I hope the hedge funds who shorted the stock go out of business and don't get a bailout from the government.
On the other hand, I don't understand why you hope they go out of business. Have they done anything bad by shorting GameStop? If they believed the stock was overvalued, are they wrong to bet on that belief?
They seem to think that shorts = bad.
As we can see now this was not only foolish but self-destructive. The only scenario where I see this paying off is when GameStop went bankrupt and there was no sign for this at all.
People love when greed gets punished and this is what we are seeing here.
But even disregarding that, a hedge fund’s job is literally to manage risk using more complex financial instruments.
A complacent hedge fund that overextends itself don’t just need to fail, they need to burn long and hard
Sadly, they usually get “bailed” out (by their buddies in their industry, not the government), like we just saw with Melvin. Which in turn creates enormous inefficiencies in our economy..
Why so?
They're based on asymmetry of information, the shorter having more insight than the lender. And their purpose is to convert that information into money at the lender's expense; by the time he gets his shares back, they've tanked.
There are obviously problems with who actually has access to short stocks, but in theory they are a reasonable counterbalance:
If you believe in the stock, buy it, if you don’t believe in it sell it.
And if you don’t currently own any shares, you can borrow shares from the people who believe in the stock, sell them now and cash out when/if the stock goes down.
The information imbalance is fundamentally a part of how we operate our markets, since information literally can’t instantly be distributed to everyone (regardless of what faith-based “economists” try to convince people to believe about the efficient market gospel)
You characterize it as a "bet". The whole point of a bet is that sometimes you lose. We don't allow for corporations to lose in the USA, only the common person.
It's a game and some one are going to lose.
For one, the calls look like they’re still overpriced relative to the puts. So manufacturing calls via put-call parity would be a starting point. (Spot checked the puts—they seem to break even under 100 per share out to November, so not much juice left there.)
It’s also only the leveraged funds burning out. And they don’t only own GameStop shorts. So money will be made bailing them out and cramming down their existing LPs.
This kind of a pyramidesque system almost guarantees that the most pain will be felt in the reversion to the mean, not flexion from it.
I just see a wake of losers all around from. Melvin's Hedge Fund? There are people and their portfolios behind that taking a hit.
Few people got in early and are seeing multiples in returns. Now they are on WSB "Now is the time to rebuy, GME to 1000$, GME to the moon!!!" because they needs loads of suckers to throw in late to keep propping the price up. But the later comers are going to lose their shirts.
The whole "Robin Hood" narrative is weird. Let's call a spade a spade; a few people are going to get rich at the expense of a lot of individuals over these shenanigans.
Too hot to make big money off ATM IMHO. 114% is nothing considering the risk.
r/WSB does not seem to believe it. I believe we should know for sure one way or the other by Saturday, but I could be wrong about that.
this is a tiny slice of justice from 2008/2009 that Occupy Wallstreet demanded and never got. The fact that they get plucked like a goose by memers on reddit and on their own professional turf is almost poetic.
I mean, there were books and even a movie about it.
I really don't understand this hatred of short sellers and cheering for people who are often clueless about valuation.
There's something as highly corrupt about that to me as much as anything else at play here.
Also spoken as "an eye for an eye will leave the whole world blind"
I've noticed that this proverb only seems to comes up when disadvantaged people (who are already missing a metaphorical eye) strike back at the people who put them in that disadvantaged state to begin with.
I harboured a lot of bitterness and built up ideals that were not based in reality. It took some time for me to realize that it's never as simple a situation as you want it to be, and no amount of pain inflicted against the simplified other that you've created for yourself will rectify anything.
Blindly attacking anything that resembles the enemy you've crafted in your own mind will just end up hurting a lot of others like yourself, and most of all: oneself.
For the record, it was Ghandi who said that. It's about rising above the condition of those who hurt you in order to not become the thing you resented. What do you benefit the world simply usurping your detractor(s)?
BTW, this could be said about long investors, they're hoping for their competitors to fail.
[1] https://www.institutionalinvestor.com/article/b1pgz6k9kjs50v...
If you see an actual institution spreading misinformation, report that institution to the SEC. If it's from someone hiding behind a keyboard and posting on reddit, ignore it, because no institution is buying based on the suggestions of WSB.
Just another example of weirdly flavored hero worship mixed with greed and the American obsession with cars.
According to the "invisible hand" of the market, they didn't, since supposedly rational investors on Reddit decided to buy lots of stock to go long. If you're going to claim the Reddit investors are actually irrational, then I have some bad news about most other investors as well.