9 ms·

This emergent behavior seems a lot like DDOS, but in the stock market.

by ryandward 6y ago

drawkbox 6y ago
... with a dash of flash mob and viral marketing.
- nixass 6y ago
  While giving financial institutions their own medicine.
  - babyshake 6y ago
    Are we totally sure there isn't an element of astroturfing?
    - dhbanes 6y ago
      Short sellers participate in this all the time.
      - drawkbox 6y ago
        Indeed. Hedge funds by nature skim from volatility. When they hold short positions they have "partners" that short and distort. Everything is astroturfing/selling pretty much nowadays. Social media is not reality, though astroturfing/distorting can become reality for better or for worse, depends on your position/tribe. What is on the surface is rarely what is the driving force underneath.
  - ryandward 6y ago
    Exactly -- reducing the barriers to market entry while increasing widespread market understanding reduces the _unique_ opportunity for arbitrage that Wall Street has enjoyed.
washedup 6y ago
They aren't trying to kill GME though, they are boosting it, essentially saving it and shareholders from short seller pressure. I see it as a bizarre, but ultimately positive behavior. Wallstreet no longer holds all the keys.
- josefresco 6y ago
  How are they saving it?
  - robjan 6y ago
    GameStop can issue shares at the higher price and use the cash to revitalise their business. Note I'm not familiar with the company so I can't assess whether the company is salvageable.
    - xnyan 6y ago
      There is so much going against them it's hard to see how they can make it work. Gamestop is a mall/strip mall operation which already means they are suffering from the massive over buildout of retail that ran wild until the crash of '08. They have a huge shopping mall presence, which means even for retail they are suffering more than most due to the cratering value of mall space in the US. A large portion of their profit came from buying used game discs and reselling at a healthy markup. Digital distribution was already hurting that in a major way and COVID is only accelerating the decline of physical media. Their plan has been the same as several other desperate mall-based stores like barnes and noble: keep the core product to draw people in, but pack the shelves with cheap high-margin "lifestyle" items like t-shirts and toys. I predict in 5 years they will be a corpse that's been picked clean by venture capital, existing as nothing more than a brand that can be slapped on some online game store.
  - washedup 6y ago
    Not "saving it" but "saving it from short seller pressure". The stock was previously heavily shorted, to the point GME was reaching bankruptcy. That is no longer the case.
robjan 6y ago
That implies that they are the bad guys and not the people who were irresponsibly shorting the stock to such a great extent.
hehehaha 6y ago
More like a political disinformation campaign for stocks. Same formula different goals.
koube 6y ago
Interesting to see this comparison being made on hacker news, it was also made on my economics RSS feed where Tyler Cowen[0] linked to a tweet[1] with this exact same comparison. [0]: https://marginalrevolution.com/marginalrevolution/2021/01/wednesday-assorted-links-282.html https://marginalrevolution.com/marginalrevolution/2021/01/we... [1]: https://twitter.com/zerohedge/status/1354412717231251459?s=21 https://twitter.com/zerohedge/status/1354412717231251459?s=2...

This emergent behavior seems a lot like DDOS, but in the stock market.

drawkbox 6y ago

... with a dash of flash mob and viral marketing.

nixass 6y ago
While giving financial institutions their own medicine.
- babyshake 6y ago
  Are we totally sure there isn't an element of astroturfing?
  - dhbanes 6y ago
    Short sellers participate in this all the time.
    - drawkbox 6y ago
      Indeed. Hedge funds by nature skim from volatility. When they hold short positions they have "partners" that short and distort. Everything is astroturfing/selling pretty much nowadays. Social media is not reality, though astroturfing/distorting can become reality for better or for worse, depends on your position/tribe. What is on the surface is rarely what is the driving force underneath.
- ryandward 6y ago
  Exactly -- reducing the barriers to market entry while increasing widespread market understanding reduces the _unique_ opportunity for arbitrage that Wall Street has enjoyed.

washedup 6y ago

They aren't trying to kill GME though, they are boosting it, essentially saving it and shareholders from short seller pressure. I see it as a bizarre, but ultimately positive behavior. Wallstreet no longer holds all the keys.

josefresco 6y ago
How are they saving it?
- robjan 6y ago
  GameStop can issue shares at the higher price and use the cash to revitalise their business. Note I'm not familiar with the company so I can't assess whether the company is salvageable.
  - xnyan 6y ago
    There is so much going against them it's hard to see how they can make it work. Gamestop is a mall/strip mall operation which already means they are suffering from the massive over buildout of retail that ran wild until the crash of '08. They have a huge shopping mall presence, which means even for retail they are suffering more than most due to the cratering value of mall space in the US. A large portion of their profit came from buying used game discs and reselling at a healthy markup. Digital distribution was already hurting that in a major way and COVID is only accelerating the decline of physical media. Their plan has been the same as several other desperate mall-based stores like barnes and noble: keep the core product to draw people in, but pack the shelves with cheap high-margin "lifestyle" items like t-shirts and toys. I predict in 5 years they will be a corpse that's been picked clean by venture capital, existing as nothing more than a brand that can be slapped on some online game store.
- washedup 6y ago
  Not "saving it" but "saving it from short seller pressure". The stock was previously heavily shorted, to the point GME was reaching bankruptcy. That is no longer the case.

robjan 6y ago

That implies that they are the bad guys and not the people who were irresponsibly shorting the stock to such a great extent.

hehehaha 6y ago

More like a political disinformation campaign for stocks. Same formula different goals.

koube 6y ago

Interesting to see this comparison being made on hacker news, it was also made on my economics RSS feed where Tyler Cowen[0] linked to a tweet[1] with this exact same comparison. [0]: https://marginalrevolution.com/marginalrevolution/2021/01/wednesday-assorted-links-282.html https://marginalrevolution.com/marginalrevolution/2021/01/we... [1]: https://twitter.com/zerohedge/status/1354412717231251459?s=21 https://twitter.com/zerohedge/status/1354412717231251459?s=2...