Even more with some irresponsible newspapers blaming the whole thing on GamerGate and Alt-Right, effectively pushing away people that previously could be on their side.
Please don't post like that to HN. Instead, either post comments that are unambiguously within the site guidelines to begin with, or be careful to disambiguate your intent. Otherwise we end up in flamewar hell or something even worse than flamewar hell.
https://news.ycombinator.com/newsguidelines.html
https://hn.algolia.com/?dateRange=all&page=0&prefix=false&so...
(dang: Thank you for all your moderation. This is a meta-comment, not a complaint.)
What's even more concerning to me is that, to platforms looking for an excuse, your comment could be painted as trying to "incite" violence, and used as a justification to ban you.
Given the track record Reddit has of keeling over to public pressure, there is no way they are going to stand up to the SEC.
This chapter in WSB has brought forth substantially better communication with the admins than we'd ever had in the past, including a direct line to Alexis.
Edit:
Thank you all for the outpour of support!
Our main challenges thus far have been technical (hitting API limits, automoderator backlog, etc.) however, those issues have now been resolved and our bots are running better than ever before.
We largely owe our success in handling this to the Reddit engineering team who has routinely stepped up and fixed things. As chaotic as the scene has been for us moderators, I'm sure they have been under much more pressure. If you know a reddit engineer, please give them your thanks as they have done a phenomenal job.
For those curious, the surge in activity broke a number of things. Here are just a few:
> modmail surpassing 80,000+ messages resulting in modmail going down
> constant threads hitting 100,000 comments resulting in slow loading site-wide
> automoderator getting backlogged and taking 30+ minutes to parse comments leading to terrible comments getting through.
All these issues are now resolved, so once again, big thanks to the Reddit engineering team!
To be honest, I think the recent restrictions on trading specific stocks (on Robinhood etc.) is absolutely dumb. Apparently, the sort of crappy market manipulation that led to the 2008 Volkswagen "short squeeze" or the 2010 "flash crash" is absolutely fine because it was driven by traders. But an amateur mob performing the short squeeze must be stopped at all cost? What bullshit. Either the "casino" should be open to all, or rules that apply to the "amateur mob" should apply to the HFT and derivatives market as well.
Market manipulation. Loosely, market manipulation happens when you artificially influence the price of a stock, resulting in a personal gain. Buying stock with the intention of causing a short squeeze can be interpreted to fit that definition. I believe that WSB is creating artificial demand to try to "screw over" certain institutional investors. I am not a lawyer; this is not a legal interpretation.
> Apparently, the sort of crappy market manipulation that led to the 2008 Volkswagen "short squeeze" or the 2010 "flash crash" is absolutely fine because it was driven by traders.
How were they "absolutely fine?" You do know that regulators attempted to prosecute the traders/executives responsible for the 2008 VW short squeeze [1], and successfully prosecuted a trader for the 2010 flash crash [2]? For the VW short squeeze, regulators were not able to find evidence that the traders involved intended to cause a short squeeze or engaged in any artificial demand; they actually demanded the stock because they sought to take over VW. This is also evidenced by the fact the Porsche sold stock on the open market once they released that a squeeze was happening [3].
[1] https://www.ft.com/content/ad782326-ed02-11e5-888e-2eadd5fbc...
[2] https://en.wikipedia.org/wiki/2010_flash_crash
[3] https://www.ft.com/content/0a58b63a-4294-3e07-8390-c3aabef39...
Most likely this will be like accessibility to poker online and in casinos which don't profit off the game directly interestingly in the 2000s. A lot of people got involved. A few made a lot of money and the rest went to do other things after a while.
Robinhood doesn't like us? We'll start out own.
Reddit doesn't like us? Let's just kickstart and crowd-source another.
This idea that the common man needs to be protected from himself is paternalistic and condescending. Private equity is the means of collective action and the rich people don't want us to organize without their blessings.
Technically the JOBS act is supposed to allow this (crowdfunding). May not be as easy as buying stock but at least it's legal now.
There's Ruqqus which is already a working alternative to reddit. However, what I found going there is that there are a lot of anti-left memes being shared. Some amount of toxicity. I'm all for freedom of speech, but I wish the platform was a bit less political, a more neutral alternative to reddit... but hey, if enough people leave reddit, maybe it will become just that.
https://ruqqus.com/+Commentary/post/74iv/lol-you-thought-tha...
Not enough liquidity. WSB has very little to do with long term investing. It's just about using the stock market as a casino.
Then payment processors ban you. Then you start your own visa. Let's start our own visa. Banks ban you. Let's start our own bank. Your hosting service bans you. Host your own. Your ISP bans you. Start your own ISP. Other ISPs don't peer with you. Start your own internet. Then the feds shut down your bank.
The answer to censorship is not "start your own".
That’s a pretty long-term bet, though, and I don’t think WSB is usually into those.
By the way, the Reddit WSB "shutdown" was done by mod admins to clean up the page a bit. It was private for an hour or two and back up.
Interesting word choice. Conservative wording of "common man", but liberal wording of "paternalistic". I don't mind the former but I do wonder how a father would be more inclined to protect a child from itself than a mother; if anything, I would find maternalistic a more fitting descriptor.
On one hand, the rise of meme stocks is shining light that one of the central conceits of capitalism is wrong (i.e. that the stock market isn't a good arbiter of the value of companies).
But as a member of the public, I'm concerned about what happens when the meme stocks come crashing back to earth. When that happens institutional investors will overreact, doom and gloom will reign, and CEOs of public companies will use that to lay off people and cut worker benefits.
The common person always loses when bubbles burst.
The question is, will the creators of these communities trust cloud providers where the platforms are hosted to not de-platform them, or will we end up with P2P, distributed networks instead?
You will want a data mesh layer that multiple apps run on top of probably.
Network effects drive a lot of adoption of these things, which is a huge headwind against an "explosion" of them lasting that long.
And I did, because I'm a registered investor. But this isn't available to most people, only the top 10%.
Now I doubt Reddit has huge contracts with the government, but I’m sure the government could find something to harass them with if it wanted to. Drive long enough and a cop will eventually find a reason to pull you over.
https://www.theguardian.com/media/2010/dec/01/wikileaks-webs...
http://scripting.com/stories/2010/12/28/usGovtABigUserOfAmaz...
Jimmy Cramer pumping stocks every evening to his boomer audience which ultimately has some effects (not sure how much though) on stock prices seems fine but a group of people discussing stocks seems like a threat...
I'm not sure I'd call it keeling over to "public" pressure.
That's bullshit.
The principle, and thus the the right to free speech is the fundamental value of a free country. Hiding behind the "they're a private company, they can do what they want" is nonsense when the vast majority of communication flows through them.
I'm wondering though what happens if section 230 was modified to only allow for filtering and removal of spam (I'm expecting wiggle here in how it's abused) and illegal content.
If you leave the responsibility of Free Speech to the Free Market then you end up having freedom of press only for the people who own one.
The hard part is getting that corp to own anything of value, since it starts with just the money you put in. But this is still a viable path to wealth for people with time horizons measured in years rather than days. (And all the people who want immediate gratification provides a fairly large market to trade with.)
That's how things have traditionally been in the US, is it not? As far as I know there was never any law that would force me to allow someone else to use my (literal) printing press.
The exception is the FCC fairness doctrine, but the basis for that was that the "printing press" (RF allocations) is actually a common good, and was only granted to private interests in exchange for certain concessions.
Look at Visa going after porn and private sex work.
This entire culture of trying to control what others can say via deplatformization is neoliberal fascism.
Bad things get said. But free speech protects all of us from tyranny, and we have to defend it. Because they'll come after you and your ideas next.
Americans have thick skin, or at least most of us do. It's a consequence of our liberty, and it's a defining trait of our system.
E.g: I run a stock newsletter. I hire a boxer, Evander Tyson, to hype a biotech penny stock, Scampill Co.. Tyson says to his followers and to my newsletter subscribers that Scampill is about to get a drug approved by the FDA that will cure cancer. I and my friends at Scampill make sure that the patsies have enough stock to buy when I put out my first email blast. When the stock goes up 900% we sell our shares. At that point there are no more large lots on the market, the spreads widen, and the price collapse occurs.
The SEC then sends their feds after me, the boxer I hired, and my friends, the insiders at Scampill. If they can catch me, I do some time in club Fed and have to pay some fines.
In this instance, there is no insider collusion, there is no single promoter with an interest, and there is no commonality to build a class among the redditors etc. who participated in the manipulation. You have a mixture of people who may have said illegal things and people who had totally licit (in the eyes of the law) motivations and actions. You have a big mixture there of mens rae and its absence and a big mixture of types of actus reus and the lack thereof. It is a big mess as compared to making a case against the typical P&D mob scheme.
Yet, you have an outcome that is somewhat similar to a classic P&D, and on a regulated marketplace, whereas most P&Ds happen on less regulated over the counter markets.
I am genuinely interested in the physicality of how that would play out. A mob with pitchforks makes a run at a Facebook HQ. Do they kidnap employees until they find one with the access to re-initialize the account? I guess they would have to keep the hostages forever, else the accounts be disabled again the next day. Do they setup a camp outside with the declared intent to launch an attack should certain accounts not get enough likes? How long could that last? Or do they break into a datacenter and attempt to do it themselves? I'm reminded of that iMac scene in Zoolander.
― Warren Buffett
They're using the "terrorist" word already in many cases.
Furthermore, this comment is offensive. Let's please not pretend that Facebook and Twitter were "looking for an excuse" before deplatforming Trump. They were entirely justified and would have been justified in doing so many years before they eventually did so.
Let's also not put the word "incite" in dick quotes barely three weeks after an insurrection and attempted coup. There was actual incitement of violence in that case.
Or this one: BLM hasn't caused any deaths, to date; the Capitol (capitalized, btw, and with an "o") insurrection caused 5 and could easily have resulted in the assassination of various senior government officials.
Or this one: BLM protests involved tens of millions of citizens across all walks of life and were prompted by very real social problems with police murdering black people; the Capitol riot was prompted by fascism and white supremacy.
Do I need to go on?
Calm down, Bud.
I appreciate your clarification, however. I withdraw my assertion that you were trying to minimize what happened on January 6th. And I apologize.
Do you honestly believe this? Somehow we'll go from not being able to buy certain stocks to violence?
Banning collecting rain water on your own property didn't do it. Abject failure of politicians keeping drinking water clean didn't do it? Not being able to buy cheese from unpasteurized milk didn't do it. Can't grow a plant in your own backyard for personal consumption. But this is it, this is the impetuous. Not being able to buy GME stock.
Let's be real. This is small potatoes.
* Increasing wealth inequality for several decades now
* older generations holding onto more wealth and power in society than ever before - with a large share of their wealth in the stock market
* Wall Street is seen as entirely unaccountable due to 2008 bailout
* Pandemic this year has basically been a huge wealth transfer from normal people and small businesses towards large conglomerates and the wall street hedge funds who back them
* Institutional trust is at historic lows, while online spaces become more and more regulated by those same institutions
So maybe GME stock is small potatoes in the grand scheme of things, but it seems like all of this has to reach a boiling point eventually. I'm not sure what that will look like, but violence wouldn't be surprising.
Everything I’ve seen from how the media covers it to how our financial institutions are forming ranks to condemn retail investors sickens me. It’s making obvious the informal lines of control the investor class use to maintain their wealth and their anger to have the average person attempting to play their game.
It’s like a giant metaphor for how screwed up our society has become.
We're pretty much there. Just try driving through the Midwest, or West in areas not subsumed by the mega-cities. It's sad.
When it gets to that, it seems to me that there's some serious anger built up.
Do you have a reference for older people having more wealth? There's definitely a smaller number of people holding more wealth, but I haven't read about older people holding more wealth.
> Increasing wealth inequality for several decades now
TV talking heads bemoan about this, but billionaires still remain the most admired people in this country (Trump, Musk, Gates, etc).
> older generations holding onto more wealth and power in society than ever before - with a large share of their wealth in the stock market
If there was anger at the older generation, we wouldn't have so many sacred cows regarding older people (social security and medicare). Average age of senator and house member has been growing over time. Hell, we just elected a 78 year old as president. How about before the revolution we just start with voting for younger people
> Wall Street is seen as entirely unaccountable due to 2008 bailout
Most people don't remember this. I'm surprised how rarely its actually discussed
> Pandemic this year has basically been a huge wealth transfer from normal people and small businesses towards large conglomerates and the wall street hedge funds who back them
This is mostly true but people don't see it that way. They're too busy yelling at people that refuse to wear masks or people that are forcing others to wear masks.
> Institutional trust is at historic lows, while online spaces become more and more regulated by those same institutions
Again, we elected a 40+ year veteran politician. House and Senate re-election rates are still 85%+ and we're ceding ever more of our authority to the [health] experts.
[0]https://www.washingtonpost.com/news/wonk/wp/2014/04/01/yes-c...
Okay, now include Jeff Bezos, George Soros, and the Koch Brothers :)
But in all serious, I'm not talking about anecdotal "admiration" of billionaires. I'm talking about literal wealth gaps[1]. The Bottom 50% of the US held 21% of the wealth in 1970, and the Top 1% held 11% of the wealth. 21% to 11%. By 2014 this had changed to 13% to 20%. Meaning the top 1% doubled its share of the wealth while the bottom 50% lost 38% of its share of the national wealth.
> If there was anger at the older generation, we wouldn't have so many sacred cows regarding older people (social security and medicare). Average age of senator and house member has been growing over time. Hell, we just elected a 78 year old as president. How about before the revolution we just start with voting for younger people
There is massive systemic momentum keeping these programs in place untouched as they are because of gridlock in the national government, I'm not really sure how their existence supports or rejects my point. I agree younger people need to be more active in the voting process and to elect younger people. I'm optimistic about several state-level voting reforms gaining momentum in the coming years to help this.
But at least at the presidential level, our arcane primary/caucus and electoral college systems give a huge advantage to older people living in rural areas. There has been increasing consolidation of young voters in urban areas which are severely under-represented in choosing the president.
And of course campaigns are financed by large wealthy interests that are mostly controlled by older generation who have an incentive to maintain the status quo. As long as we don't have congressional term limits, poor campaign finance regulation, and a massively gridlocked Congress, it's difficult for the state of things to change from what we have, which is domination by those lobbyists and a federal government which doesn't accurately reflect its populace.
> Most people don't remember this. I'm surprised how rarely its actually discussed
What is your definition of Most People? This comes up every time I've ever seen wealth inequality, accountability and government bailouts discussed (A lot in 2020, naturally).
> This is mostly true but people don't see it that way. They're too busy yelling at people that refuse to wear masks or people that are forcing others to wear masks.
It's concretely felt among those who have lost money, jobs and opportunities. Twitter arguments about masks can be present at the same time as the literal felt effect. Anyone who has followed economic news this year has seen the repercussions even if they weren't directly impacted. In my opinion you're underestimating the mood on this, but I'd like to see some data on it.
> Again, we elected a 40+ year veteran politician. House and Senate re-election rates are still 85%+ and we're ceding ever more of our authority to the [health] experts.
I already talked about federal government above^ But I think this has actually been an incredibly interesting year in that divergence from health experts became "mainstream". Tons of people getting Covid news from people on Twitter who called out studies being used by mainstream press and national governments to justify their policy decisions. I can point out a dozen random people on twitter who I trust more than NYT or Dr. Fauci to give me relevant, contextualized analysis of different COVID-19 strategies around the world. And most importantly, there's little social risk to this. I can tell that to people and they don't think I'm a quack. Half of them do are doing the same thing. Additionally, you're seeing protests break out across the world as governments try to lock-down and re-lock-down without legitimately strong evidence to back up their proposals.
[1] Figure 2.4.1a, https://wir2018.wid.world/part-2.html#article-39
Do you know how the Arab Spring started? A municipal official bullied a street vendor who was selling produce from a cart roadside.
https://en.wikipedia.org/wiki/Arab_Spring#Events_leading_up_...
https://worldwaterreserve.com/rainwater-harvesting/is-it-ill...
"I believe we are on the brink of a terrible civil war (as I described in The Changing World Order series), where we are at an inflection point between entering a type of hell of fighting or pulling back to work together for peace and prosperity..."
> An Ohio farmer, Roscoe Filburn, was growing wheat to feed animals on his own farm. The US government had established limits on wheat production, based on the acreage owned by a farmer, to stabilize wheat prices and supplies. Filburn grew more than was permitted and so was ordered to pay a penalty. In response, he said that because his wheat was not sold, it could not be regulated as commerce, let alone "interstate" commerce (described in the Constitution as "Commerce... among the several states"). The Supreme Court disagreed: "Whether the subject of the regulation in question was 'production', 'consumption', or 'marketing' is, therefore, not material for purposes of deciding the question of federal power before us.... But even if appellee's activity be local and though it may not be regarded as commerce, it may still, whatever its nature, be reached by Congress if it exerts a substantial economic effect on interstate commerce and this irrespective of whether such effect is what might at some earlier time have been defined as 'direct' or 'indirect.'
A lot of the established press was against it and they did constantly published “hit pieces”.
History is written by the victors if the American Revolution didn’t succeed the US would likely eventually gained independence but it would’ve been a commonwealth nation. The Revolution isn’t the reason why you have freedom today, Canada is free so is the UK. The world would look quite different than it is today but not as different as you might think.
There are no divisions on this board, everyone is against the Power that is being exhibited right now. TD, Interactive Brokers and Robinhood have bent the knee to enrich the rich at the expense of many.
KYC is fine if you are a multi-millionaire. You just delegate your lawyers and army of accountants to do it. But if you are a small man/company, it's a headache that can drive you out of business.
This financial restrictions has to be stopped. Financial freedom is more important than Freedom of expression.
Agree. It is not like there aren't half a dozen apps that let you trade stocks commission free on your phone. Some may require you to have $500-$1k to invest, but seriously if you don't have that you should invest in a different way then treading individual stocks.
That said, I have no idea why Robin Hood should ban the trading of GME and I wish they wouldn't.
Also this isn't people 'asserting themselves financially', this is people mug punting on a stock that wealthier and more financially savvy people who got in early are happy to unload their stock to. There will end up being people quite relieved they didn't get to execute their plan to put their life savings into peak-price Gamestop.
It isn't simply that people can't buy certain stocks. Its an accumulation of events that increasingly lead people to believe that the system is rigged against them. This extends back decades. You have to have been living under a rock to have missed the rising tide of populist sentiment over the last decade, as seen in the pro-Trump anti-establishment contingent on the right, and the explosion of pro-socialist sentiment on the far left.
This Gamestop business probably amounts to a large bucketful of water, but at a certain point, a single drop causes the dam to burst. Kicking the can down the road by saying "surely people won't resort to violence over this" all but ensures that eventually, people will.
It's a fun show regardless.
Please read this whole thread (https://old.reddit.com/r/wallstreetbets/comments/l6omry/an_o...)
This isn't about buying stock any more. This has become a battleground. The people in this thread are normal people fighting back for the first time in their lives.
We are near levels of inequality that caused the French Revolution to go violent.
What does that refer to?
As of now, I believe the last explicit ban on that was repealed decades ago.
When buying property, you may have agreed that you were not acquiring mineral rights, water rights, etc. and you still might have problems even in the absence of a government rule against it. I don't know how legitimate such claims are or how often they're successful, but I know someone who got legal nasty-grams from a land developer for doing it, and the property owner backed off when they saw the papers they had signed again.
Also, I don't think most of them were bans. I think they usually just limited the extent of it. Some barrels collecting from the downspouts from your roof--fine. Building a huge reservoir filled by rain--not fine.
And they haven't been all repealed. A few states still have restrictions, such as freely allowing collecting anything that falls on the roofs of your buildings as long as the building weren't specifically to collect rainwater but requiring approval for anything else.
The fenomenon is global by the way, but it still has been dominated by classic political tags on the media, like alt-right vs commie etc. A very few polititians broke that pattern the last 5 years or so, won'tt give any names, because all that labels I mentioned,
Police can and will provoke non-violent protests to violence. In a few cases (see the UK's "spycops" scandal) police infiltrators will organise protests so they can arrest dissidents.
Yes when executed by a single coherent entity.
This is not it, unless you believe there is a powerful cabal controlling twitter, facebook, robinhood, discord etc.
They are all doing it independtly to limit the legal and/or financial risks for themselves. Getting people to "strike first" is not the intent, saving $ is the intent here.
There is no intent on the part of the GAFAs to force the lower class into a revolution to get a pretext to squash them or any bigger "art of the war" plan behind those decisions than money.
Assuming no bad intentions doesn’t change the outcome of their actions.
Only intent here is ass covering.
Mike Duncan is an entertainer, not a professional historian.
Some interesting reading:
Professor Walter Scheidel examines the history of peace and economic inequality over the past 10,000 years - https://news.stanford.edu/2017/01/24/stanford-historian-unco...
Revolution and the Rebirth of Inequality - https://www.jstor.org/stable/2777764?seq=1
I wonder how big the intersection is between people saying this now and people who said that the Black Lives Matter protests were violent (when they largely weren't).
> there is the deplatforming going on, people asserted their power financially, and now getting that removed too
It's not the same people. I keep seeing efforts to compare the deplatforming of violent and radical white supremacists that were using platforms to coordinate a coup to whatever other unpopular thing is happening today. I suspect that's an attempt to cultivate a little sympathy for people who have none for others.
Yes, large investment firms appear to be circling their wagons now and making moves through media partners and others to try to stop the bleeding. That's an entertaining enough event all on its own, it doesn't need specious comparisons to other recent events.
Best part? They are not even hiding it. Everyone can see the message.
There's Citadel Asset Management, the quant hedge fund (which is probably the one that lent money to Melvin, though I'm not sure about that), and Citadel Securities the HFT / market-making show (they have the same owner).
HFT market-making using retail order flow isn't front-running - the price the customers get is the same regardless ("Best Bid Offer" as brokers are legally required to provide in the US). The difference is, once that the HFT market maker holds the stock, they can get rid of it more easily (i.e. they can close the trade) because (the assumption is that) the retail flow is "noise" (uncorrelated with future price movements) as opposed to professional/institutional traders (e.g. other hedge funds executing their strategies), where a big problem is negative selection (i.e. you're more likely to execute a trade with someone that has better information than you).
For instance the bid side may say
Alice wants to buy 50 shares at $20 (order added at 10:37)
Bob wants to buy 30 shares at $20.1 (order added at 11:18)
Citadel wants to buy 35 shares at $20.1 (order added at 11:17)
David buy 10 shares at $20.1 (order added at 11:01)
The bids are ordered by price, and ties are broken by who placed the order first.
If Evelyn (Robinhood customer) shows up and wants to sell 5 shares at $20, then the exchange will say, oh nice 20 is less than $20.1, lets get some trades going! $20.1 is the highest prices, and of those orders David's were entered first. So Evelyn's sell order is matched with Davids buy order. The price is determined by the order which was in the book. So Evelyn will get a better price than she hoped for!
If Evelyn had requested to sell 100 shares, then she will first sell to David for $20.1, then Citadel's for $20.1, then Bob's for $20.1 and finally some of Alice's shares for $20.
Ok but what happens if Citadel is paying for order flow?? Now the order book (from Evelyn's perspective) looks like
Alice wants to buy 50 shares at $20 (order added at 10:37)
Bob wants to buy 30 shares at $20.1 (order added at 11:18)
David buy 10 shares at $20.1 (order added at 11:01)
Citadel wants to buy 35 shares at $20.1 (order added at 11:17)
So if Evelyn (Robinhood customer) shows up, and again wants to sell 5 shares at $20, then she will sell to Citadel, even though their order is later than David's.
So to sum it up
Evelyn (Robinhood customer) is unaffected
Citadel wins
David loses.
[1] https://www.sec.gov/fast-answers/answersbestexhtm.html
Robinhood publishes their execution numbers (as required by the SEC), along with other brokers. At a quick glance, there is nothing out of the ordinary. It's also worth noting that you cannot directly compare numbers as different platforms have different trading behavior.
https://robinhood.com/us/en/about-us/our-execution-quality/
In fact, they were still seeking "best" execution; they just didn't beat other brokerages because of high payments for order flow and misled customers about that.)
- Rebates from market makers and trading venues
- Robinhood Gold
- Stock loan
- Income generated from cash
- Cash Management
https://robinhood.com/us/en/support/articles/stock-order-rou...
Legally not, illegally... yes, and try to prove that.
We usually don't see distributed market manipulation like this, but I wouldn't be surprised if a shitton of people buying GameStop to squeeze a short-seller breaks securities law. Does it feel good to get one up on a hedge fund idiot that was trying to manipulate GameStop the other way? Yes - but this is, at best, financial vigilantism.
Hedge funds do this to each other every day. Why is it suddenly wrong when it’s retail investors on the other side of the trade?
I truly do not understand the naïveté of arguments like these. Only the wealthy should be allowed to game the price of assets and rip each other off?
Do you have a source for this?
(this is why you might want to... hedge your shorts.)
For eg, here’s an insane one from last fall on negative oil futures:
https://www.bloomberg.com/opinion/articles/2020-08-04/some-p...
In other words, the capital firm that got short-squeezed by the idiots at /r/WSB were also doing something illegal. It's not the case that the short is legal but the longs aren't. Alternatively, if the argument is that /r/WSB isn't market-manipulating, they just think the stock is undervalued, then the hedge fund can use the same argument. "We think this stock is overvalued so we shorted it" is how they'll explain it to the SEC.
And that's not an invalid position: GME has been suspiciously overvalued way before any of the parties involved started holding positions. It's a retail-heavy business in pandemic season with multiple year-over-year same-store sales cuts. What that means is that, for each one of their stores, on average, they sold 30% less product in Q3 2020 than they did in Q3 2019. And even if you think, "oh, that's just the COVID economy, they'll be back"; Q3 2019 sales were already 20% down from the year before. This is a company nobody wanted to buy games from even before a novel coronavirus decided to close a good chunk of their stores.
The fun fact about that above explanation is that it provides plausible deniability for someone trying to juice the market in a particular direction. Hell, if /r/WSB hadn't caught the hedge fund with their pants down, they probably would have gotten off scot-free. However, the financial vigilantes dumping fat stacks into GME don't have the same kind of excuse - they explicitly coordinated in public fora to manipulate stock price, so it's an easy target for an SEC that really doesn't get the budget necessary to prosecute the complex kinds of financial crimes they're tasked with.
So, from a legal perspective, both parties are in the wrong. From an enforcement perspective, /r/WSB is a soft target.
On top of that, you have the beginnings of a takeover by a successful e-commerce CEO and potential for real turnaround.
That would have been enough on its own for WSB longs to jump in, but then the hedge funds shorted over 100% of the stock making it the perfect powder keg for this explosion.
What can be market manipulation is to collude with others to move a stock price not because you believe it is worth a different amount, but because you predict others will react to the movement you create. That applies to collusion involving shorts (bear raids) too. Proving the collusion and the artificial price bit is the difficult bit
This is text-book illegal activity.
There is no logical derivation of GameStop's financial books that would warrant the kind of stock price it has.
It is very very clearly market manipulation, and these exact sorts of manipulations are commonly prosecuted.
Hedge funds are so used to being the only tool on the block, they overextended, and for the first(?) time the retail side is fighting back.
The professional investing world have so many advantages over main street that it's not even funny. They've got everything from frontrunning, colocation, free money, and leverage(10x), 'unsophisticated' investors only can dream of this. And when they do go belly up, tax payers bail them out, meanwhile the bonus machine keeps churning.
But it is funny and good when main street actually catches them with their hand in the cookie jar.
How is this different from Bill Ackmans attack on Herbal life? https://www.youtube.com/watch?v=bQc6L4ieMwo
How is this different from all the FUD Tesla has gotten over the years? Which CNBC has happily broadcast for years. https://www.youtube.com/watch?v=a-YgFDAroeI
That was shorting. That is LEGAL.
> How is this different from all the FUD Tesla has gotten over the years?
Tesla was specifically investigated by the SEC when it tried to push short sellers out - and they paid an undisclosed fine for that ILLEGAL activity.
Is it? If I have the money to put a short squeeze on someone by myself, with my own money, is that illegal? Isn't that what some people do all the time with smaller numbers?
(honestly asking)
Pump and Dump schemes have been illegal forever. This is no different.
Furthermore, if you're arguing that it's illegal because it's done in group, then I don't understand what legal basis you are using for that. I also don't understand why you'd say it's "very different" from doing it on your own. I can't think of anything else off the top of my head that legal to do on your own, but illegal in group (some things are more illegal in a group, but that's not what we're talking about)
I think it's very risky for the investors but I don't know whether the SEC has stuff that would cover this.
And even if there were a law, if you somehow have your thumb on the social media hype button then how would you enforce that law? Makes me think nothing unruly is going on, just a bubble that will inevitably collapse and make Musk etc. rich once more just like during the dot com era. Some people only know how to make money through theft and I'm not surprised we've found ourselves here after the last 4 years.
If i tell you GME has a new product line that will increase their wealth 10x - that seems like manipulation. If i say to you i'm buying GME and you should too, with clear disclaimers that this isn't financial advice but rather a meme - i don't think i manipulated you.
By "normal" definition manipulation requires some about of deception/etc. I don't think "anyone" (within obvious reason) is being manipulated here. It's very clear what the community is buying into.
So i come back to what "manipulation" is defined as in the stock sense. Is it meaningfully different?
Why is one okay but not the other? Right because rich people with connections are the ones being burnt right now.
Is there a requirement for stock prices to be logical? Wouldn't that would ban all sorts of hft trades?
If only value investing was legal, the stock market look and operate very differently to today.
Edited to add: ultimately the law should be there to prevent fraud, not to restrict capital ownership and financial autonomy to a handful of cronies. You know, what they call a free market.
Incidentally, if this had been a properly regulated market to begin with, the price inflation would not have been possible.
it signifies a small loss of financial liberty and flexibility on behalf of the citizenry, which is enough to spark upset.
meanwhile large groups are allowed to systematically abuse in-place systems in a semi-visible public fashion without backlash or repercussion from regulators in most cases, exacerbating the perceived difference between 'Us and Them', fueling outrage and divide even further.
It's easy to consider why this might upset people.
I agree it's somewhat suspicious if it happens all the time, like this has happened enough times why haven't you designed your infrastructure to handle surges more gracefully, but for the most part I think it's legit.
If we assume intentional malice every time a website goes down, that's a dangerous precedent for the tech industry.
The corporations I've worked for had nothing to do with finances but managed to have several major outages I've sat in on that have lasted as little as 2 hours and as much as 48 hours. They were pretty much always network or server related, sometimes unrelated to the business entirely (a T1 line got cut accidentally by the city in one case).
Those corporations didn't want to go down, and often lost some serious money as a result. I imagine Coinbase loses out on a good amount of money every time they go down as well.
I also expect it's at least somewhat overreported or only a partial outage as well. One person has an issue and announces it and everyone just repeats it without checking themselves. There was at least two instances when I saw people say Coinbase was down and I tried logging in myself and had no issues.
What?
It doesn't really anymore, but it's an understandable mistake imo
Over the last 8-10 years online activism/mobs have increasingly been co-opted by those in power as a means of astroturfing. I think it is totally fair to be skeptical and ask whether that is going on here.
One thing is for sure. Even if this is organic, it won’t be next time. After seeing this why wouldn’t some hedge fund orchestrate something like this to manipulate the market?
But it would be a mistake to not think that some hedge fund manager, oligarch, etc. somewhere is paying attention and thinking about how they might be able to co-opt.
They do realize that and are confident that they will win. In the end it boils down to that.
In here we have a case of the wrong people succeeding at a game that de jure is supposed to be open to everyone but de facto is only open to the right people.
Let's punish hedge funds - fake outrage
Stocks are climbing up - fear of missing out
Restrictions on platforms to prevent people from falling into this scam - fake outrage
Scammers' freedom of speech is in danger - fake outrage
Looks like we entered new era where fake outrage on social media (Reddit, HN and Twitter) can make scammers a lot of money.
I am surprised that HN community is falling for this scam.
I think creating and using decentralized alternatives beyond the control of the state and affiliated corporations is a much better tool for creating lasting change. Violent revolutions tend to just replace (or restyle) the ruling class without significant changes to their behavior.
I didn't read any such claim in my German and Scandinavian news diet, is this a US-only thing? Here, the consensus seems to be that what happens is a somewhat well-deserved embarrassment.
This is a dangerous thing to say in 2021. Merely suggesting violence is an option or eventuality could be considered incitement and get you banned from every major internet platform.
People have found an unpopular target (large funds, still a lot of dislike built up over the 2008 recession, current inflated housing markets in many cities) and there's a swing in popular emotion and yes, public figures have egged it on at this stage, but it's not really a protest against donald trump's deplatforming or liberal elites that some people are trying to make it out to be.
Plenty more people willing to take risks on that among the middle class when the stock market is the only way to even keep the value of their savings anyway. My savings account has an actual interest rate that was cut from 0.50% to 0.01% this year, whereas 2020 excluded, inflation has been around 1% in my country. Many of my friends in similar situations have gotten involved in stocks under a similar background and a not insignificant number of them are operating under logic like "90% in long term stocks, 10% for whatever crazy long bets" (like which airlines are going to come out of this, whatever stock reddit is pumping at the moment, bitcoin or companies like AMD a few months ago which they're like "I use this stuff and so many insitutional investors are completely clueless on the market dynamics").
So you get people with "stupid bets" funds, and an idea that gets momentum (The shorts cannot not buy, let's outwait them), and this is the result.
I think the biggest thing that the lay-person doesn't understand is that thinking of hedge funds (and other proprietary firms), banks, exchanges and ATS's, retail brokerages, the SEC, and lawmakers as all being either one entity or all being on the same side is just absolutely incorrect. They all need each other, but by and large they are not friends.
Some claims I've seen that are just comical to me:
"The SEC is going to step in to save hedge funds"
The relationship between regulators and proprietary firms is particularly cagey. The SEC constantly audits them and asks, in my ex-professional opinions, extremely annoying questions about even the most innocuous trading activity. (Annoying because they take so much time because frequently, not knowing what the firm is doing, they ask questions that internal tooling is just not prepared to answer, thus requiring custom development; and annoying because some of them feel like they're just the SEC trying to use their authority to conduct audits to learn more about the industry). But I digress. The SEC is absolutely not going to step in and do a prop shop a favor. Their concern is with the efficient and accurate functioning of the equities market. The fact the GME, a company with no news releases and no change in their (honestly dismal) fundamentals, has experienced such absolutely insane volatility (there are large numbers of options contracts with less volatility, for crying out loud!) is absolutely a concern for them. The fact that "what is the price of GME right now", asked to a person who looked at Apple Stocks app yesterday but not yet today, is "somewhere between 10 dollars and 1000 dollars", is absolutely a major cause for concern to them. Equity markets exist to discover pricing and transfer risk. It's hard to transfer risk if you don't have any idea of the pricing!
"retail brokerages are cancel culturing the GME rocketship!" and similar rhetoric, especially with aphorisms suggesting that the SEC or shadowy "the rich and powerful" are pressing them to do so.
I really, really doubt it. Retail brokerages toe a very fine line, because on one hand they obviously really want people to store their money with them (e.g. Schwab makes like 80% of its operating revenue from interest on uninvested cash balances) and also to use their trading services. But at the same time, they are taking as clients some of the most dangerous creatures known to man: retail investors. They're dangerous because they have so little clue what they're doing (which is like, fine, you know? this is no judgement on them) that there is a very real responsibility places on the retail brokerage to protect them from themselves. There's a reason you have to apply and be approved to trade options, and there's various levels of approval for various risk categories too. You need at least 25k in balances to be a pattern day trader. There's precedent for brokerages limiting access to some ETFs that expose equities investors to the kinds of leveraged risk that is more typical of options. Brokerages have been sued - successfully - for not doing their fiduciary duty to educate investors about risk.
I am absolutely unsurprised that retail brokerages are limiting trading of GME, AMC, etc. I can already see the lawsuits coming when this thing folds - "Why did you let me trade GME given the volatility, especially after the SEC even made a statement about it? I am a retail investor and your client, and cannot be expected to know better, and you failed in your fiduciary duty to me." This is absolutely something a retail brokerage would do to protect themselves from regulatory scrutiny.
(I had more to vent, but this post is already huge so I'll stop here. You get my gist, though.)
Listed companies want nothing to do with this.
Restaurants like customers, but imagine a stampede of 1000 people rushing through the doors, it's not what they want.
The populism here is getting ridiculous, I don't think most people have any understanding of what's going on.
Given that a lot of people egging the plebes absolutely 'know better' you have to wonder what their motivations are.
This is why academic fields involved with "identity politics" are in the same class as "scientists" involved in climate change denial and questionable nutrition/smoking studies. Once there were academics involved in "critic theory" which more or less used Marxist level of analysis. A thorn in the side of the establishment. A branch within this field took the language of Marxism but replaced capitalist/working class with identities(e.g white men/minority women). Ofcourse those in power have supported this branch of critic theory and have gotten to the point where they even use it as a wedge issue. At this point this is the orthodox branch of "critic theory" and it's not because of intellectual merit.
There are millions of users of this app, and it’s easy enough to verify - why the skepticism?
I have little doubt that it's happening, but the twitter link was not substantive in comparison to:
https://blog.robinhood.com/news/2021/1/28/keeping-customers-...
The closest thing to criminal activity we see here is people betting more than a company's stock. When hedge fund managers see this and buy all the stock to squeeze the shorters it's normal. When it's people like you and me they say it is illegal.
Read matt levine's twitter: https://twitter.com/matt_levine/status/1354129838806872073
and newsletter if you want to inform yourself.
And as it turns out, people are very angry about that. And since violence gets you thrown in jail, the next is financial violence in bankrupting these country-destroying fintech scabs.
And look who comes to their rescue, but not for the masses.
Of course, if someone went above that and invested an amount, where losing it would hurt, that's different.
Don't compare deplatforming and this.
Deplatforming is akin to throwing a customer out of the grocery store for doing nazi salutes in the vegetable aisle.
What Robinhood is doing is akin to throwing a customer out of the grocery store because you don't agree with his choice of vegetables.
> throwing a customer out of the grocery store because you don't agree with his choice of vegetables.
There, fixed for you.
A clever way to create a situation to pass mass gun control and limit those pesky civil liberties, no?
This will be very disruptive to Robinhood. I think today they made a poor business decision that will affect their valuation and potentially the company itself.
I don't do much trading on Robinhood, mostly for learning or experimenting with small amounts of money but this move has left a sour taste. I'll be closing my account, while recognizing that other brokerages are doing the same (though not all).
edit
Retail investors are locked out, $GME is still going up. What's the fucking excuse now?
Well, they're gonna lose millions of customers over this I predict. How is that not killing their business?
Brokerages can, and do all the time, set specific margin requirements for volatile securities. There’s no reason they can’t do that here as well. (unless they literally can’t because their tech stack doesn’t support it which would be pretty funny)
Why would anyone use a trading platform that now has a history of picking and choosing what trades you are allowed to make?