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I wouldn’t compare what happened with GME to the lottery at least not for the people who understood why they were doing what they were doing.

viraptor 6y ago
It's still a lottery. They didn't know if there would be enough real following or if most people were just trolling. Even if they estimated that well, they still had no idea where the peak was.
- tomc1985 6y ago
  Exactly this. Many of us have been WSB for a while and it is really hard to know whether all this GME buzz would amount to anything material until it actually happened
- pmorici 6y ago
  A typical lottery in the USA has odds of like 1 in 300 million. The fact alone that more than 100% of float was shorted put the odds of this happening way above any chance you have of winning the lottery. Suggesting that just because there was an aspect of chance involved that it is on par with a lottery is ridiculous.
  - viraptor 6y ago
    With 1/300M you're likely thinking of a jackpot. Winning anything is much lower. Powerball is 1/38 for the lowest payout. And in the same way, there will be a lot of people around breakeven point in the GameStop lottery, some small winners and some people who are now set for life.
    - esperent 6y ago
      > Powerball is 1/38 for the lowest payout I'm not familiar with the Powerball, but I'm guessing that's for a prize of somewhere around $5 for a ticket price of $2. Hardly relevant, is it?
      - TheSpiceIsLife 6y ago
        All those small wins fuel buzz / conversation, and likely increase participation.
- 8note 6y ago
  Do lottery entrants have influence on their probability of winning?
  - alasdair_ 6y ago
    They influence the magnitude of the expected payout, certainly. (In a negative way)
    - deleted 6y ago
      [deleted]
- ALittleLight 6y ago
  The problem with the lottery is the odds and the expected value, not the concept of risk and reward, which is present in all manner of investing.
- PartiallyTyped 6y ago
  Then you are not paying attention. The floating shares are fewer than the shorted shares. Even if all the floating shares were bought, there are not enough shares to cover the short's position.
  - thaumasiotes 6y ago
    So what? The same share can be bought more than once in just the same way it can be sold more than once; in fact, the one necessarily entails the other.
    - PartiallyTyped 6y ago
      What happens if nobody sells? Say 40% of total shares are floating. You the hedge fund owe 60% of the shares because you shorted them. Even if your position is closed immediately (hint, it won't), you would still need to find the remaining 20% of the shares that you owe. Who will give you that 20%? Well I of course, but the difference is, I get to dictate what the market price is. We saw this happen in 2008 with Volkswagen. 1% of the total shares were floating because Porché had purchased the remaining, the rest of the shares were owned by institutions and they were not selling them.
      - thaumasiotes 6y ago
        > What happens if nobody sells? This has nothing to do with the ratio of short shares to float. What happens if there are 300 shares floating, 20 short shares, and nobody sells?
        PartiallyTyped 6y ago
        They owe more shares than there are available and they pay interest on said shares. Even if nobody sells, the interest gets accumulated and they are bleeding.
        thaumasiotes 6y ago
deleted 6y ago
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christophilus 6y ago
Exactly. I first heard the bull thesis from Michael Burry. Hardly a gambler. GME was comically over shorted in a console release year. Burry predicted a short squeeze way before WSB picked it up.
- gruez 6y ago
  >Exactly. I first heard the bull thesis from Michael Burry. Hardly a gambler. The problem with this argument is that there's always an "expert" that can justify your speculative positions.
  - strulovich 6y ago
    But we’re comparing it to a lottery. We can find plenty of experts rationalizing some stocks or history, all with convincing narratives. But can you find a expert explaining the numbers which came up in lottery last night with such a believable narrative (wrong or right)?
    - gruez 6y ago
      > But can you find a expert explaining the numbers which came up in lottery last night with such a believable narrative (wrong or right)? Isn't that what fortune tellers are? The only difference is that most people know that trying to predict the lottery is bullshit, but most don't think that's the case for stocks despite evidence to the contrary (eg. that actively managed funds underperform passive funds on average).

viraptor 6y ago

It's still a lottery. They didn't know if there would be enough real following or if most people were just trolling. Even if they estimated that well, they still had no idea where the peak was.

tomc1985 6y ago
Exactly this. Many of us have been WSB for a while and it is really hard to know whether all this GME buzz would amount to anything material until it actually happened
pmorici 6y ago
A typical lottery in the USA has odds of like 1 in 300 million. The fact alone that more than 100% of float was shorted put the odds of this happening way above any chance you have of winning the lottery. Suggesting that just because there was an aspect of chance involved that it is on par with a lottery is ridiculous.
- viraptor 6y ago
  With 1/300M you're likely thinking of a jackpot. Winning anything is much lower. Powerball is 1/38 for the lowest payout. And in the same way, there will be a lot of people around breakeven point in the GameStop lottery, some small winners and some people who are now set for life.
  - esperent 6y ago
    > Powerball is 1/38 for the lowest payout I'm not familiar with the Powerball, but I'm guessing that's for a prize of somewhere around $5 for a ticket price of $2. Hardly relevant, is it?
    - TheSpiceIsLife 6y ago
      All those small wins fuel buzz / conversation, and likely increase participation.
8note 6y ago
Do lottery entrants have influence on their probability of winning?
- alasdair_ 6y ago
  They influence the magnitude of the expected payout, certainly. (In a negative way)
  - deleted 6y ago
    [deleted]
ALittleLight 6y ago
The problem with the lottery is the odds and the expected value, not the concept of risk and reward, which is present in all manner of investing.
PartiallyTyped 6y ago
Then you are not paying attention. The floating shares are fewer than the shorted shares. Even if all the floating shares were bought, there are not enough shares to cover the short's position.
- thaumasiotes 6y ago
  So what? The same share can be bought more than once in just the same way it can be sold more than once; in fact, the one necessarily entails the other.
  - PartiallyTyped 6y ago
    What happens if nobody sells? Say 40% of total shares are floating. You the hedge fund owe 60% of the shares because you shorted them. Even if your position is closed immediately (hint, it won't), you would still need to find the remaining 20% of the shares that you owe. Who will give you that 20%? Well I of course, but the difference is, I get to dictate what the market price is. We saw this happen in 2008 with Volkswagen. 1% of the total shares were floating because Porché had purchased the remaining, the rest of the shares were owned by institutions and they were not selling them.
    - thaumasiotes 6y ago
      > What happens if nobody sells? This has nothing to do with the ratio of short shares to float. What happens if there are 300 shares floating, 20 short shares, and nobody sells?
      - PartiallyTyped 6y ago
        They owe more shares than there are available and they pay interest on said shares. Even if nobody sells, the interest gets accumulated and they are bleeding.
        thaumasiotes 6y ago

deleted 6y ago

[deleted]

christophilus 6y ago

Exactly. I first heard the bull thesis from Michael Burry. Hardly a gambler. GME was comically over shorted in a console release year. Burry predicted a short squeeze way before WSB picked it up.

gruez 6y ago
>Exactly. I first heard the bull thesis from Michael Burry. Hardly a gambler. The problem with this argument is that there's always an "expert" that can justify your speculative positions.
- strulovich 6y ago
  But we’re comparing it to a lottery. We can find plenty of experts rationalizing some stocks or history, all with convincing narratives. But can you find a expert explaining the numbers which came up in lottery last night with such a believable narrative (wrong or right)?
  - gruez 6y ago
    > But can you find a expert explaining the numbers which came up in lottery last night with such a believable narrative (wrong or right)? Isn't that what fortune tellers are? The only difference is that most people know that trying to predict the lottery is bullshit, but most don't think that's the case for stocks despite evidence to the contrary (eg. that actively managed funds underperform passive funds on average).