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He didn’t have any answer as to the fate of new bag holders he created with his tweet. That was irresponsible. His plan to make hedge funds disclose their posit

by in3d 6y ago

He didn’t have any answer as to the fate of new bag holders he created with his tweet. That was irresponsible. His plan to make hedge funds disclose their positions daily as some kind of a solution to overleverage makes no sense whatsoever. And he’s delusional about research skills of WSB posters as compared to Wall Street analysts.

tequila_shot 6y ago
um, I don't follow wsb, but based purely on what you said, you don't back your comments either. So much for taking the high-horse. Chamath at least has the$$ to show for.
paulgb 6y ago
I anticipate ours won’t be a popular opinion on here, because the whole “stick it to the man” narrative is tempting, but I have to agree. I listened in on a Clubhouse room today where people were teaching each other how to options trade and I couldn’t help but think, these are the people, not Wall Street, who are going to be left holding the bag.
- jgalt212 6y ago
  very true. I often think of Blackstone's mega home run trade with Hilton Hotels. They bought it at the wrong price at the wrong time (pre GFC). But someone, they were able to over-default on the debt and still retain control and when they ended up selling it was a huge home run for Blackstone. Of course, the original bond holders got the shaft.
- pnathan 6y ago
  > I listened in on a Clubhouse room today where people were teaching each other how to options trade oh no. that's really bad. Options is one of the really fast ways to lose your shirt. I mean, they are known for that. I expect they were talking about doing it on margin too. :-/
- chrledntsurf 6y ago
  there is always someone left holding the bag. welcome to life.
m8s 6y ago
I agree that he ignored a few important questions. There is the very real possibility (and it's more like a certainty) that regular people will join the bandwagon too late and get hurt. When hedge funds get hurt, they still have plenty of money to survive. When I see posts (although who knows if they are real) about putting your life savings on something like this, losing that money has very serious real-world implications. This all is certainly highlighting that these systems have been fundamentally unfair for a long time, but that doesn't mean that real people won't be hit hard financially as a result. I don't know, maybe I'm just far too conservative with my money to do something like this.
- briga 6y ago
  I have a hard time feeling sorry for anyone who loses large amounts of money on risky gambling like this. Especially for anyone willing to put their entire life savings on the line--if it wasn't this they would find some other stupid way to lose all their money.
  - metalliqaz 6y ago
    a fool and his money...
- chrledntsurf 6y ago
  Who cares. It's the stock market. You aren't guaranteed a profit. It doesn't give a shit about protecting you. People have been making stupid financial decisions for decades...some people are going to make a lot of money and others will lose their shirts. Same with the bitcoin people, the tesla people, etc etc. This isn't new...there are gamestops every couple of years. This is just an extreme version in a year when everyone is online 24/7.
deleted 6y ago
[deleted]
ummonk 6y ago
Given that the short interest continues to rise (I saw estimates > 200% of float) it is possible there will be very few people left holding the bag after most sell to shorters covering their positions.
- bostonsre 6y ago
  The price will crash. No one knows when hype will die out and people will stop jumping on the bandwagon, but I'm sure those hedge funds that are covering their short positions aren't going to stick around for the fall.
  - soperj 6y ago
    Those hedge funds covering their short positions have already acknowledged their fall by covering. The whole point of the short is sticking around for the fall.
    - bostonsre 6y ago
      I mean the fall from the current extremely high price to a reasonable valuation. Retail investors will be the only ones left carrying the bag when that happens.
  - daniel-thompson 6y ago
    This makes no sense. The hedge funds that cover their shorts are the ones taking the fall; entering a short at $20 and exiting at $300 is the fall.
    - throw_nbvc1234 6y ago
      Aren't there going to be multiple falls here. The one you mentioned and when the stock falls back to its "real" value?
    - bostonsre 6y ago
      Gamestop isn't going to stay at $300. You seriously don't think its going to crash back down to reality? The only ones still in the stock during the fall will be retail investors. So yes, the hedgefunds were hurt, but there will be a lot of pain for the retail investors that jumped on the bandwagon too late and don't get out soon enough.
superkuh 6y ago
>He didn’t have any answer as to fate of new bag holders he created with his tweet. Perhaps, but like his response to this question pointed out: neither did wallstreet when they left the US population as bag holders for all their damage in the past (ie, 2008). Additionally, the only people left being bag holders here so far are the hedge fund (and their copycats) taking such an absurd short position.
- runawaybottle 6y ago
  Or to further add to your point, we literally have frothy equities because we had to print our way out of the last debacle. They are complaining about a necessary situation they created lol. We need to stimulate investment to get out of the last crisis (that was the plan all along). What are these cats complaining about?
- paulgb 6y ago
  > Additionally, the only people left being bag holders here so far are the hedge fund “So far” is carrying a lot of weight here.
  - polka_haunts_us 6y ago
    As long as the price keeps going up, there's no bag to hold yet in this metaphor. We're still at the part of the heist where the vault is being emptied.
    - paulgb 6y ago
      Let me put it this way, if someone bought GME over the last few days and sold it at 3x what they paid, what fraction of that gain (on average) came from a hedge fund covering a short vs. from another retail investor buying in? The assumption seems to be that it comes purely from a short cover but that’s not at all obvious to me.
      - polka_haunts_us 6y ago
        I agree. The holding the bag metaphor comes from a gang of thieves robbing a place and then leaving a patsy behind with all the evidence of the crime and none of the loot. Right now, in my opinion, a lot of the Robinhood faction of the gang are funneling into the vault thinking Joe Wallstreet is that patsy, not realizing that the savvy senior members bailed out an hour ago and the cops are about 2 blocks over and closing. There doesn't have to be just one patsy after all. The whole metaphor discounts the "I just want the shortsellers to burn b/c anarchy" aspect that some people are claiming, which honestly I think is believed by very few and projected onto many more who really just want quick money.
elliekelly 6y ago
> And he’s delusional about research skills of WSB posters as compared to Wall Street analysts. I think it's a mistake to take his comments as applying to WSB as a whole. I agree WSB posters, collectively, are mostly clueless. But there are absolutely people in there who know what they're doing and have put a lot of thought into their strategy.
dralley 6y ago
I agree, it feels dishonest to start out by saying "where was that message in 2008?" and then within seconds "guess who was right about Tesla?". By that logic, Wall Street was "right" for years, because housing prices just kept going up and up and up and up. This story didn't end yesterday, it's entirely possible that the Tesla shorts were "just premature" the same way that the people who started shorting the housing market in 2005 were premature (and took a beating during those years). And the praise for /r/wallstreetbets seems a bit excessive considering that by his own admission, he only just learned about them a couple of days ago. I don't know how much time he's spent there but I'm not sure that his read on the place is especially accurate.
na85 6y ago
>And he’s delusional about research skills of WSB posters as compared to Wall Street analysts. Certainly there's a crowd on WSB that are just sheep, but there is a minority of WSB posters that produce quality research and analysis. The idea that Wall Street insiders are elite, a different breed, is mostly a myth. There are smart people working Wall St to be sure, but there are lots of smart people working elsewhere.
- Ataraxy 6y ago
  Not only that but there's plenty of people that work on wall street that no doubt hang out there all the same
nemothekid 6y ago
>He didn’t have any answer as to fate of new bag holders he created with his tweet. I don't know what answer you expect him to give. Are you saying that people shouldn't be allowed to tweet their trades? Also it's ridiculous to think WSB isn't full of bagholders - I've seen people blow up their accounts on completely ridiculous trades they had researched on their own. Are you saying people shouldn't be allowed to make bad trades? Chamath answers the question correctly; the question you're asking implies that you don't think retail should be trusted to invest. If that's truly what you think then say it proudly.
baryphonic 6y ago
> He didn’t have any answer as to the fate of new bag holders he created with his tweet. That was irresponsible. I have to say up front, I find this kind of attitude incredibly infantilizing and condescending. Exactly how many "bag holders" did Chamath "create"? (Hint: Zero.) Obviously the "bag holders" are assuming the risks themselves, as is (absent any evidence to the contrary) Chamath. They're on a forum literally called "Wall Street BETS" (emphasis mine). If a millionaire announces he's playing the slots and subsequently wins the jackpot, is he "responsible" for everyone else who subsequently plays slots? (He didn't make this argument as well as he could have, but Chamath himself points out that when Goldman or AIG played stupid games, everyone else was conscripted into being the "bag holders.") Also, exactly how many people are we even saying Chamath influenced? How many people were undecided about making the GME trade and then said, "welp, Chamath is long so YOLOOOOO?" And how many of these people traded irresponsibly (e.g. overleveraged, invested their life savings)? I would bet the number is small, even negligible. > His plan to make hedge funds disclose their positions daily as some kind of a solution to overleverage makes no sense whatsoever. Correct me if I'm wrong, but I don't think he ever proposed this as some sort of affirmative plan. What I heard was him pointing out the asymmetry of which entities are required/voluntarily publish their positions. If hedge funds had done that, the 136% thing would never have happened for obvious reasons. I interpreted it more as a response to the interviewer's pearl clutching about the market having no "integrity" because a stock price deviated from the "fundamentals" for a time under some bizarre circumstances. > And he’s delusional about research skills of WSB posters as compared to Wall Street analysts. If you're correct, then you can easily show us your short positions contra WSB research/herd mentality/irrationality/<pejorative> and we can track how well you end up compared to WSB.
- wjp3 6y ago
  >(He didn't make this argument as well as he could have, but Chamath himself points out that when Goldman or AIG played stupid games, everyone else was conscripted into being the "bag holders.") This - this is the point that seems to keep getting lost. The Big Guys get bail-outs constantly - hell Melvin got a float of $3B over this mess.
  - 6y ago
Ataraxy 6y ago
That says more about the fundamental problem with the system than it does any given individual. When I see stuff like this that tries to push blame on an individual for tweeting I have to immediately scoff because it totally gives cover to the system that gives people a very healthy amount of rope to hang themselves with in the first place. This isn't a defense of the guy by the way since all of this schtick is to ride positive PR as a billionare looking to enter political office in a climate where people aren't exactly enthused about billionares.
maest 6y ago
Eh, I'm not sure there's clear moral responsibility when talking your own book. However, he does come off as someone who doesn't understand what he's talking about: * comparing WSB "research" with proper fundamental analysis * daily position disclosing is unrealistic and unrelated to what's going on * doubling down on the retail vs wall street narrative and talking about the mortgage crisis, when Melvin Capital is a buy-side institution, not a sell-side institution. * generally painting WSB users as "curageous" for expressing their views in a public forums when a. everyone is using aliases and b. WSB is cery similar to one of those pump-and-dump penny stock IRC chats, just at a much larger scale. He might appear to be confident and informed but, for someone who is familiar with the industry, he just comes off as being full of bullshit/having a hidden agenda.

by in3d 6y ago

tequila_shot 6y ago

um, I don't follow wsb, but based purely on what you said, you don't back your comments either. So much for taking the high-horse. Chamath at least has the$$ to show for.

paulgb 6y ago

I anticipate ours won’t be a popular opinion on here, because the whole “stick it to the man” narrative is tempting, but I have to agree. I listened in on a Clubhouse room today where people were teaching each other how to options trade and I couldn’t help but think, these are the people, not Wall Street, who are going to be left holding the bag.

jgalt212 6y ago
very true. I often think of Blackstone's mega home run trade with Hilton Hotels. They bought it at the wrong price at the wrong time (pre GFC). But someone, they were able to over-default on the debt and still retain control and when they ended up selling it was a huge home run for Blackstone. Of course, the original bond holders got the shaft.
pnathan 6y ago
> I listened in on a Clubhouse room today where people were teaching each other how to options trade oh no. that's really bad. Options is one of the really fast ways to lose your shirt. I mean, they are known for that. I expect they were talking about doing it on margin too. :-/
chrledntsurf 6y ago
there is always someone left holding the bag. welcome to life.

m8s 6y ago

I agree that he ignored a few important questions. There is the very real possibility (and it's more like a certainty) that regular people will join the bandwagon too late and get hurt. When hedge funds get hurt, they still have plenty of money to survive. When I see posts (although who knows if they are real) about putting your life savings on something like this, losing that money has very serious real-world implications. This all is certainly highlighting that these systems have been fundamentally unfair for a long time, but that doesn't mean that real people won't be hit hard financially as a result. I don't know, maybe I'm just far too conservative with my money to do something like this.

briga 6y ago
I have a hard time feeling sorry for anyone who loses large amounts of money on risky gambling like this. Especially for anyone willing to put their entire life savings on the line--if it wasn't this they would find some other stupid way to lose all their money.
- metalliqaz 6y ago
  a fool and his money...
chrledntsurf 6y ago
Who cares. It's the stock market. You aren't guaranteed a profit. It doesn't give a shit about protecting you. People have been making stupid financial decisions for decades...some people are going to make a lot of money and others will lose their shirts. Same with the bitcoin people, the tesla people, etc etc. This isn't new...there are gamestops every couple of years. This is just an extreme version in a year when everyone is online 24/7.

deleted 6y ago

[deleted]

ummonk 6y ago

Given that the short interest continues to rise (I saw estimates > 200% of float) it is possible there will be very few people left holding the bag after most sell to shorters covering their positions.

bostonsre 6y ago
The price will crash. No one knows when hype will die out and people will stop jumping on the bandwagon, but I'm sure those hedge funds that are covering their short positions aren't going to stick around for the fall.
- soperj 6y ago
  Those hedge funds covering their short positions have already acknowledged their fall by covering. The whole point of the short is sticking around for the fall.
  - bostonsre 6y ago
    I mean the fall from the current extremely high price to a reasonable valuation. Retail investors will be the only ones left carrying the bag when that happens.
- daniel-thompson 6y ago
  This makes no sense. The hedge funds that cover their shorts are the ones taking the fall; entering a short at $20 and exiting at $300 is the fall.
  - throw_nbvc1234 6y ago
    Aren't there going to be multiple falls here. The one you mentioned and when the stock falls back to its "real" value?
  - bostonsre 6y ago
    Gamestop isn't going to stay at $300. You seriously don't think its going to crash back down to reality? The only ones still in the stock during the fall will be retail investors. So yes, the hedgefunds were hurt, but there will be a lot of pain for the retail investors that jumped on the bandwagon too late and don't get out soon enough.

superkuh 6y ago

>He didn’t have any answer as to fate of new bag holders he created with his tweet. Perhaps, but like his response to this question pointed out: neither did wallstreet when they left the US population as bag holders for all their damage in the past (ie, 2008). Additionally, the only people left being bag holders here so far are the hedge fund (and their copycats) taking such an absurd short position.

runawaybottle 6y ago
Or to further add to your point, we literally have frothy equities because we had to print our way out of the last debacle. They are complaining about a necessary situation they created lol. We need to stimulate investment to get out of the last crisis (that was the plan all along). What are these cats complaining about?
paulgb 6y ago
> Additionally, the only people left being bag holders here so far are the hedge fund “So far” is carrying a lot of weight here.
- polka_haunts_us 6y ago
  As long as the price keeps going up, there's no bag to hold yet in this metaphor. We're still at the part of the heist where the vault is being emptied.
  - paulgb 6y ago
    Let me put it this way, if someone bought GME over the last few days and sold it at 3x what they paid, what fraction of that gain (on average) came from a hedge fund covering a short vs. from another retail investor buying in? The assumption seems to be that it comes purely from a short cover but that’s not at all obvious to me.
    - polka_haunts_us 6y ago
      I agree. The holding the bag metaphor comes from a gang of thieves robbing a place and then leaving a patsy behind with all the evidence of the crime and none of the loot. Right now, in my opinion, a lot of the Robinhood faction of the gang are funneling into the vault thinking Joe Wallstreet is that patsy, not realizing that the savvy senior members bailed out an hour ago and the cops are about 2 blocks over and closing. There doesn't have to be just one patsy after all. The whole metaphor discounts the "I just want the shortsellers to burn b/c anarchy" aspect that some people are claiming, which honestly I think is believed by very few and projected onto many more who really just want quick money.

elliekelly 6y ago

> And he’s delusional about research skills of WSB posters as compared to Wall Street analysts. I think it's a mistake to take his comments as applying to WSB as a whole. I agree WSB posters, collectively, are mostly clueless. But there are absolutely people in there who know what they're doing and have put a lot of thought into their strategy.

dralley 6y ago

I agree, it feels dishonest to start out by saying "where was that message in 2008?" and then within seconds "guess who was right about Tesla?". By that logic, Wall Street was "right" for years, because housing prices just kept going up and up and up and up. This story didn't end yesterday, it's entirely possible that the Tesla shorts were "just premature" the same way that the people who started shorting the housing market in 2005 were premature (and took a beating during those years). And the praise for /r/wallstreetbets seems a bit excessive considering that by his own admission, he only just learned about them a couple of days ago. I don't know how much time he's spent there but I'm not sure that his read on the place is especially accurate.

na85 6y ago

>And he’s delusional about research skills of WSB posters as compared to Wall Street analysts. Certainly there's a crowd on WSB that are just sheep, but there is a minority of WSB posters that produce quality research and analysis. The idea that Wall Street insiders are elite, a different breed, is mostly a myth. There are smart people working Wall St to be sure, but there are lots of smart people working elsewhere.

Ataraxy 6y ago
Not only that but there's plenty of people that work on wall street that no doubt hang out there all the same

nemothekid 6y ago

>He didn’t have any answer as to fate of new bag holders he created with his tweet. I don't know what answer you expect him to give. Are you saying that people shouldn't be allowed to tweet their trades? Also it's ridiculous to think WSB isn't full of bagholders - I've seen people blow up their accounts on completely ridiculous trades they had researched on their own. Are you saying people shouldn't be allowed to make bad trades? Chamath answers the question correctly; the question you're asking implies that you don't think retail should be trusted to invest. If that's truly what you think then say it proudly.

baryphonic 6y ago

> He didn’t have any answer as to the fate of new bag holders he created with his tweet. That was irresponsible. I have to say up front, I find this kind of attitude incredibly infantilizing and condescending. Exactly how many "bag holders" did Chamath "create"? (Hint: Zero.) Obviously the "bag holders" are assuming the risks themselves, as is (absent any evidence to the contrary) Chamath. They're on a forum literally called "Wall Street BETS" (emphasis mine). If a millionaire announces he's playing the slots and subsequently wins the jackpot, is he "responsible" for everyone else who subsequently plays slots? (He didn't make this argument as well as he could have, but Chamath himself points out that when Goldman or AIG played stupid games, everyone else was conscripted into being the "bag holders.") Also, exactly how many people are we even saying Chamath influenced? How many people were undecided about making the GME trade and then said, "welp, Chamath is long so YOLOOOOO?" And how many of these people traded irresponsibly (e.g. overleveraged, invested their life savings)? I would bet the number is small, even negligible. > His plan to make hedge funds disclose their positions daily as some kind of a solution to overleverage makes no sense whatsoever. Correct me if I'm wrong, but I don't think he ever proposed this as some sort of affirmative plan. What I heard was him pointing out the asymmetry of which entities are required/voluntarily publish their positions. If hedge funds had done that, the 136% thing would never have happened for obvious reasons. I interpreted it more as a response to the interviewer's pearl clutching about the market having no "integrity" because a stock price deviated from the "fundamentals" for a time under some bizarre circumstances. > And he’s delusional about research skills of WSB posters as compared to Wall Street analysts. If you're correct, then you can easily show us your short positions contra WSB research/herd mentality/irrationality/<pejorative> and we can track how well you end up compared to WSB.

wjp3 6y ago
>(He didn't make this argument as well as he could have, but Chamath himself points out that when Goldman or AIG played stupid games, everyone else was conscripted into being the "bag holders.") This - this is the point that seems to keep getting lost. The Big Guys get bail-outs constantly - hell Melvin got a float of $3B over this mess.
- 6y ago

Ataraxy 6y ago

That says more about the fundamental problem with the system than it does any given individual. When I see stuff like this that tries to push blame on an individual for tweeting I have to immediately scoff because it totally gives cover to the system that gives people a very healthy amount of rope to hang themselves with in the first place. This isn't a defense of the guy by the way since all of this schtick is to ride positive PR as a billionare looking to enter political office in a climate where people aren't exactly enthused about billionares.

maest 6y ago

Eh, I'm not sure there's clear moral responsibility when talking your own book. However, he does come off as someone who doesn't understand what he's talking about: * comparing WSB "research" with proper fundamental analysis * daily position disclosing is unrealistic and unrelated to what's going on * doubling down on the retail vs wall street narrative and talking about the mortgage crisis, when Melvin Capital is a buy-side institution, not a sell-side institution. * generally painting WSB users as "curageous" for expressing their views in a public forums when a. everyone is using aliases and b. WSB is cery similar to one of those pump-and-dump penny stock IRC chats, just at a much larger scale. He might appear to be confident and informed but, for someone who is familiar with the industry, he just comes off as being full of bullshit/having a hidden agenda.