Armed Polite Society
Main Forums => Politics => Topic started by: AZRedhawk44 on January 28, 2021, 09:20:38 AM
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https://markets.businessinsider.com/news/stocks/gamestop-short-sellers-squeezed-losses-reddit-traders-army-cohen-palihapitiya-2021-1-1030006226
Evidently an army of autists at Reddit are weaponizing stocks, in particular they are using GameStop and AMC Theaters, in order to compel Wall Street to shell out billions of dollars to them.
I look at the stocks and say WTF? GameStop has been a solid "meh" company for a long time, basically Blockbuster. AMC should be bankrupt. There's no reason for a rocketship rise in their values right now. These guys are manipulating the price by playing options contracts and automated buy/sell algorithms.
I stand here thoroughly confused by what options, shorts, and calls are. Not looking to get involved, just looking to understand. How the hell can a company be so insanely falsely overvalued and the whole world knows it, but still goes with it? Who would put out a contract to buy GameStop when it's clearly utter garbage at its current value?
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https://twitter.com/JuddLegum/status/1354778651380875265?ref_src=twsrc%5Egoogle%7Ctwcamp%5Eserp%7Ctwgr%5Etweet
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https://popular.info/p/the-merry-adventures-of-robinhood
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The big institutional players will take stocks like these in the doldrums who's companies are expected to fail, and buy them in preparation for a short sale.
They buy them on credit, then sell them back when they drop, and are able to take the difference as profit. That's the one sentence version of how short selling works.
(Why that's the case, I dunno. But it is what it is, and that's how it works.)
Imagine getting a bank loan for a car at $20,000. Without any negative credit dings, you can give the car back to the bank at a certain time to repay the loan of the cash. The car is suddenly only worth $15,000, and you give that back to the bank, and pocket the $5000. That's a simplistic analogy for a short sale.
You're betting/gambling the stock will drop, the bank that gave you the loan is betting it will go up. The investor is making this gamble in a smaller realm on that stock, the bank generally is betting "the house will win" and they'll come out ahead when a bunch of these transactions are averaged out.
But the mobs from Reddit, 4Chan or wherever, have been buying these stocks like crazy, demand creating a spike in price, and the reverse in a short sale is true, if a stock you're trying to short goes up, you're on the hook for the difference and have to pay it. So the institutional buyers are taking it in the shorts to the tune of billions, while (assuming they cash out) all these little guys in the crowdsourced mob buy are making bank.
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The party may already be over for Gamestop. Stock is down 20% as of this writing.
https://www.cnbc.com/2021/01/28/gamestop-reverses-losses-and-surges-another-30percent-in-the-premarket-to-450-as-mania-continues.html
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The party may already be over for Gamestop. Stock is down 20% as of this writing.
https://www.cnbc.com/2021/01/28/gamestop-reverses-losses-and-surges-another-30percent-in-the-premarket-to-450-as-mania-continues.html
The small players/mobs can do their own short sales (if they dare) and ride the downslope on this and make money too.
The big institutional players who got burned could try to retaliate by driving up Gamestop again with their own buys, wiping out any small players looking to profit from short sales as it falls down, but the big boys would just ultimately be wasting money on stocks with poor fundamentals at street level for the actual business which is probably dying slowly. So they probably won't do that.
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https://markets.businessinsider.com/news/stocks/gamestop-short-sellers-squeezed-losses-reddit-traders-army-cohen-palihapitiya-2021-1-1030006226
Evidently an army of autists at Reddit are weaponizing stocks, in particular they are using GameStop and AMC Theaters, in order to compel Wall Street to shell out billions of dollars to them.
Did you ever read Vernor Vinge's A Deepness In the Sky (https://en.wikipedia.org/wiki/A_Deepness_in_the_Sky)? This reminds me of the villains in that story, the Emergents, who had learned to utilize deliberately obsessed humans, to overcome local limitations on computer power.
I look at the stocks and say WTF? GameStop has been a solid "meh" company for a long time, basically Blockbuster. AMC should be bankrupt. There's no reason for a rocketship rise in their values right now. These guys are manipulating the price by playing options contracts and automated buy/sell algorithms.
I stand here thoroughly confused by what options, shorts, and calls are. Not looking to get involved, just looking to understand. How the hell can a company be so insanely falsely overvalued and the whole world knows it, but still goes with it? Who would put out a contract to buy GameStop when it's clearly utter garbage at its current value?
All a mystery to me, too. I will likely die poor.
But the mobs from Reddit, 4Chan or wherever, have been buying these stocks like crazy, demand creating a spike in price, and the reverse in a short sale is true, if a stock you're trying to short goes up, you're on the hook for the difference and have to pay it. So the institutional buyers are taking it in the shorts to the tune of billions, while (assuming they cash out) all these little guys in the crowdsourced mob buy are making bank.
The war continues.
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As I understand it, what happened is this:
1.Some big wall street investment companies borrowed a bunch of shares in various companies and then sold them at price X expecting the price to fall to the point where they could buy them back at a price lower than X and return them to the borrowers. Perfectly legal short selling.
2.A bunch of people on Reddit looked at public information (information available to everyone trading on the stock market) and noticed that for certain companies, the total amount of stock that had been borrowed by the short sellers was close to (or in some cases above) the total amount of stock that was being traded on the market. Perfectly legal (since no information that wasn't already public was used)
3.These same Reddit people decided collectively to buy all the shares in these companies they could get their hands on. (its also not illegal for some random person on Reddit to decide to buy shares in a certain company if that's what they want to do. Or even for multiple people to decide collectively to buy shares in a certain company)
4.The people who bought these shares are now sitting on them and refusing to sell (also perfectly legal as far as I know, the shares were acquired legally and there is no law I know of that forces someone to sell their legally acquired shares)
The entire thing makes me happy and proud, but of course the big boys will successfully weaponize the SEC, which they obviously already paid off to let them get away with their original scheme, to demonize "retail investing", because as we all know, only the big players are allowed to make money, and only the little suckers are ever left holding the bag.
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Here's a fairly concise explanation:
https://www.vox.com/the-goods/22249458/gamestop-stock-wallstreetbets-reddit-citron (https://www.vox.com/the-goods/22249458/gamestop-stock-wallstreetbets-reddit-citron)
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There is also a larger context to discuss. It has been clear to me and others that there is a coming pogrom against small-potatoes investors. Access to the markets has been becoming more and more available to everyone, not just a select few, and not just to a class of people who have enough money. There used to be sufficient fees, front-loads, brokerage commissions, and minimum trades to keep out the riffraff. Now, there are zero-expense mutual funds, zero trading fees, free options, and zero barriers, basically. You can see this building in the background as big money is preparing for a crackdown on "retail investing", and we have all been just awaiting for the next stock market crash to be blamed on retail investing, and for the collusion between big money, media, and government to "do something" about it. The premise that small investors really are moving the needle of the economy is laughable, except it can be used as an act of prestidigitation to distract from the real bad actors, namely the big money players and their collusion with the government.
Sadly, this event confirms the theory as we see very clearly the coordination with the media and soon the regulators, right on their cues, so if there ever was any hope that the regulators weren't captured, it's going to be gone soon once people find out that only the big boys benefit from regulation. This event sadly will only accelerate the coming crackdown because it's all fun and games until you make the wrong people lose money, which absolutely cannot be allowed to happen, nor can it be permitted to let the word out that capitalism is still in effect and in some cases small players can actually participate in the game themselves.
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(https://hosting.photobucket.com/images/x383/WLJohnson1/ouylG6Rl.jpg)
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As I understand it, what happened is this:
2.A bunch of people on Reddit looked at public information (information available to everyone trading on the stock market) and noticed that for certain companies, the total amount of stock that had been borrowed by the short sellers was close to (or in some cases above) the total amount of stock that was being traded on the market. Perfectly legal (since no information that wasn't already public was used)
I think this is the key. I haven't researched the particulars here, but if more shares were sold short than actually exists, someone is selling short without borrowing the stock and that is illegal. So the Redditers embarrassed the big players by exposing their illegal trading and by making them lose money on those trades. (so the little guys need to be punished, of course, because the game is supposed to be rigged the other way)
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This video explains it well:
https://www.youtube.com/watch?v=aqJY9qbd9o4
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I think this is the key. I haven't researched the particulars here, but if more shares were sold short than actually exists, someone is selling short without borrowing the stock and that is illegal. So the Redditers embarrassed the big players by exposing their illegal trading and by making them lose money on those trades. (so the little guys need to be punished, of course, because the game is supposed to be rigged the other way)
Gamestop was about 45% shorted at the beginning. So not more shares then were in existence, but a pretty high percentage of the existing ones.
The regulatory issue is going to be whether the SEC decides this is some version of a Pump and Dump. (It is illegal to collude with a bunch of people and artificially drive a stock price up, then sell it high). The Reddit mob was saying the plan was to buy and hold until after the shorts were due. Then what? Reddit is saying that was the whole plan (wink, wink it's an arm-brace). If the SEC finds (or makes) evidence that a bunch of those investors also message some version of "sell now!" or "sell at $500", then that side of it is illegal.
Like I said in my thread over in RT, the whole thing is kinda funny to watch and made a short term blip in the market. That said, I think it's not as big a deal as people are making it. The funds that were shorting GME lost hundreds of millions, yes, but they manage billions or trillions. They're pissed, but not really hurt.
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The market is a silly game, rife with manipulation by big players mostly being handled by computer algorithms. It is far divorced from the fundamentals of the underlying businesses who's shares are being traded, and instead traded based on what they think other players perceptions are.
Due to a currency that's lost 98% of it's value in the past 50 years, high real inflation, and perpetually low interest rates - it is a stupid game that we are all forced to play with our own money - gambling our future ability to fiscally survive at the whims of forces we have no control over.
So, good. Screw with it, Reddit. Highlight the ridiculousness of this system.
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Gamestop was about 45% shorted at the beginning. So not more shares then were in existence, but a pretty high percentage of the existing ones.
The regulatory issue is going to be whether the SEC decides this is some version of a Pump and Dump. (It is illegal to collude with a bunch of people and artificially drive a stock price up, then sell it high). The Reddit mob was saying the plan was to buy and hold until after the shorts were due. Then what? Reddit is saying that was the whole plan (wink, wink it's an arm-brace). If the SEC finds (or makes) evidence that a bunch of those investors also message some version of "sell now!" or "sell at $500", then that side of it is illegal.
Like I said in my thread over in RT, the whole thing is kinda funny to watch and made a short term blip in the market. That said, I think it's not as big a deal as people are making it. The funds that were shorting GME lost hundreds of millions, yes, but they manage billions or trillions. They're pissed, but not really hurt.
According to what I read, Gamestop was 140% shorted, which hedge funds are legally allowed to do for reasons.
THAT was why it worked. There was absolutely no way to cover that many shorts once someone (or someones) decided to destroy the short sellers.
I'm just curious why our ruling class says THIS is bad but demon Soros doing the same thing to entire countries is fine.
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Just heard from his Dad that my nephew got in on the AMC mess and... made $40,000 yesterday trading AMC.
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One redditor has turned his original $53k position in GME (dating back into 2019) into $50mil. Not joking. It’s probably a bit under that today, but that was at yesterday’s closing.
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The TLDR on it is this:
If you're a rich hedge fund manager, manipulating the market to profit big is just fine and dandy.
If you're a normal guy hanging out with other normal guys on the internet, this is Very Bad (tm) and should be stopped.
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Here's an easy to digest explanation...
https://twitter.com/i/status/1354496683938201600
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Related:
So Nancy Pelosi buys $1M in stock options (!) in Tesla a few days before Joe Biden announces government vehicles will all be electric (not sure how that's legal).
Meanwhile, you're not allowed to buy stock in GME or AMC on Robinhood.
— Alana Mastrangelo (@ARmastrangelo) January 28, 2021
I haven't found verification of it, but if true, at the very least it's unethical if she knew and if I remember my fed.gov ethics course correctly.
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Her husband, who is a trader, bought options in TSLA, at a time when TSLA was steady climbing and looked good. Not a shady trade at all.
And if you think there will be a GSA Tesla, I have a bridge to sell you. If he had bought options in Workhorse, that would be sus.
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Her husband, who is a trader, bought options in TSLA, at a time when TSLA was steady climbing and looked good. Not a shady trade at all.
And if you think there will be a GSA Tesla, I have a bridge to sell you. If he had bought options in Workhorse, that would be sus.
It's not about the gov buying Teslas, it would be the related boost to all electric car sales based on fed.gov's thumb on the scale. GSA buys Volts and the like, but many consumers will be convinced to buy nicer E cars, because they expect the liberal administration will also be boosting infrastructure, and I won't be surprised if 46 throws out a $10K tax rebate or similar if you trade in your dino car for an E car. Just like cash for clunkers.
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We are bending over the hedge funds and *expletive deleted*ing them hard.
http://isthesqueezesquoze.com/
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Here's an easy to digest explanation...
https://twitter.com/i/status/1354496683938201600
:rofl: :rofl:
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Here's an easy to digest explanation...
https://twitter.com/i/status/1354496683938201600
(https://external-content.duckduckgo.com/iu/?u=https%3A%2F%2Fpygmylorisreid.files.wordpress.com%2F2011%2F11%2Fconfused_cat_huh1.jpg&f=1&nofb=1)
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We are bending over the hedge funds and *expletive deleted*ing them hard.
http://isthesqueezesquoze.com/
That's a good explanation.
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The over leverage was way worse than 140%. Considering the float or actively traded sales that the short sellers could buy from to cover their positions.
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https://babylonbee.com/news/wall-street-bans-anyone-who-doesnt-wear-a-top-hat-and-carry-around-giant-bags-of-money
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Holy hell, the SJW analyses on this are getting ridiculous...
https://twitchy.com/brettt-3136/2021/01/30/newsweek-far-right-extremists-are-using-gamestop-chaos-to-radicalize-and-recruit-new-members-online/
https://twitchy.com/brettt-3136/2021/01/30/washington-post-explains-how-sex-is-not-the-answer-to-stave-off-stock-market-mischief/
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So how long before the politicians step in to protect their butt buddy banksters? I know it’s gonna happen and it’s going to be the fastest government has ever done anything.
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So how long before the politicians step in to protect their butt buddy banksters? I know it’s gonna happen and it’s going to be the fastest government has ever done anything.
I already read that "squaw of the people" Elizabeth Warren wanted an investigation into these upstart individuals.
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I already read that "squaw of the people" Elizabeth Warren wanted an investigation into these upstart individuals.
So Warren has a lot of money in hedge funds?
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Holy hell, the SJW analyses on this are getting ridiculous...
https://twitchy.com/brettt-3136/2021/01/30/newsweek-far-right-extremists-are-using-gamestop-chaos-to-radicalize-and-recruit-new-members-online/
https://twitter.com/Lemmmmmmmy/status/1355503269318111238
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Next weeks fun and games ... SILVER!
The ride never ends [popcorn]
https://www.zerohedge.com/markets/reddit-preparing-unleash-worlds-biggest-short-squeeze-silver
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America Uncovered take:
https://www.youtube.com/watch?v=r9BAXUd0voY
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I haven't heard much news about silver prices today, other than it's up.
I remember when the Hunt brothers tried to corner the silver market back in the 70's or 80's. (buying contracts on the commodities market, then taking delivery of the silver, which nobody does.) They would have been successful except the SEC changed the rules on them.
If the short squeeze starts working, I expect the government to interfere again to protect the big banks and screw the small investors/speculators.
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I haven't heard much news about silver prices today, other than it's up.
I remember when the Hunt brothers tried to corner the silver market back in the 70's or 80's. (buying contracts on the commodities market, then taking delivery of the silver, which nobody does.) They would have been successful except the SEC changed the rules on them.
If the short squeeze starts working, I expect the government to interfere again to protect the big banks and screw the small investors/speculators.
I have off and on thought about owning some small amount of physical precious metals, but have never gotten around to it. While I would obviously not buy silver this week, I was curious about the reddit effect so poked around. Pretty much all the physical dealer sites I looked at were out of stock on most smaller size bars and coins.
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The silver buy is apparently a misdirection by Wall Street. It is all over r/wallstreetbets that there is no silver buy going on by them.
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Apparently physical gold and silver have been in short supply since late last year:
https://www.theepochtimes.com/us-mint-unable-to-meet-surging-demand-for-gold-silver-bullion-coins_3682641.html