The trading stops and laws that exist to prevent this kind of wild volatility are basically because for 90% of people, this is not good. By the time your parents read about this in the paper and log into their TD Ameritrade accounts to "invest", they'll be in that group of people left holding the bag.
In all the talk of conspiracy around this I'm surprised nobody is discussing the possibility that larger investors are likely manipulating/hyping the WSB community. The WSB community is acting untouchable but I get the feeling in the end they'll be the ones losing their money.
It's entirely possible a majority of retail investors make a killing and a few large funds get liquidated. At least it was until the coordinated action to protect those hedge funds today.
- “We’re going to put these hedge funds into bankruptcy”
- “These hedge funds will buy all our stocks at inflated prices”
If the hedge funds can buy all the stock, they’re not at risk of going bankrupt.
And if they are at risk of going bankrupt, they can’t buy all the stock at inflated prices.
A lot of retail investors are going to lose money when this bubble pops. /r/wsb has not invented a new way for everyone to get free money.
Fundamentally the funds made an extremely risky bet and the market is (or was at one point) seemingly reasonably and expectedly betting against it with a short squeeze. The new part is the social hype driving the squeeze via an army of retail investors.
Agree some retail investors are inevitably going to be left with a net loss here, which will suck. But it was (and may still be) a reasonable play when viewing the market as a gambling platform (which the funds were doing by over-shorting).
My hope is that the people claiming to be cashing out their 401k on GME are partaking in anonymous internet hyperbole to fuel the hype and the vast majority are gambling with a few bucks they can afford to gamble with because they can't do anything else right now.
Notably, public forums are not included as part of a boiler room scam.
There are a lot of "hot takes" and people thinking all this fits some "narrative". But I think there is just a lot going on and I'd be cautious about assigning too much meaning to any of it without a lot more information, which we won't have right away.
There is no one on the other side of the book so Robinhood can’t execute. It’s standard market dynamics that anyone whose traded before understands.
That a bunch of new retail traders are about to learn an expensive lesson on execution/liquidity risk is a normal cycle.
I don’t have a full book feed available to see what the book looks like but on my delayed free feed the last few trades were in the 300-700 sized lots. That’s tiny especially if the internalizers have pulled out.
My guess is that the book is actually showing some gigantic spread where the lowest sell price with any size is tens of dollars off the highest buy orders. But that’s speculation on my part.
[edit] later: just saw a 70k lot clear at $375. Guessing that’s some stops getting hit and clearing that level. The price immediately jumped up over $410. All of this lends credence to my belief that the GME book is crazy one sided and hard to execute into.
You agree that, without notice, _Robinhood may terminate these Terms and Conditions, or suspend your access to the Service or the Content, with or without cause at any time and effective immediately._ [...] Robinhood shall not be liable to you or any third party for the termination or suspension of the Service or the Content, or any claims related to such termination or suspension.
tl;dr: we can change what you can do on Robinhood at any time for any (or no) reason at all, and you can't do anything about it.
[1] https://old.reddit.com/r/wallstreetbets/comments/l6w4uo/robi...
[2] https://d2ue93q3u507c2.cloudfront.net/assets/robinhood/legal...
What WSB crowd is doing is market manipulation. That's illegal. WSB is doing everything openly and even celebrating it. Getting mad when openly breaking the law is not rational response. https://www.law.cornell.edu/uscode/text/15/78i
Brokers like Robinhood are reacting because they want too keep SEC out of their asses and prevent SEC doing something even worse to their customers.
Stock Markets like nasdaq are reacting to volatility, like they usually do in abnormal situation.
Shorting GME more than number stocks exist is not market manipulation? HFT isn't? Bailing out greed isn't?
Why is this notion of market manipulation such a narrow one-way street?
Moving the goal-posts here, but yes, this ought to be the catalyst to do just that. Changes to regulations may yet happen (not that I agree with it); kind of seems inevitable at this point.
No, it's just a risky play (as long as not naked) that can blow up and that's fine.
>HFT isn't?
No, HFT provides a service, like it or not. You might think the service isnt worth it but it's not market manipulation.
>Bailing out greed isn't?
That one usually isn't (most bailouts are other private actors' loans) but yes, I guess it can be if it allows actors to make risky plays without having real risk.
That said, what WSB is doing here isn't market manipulation either.
It's not, though - rich people get in trouble for this all the time. Bernie Madoff is going to die in prison for running a finance scam. Enough people were convicted of insider trading in the 80's that they made a movie about it - and the movie was just called "Wall Street". None of this is new.
This has to be a joke.
When the dust finally settled and anuses stopped bleeding, they discovered that they were coaxed to rape each other by Kings son who disguised himself as a commoner in the village subreddit. What made it worse was that King's son was involved in raping during the rape fest but somehow avoided getting raped himself.
Let's see if that's how this plays out.
Also, ignoring the fact that whilst the peasants are merely slapping each other on their wrists, they're really in fact looking to take the King who doesn't jive like them, to the guillotines.
A bunch of people hyping each other up? Also talking in public about what they like. If that moves markets? That happens.
If that opportunity is a short squeeze (which it still appears to be - newest data I can find is GME is still at 120%+ short interest), then it gets really really confusing - and I'm not sure how this is going to sort out.
People going on public news networks saying they've 'got out' and other articles talking about folks no longer being short - that would be clear market manipulation if not true.
What happened satisfies the four part test for market manipulation. But you would have to figure out the suspects who actually match the test. Most participants are just fools.
It is not illegal.
Trading against shorts instead of fundamentals isn't market manipulation.
Matt Levine's column from 2 days ago, for example, goes over some of those questions to a decent degree: (possible paywall)
https://www.bloomberg.com/opinion/articles/2021-01-26/will-w...