(Sorry for the annoying repetition:) Large threads are paginated. To see all the comments, you'll need to click More at the bottom of each page, or do this sort of thing:
After the crash of 2008, I spent some time working with Dick Fuld. Yes, the former head of Lehman Brothers. Yes, the one people describe as “disgraced,” among other terms. Here’s the irony, though — Dick was one of the only people I encountered at that level of business/finance who wasn’t a scumbag. Unlike so many virtue-signaling Silicon Valley darlings, the guy behind the curtain was an honorable dude. And again, that’s a direct account from someone who has no vested interest or a book to sell or anything of that sort.
Dick and I worked closely together, one on one. After enough time, after he trusted me, I finally got to ask him about what the hell actually happened. The man had a ton of PTSD — and probably still does — but eventually it became clear that the real story was completely, utterly, unbelievably stupid.
Yes, Lehman was doing a bunch of stupid stuff, and the management under Dick were behaving like cowboys. But at the end of the day, that was the entire market at that time. What sunk Lehman was, in the end, a decision by all of the other big banks and the regulators that they’d let Lehman die because of something that might be best summarized as “lol idk sorry Dick but we’re just gonna let you go and let the Fed bail the rest of us out sorry bro lol.” Like really. That’s how it went behind those closed doors in the lairs of the lizards that control the universe. Lehman had already suffered near-death in 1994 — the world has now forgotten that Dick was the hero that saved the firm back then — and now it was to be made a sacrificial lamb for everyone else’s benefit.
Why am I telling you this story? What is the point? Well, what I am trying to say is that these supposed “adults in the room” who are so much smarter and better than the the “retail investors” are pretty much the same sort of immature, self-centered children as the other side. The difference is, they’ve got the regulators and the politicians in their pockets. So when they say “lol oops” and literally blow up the global economy to save face, nothing happens to them. But for some reason when it’s the retail guys, a moral panic ensues.
In my eyes, the Internet-connected retail investor is learning the power of what I call “massively multiplayer liquidity.” Yes, there’s some growing pains, but let’s not kill this wild new phenomenon before we learn what it can do. Because, from what I’ve seen from the other side of things, I doubt these self-styled “retards” will ever end up as depraved and corrupt as the people they’re disrupting.
Play ball, kids. And as Dick always used to say, “don’t get left with nothing other than a ham sandwich.”
There’s a long history of similar occurrences that follow along a common line: whatever appears to support individual investors will be the path taken by politicians and regulatory bodies.
Right now it appears that the public wants to be able to trade on their terms because there is this narrative that the little guy is finally sticking it to the big bad hedge funds. In reality there is probably very little truth to this. However, support for the individual investor plays extremely well which is why you see politicians from both sides joining forces on this issue. A rumor makes it halfway around the world while the truth is still putting its pants on. Nobody is interested in the subtleties around these issues where there almost certainly should be regulations in place or at least warnings from those who do actually know better. But late in bull markets when speculation is running wild those who try to be the voice of reason are run over by the masses until they shut up and go away.
Galbraith wrote about this in the 1950’s and if you read his account of the 1929 crash the parallels are eerily similar. Nobody wants to be told they aren’t making money due to skill but because they’re caught up in a dangerous bubble. In the aftermath of a crash when tremendous sums are lost, nobody blames the speculators, they always find another scapegoat- the regulators, the brokerages, the hedge funds- whomever. It doesn’t matter so long as the speculator is held up as a victim. I expect this to end no differently.
There's a hurried rush of small investors hoping to turn their meagre savings into a big win, backed by the anxiety that if they don't try then they'll forever regret missing their one and only chance at a comfortable life.
This sort of event would be less likely if America's wealth disparity weren't so grotesquely skewed.
I disagree. I think a big part of why this whole thing is fascinating is the depth. Yesterday morning, financial press were blathering generalities pinning WSB as market manipulators and calling for regulation to stop them. That is, stop retail investors trading at a scale that moves markets. IE, the stuff that insiders get away with regularly.
Between yesterday afternoon and now, millions of people have been catching up on the detailed mechanics of stock trade execution. There's a mad dash from reporter to get interviews with brokers, clearing house operators & such.
Note that the maneuver itself was analyzed in detail, and in public. That's what allowed big names like Cuban, Musk, various politicians and such to take a side and comment on it intelligibly.
Ultimately, whoever is holding these meme stock shorts needs to buys stock to cover their positions. I acknowledge that brokers had legitimate/legal/normative reasons to stop retail buys. But, it's also true that they created a window where short sellers could buy without competition from retail investors. Maybe brokers are covered legally against market manipulation charges because clearing houses were genuinely short on liquidity. But, (1) that doesn't change what happened and (2) Isn't this the regulator's job?
The reason people are cheerleading is because of these shenanigans. "Rigged" gets thrown around often, usually it's devoid of subtlety. This time, it's detailed. We can debate the details and construction of the rig. Truths fly around reddit for an afternoon, and are discarded the following day.
Few people cheerleading because they want a no regulation, pre-depression stock market. They just aren't willing to accept a rigged system. In any case, who are the speculators here? Short sellers like Melvin or Redditors? Short sellers future-sold 140% of the stock... hoping for a crash and potentially creating one. Redditors recognized this by looking at publicly available information and discussing it in the open.
The narrative that retail investors have stuck it to hedge funds is laughable.
Who do they think is selling counter party is?
All they’ve managed to do transfer wealth from one hedge fund to another. And eventually when this pops they have transferred wealth from themselves to other winning hedge funds.
> there is this narrative that the little guy is finally sticking it to the big bad hedge funds. In reality there is probably very little truth to this.
Which part has little truth to it?
The big hedge funds are apparently losing money (billions!) on Gamestop, unless that's being mis-reported. Some of the "little guys" (reddit people) definitely were a part of the reason for that.
As much as there's a backlash of "it's ok when hedge funds do it" the GME situation is still an absolutely massive distortion. The company is still worth the same $11/share it was a few months ago. Maybe $20 if you think the new leadership will improve sales. It's not better because it's little guys doing it. It's still abusive.
In 1929 a series of events took place, and some of it took a while to happen (like Ford shutting down for a few months) that pretty much (not completely) eliminated retail accounts from both the stock market and actually from banking. Much of the public swore off checking and savings accounts, never mind owning stocks.
It seems like the big money is changing its clothes to pose as children in order to get priority on the life boats ("Women and children first!").
The social circle of firms closely connected to this ruin of Robinhood and which had been short GME are the speculators. Short for longer than intraday == speculative. Short as a market maker for an hour or two is good for efficient clearing.
It's on the guys with the big money to gather their fortitude and ride this out in the most-trust-inducing ways they can. I think the big money is naive if they think it could be otherwise.
One more thing, I am reminded that a lot of the time, a retail investor will buy something, a weak stock, and ride it down to zero out of misguided optimism. Conducting margin calls on zero notice is going to be toxic to such people and I don't think the finance world really wants that money to leave the market for good.
The very high and very speculative participation by retail investors is scaring me. I'm reminded of the story of the hedge fund manager who was getting a shoe shine, and the shoe shine boy was giving him stock tips. He closed out his positions and correctly called the top of the bubble[1]. I don't know if the story is true, and it is just an anecdote anyway. But historically this kind of activity does mark the end of bull markets.
At the same time I keep hearing that the stock market is actually undervalued on average given current interest rates - and those aren't going to change anytime soon.
Definitely things are frothy and there are bubbles in some stocks, but maybe this market still has legs - at least while the fed is buying 120 billion of debt each month.
Many might be FOMOing, but few want to be told that they're too dumb to be given this power. Clearly the experts themselves don't know when they bite too much (as seen in 2008) lets spare the common adult some decency and allow them to bankrupt themselves if they wish to do so. America was a great place precisely because of this freedom
Nope, the narrative has been building for the last two days that this was all perpetrated by fascist white supremacist deplorables... so it is no mystery which side Democrats will pick. Republicans will do the same for more classically stereotypical reasons.
The hedge funds are the speculators in this case. They're playing a dangerous game where you can short more stock than what actually exists. Why this is allowed? Who the fuck knows.
That’s where we ended up after 1929, until the current billionaire class removed all the guard rails.
Nobody deep on SV stocks and unicorn chasing wants to admit they’re in the bubble too. Why does society owe floating a coder bros data science project?
Anything not science is a meme. That billionaires should exist is a meme. This is social philosophy, not truth. And it’s gamed.
America is a bubble in time and it’s having a real (environmental) impact on the future.
Billionaires are not experts. They’re rich and can pay the fines and schmooze. That is not expertise. It’s selling “free market” and manipulating it based on a meme that speculative finance expertise is real. All it is is social engineering of the masses to accept deflation of their economic position.
> Right now it appears that the public wants to be able to trade on their terms because there is this narrative that the little guy is finally sticking it to the big bad hedge funds. In reality there is probably very little truth to this.
The fact that buying was limited yesterday is evidence that the little guy is actually winning here.
Trading was stopped to save the hedge funds, because if they go under or lose too much, the clearinghouse has to front that. If the clearinghouse goes under the whole market will crash.
"The Commission will closely review actions taken by regulated entities that may disadvantage investors or otherwise unduly inhibit their ability to trade certain securities. In addition, we will act to protect retail investors when the facts demonstrate abusive or manipulative trading activity that is prohibited by the federal securities laws. Market participants should be careful to avoid such activity."
This should scare the crap out of Robinhood from what happened yesterday.
There's been some speculation that what WSB are doing could be market manipulation or otherwise illegal. The fact that this statement only mention retail investors in the context of protecting them makes me suspect that the SEC's not going for it.
> In addition, we will act to protect retail investors when the facts demonstrate abusive or manipulative trading activity that is prohibited by the federal securities laws. Market participants should be careful to avoid such activity.
"Market participants" here is referring to retail traders. Don't make the mistake of thinking that just because you're the little guy, you're exempt from the law. It's like how the capitol rioters were sure they were on the side of America but the FBI (and half of America) sees things very differently.
A lot of government regulation is about protecting the little guy from other slightly more unscrupulous little guys. "The public" is not a monolithic entity - folks can and do screw each other over even when purporting to be part of the same mass movement.
Could be? It's an open, publicly-documented market manipulation event. How can there be any question about it? You might decide that this kind of manipulation is OK due to it's stated goals, but that doesn't make it not manipulation.
Well... they will start by redefining "market manipulation" to encompass all activity they now consider disruptive (also suitably redefined). This is America today.
Doesn't "retail investors" refer to any individual, non-professional, investor? Sounds like to me the SEC is warning any party involved in this, RH and WSB included.
The map isn't supposed to be the terrain; Generating wealth isn't the same as generating money, and the stock market seems to exist almost entirely for the latter, at the cost of the former.
We're in a situation where playing in the market is a better strategy than using the market for its legacy purposes (you know, buying partial ownership in companies) and the number of financial tools created specifically to exploit the ability of wealth to generate additional wealth vastly out match everything else.
Anyway I've got paperhands and bailed on my positions days ago by following some old WSB advice that's actually worth while - "take your profits when you want to"
What are the odds of a flash crash in the next week as a result of this activity? The system of banks and market makers and clearing houses is a always way more coupled than the the owners let on... history shows they don't know how to risk manage these sorts of situations.
Newest from the front lines, Freetrade (UK trading app) just blocked buy orders for US stocks... but they explicitly pin it on "a sudden and unexpected decision by our FX provider, and their bank"[0]. In another statement, they also express their deep unhappiness about it[1].
Assuming they're being honest - and I see no reason to doubt it - it's refreshing, compared to Robin Hood's communications, and more importantly it highlights your point. The "backend" of the market seems way more coupled than I imagined it is.
From a distance, this is all a storm in a teacup. It's a small handful of stocks, and every single one in S&P500 is waaaay bigger, in terms of trading volumes and market cap.
Anything can happen, but in finance terms, this is tiny so far.
Barely more than zero because there are market circuit breakers now and broker dealers are supposed to be limiting order flow so that HFTs can't be submitting huge numbers of orders that are massively far away from what the security is trading at. Of course some broker dealers play much faster and looser than others but if shit really hits the fan the circuit breaker catches it.
"Likewise, issuers must ensure compliance with the federal securities laws for any contemplated offers or sales of their own securities."
If GameStop management was thinking of selling some shares to the public (or directly to those who really need shares to cover their shorts) at some crazy price they'll have to be careful.
AMC was lucky to have a lot of convertible debt outstanding which has been converted without any action on their part.
Is it my imagination, or did this SEC statement not actually, you know, actually say anything, except "we're the SEC, and we're going to do the thing that it's our job to do"?
extreme stock price volatility has the potential to expose investors to rapid and severe losses and undermine market confidence
It's not the SEC's role to protect investors from risk or losses, rapid or otherwise, and saying that the recent activity "undermines confidence" is just another way of saying "increases risk", which is not their job. They should ensure confidence by guarding against fraud, but not to protect against losses by institutions that never thought that activist investors would work against their own interests.
This isn't really manipulation that we're seeing: it's people betting against the institutions that themselves bet against companies combined with a fair bit of FOMO.
Protecting investors is literally the first part of the SEC's three part purpose statement.
The SEC came into existence because retail investors lost huge amounts of money in the 20's in speculative bubbles. The same thing is going to happen here so the SEC is literally doing what it was set up to do.
I can’t help but think about Bill Ackerman when I see stories about stock shorting and their dangers. Isn’t this exactly what Bill Ackerman did? He shorted Herbalife and then went on TV (there’s even a Netflix documentary) And he lost. How is that not market manipulation? What if Ackerman did not have a position in the company, would it not be market manipulation then? It seems like what Reddit did was stand on a soapbox in the public square and say buy the stock,
I don't understand the current lessons being drawn by the public from this situation.
I don't think shorting stocks (even to 140% of its float) is a bad thing. And, the hedge fund managers that shorted GME don't deserve to be bankrupt.
Shorting stocks, in general, is a beneficial action for the market because it helps prevent shares from becoming overvalued.
The problem that GME highlighted is that it's too easy to purposefully trigger a short squeeze.
One possible solution seems to be that the SEC should make it easier to borrow shares to short a stock. And, in so doing, they should make it harder to purposefully trigger a short squeeze.
There's nothing wrong with greed if it doesn't hurt others...The SEC's ultimate goal should be to have a fair and efficiently priced market at all times. In this case, it seems like the party that needs to be protected is the hedge funds....What am I missing?
Not knowing how hard it is to provide the service fo their "core market infrastructure," I couldn't tell if it was just a self-complimentary way to boast or genuine technical feet.
Regardless, the prominence of the note was strange and set an immediate defensive tone.
What made it really odd was the arc of tone to "Market participants should be careful to avoid such activity." An elegant threat.
It seems like Robinhood, when it stopped trading on GME, decided to literally transfer money from the WSB retail traders to the funds who were short on the stock. But if Robinhood needed to halt trading in order to just survive as a brokerage, (and could demonstrate so), would that justify its behavior? Does anyone know more about laws and regulations concerning brokerages here?
There's nothing all that new about this. Read "Extraordinarily Popular Delusions and the Madness of Crowds", which is over a century old. It describes all the classics - a pump and dump, a Ponzi scheme, a pyramid scheme, a "bubble", "tulipomania", etc - from the first time they appeared on a large scale.
These are mostly 19th century tricks. That's when finance and newspapers got big enough to make them work at scale. The SEC was established after the 1929 bubble got so big it took down the whole country.
Meanwhile, the latest thing on Reddit is pumping Dogecoin.
In all these things, the people who get in late and don't get out early are the losers. It's zero-sum, after all.
When a startup seeking a C round does it, it's
-disruption
- moving fast and breaking things
- seizing market advantage by nimbly circumventing slow-moving or antiquated regulation.
When a nihilistic stan does it, it's
- <various pejoratives>
- <motivated by ignorance or abuse or amorality of various types>
Argumentation over terminology, expertise, etc., is secondary,
to the ways in which this is about power, which informs every aspect of how, why, who, and what. Including the language used and appeals made by those who have it, traditionally have it, and defend it, against those who do not.
Many of the details being argued over are interesting mostly because argument over such details is another tool of the powerful.
[+] [-] dang|5 years ago|reply
(Sorry for the annoying repetition:) Large threads are paginated. To see all the comments, you'll need to click More at the bottom of each page, or do this sort of thing:
https://news.ycombinator.com/item?id=25957748&p=2
https://news.ycombinator.com/item?id=25957748&p=3
[+] [-] numair|5 years ago|reply
After the crash of 2008, I spent some time working with Dick Fuld. Yes, the former head of Lehman Brothers. Yes, the one people describe as “disgraced,” among other terms. Here’s the irony, though — Dick was one of the only people I encountered at that level of business/finance who wasn’t a scumbag. Unlike so many virtue-signaling Silicon Valley darlings, the guy behind the curtain was an honorable dude. And again, that’s a direct account from someone who has no vested interest or a book to sell or anything of that sort.
Dick and I worked closely together, one on one. After enough time, after he trusted me, I finally got to ask him about what the hell actually happened. The man had a ton of PTSD — and probably still does — but eventually it became clear that the real story was completely, utterly, unbelievably stupid.
Yes, Lehman was doing a bunch of stupid stuff, and the management under Dick were behaving like cowboys. But at the end of the day, that was the entire market at that time. What sunk Lehman was, in the end, a decision by all of the other big banks and the regulators that they’d let Lehman die because of something that might be best summarized as “lol idk sorry Dick but we’re just gonna let you go and let the Fed bail the rest of us out sorry bro lol.” Like really. That’s how it went behind those closed doors in the lairs of the lizards that control the universe. Lehman had already suffered near-death in 1994 — the world has now forgotten that Dick was the hero that saved the firm back then — and now it was to be made a sacrificial lamb for everyone else’s benefit.
Why am I telling you this story? What is the point? Well, what I am trying to say is that these supposed “adults in the room” who are so much smarter and better than the the “retail investors” are pretty much the same sort of immature, self-centered children as the other side. The difference is, they’ve got the regulators and the politicians in their pockets. So when they say “lol oops” and literally blow up the global economy to save face, nothing happens to them. But for some reason when it’s the retail guys, a moral panic ensues.
In my eyes, the Internet-connected retail investor is learning the power of what I call “massively multiplayer liquidity.” Yes, there’s some growing pains, but let’s not kill this wild new phenomenon before we learn what it can do. Because, from what I’ve seen from the other side of things, I doubt these self-styled “retards” will ever end up as depraved and corrupt as the people they’re disrupting.
Play ball, kids. And as Dick always used to say, “don’t get left with nothing other than a ham sandwich.”
[+] [-] dkrich|5 years ago|reply
Right now it appears that the public wants to be able to trade on their terms because there is this narrative that the little guy is finally sticking it to the big bad hedge funds. In reality there is probably very little truth to this. However, support for the individual investor plays extremely well which is why you see politicians from both sides joining forces on this issue. A rumor makes it halfway around the world while the truth is still putting its pants on. Nobody is interested in the subtleties around these issues where there almost certainly should be regulations in place or at least warnings from those who do actually know better. But late in bull markets when speculation is running wild those who try to be the voice of reason are run over by the masses until they shut up and go away.
Galbraith wrote about this in the 1950’s and if you read his account of the 1929 crash the parallels are eerily similar. Nobody wants to be told they aren’t making money due to skill but because they’re caught up in a dangerous bubble. In the aftermath of a crash when tremendous sums are lost, nobody blames the speculators, they always find another scapegoat- the regulators, the brokerages, the hedge funds- whomever. It doesn’t matter so long as the speculator is held up as a victim. I expect this to end no differently.
[+] [-] dleslie|5 years ago|reply
There's a hurried rush of small investors hoping to turn their meagre savings into a big win, backed by the anxiety that if they don't try then they'll forever regret missing their one and only chance at a comfortable life.
This sort of event would be less likely if America's wealth disparity weren't so grotesquely skewed.
[+] [-] dalbasal|5 years ago|reply
I disagree. I think a big part of why this whole thing is fascinating is the depth. Yesterday morning, financial press were blathering generalities pinning WSB as market manipulators and calling for regulation to stop them. That is, stop retail investors trading at a scale that moves markets. IE, the stuff that insiders get away with regularly.
Between yesterday afternoon and now, millions of people have been catching up on the detailed mechanics of stock trade execution. There's a mad dash from reporter to get interviews with brokers, clearing house operators & such.
Note that the maneuver itself was analyzed in detail, and in public. That's what allowed big names like Cuban, Musk, various politicians and such to take a side and comment on it intelligibly.
Ultimately, whoever is holding these meme stock shorts needs to buys stock to cover their positions. I acknowledge that brokers had legitimate/legal/normative reasons to stop retail buys. But, it's also true that they created a window where short sellers could buy without competition from retail investors. Maybe brokers are covered legally against market manipulation charges because clearing houses were genuinely short on liquidity. But, (1) that doesn't change what happened and (2) Isn't this the regulator's job?
The reason people are cheerleading is because of these shenanigans. "Rigged" gets thrown around often, usually it's devoid of subtlety. This time, it's detailed. We can debate the details and construction of the rig. Truths fly around reddit for an afternoon, and are discarded the following day.
Few people cheerleading because they want a no regulation, pre-depression stock market. They just aren't willing to accept a rigged system. In any case, who are the speculators here? Short sellers like Melvin or Redditors? Short sellers future-sold 140% of the stock... hoping for a crash and potentially creating one. Redditors recognized this by looking at publicly available information and discussing it in the open.
[+] [-] unicornmama|5 years ago|reply
Who do they think is selling counter party is?
All they’ve managed to do transfer wealth from one hedge fund to another. And eventually when this pops they have transferred wealth from themselves to other winning hedge funds.
[+] [-] FartyMcFarter|5 years ago|reply
Which part has little truth to it?
The big hedge funds are apparently losing money (billions!) on Gamestop, unless that's being mis-reported. Some of the "little guys" (reddit people) definitely were a part of the reason for that.
[+] [-] tootie|5 years ago|reply
[+] [-] cardiffspaceman|5 years ago|reply
It seems like the big money is changing its clothes to pose as children in order to get priority on the life boats ("Women and children first!").
The social circle of firms closely connected to this ruin of Robinhood and which had been short GME are the speculators. Short for longer than intraday == speculative. Short as a market maker for an hour or two is good for efficient clearing.
It's on the guys with the big money to gather their fortitude and ride this out in the most-trust-inducing ways they can. I think the big money is naive if they think it could be otherwise.
One more thing, I am reminded that a lot of the time, a retail investor will buy something, a weak stock, and ride it down to zero out of misguided optimism. Conducting margin calls on zero notice is going to be toxic to such people and I don't think the finance world really wants that money to leave the market for good.
[+] [-] eloff|5 years ago|reply
At the same time I keep hearing that the stock market is actually undervalued on average given current interest rates - and those aren't going to change anytime soon.
Definitely things are frothy and there are bubbles in some stocks, but maybe this market still has legs - at least while the fed is buying 120 billion of debt each month.
[1] I found it, it was Joe Kennedy in 1929: https://archive.fortune.com/magazines/fortune/fortune_archiv...
[+] [-] franklampard|5 years ago|reply
The whole premise of your argument is based on ‘probably’
[+] [-] JohnJamesRambo|5 years ago|reply
[+] [-] ramraj07|5 years ago|reply
[+] [-] tal8d|5 years ago|reply
[+] [-] Dirlewanger|5 years ago|reply
The hedge funds are the speculators in this case. They're playing a dangerous game where you can short more stock than what actually exists. Why this is allowed? Who the fuck knows.
[+] [-] robntheh00d|5 years ago|reply
That’s where we ended up after 1929, until the current billionaire class removed all the guard rails.
Nobody deep on SV stocks and unicorn chasing wants to admit they’re in the bubble too. Why does society owe floating a coder bros data science project?
Anything not science is a meme. That billionaires should exist is a meme. This is social philosophy, not truth. And it’s gamed.
America is a bubble in time and it’s having a real (environmental) impact on the future.
Billionaires are not experts. They’re rich and can pay the fines and schmooze. That is not expertise. It’s selling “free market” and manipulating it based on a meme that speculative finance expertise is real. All it is is social engineering of the masses to accept deflation of their economic position.
[+] [-] Miner49er|5 years ago|reply
The fact that buying was limited yesterday is evidence that the little guy is actually winning here.
Trading was stopped to save the hedge funds, because if they go under or lose too much, the clearinghouse has to front that. If the clearinghouse goes under the whole market will crash.
[+] [-] gjsman-1000|5 years ago|reply
This should scare the crap out of Robinhood from what happened yesterday.
[+] [-] OscarCunningham|5 years ago|reply
[+] [-] nrmitchi|5 years ago|reply
It is possible for one group of retail (lets say the original WSBs crowd) to take illegal action that harms other retail investors.
Taking action to protect the mass of retail does not mean that all of retail is immediately in the clear.
[+] [-] nostrademons|5 years ago|reply
> In addition, we will act to protect retail investors when the facts demonstrate abusive or manipulative trading activity that is prohibited by the federal securities laws. Market participants should be careful to avoid such activity.
"Market participants" here is referring to retail traders. Don't make the mistake of thinking that just because you're the little guy, you're exempt from the law. It's like how the capitol rioters were sure they were on the side of America but the FBI (and half of America) sees things very differently.
A lot of government regulation is about protecting the little guy from other slightly more unscrupulous little guys. "The public" is not a monolithic entity - folks can and do screw each other over even when purporting to be part of the same mass movement.
[+] [-] jeffbee|5 years ago|reply
[+] [-] Tenoke|5 years ago|reply
[+] [-] balozi|5 years ago|reply
[+] [-] nend|5 years ago|reply
[+] [-] AcerbicZero|5 years ago|reply
We're in a situation where playing in the market is a better strategy than using the market for its legacy purposes (you know, buying partial ownership in companies) and the number of financial tools created specifically to exploit the ability of wealth to generate additional wealth vastly out match everything else.
Anyway I've got paperhands and bailed on my positions days ago by following some old WSB advice that's actually worth while - "take your profits when you want to"
[+] [-] dls2016|5 years ago|reply
[+] [-] TeMPOraL|5 years ago|reply
Assuming they're being honest - and I see no reason to doubt it - it's refreshing, compared to Robin Hood's communications, and more importantly it highlights your point. The "backend" of the market seems way more coupled than I imagined it is.
--
[0] - https://twitter.com/freetrade/status/1355161107699273729
[1] - https://old.reddit.com/r/wallstreetbets/comments/l7u3ag/free...
[+] [-] rich_sasha|5 years ago|reply
Anything can happen, but in finance terms, this is tiny so far.
[+] [-] throwaway0a5e|5 years ago|reply
Barely more than zero because there are market circuit breakers now and broker dealers are supposed to be limiting order flow so that HFTs can't be submitting huge numbers of orders that are massively far away from what the security is trading at. Of course some broker dealers play much faster and looser than others but if shit really hits the fan the circuit breaker catches it.
[+] [-] throwaway4good|5 years ago|reply
However for the broader market; GME and friends are tiny.
Ristricting trading is a way of managing risk.
[+] [-] Miner49er|5 years ago|reply
But if they are stopped from doing that, then it certainly could happen. I think the odds are greater then most might give it credit.
[+] [-] hehehaha|5 years ago|reply
[+] [-] kgwgk|5 years ago|reply
If GameStop management was thinking of selling some shares to the public (or directly to those who really need shares to cover their shorts) at some crazy price they'll have to be careful.
AMC was lucky to have a lot of convertible debt outstanding which has been converted without any action on their part.
[+] [-] ComputerGuru|5 years ago|reply
[+] [-] rossdavidh|5 years ago|reply
[+] [-] ineedasername|5 years ago|reply
It's not the SEC's role to protect investors from risk or losses, rapid or otherwise, and saying that the recent activity "undermines confidence" is just another way of saying "increases risk", which is not their job. They should ensure confidence by guarding against fraud, but not to protect against losses by institutions that never thought that activist investors would work against their own interests.
This isn't really manipulation that we're seeing: it's people betting against the institutions that themselves bet against companies combined with a fair bit of FOMO.
[+] [-] threedots|5 years ago|reply
The SEC came into existence because retail investors lost huge amounts of money in the 20's in speculative bubbles. The same thing is going to happen here so the SEC is literally doing what it was set up to do.
[+] [-] andreygrehov|5 years ago|reply
Well, it has also the potential to expose investors to rapid gains. ¯\_(ツ)_/¯
[+] [-] underseacables|5 years ago|reply
[+] [-] pferde|5 years ago|reply
[+] [-] fairity|5 years ago|reply
I don't think shorting stocks (even to 140% of its float) is a bad thing. And, the hedge fund managers that shorted GME don't deserve to be bankrupt.
Shorting stocks, in general, is a beneficial action for the market because it helps prevent shares from becoming overvalued.
The problem that GME highlighted is that it's too easy to purposefully trigger a short squeeze.
One possible solution seems to be that the SEC should make it easier to borrow shares to short a stock. And, in so doing, they should make it harder to purposefully trigger a short squeeze.
There's nothing wrong with greed if it doesn't hurt others...The SEC's ultimate goal should be to have a fair and efficiently priced market at all times. In this case, it seems like the party that needs to be protected is the hedge funds....What am I missing?
[+] [-] gdubs|5 years ago|reply
To me this seems:
A) remarkably hands-off, patient. “The market seems to be working.”
B) A reminder to newbies that there ARE laws, so don’t be stupid as your investing journey continues.
C) If anyone should be on the edge of their seats it’s regulated entities who may have manipulated markets by putting their thumb on the scales.
[+] [-] fartzzz|5 years ago|reply
Most of the retail investors couldn't buy specific stocks on most exchanges for some time (tastytrade, ib, rh etc). I wouldn't call that "resilient".
[+] [-] bredren|5 years ago|reply
Regardless, the prominence of the note was strange and set an immediate defensive tone.
What made it really odd was the arc of tone to "Market participants should be careful to avoid such activity." An elegant threat.
[+] [-] my_usernam3|5 years ago|reply
[+] [-] sendtown_expwy|5 years ago|reply
[+] [-] Animats|5 years ago|reply
These are mostly 19th century tricks. That's when finance and newspapers got big enough to make them work at scale. The SEC was established after the 1929 bubble got so big it took down the whole country.
Meanwhile, the latest thing on Reddit is pumping Dogecoin.
In all these things, the people who get in late and don't get out early are the losers. It's zero-sum, after all.
[+] [-] aaroninsf|5 years ago|reply
When a startup seeking a C round does it, it's -disruption - moving fast and breaking things - seizing market advantage by nimbly circumventing slow-moving or antiquated regulation.
When a nihilistic stan does it, it's - <various pejoratives> - <motivated by ignorance or abuse or amorality of various types>
Argumentation over terminology, expertise, etc., is secondary,
to the ways in which this is about power, which informs every aspect of how, why, who, and what. Including the language used and appeals made by those who have it, traditionally have it, and defend it, against those who do not.
Many of the details being argued over are interesting mostly because argument over such details is another tool of the powerful.
[+] [-] unknown|5 years ago|reply
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