Is it just me or does everyone see that whoever on WallStreetBets started the GME hype just ran a classic Pump and Dump? A lot of small retail investors are going to lose a significant amount of money and a small few will make millions.
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Yes. They don't realize that "GME to the moon", "the next price target at $1K" is gonna kill them. "So we all cash out and become rich at $1K"? Cool. Someone has to be buying the garbage on the other end, thinking it should be worth even more than that. Obv won't happen. Hence, things will go back to fundamentals and the little guys will be holding useless garbage.
Yep. But they don’t wanna hear it because they suddenly think it’s class warfare for them to blow up their own savings. And then the political class jumps on the bandwagon to try to stay relevant.
The class warfare narrative is complete bogus as well. There are probably more funds on the long side of the GME trade at this point than on the short side, assuming that wasn’t already true to begin with.
Two things can be true at the same time. Difference is that the funds will get out but the greedy “fuck Wall Street” kids will be left holding the bag.
Here's a great image breaking down market volume for $GME last week. The retail investors were net sellers Tuesday - Thursday, and the retail volume is still completely dwarfed by institutional volume.
“Fuck the rich” -16 year olds with a couple grand their parents gave them
meh in some ways yes in other ways no. It started as a Value play and then after that a gamma squeeze. In both of those the only people who lost were people who had short positions and had to cover their shorts, or who market makers who had to delta hedge against the calls they sold.
Now, it's mostly ignorance I think, though I could be the one ignorant. A lot of people believe that the original shorts are still yet to be unwound because of the large short positions as a percentage of the float. Most likely they're wrong, and these are new shorts, but either way the goal is still not to P&D. It's to cause another gamma squeeze/short squeeze to the short sellers, then sell when they have to buy to cover. I.E. not fuck over a retail investor who has to buy the top of a P&D but fuck over the institutional investors who have short positions and have to cover at the top of a buying frenzy.
Obviously people can say that it's illegal to have a coordinated pump in order to cause a short squeeze, and the SEC agrees with you, but the outrage is here because people feel (correctly) that those rules are bullshit. It's fine for Ackman to put shorts on something and then go on CNBC and shit on a company and try to kill it, or for a different hedge fund (Icahn) to short squeeze him and do the same thing. But if a bunch of retail investors decide to Short squeeze someone then suddenly the brokers/market makers fuck them over.
I agree in some aspects, but at the same time, does that mean it’s right?
Like if a big hedge fund talks their book on CNBC and profits because they disparage the company and ask us to trust that what they say is fact, we look down on it (at least I do). But when a bunch of retail investors engage in market manipulation, senators are up in arms saying their rights are being taken and we as a society congratulate them for “breaking Wall Street.”
Two wrongs don’t make a right.
You may look down on it, but you also probably just carry on as usual though, right? Business is business? When I hear someone say, "Two wrongs don't make a right," it just seems to me that the person doesn't actually want to fix the problem at the root, but the person just wants to sit back and judge people from their moral high ground. It's almost as if the bullied kid finally punches back and you say, "Hey man, not cool, two wrongs don't make a right." The point isn't about being right, it's about sticking your foot up the ass of the bully.
Exploiting the weak of heart and mind is the basis of Capitalism - welcome to the real world, kids.
Bro, they literally call each other retards and autists. But they were intelligent enough to start multiple short squeezes, capitalize on gamma squeezes, and still holding on despite an artificial 50% drop in price on Thursday.
They can potentially bring down multiple multi-billion Wall Street hedge funds. That's hilarious!
It’s even funnier because if you ask them what a short squeeze is, they actually don’t know what it is - they’re just repeating what they see other people tossing around, it is quite literally an elephant chain of idiots
*elephant chain of NEWLY RICH idiots
I’ve likely been commenting in both places longer than most people have been around here and the takes here are worse than the takes on wsb. People who seemingly are in the know how things operate want to poo-poo, some people who decided to create what would have been the largest short squeeze ever. (Would have because shorts likely closed their positions Thursday morning)
Sure politicians are just piling on at this point but Wall Street generally as an industry is broken and a bunch of people on a forum proved that. To not acknowledge what happened on Thursday morning as criminal is to ignore reality. I don’t think hedge funds called and said don’t allow retail but I do think clearinghouses let hedge funds sell shares back and forth to each other to let them out of just absurd positions. We can’t continue to have a society of rules for you but not for me and not think it won’t come crashing down eventually.
All of the mainstream brokerages have lost a huge amount of money this past week, the decision to halt trading in these shares is a matter of survival. How can they allow users to open positions in GME when they literally cannot find enough liquidity to clear trades? There was one user on reddit who posted a screenshot showing that he had sold shares in GME for $2,600. As a MM selling shares to one user for $450 and buying from another at $2,600, how can you possibly let that continue?
So do universities. Where's the outrage?
Is it just me or is it kinda funny the media has taken an assumption to label the people leading this from wsb as "kids." Idk what they consider kids, but this was clearly well thought out and well planned. Probably done by individuals who have experience/education in the industry. Besides, what "kid" has $50k + to play around with buying options. I could barely afford booze when I was 21.
r/deepfuckingvalue is married and a CFA lmao
I'm a big fan of the squeeze on the short funds. They beat down the stock of the company and over-shorted. Literally >100% shorted. Obviously didn't use any thoughts of risk management to think "It's already $4/share, maybe let's take our gains". Or when it jumped to $10, $15, $30. They had every opportunity to take the loss and close their position at that point as well. "Retail investors aren't sophisticated enough", yeah probably not sophisticated enough to overshort or get greedy enough to risk billions of their clients money. HFT's and other hedge funds squeeze each other all the time, create flash crashes that create real consequences to pensions, 401k's, etc. and now the greedy ones that over-shorted are getting fucked instead. My parents both lost their jobs in '08, let the greedy and careless funds fail. If you think it's "gambling" and "irresponsible" for the retail traders to do this, they literally have the right to put their life savings on a million-to-one parlay on basketball games and nothing is stopping them. Consumer protections are to protect them from other companies, not themselves.
Unfortunately it has been a bit of a hEdgE fUnD bAd, and then they buy 2 shares of GME with their tuition loan money, screaming $GME to $1,000 APES STRONG TOGETHER HOLD THE LINE HOORAH HOORAH, and people getting in at crazy cost bases like $370 and such. Pretty sad to see and I'm wondering when the blow-out is gonna happen. Eventually, retail investors will get bored of waiting for the "short squeeze", and start pulling out, and the truly "little people" are going to get screwed.
Obviously a lot of the comments on WSB are of satirical nature, but a couple of them really are concerning. People are dumping their entire life savings into this thing. I invested in it at $88 cost basis only because I've maxed out my Roth IRA, have an emergency savings, and doing well financially. Can't say the same for all of the other people in this. Seems a little bit of a "rich people bad me buy share of GME" type of move, and it's going to end badly. Again, I myself am invested in GME and even I've seen how much of a mob mentality all of this has become.
Fortunately, I am glad all this shady shit is coming out (CNBC, Robinhood, shorting a stock for more than the available shares???), and hope SEC does look into all of that.
It’s amazing to look at WSB and see the absolute insanity of it all. Yes, there are crazy plays like u/DFV made but man this is gonna be so ugly coming down.
100% agree. As I said in my other post, the original thesis on WSB made a lot of sense - hedge funds were getting greedy and excessively shorting the stock, and Ryan Cohen had come onboard to reinvent the company. Investing at $40 - $80 level arguably made sense (or at least was a high risk but high reward strategy). As you say though, buying in at $370 is frankly just insanity/pure gambling - as much as I like the story of this company, there is no way it is currently worth anything near $20bn.
And whilst I really enjoy reading through WSB posts and liked the GME idea from when I first read about it a couple of months ago, some of the posts now saying "it will go to $10,000" or "invest to destroy the class system" are frankly quite irresponsible. I get that it's free speech etc, but there will be retail investors now who invest money they can't afford to lose and see 75-90% of their investment vaporised.
Yeah, no doubt about it....this thing is going to get very ugly very fast. Was browsing WSB the other day, and it just gets more sad the longer I read into it. The average WSBer I'm guessing is a male in his mid-twenties, liberal, working a low-paying job aka not so well off. I've read some comments saying things like "even $10,000 will change my life"....and the vibes I'm getting are that a lot of these naïve guys are throwing everything they've got into this, as they see this as being their "big break". I hope this situation doesn't completely screw them over, but this is a bubble waiting to burst.
While the events which took place were within the legal confines of being able to artificially drive up a stock price through targeted mass buying of individual securities (ie. can't charge anyone on market manipulation because it was done thru an anonymous forum), I do not think this was an "awakening" or "mass democratizing" of the broader market. In reality and in my opinion, this was a pump and dump scheme which instead of being driven by some sketchy brokerage group was driven by a mass of anonymous forum users. We can't fault people for doing so given they were completely within their rights artificially driving prices by pile-driving these stocks down the throats of everyone on r/wallstreetbets but I think the notion of this being a tipping point in the financial industry is a bit misguided given the quality, institutional ownership, and ability of retail investors to move the price for the individual securities in question was precarious as best. While I agree that HFs have had the ability to do so (even at more macro levels most of the time), I am not here to argue whether or not that is okay. I am just not comfortable with people thinking that the week's events with GME / AMC etc have moved the needle as far as the say of an average retail investor goes. This week did prove that HFs can be more vulnerable than previously thought forsure but to say that it is a paradigm shift is just a bit acute in thinking. Maybe I'm wrong though, we'll see.
I will say though I was shocked by the brokerages curtailing buying of the hot shares as I've never heard of a retail trading platform making an effort to stabilize a certain market. Some senior folks I've talked to believe it was a government-led initiative to have them do so given that was the only way for them to halt the market maniupulation the way they saw it.
Just a few musings above, happy to debate or hear out any other arguments.
Hey,
liked your take, but there's something you don't understand.
WSB was founded to create a community for the people that are responsible for the non-linearity at the right tail of the risk-aversion spectrum, ie. people who are willing to go all in on 25 to 1 bets that will either end up 10x in the next week or -95%.
The whole concept is about posting loss porn and being politically incorrect. Sometimes winning but mostly loosing. Long-Run EV=0
Interestingly, as the sub grew in popularity, it started to move the market. Buyers and Sellers. If they all make the same bets then its likely that they will actually win:
1. They are many
2. Algos/Technical traders are going to join 50% of the way up.
3. Insitutional investors/ETFs that have systemic strategies wont change them because its 'artificial', so they join in as well
This started to make sense to smart people, less degenerates if you will. So they started contributing more and more.
In fact,there are some nice DDs by frankly brilliant investors that have never got a shot at working in finance because of the whole selection process, and not all smart people have the patience and the ability to handle corporate bullshit over 10+ years. Think about it, spring weeks/summer internships...-> Sellside -> Buyside. The process is getting so competitive that its not about how well you actually understand finance but more about how well you understand the selection process. This completely crowds out the most talented people, and the actual money makers - why would they go through all of this when they can just prove they know what they are doing by setting up an account and trading. They have no incentive to do pitchbooks, interviews, networking for years just to end up blocked because the 50 year old partner isnt going anywhere for the forseeable future. Instead, they can go for high-risk high reward. This a hyperbola but i think its interesting to think about, and I believe I've heard that a lot of banks are starting to second-guess how they select people (MS MD).
This means that only the mediocre++ investors with the best profiles on paper get the foot in the door, they may be very smart, but they often are not allowed/expected to be creative and modernize financials services. They are advantaged by the current system, so they just learn how to exploit it as much as possible. How many PE firms get payed for pretty terrible returns, how many asset managers can't beat the S&P, how many deals are actually beneficial ?. This is pretty terrible service they are providing to the broader population, especially since they are in charge of money, which is pretty important to most people. Fancy words and concepts make it sound like its actually really hard, like quantum physics, but these kids are proving that it isn't. Buyers and Sellers, that's it. Finance is an essential part of the economy, as it allows to smooth consumption over time, build capital to create generational wealth, connect investors and entrepreneurs, manage idiosyncratic risk. It has never been about generating the most returns possible, and the only reason most people in finance make so much is because they control the money. If finance was about rice than everyone would be fat and not rich.
At the limit, this breaks into revolutions of some sorts, because the smart money becomes dumb, and increasingly concentrated and the dumb money becomes smart, and increases in % of pop. This is litterally what the french revolution was about: people becoming smart. The famine was just the trigger.
I don't have any say in this, I'm just truly passionate about economics and finance, and I found that this relationship is interesting.
The funny thing however, is that it is basically a sub for retarded people that was the catalyst. People like to talk about changing the world, protesting etc... But obvisouly the only way to ever change the world is economic incentive. The 'normie' lefty redditors just appropriated what was essentially the trade of the century and turned it into a class thing. The retards created the incentive, and the normies created the justification. Economic incentive always comes first.
However, this would have never happened if there was no stock manipulation. IF shorts just covered and got squeezed, this would have gone to 1.5K perhpas in a few days and crashed back down to say low 100s and eventually to the 10-40$ level which is where the stock should roughly trade.
The funny thing is we are a generation that watches youtube, we know about darkpools, fraud, order type, what High-Frequency trading really is, Flash Crashes, CDOs etc.. because information flows easily, and we completely get it because our childhood was marked by these events. So when we saw the various manipulations, how could you not go crazy. Its more than just robinhood !
- I was looking at the ticks on NOKIA stock because the US pre-market was moving the open market in the EU (Friday moring UK time), MACD/RSI were showing volume supported bounces, were bullish like I have never seen before, basically indicating that the markets was full of buyers and incresingly so, but the price tanked hard repeatidly in very short time frames, with no volume to support it. This is called short-ladders, people selling to each other in darkpools to mimick sell-offs and to trigger margin calls. They don't need much shares, but they need to be able to trade fast between themselves. Obviously, Algos were probably accentuing the roller coaster.
- The bots that were trying to spread out the gamblers
But the point is it was so flagrant that you could just guess it from the chart, and its not like nokia is that bad of a company, there is a bull case with 5G. What's the case for agressively shorting it? Taking money from the retail guy who is generally young, and just trying to make a small buck. The problem is they think the crowd doesn't get it. The crowd definitely does, and they don't listen to the TV, nor to politicians. This won't end well...
Basically, the problem is that the funds that try to screw the little guy out of ego, proving their own incompetence and lack of elegance at the same time. And not to anyone, but to millions of young adults who in essence represent the future of this country.
The financial industry is selling its own future short, which just tells you how stupid they really are. Litterally 60+ year old boomers trying to prove that they are smarter by trying to blow up 20 year old kids, and failing to do so even though the game is rigged in the favour. Step back for a moment and think about it rationally. Forget about efficient markets, free trade etc. Would you try to prevent your son from getting rich ? This is disgraceful.
Back to your point, I think you don't realize this a lose-lose for the financial industry.
GME collapses -> Transfer of 15b+ of Wealth from struggling middle-class americans , to hedge funds that are already rich. Do you think people are going to go to work the next day and just forget about it ? Also, that money is going to flow from people who would have used it consume/invest, to people who are going to save it. This makes absolutely no sense.
In my opinion, this is going to get crazy.
Actually the reddit page has published due diligence using fundamental and technical analysis. After the media turned it into a frenzy then it became just a buying craze to fuck institutional money. I low key am happy to see people band together to put corruption of the so called “free market” in the spotlight. Anyone shitting on this should go live in China. And the jackass who said 2 wrongs don’t make a right are the reason tyranny prevails. Because they believe wrong should only be committed by the top. Anyway although I am part of the industry these people are blaming I don’t disagree with them. Our employers have fucked the taxpayers of this country for long and only abided by market fundamentals when it suited them. Capitalism is about an equal chance to be a winner or a loser. Not to manipulate the system to always win. That is just corporate totalitarianism. Also these members openly acknowledge they might lose money and at this point are investing on principle.
How is this accurate at all? Why can’t we just say that clearly hedge funds and “too big to fail” banks are in the wrong in these scenarios, but so are the retail investors on Reddit pumping GME to kids around the world who are gonna lose a lot of money. The perpetuation comes from people that want to demonize a single party, when another is wrong, which leads to clear fallacies in an argument if you don’t acknowledge both sides.
That’s the problem with people nowadays. It’s one or the other. Both parties are wrong and both should get penalized.
Your view is not reflective of reality. We’ve been saying this for literally decades about hedge funds and nothing changes. Ever. Fucking Steven Cohen is part of this saga. Are you kidding me?
So the only way to make it fair is to allow all classes of investors the opportunity to play the same game. Hedge funds blatantly manipulate markets all the time. If the WSB crowd sees an edge then they should be allow to exploit it until Gabe Plotkin is eating dinner in a soup kitchen.
All this talk about the need for “regulation” on the major networks is complete bullshit. Only a fool would trust government to step in and truly curb hedge fund market manipulation.