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> At some point somebody will be left holding the bag, odds are it will be a bunch of people from wallstreetbets and other retail investors that are late to the

> At some point somebody will be left holding the bag, odds are it will be a bunch of people from wallstreetbets and other retail investors that are late to the party. So basically like almost every other trade? Every buyer needs a seller and vice versa. If you're active in the market, why do you think you're right on any particular trade and the person on the other end is wrong?† * If you're buying, why is the other person selling? What does he know that you don't? * If you're selling, why is the other person buying? What does he know that you don't? The 'safe bet' is to go with index funds (US: S&P 500, Russell 3000) and simply get market returns for the equity portion of your portfolio. † They could be selling for "correct" reasons: to rebalance their portfolio, to generate income (e.g., in retirement), etc. They may not think there's anything material to the company in the trade, they may simply need cash.

delaaxe 6y ago
Whenever a human places a trade, the counterparty is almost always an algorithm or some kind of automated market maker
- eindiran 6y ago
  But behind the algorithm there is a human trader with motivations and market knowledge who is commanding it; the fact that the buyer is, in some technical sense, an algorithm doesn't seem very relevant to me.
  - throwaway0a5e 6y ago
    Sure there are some closely managed algorithms but I think you underestimate how many algorithmic traders are ML shops that don't do anything other than "whatever makes the number biggest at the end of the day"
  - cratermoon 6y ago
    You'd think that, but even simple algorithms exhibit complex emergent behavior when exposed to the real world. How A Book About Flies Came To Be Priced $24 Million On Amazon: https://www.wired.com/2011/04/amazon-flies-24-million/ https://www.wired.com/2011/04/amazon-flies-24-million/
    - corin_ 6y ago
      It's not that they're literally irrelevant as in have no effects; they're just irrelevant in the thinking of who you're trading with - no matter how complex the algorithm it's still buying or selling on behalf of a person or company.
      - cratermoon 6y ago
        > buying or selling on behalf of a person or company Again, that's what you'd think and it's technically true that you can know who is running what system, but the systems are too complex to say they are really working on behalf of anything except the rules of min/maxing. How do you explain bidding the price of a textbook up to millions of dollars is "working on behalf" of anyone?
  - delaaxe 6y ago
    Market makers just profit off of the bid ask spread, without “motivations” or “market knowledge”
    - eindiran 6y ago
      Arbitraging the bid-ask spread is tied to both halves: motivation - desire to make a profit, market knowledge - knowing when there are arbitrage opportunities (asks smaller than bids).
fennecfoxen 6y ago
> So basically like almost every other trade? No; most trades are traded because you expect when you're "left holding the bag" that bag will have money in it.
- throw0101a 6y ago
  You can expect whatever you want. What actually happens is something else. On any given trade you can end up with something worth more or less than what you started with. Even if you sell and cash out, you may end up "losing" because things went on to perform better than you expected and the person/entity on the other end of the trade knew something you didn't. The market owes you nothing.
  - JohnHaugeland 6y ago
    You're loudly and carefully missing the point. The expectation is that investment is done to derive ownership of something with actual value. This is a public pump and dump scheme masquerading as a righteous uprising. Nobody said the market owed anyone anything. Save the sophism. Idiots are getting bilked, those are the answer to your question, and they still exist even if you want to re-define around them. This is illegal for a reason.
    - na85 6y ago
      It didn't start as a pump and dump. It started last year with a guy who invested progressively more because he felt it was undervalued based on fundamentals. Whether or not Elon's tweet brought in a bunch of people who want it to be a pump and dump is another story.
      - wolverine876 6y ago
        What was Elon's tweet? I don't really follow these things, sorry.
        dorkwood 6y ago
jariel 6y ago
"So basically like almost every other trade? Every buyer needs a seller and vice versa." No, not at all. It's well known that this stock is massively overvalued. It's a mania, or a crowd-induced Ponzi scheme. This is different than investors predicting outcomes based on fundamentals or their view of growth. The plebes will be left holding the bag and probably lose much more money than the banks and it will affect them more greatly.
- throw0101a 6y ago
  Just because GME-as-ownership-unit may be overvalued, does not necessarily mean it is overvalued for GME-as-contract-closure-instrument. If you want to focus on GME-as-ownership-unit, as a share in a retail business, that's perfectly valid. But that's not the only perspective.
  - jariel 6y ago
    That's actually a good point, at the same time, in the bigger picture, it's market chaos and nobody wants it. Basically, mobs are fighting against hedge funds using random companies as battle grounds - the markets are there to support those companies, not destroy them. So what we are seeing is kind of an inflection point that the system wants to tamp down. It's actually pretty distressing to see how many intelligent people think they are doing some kind of good here, like burning down a few stores to force the owners to leverage some kind of fire insurance policy to destroy the 'evil insurers'.
    - ric2b 6y ago
      > the markets are there to support those companies, not destroy them. The shorts were the ones destroying Gamestop, though.

delaaxe 6y ago

Whenever a human places a trade, the counterparty is almost always an algorithm or some kind of automated market maker

eindiran 6y ago
But behind the algorithm there is a human trader with motivations and market knowledge who is commanding it; the fact that the buyer is, in some technical sense, an algorithm doesn't seem very relevant to me.
- throwaway0a5e 6y ago
  Sure there are some closely managed algorithms but I think you underestimate how many algorithmic traders are ML shops that don't do anything other than "whatever makes the number biggest at the end of the day"
- cratermoon 6y ago
  You'd think that, but even simple algorithms exhibit complex emergent behavior when exposed to the real world. How A Book About Flies Came To Be Priced $24 Million On Amazon: https://www.wired.com/2011/04/amazon-flies-24-million/ https://www.wired.com/2011/04/amazon-flies-24-million/
  - corin_ 6y ago
    It's not that they're literally irrelevant as in have no effects; they're just irrelevant in the thinking of who you're trading with - no matter how complex the algorithm it's still buying or selling on behalf of a person or company.
    - cratermoon 6y ago
      > buying or selling on behalf of a person or company Again, that's what you'd think and it's technically true that you can know who is running what system, but the systems are too complex to say they are really working on behalf of anything except the rules of min/maxing. How do you explain bidding the price of a textbook up to millions of dollars is "working on behalf" of anyone?
- delaaxe 6y ago
  Market makers just profit off of the bid ask spread, without “motivations” or “market knowledge”
  - eindiran 6y ago
    Arbitraging the bid-ask spread is tied to both halves: motivation - desire to make a profit, market knowledge - knowing when there are arbitrage opportunities (asks smaller than bids).

fennecfoxen 6y ago

> So basically like almost every other trade? No; most trades are traded because you expect when you're "left holding the bag" that bag will have money in it.

throw0101a 6y ago
You can expect whatever you want. What actually happens is something else. On any given trade you can end up with something worth more or less than what you started with. Even if you sell and cash out, you may end up "losing" because things went on to perform better than you expected and the person/entity on the other end of the trade knew something you didn't. The market owes you nothing.
- JohnHaugeland 6y ago
  You're loudly and carefully missing the point. The expectation is that investment is done to derive ownership of something with actual value. This is a public pump and dump scheme masquerading as a righteous uprising. Nobody said the market owed anyone anything. Save the sophism. Idiots are getting bilked, those are the answer to your question, and they still exist even if you want to re-define around them. This is illegal for a reason.
  - na85 6y ago
    It didn't start as a pump and dump. It started last year with a guy who invested progressively more because he felt it was undervalued based on fundamentals. Whether or not Elon's tweet brought in a bunch of people who want it to be a pump and dump is another story.
    - wolverine876 6y ago
      What was Elon's tweet? I don't really follow these things, sorry.
      - dorkwood 6y ago

jariel 6y ago

"So basically like almost every other trade? Every buyer needs a seller and vice versa." No, not at all. It's well known that this stock is massively overvalued. It's a mania, or a crowd-induced Ponzi scheme. This is different than investors predicting outcomes based on fundamentals or their view of growth. The plebes will be left holding the bag and probably lose much more money than the banks and it will affect them more greatly.

throw0101a 6y ago
Just because GME-as-ownership-unit may be overvalued, does not necessarily mean it is overvalued for GME-as-contract-closure-instrument. If you want to focus on GME-as-ownership-unit, as a share in a retail business, that's perfectly valid. But that's not the only perspective.
- jariel 6y ago
  That's actually a good point, at the same time, in the bigger picture, it's market chaos and nobody wants it. Basically, mobs are fighting against hedge funds using random companies as battle grounds - the markets are there to support those companies, not destroy them. So what we are seeing is kind of an inflection point that the system wants to tamp down. It's actually pretty distressing to see how many intelligent people think they are doing some kind of good here, like burning down a few stores to force the owners to leverage some kind of fire insurance policy to destroy the 'evil insurers'.
  - ric2b 6y ago
    > the markets are there to support those companies, not destroy them. The shorts were the ones destroying Gamestop, though.