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rocknclimb
Member
Joined: 10 Sep 2010
Posts: 439 | TRs
Location: Wenatchee Valley
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Anybody have stock of GME (Gamestop) in your portfolio? You are 1 lucky SOB if so! :-)
The fact a bunch of reddit users is wreaking havoc on hedge fund investors just makes me a happy person.
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When asked "Why do you climb"? Simply respond "Why don't you"? |
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rocknclimb
Member
Joined: 10 Sep 2010
Posts: 439 | TRs
Location: Wenatchee Valley
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What part? To me it was Robinhood and other trading apps blocking consumers from continuing to purchase shares to protect hedge funds from losing more $$$$
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When asked "Why do you climb"? Simply respond "Why don't you"? |
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rocknclimb
Member
Joined: 10 Sep 2010
Posts: 439 | TRs
Location: Wenatchee Valley
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| catsp wrote: |
| Sorry, that was a bit vague. Trying to multitask [politics removed] while not letting my tendies get cold. |
I mostly find this highly entertaining. Also, AOC streams on Twitch?.....Awesome!
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When asked "Why do you climb"? Simply respond "Why don't you"? |
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neek
Member
Joined: 12 Sep 2011
Posts: 1458 | TRs
Location: Seattle, WA
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| rocknclimb wrote: |
| The fact a bunch of reddit users is wreaking havoc on hedge fund investors just makes me a happy person. |
I won't pretend to understand all this, but
| Quote: |
| This this isn't hedge funds versus retail. It's hedge funds versus other hedge funds (and versus Wall Street "flow" desks, which make money every day, and excel at doing so on volatile days) with retail driving the way forward. Melville Capital may have imploded. But Citadel took part of it over. That's hardly a resounding victory over the biggest titans of finance. |
from https://marketsweekly.ghost.io/what-happened-with-gamestop/ |
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BigBrunyon
Member
Joined: 19 Mar 2015
Posts: 977 | TRs
Location: the fitness gyms!!
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Where's the money!!?? Get me in there!!! Add me to the list of those currently receiving lucrative sums!!! As majority owner!!! Get me a slice of the money!!! I'm lookin to make that internet cash!!
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YOU NEVER KNOW!! |
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FiveNines
Member
Joined: 01 Oct 2010
Posts: 355 | TRs
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fourteen410
Member
Joined: 23 May 2008
Posts: 2112 | TRs
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| Can someone explain in layman's terms what this situation is about? I've been seeing it mentioned everywhere, but as someone not well versed in the stock market, I don't really understand what happened. |
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FiveNines
Member
Joined: 01 Oct 2010
Posts: 355 | TRs
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14,410,
Shorting a stock means betting the stock price will go down. This is a four step process.
1. Borrow shares of a stock. Literally a loan. With interest. To be repaid in the future.
2. Sell the borrowed shares immediately and pocket the cash.
3. Stock price changes over time. Short gambler hopes the stock price will go down.
4. Purchase shares of the stock in the future. To repay the loan.
For example:
1. Borrow stock shares valued at $100/share.
2. Sell borrowed shares immediately and pocket $100/share.
3. Stock price drops $10 to $90.
4. Purchase shares at $90. To repay the loan of stock. And profit $10/share since you repaid the loan with shares that cost $10 less than the price you borrowed. - the interest on the loan.
What if the stock goes up? The borrower loses money. Since there is no limit to how high a stock could go, theoretically short positions could lose an infinite amount of money. Very risky proposition for the short seller. + interest.
Therefore, if stock rises, the lender may call on the borrower (short gambler) to repay the loan immediately. Resulting in a monetary loss. Potentially catastrophic. A Short Squeeze.
Retail investors (average janes) on the reddit subforum wall st bets have identified massive short positions on the stock for gamestop. These short positions are held by institutional investors. Hedge funds and billionaires. W/a B!
Redditors want to stick it to the hedge funds, and make money at the same time. So they began buying gamestop shares en masse. A forum consisting of millions of people all buying and holding shares drives the stock price up.
Rising gamestop stock price is wrecking the short position for the hedge funds. Which makes hedge funds desperate to purchase shares. To repay the loan on their short position. But there are too many shorts chasing too few shares to repurchase. Supply and demand drives share price even higher as shorts become even more desperate, or even forced, to repurchase. To close out their gambling positions. Feedback loop.
People are saying, the hedge fund Melvin Capital has lost 10,000,000,000 to 13,000,000,000 dollars this week on their gamestop short position.
Today (01.28.2021) lots of investing platforms, like robin hood, blocked their retail customers (avg janes) from purchasing shares of gamestop. If you are only allowed to sell, the price can only go down. This market manipulation works to relieve pressure on the institutional shorts. Limiting their losses.
AOC and Ted Cruz both agree this is illegal and anti-capitalist. For platforms to only allow selling and not purchasing of gamestop. Many others agree, too.
Hedge funds argue that reddit is fake news social media collusion manipulating stock prices and needs to be stopped. It will be interesting to see how this all turns out.
This process is also happening right now with amc, bb, nok, bbby, aal and other stocks to varying degrees.
Now, who wants to explain Bitcoin?
Preceding is for entertainment value only and not financial advice! |
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Sculpin
Member
Joined: 23 Apr 2015
Posts: 825 | TRs
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Thanks for writing that out, Five Nines. I would add one thing to clarify something you did not state explicitly, the entity that is shorting the stock is required by the shorting contract to purchase the same stock later no matter the price. That is why they are scrambling to buy now before the price goes even higher.
This is all great stuff! The system has always been rigged against small investors. Unfortunately the titans of Wall Street will find a workaround, like not releasing information about shorts.
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Between every two pines is a doorway to the new world. - John Muir |
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cdestroyer
Member
Joined: 14 Sep 2015
Posts: 684 | TRs
Location: montana
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| what it is all about is money making more money.. ifn you gots it you gots it... if not tuff! |
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gb
Member
Joined: 01 Jul 2010
Posts: 5545 | TRs
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| FiveNines wrote: |
14,410,
Shorting a stock means betting the stock price will go down. This is a four step process.
1. Borrow shares of a stock. Literally a loan. With interest. To be repaid in the future.
2. Sell the borrowed shares immediately and pocket the cash.
3. Stock price changes over time. Short gambler hopes the stock price will go down.
4. Purchase shares of the stock in the future. To repay the loan.
For example:
1. Borrow stock shares valued at $100/share.
2. Sell borrowed shares immediately and pocket $100/share.
3. Stock price drops $10 to $90.
4. Purchase shares at $90. To repay the loan of stock. And profit $10/share since you repaid the loan with shares that cost $10 less than the price you borrowed. - the interest on the loan.
What if the stock goes up? The borrower loses money. Since there is no limit to how high a stock could go, theoretically short positions could lose an infinite amount of money. Very risky proposition for the short seller. + interest.
Therefore, if stock rises, the lender may call on the borrower (short gambler) to repay the loan immediately. Resulting in a monetary loss. Potentially catastrophic. A Short Squeeze.
Retail investors (average janes) on the reddit subforum wall st bets have identified massive short positions on the stock for gamestop. These short positions are held by institutional investors. Hedge funds and billionaires. W/a B!
Redditors want to stick it to the hedge funds, and make money at the same time. So they began buying gamestop shares en masse. A forum consisting of millions of people all buying and holding shares drives the stock price up.
Rising gamestop stock price is wrecking the short position for the hedge funds. Which makes hedge funds desperate to purchase shares. To repay the loan on their short position. But there are too many shorts chasing too few shares to repurchase. Supply and demand drives share price even higher as shorts become even more desperate, or even forced, to repurchase. To close out their gambling positions. Feedback loop.
People are saying, the hedge fund Melvin Capital has lost 10,000,000,000 to 13,000,000,000 dollars this week on their gamestop short position.
Today (01.28.2021) lots of investing platforms, like robin hood, blocked their retail customers (avg janes) from purchasing shares of gamestop. If you are only allowed to sell, the price can only go down. This market manipulation works to relieve pressure on the institutional shorts. Limiting their losses.
AOC and Ted Cruz both agree this is illegal and anti-capitalist. For platforms to only allow selling and not purchasing of gamestop. Many others agree, too.
Hedge funds argue that reddit is fake news social media collusion manipulating stock prices and needs to be stopped. It will be interesting to see how this all turns out.
This process is also happening right now with amc, bb, nok, bbby, aal and other stocks to varying degrees.
Now, who wants to explain Bitcoin?
Preceding is for entertainment value only and not financial advice! |
This is a very good post. It is potentially threatening to the financial markets as it works a bit like a chain letter. To what extent these Reddit actors actually engaged in collaborating, they could have legal issues. It appears to be de-stabilizing the entire financial markets.
I'm not saying I am supportive of hedge funds and their actions, but this whole thing is difficult to keep under "control". What can SEC authorities really do? |
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coldrain108
Thundering Herd
Joined: 05 Aug 2010
Posts: 1651 | TRs
Location: somewhere over the rainbow
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What would happen in Vegas if suddenly all the bettors started winning?
The big fear is that the 325,000,000 of us stand up to the 325,000 of them...but that is what the opiate of the masses is there to prevent.
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"The world will not be destroyed by those who do evil, but by those who watch and do nothing" - Albert Einstein |
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simont
Member
Joined: 31 Dec 2011
Posts: 2 | TRs
Location: Burnaby B.C.
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| unfortunately my shares are in Gamestop Total Landscaping... |
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Sculpin
Member
Joined: 23 Apr 2015
Posts: 825 | TRs
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| simont wrote: |
| Gamestop Total Landscaping |
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Between every two pines is a doorway to the new world. - John Muir |
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Anne Elk
BrontosaurusTheorist
Joined: 07 Sep 2018
Posts: 1338 | TRs
Location: Seattle
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Hard to believe that I'd ever agree with anything Ted Cruz says. It's absolutely disingenuous to limit continued buying by these small fry. What they're doing is what the hedge funds et al do every day. "We can gamble, but you can't!" Stock shorting, collateralized debt obligations, derivatives, and on and on.
This incident is a good illustration of the truth that contemporary Wall St is one big casino running on mob psychology hooked on instant gratification. I'm kinda with RocknClimb on this one: it's very entertaining. David plants a good one right between Goliath's eyes.  One thing I don't get is why shorting is even allowed. It's also not clear who gets to do it. Not the small fry, that's for sure.
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"There are yahoos out there. It’s why we can’t have nice things." - Tom Mahood |
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