all of your own investment decisions, then a self-directed brokerage like ours could be the right fit for you. Robinhood Financial does not have account minimums for any brokerage accounts. Robinhood Financial does not provide recommendations. We are not subject to a fiduciary duty to you and do not monitor or manage your account, including the monitoring of brokerage account investments, unless we state otherwise in writing. Since we do not provide recommendations and you must make all of your own investment decisions, the licenses, education and other qualifications of our financial professionals will not be relevant to your investment decisions. Robinhood Financial professionals are available only to provide account support through an online email system. If you choose our services, you must be comfortable with investing your assets on your own.
> If you are interested in opening an account where you do not receive recommendations or advice about whether to buy or sell investments or investment strategies or account monitoring, and you make all of your own investment decisions, then a self-directed brokerage like ours could be the right fit for you. Robinhood Financial does not have account minimums for any brokerage accounts. Robinhood Financial does not provide recommendations. We are not subject to a fiduciary duty to you and do not monitor or manage your account, including the monitoring of brokerage account investments, unless we state otherwise in writing. Since we do not provide recommendations and you must make all of your own investment decisions, the licenses, education and other qualifications of our financial professionals will not be relevant to your investment decisions. Robinhood Financial professionals are available only to provide account support through an online email system. If you choose our services, you must be comfortable with investing your assets on your own.
[deleted]
Suuuuuuuuure
Unfortunately the account deactivation story is quite poor.
Under Settings > Account Information > Deactivate Account you're just sent to a customer service email form. They say it takes 1-3 business days to process.
As a side note, you have to close out all of your positions and transfer out all of your money before you're allowed to close the account. This seems unusual to me from experiences with other brokers.
From my understanding the average retail broker will allow you to transfer you assets out to another brokerage. You can do this as part of closing your account.
While just transferring money out separately and keeping the account open longer isn't a big deal, there's tax and other financial implications to having to close your positions instead of transfer them. You'll have to realize capital gains. You'll also have multiple banking days in which the price could move up while your money is transferred to another brokerage to re-buy the shares.
Under Settings > Account Information > Deactivate Account you're just sent to a customer service email form. They say it takes 1-3 business days to process.
As a side note, you have to close out all of your positions and transfer out all of your money before you're allowed to close the account. This seems unusual to me from experiences with other brokers.
From my understanding the average retail broker will allow you to transfer you assets out to another brokerage. You can do this as part of closing your account.
While just transferring money out separately and keeping the account open longer isn't a big deal, there's tax and other financial implications to having to close your positions instead of transfer them. You'll have to realize capital gains. You'll also have multiple banking days in which the price could move up while your money is transferred to another brokerage to re-buy the shares.
Robinhood does allow you to transfer holdings directly to another brokerage (for a $75 fee).
https://robinhood.com/us/en/support/articles/transfer-stocks...
https://robinhood.com/us/en/support/articles/transfer-stocks...
Ah, good find. There's no mention of this as a closing option in the app itself. That fee is a bit ridiculous, but it might be the best option if you have a real portfolio.
I can't find a history that shows when they added this, but it appears they at least added transfers in a few years ago:
https://www.reddit.com/r/RobinHood/comments/6tre6o/transfer_...
I can't find a history that shows when they added this, but it appears they at least added transfers in a few years ago:
https://www.reddit.com/r/RobinHood/comments/6tre6o/transfer_...
In retrospect this seems quite obvious.
This Citadel-Melvin-RH triangle looks super sketchy. The sort of thing that might show up in anti-corruption training at a company that does government or especially defense contracting. In fact if I still worked at a particular employer, this would have been the breakroom and lunch topic for today.
This Citadel-Melvin-RH triangle looks super sketchy. The sort of thing that might show up in anti-corruption training at a company that does government or especially defense contracting. In fact if I still worked at a particular employer, this would have been the breakroom and lunch topic for today.
This is the perfect opportunity for another platform to step up and welcome traders. Robinhood will be on damage control.
A now-old song has the lyrics "everybody knows that the dice are loaded" and, outside of "doing it for the lulz," part of this exercise is to expose the collusion as a kind of carnival. Watch Big Tech scramble to the aid of Big Money! Witness the flimsiest of excuses being generated in the hopes that one will stick! See with your own eyes the scramble to protect the usual suspects!
And what is pretty amazing is that some folks think that if they just stamp out this one, they can go back to (big) business as usual: money made by a select few, and the small fry can hope that some crumbs might trickle down to them, if only by accident. My bet is that this is going to happen again -- perhaps not exactly the same way, but it will be another nasty demonstration of the self-protection that has managed to be the sign of the entrenched.
And what is pretty amazing is that some folks think that if they just stamp out this one, they can go back to (big) business as usual: money made by a select few, and the small fry can hope that some crumbs might trickle down to them, if only by accident. My bet is that this is going to happen again -- perhaps not exactly the same way, but it will be another nasty demonstration of the self-protection that has managed to be the sign of the entrenched.
This is identical to my experience of casino gambling.
If you have a system that is beating the house (or appears to be), the house will immediately shut you down.
You can't win. Not only because the bets are stacked against you (here in favour of the wealthy), but also because the system only exists in the first place to benefit the powerful.
If you have a system that is beating the house (or appears to be), the house will immediately shut you down.
You can't win. Not only because the bets are stacked against you (here in favour of the wealthy), but also because the system only exists in the first place to benefit the powerful.
Please remember that Robinhood is a private company, so if they want to collude with hedge fund managers to deny small investors access to the stock market, then that's just something we all have to accept. We must never, ever question the actions of a private company.
Trading stocks is not the 1st amendment where we basically say we don’t really care about the outcome of your speech (as an individual). Say what you want even if its dumb and hurts you.
With capital markets...there absolutely is a goal, and it’s not speculation/gambling. The goal is to have a place where corporations can raise capital and investors can hold them accountable for how they return value to them...and then a billion rules to make that as fair and functional (not equitable) as possible.
I don’t get the argument that what these guys are doing is somehow noble, or to be encouraged. Completely unregulated non-purposeful markets are not helpful....we did that 100 years ago...thats why we have all the rules we do to make markets function to the end.
With capital markets...there absolutely is a goal, and it’s not speculation/gambling. The goal is to have a place where corporations can raise capital and investors can hold them accountable for how they return value to them...and then a billion rules to make that as fair and functional (not equitable) as possible.
I don’t get the argument that what these guys are doing is somehow noble, or to be encouraged. Completely unregulated non-purposeful markets are not helpful....we did that 100 years ago...thats why we have all the rules we do to make markets function to the end.
>it’s not speculation/gambling
What is short selling if not speculation? It's speculating that an asset will be worth less than it is now.
What is short selling if not speculation? It's speculating that an asset will be worth less than it is now.
There is a world of difference between playing a game of chance, and playing a game where you happen to believe you have real better/different information about how the future unfolds. Speculators tend to act mostly on emotion and inertia from the game, not any real understanding of any underlying fundamentals.
Short sales can be good. Downward pressure can be healthy. If you think a company is overvalued because its fundamentals are misjudged, the short is a corrective force in an overly optimistic market
Short sales can be good. Downward pressure can be healthy. If you think a company is overvalued because its fundamentals are misjudged, the short is a corrective force in an overly optimistic market
Perhaps this is proof regulations on the market should be stricter, then. After all, if a bunch of barely coordinated randos on the internet can do this through the power of 'meme magic', imagine what people with real resources and power and influence could do.
>imagine what people with real resources and power and influence could do.
You mean what they already have been doing for decades? Are you seriously in favor of clamping down on retail investors??
You mean what they already have been doing for decades? Are you seriously in favor of clamping down on retail investors??
Who has been doing this for decades? When has "Wall st." coordinated a random attack to squeeze cash out of an entity just for the hell of it?
You may disagree with the outcomes of short pressure, or private equity actions etc., thats fine, but I think there is an important distinction between actors in the market doing something profitable because they actually believe it, and the hysteria of a mob just randomly committing financial mayham because they can.
I don't think we want to live in a world where markets are increasingly led by irrational forces simply amplified by media and misinformation...its not good in media right now, I shudder to think what happens if that behavior gets a foothold in markets.
You may disagree with the outcomes of short pressure, or private equity actions etc., thats fine, but I think there is an important distinction between actors in the market doing something profitable because they actually believe it, and the hysteria of a mob just randomly committing financial mayham because they can.
I don't think we want to live in a world where markets are increasingly led by irrational forces simply amplified by media and misinformation...its not good in media right now, I shudder to think what happens if that behavior gets a foothold in markets.
to the extent that the market needs speculators, I think it is part of the "goal" of capital markets. a market of only long-term risk-averse allocators wont have the liquidity necessary to create fair prices nor is it likely to attract as much capital when companies issue shares, as a market that has a "healthy" amount of speculation.
I have no problem with individuals or fiduciaries investing on short time horizons because they believe they understand something fundamental the next guy doesn't. But mass coordinated speculation isn't that; it's using a mob to affect the underlying system for profit -underlying equity be damned.
And for all those that say "well Wall St has been doing that for years"...fine, let's address that too. Financial regulations are essentially a history lesson of past failure we've tried to correct. Let's be consistent.
And for all those that say "well Wall St has been doing that for years"...fine, let's address that too. Financial regulations are essentially a history lesson of past failure we've tried to correct. Let's be consistent.
I don’t have a data feed available to verify but it’s at least possible there is no one on the other side of the order book for these symbols so Robinhood can’t execute any more buy orders.
Judging this as a policy decision from a 1 sentence tweet and some screen shots seems premature.
Judging this as a policy decision from a 1 sentence tweet and some screen shots seems premature.
If that were the case then why didn't RH put out a statement saying exactly that? They haven't even put out a tweet.
Why didn’t they tweet a policy decision?
One explanation is that this is a systematic behavior, part of their software is seeing market conditions it can’t execute into and hitting this case. If it’s not sustained or is happening only during particular microbook states the best thing to do is let the software behave as designed and let it stabilize.
One explanation is that this is a systematic behavior, part of their software is seeing market conditions it can’t execute into and hitting this case. If it’s not sustained or is happening only during particular microbook states the best thing to do is let the software behave as designed and let it stabilize.
If it were a case of their software functioning as intended, it would be malpractice to not come out and say that. Right now it looks like they're deliberately manipulating the market to the detriment of their customers. That makes for a humongous blow to trust in their platform and can lose them many, many customers.
Why do you have to get all rational when we can stoke conspiracy theories?
The conspiracy is real, here's your source: https://blog.robinhood.com/news/2021/1/28/keeping-customers-...
This whole situation was supposed to be bad because “retail traders would be left holding the bag”. Now Robinhood has intervened, essentially crashing the stock by taking away retail buy pressure, so retail is inevitably left holding the bag.
Meanwhile, Kelly Loeffler and other senators insider traded before the pandemic market crash. Nancy Pelosi holds deep ITM Apple and TSLA calls.
Meanwhile, Kelly Loeffler and other senators insider traded before the pandemic market crash. Nancy Pelosi holds deep ITM Apple and TSLA calls.
Naked short selling through unlimited "Puts" is totally LEGAL for these hedge-funds, but when people caught them pants down they are using every ILLEGAL move to cover their asses and losses.
These are the corrupt and insane people who should be punished not the people who sussed out their bullshit!
What Robinhood and other platforms are doing is market manipulation which is illegal.
The legal and reasonable thing would be to allow trading these stocks with additional "e-signs" letting the individual know that there are additional risks here.
That would actually help the retail investor.
But these brokers and buddies are happy to help their hedge fund buddies!!
These are the corrupt and insane people who should be punished not the people who sussed out their bullshit!
What Robinhood and other platforms are doing is market manipulation which is illegal.
The legal and reasonable thing would be to allow trading these stocks with additional "e-signs" letting the individual know that there are additional risks here.
That would actually help the retail investor.
But these brokers and buddies are happy to help their hedge fund buddies!!
I am the only one who finds this understandable?
Sure short selling sounds weird and dodgy. But how is this different from shilling penny stocks in year 2000?
People on Internet forums find stocks that are easy to move for whatever reason; generate hype and price hike and then watch gullable speculators pile in while the core group of manipulators exit their positions.
Sure short selling sounds weird and dodgy. But how is this different from shilling penny stocks in year 2000?
People on Internet forums find stocks that are easy to move for whatever reason; generate hype and price hike and then watch gullable speculators pile in while the core group of manipulators exit their positions.
It's a short squeeze, not a pump and dump, as you describe.
In a short squeeze, the hedge funds that hold the shorts will be the ones who lose money. Although, to be fair, some gullable speculators probably will too, but the point is to make money off the hedge funds' poor trade.
The SEC can step in for pump and dump schemes, no reason for Robinhood to have taken the initiative (AFAIK).
In a short squeeze, the hedge funds that hold the shorts will be the ones who lose money. Although, to be fair, some gullable speculators probably will too, but the point is to make money off the hedge funds' poor trade.
The SEC can step in for pump and dump schemes, no reason for Robinhood to have taken the initiative (AFAIK).
Yeah I don't understand why so many people are defending a ponzi scheme. Its in at least 90% of Robinhood users interest to not be able to buy GME right now.
This significantly constrains demand while at the same time it pressures people to put their supply in the market (sell it off). So they're lowering demand and increasing supply, which is sure to drive the price down and make people lose money.
Likely to the benefit of institutional investors-- the same ones that lost money on the squeeze-- to make money on shorts they places at the top.
Doesn't smell right. It might even just (relatively innocently) be from soft pressure from the SEC to limit a perceived market manipulation, but it will still induce losses in positions that users might have sold at higher prices.
Likely to the benefit of institutional investors-- the same ones that lost money on the squeeze-- to make money on shorts they places at the top.
Doesn't smell right. It might even just (relatively innocently) be from soft pressure from the SEC to limit a perceived market manipulation, but it will still induce losses in positions that users might have sold at higher prices.
For anyone like me who needs an ELI5, the best comment I found that explains what this story is all about is this:
https://news.ycombinator.com/item?id=25949669
Hacker News needs a way to mark the best comments when there are 1600 comments to read. Years ago, HN used to publicly show karma score of every comment. They eliminated that (and probably for good reasons), but it was useful to find the best comments. Some other way to find the most incisive comments woud be great.
https://news.ycombinator.com/item?id=25949669
Hacker News needs a way to mark the best comments when there are 1600 comments to read. Years ago, HN used to publicly show karma score of every comment. They eliminated that (and probably for good reasons), but it was useful to find the best comments. Some other way to find the most incisive comments woud be great.
Pretty staggering hubris from the company whose shoddy software used to offer "infinite leverage"[0] to make themselves the self-appointed guardians of responsible investing.
Maybe one of these newly-minted millionaires can cash out and use their gains to sue.
[0] https://www.bloomberg.com/news/articles/2019-11-05/robinhood...
Maybe one of these newly-minted millionaires can cash out and use their gains to sue.
[0] https://www.bloomberg.com/news/articles/2019-11-05/robinhood...
This is typical market manipulation from WallStreet. They colluded to guarantee the outcome of their price manipulation and make millions on the back of thousands of small investors.
I understand that the hedge funds stand to lose a lot of money, and potentially go bankrupt, but isn't that just one of the risks when you play the stock market? There is no guarantee that all your bets will end up making you money. If you want a sure thing, put your money in bonds or some other investment that has low risk. The hedge funds are acting like they deserve to make money off their shorts and them not making that money is theft in some way.
Big if true (have to take everything with a grain of salt nowadays).
Can anyone with more knowledge than me comment on what Robinhood's exposure is in all this? My understanding is they do not have any direct financial exposure, only reputational risk (and of course downsides from their users potentially losing a lot of money, but that should be part of the game). Is that correct?
And does blocking specific trades today open them up to future liability?
Can anyone with more knowledge than me comment on what Robinhood's exposure is in all this? My understanding is they do not have any direct financial exposure, only reputational risk (and of course downsides from their users potentially losing a lot of money, but that should be part of the game). Is that correct?
And does blocking specific trades today open them up to future liability?
Maybe they have indirect exposure derived from loans granted to users that are holding those stocks? Just trying to guess.
Edit - related comment (about "margin requirements"): https://news.ycombinator.com/item?id=25942150
Edit - related comment (about "margin requirements"): https://news.ycombinator.com/item?id=25942150
So organized capital was all about free markets and small government, until organized people took it on.
Chamath Palihapitiya of Social Capital is becoming one of my heroes, LOL. Last year he criticized the trillion dollar bailouts of Wall Street, now he comes on to defend the right of retail investors to share information publicly and coordinate a short squeeze against overleveraged short positions by shadowy hedge funds.
When organized people take on organized capital, we get this kind of situation where the organized capital tries to call for government to add additional rules to protect their existing ways of making money. What happened to wanting a free market and less regulation? What happened to welcoming innovation?
Technology empowers people and unites communities. Sometimes those communities can start to organize in new ways. That’s why we started Qbix.com and Intercoin.org - to build the tools for them to do so, without relying on the Big Tech oligopoly.
The future is decentralized. You can’t keep shutting down people’s speech on platforms. And here we are shutting down people’s transactions. Even if you don’t like what they are doing or saying.
Chamath Palihapitiya of Social Capital is becoming one of my heroes, LOL. Last year he criticized the trillion dollar bailouts of Wall Street, now he comes on to defend the right of retail investors to share information publicly and coordinate a short squeeze against overleveraged short positions by shadowy hedge funds.
When organized people take on organized capital, we get this kind of situation where the organized capital tries to call for government to add additional rules to protect their existing ways of making money. What happened to wanting a free market and less regulation? What happened to welcoming innovation?
Technology empowers people and unites communities. Sometimes those communities can start to organize in new ways. That’s why we started Qbix.com and Intercoin.org - to build the tools for them to do so, without relying on the Big Tech oligopoly.
The future is decentralized. You can’t keep shutting down people’s speech on platforms. And here we are shutting down people’s transactions. Even if you don’t like what they are doing or saying.
It’s real. They just announced it on their blog: https://blog.robinhood.com/news/2021/1/28/keeping-customers-...
> Our mission at Robinhood is to democratize finance for all. We’re proud to have created a platform that has helped everyday people, from all backgrounds, shape their financial futures and invest for the long term.
> We continuously monitor the markets and make changes where necessary. In light of recent volatility, we are restricting transactions for certain securities to position closing only, including $AMC, $BB, $BBBY, $EXPR, $GME, $KOSS, $NAKD and $NOK. We also raised margin requirements for certain securities.
> Amid significant market volatility, it’s important as ever that we help customers stay informed.
> We fundamentally believe that everyone should have access to financial markets. We’re humbled to have helped many people invest in the markets for the first time.
> Our mission at Robinhood is to democratize finance for all. We’re proud to have created a platform that has helped everyday people, from all backgrounds, shape their financial futures and invest for the long term.
> We continuously monitor the markets and make changes where necessary. In light of recent volatility, we are restricting transactions for certain securities to position closing only, including $AMC, $BB, $BBBY, $EXPR, $GME, $KOSS, $NAKD and $NOK. We also raised margin requirements for certain securities.
> Amid significant market volatility, it’s important as ever that we help customers stay informed.
> We fundamentally believe that everyone should have access to financial markets. We’re humbled to have helped many people invest in the markets for the first time.
I wonder if this is just for after hours trading. You would think the user could at least place an order for execution when the market opens.
GME was up over $100 pre-market when I got up this morning, so someone somewhere is buying.
GME was up over $100 pre-market when I got up this morning, so someone somewhere is buying.
In the night, GME went from 350 to 250 USD as well; this was when Discord had been banned and the Reddit suspended (both for moderation / hate speech issue).
The variations are extreme, in the morning it was hitting 500 USD in the morning, and now 400 USD.
The variations are extreme, in the morning it was hitting 500 USD in the morning, and now 400 USD.
Now 309 USD, only 20 minutes, this comment didn't age well.
I'm personally really pissed off because I made a Robinhood account last night to buy $10 each f AMC and GME, the first stock trading I've ever done. I just want to make some extra money so I can start a family, you know?
I feel like the history of my personal financial life has been the increasing awareness that nobody with any power cares one whit about me or anyone like me.
I feel like the history of my personal financial life has been the increasing awareness that nobody with any power cares one whit about me or anyone like me.
I think one of the original messages of HN was "start a business" partly because investing in those new businesses was what Pg wanted to do for a living. why don't you embrace that message? it seems healthier than complaining about the stock market being rigged
I find the actions of billionaires petty. This is a world of absurd valuations, stocks skyrocketing despite experiencing the equivalent of a world war. And they can't let go of a few billion to some random redditors?
The billionaire class is made to look bad with this, and billionaires must stop this reaction in order to restore the faith and trust in the Ancien regime of the markets.
The billionaire class is made to look bad with this, and billionaires must stop this reaction in order to restore the faith and trust in the Ancien regime of the markets.
It's not just Robinhood, IB and WeBull have also suspended GME. Schwab lets me get all the way to confirming an order, but I'm not spending $370 on a share of GME to confirm if it will go through haha. IB/WeBull/Schwab seem to still allow AMC/NOK/BB.
Those are the brokerages I use, can't check in the others.
Those are the brokerages I use, can't check in the others.
It's the same with Trading212 in the UK
Imagine buying some of these stocks. Next day people can only sell. What could go wrong..who will make money put of this? I think it's time to do something! People will get fed up of this fake freedom and "equal opportunity" bs
All of this is making me wonder if I'm making the right choices for the retail brokerage that I use personally. While I'm not trading these stocks, what if this happens with a stock I do have money in?
Initially I had thought, "hey, there's this Interactive Brokers place that seems a bit further removed from places like Robinhood or Fidelity/Schwab/TD/ETrade." But apparently they're now blocking trades too.
What is the right way to ensure you're able to trade? I know there's the StockBrokers.com review site, but it doesn't seem they're going to have this kind of information.
Initially I had thought, "hey, there's this Interactive Brokers place that seems a bit further removed from places like Robinhood or Fidelity/Schwab/TD/ETrade." But apparently they're now blocking trades too.
What is the right way to ensure you're able to trade? I know there's the StockBrokers.com review site, but it doesn't seem they're going to have this kind of information.
Incredible shenanigans. Government needs to lower the boom.
Very much an example of how only "certain people" are allowed to win in our society and the system will intervene to ensure that established wealth retains its preferred status.
Very much an example of how only "certain people" are allowed to win in our society and the system will intervene to ensure that established wealth retains its preferred status.
Not you too, Interactive Brokers :'(
https://twitter.com/IBKR/status/1354792600004386818
https://twitter.com/IBKR/status/1354792600004386818
The fact is that a few things that are already prohibited are happening here. You have 1) pump-and-dump manipulation on the day trader side and 2) Robinhood grew an entire business based on selling blocks of order-volume so that people can front-run and piggy-back off of trades (which is also prohibited).
If the SEC wasn't neutered by the last administration and was doing their job, people would be hauled in for market manipulation on both sides.
Real marketplaces need to be free from gross manipulation or else people lose faith in them for legitimate commerce.
If the SEC wasn't neutered by the last administration and was doing their job, people would be hauled in for market manipulation on both sides.
Real marketplaces need to be free from gross manipulation or else people lose faith in them for legitimate commerce.
Alienating your userbase before an IPO. Damn, how much leverage do this 'hidden' hand have.
Yeah but the thing is that the free market does not exists and companies can screw customers up and customers hating a company does not affect it that much.
The lists of companies that are absolutely shitty to their customers and are making billions is never ending. They don't need our approval.
The lists of companies that are absolutely shitty to their customers and are making billions is never ending. They don't need our approval.
RH are victims of their successful business model!
Justin Kan (Twitch founder) is calling for Ken Griffin and Robinhood's co-founders to jailed.
> Just got a tip that Citadel reloaded their shorts before they told Robinhood to stop trading $GME.
> If this is true, Ken Griffin and the Robinhood founders should be in jail.
> This is class warfare.
See https://twitter.com/justinkan/status/1354856228661334017.
> If this is true, Ken Griffin and the Robinhood founders should be in jail.
> This is class warfare.
See https://twitter.com/justinkan/status/1354856228661334017.
https://seekingalpha.com/news/3655841-why-brokers-shut-down-... is likely an honest explanation and isn't nefarious. The system may have issues, but Robinhood just wants to stay in business.
Namely, should a brokerage—especially one like Robinhood that brands itself with an anti-Wall Street Everyman gloss—be selling its customers’ trades?
What's the proposed alternative, because it seems like that would take us to a full circle. In previous years, the brokerage dealing directly to the clients was fraught with problems: conflict of interest between the brokerage and their clients because the brokerage holds offsetting client positions, and the market risk held by the brokerage.
Auditing "best execution" is pretty straight-forward for a brokerage and regulators (really anyone with the data). If Brokerages are "cheating" and dealing against their clients best interests, then that's exactly the role of regulators.
(This comment was originally a reply to "Robinhood makes most of its money selling customer orders (2020)" https://news.ycombinator.com/item?id=25946626, but we've merged it into the main thread.)
This is manipulating the market, imagine if you set up a brokerage where you can only sell a certain stock but not buy.
The whole value prop of Robinhood (from an institutional POV like Citadel) is that providing liquidity to retail traders is valuable because it's lower risk - my guess is that the GME imbroglio blew that assumption out of the water and they got caught with their pants down.
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This is not robinhood only, this is on a lot of brokers world wide. Gamestop and AMC are close-only.
Anyone have any recommendations on brokers? I would like to move off Robinhood as soon as possible.
Fidelity has been rock solid for me. Great customer service. Relatively terrible UI, but you get used to it.
Edit: Also, their rewards card dumps 2% of your usage into your brokerage. It's a nice combo.
Edit: Also, their rewards card dumps 2% of your usage into your brokerage. It's a nice combo.
Robinhood's rating has dropped to 1 star in the Google play store.
https://play.google.com/store/apps/details?id=com.robinhood....
https://play.google.com/store/apps/details?id=com.robinhood....
How is this not market manipulation?
I agree. This seems like illegal market manipulation on the part of Robinhood.
So am I crazy, or is WSB a fairly transparent ploy for larger investors to get more stupid money into the market? Like the people making out here are the ones that sold the short positions before everyone hopped on the bandwagon. Am I missing something here?
I can confirm interactive brokers is doing the same thing. Looks like collusion from the top.
Robinhood has announced this restriction on their blog here: https://blog.robinhood.com/news/2021/1/28/keeping-customers-... .
> We continuously monitor the markets and make changes where necessary. In light of recent volatility, we are restricting transactions for certain securities to position closing only, including $AAL, $AMC, $BB, $BBY, $CTRM, $EXPR, $GME, $KOSS, $NAKD, $NOK, $SNDL, $TR, and $TRVG. We also raised margin requirements for certain securities.
> We continuously monitor the markets and make changes where necessary. In light of recent volatility, we are restricting transactions for certain securities to position closing only, including $AAL, $AMC, $BB, $BBY, $CTRM, $EXPR, $GME, $KOSS, $NAKD, $NOK, $SNDL, $TR, and $TRVG. We also raised margin requirements for certain securities.
WSB reminds me of the heyday of LulzSec. As questionable as LulzSec / anon’s hacking was, it was also exciting to watch in real-time (10 years ago!)
Of course they were caught and of course they turned out to be regular nobodies. Everything is normal and banal in the end.
If WSB doesn’t turn out to be a regular ole pump and dump then I’d be very surprised. The only thing that’s weird about it is that not even the current cohort of pumpers realise that’s what they are doing.
Could it be that the original pumpers have closed out already leaving behind a crowd of meme spewing parrots that collective display malicious sentience while individually being regular joes?
Of course they were caught and of course they turned out to be regular nobodies. Everything is normal and banal in the end.
If WSB doesn’t turn out to be a regular ole pump and dump then I’d be very surprised. The only thing that’s weird about it is that not even the current cohort of pumpers realise that’s what they are doing.
Could it be that the original pumpers have closed out already leaving behind a crowd of meme spewing parrots that collective display malicious sentience while individually being regular joes?
It's not a pump and dump. It's a short squeeze. It's nothing new. It's the plot of the 80s movie "Trading Places."
A hedge fund bought short position futures contracts for 120% of the available stock on the market. That's the underlying reason the price is going up: because they're forced to somehow buy more than 100% of the available Game Stop stock because they agreed to sell it to the people on the other end of those contracts for a set strike price.
A hedge fund bought short position futures contracts for 120% of the available stock on the market. That's the underlying reason the price is going up: because they're forced to somehow buy more than 100% of the available Game Stop stock because they agreed to sell it to the people on the other end of those contracts for a set strike price.
no the pump and dump part means that WSB arguably exists as a kind of ion cannon like Anon used to be, where if you can convince a sizable number of community members to commit to a proposed course of action, you can create a reflexive effect that you can harness to your advantage. creating a stock price event, on purpose, using a community like WSB, and profiting, by exiting the trade is a "pump" and "dump."
it is ancillary that a short squeeze might be an attendant and inciting event. you could do this with any stock as long as the supply is limited compared to the demand created by the manipulation of trader sentiment. the short squeeze just amplifies the effect
it is ancillary that a short squeeze might be an attendant and inciting event. you could do this with any stock as long as the supply is limited compared to the demand created by the manipulation of trader sentiment. the short squeeze just amplifies the effect
It's disingenuous and factually incorrect to compare WSB with a DDOS takedown crew running a tool against scientology.org.
WSB is legally sharing trading information and making informed investing decisions based on public information. What happened with Game Stop is completely predicated on large investors, who should have known better, buying positions that exposed them to an infinite amount of risk.
The short squeeze is the reason this is happening and not "ancillary." The hedge fund took these positions because they thought they were a form a free money. A better analogy would be "The Producers." The audience just walked out of "Spring Time for Hitler" for intermission and they're humming the songs and laughing.
WSB is legally sharing trading information and making informed investing decisions based on public information. What happened with Game Stop is completely predicated on large investors, who should have known better, buying positions that exposed them to an infinite amount of risk.
The short squeeze is the reason this is happening and not "ancillary." The hedge fund took these positions because they thought they were a form a free money. A better analogy would be "The Producers." The audience just walked out of "Spring Time for Hitler" for intermission and they're humming the songs and laughing.
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Now that’s a name I haven’t heard in a long time.
This is exactly what they should have done immediately when these stocks started to make no sense.
150% moves would be maybe a rough estimate.
Markets need to be protected from manipulation.
Not allowing purchases from robinhood does not punish retail traders more than institutions.
There was NO legitimate reason for the price on these stocks. By limiting purchases they are preventing their clients from getting into a trade that will almost certainly result in losses.
"the short sellers" could very well be other retail investors. I personally shorted GME & AMC when they hit ridiculous prices (I lost money on these trades when they became 2x ridiculous)
150% moves would be maybe a rough estimate.
Markets need to be protected from manipulation.
Not allowing purchases from robinhood does not punish retail traders more than institutions.
There was NO legitimate reason for the price on these stocks. By limiting purchases they are preventing their clients from getting into a trade that will almost certainly result in losses.
"the short sellers" could very well be other retail investors. I personally shorted GME & AMC when they hit ridiculous prices (I lost money on these trades when they became 2x ridiculous)
Surprised no one is commenting how they stopped AAL (American Airlines) as well, it's not even close to being back at precovid levels, which would not be an unreasonable level for the stock I believe.
I predict that we will see a law or regulation which will require that a person hold a license from the government in order to trade stocks, or certain securities. In every state there are laws that you must hold a license to perform certain tasks, so it's not inconceivable that the government will say: "This is too dangerous to let just anyone do, look what unlicensed, and untrained people did with GameStop. The government must require that only a professional licensed financial trader buy or sell stocks and securities."
RH is blatantly rigging the system in favor of the hedge funds. Not good.
On the one hand this is outrageous. On the other, if you don't pay for the product (Robinhood) then you are the product. How many times do we have to be reminded of this.
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To be clear I bought puts on GME yesterday, so this will work well for me, but it is totally unfair by Robinhood. I will be cancelling my Robinhood account after this show of force.
use a better broker! dont be a mark
What they should do if it is indeed to protect the user is have you sign a document. Just like Fidelity does if you want to buy UVXY or the oil short securities
FWIW Fidelity lets you buy GME....
FWIW Fidelity lets you buy GME....
This will just incense the WSB crowd more, surely? The cat is out of the bag, people can organize a group purchase of stock if they feel like it. On one platform or another.
This is messed up but WSB has pissed off RH so much before ("infinite money cheatcode")[0] so it probably took less convincing for them to do this than one might think.
0. https://markets.businessinsider.com/news/stocks/robinhood-fi...
0. https://markets.businessinsider.com/news/stocks/robinhood-fi...
Robinhood is being deceptive.
They say this move is to protect their customers, in fact it's to protect themselves. As others have pointed out, Robinhood lends margin to some accounts and if those accounts cannot pay for losses purchased on margin, Robinhood is responsible. This is a real risk, and they should have made the margin requirement 100% for GME or cash only as other brokers did. They did not have to limit buys to de-risk their own portfolio.
They say this move is to protect their customers, in fact it's to protect themselves. As others have pointed out, Robinhood lends margin to some accounts and if those accounts cannot pay for losses purchased on margin, Robinhood is responsible. This is a real risk, and they should have made the margin requirement 100% for GME or cash only as other brokers did. They did not have to limit buys to de-risk their own portfolio.
I don't understand what these investors do, I don't think it makes sense for most of them and I would advice against it.
However, the whole point of Robinhood is to allow people to buy the stocks they want.
Would they also have stopped people buying Tesla a few years ago? This has proven to be right bet. However given r/teslainvestorsclub strongly pushing for the stock, could be interpreted as the same thing.
Robinhood seems to just decide who can be a winner.
However, the whole point of Robinhood is to allow people to buy the stocks they want.
Would they also have stopped people buying Tesla a few years ago? This has proven to be right bet. However given r/teslainvestorsclub strongly pushing for the stock, could be interpreted as the same thing.
Robinhood seems to just decide who can be a winner.
Even a congresswoman has a quite strong opinion on this: https://web.archive.org/web/20210128155006/https://twitter.c...
Unfortunately the tweet has already been deleted. There seems to be quite a lot of pressure.
Unfortunately the tweet has already been deleted. There seems to be quite a lot of pressure.
[deleted]
Ted Cruz and AOC have also tweeted similar.
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https://twitter.com/AOC/status/1354833285386543105
"Committee investigators should examine any retail services freezing stock purchases [...] especially those allowing sales, but freezing purchases."
Apparently she would prefer that people were blocked from selling their holdings.
"Committee investigators should examine any retail services freezing stock purchases [...] especially those allowing sales, but freezing purchases."
Apparently she would prefer that people were blocked from selling their holdings.
Did you not read the tweet or are you just trying to misrepresent her argument? She is asking why different sets of trading rules are apply to retail and institutional investors. If retail can sell, but can't buy, who are they selling to?
"We now need to know more about @RobinhoodApp’s decision to block retail investors from purchasing stock while hedge funds are freely able to trade the stock as they see fit."
"We now need to know more about @RobinhoodApp’s decision to block retail investors from purchasing stock while hedge funds are freely able to trade the stock as they see fit."
Does she or doesn't she say that the retail services allowing sales but freezing purchases are especially worth of investigation, compared to the general category of retail services freezing stock purchases?
Of course, in reality, the only services freezing stock purchases are those allowing sales but freezing purchases. Because freezing sales in addtion to purchases would be much more problematic, not less.
Of course, in reality, the only services freezing stock purchases are those allowing sales but freezing purchases. Because freezing sales in addtion to purchases would be much more problematic, not less.
Your comment is not a gotcha. She'd clearly prefer that stock trading not be frozen at all. Freezing purchases but not sales is a gift to short sellers because retail investors can only lower the price, which will induce more people to panic sell.
So the hypothetical broker that had frozen both would be less worth of investigation?
No, I think she would prefer that exchanges didn't restrict purely in an effort to "protect" retail investors and nakedly do the bidding to protect larger institutional investors who are getting squeezed.
A brokerage NOT allowing buys, sells, margins, options on a security is well within their right to do so. It's only when they start to take positions that limit an investor's ability to manage their own risk that it gets a little fishy...
A brokerage NOT allowing buys, sells, margins, options on a security is well within their right to do so. It's only when they start to take positions that limit an investor's ability to manage their own risk that it gets a little fishy...
So if you have shares in a brokerage account you think the broker is within his right to prevent you from selling them?
That is not what that tweet is saying. She is saying that particular pattern, sales allowed but purchases are restricted, is especially deserving of an investigation.
I don't know. If they had restricted sales I think that would be much worse. That particular pattern is the only pattern that could exist in practice.
I don't get how Robinhood can make this move. I see this move as a lose/lose. Anyone care to emphasize with them? Maybe they see themselves as saving the lay investor?
But then from a price action perspective, - If GME goes up, people are going to have the sentiment that Robinhood stopped them from making money to protect the fat cats - If GME goes down, people are going to blame RH.
But then from a price action perspective, - If GME goes up, people are going to have the sentiment that Robinhood stopped them from making money to protect the fat cats - If GME goes down, people are going to blame RH.
The sacrificial lamb enters the fray. Killing off Robinhood is a much cheaper option than allowing your Wall Street buddies to take a loss.
Eighteen years ago flashmobs were disrupting some retail stores - but I knew they have a potential for more. Now we see flashmobs in the US Senate and then disrupting capital markets. It is funny - but also ... disruptive.
Actually politics has been a part of entertainment for some time already - but I don't like it like that and I am afraid capital markets will also be worse.
Actually politics has been a part of entertainment for some time already - but I don't like it like that and I am afraid capital markets will also be worse.
We as a technology community should know this better than anyone. If you are getting a service for free, then you are not the customer.
Does anybody know: who is getting rich on this? What I mean, the short seller have to pay up a lot of money because of the squeeze, so who gets this money. Of course the entities who lend the stocks to them. Who is it specifically Goldman? (the guys from reddit just 'create' the squeeze, they are not getting a big chunk from the cake).
This is so over the line that reps Cortez and Cruz both agree it’s ‘unacceptable’, and would push for hearings on the matter...
In America, the law is king...until one of the actual kings gets punched in the face and re-writes the law the next day.
If the prevent buy and let people only sell stock it is going to create a great market imbalance that will just crash the stocks blocked.
For once this done by multiple broker is pure market manipulation because it is going to have a huge effect on the blocked stocks... and will leave big fish with direct access dictate the direction.
For once this done by multiple broker is pure market manipulation because it is going to have a huge effect on the blocked stocks... and will leave big fish with direct access dictate the direction.
1. RobinHood get their money from Citadel.
2. The price was not driven by the little people but by Citadel following the trend.
3. Now Citadel want to realize some gains an instructed RobinHood that th silliness needs to stop.
4. Citadel go on the other side of the trade and sell short, as there are no more buyers.
What SEC thinks of this GameStop madness? Is this normal market activity or pump and dump scheme? They only said they are monitoring ongoing market volatility. [1]
I didn't research this whole situation a lot but I know brick and mortar game selling is almost dead and everything moved online especially to Steam which basically has monopoly on digital online video games selling.
I don't agree with Chamath when he said paraphrasing this is the move against financial establishment, this is the result of transparent and open stock market research. For me this is public and collective pump and dump scheme.
The narrative of going against current financial establishment is the same one that motivated criminals and drug sellers to embrace Bitcoin because they thought it was meant to be anonymous and anarchist but in reality it was meant to be everything opposite; to establish decentralized trust, transparency, enable micro transactions and to eradicate fraud and financial mischief.
[1] https://www.sec.gov/news/public-statement/joint-statement-on...
I didn't research this whole situation a lot but I know brick and mortar game selling is almost dead and everything moved online especially to Steam which basically has monopoly on digital online video games selling.
I don't agree with Chamath when he said paraphrasing this is the move against financial establishment, this is the result of transparent and open stock market research. For me this is public and collective pump and dump scheme.
The narrative of going against current financial establishment is the same one that motivated criminals and drug sellers to embrace Bitcoin because they thought it was meant to be anonymous and anarchist but in reality it was meant to be everything opposite; to establish decentralized trust, transparency, enable micro transactions and to eradicate fraud and financial mischief.
[1] https://www.sec.gov/news/public-statement/joint-statement-on...
This isn't a fundamental based investment on both sides. Even if you believe GME is about to go out of business, shorting it at 140% is ridiculous. This is momentum trade on both sides. The difference is all establishment (news media, hedge fund bros, brokers and government) is against one side (retail).
This article has a good summary of what exactly happened: https://www.nbcnews.com/think/opinion/redditors-took-hedge-f...
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What about robinhood's platform not being to handle the activity level and are concerned about their ability to execute all the trades while managing the book probably given their history on execution. Thus they had to limit purchases as they expected more surges and then a lot of risk on Friday settlement.
When was Nokia being pumped? I bought calls on it for something I saw on HN a week ago which is what you're supposed to do and have been watching WSB and no one was talking about it.
Also: thinkorswim just let me submit an order to buy more NOK anyway. Heh, this is what you get for using robinhood.
Also: thinkorswim just let me submit an order to buy more NOK anyway. Heh, this is what you get for using robinhood.
Mods on WSB are catching a lot of flack for closing a thread asking for alternative brokers (no idea why) and for commenting in another sticky not to go and write bad reviews for the brokers limiting trades.
I fear they are about to get a harsh lesson in what happens when the mob you are leading turns against you.
I fear they are about to get a harsh lesson in what happens when the mob you are leading turns against you.
Of course a company that steals from the poor to give to the rich would be named Robinhood
We totally live in a simulation
We totally live in a simulation
Robinhood will have its work cut out to recover the trust lost today. I wonder how they will respond?
I don't think they can respond to this adequately.
Imagine being the first one to bend to big money with that name hahaha
Imagine being the first one to bend to big money with that name hahaha
So what do the apologists for wealth concentration that cite the supposed "Free Market" as a reason to fight market regulation think of this? Is this not real free market behavior? If not, are the activities of hedge funds not real free market behavior?
Truly a terrible idea on Robinhood's part, but most of the high-profile outrage seems to come from people who typically are in favor of protecting people from themselves. Seems a bit hypocritical to support investor accreditation and then lambast this move.
Can someone clarify whether RH blocks margin purchases (in other words, just refuses to lend people money to purchase those stocks), or blocks outright cash purchases?
The former would be entirely understandable and justifiable, the latter not so much.
The former would be entirely understandable and justifiable, the latter not so much.
Lol, seems to be a general restriction on buying. Wow.
https://blog.robinhood.com/news/2021/1/28/keeping-customers-...
https://blog.robinhood.com/news/2021/1/28/keeping-customers-...
There are a handful on people on wsb manipulating a lot of people into buying worthless stock from each other, often on margin. It is such a classic con. I can't believe people are mad at RH for helping them not get conned.
99.99% (or more) of people who buy lotteries, lose ALL their money. However, government allows anyone to buy them. There is no meaningful restriction for an assured destruction of wealth for most of those who buy them.
While this GME/AMC run will not end well for many people, restricting people from buying those stocks - whether it is through actions of trading platforms or governing agencies - smacks not just of paternalism, but downright favoritism. Only certain parties benefit from this.
While this GME/AMC run will not end well for many people, restricting people from buying those stocks - whether it is through actions of trading platforms or governing agencies - smacks not just of paternalism, but downright favoritism. Only certain parties benefit from this.
Yes. The way the short squeeze has been working so far is the hedge funds do a ladder short to drive the price down, and retail buys up shares, sending price back up. Without retail to buy shares, price can keep falling until people get freaked out and sell their shares, which is what the hedge funds want.
99.99% of people who buy lotteries know it's a gamble rather than a moneymaking strategy. Nobody is advising people buying lottery tickets that they should borrow money to buy as many of them as possible because they will make a nice easy profit at the expense of the rich. It's often said lotteries are a tax on people that don't understand probability, but at least people playing don't think they're doing arbitrage.
And governments often do restrict other forms of gambling associated with more problematic losses. There are those who would like them more restrictions on it, and those who would like fewer, but at least the latter group don't argue that without loosening gambling laws, the little guy doesn't stand a chance of wealth improvement.
And governments often do restrict other forms of gambling associated with more problematic losses. There are those who would like them more restrictions on it, and those who would like fewer, but at least the latter group don't argue that without loosening gambling laws, the little guy doesn't stand a chance of wealth improvement.
> Nobody is advising people buying lottery tickets
That's demonstrably false. There are literal ads on TV that show how wealthy you can become if you just buy a lottery ticket.
> that they should borrow money to buy as many of them as possible because they will make a nice easy profit
You clearly haven't read any of the GME threads on WSB. Pretty much everyone is saying to only invest what you can afford to lose. Most people are buying small amounts just to f##k with the hedge funds, and they are outspoken about it.
> but at least people playing don't think they're doing arbitrage.
Buying a lottery ticket for a dollar, hoping they make much more? Isn't that the whole point of a lottery?
> And governments often do restrict other forms of gambling associated with more problematic losses.
That's the whole point of the criticism that you're missing. These restrictions are completely arbitrary and don't follow any rules.
You can go to a casino and lose your life savings.
You can buy 1 million lottery tickets and lose your life savings.
You can buy one of thousands of penny stocks and lose your life savings.
The government won't stop you. The brokers won't stop you.
But suddenly, when a big hedge fund is caught with their pants down, people like you come out and pretend like what's happening is a big problem, and we have to stop the trading "because some people can lose money".
Sorry, I'm not buying your narrative at all.
That's demonstrably false. There are literal ads on TV that show how wealthy you can become if you just buy a lottery ticket.
> that they should borrow money to buy as many of them as possible because they will make a nice easy profit
You clearly haven't read any of the GME threads on WSB. Pretty much everyone is saying to only invest what you can afford to lose. Most people are buying small amounts just to f##k with the hedge funds, and they are outspoken about it.
> but at least people playing don't think they're doing arbitrage.
Buying a lottery ticket for a dollar, hoping they make much more? Isn't that the whole point of a lottery?
> And governments often do restrict other forms of gambling associated with more problematic losses.
That's the whole point of the criticism that you're missing. These restrictions are completely arbitrary and don't follow any rules.
You can go to a casino and lose your life savings.
You can buy 1 million lottery tickets and lose your life savings.
You can buy one of thousands of penny stocks and lose your life savings.
The government won't stop you. The brokers won't stop you.
But suddenly, when a big hedge fund is caught with their pants down, people like you come out and pretend like what's happening is a big problem, and we have to stop the trading "because some people can lose money".
Sorry, I'm not buying your narrative at all.
> Most people are buying small amounts just to f##k with the hedge funds, and they are outspoken about it.
I think the funniest part about this is that it is rationally irrational.
It's irrational from a market perspective, Gamestop really isn't fundamentally worth this much, everyone who invests ought to lose the money. Short sellers ought to make bank on it.
And then comes WSB and offers a different reason: Buy a couple of shares and hold just to punish the short sellers. It's irrational in the market sense, but it's completely rational from an internet mob sense. They're not out to make money, which is the normal rational decision-making process that all the big players are accustomed to. This mob is out for blood, and they're doing it for shits and giggles. Of course the big market players are upset, because the mob has money and are wielding it "wrong"!
I think the funniest part about this is that it is rationally irrational.
It's irrational from a market perspective, Gamestop really isn't fundamentally worth this much, everyone who invests ought to lose the money. Short sellers ought to make bank on it.
And then comes WSB and offers a different reason: Buy a couple of shares and hold just to punish the short sellers. It's irrational in the market sense, but it's completely rational from an internet mob sense. They're not out to make money, which is the normal rational decision-making process that all the big players are accustomed to. This mob is out for blood, and they're doing it for shits and giggles. Of course the big market players are upset, because the mob has money and are wielding it "wrong"!
Yes, GME is the laughing stock. In a very literal sense.
Somewhat off topic but I was in Spain before Christmas, and there the Christmas Lottery is a big deal: it has a huge jackpot but costs 20€ for a ticket. The drawing of the numbers is a massive televised affair, with children singing out the numbers, I kid you not. Lots of interviews with winners big and small.
There were lines outside the ticket shops (semi social distanced and with masks). Street vendors of tickets were walking around asking people “don’t you want 200 million Euros?” Or whatever the number was, I didn’t win so I forget.
Point being, with the Christmas lottery all but personally endorsed by the Pope and the King, and with millions of poor and poorly educated people watching this spectacle, I’d be shocked if some people didn’t cause themselves real trouble as a result. Just one more ticket...
(My friends there treat it mostly as a joke but still do buy one ticket each, every year, on principle.)
There were lines outside the ticket shops (semi social distanced and with masks). Street vendors of tickets were walking around asking people “don’t you want 200 million Euros?” Or whatever the number was, I didn’t win so I forget.
Point being, with the Christmas lottery all but personally endorsed by the Pope and the King, and with millions of poor and poorly educated people watching this spectacle, I’d be shocked if some people didn’t cause themselves real trouble as a result. Just one more ticket...
(My friends there treat it mostly as a joke but still do buy one ticket each, every year, on principle.)
> That's demonstrably false.
That's because you truncated my sentence to pretend I made a claim I didn't make. What I did say is that nobody is marketing lottery tickets as an investment or (or posting screenshots of how much they've spent on lottery tickets to encourage others not to cash out). They're literally not allowed to in those ads you mention.
> You clearly haven't read any of the GME threads on WSB. Pretty much everyone is saying to only invest what you can afford to lose. Most people are buying small amounts just to f##k with the hedge funds, and they are outspoken about it.
All the top threads are people encouraging others not to take their money out because it'll hold its value, honest, and the specific stakes people are sharing range from thousands to [options on] millions. You don't see people make those kind of bets on lotteries, and people with financial upside from lottery ticket sales certainly aren't allowed to encourage them to.
I mean, the whole reason we're having this discussion about Wall St versus the common man is because people here are treating entering the market at this stage as an opportunity rather than a negative EV gamble for people looking to join the action. If a vendor stops selling tickets for a particular lottery, nobody acts like wannabe customers or ticket holders dreaming of bigger jackpots are victims.
> Buying a lottery ticket for a dollar, hoping they make much more? Isn't that the whole point of a lottery?
The point of buying a lottery ticket for a dollar for what even the dumbest lottery player knows is an tiny chance of winning isn't very similar to the point of buying what used to be $20 stocks starting at $200 after reading an "AT THIS RATE $5,000 IS GOING TO BE NOTHING FOR GME" post.
> But suddenly, when a big hedge fund is caught with their pants down, people like you come out and pretend like what's happening is a big problem, and we have to stop the trading "because some people can lose money".
Casinos block people from some gambles all the time (especially if something funny's going on or they think they might get sued). Nobody cares. Some brokers stop people from some gambles on their platform and people gnash their teeth with rage at how unfair it is, before flipping to arguing that it's just a game people are playing with what they can afford to lose. The double standard here isn't mine.
And yes, most people buying today would lose money (with or without broker intervention). That's not a reason to for Robinhood to stop the trading, it's a simple observation which is hard to square with arguments that stopping the trades is some monstrous imposition on the common man.
As for the hedge funds and investment pros, some of the longs would have loved to see more retail investor action today, and some of the shorts are already out.
That's because you truncated my sentence to pretend I made a claim I didn't make. What I did say is that nobody is marketing lottery tickets as an investment or (or posting screenshots of how much they've spent on lottery tickets to encourage others not to cash out). They're literally not allowed to in those ads you mention.
> You clearly haven't read any of the GME threads on WSB. Pretty much everyone is saying to only invest what you can afford to lose. Most people are buying small amounts just to f##k with the hedge funds, and they are outspoken about it.
All the top threads are people encouraging others not to take their money out because it'll hold its value, honest, and the specific stakes people are sharing range from thousands to [options on] millions. You don't see people make those kind of bets on lotteries, and people with financial upside from lottery ticket sales certainly aren't allowed to encourage them to.
I mean, the whole reason we're having this discussion about Wall St versus the common man is because people here are treating entering the market at this stage as an opportunity rather than a negative EV gamble for people looking to join the action. If a vendor stops selling tickets for a particular lottery, nobody acts like wannabe customers or ticket holders dreaming of bigger jackpots are victims.
> Buying a lottery ticket for a dollar, hoping they make much more? Isn't that the whole point of a lottery?
The point of buying a lottery ticket for a dollar for what even the dumbest lottery player knows is an tiny chance of winning isn't very similar to the point of buying what used to be $20 stocks starting at $200 after reading an "AT THIS RATE $5,000 IS GOING TO BE NOTHING FOR GME" post.
> But suddenly, when a big hedge fund is caught with their pants down, people like you come out and pretend like what's happening is a big problem, and we have to stop the trading "because some people can lose money".
Casinos block people from some gambles all the time (especially if something funny's going on or they think they might get sued). Nobody cares. Some brokers stop people from some gambles on their platform and people gnash their teeth with rage at how unfair it is, before flipping to arguing that it's just a game people are playing with what they can afford to lose. The double standard here isn't mine.
And yes, most people buying today would lose money (with or without broker intervention). That's not a reason to for Robinhood to stop the trading, it's a simple observation which is hard to square with arguments that stopping the trades is some monstrous imposition on the common man.
As for the hedge funds and investment pros, some of the longs would have loved to see more retail investor action today, and some of the shorts are already out.
People buy GME for entertainment purposes. Instead of buying games at gamestop they want to have fun in a different way. By stopping the fun Robinhood basically gave everyone a big fuck you.
It's basically corruption and shows why we need free markets and why it is a problem that exchanges are private companies.
If anything, this proves that free markets cannot exist. If rich people showed even a tiny shred of humility this wouldn't have happened.
what
Im guessing their argument would be that while a majority of people know what they're doing / the risk they are exposed to, a lot of people are seeing the gains online right now and are jumping into it blindly. Big difference between WSBers buying in at 10-30$, and people from all around the internet now buying in at 300$
Back in 1999 when Red Hat went IPO (dsiclaimer: I had FoC options), eTrade denied a very large swath of first-time investors with their platform trying to take advantage of Red Hat's FoC share options; I was one of them.
There was a followup round of reach-out "hey, you might want to take this quiz again and maybe we'll let you play" (meaning go answer the questions and lie that you're an experienced investor) to try and get the disenfranchised back into the game.
There was a followup round of reach-out "hey, you might want to take this quiz again and maybe we'll let you play" (meaning go answer the questions and lie that you're an experienced investor) to try and get the disenfranchised back into the game.
...and yet cigarettes are still legal.
Stock market regulation stems largely from the experience of the Great Depression. So even if 99.99% of people lose all their money in lotteries we haven't seen an economic crisis caused by lotteries.
We're not likely to see an economic crisis due to a Gamestop short squeeze, but it is a bit of a worrying sign.
We're not likely to see an economic crisis due to a Gamestop short squeeze, but it is a bit of a worrying sign.
And how much did that regulation help prevent the Great Recession and Global Financial Crisis of 2008?
There's a pretty direct line of causation from the rollback of some regulations and lack of enforcement of others to that. That crisis was a reminder of why we have these sorts of regulations and an example of why we should enforce them.
I disagree on that point. The '08 financial crisis was not so clear-cut as to trace back to one single regulation being "rolled back". And it's not clear to me, that whatever vulnerabilities existed in the system then, have somehow been patched up today. We could and still very well might have another large meltdown in the markets in the near future.
I agree with you. But it is also much higher friction to invest large sums in lotteries. Casinos feel the more apt analogy.
> people asserted their power financially
This is just wrong. Where was this power before? Stock trading platforms have been around forever. And, why to assert this power only on some of the stocks? It's just sheep chasing sheep
This is just wrong. Where was this power before? Stock trading platforms have been around forever. And, why to assert this power only on some of the stocks? It's just sheep chasing sheep
Isn't this a bad business move? Doesn't RH want its users to engage with them? Or are they calculating that this sort of mass-coordination on their app will lead to regulations and censures against them?
Not that I condone this type of market manipulation, but I do wonder what is the end game for all these wsb buyers - the price will come down eventually right? What will happen when they try to cash out?
As someone without any skin in the game this has been really entertaining.
"You can buy candies". We don't have candies. How's that a problem? Obviously it's a logistics problem. It seems like the anger being driven to the wrong people.
Hedge funds made millions off this move by Robinhood. As soon as this information became known - and they would be the first to know about since they would've game planned this out - they would've loaded up on put options and front-run retail investors who were getting stopped out of their position due to cascading liquidations. What a tremendous transfer of wealth from retail to institutions that we witnessed today.
It's fairly interesting to see the cultural response to this, and it doesn't seem to divide down the usual left/right political lines which is a relief after years of constant fighting. I wonder if this might be a driver of more political harmony in the coming months.
I also wonder how much of all this is due to a social media vacuum created by the end of Trump's tenure and his removal from social media. The timing of this GME episode lines up pretty well with that hypothesis.
It's fairly interesting to see the cultural response to this, and it doesn't seem to divide down the usual left/right political lines which is a relief after years of constant fighting. I wonder if this might be a driver of more political harmony in the coming months.
I also wonder how much of all this is due to a social media vacuum created by the end of Trump's tenure and his removal from social media. The timing of this GME episode lines up pretty well with that hypothesis.
They don't even show up in search. Why would Robinhood do that?
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I am just going to leave this here:
https://www.sec.gov/oiea/Complaint.html
https://www.sec.gov/oiea/Complaint.html
The only problem I see here is that market makers can still buy the stock to prop it up so they don't have to pay out on the options they sold.
Restricting retail from buying the stock is a good idea. There is no legitimate reason to buy these stocks. They are doing naive investors a favor.
People who own the stock can either hold or sell. You sell if you think the current price exceeds the value.
I can guarantee that also no institutional investors are buying the stock. They just don't really need someone to tell them that.
Brokers are attempting to limit complaints by limiting their user's losses. They have done this in self interest.
Restricting retail from buying the stock is a good idea. There is no legitimate reason to buy these stocks. They are doing naive investors a favor.
People who own the stock can either hold or sell. You sell if you think the current price exceeds the value.
I can guarantee that also no institutional investors are buying the stock. They just don't really need someone to tell them that.
Brokers are attempting to limit complaints by limiting their user's losses. They have done this in self interest.
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Robinhood bugged out as I attempted to sell some of my AMC this morning. The Market Sell order barely went through and was visually glitched for 10 minutes.
Could GME issue more stock as the shorts start to get squeezed? Could be a good opportunity for GME to build a war chest for their digital conversion....
CTRM (Castor Maritime) to that list! important to track all delisted apps. Can't leave any of em behind. Don't let them win a single hand!
How is banning people from buying stock with the express purpose of prevent the price of that stock from going up in any way, shape, or form legal?
CTRM (Castor Maritime), BB, NOK, GME, AmC, and others! Important no stock delisted goes unmentioned. Don't let them win, not a single hand!
Is this legal? Or is it a case of the eventual SEC fine will be a much smaller problem for them than upsetting whoever asked them to do this?
Relying on USA based IT seems to be very poor choice
Not only them. I just got an e-mail from Tasty Works saying they're doing the same. And that it's out of their direct control.
Class action lawsuit, incoming. WE LIKE THE STOCK.
It was obvious, the real customer of Robihood are hedge found for their front-running business. They protect interest of hedge founds.
Apparantly they're letting people close out their position, but how are you supposed to do that when no one can buy it from you?
Should probably change their name to Nottingham.
This is really messed up. Does anyone here think that Robinhood will allow me to buy any shares soon or will it just be limited?
I always thought BTC and blockchain stuff had no utilitized value, so I never really took it seriously.
Today I started to take it seriously.
Today I started to take it seriously.
This is not limited to these stocks - I’ve been stopped from buying some REITS, closed end funds, ETFs, ect (even DNP).
"oh no our customers are making too money" seems like a very weird stance for this company to take.
Project Veritas is on the case:
Robinhood whistleblowers can hit us up at [email protected] or on Signal 914-653-3110
Robinhood whistleblowers can hit us up at [email protected] or on Signal 914-653-3110
That's why the world needs more decentralized technologies. Pro DeFi & other decentralized tech.
Lol, what else to say but: Buy Bitcoin?
Watching this unfold makes so many of the early criticism of Bitcoin look ridiculous.
Looks like the Robinhood became corrupt and ratted his outlaws out to the Sheriff of Nottingham
Doge cryptocurrency can also be added to the list of Robinhood's halted buys for today.
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why would people use this site? it seems very unreliable, i tried with many attempts last night to signup and all I get are strange errors..why would i want to conduct serious business through them if they can't simply handle signups
This is not going to end nicely.
For real. This will cause deaths, you can be sure of that.
Clickbait. They're reducing the (risky) leverage. "A Schwab spokeswoman said that the platform changed its margin requirements, limiting how much an investor can borrow, on Jan. 13 and said it has placed “restrictions in place on certain transactions in GME and other securities"
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Interactive Brokers (IB) is blocking GME stock buy even on non margin account.
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Excuse my ignorance but can this not be considered manipulating the market ?
Robinhood's rating on the android app store has fallen to 1.1 stars.
The ONE TIME that shareholders don't ruin things for everyone . . .
I'm using Trading212 and they did the same today with GME and AMC.
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Take from the rich and... oh wait you're not allowed to do that.
This whole Game Stop situation has made the power of the rich so obvious and disgusting.
They temporarily shut down the market, banned the discord server, and are now preventing people from buying stocks on the most popular app used by small time investors.
All of these moves hurt the small time investor trying to cash in on the next bitcoin-like bubble. This just creates more division, more disgust, and more of a class war than already exists. So sad to see.
They temporarily shut down the market, banned the discord server, and are now preventing people from buying stocks on the most popular app used by small time investors.
All of these moves hurt the small time investor trying to cash in on the next bitcoin-like bubble. This just creates more division, more disgust, and more of a class war than already exists. So sad to see.
Read up on the story of the Piggly Wiggly short/corner.
a link for the lazy (twitter thread): https://twitter.com/dollarsanddata/status/135456107992655053...
And that time, the rules were also changed to protect the big guys. How convenient. The stock market is a farce.
unroll: https://threadreaderapp.com/thread/1354561079926550530.html
interestingly, the page I got was cached from Cloudflare. I wonder if the twitter chatter / thread unrolling is up enough during all this nuttiness that it's brought the site down.
interestingly, the page I got was cached from Cloudflare. I wonder if the twitter chatter / thread unrolling is up enough during all this nuttiness that it's brought the site down.
Love that story. It's told in more detail along with other stories like it in Business Adventures by John Brooks - https://amzn.to/3cq4Fs5
So the moral of the story is you can't win against the machine
Were the market shutdowns manual or automatic handbrakes? I know there are breaks when specific thresholds are hit that are pre-determined.
As far as I know, they were automatic handbrakes based on excessive volatility. A feature designed to prevent chaos and people from over buying/selling due to panic.
Brokerages preventing users from buying certain stocks is clearly manual, and fairly unprecedented afaik
Yes. Both things happened. I was specifically talking about halting trade multiple times during the day.
There are different layers here.
Baked into the exchanges (NYSE, Nasdaq) are circuit breakers which halt all trading on certain volatility conditions. The intent is to stabilize prices. This is not what happened here.
What happened here is a broker (Robinhood) decided to not accept certain kinds of orders. It wasn't a market shutdown, it was a specific manipulation to stop the purchase but _not_ the sale of an instrument, causing the price to drop.
Baked into the exchanges (NYSE, Nasdaq) are circuit breakers which halt all trading on certain volatility conditions. The intent is to stabilize prices. This is not what happened here.
What happened here is a broker (Robinhood) decided to not accept certain kinds of orders. It wasn't a market shutdown, it was a specific manipulation to stop the purchase but _not_ the sale of an instrument, causing the price to drop.
I was referring to what happened yesterday by NYSE, not what Robinhood did today.
Just invest in Bitcoin now, it is going to do the same thing in a few months. And it can’t be censored like this. I admire the gme crowd’s efforts but they are so misguided. Investing in zombie companies we actually hate is pointless. Yes you might bankrupt a hedge fund or two but the system will continue. Bitcoin was created for the disruption to the corrupt financial system that they are seeking.
It may displace the billionaires who run banks, hedge funds, etc... and replace them with billionaires who own huge mining farms.
Bitcoin doesn't solve any of our problems. It just shuffles around who's in power.
Bitcoin doesn't solve any of our problems. It just shuffles around who's in power.
Bitcoin solves a lot of the biggest problems.
Fractional lending isn't possible because you can't make bitcoin out of nothing then charge interest on the nothing you lended.
Inflation is out of government control and no longer works as an unofficial tax. Related, money can't be printed at-will.
Large banks and corporations can't outright prevent transactions from happening.
The money can have value as a universal reserve currency without any specific political ties.
Removing big banks from the equation takes their hands at least partway off the politicians.
Seems like at least a decent upgrade to me.
Fractional lending isn't possible because you can't make bitcoin out of nothing then charge interest on the nothing you lended.
Inflation is out of government control and no longer works as an unofficial tax. Related, money can't be printed at-will.
Large banks and corporations can't outright prevent transactions from happening.
The money can have value as a universal reserve currency without any specific political ties.
Removing big banks from the equation takes their hands at least partway off the politicians.
Seems like at least a decent upgrade to me.
You need inflation to at least match productivity improvements. Otherwise your economy will slow down over time.
I agree on the importance of inflation, but with a difference in how it happens.
Bitcoin currently inflates slightly. I think it should target a 1-2% steady inflation forever both to encourage spending and to replace lost coinage.
At the same time, inflation should not be a spending power advantage. By distributing inflation among miners, you don't give disproportionate advantage to any one group like governments currently enjoy. I view this as more fair and it removes the incentive to attempt to change inflation rates in the future.
Bitcoin currently inflates slightly. I think it should target a 1-2% steady inflation forever both to encourage spending and to replace lost coinage.
At the same time, inflation should not be a spending power advantage. By distributing inflation among miners, you don't give disproportionate advantage to any one group like governments currently enjoy. I view this as more fair and it removes the incentive to attempt to change inflation rates in the future.
> and replace them with billionaires who own huge mining farms.
Aren't most crypto coins set up so that mining is only getting harder with time? The ones ending up rich are the old money, the guys that invested into it in its early days.
Aren't most crypto coins set up so that mining is only getting harder with time? The ones ending up rich are the old money, the guys that invested into it in its early days.
Yes mining is a fool's errand. It was only great when you could do it on your computer. After that, it has just simply been a race against the difficulty and costs of mining. Almost every mining company would have come out further ahead if they simply bought coins rather than mined.
Source: I was a miner and would be a lot richer if I had just started purchasing coins earlier. :) Also any history book on cryptocurrency such as The Age of Cryptocurrency by Paul Vigna and Michael Casey from WSJ. The miners profiled in it are just trying to keep the lights on in 2015 and nothing has changed to the hamster wheel.
Source: I was a miner and would be a lot richer if I had just started purchasing coins earlier. :) Also any history book on cryptocurrency such as The Age of Cryptocurrency by Paul Vigna and Michael Casey from WSJ. The miners profiled in it are just trying to keep the lights on in 2015 and nothing has changed to the hamster wheel.
And merely being rich gives you little to no power over Bitcoin
This is a gross oversimplification of how power to influence fiat and power to influence Bitcoin differ. Do better.
I mean, GME has value because it is shorted so much. The goal of WSB is to go for a short squeeze (when the short positions have to be closed to avoid going bankrupt, the stock price goes up). In that regard I'd consider bitcoin to have less "value", as its price is mostly based on hype, and it doesn't really have any practical uses.
And then the rich noted that, bought mining farms and turned bitcoin into their own playtoy.
How? Do you even understand how Bitcoin works?
By killing the revolution.
More money = more mining power, more trading power, ICO pumps and dumps that rose the overall crypto market volume, raising the hype and earned millions in the process for the early buyers/minters. The game was never equal.
Want to buy BTC? Get your ID ready, or do a local exchange which is quite inconvenient.
The revolution died as soon as you could a profit out of it.
More money = more mining power, more trading power, ICO pumps and dumps that rose the overall crypto market volume, raising the hype and earned millions in the process for the early buyers/minters. The game was never equal.
Want to buy BTC? Get your ID ready, or do a local exchange which is quite inconvenient.
The revolution died as soon as you could a profit out of it.
Yes, some of what you describe could be done with Bitcoin, but Please do not confuse Bitcoin with “the overall crypto market” where all of what you described actually took place.
KYC and government regulations are a pain, but the core decentralized, limited supply, secure nature of Bitcoin will remain fully intact.
Rich and powerful people have already tried to take it over, they ended up with their own forks and you can judge how those have done.
KYC and government regulations are a pain, but the core decentralized, limited supply, secure nature of Bitcoin will remain fully intact.
Rich and powerful people have already tried to take it over, they ended up with their own forks and you can judge how those have done.
>KYC and government regulations are a pain, but the core decentralized, limited supply, secure nature of Bitcoin will remain fully intact.
>decentralized How much of BTC is owned by large miners?
>Limited supply If we can't mine more, those with the larger supply have control.
>secure
For now.
Blockchain as the idea will propagate and is great, but bitcoin has failed.
>Please do not confuse Bitcoin with “the overall crypto market”
But it's value is quite tied to the crypto arket, isn't it?
>decentralized How much of BTC is owned by large miners?
>Limited supply If we can't mine more, those with the larger supply have control.
>secure
For now.
Blockchain as the idea will propagate and is great, but bitcoin has failed.
>Please do not confuse Bitcoin with “the overall crypto market”
But it's value is quite tied to the crypto arket, isn't it?
I'm hesitant to invest in an alternative currency that the CCP is one of the largest holders of as a means to stave off corruption.
> Of all the countries in the world, China had, by far, the largest international reserves in August 2020, with 3.46 trillion U.S. dollars in reserves.
Maybe you shouldn’t use USD either.
Maybe you shouldn’t use USD either.
Bitcoin is a bubble in progress. If you want to make money it certainly is a much better asset to speculate with. However, it's a bit late. Most of the easy gains are not available anymore. If you buy now you there is a decent risk that you will have to wait a year.
This does make the advantages of stuff like Ethereum dexes (uniswap, etc) a lot more obvious.
People can stay irrational longer than you can stay solvent.
Onto the next one.
Onto the next one.
Is this even legal?
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Well, so this is the free market in action - wow!
is there a good alternative to robinhood? I really like robinhood, but what they have done today is super dumb.
I really don't get why everybody is so upset. The stock market is a private company. If you don't like it just make your own financial system.
/s
/s
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institutions are controlling robin hood? why else would they not let you buy/sell certian stocks.
How is this not market manipulation ?
ok fine but there are other brokers..
how can robin hood stop me from buying certian stocks? is this legal?find another platform.
Traderepublic is doing the same
hedge funds are a group of people all giving their money to act together.
how is this any different?
how is this any different?
Switch to WeBull, works great.
how come is this even legal
basically the system is telling us to do what they want of fuk off
basically the system is telling us to do what they want of fuk off
so much for the free market
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Wait, so now private entities censoring/deplatforming/shutting down anyone they want for any reason they want is a bad thing? Just pretend they were all evil Trump voters that got what they deserved.
And they call themselves "Robinhood"! Nauseating.
I have to say whoever voted for Biden voted for this.
A Trump admin would have done the same but at least we could get some angry journalists yelling at them. See what we get now? A bunch of a* lickers.
A Trump admin would have done the same but at least we could get some angry journalists yelling at them. See what we get now? A bunch of a* lickers.
>A Trump admin would have done the same but at least we could get some angry journalists yelling at them. See what we get now? A bunch of a* lickers.
But Trump supporters have been telling everyone for years that journalists are all a*lickers for corporations and the left. Why would they suddenly have integrity today if Trump were in office now? Surely they would just toe the line of their corporate masters of find some way to blame Trump for everything, as we're told their extremist left-wing pro Democrat agenda required them to.
But Trump supporters have been telling everyone for years that journalists are all a*lickers for corporations and the left. Why would they suddenly have integrity today if Trump were in office now? Surely they would just toe the line of their corporate masters of find some way to blame Trump for everything, as we're told their extremist left-wing pro Democrat agenda required them to.
I never mentioned integrity. Integrity is nonexistent in the previous admin, the current admin, the big tech, and the mainstream media. And they working together is much more scarier than they fighting each other. I wish you could have seen this after what happened to Parler and now the GME stock saga.
And dogecoins!
Deplatforming in action, first they came for Trump and his supporters, now for people trying to make a quick buck the same way as the fat foxes on Wall Street, what will be next?
So is schwab.
Sure. Robinhood got a call from someone very powerful in their circle, politely asking them to stop the amateur plebes from interfering with their professional market manipulation. We are taking about people commanding titanic amounts of capital and (indirect) regulatory power. Robinhood then had the choice, do we make enemies out of these people or do we just screw, er, I mean protect, our customers? Unburdened by a moral compass or fear of retribution, the RH leadership made the obvious choice.
This is so true. It's all connected. It's probable that Reddit, Discord, RobinHood have all received calls to disrupt retail traders from political players or financial backers. There's no evidence of this, the truth is we'll never know, but how its most obvious reason. If only RobinHood would live up to its namesake. It is alarming that "soft" circuit breakers are being used to target retail traders on exchanges.
<rant>
I rarely emote but this stinks to high heaven, corporates and politicians doing anything to keep necks under boots.As upsetting as it is to see folk fighting back capped at their knees, the broader issue is that of censorship, of the soft or hard variety, and coordination across firms to limit movements.
</rant>
<rant>
I rarely emote but this stinks to high heaven, corporates and politicians doing anything to keep necks under boots.As upsetting as it is to see folk fighting back capped at their knees, the broader issue is that of censorship, of the soft or hard variety, and coordination across firms to limit movements.
</rant>
When Wall Street is making billions off of selling balloon interest mortgages with no income verification the position is "The consumer is an adult and can make decisions for themselves and read the fine print.... blah blah blah .. personal responsibility."
When the people are causing Wall Street to lose billions on their absurdly large short position, suddenly they are concerned for the "amateur" investors. The "unsophisticated" investors. "We need to save them from themselves, we have to do something, they don't know what they are doing! How could they possibly be responsible adults taking this position that is hurting us financially? I know! Let's strap on these training wheels for their own good so they cannot hurt themselves cough or us cough. "
When the people are causing Wall Street to lose billions on their absurdly large short position, suddenly they are concerned for the "amateur" investors. The "unsophisticated" investors. "We need to save them from themselves, we have to do something, they don't know what they are doing! How could they possibly be responsible adults taking this position that is hurting us financially? I know! Let's strap on these training wheels for their own good so they cannot hurt themselves cough or us cough. "
That's pretty much it.
I remember seeing something similar during Tesla's run up, where firms would force individual investors to sell their call options because the investor would have tax liability once their call options were profitable.
Course, it also had the effect of reducing the amount they would have made by forcing them to sell early.
Tails we win, heads you lose.
I remember seeing something similar during Tesla's run up, where firms would force individual investors to sell their call options because the investor would have tax liability once their call options were profitable.
Course, it also had the effect of reducing the amount they would have made by forcing them to sell early.
Tails we win, heads you lose.
Just as a note - Elizabeth Warren is pretty much on the same page:
> “For years, the same hedge funds, private equity firms, and wealthy investors dismayed by the GameStop trades have treated the stock market like their own personal casino while everyone else pays the price.”
I find it interesting that folks feel empowered to call out the BS even when they've got a pretty big spotlight on them - instead of being shushed to quiet by monied interests.
> “For years, the same hedge funds, private equity firms, and wealthy investors dismayed by the GameStop trades have treated the stock market like their own personal casino while everyone else pays the price.”
I find it interesting that folks feel empowered to call out the BS even when they've got a pretty big spotlight on them - instead of being shushed to quiet by monied interests.
Socialism for the rich, capitalism for the poor.
I look forward to the investigations on market manipulation that RH, Schwann, and TD did by not allowing their customers to trade on that stock.
Or is it normal for brokers to independently halt trades on stocks they deem too risky?
Or is it normal for brokers to independently halt trades on stocks they deem too risky?
> Or is it normal for brokers to independently halt trades on stocks they deem too risky?
Absolutely not, and I almost typed "LOL" in front of that because your question - while genuine and sincere - is so ridiculous in the context of the stock market that it actually made me laugh out loud.
Brokers are more than happy to allow unsophisticated investors to buy or sell any stock. They won't let you use sophisticated products like options, etc., but simple buying and selling? Absolutely. What's happening here is simple. The wrong people are getting rich. The wrong people are losing money. That cannot be allowed.
There is something called the "pattern day trading rule" wherein someone buys and sells the same security several times and their ability to buy and sell gets restricted, but that's not what's happening here. People wanting to buy $GME are wanting to buy and hold. Not sell.
Absolutely not, and I almost typed "LOL" in front of that because your question - while genuine and sincere - is so ridiculous in the context of the stock market that it actually made me laugh out loud.
Brokers are more than happy to allow unsophisticated investors to buy or sell any stock. They won't let you use sophisticated products like options, etc., but simple buying and selling? Absolutely. What's happening here is simple. The wrong people are getting rich. The wrong people are losing money. That cannot be allowed.
There is something called the "pattern day trading rule" wherein someone buys and sells the same security several times and their ability to buy and sell gets restricted, but that's not what's happening here. People wanting to buy $GME are wanting to buy and hold. Not sell.
This may be another genuine but ridiculous question, but...
I think "the wrong people are losing money" is right on point, and to be clear, I don't think Robinhood has any business stopping people from buying stocks if they want to. But I am really wondering about how many people are getting rich from this stock pop. When the dust from all this settles, aren't a lot of the folks buying the stock over the last week or so going to end up underwater? My assumption has been that they saw that as an acceptable price for a jolly time Sticking It To The Man. And, back in the long ago (e.g., last week) when the stock price was $20 or $30 a share, that makes sense if you have the money to burn. But at $200+ a share, what's the rationale for holding on?
I think "the wrong people are losing money" is right on point, and to be clear, I don't think Robinhood has any business stopping people from buying stocks if they want to. But I am really wondering about how many people are getting rich from this stock pop. When the dust from all this settles, aren't a lot of the folks buying the stock over the last week or so going to end up underwater? My assumption has been that they saw that as an acceptable price for a jolly time Sticking It To The Man. And, back in the long ago (e.g., last week) when the stock price was $20 or $30 a share, that makes sense if you have the money to burn. But at $200+ a share, what's the rationale for holding on?
> how many people are getting rich from this stock pop
The people getting rich are the market makers. This is the hole in the Wall Street vs. the Rebels argument the media seems to be trying to pigeonhole this into.
The first-order losers are the hedge funds who, for some stupid reason, expressed their short view through actual shorting versus through puts and the retail investors who bought at inflated prices. The second-order losers will be the brokers, who will likely face margin losses, options-settlement losses, investor lawsuits, regulatory fines and Congressional attention for enabling the pump and dump and then ham-fistedly trying to stop it.
The people getting rich are the market makers. This is the hole in the Wall Street vs. the Rebels argument the media seems to be trying to pigeonhole this into.
The first-order losers are the hedge funds who, for some stupid reason, expressed their short view through actual shorting versus through puts and the retail investors who bought at inflated prices. The second-order losers will be the brokers, who will likely face margin losses, options-settlement losses, investor lawsuits, regulatory fines and Congressional attention for enabling the pump and dump and then ham-fistedly trying to stop it.
The other first-order losers are RH retail investors who just made a huge unrealized gain and are not allowed to realize the profits by selling in time. I'm on TD and they arent allowing in-the-money call option sell-to-closes to execute.
That's what I'm mostly concerned about, yes. If my understanding about the initial involvement of the Reddit crowd is correct -- that it was really about "let's pump this stock up to screw hedge funds that are shorting it" -- that group is presumably okay with losing their investment. But I can't help suspect that over the last few days, that group has become outnumbered by investors who figured they could take advantage of this weird pop by buying and selling within a very short time frame, which it sounds like you're in, and possibly even by investors who want to hold the stock, not understanding that -- even without Robinhood's interference -- it's likely set up for a fall just as quick as its rise.
Part of the thing is -- I dont have a margin account. I'm not leveraged. The whole bit about "protecting the retail investor" is absurd. There is nothing to protect and they face no harm from me since its not margined. I can lose all my equity and that is it. I am the one who faces harm -- because I cant actually get out of the trade of a lifetime.
Second thing -- I think there were many things going on and many cohorts on WSB.
- Cohort 1: possibly pump and dump (though, this happens all the time with hedge fund managers also trying to move their position...)...or perhaps 22yos excited by GameStop, not that hard to imagine. GME has been a huge discussion on WSB for months.
- Cohort 2: 22yos YOLO'ing their weekly stipend and stimulus check. No real though about pump and dump and more so just silly gambling.
- Cohort 3: Intelligent investors seeing an opportunity, not manipulating any more than a hedge fund manager does (see: Infinite Gamma Squeeze notice: https://www.reddit.com/r/stocks/comments/l3e54f/gme_infinite...)
- Cohort 4: Downtrodden retail "investors" looking to stick it to the man: https://twitter.com/inactivist_/status/1354537152445521923/p...
- Cohort 5: Onlookers on WSB (im a frequent reader, never post) looking to hitch a wagon to the runaway train.
Second thing -- I think there were many things going on and many cohorts on WSB.
- Cohort 1: possibly pump and dump (though, this happens all the time with hedge fund managers also trying to move their position...)...or perhaps 22yos excited by GameStop, not that hard to imagine. GME has been a huge discussion on WSB for months.
- Cohort 2: 22yos YOLO'ing their weekly stipend and stimulus check. No real though about pump and dump and more so just silly gambling.
- Cohort 3: Intelligent investors seeing an opportunity, not manipulating any more than a hedge fund manager does (see: Infinite Gamma Squeeze notice: https://www.reddit.com/r/stocks/comments/l3e54f/gme_infinite...)
- Cohort 4: Downtrodden retail "investors" looking to stick it to the man: https://twitter.com/inactivist_/status/1354537152445521923/p...
- Cohort 5: Onlookers on WSB (im a frequent reader, never post) looking to hitch a wagon to the runaway train.
I think you're touching on why brokerages have tried to come down hard on GME. The brokerages themselves have exposure as you explain -- they have a direct financial stake.
Maybe someone at RH ran the numbers on how much they stand to lose if things go sideways and decided it poses an existential threat.
It's the only reason I can think of because halting GME when more than half of their customers hold GME seems like a company ending event.
Maybe someone at RH ran the numbers on how much they stand to lose if things go sideways and decided it poses an existential threat.
It's the only reason I can think of because halting GME when more than half of their customers hold GME seems like a company ending event.
> more than half of their customers hold GME
This is incorrect. See the correction at the bottom of the article that originally reported that figure [1]:
Correction: An earlier version of this article stated that 56 percent of Robinhood users hold GME stock. This is incorrect, based on a misreading of a statistic on Robinhood. Motherboard regrets the error.
[1] https://www.vice.com/en/article/m7ak7y/r
This is incorrect. See the correction at the bottom of the article that originally reported that figure [1]:
Correction: An earlier version of this article stated that 56 percent of Robinhood users hold GME stock. This is incorrect, based on a misreading of a statistic on Robinhood. Motherboard regrets the error.
[1] https://www.vice.com/en/article/m7ak7y/r
"This is Wall Street, Dr. Burry, if you offer us free money, we are going to take it."
https://www.youtube.com/watch?v=Cxjdj5_5yNM
https://www.youtube.com/watch?v=Cxjdj5_5yNM
Everything that's happening is just reminding of the Big Short, Flash Boys and generally what Michael Lewis has been saying
It reminds me of Reminisces of a Stock Operator (1923)
https://en.wikipedia.org/wiki/Reminiscences_of_a_Stock_Opera...
Wall Street does not exist so that an individual can invest $100 and make a profit. It exists so that financial institutions can invest $100M and make a profit. It benefits from the illusion of the former though so the public is encouraged to believe that.
"I'm sorry, are you for real? You want to pay against the housing market and you're worried we won't pay you?"
On the pattern day trading rule its also worth noting that you are exempt from that above $25k on Robinhood. As I watched the subreddit over the past few weeks I saw a lot of folks happy that their account was now no longer subject to the pattern day trading rule. They started out below $25k but growth in GME value pushed them over $25k
Edit: A lot of people fixating on the fact broker-dealers aren't investment advisors...
https://www.sec.gov/rules/other/2013/34-69013.pdf
SEC has already started providing guidance on that loophole. They're not a fiduciary, but there's a want from the SEC to have their operation start to be more in line with if they were one ("harmonization")
After all RH does advertise popular stocks, they put out news branded digests of the market, it does show users gamified views of things like options, they have an entire "learning platform" meant to guide you through the market.
It's not an investment advisor, it doesn't have a fiduciary duty but the SEC wants broker-dealer behavior to better reflect the fact that retail investors assume that the platforms they use to trade are aligned with their financial goals
----
So disclaimer: I was holding large amounts of GME and AMC and sold this morning as a direct result of this news.
But I really don't get why people are so shocked.
People who started this wanted to buy and hold until shorts are kill.
Then people who heard about this plan after it started working joined, they still wanted to hold but their reasoning was starting to get a little removed from the original goal. This group is slightly bigger than the first
Fast forward a few days and suddenly this stock that just keeps going up by hundreds of dollars a day is in the news, people don't quite get what's happening, but it looks like a magical money fountain. And as a bonus this magic fountain is a big FU to the man? Sign me up! This group is exponentially bigger than the first, and exponentially less understanding of why this is happening.
-
At this point retail money is flooding into this stock left and right, and people are starting invest money they cannot afford to lose.
The problem for these brokers is when this musical chairs dance stops, retail investors will be holding the bag. Full stop.
But more importantly, those clueless people just buying GME because they have some vague idea of "it goes up" and "we're rebelling" are going to lose their shirts. The people in the first group who were doing this for the principle of it and as a YOLO don't really care, it's "fuck Melvin" all the way...
But the people in the last group are going to feel blindsided.
-
This feels like damned if you do, damned if you don't. The action of trying to insulate these people from losing their money will actively make people lose money. The dip to the low $130 was directly caused by the actions they're taking.
But on the flipside, imagine what would have happened during the rally to $400 this morning. We likely would have seen another breakout that puts all options ITM...
The fact is, the dance will end. The idea is buy and hold... but for the newest cohort there's an implied "until the money fountain stops".
And the higher the share price is when that happens, the more it will hurt. (and make no mistake, some hedge fund might be hurting, but the big guy can navigate this. If it takes making Congress halt these stocks they'll do it)
This has been a fun ride, and thrust the insane inequality of our financial systems for normal individuals and cash flushed "institutions" into the spotlight... but I can't pretend I don't understand why it's happening.
https://www.sec.gov/rules/other/2013/34-69013.pdf
SEC has already started providing guidance on that loophole. They're not a fiduciary, but there's a want from the SEC to have their operation start to be more in line with if they were one ("harmonization")
After all RH does advertise popular stocks, they put out news branded digests of the market, it does show users gamified views of things like options, they have an entire "learning platform" meant to guide you through the market.
It's not an investment advisor, it doesn't have a fiduciary duty but the SEC wants broker-dealer behavior to better reflect the fact that retail investors assume that the platforms they use to trade are aligned with their financial goals
----
So disclaimer: I was holding large amounts of GME and AMC and sold this morning as a direct result of this news.
But I really don't get why people are so shocked.
People who started this wanted to buy and hold until shorts are kill.
Then people who heard about this plan after it started working joined, they still wanted to hold but their reasoning was starting to get a little removed from the original goal. This group is slightly bigger than the first
Fast forward a few days and suddenly this stock that just keeps going up by hundreds of dollars a day is in the news, people don't quite get what's happening, but it looks like a magical money fountain. And as a bonus this magic fountain is a big FU to the man? Sign me up! This group is exponentially bigger than the first, and exponentially less understanding of why this is happening.
-
At this point retail money is flooding into this stock left and right, and people are starting invest money they cannot afford to lose.
The problem for these brokers is when this musical chairs dance stops, retail investors will be holding the bag. Full stop.
But more importantly, those clueless people just buying GME because they have some vague idea of "it goes up" and "we're rebelling" are going to lose their shirts. The people in the first group who were doing this for the principle of it and as a YOLO don't really care, it's "fuck Melvin" all the way...
But the people in the last group are going to feel blindsided.
-
This feels like damned if you do, damned if you don't. The action of trying to insulate these people from losing their money will actively make people lose money. The dip to the low $130 was directly caused by the actions they're taking.
But on the flipside, imagine what would have happened during the rally to $400 this morning. We likely would have seen another breakout that puts all options ITM...
The fact is, the dance will end. The idea is buy and hold... but for the newest cohort there's an implied "until the money fountain stops".
And the higher the share price is when that happens, the more it will hurt. (and make no mistake, some hedge fund might be hurting, but the big guy can navigate this. If it takes making Congress halt these stocks they'll do it)
This has been a fun ride, and thrust the insane inequality of our financial systems for normal individuals and cash flushed "institutions" into the spotlight... but I can't pretend I don't understand why it's happening.
From what you describe, brokers are protecting the retail investor? Awesome, I can feel free to make any speculative decision and they will protect me from myself if it goes south. Where can I sign up to one of these brokers that guarantee I am safe?
I disagree with your assessment, these brokers are preventing purchases of these stock, there is no risk for the broker in this regard.
I disagree with your assessment, these brokers are preventing purchases of these stock, there is no risk for the broker in this regard.
These companies are still businesses. They won't care if you, a single retail investor, screw up and lose a lot of money. However it is dangerous for the future health of their business if a sizable portion of their retail investors take a bath on this, get turned off by that experience, and end up stop using the service.
You aren't thinking straight. Millions of people bought GME for a single reason and Robinhood denied them that reason. If anything this is going to piss them off even more.
I don't even have a Robinhood account and it is now guaranteed that I will never use Robinhood in my entire life because they are total scumbags.
I don't even have a Robinhood account and it is now guaranteed that I will never use Robinhood in my entire life because they are total scumbags.
Those people might be angrier at this specific moment, but I don't think that will last long. Losing real money currently in your possession is always going to be more painful than losing out on future earnings that were always theoretical. Once GME drops back down to some normal levels, which is only a matter of time, the anger of restricting trades will fade. The anger from people who lost a lot won't fade as easily.
I don't have a Robinhood account either. They are plenty of reasons why I would avoid doing business with that company. I still don't think this is as bad a business move as some people here are claiming.
I don't have a Robinhood account either. They are plenty of reasons why I would avoid doing business with that company. I still don't think this is as bad a business move as some people here are claiming.
How will those investors feel when they are paternalistically told the trade they want to make is too risky, and then end up losing out on 3x gains as a result?
Let's not beat around the bush, RH doesn't care about it's users, it cares about it's clients. Including Citadel, who has a LOT to lose if all the options are ITM tomorrow.
Brokers are covering their asses. You're projecting a positive spin on this when I literally said "this is actively hurting investors"
-
Something insane is happening, claims of market manipulation are flying, Congress is saying they're going to investigate, what started as a meme is suddenly picking up more daily volume than SPY...
There's going to be a bloodbath, and their options are:
- do absolutely nothing, watch people get slaughtered. This is what they normally do!
- start removing yourself from the blast radius and pop the bubble, watch people get slaughtered.
The second case still hurts people, it's not some benevolent thing they're doing! They're doing it because it covers their asses a bit.
Because this time with all the tricky stuff happening with claims of manipulation, the insane volatility, the insane publicity, and most importantly the insane volume, they're afraid they might be opening themselves up to some sort of liability.
sec.gov/rules/other/2013/34-69013.pdf
Broker-dealers aren't supposed to hold your hand, but there is guidance that they should provide some meaningful sort of hand rails for retail investors.
Usually they make money either way and sit back, but this time the same way the masses have been concentrated at a stock ticker, the masses (and Congress) could end up concentrated at their door step asking why they let this happen...
They'd rather have AOC threatening to ask why a stock that's been spiked %1,400 in a month was deemed too high volatility for clients than the SEC asking why they let so many people take a bath on a meme gone wild...
-
Something insane is happening, claims of market manipulation are flying, Congress is saying they're going to investigate, what started as a meme is suddenly picking up more daily volume than SPY...
There's going to be a bloodbath, and their options are:
- do absolutely nothing, watch people get slaughtered. This is what they normally do!
- start removing yourself from the blast radius and pop the bubble, watch people get slaughtered.
The second case still hurts people, it's not some benevolent thing they're doing! They're doing it because it covers their asses a bit.
Because this time with all the tricky stuff happening with claims of manipulation, the insane volatility, the insane publicity, and most importantly the insane volume, they're afraid they might be opening themselves up to some sort of liability.
sec.gov/rules/other/2013/34-69013.pdf
Broker-dealers aren't supposed to hold your hand, but there is guidance that they should provide some meaningful sort of hand rails for retail investors.
Usually they make money either way and sit back, but this time the same way the masses have been concentrated at a stock ticker, the masses (and Congress) could end up concentrated at their door step asking why they let this happen...
They'd rather have AOC threatening to ask why a stock that's been spiked %1,400 in a month was deemed too high volatility for clients than the SEC asking why they let so many people take a bath on a meme gone wild...
>At this point retail money is flooding into this stock left and right, and people are starting invest money they cannot afford to lose.
Yes, lets do them a favor by destroying the value of their life savings they just invested.
>The problem for these brokers is when this musical chairs dance stops, retail investors will be holding the bag. Full stop.
Are you new? That's the entire reason wallstreetbets exists in the first place. It was always about losing money on purpose.
Yes, lets do them a favor by destroying the value of their life savings they just invested.
>The problem for these brokers is when this musical chairs dance stops, retail investors will be holding the bag. Full stop.
Are you new? That's the entire reason wallstreetbets exists in the first place. It was always about losing money on purpose.
> Yes, lets do them a favor by destroying the value of their life savings they just invested.
Comment pointed out that this hurts retail investors badly. I literally attributed an almost 50% drop to their actions.
But it covers their asses, and it reduces the number of people who can lose their life savings with them. Note the "with them" part
> Are you new? That's the entire reason wallstreetbets exists in the first place. It was always about losing money on purpose.
Are you new? WSB has always had clueless people trying to ride it's coattails, there's the "As and the Rs" for a reason. That's why it used to go private even more often than this.
My comment explains like 3 different ways that the people who did this made a YOLO with "fuck melvin" in mind don't care.
But there's suddenly an entire clueless public trying to clutch onto it, and they don't really know or care what Melvin and yolo and WSB are, they just see a ticker keeps going up because of those reddit guys
-
You should read comments before you reply. It's a lot of words but if you're willing to take the effort to reply, take some effort to read.
Comment pointed out that this hurts retail investors badly. I literally attributed an almost 50% drop to their actions.
But it covers their asses, and it reduces the number of people who can lose their life savings with them. Note the "with them" part
> Are you new? That's the entire reason wallstreetbets exists in the first place. It was always about losing money on purpose.
Are you new? WSB has always had clueless people trying to ride it's coattails, there's the "As and the Rs" for a reason. That's why it used to go private even more often than this.
My comment explains like 3 different ways that the people who did this made a YOLO with "fuck melvin" in mind don't care.
But there's suddenly an entire clueless public trying to clutch onto it, and they don't really know or care what Melvin and yolo and WSB are, they just see a ticker keeps going up because of those reddit guys
-
You should read comments before you reply. It's a lot of words but if you're willing to take the effort to reply, take some effort to read.
You've been defending the actions of the brokers and defending the hedge funds since yesterday. What's up? Hate the little guy much?
What kind lazy non-comment is this?
I didn't talk about any actions of any brokers yesterday or hedge funds yesterday, and besides, do you think a hedge fund has a HN account?
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Also, hate rationale discussion much? You couldn't refute a single thing I said, the brokers can do something that: I don't like, was self-serving, and good for shorts... but was also the least damaging call for retail... all at the same time.
It sounds like you're taking a bath because you didn't respond to the most blatant sell signal I've ever seen in my life and looking at someone to lash out at...
Pro tip for next time: If your plan works because people are buying and holding... if they can't buy it's probably going to go south.
It was a lose lose situation, the point of halting buys is to stop the pump... if it didn't stop the pump they would have halted the stock.
In fact if GME breaks out and doubles again count how long until it gets halted period for an "investigation".
Everyone was playing musical chairs and the music stopped. Don't get mad at me because you didn't try and find a seat.
I didn't talk about any actions of any brokers yesterday or hedge funds yesterday, and besides, do you think a hedge fund has a HN account?
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Also, hate rationale discussion much? You couldn't refute a single thing I said, the brokers can do something that: I don't like, was self-serving, and good for shorts... but was also the least damaging call for retail... all at the same time.
It sounds like you're taking a bath because you didn't respond to the most blatant sell signal I've ever seen in my life and looking at someone to lash out at...
Pro tip for next time: If your plan works because people are buying and holding... if they can't buy it's probably going to go south.
It was a lose lose situation, the point of halting buys is to stop the pump... if it didn't stop the pump they would have halted the stock.
In fact if GME breaks out and doubles again count how long until it gets halted period for an "investigation".
Everyone was playing musical chairs and the music stopped. Don't get mad at me because you didn't try and find a seat.
Brokers aren’t fiduciaries.
Brokers can and do change margin requirements in times of high volatility. For instance, IB raised margin reqs going into the election on many products.
Also, I am fairly certain that no broker is under obligation to provide you trading access to any specific stock or futures contract. There are many futures I would like to have access to trade but are unavailable at retail.
If you have an existing position, they are likely obligated to allow you to close out.
Also, I am fairly certain that no broker is under obligation to provide you trading access to any specific stock or futures contract. There are many futures I would like to have access to trade but are unavailable at retail.
If you have an existing position, they are likely obligated to allow you to close out.
https://www.finra.org/rules-guidance/rulebooks/finra-rules/5...
Without such regulation what would stop any bad actor from colluding with brokers to halt trading a moments that benefit themselves? Pretty hard to enforce or prove in practise but the idea that brokerages can prevent groups of users from accessing markets willy nilly is absurd. This is for cash products no any futures/options, even for those once they grant access it should not be taken away
Without such regulation what would stop any bad actor from colluding with brokers to halt trading a moments that benefit themselves? Pretty hard to enforce or prove in practise but the idea that brokerages can prevent groups of users from accessing markets willy nilly is absurd. This is for cash products no any futures/options, even for those once they grant access it should not be taken away
Nothing in that regulation stipulates that a broker must provide access to a market in any (and therefore every) security. Specifically, it refers to any transaction Clearly, a transaction can't occur unless the broker agrees they will provide that security for trade.
As to your second point, it would not be in a broker's best interest to change access to certain securities 'willy nilly' as they will lose business and clients. Whap happened today was not an arbitrary decision.
Would you be arguing if these brokers raised the margin requirement on Gamestop, etc to 99%? That is within their rights to do so, the SEC only sets a regulatory minimum margin req, not (to the best of my knowledge) a maximum.
People seem to forget that many people "trading" Gamestop and the like are doing so on margin. As such, the broker dealer has financial risk that you will not be able to pay your loan back, ie by a close out of positions. Is it reasonable or unreasonable to expect that the eventual decline in these stocks will be rapid with sizable gaps? How many of the Robinhood traders are going to cry bloody murder when they are automatically closed out 10s, perhaps a hundred points lower from when the call was triggered?
As to your second point, it would not be in a broker's best interest to change access to certain securities 'willy nilly' as they will lose business and clients. Whap happened today was not an arbitrary decision.
Would you be arguing if these brokers raised the margin requirement on Gamestop, etc to 99%? That is within their rights to do so, the SEC only sets a regulatory minimum margin req, not (to the best of my knowledge) a maximum.
People seem to forget that many people "trading" Gamestop and the like are doing so on margin. As such, the broker dealer has financial risk that you will not be able to pay your loan back, ie by a close out of positions. Is it reasonable or unreasonable to expect that the eventual decline in these stocks will be rapid with sizable gaps? How many of the Robinhood traders are going to cry bloody murder when they are automatically closed out 10s, perhaps a hundred points lower from when the call was triggered?
In my comment, I specifically said trading with cash. Easy to argue it was not arbitrary when there's a whale no one know about and the stock is obscure and the whale pays the brokerage more money that is worth to risk losing a few customers in that obscure stock. That's why these rules exist, even though they are more in-principle than anything
This is unlikely. The regulators are on the side of the financial institutions since the unusual activity is coming from retail traders.
The NASDAQ CEO, Anna Friedman has already said they will stop trading on a stock if they match chatter from social media with a stock's movement. Her justification is to allow them "time to investigate" the situation.
SEC lawyers have stated also that justification for investigation come when "volatile trading fuelled by opinions where there appears to be little corporate activity to justify [price movements]".
It's a ridiculous assertion since several banks and funds use alternate data sources to inform their buy and sell decisions. These alternate, or non-traditional, sources of data are usually many steps removed from corporate company announcements and news headlines.
Saying all that to say that legal positions are shoring up on the side of the exchanges and professionals.
The NASDAQ CEO, Anna Friedman has already said they will stop trading on a stock if they match chatter from social media with a stock's movement. Her justification is to allow them "time to investigate" the situation.
SEC lawyers have stated also that justification for investigation come when "volatile trading fuelled by opinions where there appears to be little corporate activity to justify [price movements]".
It's a ridiculous assertion since several banks and funds use alternate data sources to inform their buy and sell decisions. These alternate, or non-traditional, sources of data are usually many steps removed from corporate company announcements and news headlines.
Saying all that to say that legal positions are shoring up on the side of the exchanges and professionals.
> The regulators are on the side of the financial institutions since the unusual activity is coming from retail traders.
I call BS. I mean you might be right that they are on the side of the institutions, but it's not because retail is unusual, it's because it's a big old boys club and they don't want the plebs getting uppity. MM's exposed themselves by massively naked short selling into very risky territory, which is illegal and what the regulators should be more interested in, as it is what enabled all this to happen in the first place!(1)
It's well known that the SEC is a toothless wonder that doesn't go after the malfeasance right under it's nose but loves to go after middle and low end people, with maybe a smattering of high profiles just for the optics (come to think of it, very much like the IRS). The legal system is part of that corruption. So you may be right that the legal positions are shoring up on their side (though I think its very possible you are wrong), but that doesn't make it the right, or just, state of things!
I think we are living in a moment of history that will lay bare just how abusive and illegally manipulative the whole system is against retail and there is going to be a backlash that isn't inconsequential.
[1] https://www.sec.gov/answers/nakedshortsale.htm
I call BS. I mean you might be right that they are on the side of the institutions, but it's not because retail is unusual, it's because it's a big old boys club and they don't want the plebs getting uppity. MM's exposed themselves by massively naked short selling into very risky territory, which is illegal and what the regulators should be more interested in, as it is what enabled all this to happen in the first place!(1)
It's well known that the SEC is a toothless wonder that doesn't go after the malfeasance right under it's nose but loves to go after middle and low end people, with maybe a smattering of high profiles just for the optics (come to think of it, very much like the IRS). The legal system is part of that corruption. So you may be right that the legal positions are shoring up on their side (though I think its very possible you are wrong), but that doesn't make it the right, or just, state of things!
I think we are living in a moment of history that will lay bare just how abusive and illegally manipulative the whole system is against retail and there is going to be a backlash that isn't inconsequential.
[1] https://www.sec.gov/answers/nakedshortsale.htm
Are they going to start monitoring Bloomberg chat now as well?
Of course not. They're probably just going to wait until this blows over and get back to business as usual.
The way it's panning out now they probably won't go down the regulatory route. They already have levers that they can pull if the behaviour happens again, through the platform (Robinhood and the like) limiting trading or having Reddit or Discord ban or suspend groups on spurious grounds such as hate speech.
Why go down the legal route when you can give a soft nudge to board members and still get the desired outcome?
The way it's panning out now they probably won't go down the regulatory route. They already have levers that they can pull if the behaviour happens again, through the platform (Robinhood and the like) limiting trading or having Reddit or Discord ban or suspend groups on spurious grounds such as hate speech.
Why go down the legal route when you can give a soft nudge to board members and still get the desired outcome?
No, of course not. It's perfectly fine when they do it.
Brokers don't have a fiduciary interest, unlike Asset Managers.
So, no. They have no obligation to halt trades, usually they make money on volume of trades and would encourage people to trade more.
https://www.forbes.com/sites/forbesfinancecouncil/2020/06/17...
Do they have the legal privilege to do it? I suspect not, because if they did, they would be able to kill a company by not let anyone buy its share.
Idk if it is or not but it feels like crazy levels of illegal to be able to just halt buy orders like that. Imagine the inverse, if they just halted sell orders on a stock they were deeply invested?
If not criminal it sounds like a class action lawsuit.
Others in this thread are pointing out issues with arbitration, which really muddies the water on how this can be handled. Definitely complaining to the SEC though. Imagine if they did the inverse of this, and stopped anyone from being able to sell a stock they were heavily invested in. That would be absolute madness. It’s the exact same ass-covering.
Arbitration is usually bad for consumers but in volume it can be terrible for the offending company. Ususally folks dont go through it with but if you get WSB to ally and do mass arbitration to stick it to the man robinhood is an a world of hurt on legal costs.
I think RH can probably hide behind the excuse of "We thought it was a pump and dump scheme and tried to cool down the market". I'm not certain this isn't, somewhere in its core, a pump and dump scheme, even if the majority of people buying seem to be honest in their intentions.
This is purely fundamental. As of this morning, short interest was still 139% of float - which means that there are still exist buyers who will pay any price, no matter how high - or default on their shorting obligation.
Is it anything but rational to buy something you know someone is willing to pay any price (at this point in time) with the intention of selling it later?
Is it anything but rational to buy something you know someone is willing to pay any price (at this point in time) with the intention of selling it later?
Usually it's the exchange that halts or throttles trading.
Exactly. The entire market should be impacted equally. A brokerage making this decision is problematic. I'd fear now the WSB gang turns to class action lawsuit on RH et al for preventing them from exiting their positions, after ... well, allowing them to enter those positions. You know, the job of a brokerage.
Robinhood has not prevented anyone from closing their position. They've only prevented people from buying these stocks.
Right I’m seeing Vanguard not allowing it which I don’t believe is connected to Citadel.
"Investigations for thee and not for me." Or, I think no investigation will occur.
Pretty sure what the WSB traders were doing could qualify for market manipulation and various securities frauds in broad daylight.
I honestly hope not, and that RHb etc are in the wrong. But it’s sure to be informative anyway.
I honestly hope not, and that RHb etc are in the wrong. But it’s sure to be informative anyway.
There's something different about "organizing" raids in the public eye though.
There's no actual group consensus, no agreements, no negotiation, none of the processes that are required to actually "cooperate".
What happens is a a leader throws a bet at the wall and says "FOLLOW ME!". But no one is compelled or committed to any kind of action. This is the same thing as any analyst or short seller publishing their thesis and disclosing that they have a position. Its protected as freedom of speech.
Now, if the discord group or elsewhere have private circles about which stocks to raid and when, that is obviously a different matter. But I don't think that is the phenomenon that is occurring. This is a broader social movement.
There's no actual group consensus, no agreements, no negotiation, none of the processes that are required to actually "cooperate".
What happens is a a leader throws a bet at the wall and says "FOLLOW ME!". But no one is compelled or committed to any kind of action. This is the same thing as any analyst or short seller publishing their thesis and disclosing that they have a position. Its protected as freedom of speech.
Now, if the discord group or elsewhere have private circles about which stocks to raid and when, that is obviously a different matter. But I don't think that is the phenomenon that is occurring. This is a broader social movement.
> g to insulate these people from losing their money will actively make people lose money. The dip to the low $130 was directly caused by the actions they're taking.
> But on the flipside, imagine w
Due diligence and disclosing your position is not "market manipulation". Mainstream media wants it to look like that. Even the DFV, who spearheaded the GME position got a lot of flack early on.
> But on the flipside, imagine w
Due diligence and disclosing your position is not "market manipulation". Mainstream media wants it to look like that. Even the DFV, who spearheaded the GME position got a lot of flack early on.
That's the same as any market analysis you can read on any blog or mainstream media though. Somebody will just say "buy that stock" and people might agree with the analysis or not. If you think what they have done is market manipulation, so is every other financial newspaper out there.
I've noticed that EFTs that typically happened in 24 hours all the sudden require nearly a week. Even from places that have auto-drips enabled.
There won't be any serious investigation leading to a bombshell revelation like "Citadel told Robinhood to stop buying in $GME." The same people pressuring RH, Discord, etc are also quite adept at pressuring politicians and regulators.
There will probably be some hearings for show, but nothing more.
There will probably be some hearings for show, but nothing more.
[deleted]
Are they really going to be investigated? Like honestly.
> Or is it normal for brokers to independently halt trades on stocks they deem too risky?
Yes. It is exactly normal.
One. Brokers are required to act in the best interests of their clients. What is that? Well...
"A broker who becomes a fiduciary of his client must act with utmost good faith, reasonable care, and loyalty concerning the customer’s account, and owes a duty to keep informed regarding changes in the market which affect his customer’s interests, to act responsibly to protect those interests, to keep the customer informed as to each completed transaction, and to explain forthrightly the practical impact and potential risks of the course of dealing in which the broker is engaged."
— Rupert v. Clayton
Two. Robinhood is already under scrutiny already for trying to gamify trading, on the premise that it encourages people to treat things like a casino and lets them get hurt in the name of their own profit. They are on thin ice as it stands.
Three. This whole thing is going down like the Pequod, complete with the impassioned revenge monologue. "To the last I grapple with thee! From hell's heart I stab at thee! For hate's sake I spit my final breath at thee!"
If Robinhood didn't do something, they would soon learn what the true wrath of the regulators really looks like. Much, much better to drop Gamestop like a hot potato.
Some recent examples of similar actions: https://www.reuters.com/article/us-tvix-brokerages/schwab-co...
Yes. It is exactly normal.
One. Brokers are required to act in the best interests of their clients. What is that? Well...
"A broker who becomes a fiduciary of his client must act with utmost good faith, reasonable care, and loyalty concerning the customer’s account, and owes a duty to keep informed regarding changes in the market which affect his customer’s interests, to act responsibly to protect those interests, to keep the customer informed as to each completed transaction, and to explain forthrightly the practical impact and potential risks of the course of dealing in which the broker is engaged."
— Rupert v. Clayton
Two. Robinhood is already under scrutiny already for trying to gamify trading, on the premise that it encourages people to treat things like a casino and lets them get hurt in the name of their own profit. They are on thin ice as it stands.
Three. This whole thing is going down like the Pequod, complete with the impassioned revenge monologue. "To the last I grapple with thee! From hell's heart I stab at thee! For hate's sake I spit my final breath at thee!"
If Robinhood didn't do something, they would soon learn what the true wrath of the regulators really looks like. Much, much better to drop Gamestop like a hot potato.
Some recent examples of similar actions: https://www.reuters.com/article/us-tvix-brokerages/schwab-co...
Brokers are not fiduciaries.
https://www.forbes.com/sites/forbesfinancecouncil/2020/06/17...
Best interests means facilitating trades as best as possible, not trying to protect clients from their own trades. No broker is attempting to preserve your capital.
What they will do is protect their capital over yours by raising margin requirements and initiating special rules to limit their risk. They don't care if you blow up your account, as long as you don't owe them at the end.
What they will do is protect their capital over yours by raising margin requirements and initiating special rules to limit their risk. They don't care if you blow up your account, as long as you don't owe them at the end.
The reddit narrative is wrong. WSB marked their sub private for a little while to address a huge influx of bots and spam. They were only down for maybe an hour or so.
[deleted]
We already know that this is not what happened with reddit. And there's absolutely no reason to think RH has done this either. It is also grossly naïve to think that any investor who wasn't short on GME isn't already on the bandwagon.
It didn’t make much sense to me yesterday when Chamath and others were saying the system was rigged against the small investors. It totally does today. These actions are nothing but The powerful signaling to the small investors whose turf they encroached on.
I just shutdown my Robinhood (they have the audacity to use that name while stealing from the poor) account
I just shutdown my Robinhood (they have the audacity to use that name while stealing from the poor) account
This narrative doesn't make any sense. Hedge funds aren't a monolithic entity. Some hedge funds lost billions of dollars on shorts. Redditors made millions of dollars. Where do you think the rest of the money went to? That's right, other, more powerful, hedge funds. BlackRock held 9.2 million shares as of a few weeks ago.
There is a saying that if you're not paying for a product, you are the product.
Robinhood's real customer, the paying customer isn't the users of its app, which they offer out for free. It's actual paying customers are HFT firms, and specifically Citadel, the same Citadel that on Monday bailed out Melvin Capital with a 3 billion dollar loan.
Wouldn't surprise me one bit to find out Citadel called up Robinhood and said either shut this GME trading down or they're pulling the plug.
Robinhood's real customer, the paying customer isn't the users of its app, which they offer out for free. It's actual paying customers are HFT firms, and specifically Citadel, the same Citadel that on Monday bailed out Melvin Capital with a 3 billion dollar loan.
Wouldn't surprise me one bit to find out Citadel called up Robinhood and said either shut this GME trading down or they're pulling the plug.
Melvin Capital closed out their short positions, so what exactly does Citadel stand to gain here?
I do admit to speculating here, but I am speculating that Melvin Capital did not close out their short position. Their claim to CNBC leaves a lot of room for interpretation, misunderstanding, and it's an informal statement.
We won't know what Melvin Capital did until they submit their next 13F filing.
We won't know what Melvin Capital did until they submit their next 13F filing.
BlackRock isn’t a hedge fund, it’s (primarily) an index provider and just holds stocks including GME on behalf of clients who invest in wide swaths of the market at once. Most of the profit has probably gone to passive investors who own a little bit of GME as part of a diversified portfolio. (I’m pretty sure that group includes me but I’m not even 100% certain of that.)
BlackRock hold everything. It doesn’t really mean anything to say that they hold a lot of shares in some particular company. You might as well have just written “GameStop is a publicly traded US company” and one would deduce that BlackRock owns a lot of shares in it.
BlackRock had 13% of GameStop. That's more consistent with taking a real stake than just happening to own it along with a piece of everything else.
https://www.reuters.com/article/us-blackrock-investment-game...
https://www.reuters.com/article/us-blackrock-investment-game...
BlackRock owns a similar % of the entire market, so this isn't too surprising. BlackRock has about $9 trillion AUM, and the global stock market is worth around $100 trillion. (Not all of that $9 trillion is stocks, but BlackRock still owns a notable percentage of the total stock market.)
[deleted]
Linkedin is your friend. A lot of top people came from Blackrock. lol.
not having a RH account, can you trade there on leverage? I imagine if a huge number of retail traders are ending up leveraged to high hell, RH may have ended up in an uncanny financial position because of this.
You can (and people frequently do) trade options on RH, which are inherently leveraged. But RH is just a broker - it’s not on the other side of the trades itself.
ah okay. I wasn't sure what services RH offered and didn't. The amount of meme-ery around them had me wondering if they had decided to go beyond being a broker to try and extract more money from users like they do by selling access to their order flow.
I think the biggest thing RH offered that they may have been justified in curtailing is fractional stock buys and buys on margin. But to stop trading on buys outright is very strange.
Then they can enact a moritorium on leverage buys to protect themselves. They have no liability for clients who are buying without leverage.
Now they made enemies of most of their clients. I bet not more than few weeks before you will see advertising from big shot lawyers on national TV welcoming you into class action lawsuits. Frankly, I am terribly disgusted by this news from Robinhood and I hope they will be sued into eternity... and then hopefully DOJ step in an see what they did was illegal. If you have Robinhood account, write you state AG. Show your outrage in writing so they can also get involved.
> you will see advertising from big shot lawyers on national TV welcoming you into class action lawsuits
Like all darling start-ups, Robinhood has a section of its terms of use whereby users give up their right to sue.
Because courts are only for the rich and those with the power to negotiate. The rest of us clicking on take-it-or-leave-it contracts can pound sand.
Section 38: https://cdn.robinhood.com/assets/robinhood/legal/Robinhood%2...
Like all darling start-ups, Robinhood has a section of its terms of use whereby users give up their right to sue.
Because courts are only for the rich and those with the power to negotiate. The rest of us clicking on take-it-or-leave-it contracts can pound sand.
Section 38: https://cdn.robinhood.com/assets/robinhood/legal/Robinhood%2...
What if you're not a user and these trade restrictions affected your trades outside of the RH platform?
It's illegal to dump products on a market (physical products) below price... yet some a-hole can force their plaform into "sell-only" mode and it's all cool.
It's illegal to dump products on a market (physical products) below price... yet some a-hole can force their plaform into "sell-only" mode and it's all cool.
Hi! Sorry, not an american.
Exactly how is it legal to forego your right to a fair trial on an "agreement" between two parties who for any intents and purposes do not know each other?
Exactly how is it legal to forego your right to a fair trial on an "agreement" between two parties who for any intents and purposes do not know each other?
Clauses like this are put in there to try and protect from nuisance lawsuits. But in a case like this, it will certainly not protect them.
Speaking of which, https://twitter.com/ljmoynihan/status/1354836830169006081
there are lots of other ways to trade stocks and they will all limit your ability to trade any old thing depending on the state of the market, the state of your balance sheet, the state of their balance sheet. why do you care about one particular crappy retail broker?
Citadel runs robinhood transactions and Citadel bailed out the hedgefunds.
The house(Citadel) always wins.
The house(Citadel) always wins.
While what you say is plausible, can't it also simply be that they saw a gigantic portion of their userbase making these incredibly risky bets and they were worried that it'd end up blowing in their face?
A broker is nit your friend who refuses to buy junk food for you because he suspects you’ll be sick.
A broker is yiur fiduciary/agent; their discretion at refusing your order should be limited to well defined circumstances, and I would be surprised if this is one of them.
(I would not be surprised if the EULA lets them do what they want, but I would be surprised if it would actually be found legal in court —- though it will likely take ages to test because it likely contains a binding arbitration clause)
A broker is yiur fiduciary/agent; their discretion at refusing your order should be limited to well defined circumstances, and I would be surprised if this is one of them.
(I would not be surprised if the EULA lets them do what they want, but I would be surprised if it would actually be found legal in court —- though it will likely take ages to test because it likely contains a binding arbitration clause)
It's not what I was trying to say, of course they're not your friend, I'm not that naive. But on the other hand if many of their users go bankrupt because of poor trades that could backfire against Robinhood themselves, directly or indirectly (for instance by motivating new regulations).
Sorry, but no. Concern for the little people isn't even slightly indicated by Robinhood's actions.
[deleted]
WSB have been yoloing their trades since forever.
This is some anticompetitive bullshit, plain and simple.
This is some anticompetitive bullshit, plain and simple.
That doesn't make any sense because they still allowed them to sell, realizing a loss. Why not stop buying and selling?
This right here. Only allowing sells appears to be blatantly anti-retail investor, intended to help drive down prices for those with short positions needing to be closed.
Exactly. How are retail investors supposed to benefit if they are forced to wait until the stock they just bought tanks? If anything that's a direct attack at the value of your portfolio.
Try calling up your local Charles Schwab office to ask them if they'll stop you from making bad trades. While you're there, also see if they'll help you get your money back if you lose money on bad trades.
D1 capital is a Robinhood investor and was reported to have lost 20% in the markets due to this revolt.
Yep, how is this not market manipulation?!
https://www.crunchbase.com/organization/robinhood/company_fi...
https://www.bloomberg.com/news/articles/2021-01-28/dan-sundh...
I'm sure there are other investors on that list losing money from this whole thing too.
https://www.crunchbase.com/organization/robinhood/company_fi...
https://www.bloomberg.com/news/articles/2021-01-28/dan-sundh...
I'm sure there are other investors on that list losing money from this whole thing too.
All robinhood orders go to Citadel for execution because that is how they make money. Citatel just bailed out Melvin who shorted GME https://www.cnbc.com/2021/01/27/hedge-fund-targeted-by-reddi... So the call to Robinhood was probably from Citadel. It's disgusting that instead of saying just this, they hypocritically "protected" their users.
To the two downvoters , this is 1h after I wrote the comment: https://twitter.com/justinkan/status/1354853920762253315
It’s Citadel, they are holding the shorts, and they are the main customer of Robinhood.
I think Citadel is winning this war, but people are moving in masses to Fidelity now that they learned why Robinhood is ,,free’’
I think Citadel is winning this war, but people are moving in masses to Fidelity now that they learned why Robinhood is ,,free’’
So the exact opposite of what the real Robinhood would do?
100% this, very eloquently said
Yeah there’s something going on here. But they don’t realize that the Streisand effect will be or in full force in this. People are going to freak.
What would "they" do if they were enemies of Robin Hood? Short Robin Hood stock? Or send contract killers?
If by "they" you mean Wall Street - pull the data sharing contracts that underpin Robin Hood's business model in the first place.
If by "they" you mean WSB - for now, they just nuked RH's app in Play Store, but they're already calling for a class action lawsuit.
If by "they" you mean WSB - for now, they just nuked RH's app in Play Store, but they're already calling for a class action lawsuit.
Don’t just pull RH’s, pull all brokers’. Paying a commission doesn’t protect you from anyone maximizing profits.
All the discount brokers sell order flow.
> Schwab earned 1.4% of revenue from payment for order flow, TD Ameritrade about 8.4%, and ETRADE about 6.1%.
They all make half or a lot less of their revenue from commissions.
> The contribution to revenue across the discount brokerages is minimal: 6.8% at Schwab, 28% at TD Ameritrade, and 17% at ETRADE.
> Interactive Brokers is the one standout, largely because it caters to high-volume professional and semi-professional traders; it makes 49% of revenues on commissions.
All RH did was run a tight ship on costs and cut commissions to zero. In theory, commissions could go less than zero.
https://www.kalzumeus.com/2019/6/26/how-brokerages-make-mone...
All the discount brokers sell order flow.
> Schwab earned 1.4% of revenue from payment for order flow, TD Ameritrade about 8.4%, and ETRADE about 6.1%.
They all make half or a lot less of their revenue from commissions.
> The contribution to revenue across the discount brokerages is minimal: 6.8% at Schwab, 28% at TD Ameritrade, and 17% at ETRADE.
> Interactive Brokers is the one standout, largely because it caters to high-volume professional and semi-professional traders; it makes 49% of revenues on commissions.
All RH did was run a tight ship on costs and cut commissions to zero. In theory, commissions could go less than zero.
https://www.kalzumeus.com/2019/6/26/how-brokerages-make-mone...
Everybody screaming "class action lawsuit" is lying to themselves. I'm pretty confident this is totally within Robinhood's rights according to their terms and conditions (that everybody with an account agreed to).
Robinhood isn't only limited by its terms and conditions; there are also laws it has to comply with.
EULAs can't override federal law.
That said, even if the SEC does rule against Citadel I wouldn't expect the fine to be anything that bothers Citadel. The message time and time again is that the fees are way less painful than not cheating in the first place.
That said, even if the SEC does rule against Citadel I wouldn't expect the fine to be anything that bothers Citadel. The message time and time again is that the fees are way less painful than not cheating in the first place.
So is closing the account and moving to a better app.. Robin Hood is going to take this on the chin.
We detached this subthread from https://news.ycombinator.com/item?id=25941689.
Source?
If I had a source I would be reporting it to the SEC, the FBI and any newspaper that would print it, though of course that would likely be none. This is all speculation, obviously.
“You know: we can buy market information elsewhere”.
This is not a source but.
The problem with huge power is that one loses control of the size of one’s decisions.
This is not a source but.
The problem with huge power is that one loses control of the size of one’s decisions.
Lol
Please don't post unsubstantive comments here. We're trying for something a bit different than internet default.
https://news.ycombinator.com/newsguidelines.html
https://hn.algolia.com/?dateRange=all&page=0&prefix=false&so...
https://news.ycombinator.com/newsguidelines.html
https://hn.algolia.com/?dateRange=all&page=0&prefix=false&so...
Hackernews, everyone!
Please also don't post unsubstantive comments here. We're trying for something a bit different than internet default.
https://news.ycombinator.com/newsguidelines.html
https://hn.algolia.com/?dateRange=all&page=0&prefix=false&so...
https://news.ycombinator.com/newsguidelines.html
https://hn.algolia.com/?dateRange=all&page=0&prefix=false&so...
Only a small fraction of RH's customers bought into the fantasy they are fighting some kind of revolution against hedge funds (or that 'the smoking man' paid them a visit in the night...). The vast majority don't care about any of these stocks. Also, by making trading so easy RH has a responsibility to protect amateur investors from making terrible financial decisions. If you really want to buy game stop stock or whatever there are plenty of ways to do so. So they are by no means "screwing" their customers.
> Also, by making trading so easy RH has a responsibility to protect amateur investors from making terrible financial decisions.
I strongly disagree with this. Nobody can know beforehand what is a good investment or not. The omnipresent disclaimer applies: "All investments involve risks, including the possible loss of capital."
The idea that the professionals know something that the rest of us don't, is quite controversial and there are many articles giving evidence to the contrary.
https://www.researchgate.net/publication/234025489_The_Activ...
This idea is also quite condescending (my own opinion, no references given).
I strongly disagree with this. Nobody can know beforehand what is a good investment or not. The omnipresent disclaimer applies: "All investments involve risks, including the possible loss of capital."
The idea that the professionals know something that the rest of us don't, is quite controversial and there are many articles giving evidence to the contrary.
https://www.researchgate.net/publication/234025489_The_Activ...
This idea is also quite condescending (my own opinion, no references given).
>The vast majority don't care about any of these stocks.
Are you crazy? Robinhood just sent a message to retail investors (it's entire customerbase) that they are going to crush you at any given time. By using Robinhood your are exposing yourself to extreme risk of losing your investments no matter what stock you trade.
>Also, by making trading so easy RH has a responsibility to protect amateur investors from making terrible financial decisions.
WSB is about making terrible financial decisions as a sport. That's the entire point.
Are you crazy? Robinhood just sent a message to retail investors (it's entire customerbase) that they are going to crush you at any given time. By using Robinhood your are exposing yourself to extreme risk of losing your investments no matter what stock you trade.
>Also, by making trading so easy RH has a responsibility to protect amateur investors from making terrible financial decisions.
WSB is about making terrible financial decisions as a sport. That's the entire point.
Protecting them is one thing, but ceasing all buys before the market opens and without warning is irresponsible.
Buy Bitcoin
"Free marketeers declare markets a little too free for their tastes"
I've been really enjoying watching this whole thing pan out but you had to know that the 'professional capitalists' who brought us the economic crisis in 2009 would close ranks and appeal to the SEC to save them from the vicious retail investors. Robin Hood doesn't want to be banished to the proverbial wastelands because their customers are more clever than some hedge fund operators.
I'd argue Robinhood customers are not more clever, but they are more irrational/motivated by non-market goals.
Getting absolutely wrecked by irrational market behaviour is a rite of passage for small traders, and it's only fair that some bigger hedge funds should learn that lesson too.
Getting absolutely wrecked by irrational market behaviour is a rite of passage for small traders, and it's only fair that some bigger hedge funds should learn that lesson too.
Some of them were sophisticated enough to see the short squeeze opportunity and realized it was possible to exploit it. Melvin Capital kept pouring more good money after bad in a classic and literal sunk-cost fallacy. This is all completely rational behavior by WSB investors, taking advantage of the short squeeze.
At a fundamental level GME just got a new activist investor/board member with a history of revitalizing retail operations and turning them around. This would be a rational reason to invest in GameStop at a basic level.
This is just the status quo realizing their position can be threatened and the easy money the wealthy have rolling in can be taken by average people acting in concert.
Criminal
Robinhood is looking for a near term IPO. Who will take their stock public? Daddy told them to delist and they complied.
https://twitter.com/justinkan/status/1354853920762253315
>Just got a tip that Citadel reloaded their shorts before they told Robinhood to stop trading $GME.
If this is true, Ken Griffin and the Robinhood founders should be in jail.
This is class warfare.
If this is true, Ken Griffin and the Robinhood founders should be in jail.
This is class warfare.
'Reloaded' isn't a term I understand yet amidst the WSB stuff going on. Do you have a brief refresher on what it's slang for?
"Reloaded" in this context means they reopened their short position. As in, they had closed their short earlier, and now they opened it again. The implication is that they made a large bet that the stock price would fall, just before they changed the rules to cause the stock price to fall.
I have no idea if any of this is true.
I have no idea if any of this is true.
bought more
I can't wait (and by that I mean I'm terrified) to see what politics happens in the midterms. 2007/8 -> tea party & Sarah Palin lowering the bar.
I argue economy/bailouts & anger had a large role. But obviously Obama, Obamacare, & racism played big role too.
It's palpable and poll-able how pissed off everyone except the top top % is.
I work in Democratic politics, am a relatively good earner, clearly engaged, and I'm pissed. I have a hard time understanding the other side (MAGA) but they seem even more angry all around - enough to attempt to murder Congress.
Maybe the best hope we have is the 'working class' (at this point I would categorize that as anyone making under $500k) getting pushed so far that we see real change to redistribute wealth and power back down.
I'm skeptical though because the other type of political polarization doesn't help; half these voters identify more for Trump / religious issues than their own interests.
I argue economy/bailouts & anger had a large role. But obviously Obama, Obamacare, & racism played big role too.
It's palpable and poll-able how pissed off everyone except the top top % is.
I work in Democratic politics, am a relatively good earner, clearly engaged, and I'm pissed. I have a hard time understanding the other side (MAGA) but they seem even more angry all around - enough to attempt to murder Congress.
Maybe the best hope we have is the 'working class' (at this point I would categorize that as anyone making under $500k) getting pushed so far that we see real change to redistribute wealth and power back down.
I'm skeptical though because the other type of political polarization doesn't help; half these voters identify more for Trump / religious issues than their own interests.
This sort of stuff will put people more and more on edge, there is the deplatforming going on, people asserted their power financially, and now getting that removed too, the powers that rule USA don't realize that soon the only tool left to common people is violence?
Even more with some irresponsible newspapers blaming the whole thing on GamerGate and Alt-Right, effectively pushing away people that previously could be on their side.
Even more with some irresponsible newspapers blaming the whole thing on GamerGate and Alt-Right, effectively pushing away people that previously could be on their side.
Some people are complaining to me that this comment is an implicit call to violence. It's not so hard to see why they might be reading it that way.
Please don't post like that to HN. Instead, either post comments that are unambiguously within the site guidelines to begin with, or be careful to disambiguate your intent. Otherwise we end up in flamewar hell or something even worse than flamewar hell.
https://news.ycombinator.com/newsguidelines.html
https://hn.algolia.com/?dateRange=all&page=0&prefix=false&so...
Please don't post like that to HN. Instead, either post comments that are unambiguously within the site guidelines to begin with, or be careful to disambiguate your intent. Otherwise we end up in flamewar hell or something even worse than flamewar hell.
https://news.ycombinator.com/newsguidelines.html
https://hn.algolia.com/?dateRange=all&page=0&prefix=false&so...
This reaction was predicted in this sibling comment: https://news.ycombinator.com/item?id=25941883
(dang: Thank you for all your moderation. This is a meta-comment, not a complaint.)
(dang: Thank you for all your moderation. This is a meta-comment, not a complaint.)
> the powers that rule USA don't realize that soon the only tool left to common people is violence?
What's even more concerning to me is that, to platforms looking for an excuse, your comment could be painted as trying to "incite" violence, and used as a justification to ban you.
What's even more concerning to me is that, to platforms looking for an excuse, your comment could be painted as trying to "incite" violence, and used as a justification to ban you.
The WSB sub is almost certainly going to get banned by Reddit.
Given the track record Reddit has of keeling over to public pressure, there is no way they are going to stand up to the SEC.
Given the track record Reddit has of keeling over to public pressure, there is no way they are going to stand up to the SEC.
With 175MM+ pageviews yesterday alone, I'm sure they're ecstatic about WSB's growth.
This chapter in WSB has brought forth substantially better communication with the admins than we'd ever had in the past, including a direct line to Alexis.
Edit:
Thank you all for the outpour of support!
Our main challenges thus far have been technical (hitting API limits, automoderator backlog, etc.) however, those issues have now been resolved and our bots are running better than ever before.
We largely owe our success in handling this to the Reddit engineering team who has routinely stepped up and fixed things. As chaotic as the scene has been for us moderators, I'm sure they have been under much more pressure. If you know a reddit engineer, please give them your thanks as they have done a phenomenal job.
For those curious, the surge in activity broke a number of things. Here are just a few:
> modmail surpassing 80,000+ messages resulting in modmail going down
> constant threads hitting 100,000 comments resulting in slow loading site-wide
> automoderator getting backlogged and taking 30+ minutes to parse comments leading to terrible comments getting through.
All these issues are now resolved, so once again, big thanks to the Reddit engineering team!
This chapter in WSB has brought forth substantially better communication with the admins than we'd ever had in the past, including a direct line to Alexis.
Edit:
Thank you all for the outpour of support!
Our main challenges thus far have been technical (hitting API limits, automoderator backlog, etc.) however, those issues have now been resolved and our bots are running better than ever before.
We largely owe our success in handling this to the Reddit engineering team who has routinely stepped up and fixed things. As chaotic as the scene has been for us moderators, I'm sure they have been under much more pressure. If you know a reddit engineer, please give them your thanks as they have done a phenomenal job.
For those curious, the surge in activity broke a number of things. Here are just a few:
> modmail surpassing 80,000+ messages resulting in modmail going down
> constant threads hitting 100,000 comments resulting in slow loading site-wide
> automoderator getting backlogged and taking 30+ minutes to parse comments leading to terrible comments getting through.
All these issues are now resolved, so once again, big thanks to the Reddit engineering team!
Thanks for your work - As a former super-mod I know how crazy and thankless it can be. You guys have a real scene going on, it's pretty beautiful.
Don't stop. I am 100% behind you guys.
[deleted]
What SEC rule is WSB violating? I've seen no evidence yet that there is any sort of pump and dump collusion, the speculative bubble / stick-it-to-the-market-manipulators deal on WallStreetBets seems to be fairly organically driven as many memes are. There's no rules that I can think of against "tulip mania" type speculative bubbles. If there were, a huge amount of people would have been in serious trouble for the 2008 real estate bubble / crash.
To be honest, I think the recent restrictions on trading specific stocks (on Robinhood etc.) is absolutely dumb. Apparently, the sort of crappy market manipulation that led to the 2008 Volkswagen "short squeeze" or the 2010 "flash crash" is absolutely fine because it was driven by traders. But an amateur mob performing the short squeeze must be stopped at all cost? What bullshit. Either the "casino" should be open to all, or rules that apply to the "amateur mob" should apply to the HFT and derivatives market as well.
To be honest, I think the recent restrictions on trading specific stocks (on Robinhood etc.) is absolutely dumb. Apparently, the sort of crappy market manipulation that led to the 2008 Volkswagen "short squeeze" or the 2010 "flash crash" is absolutely fine because it was driven by traders. But an amateur mob performing the short squeeze must be stopped at all cost? What bullshit. Either the "casino" should be open to all, or rules that apply to the "amateur mob" should apply to the HFT and derivatives market as well.
> What SEC rule is WSB violating?
Market manipulation. Loosely, market manipulation happens when you artificially influence the price of a stock, resulting in a personal gain. Buying stock with the intention of causing a short squeeze can be interpreted to fit that definition. I believe that WSB is creating artificial demand to try to "screw over" certain institutional investors. I am not a lawyer; this is not a legal interpretation.
> Apparently, the sort of crappy market manipulation that led to the 2008 Volkswagen "short squeeze" or the 2010 "flash crash" is absolutely fine because it was driven by traders.
How were they "absolutely fine?" You do know that regulators attempted to prosecute the traders/executives responsible for the 2008 VW short squeeze [1], and successfully prosecuted a trader for the 2010 flash crash [2]? For the VW short squeeze, regulators were not able to find evidence that the traders involved intended to cause a short squeeze or engaged in any artificial demand; they actually demanded the stock because they sought to take over VW. This is also evidenced by the fact the Porsche sold stock on the open market once they released that a squeeze was happening [3].
[1] https://www.ft.com/content/ad782326-ed02-11e5-888e-2eadd5fbc...
[2] https://en.wikipedia.org/wiki/2010_flash_crash
[3] https://www.ft.com/content/0a58b63a-4294-3e07-8390-c3aabef39...
Market manipulation. Loosely, market manipulation happens when you artificially influence the price of a stock, resulting in a personal gain. Buying stock with the intention of causing a short squeeze can be interpreted to fit that definition. I believe that WSB is creating artificial demand to try to "screw over" certain institutional investors. I am not a lawyer; this is not a legal interpretation.
> Apparently, the sort of crappy market manipulation that led to the 2008 Volkswagen "short squeeze" or the 2010 "flash crash" is absolutely fine because it was driven by traders.
How were they "absolutely fine?" You do know that regulators attempted to prosecute the traders/executives responsible for the 2008 VW short squeeze [1], and successfully prosecuted a trader for the 2010 flash crash [2]? For the VW short squeeze, regulators were not able to find evidence that the traders involved intended to cause a short squeeze or engaged in any artificial demand; they actually demanded the stock because they sought to take over VW. This is also evidenced by the fact the Porsche sold stock on the open market once they released that a squeeze was happening [3].
[1] https://www.ft.com/content/ad782326-ed02-11e5-888e-2eadd5fbc...
[2] https://en.wikipedia.org/wiki/2010_flash_crash
[3] https://www.ft.com/content/0a58b63a-4294-3e07-8390-c3aabef39...
> Market manipulation. Loosely, market manipulation happens when you artificially influence the price of a stock, resulting in a personal gain. Buying stock with the intention of causing a short squeeze can be interpreted to fit that definition. I believe that WSB is creating artificial demand to try to "screw over" certain institutional investors. I am not a lawyer; this is not a legal interpretation.
Bill Ackman went on CNBC last year in near tears saying the end was coming, helping stocks continue their nose dive...all the while he was buying tons and tons of stocks which he turned into billions. How is that allowed but people on a message board sharing positions and high number of short floats isn't? There is literally, and has been for a long time, a website that tells you the short interest in a stock. It's sole purpose is to help people find short squeezes. That's why you have stats like "days to cover."
Bill Ackman went on CNBC last year in near tears saying the end was coming, helping stocks continue their nose dive...all the while he was buying tons and tons of stocks which he turned into billions. How is that allowed but people on a message board sharing positions and high number of short floats isn't? There is literally, and has been for a long time, a website that tells you the short interest in a stock. It's sole purpose is to help people find short squeezes. That's why you have stats like "days to cover."
> ...all the while he was buying tons and tons of stocks which he turned into billions
It's called activist investing. His fund did not buy stocks, but bought Credit Default Swaps to the tune of $27 million USD. In the event that the markets dropped, they were awarded massive gains if they exit position. They gained $1.3 billion.
Prior to exiting the position which was publicly released, he went on media outlets and promoted the idea of shutting down the economy. This is what activist investors do. They actively spread rumors that will help their positions.
https://assets.pershingsquareholdings.com/2020/03/26122842/P...
It's called activist investing. His fund did not buy stocks, but bought Credit Default Swaps to the tune of $27 million USD. In the event that the markets dropped, they were awarded massive gains if they exit position. They gained $1.3 billion.
Prior to exiting the position which was publicly released, he went on media outlets and promoted the idea of shutting down the economy. This is what activist investors do. They actively spread rumors that will help their positions.
https://assets.pershingsquareholdings.com/2020/03/26122842/P...
That is -not- what an activist investor is. An activist investor is someone that buys a large enough portion of a company in order to have a say in board operations, etc (even liquidation.) You can go on air and talk up your company, ever CEO, etc does that. That is expected. What he did was talk down positions he was going into. That is not activism.
> It's called activist investing.
I'd be really interested in learning more about the Olympic level mental gymnastics one has to go through to write this off as O.K. but then turn around and say that a bunch of random people on an open public forum saying to buy an over-shorted stock is market manipulation. They don't even have the purchasing power to make a difference here.
I'd be really interested in learning more about the Olympic level mental gymnastics one has to go through to write this off as O.K. but then turn around and say that a bunch of random people on an open public forum saying to buy an over-shorted stock is market manipulation. They don't even have the purchasing power to make a difference here.
I remember, a few years back, that Musk made news because he shut down someone asking questions in a public earnings report. The press was giving him a lot of flack about it. Then I kept reading, and found out the person who was trying to ask those questions represented a firm(s) that had large short positions on the stock, and was trying to cause the stock to dip. Musk knew what was going on, and headed it off. Seemed like he made a good call, but then the press made THAT the story instead.
> There is literally, and has been for a long time, a website that tells you the short interest in a stock. It's sole purpose is to help people find short squeezes. That's why you have stats like "days to cover."
Again, I am not a lawyer, I am not your lawyer, and this is not a legal interpretation or legal advice; just my personal opinion.
Motivation and intent are the main factors in determining manipulation. So there are two cases:
1. A trader buys stock, seeking to profit, because they believe that a short squeeze may be incoming soon.
2. A trader buys stock, seeking to profit, because they intend to drive the stock price up, thereby causing a short squeeze.
(1) is legal (in my understanding; see the disclaimers above). (2) is not. They differ in their intents. The first one is "legitimate" demand, the second is "artificial."
Now, it's difficult to prove intent in court. And clearly, many people in WSB legitimately are buying the stock because of (1). But there are some who are doing (2). They have plausible deniability, though, and that's why it's unlikely that anyone in WSB will be successfully prosecuted without more concrete evidence.
Again, I am not a lawyer, I am not your lawyer, and this is not a legal interpretation or legal advice; just my personal opinion.
Motivation and intent are the main factors in determining manipulation. So there are two cases:
1. A trader buys stock, seeking to profit, because they believe that a short squeeze may be incoming soon.
2. A trader buys stock, seeking to profit, because they intend to drive the stock price up, thereby causing a short squeeze.
(1) is legal (in my understanding; see the disclaimers above). (2) is not. They differ in their intents. The first one is "legitimate" demand, the second is "artificial."
Now, it's difficult to prove intent in court. And clearly, many people in WSB legitimately are buying the stock because of (1). But there are some who are doing (2). They have plausible deniability, though, and that's why it's unlikely that anyone in WSB will be successfully prosecuted without more concrete evidence.
What is artificial about buying a stock and encouraging others to buy it?
Because the encouragement affects the outcome of your own investment instead of "happening on its own".
So no one should be allowed to speak for or against buying or selling stocks they own?
> Bill Ackman went on CNBC last year in near tears saying the end was coming, helping stocks continue their nose dive.... How is that allowed?
It shouldn't be allowed without proper disclosure on their actual positions. The SEC has prosecuted people in the past for making public statements while taking the other direction without proper disclosure.
I believe that this should be investigated by the SEC, but it likely may not since, at the direction of the Trump administration, the SEC has instead focused their efforts on other financial crimes.
It shouldn't be allowed without proper disclosure on their actual positions. The SEC has prosecuted people in the past for making public statements while taking the other direction without proper disclosure.
I believe that this should be investigated by the SEC, but it likely may not since, at the direction of the Trump administration, the SEC has instead focused their efforts on other financial crimes.
> The SEC has prosecuted people in the past for making public statements while taking the other direction without proper disclosure.
There a difference between "This stock is going down. (I buy long because I know something I'm not saying)" and "This stock is going down. (I buy short because I believe what I say)"
This is essentially Reddit saying "This stock is going up, so buy options to exacerbate that and to profit." No misrepresentation.
If the SEC doesn't like this, they should fix the underlying market structure that makes this action possible. Effectively: what allows the traders to create leverage by abusing / forcing brokers to take specific actions.
Or just give up and accept that by digitizing markets we're past the rubicon to smart trading and predatory pack algorithms being successful.
There a difference between "This stock is going down. (I buy long because I know something I'm not saying)" and "This stock is going down. (I buy short because I believe what I say)"
This is essentially Reddit saying "This stock is going up, so buy options to exacerbate that and to profit." No misrepresentation.
If the SEC doesn't like this, they should fix the underlying market structure that makes this action possible. Effectively: what allows the traders to create leverage by abusing / forcing brokers to take specific actions.
Or just give up and accept that by digitizing markets we're past the rubicon to smart trading and predatory pack algorithms being successful.
First, I am not arguing that WSB is engaging in fraud or misrepresentation, as is alleged with Ackman. That is entirely different from the activity I am alleging is being done on WSB (by a subset of posters).
> This is essentially Reddit saying "This stock is going up, so buy options to exacerbate that and to profit." No misrepresentation.
I see threads where WSB is saying "This stock is going up, and if we make it go up more, hedge funds & market makers will have to buy more stock to cover their short positions, and therefore it will go up even further [and we will make more money]." That's the manipulative part — creating artificial prices to induce even more demand.
> This is essentially Reddit saying "This stock is going up, so buy options to exacerbate that and to profit." No misrepresentation.
I see threads where WSB is saying "This stock is going up, and if we make it go up more, hedge funds & market makers will have to buy more stock to cover their short positions, and therefore it will go up even further [and we will make more money]." That's the manipulative part — creating artificial prices to induce even more demand.
I think it's the "manipulative" that's debatable here, because the manipulation is effectively being done by a second party.
Is it manipulation if you're so predictable that an action by me causes you to always act a certain way? And I profit when you take that action?
If hedge funds refused to cover their shorts (I'm probably using the wrong terminology) and left them open, this wouldn't be an issue, no? Or, conversely, if market makers refused to sell options on overly volatile stocks / stocks being manipulated?
Is it manipulation if you're so predictable that an action by me causes you to always act a certain way? And I profit when you take that action?
If hedge funds refused to cover their shorts (I'm probably using the wrong terminology) and left them open, this wouldn't be an issue, no? Or, conversely, if market makers refused to sell options on overly volatile stocks / stocks being manipulated?
> Is it manipulation if you're so predictable that an action by me causes you to always act a certain way? And I profit when you take that action?
It depends, but approximately, yes if there was any intent to exploit that fact. See spoofing, other prosecutions for creating short squeezes, etc.
https://dealbreaker.com/2012/06/phil-falcones-alleged-piggis...
The rationale is that markets are better for participants when their prices are accurate and reflect true supply and demand. Price manipulation subverts that, so the SEC disallows it (except in some cases where manipulation is explicitly allowed for historical reasons).
> refused to cover their shorts (I'm probably using the wrong terminology) and left them open, this wouldn't be an issue, no?
This is imprecise; hedge funds might cover short positions to hedge further losses, or because their prime broker might require them to maintain a certain margin (to reduce counterparty risk). I have no experience in institutional investing, so that's a guess.
> Or, conversely, if market makers refused to sell options on overly volatile stocks / stocks being manipulated?
Market makers will increase a premium for options on "overly volatile stocks." If the risk is too high, then they may stop selling the options altogether. But the problem is — it's difficult to predict which next stock WSB might start manipulating. That's another issue. If regulatory agencies don't step in and prevent this type of manipulation, the premiums on all retail-adjacent options will be higher because of the increased risk and fear that a capricious WSB crowd might turn on a MM. That's bad for people who use options "correctly" — not for gambling, but as a way to hedge and reduce risk.
It depends, but approximately, yes if there was any intent to exploit that fact. See spoofing, other prosecutions for creating short squeezes, etc.
https://dealbreaker.com/2012/06/phil-falcones-alleged-piggis...
The rationale is that markets are better for participants when their prices are accurate and reflect true supply and demand. Price manipulation subverts that, so the SEC disallows it (except in some cases where manipulation is explicitly allowed for historical reasons).
> refused to cover their shorts (I'm probably using the wrong terminology) and left them open, this wouldn't be an issue, no?
This is imprecise; hedge funds might cover short positions to hedge further losses, or because their prime broker might require them to maintain a certain margin (to reduce counterparty risk). I have no experience in institutional investing, so that's a guess.
> Or, conversely, if market makers refused to sell options on overly volatile stocks / stocks being manipulated?
Market makers will increase a premium for options on "overly volatile stocks." If the risk is too high, then they may stop selling the options altogether. But the problem is — it's difficult to predict which next stock WSB might start manipulating. That's another issue. If regulatory agencies don't step in and prevent this type of manipulation, the premiums on all retail-adjacent options will be higher because of the increased risk and fear that a capricious WSB crowd might turn on a MM. That's bad for people who use options "correctly" — not for gambling, but as a way to hedge and reduce risk.
I personally believed that stocks would continue at depressed valuations for the duration of the pandemic, yet bought during the crash because I knew there would be a recovery. I don’t think those actions are contradictory. (And of course I wound up being surprised how quickly prices recovered.)
You weren't a huge fund manager on TV talking down the market in real time while having your firm buy. A lot of people vested around last March, that's completely different than trying to scare people out of positions on national TV so that you can get into the position at a lower price.
This is not artificially influencing the stock price. Buying a stock believing it will increase in value is basically the point of the stock market. Believing it will increase in value because it's been over-shorted is a legitimate reason to ascribe value to it.
> The US Securities Exchange Act defines market manipulation as "transactions which create an artificial price or maintain an artificial price for a tradable security".
It is my opinion that this demand is not artificial, it is genuine, although caused by factors other than the inherent value of the stock itself.
If this is considered to be 'creating an artificial price', I don't see how a position where 140% of the shares of a company are shorted could not be, meaning significantly wider implications than just a single subreddit.
> The US Securities Exchange Act defines market manipulation as "transactions which create an artificial price or maintain an artificial price for a tradable security".
It is my opinion that this demand is not artificial, it is genuine, although caused by factors other than the inherent value of the stock itself.
If this is considered to be 'creating an artificial price', I don't see how a position where 140% of the shares of a company are shorted could not be, meaning significantly wider implications than just a single subreddit.
> Loosely, market manipulation happens when you artificially influence the price of a stock, resulting in a personal gain.
Every purchase influences the market, and results in gain, otherwise people would not be buying, and selling things.
Every purchase, is a market manipulation by the definition.
Every purchase influences the market, and results in gain, otherwise people would not be buying, and selling things.
Every purchase, is a market manipulation by the definition.
> Every purchase, is a market manipulation by the definition.
Well, I don't think this would hold up in court. Both the SEC and courts have made a distinction in the past between "real demand" (i.e. demand motivated because you think the stock is undervalued) and "artificial demand" (i.e. demand that is not based on any underlying analysis, but instead motivated because you intend to trigger other market mechanisms, including coverings of short positions). Like most legal definitions, the actual definition is hazy, and courts may have established legal tests. Read Matt Levine for a nuanced analysis [1].
Again, not a lawyer, this isn't legal advice.
[1] https://www.bloomberg.com/opinion/articles/2021-01-26/will-w...
Well, I don't think this would hold up in court. Both the SEC and courts have made a distinction in the past between "real demand" (i.e. demand motivated because you think the stock is undervalued) and "artificial demand" (i.e. demand that is not based on any underlying analysis, but instead motivated because you intend to trigger other market mechanisms, including coverings of short positions). Like most legal definitions, the actual definition is hazy, and courts may have established legal tests. Read Matt Levine for a nuanced analysis [1].
Again, not a lawyer, this isn't legal advice.
[1] https://www.bloomberg.com/opinion/articles/2021-01-26/will-w...
And every time, an effort to judge whose demand is more real that other ends up with absurd, scandalous legal rulings.
They should not be.
These guys have full understanding how laughable it the attempt to judge somebody by pretending the judge/bureaucrat can peer into somebody's mind, and yet they do it.
They should not be.
These guys have full understanding how laughable it the attempt to judge somebody by pretending the judge/bureaucrat can peer into somebody's mind, and yet they do it.
> pretending the judge/bureaucrat can peer into somebody's mind
But historical cases don't peer into people's minds. They look at evidence, such as texts in chat rooms that show clear intent to manipulate. See the Libor scandal chats [1], where one trader wrote "its just amazing how libor fixing can make you that much money" and "its a cartel now in london."
I think it's unlikely that the SEC will be able to successfully prosecute WSB traders, though, due to lack of evidence. It's also probably not even worth their time.
[1] https://www.buzzfeednews.com/article/matthewzeitlin/why-bank...
But historical cases don't peer into people's minds. They look at evidence, such as texts in chat rooms that show clear intent to manipulate. See the Libor scandal chats [1], where one trader wrote "its just amazing how libor fixing can make you that much money" and "its a cartel now in london."
I think it's unlikely that the SEC will be able to successfully prosecute WSB traders, though, due to lack of evidence. It's also probably not even worth their time.
[1] https://www.buzzfeednews.com/article/matthewzeitlin/why-bank...
You never need the disclaimer about not being a lawyer. Ever
Since I am not a lawyer and therefore unfamiliar with the potential liabilities I might incur by not including that disclaimer, I would rather cover my ass.
https://law.stackexchange.com/questions/683/usa-is-i-am-not-...
Also, are you a lawyer, and is that legal advice? :)
https://law.stackexchange.com/questions/683/usa-is-i-am-not-...
Also, are you a lawyer, and is that legal advice? :)
Sure and yes it is.
There are no repurcussions for not having that antiquated disclaimer. Which wouldn't hold up even if there was some magic that allowed a case to be brought
There are no repurcussions for not having that antiquated disclaimer. Which wouldn't hold up even if there was some magic that allowed a case to be brought
Wall Street asked for exactly these sorts of deregulations. It's absolutely hypocritical for them to ask for exceptions to be made now and those half-assed versions of older regulations brought back but for only some traders.
Facts won’t matter, they can ban just out of lawyer fear that they are at risk if they don’t ban.
IMO the same is true with mask mandates. Businesses probably fear lawsuits from employees and customers who might get sick, and blame them for not doing enough. Sometimes a business does something that it claims is in the public interest but in reality is to protect them; i.e. Green Washing.
https://en.wikipedia.org/wiki/Greenwashing
https://en.wikipedia.org/wiki/Greenwashing
Yep. In Virginia a church sued and forced the mandate to put the misdemeanor on the individual rather than the church. I wish they would do this for businesses as well.
None, but Reddit doesn't need a valid reason to ban a subreddit. Where there's a will, there's a way.
The hedge funds went to CNBC and told them they settled their short positions at $90. This news rippled through the entire trading community, exactly the same as WSB information ripples through the entire trading community. There is zero difference.
Most likely this will be like accessibility to poker online and in casinos which don't profit off the game directly interestingly in the 2000s. A lot of people got involved. A few made a lot of money and the rest went to do other things after a while.
Most likely this will be like accessibility to poker online and in casinos which don't profit off the game directly interestingly in the 2000s. A lot of people got involved. A few made a lot of money and the rest went to do other things after a while.
Would be interesting if WSB was allowed to invest in private startups as easily as they can invest in meme stocks.
Robinhood doesn't like us? We'll start out own.
Reddit doesn't like us? Let's just kickstart and crowd-source another.
This idea that the common man needs to be protected from himself is paternalistic and condescending. Private equity is the means of collective action and the rich people don't want us to organize without their blessings.
Robinhood doesn't like us? We'll start out own.
Reddit doesn't like us? Let's just kickstart and crowd-source another.
This idea that the common man needs to be protected from himself is paternalistic and condescending. Private equity is the means of collective action and the rich people don't want us to organize without their blessings.
> Would be interesting if WSB was allowed to invest in private startups as easily as they can invest in meme stocks.
Technically the JOBS act is supposed to allow this (crowdfunding). May not be as easy as buying stock but at least it's legal now.
Technically the JOBS act is supposed to allow this (crowdfunding). May not be as easy as buying stock but at least it's legal now.
> Reddit doesn't like us? Let's just kickstart and crowd-source another.
There's Ruqqus which is already a working alternative to reddit. However, what I found going there is that there are a lot of anti-left memes being shared. Some amount of toxicity. I'm all for freedom of speech, but I wish the platform was a bit less political, a more neutral alternative to reddit... but hey, if enough people leave reddit, maybe it will become just that.
https://ruqqus.com/+Commentary/post/74iv/lol-you-thought-tha...
There's Ruqqus which is already a working alternative to reddit. However, what I found going there is that there are a lot of anti-left memes being shared. Some amount of toxicity. I'm all for freedom of speech, but I wish the platform was a bit less political, a more neutral alternative to reddit... but hey, if enough people leave reddit, maybe it will become just that.
https://ruqqus.com/+Commentary/post/74iv/lol-you-thought-tha...
> what I found going there is that there are a lot of anti-left memes being shared
This is probably because reddit is quite clearly a left-leaning platform. Due to the lack of healthy balance, the refugees from reddit are mostly people who feel their views and voices are being silenced by aggressive moderation. In my opinion this state of affairs is only reddit's fault.
This is probably because reddit is quite clearly a left-leaning platform. Due to the lack of healthy balance, the refugees from reddit are mostly people who feel their views and voices are being silenced by aggressive moderation. In my opinion this state of affairs is only reddit's fault.
>Would be interesting if WSB was allowed to invest in private startups as easily as they can invest in meme stocks.
Not enough liquidity. WSB has very little to do with long term investing. It's just about using the stock market as a casino.
Not enough liquidity. WSB has very little to do with long term investing. It's just about using the stock market as a casino.
Which is more or less how most big investment (hedge) and prop trading firms use it anyway. The key difference here as the same is it always is: which group has the ear of those with power.
> Robinhood doesn't like us? We'll start out own.
Then payment processors ban you. Then you start your own visa. Let's start our own visa. Banks ban you. Let's start our own bank. Your hosting service bans you. Host your own. Your ISP bans you. Start your own ISP. Other ISPs don't peer with you. Start your own internet. Then the feds shut down your bank.
The answer to censorship is not "start your own".
Then payment processors ban you. Then you start your own visa. Let's start our own visa. Banks ban you. Let's start our own bank. Your hosting service bans you. Host your own. Your ISP bans you. Start your own ISP. Other ISPs don't peer with you. Start your own internet. Then the feds shut down your bank.
The answer to censorship is not "start your own".
As a bitcoiner none of those things sound too crazy. Community banks, community ISPs, and market-based money? Sweet. Kick Comcast and BoA to the curb.
There is absolutely nothing stopping the members of WSB from pooling their money to start an angel fund, VC fund, or any other form of private equity. You don’t need special Wall Street credentials to do that, just some money and a lawyer.
That’s a pretty long-term bet, though, and I don’t think WSB is usually into those.
That’s a pretty long-term bet, though, and I don’t think WSB is usually into those.
> Reddit doesn't like us? Let's just kickstart and crowd-source
another.
By the way, the Reddit WSB "shutdown" was done by mod admins to clean up the page a bit. It was private for an hour or two and back up.
By the way, the Reddit WSB "shutdown" was done by mod admins to clean up the page a bit. It was private for an hour or two and back up.
> This idea that the common man needs to be protected from himself is paternalistic
Interesting word choice. Conservative wording of "common man", but liberal wording of "paternalistic". I don't mind the former but I do wonder how a father would be more inclined to protect a child from itself than a mother; if anything, I would find maternalistic a more fitting descriptor.
Interesting word choice. Conservative wording of "common man", but liberal wording of "paternalistic". I don't mind the former but I do wonder how a father would be more inclined to protect a child from itself than a mother; if anything, I would find maternalistic a more fitting descriptor.
There's no public pressure to do that, the only pressure is from Wall Street itself. The public is cheering the whole thing.
How do we know what 'the public' is cheering? Has there been any reputable sources of this?
On one hand, the rise of meme stocks is shining light that one of the central conceits of capitalism is wrong (i.e. that the stock market isn't a good arbiter of the value of companies).
But as a member of the public, I'm concerned about what happens when the meme stocks come crashing back to earth. When that happens institutional investors will overreact, doom and gloom will reign, and CEOs of public companies will use that to lay off people and cut worker benefits.
The common person always loses when bubbles burst.
On one hand, the rise of meme stocks is shining light that one of the central conceits of capitalism is wrong (i.e. that the stock market isn't a good arbiter of the value of companies).
But as a member of the public, I'm concerned about what happens when the meme stocks come crashing back to earth. When that happens institutional investors will overreact, doom and gloom will reign, and CEOs of public companies will use that to lay off people and cut worker benefits.
The common person always loses when bubbles burst.
"The common person always loses when bubbles burst."
That is a tautology, because you define the "common person" as the person who loses.
I'm sure there were people who made good money in the 2008 housing bubble. Didn't they all live like kings for a while, because they could borrow arbitrary sums against their houses?
Similarly, some people may make good money on that GameStop thing now.
The "common people" who didn't participate in this will probably never even notice. At most they'll notice that their favorite shopping mall is closing, but that is part of a larger trend. And they can now shop on Amazon instead, so their quality of life probably remains the same or gets improved.
That is a tautology, because you define the "common person" as the person who loses.
I'm sure there were people who made good money in the 2008 housing bubble. Didn't they all live like kings for a while, because they could borrow arbitrary sums against their houses?
Similarly, some people may make good money on that GameStop thing now.
The "common people" who didn't participate in this will probably never even notice. At most they'll notice that their favorite shopping mall is closing, but that is part of a larger trend. And they can now shop on Amazon instead, so their quality of life probably remains the same or gets improved.
Actually, I never defined the common person. Because I felt it's pretty obvious.
The common person is the majority of Americans who live paycheck-to-paycheck and don't invest in the market.
Those who don't participate will be negatively impacted if this causes another recession, which is likely as investors get spooked by another bubble burst. Which means standard of living, job benefits, and salaries will continue to stagnate.
This also ignores the fact that we've moved from guaranteed pensions to 401ks, which are heavily dependent on hedge funds. If hedge funds lose their shirts, they'll get a bailout from the government because we didn't learn our lesson about too big to fail last time. Which will mean government austerity in other areas, typically starting in social welfare programs.
The common person is the majority of Americans who live paycheck-to-paycheck and don't invest in the market.
Those who don't participate will be negatively impacted if this causes another recession, which is likely as investors get spooked by another bubble burst. Which means standard of living, job benefits, and salaries will continue to stagnate.
This also ignores the fact that we've moved from guaranteed pensions to 401ks, which are heavily dependent on hedge funds. If hedge funds lose their shirts, they'll get a bailout from the government because we didn't learn our lesson about too big to fail last time. Which will mean government austerity in other areas, typically starting in social welfare programs.
401ks, given their rules, are not reliant on hedge funds, unless you expert hedge funds to be any good at influencing pricing in the long term
If there was no meme-stockery happening, Gamestop would have gone bust and everyone that works there would have been laid off. That's what the whole short strategy was intended to do, bleed them dry just like Toys R Us.
In a crazy way this is probably saving a lot more jobs than it's jeopardizing.
In a crazy way this is probably saving a lot more jobs than it's jeopardizing.
Why would GameStop have gone bust? Even if GameStop stock would trade at zero, the company still exists until it runs out of money and declares bankruptcy, which is independent of its stock price.
In this case, it's not really saving any jobs, since GameStop employees (excluding higher ranked employees) probably don't have any part of their compensation that's stock based.
Toys R Us was a leveraged buyout, which is definitely a much more ethically dubious strategy, and that can cause jobs to be lost. This won't cause any jobs at GameStop to be lost, although there probably will be some unhappy traders and people left holding bags of GameStop stock.
In this case, it's not really saving any jobs, since GameStop employees (excluding higher ranked employees) probably don't have any part of their compensation that's stock based.
Toys R Us was a leveraged buyout, which is definitely a much more ethically dubious strategy, and that can cause jobs to be lost. This won't cause any jobs at GameStop to be lost, although there probably will be some unhappy traders and people left holding bags of GameStop stock.
If GameStop trades below book value, then someone could do a takeover, sell all the assets and make a profit.
Good point.
Out of curiosity, has that actually happened to a public stock? I'd assume the minority shareholders would have standing for a lawsuit if someone were to do a hostile takeover of a stock and liquidate the assets of the company.
Out of curiosity, has that actually happened to a public stock? I'd assume the minority shareholders would have standing for a lawsuit if someone were to do a hostile takeover of a stock and liquidate the assets of the company.
Afaik it used to be popular in the 70s and 80s. It’s sometimes called “Corporate Raid” [0]. In the movie Wall Street, Gordon Gecko wants to buy the airline to sell it for parts.
[0] https://en.wikipedia.org/wiki/Corporate_raid#History
[0] https://en.wikipedia.org/wiki/Corporate_raid#History
Bankruptcy is not independent from the stock price. If your company goes bankrupt, its shares are voided.
You're right, what I meant is that the share price doesn't affect the finances of the company (eg. a company that sells widgets makes the same amount of money whether their stock is worth $1 or $100000). As you point out, the share price should in theory reflect the value of the company (bankrupt company -> share price of $0), but a fluctuating stock price doesn't really change the value of the company itself (excluding shares that it owns, obviously).
> one of the central conceits of capitalism is wrong (i.e. that the stock market isn't a good arbiter of the value of companies)
The "central conceit" is not that the market is a "good arbiter" of the value of a company. Just that it's the least bad one.
The central conceit of every alternative to capitalism is that there's such a thing as a singular, coherent definition of "the value of a company" and that it's consistently, accurately measurable by some central authority.
The "central conceit" is not that the market is a "good arbiter" of the value of a company. Just that it's the least bad one.
The central conceit of every alternative to capitalism is that there's such a thing as a singular, coherent definition of "the value of a company" and that it's consistently, accurately measurable by some central authority.
Just looking at this from a technical perspective, it'll be pretty exciting if all this ends up leading to an explosion in the take up of self-hosted social media platforms.
The question is, will the creators of these communities trust cloud providers where the platforms are hosted to not de-platform them, or will we end up with P2P, distributed networks instead?
The question is, will the creators of these communities trust cloud providers where the platforms are hosted to not de-platform them, or will we end up with P2P, distributed networks instead?
When you take you're tech to it's limit you get mailing lists, again.
Then email providers will kick out unapproved users, DNS will kick out unapproved email providers, and so on.
I want an anti-authoritarian internet. The past year has been surreal.
I want an anti-authoritarian internet. The past year has been surreal.
Until China, Japan and Russia unite to provide disenfranchised Americans with a free internet that is off-limits from the grabbing hands of the US elites.
And it will thrive and will be a better place to make more money that SV for 5-10 years, until it gets censored like any public space.
And it will thrive and will be a better place to make more money that SV for 5-10 years, until it gets censored like any public space.
It’ll have to be p2p maybe with super nodes to replicate.
You will want a data mesh layer that multiple apps run on top of probably.
You will want a data mesh layer that multiple apps run on top of probably.
> explosion in the take up of self-hosted social media platforms.
Network effects drive a lot of adoption of these things, which is a huge headwind against an "explosion" of them lasting that long.
Network effects drive a lot of adoption of these things, which is a huge headwind against an "explosion" of them lasting that long.
Dogecoin subreddit may get banned too. Saw elsewhere that they're trying to push it to $1 (it's at $0.01 and the push has raised it 72%). Half tempted to drop $1k in it, in a Just-In-Case thing. Supposedly the total volume of Dogecoin is only 128k coins, though that sounds low. If it is that low it explains why the coin is so volatile. My main cryptocurrency positions are Bitcoin and Cardano.
It's definitely not 128k coins. When it was first created it was notable for having such a huge supply of coins that people could have silly fun with it and not care about the 'value' of it. That hasn't remained true, but it was the initial idea behind it, a joke coin people could give tons of coins to other people to for pennies.
Too many whales in dogecoin that want to keep a lid on it. It's meant to be used for charity and community building. Sometimes you can play the run and use derivatives to short it on the way down. Easier plays than this though.
There is no way that's true because I mined and then lost 81k dogecoins because I reformatted my computer.
Total volume of dogecoin is ~128 billion coins, not 128k.
That is a heck of a decimal point error on my part. Thanks for the correction.
I think its fine that the SEC attempts to clean up stock manipulation schemes. The reason anyone cares is that you can lose all your money playing around in the market, and the SEC is responsible for trying to keep people from being taken advantage of, and in cases like this swept up in manias.
You can lose all your money in the market playing around in the market. If I could sign some sort of statement saying I know what I'm doing, I won't invest more than I'm willing to lose, and while I may make extremely risky bets, I'm willing to forego your "protection" in favor of being able to lose all of my money, I would.
And I did, because I'm a registered investor. But this isn't available to most people, only the top 10%.
And I did, because I'm a registered investor. But this isn't available to most people, only the top 10%.
I agree with your skepticism of registered investor requirements, but that's not really a related issue. Regulators and platforms intervene in this way against even the most sophisticated investors; the possibility of a trading freeze when the market exhibits crazy volatility is well-known.
I can buy GameStop. My friend can't. Trading freeze for everyone, sure. Trading freeze for some people, but not for other people? That's fucking bullshit.
I can’t imagine a scenario where the SEC goes after reddit of all places.
There are other ways of applying pressure. AWS hosting Wikileaks was not illegal but they were still pressured to stop hosting if they wanted lucrative hosting contracts with the federal government.
Now I doubt Reddit has huge contracts with the government, but I’m sure the government could find something to harass them with if it wanted to. Drive long enough and a cop will eventually find a reason to pull you over.
https://www.theguardian.com/media/2010/dec/01/wikileaks-webs...
http://scripting.com/stories/2010/12/28/usGovtABigUserOfAmaz...
Now I doubt Reddit has huge contracts with the government, but I’m sure the government could find something to harass them with if it wanted to. Drive long enough and a cop will eventually find a reason to pull you over.
https://www.theguardian.com/media/2010/dec/01/wikileaks-webs...
http://scripting.com/stories/2010/12/28/usGovtABigUserOfAmaz...
Definitely. It wouldn’t at all surprise me to find out reddit was being pressured in some way but I think that pressure is far more likely to come from investment folks than regulators. And I think elite investor class pressure would be far more threatening & potentially costly to reddit than anything the SEC might be able to dig up.
It would be interesting to know what the difference is between CNBC talking heads VS a community of "traders"?
Jimmy Cramer pumping stocks every evening to his boomer audience which ultimately has some effects (not sure how much though) on stock prices seems fine but a group of people discussing stocks seems like a threat...
Jimmy Cramer pumping stocks every evening to his boomer audience which ultimately has some effects (not sure how much though) on stock prices seems fine but a group of people discussing stocks seems like a threat...
Really - is a TV network much different from a subreddit where only the mods can post?
Exactly, this is the point that I am trying to figure out. Moderators control the conversation and that's it. So what is the difference between CNBC talking heads pumping up a stock VS subredditors who are, as you might imagine, everyday people just having some financial fun and sharing ideas. One can get paid off whilst the other cannot I imagine is the difference.
> Given the track record Reddit has of keeling over to public pressure
I'm not sure I'd call it keeling over to "public" pressure.
I'm not sure I'd call it keeling over to "public" pressure.
Private platforms, can't do shit about them, yada yada yada.
That's bullshit.
The principle, and thus the the right to free speech is the fundamental value of a free country. Hiding behind the "they're a private company, they can do what they want" is nonsense when the vast majority of communication flows through them.
I'm wondering though what happens if section 230 was modified to only allow for filtering and removal of spam (I'm expecting wiggle here in how it's abused) and illegal content.
That's bullshit.
The principle, and thus the the right to free speech is the fundamental value of a free country. Hiding behind the "they're a private company, they can do what they want" is nonsense when the vast majority of communication flows through them.
I'm wondering though what happens if section 230 was modified to only allow for filtering and removal of spam (I'm expecting wiggle here in how it's abused) and illegal content.
IANAL, but common misconception is that a constitution regulates the rights between individuals/citizens of that state. But this is wrong, the constitution regulates the rights of an individual against the state/government. That is, you have the freedom of speech against any government entities and cannot be prosecuted for exercising it. But if you come to my bar/house whatever and I don't like your opinion, I can show you the door and you can't quote the constitution and refuse to leave because you are exercising your rights.
Civil Liberties don't exist if you leave them to the public sector. The US Government hosts and produces virtually nothing on it's own and just about everything you interact with is run or produced by a corporation.
If you leave the responsibility of Free Speech to the Free Market then you end up having freedom of press only for the people who own one.
If you leave the responsibility of Free Speech to the Free Market then you end up having freedom of press only for the people who own one.
You can own a corporation with about $400 and an hour of filling out a form online, plus a month or so waiting for various government agencies to process it.
The hard part is getting that corp to own anything of value, since it starts with just the money you put in. But this is still a viable path to wealth for people with time horizons measured in years rather than days. (And all the people who want immediate gratification provides a fairly large market to trade with.)
The hard part is getting that corp to own anything of value, since it starts with just the money you put in. But this is still a viable path to wealth for people with time horizons measured in years rather than days. (And all the people who want immediate gratification provides a fairly large market to trade with.)
> you end up having freedom of press only for the people who own one.
That's how things have traditionally been in the US, is it not? As far as I know there was never any law that would force me to allow someone else to use my (literal) printing press.
The exception is the FCC fairness doctrine, but the basis for that was that the "printing press" (RF allocations) is actually a common good, and was only granted to private interests in exchange for certain concessions.
That's how things have traditionally been in the US, is it not? As far as I know there was never any law that would force me to allow someone else to use my (literal) printing press.
The exception is the FCC fairness doctrine, but the basis for that was that the "printing press" (RF allocations) is actually a common good, and was only granted to private interests in exchange for certain concessions.
It's how it is today and also how it was when the framers wrote the constitution. Benjamin Rush suggested a particular printer for Thomas Paine to work with to print Common Sense, because Rush knew not every printer would want to print it based on its content.
This isn't the case. The rights we have are naturally ours, by nature of our very existence, and the constitution enumerates them as a mechanism to keep the government from infringing on them. It is very clearly written this way, and to say that our foundational natural rights don't matter in any context is dystopian and authoritarian. That is to say, rights exist outside and beyond the constitution. The question is really one of e.g. my rights vs Facebook's rights.
The moment the government started giving our licenses as to who can run a bar, meaning that not just anyone can open one and bars have to be pleasing enough to the state to be allowed is the moment when the separation between private business and state ceases to be a clear well agreed upon line.
Comparing your bar/house to a massive social platform like Reddit is absurd beyond belief.
This sucks when there are only three or four bars and they all have the same corporate interest.
Look at Visa going after porn and private sex work.
This entire culture of trying to control what others can say via deplatformization is neoliberal fascism.
Bad things get said. But free speech protects all of us from tyranny, and we have to defend it. Because they'll come after you and your ideas next.
Americans have thick skin, or at least most of us do. It's a consequence of our liberty, and it's a defining trait of our system.
Look at Visa going after porn and private sex work.
This entire culture of trying to control what others can say via deplatformization is neoliberal fascism.
Bad things get said. But free speech protects all of us from tyranny, and we have to defend it. Because they'll come after you and your ideas next.
Americans have thick skin, or at least most of us do. It's a consequence of our liberty, and it's a defining trait of our system.
Pump and dump schemes being regulated being framed as a free speech issue? I don't know if it is productive to make this about free speech. The purpose of life isn't just to emit speech, and indeed the purpose of WSB is for people to exhort other people to action and that action is to buy and sell certain stocks, so that a subset of participants can profit and other people lose their capital. "Speech" is not the central issue or the most interesting one to me about this case, it is rather more interesting to see how mobs can be formed and influenced to take action.
The law isn't set up to regulate 'distributed' peer to peer pump and dumps. The precedent is all focused on clearly identifiable orchestrators.
E.g: I run a stock newsletter. I hire a boxer, Evander Tyson, to hype a biotech penny stock, Scampill Co.. Tyson says to his followers and to my newsletter subscribers that Scampill is about to get a drug approved by the FDA that will cure cancer. I and my friends at Scampill make sure that the patsies have enough stock to buy when I put out my first email blast. When the stock goes up 900% we sell our shares. At that point there are no more large lots on the market, the spreads widen, and the price collapse occurs.
The SEC then sends their feds after me, the boxer I hired, and my friends, the insiders at Scampill. If they can catch me, I do some time in club Fed and have to pay some fines.
In this instance, there is no insider collusion, there is no single promoter with an interest, and there is no commonality to build a class among the redditors etc. who participated in the manipulation. You have a mixture of people who may have said illegal things and people who had totally licit (in the eyes of the law) motivations and actions. You have a big mixture there of mens rae and its absence and a big mixture of types of actus reus and the lack thereof. It is a big mess as compared to making a case against the typical P&D mob scheme.
Yet, you have an outcome that is somewhat similar to a classic P&D, and on a regulated marketplace, whereas most P&Ds happen on less regulated over the counter markets.
E.g: I run a stock newsletter. I hire a boxer, Evander Tyson, to hype a biotech penny stock, Scampill Co.. Tyson says to his followers and to my newsletter subscribers that Scampill is about to get a drug approved by the FDA that will cure cancer. I and my friends at Scampill make sure that the patsies have enough stock to buy when I put out my first email blast. When the stock goes up 900% we sell our shares. At that point there are no more large lots on the market, the spreads widen, and the price collapse occurs.
The SEC then sends their feds after me, the boxer I hired, and my friends, the insiders at Scampill. If they can catch me, I do some time in club Fed and have to pay some fines.
In this instance, there is no insider collusion, there is no single promoter with an interest, and there is no commonality to build a class among the redditors etc. who participated in the manipulation. You have a mixture of people who may have said illegal things and people who had totally licit (in the eyes of the law) motivations and actions. You have a big mixture there of mens rae and its absence and a big mixture of types of actus reus and the lack thereof. It is a big mess as compared to making a case against the typical P&D mob scheme.
Yet, you have an outcome that is somewhat similar to a classic P&D, and on a regulated marketplace, whereas most P&Ds happen on less regulated over the counter markets.
I just think it's really hypocritical of the government to advocate for freedom when they're literally making the market less free. The only markets to be regulated should be the ones that would otherwise be in market failure, like medicine.
>> only tool left to common people is violence?
I am genuinely interested in the physicality of how that would play out. A mob with pitchforks makes a run at a Facebook HQ. Do they kidnap employees until they find one with the access to re-initialize the account? I guess they would have to keep the hostages forever, else the accounts be disabled again the next day. Do they setup a camp outside with the declared intent to launch an attack should certain accounts not get enough likes? How long could that last? Or do they break into a datacenter and attempt to do it themselves? I'm reminded of that iMac scene in Zoolander.
I am genuinely interested in the physicality of how that would play out. A mob with pitchforks makes a run at a Facebook HQ. Do they kidnap employees until they find one with the access to re-initialize the account? I guess they would have to keep the hostages forever, else the accounts be disabled again the next day. Do they setup a camp outside with the declared intent to launch an attack should certain accounts not get enough likes? How long could that last? Or do they break into a datacenter and attempt to do it themselves? I'm reminded of that iMac scene in Zoolander.
You are thinking to gentle and precise. Think more along the lines of setting data centers and office buildings on fire. Find anyone who has FB on a linked in profile, go their house, and burn it down. Let it all be known that it was an act of war and watch the insurance companies cover nothing.
I don’t want to be banned but... You are, I think, blessed to not be able to imagine violence. When someone says violence is an outcome the violence becomes the goal — not reinstating accounts... You don’t physically attack a DC you sever as many links in and out as possible.
Along these lines, bad-faith actors can plan racist messages as a pretext for banning arbitrary communities
There is a precedent for this, look at all the shenanigans r/AgainstHateSubreddits is known for.
“There’s class warfare, all right, but it’s my class, the rich class, that’s making war, and we’re winning.”
― Warren Buffett
― Warren Buffett
> be painted as trying to "incite" violence,
They're using the "terrorist" word already in many cases.
They're using the "terrorist" word already in many cases.
[deleted]
There's not any real reason to be concerned about this. Not yet, at least.
Furthermore, this comment is offensive. Let's please not pretend that Facebook and Twitter were "looking for an excuse" before deplatforming Trump. They were entirely justified and would have been justified in doing so many years before they eventually did so.
Let's also not put the word "incite" in dick quotes barely three weeks after an insurrection and attempted coup. There was actual incitement of violence in that case.
Furthermore, this comment is offensive. Let's please not pretend that Facebook and Twitter were "looking for an excuse" before deplatforming Trump. They were entirely justified and would have been justified in doing so many years before they eventually did so.
Let's also not put the word "incite" in dick quotes barely three weeks after an insurrection and attempted coup. There was actual incitement of violence in that case.
I think there's plenty of reason to be concerned, but certainly not enough to be terrified or overreact with comments like "this comment is offensive".
I don't think that expressing my opinion is an overreaction. It's offensive to minimize what happened on January 6th. That's what you do when you mock the notion that the president incited violence.
And I am offended when a few loud voices maximize it. It is called making a mountain out of a mole hill and the media did well here to convince so many to not give too much thought about giving up their rights again.
Very similar to 9/11 except less casualties thankfully. Just an interesting observation of how much control screens can exert then vs now. More are connected with constant access. We need better screen diets.
Very similar to 9/11 except less casualties thankfully. Just an interesting observation of how much control screens can exert then vs now. More are connected with constant access. We need better screen diets.
"It's offensive" is not actually an argument. There never was a societal consensus that nobody should be allowed to say things that somebody could consider offensive. That's just what some people want, as a means to control other people.
> It's offensive to minimize what happened on January 6th. That's what you do when you mock the notion that the president incited violence.
No, that doesn't follow.
No, that doesn't follow.
Where was all of this offense concerning violence when we watched countless businesses being burned and looted throughout the summer? I'm not justifying what happened at the Capitol, but the shouts of righteous indignation ring more than a little hollow.
When things ring hollow, that is like nails on a chalkboard.
It was concerning because it was a demonstration of significant soft-power, and I think many people are surprised or hadn't yet considered the implications of that kind of power.
I'm curious why people are so tender to the capital riots and not to the Chaz "autonomous zone" and the riots, continued even to this day, by BLM and Antifa. Is there a distinction I'm not getting here?
There are quite a few distinctions that should be obvious, yes, but let's stick to the most obvious one: BLM hasn't attempted to overturn a US election or overthrow the government.
Or this one: BLM hasn't caused any deaths, to date; the Capitol (capitalized, btw, and with an "o") insurrection caused 5 and could easily have resulted in the assassination of various senior government officials.
Or this one: BLM protests involved tens of millions of citizens across all walks of life and were prompted by very real social problems with police murdering black people; the Capitol riot was prompted by fascism and white supremacy.
Do I need to go on?
Or this one: BLM hasn't caused any deaths, to date; the Capitol (capitalized, btw, and with an "o") insurrection caused 5 and could easily have resulted in the assassination of various senior government officials.
Or this one: BLM protests involved tens of millions of citizens across all walks of life and were prompted by very real social problems with police murdering black people; the Capitol riot was prompted by fascism and white supremacy.
Do I need to go on?
12-19 people have died due to BLM "protests", and over 700 officers injured. So BLM riots have had a worse impact.
> 12-19 people have died due to BLM "protests", and over 700 officers injured. So BLM riots have had a worse impact.
Your statement is dense with issues:
1. You're comparing a single "protest" to a protest movement. Also, where did you get a figure like "12-19"?
2. There are documented and confirmed cases of capitol-riot-type people using the BLM protests as cover for violence (e.g. https://www.nbcchicago.com/news/local/illinois-man-accused-o... and https://www.theguardian.com/world/2020/oct/23/texas-boogaloo...). The attempts to blame the capital riots on "antifa" are groundless.
3. The capitol rioters deliberately struck at the democratic process itself (e.g. process of conducting a fair election) because they rejected the results of that process, which is a far more serious thing than any traditional protest, no matter how violent.
Your statement is dense with issues:
1. You're comparing a single "protest" to a protest movement. Also, where did you get a figure like "12-19"?
2. There are documented and confirmed cases of capitol-riot-type people using the BLM protests as cover for violence (e.g. https://www.nbcchicago.com/news/local/illinois-man-accused-o... and https://www.theguardian.com/world/2020/oct/23/texas-boogaloo...). The attempts to blame the capital riots on "antifa" are groundless.
3. The capitol rioters deliberately struck at the democratic process itself (e.g. process of conducting a fair election) because they rejected the results of that process, which is a far more serious thing than any traditional protest, no matter how violent.
1) Because there was just a single "capitol incident", and several BLM riots.
2) So you seriously believe all violence at BLM riots was solely because of false flag white supremacists? Really?
3) Bullshit. Riots are not "democratic process" either - it's people rejecting the established laws (like property rights) and proceeding to do their own thing. I mean they installed an "autonomous zone", how is that not an attack on democracy?
2) So you seriously believe all violence at BLM riots was solely because of false flag white supremacists? Really?
3) Bullshit. Riots are not "democratic process" either - it's people rejecting the established laws (like property rights) and proceeding to do their own thing. I mean they installed an "autonomous zone", how is that not an attack on democracy?
> 1) Because there was just a single "capitol incident", and several BLM riots.
No, there wasn't just a single incident. Just to give some examples off the top of my head: large groups of III%ers participated in both the Capitol Attack and Unite the Right rally in Charlottesville, and the BLM counter-protests were arguably part of the same phenomenon (and one of them shot three people in Kenosha).
> 2) So you seriously believe all violence at BLM riots was solely because of false flag white supremacists? Really?
That's a sloppy reading of what I said. I merely pointed out a fact that makes attribution of violence that occurred at the protests difficult.
> 3) Bullshit. Riots are not "democratic process" either - it's people rejecting the established laws (like property rights) and proceeding to do their own thing. I mean they installed an "autonomous zone", how is that not an attack on democracy?
It's pretty obvious that it wasn't an "attack on democracy" because they made reform demands to elected officials and were cooperating with the government:
https://www.nytimes.com/2020/06/11/us/seattle-autonomous-zon...
> The protest zone has increasingly functioned with the tacit blessing of the city. Harold Scoggins, the fire chief, was there on Wednesday, chatting with protesters, helping set up a call with the Police Department and making sure the area had portable toilets and sanitation services....
> The demonstrators have also been trying to figure it out, with various factions voicing different priorities. A list of three demands was posted prominently on a wall: one, defund the Police Department; two, fund community health; and three, drop all criminal charges against protesters.
In comparison, the capitol attackers setup a gallows and were chanting things like "Hang Mike Pence," because he wouldn't unconstitutionally override the election (https://www.snopes.com/fact-check/hang-mike-pence-chant-capi..., https://www.cnn.com/videos/politics/2021/01/15/mike-pence-cl...). The sloppy false equivalences to deflect away from that are getting old.
No, there wasn't just a single incident. Just to give some examples off the top of my head: large groups of III%ers participated in both the Capitol Attack and Unite the Right rally in Charlottesville, and the BLM counter-protests were arguably part of the same phenomenon (and one of them shot three people in Kenosha).
> 2) So you seriously believe all violence at BLM riots was solely because of false flag white supremacists? Really?
That's a sloppy reading of what I said. I merely pointed out a fact that makes attribution of violence that occurred at the protests difficult.
> 3) Bullshit. Riots are not "democratic process" either - it's people rejecting the established laws (like property rights) and proceeding to do their own thing. I mean they installed an "autonomous zone", how is that not an attack on democracy?
It's pretty obvious that it wasn't an "attack on democracy" because they made reform demands to elected officials and were cooperating with the government:
https://www.nytimes.com/2020/06/11/us/seattle-autonomous-zon...
> The protest zone has increasingly functioned with the tacit blessing of the city. Harold Scoggins, the fire chief, was there on Wednesday, chatting with protesters, helping set up a call with the Police Department and making sure the area had portable toilets and sanitation services....
> The demonstrators have also been trying to figure it out, with various factions voicing different priorities. A list of three demands was posted prominently on a wall: one, defund the Police Department; two, fund community health; and three, drop all criminal charges against protesters.
In comparison, the capitol attackers setup a gallows and were chanting things like "Hang Mike Pence," because he wouldn't unconstitutionally override the election (https://www.snopes.com/fact-check/hang-mike-pence-chant-capi..., https://www.cnn.com/videos/politics/2021/01/15/mike-pence-cl...). The sloppy false equivalences to deflect away from that are getting old.
1) The Kenosha shooting was self defense. And if you arbitrarily lump things together, you can probably find an arbitrary number of victims. BLM is connected to socialism, so I guess you could count the 100 million dead in the Chinese Culture revolution and so on.
2) In the same vein, there seems to be only one actual victim of protester violence at the capitol, and that one also looks more like an accident (got hit in the head with a thrown item, which is of course a stupidly dangerous attack, but also common at BLM riots)
3) That's not CHAZ cooperating with authorities, but authorities cooperating with CHAZ. Just because "your people" welcomed the secession, doesn't make it any more democratic.
Also, there are videos from the capitol of security staff chatting with the protesters. So I guess they were also cooperating, and hence, by your logic, democratic.
Anyway, let's end here. There really is no point. It is just always interesting how warped people's perceptions can be.
2) In the same vein, there seems to be only one actual victim of protester violence at the capitol, and that one also looks more like an accident (got hit in the head with a thrown item, which is of course a stupidly dangerous attack, but also common at BLM riots)
3) That's not CHAZ cooperating with authorities, but authorities cooperating with CHAZ. Just because "your people" welcomed the secession, doesn't make it any more democratic.
Also, there are videos from the capitol of security staff chatting with the protesters. So I guess they were also cooperating, and hence, by your logic, democratic.
Anyway, let's end here. There really is no point. It is just always interesting how warped people's perceptions can be.
> 1) The Kenosha shooting was self defense.
We'll see about that when he goes to trial.
> And if you arbitrarily lump things together, you can probably find an arbitrary number of victims.
Which is what you're doing. Why arbitrarily lump together BLM and looters, when it could make more sense to consider them different groups that happen to be in the same area reacting in their own ways to the same circumstances?
> 3) That's not CHAZ cooperating with authorities, but authorities cooperating with CHAZ. Just because "your people" welcomed the secession, doesn't make it any more democratic.
The point is it's not a succession if you continue to recognize the government by calling on it to reform.
> Anyway, let's end here. There really is no point. It is just always interesting how warped people's perceptions can be.
Yep.
We'll see about that when he goes to trial.
> And if you arbitrarily lump things together, you can probably find an arbitrary number of victims.
Which is what you're doing. Why arbitrarily lump together BLM and looters, when it could make more sense to consider them different groups that happen to be in the same area reacting in their own ways to the same circumstances?
> 3) That's not CHAZ cooperating with authorities, but authorities cooperating with CHAZ. Just because "your people" welcomed the secession, doesn't make it any more democratic.
The point is it's not a succession if you continue to recognize the government by calling on it to reform.
> Anyway, let's end here. There really is no point. It is just always interesting how warped people's perceptions can be.
Yep.
> BLM hasn't caused any deaths, to date
Lee Keltner
Aaron "Jay" Danielson
Garret Foster
Tyler Gerth
David Dorn
Victor Cazares Jr
Secoriea Turner
....
And that's just a small sampling.
Do I need to go on?
Lee Keltner
Aaron "Jay" Danielson
Garret Foster
Tyler Gerth
David Dorn
Victor Cazares Jr
Secoriea Turner
....
And that's just a small sampling.
Do I need to go on?
Yes please go on with your disingenuous list.
Lee Keltner - Killed in Denver by the hired security guard for a journalist.
Aaron Danielson - Killed at dueling protests by self identifying anti-facist (antifa)
Garret Foster - He was a BLM protestor killed by an active Army sergeant.
Tyler Gerth- he was a protest photographer killed by a guy with a grudge over an argument.
David Dorn - Not killed by BLM The protests were several miles away and had disbanded a few hours earlier near the Metropolitan Police Headquarters downtown after clashes between police and a few remaining agitators turned violent
Do I really have to go on?
You make it sound like those on your list were killed BLM mobs and a modicum of investigation makes it obvious you lack perspective. Those that marched on the Capitol were indeed a mob.
Lee Keltner - Killed in Denver by the hired security guard for a journalist.
Aaron Danielson - Killed at dueling protests by self identifying anti-facist (antifa)
Garret Foster - He was a BLM protestor killed by an active Army sergeant.
Tyler Gerth- he was a protest photographer killed by a guy with a grudge over an argument.
David Dorn - Not killed by BLM The protests were several miles away and had disbanded a few hours earlier near the Metropolitan Police Headquarters downtown after clashes between police and a few remaining agitators turned violent
Do I really have to go on?
You make it sound like those on your list were killed BLM mobs and a modicum of investigation makes it obvious you lack perspective. Those that marched on the Capitol were indeed a mob.
Just like how the MSM constantly emphasizes the fact that 5 people died as a result of the capital riots.
When: 2 people died as a result of strokes. No participation in the riot.
1 person trampled by the rioters. 1 unarmed person shot by the police. 1 police officer dead due to being struck in the head.
So clearly, only 2 people died as a consequence of the riots, per your logic.
When: 2 people died as a result of strokes. No participation in the riot.
1 person trampled by the rioters. 1 unarmed person shot by the police. 1 police officer dead due to being struck in the head.
So clearly, only 2 people died as a consequence of the riots, per your logic.
Well, the Capitol riots were in the capital (Washington DC), so let's give him the orthographic benefit of the doubt...
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[deleted]
I feel that your argument started out very strong but fell off a cliff at the end by making similarly alienating comments to what your parent made.
I appreciate the feedback. Could you tell me exactly which comments you found to be alienating? Perhaps that would help me refine arguments in the future. Thanks.
> the Capitol riot was prompted by fascism and white supremacy.
If you're proud to be a fascist and white supremacist then this doesn't make someone not want to be one. If you're not then you'd be offended by that accusation that you are one. It's a polarising statement that target's an individual's identity, not their actions. It was an ad hominem attack.
Had you made reference to the disinformation campaign surrounding the election results or the President's remarks that actively fanned the flames of their outrage (outrage that they certainly perceived as legitimate but the rest of us know was misguided) then that would be a very different argument. It would be one that forgave regular people for being people and targeted those truly responsible. It's an argument that invites people to agree with you rather than making them the enemy.
If you're proud to be a fascist and white supremacist then this doesn't make someone not want to be one. If you're not then you'd be offended by that accusation that you are one. It's a polarising statement that target's an individual's identity, not their actions. It was an ad hominem attack.
Had you made reference to the disinformation campaign surrounding the election results or the President's remarks that actively fanned the flames of their outrage (outrage that they certainly perceived as legitimate but the rest of us know was misguided) then that would be a very different argument. It would be one that forgave regular people for being people and targeted those truly responsible. It's an argument that invites people to agree with you rather than making them the enemy.
> BLM hasn't attempted to overturn a US election or overthrow the government.
CHAZ was even one step further.
CHAZ was even one step further.
>Or this one: BLM hasn't caused any deaths, to date; the Capitol (capitalized, btw, and with an "o") insurrection caused 5 and could easily have resulted in the assassination of various senior government officials
In Atlanta BLM protestors set up an armed road block. Several people were shot there culminating in the shooting death of a 9 year old girl.
In Atlanta BLM protestors set up an armed road block. Several people were shot there culminating in the shooting death of a 9 year old girl.
BLM hasn't attempted to overturn a US election or overthrow the government.
Isn’t declaring part of the sovereign territory of the United States to be an autonomous zone sort of similar?
Isn’t declaring part of the sovereign territory of the United States to be an autonomous zone sort of similar?
Not really lol, that’s more like trying to seceded or fight for independence while the capital insurrection attempted to kidnap and kill actual leaders of America.
Any proof for that?
White supremacy is the new Jewish cabal
Please keep this sort of hellpost away from HN.
https://news.ycombinator.com/newsguidelines.html
https://news.ycombinator.com/newsguidelines.html
The Capitol "riot" involved people with known plots to capture and kill lawmakers, and occurred while Congress was in session doing one of the most important (if intended to be mundane) tasks it does every four years.
Yes, the anarchist are not trying to dictate to the rest of the country how to be ruled. This is major difference and though I'm not an anarchist, I can make a difference.
gadders(4)
Oh no, it's offensive. Get a grip
I believe SMBC says it well: “I’m offended” is a much more useful concept than “it’s offensive.”
https://www.smbc-comics.com/comic/2011-02-23
https://www.smbc-comics.com/comic/2011-02-23
I put incite in "dick quotes" to emphasize that it has become the specific word with which to paint a comment _about_ violence when you don't like the message or the messenger, not to minimize or parody what happened on the 6th.
Calm down, Bud.
Calm down, Bud.
[deleted]
I don't think that "calm down" is an appropriate response; you don't know anything about my state of calmness, or lack thereof. Even if you did, it's frankly not your business whether I am calm or not, nor does it affect the quality of my argument.
I appreciate your clarification, however. I withdraw my assertion that you were trying to minimize what happened on January 6th. And I apologize.
I appreciate your clarification, however. I withdraw my assertion that you were trying to minimize what happened on January 6th. And I apologize.
To be fair, you didn't seem to be bothered with inferring my state of mind in your original comment. Nor did your inference, even if true, change the meaning of what I said, either.
I was going to say "Calm down, Francis," as per the old movie Stripes, and then changed it, but neither would have been helpful. I apologize too.
I was going to say "Calm down, Francis," as per the old movie Stripes, and then changed it, but neither would have been helpful. I apologize too.
> the powers that rule USA don't realize that soon the only tool left to common people is violence?
Do you honestly believe this? Somehow we'll go from not being able to buy certain stocks to violence?
Banning collecting rain water on your own property didn't do it. Abject failure of politicians keeping drinking water clean didn't do it? Not being able to buy cheese from unpasteurized milk didn't do it. Can't grow a plant in your own backyard for personal consumption. But this is it, this is the impetuous. Not being able to buy GME stock.
Let's be real. This is small potatoes.
Do you honestly believe this? Somehow we'll go from not being able to buy certain stocks to violence?
Banning collecting rain water on your own property didn't do it. Abject failure of politicians keeping drinking water clean didn't do it? Not being able to buy cheese from unpasteurized milk didn't do it. Can't grow a plant in your own backyard for personal consumption. But this is it, this is the impetuous. Not being able to buy GME stock.
Let's be real. This is small potatoes.
I think it's important to put this in the context of many other related issues/pressures:
* Increasing wealth inequality for several decades now
* older generations holding onto more wealth and power in society than ever before - with a large share of their wealth in the stock market
* Wall Street is seen as entirely unaccountable due to 2008 bailout
* Pandemic this year has basically been a huge wealth transfer from normal people and small businesses towards large conglomerates and the wall street hedge funds who back them
* Institutional trust is at historic lows, while online spaces become more and more regulated by those same institutions
So maybe GME stock is small potatoes in the grand scheme of things, but it seems like all of this has to reach a boiling point eventually. I'm not sure what that will look like, but violence wouldn't be surprising.
* Increasing wealth inequality for several decades now
* older generations holding onto more wealth and power in society than ever before - with a large share of their wealth in the stock market
* Wall Street is seen as entirely unaccountable due to 2008 bailout
* Pandemic this year has basically been a huge wealth transfer from normal people and small businesses towards large conglomerates and the wall street hedge funds who back them
* Institutional trust is at historic lows, while online spaces become more and more regulated by those same institutions
So maybe GME stock is small potatoes in the grand scheme of things, but it seems like all of this has to reach a boiling point eventually. I'm not sure what that will look like, but violence wouldn't be surprising.
Nailed it. There is a context for all of what’s happening. GME may seem like a funny oddity but there is real resentment boiling underneath the surface of this event. I know it because I feel that way myself.
Everything I’ve seen from how the media covers it to how our financial institutions are forming ranks to condemn retail investors sickens me. It’s making obvious the informal lines of control the investor class use to maintain their wealth and their anger to have the average person attempting to play their game.
It’s like a giant metaphor for how screwed up our society has become.
Everything I’ve seen from how the media covers it to how our financial institutions are forming ranks to condemn retail investors sickens me. It’s making obvious the informal lines of control the investor class use to maintain their wealth and their anger to have the average person attempting to play their game.
It’s like a giant metaphor for how screwed up our society has become.
Pretty much all media coverage of the GME thing boils down to “oh no! The wrong type of people are manipulating the stock market this time!” It’s pretty sickening and transparent. CNBC is like the propaganda arm of Wall Street.
Here's an exception in the media: Saagar Enjeti at The Hill Rising. It's a great take on the situation and he's happy to see Wall Street get kicked in the face: https://youtu.be/9ToOGrUQ7ME
Both hosts at The Hill Rising have great commentary. Not always perfect, but generally much more piercing through the usual inane mass media coverage. (other coverage on the Hill is ok but more hit or miss IMO)
Agreed. I watch at least one segment of theirs pretty much every single day. I don't always care about some of the things they cover (especially the when they're criticizing something someone said in Congress), and sometimes I don't fully agree with their takes on things, but overall they're great.
CNBC is like that, sure. But I’ve found articles in places like Bloomberg and NYT to be quite even handed about it all. If I recall the NYT article even ends with a quote from a pastor’s wife(!): “eat the rich”.
I saw some mild Bloomberg articles. Not sure how they source their stories. Haven't seen anything that defends retail investors though.
Watching some CNBC clips yesterday is what convinced to put a couple hundred bucks into GME for the hell of it.
I'm pretty lucky, I happened to like computers and got into a field that pays decently well for now. I have no illusions that that I'm not working class though. I watched my parents nearly get crushed in 07/08. I graduated into a economic war zone. Watching the banks get bailed out as I went to parties hosted by kids whose parents were losing the house. Seeing the kids who used to live in the house encourage everyone to punch holes in the drywall because fuck the bank.
I haven't forgotten what Wall Street did to us. The wealth inequality in this country is insane. The elites have been treating the working class like dirt for decades now.
With that context... those CNBC clips made me livid. Fuck the Wall Street propaganda. I'll chip in my little piece if there's a remote chance of taking down one or two of the vultures who are destroying this country with their greed. Much of the finance class that runs this country builds nothing, provides nothing, and tears down communities so they can shake a few coins out of the wreckage.
In talking with my friends who voted for Trump, this is the first time I've been able to feel on the page as them in a long time. There is class rage at play here. People are sick of this system.
I'm pretty lucky, I happened to like computers and got into a field that pays decently well for now. I have no illusions that that I'm not working class though. I watched my parents nearly get crushed in 07/08. I graduated into a economic war zone. Watching the banks get bailed out as I went to parties hosted by kids whose parents were losing the house. Seeing the kids who used to live in the house encourage everyone to punch holes in the drywall because fuck the bank.
I haven't forgotten what Wall Street did to us. The wealth inequality in this country is insane. The elites have been treating the working class like dirt for decades now.
With that context... those CNBC clips made me livid. Fuck the Wall Street propaganda. I'll chip in my little piece if there's a remote chance of taking down one or two of the vultures who are destroying this country with their greed. Much of the finance class that runs this country builds nothing, provides nothing, and tears down communities so they can shake a few coins out of the wreckage.
In talking with my friends who voted for Trump, this is the first time I've been able to feel on the page as them in a long time. There is class rage at play here. People are sick of this system.
Indeed. This kind of "fuck you i got mine" attitude is how countries are lost in extreme corruption or "third world" - third world countries are that because the people are impoverished, and the elite have everything.
We're pretty much there. Just try driving through the Midwest, or West in areas not subsumed by the mega-cities. It's sad.
We're pretty much there. Just try driving through the Midwest, or West in areas not subsumed by the mega-cities. It's sad.
I have former Gamestop employees that hate the company and want to see its demise on my feed going 'Good. Fuck these hedge funds,' knowing full well that people are injecting money into a company they hate.
When it gets to that, it seems to me that there's some serious anger built up.
When it gets to that, it seems to me that there's some serious anger built up.
To be fair, Wall Street's been unaccountable for a while. The 2008 was just a large example of this.
Do you have a reference for older people having more wealth? There's definitely a smaller number of people holding more wealth, but I haven't read about older people holding more wealth.
Do you have a reference for older people having more wealth? There's definitely a smaller number of people holding more wealth, but I haven't read about older people holding more wealth.
Google image search "generational wealth USA"
You'll find several similar charts. I dislike the Washington Post, but it's just the first result:
https://www.washingtonpost.com/business/2019/12/03/precariou...
Are there any charts that aren't piecemeal?
Saying that there's wealth deficit for millennials/genx because boomers have accumulated more wealth later in life is a little handy-wavy.
What did the boomer chart look like when they were 20-35? What will the genx chart look like when they're 50-70? And what will the millennial chart look like when they're 30-70?
Edit - 70+ for everyone would be good too.
Saying that there's wealth deficit for millennials/genx because boomers have accumulated more wealth later in life is a little handy-wavy.
What did the boomer chart look like when they were 20-35? What will the genx chart look like when they're 50-70? And what will the millennial chart look like when they're 30-70?
Edit - 70+ for everyone would be good too.
> Saying that there's wealth deficit for millennials/genx because boomers have accumulated more wealth later in life is a little handy-wavy.
That's not what the chart I linked is claiming. The Boomer line goes back to when they were 35. Not sure what the data limitations were preventing it from going back further. Meanwhile all age data is shown for Gen X.
I'm not sure what you mean about the future chart? I guess we'll have to wait and see :-)
But anyway, this chart appears to answer the question: "which generation had more relative wealth in its early 30s?"
That's not what the chart I linked is claiming. The Boomer line goes back to when they were 35. Not sure what the data limitations were preventing it from going back further. Meanwhile all age data is shown for Gen X.
I'm not sure what you mean about the future chart? I guess we'll have to wait and see :-)
But anyway, this chart appears to answer the question: "which generation had more relative wealth in its early 30s?"
One possible problem is that generational earnings are a function of economic conditions. These may average out over a lifetime, but if we look at restricted intervals, it may seem like newer generations have less wealth even if they end up having similar overall wealth over their lifetime.
Leaving out boomer data from ~18-35 makes me a little more suspicious of cherry picking because that data could be similar. It may also show boomers gaining even more wealth, but if it's not available we can't know.
Leaving out boomer data from ~18-35 makes me a little more suspicious of cherry picking because that data could be similar. It may also show boomers gaining even more wealth, but if it's not available we can't know.
Robinhood is in a heads I win, tails you lose scenario with the press here. Wealth inequality will get even worse if regular people lose a ton of money on GME. They already fucked up by causing one guy to commit suicide, so you can't blame them for playing it safe this time.
If there is a big economic downfall and the government tries to play trickle down bs again I'm sure the populace would be enraged.
Game, stop.
To play devil's advocate....
> Increasing wealth inequality for several decades now
TV talking heads bemoan about this, but billionaires still remain the most admired people in this country (Trump, Musk, Gates, etc).
> older generations holding onto more wealth and power in society than ever before - with a large share of their wealth in the stock market
If there was anger at the older generation, we wouldn't have so many sacred cows regarding older people (social security and medicare). Average age of senator and house member has been growing over time. Hell, we just elected a 78 year old as president. How about before the revolution we just start with voting for younger people
> Wall Street is seen as entirely unaccountable due to 2008 bailout
Most people don't remember this. I'm surprised how rarely its actually discussed
> Pandemic this year has basically been a huge wealth transfer from normal people and small businesses towards large conglomerates and the wall street hedge funds who back them
This is mostly true but people don't see it that way. They're too busy yelling at people that refuse to wear masks or people that are forcing others to wear masks.
> Institutional trust is at historic lows, while online spaces become more and more regulated by those same institutions
Again, we elected a 40+ year veteran politician. House and Senate re-election rates are still 85%+ and we're ceding ever more of our authority to the [health] experts.
[0]https://www.washingtonpost.com/news/wonk/wp/2014/04/01/yes-c...
> Increasing wealth inequality for several decades now
TV talking heads bemoan about this, but billionaires still remain the most admired people in this country (Trump, Musk, Gates, etc).
> older generations holding onto more wealth and power in society than ever before - with a large share of their wealth in the stock market
If there was anger at the older generation, we wouldn't have so many sacred cows regarding older people (social security and medicare). Average age of senator and house member has been growing over time. Hell, we just elected a 78 year old as president. How about before the revolution we just start with voting for younger people
> Wall Street is seen as entirely unaccountable due to 2008 bailout
Most people don't remember this. I'm surprised how rarely its actually discussed
> Pandemic this year has basically been a huge wealth transfer from normal people and small businesses towards large conglomerates and the wall street hedge funds who back them
This is mostly true but people don't see it that way. They're too busy yelling at people that refuse to wear masks or people that are forcing others to wear masks.
> Institutional trust is at historic lows, while online spaces become more and more regulated by those same institutions
Again, we elected a 40+ year veteran politician. House and Senate re-election rates are still 85%+ and we're ceding ever more of our authority to the [health] experts.
[0]https://www.washingtonpost.com/news/wonk/wp/2014/04/01/yes-c...
You don’t really get much of a choice on who you vote for, you just get to pick which of the two parties occupies your seat. We should eliminate parties entirely and just go back to a vanilla republic where you pick someone from your community to represent you. Repeal the 17th amendment, return the Presidential electors back to being chosen by the legislators, who are voted in only by the will of their local constituents rather than the blessing of the party.
There were 29 major candidates for Democratic party this year. The Democratic primaries were very competitive, and turnout was high (all things considering). Why do you think you'd have different results nationally?
> TV talking heads bemoan about this, but billionaires still remain the most admired people in this country (Trump, Musk, Gates, etc).
Okay, now include Jeff Bezos, George Soros, and the Koch Brothers :)
But in all serious, I'm not talking about anecdotal "admiration" of billionaires. I'm talking about literal wealth gaps[1]. The Bottom 50% of the US held 21% of the wealth in 1970, and the Top 1% held 11% of the wealth. 21% to 11%. By 2014 this had changed to 13% to 20%. Meaning the top 1% doubled its share of the wealth while the bottom 50% lost 38% of its share of the national wealth.
> If there was anger at the older generation, we wouldn't have so many sacred cows regarding older people (social security and medicare). Average age of senator and house member has been growing over time. Hell, we just elected a 78 year old as president. How about before the revolution we just start with voting for younger people
There is massive systemic momentum keeping these programs in place untouched as they are because of gridlock in the national government, I'm not really sure how their existence supports or rejects my point. I agree younger people need to be more active in the voting process and to elect younger people. I'm optimistic about several state-level voting reforms gaining momentum in the coming years to help this.
But at least at the presidential level, our arcane primary/caucus and electoral college systems give a huge advantage to older people living in rural areas. There has been increasing consolidation of young voters in urban areas which are severely under-represented in choosing the president.
And of course campaigns are financed by large wealthy interests that are mostly controlled by older generation who have an incentive to maintain the status quo. As long as we don't have congressional term limits, poor campaign finance regulation, and a massively gridlocked Congress, it's difficult for the state of things to change from what we have, which is domination by those lobbyists and a federal government which doesn't accurately reflect its populace.
> Most people don't remember this. I'm surprised how rarely its actually discussed
What is your definition of Most People? This comes up every time I've ever seen wealth inequality, accountability and government bailouts discussed (A lot in 2020, naturally).
> This is mostly true but people don't see it that way. They're too busy yelling at people that refuse to wear masks or people that are forcing others to wear masks.
It's concretely felt among those who have lost money, jobs and opportunities. Twitter arguments about masks can be present at the same time as the literal felt effect. Anyone who has followed economic news this year has seen the repercussions even if they weren't directly impacted. In my opinion you're underestimating the mood on this, but I'd like to see some data on it.
> Again, we elected a 40+ year veteran politician. House and Senate re-election rates are still 85%+ and we're ceding ever more of our authority to the [health] experts.
I already talked about federal government above^ But I think this has actually been an incredibly interesting year in that divergence from health experts became "mainstream". Tons of people getting Covid news from people on Twitter who called out studies being used by mainstream press and national governments to justify their policy decisions. I can point out a dozen random people on twitter who I trust more than NYT or Dr. Fauci to give me relevant, contextualized analysis of different COVID-19 strategies around the world. And most importantly, there's little social risk to this. I can tell that to people and they don't think I'm a quack. Half of them do are doing the same thing. Additionally, you're seeing protests break out across the world as governments try to lock-down and re-lock-down without legitimately strong evidence to back up their proposals.
[1] Figure 2.4.1a, https://wir2018.wid.world/part-2.html#article-39
Okay, now include Jeff Bezos, George Soros, and the Koch Brothers :)
But in all serious, I'm not talking about anecdotal "admiration" of billionaires. I'm talking about literal wealth gaps[1]. The Bottom 50% of the US held 21% of the wealth in 1970, and the Top 1% held 11% of the wealth. 21% to 11%. By 2014 this had changed to 13% to 20%. Meaning the top 1% doubled its share of the wealth while the bottom 50% lost 38% of its share of the national wealth.
> If there was anger at the older generation, we wouldn't have so many sacred cows regarding older people (social security and medicare). Average age of senator and house member has been growing over time. Hell, we just elected a 78 year old as president. How about before the revolution we just start with voting for younger people
There is massive systemic momentum keeping these programs in place untouched as they are because of gridlock in the national government, I'm not really sure how their existence supports or rejects my point. I agree younger people need to be more active in the voting process and to elect younger people. I'm optimistic about several state-level voting reforms gaining momentum in the coming years to help this.
But at least at the presidential level, our arcane primary/caucus and electoral college systems give a huge advantage to older people living in rural areas. There has been increasing consolidation of young voters in urban areas which are severely under-represented in choosing the president.
And of course campaigns are financed by large wealthy interests that are mostly controlled by older generation who have an incentive to maintain the status quo. As long as we don't have congressional term limits, poor campaign finance regulation, and a massively gridlocked Congress, it's difficult for the state of things to change from what we have, which is domination by those lobbyists and a federal government which doesn't accurately reflect its populace.
> Most people don't remember this. I'm surprised how rarely its actually discussed
What is your definition of Most People? This comes up every time I've ever seen wealth inequality, accountability and government bailouts discussed (A lot in 2020, naturally).
> This is mostly true but people don't see it that way. They're too busy yelling at people that refuse to wear masks or people that are forcing others to wear masks.
It's concretely felt among those who have lost money, jobs and opportunities. Twitter arguments about masks can be present at the same time as the literal felt effect. Anyone who has followed economic news this year has seen the repercussions even if they weren't directly impacted. In my opinion you're underestimating the mood on this, but I'd like to see some data on it.
> Again, we elected a 40+ year veteran politician. House and Senate re-election rates are still 85%+ and we're ceding ever more of our authority to the [health] experts.
I already talked about federal government above^ But I think this has actually been an incredibly interesting year in that divergence from health experts became "mainstream". Tons of people getting Covid news from people on Twitter who called out studies being used by mainstream press and national governments to justify their policy decisions. I can point out a dozen random people on twitter who I trust more than NYT or Dr. Fauci to give me relevant, contextualized analysis of different COVID-19 strategies around the world. And most importantly, there's little social risk to this. I can tell that to people and they don't think I'm a quack. Half of them do are doing the same thing. Additionally, you're seeing protests break out across the world as governments try to lock-down and re-lock-down without legitimately strong evidence to back up their proposals.
[1] Figure 2.4.1a, https://wir2018.wid.world/part-2.html#article-39
> This is small potatoes.
Do you know how the Arab Spring started? A municipal official bullied a street vendor who was selling produce from a cart roadside.
https://en.wikipedia.org/wiki/Arab_Spring#Events_leading_up_...
https://en.wikipedia.org/wiki/Mohamed_Bouazizi
Do you know how the Arab Spring started? A municipal official bullied a street vendor who was selling produce from a cart roadside.
https://en.wikipedia.org/wiki/Arab_Spring#Events_leading_up_...
https://en.wikipedia.org/wiki/Mohamed_Bouazizi
Was any of his produce small potatoes? (I only joke)
The Federal Government does not have any restrictions on rainwater harvesting. Some states have minor regulations in terms of the amount of rainwater collecting and the means by which it is collected, but most states allow their citizens to collect rainwater while others even encourage it.
https://worldwaterreserve.com/rainwater-harvesting/is-it-ill...
https://worldwaterreserve.com/rainwater-harvesting/is-it-ill...
They don't anymore bc Trump scrapped that. Obama instituted it by expanding the clean water act to cover "isolated wetlands, ponds, and ditches".
Taking water out of ditches or the other types of places mentioned is not "rain-water harvesting."
If you dig a ditch specifically to be filled with rain water, then in what sense is taking rainwater from that ditch not harvesting rainwater?
Is it no longer rainwater if it touches a ditch? Maybe it's no longer rainwater if it touches a barrel. "Haha no States have laws against harvesting rainwater, only barrel water, you fools!"
Is it no longer rainwater if it touches a ditch? Maybe it's no longer rainwater if it touches a barrel. "Haha no States have laws against harvesting rainwater, only barrel water, you fools!"
We live in interesting times. This is surreal coming from Ray Dalio
"I believe we are on the brink of a terrible civil war (as I described in The Changing World Order series), where we are at an inflection point between entering a type of hell of fighting or pulling back to work together for peace and prosperity..."
https://twitter.com/RayDalio/status/1353408208082112512
"I believe we are on the brink of a terrible civil war (as I described in The Changing World Order series), where we are at an inflection point between entering a type of hell of fighting or pulling back to work together for peace and prosperity..."
https://twitter.com/RayDalio/status/1353408208082112512
It's true that today's population is complacent. Many should take another look at how flimsy the reasons were why Americans fought a war of independence.
Sadly it's more than today's population. Take for instance Wickard v. Filburn (1942), a law was upheld that prevented farmers from growing food in order to prop up food prices. An Ohio farmer was forbidden to grow wheat to feed his own livestock, not even sell it.
> An Ohio farmer, Roscoe Filburn, was growing wheat to feed animals on his own farm. The US government had established limits on wheat production, based on the acreage owned by a farmer, to stabilize wheat prices and supplies. Filburn grew more than was permitted and so was ordered to pay a penalty. In response, he said that because his wheat was not sold, it could not be regulated as commerce, let alone "interstate" commerce (described in the Constitution as "Commerce... among the several states"). The Supreme Court disagreed: "Whether the subject of the regulation in question was 'production', 'consumption', or 'marketing' is, therefore, not material for purposes of deciding the question of federal power before us.... But even if appellee's activity be local and though it may not be regarded as commerce, it may still, whatever its nature, be reached by Congress if it exerts a substantial economic effect on interstate commerce and this irrespective of whether such effect is what might at some earlier time have been defined as 'direct' or 'indirect.'
[0] https://en.wikipedia.org/wiki/Wickard_v._Filburn
> An Ohio farmer, Roscoe Filburn, was growing wheat to feed animals on his own farm. The US government had established limits on wheat production, based on the acreage owned by a farmer, to stabilize wheat prices and supplies. Filburn grew more than was permitted and so was ordered to pay a penalty. In response, he said that because his wheat was not sold, it could not be regulated as commerce, let alone "interstate" commerce (described in the Constitution as "Commerce... among the several states"). The Supreme Court disagreed: "Whether the subject of the regulation in question was 'production', 'consumption', or 'marketing' is, therefore, not material for purposes of deciding the question of federal power before us.... But even if appellee's activity be local and though it may not be regarded as commerce, it may still, whatever its nature, be reached by Congress if it exerts a substantial economic effect on interstate commerce and this irrespective of whether such effect is what might at some earlier time have been defined as 'direct' or 'indirect.'
[0] https://en.wikipedia.org/wiki/Wickard_v._Filburn
And as awful as that logic was, the absurdity was surpassed in Gonzales v. Raich [1], when the SC leveraged Wickard to conclude that the commerce clause also allows the federal government to ban activities that could affect prices in illegal markets, too.
[1] https://en.wikipedia.org/wiki/Gonzales_v._Raich
[1] https://en.wikipedia.org/wiki/Gonzales_v._Raich
If a new Constitution would be written would people want this in it or not? Is this consistent with self-determination or not?
The commerce clause was intended to create a free trade zone between the states, which at that time were engaging in trade wars with each other.
Then it was misinterpreted in Wickard to permit nearly limitless power to Congress.
So yes, in a new Constitution we would want a commerce clause, and we would want it never to be interpreted in such a manner.
Then it was misinterpreted in Wickard to permit nearly limitless power to Congress.
So yes, in a new Constitution we would want a commerce clause, and we would want it never to be interpreted in such a manner.
I’ve always thought that if the Revolution happened today, you’d have big media corporations like The NY Times writing hit pieces on George Washington everyday.
The American Revolution used the social media of the time, what do you think the federalist papers were all about?
A lot of the established press was against it and they did constantly published “hit pieces”.
History is written by the victors if the American Revolution didn’t succeed the US would likely eventually gained independence but it would’ve been a commonwealth nation. The Revolution isn’t the reason why you have freedom today, Canada is free so is the UK. The world would look quite different than it is today but not as different as you might think.
A lot of the established press was against it and they did constantly published “hit pieces”.
History is written by the victors if the American Revolution didn’t succeed the US would likely eventually gained independence but it would’ve been a commonwealth nation. The Revolution isn’t the reason why you have freedom today, Canada is free so is the UK. The world would look quite different than it is today but not as different as you might think.
Canada and the UK developed in the same post-American Revolution world as America itself did. The idea that the Commonwealth would have automatically become free is historical revisionism.
I didn’t said it automatically would be, but I would put my money on the west developing in a similar fashion as far as form of governments goes than not.
Considering that the West almost ended up being ruled by the Nazis, I’m not sure how this is remotely likely without the US existing as an independent powerhouse.
You say this like it wasn't the case that media outlets wrote anti-revolution articles then: https://allthingsliberty.com/2014/03/james-rivington-kings-p...
Lol you're reaching. This is not the issue that divides us. Rather, we enjoy seeing winners and losers in the market.
No, I don't like seeing winners and losers in the market. I like to see winners, it's not a zero sum game.
There are no divisions on this board, everyone is against the Power that is being exhibited right now. TD, Interactive Brokers and Robinhood have bent the knee to enrich the rich at the expense of many.
There are no divisions on this board, everyone is against the Power that is being exhibited right now. TD, Interactive Brokers and Robinhood have bent the knee to enrich the rich at the expense of many.
People do like other people's drama. It reminds them they're not the only ones with troubles. As for zero sum, of course it's not, the market grows over time, but there def are winners and losers when you look at events up close.
Bending the knee is not right, there must be some sanity in the market. They're trying to protect mom and dad from losing their shirts.
Bending the knee is not right, there must be some sanity in the market. They're trying to protect mom and dad from losing their shirts.
Sanity is a relative term depending on which side of the trade one is on. Moms and Dads (if any were in GME) will lose money and make money, they are directing who will be losing.
I'm happy to change my phrase, what would you call it when brokerages unilaterally help their market makers by changing trading terms to ones that favor one side. Halting trading is usually done by an exchange.
I'm happy to change my phrase, what would you call it when brokerages unilaterally help their market makers by changing trading terms to ones that favor one side. Halting trading is usually done by an exchange.
Here [1], see also [2]
> Market makers have no interest in owning the stock. They have no interest in being long or short. They're like a furniture or electronics store. They match buyers and sellers, and for this, they make a slim profit margin. This profit margin is known as the spread. The reason they make a profit is because risk is involved. If they sell stock to you, but the price is so volatile that it moves up and up before they can find a buyer and equal out their book, they can lose a lot of money, and they can lose it fast.
> This is why discount brokers (Robinhood, Cashapp, Webull, etc...) have stopped allowing people to buy GME, and AMC, among others. They can't find a market maker to take your order. It sucks because retail made a lot of dumb moves, and bought a lot of shares they shouldn't have bought, and they're going to lose a ton of money, but it's not a conspiracy. [1]
[1] https://www.reddit.com/r/neoliberal/comments/l6qhhg/discussi...
[2] https://www.reddit.com/r/neoliberal/comments/l7bo3r/the_game...
> Market makers have no interest in owning the stock. They have no interest in being long or short. They're like a furniture or electronics store. They match buyers and sellers, and for this, they make a slim profit margin. This profit margin is known as the spread. The reason they make a profit is because risk is involved. If they sell stock to you, but the price is so volatile that it moves up and up before they can find a buyer and equal out their book, they can lose a lot of money, and they can lose it fast.
> This is why discount brokers (Robinhood, Cashapp, Webull, etc...) have stopped allowing people to buy GME, and AMC, among others. They can't find a market maker to take your order. It sucks because retail made a lot of dumb moves, and bought a lot of shares they shouldn't have bought, and they're going to lose a ton of money, but it's not a conspiracy. [1]
[1] https://www.reddit.com/r/neoliberal/comments/l6qhhg/discussi...
[2] https://www.reddit.com/r/neoliberal/comments/l7bo3r/the_game...
Day trading will likely lose a lot of people a lot of money. It's absolutely a zero sum game and for the vast majority, a negative-sum game.
And all of it under the guise of "protecting the little guy."
Why do you think it's a guise to stop buys on a ridiculous valuation? You can still sell.
By that logic, nobody should be allowed to buy and sell Bitcoin, because there's no way a currency with such a low GDP can be worth that much.
I can walk into any gas station in the country and blow as much money as I care to on lottery tickets. I can drive to Las Vegas and walk into a casino and do practically anything I want with my money. This is America and retail investors are (hopefully) all legal age and are participating of their own free will.
Hedge funds have treated the stock market like their own personal casino for decades. When the house starts to lose at their own game, due to their own greed, it's suddenly a problem?
Hedge funds have treated the stock market like their own personal casino for decades. When the house starts to lose at their own game, due to their own greed, it's suddenly a problem?
Casino is right but you can't easily get to one. They're highly regulated and not everywhere for a reason, which is they make masses poor and are generally bad for the economy. Great you get tax money but you've destroyed people's lives to do it and people are a country's most valuable asset.
Don't know what you're on about the house losing here. Brokers make a killing on any trade action. Heavy retail day trading inevitably falters and ends up creating tons of poor while money flows into the pockets of a few. See: the year 2000.
Don't know what you're on about the house losing here. Brokers make a killing on any trade action. Heavy retail day trading inevitably falters and ends up creating tons of poor while money flows into the pockets of a few. See: the year 2000.
I can't remember the movie. Can't even remember the actor, but...
"What. the fuck. are you talking about?!"
Tesla's price-to-earnings ratio is 1660.
Why didn't TSLA buying get shut down? OH yeah, because a shitload of institutional investors have shares.
"What. the fuck. are you talking about?!"
Tesla's price-to-earnings ratio is 1660.
Why didn't TSLA buying get shut down? OH yeah, because a shitload of institutional investors have shares.
B/c TSLA shenanigans all occurred under a completely corrupted admin whose agencies will need time to rebuild. Can't believe I need to write that. It's no secret a con man was at the helm.
I like to see winners, it's not a zero sum game
Short selling absolutely is a zero sum game.
Short selling absolutely is a zero sum game.
Eh, there's an argument to be made that maintaining a healthy market with longs and shorts produces more value in the long term. Generally I disagree with gp tho b/c people love drama even if it isn't 100 to zero.
I mean it could be not "it" but the "it" that triggers this build-up of tension. People are fed up (and rightly so) of the elite gaming the system.
KYC is fine if you are a multi-millionaire. You just delegate your lawyers and army of accountants to do it. But if you are a small man/company, it's a headache that can drive you out of business.
This financial restrictions has to be stopped. Financial freedom is more important than Freedom of expression.
KYC is fine if you are a multi-millionaire. You just delegate your lawyers and army of accountants to do it. But if you are a small man/company, it's a headache that can drive you out of business.
This financial restrictions has to be stopped. Financial freedom is more important than Freedom of expression.
>> Let's be real. This is small potatoes.
Agree. It is not like there aren't half a dozen apps that let you trade stocks commission free on your phone. Some may require you to have $500-$1k to invest, but seriously if you don't have that you should invest in a different way then treading individual stocks.
That said, I have no idea why Robin Hood should ban the trading of GME and I wish they wouldn't.
Agree. It is not like there aren't half a dozen apps that let you trade stocks commission free on your phone. Some may require you to have $500-$1k to invest, but seriously if you don't have that you should invest in a different way then treading individual stocks.
That said, I have no idea why Robin Hood should ban the trading of GME and I wish they wouldn't.
And lets be honest, the overlap between retail investors trying to buy meme stocks and people who regarded Parler as their true voice isn't going to be that huge (and the relationship between AWS and Robinhood's compliance teams negligible). Anyone sufficiently motivated to see strong connections between the actions of AWS booting Parler and Robinhood restricting trades is going to be so accustomed to seeing everything through a fact-lite 'us vs the man' lens that it barely matters what corporations actually do. And those tempted by actual violence have had other causes to attach themselves to over the last 12 months anyway.
Also this isn't people 'asserting themselves financially', this is people mug punting on a stock that wealthier and more financially savvy people who got in early are happy to unload their stock to. There will end up being people quite relieved they didn't get to execute their plan to put their life savings into peak-price Gamestop.
Also this isn't people 'asserting themselves financially', this is people mug punting on a stock that wealthier and more financially savvy people who got in early are happy to unload their stock to. There will end up being people quite relieved they didn't get to execute their plan to put their life savings into peak-price Gamestop.
> Do you honestly believe this? Somehow we'll go from not being able to buy certain stocks to violence?
It isn't simply that people can't buy certain stocks. Its an accumulation of events that increasingly lead people to believe that the system is rigged against them. This extends back decades. You have to have been living under a rock to have missed the rising tide of populist sentiment over the last decade, as seen in the pro-Trump anti-establishment contingent on the right, and the explosion of pro-socialist sentiment on the far left.
This Gamestop business probably amounts to a large bucketful of water, but at a certain point, a single drop causes the dam to burst. Kicking the can down the road by saying "surely people won't resort to violence over this" all but ensures that eventually, people will.
It isn't simply that people can't buy certain stocks. Its an accumulation of events that increasingly lead people to believe that the system is rigged against them. This extends back decades. You have to have been living under a rock to have missed the rising tide of populist sentiment over the last decade, as seen in the pro-Trump anti-establishment contingent on the right, and the explosion of pro-socialist sentiment on the far left.
This Gamestop business probably amounts to a large bucketful of water, but at a certain point, a single drop causes the dam to burst. Kicking the can down the road by saying "surely people won't resort to violence over this" all but ensures that eventually, people will.
I would guess most count oppression and exploitation cumulatively not by maximum event size.
I do agree with you when it comes to the surface level idea of buying a particular stock. However, the fight here isnt about that. This is a fight between the public mixed with low level capitalist (sub 8 digit yearly earnings) and the billionaire well... oligarchy of hedge funds. The hedge funds are putting pressure on gov and media to stop allowing the general public from doing something. This was originally a fight to screw over a hedge fund that was picking on Gamestop to bankrupt them through predatory short selling. Its blown up to now the hedge funds trying to manipulate public discourse, media discourse and the public's ability to participate in the market. Originally, capitalism is about anyone has the ability to participate in business and the market equally, regardless of their family lineage or social class. Obviously reality is messier than theory, but you no longer need to have a royal family name to own land or start a business. Hedge funds, banks and others are trying to accomplish the same old, "kiss my ring", just with slightly different tactics.
It's a fun show regardless.
It's a fun show regardless.
> Somehow we'll go from not being able to buy certain stocks to violence?
Please read this whole thread (https://old.reddit.com/r/wallstreetbets/comments/l6omry/an_o...)
This isn't about buying stock any more. This has become a battleground. The people in this thread are normal people fighting back for the first time in their lives.
Please read this whole thread (https://old.reddit.com/r/wallstreetbets/comments/l6omry/an_o...)
This isn't about buying stock any more. This has become a battleground. The people in this thread are normal people fighting back for the first time in their lives.
Didn’t it already happen in the capitol insurrection? Will it happen again with some other collection of people? Historically high inequality societies see high instability and even revolution.
Yes.
We are near levels of inequality that caused the French Revolution to go violent.
We are near levels of inequality that caused the French Revolution to go violent.
> Banning collecting rain water on your own property
What does that refer to?
What does that refer to?
It's literal. There are a number of states that make it outright illegal to collect rain water even if you're doing it to water your own garden during droughts.
Exactly that, a number of US states used to ban it so water utilities, and water rights buyers can make more money.
As of now, I believe the last explicit ban on that was repealed decades ago.
As of now, I believe the last explicit ban on that was repealed decades ago.
There are still some restrictions, and a good summary here: https://worldwaterreserve.com/rainwater-harvesting/is-it-ill....
When buying property, you may have agreed that you were not acquiring mineral rights, water rights, etc. and you still might have problems even in the absence of a government rule against it. I don't know how legitimate such claims are or how often they're successful, but I know someone who got legal nasty-grams from a land developer for doing it, and the property owner backed off when they saw the papers they had signed again.
When buying property, you may have agreed that you were not acquiring mineral rights, water rights, etc. and you still might have problems even in the absence of a government rule against it. I don't know how legitimate such claims are or how often they're successful, but I know someone who got legal nasty-grams from a land developer for doing it, and the property owner backed off when they saw the papers they had signed again.
I believe they were usually enacted to protect the nearby properties that the runoff went to, not to help water utilities and water rights buyers make more money, and to protect sources for streams and creeks and rivers.
Also, I don't think most of them were bans. I think they usually just limited the extent of it. Some barrels collecting from the downspouts from your roof--fine. Building a huge reservoir filled by rain--not fine.
And they haven't been all repealed. A few states still have restrictions, such as freely allowing collecting anything that falls on the roofs of your buildings as long as the building weren't specifically to collect rainwater but requiring approval for anything else.
Also, I don't think most of them were bans. I think they usually just limited the extent of it. Some barrels collecting from the downspouts from your roof--fine. Building a huge reservoir filled by rain--not fine.
And they haven't been all repealed. A few states still have restrictions, such as freely allowing collecting anything that falls on the roofs of your buildings as long as the building weren't specifically to collect rainwater but requiring approval for anything else.
I think the point is the general cut on freedoms more than any of the individual steps. For some people the increasing power given to corporations and governments to cut people freedom and putting their rights in front of individual rights (the pilar of all mordern western democracies).
The fenomenon is global by the way, but it still has been dominated by classic political tags on the media, like alt-right vs commie etc. A very few polititians broke that pattern the last 5 years or so, won'tt give any names, because all that labels I mentioned,
The fenomenon is global by the way, but it still has been dominated by classic political tags on the media, like alt-right vs commie etc. A very few polititians broke that pattern the last 5 years or so, won'tt give any names, because all that labels I mentioned,
It is no exaggeration to say wars have been fought for worse reasons than this.
What nightmare of a HOA do you have that bans rain barrels?
I'm not aware of any HOA that bans rain water collection but many state and local governments do to protect their monopoly.
It's not a HOA. Several states in the southwest have laws prohibiting/restricting rainwater collection.
Oh that's crazy! Here in Chicago you can actually get a rebate from the government for using one![1]
[1]https://mwrd.org/rain-barrels
[1]https://mwrd.org/rain-barrels
That sounds like a good idea. Just regulate the rain barrels so that they lose a certain amount of water if you don't use it yourself.
The entire states of Colorado and Utah ban rainwater collection.
straw, when the camel broke.
It’s a pretty classic tactic in the history of conflict. By pushing your opponent into a tight position, you force him to strike first, thus giving you complete justification in your disproportionate response.
It's a police tactic called Kettling https://en.wikipedia.org/wiki/Kettling
I’m kind of embarrassed to say it never occurred to me that the goal of kettling was to encourage a non-violent protest to violence. Thinking on it, it makes a sort of sick sense. If the people are actually violent the rules go out the window and you can use whatever force you deem necessary. And the police always consider themselves the superior group.
The link to the Wikipedia article explicitly mentions that is was originally designed to just coop up a crowd for several hours so that they get bored and the situation de-escalates. This was seen as a more effective and humane tactic than dispersing rioting crowds using fear by doing police charges. That said, 1990s era European protests (when the theory behind kettling was developed) were rather less violent than current day American protests, helped in no small part of course by the relative prevalence of firearms in American society and their higher distrust of police forces (again, compared to Europeans. Atm distrust between police and protesters in the USA seems to be in a vicious downward spiral where the actions of both group confirm the prejudices of the other group)
Kettling is one of the less provocative tactics, but it's intended as a collective punishment of the kettled: extra-legal detention for a period of hours with no food, water or toilet facilities.
Police can and will provoke non-violent protests to violence. In a few cases (see the UK's "spycops" scandal) police infiltrators will organise protests so they can arrest dissidents.
Police can and will provoke non-violent protests to violence. In a few cases (see the UK's "spycops" scandal) police infiltrators will organise protests so they can arrest dissidents.
Lots of people call it a riot if a crowd does not immediately disperse when ordered to do so. Like super immediately.
[deleted]
> It’s a pretty classic tactic in the history of conflict
Yes when executed by a single coherent entity.
This is not it, unless you believe there is a powerful cabal controlling twitter, facebook, robinhood, discord etc.
They are all doing it independtly to limit the legal and/or financial risks for themselves. Getting people to "strike first" is not the intent, saving $ is the intent here.
Yes when executed by a single coherent entity.
This is not it, unless you believe there is a powerful cabal controlling twitter, facebook, robinhood, discord etc.
They are all doing it independtly to limit the legal and/or financial risks for themselves. Getting people to "strike first" is not the intent, saving $ is the intent here.
Apple, Amazon and Google killing Parler in lockstep isn't coherent enough for you?
No it's not, the moment Parler became a liability to them they dumped it. It for some reason it was to become good business again tomorrow, they would jump to host it again.
There is no intent on the part of the GAFAs to force the lower class into a revolution to get a pretext to squash them or any bigger "art of the war" plan behind those decisions than money.
There is no intent on the part of the GAFAs to force the lower class into a revolution to get a pretext to squash them or any bigger "art of the war" plan behind those decisions than money.
Their motivation does not matter. The point is that effectively they are a single coherent entity.
Assuming no bad intentions doesn’t change the outcome of their actions.
Assuming no bad intentions doesn’t change the outcome of their actions.
Doesn’t need to be a grand conspiracy, merely the same reaction by multiple independent entities.
You are talking about result, I am talking about intent.
Yes the result might be the same, but there is no intent to "force him to strike first, thus giving you complete justification in your disproportionate response".
Only intent here is ass covering.
Only intent here is ass covering.
Money is the greatest coordinating force in the history of civilization.
It seems preprogrammed in the brain. I can witness that in people that will gradually boil you until you snap and then benefit from the chaos as revenge almost sub-conscientiously
That tactic worked out well during the French Revolution...
Give the Revolutions podcast by Mike Duncan a listen. The French revolution was not what it seems... it was elites vs. elites, not peasants vs. monarchy.
It's always elites vs. elites. The problem now is that there's plenty of elites on the outs. Elite overproduction and all that.
It's not as simple as that. I don't think any of Jean-Clément Martin books are translated to english, but its really not as simple as that.
Yeah, what a weird take. As if La Bastille was attacked by French aristocracy. This argument only holds if you hold 2 very loose claims. 1) To confuse the leaders with the whole movement. 2) To compare the rag-tag group of young lawyers, acerbic journalists, disgruntled politicians with the whole ancien regime.
Mike Duncan is an entertainer, not a professional historian.
Mike Duncan is an entertainer, not a professional historian.
“Those who make peaceful revolution impossible will make violent revolution inevitable."
"There are four boxes to be used in the defense of liberty: soap, ballot, jury, and ammo. Please use in that order."
Stalin empirically disproved that statement.
Fair point, so I guess if the leader gets really blatantly violent, along with enough government propaganda, it can stop a revolution.
Luddites is also a good example. Oh, you are poor and starving and protesting on the streets? They start destroying machines? Time to arrest everyone, even those who did nothing.
That tactic backfired multiple times in history, for example https://en.wikipedia.org/wiki/Defenestrations_of_Prague
Obligatory we are at higher inequality than immediately before the French Revolution. Wonder what that means?
Some interesting reading:
Professor Walter Scheidel examines the history of peace and economic inequality over the past 10,000 years - https://news.stanford.edu/2017/01/24/stanford-historian-unco...
Revolution and the Rebirth of Inequality - https://www.jstor.org/stable/2777764?seq=1
Some interesting reading:
Professor Walter Scheidel examines the history of peace and economic inequality over the past 10,000 years - https://news.stanford.edu/2017/01/24/stanford-historian-unco...
Revolution and the Rebirth of Inequality - https://www.jstor.org/stable/2777764?seq=1
> ...the powers that rule USA don't realize that soon the only tool left to common people is violence?
I wonder how big the intersection is between people saying this now and people who said that the Black Lives Matter protests were violent (when they largely weren't).
> there is the deplatforming going on, people asserted their power financially, and now getting that removed too
It's not the same people. I keep seeing efforts to compare the deplatforming of violent and radical white supremacists that were using platforms to coordinate a coup to whatever other unpopular thing is happening today. I suspect that's an attempt to cultivate a little sympathy for people who have none for others.
Yes, large investment firms appear to be circling their wagons now and making moves through media partners and others to try to stop the bleeding. That's an entertaining enough event all on its own, it doesn't need specious comparisons to other recent events.
I wonder how big the intersection is between people saying this now and people who said that the Black Lives Matter protests were violent (when they largely weren't).
> there is the deplatforming going on, people asserted their power financially, and now getting that removed too
It's not the same people. I keep seeing efforts to compare the deplatforming of violent and radical white supremacists that were using platforms to coordinate a coup to whatever other unpopular thing is happening today. I suspect that's an attempt to cultivate a little sympathy for people who have none for others.
Yes, large investment firms appear to be circling their wagons now and making moves through media partners and others to try to stop the bleeding. That's an entertaining enough event all on its own, it doesn't need specious comparisons to other recent events.
Yes. You can now see the true extent of their tricks and possible ways of shaking the WSB traders. Obviously these large guys are using their influence and connections to drive FUD, lies and fake news to frame their enemy / target (/r/WSB) to give in and sell. Even the stock brokers are in on it. All of this to protect the losses of the irresponsible and the greediest of hedge-funds and short-sellers.
Best part? They are not even hiding it. Everyone can see the message.
Best part? They are not even hiding it. Everyone can see the message.
Am I the only one who see's parallels between the above paranoia and "the election was stolen and they're not even hiding it?"
I've heard the talk that Robinhood website is an op by a financial fund called Citadel LLC. It may be considered market manipulation on their side well more solidly than some speculation on the internet, not to say a breach of brokerage contractual obligations.
Not quite. Citadel is a very well known quant hedge fund. The main way Robinhood makes money (and can let people trade without commission) is by selling their customers order flow (legally) to Citadel. Citadel (legally) uses this customer information to, in the milliseconds before the customer, front-run the trade, buy the shares and sell them to the Robinhood users at a marginal profit.
You got things a bit mixed up.
There's Citadel Asset Management, the quant hedge fund (which is probably the one that lent money to Melvin, though I'm not sure about that), and Citadel Securities the HFT / market-making show (they have the same owner).
HFT market-making using retail order flow isn't front-running - the price the customers get is the same regardless ("Best Bid Offer" as brokers are legally required to provide in the US). The difference is, once that the HFT market maker holds the stock, they can get rid of it more easily (i.e. they can close the trade) because (the assumption is that) the retail flow is "noise" (uncorrelated with future price movements) as opposed to professional/institutional traders (e.g. other hedge funds executing their strategies), where a big problem is negative selection (i.e. you're more likely to execute a trade with someone that has better information than you).
There's Citadel Asset Management, the quant hedge fund (which is probably the one that lent money to Melvin, though I'm not sure about that), and Citadel Securities the HFT / market-making show (they have the same owner).
HFT market-making using retail order flow isn't front-running - the price the customers get is the same regardless ("Best Bid Offer" as brokers are legally required to provide in the US). The difference is, once that the HFT market maker holds the stock, they can get rid of it more easily (i.e. they can close the trade) because (the assumption is that) the retail flow is "noise" (uncorrelated with future price movements) as opposed to professional/institutional traders (e.g. other hedge funds executing their strategies), where a big problem is negative selection (i.e. you're more likely to execute a trade with someone that has better information than you).
This is incorrect. To understand the business model you first have to understand the order book and how trades normally work. The order book consists of two sides. The bids (people who want to buy, how much and at what price), and the asks(people who want to sell, how much and at what price).
For instance the bid side may say
Alice wants to buy 50 shares at $20 (order added at 10:37)
Bob wants to buy 30 shares at $20.1 (order added at 11:18)
Citadel wants to buy 35 shares at $20.1 (order added at 11:17)
David buy 10 shares at $20.1 (order added at 11:01)
The bids are ordered by price, and ties are broken by who placed the order first.
If Evelyn (Robinhood customer) shows up and wants to sell 5 shares at $20, then the exchange will say, oh nice 20 is less than $20.1, lets get some trades going! $20.1 is the highest prices, and of those orders David's were entered first. So Evelyn's sell order is matched with Davids buy order. The price is determined by the order which was in the book. So Evelyn will get a better price than she hoped for!
If Evelyn had requested to sell 100 shares, then she will first sell to David for $20.1, then Citadel's for $20.1, then Bob's for $20.1 and finally some of Alice's shares for $20.
Ok but what happens if Citadel is paying for order flow?? Now the order book (from Evelyn's perspective) looks like
Alice wants to buy 50 shares at $20 (order added at 10:37)
Bob wants to buy 30 shares at $20.1 (order added at 11:18)
David buy 10 shares at $20.1 (order added at 11:01)
Citadel wants to buy 35 shares at $20.1 (order added at 11:17)
So if Evelyn (Robinhood customer) shows up, and again wants to sell 5 shares at $20, then she will sell to Citadel, even though their order is later than David's.
So to sum it up
Evelyn (Robinhood customer) is unaffected
Citadel wins
David loses.
For instance the bid side may say
Alice wants to buy 50 shares at $20 (order added at 10:37)
Bob wants to buy 30 shares at $20.1 (order added at 11:18)
Citadel wants to buy 35 shares at $20.1 (order added at 11:17)
David buy 10 shares at $20.1 (order added at 11:01)
The bids are ordered by price, and ties are broken by who placed the order first.
If Evelyn (Robinhood customer) shows up and wants to sell 5 shares at $20, then the exchange will say, oh nice 20 is less than $20.1, lets get some trades going! $20.1 is the highest prices, and of those orders David's were entered first. So Evelyn's sell order is matched with Davids buy order. The price is determined by the order which was in the book. So Evelyn will get a better price than she hoped for!
If Evelyn had requested to sell 100 shares, then she will first sell to David for $20.1, then Citadel's for $20.1, then Bob's for $20.1 and finally some of Alice's shares for $20.
Ok but what happens if Citadel is paying for order flow?? Now the order book (from Evelyn's perspective) looks like
Alice wants to buy 50 shares at $20 (order added at 10:37)
Bob wants to buy 30 shares at $20.1 (order added at 11:18)
David buy 10 shares at $20.1 (order added at 11:01)
Citadel wants to buy 35 shares at $20.1 (order added at 11:17)
So if Evelyn (Robinhood customer) shows up, and again wants to sell 5 shares at $20, then she will sell to Citadel, even though their order is later than David's.
So to sum it up
Evelyn (Robinhood customer) is unaffected
Citadel wins
David loses.
This is missing the context that Robinhood is required to seek the "best" execution of trades [1]. So Citadel is making a profit yes, but the customer is not necessarily harmed in that profit as Citadel may still be delivering a better execution than other market makers or the actual exchange itself.
[1] https://www.sec.gov/fast-answers/answersbestexhtm.html
Robinhood publishes their execution numbers (as required by the SEC), along with other brokers. At a quick glance, there is nothing out of the ordinary. It's also worth noting that you cannot directly compare numbers as different platforms have different trading behavior.
https://robinhood.com/us/en/about-us/our-execution-quality/
https://www.schwab.com/execution-quality
https://www.fidelity.com/trading/execution-quality/overview
[1] https://www.sec.gov/fast-answers/answersbestexhtm.html
Robinhood publishes their execution numbers (as required by the SEC), along with other brokers. At a quick glance, there is nothing out of the ordinary. It's also worth noting that you cannot directly compare numbers as different platforms have different trading behavior.
https://robinhood.com/us/en/about-us/our-execution-quality/
https://www.schwab.com/execution-quality
https://www.fidelity.com/trading/execution-quality/overview
Of note here: Robinhood recently (last month) settled charges that they actually weren't seeking best execution.
https://www.sec.gov/news/press-release/2020-321
https://www.sec.gov/news/press-release/2020-321
(In 2018, and the actual charges they settled were not that they weren't seeking best execution. The charges that landed were that they falsely advertised that their execution matched or beat other brokers.
In fact, they were still seeking "best" execution; they just didn't beat other brokerages because of high payments for order flow and misled customers about that.)
In fact, they were still seeking "best" execution; they just didn't beat other brokerages because of high payments for order flow and misled customers about that.)
That doesn't sound correct: https://robinhood.com/us/en/support/articles/how-robinhood-m...
- Rebates from market makers and trading venues
- Robinhood Gold
- Stock loan
- Income generated from cash
- Cash Management
- Rebates from market makers and trading venues
- Robinhood Gold
- Stock loan
- Income generated from cash
- Cash Management
Payment for order flow falls under "rebates from market makers and trading venues."
https://robinhood.com/us/en/support/articles/stock-order-rou...
https://robinhood.com/us/en/support/articles/stock-order-rou...
I just learned about the Citadel/Robinhood connection from this https://marketsweekly.ghost.io/what-happened-with-gamestop/, which the author https://twitter.com/alexisgoldstein/status/13546053632874864... explained as "Why it's not Robinhood/Reddit vs. Hedge Funds. It's Hedge Funds vs. Hedge Funds vs. Wall Street, with Robinhood as a fig leaf". The sidebars in the article explain a lot of the lingo.
Can Citadel exercise any sort of discretion on what order-flow they'll fill? Can they legally tell Robinhood that they will no longer fill orders for GME?
> Can Citadel exercise any sort of discretion on what order-flow they'll fill? Can they legally tell Robinhood that they will no longer fill orders for GME?
Legally not, illegally... yes, and try to prove that.
Legally not, illegally... yes, and try to prove that.
This and they have terrible spreads. So commission is included in the price.
How much do you think Citadel has made off of GME in the last week?
They have certainly profited from the increased options & equity trading. I'm also pretty certain it's less than the loss Melvin Capital suffered.
Is that the same Citadel who lent money to Melvin Capital? If so, that's a huge red flag.
Citadel securities is the market maker that pays for order flow, Citadel is the hedge fund that lent 2 billion to melvin capital. Definitely smells like some backroom don't bite the hand that feeds you.
It is.
citadel is their market maker but as far as I know is not owned or operated by them.
[deleted]
If I were running a financial brokerage I'd totally do this, too. It's not a matter of "helping my hedge fund broker friends", it's a matter of "how do we keep the SEC off our backs". Remember: Robinhood is already being charged with securities law violation for giving their customers a raw deal on order execution.
We usually don't see distributed market manipulation like this, but I wouldn't be surprised if a shitton of people buying GameStop to squeeze a short-seller breaks securities law. Does it feel good to get one up on a hedge fund idiot that was trying to manipulate GameStop the other way? Yes - but this is, at best, financial vigilantism.
We usually don't see distributed market manipulation like this, but I wouldn't be surprised if a shitton of people buying GameStop to squeeze a short-seller breaks securities law. Does it feel good to get one up on a hedge fund idiot that was trying to manipulate GameStop the other way? Yes - but this is, at best, financial vigilantism.
> Does it feel good to get one up on a hedge fund idiot that was trying to manipulate GameStop the other way? Yes - but this is, at best, financial vigilantism.
Hedge funds do this to each other every day. Why is it suddenly wrong when it’s retail investors on the other side of the trade?
I truly do not understand the naïveté of arguments like these. Only the wealthy should be allowed to game the price of assets and rip each other off?
Hedge funds do this to each other every day. Why is it suddenly wrong when it’s retail investors on the other side of the trade?
I truly do not understand the naïveté of arguments like these. Only the wealthy should be allowed to game the price of assets and rip each other off?
> Hedge funds do this to each other every day.
Do you have a source for this?
Do you have a source for this?
If it were not so shorting wouldn't be considered high risk...
If you remove the short squeeze part. It is still a pump and dump. Someone is going to be holding the bag when the stock comes back down. That is going to be retail investors.
short positions are inherently higher risk than long positions because your upside is finite, and the downside is unbounded.
(this is why you might want to... hedge your shorts.)
(this is why you might want to... hedge your shorts.)
Start with Matt Levine or Michael Lewis if you want to see how games are played.
For eg, here’s an insane one from last fall on negative oil futures:
https://www.bloomberg.com/opinion/articles/2020-08-04/some-p...
For eg, here’s an insane one from last fall on negative oil futures:
https://www.bloomberg.com/opinion/articles/2020-08-04/some-p...
I'm still shit at these things, but so far, I seriously cannot understand how hedge funds get away with "shorting", but people doing the same thing in reverse is market manipulation. From this (admittedly naive) POV, this sounds like double standards.
Holding a short position (selling before you buy) or a long position (buying before you sell) are both valid and legal trading decisions on their own. Market manipulation arises out of context. When you start tweeting about how you should totally sell a stock that you have a short position on, then you start stepping into illegal behavior.
In other words, the capital firm that got short-squeezed by the idiots at /r/WSB were also doing something illegal. It's not the case that the short is legal but the longs aren't. Alternatively, if the argument is that /r/WSB isn't market-manipulating, they just think the stock is undervalued, then the hedge fund can use the same argument. "We think this stock is overvalued so we shorted it" is how they'll explain it to the SEC.
And that's not an invalid position: GME has been suspiciously overvalued way before any of the parties involved started holding positions. It's a retail-heavy business in pandemic season with multiple year-over-year same-store sales cuts. What that means is that, for each one of their stores, on average, they sold 30% less product in Q3 2020 than they did in Q3 2019. And even if you think, "oh, that's just the COVID economy, they'll be back"; Q3 2019 sales were already 20% down from the year before. This is a company nobody wanted to buy games from even before a novel coronavirus decided to close a good chunk of their stores.
The fun fact about that above explanation is that it provides plausible deniability for someone trying to juice the market in a particular direction. Hell, if /r/WSB hadn't caught the hedge fund with their pants down, they probably would have gotten off scot-free. However, the financial vigilantes dumping fat stacks into GME don't have the same kind of excuse - they explicitly coordinated in public fora to manipulate stock price, so it's an easy target for an SEC that really doesn't get the budget necessary to prosecute the complex kinds of financial crimes they're tasked with.
So, from a legal perspective, both parties are in the wrong. From an enforcement perspective, /r/WSB is a soft target.
In other words, the capital firm that got short-squeezed by the idiots at /r/WSB were also doing something illegal. It's not the case that the short is legal but the longs aren't. Alternatively, if the argument is that /r/WSB isn't market-manipulating, they just think the stock is undervalued, then the hedge fund can use the same argument. "We think this stock is overvalued so we shorted it" is how they'll explain it to the SEC.
And that's not an invalid position: GME has been suspiciously overvalued way before any of the parties involved started holding positions. It's a retail-heavy business in pandemic season with multiple year-over-year same-store sales cuts. What that means is that, for each one of their stores, on average, they sold 30% less product in Q3 2020 than they did in Q3 2019. And even if you think, "oh, that's just the COVID economy, they'll be back"; Q3 2019 sales were already 20% down from the year before. This is a company nobody wanted to buy games from even before a novel coronavirus decided to close a good chunk of their stores.
The fun fact about that above explanation is that it provides plausible deniability for someone trying to juice the market in a particular direction. Hell, if /r/WSB hadn't caught the hedge fund with their pants down, they probably would have gotten off scot-free. However, the financial vigilantes dumping fat stacks into GME don't have the same kind of excuse - they explicitly coordinated in public fora to manipulate stock price, so it's an easy target for an SEC that really doesn't get the budget necessary to prosecute the complex kinds of financial crimes they're tasked with.
So, from a legal perspective, both parties are in the wrong. From an enforcement perspective, /r/WSB is a soft target.
I think you missed most of the story. The stock was massively undervalued before attracting the attention of WSB. The first posts were when it was valued less than the cash it was holding.
On top of that, you have the beginnings of a takeover by a successful e-commerce CEO and potential for real turnaround.
That would have been enough on its own for WSB longs to jump in, but then the hedge funds shorted over 100% of the stock making it the perfect powder keg for this explosion.
On top of that, you have the beginnings of a takeover by a successful e-commerce CEO and potential for real turnaround.
That would have been enough on its own for WSB longs to jump in, but then the hedge funds shorted over 100% of the stock making it the perfect powder keg for this explosion.
So definitely double standards.
The same thing in reverse isn't market manipulation. Buying call options or the stock itself is legal.
What can be market manipulation is to collude with others to move a stock price not because you believe it is worth a different amount, but because you predict others will react to the movement you create. That applies to collusion involving shorts (bear raids) too. Proving the collusion and the artificial price bit is the difficult bit
What can be market manipulation is to collude with others to move a stock price not because you believe it is worth a different amount, but because you predict others will react to the movement you create. That applies to collusion involving shorts (bear raids) too. Proving the collusion and the artificial price bit is the difficult bit
It's not only that - the current price of AMC, GME, etc... are being manipulated artificially.
This is text-book illegal activity.
There is no logical derivation of GameStop's financial books that would warrant the kind of stock price it has.
It is very very clearly market manipulation, and these exact sorts of manipulations are commonly prosecuted.
This is text-book illegal activity.
There is no logical derivation of GameStop's financial books that would warrant the kind of stock price it has.
It is very very clearly market manipulation, and these exact sorts of manipulations are commonly prosecuted.
No this is EMH at work. Main street has realized that they can attack short positions which are unnatural in size. And they intend to get paid for doing it.
Hedge funds are so used to being the only tool on the block, they overextended, and for the first(?) time the retail side is fighting back.
The professional investing world have so many advantages over main street that it's not even funny. They've got everything from frontrunning, colocation, free money, and leverage(10x), 'unsophisticated' investors only can dream of this. And when they do go belly up, tax payers bail them out, meanwhile the bonus machine keeps churning.
But it is funny and good when main street actually catches them with their hand in the cookie jar.
How is this different from Bill Ackmans attack on Herbal life? https://www.youtube.com/watch?v=bQc6L4ieMwo
How is this different from all the FUD Tesla has gotten over the years? Which CNBC has happily broadcast for years. https://www.youtube.com/watch?v=a-YgFDAroeI
Hedge funds are so used to being the only tool on the block, they overextended, and for the first(?) time the retail side is fighting back.
The professional investing world have so many advantages over main street that it's not even funny. They've got everything from frontrunning, colocation, free money, and leverage(10x), 'unsophisticated' investors only can dream of this. And when they do go belly up, tax payers bail them out, meanwhile the bonus machine keeps churning.
But it is funny and good when main street actually catches them with their hand in the cookie jar.
How is this different from Bill Ackmans attack on Herbal life? https://www.youtube.com/watch?v=bQc6L4ieMwo
How is this different from all the FUD Tesla has gotten over the years? Which CNBC has happily broadcast for years. https://www.youtube.com/watch?v=a-YgFDAroeI
> How is this different from Bill Ackmans attack on Herbal life?
That was shorting. That is LEGAL.
> How is this different from all the FUD Tesla has gotten over the years?
Tesla was specifically investigated by the SEC when it tried to push short sellers out - and they paid an undisclosed fine for that ILLEGAL activity.
That was shorting. That is LEGAL.
> How is this different from all the FUD Tesla has gotten over the years?
Tesla was specifically investigated by the SEC when it tried to push short sellers out - and they paid an undisclosed fine for that ILLEGAL activity.
"This is text-book illegal activity."
Is it? If I have the money to put a short squeeze on someone by myself, with my own money, is that illegal? Isn't that what some people do all the time with smaller numbers?
(honestly asking)
Is it? If I have the money to put a short squeeze on someone by myself, with my own money, is that illegal? Isn't that what some people do all the time with smaller numbers?
(honestly asking)
Coordinating millions of people to pump a stock so that a short squeeze will occur is very different from you doing it on your own.
Pump and Dump schemes have been illegal forever. This is no different.
Pump and Dump schemes have been illegal forever. This is no different.
This is not a pump and dump. In PnD, there is an element of subterfuge - the people you are selling to are unaware of what is going on. In this play, all actors are fully informed of what is going on. I mean, maybe some people don't really understand the details, but the majority of people here aren't buying GME because they think it'll keep going up; they all know it's overvalued, but they don't care, because the goal is only partially to make a profit. 'Pump and dump' isn't illegal per se, what is illegal is lying about fundamentals or circumstances to influence stock price. That is not what is happening here.
Furthermore, if you're arguing that it's illegal because it's done in group, then I don't understand what legal basis you are using for that. I also don't understand why you'd say it's "very different" from doing it on your own. I can't think of anything else off the top of my head that legal to do on your own, but illegal in group (some things are more illegal in a group, but that's not what we're talking about)
Furthermore, if you're arguing that it's illegal because it's done in group, then I don't understand what legal basis you are using for that. I also don't understand why you'd say it's "very different" from doing it on your own. I can't think of anything else off the top of my head that legal to do on your own, but illegal in group (some things are more illegal in a group, but that's not what we're talking about)
If you're able to rally people on social media is that manipulation? I'm not so sure.
I think it's very risky for the investors but I don't know whether the SEC has stuff that would cover this.
And even if there were a law, if you somehow have your thumb on the social media hype button then how would you enforce that law? Makes me think nothing unruly is going on, just a bubble that will inevitably collapse and make Musk etc. rich once more just like during the dot com era. Some people only know how to make money through theft and I'm not surprised we've found ourselves here after the last 4 years.
I think it's very risky for the investors but I don't know whether the SEC has stuff that would cover this.
And even if there were a law, if you somehow have your thumb on the social media hype button then how would you enforce that law? Makes me think nothing unruly is going on, just a bubble that will inevitably collapse and make Musk etc. rich once more just like during the dot com era. Some people only know how to make money through theft and I'm not surprised we've found ourselves here after the last 4 years.
Yea - i'm confused on what the definition of manipulation is here.
If i tell you GME has a new product line that will increase their wealth 10x - that seems like manipulation. If i say to you i'm buying GME and you should too, with clear disclaimers that this isn't financial advice but rather a meme - i don't think i manipulated you.
By "normal" definition manipulation requires some about of deception/etc. I don't think "anyone" (within obvious reason) is being manipulated here. It's very clear what the community is buying into.
So i come back to what "manipulation" is defined as in the stock sense. Is it meaningfully different?
If i tell you GME has a new product line that will increase their wealth 10x - that seems like manipulation. If i say to you i'm buying GME and you should too, with clear disclaimers that this isn't financial advice but rather a meme - i don't think i manipulated you.
By "normal" definition manipulation requires some about of deception/etc. I don't think "anyone" (within obvious reason) is being manipulated here. It's very clear what the community is buying into.
So i come back to what "manipulation" is defined as in the stock sense. Is it meaningfully different?
What about Tesla? It's incredibly overvalued and in the same boat essentially.
Why is one okay but not the other? Right because rich people with connections are the ones being burnt right now.
Why is one okay but not the other? Right because rich people with connections are the ones being burnt right now.
> There is no logical derivation of GameStop's financial books that would warrant the kind of stock price it has.
Is there a requirement for stock prices to be logical? Wouldn't that would ban all sorts of hft trades?
Is there a requirement for stock prices to be logical? Wouldn't that would ban all sorts of hft trades?
The price of GME is due to a squeeze. The shorts have to get out. People know this. They are refusing to sell. Manipulation but legal.
Coordinating a short position and shorting over 150% of the available stock is not market and price manipulation?
There’s nothing illegal about buying a stock, or even voicing your opinion about a stock.
If only value investing was legal, the stock market look and operate very differently to today.
Edited to add: ultimately the law should be there to prevent fraud, not to restrict capital ownership and financial autonomy to a handful of cronies. You know, what they call a free market.
Incidentally, if this had been a properly regulated market to begin with, the price inflation would not have been possible.
If only value investing was legal, the stock market look and operate very differently to today.
Edited to add: ultimately the law should be there to prevent fraud, not to restrict capital ownership and financial autonomy to a handful of cronies. You know, what they call a free market.
Incidentally, if this had been a properly regulated market to begin with, the price inflation would not have been possible.
No one is going to become violent over not being able to buy GameStop or Nokia stock.
It's not that those stocks hold specific value, it's that the denial of trade demonstrates to people a lack of personal power and freedom with regards to their own finances and where they may be directed.
it signifies a small loss of financial liberty and flexibility on behalf of the citizenry, which is enough to spark upset.
meanwhile large groups are allowed to systematically abuse in-place systems in a semi-visible public fashion without backlash or repercussion from regulators in most cases, exacerbating the perceived difference between 'Us and Them', fueling outrage and divide even further.
It's easy to consider why this might upset people.
it signifies a small loss of financial liberty and flexibility on behalf of the citizenry, which is enough to spark upset.
meanwhile large groups are allowed to systematically abuse in-place systems in a semi-visible public fashion without backlash or repercussion from regulators in most cases, exacerbating the perceived difference between 'Us and Them', fueling outrage and divide even further.
It's easy to consider why this might upset people.
Once again, no one is going to become violent over this. People aren't losing jobs, they aren't losing housing, they aren't losing food, they aren't being disappeared by balaclava'ed men in the middle of the night.
If further decreases the legitimacy of the regime currently in place, I'm not talking Democrats vs. Republicans or anything like that, I'm talking about the military-industrial complex which has got a strong financial wing added to it starting with the mid '80s. Once that legitimacy is gone then all bets are off.
Ah, but what about being able to sell?
Messing with people's finances is more anger inducing imo than banning people from an internet message board.
It's also ironic that one of the supposed ethos of Bitcoin is to circumvent these powers that be - meanwhile every time there's an upward surge in pricing Coinbase conveniently isn't accessible which temporarily blocks impulse sellers and stops a rush of the "army of HODLers" from selling. If this behaviour isn't illegal it certainly should be, it's manipulation.
When that happens it's usually at the same time as a huge influx of new users and/or user activity.
I agree it's somewhat suspicious if it happens all the time, like this has happened enough times why haven't you designed your infrastructure to handle surges more gracefully, but for the most part I think it's legit.
If we assume intentional malice every time a website goes down, that's a dangerous precedent for the tech industry.
The corporations I've worked for had nothing to do with finances but managed to have several major outages I've sat in on that have lasted as little as 2 hours and as much as 48 hours. They were pretty much always network or server related, sometimes unrelated to the business entirely (a T1 line got cut accidentally by the city in one case).
Those corporations didn't want to go down, and often lost some serious money as a result. I imagine Coinbase loses out on a good amount of money every time they go down as well.
I also expect it's at least somewhat overreported or only a partial outage as well. One person has an issue and announces it and everyone just repeats it without checking themselves. There was at least two instances when I saw people say Coinbase was down and I tried logging in myself and had no issues.
I agree it's somewhat suspicious if it happens all the time, like this has happened enough times why haven't you designed your infrastructure to handle surges more gracefully, but for the most part I think it's legit.
If we assume intentional malice every time a website goes down, that's a dangerous precedent for the tech industry.
The corporations I've worked for had nothing to do with finances but managed to have several major outages I've sat in on that have lasted as little as 2 hours and as much as 48 hours. They were pretty much always network or server related, sometimes unrelated to the business entirely (a T1 line got cut accidentally by the city in one case).
Those corporations didn't want to go down, and often lost some serious money as a result. I imagine Coinbase loses out on a good amount of money every time they go down as well.
I also expect it's at least somewhat overreported or only a partial outage as well. One person has an issue and announces it and everyone just repeats it without checking themselves. There was at least two instances when I saw people say Coinbase was down and I tried logging in myself and had no issues.
By crashing, or giving the appearance of crashing, Coinbase, Kraken etc maintain plausible deniability. RH is going whole hog "look at us, we are denying you the ability to buy this security so that hedge funds can drive the price down, and all you can do is sell your existing position - can't even short it if you like"
Bitcoin is a monetary escape valve from the current financial system according to Janet Yellen. It’s a 20 year long trend that can work peer to peer even without any exchange. Of course Coinbase makes things simpler, but it’s not needed.
"They're a private company! They can restrict their product for corrupt political and financial purposes and this is good... for... reasons... at least that's what the tv/social media told me."
> some irresponsible newspapers blaming the whole thing on GamerGate and Alt-Right [...]
What?
What?
OP might have a few hangups: https://hn.algolia.com/?dateRange=all&page=0&prefix=false&qu...
To be entirely fair to the FT, WSB did originally have some connection to 4chan's /biz/.
It doesn't really anymore, but it's an understandable mistake imo
It doesn't really anymore, but it's an understandable mistake imo
yes Financial Times! this is a real low for a journalist...
Serious question. Is the whole David vs Goliath narrative unfounded?
Over the last 8-10 years online activism/mobs have increasingly been co-opted by those in power as a means of astroturfing. I think it is totally fair to be skeptical and ask whether that is going on here.
One thing is for sure. Even if this is organic, it won’t be next time. After seeing this why wouldn’t some hedge fund orchestrate something like this to manipulate the market?
Over the last 8-10 years online activism/mobs have increasingly been co-opted by those in power as a means of astroturfing. I think it is totally fair to be skeptical and ask whether that is going on here.
One thing is for sure. Even if this is organic, it won’t be next time. After seeing this why wouldn’t some hedge fund orchestrate something like this to manipulate the market?
[deleted]
If you are coming with such a narrative it would behoove you to come with proof.
What narrative am I coming with? My comment is questioning the prevailing David vs Goliath narrative. Based on past events, I think there is enough of a prior probability of astroturfing to be skeptical. We will find out whether this was organic or not as things evolve.
But it would be a mistake to not think that some hedge fund manager, oligarch, etc. somewhere is paying attention and thinking about how they might be able to co-opt.
But it would be a mistake to not think that some hedge fund manager, oligarch, etc. somewhere is paying attention and thinking about how they might be able to co-opt.
> the powers that rule USA don't realize that soon the only tool left to common people is violence?
They do realize that and are confident that they will win. In the end it boils down to that.
In here we have a case of the wrong people succeeding at a game that de jure is supposed to be open to everyone but de facto is only open to the right people.
They do realize that and are confident that they will win. In the end it boils down to that.
In here we have a case of the wrong people succeeding at a game that de jure is supposed to be open to everyone but de facto is only open to the right people.
Remember how quaint Occupy Wall St. seemed back in 2011? They were maligned as a bunch of privileged wannabe hippie kids. The economy was "hopelessly complex" and "how were we to know" etc. Seems we're way past that, to blatant protection of the wealthy over a fluctuation in .025% of the stock market.
> GamerGate
Actually it seems related to me. Leveraged short-selling is a tactic of activist investors to take control of a company, and there was an article about what they wanted to do with it. No doubt the past actions of activist investors in the gaming industry was fuel for this fire. I’m not a gamer and I don’t know what is going on, but I think it has something to do with getting rid of the ownership model of games to make way for cloud gaming and advertising, served with a political agenda. GameStop made the ownership model work. Every major cloud service provider, social media company, and their investors all want it gone. Gamers know that ownership is the only way to keep politics out of gaming.
People who engineered this fake outrage made a lot of money by buying early and selling early, everyone who believed this scam lost money.
Let's punish hedge funds - fake outrage
Stocks are climbing up - fear of missing out
Restrictions on platforms to prevent people from falling into this scam - fake outrage
Scammers' freedom of speech is in danger - fake outrage
Looks like we entered new era where fake outrage on social media (Reddit, HN and Twitter) can make scammers a lot of money.
I am surprised that HN community is falling for this scam.
Let's punish hedge funds - fake outrage
Stocks are climbing up - fear of missing out
Restrictions on platforms to prevent people from falling into this scam - fake outrage
Scammers' freedom of speech is in danger - fake outrage
Looks like we entered new era where fake outrage on social media (Reddit, HN and Twitter) can make scammers a lot of money.
I am surprised that HN community is falling for this scam.
Violence against whom and how? Do the powers that rule the USA truly fear any commoners? I doubt it, the rich are ensconced in private jets, mansions, posh offices, and do not interact with commoners, nor are they easily targeted due to lack of proximity and knowledge. It's not like the French Revolution, where the mobs knew precisely where the king, queen, and legislature were, and could assail them personally.
You had me, up until "legislature". Recent events seem to indicate the people know precisely where the legislature meets.
> the powers that rule USA don't realize that soon the only tool left to common people is violence?
I think creating and using decentralized alternatives beyond the control of the state and affiliated corporations is a much better tool for creating lasting change. Violent revolutions tend to just replace (or restyle) the ruling class without significant changes to their behavior.
I think creating and using decentralized alternatives beyond the control of the state and affiliated corporations is a much better tool for creating lasting change. Violent revolutions tend to just replace (or restyle) the ruling class without significant changes to their behavior.
[deleted]
> Even more with some irresponsible newspapers blaming the whole thing on GamerGate and Alt-Right, effectively pushing away people that previously could be on their side.
I didn't read any such claim in my German and Scandinavian news diet, is this a US-only thing? Here, the consensus seems to be that what happens is a somewhat well-deserved embarrassment.
I didn't read any such claim in my German and Scandinavian news diet, is this a US-only thing? Here, the consensus seems to be that what happens is a somewhat well-deserved embarrassment.
> the powers that rule USA don't realize that soon the only tool left to common people is violence?
This is a dangerous thing to say in 2021. Merely suggesting violence is an option or eventuality could be considered incitement and get you banned from every major internet platform.
This is a dangerous thing to say in 2021. Merely suggesting violence is an option or eventuality could be considered incitement and get you banned from every major internet platform.
Honestly, I don't see where the attempt to equate the WSB people out to make a quick buck by gambling and hope they win out over the hedge funds as being that connected to the deplatforming of right wing people - I'm sure given "the right" and "wall street bets" are large groups that there is some overlap, but in Europe I know plenty of people following along the stock market with no connection to current US issues.
People have found an unpopular target (large funds, still a lot of dislike built up over the 2008 recession, current inflated housing markets in many cities) and there's a swing in popular emotion and yes, public figures have egged it on at this stage, but it's not really a protest against donald trump's deplatforming or liberal elites that some people are trying to make it out to be.
Plenty more people willing to take risks on that among the middle class when the stock market is the only way to even keep the value of their savings anyway. My savings account has an actual interest rate that was cut from 0.50% to 0.01% this year, whereas 2020 excluded, inflation has been around 1% in my country. Many of my friends in similar situations have gotten involved in stocks under a similar background and a not insignificant number of them are operating under logic like "90% in long term stocks, 10% for whatever crazy long bets" (like which airlines are going to come out of this, whatever stock reddit is pumping at the moment, bitcoin or companies like AMD a few months ago which they're like "I use this stuff and so many insitutional investors are completely clueless on the market dynamics").
So you get people with "stupid bets" funds, and an idea that gets momentum (The shorts cannot not buy, let's outwait them), and this is the result.
People have found an unpopular target (large funds, still a lot of dislike built up over the 2008 recession, current inflated housing markets in many cities) and there's a swing in popular emotion and yes, public figures have egged it on at this stage, but it's not really a protest against donald trump's deplatforming or liberal elites that some people are trying to make it out to be.
Plenty more people willing to take risks on that among the middle class when the stock market is the only way to even keep the value of their savings anyway. My savings account has an actual interest rate that was cut from 0.50% to 0.01% this year, whereas 2020 excluded, inflation has been around 1% in my country. Many of my friends in similar situations have gotten involved in stocks under a similar background and a not insignificant number of them are operating under logic like "90% in long term stocks, 10% for whatever crazy long bets" (like which airlines are going to come out of this, whatever stock reddit is pumping at the moment, bitcoin or companies like AMD a few months ago which they're like "I use this stuff and so many insitutional investors are completely clueless on the market dynamics").
So you get people with "stupid bets" funds, and an idea that gets momentum (The shorts cannot not buy, let's outwait them), and this is the result.
Yeah, there isn't necessarily a ton of overlap. I'm pretty liberal but I follow this stuff, not so much WSB (and no skin in the game for this GME craziness) but crypto, and put money I'm willing to lose into these things periodically. I've lost some money, sure, but I'm significantly up overall.
[deleted]
I worked in proprietary trading for about half a decade.
I think the biggest thing that the lay-person doesn't understand is that thinking of hedge funds (and other proprietary firms), banks, exchanges and ATS's, retail brokerages, the SEC, and lawmakers as all being either one entity or all being on the same side is just absolutely incorrect. They all need each other, but by and large they are not friends.
Some claims I've seen that are just comical to me:
"The SEC is going to step in to save hedge funds"
The relationship between regulators and proprietary firms is particularly cagey. The SEC constantly audits them and asks, in my ex-professional opinions, extremely annoying questions about even the most innocuous trading activity. (Annoying because they take so much time because frequently, not knowing what the firm is doing, they ask questions that internal tooling is just not prepared to answer, thus requiring custom development; and annoying because some of them feel like they're just the SEC trying to use their authority to conduct audits to learn more about the industry). But I digress. The SEC is absolutely not going to step in and do a prop shop a favor. Their concern is with the efficient and accurate functioning of the equities market. The fact the GME, a company with no news releases and no change in their (honestly dismal) fundamentals, has experienced such absolutely insane volatility (there are large numbers of options contracts with less volatility, for crying out loud!) is absolutely a concern for them. The fact that "what is the price of GME right now", asked to a person who looked at Apple Stocks app yesterday but not yet today, is "somewhere between 10 dollars and 1000 dollars", is absolutely a major cause for concern to them. Equity markets exist to discover pricing and transfer risk. It's hard to transfer risk if you don't have any idea of the pricing!
"retail brokerages are cancel culturing the GME rocketship!" and similar rhetoric, especially with aphorisms suggesting that the SEC or shadowy "the rich and powerful" are pressing them to do so.
I really, really doubt it. Retail brokerages toe a very fine line, because on one hand they obviously really want people to store their money with them (e.g. Schwab makes like 80% of its operating revenue from interest on uninvested cash balances) and also to use their trading services. But at the same time, they are taking as clients some of the most dangerous creatures known to man: retail investors. They're dangerous because they have so little clue what they're doing (which is like, fine, you know? this is no judgement on them) that there is a very real responsibility places on the retail brokerage to protect them from themselves. There's a reason you have to apply and be approved to trade options, and there's various levels of approval for various risk categories too. You need at least 25k in balances to be a pattern day trader. There's precedent for brokerages limiting access to some ETFs that expose equities investors to the kinds of leveraged risk that is more typical of options. Brokerages have been sued - successfully - for not doing their fiduciary duty to educate investors about risk.
I am absolutely unsurprised that retail brokerages are limiting trading of GME, AMC, etc. I can already see the lawsuits coming when this thing folds - "Why did you let me trade GME given the volatility, especially after the SEC even made a statement about it? I am a retail investor and your client, and cannot be expected to know better, and you failed in your fiduciary duty to me." This is absolutely something a retail brokerage would do to protect themselves from regulatory scrutiny.
(I had more to vent, but this post is already huge so I'll stop here. You get my gist, though.)
I think the biggest thing that the lay-person doesn't understand is that thinking of hedge funds (and other proprietary firms), banks, exchanges and ATS's, retail brokerages, the SEC, and lawmakers as all being either one entity or all being on the same side is just absolutely incorrect. They all need each other, but by and large they are not friends.
Some claims I've seen that are just comical to me:
"The SEC is going to step in to save hedge funds"
The relationship between regulators and proprietary firms is particularly cagey. The SEC constantly audits them and asks, in my ex-professional opinions, extremely annoying questions about even the most innocuous trading activity. (Annoying because they take so much time because frequently, not knowing what the firm is doing, they ask questions that internal tooling is just not prepared to answer, thus requiring custom development; and annoying because some of them feel like they're just the SEC trying to use their authority to conduct audits to learn more about the industry). But I digress. The SEC is absolutely not going to step in and do a prop shop a favor. Their concern is with the efficient and accurate functioning of the equities market. The fact the GME, a company with no news releases and no change in their (honestly dismal) fundamentals, has experienced such absolutely insane volatility (there are large numbers of options contracts with less volatility, for crying out loud!) is absolutely a concern for them. The fact that "what is the price of GME right now", asked to a person who looked at Apple Stocks app yesterday but not yet today, is "somewhere between 10 dollars and 1000 dollars", is absolutely a major cause for concern to them. Equity markets exist to discover pricing and transfer risk. It's hard to transfer risk if you don't have any idea of the pricing!
"retail brokerages are cancel culturing the GME rocketship!" and similar rhetoric, especially with aphorisms suggesting that the SEC or shadowy "the rich and powerful" are pressing them to do so.
I really, really doubt it. Retail brokerages toe a very fine line, because on one hand they obviously really want people to store their money with them (e.g. Schwab makes like 80% of its operating revenue from interest on uninvested cash balances) and also to use their trading services. But at the same time, they are taking as clients some of the most dangerous creatures known to man: retail investors. They're dangerous because they have so little clue what they're doing (which is like, fine, you know? this is no judgement on them) that there is a very real responsibility places on the retail brokerage to protect them from themselves. There's a reason you have to apply and be approved to trade options, and there's various levels of approval for various risk categories too. You need at least 25k in balances to be a pattern day trader. There's precedent for brokerages limiting access to some ETFs that expose equities investors to the kinds of leveraged risk that is more typical of options. Brokerages have been sued - successfully - for not doing their fiduciary duty to educate investors about risk.
I am absolutely unsurprised that retail brokerages are limiting trading of GME, AMC, etc. I can already see the lawsuits coming when this thing folds - "Why did you let me trade GME given the volatility, especially after the SEC even made a statement about it? I am a retail investor and your client, and cannot be expected to know better, and you failed in your fiduciary duty to me." This is absolutely something a retail brokerage would do to protect themselves from regulatory scrutiny.
(I had more to vent, but this post is already huge so I'll stop here. You get my gist, though.)
Why allow sales in that case?
Exactly my thoughts. It's only a matter of time now. I'm most surprised it hasn't started in earnest yet.
Perhaps but Americans won't result to violence en mass. Despite what you may have seen, Americans are rather docile. A small minority of folks who just so happened to be of military age during the country's longest war but never signed up to fight are the same people who buy the most guns and saber rattle about civil war, etc...
No, this is the market defending itself from unwanted shenanigans.
Listed companies want nothing to do with this.
Restaurants like customers, but imagine a stampede of 1000 people rushing through the doors, it's not what they want.
The populism here is getting ridiculous, I don't think most people have any understanding of what's going on.
Listed companies want nothing to do with this.
Restaurants like customers, but imagine a stampede of 1000 people rushing through the doors, it's not what they want.
The populism here is getting ridiculous, I don't think most people have any understanding of what's going on.
It seems more like big fish stuck in a losing set of trades are pulling whatever strings they can to save themselves.
They will take a haircut and move on. Some of the plebes rushing the doors are going to get crushed.
Given that a lot of people egging the plebes absolutely 'know better' you have to wonder what their motivations are.
Given that a lot of people egging the plebes absolutely 'know better' you have to wonder what their motivations are.
There's cryptocurrency.
"Pick the target, freeze it, personalize it, and polarize it."
>This is why I put academic fields adjacent to "identity politics" in the same category as climate change
This is why academic fields involved with "identity politics" are in the same class as "scientists" involved in climate change denial and questionable nutrition/smoking studies. Once there were academics involved in "critic theory" which more or less used Marxist level of analysis. A thorn in the side of the establishment. A branch within this field took the language of Marxism but replaced capitalist/working class with identities(e.g white men/minority women). Ofcourse those in power have supported this branch of critic theory and have gotten to the point where they even use it as a wedge issue. At this point this is the orthodox branch of "critic theory" and it's not because of intellectual merit.
This is why academic fields involved with "identity politics" are in the same class as "scientists" involved in climate change denial and questionable nutrition/smoking studies. Once there were academics involved in "critic theory" which more or less used Marxist level of analysis. A thorn in the side of the establishment. A branch within this field took the language of Marxism but replaced capitalist/working class with identities(e.g white men/minority women). Ofcourse those in power have supported this branch of critic theory and have gotten to the point where they even use it as a wedge issue. At this point this is the orthodox branch of "critic theory" and it's not because of intellectual merit.
This is a twitter post of a screenshot. There's almost no substance here. We don't know why or even if this happened. So the immediate leap to talk of violence as a reaction is incendiary.
It’s happening. You can’t find GME on Robinhood unless it’s in one of your lists, and when you do it says “This stock is not supported in Robinhood”.
There are millions of users of this app, and it’s easy enough to verify - why the skepticism?
There are millions of users of this app, and it’s easy enough to verify - why the skepticism?
Only because I think it's prudent to wait until more information is available (than was provided in the original link) before talking about violent repercussions.
I have little doubt that it's happening, but the twitter link was not substantive in comparison to:
https://blog.robinhood.com/news/2021/1/28/keeping-customers-...
I have little doubt that it's happening, but the twitter link was not substantive in comparison to:
https://blog.robinhood.com/news/2021/1/28/keeping-customers-...
You know, you could always just pay for your trades and get them executed as you wish. Or you use a service that is free, but please stop complaining.
Its called "RedPilling".
HN admins will ban this thread in 3...2...
Pump and dump isn’t legal.
Except it isn't a pump and dump. It is a short squeeze. Hedge fund managers are betting more stocks than the company issued and people are taking advantage of that opportunity.
The closest thing to criminal activity we see here is people betting more than a company's stock. When hedge fund managers see this and buy all the stock to squeeze the shorters it's normal. When it's people like you and me they say it is illegal.
The closest thing to criminal activity we see here is people betting more than a company's stock. When hedge fund managers see this and buy all the stock to squeeze the shorters it's normal. When it's people like you and me they say it is illegal.
It is a pump in the sense that none of the fundamentals of the company have changed between December and now, the main event has been people buying stock with the express purpose of enabling a short squeeze. Legally, there could be an argument for it being market manipulation.
So nobody should ever buy a stock unless something material, as defined by you, has changed? Not because they think it'll go up in the future?
Sure they can. But coordinating multiple people to do that is a classic pump and dump, and is explicitly illegal.
Where's the coordination? People in subreddits are talking about what they are doing and others are choosing to do the same thing.
No different from somebody on CNBC providing stock picks.
No different from somebody on CNBC providing stock picks.
Exactly. CNBC is the biggest market manipulator with a huge mouthpiece. Anytime Cramer mentions a stock in favorable terms it goes up, at least short term. Meanwhile we know that he is friends with hedge funds and at least part of time is probably taking positions before going on TV.
We give that a free pass but suddenly a loosely-organized internet forum is a problem.
We give that a free pass but suddenly a loosely-organized internet forum is a problem.
There are two major differences...
1. If Cramer said "Hey, let's all buy this stock because there is a potential short squeeze.", then that would be illegal because it's attempting to create an artificial market pump through short squeezing.
2. Cramer is LICENSED to give investment advice. A licensed doctor can go on TV and make medical recommendations. Reddit specifically bans subs that try to do that.
1. If Cramer said "Hey, let's all buy this stock because there is a potential short squeeze.", then that would be illegal because it's attempting to create an artificial market pump through short squeezing.
2. Cramer is LICENSED to give investment advice. A licensed doctor can go on TV and make medical recommendations. Reddit specifically bans subs that try to do that.
It is the hedge funds that are inflating the stock price because they have to cover their short positions. This is a short squeeze.
It is clear from your comments you have no clue what you're talking about. Stop spreading misinformation.
Read matt levine's twitter: https://twitter.com/matt_levine/status/1354129838806872073
and newsletter if you want to inform yourself.
Read matt levine's twitter: https://twitter.com/matt_levine/status/1354129838806872073
and newsletter if you want to inform yourself.
Pump and hold may not be illegal but it means those people that pumped can’t sell for huge gains.
It's not a short squeeze any more the shorts sold out at a huge loss. Now it's just hot air holding it up.
You’re getting that from news stories and people aren’t buying it. I just looked at TD Ameritrade and it was at 121% of float. Are there newer numbers?
short numbers almost always lag atleast a week from what the average person can see.
Again, it's a "Rules for thee but not for me" situation.
And as it turns out, people are very angry about that. And since violence gets you thrown in jail, the next is financial violence in bankrupting these country-destroying fintech scabs.
And look who comes to their rescue, but not for the masses.
And as it turns out, people are very angry about that. And since violence gets you thrown in jail, the next is financial violence in bankrupting these country-destroying fintech scabs.
And look who comes to their rescue, but not for the masses.
[deleted]
Incorrect. GME is still heavily shorted by hedge funds.
Squeezing a short is different then a pump and dump.
When it succeeds, and the originators of the squeeze don't sell beforehand.
As it was said in previous days: they (the originators of the squeeze) can remain irrational longer, than the other side (hedge fund managers) can remain solvent.
True, but if they sell a massive position and the stock tanks, and a bunch of little guys are left to hold the bag, I could see the SEC definitely investigating it as a pump and dump.
If the bunch of the little guys invested each just few hundred, it is not that a big loss. So if they end up holding the bag, it will be distributed among big crowd, where each member would be missing just a little.
Of course, if someone went above that and invested an amount, where losing it would hurt, that's different.
Of course, if someone went above that and invested an amount, where losing it would hurt, that's different.
> This sort of stuff will put people more and more on edge, there is the deplatforming going on, people asserted their power financially, and now getting that removed too
Don't compare deplatforming and this.
Deplatforming is akin to throwing a customer out of the grocery store for doing nazi salutes in the vegetable aisle.
What Robinhood is doing is akin to throwing a customer out of the grocery store because you don't agree with his choice of vegetables.
Don't compare deplatforming and this.
Deplatforming is akin to throwing a customer out of the grocery store for doing nazi salutes in the vegetable aisle.
What Robinhood is doing is akin to throwing a customer out of the grocery store because you don't agree with his choice of vegetables.
> Deplatforming is
> throwing a customer out of the grocery store because you don't agree with his choice of vegetables.
There, fixed for you.
> throwing a customer out of the grocery store because you don't agree with his choice of vegetables.
There, fixed for you.
facts
> the powers that rule USA don't realize that soon the only tool left to common people is violence?
A clever way to create a situation to pass mass gun control and limit those pesky civil liberties, no?
A clever way to create a situation to pass mass gun control and limit those pesky civil liberties, no?
Oh please. Robinhood's business model is not designed for this kind of thing. They are not required to tank their own business to allow malcontents to feel better about themselves.
I always thought the app was good - but my view of the role of the broker is to place my trades. If the SEC wants to shut down trading of a security they should do so.
This will be very disruptive to Robinhood. I think today they made a poor business decision that will affect their valuation and potentially the company itself.
I don't do much trading on Robinhood, mostly for learning or experimenting with small amounts of money but this move has left a sour taste. I'll be closing my account, while recognizing that other brokerages are doing the same (though not all).
edit
Retail investors are locked out, $GME is still going up. What's the fucking excuse now?
This will be very disruptive to Robinhood. I think today they made a poor business decision that will affect their valuation and potentially the company itself.
I don't do much trading on Robinhood, mostly for learning or experimenting with small amounts of money but this move has left a sour taste. I'll be closing my account, while recognizing that other brokerages are doing the same (though not all).
edit
Retail investors are locked out, $GME is still going up. What's the fucking excuse now?
> Oh please. Robinhood's business model is not designed for this kind of thing. They are not required to tank their own business to allow malcontents to feel better about themselves.
Well, they're gonna lose millions of customers over this I predict. How is that not killing their business?
Well, they're gonna lose millions of customers over this I predict. How is that not killing their business?
How does allowing trades tank their business? That is their business.
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Thousands of new accounts buying one stock for free (while it's at the top) and then disappearing after it tanks is not going to help them. Is this not obvious?
That shouldn’t change anything if they require the stocks to be purchased with cash and not margin.
Brokerages can, and do all the time, set specific margin requirements for volatile securities. There’s no reason they can’t do that here as well. (unless they literally can’t because their tech stack doesn’t support it which would be pretty funny)
Brokerages can, and do all the time, set specific margin requirements for volatile securities. There’s no reason they can’t do that here as well. (unless they literally can’t because their tech stack doesn’t support it which would be pretty funny)
Then block new accounts for a day or two until this blows over, not specific stocks.
Why would anyone use a trading platform that now has a history of picking and choosing what trades you are allowed to make?
Why would anyone use a trading platform that now has a history of picking and choosing what trades you are allowed to make?
Robinhood doesn’t let you choose your free stock, they give you one randomly.
Yeah i'm sure they hate the traffic and the increased user base. Get real.
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For a lot of young people, the only paths to a regular life are either work hard for 5-10 years, live like a poor student, save the majority of their money and gamble that life will be affordable at the end, or just gamble away their money today. It’s so much harder to reach regular milestones that it’s sometimes not even worth the effort. I don’t think taking this away from a bunch of nihilistic young men is going to end well...
On an unrelated note, start preparing yourself for a neo-feudal society now and you will still live well. You will own nothing, and you will be happy.
On an unrelated note, start preparing yourself for a neo-feudal society now and you will still live well. You will own nothing, and you will be happy.
> On an unrelated note, start preparing yourself for a neo-feudal society now
What would it mean to prep for this? What would a neo-feudal society actually look like?
What would it mean to prep for this? What would a neo-feudal society actually look like?
<3
Goodluck with DOJ and SEC investigating and bringing charges against RobbingHood and Citadel. I am not holding my breath.
So the HF strategy is now to:
1. stop hemmorage
2. lose their edge in market (buying order flow from RH)
3. go to court & hopefully settle for less than their AUM.
All in all, this seems like a desperate move. Every securities lawyer is celebrating right now because they have a home run case.
Either way, Citadel is screwed but the HF managers probably decided its better to call it a day at -30% than over -100%.
1. stop hemmorage
2. lose their edge in market (buying order flow from RH)
3. go to court & hopefully settle for less than their AUM.
All in all, this seems like a desperate move. Every securities lawyer is celebrating right now because they have a home run case.
Either way, Citadel is screwed but the HF managers probably decided its better to call it a day at -30% than over -100%.
How is that not illegal?
It's most likely that (because of dark pools and other legalized front running) that Robinhood is the losing counterparty at the other end of these trades.
They are not the only one, TD Ameritrade and Alpaca are doing it too... they are on one team, we are on the other.
Do they limit only on margin buys or even cash buys? Because with TD Ameritrade, they only limit with margin buys.
What kind of joke brokerage would do this? Closing my account ASAP
Relevant XKCD -
https://xkcd.com/1357/
They are a private company and you aren't allowed to complain, something something American law.
https://xkcd.com/1357/
They are a private company and you aren't allowed to complain, something something American law.
This is ridiculous
where's the 'just build your stock exchange' crowd now?
oh no, but what happened to the free market? this is censorship /s
I am in Uk, and Trading 212 has not allowed any purchases since yesterday.
Freetrade is the only platform that was still allowing trades. I thibk i will stick by them, despite them taking saubscribtuon payments
Freetrade is the only platform that was still allowing trades. I thibk i will stick by them, despite them taking saubscribtuon payments
At least with the subscription they pay 3% on up to 4k cash, essentially covering the cost (assuming you have an emergency fund/cash available).
Had an AMC buy go through today on Freetrade too.
im just so worried this is textbook bolshevism.
the narrative that the evil corporate oligarchs are ruining peoples lives is certainly rooted in truth, but it is not true enough that people need to die about it.
these people with their FREE stock trading platforms browsing reddit all day with their $500-$2000 smart phones AND computers, feel like life is unfair. they feel repressed (because there is certainly >0 repression occurring), but have no idea how deep this rabbit hole is. the single mothers with 4 kids arent on WSB. the mentally ill, the 75 year olds that lost pensions, the drug addicted, the slumlords, the victims of being poor in ghettos - none of the people with real problems are WSB players.
once people with actual problems get involved, all these kulaks are gonna realize how much they have to lose.
the narrative that the evil corporate oligarchs are ruining peoples lives is certainly rooted in truth, but it is not true enough that people need to die about it.
these people with their FREE stock trading platforms browsing reddit all day with their $500-$2000 smart phones AND computers, feel like life is unfair. they feel repressed (because there is certainly >0 repression occurring), but have no idea how deep this rabbit hole is. the single mothers with 4 kids arent on WSB. the mentally ill, the 75 year olds that lost pensions, the drug addicted, the slumlords, the victims of being poor in ghettos - none of the people with real problems are WSB players.
once people with actual problems get involved, all these kulaks are gonna realize how much they have to lose.
>thread for an unsourced tweet reaching the front page, with everybody assuming it's true
where have I seen this before?
https://news.ycombinator.com/item?id=23987584
where have I seen this before?
https://news.ycombinator.com/item?id=23987584
As for this thread, it's got 1500+ comments. If you want to see them all you'll need to click through the More links at the bottom, or like this:
https://news.ycombinator.com/item?id=25941431&p=2
https://news.ycombinator.com/item?id=25941431&p=3
https://news.ycombinator.com/item?id=25941431&p=4
(Use your imagination after that.)