Author Topic: Gamestop: Reddit vs. Wall St.  (Read 10233 times)

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Offline DrGTopic starter

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Gamestop: Reddit vs. Wall St.
« on: January 28, 2021, 07:55:03 pm »
Not sure if there is much interest in this, but I find it fascinating. My summary is not going to do it justice, but, basically, "users" decided that there was too much shorting going on with Gamestop and, for lack of a better understanding on my part, felt that the price was being manipulated downward by very large entities that were shorting the stock. Collectively, a large number of small time "traders" decided to buy Gamestop but with instruction that the brokers not allow loaning the stock to cover shorts. This drove the price up to mammoth levels and caused a lot of the traditional financial community to balk and call for regulations to stop this activity - the hypocrisy being that similar activities are allowed by big Wall St. - IOW "reverse social justice warriors."

Again, I am not doing it justice, but if you are interested, check out the video here, it is long but it is on point..
https://thehill.com/policy/finance/536212-reddit-traders-cause-wall-street-havoc-by-buying-gamestop

or a shorter article here https://www.npr.org/2021/01/28/961349400/gamestop-how-reddit-traders-occupied-wall-streets-turf

or just search on "Reddit Gamestop".

Now, in my opinion (and this is only my opinion and I have no particular interest in Gamestop or the equity markets in general), someone is going to get burned. I say this because if you screw with people who have a lot of money, they don't just take it. Sticking it to the man is usually expensive, again, in my opinion.

But, it sure is an interesting show to watch.

I am always on the look out for these "shows", because behavior interests me. Earlier today, I posted a video in a thread on the RPI Pico...


Take a look at ~7.05 - 9.05 where they talk about how they got together and kept a secret and without all of the usual Big Chip makers "inconveniences".....they did "what everyone says should be possible" - I think that is the quote.

In the same vein as Reddit Users vs. Wall St. now, I am wondering what the Big Chip makers and the cloners will do in reaction.
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Online ataradov

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Re: Gamestop: Reddit vs. Wall St.
« Reply #1 on: January 28, 2021, 08:52:00 pm »
I don't want to defend normal chip makers too much, I hate that kind of behaviour too. But "That's so great, let's not mess this up" only holds for some time and at a certain scale. A some point someone will mess up, may be inadvertently or because of the disgruntled employee.

And then the same companies will put some agreements in place. And they will be softer at first, but then with the time they will turn into NDA.

And once people start designing your stuff into real products, there are all sorts of legal ramifications that you are not in control of, unless you have strict policies.

Regular vendors also did not start with a bunch of lawyers and NDAs. But everyone either folds or ends up there anyway. I don't see why that would be an exception.
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Offline pickle9000

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Re: Gamestop: Reddit vs. Wall St.
« Reply #2 on: January 28, 2021, 09:13:38 pm »
This is a great story, super interesting.

With luck this will create a more robust / careful sock market. On the other hand every country with the cash may start manipulating the market. Then after some massive losses rules will come that should have been put in place years ago.
 

Online magic

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Re: Gamestop: Reddit vs. Wall St.
« Reply #3 on: January 28, 2021, 09:30:04 pm »
Not sure if there is much interest in this, but I find it fascinating. My summary is not going to do it justice, but, basically, "users" decided that there was too much shorting going on with Gamestop and, for lack of a better understanding on my part, felt that the price was being manipulated downward by very large entities that were shorting the stock. Collectively, a large number of small time "traders" decided to buy Gamestop but with instruction that the brokers not allow loaning the stock to cover shorts.
No expert either, but I have heard about it and I can't help but see a hole in their argument: there is bound to be reasonable shareholders who are in it for the long game. They know that this peak isn't going to last, so they will take the opportunity to milk the shorters by lending them shares instead. And the shorters will rather pay for that than buy shares for $1k from nerds, expecting the scheme to collapse in near future. Knowing plebbit's attention span, they may not even need to wait for long. Many of those investors are likely of the "buy peak, sell dip" variety >:D
 

Offline Psi

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Re: Gamestop: Reddit vs. Wall St.
« Reply #4 on: January 28, 2021, 09:38:15 pm »
The big players are throwing their weight around trying all sort of tactics to get the price down.

Some small home traders have got emails from their brokers saying they have blocked buying of Gamestop but still allows selling. 
Not sure how they are doing that legally  :-//


Louis Rossmann has some videos on gamestop





« Last Edit: January 28, 2021, 10:44:00 pm by Psi »
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Offline thm_w

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Re: Gamestop: Reddit vs. Wall St.
« Reply #5 on: January 28, 2021, 10:03:08 pm »
The big players are throwing their weight around trying all sort of tactics to get the price down.

Some small home traders have got emails from their exchange saying the exchange has blocked buying of Gamestop but still allows selling. 
Not sure how they are doing that legally  :-//

I thought you were referring to the cash only requirements of some brokers instead of margin, but wow, you are right some are outright blocking buying:
https://www.wsj.com/articles/online-brokerages-restrict-trading-on-gamestop-amc-amid-frenetic-trading-11611849934

Clear manipulation going on here.
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Offline DrGTopic starter

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Re: Gamestop: Reddit vs. Wall St.
« Reply #6 on: January 28, 2021, 10:14:18 pm »
I don't want to defend normal chip makers too much, I hate that kind of behaviour too. But "That's so great, let's not mess this up" only holds for some time and at a certain scale. A some point someone will mess up, may be inadvertently or because of the disgruntled employee.

And then the same companies will put some agreements in place. And they will be softer at first, but then with the time they will turn into NDA.

And once people start designing your stuff into real products, there are all sorts of legal ramifications that you are not in control of, unless you have strict policies.

Regular vendors also did not start with a bunch of lawyers and NDAs. But everyone either folds or ends up there anyway. I don't see why that would be an exception.

I added on the RP2040 stuff that you are responding to. I think I was channeling my inner "James Burke" https://en.wikipedia.org/wiki/Connections_(TV_series). But, I understand what you are saying and honestly did not consider it at first...someone will mess up, is a good bet.
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Offline DrGTopic starter

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Re: Gamestop: Reddit vs. Wall St.
« Reply #7 on: January 28, 2021, 10:16:18 pm »
/-//

Louis Rossmann has some videos on gamestop

I watched that last video. I like that guy :)
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Offline langwadt

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Re: Gamestop: Reddit vs. Wall St.
« Reply #8 on: January 28, 2021, 11:08:20 pm »
The big players are throwing their weight around trying all sort of tactics to get the price down.

Some small home traders have got emails from their exchange saying the exchange has blocked buying of Gamestop but still allows selling. 
Not sure how they are doing that legally  :-//

I thought you were referring to the cash only requirements of some brokers instead of margin, but wow, you are right some are outright blocking buying:
https://www.wsj.com/articles/online-brokerages-restrict-trading-on-gamestop-amc-amid-frenetic-trading-11611849934

Clear manipulation going on here.

without paywall, https://www.axios.com/robinhood-gamestop-restrictions-370adfcb-fe22-494d-85e7-eb9c4a98bed7.html

not every day you see those politicians agree on something, but I'm sure their true masters have dispatched
an army of lobbyists to reign them in ...



 

Offline raptor1956

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Re: Gamestop: Reddit vs. Wall St.
« Reply #9 on: January 28, 2021, 11:25:01 pm »
The hedge funds engage in gambling that is little different than playing Craps in Vegas except they have the rules arranged in the favor -- they are the house.  When a group of little people band together and buy a stock which increases the stock price the hedge funds lose there shit.  "You can't play our game ..."

Robinhood and other trading platforms being used by these little investors have stopped there own users from buying any more of that stock meanwhile the hedge fund types are free to buy and sell as they see fit.  Clearly the big shots are worried that the little guy might learn from this and upset there lucrative apple cart and have applied pressure to have Robinhood and the hosts for Reddit shut down.

And, in what is a continuing pattern of duplicity they insist on being able to do as they please with little or no oversight but don't hesitate for a moment to call for regulation to prevent little guys from doing this again.

And if that isn't the worst, they are calling for bailouts for the hedge funds involved.  If you play craps in Vegas and lose your life savings do you get a bailout -- why no, no you don't.

This has exposed the rigged game WS plays but I see little chance anything but handwaving will be done to reign in the abuses they engage in -- at huge profit and invariably at the expense of most everyone else.


Brian
 
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Offline DrGTopic starter

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Re: Gamestop: Reddit vs. Wall St.
« Reply #10 on: January 29, 2021, 03:06:36 am »
I watched an interview with RobinHood's CEO tonight and still can not figure out exactly why they halted buying. A lot of "requirements" lingo but nothing particularly coherent to me. BTW, I have shirts older than that guy :)

Same with reading E*Trade's announcement. Buying is supposed to resume on Friday there.

I know that the exchange can halt trading of a stock under certain conditions like suspected fraud or or some imminent reveal, but these actions appear to be done by the brokerage houses. So what has happened in 1-2 days of no buying that has fixed everything?
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Offline Psi

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Re: Gamestop: Reddit vs. Wall St.
« Reply #11 on: January 29, 2021, 06:45:03 am »
Lets hope this is a turning point.

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Offline daqq

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Re: Gamestop: Reddit vs. Wall St.
« Reply #12 on: January 29, 2021, 06:52:58 am »
Believe it or not, pointy haired people do exist!
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Offline TimNJ

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Re: Gamestop: Reddit vs. Wall St.
« Reply #13 on: January 29, 2021, 06:54:36 am »
I watched an interview with RobinHood's CEO tonight and still can not figure out exactly why they halted buying. A lot of "requirements" lingo but nothing particularly coherent to me. BTW, I have shirts older than that guy :)

Same with reading E*Trade's announcement. Buying is supposed to resume on Friday there.

I know that the exchange can halt trading of a stock under certain conditions like suspected fraud or or some imminent reveal, but these actions appear to be done by the brokerage houses. So what has happened in 1-2 days of no buying that has fixed everything?

This is the email I got from Robinhood. Do I know jack all about SEC regulations? ...No, no I do not, but my initial feeling from reading it was “Hmm, I think they intentionally threw in some big words that they know I don’t know about.”

Quote
This was a temporary decision made to best continue serving you, and was not an easy one to make. We know it’s led to frustration and confusion, and wanted to provide some clarity.
As a brokerage firm, we have many financial requirements, including SEC net capital obligations and clearinghouse deposits. Some of these requirements fluctuate based on volatility in the markets and can be substantial in the current environment. These requirements exist to protect investors and the markets and we take our responsibilities to comply with them seriously, including through the measures we have taken today.
To be clear, this decision was not made on the direction of any market maker we route to or other market participants.
 

Offline james_s

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Re: Gamestop: Reddit vs. Wall St.
« Reply #14 on: January 29, 2021, 07:00:22 am »
The whole stock market is a complete mess. It's supposed to be there to allow companies to raise capital they can use to expand. Instead it has transformed into a gigantic casino where people gamble away money hoping to win big and sell.
 

Offline Nominal Animal

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Re: Gamestop: Reddit vs. Wall St.
« Reply #15 on: January 29, 2021, 07:06:27 am »
The rules are for thee, not for the big banks and hedge funds.
 

Offline floobydust

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Re: Gamestop: Reddit vs. Wall St.
« Reply #16 on: January 29, 2021, 07:09:37 am »
It's going to be very ugly, Wall Street is really showing its true colours.

Janet Yellen was paid by hedge fund Citadel $810,000 to speak at three events in 2019, 2020.
US Treasury Secretary for what, two days now, she should recuse herself.
"The Treasury Department must be an institution that wakes up every morning thinking about the American people.
Your jobs, your paychecks. Your struggles, your hopes. Your dignity. And your limitless potential.
We will work to restore that public trust and promise."

What a crock!
« Last Edit: January 29, 2021, 07:11:10 am by floobydust »
 

Offline Moshly

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Re: Gamestop: Reddit vs. Wall St.
« Reply #17 on: January 29, 2021, 08:01:29 am »
Louis made it onto Yahoo finance as a Reddit User.
 
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Offline nctnico

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Re: Gamestop: Reddit vs. Wall St.
« Reply #18 on: January 29, 2021, 12:56:26 pm »
The whole stock market is a complete mess. It's supposed to be there to allow companies to raise capital they can use to expand. Instead it has transformed into a gigantic casino where people gamble away money hoping to win big and sell.
IMHO short selling is the only real problem on the stock market. Especially when being able to short more shares than that actually exist. The latter means more strict regulation is needed and that seems to be the underlying issue.
« Last Edit: January 29, 2021, 01:07:55 pm by nctnico »
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Offline Stray Electron

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Re: Gamestop: Reddit vs. Wall St.
« Reply #19 on: January 29, 2021, 02:50:30 pm »
It's going to be very ugly, Wall Street is really showing its true colours.

Janet Yellen was paid by hedge fund Citadel $810,000 to speak at three events in 2019, 2020.
US Treasury Secretary for what, two days now, she should recuse herself.


   American politics is a F U mess! And that includes most or all of the US federal government agencies.  That is a CLEAR conflict of interest. when I was US military government contractor we literally couldn't even provide free coffee at meetings because it could have been perceived as some sort of payoff. But Bill Clinton, Janet Yellen and just about every other high level US government employee is allowed to take hundreds of thousands of dollars from the same groups that they're supposed to be regulating for doing next to nothing.
 

Offline DrGTopic starter

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Re: Gamestop: Reddit vs. Wall St.
« Reply #20 on: January 29, 2021, 04:23:10 pm »
I watched an interview with RobinHood's CEO tonight and still can not figure out exactly why they halted buying. A lot of "requirements" lingo but nothing particularly coherent to me. BTW, I have shirts older than that guy :)

Same with reading E*Trade's announcement. Buying is supposed to resume on Friday there.

I know that the exchange can halt trading of a stock under certain conditions like suspected fraud or or some imminent reveal, but these actions appear to be done by the brokerage houses. So what has happened in 1-2 days of no buying that has fixed everything?

This is the email I got from Robinhood. Do I know jack all about SEC regulations? ...No, no I do not, but my initial feeling from reading it was “Hmm, I think they intentionally threw in some big words that they know I don’t know about.”

Quote
This was a temporary decision made to best continue serving you, and was not an easy one to make. We know it’s led to frustration and confusion, and wanted to provide some clarity.
As a brokerage firm, we have many financial requirements, including SEC net capital obligations and clearinghouse deposits. Some of these requirements fluctuate based on volatility in the markets and can be substantial in the current environment. These requirements exist to protect investors and the markets and we take our responsibilities to comply with them seriously, including through the measures we have taken today.
To be clear, this decision was not made on the direction of any market maker we route to or other market participants.

Yeah, that's pretty much what he was sticking to - sounded to me like weasel words. The interviewer (Chris Cuomo) kept coming back to it and it sounded to me like... Q: "do you need more liquidity?", A: "no that's not it, it's <weasel words>" --> repeat until time is up. Instead of: The reason that we temporarily prevented buying of this stock is _______________. What we did to allow buying again is ______________.

When they don't do this, I am thinking that the shorts were covered...some how. But, maybe I am wrong. It does not seem to be an unreasonable expectation to receive a specific answer. AMC and a couple of others stocks were in the same boat.

Regardless, since these companies are in bad shape from the pandemic, it makes no sense that their fundamentals could support those prices. Like I said in my first post, someone is going to get burned.

It pisses people off that when the small investors, acting as a collective (presumably based on internet democratizing of information), squeezed a few hedge funds and the appearance is that the brokers have acted in the best interests of "big money" and not their "little" customers. Even if true, it does not mean it is illegal. Appearances are just that and they can be wrong, but to show that they are wrong we need to see some facts.
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Offline JohnnyMalaria

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Re: Gamestop: Reddit vs. Wall St.
« Reply #21 on: January 29, 2021, 04:44:37 pm »
The stock market is like Las Vegas. They will change the house rules when they realize the existing ones are no longer good enough to make sure only the big players win. e.g., the introduction of after-hours trading but only if you are important enough and delayed quotes etc.

It's glorified gambling. You'll lose.
 

Offline TimNJ

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Re: Gamestop: Reddit vs. Wall St.
« Reply #22 on: January 29, 2021, 05:05:15 pm »
"Gambling in a suit" as one of my dad's Wall Street friends put it, back in the 80's.

I find it hilarious how tone deaf some of these brokerages are, especially in choice of words on how they explain things to the plebeians. If they just wrote sentences that didn't look like were reviewed by 17 people in a board room, with words hand selected from the corporate dictionary, I'd honestly probably believe them. And I'm not claiming that there's actual criminal wrongdoing by any brokerage, in this case. (I do not understand the system enough to know.) But, they do come off as rather slimy...but I guess we knew that already?

 

Offline DrGTopic starter

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Re: Gamestop: Reddit vs. Wall St.
« Reply #23 on: January 29, 2021, 06:01:08 pm »
Quite the ShitStorm going on.

Today's statement from the US SEC https://www.sec.gov/news/public-statement/joint-statement-market-volatility-2021-01-29

From the 3RD pph...

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. Likewise, issuers must ensure compliance with the federal securities laws for any contemplated offers or sales of their own securities.

"Market participants should be careful to avoid such activity". - WTF? When are "Market participants" supposed to know "when the facts demonstrate abusive or manipulative trading activity that is prohibited by the federal securities laws" -  after the burn?

Do all those shorts still exist - yes or no? Holding those shorts costs money (my understanding is that they are not interest-free loans), covering those shorts right now costs a lot of money. Are there still shorts to the tune of 120% of the stock, as was put forth?
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Offline nctnico

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Re: Gamestop: Reddit vs. Wall St.
« Reply #24 on: January 29, 2021, 06:12:34 pm »
Quite the ShitStorm going on.

Today's statement from the US SEC https://www.sec.gov/news/public-statement/joint-statement-market-volatility-2021-01-29

From the 3RD pph...

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. Likewise, issuers must ensure compliance with the federal securities laws for any contemplated offers or sales of their own securities.

"Market participants should be careful to avoid such activity". - WTF? When are "Market participants" supposed to know "when the facts demonstrate abusive or manipulative trading activity that is prohibited by the federal securities laws" -  after the burn?

Do all those shorts still exist - yes or no? Holding those shorts costs money (my understanding is that they are not interest-free loans), covering those shorts right now costs a lot of money. Are there still shorts to the tune of 120% of the stock, as was put forth?
I guess so. Selling short means selling shares you don't own (but rent from a party who does). If they want to 'unshort' then they have to buy the shares back at the current market price. If the shorters where clever they used stock options to guard them against the price rising too far though so someone else may need to cover the bill.
« Last Edit: January 29, 2021, 06:17:26 pm by nctnico »
There are small lies, big lies and then there is what is on the screen of your oscilloscope.
 


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