The New Big Short
Lehman lost $4 Billy and caused the financial crisis. this is potentially going to be 100+ Billion lost. I am heavily considering some short positions
1) Banks - likely that they were levered, although probably not to the extent of 2008 levels
2) Brokers - They are the intermediaries and wait while the 2 day transaction period fills. If they get caught with the hot potato, do they lose big??
3) Something that will go down with institutional capital
Im also probably the dumbest person youve ever met so curious to hear your thoughts...
If you bet against WSB you will lose. Stonks only go up 🚀🚀🚀
I will bet with their waves
The downward, panic selling reaction to the GFC occurred due to the entire market not knowing to what extent and the amount the CDO's and synthetic CDO's etc. were worth in aggregate. People just knew big, in the range of big to very. very big. When investors can't confidently quantify the value at risk, markets panic and systems fail.
I think they won't lose any amount of income
Banks are absolutely much better capitalized for this cycle and regulators are far more aware of what’s going on there.
Does that mean they won’t have impairments? No. But it does mean they’re at least better positioned to weather that storm.
Why did robinhood have to block trading, shouldn’t it have been easy to get a 2 day bridge loan to satisfy custodian banks between execution and settlement? Did they try and fail? If so that seems like it could be a big deal
robinhood was surprised by the regulatory capital call....it took them about 8 hours to tap their credit line (they obviously did not have this lined up and ready to go)....not bad all considered...but 8 hours can be an eternity in the stock market.
I wonder if rehypothecation (of everything, not just shorts) is the culprit this time around? I don’t really know much about this can anyone help?
Do you mean recalls and buy ins? I don’t suspect vanillas suddenly demanded their shares back, unless there was some Corp action (dividend ex date, vote date, etc).
i could see banks buying some clients in. But unless risk models truly went bonkers, buying in Melvin would be unlikely.
using some big words... what is rehypothecation and why do you think it could cause something big to happen? ok if you're not confident, would just like to hear your theory.
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