Reddit’s ‘GMEBagHoldersClub’ Is Where GameStop Stock Buyers Admit They Messed Up
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One example that may not be criminal but is certainly suspect is the "top moderators" on reddit's WallStreetBets sub seem to have been suppressing all posts about $GME that weren't pumping the stock, quite thoroughly, until reddit staff stepped in and removed them. Some screenshots flying around that appear to depict the same moderators discussing payouts and investors. Doesn't seem right.
I think it is ludicrous that they are going after him.
Hyping up meme stocks is just the newest addition to tactics like wire fraud, MLMs, etc. It too will in time be thoroughly discredited, yet never eradicated completely.
You can certainly get lucky gambling on crypto, TSLA, etc. You can also trade those profitably by knowing your shit. You will occasionally make poor decisions either way, so make sure you can handle the consequences.
I think your examples and meme stock are two completely different things. MLMs, frauds etc are by design lies while meme stocks are jokes and usually big hive mind mistakes. This is an apples to oranges comparison
But there are differences too of course. The virality built into modern tech makes it easy to amplify opinions into full on bubbles. You don't need to create your of Herbalife to defraud people. Now you just need to find an organic idea / trend that you could profit from ("Buy GME because short squeeze, let's show wall street!"), and hype it up with bots and followers to bootstrap the bubble, hoping that it will snowball on the same kind of virality that put it on your radar in the first place.
The new scheme is better because you don't need to create a company that can be sued. You're just a redditor caught in a meme / joke with thousands of others like you. Some newbies took this too seriously and lost their money. Well duh, their fault, should have been more careful.
Nice and clean, see.
But then, does it matter (for your decisions on participating) whether the source of the hype is purely organic, or if it was helped along by some person? Does it matter how many people helped it along? All those HODL posts, billboards, journalists, etc.
It doesn't really matter if there's an OG evil schemer in there somewhere or if a bunch of people organically / accidentally filled in the role. MLMs perpetuate first and foremost by the actions of regular participants, not the OG schemer, and so do meme stocks. MLMs are / were distributed under the pretense of running your own business and selling products for e.g. skin care. Meme stocks are driven by, well, memes, jokes, politics in this case. It's just a cover story, it doesn't matter.
Up until the crash I've seen zero jokes / memes about selling it all. Every single post I've seen was about holding and buying more. That's not an accident. People who bought into the hype with their money upvote these jokes and not others to bring more people in because they need it to make a profit (or to minimize their loss).
But there were people who legitimately treated this as a joke, right? Of course, just like there were people who legitimately believed in the quality and usefulness of MLM products they sell. Can you tell such people from those who deliberately pump and dump? No. Then, the only role of those people is to add legitimacy to the cover story of the bubble.
My point here is not to blame redditors for this fiasco, it's to hopefully prevent people from jumping into such schemes because they seem organic or funny or whatever. It doesn't matter. The bubble works the same regardless.
When GME hit the fan, I couldn't help but feel how familiar it felt. The cricle was completed when I saw a "if we can drive up the price of GME/AMC with memes, then we can drive up the price of dogecoin -- Buy and HOLD until it reaches $1" appear on near the top of /r/all.
It's not a hivemind mistake. The hivemind seems to create a cycle of individual victims who buy and then once they are invested, they quickly realize how the cycle works and that they need to meme and hype to maintain the price so they can get their investment out.
Sure there are many people who just invest for the meme, but so many fresh people get dragged along who think this is a sure way to make some money.
Then there are also people who have seen it all before and think they can outsmart the mob to make a profit. Many of them do make a profit.
And that's before we even start to consider the people who actively try to stear the hivemind towards new investment (that they have pre-bought)
Their mandate includes insuring that value of shares accurately reflects the value of the company and that investors remain confident in the function of the market. This situation is damaging both those mandates, especially once GME fully crashes and all the noob investors who bought the peek lose their investment and decide to never invest again.
Before anyone replies saying that the SEC should instead be focused on hedge fund market manipulation, I'll point out that's already against the rules and it's just an issue of enforcement.
And I assure you that the SEC are going to have an even harder time enforcing any rules against "meme stock hyping"
Online CFD brokerages look to me like the gambling industry wanted to have a section that was branded as "investments" so they could extract that money from uninformed casuals.
I'm not one for banning things, but I really wish there was more financial literacy. Half of the stories in europe of "retail investor loses shirt" are with CFDs when the so called investor likely doesn't even know the difference between a stock and a CFD.
Moreover, because anyone in the financial industry knows this, I assume all companies offering CFDs as their core product, and making their best attempts to make it look like they're selling actual stock, are all ran by a bunch of scammers.
I recall I’d been made redundant and went to interview at another broker based around Imperial Wharf. Downstairs they had their “education” department where people paid large sums to “learn” how to trade, which mostly involved drawing shapes in stock charts and pretending they had meaning (if trading were that easy algo trading would be trivial). Upstairs I got to see the broker they ran, which they funnelled everyone who learnt how to trade into using. Dude interviewing me was coked out of his head, sniffing every 10 seconds. They were, essentially, pretending to teach people to trade while running the trading platform that would take all their money.
They offered me the job. I turned it down.
I mean, yeah, the "bet" is even in the name.
I don't think they'll like "Bro, it was always about making fun of how much money you lost."
It already is ruined. Given the influx of media attention, new users, bots and the GME after-party of bag-holders who missed the ship. The 'actual' old members (who got in early as $5 - $20) are already gone with their gains. Now it's just full of latecomers who bought as high as $200 - $465 posting screenshots of losing their entire life savings.
The subreddit already had users pretending and memeing to be idiots until the real idiots came in and those posting screenshots of their huge losses with their life savings with disinformation, ape emojis, 'diamond hands', 'hodl' as the stock fell etc.
Not only they didn't know that they have become a meme, They are now going to be featured in the new WallStreetBets movie. Won't be surprised if they called it 'Diamond Hands' or 'The big short squeeze'.
This was, originally, not a 'pump and dump' that everyone with two working brain cells should immediately have recognized as one. Buying into a pump'n'dump when it's already rising is not a smart decision -- but buying into a short squeeze of potentially HF shattering proportions, even after the underlying stock has already gone up dramatically in value, is a quite different scenario, and rationally justifiable imho.
The point where it all went wrong was probably the buying restrictions for retail customers that killed the momentum completely. Without that element, ridiculously high meme prices like $1k per share could have been realistically achievable, driven by FOMO and further fueled by Melvin-copy-cat hedge funds that might actually have been margin called at those ridiculous prices.
So, I'm a bit disheartened by the view here that 'of course it was always going to go wrong, what did they expect'. It definitely was naive to believe everything would go 'smoothly' when billions are on the line, and markets are put under stress they might have never seen before. But the whole thing wasn't destined to fail like it did.
Looking back, I believe the only real mistake many made was not realizing the variant of the prisoner's dilemma that people were in had rapidly shifted on Thursday to favor defecting, even if just to let the dust settle and reevaluate their position. But when you're caught up in an echo chamber that still promotes 'holding' above all else, it becomes difficult to realize that, since holding would indeed have been the right decision if everybody else had done the same. In retrospect it's of course ridiculous to expect a huge group of ultimately self-interested people to coordinate on that level. Still, people held because they got caught up in the herd mentality. After that point though, it indeed turned into a serious of small pump-and-dumps that one should have better left alone.
All in all, I think people shouldn't beat themselves up too badly about what happened, because there _was_ no good template for any of this that one should have consulted.
It was at least a very interesting lesson in stock market mechanics and the kind of manipulation that people with tons of money will engage in when cornered. The decisions leading to retail being prevented from buying may or may not have been indirectly influenced by a motivation to stop the squeeze, but the 'WallstreetBets has moved on to Silver' was definitely a widespread disinformation campaign -- kinda cool to see one of those in action for once.
In my opinion, the point where it all went wrong was when Melvin announced that they had closed their short position and the WSB hivemind decided that they were lying to the public. The conversations after that became increasingly conspiratorial and divorced from reality.
Although it of course seemed quite strange at the time that they would publicly announce that they had closed their positions, unless they wanted the price to drop... heh, it was a mess.
In a sense it was the perfect combination of "limited knowledge" (because only a select few had access to Short Interest estimates) and "limited understanding" (because people thought an unchanging level of Short Interest would necessarily imply that no shorts had closed their positions -- when in reality it was much more likely that new, quite reasonable shorts had instantly taken their place).
Ironically though, I think there could have still been a larger squeeze simply because there still was plenty of shorted stock and people continued to buy, not understanding that their main "opponent" had already tapped out.
Just like in a pump-and-dump, some people were always going to be bag holders with GME, namely those that misunderstood what 'short interest over 100%' meant and thought they could set their price at $42069.
But I still think there was an important difference: The point at which the best move switches from cooperate to defect comes sooner in a regular PnD, because there is no 'outside money' to be gained when cooperating for long enough. So, in a PnD, you should probably sell as soon as the momentum has really picked up, whereas in this case, the momentum actually increased the chance of cooperating being a successful strategy -- up to a point that would have had to be determined.
And then what? How long is meme inflation good for? AMC managed to issue stock to cash in; how long would it have been before GME's management sold out and also did a share issue?
> variant of the prisoner's dilemma
It's an amazing one where you can meet someone on the virtual street, con them into working with you, defect against them, and leave them worse off.
And then, I suppose, the expectation was to sell most shares to desperate hedge funds and maybe keep one or two because you actually like GameStop. The idealistic and completely unrealistic narrative being that it would only be short sellers that pay for the redditor's profits, of course. I think GME wouldn't really have had the opportunity to capitalize on the situation, because them issuing shares would have angered basically 95% of reddit -- and if you're dependant on gamer's liking you, that would probably be a death sentence.
> con them into working with you
I'm not sure how much active misleading was going on, when the narrative that most people believed allowed for motivating people to buy/hold without any nefarious motives.
Still i think Gamestop has a good future ahead of it, just nothing to warrant even the current stock price. But hey, maybe the squeeze will come ;)
One thing you could ask is is the average Redditor smart enough to see the consequences or is this really a bunch of teens putting up their savings being hyped by a hype machine?
At first it was a value play for some, GME was undervalued, then it became a, look all these funds are so short the stock, we can make them hurt, and make them pay us.
Not necessarily. Investing in stocks isn't necessarily a zero-sum game like a lot of people assume. Both the buyer and seller could make profit on a transaction.
Imagine person A bought AMZN for 1000 and later sold it to person B for 2000. A made 1000, and now B made 1000+ on it.
So looking at it from a whole is different from just the buyer and seller. There's a chain.
I agree it's not a zero sum as stocks can rise independently of just market activity if the company is doing well.
(Some companies have non-voting stock, and some don't pay dividends, but in all cases everyone is holding out for the eventual promise of capital returned from the business's actual profits.)
Your logic applies equally well to long positions, if you believe all people and businesses are constantly in such flux.
After 2008 one of the "solutions" was to limit day trading to normal trading.
In other words it's knee jerk bad solutions to make the problem disappear from view whilst ensuring the root cause continues as normal.
(It's the same math pretty much and Bookmakers are doing the risk calculations in real time so for example you could settle your bet and get a partial return on a bet on the US election for example after the election but before the final counts came)
People aren't betting on GME not only because they think they'll get lots of profits. Heck, some clearly say they're expecting to lose the money. They're doing it to screw over Wall Street hedge funds and some of them really did get screwed.
As always people lack to see the root of the issues and take or praise the wrong measures. It's as always the problem of the chicken and the egg but nobody seems to have the clue on who's the chicken.
WSB has gotten very large very quick since the WSBGod saga
In the old days enough people would have went in with that mentality to make it representative of the situations, but today most people there are just people looking for a ticker to buy because they heard WSBs has made people millionaires
Percentage-wise the people who did this with the primary motive of screwing over hedges and were ok with losing money are a large part of where this started but an extremely small part of where this ended up.
That's why places like Citadel are showing retail investors were net selling almost immediately after this blew up past the subreddit
It's out of date to give WSB this much credit, a bunch of people saw dollar signs off a pump and "hold the line until I can dump" and got screwed
GME bagholders didn't do anything wrong.
Look at the candles. That isn't a short squeeze.
That is a short squeeze into a week of market fuckery at the highest level to keep it low enough hedge funds don't go out of business and get a chance to cover at something that isn't astronomical.
Yes, if they allowed it to happen it would have bought some institutions down. No I don't think that would have actually been a bad thing.
Shits fucked and the media is all about that click bait.
Silver was a complete pump and dump carried out by the media at the behest of Citadel.
- made 400% of GME, got out when I noticed the bank's weren't going to let it happen.
I mean, it was not just about GME now. If it worked out, it would happen again. Now everybody knows .. the big guys just allways bend the rules and you have no chance, so you don't even try a second GME.
This has the distinct flavour of QAnon esque conspiracy theories.
QAnon requires you to believe absolutely insane stuff, like Anderson Cooper drinking the blood of babies. This theory would require you to believe that enormously wealthy entities would find a way to use their influence and their knowledge of the inner workings of the stock market they know like the back of their hand to prevent themselves from losing a metric shit ton of money.
I'm not saying it necessarily happened, because it would still be awfully hard to hide your tracks and there'd be hell to pay if you failed, but those two conspiracy theories are definitely on different levels of 'hard to believe'.
There definitely still are people that expect the "rocket to start any minute now", and a lot of those might also believe that they were stopped from making a ton of money by evil forces -- that might be loosely comparable to a cult like QAnon. But that doesn't mean that there aren't some reasonable questions to be asked about the strange occurrences on the stock market last week.
As far as strange occurrences, I doubt we’ll ever have a satisfactory answer given how much of the market is now run by black boxes.
Aren't the hedges involved insured to the tune of Trillions (USD)?
We got fucked by big money and big media. That's all.
Do you think Tesla is worth what it trades for?
Nobody is mad they bought in at 400 and are now sitting at 50. They're mad because they bought in at 150, were promised a squeeze, and when it happened the market makers stepped in and pulled the fucking rug out.
People are mad because the game is rigged and there is no free market. It's just bullshit. It literally proved the whole premise of "the movement"
I think citation is needed for the Citadel connection.
I'll agree that something incredibly weird happened with silver. It wasn't just medium-obvious reddit bots pushing it on WSB, but major outlets like CNBC and drudgereport suddenly going all in with silver coverage too.
Honestly I'd prefer someone investigate the silver angle more than gamestop, even though it was wildly less successful that GME manipulation. It looked better coordinated.