An Elegant Revolution Followed by Slaughter
nymag.com
nymag.com
the best most analysts predict is an SEC or federal bailout for some hedges, but theres no way either institution can cover them all...
the fact that we keep seeing public investment firms lock out these trades and hourly hit pieces from talking heads seems to suggest hedges are all out of ideas. This is the financial equivalent of asymmetric guerilla warfare. These players don't care about losses because Their losses are the price of admission to watch your curated hedge fund burn.
The truly scary part is this is not only working, but is a repeatable strategy that will work over and over. The next internet board to lead after wsb will be just as successful at bankrupting casino firms using their own casino tactics.
Uh, should I be feeling sorry for the hedge funds? I can't say I find their plight particularly sympathetic.
Why the hell should the SEC do that? This type of nonsense is infuriating. Everyone loves capitalism and deregulation until a big player falls then it's time to run to the government and save them.
>This is the financial equivalent of asymmetric guerilla warfare
Which is what the average person not involved in the financial markets experiences every day they exist because of decisions being made by people far away with more money than they'll ever have in their lives.
This doesn't make sense. What analysts are predicting that? Hedge funds are not core infrastructure for the government the way banks are. And individual hedge funds generally manage tens of billions at most.
If this effected a systematic market correction, I could see many hedge funds going under causing a catastrophe for brokers and banks. But I don't see why hedge funds would actually be bailed out by the government.
Maybe they should think twice anyway!
In one since shorting is literally trying to take advantage of someone that has faith in a company. Many times people will short a stock and then release a paper shitting all over the stock and painting it in the worst light possible (legally) to push the price down.
I have little sympathy for them. I don't think shorting should be illegal, but they know what they are signing up for.
I'm seeing stories of people putting their modest life savings into GameStop stock. When the bubble invariably bursts, they will be left penniless. We will see people making actual, huge losses that they very much care about.
Sure, there are also the people to whom this is a game/collective action, and who can afford to lose a few hundred bucks to make a statement or have fun. But let's not pretend that that's the case for everyone. There will be painful outcomes here, with lots of people spending more than they can afford on stocks that they will only be able to sell at a tiny fraction of the current price. Stock price manipulation can be enjoyable, but it shouldn't be confused with prices going up because the business behind the stocks actually does better.
This is such a weird situation: On Twitter I see several of the same people who are usually like "Bitcoin is a scam, it's pure speculation without fundamentals" now applauding the GameStop situation just because this time the speculation without fundamentals also hurts hedge funds (but ignoring that it will hurt lots of individual investors as well).
> a repeatable strategy that will work over and over.
As long as the people playing along have the real money to put into real stocks that are not worth that real money. It would be more sustainable/repeatable if people had stopped driving up the price once a reasonable ceiling was reached.
These people were too naive to speculate in the stock market, and had they not bought stocks, they would likely waste those savings in another naive investment.
Either way, the OP's point was that everyone is only playing with money they can afford to lose, and that point is false.
I genuinely do not understand this "won't someone, please, think of the children?!" line of reasoning. This isn't the first short squeeze in history that led to retail winners and losers. Retail investors had a hand in the dotcom crash and the 1929 crash.
Why is it only applicable to this specific short squeeze?
You're not wrong, but how is GME different that any other stock someone could have gone all-in on?
Nick Maggiulli posted this on a somewhat unrelated matter (some TikToker's strategy to fund their lifestyle):
> If it wasn’t obvious before, it bears repeating now—some people are going to beat you at investing. Some of them will be dumber than you. Some will be less knowledgable. Some will even be completely wrong about the future. But they will beat you just the same. There is no great arbiter of justice in the investment world. There is no cosmic force that ensures that only the knowledgable make money. If there were, then I would be a far richer man today.
> But what does exist in the investment world is the inevitable pull of fundamentals. The inescapable attraction between prices and reality. Like a moth drawn to a flame. Yes, markets will go through periods where some people make lots of money very quickly with little effort. We are seeing such a market today. But, eventually, these same markets find their way back. As the legendary Benjamin Graham once said:
>> In the short run, the market is a voting machine but in the long run, it is a weighing machine.
> So let them vote. Let them vote on which stock will be the next to double in a day. Let them vote on which non-profit will make them rich. Let them vote on what to buy and what to sell. Let them vote I say. Because gravity will eventually set in. Maybe not today. Maybe not tomorrow. Maybe not next week or even next year. But eventually it will set in.
> So there is no point in making fun of other investors because they happen to be doing better than you, even if they are using a seemingly foolish strategy. If they are truly fools, they will learn their lesson. Maybe not in this market, but maybe in the next one.
It's different for the very reason that we are discussing it: Because people got together to deliberately (and quite possibly illegally) manipulate it into a bubble.
I see little difference between what WSB is doing and what various newsletters or Jim Cramer does.
One of the folks has been published about why GME deserves a chance has been published his rationale since at least mid-2020:
* https://www.youtube.com/c/RoaringKitty/videos
Some people are in because of his fundamentals analysis, some are in for the LOLz, some are in as an F.U. to the hedge fund fat cats, and some are in to try to get rich quick.
Sometime in Sept 2020 GME had purchased sum of shares reducing float or outstanding shares. Such purchases would create the current imbalance and the war between various parties involved.
I can not believe that the whole scheme has not been by design. I recall seeing GME pump starting right about then in Sept. I am also convinced that the shorting hedge funds could have been playing it on the up side via options. They could have sold puts; bought calls. There are a lot of dark pools and each party can have multiple arms. It is pretty naive to believe that all these hedge funds dabbling in these type of games are the sheep and not the wolves and have been silent through it all .
Both the new shareholders who are now the insiders and the hedge funds are likely to be aware of the small float that would have kick started the short covering pyramiding scheme and reddit would have provided the pawns to spawn it really fast by pumping the forums.
Don't be naive. They fundies have been hitting all the high volatility stocks with small floats + high short ratios.
Slippage like this is their dream. It's the best possible scenario for HFT
Same deal with Tesla I think.
Original text: https://i.redd.it/nvp1vde7g1e61.jpg New text: https://i.redd.it/o0hpei8ic2e61.jpg
By contrasting it with correlating two (uncorrelated) groups that didn't trigger an emotional response, it becomes much more obvious that the article is pushing a narrative and not just reporting facts.
Did the French Revolution feel like a revolution when the Bastille was stormed? I'm NOT equating the the two, but theorizing that revolutions aren't always fully planned at first. This (and similar mob actions over the last few years) feel more like peasant uprisings: local and lack cohesiveness to do more than a single action.
> People are fed up with the financial industrial complex, which favors the already-rich and people over the age of 40.
This I'm scratching my head over. Do people on wsb think that "people over 40" are conspiring against them just because they've been able to have longer positions than a 20 year old? Do they not realize that someday (if they're lucky), they too will be over 40?
Not entirely. I like to think we're a little better. But we did get away with comparatively cheap college, used it to get reasonable jobs, and put that in retirement funds where exponential growth is starting to happen. We're still sitting in those jobs, and will be for a while.
I'm pretty sure that people blaming "Boomers" really meant Anybody Over 40 all along. So I've been kinda waiting for it to be my turn.
Overall somme will have make money, other will have lost some.. it's a zero sum game except for brokers and HFT firms.
This is completely fabricated. I have no confidence in the article at this point. The sub was back up within an hour or so and the stated reason for taking the sub private (it was never "offline") from the mods was that there was a lot of spam/bot traffic they needed to deal with.
This type of topic, stock market strategies that not many people understand, is easy enough of a narrative to manipulate. Manipulating more easily understood facts, like a subreddit going private to stop bots, seems lazy!
Pre "WSBGod" the sub hated sudden influxes of new users who'd ask dumb questions and make lazy attempts at humor. GME is the perfect example of a time when the sub would normally go straight to private with flaired users only allowed to enter
Now post that the community has gotten even noiser and less coherent so I think they've given up and just decided to roll with it.
One of the mods resigned few weeks ago stating that the board was being overrun to pump certain stocks and that he was powerless to prevent it for various reasons.
This was coming and expected because a good pump and dump needs pawns. It this case many of the pawns are not dumb anymore.
There's a lot to be said for this. It may be the one thing the QAnons and the AOC wing of the Democrats actually agree on, although the Q lot pick the wrong targets. Conversely, it's the one thing that "centrists" (if there are any true centrists left) refuse to acknowledge or plan for.
It's not going to be solved by a shaman storming the capitol. It's not going to be solved by memeing stocks, that's obviously going to get slapped down. But the people aggrieved are going to keep .. testing the fences, like the raptors in Jurassic Park.
I haven't seen this definition of a subset of Democrats before. Are you using support for AOC to imply "farther out than most Democrats"? I thought the vast majority, if not all, Democrats liked her, but I rarely read social media.
That's not skepticism. You've already made up your mind.
While she as a person seems, on the whole, to be well liked, some of her more "extreme" policies don't have wide support within the party.
I would argue they share a lot of similar grievances, but who has been cast as the reason for them is vastly different.
Different solutions as well.
How much of this is just the costs of college spiraling out of control combined with a larger number of people going to college? I graduated with 60k more in debt than my father from the same school 30 years later.
Also do people really care about age dependent income inequality? Because in time everyone under 40 will eventually be over 40.
It's not that we just started showering wealth on the 40+ crowd, it's also a matter of the 18-40 year old adults perhaps not having the same opportunities to succeed (or having more opportunities to fail) than their parents did.
Half of men in the 24-35 year old range will do worse than their father. And the other half better. And most women will be making more money than their mothers.
[0] - https://www.census.gov/data/tables/time-series/demo/income-p...
If she was just earning more money and had this great opportunity to buy a home you'd think the opposite would be true or at least things would stay level.
Yet there are likely more millionaires and billionaires under 40 than any time in history.
... when options expire Friday.
Really weird that people are trying to manipulate the narrative like this.
I have Reddit-addicted friends who told me the ONLY people who would lose money after all this would be the evil hedge funds, and every retail investor was bound to make a killing if they just HODL
I tried to explain that all those people have to actually SELL, hopefully near the top, to a willing buyer... Most people are not putting much thought into this beyond the fact that it aligns with their exiting emotions toward The Man and sticking it to him somehow.
Step 1: Buy the stock with 140% short interest. -> Price goes up.
Step 2: Shorts cover (This is the "Sell" phase for retail investors). -> Price goes up.
Step 3: Shorts are finished covering (This is the "you missed it" phase for retail investors). -> Price tanks back to $15.
I personally think we're either at the end of step 1 or the beginning of step 2, because we haven't seen the volume necessary for step 3 to be possible, unless you believe without evidence that all of the shorts covered outside of the exchanges. Which would be a claim I'm not comfortable making without evidence.
I find it attractive too to some extent. The financial system is bonkers and unfair. But...
I think that populist sentiment also blinds folks to a great number of things. I know it brings in a whole other mess but Trump, he loved his populist rhetoric too, even if his actions were anything but that.
It's also not entirely clear to me who, other than some hedge fund, actually shot shafted here and who... maybe the man, is also along for the ride / possible profits here.
People will unwittingly vote for the man to stick it to the man.
Scott Galloway, you should read some history to understand that nearly every war was started by men in YOUR age plus a simple but extreme mindset like yours.
Lets talk about bored old men like you, who "hopefully" sit at home but write bullshit like that. I hope you try not to start a painting career in Vienna.