I get this knee jerk reaction but there is something to be said about the risk analysis, sophistication, etc of said hedge funds. They’re not gambling in the same sense, but sure in some sense they are. Even having an entry level “risk model” is more sophistication than most home traders.
Derivatives involves a lot of betting. It also involves legitimate hedging. A farmer can lock in their revenue, and a manufacturing company can lock in exchange rates.
While the title might be true for the "amateur investors" that got in early, I strongly believe that most of them are not outwitting anyone and will be bagholders. As of this post basically everyone who bought yesterday are underwater by 50%.
Not being in the US I don't know this but can Robinhood be sued, like a lot of people seem to be calling for, just for refusing to handle trades on a stock?
Which can be viewed as market manipulation. I'm not in US either but it looks pretty dodgy on their part. A key message of all these new trading platforms is that your capital is at risk. Their users know this, so why are they restricting trades?
The T&Cs will almost certainly allow them a huge amount of latitude in what they will let people do with their platform.
Although if a decent amount of retail investors lose money as a result of not being able to sell stock they already own then the blood is in the water for a class action. Saul Goodman is waiting for your call!
Outwit certain parts of wall street, maybe. Any hedge fund making money off of deal flow is gonna make a huge profit when there's a big spread between buy/sell prices.
"It seems meaningless to talk about the price of GameStop stock, as though a single number could represent such an elusive concept. GameStop stock has all the prices at once."
We will be reading "I lost all my savings" posts in a few days on reddit. It is for sure GME will hit 30, and those bought it at high will be sharing their real life pain instead of memes.
How sure are we that this is really being driven by "amateurs" and not by scammers running a pump and dump scheme under cover of a grassroots phenomenon?
A stock actually has a calculable estimate of value, you know. It's the sum of future cash flows. Gamestop has been losing money for years and their outlook as a brick and mortar retailer for items that are now sold online is poor. The short sellers are correct. The business of Gamestop is bad and it's equity will be worth nothing. A short squeeze isn't going to change that in the long term.
The problem with GME starts with the funds that managed to accumulate a 140% short interest in the stock.
Send those people to jail for illegally issuing unregistered shares of a security, or counterfeiting shares of a security, because everything that happened after that point is entirely their fault.
Alternatively, fine them $10B and issue it as a dividend to the shareholders that bought and held after Jan 1.
I liked Ars Technica's analysis of what happened. The TL,DR is that if a company's stock is so heavily shorted, so much so that the number of "borrowed" shares exceeds the number of liquid shared available, and it is not on the verge of going bankrupt, this kind of short squeeze is possible and you can get a feedback mechanism going to make the price soar, at least in the short term.
If Wall Street wants to address this, they could put limits on the number of shares that can be shorted.
[+] [-] dang|5 years ago|reply
For pointers into the massive graph of submissions on this topic, see https://news.ycombinator.com/item?id=25933543.
[+] [-] marcus_holmes|5 years ago|reply
Yep. Agreed. Spot-on. That's what Wall St does. If you don't like it, try and stop it. But for everyone, including the hedge funds.
Treating the derivatives markets like a casino (and taxing appropriately) sounds like a great idea.
[+] [-] parhamn|5 years ago|reply
You can’t just dismiss all that as nothing.
[+] [-] boxed|5 years ago|reply
[+] [-] mathattack|5 years ago|reply
[+] [-] gruez|5 years ago|reply
[+] [-] Out_of_Characte|5 years ago|reply
The hedgefunds should definitely take note not to play a dangerous game because losing is always on the table.
[+] [-] WrtCdEvrydy|5 years ago|reply
everyone who bought yesterday is fighting exchanges whose only option for GME is "sell" because buying is restricted.
I don't know how some of these shorts will find 20 million shares by tomorrow.
[+] [-] rasz|5 years ago|reply
[+] [-] unknown|5 years ago|reply
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[+] [-] ButterWashed|5 years ago|reply
[+] [-] otaconjh|5 years ago|reply
[+] [-] multjoy|5 years ago|reply
Although if a decent amount of retail investors lose money as a result of not being able to sell stock they already own then the blood is in the water for a class action. Saul Goodman is waiting for your call!
[+] [-] randmeerkat|5 years ago|reply
[+] [-] lldbg|5 years ago|reply
[+] [-] gchokov|5 years ago|reply
[+] [-] newfeatureok|5 years ago|reply
[+] [-] chadash|5 years ago|reply
[+] [-] betterunix2|5 years ago|reply
[+] [-] lisper|5 years ago|reply
[+] [-] nubb|5 years ago|reply
[+] [-] cbozeman|5 years ago|reply
[+] [-] beervirus|5 years ago|reply
"It seems meaningless to talk about the price of GameStop stock, as though a single number could represent such an elusive concept. GameStop stock has all the prices at once."
[+] [-] jonatron|5 years ago|reply
[+] [-] jpxw|5 years ago|reply
I’ve read posts on /r/WSB where people talk about having put all of their savings into this.
I only hope that they’re just teenagers with little savings.
[+] [-] system2|5 years ago|reply
[+] [-] vannevar|5 years ago|reply
[+] [-] throwaway5752|5 years ago|reply
[+] [-] zaroth|5 years ago|reply
Send those people to jail for illegally issuing unregistered shares of a security, or counterfeiting shares of a security, because everything that happened after that point is entirely their fault.
Alternatively, fine them $10B and issue it as a dividend to the shareholders that bought and held after Jan 1.
[+] [-] not2b|5 years ago|reply
If Wall Street wants to address this, they could put limits on the number of shares that can be shorted.
https://arstechnica.com/gaming/2021/01/the-complete-morons-g...