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Comment by phoe-krk | Hacker News Reader

Markets can stay irrational longer than you can stay solvent -- Keynes.

Yeah, I know... But it's annoying to see money getting transfered from people who are good at valuation to people who're clueless.

> people who are good at valuation

I wouldn't call people who short 140% of available shares good at anything

Greedy gamblers who assume everyone else is incapable of calling their bluff?

And here I've been told that the market price is the price, because that's the price, and don't get emotional about the market.

I guess that only applies when the 'right' people are involved?

See, this is what I mean by clueless. Price and valuation are completely different concepts. An asset that will never generate any cash has a valuation of zero, but its market price could be anything.

See, this is what I mean by how econ 101 reasoning makes people weirdly arrogant and impossible to talk to.

Parent is so quick to try to score a point arguing definitions that they entirely missed the point.

I'd be happy to discuss substance but your comment brings up no actual points, only ad hominem.

Right now, money isn't getting transferred from people who are good at valuation to people who're clueless. I'd say it's quite the opposite.

Well any reasonable GameStop valuation is at least an order of magnitude below current market price.

The value currently is not in GameStop itself but in the need for the short sellers to buy back the shares. So there is value in buying & holding. How much is still open..

The situation is pretty bonkers but I hope in the end that the hedge funds have learned a lesson.

The whole affair isn't, and wasn't, about GameStop's valuation, or even about Gamestop as a company whatsoever. It's about stock market mechanics and the ability to leverage them to make a profit.

not to pile on here, but what is happening is money is getting transferred from one gambler to another

I press f on the worlds smallest keyboard to pay respect to the billionaires betting they could grind the company out of existence through aggressive shorting who lost money on this.

The real conclusion would be to realize that the people "good at valuation" are glorified gamblers and not on another plane of existence from the rest.

In fact, it's tautological to state that if they got burned, then they are not that good. Or perhaps the entire thing is pareidolic nonsense.

Disagree. The short-sellers are correct about GameStop's valuation. In a liquid and competitive market they would profit and help the price move into the direction of correct valuation.

Well, the market thought otherwise and market is always right.

They just forgot that efficient market hypothesis is just that, a hypothesis. Real world markets behave differently thanks to finite resources and secondary markets (essentially leveraged derivatives caused 2008 crash and I believe they'll cause another before regulators wake up from their sleep).

Isn't that essentially magical thinking? The market is what it is, and their strategy failed. It doesn't really make sense to blame the market when the scheme fails and presumably celebrate the individual or group's purported brilliance when the scheme works. What actually happens is the ultimate arbiter of who profits and who doesn't, not the hypothetical fairer environment that "should" have existed to reward certain strategies.

It's similar to blaming the roulette wheel when the gambler fails and praising the gambler when they succeed.

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