Reddit, u/wallstreetbets & GameStop: market manipulation is OK if you’re rich

[Ned_Flanders]

It is new. You can't print a pamphlet then see a response within a second and use that to coordinate action.

Its similar but different and in the same way the printing press changed things so does instant communication.

And how quick was a trade in a coffee house? The speed is matching the speed of the transaction. Doing it faster does not make it new, just faster. And that is offset by microtrading software that effects trades in milliseconds without human intervention (which is still faster than Reddit)

I get people are excited about this, but it's legit a fresh coat of paint on an old play

 

[ferball]

And you keep thinking them saying no stopped people from acting, it didn't.

They are not an essential service which has to guarantee supply FFS.

No they aren't.

And the perception is that they screwed little people to protect big financial organisations like Citidel.

This reinforces the idea that the market is rigged and the ruling class are scum.

 

[Ned_Flanders]

No they aren't.

And the perception is that they screwed little people to protect big financial organisations like Citidel.

This reinforces the idea that the market is rigged and the ruling class are scum.

This I 100% agree

It's this perception people are reacting to, and that is a worry

Markets rely on people having informed knowledge when they make an economic decision. People who don't understand shorting, don't understand brokerage, and are following what that read on Reddit or news.com.au is not informed knowledge.

When the dump happens, a lot of punters will get hurt. Some funds will be whacked, but you can guarantee they are already moving to isolate the effected ones to limit the contagion (a move I loathe, but again, been happening since Adam was a boy)

 

[Evolved1]

Those who coordinated the action made bank. Dumb money will be left holding the bags. Am I missing anything?

 

[Chameleon75]

from what has been reported, at this stage i dont think they will - only if its shown they are colluding with one of the funds

at this stage, from the noises from govt, it sounds like the hedge funds and the reddit users are the ones looking at legal issues. the hedge funds i suspect its if the short was a coordinated one between then. The reddit users have openly worked to manipulate the market, so the ones guiding the others may be facing some problems

that sh*t is 2-5 years away from completion however, so its a crap shot predicting who will face which sanctions yet

The redditers are not manipulating the market, this stock has been shorted over the last two months and the bulk of the purchases have been made over that time, they’re simply topping up their position, taking a long position isn’t market manipulation.

The hedge funds have done this to themselves, it was some of the funds closing out their positions that caused the sudden spike in price. Some of the smaller funds haven’t got the cash reserves to cover the interest and began buying back stock. The stock was shorted to 140% and this week that was brought back to 123.5%, the increased demand was from the hedge funds themselves. To the extent that the redditers are having an influence their refusal to sell is exacerbating the squeeze caused by the hedge funds.

A former hedge fund manager was on Bloomberg, he believes that as the larger funds begin to close out their positions the potential increase in price is infinite regardless of what the redditers do as there is simply not enough stock in the entire float to close out all the shorts.

It’s a very expensive game of musical chairs.

 

[Deaneus!]

Some definitely, my worry is the media are showing this as a little guys taking money from big guys story, which makes people think it's a money making opportunity.

WSJ opinion this morning did the same

Then shot herself in the head to make sure. Twice.

(Yes I made that up to make a point. She didn't shoot herself in the head.)

I always liked, “He fell on a knife. Seven times.”

Those who coordinated the action made bank. Dumb money will be left holding the bags. Am I missing anything?

The point, and most of the story.

 

[BruceFromBalnarring]

And you keep thinking them saying no stopped people from acting, it didn't.

They are not an essential service which has to guarantee supply FFS.

No. It bought time for the hedge funds to “recalibrate” (crash the stock), which they did.

 

[BruceFromBalnarring]

And you keep thinking them saying no stopped people from acting, it didn't.

They are not an essential service which has to guarantee supply FFS.

They are a financial service legally bound not to manipulate the market.

 

[Forward Press]

Ted Cruz and AOC agreeing with each other in support of this. Crazy stuff, hopefully it leads to more power for the little guy moving forward.

First ever FK post I agreed with.

You know it's a true subversion of corporate America when AOC and Cruz can agree, and the Dem and Rep leadership are conspicuously silent. We are almost certain the big guys would win, eventually - but can we hope that, for once, the little guys win this one?

 

[Evolved1]

First ever FK post I agreed with.

You know it's a true subversion of corporate America when AOC and Cruz can agree, and the Dem and Rep leadership are conspicuously silent. We are almost certain the big guys would win, eventually - but can we hope that, for once, the little guys win this one?

Some regulation is needed to protect the little guy, even from himself.

 

[BruceFromBalnarring]

See here’s what will happen. Might happen. This will be the initial skirmish that should have been the warning. But it won’t be heeded. There will be an almighty crash. Mums and dads will lose their life savings and assets. The financial institutions will offer up some poor campaigner as their representative fall guy and the billionaires, having bought up all the assets the punters have lost, will go again. And there’ll be anger on the streets, and the next president will make Trump look like a ******* wet nurse. And “society” will ask “how did we get here?”.

And I’ll say “because dickheads like Ned said “that’s just the way it is””.

 

[Deaneus!]

Ha ha ha ha ha ha ha ha ha etc

‘Meme stock’ rally rescues AMC Theatres from $600M debt

Theater chain gets unexpected lifeline when private equity trades a corporate IOU for stock

www.polygon.com

 

[ferball]

See here’s what will happen. Might happen. This will be the initial skirmish that should have been the warning. But it won’t be heeded. There will be an almighty crash. Mums and dads will lose their life savings and assets. The financial institutions will offer up some poor campaigner as their representative fall guy and the billionaires, having bought up all the assets the punters have lost, will go again. And there’ll be anger on the streets, and the next president will make Trump look like a ******* wet nurse. And “society” will ask “how did we get here?”.

We don't often agree (before this s**t happened anyway) but this is pretty close to the mark. If this cycle keeps going then it will result in some form of revolution/uprising and general shittiness in the US or a genuine fascist will come to power. Its not the initial skirmish tho. Occupy and the Tea Party (before it was taken over by the Evil Oil Brothers,) were initially driven by both parties response to the GFC. There was no real Wall St fall guy for all that.

Its the next skirmish, not the initial one. Its so visible and the abuse of power seems so obvious that this event really does have the power to create a noticeable class divide that might overcome the manufactured cultural war one. If I was a conspiracy theorist I might be inclined to think constantly tell all and sundry the divisions caused by the culture war are manufactured by the ruling class to maintain their position using the strategy we all call "divide and conquer".

 

[Nuggs Bunny]

Maybe hedge funds should steer clear of short positions and just stick to buying & long holding blue chip stocks until they know what they're doing.

 

[SaltPeter]

Maybe hedge funds should steer clear of short positions and just stick to buying & long holding blue chip stocks until they know what they're doing.

Or maybe the arrogant greedy campaigners should buy OTM calls to insure their position, or at least minimise their risk

 

[kranky al]

Stolen from bell tower times:

<<<
GameStop has set a dangerous precedent in the deluded mind of Jack. To some, this market manipulation masterclass by Reddit rogues was a clear message to hedge fund scumbags that the barbarians had breached the gates.



However, the lesson Jack took from it was that his “investment philosophy” of blindly jumping on hot tips on social media sites was flawless in every way.


Total validation that he was the wolf of Facebook stock tips. Even if his portfolio was deeper in the red than a haemophiliacs tampon. Mere semantics at this point.


Safe in the knowledge he was a gigabrain, Jack decided it was only right to give back to the community. So he rolls up his sleeves and selflessly offers his expert analysis on what exactly happened in GameStop.


His first unwitting student was a girl who had agreed to get a coffee with him out of pity. They fumble through some excruciating small talk before a long silence falls over the rendezvous. As she sips her long mac topped up, Jack decides to ring the bell – class is in session.


He grabs her drink, “imagine that I borrow this coffee off you. I now owe you one coffee right?” She freezes up. Terrified he’s about to launch into some kind of pyramid scheme or negotiation for a quick wristy, “um, yes?”


“Now, imagine I sell that coffee for what you paid for it. I’ve made $4 but I still owe you a coffee, right?”, she sits in bemused silence. He continues, “now, I’ve essentially made a bet that the value of the coffee will be $2 soon, so I can return your coffee to you and still make $2 profit, right? Well that’s essentially GameStop”.


He sits back with an expression that’s far too smug for someone who has just explained barely 1% of the total story.


She searches desperately through her short term memory to remember where she actually asked. “Oh, you mean short selling? I think I saw that exact example on a meme going around this morning”. His heart sinks, how is it possible she also saw it.


You’d think getting busted passing off basic knowledge you got from a meme a few hours earlier as your own expertise would humble a man. Not Jack though. He decides the only way out of this pit of shame is to double down. Hard.
“Just giving you the basic version, it’s pretty complicated stuff, next time I’ll break down the pump & dump play for you, gotta walk before you run with the big dogs, babes”



When he gets home he jumps on social media and hammers out a few posts. One about how the Reddit stockbros could’ve done it better. One on why sophisticated investors like him aren’t really worried and finally, he channels his inner Elon with a one-word update, “Dogecoin”.
He messages the girl from earlier, “you know how we were talking about GameStop? Well, thought I’d run a little play of my own. Dogecoin just went up 20% after my status update! Ape strong together diamond hands, babes. The power of influence hey . ” *left on seen*.

Move over Bic, this is how you sell a pen.>>>

 

[BruceFromBalnarring]

Or maybe the arrogant greedy campaigners should buy OTM calls to insure their position, or at least minimise their risk

Sorry mate I might have lapped up all his drips of ironic sarcasm before you got here.

 

[SaltPeter]

Sorry mate I might have lapped up all his drips of ironic sarcasm before you got here.

Its ok, I got the sarcasm

 

[FireKrakouer]

I've never seen left and right on social media so united. There's always one goose who gets defensive and plays contrarian though. Give it up Neddy.

 

[FireKrakouer]

Is there an Aussie app that allows GameStop stock purchases? Imma buy just one share to retire on.

 

[Ned_Flanders]

I've never seen left and right on social media so united. There's always one goose who gets defensive and plays contrarian though. Give it up Neddy.

This isn't about left or right. It's about how the share market works. Shorts are legal (without collusion).

Let me be blunt, as I've said previously, I'd curtail how derivatives are used (only allowing them for risk offsets), and I'd make share trades non sellable for 48hrs. Reality is I'm in the minority. Most want the stock market to be a speculation arena, not an investment one

 

[ferball]

This isn't about left or right. It's about how the share market works. Shorts are legal (without collusion).

Let me be blunt, as I've said previously, I'd curtail how derivatives are used (only allowing them for risk offsets), and I'd make share trades non sellable for 48hrs. Reality is I'm in the minority. Most want the stock market to be a speculation arena, not an investment one

Yet isn't the speculation what really causes the problems?

 

[Ned_Flanders]

Yet isn't the speculation what really causes the problems?

Absolutely. Everything is about betting on stock, not investing in a firm

It's why I'm in favour of a 48 ban of selling

 

[ferball]

And how quick was a trade in a coffee house? The speed is matching the speed of the transaction. Doing it faster does not make it new, just faster. And that is offset by microtrading software that effects trades in milliseconds without human intervention (which is still faster than Reddit)

I get people are excited about this, but it's legit a fresh coat of paint on an old play

Its the scale and ability of small players to have an impact that is not necessarily in line with the functions of the market. Read the WSB reddit. Its full of people prepared to lose money to watch a hedge fund fall apart because they are bitter and pissed off about the consequences of the GFC.

They are using the market and modern communications tools to try and break something they don't like.

Its not the speed of trading that is the new thing. Its the way technology makes it possible to use trading to do something else.

In this case unite a bunch of people who don't know each other around the idea of using the market to buy the potential destruction of a large hedge fund.

Not everyone is trying to make money out of this.

 

[Eagle Wrath]

So Robinhood were brought down to a 1 star rating on google playstore by reviewers, after Robinhood influenced the market against small investors.

Google have responded by removing close to 100,000 negative posts. The company has now deleted enough reviews to bring it back up to nearly 4 stars.

Thankfully most of this is being reported and is spurring on small investors more. Hope they crush these billionaires.