r/WSB is taking advantage of dumb kids

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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Comments (84)

Jan 28, 2021 - 8:25pm

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. 

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  • Intern in IB - Gen
Jan 28, 2021 - 8:27pm

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.

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Jan 28, 2021 - 8:52pm

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. 

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  • Analyst 1 in IB - Ind
Jan 28, 2021 - 9:49pm

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.

  • Analyst 1 in IB-M&A
Jan 29, 2021 - 2:17am

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. 

Jan 30, 2021 - 2:36pm

I think the difference between Ackman/Icahn and WSB is that the oldheads did that as single actors, not as a group of individuals encouraging other buyers to ignore fundamentals and to continue buying in effect to manipulate price to produce the desired outcome which I'm not entirely sure what that is yet - seizing the means of production by way of proletariat revolution and beheading the hoarders of capital (or something like that I'm guessing...)

Hear me now, children, for my occupation is of much import. For 82 years I have been an oil man, a ‘baron’ some have called me. Now what does an oil baron do? The answer - crush your enemies! Grind their bones into dirt! Make them regret that they were ever born! Oil is not for the weak - it is the Earth’s milk, and only the strong may suckle at Mother’s teat!

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  • Intern in IB-M&A
Jan 29, 2021 - 2:10am

He cashed out $14mm at the top I think. Still very impressive, but it's something you need to keep in mind. He has actually been buying crazy out of the money options in GME since 2019. He started off with $50k in 2019, kept reinvesting until it was worth $700k, that went up to $50mm, then he cashed out the $14mm.

Jan 28, 2021 - 9:50pm

Exploiting the weak of heart and mind is the basis of Capitalism - welcome to the real world, kids.

...and the Truth shall set you free
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  • Intern in S&T - FI
Feb 1, 2021 - 2:51am

These "Fuck Wall Street" folks are gonna learn it the hard way. Turns out the capitalists sold the socialists the ropes to hang themselves, not the other way around.

  • VP in IB - Gen
Jan 29, 2021 - 2:03am

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!

Jan 31, 2021 - 4:19am

these arent the original autists, the ones who discovered robinhood infinite leverage are(imagine if some grog levered up to  1 billion lol) ....

the ones in now are mostly FOMO bagholders

Jan 29, 2021 - 6:05am

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. 

The answer to your question is 1) network 2) get involved 3) beef up your resume 4) repeat -happypantsmcgee

WSO is not your personal search function.

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  • Prospect in IB - Gen
Jan 29, 2021 - 6:57am

Totally agree. People can say a coordinated short squeeze and pump and dump is market manipulation but this happens all the time and the SEC turns a blind eye. However what happened on Thursday with the brokerages halting the buying of certain stocks is insane, and then the Robinhood CEO not giving a proper reason as to why they did it. I think most retail investors know that they risk all the money they put into it (just the same as gambling) so the "we are protecting retail guys" is a lame excuse. Will be interesting to see the fallout over the coming weeks.

Jan 29, 2021 - 7:55am

It's not a lame excuse. Who do you think the greater fools would be? The professionals or the retail guys. My money says that letting this thing rampant would have left retail investors holding the bag. Let's say this thing went up into the thousands, that's 10s of billions of dollars that many "fool" retail investors would be losing when this thing inevitably plummets.

Jan 29, 2021 - 7:49am

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?

Jan 29, 2021 - 7:51am

Leon Dragonov

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?

This would make sense if they halted trading for everyone... not just retail. But they didn't do that they only stopped trading for retail. You have to ask yourself why.... 

The answer to your question is 1) network 2) get involved 3) beef up your resume 4) repeat -happypantsmcgee

WSO is not your personal search function.

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Jan 31, 2021 - 4:06pm

Depends on where you go on reddit to discuss finance/economics/markets.

/r/WSB = professionals pretending to be dumb amateurs 

/r/investing & /r/stocks = dumb amateurs pretending to be professionals

Hear me now, children, for my occupation is of much import. For 82 years I have been an oil man, a ‘baron’ some have called me. Now what does an oil baron do? The answer - crush your enemies! Grind their bones into dirt! Make them regret that they were ever born! Oil is not for the weak - it is the Earth’s milk, and only the strong may suckle at Mother’s teat!

Jan 29, 2021 - 11:22am

So do universities. Where's the outrage?

Never discuss with idiots, first they drag you at their level, then they beat you with experience.

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Jan 29, 2021 - 12:06pm

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.  

  • Intern in PE - Other
Jan 29, 2021 - 12:20pm

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.

Jan 29, 2021 - 8:37pm

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.

Jan 29, 2021 - 10:18pm

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.

Jan 30, 2021 - 1:45pm

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.

Jan 31, 2021 - 3:55pm

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.

  • Analyst 2 in IB - Ind
Jan 30, 2021 - 1:30am

I hate CNBC always talking about the market manipulation, inefficient markets, fundamental value, protecting the little guy blah blah blah how bout we blame the HFs who crowded into the same position with none of them thinking to stop hey we're all massively on one side of this trade, maybe we need some risk management here and shouldn't keep shorting a stock thats 140% shorted. A lot of talk from the talking heads about the GME bubble that will burst at the top, but what about about the bubble the HFs created at the bottom by artificially driving the stock too low with massive short positions. But hey they were all too busy making money hand over first. Why doesn't CNBC cry about protecting the HFs from themselves from their own dumb trades, over leveraging and group think rather than retail investors. Yes but let's put more regulation and restrictions on the retail investors, that way the current market makers keep their power and "efficient markets". What a bunch of BS. If you think otherwise you clearly been brainwashed by big media to trust in the system and that they're looking out for our best interest

Jan 30, 2021 - 2:16am

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.

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Jan 30, 2021 - 3:59am

agree with most of your take. I disagree though with the idea that we can't fault people for pumping the stock given that they were within their rights in doing so, if you are saying that we can't fault them morally (I agree that we can't fault them legally). the GME pumping is no less objectionable than some sketchy brokerage group pumping a stock IMO. there are stupid people who are going to buy, at the very top, because they saw rocket ship memes posted by a GME pumper. at first I was going to say that it's only objectionable if the rocket ship meme posters are people who got in closer to the bottom but then I thought about it some more and I changed my mind to now thinking that it's objectionable to be pumping even if you bought at the top. just because you are too stupid to realize that it's not a good idea doesn't mean that it's harmless to try and convince someone else to join you.

Jan 30, 2021 - 4:04am

Yeah I agree but I'm not even trying to touch the ethics of what took place - more just saying that technically what they did was legal by and large. Not saying we should or shouldn't fault them, though seeing it as what it is - a pump and dump - it's easy to do so. 

Jan 30, 2021 - 11:09am

I think people will have different views in a month or two after this plays out and we see who the bagholders are on the return back to reality. Every short squeeze comes back down and anybody buying GME right now is most likely to get screwed if they hold. Just a matter of who is the greater fool and I am guessing it will be many of the retail investors that everyone is glorifying. I could be completely wrong and GME stays at ridiculous valuations forever...........

I do worry about broader function of the system in general. This is not just GME but 10-12 other stocks. Cost of capital for the market will go up if this volatility persists and people just keep moving to the next stock to pump. CEOs make out like bandits here, and get to sell stock. 

Jan 30, 2021 - 1:40pm

TheBuellerBanker

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.

Not sure why this got monkey sh*t as 100% agree (SB'd). On the one hand I'm very happy to see retail investors for once triumph over a hedge fund, and what Robinhood did last week was frankly appalling.

On the flip side, the GME share price is getting to the point where new retail investors are ultimately going to be seriously burned at some point. I'm not a GME investor or a WSB poster but have followed it on the site out of curiosity for the past couple of months. The initial thesis made a lot of sense - hedge funds such as Melvin Capital had got greedy and shorted the stock excessively, plus Ryan Cohen from Chewy now owned a big stake in the company and had got on the board. So the prospect of the price jumping from $20 - $50 (or even $100) didn't seem unrealistic at all, and I was pretty happy/amused when it happened.

Now though the stock is close to $400, valuing GME at over $20bn. This is just a bubble pure and simple - whilst I have no sympathy for the hedge funds who got greedy over-shorting this (and think Robinhood tried to screw over retail investors big time), ultimately this is going to end in tears. WSB membership has gone from 2m to 6m+ as of today, and now every post on there is about how GME stock price is going to reach $10,000 a share.

Even if GME is worth maybe $5bn accounting for the Cohen factor (which is still 6x higher than it was a couple of months ago) then new investors getting in today face a 75-80% loss at a minimum when the price falls to earth. I actually find WSB quite interesting/amusing to read a times, and personally I think it would be better for the credibility of the sub long-term if the price had gone to $100 (up from $15) and stayed at that level for a few months. Whereas what will inevitably happen now is the price will eventually drop 80-90% and all those retail investors who went in at the top will lose everything.

  • Prospect in Consulting
Jan 30, 2021 - 4:01pm

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.

Feb 2, 2021 - 11:12pm

Thanks and I agree with you. Looks like we are beginning to see GME fall already... but on the other hand now the wsb crowd is headed into silver. Let's see where that goes now.

Also agree that Robinhood did not do right by their users although they are linked with Citadel executing like 60% of their trades which would explain them regulating the squeeze - though I can't verify how accurate that is.

Jan 30, 2021 - 3:57pm

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. 

  • Analyst 1 in IB - Ind
Jan 30, 2021 - 5:03pm

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.

Jan 30, 2021 - 7:39pm

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.  

Jan 31, 2021 - 9:43am

I understand what you are saying but how is this short squeeze initiated by a bunch of retail investors illegal when we allow hedge funds to do it. Icahn did the same thing to ackman on the Herbalife trade. There are many other less popular ones where fund managers went on CNBC to hype retail to also follow suit. No SEC investigations there so what's the problem here? That it's the little guy learning to play the game. 

Jan 31, 2021 - 1:42pm

a number of hedge funds have been shorting GME around $300-350....so if it goes up to $1000, the buyers will be these new hedge fund shorts getting stopped out.

just google it...you're welcome
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Jan 31, 2021 - 1:48pm

I saw some guy who took his ~40k dental school loan to buy GME at like 200-300.... I'm not one of the people that think retail traders need to be "protected" or anything like that, but people are about to learn the hard way that this is dangerous and you can get burned very fast 

Jan 31, 2021 - 3:09pm

Jeez. That certainly doesn't sound like a very smart decision... I could definitely be wrong but I think that it's wayyyyyy too late to be buying GME shares now. 

Jan 31, 2021 - 10:03pm

This is a little different from a pump and dump. You really couldn't do this to any other company. This was only possible when the hedge funds went to 140% short interest. Think about that for a second. They have guaranteed that they will buy 140% of available gamestop shares. This is the most beautiful expression of simple market dynamics I've ever seen. Supply and demand. Buyer and Seller. The problem with pump and dumps is that you create artificial demand and then there are no buyers left for the inflated price. I would argue that the hedge funds have created real demand for the shares with their position. The bull thesis was that the hedge funds have generously offered to be the buyers so now the market is holding them hostage.

A market is determined by a buyer and a seller agreeing to a price. But what happens when the buyer waives their right to an agreement? When the hedge funds went 140% short, the shares of Gamestop had theoretical infinite value. Please let me know if I'm misunderstanding something.

Feb 1, 2021 - 5:33am

They don't have to buy back more stocks than the ones floating around. Think about it as a chain of shorts: if I short 140% of 10 stocks, all I'll have to do is to buy 10 stocks and then hand them back to its owner, of whom 4 stocks have been shorted again, so that player has to return 4 of those shares again. That's how this number is possible. It's more like a chain. Still a bad situation as it's hard to get the stocks currently as the WSB people apparently are only holding them to screw the HF over, but overall it's still manageable (and a bearish sentiment will at some point kick in, but until then a couple of HF will have left the market). Once a sustainable downwards trend sets in the whole thing will very likely very quickly implode. A few guys at WSB will make out like bandits, a few hedge funds are enjoying the situation as well (see Silver Lake / AMC), and a lot of retail guys will suffer

Feb 5, 2021 - 5:21pm

Hear me now, children, for my occupation is of much import. For 82 years I have been an oil man, a ‘baron’ some have called me. Now what does an oil baron do? The answer - crush your enemies! Grind their bones into dirt! Make them regret that they were ever born! Oil is not for the weak - it is the Earth’s milk, and only the strong may suckle at Mother’s teat!

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