11 ms·

For those of us not in the know, what is so special about today regarding WSB? I know there's a feud with short sellers going on, but I haven't been following t

by astine 6y ago

For those of us not in the know, what is so special about today regarding WSB? I know there's a feud with short sellers going on, but I haven't been following the details.

colejohnson66 6y ago
GameStop’s stock ($GME) literally doubled overnight as a Reddit community decided to fight short sellers. Then it blew up.
sillysaurusx 6y ago
Someone went from 50k to 50M by igniting a short squeeze. All eyes were on the WSB subreddit, and discord server. Now both are private or offline. No one has any chance to coordinate now. Discord’s action is effectively market manipulation in a literal sense, because this is certainly going to affect the market. I’m curious why the sub went private though. EDIT: I regret my phrasing. I didn’t mean this was illegal market manipulation, just that discord is literally manipulating the market by cutting off one of two primary coordination channels. But they’re within their legal rights to do so, of course. EDIT2: WSB Subreddit is back; mods issued a statement: https://www.reddit.com/r/wallstreetbets/comments/l6j4r9/where_do_we_go_from_here_and_who_is_going_to_step/?utm_source=share&utm_medium=ios_app&utm_name=iossmf https://www.reddit.com/r/wallstreetbets/comments/l6j4r9/wher...
- Tenoke 6y ago
  >I’m curious why the sub went private though. They considered making it private [and did briefly] during previous fiascos. At the time there were threads by the mods in which you can post so you are included but the alternative was by post history. It's very possible they've left e.g. the 10% most active posters in the sub and can still coordinate to an extent. Edit: That seems to be the case, as their new message is "WallStreetBets is under in tents load and is only for approved submitters. In the meantime, please enjoy some spaghetti. https://www.youtube.com/watch?v=gW1GR7BECq4 https://www.youtube.com/watch?v=gW1GR7BECq4" Edit2: Now changed to "We are experiencing technical difficulties based on unprecedented scale as a result of the newfound interest in WSB. We are unable to ensure Reddit's content policy and the WSB rules are enforceable without a technology platform that can support automation of this enforcement. WSB will be back.
  - tropicalrun 6y ago
    Before it went private I popped in and saw a thread where they were debating and coordinating what to do b/c they apparently had big issues today with bots and so many messages. Earlier I saw a few comments about downvoting bots all day. They were debating whether it would be worthwhile and feasible to limit posting to people who had commented in the reddit 6 months prior as a filter.
- necubi 6y ago
  Market manipulation is not anything that "affects the market." That definition would cover pretty much any and all behavior. In this case Discord is not trading securities, is not telling any one else to trade securities, has nothing at all to do with securities. If I run an email service and find that a user is running a pump-and-dump scam through it, do you really think I shouldn't be able to shut down their account? (If you're interested in the actual law on market manipulation, it's here: https://www.law.cornell.edu/uscode/text/15/78i https://www.law.cornell.edu/uscode/text/15/78i)
  - sillysaurusx 6y ago
    Yeah, I didn’t mean it in the legal sense. It was just interesting that this decision can cost certain people millions of dollars. But that’s true of many actions in the world, as you say.
    - necubi 6y ago
      "Market manipulation" is what we call it when you affect markets illegally. If it's not illegal, it's not manipulation. For example, if I buy a bunch of stock in a company it will usually raise the stock price. That affects the market but is not illegal and is not manipulation.
      - thaumasiotes 6y ago
        > "Market manipulation" is what we call it when you affect markets illegally. If it's not illegal, it's not manipulation. This is backwards. The label "manipulation" is applied (or not) retroactively based on whether something was determined to be illegal or not. It's not something you can know in advance; two copies of the exact same action might be judged differently.
  - TeMPOraL 6y ago
    Would it change anything if someone at Discord, particularly someone involved in making this decision, had a stake in GameStop's stock performance?
  - 6y ago
- DeepYogurt 6y ago
  > Discord’s action is effectively market manipulation in a literal sense, because this is certainly going to affect the market. It certainly will have an effect, but I'm not sure it meets the definition of "manipulation". I think (though am not certain) that the manipulating party would need to have a stake in the market asset for manipulation to apply. Many definitions (though not investor.gov) imply that personal gain is a requirement. No doubt there will be a legal case made here.
- TameAntelope 6y ago
  My rough understanding is that the sub is required by Reddit admins to perform certain actions related to every submission (and even maybe every comment) which, due to API limitations, they could no longer do automatically.
- economusty 6y ago
  The next few stocks to focus on we already agreed, GME>BB>NOK. No further coordination necessary.
- alchemism 6y ago
  > No one has any chance to coordinate now. As with other subgroups both economic and political, the real coordination happens in Telegram and Signal. The public channels amplify.
- daniel-thompson 6y ago
  > No one has any chance to coordinate now. Even though r/wsb is now private, there are already 3.8m people who are subbed to it and can still see & use it.
- adventurer 6y ago
  Add this to the mix. The major brokerage firms go down. When users are able to login they receive messages they can no longer make call options on GME and are only allowed to sell.
rory 6y ago
They've officially ticked off rich and well-connected people, so regulators are coming to shake the tree branch (I have no idea whether what they're doing is illegal or not) and the platforms want to distance themselves from that ASAP.
- epistasis 6y ago
  I don't think anybody has ever suffered negative regulatory action for doing a short squeeze. Even Martin Shkreli didn't get in trouble for his.
  - koolba 6y ago
    Acting alone it’s not inherently illegal. Real question is whether pooling your strength (ie assets) with others to force a squeeze is illegal collusion and market manipulation.
    - epistasis 6y ago
      In particular, it's hard to see a short squeeze as market manipulation, which is why nobody has been penalized for it. What is a hedge fund except more explicit coordination of many people's money on a much greater scale? The classic example of Porsche's squeeze on VW stock was Porsche's management coordinating many people's pooled assets.
  - jfim 6y ago
    It has happened in the past: https://www.marketwatch.com/story/squeeze-on-goldman-put-falcone-in-penalty-box-2013-08-21 https://www.marketwatch.com/story/squeeze-on-goldman-put-fal... and https://www.sec.gov/news/press-release/2012-2012-122htm https://www.sec.gov/news/press-release/2012-2012-122htm
    - epistasis 6y ago
      It looks like Falcone may have been ok both sides of the squeeze, or at least treating its customers differently in order to execute it?
garmaine 6y ago
The details: a hedge fund decided to short retail stocks during the pandemic. They overextended with a naked short position against GameStop (that brick and mortar video game retailer) that exceeds not only the share float by a large margin but even the total number of shares in existence. u/DeepFuckingValue on r/wallstreetbets discovered this a month or so ago, took out a $50k position, and let the rest of the sub in on it. That position is now worth $50M, a 1,000x increase. Now there is literally no limit to the upside of a short squeeze. The price goes up high enough and the short sellers declare bankruptcy and liquidate their positions to cover the cost of purchasing shares. If they still come up short, then the same happens to the banks that lend to them . If that comes short, the brokerage must step up. At that point there’d probably be government intervention and a bailout. The WSB motto has become “we can stay retarded longer than they can stay solvent.” According to a naïve view of the law, at least, that is correct. Far more likely there will be market outages and regulator shenanigans at undo the situation. Nobody is more of a sore loser than the establishment.
- ziml77 6y ago
  So basically that dude knew exactly how to make serious money by making it out to be some massive blow to Wall Street?
  - garmaine 6y ago
    Both can be true.

by astine 6y ago

For those of us not in the know, what is so special about today regarding WSB? I know there's a feud with short sellers going on, but I haven't been following the details.

colejohnson66 6y ago

GameStop’s stock ($GME) literally doubled overnight as a Reddit community decided to fight short sellers. Then it blew up.

sillysaurusx 6y ago

Someone went from 50k to 50M by igniting a short squeeze. All eyes were on the WSB subreddit, and discord server. Now both are private or offline. No one has any chance to coordinate now. Discord’s action is effectively market manipulation in a literal sense, because this is certainly going to affect the market. I’m curious why the sub went private though. EDIT: I regret my phrasing. I didn’t mean this was illegal market manipulation, just that discord is literally manipulating the market by cutting off one of two primary coordination channels. But they’re within their legal rights to do so, of course. EDIT2: WSB Subreddit is back; mods issued a statement: https://www.reddit.com/r/wallstreetbets/comments/l6j4r9/where_do_we_go_from_here_and_who_is_going_to_step/?utm_source=share&utm_medium=ios_app&utm_name=iossmf https://www.reddit.com/r/wallstreetbets/comments/l6j4r9/wher...

Tenoke 6y ago
>I’m curious why the sub went private though. They considered making it private [and did briefly] during previous fiascos. At the time there were threads by the mods in which you can post so you are included but the alternative was by post history. It's very possible they've left e.g. the 10% most active posters in the sub and can still coordinate to an extent. Edit: That seems to be the case, as their new message is "WallStreetBets is under in tents load and is only for approved submitters. In the meantime, please enjoy some spaghetti. https://www.youtube.com/watch?v=gW1GR7BECq4 https://www.youtube.com/watch?v=gW1GR7BECq4" Edit2: Now changed to "We are experiencing technical difficulties based on unprecedented scale as a result of the newfound interest in WSB. We are unable to ensure Reddit's content policy and the WSB rules are enforceable without a technology platform that can support automation of this enforcement. WSB will be back.
- tropicalrun 6y ago
  Before it went private I popped in and saw a thread where they were debating and coordinating what to do b/c they apparently had big issues today with bots and so many messages. Earlier I saw a few comments about downvoting bots all day. They were debating whether it would be worthwhile and feasible to limit posting to people who had commented in the reddit 6 months prior as a filter.
necubi 6y ago
Market manipulation is not anything that "affects the market." That definition would cover pretty much any and all behavior. In this case Discord is not trading securities, is not telling any one else to trade securities, has nothing at all to do with securities. If I run an email service and find that a user is running a pump-and-dump scam through it, do you really think I shouldn't be able to shut down their account? (If you're interested in the actual law on market manipulation, it's here: https://www.law.cornell.edu/uscode/text/15/78i https://www.law.cornell.edu/uscode/text/15/78i)
- sillysaurusx 6y ago
  Yeah, I didn’t mean it in the legal sense. It was just interesting that this decision can cost certain people millions of dollars. But that’s true of many actions in the world, as you say.
  - necubi 6y ago
    "Market manipulation" is what we call it when you affect markets illegally. If it's not illegal, it's not manipulation. For example, if I buy a bunch of stock in a company it will usually raise the stock price. That affects the market but is not illegal and is not manipulation.
    - thaumasiotes 6y ago
      > "Market manipulation" is what we call it when you affect markets illegally. If it's not illegal, it's not manipulation. This is backwards. The label "manipulation" is applied (or not) retroactively based on whether something was determined to be illegal or not. It's not something you can know in advance; two copies of the exact same action might be judged differently.
- TeMPOraL 6y ago
  Would it change anything if someone at Discord, particularly someone involved in making this decision, had a stake in GameStop's stock performance?
- 6y ago
DeepYogurt 6y ago
> Discord’s action is effectively market manipulation in a literal sense, because this is certainly going to affect the market. It certainly will have an effect, but I'm not sure it meets the definition of "manipulation". I think (though am not certain) that the manipulating party would need to have a stake in the market asset for manipulation to apply. Many definitions (though not investor.gov) imply that personal gain is a requirement. No doubt there will be a legal case made here.
TameAntelope 6y ago
My rough understanding is that the sub is required by Reddit admins to perform certain actions related to every submission (and even maybe every comment) which, due to API limitations, they could no longer do automatically.
economusty 6y ago
The next few stocks to focus on we already agreed, GME>BB>NOK. No further coordination necessary.
alchemism 6y ago
> No one has any chance to coordinate now. As with other subgroups both economic and political, the real coordination happens in Telegram and Signal. The public channels amplify.
daniel-thompson 6y ago
> No one has any chance to coordinate now. Even though r/wsb is now private, there are already 3.8m people who are subbed to it and can still see & use it.
adventurer 6y ago
Add this to the mix. The major brokerage firms go down. When users are able to login they receive messages they can no longer make call options on GME and are only allowed to sell.

rory 6y ago

They've officially ticked off rich and well-connected people, so regulators are coming to shake the tree branch (I have no idea whether what they're doing is illegal or not) and the platforms want to distance themselves from that ASAP.

epistasis 6y ago
I don't think anybody has ever suffered negative regulatory action for doing a short squeeze. Even Martin Shkreli didn't get in trouble for his.
- koolba 6y ago
  Acting alone it’s not inherently illegal. Real question is whether pooling your strength (ie assets) with others to force a squeeze is illegal collusion and market manipulation.
  - epistasis 6y ago
    In particular, it's hard to see a short squeeze as market manipulation, which is why nobody has been penalized for it. What is a hedge fund except more explicit coordination of many people's money on a much greater scale? The classic example of Porsche's squeeze on VW stock was Porsche's management coordinating many people's pooled assets.
- jfim 6y ago
  It has happened in the past: https://www.marketwatch.com/story/squeeze-on-goldman-put-falcone-in-penalty-box-2013-08-21 https://www.marketwatch.com/story/squeeze-on-goldman-put-fal... and https://www.sec.gov/news/press-release/2012-2012-122htm https://www.sec.gov/news/press-release/2012-2012-122htm
  - epistasis 6y ago
    It looks like Falcone may have been ok both sides of the squeeze, or at least treating its customers differently in order to execute it?

garmaine 6y ago

The details: a hedge fund decided to short retail stocks during the pandemic. They overextended with a naked short position against GameStop (that brick and mortar video game retailer) that exceeds not only the share float by a large margin but even the total number of shares in existence. u/DeepFuckingValue on r/wallstreetbets discovered this a month or so ago, took out a $50k position, and let the rest of the sub in on it. That position is now worth $50M, a 1,000x increase. Now there is literally no limit to the upside of a short squeeze. The price goes up high enough and the short sellers declare bankruptcy and liquidate their positions to cover the cost of purchasing shares. If they still come up short, then the same happens to the banks that lend to them . If that comes short, the brokerage must step up. At that point there’d probably be government intervention and a bailout. The WSB motto has become “we can stay retarded longer than they can stay solvent.” According to a naïve view of the law, at least, that is correct. Far more likely there will be market outages and regulator shenanigans at undo the situation. Nobody is more of a sore loser than the establishment.

ziml77 6y ago
So basically that dude knew exactly how to make serious money by making it out to be some massive blow to Wall Street?
- garmaine 6y ago
  Both can be true.