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Comment by jimmydorry | Hacker News Reader

It really lifts the veil on how little research goes into some of these articles when you see the reporting on a topic you have closely followed.

>The stock, which peaked at $482.95 a share when hedge funds that had shorted GameStop were forced to buy at any price, has come back to earth. But it is still at about $112 a share, compared to less than $20 on Jan. 1, 2021.

This is a pretty basic error to make when the SEC investigated and even put out a report showing that the majority of that price movement was from non-short sellers (e.g. retail) and that as a proportion of volume, barely any of it was due to short sellers closing their positions.

The article also completely glossed over the fact that DFV was made fun of and derrided for taking such a large risk in GME. Especially when it was down (for a majority of the time since he started posting that position, if I recall corrected). It instead portrays him as making "consistent returns" and starting a movement to influence the price.

[1] https://www.sec.gov/files/staff-report-equity-options-market... Page 28 if you want a nice graph to take a glance at.

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> the SEC investigated and even put out a report showing that the majority of that price movement was from non-short sellers (e.g. retail) and that as a proportion of volume, barely any of it was due to short sellers closing their positions.

That's talking about the longer lasting effects (i.e. the reason GME stayed at $100+)

but from p26:

> particularly during the earlier rise from January 22 to 27 the price of GME rose as the short interest decreased. Staff also observed discrete periods of sharp price increases during which accounts held by firms known to the staff to be covering short interest in GME were actively buying large volumes of GME shares, in some cases accounting for very significant portions of the net buying pressure during a period

The run up to $500 was almost certainly a short squeeze

It also says short covering was only small portion of overall buy volume, so while there might have been a short-squeeze that might not explain the full price dynamic (p27 and also figure 6).

>particularly during the earlier rise from January 22 to 27 the price of GME rose as the short interest decreased. Staff also observed discrete periods of sharp price increases during which accounts held by firms known to the staff to be covering short interest in GME were actively buying large volumes of GME shares, in some cases accounting for very significant portions of the net buying pressure during a period

This is a deceptive way of putting it. Yes, if you fiddle with the window you are looking at, it is possible for the short sellers's volume to make a majority of volume (e.g. for a given 5 minute window). But a reasonable person would look at the graph in the report and come to a completely different conclusion [1].

If you look at that cumulative volume of short seller volume, it is not possible to close out the reported 122.97% short interest. Let alone the "unofficial" short interest of >200% that came out of the RobinHood hearings.

The controversy surrounding the stock stems from this disconnect of short volume and retail volume, and an article that ignores this (especially when talking about the figure who rose to fame off the back figuring this out), speaks to how little research was actually done. Especially when they spin it as a clear cut "short squeeze" when it appears to be anything but.

[1] https://i.imgur.com/K4ylLhk.png

Didn't it also say that retail was a small fraction of the market buying and selling shares? I thought I'd seen that.

I believe you are mistaken. Have a look at the report as it's definitely an interesting read. From what I understand, retail was the majority of the volume.

That's because the point of this article is "Don't trust these scam artists!" because collective action motivated by hatred of elite rigging the system... is dangerous to those elite.

I would argue Michael Burry actually sparked GME, that and new CEO and some massive short selling. Burry has much more of a following on twitter then the 400 from Roaring Kitty, and him buying was a trigger for my interest in it.

Now, he usually does proper analysis and did have reasons for stock to run up, it was fun to see his tweets about the mess of trying to track down the shares he bought - https://i.redd.it/utr5k9banpe81.jpg

https://markets.businessinsider.com/news/stocks/big-short-in...

So I was very active on the Wall Street Bets Reddit forum shortly before and during all of this.

I would agree that Roaring Kitty wasn't much of a catalyst (prior to the price exploding), but was an early proponent of GME.

I do distinctly remember deciding to invest in GME around December 22nd of 2020, based on what I was reading on the Wall Street Bets forum (unfortunately only like 50 shares.) It was a major daily topic on there from mid December (or earlier) on. Michael Burry was rarely mentioned as a holder, he had bought into GME a lot earlier. The conversation mostly centered on short interest, fundamentals and future moves GME would do.

So I would argue it was 'the collective' on WSB that was perhaps one of the larger catalysts.

Thanks for the links that report on the story. I was curious to see more of the original Tweets too, but it’s too bad that Michael Burry deleted his Twitter account in April 2021 [0].

[0] https://www.marketwatch.com/amp/story/big-short-trader-micha...

There is archive of his tweets

https://twitter.com/burryarchive

Twitter is irrelevant though, this was a Reddit op.

> collective action motivated by hatred of elite rigging the system... is dangerous to those elite.

It's not.

The elite are largely shielded from the volatility of the masses.

It's the "middle class" whose retirement, pensions and life savings are tied up in the market that end up getting hit the most.

I'm not sure that's true? The stock market is up quite a bit if you look back a few years. Your average boglehead-style buy-and-hold investor has probably done very well.

Overall the market will win, but volatility around retirement is the issue.

EDIT TO ADD: Sincerely, thank you for your comment (and the replies providing additional context). It's given me some much needed information to go research (ala Boglehead investing).

>boglehead-style

What does this mean?

John C. Bogle founded Vanguard, which had the first index funds. Simply put, "Boglehead" refers to someone who invests in index fund(s) and leaves the money there long-term, without trying to time the market, buy individual stocks, etc.

Thanks. My search-fu was not caffeinated enough this morning.

There’s an entire forum dedicated to this at https://www.bogleheads.org/.

https://www.amazon.com/Bogleheads-Guide-Investing-Taylor-Lar...

Basically: buy a few index funds, don’t sweat trying to beat the market, you’ll come out alright.

The collective action was motivated by greed, they were very up front about that, including Roaring Kitty. The "elite" that held similar positions in GME got rich too, there wasn't anything dangerous about it.

> This is a pretty basic error to make when the SEC investigated and even put out a report showing that the majority of that price movement was from non-short sellers (e.g. retail) and that as a proportion of volume, barely any of it was due to short sellers closing their positions.

It was apparently also very dangerous to retail investors.

Not at all. Any retail investor who is following this, even in a cursory way, will know to DRS their shares and wait.

It's pretty clear the GME jig is more than up. It's fascinating to see folks out there thinking the squeeze hasn't happened yet - it clearly has. The stock has fallen to less than 20% of its peak price.

The SHF have not covered their shorts. The price movement can be related to several factors and if you want to believe that it means they've covered, you're welcome to. I would suggest reading more if you're interested.

The people that are holding and directly registering their shares know differently.

No, sorry. The GME mythical doomsday that they have been predicting is not going to come.

There is no final reckoning, where GMR is going to shoot to 10 thousand dollars a share, and cause the world economy to crash.

There was a large initial spike, in retail investment, initially, and then when the hype went down, so did the price.

And that's that. The prophecy of the short squeeze isn't coming.

I'm glad you're confident. You have to understand that retail is also confident and it is directly registering its shares. When it reaches 100%, let's see.

Your position is not falsifiable. How long has to go on, with the prophecy not coming true for you to admit you are wrong?

As in give me a date. On that exact day, I can come back to you when the prophecy did not come true, and see if you are willing to admit that you were wrong, or if you will just come up with another excuse for why the prophecy is delayed.

Do you see the problem here? No matter what you say, if you give me a day for when the prophecy is going to happen, you can just make up an excuse later.

That's the issue with conspiracy theories. They are not falsifiable.

Your position is not falsifiable either. Show me the proof that they've covered. Of course you can't. But you're confident anyway. Based on what? You're certainly in the minority among retail investors. That makes /you/ the conspiracy nut, not them.

No one said this would take a day or a month. The expression is "diamond hands"; being patient is not easy. No one know when it will happen. But what we do know is that there continues to be a steady flow of investors whom are directly registering their shares every day.

Of course my position is falsifiable. If there is a massive prophetic doomsday, where the price of GME goes to 10 thousand, or a million dollars, and crashes the world economy, then my position would be falsified.

But with the prophecy predictors, the same is not the case. No matter how long goes on, with the doomsday not happening, a doomsday predictor can just make up an excuse for why the doomsday was delayed.

So once again, give me a date. Surely there must be a day, where if this goes on long enough, with no doomsday, that you will admit that you got duped, and this is all nonsense.

because I am happy to come back to you, on that day, to see if you are willing to take in new information, or if you will just come up with some excuse for why doomsday got delayed.

See the difference between your's , and my position? With me, if the doomsday happens, then that is when I am proven wrong. For you, if the doomsday doesn't happen, for however long, you can just make up a reason for why it got delayed.

Or, in other words, the doomsday is not falsifiable.

> /you/ the conspiracy nut

You are the one predicting a doomsday, supposedly right? Every day that the doomsday does not happen, is more evidence that I am right. Just give a date. Give me a day, when you will say "Well I guess the doomsday isn't coming". I will mark it on my calendar.

If you do not give a date, then you are literally admitting that your position cannot be falsified, because you are saying that no matter how long goes by, with the million dollar short squeeze, you will not be convinced.

I can be convinced. If price hits a million dollars, I was wrong. You can't be convinced, if you are unwilling to give a day when you'd admit that you got duped.

Most retail GME investors intend to hold and not set a date or trigger price. That's the strategy, actually.

Institutional investors that got caught naked short selling can manipulate the price and stall but they can't stall forever -- and every single day it gets harder and harder.

Will it go to $10,000? Who knows. There's a price not much above that which would crush world markets to the point where it would usher in the apocalypse. There would be intervention before that happened.

Very few of these GME investors are solely trying to make some money. They see a corrupt market place and they want to take it down. The SEC could have just done its job but it didn't. They could have stopped the naked shorting. They could have curbed the corruption. They didn't. Instead an army (make no mistake) of small retail investors are buying and holding and registering their shares. You may not understand it, but this is war.

And look at the vitriol. Flat-earthers? Conspiracy nut? It's funny because if I buy Netflix because I think the price will go up, no one tells me that. There are no articles saying, "Netflix's growth is over! Everyone sell! Please, God, sell!" Can you imagine the buy button (but not sell button) being turned off for Netflix for a day during a price run-up? Don't be confused. This is war.

If you want a date, let's give it two years. Who knows and frankly the investors don't care.

> And look at the vitriol.

The vitrol is due to the fact that no matter how long the conspiracy doomsday fails to happen, you will come up with an excuse for why the doomsday got delayed.

> If you want a date, let's give it two years.

So then, if in 2 years, the financial doomsday doesn't happen, you will admit "yep, I got totally tricked by an internet conspiracy, and have no idea what I was thinking, and I will try not be convinced by conspiracy theories anymore, and nobody should listen to what I had to say about any of this stuff previously"?

Or will you just make up another reason why the doomsday didn't happen?

> I think the price will go up

Its not about price going up by a couple percentage points. Instead, the issue is this unfalsifiable conspiracy, of financial collapse and doomsday that people are predicting, and will accept no amount of evidence to the contrary, no matter how long this doomsday fails to materialize.

Your vitriol is because you place a timeline no one else placed on a position you don't hold? So you're angry?

You're not angry at hedge funds for naked short selling? You're not mad at the front running? Did you or did you not see that the buy option was turned off for one stock on a critical day last year during a run-up in price and no one went to jail? You're not furious that the SEC has abandoned its job?

The retail investors doing this are all holding long-term. The motto is, "We just like the stock." Maybe they're sanguine because they think time is on their side or maybe they like the stock. What's the problem? The only one trying to put a date on it and losing their mind and name-calling is you.

Your righteousness feels false here.

You didn't answer the question. Will you admit that you fell for a stupid conspiracy theory and that absolutely nobody should take anything you say seriously ever again, if in a reasonable timeframe, this mythical financial doomsday fails to materialize?

Or will you just make up another excuse?

That is what I mean by falsifiability. If you do not say that you will admit that you were wrong, if this mythical doomsday does not happen, then by definition you are saying that you cannot be convinced out of your position, no matter how long goes by, without the doomsday happening.

I answered your question but you don't want to hear it.

So then the answer is yes, after a reasonable timeframe happens, without this financial doomsday happening, you will admit that you just fell for a dumb conspiracy theory, and people should not take what you say seriously?

That would be falsifiability, if you agree that yes you will agree that you fell for a conspiracy theory, in that situation.

If you make up an excuse, then by definition, your opinion is unfalsifiable.

You're making a straw man argument and attacking it with a lot of anger. No one investing in GME is on a timeline. No one. Could it there be a huge gamma short squeeze? Absolutely. The due diligence that Mr. Gill put together is impressive. A tidal wave of investors agree with him. Will it happen? Maybe. But that's all you get to know -- that maybe it could happen. In the meantime they're holding shares of a company that is doing pretty well lately -- and they know that time is on their side. They can just back and hold their registered shares knowing that's all they need to do. They literally use terms like 'infinity pool' meaning they plan to hold for a long, long time.

And being prepared to hold for a long time is key. Here's why: let's say it's true. Let's say that hedge funds did engage in naked shorting of a company seemingly headed for the dust bin. If this buy, register and hold strategy was for only x months, then the hedge funds can wait to close out their position. Right? Is that confusing? By saying, "There's no end," it puts tremendous pressure on these hedge funds.

I've listed several places where the markets have been shown to be corrupt and rigged. People still go to jail for insider trading but not for any of these other, much worse, market manipulations? And you ignored it. What has incurred your wrath, instead, is that a large group of people would buy, register and hold a stock they like and not state unequivocally when they were going to sell. That's what has made you mad.

The math of all of this is that either don't understand what I'm saying or you do, which means you're either a little fool or a giant asshole.

> No one .... is on a timeline

If you do not have a timeline for your predictions of financial doomsday, then that by definition means that your predictions are unfalsifiable. Which is the problem there I have trying to bring up this entire time.

It is a big problem, if you are literally saying that no matter how long goes on, without the doomsday happening, then you will just make up an excuse for why the doomsday got delayed.

That is a problem, because then the belief is not falsifiable.

Man, there’s a few of you left holding a random stock after a pump and dump you fell for faded. That’s it. That’s the reality. And somehow this has morphed into “we didn’t miss it !“, and then lastly into “this is war and we will take down the global financial system”.

Total nonsense, but entertaining in a car-crash kind of way.

And you say this for other positions that you don't like? Puts of $fb? Calls on $nflx? Of course not.

The reality is that hedge funds engaged in illegal naked short selling, confident that they would never get caught because the SEC has essentially abandoned its role. And a group of retail investors decided simply to buy and hold registered shares of that firm, knowing that simply by doing that, they could bleed those SHFs out or force them to close their position at a much higher price. There's a lot of due diligence out there that backs that position up if you want to look -- but you don't.

Here's the thing, you can like it or not like it. No one cares. However, it's worth noting that it's the only position you'll see be called names and screamed at. "Don't hold! Oh God it's been a year why are you still holding?! God! Stop! Please, stop!"

You misunderstand every reply here and elsewhere. Nobody cares that you are still holding. Nobody. What you do with your portfolio is up to you.

What people do care about is telling you that no, there isn’t some shadowy cabal of hedge funds with your name pinned to a wall under the heading “number one risk to the financial system”.

Continue to hold, but please do understand you’re quite deep in a self-reinforcing grandiose doomsday conspiracy that makes you feel special. None of which have ever historically bore fruit, not for lack of waiting and money invested.

I'm not holding. I don't own any GME stock. I've just been following the story.

> some shadowy cabal of hedge funds

You keep diving into hyperbole. It's just hedge funds that bought naked short positions and got caught by the market. It's pretty simple.

> Will it go to $10,000? Who knows. There's a price not much above that which would crush world markets to the point where it would usher in the apocalypse.

> Instead an army (make no mistake) of small retail investors…

> You may not understand it, but this is war.

> Don't be confused. This is war.

I keep diving into hyperbole? I think this conversation has run its course.

There's a reason I've been following the story. There is nothing new about hedge funds naked shorting (essentially counterfitting) shares, and nothing new in the SEC's refusal to do anything about it.

What's new here is that this is the first time in history that retail has simply used collective buying power to catch them out at it. By simply en masse buying and holding directly registered shares, it puts them over a barrel.

The statements that it's war or what could happen aren't hyperbole -- and I find that fascinating. We'll see...

Absurd. You could falsify the opposing position by providing data that shows significant short interest. Of course you will have trouble with this because all of the data confirms the opposing position.

On the other hand, your position cannot be falsified because you dismiss all of the available data as manipulated without proof.

Your account is only four hours old but you have a dozen comments in this thread, all of which are desperately pleading with people that the shorts covered, there's no squeeze possible.

Smells desperate.

Well, they suspect differently, that's not the same as knowing.

Sure. There is a lot of confidence on this thread both ways. No one will know until all shares are registered, which is why there is a rush by GME holders to DRS their shares with Computershare.

The markets have been corrupt for quite a while. This may be its Bastille moment.

I completely reject this both side thing. Every data point out there shows that these conspiracy theories are unfounded. Even the redditors who believe this nonsense have debunked them themselves through their own experiments (the shareholder vote, the DRS thing) and they keep pushing the goalposts.

There's no global conspiracy to hide shorts of GameStop. It's flat-earth level nonsense. The SEC report spelled everything out, I suggest reading it.

>No one will know until all shares are registered

So we'll never know, because it's obviously not going to happen. Retail doesn't even own half the shares, if redditors manage to hit 10M shares registered I'll be impressed. I really didn't expect to read this drivel on Hacker News frankly.

The DRS bot they use is also easily fooled. R/Gme_meltdown users regularly have false submissions accepted to prove the point.

While this is totally true, let's not forget Gamestop themselves announced that a bit more than 5.2M shares were registered with Computer share at the time of their last earnings report, with the bot estimating something like 7 or 8M based on average shares per post * estimated holder, so not that far off

That is hugely off, even if you assume 100% of the registered shares came from reddit, which would be a very silly assumption to make.

I see your point. My personal opinion is that sure the bot can't be trusted, but that when GME will give the updated numbers of registered shares, there will at least be 2 official data points on this subject... Depending on how high it is (only a minority of outside-of-the-US holders had been able to DRS as of October 30th, not the case anymore), we'll either get an estimation on when a full lock-up of the float would happen, or a new cycle of trying to find the next catalyst ¯\_(ツ)_/¯

> The SHF have not covered their shorts

What is a "SHF"? What data do you base this on? Last I checked, short interest is around 20%.

That's the public information available. There are many ways of hiding short positions like with ETFs. Look at the XRT (an ETF holding GME). Note, I have GME in my portfolio, there's more to GME than the squeeze.

It is a video game rental company with some uninspiring financials. What more is there to GME?

I believe you are wrong about both statements in your first sentence.

Wait for what exactly?

The more that directly register their shares, the smaller the pool to manage the price. It doesn't have to hit 100% for there to be an effect. But if it ever does hit 100%, the price has no upper bound.

Or maybe it’s just yet more shallow and lazy reporting by the increasingly irrelevant profession of journalism.

Collective participation in the stock market is a good thing for the elite, though they may not all see it that way.

Deep reporting and meaningful analysis takes expertise and time, both of which cost money.

If reporting is becoming irrelevant and shallow, we (collectively) have only ourselves to blame by not supporting (with money) deep investigative journalism.

It is a bit lazy to blame the consumer for the lack of quality. Kind of a light version of how consumption but not production is blamed for the climate disaster.

Spending your own money on quality news papers is not the only way to support good journalism. You could also ask your national government to spend more tax money towards your national media company (if you have one) or towards subsidizing independent ones. Or you could champion pro-consumer legislation which might prevent ad monopolies like google from swallowing most of the ad revenue.

Asking consumers to spend their money correctly is probably the least effective way of increasing the quality of production.

I agree, but the article is talking about an event that happened a year ago and how the main actor in said event has not had much social media presence in the last 8 months. They have had plenty of time.

I don’t see the point of journalism, so maybe nobody is to blame.

Between authors, podcasts, youtubers, and the sheer amount of raw data out there, I think we can do away with the whole concept of “news”

Gotta put raw info into digestible formats for the masses.

There’s no way to do that without value judgements. Let the masses do it for themselves. All you need are a few dozen data-driven bloggers per million people.

But journalists are the highest of high integrity individuals (just ask them) and they would never engage in deliberate mental poisoning of their 'readers' on behalf of their masters?

It's not clear to me what you think the error is. That the majority of the price action was caused by retail and not short sellers covering their position doesn't negate the fact that shorts were forced to cover their positions and did so. The language and charts in the SEC report show as much.

Where exactly does the SEC state that the majority of all the short positions have been closed? I can't find this in that report.

In the section "Short Selling and Covering Short Positions" is a chart on page 27 that shows the short interest for GME. It shows the short interest dropping precipitously, meaning that the majority of positions were closed.

They did not cover. When enough people DRS their shares it will become clear.

How many shares need to be DRS'd?

Then how do you explain the massive drop in short interest in the graph in the sec report? Short interest can’t drop without shorts covering…

There are many ways of hiding short positions like with ETFs. Look at the XRT (an ETF holding GME).

So you are saying the SEC report is wrong about the short interest?

I didn't say that. I'm saying there are many ways of hiding short positions.

XRT has been highly shorted for well over a decade because pretty much all of the stocks in it are failing brick and mortars, including gamestop. What does that have to do with GameStop’s short position?

your account was created 5 hours ago, this was posted 6 hours ago. you seem to be quite opinionated about this topic. any reason why that is?

I mean the article basically has no info at all in it. It could have been written by an AI.

Can anyone update me on what the guy is doing now and how much money he made, when he sold, does he still hold any, etc.? The actual interesting part of the story.

Thsi time last year he owned a lot of options -- the ability to buy thousands of shares at a low price (like $5 each, when the shares were selling at $200). Typically you can sell those options and take the cash, but you can simply pay for the shares instead.

Each month he'd post an update which said he bought the shares instead.

Obviously he could have faked the screenshots, but he also swore to congress when the price was c. $40 (after the initial $400 spike) that he would still buy Gamestop at $40. A few days later he posted another screenshot showing not only did he exercise his final options, but he bought even more at around $40.

Now he could have sold most of his shares at any point in the last 9 months, which mostly bounced between $150 and $250, or he could have kept them just like the Gamestop board did (indeed I believe some of the board actually bought more shares at those overinflated (imo) prices. Nobody knows.

I believe one way of making money without selling is to sell options -- you tell someone "I will guarantee to sell 100 shares for $150 a share on May 1st" for example. They will pay you $3 a share for that guarantee, and when the price on May 1st is $140 you just laugh. If the price is $160, you have to sell your shares for less than market price (but still more than you paid), and eat the loss.

The article didn't actually have any new information, as far as I'm aware no one knows what he has done since he went quiet.

Yup, Spoiler alert - They asked him what he was doing now. He didn't reply.

DFV was a player but not the ringleader by any means. Basically a bunch of reddit users on r/wallstreetbets came up with a premise to buy into heavily shorted stocks to:

A. Initiate a short squeeze in heavily shorted stocks by having retail traders pile into them by buying shares and..

B. Strike back at market manipulators like Andrew Left and Melvin Capitol by forcing them to buy back their short positions due to skyrocketing share prices of their shorted assets.

On the wallstreetbets forum point B was touted as the reason to buy into these stock positions due to all the issues these wall street short sellers cause with traders and society in general. DFV was just lucky in that his trade was picked up by the crowd due to it being heavily shorted and eligible for point A.

The SEC uses ggplot? That's awesome, go R!

> It really lifts the veil on how little research goes into some of these articles when you see the reporting on a topic you have closely followed.

Briefly stated, the Gell-Mann Amnesia effect is as follows. You open the newspaper to an article on some subject you know well. In Murray's case, physics. In mine, show business. You read the article and see the journalist has absolutely no understanding of either the facts or the issues. Often, the article is so wrong it actually presents the story backward—reversing cause and effect. I call these the "wet streets cause rain" stories. Paper's full of them.

In any case, you read with exasperation or amusement the multiple errors in a story, and then turn the page to national or international affairs, and read as if the rest of the newspaper was somehow more accurate about Palestine than the baloney you just read. You turn the page, and forget what you know.

https://en.wikipedia.org/wiki/Michael_Crichton#GellMannAmnes...

Thanks, it's nice to have a name for this kind of feeling.

It's more than this effect if it is deliberate.

Shorts covering causes the initial run-up and then retail FOMO’d in causing the rest. The short interest graph and language starting on the bottom of page 26 make it clear that shorts covered.

The article was about the guy and what he's doing now, not the nitty gritty of the stock value.

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