The Stock Market thread

[albionmoonlight]

It hurts the market overall if people start to believe that the price of assets do not reflect the things underlying those assets.

It may be legal. But if it is legal, then Congress should probably pass some laws making it illegal or harder to do (consistent with the 1st Amendment, etc.)

I don't see any public benefit to the stock market getting (more of) a reputation as legalized gambling that has nothing to do with the actual economy.

[Edward64]

Originally Posted by albionmoonlight

It hurts the market overall if people start to believe that the price of assets do not reflect the things underlying those assets.

It may be legal. But if it is legal, then Congress should probably pass some laws making it illegal or harder to do (consistent with the 1st Amendment, etc.)

I don't see any public benefit to the stock market getting (more of) a reputation as legalized gambling that has nothing to do with the actual economy.

Absolutely agree.

From what I've heard the craziness is driven by coordinated retail investors (e.g. Robinhood)? If true, I have to believe there's going to be a bunch of folks getting hurt when the house of cards come tumbling down.

[Swaggs]

If nothing else, these events have lead me to finally read up on and understand what short selling is and how hedge funds work.

[Arles]

It's pretty crazy. One thing I read to is that for every call option purchased, shares have to be purchased by the backing institution to hedge the short position. More calls bought = more shares needed to hedge (thus the price goes up). Then you throw in hedge fund short selling algorithms on overrated stocks and you get these gamma squeezes. In 2020, we set a record with 30 million contracts traded daily. Thus far in 2021, we are at 40 million a day.

If this keeps up, there's a good chance options will eventually be banned by non-accredited investors. It may be the new "pattern day trade" rule eventually. A lot of the banks and hedge fund managers don't like these RobinHood discord servers trying to game the system.

[PilotMan]

There's a feeling in the market that resembles the point prior to the last couple recessions and market collapses. The feeling that you are always going to win, the disconnect from the greater economy. It's got me very ready to pull the trigger on some of my gains the first hint it starts to stagger.

When my 18yr old is talking about how he can make thousands options trading because his friends are talking about it there are red flags. I told him, that the quick check cashing places are more than willing to give him cash advances too, but that they didn't care if he couldn't pay it back on their terms. I said Robinhood will give you all the rope you need to lynch yourself, it's not worth it, he saw my point.

[Edward64]

Originally Posted by PilotMan

When my 18yr old is talking about how he can make thousands options trading because his friends are talking about it there are red flags. I told him, that the quick check cashing places are more than willing to give him cash advances too, but that they didn't care if he couldn't pay it back on their terms. I said Robinhood will give you all the rope you need to lynch yourself, it's not worth it, he saw my point.

This is funny. My son texted me last night asking what I thought about Gamestop. I told him don't do it, there was manipulation going on and he would get burnt. This is the kid that got into Tesla like 3 years ago and hasn't sold that yet. I was reassured that he asked me first.

There's a feeling in the market that resembles the point prior to the last couple recessions and market collapses. The feeling that you are always going to win, the disconnect from the greater economy. It's got me very ready to pull the trigger on some of my gains the first hint it starts to stagger.

Yes, I agree. I have <10% of portfolio in what I consider speculative (ARKK, ASHR, GBTC, SPCE etc.). The rest is in what I consider pretty solid and know they will rebound over time.

Not going to try time the market though. In retrospect, I think I would have known when to sell last year when the Pandemic hit. But I'm pretty sure I would not have known when to get back into the market.

[GrantDawg]

Can someone explain to me what market benefit of "short sells" are? Why are they legal?

Sent from my SM-N960U using Tapatalk

[SirFozzie]

It can provide liquidity in a stock that is sluggish, as well as ameliorate market efficiencies.

Short (finance - Wikipedia)

[wustin]

I was +$1500, -$20, then back up +$500 from Gamestop yesterday. I didn't sell at $159 where it peaked but I just set my sell limit to $250.01.

I know short squeezes are hard to time well but I legitimately think there will be one more good push some time this week until all these hedge funds start pulling their bullshit.

[wustin]

Dola

I think $250 reasonable seeing as how Monday panned out and the sky high short interest rates. I'm sure it can soar higher but I will let the bag holders worry about trying to make it to $300.

[SirFozzie]

Honestly, stuff like what';s going on with GameStop makes me less confident in the economy, not more.

Basically, we have two sides here.

One) Thinks a overvalued stock is overvalued and is attempting to make money off it being overvauled (and them telling folks they think it's overvalued). Kinda shitty that they're betting against it, but yeah. Part and Parcel of everyday life.

Two) 4chan/reddit types who also agree the stock is overvalued but "They said something mean about gaming! LOL THE STOCK IS GOING TO TENDIE LAND! $300 a share!"

This is one of the fundamental battles in our economy right now. Seriously.

Maybe I'm in "Get off my lawn" mode.

[wustin]

It started with Citron attempting to short and claiming GME would drop to $20. Remember the entirety of 2020 and still this year you've seen retro gaming prices go up, bitcoin, vintage pokemon and mtg cards, etc. Yeah there's r/WSB but they are only a dip of the retail investors. Covid, people with disposable income stuck at home, the stars aligned for this one.

The only way this is over is if people sell out in droves or Gamestop dumps more shares into the market. The drops from yesterday were some retail getting out and institutional manipulation.

One of the hedge funds Melvin Capital just got a 2+ billion bail out to help cover their shorts. We're still waiting on one of them to cave in and liquidate to start the squeeze.

[SackAttack]

Originally Posted by wustin

It started with Citron attempting to short and claiming GME would drop to $20. Remember the entirety of 2020 and still this year you've seen retro gaming prices go up, bitcoin, vintage pokemon and mtg cards, etc.

Sure. There's a market demand for stuff like that because lol quarantine.

But the thing is, GameStop abandoned their retro positions years ago and while they've tried to restore that, it's limited to an online footprint. For the folks who're into retro enough to pay GameStop's prices for vintage stuff, that matters. It means that eBay is more transparent about the quality of the item than GameStop is; all you can do is purchase, and if it's substandard condition, return it to a store.

Being in gaming in general is a good thing right now, but longer term, once the lockdowns fade away, they're still not in great shape. They inhabit expensive mall real estate, for the most part, and they're flailing about looking for ways to connect with the market. There's a reason why, despite selling both new and used hardware/software for the two most recent generations, their stores are constantly adding collectibles, trading cards, and god knows what to augment revenues. They haven't the faintest how they're going to transform to meet the challenge when digital console sales surpass physical, and even the recent announcement that they'll get a cut of digital sales on Xbox consoles sold appears trivial from a revenue perspective.

So, I mean, this isn't about how sound GME is as a stock. It's about a bunch of people going "man, FUCK that guy; if we pump the stock up, we can force him into a position where he either loses his shirt or cuts his losses."

And once they've driven him from the battlefield one way or another, the underlying challenges that led Citron to proclaim - correctly, I think - that GME was headed to $20 or below will still exist.

He's almost certainly going to take a bath to some degree; if he has to buy more shares to cover his shorts, he's presumably doing it at current market prices and I'm not smart enough to see where he makes that money back.

But the Reddit crowd aren't, I don't think, going to universally walk away from this untouched, either. Some will. Maybe they won't walk at THE peak, but they'll walk at A peak - which I think happened today - and call it good. But some are gonna get stuck without a chair when the music ends, and how ugly that gets depends on how heavily people latched on.

[sterlingice]

Analyst on GameStop volatility: 'If you want to gamble, go to the casino'

Considering the stock market, this headline is laughably un-self-aware. The stock market looks a ton like gambling and I'm sure this analyst has participated in making it do so.

SI

[wustin]

Today was way better than yesterday even though it peaked less. It's about to close at double the price if nothing bad happens.

[wustin]

Elon Musk tweets about wsb and gamestop after 4pm and it jumps up to 190 after hours

[sterlingice]

I've never dabbled in shorts at all but is there some way to bet on/invest in "Gamestop will definitely not be above $190 in 6 months" because that's practically sure money at this point

SI

[wustin]

Well yeah the squeeze is definitely happening within the next week or two. You can't really time it since it's so volatile, you just gotta pick a number you're comfortable with selling. I moved my sell limit up to $1000 now lol.

[Lathum]

ok. so I don't do the market myself. I have a guy that does that. I do however fucking love to gamble, and this seems like it.

I have an account I dabble in with about $1500 on Schwab. I know these Reddit guys want to get it to 1K. Lets say I buy 10 shares at open tomorrow for a rough total of $1500. Is there a shot it will go up to even close to 1K, netting a profit of almost 9K, or has that ship sailed and it is gonna crash (obviously no one can tell).

Is this basically a rich getting richer thing and if you have the money you can capitalize off however they are manipulating this, or would I be too far at the bottom of the pyramid.

Note losing the $1500, or a small portion, wouldn't be a big deal financially.

[kingfc22]

I put some money into AMC this afternoon hoping that some of the retail investors get priced out of GME and turn to a lower entry point.

Up 25% in just after hours. Curious to how it plays out.

[PilotMan]

Originally Posted by SirFozzie

Honestly, stuff like what';s going on with GameStop makes me less confident in the economy, not more.

Yep, one more red flag, this hits it on the button.

[BishopMVP]

Originally Posted by Lathum

ok. so I don't do the market myself. I have a guy that does that. I do however fucking love to gamble, and this seems like it.

I have an account I dabble in with about $1500 on Schwab. I know these Reddit guys want to get it to 1K. Lets say I buy 10 shares at open tomorrow for a rough total of $1500. Is there a shot it will go up to even close to 1K, netting a profit of almost 9K, or has that ship sailed and it is gonna crash (obviously no one can tell).

Is this basically a rich getting richer thing and if you have the money you can capitalize off however they are manipulating this, or would I be too far at the bottom of the pyramid.

Note losing the $1500, or a small portion, wouldn't be a big deal financially.

I wouldn't count on $1000, but if you can actually buy at $150 and feel comfortable cashing out at $250/$300 instead of trying to time the crest you can make a solid quick profit.

Love watching this play out. There's no good guys I need to root for... Saw one of the firms with big short positions got a $2b bailout to cover their positions & avoid triggering the fall, but how long does Wall Street want to continue with that instead of cutting their losses on this one & figuring out a smarter way to play on the overconfidence of people if they win this round?

[wustin]

We're long past $150. It's $350 premarket.

[wustin]

From 350 to 250 jesus

[NobodyHere]

[Kodos]

Originally Posted by wustin

From 350 to 250 jesus

It's just a flesh wound!

[Edward64]

Ugly day. Powell's fault.

[albionmoonlight]

On the one hand, watching a hedge fund take it on the nose because they got outsmarted by fucking Reddit is fun.

On the other hand, the ability for people to weaponize (for lack of a better term) the stock market is a long-term bad.

[Edward64]

Originally Posted by albionmoonlight

On the one hand, watching a hedge fund take it on the nose because they got outsmarted by fucking Reddit is fun.

Agree.

CNBC today with Chamath was fun. I don't pretend to understand all the nuances or implications but it was fun to see him take up for the common/retail man/investor ... and voter of course.

[RainMaker]

The Gamestop stuff is one of the funniest stories I've ever read about. Just dismantling a hedge fund with some shitposters on Reddit.

[molson]

This guy did alright. $54 million now if he held and cashes out now

Spoiler

Apparently he started with $50k.

[JPhillips]

I have no sympathy for the hedge funds losing their asses, but a lot of other investors are going to lose their money when the valuation for Gamestop returns to something sane. The damage won't be limited to rich pricks.

[molson]

And it will inspire amateurs to jump in and lose their shirts. I've read a bunch of stories over the last year, sometimes playing out in real time over reddit, about people losing obscene amounts of money on RobinHood using shorts and options and things they didn't understand could cost them more than they put in. Those stories are equally compelling, just in a more morbid way.

[Ksyrup]

Hedge funds before and after this week: pic.twitter.com/XmuX520ks0

— Lauren Row (@LaurenRow5) January 27, 2021

[wustin]

Brokers are already limiting new users from signing up and putting a limit on the number of GME and AMC shares that can be purchased.

[PilotMan]

The funny thing about that is that there are investors out there that short a stock, then run negative press out nearly non-stop until the company either begs them to call off the dogs, or they succeed in driving the price into the ground. If those companies are the ones feeling pain from all this I would enjoy every minute of it.

[wustin]

Robinhood has disallowed users from trading GME, AMC, and NOK. Only sell or reduce positions. They also got rid of those stocks from their search engines.

[sterlingice]

Wow - this is some shady crap. What happened to "let the free market decide" that these guys yell at the top of their lungs when they're screwing the rest of us over?

SI

[Edward64]

Originally Posted by sterlingice

Wow - this is some shady crap. What happened to "let the free market decide" that these guys yell at the top of their lungs when they're screwing the rest of us over?

SI

I don't disagree but it's not clear to me where the line is before it becomes stock/market manipulation. Dunno.

[Ksyrup]

Yeah seeing the same stuff about banks prohibiting trading of certainly stocks for "security reasons" to protect their large clients who are getting killed.

[wustin]

All of the major brokers have shut down GME besides like Fidelity.

[sterlingice]

Originally Posted by Edward64

I don't disagree but it's not clear to me where the line is before it becomes stock/market manipulation. Dunno.

I'd be a lot more sympathetic if these same hedge fund folks weren't the ones who have free and complicit platforms like CNBC that allow them to go on and talk down stocks right after they bought them to short. How is that any different than what r/wsb is doing? Hell, at least what they're doing is open and honest - they can't shut up about it on Reddit.

And, yes, I worry this risk is a contagion towards the greater market. But, on the other hand, these financial assholes have been skimming off of our retirement for years so it's not like what they're doing is a victimless crime either.

SI

[Ghost Econ]

Originally Posted by Edward64

I don't disagree but it's not clear to me where the line is before it becomes stock/market manipulation. Dunno.

I would say preventing people from purchasing stock to keep your friends from losing money is pretty clear market manipulation.

[Fidatelo]

[Coffee Warlord]

Don't worry, the SEC will find some obscure rule to bring the hammer down. Cannot let the proles think they can win.

[wustin]

back up to over 400 after the short attacks premarket without robinhood users being able to buy

this is one for the books folks

[sterlingice]

It's been fascinating to watch

GME closed at $365 yesterday
It was almost to $450 this morning in futures
Then Robinhood stopped allows trades of it and it fell to almost $250
But now the story has spread, people are even more pissed and have taken their money elsewhere and it’s back to $400 and seemingly climbing

SI

[Mota]

Originally Posted by sterlingice

I'd be a lot more sympathetic if these same hedge fund folks weren't the ones who have free and complicit platforms like CNBC that allow them to go on and talk down stocks right after they bought them to short. How is that any different than what r/wsb is doing? Hell, at least what they're doing is open and honest - they can't shut up about it on Reddit.

And, yes, I worry this risk is a contagion towards the greater market. But, on the other hand, these financial assholes have been skimming off of our retirement for years so it's not like what they're doing is a victimless crime either.

SI

That's exactly it, right? They have been caught at their own game, and are now crying to their mommies.

I don't think there's anything wrong with what Reddit is doing. They found market inefficiencies, and are exploiting them. Isn't that exactly what the stock market is about?

I took commerce in college and was taught all about investing, looking at the fundamentals of companies, their earnings ratios, valuations, etc. We are so far away from any of that stuff these days. Some of the highest valued stocks have never made a single dollar of profit.

[wustin]

CNBC complaining about reddit being market manipulators. They can't buy and institutions made the share price drop over $300 in less than 2 hours.

[Ghost Econ]

Down to $126 now.

How is this not some sort of collusion between the brokers and hedge funds to manipulate a stock price for financial gain?