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It's really not. Because eventually retail is going to get destroyed. Yes, some hedge funds have lost their shirts, but those are the first ones who were in t

It's really not. Because eventually retail is going to get destroyed. Yes, some hedge funds have lost their shirts, but those are the first ones who were in the short before the squeeze. The hedge funds and more importantly day trading shops making money right now are the ones who saw the activity and are goosing the stock price right now. I don't know if people realize that there are thousands of day trading shops where hundreds of people are in a single room, like an internet cafe, where people are day trading at terminals and people bark orders to each other and they all jump on the same stocks. These are probably the shops that are responsible for most of this volume. There is no way that WSB boosted the price for $40 to $400. Those are hedge funds and trading shops that jumped into it afterwards. They will sell at the top, and retail investors are going to buy on the fall, thinking it's "on sale" and then they will get wiped out.

mam2 6y ago
Or not.. people have been saying that about tesla for years..
- wpasc 6y ago
  That's a false equivalency if I've ever seen one
  - thebean11 6y ago
    The companies aren't similar, but both are/were heavily shorted "meme" stocks used as examples of an irrational market or bubble. Both short squeezed, and were heavily shorted by many of the same groups.
tempsy 6y ago
that isn’t what the article is saying. it’s arguing that the short squeeze is less about pure profit making, though of course that’s part of it, but more about actively trying to hurt hedge funds who are naked short selling and potentially forcing them to liquidate as a sort of populist driven “payback” against the elite.
- ping_pong 6y ago
  It's all about making money. WSB was about hurting the hedge funds or screwing the system. And to be clear, I know wsb because I was one of the first group of subscribers of wsb way way back, but quit it because it wasn't engaged in what I thought was trading strategies, but a lot of shitposting. But they didn't cause this crazy short squeeze. It's the other hedge funds and day trading shops that are causing this because they see weakness and an easy way to day trade to crazy profits.
  - tempsy 6y ago
    nah you’re underestimating their power to move names in small cap stocks with high short interest.
    - ping_pong 6y ago
      That's absurd. People in WSB probably bought low and haven't sold at all or sold on the way up. Look at the volume. Who is shorting at these prices with this kind of activity? Who has the money to keep buying at $350 to propel the stock to $400? Definitely not WSB. I know plenty of people dipping their toes in and buying 10 or 20 shares for fun right now. But there's 55M shares trading at all time highs. That's not retail. That's day trading shops and deep pockets.
      - tempsy 6y ago
        i guess we’ll disagree there. i’m sure the big boys are playing the swings but they didn’t start this. and it’s not just Gamestop it’s a lot of names.
        Scoundreller 6y ago
        The models for any short selling have just imploded. I’d imagine a lot of low-capitalized short sellers just exited a lot of positions and won’t take any for a while. “Holding until it’s over” now means having enough capital for 100x any short position you take. That limits how much you can short.
boringg 6y ago
I don't think you understand what's happening here. There's only so much volume available as a result of the short positions. WSB et al are putting in money on a long hold. As a result that drives up the price. Yeah gamma's are in for sure making money. There are some people who have made multiple millions. One individual sitting at $31M currently on a $50k investment. Some retail will lose, but wall street institutional short sellers are getting hit hard right now. For them to win this they need to keep putting more money into the fire which pulls in bigger and bigger fish. At some point large institutional investors aren't willing to bail out the short sellers. It is also a strong argument that wall street isn't as intelligent or in control as they like to promote. General public doesn't understand the trade or the sentiment behind it.
- nightowl_games 6y ago
  > For them to win this they need to keep putting more money into the fire which pulls in bigger and bigger fish. This isn't true. The institutions with Short Exposure are connected to the institutions who buy Robinhood data and perform high frequency trading on those orders. Citadel and Melvin can BUY GME themselves to mitigate the risks. It is likely that a substantial amount of GME is being held by the institutions who had short exposure. It's basic risk mitigation. The high frequency traders who have the Robinhood data are making money on every Buy GME order and will make money on every sell when this bubble collapses. It is wrong to present this as a populist uprising. This is an incredible fluctuation, a hilarious anomaly, but it is nothing more than that. It will have no lasting impact. I firmly believe that the hedge funds that held GME short positions have bought into GME to mitigate their exposure. They likely bought in algorithmically using robinhood data and are making money off of retail right now. My message to the people here: /r/wallstreetbets is not a gameshark. You are still playing their game. You are still playing a rigged game and you are still losing.
  - boringg 6y ago
    > This isn't true. The institutions with Short Exposure are connected to the institutions who buy Robinhood data and perform high frequency trading on those orders. Citadel and Melvin can BUY GME themselves to mitigate the risks. It is likely that a substantial amount of GME is being held by the institutions who had short exposure. It's basic risk mitigation. -- They would have to do this at great cost and loss (rumor mill has it at current loss of $4B). If you believe the reports in the media Melvin has had to go ask for money from other institutions. Thus bigger fish would now be involved as they are putting money out to Melvin. > The high frequency traders who have the Robinhood data are making money on every Buy GME order and will make money on every sell when this bubble collapses. -- Agreed i said as much in my comment that people will make money on it - some retail some institutionals. > It is wrong to present this as a populist uprising. -- Disagree. This is a trade that at its core is a sentiment of disenfranchisement, anger at wall street short sellers, financial establishment - and of course with the hope of making money. > This is an incredible fluctuation, a hilarious anomaly, but it is nothing more than that. It will have no lasting impact. - Agree - most likely - it will however make wallstreet institutional short sellers think more carefully about their positions. There will be impacts but doubtful anything transcendent on the markets. If anything SEC will investigate Wallstreetbets traders as opposed to doing anything to Wall street (which has been having carte blanche under the last administration's effort to neuter the SEC). > I firmly believe that the hedge funds that held GME short positions have bought into GME to mitigate their exposure. They likely bought in algorithmically using robinhood data and are making money off of retail right now. -- Might be, however the losses they took at the beginning on their position were pretty steep to jump right back into the pool. > My message to the people here: /r/wallstreetbets is not a gameshark. You are still playing their game. You are still playing a rigged game and you are still losing. -- I don't think anyone has allusions that the tables have turned. This is more like the chance for this one time give a giant F U to wallstreet who has been perceived to be making money off the backs of the population without any care at all from retail investors.
splistud 6y ago
perhaps you don't realize these day trading shops (and loosely connected groups of high volume traders), are active on wsb
ISL 6y ago
It isn't just retail that is going to get destroyed -- the option-sellers may not have enough capital to hedge effectively. A lot of parties are going to be harmed by this; it is an expensive tuition payment to the school of hard knocks. The most interesting technical thing about this fracas is the fact that WSB has managed to play the options-sellers off against the shorts to set this off. The kids have temporarily played the adults off against one another and caused an explosion. In the end, the savvy and the lucky will have more capital than in the beginning, and the un-trained and unlucky are going to be very sad. In the meantime, food-fights are fun while the food is flying.
- elliekelly 6y ago
  And (no one seems to be talking about this) but there's definitely a systemic cost. Going forward, how do you effectively manage the risk of one of your positions becoming a meme? This happening once is an interesting situation and I've certainly enjoyed watching it play out. If it happens repeatedly it will definitely start to undermine the investing public & market participant confidence in the market. That's certainly not something anyone should be rooting for.
  - stonecraftwolf 6y ago
    I don’t think dismissing this phenomenon as a stock turning into a meme is right. WSB is...something, but there is actually a rationale behind going long GME. If you think that the new CEO, known for turning dead retail into profitable online content and e-commerce businesses (as I understand it), is going to turn GME around, then buying $12 Apr 21 calls for thirteen cents or whatever it was makes sense absent any notion of a short squeeze or market manipulation. That it was one of the most shorted stocks and there was an obvious opportunity for a short squeeze, and that this seems to all be multiplied by HFT, is quite the force multiplier. It’s not like this is some random event that could happen to any position. There seem to be a number of factors in play, but it’s not random, and it’s not because a meme got popular.
    - eastbayjake 6y ago
dannyw 6y ago
You underestimate just how much concentrated retail volume is. I have had more than ten people ask me how to buy GME. Its on the front page of everything. Bitcoin’s nearly $1T market cap is more or less all retail. Plenty of WSB posts with multi million positions. Disclosure: I long GME.
- xiphias2 6y ago
  Also with out if money call options you can have 5x leverage quite easily with limited downside, and that's what retail is doing on masse. It's more fun than playing lottery for sure.
  - dannyw 6y ago
    Also with half of the market being passive, every $1 of active money is matched by $1 of passive money.
    - tonfa 6y ago
      What does it mean? The passive ownership usually follows market cap, it doesn't need to buy because the share goes up, it was already owning the correct fraction (ok unless it suddenly enters the sp500 then it might move the price :))
- ping_pong 6y ago
  You don't understand. The original multi million dollar positions with WSB are static now. They're not trading anymore. They can't possibly boost the stock price any further. The way the stock price goes up is by more volume coming in at the highs. But we are talking 57 M shares traded at noon today with outstanding float of 65M. Those are professional day traders propelling the stock. Buying high and selling higher. It's not WSB.
  - jaxwerk 6y ago
    Margin calls are surely coming for large short positions, starting Friday and likely continuing in coming weeks. If the short positions need to cover, there's forced demand.
moolcool 6y ago
Every thread about WSB has comments like this, pretending that tons of stupid kids haven't made fortunes rolling the dice on meme stocks. You ignore or misunderstand what's going on at your own peril.
- germinalphrase 6y ago
  There are something like 3 million subscribers to WSB. How many people are really making that kind of money on meme stocks?
  - moolcool 6y ago
    Where have you been? TSLA was one of the biggest meme stocks and WSB won big.
    - germinalphrase 6y ago
      I hear the hype. I see a few big winners, but there are a lot of people piling on that don’t know the first thing about why prices go up and down.
      - moolcool 6y ago
        So what?
        germinalphrase 6y ago
        If the argument is everyone’s making bank on these meme stonks and it turns out to only be a tiny fraction of the user base that are ending in the black, the argument isn’t very well founded.
        moolcool 6y ago
        You can make that argument about literally any retail investing. Of course it's a gamble, it's right in the title. Wall Street Bets.
lend000 6y ago
There is simply a supply shortage of GameStop stock at the moment. There are no massive hedge funds that took huge positions before the price started rocketing up. Maybe some smaller prop shops with sentiment based strats, but this is mostly retail volume, now being reigned in by market makers. Obviously the smart, patient, and principled retail traders will do better than the uninformed and emotional when all is said and done and the price stabilizes near realistic levels. That is just how markets work. They are not perfect, but allow us to asymptotically approach pricing perfection to the degree that available information is perfect, in the long term. Such phenomenons are much less volatile on larger market cap components of the economy where the big funds can aid in price discovery.
gizmondo 6y ago
> I don't know if people realize that there are thousands of day trading shops where hundreds of people are in a single room, like an internet cafe, where people are day trading at terminals and people bark orders to each other and they all jump on the same stocks. I'm here just puzzled, why exactly would you need hundreds of people? And why would all of them "jump on the same stocks" as opposed to a single person doing that? Do stocks care how many people jump on them, or what?
postalrat 6y ago
If you already know what will happen then surely there must be way way for you to make a profit on that knowledge.

mam2 6y ago

Or not.. people have been saying that about tesla for years..

wpasc 6y ago
That's a false equivalency if I've ever seen one
- thebean11 6y ago
  The companies aren't similar, but both are/were heavily shorted "meme" stocks used as examples of an irrational market or bubble. Both short squeezed, and were heavily shorted by many of the same groups.

tempsy 6y ago

that isn’t what the article is saying. it’s arguing that the short squeeze is less about pure profit making, though of course that’s part of it, but more about actively trying to hurt hedge funds who are naked short selling and potentially forcing them to liquidate as a sort of populist driven “payback” against the elite.

ping_pong 6y ago
It's all about making money. WSB was about hurting the hedge funds or screwing the system. And to be clear, I know wsb because I was one of the first group of subscribers of wsb way way back, but quit it because it wasn't engaged in what I thought was trading strategies, but a lot of shitposting. But they didn't cause this crazy short squeeze. It's the other hedge funds and day trading shops that are causing this because they see weakness and an easy way to day trade to crazy profits.
- tempsy 6y ago
  nah you’re underestimating their power to move names in small cap stocks with high short interest.
  - ping_pong 6y ago
    That's absurd. People in WSB probably bought low and haven't sold at all or sold on the way up. Look at the volume. Who is shorting at these prices with this kind of activity? Who has the money to keep buying at $350 to propel the stock to $400? Definitely not WSB. I know plenty of people dipping their toes in and buying 10 or 20 shares for fun right now. But there's 55M shares trading at all time highs. That's not retail. That's day trading shops and deep pockets.
    - tempsy 6y ago
      i guess we’ll disagree there. i’m sure the big boys are playing the swings but they didn’t start this. and it’s not just Gamestop it’s a lot of names.
      - Scoundreller 6y ago
        The models for any short selling have just imploded. I’d imagine a lot of low-capitalized short sellers just exited a lot of positions and won’t take any for a while. “Holding until it’s over” now means having enough capital for 100x any short position you take. That limits how much you can short.

boringg 6y ago

I don't think you understand what's happening here. There's only so much volume available as a result of the short positions. WSB et al are putting in money on a long hold. As a result that drives up the price. Yeah gamma's are in for sure making money. There are some people who have made multiple millions. One individual sitting at $31M currently on a $50k investment. Some retail will lose, but wall street institutional short sellers are getting hit hard right now. For them to win this they need to keep putting more money into the fire which pulls in bigger and bigger fish. At some point large institutional investors aren't willing to bail out the short sellers. It is also a strong argument that wall street isn't as intelligent or in control as they like to promote. General public doesn't understand the trade or the sentiment behind it.

nightowl_games 6y ago
> For them to win this they need to keep putting more money into the fire which pulls in bigger and bigger fish. This isn't true. The institutions with Short Exposure are connected to the institutions who buy Robinhood data and perform high frequency trading on those orders. Citadel and Melvin can BUY GME themselves to mitigate the risks. It is likely that a substantial amount of GME is being held by the institutions who had short exposure. It's basic risk mitigation. The high frequency traders who have the Robinhood data are making money on every Buy GME order and will make money on every sell when this bubble collapses. It is wrong to present this as a populist uprising. This is an incredible fluctuation, a hilarious anomaly, but it is nothing more than that. It will have no lasting impact. I firmly believe that the hedge funds that held GME short positions have bought into GME to mitigate their exposure. They likely bought in algorithmically using robinhood data and are making money off of retail right now. My message to the people here: /r/wallstreetbets is not a gameshark. You are still playing their game. You are still playing a rigged game and you are still losing.
- boringg 6y ago
  > This isn't true. The institutions with Short Exposure are connected to the institutions who buy Robinhood data and perform high frequency trading on those orders. Citadel and Melvin can BUY GME themselves to mitigate the risks. It is likely that a substantial amount of GME is being held by the institutions who had short exposure. It's basic risk mitigation. -- They would have to do this at great cost and loss (rumor mill has it at current loss of $4B). If you believe the reports in the media Melvin has had to go ask for money from other institutions. Thus bigger fish would now be involved as they are putting money out to Melvin. > The high frequency traders who have the Robinhood data are making money on every Buy GME order and will make money on every sell when this bubble collapses. -- Agreed i said as much in my comment that people will make money on it - some retail some institutionals. > It is wrong to present this as a populist uprising. -- Disagree. This is a trade that at its core is a sentiment of disenfranchisement, anger at wall street short sellers, financial establishment - and of course with the hope of making money. > This is an incredible fluctuation, a hilarious anomaly, but it is nothing more than that. It will have no lasting impact. - Agree - most likely - it will however make wallstreet institutional short sellers think more carefully about their positions. There will be impacts but doubtful anything transcendent on the markets. If anything SEC will investigate Wallstreetbets traders as opposed to doing anything to Wall street (which has been having carte blanche under the last administration's effort to neuter the SEC). > I firmly believe that the hedge funds that held GME short positions have bought into GME to mitigate their exposure. They likely bought in algorithmically using robinhood data and are making money off of retail right now. -- Might be, however the losses they took at the beginning on their position were pretty steep to jump right back into the pool. > My message to the people here: /r/wallstreetbets is not a gameshark. You are still playing their game. You are still playing a rigged game and you are still losing. -- I don't think anyone has allusions that the tables have turned. This is more like the chance for this one time give a giant F U to wallstreet who has been perceived to be making money off the backs of the population without any care at all from retail investors.

splistud 6y ago

perhaps you don't realize these day trading shops (and loosely connected groups of high volume traders), are active on wsb

ISL 6y ago

It isn't just retail that is going to get destroyed -- the option-sellers may not have enough capital to hedge effectively. A lot of parties are going to be harmed by this; it is an expensive tuition payment to the school of hard knocks. The most interesting technical thing about this fracas is the fact that WSB has managed to play the options-sellers off against the shorts to set this off. The kids have temporarily played the adults off against one another and caused an explosion. In the end, the savvy and the lucky will have more capital than in the beginning, and the un-trained and unlucky are going to be very sad. In the meantime, food-fights are fun while the food is flying.

elliekelly 6y ago
And (no one seems to be talking about this) but there's definitely a systemic cost. Going forward, how do you effectively manage the risk of one of your positions becoming a meme? This happening once is an interesting situation and I've certainly enjoyed watching it play out. If it happens repeatedly it will definitely start to undermine the investing public & market participant confidence in the market. That's certainly not something anyone should be rooting for.
- stonecraftwolf 6y ago
  I don’t think dismissing this phenomenon as a stock turning into a meme is right. WSB is...something, but there is actually a rationale behind going long GME. If you think that the new CEO, known for turning dead retail into profitable online content and e-commerce businesses (as I understand it), is going to turn GME around, then buying $12 Apr 21 calls for thirteen cents or whatever it was makes sense absent any notion of a short squeeze or market manipulation. That it was one of the most shorted stocks and there was an obvious opportunity for a short squeeze, and that this seems to all be multiplied by HFT, is quite the force multiplier. It’s not like this is some random event that could happen to any position. There seem to be a number of factors in play, but it’s not random, and it’s not because a meme got popular.
  - eastbayjake 6y ago

dannyw 6y ago

You underestimate just how much concentrated retail volume is. I have had more than ten people ask me how to buy GME. Its on the front page of everything. Bitcoin’s nearly $1T market cap is more or less all retail. Plenty of WSB posts with multi million positions. Disclosure: I long GME.

xiphias2 6y ago
Also with out if money call options you can have 5x leverage quite easily with limited downside, and that's what retail is doing on masse. It's more fun than playing lottery for sure.
- dannyw 6y ago
  Also with half of the market being passive, every $1 of active money is matched by $1 of passive money.
  - tonfa 6y ago
    What does it mean? The passive ownership usually follows market cap, it doesn't need to buy because the share goes up, it was already owning the correct fraction (ok unless it suddenly enters the sp500 then it might move the price :))
ping_pong 6y ago
You don't understand. The original multi million dollar positions with WSB are static now. They're not trading anymore. They can't possibly boost the stock price any further. The way the stock price goes up is by more volume coming in at the highs. But we are talking 57 M shares traded at noon today with outstanding float of 65M. Those are professional day traders propelling the stock. Buying high and selling higher. It's not WSB.
- jaxwerk 6y ago
  Margin calls are surely coming for large short positions, starting Friday and likely continuing in coming weeks. If the short positions need to cover, there's forced demand.

moolcool 6y ago

Every thread about WSB has comments like this, pretending that tons of stupid kids haven't made fortunes rolling the dice on meme stocks. You ignore or misunderstand what's going on at your own peril.

germinalphrase 6y ago
There are something like 3 million subscribers to WSB. How many people are really making that kind of money on meme stocks?
- moolcool 6y ago
  Where have you been? TSLA was one of the biggest meme stocks and WSB won big.
  - germinalphrase 6y ago
    I hear the hype. I see a few big winners, but there are a lot of people piling on that don’t know the first thing about why prices go up and down.
    - moolcool 6y ago
      So what?
      - germinalphrase 6y ago
        If the argument is everyone’s making bank on these meme stonks and it turns out to only be a tiny fraction of the user base that are ending in the black, the argument isn’t very well founded.
        moolcool 6y ago
        You can make that argument about literally any retail investing. Of course it's a gamble, it's right in the title. Wall Street Bets.

lend000 6y ago

There is simply a supply shortage of GameStop stock at the moment. There are no massive hedge funds that took huge positions before the price started rocketing up. Maybe some smaller prop shops with sentiment based strats, but this is mostly retail volume, now being reigned in by market makers. Obviously the smart, patient, and principled retail traders will do better than the uninformed and emotional when all is said and done and the price stabilizes near realistic levels. That is just how markets work. They are not perfect, but allow us to asymptotically approach pricing perfection to the degree that available information is perfect, in the long term. Such phenomenons are much less volatile on larger market cap components of the economy where the big funds can aid in price discovery.

gizmondo 6y ago

> I don't know if people realize that there are thousands of day trading shops where hundreds of people are in a single room, like an internet cafe, where people are day trading at terminals and people bark orders to each other and they all jump on the same stocks. I'm here just puzzled, why exactly would you need hundreds of people? And why would all of them "jump on the same stocks" as opposed to a single person doing that? Do stocks care how many people jump on them, or what?

postalrat 6y ago

If you already know what will happen then surely there must be way way for you to make a profit on that knowledge.