What happens when the internet realizes the stock market is basically a casino? They go shopping at the Mall So it seems 2021 is going to be the year that internet culture finally reaches the deepest and most protected pockets of society. The past day has seen the kind of demented activity on the stock market that normally comes with an era-defining crash – except in this case it was Reddit readers who are, um, having a laugh while …
GameStop just tweeted :
For the 8th consecutive year, @GameStop has earned a perfect score of 100 on @HRC’s 2021 Corporate Equality Index. We’re proud of our associates for their continued commitment to promoting #LGBTQ equality in the workplace and community!
If such positive news had leaked a few days back then it could explain why everyone chose to invest. A perfect 100!
Who says it's not a rigged Great Game? ...... https://www.rt.com/usa/513920-robinhood-gamestop-gme-amc-shutdown/
If you can't stand the heat, get out of the kitchen if you can without kicking over the cans of worms therein, but where the hell does one then go to escape ? :-) ..... https://www.rt.com/op-ed/513839-gamestop-reddit-wallstreet-panic/
Of course do bear in mind that RT will publish a string of words as a 'story' only if it fits in with their strategic mission. They will even publish the truth if it furthers their cause. Or the truth with heavy spin. Or mostly the truth and a few fibs. Or some total bollocks from time to time.
"Who says it's not a rigged Great Game? ...... https://www.rt.com/usa/513920-robinhood-gamestop-gme-amc-shutdown/"
From that article:
"Some users reported that they were only allowed to close out their positions, but with nobody to buy, these users stood to lose massive profits."
That's just Robinhood users. I suspect that the hedge funds will be allowed to buy through their own (proprietary) trading platforms. To cover their short positions, of course. Certainly the game is rigged. The Reddit gang intercepted the football and ran it in for a touchdown. But the referees have asked them to hand it back to the opposing team, go back to their own 20 yard line and think about who owns the field that they are playing on.
I may just quit watching football and take up soccer. (Sorry about that. I'll just get my coat.)
"But the referees have asked them to hand it back to the opposing team"
What the referees CAN'T do is force the redittors to sell their GS shares, merely warn them that they stand to lose 100% if the shares tank
The point is that the original starters of this game EXPECTED to lose 100% and openly stated as much. The payoff is hedgefunds lose 1000%+
If enough GS shares are held privately then there aren't enough of them on the playing field for the HFs when the return options come due on January 29th and the HFs burn down.
GS shares will spike to stratospheric levels momentarily and some people might be able to cash out, but GS shares are ALWAYS going to tank at the end of this game. That's been the expected outcome all along (which is vastly different to a pump'n'dump, where investors in a mis-sold share going in are doing so on the basis that the shares will stay high or improve based on fake reports, not in the certain knowledge that the shares WILL crash in a few weeks at most)
The intent isn't to make money out of GS shares, it's to burn the hedgefunds down.
If some redditors make money along the way that's nice but it's not the intention of the game.
Meantime there are a bunch of other daytrading dweebs who have piled in to try and make money because GS shares are high - these deserve to be burned down too (two birds with one stone!)
"The point is that the original starters of this game EXPECTED to lose 100% and openly stated as much."
It wouldn't be the first time an 'investor' bought up shares in a company to kill off a product or technology and shut it down. Loosing 100% is of little concern and certainly not illegal. The big software houses are sitting on piles of technology and the corpses of numerous competing startups.
Who are we to question the bigger picture of some Reddit blogger who is doing the same thing? The acid test will be whether the organizers of this movement have dotted their Is and crossed their Ts should the SEC decide that they are providing investment advice. That they were honest about the possibility of others losing 100% of their investments may be good enough.
The sweet sound of shit hitting the fan .......... https://www.zerohedge.com/markets/you-can-not-purchase-additional-shares-robinhood-reportedly-removed-shuts-down-buying
With whom and/or what do your true allegiances lie? The Sheriff of Nottingham Crooks or the Merry Men and Women of Sherwood Forest and Robin Hoods? :-)
Short selling has a legitimate place in commodities trading, where an actual producer of a commodity, who owns the physical thing they are shorting, can make a hedge against a price fluctuation. Speculative short selling is a distortion, but it makes sense to allow it *up to a point* because the alternative is some sort of enforcement division to go around verifying that short sellers actually hold enough of the "thing" to cover their short position.
When the distortion becomes the normal, that's when you know the system has been corrupted. But we all knew that already.
The real damage here is not to the short hedge funds, nor to the long redditors, but to the reputation of the market system itself. It needs to be *seen* as essentially fair (even though it's far from fair), otherwise there is no way to convince mom and pop to put their retirement funds there. So I predict the SEC will find a way to regulate the redditors and other small-time day traders into oblivion, and blame *them* for illegally disrupting an otherwise free and fair market. Then back to business as usual. The fact that a bunch of hedge fund managers lost their clients a ton of money won't even be a black mark on the resume, just an asterisk and another war story during a round of golf.
"Speculative short selling is a distortion, but it makes sense to allow it *up to a point* because the alternative is some sort of enforcement division to go around verifying that short sellers actually hold enough of the "thing" to cover their short position."
Funnily enough there IS enforcement, precisely BECAUSE naked shorting became a standard market destruction tool and it backfired.
"When the distortion becomes the normal, that's when you know the system has been corrupted. But we all knew that already"
The kind of shorting that's going on is "Naked shorting" with a figleaf (the shares have had to be "borrowed" from someone) and has proven to be as abusable as now-criminalised naked shorting practices were
Unsurprisngly it was hedgefunds which mostly engaged in naked shorting in the past. They just found a away around the rules enacted to try and stop them continuing the practice - and just like years past the regulatory authorities turned a blind eye to it until the stock markets were set on fire - which merely proves who they really work for.
There's a lot of social movement aspect going on with this so it's not just a greed play, I mean who doesn't hate people who spend their entire day figuring out ways to make someone fail (short sellers).
The Shorters made a big mistake also, GameStop was profitable and didn't carry any debt so the short positions against it didn't make any sense unless someone was trying to drive the stock down to orchestrate a buyout and dismemberment. This brought it to the attention of a lot of people including the Reddit crowd.
Now people are crowd sourcing against the short sellers and a lot of them are spending a couple of bucks and calling it a donation; basically buying a ticket to piss on Wall Streets shoe.
The conversation in my house went like this:
"Honey I blew my beer money in the markets this morning."
"That's nice dear, please don't forget to take out the garbage today."
I strongly suspect this is a variant on a short squeeze perpetrated by hedge funds.
1 The traders bought at $5,
2 Started shorting,
3 Created outrage on social media,
4 Suggest how to undo the hedge funds,
5 Start a movement to increase the price,
6 Price rises
7 Sell out shares bought at stage 1 at a profit,
8 Prices fall,
9 Close out short orders at profit,
10 Buy a yacht,
11 Redo.
The amount of profit which can be made by stiffing the shorters is relatively low - even if someone ends up with a yacht the actual overall profit is small compared to the overall market
The amount of loss the shorters can incur is virtually limiitless
The overall benefit to the markets from exposing predatory shorting practices and eliminating the people concerned, is worth the effort
Shorting has benefits in exposing things like Enron fraud, but predatory shorting is damaging
Stock trading is something that even the relatively dumb can do fairly easily as most of it is mechanical. Problems arise when people decide they're "geniuses" and "have systems" - which is the mantra of every addict gambler in existence
Disclosure: I watched my father do exactly this - repatedly, for decades - with horses and stocks. Needless to say he's lost every single "investment" he's been involved in. It's a salutary lesson that gambling is a fool's game
If you buy shares, the worst you can do is lose everything
Shorting can be dangerous and damaging but TRADITIONALLY you had to own the shares in order to sell them in the first place
Meaning that the worst case scenario is losing everything
"naked shorting" - where you sell shares you don't even HAVE - was one of the leading factors in the last couple of stock market crashes - This is why "naked shorting" was outlawed a few years ago
"Borrowing" shares is merely naked shorting with Groucho Marx glasses on and should have been banned too
Naked/borrowed shorting can result in you losing hundreds of times more than you have when the chickens come home to roost
Destroying the naked/borrowing shorters is a good thing, they shouidnt' be allowed in the stock exchanges as they're what makes it a full-blown casino
Elon Musk has put his weight behind the campaign because he _really_ dislikes shorters - and bankrupting the naked/borrowed shorters is in his interest
Elon Musk has put his weight behind the campaign because he _really_ dislikes shorters - and bankrupting the naked/borrowed shorters is in his interest
As such, you (and I) can be fairly sure he put (a very small part of) his money behind it as well. And he probably will make a profit on it as well.
"you (and I) can be fairly sure he put (a very small part of) his money behind it as well."
You might be. Personally If I was him I'd be cheering from the sidelines and ensuring my money didn't go anywhere near this as that could be used by the "regulators" to prove that he (and other promoters) were engaging in pump-and-dump market manipulation
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