Comment by PragmaticPulp | Hacker News Reader

Comment by PragmaticPulp | Hacker News Reader

Parent Full thread

/r/WallStreetBets has devolved into a pump-and-dump echo chamber.

I was a member of /r/WallStreetBets for several years. It was fun to joke around and talk quant stuff in some of the comment threads before it devolved into pure memes.

Recently, I commented on a few of the front-page threads to correct some misinformation. They banned my account within minutes. They don't want to see any comments that don't support the pump.

At this point, they're heavily moderating the sub to only allow posts and comments that glorify $GME. The only allowable content is that which insinuates anyone who buys $GME is about to get extremely wealthy, or that everyone buying $GME is sticking it to Wall Street.

The situation has gone from funny to scary as Redditors are pouring money into $GME with expectations of getting rich and taking down Wall Street at the same time. Subreddit moderators have no interest in letting any comments through that might spoil the party before the early $GME buyers can exit their positions.

I was auto-banned from WSB for 72 hours for mentioning AMC on Tuesday.

Care to elaborate on some of your points/concerns here? I’m not an expert, but it sounds like short interest is still so high that if a coordinated group can hold the line they’ll squeeze the shorts. But you and other posters make it sound like that isn’t possible. Can you or anyone else explain why not?

> if a coordinated group can hold the line...

It's possible in theory, but very unlikely in practice.

A short squeeze is a very temporary event. Once it's over, the share price will begin to decline quickly. Anyone left holding shares on the way down will lose their money. Moreover, if they only joined to squeeze the shorts, they'll lose their purpose. Despite what the memes say, they'll absolutely start selling when it looks like there isn't any more money to be made.

WSB presents an extremely over-simplified version of the stock market. They look at graphs of short interest and assume that no new short positions have been opened since this started. In reality, hedge funds are likely closing and opening short positions all day, every day. They're trying to push the idea that total short interest is a valid indicator of when the squeeze has started, but it's not valid at all.

Frankly, the level of misinformation coming out of WSB can no longer be attributed to Redditors having fun making memes. They deliberately remove comments and accounts that don't toe the line or pump the stock. They deliberately push flawed ideas to convince newcomers to buy more shares. They're pumping the stock, and the early GME buyers will take advantage of the pump by dumping their shares. It's basically a pump-and-dump at this point.

What you've said is great. I'd just like to add that the idea that Reddit is holding strong is actually wrong already. Although all over the net you only see people posting about HODL and [rocket emoji] [rocket emoji] GME to infinity!!!!!, in reality many retail investors have been exiting positions and quietly taking their profits. I suspect that many are early investors who run with their money and then just don't post about it to avoid being ostracized for "squeezebreaking."

Matt Levine saw the Citadel order flow (so Robinhood investors' orders) over the past week[1] and, contrary to what you'd expect, there were only more net buy orders than sell orders on Monday. Every other day, there were more sells than buys, to end the week overall at about a 1:1 ratio.

What to make of this? I think that this is pretty clear indication that early WSBers (who got in at sub-100) are smartly taking their profits and running. What we're going to see at the end of the day is a pretty significant wealth transfer, but unlike what the news is parroting, it is going to be a wealth transfer from the starry-eyed lowest rungs of society to the upper-middle class and large institutions who have gone long on GME. When those driving the narrative on WSB and the Wall Street trading desks exit, the mom and pops who heard about this on the morning news and got in at 200+ are going to be left holding the bag.

[1] https://www.bloomberg.com/opinion/articles/2021-01-29/reddit...

Big banks own upwards of twice as much as retail. What is the big banks target price and what is retails target price?

Over on WSB they're going nuts claiming that 5k isn't a meme.

The banks aren't holding until then. If they decide to offload at, say, 600, then retail will be left with the bag since the bank selloff will drop the price down dramatically.

That's the claim as I've seen it made on the /r/stocks subreddit.

I have a lot of shares. In at $17. I'm not sure what to think. I've already taken out 5x my initial investment. I've been doing as much research as I can to determine how high this could go, partially for my own benefit, but I also want to "hold the line."

Who knows what would have happened had RobinHood and others not shut down buying. I'm pretty sure I would have retired.

> Who knows what would have happened had RobinHood and others not shut down buying. I'm pretty sure I would have retired.

This is another misconception: Robinhood didn't exactly choose to shut down buying. The extreme volatility required significant extra collateral to be posted, which Robinhood probably didn't have the money for. This is why they had to do an emergency raise of a billion dollars and draw down their credit lines.

Robinhood also makes all accounts margin accounts by default. They try to hide the fact that trades don't settle until T+2 days by making the margin invisible to the end-user, but it still draws down their credit. Robinhood Instant [transfers] also consume margin while they wait for incoming bank transfers. Without an infinite supply of credit, it just wasn't possible to allow unlimited buying (margin buying in most cases, due to T+2 settling or bank transfer delays) of GME stock.

Congrats on the value of your shares, but I would implore you to come up with an exit strategy. Even /u/DFV has been slowly taking money off the table during this entire run-up. Don't let yourself be one of those people talking about how you had a paper gain of a million dollars for a brief moment in 2021 before you lost it all.

I never said they chose to. I know all about the DTCC and its rules.

I've also taken out 5x my initial investment. I've been trying to minimize exactly that kind of regret along the way.

I would love to hold and see it going to the moon but I will likely have a few limit sell orders open before monday morning.

I've read about 100 explanations about how gamma works for calls and zero for puts.

what info were you trying to correct?

many are also not caring for expecting to get rich

Reply on news.ycombinator.com