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Hedge funds loosing their shirts to nerds and soccer moms.

asdfasgasdgasdg 6y ago
Plenty of "nerds and soccer moms" are going to lose their shirts in this too. Whoever is buying this stock today is likely to have a bad time (unless they can keep the pyramid going for a little longer and hand the bag to someone else).
- germinalphrase 6y ago
  It’s a fascinating little story. Cant help but think that there is someone in the industry making the real money here and all the “soccer moms and nerds” are just cover/dopes.
  - geogra4 6y ago
    That's my sense too. There's gotta be some big muscle behind this.
  - 52-6F-62 6y ago
    Because that's usually how it goes. It appears that every bit of skepticism has been thrown out the window. I think a lot of people are about to get burned who expected riches. And all because of empty promises by anonymous message board users. It's disconcerting.
    - asdfasgasdgasdg 6y ago
      Maybe I'm just a bad person but I don't feel much for people who get scammed due to their own greed.
      - 52-6F-62 6y ago
        I'm a little more ambivalent, myself. But I think I just don't like seeing it at all. If the entirety of the human were, functionally, a complex organism then the result of this sudden and energy-expensive outgrowth will likely be a sudden and intense immune response that will have effects beyond those directly involved.
      - eloff 6y ago
        Some valuable stock market lessons available at $300 a piece right now. Probably not going to end well, but they'll learn something from it.
        nrmitchi 6y ago
        > but they'll learn something from it. Unfortunately, I disagree. I think there will be stories written for the next bit about the handful that make bank, very few stories written about the people who lose their shirts and end up with their financial life in ruins. When nonsense like this happens again, no one will remember the downside.
        eloff 6y ago
        Everyone who loses their shirts will learn a lesson they'll never forget. Pain is the best teacher. The smart people learn from other people's pain.
        Fjolsvith 6y ago
        Not hard to take your stimulus check and stick it to the man with it.
    - berrynice 6y ago
      Alot of people don't care about riches, they just care about winning, they want revenge even if it'll cost them.
  - addicted 6y ago
    There was a story yesterday (I'm not sure of its validity) that Citadel has paid for advance knowledge for Robin Hood stock transactions, so they are almost certainly making money on this. And unsurprisingly they've fronted money to at least 1 of the hedge funds on the wrong side of these trades. They're probably making bank. A couple of particular hedge funds will lose money. But what happens to the people who are carrying GME when this frenzy ends and no one is willing to buy GME at a $24Bn market cap valuation. They end up being the ones who paid for everyone else to "lose their shirts".
    - mason55 6y ago
      > There was a story yesterday (I'm not sure of its validity) that Citadel has paid for advance knowledge for Robin Hood stock transactions That's a complete distortion of what's actually happening. If this were actually happening and people knew about it there would be absolute outrage. The truth is that Citadel is one of a few firms that pay Robinhood for the option to take the other side of trades. It's pretty innocuous but people get upset about it and turn it into "Citadel get advance knowledge of Robinhood trades". Citadel is in the business of making markets. Instead of taking a position on a stock, they just happily take the other side of most trades. They make their money by offering slightly below the "true" market price and in exchange they provide liquidity to the market so that you can sell your stock pretty much whenever you want. The idea is that most trades are pretty random and for each trade on one side you have a trade on the other side that balances it out and Citadel keeps the difference between the "true" price and what they pay/sell at. The problem is that sometimes lots of stock will be sold for a good reason (imagine someone finds out that there's an accounting fraud at some company). In this case, Citadel loses money because the trades don't balance out and the stock just goes down. From Citadel's perspective, traders on Robinhood are much more likely to be random people with no extra info (retail investors) and so they're willing to pay Robinhood to route the orders to them because it reduces the risk of adverse selection. In exchange, Citadel has to give a price that's at least equal to the best price in the market or else they're not allowed to fulfill the order.
      - deeeeplearning 6y ago
  - robjan 6y ago
    HFT firms are making a killing on the volatility and order flow
  - lordnacho 6y ago
    As an ex hedge fund / HFT options guy, I would be intrigued to know who is lending their stock out to be shorted. You'd think they have some incentive to stop lending them out, especially if the options are pushing the gamma so short that the sellers need to cover. If the options guys are needing to buy but nobody can sell, that would seem to be quite good for someone who is holding the stock. I'm not so sure about the soccer moms thing. The FT has a chart of how many small players there are, and although it's shot up it doesn't look huge to me. Seems to me the WSB crowd IS making money, but there's probably more institutions jumping on for a piece of meat too.
    - deleted 6y ago
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    - deleted 6y ago
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    - mannykannot 6y ago
      Matt Levine said this a couple of days ago: "Bloomberg tells me that short interest is 71.2 million shares, while GameStop has only 69.7 million shares outstanding." (As he explained in a footnote, this does not necessarily imply massive naked shorting.) I don't know how things have changed since then. Maybe this morning would have been a good time for GameStop to issue more shares?
    - wp381640 6y ago
      Chatter in the last 12 hours on discord and on the threads has been a lot about having holders call brokers to ask that their stocks not be lent out
- allie1 6y ago
  “bulls last until the last person willing to buy a share at quoted price, buys it” This too will go down, violently.
- Miner49er 6y ago
  I doubt this is the end. It still has a lot of room to run, probably. The shorts haven't covered, they've doubled down.
  - asdfasgasdgasdg 6y ago
    Why wouldn't they double down? Fundamentally, Gamestop isn't a thirty billion dollar company. The odds that retail investors stay greedy long enough to force the current shorts to cover are not very high, IMO. Some of these redditors are going to want to cash in their gains, and when that happens I guess it's going to collapse very quickly. I don't buy individual stocks and even I'm tempted to get in on the short side right now. Seems like an easy way to turn $1k into $10k. Take my wife out for a nice dinner or something.
    - thebean11 6y ago
      The stock is going up because of shorts. If the cycle of old shorts covering and new shorts taking positions continues, combined with the positive feedback loop of retail FOMO, the stock will continue to go up. > I don't buy individual stocks and even I'm tempted to get in on the short side right now. Seems like an easy way to turn $1k into $10k. Sure, if you call the top, otherwise you'll turn $1k into -$20k pretty quickly
    - andrethegiant 6y ago
      This doesn't have to do with GameStop as a company -- they are merely the rope in a tug of war between retail investors and wall st. Buying shares seems like the easy way to turn 1k into 10k given how many success stories have happened over the last few days.
    - stu2b50 6y ago
      If you short gme you're about to be in very heavy debt to your broker. At least buy a put or something instead. I don't think anyone is actually long on gamestop at $350 per share, but trying to short is not about company expectations at this point, it's about timing this hysteria wave, and if you mistime it you get destroyed by infinite risk and your broker liquidate your position and you leave with not 10k, but -100k.
- tzfld 6y ago
  As I see, many of them are aware of this and doing mainly for fun/revenge/etc and ready to lose the 'investment'. Basically a special kind of bubble scheme to deliberately pushing an actor to the top of it to maximalize it's loss. Not sure if there was anything like this in the past. Interesting story.
  - deleted 6y ago
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  - anewaccount2021 6y ago
    Shorts have been getting slaughtered in covering rallies since the first short was allowed. I can't believe these "professional" funds would keep short positions open on an equity with crazy-high short interest...that's like Trading-For-Dummies grade fail. What's more amazing is many of their clients will be destroyed in the largest bubble in history, where money was given out to every idiot with a TD Ameritrade account.
    - Fjolsvith 6y ago
      Gotta love those stimulus checks.
- anewaccount2021 6y ago
  Exactly! /r/wallstreetbets are also trading against each other, without mercy! Not sure why people think that sub is some sort of group trading account... But, chances are, a lot of them will make incredible gains by betting on the misery of hedge funds who themselves bet on misery. No tears shed for the hedge funds or the account holders who are now basically zero'd out. Imagine having your life savings in one of these funds...in the biggest bubble in history, your account went to ZERO!
  - Fjolsvith 6y ago
    And the thing is that for the last four years the mainstream media kept saying the market was going to crash on Trump, and it actually does it the first week into Biden's term.
- saalweachter 6y ago
  The interesting thing to me is that -- in so much as this is being done for profit making and not more abstract reasons -- if 90% of the jumpers-on lose their money, it won't necessarily dissuade that many people from the community in the future. There will be a lot of people making a lot or a little money, and sharing their stories, and the ones who lose this round will be able to tell themselves that next time, if they are faster and get out at the right time, they too can be one of the winners...
- deleted 6y ago
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- manomanowicz 6y ago
  The 'losers' are the one's who are buying high and selling low. Ironically in this case, it's the short sellers who can't cover their positions who are being forced to buy at the top, having already sold low.
- berrynice 6y ago
  Alot of people aren't trying to make money, they just want to kill a few hedgefunds regardless how much money they lose, they know they'll never retire and they're already broke, many of these people have nothing to lose
- davewritescode 6y ago
  I made 5 figures yesterday after I had bought in around $40. My initial investment was pretty low and when it hit high $140s I took my money and ran. At these boosted stock prices all it's going to take to sink anybody is an after hours announcement of additional shares being offered. I couldn't made a lot more money but I try not to be greedy.
gruez 6y ago
I know this is a popular sentiment (ie. the little guys prevailing over the big guys in wall st), but this is likely not the case. >In general, a crafty short seller (a.k.a. most long/short funds) will do the following to ensure the internet doesn’t outsmart them: > 1. Capping loss with put options — With a put option, you roughly get all the benefit of shorting a stock (minus the premium paid and strike) with a finite amount to lose. > 2. Capping loss with OTM call options — This is my favorite, and one of the more common strategies. When you assemble a short position, you aren’t stupid hopefully — you understand stocks only go up, and infinity is a much farther number from current price than 0 (using a discrete numeraire, of course). https://nope-its-lily.medium.com/gamestop-power-to-the-market-players-part-1-d8863f2f8604 https://nope-its-lily.medium.com/gamestop-power-to-the-marke...
- anewaccount2021 6y ago
  Read the news - what you are describing didn't happen. Look at Melvin - they are trying to convince the market they are still solvent. Citron closed their shorts at a huge loss. This really is a case of "seasoned professionals" getting slaughtered on awful trades, and they didn't appear to have a safety net set up. edit: people seem to think I am cheerleading WSB...far from it, someone there will also get slaughtered by being the last fool to walk in on a risky trade. Trading is merciless, caveat emptor! edit2: the article above does NOT refute my claims. Melvin took a $2 billion emergency infusion from Citadel. You don't do that if you safely closed your trades without hazard. Sorry I'm going to trust Bloomberg over "nope-its-lily"
  - darepublic 6y ago
    Egging on reddit certainly doesn't help. I agree with the notion of shorting game stop but don't make a big fuss about it.
  - TameAntelope 6y ago
    WSB certainly has the narrative locked up, but that doesn't actually mean anything when it comes to who is walking away with fatter wallets. There is zero percent chance that this is actually playing out the way WSB is claiming it's playing out.

Plenty of "nerds and soccer moms" are going to lose their shirts in this too. Whoever is buying this stock today is likely to have a bad time (unless they can keep the pyramid going for a little longer and hand the bag to someone else).

germinalphrase 6y ago
It’s a fascinating little story. Cant help but think that there is someone in the industry making the real money here and all the “soccer moms and nerds” are just cover/dopes.
- geogra4 6y ago
  That's my sense too. There's gotta be some big muscle behind this.
- 52-6F-62 6y ago
  Because that's usually how it goes. It appears that every bit of skepticism has been thrown out the window. I think a lot of people are about to get burned who expected riches. And all because of empty promises by anonymous message board users. It's disconcerting.
  - asdfasgasdgasdg 6y ago
    Maybe I'm just a bad person but I don't feel much for people who get scammed due to their own greed.
    - 52-6F-62 6y ago
      I'm a little more ambivalent, myself. But I think I just don't like seeing it at all. If the entirety of the human were, functionally, a complex organism then the result of this sudden and energy-expensive outgrowth will likely be a sudden and intense immune response that will have effects beyond those directly involved.
    - eloff 6y ago
      Some valuable stock market lessons available at $300 a piece right now. Probably not going to end well, but they'll learn something from it.
      - nrmitchi 6y ago
        > but they'll learn something from it. Unfortunately, I disagree. I think there will be stories written for the next bit about the handful that make bank, very few stories written about the people who lose their shirts and end up with their financial life in ruins. When nonsense like this happens again, no one will remember the downside.
        eloff 6y ago
        Everyone who loses their shirts will learn a lesson they'll never forget. Pain is the best teacher. The smart people learn from other people's pain.
      - Fjolsvith 6y ago
        Not hard to take your stimulus check and stick it to the man with it.
  - berrynice 6y ago
    Alot of people don't care about riches, they just care about winning, they want revenge even if it'll cost them.
- addicted 6y ago
  There was a story yesterday (I'm not sure of its validity) that Citadel has paid for advance knowledge for Robin Hood stock transactions, so they are almost certainly making money on this. And unsurprisingly they've fronted money to at least 1 of the hedge funds on the wrong side of these trades. They're probably making bank. A couple of particular hedge funds will lose money. But what happens to the people who are carrying GME when this frenzy ends and no one is willing to buy GME at a $24Bn market cap valuation. They end up being the ones who paid for everyone else to "lose their shirts".
  - mason55 6y ago
    > There was a story yesterday (I'm not sure of its validity) that Citadel has paid for advance knowledge for Robin Hood stock transactions That's a complete distortion of what's actually happening. If this were actually happening and people knew about it there would be absolute outrage. The truth is that Citadel is one of a few firms that pay Robinhood for the option to take the other side of trades. It's pretty innocuous but people get upset about it and turn it into "Citadel get advance knowledge of Robinhood trades". Citadel is in the business of making markets. Instead of taking a position on a stock, they just happily take the other side of most trades. They make their money by offering slightly below the "true" market price and in exchange they provide liquidity to the market so that you can sell your stock pretty much whenever you want. The idea is that most trades are pretty random and for each trade on one side you have a trade on the other side that balances it out and Citadel keeps the difference between the "true" price and what they pay/sell at. The problem is that sometimes lots of stock will be sold for a good reason (imagine someone finds out that there's an accounting fraud at some company). In this case, Citadel loses money because the trades don't balance out and the stock just goes down. From Citadel's perspective, traders on Robinhood are much more likely to be random people with no extra info (retail investors) and so they're willing to pay Robinhood to route the orders to them because it reduces the risk of adverse selection. In exchange, Citadel has to give a price that's at least equal to the best price in the market or else they're not allowed to fulfill the order.
    - deeeeplearning 6y ago
- robjan 6y ago
  HFT firms are making a killing on the volatility and order flow
- lordnacho 6y ago
  As an ex hedge fund / HFT options guy, I would be intrigued to know who is lending their stock out to be shorted. You'd think they have some incentive to stop lending them out, especially if the options are pushing the gamma so short that the sellers need to cover. If the options guys are needing to buy but nobody can sell, that would seem to be quite good for someone who is holding the stock. I'm not so sure about the soccer moms thing. The FT has a chart of how many small players there are, and although it's shot up it doesn't look huge to me. Seems to me the WSB crowd IS making money, but there's probably more institutions jumping on for a piece of meat too.
  - deleted 6y ago
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  - deleted 6y ago
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  - mannykannot 6y ago
    Matt Levine said this a couple of days ago: "Bloomberg tells me that short interest is 71.2 million shares, while GameStop has only 69.7 million shares outstanding." (As he explained in a footnote, this does not necessarily imply massive naked shorting.) I don't know how things have changed since then. Maybe this morning would have been a good time for GameStop to issue more shares?
  - wp381640 6y ago
    Chatter in the last 12 hours on discord and on the threads has been a lot about having holders call brokers to ask that their stocks not be lent out
allie1 6y ago
“bulls last until the last person willing to buy a share at quoted price, buys it” This too will go down, violently.
Miner49er 6y ago
I doubt this is the end. It still has a lot of room to run, probably. The shorts haven't covered, they've doubled down.
- asdfasgasdgasdg 6y ago
  Why wouldn't they double down? Fundamentally, Gamestop isn't a thirty billion dollar company. The odds that retail investors stay greedy long enough to force the current shorts to cover are not very high, IMO. Some of these redditors are going to want to cash in their gains, and when that happens I guess it's going to collapse very quickly. I don't buy individual stocks and even I'm tempted to get in on the short side right now. Seems like an easy way to turn $1k into $10k. Take my wife out for a nice dinner or something.
  - thebean11 6y ago
    The stock is going up because of shorts. If the cycle of old shorts covering and new shorts taking positions continues, combined with the positive feedback loop of retail FOMO, the stock will continue to go up. > I don't buy individual stocks and even I'm tempted to get in on the short side right now. Seems like an easy way to turn $1k into $10k. Sure, if you call the top, otherwise you'll turn $1k into -$20k pretty quickly
  - andrethegiant 6y ago
    This doesn't have to do with GameStop as a company -- they are merely the rope in a tug of war between retail investors and wall st. Buying shares seems like the easy way to turn 1k into 10k given how many success stories have happened over the last few days.
  - stu2b50 6y ago
    If you short gme you're about to be in very heavy debt to your broker. At least buy a put or something instead. I don't think anyone is actually long on gamestop at $350 per share, but trying to short is not about company expectations at this point, it's about timing this hysteria wave, and if you mistime it you get destroyed by infinite risk and your broker liquidate your position and you leave with not 10k, but -100k.
tzfld 6y ago
As I see, many of them are aware of this and doing mainly for fun/revenge/etc and ready to lose the 'investment'. Basically a special kind of bubble scheme to deliberately pushing an actor to the top of it to maximalize it's loss. Not sure if there was anything like this in the past. Interesting story.
- deleted 6y ago
  [deleted]
- anewaccount2021 6y ago
  Shorts have been getting slaughtered in covering rallies since the first short was allowed. I can't believe these "professional" funds would keep short positions open on an equity with crazy-high short interest...that's like Trading-For-Dummies grade fail. What's more amazing is many of their clients will be destroyed in the largest bubble in history, where money was given out to every idiot with a TD Ameritrade account.
  - Fjolsvith 6y ago
    Gotta love those stimulus checks.
anewaccount2021 6y ago
Exactly! /r/wallstreetbets are also trading against each other, without mercy! Not sure why people think that sub is some sort of group trading account... But, chances are, a lot of them will make incredible gains by betting on the misery of hedge funds who themselves bet on misery. No tears shed for the hedge funds or the account holders who are now basically zero'd out. Imagine having your life savings in one of these funds...in the biggest bubble in history, your account went to ZERO!
- Fjolsvith 6y ago
  And the thing is that for the last four years the mainstream media kept saying the market was going to crash on Trump, and it actually does it the first week into Biden's term.
saalweachter 6y ago
The interesting thing to me is that -- in so much as this is being done for profit making and not more abstract reasons -- if 90% of the jumpers-on lose their money, it won't necessarily dissuade that many people from the community in the future. There will be a lot of people making a lot or a little money, and sharing their stories, and the ones who lose this round will be able to tell themselves that next time, if they are faster and get out at the right time, they too can be one of the winners...
deleted 6y ago
[deleted]
manomanowicz 6y ago
The 'losers' are the one's who are buying high and selling low. Ironically in this case, it's the short sellers who can't cover their positions who are being forced to buy at the top, having already sold low.
berrynice 6y ago
Alot of people aren't trying to make money, they just want to kill a few hedgefunds regardless how much money they lose, they know they'll never retire and they're already broke, many of these people have nothing to lose
davewritescode 6y ago
I made 5 figures yesterday after I had bought in around $40. My initial investment was pretty low and when it hit high $140s I took my money and ran. At these boosted stock prices all it's going to take to sink anybody is an after hours announcement of additional shares being offered. I couldn't made a lot more money but I try not to be greedy.

gruez 6y ago

I know this is a popular sentiment (ie. the little guys prevailing over the big guys in wall st), but this is likely not the case. >In general, a crafty short seller (a.k.a. most long/short funds) will do the following to ensure the internet doesn’t outsmart them: > 1. Capping loss with put options — With a put option, you roughly get all the benefit of shorting a stock (minus the premium paid and strike) with a finite amount to lose. > 2. Capping loss with OTM call options — This is my favorite, and one of the more common strategies. When you assemble a short position, you aren’t stupid hopefully — you understand stocks only go up, and infinity is a much farther number from current price than 0 (using a discrete numeraire, of course). https://nope-its-lily.medium.com/gamestop-power-to-the-market-players-part-1-d8863f2f8604 https://nope-its-lily.medium.com/gamestop-power-to-the-marke...

anewaccount2021 6y ago
Read the news - what you are describing didn't happen. Look at Melvin - they are trying to convince the market they are still solvent. Citron closed their shorts at a huge loss. This really is a case of "seasoned professionals" getting slaughtered on awful trades, and they didn't appear to have a safety net set up. edit: people seem to think I am cheerleading WSB...far from it, someone there will also get slaughtered by being the last fool to walk in on a risky trade. Trading is merciless, caveat emptor! edit2: the article above does NOT refute my claims. Melvin took a $2 billion emergency infusion from Citadel. You don't do that if you safely closed your trades without hazard. Sorry I'm going to trust Bloomberg over "nope-its-lily"
- darepublic 6y ago
  Egging on reddit certainly doesn't help. I agree with the notion of shorting game stop but don't make a big fuss about it.
- TameAntelope 6y ago
  WSB certainly has the narrative locked up, but that doesn't actually mean anything when it comes to who is walking away with fatter wallets. There is zero percent chance that this is actually playing out the way WSB is claiming it's playing out.