Anonymous wrote:Did WSB uncover a huge scam walk street had been running?

https://www.reddit.com/r/wallstreetbets/comments/l97ykd/the_real_reason_wall_street_is_terrified_of_the/

Basically, the allegation is that there may be more shares floating around than actually exist! Wall street has been creating fake shares, and if you bought gme stock you may only have an iou for a stock, not the actual stock. The number of failures to deliver for GME is perplexing, and Michael Burry was wondering why it took 3 weeks to deliver shares when he requested delivery of the ones he owned.

Um, the fact that short interest rose above 100% is neither illegal nor hidden.

Anonymous wrote:https://www.reddit.com/r/wallstreetbets/comments/l9cz1k/for_everyone_that_just_joined_because_of_gme_and/

This is exactly why WSB is going to ruin a lot of individuals who get suckered into a ponzi scheme. Tiny disclaimer at the bottom does not absolve them of guilt.

Regular people will go bankrupt listening to this. Meanwhile Melvin Capital will have a bad year, and then they will keep on managing a hedge fund until they retire.

'
I don't know about this. Maybe Biden will put Warren in charge of a comprehensive stock trade reform legislation. In these populist times, who would dare vote against it?

Did WSB uncover a huge scam walk street had been running?

https://www.reddit.com/r/wallstreetbets/comments/l97ykd/the_real_reason_wall_street_is_terrified_of_the/

Basically, the allegation is that there may be more shares floating around than actually exist! Wall street has been creating fake shares, and if you bought gme stock you may only have an iou for a stock, not the actual stock. The number of failures to deliver for GME is perplexing, and Michael Burry was wondering why it took 3 weeks to deliver shares when he requested delivery of the ones he owned.

The 'everyman' involved in this, Dave Portnoy, is a billionaire himself by putting sports gambling in the hands of teens and college kids via Barstool Sports and PENN casino. He's an egomaniac attention obsessed parasite.

Anonymous wrote:

Anonymous wrote:https://www.reddit.com/r/wallstreetbets/comments/l9cz1k/for_everyone_that_just_joined_because_of_gme_and/

This is exactly why WSB is going to ruin a lot of individuals who get suckered into a ponzi scheme. Tiny disclaimer at the bottom does not absolve them of guilt.

Regular people will go bankrupt listening to this. Meanwhile Melvin Capital will have a bad year, and then they will keep on managing a hedge fund until they retire.

If this frenzy is artificially popped by tilting the scales even further in favor of the hedge funds then the people you are concerned about will get hurt worse. We have to let this play out naturally. Those risks are forseeable. The risks of popping this artificially are not.

No, those people will get hurt by the same amount. There will be fewer winners in the ponzi scheme though.

And frankly there is no "scales tipping" going on. If you are butthurt about Thursday, get a bigger and better broker. Honestly you can't expect to take on the seventh fleet from a speedboat with a machine gun on it. Talk about how a little company like Robin Hood somehow rigged the system is a conspiracy theory. And ultimately the SEC will write a report that says they were in danger of going below their required capital ratios. WSB will, like good conspiracy theorists, claim that this is proof that "THE CONSPIRACY GOES EVEN DEEPER".

The WSB instructions on Thursday were to hold. And RH never restricted holding. WSB was mad that people might sell what they freely own. Think about that.

Ultimately the WSB plan will fall apart because they aren't a unified syndicate with pooled profits, and when profit taking comes, it's every man for himself. There will be no settlement day where the people who got in at $300 or $400 get money. You could already be suckered. For all you know, some of the paper multimillionaires may have already hedged their positions. If you are relying on their portfolio screenshots to tell the truth, good luck with that. The guy who started this never intended to launch a crusade to destroy short selling. Why would you expect him to take up the cause now? Fear that his life will be threatened if he does, maybe. It is rational to expect that he is looking out or his family right now. He's a renter who currently has $40M. and knows how to lock in those profits without showing his cards. Not saying he did, but why wouldn't he?

Most squeezes and market cornering efforts fail. Sometimes both sides go down the toilet. And those efforts are an individual or a small group of highly unified individuals. In this case you have thousands of people with indvidual motives. Those range from a $500 bet to "stick it to the man", to someone going all in to pay off college debt, to someone else who doesn't even understand what buying on margin means but sees a boat or a house in his future.

I have seen a few people describe them as "collateral damage". Hey, you aren't a bond villain. You're a person who must weigh the ethics of participating in this scheme based on misinformation, in the same way a member of Congress needs to weigh the ethics of challenging certification of the vote with an uneducated/delusional mob outside.

Anonymous wrote:https://www.reddit.com/r/wallstreetbets/comments/l9cz1k/for_everyone_that_just_joined_because_of_gme_and/

This is exactly why WSB is going to ruin a lot of individuals who get suckered into a ponzi scheme. Tiny disclaimer at the bottom does not absolve them of guilt.

Regular people will go bankrupt listening to this. Meanwhile Melvin Capital will have a bad year, and then they will keep on managing a hedge fund until they retire.

And the other source keep saying that the hedge funds are going to profit. If the stock is artificially at $300+ and expected to fall, why wouldn't another hedge fund short sell as many shares they could find right now? To cover their losses, I would guess that the original short-sellers are already reselling their shorts to someone who wants to take the risk on the big $300+ -> $4 drop.

Anonymous wrote:https://www.reddit.com/r/wallstreetbets/comments/l9cz1k/for_everyone_that_just_joined_because_of_gme_and/

This is exactly why WSB is going to ruin a lot of individuals who get suckered into a ponzi scheme. Tiny disclaimer at the bottom does not absolve them of guilt.

Regular people will go bankrupt listening to this. Meanwhile Melvin Capital will have a bad year, and then they will keep on managing a hedge fund until they retire.

If this frenzy is artificially popped by tilting the scales even further in favor of the hedge funds then the people you are concerned about will get hurt worse. We have to let this play out naturally. Those risks are forseeable. The risks of popping this artificially are not.

https://www.reddit.com/r/wallstreetbets/comments/l9cz1k/for_everyone_that_just_joined_because_of_gme_and/

This is exactly why WSB is going to ruin a lot of individuals who get suckered into a ponzi scheme. Tiny disclaimer at the bottom does not absolve them of guilt.

Regular people will go bankrupt listening to this. Meanwhile Melvin Capital will have a bad year, and then they will keep on managing a hedge fund until they retire.

When gabe plotkin lost 53% in January, the mask slipped.
https://www.wsj.com/articles/melvin-capital-lost-53-in-january-hurt-by-gamestop-and-other-bets-11612103117

Anonymous wrote:This whole story is so intriguing. If only I had a basic understanding of the stock market so that I could follow along.

There are a million nuances but these are the main points:

Shortselling:

Today, hedge funds borrowed 5 apples and sold them at $10 an apple. So they had $50. They agreed to return the apples tomorrow. They hope that tomorrow the apples will cost $8 an apple. So they would use $40 to buy back 5 apples and return the apples, keep the difference at a profit of $10.

The plan:
Borrow 5 apples, and sell at $10 each. Get $50 (5*10) . Buy 5 apples back at $8 each. Get $40 (8*5). Return 5 apples to owner. Keep $10 profit (50$-$40)

The problem:
Those who own the apples decide that they will only sell at $1000 an apple
Now hedge funds are looking at:

Borrow 5 apples and sell at $10 an apple. Get $50. Buy apples back at $1000 an apple. So now they need $5000 to buy 5 back. But they have only $50 from the sale of 5 apples. Where do they get $4950 to buy the apples back ($5000 -$50)?

Now RH comes in

For several reasons RH stops apple purchases on its app but does not restrict selling. And many of the owners of the apples use RH's app to buy and sell apples. It can take a few days to set up buying and selling on a new app. So owners of apples are not happy because if buying is restricted and selling is not, then the price should go down since there is less competition for apples.

RH seems to have cash issues with the increased volume of buying and selling apples. Some believe that RH intentionally does not want people to buy anymore apples, so that the hedgefunds have less competition in buying to pay their debt. RH serves the owners of apples who use its apps to buy and sell apples. However, RH also serves the hedge funds -it sells data from those who use its apps to hedge funds.

Here we are. The owners of apples don't want to sell(or what to sell at a highly exagerrated price). And hedge funds need to buy but want to buy at a "reasonable price". Some have already bought within the past weeks.

Potential villains:

1. RH who restricted buying and thereby reducing competition for the hedge funds (since hedge funds do not use RH for purchasing apples, hedge funds can still buy while many others cannot).

2. Hedge funds who borrowed and sold too many apples without foreseeing that the owners of apples may not be willing to let them buy at a lower price when the hedge funds debt was due. It's not like this has not happened before (See Volkswagen short squeeze).

3. NYSE and regulators of the stock market: They are so reactionary that they could never have seen this coming even if it hit them in the face. In fact, it did hit them in the face (see Volkswagen)- shortselling could have been severely limited after the Volkswagen situation, or it could have been completely restructured to prevent this situation.

4. Current owners of apples who are seen by some as unreasonable for only wanting to sell apples at a very high price. There is also the reality that several of these people will be left holding overpriced apples when the hedge funds have bought whatever they need to pay back the borrowed appples.

Anonymous wrote:This whole story is so intriguing. If only I had a basic understanding of the stock market so that I could follow along.

More than half of the gamestop speculators are at your level of knowledge. That's the scary thing.

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I understand there is huge risk if DTC and Apex go under because Melvin can' cover their losses. That being said, if retailers aren't allowed to buy, then shorts shouldn't have been allowed to sell and should have been allowed to buy only.

Restrict both sides of the trade.

do you understand the simple fact that the shorts do not trade in Robin Freaking Hood? I keep saying this. If you think trading should be halted for tell at NYSE. But frankly you guys seem to feel entitled to special status. You could be on a bigger brokerage and kept trading. Your choice of a startup to execute a short squeeze is like landing at Normandy with nerf guns.

Do you no understand this was entirely triggered by the fact that there was massive risk that it was feared that Melvin wouldn't be able to cover their short losses? The losses don't magically disappear. They get passed onto the clearance houses, which is why DTC began requiring 100% collateral. It's not a RH problem, it is a dumbass Melvin Capital problem. And now that Melvin exposed the entire market to huge risk they're still allowed to get away with whatever they want. They messed up so they should face restrictions as well.

Oh, so its OK for Melvin to drive down the price with free rein while the public isn't allowed to buy, so that they can buy to cover their shorts at a cheaper price, yet retail can't buy to maintain a higher price for sale? Hell no.

I'd be perfectly fine BTW if the NYSE halted the stock and they settled upon price for a payout of $400-500. That way everyone is somewhat happy and risk to the entire market is mitigated.

The longs also exposed the market to huge risks and they knew it. They want it. The want to blow up the shorts no matter what the collateral damage to the market or themselves. And you are arguing that RH should let them do it.

Right now the biggest risk to the market is any large move either way. The longs didnt cause this. Over leveraged big money gambled and caused this. If they got out on Thursday then the risk is contained. If they didnt get out then we are all effed and they need to be wearing orange for the rest of their lives. It may seem counterimlntuitive but, considering the amount of pension and index fund money long, gamestop at $500 is less destabilizing than Gamestop at $100.

Ummm no. The risk to the market is the insanity driven by the manipulation of WSB types. Market closed down bc of it. Dont act like holding some long in GME in your mutual fund changes that. Redonculous

You have no idea have much money is in automated trades or what gets triggered if one of the major indexes suffers a a sudden 5% drop.

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I understand there is huge risk if DTC and Apex go under because Melvin can' cover their losses. That being said, if retailers aren't allowed to buy, then shorts shouldn't have been allowed to sell and should have been allowed to buy only.

Restrict both sides of the trade.

do you understand the simple fact that the shorts do not trade in Robin Freaking Hood? I keep saying this. If you think trading should be halted for tell at NYSE. But frankly you guys seem to feel entitled to special status. You could be on a bigger brokerage and kept trading. Your choice of a startup to execute a short squeeze is like landing at Normandy with nerf guns.

Do you no understand this was entirely triggered by the fact that there was massive risk that it was feared that Melvin wouldn't be able to cover their short losses? The losses don't magically disappear. They get passed onto the clearance houses, which is why DTC began requiring 100% collateral. It's not a RH problem, it is a dumbass Melvin Capital problem. And now that Melvin exposed the entire market to huge risk they're still allowed to get away with whatever they want. They messed up so they should face restrictions as well.

Oh, so its OK for Melvin to drive down the price with free rein while the public isn't allowed to buy, so that they can buy to cover their shorts at a cheaper price, yet retail can't buy to maintain a higher price for sale? Hell no.

I'd be perfectly fine BTW if the NYSE halted the stock and they settled upon price for a payout of $400-500. That way everyone is somewhat happy and risk to the entire market is mitigated.

The longs also exposed the market to huge risks and they knew it. They want it. The want to blow up the shorts no matter what the collateral damage to the market or themselves. And you are arguing that RH should let them do it.

Right now the biggest risk to the market is any large move either way. The longs didnt cause this. Over leveraged big money gambled and caused this. If they got out on Thursday then the risk is contained. If they didnt get out then we are all effed and they need to be wearing orange for the rest of their lives. It may seem counterimlntuitive but, considering the amount of pension and index fund money long, gamestop at $500 is less destabilizing than Gamestop at $100.

Ummm no. The risk to the market is the insanity driven by the manipulation of WSB types. Market closed down bc of it. Dont act like holding some long in GME in your mutual fund changes that. Redonculous

This whole story is so intriguing. If only I had a basic understanding of the stock market so that I could follow along.

Anonymous wrote:

Anonymous wrote:
I agree that overleveraging is bad and should be prevented, but that's not the issue. You manipulate the market, you create risk. These people manipulated the market and made money. They also identified a type of risk that was ignored before and should be closed in the future. Good for them! But they don't get a medal, they don't get to dictate a price, and the stupid shorts did not break any laws. Sorry, it just doesn't work the way you think it does.

Did the Reddit longs break any laws either?

Yes, the whole system if f-ed. AFAICT, the Redditors goal is to prove that. I do think that the collateral impacts are concerning...but I'm not 100% how to fix this. I think if it gets fixed in a way that more than a few pounds of flesh aren't extracted from WS (which I doubt will happen), then in the long run it's worse than any short-term instability the Redditors caused. The system is rigged so that WS always wins. That will continue to drive destabilizing behavior. We at least need to start by admitting that and taking the risk seriously. I don't think we really did in 2008 (i.e. didn't take the moral hazard concerns seriously), and I don't think we've learned enough since.

A big problem, IMHO, is that no one has seriously challenged the notion that more liquidity is always good.

Exactly. The redditors did nothing wrong. They had a discussion on a messageboard, like we're doing right now, and one guy posted an idea he had in August 2019. This guy, a dad from Boston that lives in a house worth less than the average priced home in DC, said he had looked closer at the cash flow figures. He said that at $4 it was undervalued and that he had bought in. He was made fun of and told it was a stupid trade, that gamestop was poorly run, indebted, reliant on dying malls, and about to be left behind by digital distribution. The guy said, you may be right about most of that but they arent going bankrupt.

When they looked closer at the stock, they noticed it had an extremely large short interest. In fact, the stock was undervalued. It was undervalued because a series of extremely large shorts had been placed against it and capital was scared. They then figured out that more shares were shorted than existed in the company. So they asked, how can this possibly be right? So they learned about how brokerage/dealers lend out our shares to big money traders tomwrite options, literal bets on a stock's future price. Stay away shouted the horde. Do you realize how much money's against you? Things looked bleak but then the Chewy Founder was brought onto the board with a 10% stake. The stock goes up based on that good news. As the stock went up the shorts started having to buy and it became apparent that an awful lot more shares needed to be bought than were easily available. People started buying in and the word spread. Then they asked, what if we just refused to sell? Jokes were made and memes created. They had fun with it.

Meanwhile, traders notoriously lurk on wsb to turn their schemes into pump and dumps. Most of wsb are momentum chasers you see. Robinhood used to publish it's daily trade numbers both by size and number of accounts. Professional traders were using that data to build up and then destroy popular robinhood positions. They did this by front running the robinhood order book. Anyway, I digress. Traders read the idea, looked at the numbers, and realized that wsb was right. Institutions that dont actively trade held most of the shares. Real money started buying in and each time that happened they started to make more people notice who then jumped on in turn.

Meanwhile the shorts kept doubling down and refusing to give in. They were not going to lose to a bunch of messageboard nerds. But the nerds didn't care. The original guy cashed out a bit and bought back in. They posted their holdings throughout to prove what they were doing. They held. They joked. At any time the billionaire shorts could have covered, but they refused to. They were too cool and werent going to give in to the amateurs. As this standoff was happening, index funds were having to buy more and more shares which was driving the price higher. Now more big money came in. The shorts still refused to cover. They had even sold calls to the redditors. And now, here we are. Either a bunch of hedge funds are going to go bankrupt, which will trigger a sell off in their holdings, or the indexes will crash and trigger it's own cascading automated selloff, like happened in march. Fun times.

To blame the redditors for this situation is preposterous. To claim they broke securitoes law is slanderous. They did nothing wrong. Against all the odds they did the research, with access to way less of it by the way. They formulated a strategy and explained their reasoning along with the upsdie and downside. They were transparent about what they were personally doing. They didn't mislead anybody. They don't have the money to do this on their own. Professional traders agreed with them and jumped on the trade while also playing the wild intraday swings. See, even within this trade there a professional traders skimming a piece of the action. HFT is even involved.

And yet, some want to blame a few thousand nerds because they think they're stupid