Wall Street was the real winner of the GameStop saga
economist.com
economist.com
The result is STONKS, a comedy/drama feature screenplay [0], fictional but inspired by the GME events, and a love letter of sorts to WSB. We queried Hollywood producers but were ignored; we shared on WSB itself but we were insta-banned and never told why (but given the founder sold the rights to his life story to Hollywood [1], we can make an informed guess).
Anyway, here it is. Feedback welcome.
[0] https://gabrielgambetta.com/files/STONKS-2022-02-02.pdf
[1] https://www.wsj.com/articles/reddits-wallstreetbets-founder-...
You can only read "Reporting in from Kazakhstan with 2 shares, stay strong apes HODL" so many times....
The quality of poster is much much worse now.
All WSB does now is magnify the winners/pumpers while leaving trail of poor people without their money.
That's all it ever was from my observation from around the same time; they shill the most absurd stock with emojis and brag about taking losses with diamond hands, but somehow discussing Bitcoin as an actual way to counter-act the ills of the 'hedgies' or central banks was banned so I lost interest.
I occasionally drop back in for certain things.
Like the ape statue at Wallstreet in front of the bull and buying kids those switches was cool, though.
But those incidents were always the exception, not the rule.
GME had it's own daily thread well into April, at which point it was still completely dominating with significantly lower quality discussion that extended outside the GME specific daily thread.
Once we ended the daily thread and asked people to move to r/GME or r/SuperStonk, people incorrectly assumed it was banned, and continued to repeat this narrative, despite our repeated mentions that it was not banned.
Also, the WSB mod team is more or less the same as it was in 2019 or earlier. The majority of the team has been around for 6+ years.
I was never clear if this was some sort of in-joke/meme, or some fringe idea that kept getting upvoted because it was hilarious, or if the people in there actually knew so little about stocks and economics that they thought something like that was possible.
But I can assure you that the members are 100% serious.
< We are, to an extent.
> Direct registering shares
< If the outstanding float of a stock is il-liquid and unable to be lent out, that'll force a short squeeze if the rest of the conditions are met. Lots of due diligence is readily available over there to show that those conditions are only getting more dire for the funds that never actually hedged their bets with authentic shares.
> Issues an NFT dividend
< This forces the hedge funds to also buy those NFT's to pair with the shares, which they'll be forced to buy too = short squeeze.
I can't find it now, but I'm sure there was an example of someone attempting the "buy the float" situation (not just Piggly Wiggly but another one more recent), and despite owning every share they were still being traded on the market. If I remember right it just carried on. Superstonk treat that as proof their theories are correct, I'd treat it as proof that even if they are right they won't get what they think they want.
Nor do they don't seem to account for the government stepping in and doing something like eminent domain and declaring the shares are worth a "more than fair price" and force-buying the shares at a fixed price of say $100/share, or even $500/share, or lets be crazy and call it $1000 per share - over twice as much as a share has ever traded for, and ending the situation.
I suspect a lot of people were waiting for 12 months before selling, as I believe that's preferable for tax purposes in the US, and that explains the high price until Christmas and then the more recent fall.
I also have 10 shares (bought at about $45). I have no idea about NFTs, but I feel like the potential risk is worth not selling for profit now. I don't think I'd buy any more at $100 though. If I could offset capital losses against income (which I believe you can in the US) I'd certainly buy more shares (although probably not in GME), but in the UK you can't, and I can't help but think the tap is going to be turned off on the US markets very soon so putting money into normal stocks isn't a great move either.
Two folds to the story -
WSB Side
WSB mods alleged the sub was suffocating with the GME and subsequent squeeze stock posts and shitty memes. I made couple memes myself but after the weeks to come WSB was inundated with all the memes centered around this one topic. WSB is a general investment subreddit that took a turn towards GME everything.
Another problem was GME's foundational investment theory, that it had high short interest. But if you look at DFV's way of investing he preached low valuation high potential stock. Just the mere short interest as a determinant wasn't true but an after thought. From that point on, many people who thought they were late in the GME game started to pile on other high short interest stock like Bed Bath and Beyond, WKHS etc. At that point WSB was becoming less of a shitty DD based stock to shitty meme based stock site. Mods clutched up modding but you can never know the difference between one pile of shit vs another pile of shit when it comes to a post. So post removal felt arbitrary.
Superstonk Side
The GME centered group left WSB because there was a new mod who didn't fit the WSB philosophy. There were some personal hypothesis about her(?). They even alleged I believe that mod made their adolescent child a mod of WSB who were also removing content left and right.
My post about cautioning people about GME which reached some magnitudes of thousand upvotes and plenty of agreeable comments was removed without notice.
There were several highly upvoted and good value posts removed which led to people believing that the real wall street might have infiltrated the WSB. So, in this cloud of distrust groups left and they started their own spinoff version of WSB.
You are confused. This has nothing to do with WSB.
What you are describing happened solely on r/SuperStonk or the other GME subreddits.
WSB has never had a child moderator.
I have confused the GME subreddit with WSB on the point about the child moderator.
https://www.reddit.com/r/Superstonk/comments/mkdpk3/plumdrag...
---
Also WSB discontinued the daily GME thread and people moved (refugee-d) to superstonk.
https://www.reddit.com/r/Superstonk/comments/ms8681/rwallstr...
"not bad for a day's work"
Interesting definition of work. I see Kyle's future having morphed into Ivanov..
Who knows, maybe this is the origin story of Kyle as a hedge fund supervillain? :)
edit: it was Rasputin! Here's a Slate article describing the events: https://slate.com/culture/2016/08/the-bizarre-true-story-beh...
edit2: Here is a secondary source from Stanford, which is drier, but also less subject to hyperbole: https://web.stanford.edu/dept/HPS/HistoryWired/Davis/DavisAu...
WSB is not, and has never been, the place to promote your art, especially when you're explicitly trying to raise awareness so you can sell it.
OP did the same thing with a gamedev book a year prior.
Easy ban.
I did in fact announce my (freely available) CG book [0] on Reddit, where it was very well received - 1300 upvotes in gamedev [1], 2500 in programming [2], tons of awards. Turns out Redditors respond positively to original quality content shared for free :)
[0] https://gabrielgambetta.com/computer-graphics-from-scratch/i...
[1] https://www.reddit.com/r/gamedev/comments/lbmbdf/computer_gr...
[2] https://www.reddit.com/r/programming/comments/lbmda2/compute...
The only time he ever came to WSB after 2016 was if someone approached him with a way to make money off the community. It's laughable that anyone would buy the rights to his story when he wasn't around at all.
If WSJ cared about integrity, they would put "DISGRACED" ahead of the word founder.
I'm 10 pages in, it's engaging and taps into the whole 'GME is Occupy Wall Street 2.0' narrative that was widespread in late 2020-2021. It reads a lot like 'How to Sell Drugs Fast' to me.
I think we really should have a monthly screen-writer post on HN, throughout the years here I've read a few things that seemed like it had potential if it were fleshed out but usually fell on deaf ears. I have a few pilots and screen plays I go back to when I have down time.
Who knows maybe a FAANG worker has an in at Netflix?
Edit: Just finished it, the last act seems really rushed, like it was meant to meet a page threshold more than finding the protagonist's resolution.
The overall arch was solid, with typical banter and some inside jokes that could still be relatable to the uninitiated.
IMO, it was kind of an exemplifier of postmodernism, used colloquially. All the "beat down hedgies" stuff was just part of the game, just like "fuck the fundamentals" was part of the game.
IMO it has had an influence. A neurotic, dramatic lens through which we can look at financial institutions, more abstract economics. What is capital? What is money? Etc. Obviously, it all happens within a context with crypto, a long term bull market, and such. I think one of the features of being a basket case, meme-ish phenomenon is a sort of openness to ideas. Mentality-wise it allows exploring concepts with the vigour of a believer, but without really being bought into the position long term. Meme trading, and maybe trading generally, kind of lends to this. You can believe a "case" a hold the position with caveat.
As is typical of "movements" today, there is no expectation of winning... just as there is no expectation that market rationality "wins." Everything, in our times, is a "just so story," in economic rhetoric terms.
I don't think the stock market serves a public function with these mechanisms in place and needs further regulation.
You’re describing accelerating creative destruction. It’s painful but good. Prevent it entirely and you cause stagnation.
We can make the human impact more compassionate. But trying to stop it is folly.
Additionally creative destruction can also mean that I destroy the wealth of those that currently do profit from canceling companies prematurely. It is applicable to economies rebuilding after a war, not applicable to Gamestop. That is an excuse for exploitation.
the "advantage" here is that the true value of the company is reflected in the market, so that capital is allocated to the best companies rather than the most hyped ones.
>That is more parasitic than constructive
Can you explain how it's "parasitic"?
>Additionally creative destruction can also mean that I destroy the wealth of those that currently do profit from canceling companies prematurely
Isn't that what happens if someone thinks a stock will go down, shorts it, and gets it wrong?
It exists, but it isn't a permanent feature of the big fish economy that stock markets represent. There are processes like online travel retail overtaking travel agenting. That's a sort of creative destruction. Mostly though, travel agents were an SME sector. Like the proverbial (and literal) restaurant trade, they're subject to market forces in this way and the theory often plays out in practice. Heavy price competition. Creative destruction. Etc.
Banking OTOH, doesn't really have a creative destruction dynamic to speak of. Most auto manufacturers are what and who they were 20 or 50 years ago. Big tech, also, doesn't compete like restaurants do. It's more about holding control via network effects, platforms or whatnot. Avoiding head to head competition and market price dynamics entirely.
GME fell somewhere in the middle. They're kind of restaurant like, but also relatively big and publicly traded.
In any case, the financial meta game can often be more relevant and determinant of reality than market dynamics as per Schumpeter, JS Mill and the like.
Schumpeterian creative destruction is an ideal. But the process of innovation it describes is well documented in the study of entrepreneurship, venture capital, new firm formation and the industrial dynamic of new entrance.
> isn't a permanent feature of the big fish economy that stock markets represent
Most of the stock market isn’t Goliaths. Formation and destruction still reigns in most of the economy. There, short sellers add value. (I’m more sceptical of private equity and its leverage tactics.)
> Banking OTOH, doesn't really have a creative destruction dynamic to speak of. Most auto manufacturers are what and who they were 20 or 50 years ago
Banking and auto manufacturers share a history in being bailed out. Big Tech looks like a classic market failure, though Facebook’s stumbling gives me pause on that conclusion.
I'm not sure we disagree, at least not much.
What I meant is that descriptions/theories/models/takes^ such as these are an ideal, I agree. The extent to which this ideal describes what appears to be a dominant process in the part of the world we're describing varies.
What I'm (halfheartedly) arguing is that the Schumpeterian description currently, isn't so dominant. At least, it's not dominant enough to be the basis for understanding short selling... I don't believe. In fact, the share price of a company isn't necessarily very important to the operation of the company... in theory. Short selling is, also in theory, not necessarily all that impactful on share prices.
>>Banking and auto manufacturers share a history in being bailed out.
True, but again, this is markets in practice. The long term, perfect free market ideals are not something that generally exist in reality for a lot of reasons... both good and bad depending on your perspectives.
I don't think Schumpeter meant for his ideas to apply only in hypothetical markets. Creative destruction was as a powerful force, for example, in the early decades of auto manufacturing. Banking has always been somewhat perplexing to economists, who can't really agree on whether or not they should be considered "firms."
We might disagree about short sellers vs leveraged buyouts. I'm more skeptical of short selling and derivatives value add, more willing to entertain the idea that leveraged buyouts have a useful role. At least leveraged buyouts relate directly to financing business activities.
^Economists, atm, seem to like the term "story."
There is this aspect, true - and necessary. An equal folly is to believe this is the only thing, or even the only significant thing, going on.
Gamestop is one of those companies where the demise has been severely delayed IMO; they could've seen the future years ago but chose to stay with their legacy business of selling games in physical stores. Online game stores do what they do but with much lower costs and a much better business model.
There are two ways forward for Gamestop IMO but neither is very positive:
- They try to compete with the giants in the online gaming market, like Steam. I can't see them bootstrap their way into that, Steam and the others have too much network effect going on and GME has not shown any real talent in the online/tech domain.
- They try to revitalize their offline presence. I don't see this happening either. There has been a decades long trend of everything moving from off- to on-line and I don't see that changing anytime soon.
For anyone who agrees with the above assessment, the conclusion would be that the future for Gamestop is not very bright. Depending on the timescale you think it is going to play out, being short is an entirely valid position to be in. Personally, I think the sentimental memories of the ~25-~45 years old generation will keep it alive for a decade or so more.
Maybe it's just my personal preferences, but I can't imagine myself or anyone I know buying enough "gaming merchandise" in significant numbers. If I need a game, it's either digital, or physical through amazon with same day delivery. It's the same with other gaming-related merchandise. I go for whatever's cheaper/on sale, which is usually bestbuy or amazon.
Maybe they will offer a simoler api to nfts and transactions?
C was $564.10 at the end of 2006. By early 2009 it was $10.20 - that's about a 98.2% reduction in the stock price. That's a much larger destruction of capital than GME ever was.
So it wasn't the stock price falling that brought the company low, it was the company failing that brought the stock price low.
If anything, selling short needs to be made easier as it represents an essential corrective. And this ultimately serves the greater good too as it ensures that the price of a stock is correct and investors don't overpay, which will inevitably lead to losses for them. A good recent example of what happens otherwise is Wirecard. In 2019 the German BaFin enacted a ban on short sales in the stock of the company after reports had been published that were essentially accusing them of fraud. In the end, those reports turned out to be true, and the company collapsed less than 18 months later. The stock fell from over EUR 150 to virtually zero and investors lost pretty much everything. They should have listened to the short sellers rather than fight them.
There are also no "easy profits" in short selling. They only make money if they are right. There are people who have been calling for the immediate collapse of Tesla for the last decade or so. Others have been trying to short Amazon, Google, Apple, Microsoft, because they think that these companies are completely overvalues. Most of these people are probably bankrupt by now.
But GME isn't any of those companies. They are a failing brick and mortar retailer that is boxed in by Steam on one side and Amazon on the other. They have repeatedly attempted to transform the company over the last decade without success. The fact that their plan is to launch some NFT market place, a field in which they have no experience and that is already crowded by established players like OpenSea, demonstrates how much their management is completely out of ideas. And if the shorts make money from the GME stock, it just means they were right.
Is it? Who's purpose?
The main purpose of an IPO is (was?) financing. IE, raising money for the company operations... like a bank loan, VC investment, etc. In practice, many of today's IPOs are companies that don't need to raise money (anymore). For those companies, their main purpose when doing an IPO is usually liquidity. IE, letting founders, investors and such cash their shares... or continue owning them with the added benefit of market prices to validate the value of their wealth.
Your argument is quite mainstream, but I can't see how anyone would make it except to justify short selling. It seems to me there's a lot of "you sure about that?" in the whole thing.
Are you sure "finding the correct price" is an actual need? Who needs this, and why? Are you sure short selling makes for better prices?
Liquidity is a similar argument made in favour of derivative HFT and such. I also think its (probably/usually) quite bogus. Do stock markets even have liquidity problems? Stocks are insanely liquid. That's what they're for.
Investors (as opposed to speculators) and anyone interested in general economic efficiency.
After the IPO, a stock ultimately represents a claim on a future revenue stream, and as such the "proper value" would be the (proportional) NPV of the company's future income. To the extent the market price doesn't reflect this, it represents inefficient allocation of investment resources.
Unlike bonds, an equity's future income is very hard to predict, so providing that pricing information, along with liquidity, is what ostensibly distinguishes Wall Street from a casino.
Personally, I don't care about short selling. I trace the root of the problem to the fact that dividends are taxed much more harshly than capital gains because capital gains don't incur taxes until sale, so they compound better. This incentivizes mature companies to retain earnings and grow through M&A (including of competitors), leading to this glorious present of megaconglomerates and oligopolies we are now living in. My prescription would be to incentivize dividends and discourage retained earnings so that some connection to reality is re-established in the market.
Another of the many problems with megaconglomerates, aside from them being anticompetitive, is that it is much harder to accurately predict the combined future income of 100 aggregated businesses than just one, so their very existence distorts prices all the more.
Loosely, I think corporations should have a progressive income tax based on net income (defined in such a way as to prevent Hollywood-style games) or maybe market cap, to disincentivize getting huge and to encourage divestment. Dividends, I believe, usually already have a nominally lower tax rate than capital gains, but the fundamental problem is related to compounding. I therefore think the capital gains rate should be much, much higher and the dividends rate probably somewhat lower.
For example: you can't go to the bakery, borrow a loaf of bread, sell it to a passing punter, and then pay the baker at 5pm when they drop the price to get rid of their stock before it goes stale.
The rest of the economy manages to find the "correct" price for things without shorts. So could the stock market.
For some reason people think borrowing a stock and selling it is some super nefarious plot to kill companies, but apart from some special circumstances like secondary offerings or employee equity compensation there is really no reason a company should worry overly much about their stock price. If the company keeps making a profit, no amount of short selling can make it go bankrupt.
If you sell empty bags on the street, promising the buyers there is bread inside, only to collect those empty bags back when the buyers throw the (supposed) bread away because it became worthless, is not good business. You're the only one profiting, both the bakers and the buyers are loosing money.
A short seller making a bet that a stock goes down by selling the stock is simply the same (but in reverse) as someone betting the stock will go up by buying a stock. The underlying business is not affected at all.
(And before someone jumps in to give me the speech about how the future of civilization depends on market makers being able to fabricate shares long enough to cover: Yes, I know about the exception that permits this. The purpose of my comment was just to clarify what the argument was and that the parent of this comment was not replying to it.)
I disagree since that would give people decision making capabilities who are the least qualified to do so.
> And this ultimately serves the greater good too
You can believe that but you also don't have to.
We don't have to lie to ourselves. Stocks are highly emotional and investors regularly overpay when they buy into hype. I am not against short selling, it is a trade like any other. But let's keep things honest.
It's unclear why investing in the belief something is overvalued demands a different or larger set of decision making capabilities than the belief is it undervalued.
The purpose is precisely to zoom in on the correct value of a stock (via crowdsourcing and putting your money where your mouth is), and thereby allow investment to flow to the most advantageous opportunities.
1. WSB was created before Robinhood was released.
2. WSB started as a place for people to discuss more risky strategies than what was being discussed on r/investing
3. Yes. There is no movement. WSB is not your personal army.
The 220% was in Feb.
Before; SI = [Number of Shares Short] / [Float]
Now; SI = [Number of Share Short] + [Float] / [Float]
Ask yourself, why...
This is nonsense. Who is “they”?
FINRA and the SEC require brokers to report short interest data twice a month [1]. These are share aggregates. FINRA then provides those data for U.S.-listed companies to the exchanges, who publish it. None of those exchanges have changed their publishing methodologies in years.
FINRA and the SEC have nothing to do with the actual calculation of SI that various websites report.
Read; https://www.reddit.com/r/wallstreetbets/comments/lbydkz/s3_p...
S3 SI% of Float = Shares Sold Short/(Float + Shares Sold Short)
> Now; SI = [Number of Share Short] + [Float] / [Float]
So you're saying that SI is always reported as higher than 100% now? Since that's not the cause, are you saying there's negative number of short shares now?
Maybe think for 2 seconds about your 2nd formula?
S3 SI% of Float = Shares Sold Short/(Float + Shares Sold Short)
"In seeking to answer this question, staff observed that during some discrete periods, GME had sharp price increases concurrently with known major short sellers covering their short positions after incurring significant losses. During these times, short sellers covering their positions likely contributed to increases in GME’s price. For example, staff observed that 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. Figure 6 shows that buy volume in GME, including buy volume from participants identified as having large short positions, increased significantly beginning around January 22 and remained high for several days, corresponding to the beginning of the most dramatic phase of the run-up in GME’s price."
Meaning shorts covering causing a small increase in price and then retail FOMOd in.
See also the graph on the next page that show short interest dropping from over 100% to around 20%.
1. Lots of people are short.
2. Price goes up significantly, shorters get margin calls.
3. Price goes up a lot due to buying pressure from shorters closing their positions. (ie, the squeeze itself)
4. Price is now extremely high and fairly disconnected from fundamentals.
5. People notice the price is very high compared to earnings and open new short positions.
After step 5, there can be a ton of shorters in the stock yet there is not a very big chance of a new squeeze since the price at which the new short positions were opened is so high. Imagine how much the price of GME would need to rise to squeeze out the shorters who opened their position in the 300-400 USD price range.
I was late to get in, but not too late; the next morning, the price had doubled, so I sold half. I held on to the rest just to be along for the ride, but I think that morning was the real squeeze. I think I bought some extra on a dip, sold half of that for double again, and sold the rest on a minor bump a few months later.
Hectic stock like this can be an easy way to make a quick profit as long as you remember to buy the dips and sell at any bump that comes along. I bet that's what the big guys on Wallstreet did to make way bigger profits than I'll ever be able to.
As long as the dip is not permanent, say, due to a permanent change in the fundamentals. Then it might just keep dipping.
And when trading derivatives, even dips caused by the market (rather than fundamentals), can lose you lots of real money. Because even if it will eventually recover, it might dip deeper and longer than you can afford. I lost a ton of money on Tesla that way. (I would have been rich now if I'd been able to keep that.)
Of course sometimes it is the companies themselves, and then you need to pay attention. And because you rarely know in advance whether a dip is the company or the market, you always need to pay attention. But the Gamestop thing was a clear case of the market freaking out.
Of course, the bigger picture challenge is that -- modulo market freakouts -- everyone else is also "checking if something changed about the company itself", and that's already built into the market price, that's kind of the model of how the market works. To make money by buying in dips only after checking if something is changed in the company itself, you have to think you are better at noticing or predicting changes in the company itself than everyone else, I guess?
I had the misfortune to encounter one of these on reddit the other week. I asked (what I thought was) a fairly simple question - are people still in it because they think the company has a reasonable chance of turning around and making good money, or is this now an idealogical thing about sticking it to the man, or a bit of both?
And I basically got a full-on hard sell as a response, massive amounts of details about business plans and any reservations I expressed were due to me being stupid and/or biased.
So that's me told.
Now, the DRS movement, for lack of a better term, did not start to take off until late August/Early September. IOW, DRSing shares has not been going on since last January.
The next quarterly results (Nov-Jan) will be released around the end of March and, assuming that Gamestop continues to release the DRS numbers, will provide 2 data points.
The last point I would like to make is that the total number of shares outstanding for Gamestop is only 76.5 Million. 12 Million of those shares are Insider shares. Even if you Ignore institutional holdings and individual investor shares held in brokerage accounts, 5.2 Million is 8% of 64.5 Million. I would say that is not an insignificant percentage, even if the DRS movement stagnated after October.
I don't want to spread negativity, I have a bit of money invested as well on the off chance that the theories are true, but I'm placing my bets that if anything happens it'll be because of stricter regulations regarding short selling, not because of DRS.
I've always thought that this would take some time (i.e. DRSing the float). I don't think it necessarily has to reach 100% (although that would fantastic) I do think the higher the number climbs, the harder it will be for investors and regulators to ignore.
DRSing shares will reveal irrefutable, easy-to-digest proof that there is illegal naked shorting of Gamestop. How that plays out (squeeze, investigation etc) is anybodies guess because this exact situation has never happened previously. (individual retail investors directly registering shares in their name to secure the entire inventory of a company).
>“Some commentators have asked how short interest can get as high as it did in GameStop. Short interest can exceed 100%—as it did with GME—when the same shares are lent multiple times by successive purchasers. If someone purchases a stock from a short seller and subsequently lends the stock out again, it will appear as if the stock was sold short twice for the purpose of the short interest calculation.”
https://www.bloomberg.com/opinion/articles/2021-10-19/matt-l...
Is there any expectation that the number of DRSed shares will continue to climb, rather than asymptotically approach some arbitrary number? At this point you'd think everyone who wanted to DRS their shares already did it, so for that number to increase you either have to target stragglers (not many of them), or buy more shares (I doubt folks on superstonk have enough free cashflow to pull that off).
>I do think the higher the number climbs, the harder it will be for investors and regulators to ignore.
>DRSing shares will reveal irrefutable, easy-to-digest proof that there is illegal naked shorting of Gamestop.
Like, illegal naked shorting that's happening right now? I saw in other comments that the short interest is 20% or 14%. It's pretty obvious that you don't need to do naked short selling to get that kind of short interest. Not to mention, > 100% short interest isn't indicative of naked short selling either, because the same share can be lent over and over again.
But to be completely Honest: I will be able to answer your question with more certainty in about 12 months.
That will give us 5 data points. That should be enough to get an approximate number of shares being DRS'd every 3 months.
Through all of the due diligence and personal research, I do believe Illegal naked shorting is taking place. I'm not here to convince anyone to buy GME, but the DRS number seems simple enough for the general public (short attention span--I include myself in that) to wrap their heads around. DRS is the elevator speech, so to speak, for me.
If someone were inclined to listen to me, I can do a quick 2 minute, back of the napkin calculation that may spark interest, using DRS.
Companies use social media for astroturfing and viral marketing, why not market manipulation?
chron.com/business/article/Whole-Foods-CEO-used-fake-name-to-knock-rival-1830788.php
It actually felt good to pay over $10k in taxes for short term gains.
I am averaging about 16% YTY return for the last 20 years (and much better than that the last 5, obviously).
The trick... undervalued or momentum stocks that suddenly have big interest. Spot the trend and go with it (swimming in the big fishes wake).
It's OK to exit AFTER the movement breaks... never be greedy. Never cry about the profits you never got.
The best thing is just to go with indexes and spread buys over time (daily if you can) and sell only when you want money to spend, not because you're scared of the market.
No one beats the market... I just try to find the flow and go with it.
I used to be a trader (series 7 and 63) and knew what I was doing.
All around, he doesn't seem like he knows how to manage his money.
to read the full article without GDPR, paywall, or other annoyances.
The market for in-game purchases (like every mobile game for crying out loud) is huge. Epic games' Fortnite is 100% free to play but has a store for purchasing cosmetic stuff (and a lawsuit with Apple over this). There was $3.7 Billion dollars of revenue associated with Fortnite in 2019 [1]. Billion with a B. All cosmetic, in-game items.
What is reported as being built would be a marketplace for gamers, and possibly content creators (people that build mods, skins, maps, etc. for games if allowed) to buy/sell/trade these in-game items. Not $10k GIF's of apes or whatever nonsense. Instead of spending $5 or $20 on something and it sits on a gamers account, think of it as they could spend that and later on they could re-sell it or trade on a marketplace.
I don't think any of this requires blockchain or NFT. I think the companies involved are using that because it ticks a lot of requirements boxes for basically Digital Rights Management with sales/resales built in (I think via ETH/smart contracts).
As silly as buying pixels for a game may sound, it already is a large market and a company like GameStop getting into that could capture a reliable subscription-like revenue stream not tied to game console refreshes or used physical games.
What would be sad is if this is a revolutionary type of change to an industry (i.e gamers own the digital sword they bought, maybe take it from one game-world to another like in Ready Player One?) but is squashed by the volume of noise about "hedge funds r bad, boo wall st" every time the company is brought up.
[0] sec filing: https://www.sec.gov/ix?doc=/Archives/edgar/data/1326380/0001... [1] fortnite rev: https://www.statista.com/statistics/1238904/fortnite-revenue...
There is zero chance of GME of all places becoming some sort of market for NTF game cosmetics. None of that blather matters if you don't have a user base, and there's no way GME is going to get one.
Why would Epic, Valve, etc go along with GME's scheme? If they want to offer unique to a single player items they can do so essentially trivially with their existing platform. They don't need to partner with anyone, just put a dev team or two on it for a short bit. They certainly don't need to partner with anyone like GME, let alone a bunch of shady cryptocoin operations running out of tax havens.
Basically no one cares about this utopia you're imagining to start with, and even if they did, there's no pathway to create it in the form of GME.
1. The Steam Community Marketplace already exists.
2. Why is GameStop - a retail chain with an increasingly irrelevant brand - the right company to build a digital marketplace?
3. Why would developers and publishers participate in GameStop's marketplace - what would it offer them?
4. Gamers hate NFTs. Search that phrase.
This whole saga seems to at least introduce some new rules and regulations. Although enforcing them will be the real game-changer.
You need qualitative and quantitative to arrive at a fundamental value. Everything you’ve listed is qualitative.
The short squeeze is blatantly over in the eyes of basically every investment professional, the incredibly weird price action driven by devotees is not.
In 2007 it was waiters and the unemployed buying million dollar homes.
In 1720 it was people ploughing their life savings into the South Sea Company though they freely admitted they had no clue what it was (understandable, since it was not much of anything). But many HODLed until it all came crashing down.
No conspiracy necessary.
Don't get me wrong I'm as nostalgic of browsing walls of videogames as the next 30+ year old gamer but nostalgia rarely makes money.
Now that is current madness, IMHO, as insane as Gamestop. Look how society and humanity have changed over history, over the last 10 years, over the last century. The changes are dramatic! And the nature of humans includes those changes; it includes the good as well as the bad, the bad as well as the good (people act like they just discovered the bad part a few years ago!). You and I and all the rest each have the free will to choose between them, decide what we are going to do and what we will make our society.
We got here by people choosing good, choosing optimism, almost always in much worse situations than we are. Shame on us if, standing on their shoulders, living on their accomplishments, we choose to quit and throw it all away.
(Also, what a miserable way to live, drowning yourself in despair!)
But more importantly I think that for many small investors the point was not making money. The point was the story. It was worth losing some cash so that they can be a part of these things. Luckily winning is not always defined by money…
It's pretty funny that the entire article is only like 3x the length of the preview.
There's a supreme value to the widely-held belief that 'the market' just 'works' and is 'fair' or 'free' or something. The only way features like liquidity were possible to offer in the early days of the emerging globalized financial markets was by appointing Market Makers, Authorized Participants, and other privileged positions that could self-regulate and influence the market. There were all kinds of (legitimate) limits to creating a truly 'free' or 'fair' system during the bootstrapping phase. So the system was justified, once upon a time at least...
So that's how we got here: What now?
Well... many of us still expecting a GME squeeze believe that Market Makers got greedy and instead of contenting themselves with the profit channels they were conceived to capture they used their central position to extract revenue from some less scrupulous places than the bid-ask spread. Once MMs realized the haul they could extract by selling shorts throughout the deaths of certain 'surely dead' companies, it doesn't take a stroke of genius to think about inciting these kinds of events themselves. Here's where the rub comes in: Because of the way things were bootstrapped, most of these Market Makers are self-regulating bodies that self-report a lot of critical positions if they even have to report it _at all_. Regardless of how we got here, the reality is that many privileged positions such as Market Makers do NOT need to report their short positions. Even if they were 'required' there are so many ways to 'hide' the position on a balance sheet that I honestly cannot imagine paperwork exists that would conclusively DISPROVE the possibility of a MOASS.
Many others hold the belief that 'the market' is 'working' just 'fine' whatever those words mean to the individual espousing that belief. Their belief is, in general, that the rules of the game are to be trusted. They don't just quote the SEC report citing Self-Regulating Organization short interested coming in at 0% right after Jan 2021, they actually BELIEVE it. They don't even question that these self reporting organizations may be lying. I mean, with their immaculate records how could you not believe them?
So there you have it: One group believes mostly on principle that markets are 'good' or 'functioning correctly' thus MOASS couldn't happen and anyone still awaiting MOASS is doing so because of ideological reasons more than a single piece of evidence.
Disclaimer: I hold some GME
Don't just get your news from Bloomberg or CNN.
GME has increased its percentage of the S&P because retail investors have bought the position. Blackrock is not taking a position that a short squeeze is possible they are just reacting to the index.
Further they are in sptmi which massive etfs like vanguards vti & blackrocks itot are benchmarked against st.
Any institute, including GameStop themselves, would be committing a crime if they knowingly triggered a short squeeze. The SEC rules on this is quite clear.
What's interesting to me is that the official SEC report on GameStop "squeeze" specifically called out that the rise in price WAS NOT due to short covering, but rather a large increase in retail buying and market makers balancing options. So the reported % short went from more than 100% to less than %20 with zero short covering and prices falling? Yeah, sure.
Is there any law or ruling you can point out to?
I don't think (but someone correct me as I'm no professional) the occurrence of short squeezes are illegal, unless there is a knowing collusion behind it (check previous cases from courts regarding collusion to trigger short squeezes). What is illegal is naked shorting (https://www.investopedia.com/terms/r/regsho.asp) which could be a trigger/condition to future squeezes..
Issuers have precedent for issuing shares into shorts [1][2].
[1] https://www.nytimes.com/2008/10/30/business/worldbusiness/30...
[2] https://www.bloomberg.com/opinion/articles/2021-06-03/amc-ha...
Buying significant calls will move the market as the market maker buys shares the ensure they can cover. Shorting drops price because it "creates" shares. Even six figure trades can move the market,
There was never going to be a flag day though... shorts cover over time as their bet looks less likely to payoff. By the time the "squeeze" day arrived the billion dollar losers had already covered.