The Active Stock Market Trader, or Traders of Other (Crypto ect.) Market's Thing's Thread.
- Thread starter Chrunch Houston
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Pump and dump requires some level of fraudulent statements to be made about the stock in question to inflate the price as well as a plan of when to parachute out; and as far as I know none of the TV talking heads who are so mad about this and demanding insane government responses like banning stock market discussion on social media have actually found such a thing.
Just hyping it up and subsequently pouring money in it and having people follow your lead, even if it's deliberately to spite someone else as is the case here, isn't illegal at all as far as I can tell. Someone is going to be left holding the bag when it stops being wildly overvalued, but that's wasn't stopping people from buying stuff like Tesla for most of last year.
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- 12,900
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- Moglet85
- Moglet
Admittedly I don't know that much about the market but if they put a stop on trading for 30 days surely all that's going to do is delay everything? Those who were shorting will still have to close the short at some point and the whole point of WSB is to hold until that happens regardless of how long it takes. The return will be lower than it would otherwise have been, sure, but it won't fully protect the hedge funds.
Unless the plan is to only stop retail traders from trading in which case they're showing their true colours.
This is what it is. Numerous people were bragging on Twitter about shorting on GameStop, reddit users saw this and jumped on it and it then spiralled from there. The idea is to hold and hold until the hedge funds have no choice but to close their shorts at massively inflated values. Their thinking is that this short squeeze will then enable the retail traders to sell at even higher prices. I'm not sure how accurate this is though, I have no experience of it myself. It could just be people doing it for memes at this point.
For anyone looking at this thread who doesn't understand what is happening I found this to be a nice summary
Unless the plan is to only stop retail traders from trading in which case they're showing their true colours.
This is what it is. Numerous people were bragging on Twitter about shorting on GameStop, reddit users saw this and jumped on it and it then spiralled from there. The idea is to hold and hold until the hedge funds have no choice but to close their shorts at massively inflated values. Their thinking is that this short squeeze will then enable the retail traders to sell at even higher prices. I'm not sure how accurate this is though, I have no experience of it myself. It could just be people doing it for memes at this point.
For anyone looking at this thread who doesn't understand what is happening I found this to be a nice summary
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- 3,334
- NJ
- koszak27
I have browsed through r/WSB in the past but it was mostly in love with TSLA. But when you give enough frustrated people the time and motive to fight back, they will find a way. The basics are that billionaires and their hedge funds have been taking short positions for years on companies they know will go down in price. They use their insiders, information and clout to talk publicly in the media about the company losing value and this causes the price to drop. Some smart and motivated Redditors notice that 84% of Gamestop stock is held in short. They decide to band together and buy the stock which triggers the price to rise. And it goes up so much that one hedge funds loses more than they are worth.
But you know what that means... "This can't be tolerated! Social media is out of control!" "We need stock market regulation!" "It must have been foreign interference!"
Basically, some billionaires got too greedy and a bunch of people online took them out. But it really does ask the question of what is a stock's value? Is there anything to it besides the public's perception?
The video below sums it up rather well and certainly better than I have:
But you know what that means... "This can't be tolerated! Social media is out of control!" "We need stock market regulation!" "It must have been foreign interference!"
Basically, some billionaires got too greedy and a bunch of people online took them out. But it really does ask the question of what is a stock's value? Is there anything to it besides the public's perception?
The video below sums it up rather well and certainly better than I have:
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Danoff
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Admittedly I don't know that much about the market but if they put a stop on trading for 30 days surely all that's going to do is delay everything? Those who were shorting will still have to close the short at some point and the whole point of WSB is to hold until that happens regardless of how long it takes. The return will be lower than it would otherwise have been, sure, but it won't fully protect the hedge funds.
Unless the plan is to only stop retail traders from trading in which case they're showing their true colours.
This is what it is. Numerous people were bragging on Twitter about shorting on GameStop, reddit users saw this and jumped on it and it then spiralled from there. The idea is to hold and hold until the hedge funds have no choice but to close their shorts at massively inflated values. Their thinking is that this short squeeze will then enable the retail traders to sell at even higher prices. I'm not sure how accurate this is though, I have no experience of it myself. It could just be people doing it for memes at this point.
For anyone looking at this thread who doesn't understand what is happening I found this to be a nice summary
The mistake that these hedge funds are making, and that so many people make, is to assume that the stock market makes sense, or holds some consistency with the fundamentals of the company the stock is based on. In reality, of course, there can be much less related reasons why people are buying stock. In this case, malicious reasons aimed specifically at the hedge fund. This isn't exactly "losing at their own game" so much as it is failing to recognize that the game could include actors who are not intending to play it but intending to harm others - and that doing so may be legal.
What hedge funds would like to pretend is that the stock market is a science which is based on the analysis they have invented to forecast it. But it is not, it's based on the whims of massive numbers of people, and in this case those whims turned directly against the hedge funds. If they have to deal with this going forward, they need to diversify their portfolio more carefully and have a better understanding of risk assessment of short positions. Their "game" and "analysis" has to include financial trolling.
ROAD_DOGG33J
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- holyc0w1
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Yes, I don't think the hedge funds got greedy. They were taking a calculated risk, and most likely a reasonable one at the time. What they didn't factor in is the potential of somebody trolling their position.
Uncovered shorting is too risky for me as the potential loss could be infinite in theory. But these hedge funds will move on and probably evaluate their position more carefully going forward.
Uncovered shorting is too risky for me as the potential loss could be infinite in theory. But these hedge funds will move on and probably evaluate their position more carefully going forward.
- 6,072
- Simcoeace
Yes - I have to assume that while the GameStop scenario is is a kick in the gut for a couple of hedge funds, it's a drop in the bucket when it comes to overall big Wall St. manipulation.
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- Blitzbay
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The issue is so many people are now jumping in on both sides (the established politicians on one and the younger group on the other, for example) stating they think this is capitalism at work and it needs to be fixed. It is capitalism at work, and now people should probably realize that if they did not sell earlier, they will likely be stuck and lose all of their gains. There is no sure thing in the stock market, regardless of what ANYONE tells you. The hedge funds took a risk and they are paying for it. Those who are unable to trade now owning these ridiculously volatile (and frankly, worthless) stocks like GameStop got caught up in a bubble and now have to wait for it to pop. The apps which made it so easy for them to make these trades in the first place (WeBull, Robinhood) and established groups (Schwab, TD) kind of have skin in the game and they are trying to protect themselves. The former two are actually mostly utilized by the same hedge funds screwed over by this situation.
- 12,900
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- Moglet85
- Moglet
So much for the free market, eh? It speaks volumes that a lot of the apps restricting trading in these stocks are still allowing you to sell. They want to drive the price back down to bail out their best buddies (or, in the case of Robinhood, their owners). Luckily a lot of the big players in this are switching to other apps or ways of trading and/or are still holding on GME.
EDIT: Trading 212 have also blocked purchases in GME, AMC and NOK as of today under the "interest of mitigating risk for our clients"
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VolkswagenX
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From what I have learned so far is that Melvin capital did get greedy. They had many opportunities to take huge profits (more than 10x) but wanted GME to go to zero and tried very hard to make it happen. Some smart people noticed what they were doing and deceided to teach them a lesson and now they are crying.
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Keef
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I've been wondering why this thread was so high up lately. I just read about the GameStop/AMC/Robinhood situation. A couple hours ago congresswoman Rashida Tlaib tweeted about it and she's got 1.4 million followers.
People at the highest levels of government are aware of what Robinhood is doing now, blocking trades on stock their client Citadel has shorts on. The SEC probably won't do anything but Robinhood might lose their ass on this whole debacle. I'm glad I gave up on the Robinhood game last summer. Might as well delete my account and move elsewhere now.
People at the highest levels of government are aware of what Robinhood is doing now, blocking trades on stock their client Citadel has shorts on. The SEC probably won't do anything but Robinhood might lose their ass on this whole debacle. I'm glad I gave up on the Robinhood game last summer. Might as well delete my account and move elsewhere now.
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Danoff
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Danoff
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I think you misunderstood, I was implying that what robinhood is doing should potentially be illegal*. Specifically, preventing their clients from buying while the first-dibs folks eat their lunch should potentially be illegal*. And yes, I acknowledge that this kind of thing goes on regularly in trading.
*unless they have very carefully contracted with users to allow this
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VolkswagenX
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Joey D
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It's possible, but not easy. You have to apply for an equities membership through the NYSE and that requires you to either be or be part of a Self Regulatory Organization. You then need to fill out all sorts of forms depending on what you actually want to do. You also need to have a connection to a firm. There's probably more to it than that, but that's the gist of it. Individuals can't just go there to purchase stock. I'm not even sure if you can take a tour of the NYSE either since those were canceled after 9/11.
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It's a very droll time to roll out the usual advice given to lower-income earners by higher-income earners.
"I've lost $3 billion, my car and my home."
Have these hedgefunders tried budgeting?
Etc. Etc.
Hard to not be smug about it but equally hard to not empathise with the point being made.
"I've lost $3 billion, my car and my home."
Have these hedgefunders tried budgeting?
Etc. Etc.
Hard to not be smug about it but equally hard to not empathise with the point being made.
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