GameStop drops by 40% in 25 minutes(cnbc.com)
cnbc.com
GameStop drops by 40% in 25 minutes
https://www.cnbc.com/2021/03/10/gamestop-surges-40percent-then-wipes-out-gain-completely-and-is-halted-again.html
160 comments
I'm certain the GME bubble will burst at some point. I am almost as certain that when this inevitably happens, those who lost their money will blame hedge funds, short sellers, Wall street, elites, the system, etc. instead of looking into the mirror.
Enron and Madoff are examples of what "some time" means.
Yeah, all bubbles / ponzi schemes run out of money eventually. But 17 years (Madoff) is longer than most people's radar. If you decide to go short, you gotta be right not only in the direction of the stock, but also in the timing of it.
Timing is everything. Unfortunately, timing is also the most random.
Yeah, all bubbles / ponzi schemes run out of money eventually. But 17 years (Madoff) is longer than most people's radar. If you decide to go short, you gotta be right not only in the direction of the stock, but also in the timing of it.
Timing is everything. Unfortunately, timing is also the most random.
The old "the market can stay irrational longer than you can stay solvent" adage still holds true. But I would be surprised if this particular bubble lasts as long as Madoff's, since the facts are available for everyone to see, unlike Madoff's case.
At what point do you throw your hands in the air and say that "the market can stay irrational longer than you can stay solvent" means "the market is irrational, mostly smoke and mirrors." Stocks seem to have little more intrinsic value than bitcoin over a long enough period as to make the difference silly. It's all speculation/gambling, not investment, as far as I can tell.
Are you still getting a quarterly dividend at 3.25% APY from KO? (Coke)
I think that KO stock you have might still be valued, and probably valued well. Just stay away from the stupid memes, and you'll find plenty of value.
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Does the stock O still have a good dividend? Does O still follow the general trends of real-estate as expected? (Ex: O's assets are mostly houses in residential areas. O largely goes up when the housing market is good, and goes down when the housing market is bad).
As such, O provides you with a low-cost way to expose yourself to the real-estate market without having to invest 6-figures to do so. That's plenty of value right there. Short-selling O, or buying call/put options on O can similarly provide more sophisticated financial instruments against the housing market.
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I don't know what your expectations of the stock market are. But... a quarterly dividend from my dividend stocks + exposure to hard to enter markets are the main jobs of it for me. And I think its pretty good at both.
I think that KO stock you have might still be valued, and probably valued well. Just stay away from the stupid memes, and you'll find plenty of value.
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Does the stock O still have a good dividend? Does O still follow the general trends of real-estate as expected? (Ex: O's assets are mostly houses in residential areas. O largely goes up when the housing market is good, and goes down when the housing market is bad).
As such, O provides you with a low-cost way to expose yourself to the real-estate market without having to invest 6-figures to do so. That's plenty of value right there. Short-selling O, or buying call/put options on O can similarly provide more sophisticated financial instruments against the housing market.
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I don't know what your expectations of the stock market are. But... a quarterly dividend from my dividend stocks + exposure to hard to enter markets are the main jobs of it for me. And I think its pretty good at both.
This is the real fascinating thing to watch.
There's more and more people who believe in this kind of nihilism that since there's corruption and bubbles in the real economy that it is entirely fiction.
And that is giving rise to things like this crazy pumping of GME for the lulz.
The trend seems to be that a larger fraction of people have complete disillusionment with all our institutions to the point where nothing matters.
That also seems incredibly dangerous to me. By believing that institutions are meaningless and beyond reform that could lead to a much larger systemic collapse in institutions / values / etc.
There's more and more people who believe in this kind of nihilism that since there's corruption and bubbles in the real economy that it is entirely fiction.
And that is giving rise to things like this crazy pumping of GME for the lulz.
The trend seems to be that a larger fraction of people have complete disillusionment with all our institutions to the point where nothing matters.
That also seems incredibly dangerous to me. By believing that institutions are meaningless and beyond reform that could lead to a much larger systemic collapse in institutions / values / etc.
It's all at such a distant level of abstraction. Money doesn't represent gold, it represents an intangible set of contracts and rights and regulations and coordination. Stocks don't represent investment in a project or dividends coming in, just a hypothetical ability for somebody to potentially buy control of a company that nobody will ever do. Your wage doesn't represent the value you create. Your engagement ring's cost doesn't reflect anything other than a collective craziness and manipulated supply weirdness, kinda. Your job is at least 50% bullshit (or scrolling around HN/fb/reddit). The number of hours you "work" isn't what you (should) need to subsist.
There's too much of our lives that's as distanced and separated from fundamentals as GME.
There's too much of our lives that's as distanced and separated from fundamentals as GME.
I think there is a difference between nihilism towards our society or existence and the feeling that the stock market is crap. The latter does not necessitate towards the former.
I think the feeling that the stock market is crap is completely rational for the working public. And hoping for the destruction of it is normal given that the normal person has experienced nothing good coming from it; in fact the normal person sees the stock market as something that the rich use to get richer.
Believing that the stock market is crap has nothing to do with our institutions beyond wall street† so it doesn’t necessitate towards this dangerous nihilism that you are so afraid of. In the current discord I see two avenues for this despair.
1. Susceptibility towards populism and fascism. This includes trumpism, and is indeed worrying. Minorities are blamed for all the inequalities even though this stems from wall street and the stock market being crap... (don’t ask me, I don’t understand the logic either).
2. Susceptibility towards socialism. The collapse of wall street is viewed as a favorable outcome in the current class war. The suffering of the Bourgeois is victory to be celebrated.
† Well perhaps tangentially the institutions which favors wall street; such as the white house; but that despair translates more to “we should improve our democracy somwhat” rather then “we should abolish democracy”.
I think the feeling that the stock market is crap is completely rational for the working public. And hoping for the destruction of it is normal given that the normal person has experienced nothing good coming from it; in fact the normal person sees the stock market as something that the rich use to get richer.
Believing that the stock market is crap has nothing to do with our institutions beyond wall street† so it doesn’t necessitate towards this dangerous nihilism that you are so afraid of. In the current discord I see two avenues for this despair.
1. Susceptibility towards populism and fascism. This includes trumpism, and is indeed worrying. Minorities are blamed for all the inequalities even though this stems from wall street and the stock market being crap... (don’t ask me, I don’t understand the logic either).
2. Susceptibility towards socialism. The collapse of wall street is viewed as a favorable outcome in the current class war. The suffering of the Bourgeois is victory to be celebrated.
† Well perhaps tangentially the institutions which favors wall street; such as the white house; but that despair translates more to “we should improve our democracy somwhat” rather then “we should abolish democracy”.
The Tesla Nevada Gigafactory, and all the jobs it entails, would not exist without the ability for the stock-market to raise billions of dollars.
The banks were willing to offer Tesla ~$1.3 Billion IIRC, but the cost of the factory would be $5 Billion total. Furthermore, wages would have to be paid during the "rampup" period.
I'd say "having a job at all" is a major advantage to the working public. All TSLA / Elon had to do was issue a secondary offering with a bit of hype to the public investors, and they shoved $Billions into the company, allowing it to expand.
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You need to work on building cars for months, or even years, before a factory churns a profit. Where do you get the money for that? Well, the Stock Market is absolutely full of people who are willing to risk money (for the promises of more money).
If you have a better plan for where a company can raise ~$4 Billion or so, please explain.
The banks were willing to offer Tesla ~$1.3 Billion IIRC, but the cost of the factory would be $5 Billion total. Furthermore, wages would have to be paid during the "rampup" period.
I'd say "having a job at all" is a major advantage to the working public. All TSLA / Elon had to do was issue a secondary offering with a bit of hype to the public investors, and they shoved $Billions into the company, allowing it to expand.
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You need to work on building cars for months, or even years, before a factory churns a profit. Where do you get the money for that? Well, the Stock Market is absolutely full of people who are willing to risk money (for the promises of more money).
If you have a better plan for where a company can raise ~$4 Billion or so, please explain.
Not to long ago the government participated in big expensive projects like these. In the great depression nobody wanted to issue loans to big projects like these and nobody wanted to buy stocks to fund them either. What happened was not that new jobs didn’t get created, but that big expensive factories were build by the state.
Note also that building a big factory to produce electric cars is exactly the kind of thing that the green new deal is advocating for. And this falls neatly into avenue of despair nr. 2: susceptibility towards socialism. As a taxpayer and a worker I would much rather want to see the profits of a big expensive factory—which the company it self cannot afford to build—go back to the state—or even better, to the workers; as opposed to faceless shareholders—or worse, to billionaires like Elon Musk.
Note also that building a big factory to produce electric cars is exactly the kind of thing that the green new deal is advocating for. And this falls neatly into avenue of despair nr. 2: susceptibility towards socialism. As a taxpayer and a worker I would much rather want to see the profits of a big expensive factory—which the company it self cannot afford to build—go back to the state—or even better, to the workers; as opposed to faceless shareholders—or worse, to billionaires like Elon Musk.
> Not to long ago the government participated in big expensive projects like these.
The Stock Market has been participating on these expensive projects since the 1500s Dutch Traders swapped stocks so that one shipwreck could be supported by many traders. You needed tons of money to fill a Treasure Ship, that treasure ship left for India with common / cheap European goods, filled up with expensive spices, and came back.
The idea of selling stock to raise money is literally older than our government.
The Stock Market has been participating on these expensive projects since the 1500s Dutch Traders swapped stocks so that one shipwreck could be supported by many traders. You needed tons of money to fill a Treasure Ship, that treasure ship left for India with common / cheap European goods, filled up with expensive spices, and came back.
The idea of selling stock to raise money is literally older than our government.
I know, but what has that to do with anything?
You assert that the Stock Market offers nothing. But in practice, and what has been true since the 1500s, is that the Stock Market:
1. Provides initial funding for large, risky projects.
2. These projects (and jobs), such as the sailing jobs associated with those 1500s Treasure ships, would not exist without investment from a large number of investors.
3. The rewards (such as the Treasure Ship successfully returning from India) offers exponential growth. $100 investment becomes $200. Or $200 initial investment becomes $400, due to the difference in prices between Europe and India. As such, all investors of all classes who can afford a share can benefit. (Ex: A millionare may offer $100k, but a billionaire may offer $100 million. Both are awarded by proportion of the initial investment).
4. The value of the shares change based on information. If you hear that the Treasure Ship has sunk, the value is zero. If you hear that the Treasure Ship has made successful stops in Madagascar, India, or is nearly home, the value of those shares increases (less chance of failure, since its almost done with the trip). To fairly trade the shares innately means changing the value of the shares as various information comes in.
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So my point is multi-fold.
1. Exponential growth isn't really from the Stock Market per se, but from the opportunities that arise from pooling money together.
2. The Stock Market makes those trades possible.
3. There are other ways to make such investments (such as US Government). But its not very clear that the government should be the one solely responsible for these sorts of risky behaviors. For better or worse, people understand the risks on the Stock Market (ex: if the Treasure Ship sinks, the value of that stock loses everything). If a Government-sponsored ship sinks, that's a huge loss for the Government. These sorts of risks are almost better handled by private citizens: the risk-takers, the Entrepreneurs, rather than stable governments or workers.
4. It is natural for the value of shares to change.
1. Provides initial funding for large, risky projects.
2. These projects (and jobs), such as the sailing jobs associated with those 1500s Treasure ships, would not exist without investment from a large number of investors.
3. The rewards (such as the Treasure Ship successfully returning from India) offers exponential growth. $100 investment becomes $200. Or $200 initial investment becomes $400, due to the difference in prices between Europe and India. As such, all investors of all classes who can afford a share can benefit. (Ex: A millionare may offer $100k, but a billionaire may offer $100 million. Both are awarded by proportion of the initial investment).
4. The value of the shares change based on information. If you hear that the Treasure Ship has sunk, the value is zero. If you hear that the Treasure Ship has made successful stops in Madagascar, India, or is nearly home, the value of those shares increases (less chance of failure, since its almost done with the trip). To fairly trade the shares innately means changing the value of the shares as various information comes in.
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So my point is multi-fold.
1. Exponential growth isn't really from the Stock Market per se, but from the opportunities that arise from pooling money together.
2. The Stock Market makes those trades possible.
3. There are other ways to make such investments (such as US Government). But its not very clear that the government should be the one solely responsible for these sorts of risky behaviors. For better or worse, people understand the risks on the Stock Market (ex: if the Treasure Ship sinks, the value of that stock loses everything). If a Government-sponsored ship sinks, that's a huge loss for the Government. These sorts of risks are almost better handled by private citizens: the risk-takers, the Entrepreneurs, rather than stable governments or workers.
4. It is natural for the value of shares to change.
There's a difference between thinking that the stock market has a lot of crap in it, and feeling like the stock market is 100% crap -- so YOLO into GME and bitcoin.
The latter opinion is, honestly, the kind of attitude that I think is going to lead directly to fascism.
Lots of people thinking "nothing matters anymore".
The latter opinion is, honestly, the kind of attitude that I think is going to lead directly to fascism.
Lots of people thinking "nothing matters anymore".
I don't know why people call Madoff's scheme or Enron bubbles. People acted quite rationally given they believed these companies were not completely fabricating their accounting.
Once it was found out what they were doing, the market acted rationally again, but dumping their value to zero.
Once it was found out what they were doing, the market acted rationally again, but dumping their value to zero.
enron/madoff isn't really comparable because there's a mastermind behind both of them. GME? not so much.
A certain unprintable Redditor with initials DFV?
Ah yeah, the guy who moved the entire stock market and beat the hedge funds with only $50k invested, despite GME stock trading volumes in billions of dollars per day. /s
If someone seriously thinks that DFV (or the entirety of WSB, for that matter) would even physically be able to notably move a ticker such as GME, then I don't have much to say to them, because this is completely inane. With some penny stocks that have almost no trading volume? Sure, technically possible. But with something like GME, it is quite not that simple.
For a solid frame of reference, the entire holdings of GME that DFV had after the gigantic pump were about $50mil, one of the largest retail traders by far. Institutional traders? They did individual GME trades in volumes of $700mil+ each on a daily basis. Not $700mil+ for all institutional investors combined, but individually. Cannot be bothered to find a citation for it now, but iirc institutional investors also held about 75-80% of all outstanding GME shares throughout the entire pump.
If someone seriously thinks that DFV (or the entirety of WSB, for that matter) would even physically be able to notably move a ticker such as GME, then I don't have much to say to them, because this is completely inane. With some penny stocks that have almost no trading volume? Sure, technically possible. But with something like GME, it is quite not that simple.
For a solid frame of reference, the entire holdings of GME that DFV had after the gigantic pump were about $50mil, one of the largest retail traders by far. Institutional traders? They did individual GME trades in volumes of $700mil+ each on a daily basis. Not $700mil+ for all institutional investors combined, but individually. Cannot be bothered to find a citation for it now, but iirc institutional investors also held about 75-80% of all outstanding GME shares throughout the entire pump.
Someone claimed that during the week when it first went crazy, that retail traders were actually net sellers, according to, I forget, maybe numbers from Citadel?
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Just because you cannot see the mastermind doesn't mean that there isn't someone pulling strings. And the Madoff scam wasn't a single person. There were lots of naïve participants/benefiters enjoying the profits of that scam. In that sense it is a parallel to gamestop: A small cadre of people influencing things, and lots of little people participating in what they should reasonably understand to be a pyramid. The situation has Fyre written all over it..
>> GME isn't even a scam, its just the market doing its thing.
Short-term scams do exist. Identifying and leveraging a potential squeeze situation is standard market behavior, but taking to twitter to rally the masses into a stock is really just a confidence trick. Pump and dump is a real thing.
Short-term scams do exist. Identifying and leveraging a potential squeeze situation is standard market behavior, but taking to twitter to rally the masses into a stock is really just a confidence trick. Pump and dump is a real thing.
GME is... very much a bubble. But its not a scam because there's a nugget of truth here still.
GME's board of directors is planning to transform the company from a mall-based retailer into an online distributor of games. This will require money, and... well... a high-stock price will allow GME to make a secondary offering to fund the development of a new webpage, that will become the cornerstone of this new online-distributor business.
This isn't exactly a venture I'd put my money on. But hey, some people clearly are willing to play the game. (Whether they know what's going on is another question)
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Just because there's a bunch of dumbasses throwing money at this doesn't necessarily mean its a scam. Don't get me wrong, I think they're all wasting their money (so I'm going to stay away from it). But you know what? If it works out for them, good for them! I honestly am rooting for them to be successful.
I mean, really, think about the chances here. They look low, but are they as low as say... Star Citizen actually getting released? From a video-game perspective, the long-shot chance of Gamestop becoming an online powerhouse is probably more likely than Star Citizen ever coming out (or insert any other dumb kickstarter idea in here)
GME's board of directors is planning to transform the company from a mall-based retailer into an online distributor of games. This will require money, and... well... a high-stock price will allow GME to make a secondary offering to fund the development of a new webpage, that will become the cornerstone of this new online-distributor business.
This isn't exactly a venture I'd put my money on. But hey, some people clearly are willing to play the game. (Whether they know what's going on is another question)
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Just because there's a bunch of dumbasses throwing money at this doesn't necessarily mean its a scam. Don't get me wrong, I think they're all wasting their money (so I'm going to stay away from it). But you know what? If it works out for them, good for them! I honestly am rooting for them to be successful.
I mean, really, think about the chances here. They look low, but are they as low as say... Star Citizen actually getting released? From a video-game perspective, the long-shot chance of Gamestop becoming an online powerhouse is probably more likely than Star Citizen ever coming out (or insert any other dumb kickstarter idea in here)
The categorization of scam is interesting in this context. Why isn’t gamestop considered a scam? Why is Enron? From the point of view of a worker which gets their profits diluted in dividends payed to shareholders, the very existence of a stock market very much looks like a scam.
Another interesting aspect is various cryptocurrencies (or—as per recent discussion—NFTs).
I guess whatever the establishment is uncomfortable with will be labelled as scam. Perhaps future will look at GameStop as a scam. But from my point of view, trading in stocks is always a scam.
Another interesting aspect is various cryptocurrencies (or—as per recent discussion—NFTs).
I guess whatever the establishment is uncomfortable with will be labelled as scam. Perhaps future will look at GameStop as a scam. But from my point of view, trading in stocks is always a scam.
> From the point of view of a worker which gets their profits diluted in dividends payed to shareholders
I hate Tesla, but their IPOs and SPOs are a great example of what the stock market offers, and why a dividend (or other reward) is necessary.
Without raising $5 Billion from investors back in 2014, Tesla wouldn't have had the money to build their Nevada Gigafactory.
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Banks offer loans, which depend on interest rates. Shareholders don't want money, they want a share of the future profits. As such, the "promise" you make to a shareholder is more flexible, longer-looking, a better deal for most people involved.
If you can't make money this year, or next year, or 5 years from now... shareholders are forward looking enough to still give you money. As long as that share they received truly benefits 5, 10, 15, or 20 years from now.
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Owning a right to future profits and a vote for the board-of-directors is a powerful thing. Shareholders become one of the owners of the company, with all the rights associated with that.
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So. Lets timetravel back to 2014. Tesla needs money. It wants public money: willing to give you a piece of ownership (aka: future dividends and a vote for the board-of-directors). It promises to use that money to build a Gigafactory in Nevada.
Today: we now have a company, and set of shareholders, who BOTH benefit from the situation. That's the magic of the stockmarket. It turns out that the "promise of future profits + voting rights" is a powerful item to trade.
I hate Tesla, but their IPOs and SPOs are a great example of what the stock market offers, and why a dividend (or other reward) is necessary.
Without raising $5 Billion from investors back in 2014, Tesla wouldn't have had the money to build their Nevada Gigafactory.
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Banks offer loans, which depend on interest rates. Shareholders don't want money, they want a share of the future profits. As such, the "promise" you make to a shareholder is more flexible, longer-looking, a better deal for most people involved.
If you can't make money this year, or next year, or 5 years from now... shareholders are forward looking enough to still give you money. As long as that share they received truly benefits 5, 10, 15, or 20 years from now.
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Owning a right to future profits and a vote for the board-of-directors is a powerful thing. Shareholders become one of the owners of the company, with all the rights associated with that.
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So. Lets timetravel back to 2014. Tesla needs money. It wants public money: willing to give you a piece of ownership (aka: future dividends and a vote for the board-of-directors). It promises to use that money to build a Gigafactory in Nevada.
Today: we now have a company, and set of shareholders, who BOTH benefit from the situation. That's the magic of the stockmarket. It turns out that the "promise of future profits + voting rights" is a powerful item to trade.
This still doesn’t make things look less like a scam. An anecdote of where the scheme worked for some people in the past is a very common thing for a scammer to tell future victims in order to persuade them into the scam.
Example: [Person A] was a single parent living paycheck to paycheck, then they started selling [pyramid product X] and now they’re sending their kids through collage on the profits alone.
Shareholders not making money is akin to saying that pyramid scammers don’t make money, off course they do... Otherwise they wouldn’t be spending their time and energy doing this. Every dollar you earn by doing nothing is a dollar made by someone else they didn’t get.
Example: [Person A] was a single parent living paycheck to paycheck, then they started selling [pyramid product X] and now they’re sending their kids through collage on the profits alone.
Shareholders not making money is akin to saying that pyramid scammers don’t make money, off course they do... Otherwise they wouldn’t be spending their time and energy doing this. Every dollar you earn by doing nothing is a dollar made by someone else they didn’t get.
There's no payoff for a pyramid scheme. They just pile money somewhere, without actually doing anything with it. A pyramid scheme is literally the "Wicked and Evil" 3rd servant from the parable of the talents. They waste the huge pile of money by burying it and not really making it work for their masters.
The expectation of the Stock Market is to do something with the money. For Amazon, the IPO allowed them to buy servers. For Google, same thing: tons of computers cost tons of money. For Tesla, they bought a Nevada Factory.
The money disappeared into a Factory, and then the Factory made money later (which is then used to increase the value of shares and make everyone who participated richer).
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This is allowed in part, because it works. It makes society stronger. It rewards risk-takers who would otherwise do nothing with their money. It provides thinkers with money and capital when they need it most. If the scheme doesn't work out, the investors lose, but they're still happy that they got to partake in the experiment.
Stocks are the original "Kickstarter". And I argue that they're far more fair than kickstarter. Owning a vote for the board-of-directors + a share of the promised dividend is worth a hell of a lot more than stupid keychains.
The expectation of the Stock Market is to do something with the money. For Amazon, the IPO allowed them to buy servers. For Google, same thing: tons of computers cost tons of money. For Tesla, they bought a Nevada Factory.
The money disappeared into a Factory, and then the Factory made money later (which is then used to increase the value of shares and make everyone who participated richer).
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This is allowed in part, because it works. It makes society stronger. It rewards risk-takers who would otherwise do nothing with their money. It provides thinkers with money and capital when they need it most. If the scheme doesn't work out, the investors lose, but they're still happy that they got to partake in the experiment.
Stocks are the original "Kickstarter". And I argue that they're far more fair than kickstarter. Owning a vote for the board-of-directors + a share of the promised dividend is worth a hell of a lot more than stupid keychains.
> There's no payoff for a pyramid scheme. They just pile money somewhere, without actually doing anything with it.
Agreed, the stock market is not a pyramid scheme. I only used pyramid scheme as an example for a scammer’s rhetoric. However it still looks like a scam to me (albeit not as bad of a scam as the average pyramid scheme is).
Having worked for a company which increased in share prices exponentially while I worked there on minimum wage, I cannot agree with the statement that the shareholder/worker relationship made “everyone who participated richer”. The average worker certainly didn’t. The only people that got richer were the shareholders (and perhaps some contractors). I experienced this exponential growth as a scam. The value of my work was being extracted into rich people’s pockets.
See the stock market might look to an outsider as an arrangement where everyone benefits, but to a worker it always looks like a scam. Especially when you consider an alternate arrangement where the shareholder returns control of the profits of the company back to the workers after they’ve made up the money they gave originally to the business plus some fees and interest. The very fact that the shareholders keep control even after they’ve made their fare share of the profits, multiple times over, is what makes this look like a scam in the eyes of the workers.
Agreed, the stock market is not a pyramid scheme. I only used pyramid scheme as an example for a scammer’s rhetoric. However it still looks like a scam to me (albeit not as bad of a scam as the average pyramid scheme is).
Having worked for a company which increased in share prices exponentially while I worked there on minimum wage, I cannot agree with the statement that the shareholder/worker relationship made “everyone who participated richer”. The average worker certainly didn’t. The only people that got richer were the shareholders (and perhaps some contractors). I experienced this exponential growth as a scam. The value of my work was being extracted into rich people’s pockets.
See the stock market might look to an outsider as an arrangement where everyone benefits, but to a worker it always looks like a scam. Especially when you consider an alternate arrangement where the shareholder returns control of the profits of the company back to the workers after they’ve made up the money they gave originally to the business plus some fees and interest. The very fact that the shareholders keep control even after they’ve made their fare share of the profits, multiple times over, is what makes this look like a scam in the eyes of the workers.
Exponential growth is promised to investors, to entice investors into giving money to a company.
Sometimes, shares and options are offered to workers (very common in SV), but honestly I'd probably take the cash most of the time. The promise of future money is best left for rich folk who can afford to lose that pile of money.
For workers like me (and probably you), the cash deal is better. If you disagree, feel free to work for a myriad of startups who are offering stock instead of cash.
But yeah, its an option. Not an option I'd personally bet on... but if you really wanted to be rewarded in shares instead of money, the opportunity for that is all over the place.
Sometimes, shares and options are offered to workers (very common in SV), but honestly I'd probably take the cash most of the time. The promise of future money is best left for rich folk who can afford to lose that pile of money.
For workers like me (and probably you), the cash deal is better. If you disagree, feel free to work for a myriad of startups who are offering stock instead of cash.
But yeah, its an option. Not an option I'd personally bet on... but if you really wanted to be rewarded in shares instead of money, the opportunity for that is all over the place.
> From the point of view of a worker which gets their profits diluted in dividends payed to shareholders, the very existence of a stock market very much looks like a scam.
Only if the worker doesn't understand that the initial sale of stock raised the money that let the company buy the tools that the worker uses to make the profits. Getting that money without paying dividends looks like a scam where the stock owners are the suckers.
Only if the worker doesn't understand that the initial sale of stock raised the money that let the company buy the tools that the worker uses to make the profits. Getting that money without paying dividends looks like a scam where the stock owners are the suckers.
>> the initial sale of stock raised the money that let the company buy the tools
Maybe in the movies. Modern IPOs rarely work that way. Some companies take the money and do things, but the norm is that IPO money goes to existing shareholders (founder et al) and the company continues as before. If the money is enough, the founders disappear into ultra-rich-person nirvana, or go on to found other projects, and the new shareholder-elected board heads the company.
A modern shareholder could not care less about future profits. All they care about is deltas on future stock price, whether the price moves up or down. Their profits come when they hand their shared to someone else. Whether the company turns any profits is beside the point.
Maybe in the movies. Modern IPOs rarely work that way. Some companies take the money and do things, but the norm is that IPO money goes to existing shareholders (founder et al) and the company continues as before. If the money is enough, the founders disappear into ultra-rich-person nirvana, or go on to found other projects, and the new shareholder-elected board heads the company.
A modern shareholder could not care less about future profits. All they care about is deltas on future stock price, whether the price moves up or down. Their profits come when they hand their shared to someone else. Whether the company turns any profits is beside the point.
To me this looks like predatory lending. I.e. selling stocks in order to raise money to get means of production is for all intents and purposes the same as getting a loan which you are never allowed to pay back, and your lenders will continue to collect interests, tied to your profits, indefinitely.
Still very much looks like a scam.
Still very much looks like a scam.
Its not a loan though. If you fail to make money from your venture, you don't owe the "lender" anything. So you remove the risk to you (you can't owe someone $1 million without any way to pay it). The tradeoff is that you sacrifice some of the upside.
This still looks like a scam though. A predatory lender which never accepts paying down the capital, but assumes risks where some of their clients might not turn a profit and therefor is a net loss, will simply raise the interest (or—in the case of an investor—the share of the profits) from the profitable clients to counter the loss. This is exactly the behavior of shareholders, and to my eyes it still very much looks like a scam.
The shareholders don't set the amount of the dividends. That is, in your analogy, the lender doesn't get to raise the interest rate. That kind of blows up your analogy.
But by all means, tell us again how it looks like a scam. Maybe we'll start to agree with you if you repeat it a couple more times.
But by all means, tell us again how it looks like a scam. Maybe we'll start to agree with you if you repeat it a couple more times.
> The shareholders don't set the amount of the dividends
True, the board of directors decide to pay the shareholders dividends. But in a hierarchical company to a worker, this board looks like a part of the scam. The relationship between a well paid board of directors (whom seemingly to a worker contributes nothing of value) and shareholders looks awfully convenient (one might even say conspiratory), and especially so if the board of directors are voted in by the shareholders.
> But by all means, tell us again how it looks like a scam
Sure. This whole thing looks like a stinky scam to me. And now knowing the relationship between the board of directors and shareholders of an average publicly traded company, even more so. Now it looks like a conspiracy as well.
True, the board of directors decide to pay the shareholders dividends. But in a hierarchical company to a worker, this board looks like a part of the scam. The relationship between a well paid board of directors (whom seemingly to a worker contributes nothing of value) and shareholders looks awfully convenient (one might even say conspiratory), and especially so if the board of directors are voted in by the shareholders.
> But by all means, tell us again how it looks like a scam
Sure. This whole thing looks like a stinky scam to me. And now knowing the relationship between the board of directors and shareholders of an average publicly traded company, even more so. Now it looks like a conspiracy as well.
[deleted]
> I guess if its your first bubble, this is exciting stuff, but these things come crashing down eventually.
Portraying gamespot's case as a bubble is either ignorant or disingenuous. It's a game of chickens between hedge funds using glaringly obvious market manipulation to drive their shorts and retail investors who spotted how the hedge fund's overplayed their hand.
> Hertz is a better saga (...)
Hertz has zero to do or in common with gamespot's saga. Hedge funds cornered themselves by shorting over 100% of gamespot's stock, and thus forcing themselves to buy over 100% of gamespot's stock back for whatever the market will be asking to be able to deliver on their contracts. Hertz was a company already in bankruptcy.
Portraying gamespot's case as a bubble is either ignorant or disingenuous. It's a game of chickens between hedge funds using glaringly obvious market manipulation to drive their shorts and retail investors who spotted how the hedge fund's overplayed their hand.
> Hertz is a better saga (...)
Hertz has zero to do or in common with gamespot's saga. Hedge funds cornered themselves by shorting over 100% of gamespot's stock, and thus forcing themselves to buy over 100% of gamespot's stock back for whatever the market will be asking to be able to deliver on their contracts. Hertz was a company already in bankruptcy.
> I guess if its your first bubble
The bubble is/was at both ends. I honestly have to agree that it was undervalued at the time that the original GME posts were made, but it's also very overvalued right now.
GameStop has limited immunity from the problem other brick-and-mortars are facing: console games purchased through digital content delivery platforms cannot be transferred to friends, where-as games that are purchased at GameStop typically can be. There's also hardware to be purchased and other goodies. GameStop is not intrinsically doomed to failure, if they proactively differentiate from digital content delivery.
That being said, it's highly doubtful that GameStop will outpace digital content delivery platforms (like Steam/PSN/XBox Live/etc.), unless they build their own.
In my opinion, they do potentially have a sustainable 8-9 figure market cap. This bubble is going to pop, just as much as the squeeze had to happen.
The bubble is/was at both ends. I honestly have to agree that it was undervalued at the time that the original GME posts were made, but it's also very overvalued right now.
GameStop has limited immunity from the problem other brick-and-mortars are facing: console games purchased through digital content delivery platforms cannot be transferred to friends, where-as games that are purchased at GameStop typically can be. There's also hardware to be purchased and other goodies. GameStop is not intrinsically doomed to failure, if they proactively differentiate from digital content delivery.
That being said, it's highly doubtful that GameStop will outpace digital content delivery platforms (like Steam/PSN/XBox Live/etc.), unless they build their own.
In my opinion, they do potentially have a sustainable 8-9 figure market cap. This bubble is going to pop, just as much as the squeeze had to happen.
GameStop is not just competing with digital content and delivery, they are also competing against established all-in-one stores like Carrefour and Fnac, that typically carries everything GameStop (currently) carries plus more.
If they can make themselves different enough to give people a reason to buy their PS5 at GameStop instead of at Carrefour, remains to be seen.
If they can make themselves different enough to give people a reason to buy their PS5 at GameStop instead of at Carrefour, remains to be seen.
That whole GME thing is not stupid... institutions are holding 106% of GME stocks... not sure how much non-institutions are holding. What is stupid is what the government is allowing institutions to do.
> % Held by Institutions 106.22
https://invest.ameritrade.com/grid/p/site#r=jPage/https://re...
> % Held by Institutions 106.22
https://invest.ameritrade.com/grid/p/site#r=jPage/https://re...
Holding 106% can be perfectly rational, it happens just because shorts create a loan.
Suppose we have a company and an institution has analyzed the books and knows is worth $10/share, shares are currently trading at $5. Suppose this is an unusually small company and there are only 100 shares outstanding total. Institution buys them all up since it's such a good deal.
Along comes Citadel who decides the company is going bankrupt and decides to sell the company short. Borrows 50 shares from the institution's broker and puts them up on the market. Now the institution sees that 50 more shares are available again at $5. Still the institution knows they are worth $10/share.. it's completely rational to purchase those shares and increase the holding to 150 shares even if the official shares outstanding is only 100 shares. Institution can sell all 150 for $10 a share assuming they are eventually right about the validation and Citadel will be the one that needs to make up the difference.
Suppose we have a company and an institution has analyzed the books and knows is worth $10/share, shares are currently trading at $5. Suppose this is an unusually small company and there are only 100 shares outstanding total. Institution buys them all up since it's such a good deal.
Along comes Citadel who decides the company is going bankrupt and decides to sell the company short. Borrows 50 shares from the institution's broker and puts them up on the market. Now the institution sees that 50 more shares are available again at $5. Still the institution knows they are worth $10/share.. it's completely rational to purchase those shares and increase the holding to 150 shares even if the official shares outstanding is only 100 shares. Institution can sell all 150 for $10 a share assuming they are eventually right about the validation and Citadel will be the one that needs to make up the difference.
https://markets.businessinsider.com/news/stocks/gamestop-sto...
First time might have been retail traders but this is all about big whales. Shorts are pinned - all shorts must cover. Writing this off as a retail pump and dump is ignorance.
First time might have been retail traders but this is all about big whales. Shorts are pinned - all shorts must cover. Writing this off as a retail pump and dump is ignorance.
The noise is precisely why people are distracted. A lot of people would love to get rich by buying low and selling high within that noise. The more noise there is, the more opportunities there are.
That's gambling, not investing, but people love gambling. As with gambling, the house always wins, but some people come out ahead anyway. Like lottery winners, that makes people dream.
In this case there may even have been some house disadvantage: too much pessimism by investors not only made opportunities for legitimate investing wins, but the quirks of the rules left them open to having to materialize losses. Any such advantage to investors is long since gone, but it amplifies the lotto excitement.
That's gambling, not investing, but people love gambling. As with gambling, the house always wins, but some people come out ahead anyway. Like lottery winners, that makes people dream.
In this case there may even have been some house disadvantage: too much pessimism by investors not only made opportunities for legitimate investing wins, but the quirks of the rules left them open to having to materialize losses. Any such advantage to investors is long since gone, but it amplifies the lotto excitement.
It's just frustrating to see otherwise reasonable people start tossing out crazy conspiracy theories about the Day of the Short Squeeze when GME will go to infinity and we'll take all the hedge funds' money. I can't even escape from it by staying off social media, because a quarter of my friends are in on it. I'm a lot less troubled than I was the first time around because there doesn't seem to be any severe systemic risk, but I still really wish I could figure out how to convince people to knock it off.
For most people, this is a gambling thing. For them, its not much different than spending $100 or $500 on blackjack and slots.
Its entertainment to them. Sure, some of us are trying to do work (aka: properly price things, determine which companies deserve our money, etc. etc.), and these events are distracting...
But if its just a bubble, I don't think there's much harm in letting it run its course. Let them gamble, as long as no sharks swim by to illegally try to extract money from their fun.
Of course, if someone in particular you know has a gambling problem (and might lose their life savings), that's a different story.
Its entertainment to them. Sure, some of us are trying to do work (aka: properly price things, determine which companies deserve our money, etc. etc.), and these events are distracting...
But if its just a bubble, I don't think there's much harm in letting it run its course. Let them gamble, as long as no sharks swim by to illegally try to extract money from their fun.
Of course, if someone in particular you know has a gambling problem (and might lose their life savings), that's a different story.
Yeah, I agree with all of that - it doesn't seem like there's any huge number of people putting their life savings into it. I'm just vaguely annoyed by gambling in general and don't like when I have to hear about it all the time.
Maybe rather than seeing GME as a crazy event that even made your "reasonable" friends non-reasonable, could it be that you thought they were more reasonable than they actually were?
> this whole GME thing is stupid: but following the price is also stupid.
I will top that by stating: “Nothing that happens in the stock market is stupider then the fact that the stock market exists.”
I will top that by stating: “Nothing that happens in the stock market is stupider then the fact that the stock market exists.”
I am having the time of my life today.
Cashed out at $320 and bought back in at the dip. Wheee!
Hedge funds are shorting from dark pools (EDIT - the public data was late, so it now seems unlikely it was a dark pool), and I am fucking excited to see what happens for the rest of the day and especially just before closing (and after hours).
Cashed out at $320 and bought back in at the dip. Wheee!
Hedge funds are shorting from dark pools (EDIT - the public data was late, so it now seems unlikely it was a dark pool), and I am fucking excited to see what happens for the rest of the day and especially just before closing (and after hours).
Be careful you don't get caught up in nice sounding, unsubstantiated narratives propagated memetically on reddit.
I know people hate this stuff on HN, but I still enjoy a good laugh.
https://i.redd.it/tjouf0bctbj61.gif
I genuinely appreciate the advice though. Cheers.
https://i.redd.it/tjouf0bctbj61.gif
I genuinely appreciate the advice though. Cheers.
[deleted]
> Cashed out at $320 and bought back in at the dip. Wheee!
I remember DFV posting about this at low double digits on WSB, but how is the tax liability on your side? This is why I prefer bitcoin, I can choose to stay and benefit from the appreciation without having to sell directly, whereas taxes on stocks was always a horrible proposition. My Charles Schwab brokerage account is more likely to get more activity from them adopting Bitcoin than any stocks, at this point if I'm honest.
I remember DFV posting about this at low double digits on WSB, but how is the tax liability on your side? This is why I prefer bitcoin, I can choose to stay and benefit from the appreciation without having to sell directly, whereas taxes on stocks was always a horrible proposition. My Charles Schwab brokerage account is more likely to get more activity from them adopting Bitcoin than any stocks, at this point if I'm honest.
How are taxes for Bitcoin any different? Like stocks, you’d still pay taxes on the gains from selling.
Some people are crazy enough to get a loan against their Bitcoin. Unless you bank on your ability to pay the loan anyway this is an easy way to lose all your Bitcoin if you end up unemployed during a Bitcoin crash. Some companies require 300% backing in Bitcoin for each dollar you borrow and force you to liquidate at 110%. Paying capital gains is cheap compared to losing 66% of your Bitcoin.
> Some people are crazy enough to get a loan against their Bitcoin
It's not that people are crazy (maybe in the US, but thinking of some countries in the EU now), but that the tax advantage of taking out a loan on your Bitcoin leads to you having to pay less taxes than if you just straight out sold them. Hence people walk that route sometimes.
It's not that people are crazy (maybe in the US, but thinking of some countries in the EU now), but that the tax advantage of taking out a loan on your Bitcoin leads to you having to pay less taxes than if you just straight out sold them. Hence people walk that route sometimes.
Wealthy people can do this with their stocks and other assets as well. Basically a mortgage but without the FHA
Are you suggesting that, somehow, Bitcoin is immune to having to pay tax on gains?
Or are you suggesting that Bitcoin is great because you can hide your capital gains somehow and not pay tax?
Or are you suggesting that Bitcoin is great because you can hide your capital gains somehow and not pay tax?
Taxes on BTC are pretty much the same as Stock
For the most part taxes on stocks are at least better than bitcoin. Roughly they are treated the same in the US though.
While technically accurate, this is as disingenuous (read: dishonest) as playing around with axes on a graph and removing units because that's the only way to prove your point.
A slightly more accurate description might be "GME gains 530% in a month and is still green for both day over day and on the day time scales." And even more accurate description might be "stock goes up and down in the same day."
A slightly more accurate description might be "GME gains 530% in a month and is still green for both day over day and on the day time scales." And even more accurate description might be "stock goes up and down in the same day."
This is just crazy, someone doesn't like when the retail is winning. Looking at the options flow for this, more than 100 million dollars have been spent on contracts today. Halting it all of a sudden only makes people lose money.
Here are the options flow stats, crazy amount being spent on options. https://i.gyazo.com/dca500ef0f774a0019f0a42b7ac1e855.png
Source: https://www.tradytics.com
Here are the options flow stats, crazy amount being spent on options. https://i.gyazo.com/dca500ef0f774a0019f0a42b7ac1e855.png
Source: https://www.tradytics.com
Halts are based on specific criteria and rules, they aren't arbitrarily imposed.
See: https://www.nasdaqtrader.com/content/MarketRegulation/LULD_F...
See: https://www.nasdaqtrader.com/content/MarketRegulation/LULD_F...
Well, we might want to consider changing the criteria a little bit. No?
I think that going up or down 10% (or more) in a span of 5 minutes is a pretty solid criteria for automatic halting, which is what it is today. If you have a better proposition for the halting criteria, please post it here.
What do you think of tradytics? Looks really interesting, though I mainly trade OTC, which I sort of doubt it has much support for.
haha I am the developer of it so I can't really say anything lol. Although we don't have OTC, a lot of other stuff is free on the website so give it a go with a free account. Always happy to answer questions.
It looks good, I'll definitely give it a real try if I start trading options more, the order flow data alone looks like it would make it worthwhile. Do you incorporate L2 data? Couldn't find that anywhere, only thing that seems like its missing.
[deleted]
I'm having a fun time tracking the madness with my sideproject: https://topstonks.com/stocks/GME
Total comment volume on /r/wallstreetbets is up 300% over the last 24 hours
Total comment volume on /r/wallstreetbets is up 300% over the last 24 hours
Can you do comment volume to gains or loss? That would be interesting to see.
Trading has been halted 7 times today, as of now: https://www.nyse.com/trade-halt-current
Pump it -> sell it -> short it -> halt buying -> profit!
80% of my portfolio is now in long-term PUTS against GME (like short-selling, but without the risk of margin calls if the price rises.) People want to treat it like a casino, fine. But that won't last.
When it goes back down I'm going to make a nice profit out of this craziness.
Or you know, lose a lot if it somehow stays insane for an entire year.
I know what my money's on.
When it goes back down I'm going to make a nice profit out of this craziness.
Or you know, lose a lot if it somehow stays insane for an entire year.
I know what my money's on.
> People want to treat it like a casino, fine.
Like you?
I already liquidated 30% of my position and got my initial investment back. Now I'm playing with house money. I gotta say, it's a lot more fun being on this side (with the memes and the fun mottos), than being on the side you're on!
Like you?
I already liquidated 30% of my position and got my initial investment back. Now I'm playing with house money. I gotta say, it's a lot more fun being on this side (with the memes and the fun mottos), than being on the side you're on!
I'm not in a position to give you specifically financial advice, but there's no easy money to be made in GME, the entire thing is incredibly risky. The LEAPS for GME in the 10-50 dollar strike price range are all pricing in premiums of 30-50%, meaning the price of GME needs to go below half the strike price before it pays out.
In other words, best case scenario is GME drops from 300 dollars to 10 bucks and then you make 100% on your money. That's not really a nice profit for the risk you're taking.
In other words, best case scenario is GME drops from 300 dollars to 10 bucks and then you make 100% on your money. That's not really a nice profit for the risk you're taking.
You can make big money trading the volitility, if you get really lucky. The price of some puts I looked at went up 500%+ during the drop today. Would not try this personally lol
Short term puts yes, long term puts no. For short term puts you pay (or are rewarded) in volatility, for long term puts you pay (or are rewarded) in premium.
At any rate, my point isn't you can't make money off this, it's that there's no easy arbitrage opportunity happening on GME. It's basically trading like a volatile stock would trade, and it's being priced as such. Whatever free or easy money you think there is to be made on GME is likely just a coin toss.
At any rate, my point isn't you can't make money off this, it's that there's no easy arbitrage opportunity happening on GME. It's basically trading like a volatile stock would trade, and it's being priced as such. Whatever free or easy money you think there is to be made on GME is likely just a coin toss.
I meant doing day trades of long term puts, but yes I agree any money here is a huge gamble.
Yeah, this has sort of dawned on me a few days after I made the trade. I don't think I'd take that risk on again if I had the option.
What kind of premiums did you pay on those puts though? Last I looked the prices were pretty insane.
Yes, it's very high.
I worry that I can lose money even if my bet is correct, if the volatility goes down and thus the premiums also go down.
I worry that I can lose money even if my bet is correct, if the volatility goes down and thus the premiums also go down.
Looking right now some of the options a few months out have implied volitility of 1000%+, your best bet might be selling them off on big crashes instead of waiting it out? Some of the puts I looked at went up 500%+ after this dip
Yeah, that occurred to me. At least sell off enough that I don't mind letting the rest ride.
depends on when your puts expire. Everyday you are losing money due to time premium.
markets like this can stay irrational longer than you can stay solvent.
They're long-term puts. Options generally don't lose much that value in time premium until about 90 days before expiry and then it accelerates quite rapidly.
Wait til you find out about IV crush
^This. It isn't all just about the stock price and expiration date/strike price.
Case in point: had friends who bought GME puts 2 days ago. GME stock went significantly up in price since then, and so did my friends' puts.
Why did their puts go up in price if the stock price went up? Because IV increased, which pumped the price of options across the board, both puts and calls. When IV crush occurs, the exact opposite happens.
Case in point: had friends who bought GME puts 2 days ago. GME stock went significantly up in price since then, and so did my friends' puts.
Why did their puts go up in price if the stock price went up? Because IV increased, which pumped the price of options across the board, both puts and calls. When IV crush occurs, the exact opposite happens.
Thanks for that, I'll sleep better now.
I'm guessing your puts will be ITM but you'll get raked over the coals with volatility going way way way down. Good luck
/r/WallStreetBets considers - and I'm phrasing it nicely - to be unreliable and not worth considering as source of information in regards to GameStop, or actually generally.
WSB is straight-up crazy town. Granted, you can win money in crazy town. And one can stumble across an interesting idea or two. But it's still fucking crazy town.
WSB is just another internet, within the internet. The whole web used to be crazy town, until that was not OK anymore. As WSB continues to grow, more "normal" people will enter and eventually WSB will be like any other average place for average thought. Instead of the roller-coaster of gems and shitty posts.
The thing that I find interesting about the responses to the Gamestop saga on HN is the certainty everyone portrays. Everyone is convinced that the retail investors and WSB crowd are greater fools, and yet here we are again at practically the same peak as the last time and there is even greater evidence of shorts having increased their positions to an impossible level of leverage.
I think there is a bizarre Dunning-Kruger-like effect here, particularly when it comes to finance, where everyone is convinced they know far more than whoever is buying or selling GME.
Look through old comment threads and you can see everyone making such convincing arguments that the short squeeze was already over and the GME would never be priced above $300 again...
I think there is a bizarre Dunning-Kruger-like effect here, particularly when it comes to finance, where everyone is convinced they know far more than whoever is buying or selling GME.
Look through old comment threads and you can see everyone making such convincing arguments that the short squeeze was already over and the GME would never be priced above $300 again...
The broad argument still holds, for me: trying to beat Wall Street at their own game, on their own turf, is doomed to failure in the long term.
That's not to say there isn't money to be made here, clearly there is. But it's not a level playing field: funds can get bailed out to the tune of billions, they can freeze the sale of stocks, so on and so forth. The app everyone is using to buy these stocks is owned by Wall Street, too.
If this ever came to the point that WSB wants (or wanted? the anti-Wall Street rhetoric ebbs and flows) my gut instinct is that Wall Street will just pull some trick people haven't thought of yet that wipes out the retail investor threat and tell everyone to get out of their sandbox.
That's not to say there isn't money to be made here, clearly there is. But it's not a level playing field: funds can get bailed out to the tune of billions, they can freeze the sale of stocks, so on and so forth. The app everyone is using to buy these stocks is owned by Wall Street, too.
If this ever came to the point that WSB wants (or wanted? the anti-Wall Street rhetoric ebbs and flows) my gut instinct is that Wall Street will just pull some trick people haven't thought of yet that wipes out the retail investor threat and tell everyone to get out of their sandbox.
> But it's not a level playing field: funds can get bailed out to the tune of billions, they can freeze the sale of stocks, so on and so forth. The app everyone is using to buy these stocks is owned by Wall Street, too.
Hedge funds don't get bailed out by taxpayers. Unlike AIG, or Fannie Mae/Freddie Mac, they aren't critical to the function of the economy. Individual funds lose millions of dollars, and go bust all the time, and the rest of Wall Street laughs and moves on with life. [1][2]
When they do get bailed out, they get bailed out by predatory-rate loans and hostile takeovers, and other funds who want to buy their positions at a discount. Saying that hedge funds get bailed out when they lose big is like saying that a loan shark bailed me out when I lost all my money at the craps table. Technically true, practically, I am now an indebtured servant, with only one working knee.
The funds aren't the ones stopping the sale of stocks - Robinhood being a shitty discount brokerage that didn't bother maintaining sufficient clearinghouse collateral [3] stopped the sale of stocks. Retail investors who were using serious-person brokerages had no problem buying GME.
If you want to make this argument, you should go on - because the points you made are insufficient to support it.
[1] Remember Knight Capital losing 400 million dollars because of a one-line software configuration bug? They, uh, aren't in business anymore. Uncle Sam wasn't very interested in bailing them out, because their insolvency was not a systemic threat to our entire banking system.
[2] If you do think that hedge funds who lose a lot of money in bad options trades get bailed out with public funds, please list examples. If you think that they get bailed out with private funds... Those aren't bailouts.
[3] These collateral requirements are computed by pre-determined formulas. Maintaining collateral costs money, and it was money that RobinHood wasn't interested in spending.
Hedge funds don't get bailed out by taxpayers. Unlike AIG, or Fannie Mae/Freddie Mac, they aren't critical to the function of the economy. Individual funds lose millions of dollars, and go bust all the time, and the rest of Wall Street laughs and moves on with life. [1][2]
When they do get bailed out, they get bailed out by predatory-rate loans and hostile takeovers, and other funds who want to buy their positions at a discount. Saying that hedge funds get bailed out when they lose big is like saying that a loan shark bailed me out when I lost all my money at the craps table. Technically true, practically, I am now an indebtured servant, with only one working knee.
The funds aren't the ones stopping the sale of stocks - Robinhood being a shitty discount brokerage that didn't bother maintaining sufficient clearinghouse collateral [3] stopped the sale of stocks. Retail investors who were using serious-person brokerages had no problem buying GME.
If you want to make this argument, you should go on - because the points you made are insufficient to support it.
[1] Remember Knight Capital losing 400 million dollars because of a one-line software configuration bug? They, uh, aren't in business anymore. Uncle Sam wasn't very interested in bailing them out, because their insolvency was not a systemic threat to our entire banking system.
[2] If you do think that hedge funds who lose a lot of money in bad options trades get bailed out with public funds, please list examples. If you think that they get bailed out with private funds... Those aren't bailouts.
[3] These collateral requirements are computed by pre-determined formulas. Maintaining collateral costs money, and it was money that RobinHood wasn't interested in spending.
And they said shorts exited their positions. Then we saw Feb 12th's numbers and short interest was still high. New shorts? Definitely possible. And here we are.
That big dip today puts it on the short sale restriction list so tomorrow will be interesting.
AMC also had a similar big dip at about the same time as GME.
That big dip today puts it on the short sale restriction list so tomorrow will be interesting.
AMC also had a similar big dip at about the same time as GME.
> And they said shorts exited their positions. Then we saw Feb 12th's numbers and short interest was still high.
High? It was down from 42.0% (2 weeks ago) to 30.2%. The week before unofficial estimates put the short interest at over 100%.
High? It was down from 42.0% (2 weeks ago) to 30.2%. The week before unofficial estimates put the short interest at over 100%.
Anything over 10% is considered high. The narrative was that shorts exited their positions.
In "GME round 1", S3 was reaching out to CNBC to correct them, saying most of the shorts are NOT covering. [1]
The 100%+ was based on low float numbers or algorithms developed by companies like S3. Morningstar, as an example, currently reports the float at 27.29M. So their SI is 52% right now.
Nobody really knows what it is at any given time. We have 2 week gaps in data.
So yes, round 2, there appears to be a big drop in shorts, but who knows. There's a battle going on. After round 1, nobody would want a high short volume come reporting time.
So what's the actual short volume. And what are the positions on those? Nobody knows.
S3, from their algorithm estimates 20.52% right now. [2]
[1] https://twitter.com/ihors3/status/1355226736733073416
[2] https://twitter.com/ihors3/status/1369713610432393220
In "GME round 1", S3 was reaching out to CNBC to correct them, saying most of the shorts are NOT covering. [1]
The 100%+ was based on low float numbers or algorithms developed by companies like S3. Morningstar, as an example, currently reports the float at 27.29M. So their SI is 52% right now.
Nobody really knows what it is at any given time. We have 2 week gaps in data.
So yes, round 2, there appears to be a big drop in shorts, but who knows. There's a battle going on. After round 1, nobody would want a high short volume come reporting time.
So what's the actual short volume. And what are the positions on those? Nobody knows.
S3, from their algorithm estimates 20.52% right now. [2]
[1] https://twitter.com/ihors3/status/1355226736733073416
[2] https://twitter.com/ihors3/status/1369713610432393220
[deleted]
I think the coolheaded responses on HN are refreshing. You only see people who are onn fire on /biz/ and /r/WSB. They are way too emotional.
I was onside with the retail investors during the short squeeze against wallstreet hedge funds. But I don't think that narrative holds anymore and its beginning to look like stock manipulation
That narrative was never really accurate, there were plenty of hedge funds long too.
It doesn't have to be manipulation. Just a bunch of people and goading each other in a presumed David-against-Goliath "fight", investors trying to predict their and each other's movements, and funds trying to capitalize on investor irrationality, in a market situation (high short interest) which is strongly susceptible to such fluctuations.
I'd agree that goading and memeing shouldn't be considered manipulation on their own, but there's a reasonable number of specific lies being mixed in. There was a big thread on Reddit yesterday purporting to prove that nobody closed their short positions and the real short interest is an order of magnitude higher than commonly believed.
Is GME still in high short interest? I understand shorting it when it was $15 in December, I understand shorting it when it goes to $300 or $250, but I don't understand how it gets to $250. Given that GME's entire thing is that it doubles in price for no good reason, you'd be an idiot to short it at $50 or $70, at this point.
By the same token you would be an idiot not to. Everyone knows GME stock is worthless, was pumped by delusional people and is bound to go down. We are in a Moebius strip of memelords and shorts feeding off each other.
Shorts cost money to maintain, you can get margin called and lose everything, and the upside of shorting a $15 stock at $50, when it occasionally balloons up to $300 is... Not great.
As Paul Newman said "If you're playing a poker game and you look around the table and and can't tell who the sucker is, it's you."
I don't think I've ever seen that attributed to Paul Newman.
https://quoteinvestigator.com/2011/07/09/poker-patsy/
https://quoteinvestigator.com/2011/07/09/poker-patsy/
Its probably like that supposed Thucydides quote and attributed to many people.
I don't think GameStop is a case of this, but I can't help but see the GameStop stock story unfolding with the social media drivers and think of the result of a melding of two specific technologies into a third with horrifying implications for long term financial stability.
First, the research over the last decade into social media persona swarms, where a single operator can program and control a large group of fake social media accounts whose details are created through methods such as Generative Adaptive Networks (GANs), a Machine Learning technique that can learn to produce something new that imitates an original. [1][2][3]
Next, automated algorithmic trading [4], where algorithms determine what and when to buy (increasingly using Machine Learning), which is believed to account for 70-80% of U.S. stock trading.
Last, the melding of the two, where automated traders use automated social media accounts to influence at opportune moments and then take advantage of the temporary dips or surges caused by that influence, possibly causing ripple effect dips or surges that the automated traders can use.
As far as I know, right now this is just an interesting idea for a science fiction story (am planning to write that in the near term now, too). However, the technology to do this exists right now - the problem is one of integration rather than innovation.
[1] https://www.dailykos.com/stories/2011/2/16/945768/-
[2] https://www.techdirt.com/articles/20110318/02153313534/us-mi...
[3] https://www.networkworld.com/article/2201350/lots-of--people...
[4] https://www.fool.com/knowledge-center/what-is-algorithmic-tr....
[5] https://therobusttrader.com/what-percentage-of-trading-is-al...
First, the research over the last decade into social media persona swarms, where a single operator can program and control a large group of fake social media accounts whose details are created through methods such as Generative Adaptive Networks (GANs), a Machine Learning technique that can learn to produce something new that imitates an original. [1][2][3]
Next, automated algorithmic trading [4], where algorithms determine what and when to buy (increasingly using Machine Learning), which is believed to account for 70-80% of U.S. stock trading.
Last, the melding of the two, where automated traders use automated social media accounts to influence at opportune moments and then take advantage of the temporary dips or surges caused by that influence, possibly causing ripple effect dips or surges that the automated traders can use.
As far as I know, right now this is just an interesting idea for a science fiction story (am planning to write that in the near term now, too). However, the technology to do this exists right now - the problem is one of integration rather than innovation.
[1] https://www.dailykos.com/stories/2011/2/16/945768/-
[2] https://www.techdirt.com/articles/20110318/02153313534/us-mi...
[3] https://www.networkworld.com/article/2201350/lots-of--people...
[4] https://www.fool.com/knowledge-center/what-is-algorithmic-tr....
[5] https://therobusttrader.com/what-percentage-of-trading-is-al...
My friends realized there is money to be made here, but I think the thing I realized is how time consuming it is. You really have to be on the prices all day.
I am squarely of the belief that all of this fun and games will probably end shortly after people start going out and doing things again.
I am squarely of the belief that all of this fun and games will probably end shortly after people start going out and doing things again.
Total chaos. It's a vol game, but you need a lot of time to do it well (and honestly need to know drivers of market volume, which is even harder to do from the outside).
Interestingly AMC had a similar shape as well. Coincidence?
No, considering the same people are buying it for the same reasons.
The two stocks are targeted by the same group of investors.
It would make sense they move together.
The two tend to have similar patterns most days
KOSS as well
What is driving the action at this point? Aren't all of the hedge funds cashed out at this point?
Could someone explain the games stop draw? Apple has over 500 stores while gamestop has over 5500.
The Reddit belief is short squeeze. That there are fewer shares available than people (hedge funds) have shorted. Thus if price goes up, they have to buy to cover, pushing price up even more, and the cycle continues. Until it bursts at some point (not really talked about).
It doesn't have a lot to do with financial future of GameStop. It's overvalued as a company almost surely. But it's not a scam company, it's not going bankrupt, but the draw is a certain class of investor bet way too heavily against it that it created an opportunity to take advantage of, GameStop just happens to be the field the game is being played on.
It doesn't have a lot to do with financial future of GameStop. It's overvalued as a company almost surely. But it's not a scam company, it's not going bankrupt, but the draw is a certain class of investor bet way too heavily against it that it created an opportunity to take advantage of, GameStop just happens to be the field the game is being played on.
> The Reddit belief is short squeeze. That there are fewer shares available than people (hedge funds) have shorted. Thus if price goes up, they have to buy to cover, pushing price up even more, and the cycle continues. Until it bursts at some point (not really talked about).
The problem is that Reddit is full of morons, who don't understand a single thing about short sales.
When a stock is 150% shorted, there exist 250% shares of stock. That's because for every short sale, a new long position is created.
It is impossible for there to be more short positions, than there are long positions. [1]
Now, if[2], say 150% of the shares are held by buy-and-forget investors, who won't sell, regardless of where the price goes, a short squeeze is possible (Because there are fewer shares being actively traded, than there are short positions open.)
The thing is, when GME goes to some ridiculous valuation like $300, some of those buy-and-forget investors may be inclined to take their money, and sell. Any half-actively managed fund would be crazy not to.
Are short sellers getting margin-called applying upwards price pressure? Yes. Is that the only source of upwards price pressure? No, there's also a mountain of people with either FOMO, or the hope to unload the stock to a bigger fool. This is rational, in the same sense that investing early into a bubble, or a pyramid scheme is rational.
[1] Unless you do a naked short sell[3]. Reddit screams about illegal naked short selling, without offering a shred of proof, because it doesn't understand the concept mentioned in the paragraph above.
[2] Reddit also has no proof that this is the case, it's just a tribe of apes screaming 'hodl' at eachother.
[3] The only people who naked short sell are market makers, who are incredibly risk averse, and balance their positions out on a regular basis. Hedge funds aren't market makers, and aren't allowed to naked short sell.
The problem is that Reddit is full of morons, who don't understand a single thing about short sales.
When a stock is 150% shorted, there exist 250% shares of stock. That's because for every short sale, a new long position is created.
It is impossible for there to be more short positions, than there are long positions. [1]
Now, if[2], say 150% of the shares are held by buy-and-forget investors, who won't sell, regardless of where the price goes, a short squeeze is possible (Because there are fewer shares being actively traded, than there are short positions open.)
The thing is, when GME goes to some ridiculous valuation like $300, some of those buy-and-forget investors may be inclined to take their money, and sell. Any half-actively managed fund would be crazy not to.
Are short sellers getting margin-called applying upwards price pressure? Yes. Is that the only source of upwards price pressure? No, there's also a mountain of people with either FOMO, or the hope to unload the stock to a bigger fool. This is rational, in the same sense that investing early into a bubble, or a pyramid scheme is rational.
[1] Unless you do a naked short sell[3]. Reddit screams about illegal naked short selling, without offering a shred of proof, because it doesn't understand the concept mentioned in the paragraph above.
[2] Reddit also has no proof that this is the case, it's just a tribe of apes screaming 'hodl' at eachother.
[3] The only people who naked short sell are market makers, who are incredibly risk averse, and balance their positions out on a regular basis. Hedge funds aren't market makers, and aren't allowed to naked short sell.
> Now, if[2], say 150% of the shares are held by buy-and-forget investors, who won't sell, regardless of where the price goes, a short squeeze is possible
That's precisely the whole premise of gamestop's rally. It's weird why you accuse those who state the same as you as being "morons" just for pointing precisely the same fact that you've just pointed out.
> The thing is, when GME goes to some ridiculous valuation like $300, some of those buy-and-forget investors may be inclined to take their money, and sell.
Think for a second: Don't you think that it might just be because of that why "hold" and "diamond hands" is repeated ad-nauseum by those who rally behind the short squeeze?
Perhaps those "morons" might have a point, right?
That's precisely the whole premise of gamestop's rally. It's weird why you accuse those who state the same as you as being "morons" just for pointing precisely the same fact that you've just pointed out.
> The thing is, when GME goes to some ridiculous valuation like $300, some of those buy-and-forget investors may be inclined to take their money, and sell.
Think for a second: Don't you think that it might just be because of that why "hold" and "diamond hands" is repeated ad-nauseum by those who rally behind the short squeeze?
Perhaps those "morons" might have a point, right?
It's the prisoner's dilemma playing out with millions of participants. Sure, if everybody holds, there's nobody to buy shares from. But it just takes some defectors to sell and take the sure profits leaving the rest as bag-holders.
And whether you collude or defect, you'd still tell others to keep holding, we're all taking down the hedgies together, whatever.
And whether you collude or defect, you'd still tell others to keep holding, we're all taking down the hedgies together, whatever.
> Sure, if everybody holds, there's nobody to buy shares from.
Not really. For your belief to have any basis, you'd need to believe that the whole world was comprised of either WSB-blend of redditors or hedge fund shorters, which is a highly silly assumption.
> But it just takes some defectors to sell
You're somehow assuming that a hand-full of single- or double-digit stock portfolio retail investors are able to manipulate the stock price by selling their residual position.
Not really. For your belief to have any basis, you'd need to believe that the whole world was comprised of either WSB-blend of redditors or hedge fund shorters, which is a highly silly assumption.
> But it just takes some defectors to sell
You're somehow assuming that a hand-full of single- or double-digit stock portfolio retail investors are able to manipulate the stock price by selling their residual position.
I think we're talking past each other. I'm saying that the reddit-power short squeeze to-the-moon fantasy is a fantasy because the market is composed of many participants and lots of them will choose to sell at a price that's profitable, but not astronomical.
It seems clear that you don't have much in the sense of a context regarding what the WSB crowd does or thinks or days.
You're talking about "fantasy" about wins regarding a community renowned for posting screenshots of stock market losses under the premise of "loss porn". You're also talking about the possibility of losing money while talking about a phenomenon with a highly emotional and defiant tone, with multiple and reiterating and recurrent threads about how they don't care if they lose money or withstand massive losses if that means they have a shot at screwing hedge funds and their blatantly manipulative tactics. You're talking about the risk of losses on investments from a community where "exit strategy" is a kin to an inside joke.
In essence, you're trying to find an explanation to a social and political event through the optics of basic conservative textbook investment principles, and your conclusion is that nothing fits your personal explanation.
You're talking about "fantasy" about wins regarding a community renowned for posting screenshots of stock market losses under the premise of "loss porn". You're also talking about the possibility of losing money while talking about a phenomenon with a highly emotional and defiant tone, with multiple and reiterating and recurrent threads about how they don't care if they lose money or withstand massive losses if that means they have a shot at screwing hedge funds and their blatantly manipulative tactics. You're talking about the risk of losses on investments from a community where "exit strategy" is a kin to an inside joke.
In essence, you're trying to find an explanation to a social and political event through the optics of basic conservative textbook investment principles, and your conclusion is that nothing fits your personal explanation.
I think the political side of it "screwing hedge funds" is a bunch of BS. It's about as real as Bitcoin being for "enabling worldwide payments free from censorship". It's a nice story but the big price swings are driven by people trying to get rich quick. And hey, more power to them, nothing wrong with trying to get rich quick.
Diamond hands might force short sellers to pay high prices to cover. But they pay those high prices to the people who sell, not to the people holding. Those sellers are the real winners -- well, them and anybody who shorts it again at the peak. Are they other hedge funds? Retail investors with "paper hands"? Who knows. All that's obvious to me is that if you're the last to sell, the only person you succeeded in screwing over is yourself.
Diamond hands might force short sellers to pay high prices to cover. But they pay those high prices to the people who sell, not to the people holding. Those sellers are the real winners -- well, them and anybody who shorts it again at the peak. Are they other hedge funds? Retail investors with "paper hands"? Who knows. All that's obvious to me is that if you're the last to sell, the only person you succeeded in screwing over is yourself.
> I think the political side of it "screwing hedge funds" is a bunch of BS.
You're free to ignore or downplay whatever facts you'd like, but it takes a lot of will power to turn a blind eye to the political and protest aspect of gamestop's stock purchases.
You're talking about a bunch of small WSB-like retail investors who purchase half a dozen stocks with their disposable cash because they feel that contributes to evil hedge funds of the likes of Melvin Capital to lose half their cash on their manipulative shorts. You're talking about people who look at gamestop's stock as a high-risk investment where the payoff is not cash but screwing big financial companies out of their cash.
It's like you're watching a parade or a protest march and you're there wondering why all those idiots are just standing there instead of running to win the race. The point of a protest march is not to ensure that your everyday flow stays neatly predictable, is it?
You're free to ignore or downplay whatever facts you'd like, but it takes a lot of will power to turn a blind eye to the political and protest aspect of gamestop's stock purchases.
You're talking about a bunch of small WSB-like retail investors who purchase half a dozen stocks with their disposable cash because they feel that contributes to evil hedge funds of the likes of Melvin Capital to lose half their cash on their manipulative shorts. You're talking about people who look at gamestop's stock as a high-risk investment where the payoff is not cash but screwing big financial companies out of their cash.
It's like you're watching a parade or a protest march and you're there wondering why all those idiots are just standing there instead of running to win the race. The point of a protest march is not to ensure that your everyday flow stays neatly predictable, is it?
It's possible, I just consider it a more charitable interpretation to assume they're trying to make a buck, than that they're trying to protest in the dumbest way since self-immolation.
To be clear, the make-a-buck version of events DOES make sense to me. I'm not standing here going "why are these people all doing this irrational thing?". It makes perfectly rational sense if they really do plan to exit, regardless of what they joke about in memes. It's not a game everybody can win, but there are some big winners paid for by the long tail of losers holding the bag at the end, and everybody can try to time the bubbles to make themselves one of those winners.
On the other hand, the "I'm fine with taking a loss because at least I stuck it to the man" version makes no sense to me.
If you buy and hold, and your diamond hands cause you to miss the window of profitability, you are helping somebody else who does sell get a better price for their shares. All you know about that person is that they DON'T have diamond hands. They might just be another hedge fund. Helping an unknown fund that's long make money off some other unknown fund that's short is... something... but I don't see how it's an effective protest.
I guess it makes some amount of sense if your definition of "evil" is just short-selling, so somehow long funds are "good" and short funds are "bad". I admit I have seen that sentiment floating around. It doesn't make any sense, but it is out there, so I'll grant that at least a few shares have been bought on that belief. Again, I think the most charitable interpretation is that most price movement is not driven by people with such a naive idea about shorts and longs, but I could be wrong.
To be clear, the make-a-buck version of events DOES make sense to me. I'm not standing here going "why are these people all doing this irrational thing?". It makes perfectly rational sense if they really do plan to exit, regardless of what they joke about in memes. It's not a game everybody can win, but there are some big winners paid for by the long tail of losers holding the bag at the end, and everybody can try to time the bubbles to make themselves one of those winners.
On the other hand, the "I'm fine with taking a loss because at least I stuck it to the man" version makes no sense to me.
If you buy and hold, and your diamond hands cause you to miss the window of profitability, you are helping somebody else who does sell get a better price for their shares. All you know about that person is that they DON'T have diamond hands. They might just be another hedge fund. Helping an unknown fund that's long make money off some other unknown fund that's short is... something... but I don't see how it's an effective protest.
I guess it makes some amount of sense if your definition of "evil" is just short-selling, so somehow long funds are "good" and short funds are "bad". I admit I have seen that sentiment floating around. It doesn't make any sense, but it is out there, so I'll grant that at least a few shares have been bought on that belief. Again, I think the most charitable interpretation is that most price movement is not driven by people with such a naive idea about shorts and longs, but I could be wrong.
I mean, of course they have a point. Some of them are going to win. Some of them have won big.
The thing is, I don't think the winners are mostly getting rich off the backs of short sellers. They are getting rich off the backs of other retail investors, most of whom are losing money, because they buy in at $220, hold through $300, and then diamond hands the drop to $50.
I understand why people with an exit plan are screaming at everyone else to hold. They need everyone else to hold, so that their exit pays off. This is why I assume they are spreading FUD, and misinformation about how short sales work.
The thing is, I don't think the winners are mostly getting rich off the backs of short sellers. They are getting rich off the backs of other retail investors, most of whom are losing money, because they buy in at $220, hold through $300, and then diamond hands the drop to $50.
I understand why people with an exit plan are screaming at everyone else to hold. They need everyone else to hold, so that their exit pays off. This is why I assume they are spreading FUD, and misinformation about how short sales work.
> The thing is, I don't think the winners are mostly getting rich off the backs of short sellers.
I don't think your definition of winners applies here, because for some this isn't really about making a quick buck. There's a whole class of WSB-based stock purchasers who buy/bought stock in protest, and don't care at all if they lose 200$-2000$ in this as long as they see hedge funds hemorrhaging cash.
For them, winning is seeing the likes of Melvin Capital wasting half of their cash on a failed short.
https://edition.cnn.com/2021/01/31/investing/melvin-capital-...
And that's something they don't mind paying 2000$ to see.
I don't think your definition of winners applies here, because for some this isn't really about making a quick buck. There's a whole class of WSB-based stock purchasers who buy/bought stock in protest, and don't care at all if they lose 200$-2000$ in this as long as they see hedge funds hemorrhaging cash.
For them, winning is seeing the likes of Melvin Capital wasting half of their cash on a failed short.
https://edition.cnn.com/2021/01/31/investing/melvin-capital-...
And that's something they don't mind paying 2000$ to see.
> I don't think your definition of winners applies here, because for some this isn't really about making a quick buck. There's a whole class of WSB-based stock purchasers who buy/bought stock in protest, and don't care at all if they lose 200$-2000$ in this as long as they see hedge funds hemorrhaging cash.
That class of WSB should open their eyes and realize that hedge funds on the long side of the trades aren't hemmorhaging cash. Those funds are happily taking WSB cash, and laughing all the way to the bank.
As a form of social protest, giving your money to a hedge fund seems to be an odd one.
For some mysterious reason, though, the WSB narrative is that all the hedge funds are on the short side of these trades. Again, no proof is given for this statement, it's just a magical incantation that the tribe keeps repeating.
... Or, it's something that people hoping to get rich from a pump and dump keep repeating, so that bigger fools drive the stock price up for them, and they can cash out. If I were one of those people, that's what I'd be doing.
That class of WSB should open their eyes and realize that hedge funds on the long side of the trades aren't hemmorhaging cash. Those funds are happily taking WSB cash, and laughing all the way to the bank.
As a form of social protest, giving your money to a hedge fund seems to be an odd one.
For some mysterious reason, though, the WSB narrative is that all the hedge funds are on the short side of these trades. Again, no proof is given for this statement, it's just a magical incantation that the tribe keeps repeating.
... Or, it's something that people hoping to get rich from a pump and dump keep repeating, so that bigger fools drive the stock price up for them, and they can cash out. If I were one of those people, that's what I'd be doing.
I'm pretty sure most people would argue that it has nothing to do with market fundamentals or the valuation of Gamestop as a company. There's a mixture of wanting to stick it to hedge funds (based on the idea that a short squeeze could happen), power from it being a meme, and other social factors. You'll often see optimism on Reddit about changes that Gamestop is making to their stores or business model, but I think that's really the minority here.
Disclaimer: I have previously bought/sold GME purely out of personal interest for the phenomenon (and have no position in it now, nor do I have a plan to buy any more), but this is not financial advice.
Disclaimer: I have previously bought/sold GME purely out of personal interest for the phenomenon (and have no position in it now, nor do I have a plan to buy any more), but this is not financial advice.
It's a battle with the people with an financial incentive/bet that the stock will go down.
These people have essentially borrowed shares and sold them on the market (short sale), and are waiting at some time in the future to buy them back. The idea is they will buy the stock back at a much lower price than they originally sold them for.
The people holding the IOUs for gamestop stock are paid regular interest payments. These payments are relative to the price of gamestop. The higher the stock price goes, the higher the interest payments are.
When the stock skyrockets like this, a positive feedback loop is generated (called a short-squeeze), people want to buy back shares to stop their interest payments on the IOUs. And if there aren't enough shares available, the price spikes. Eventually, the market cools off and the price plummets back to earth.
These people have essentially borrowed shares and sold them on the market (short sale), and are waiting at some time in the future to buy them back. The idea is they will buy the stock back at a much lower price than they originally sold them for.
The people holding the IOUs for gamestop stock are paid regular interest payments. These payments are relative to the price of gamestop. The higher the stock price goes, the higher the interest payments are.
When the stock skyrockets like this, a positive feedback loop is generated (called a short-squeeze), people want to buy back shares to stop their interest payments on the IOUs. And if there aren't enough shares available, the price spikes. Eventually, the market cools off and the price plummets back to earth.
There is no draw, it's a meme stock that's had a cult form around it.
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Chamath liquidating again.
There's speculation this article was part of a coordinated attack. The stock then shot back up.
[deleted]
>There's speculation this article was part of a coordinated attack
WSB is almost qanon at this point. everything is a coordinated attack to them.
WSB is almost qanon at this point. everything is a coordinated attack to them.
There's definitely some truth to that, but CNBC still has "GameStop drops 40% in 25 minutes" on the homepage.
They were really quick to get that up when it happened but not so quick to alter the headline they want.
Isn't it more newsworthy that it bounced back so quickly? It's up over $100/share since Monday. Currently up $20/share on the day and will be on the short sale restriction list tomorrow.
They were really quick to get that up when it happened but not so quick to alter the headline they want.
Isn't it more newsworthy that it bounced back so quickly? It's up over $100/share since Monday. Currently up $20/share on the day and will be on the short sale restriction list tomorrow.
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Look, I think this whole GME thing is stupid: but following the price is also stupid. I guess if its your first bubble, this is exciting stuff, but these things come crashing down eventually.
Hertz is a better saga to follow, since that saga is almost done. I don't know if any news on GME has come out recently, but nothing is quite as final as bankruptcy court (in the case of Hertz).
If you look at the timescales at which stocks meme / move, its on the order of years. Decades even, in the case of Enron and literal scams like Madoff. GME isn't even a scam, its just the market doing its thing.
For Hertz, it entered meme status AFTER it started bankruptcy proceedings last year. Those proceedings are still not over yet. It just goes to show how long things take in the world of finance.
The daily ups and downs are largely noise. Try not to be distracted by them.