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Then you don't understand this, or any of the things you listed. George Soros noticed a mismatch of fundamental value. He pushed the price towards its fundament

by darawk 6y ago

Then you don't understand this, or any of the things you listed. George Soros noticed a mismatch of fundamental value. He pushed the price towards its fundamental value. These traders are pushing the price away from fundamental value, and they are doing so at the expense of other, later retail traders.

strken 6y ago
You seem to be equating "is moral" with "moves prices towards the fundamental value of the underlying asset", which is an interesting position to take. That being said, if you're worried about pushing prices away from fundamental value, how about negative crude prices?
- darawk 6y ago
  > You seem to be equating "is moral" with "moves prices towards the fundamental value of the underlying asset", which is an interesting position to take I didn't say anything about morality. This is a purely functional argument. When something is sold for its fundamental value, nobody loses. That's why its good for society for things to transact at their intrinsic value. > That being said, if you're worried about pushing prices away from fundamental value, how about negative crude prices? It was crude futures that were negative. Crude oil has storage costs. Those costs rarely overwhelm the value of the asset, but in particular circumstances they can. That is what happened when crude futures went negative. It seems illogical, but if you actually understand it, it all makes sense and fits neatly inside an intrinsic value narrative.
  - strken 6y ago
    > I didn't say anything about morality. The original claim was that squeezing an ill-advised short wasn't less moral than deliberately collapsing a currency and taking $1bn of funds from a government, or engaging in sketchy HFT practices. You said "then you don't understand this, or any of the things listed", implying that you believe that squeezing the short WAS less moral. > Crude oil has storage costs. Those costs rarely overwhelm the value of the asset, but in particular circumstances they can. "Storage costs" is a convenient and inoffensive way to say "the few remaining buyers with enough spare capacity smelled blood in the water and were able to price gouge".
    - darawk 6y ago
      > The original claim was that squeezing an ill-advised short wasn't less moral than deliberately collapsing a currency and taking $1bn of funds from a government, or engaging in sketchy HFT practices. You said "then you don't understand this, or any of the things listed", implying that you believe that squeezing the short WAS less moral. Sure. But you don't need morality to make the point. I will make that point though: things trading at their intrinsic value is more moral than not doing so, because it means nobody loses. > "Storage costs" is a convenient and inoffensive way to say "the few remaining buyers with enough spare capacity smelled blood in the water and were able to price gouge". Err. No. It means the storage capacity was completely gone, and people were scrambling to find new storage capacity. It doesn't seem like you're very familiar with how these things work.
freeone3000 6y ago
Why does a stock, or anything, have a fundamental value? You can't eat a share of gamestop, you can't build a house with it, you can't even sell games with it because it represents an abstract stake in the company's future profits, but doesn't actually pay out based on the company's performance except when we agree it should. What does "fundamental value" have to do with anything involved in the stock market?
- nrmitchi 6y ago
  I'm not sure if you're actually expecting an answer here or just raging, but one reason that Gamestop (and many other stocks) have a fundamental value is because they pay out a dividend to the holder. For example, if the dividend that was paid out per share of GME on, for example, March 15th, 2019 was $0.38, and you owned 1000 shares (and ~4k investment), then you received a payment of $380. In many companies, these dividend amounts and schedules are extremely predictable. You can then use that money to buy food, or build a house, if you wanted. The fundamental value of many stocks is tied to the dividend that it will pay you for owning it. Obviously "growth" stocks (stocks that as designed to increase in value, rather than pay a dividend, because funds are used to buy-back stock instead, thus raising the price) is valued differently, but there is still a fundamental value based on the financial situation of the underlying company.
  - freeone3000 6y ago
    If that were true, we'd be able to value stocks simply by summing the expected dividend over the next 20 years. This makes no sense for GME, but, it also makes no sense for MSFT, whose value has more than doubled in price since three years ago with no increase in dividends. It doesn't make sense for TLSA, which doesn't even have dividends and doesn't do buybacks (and even has outstanding ATMs!). It doesn't make sense for GOOG, it doesn't make sense for AMD, it doesn't make sense for NVDA. Let's assume that you're right, and that nearly every tech stock, automotive stock, and stock for any company the average person has heard of, or is in an index, is drastically overvalued. Is there any event that would cause the value to "correct"? Some shift causing people to sell their TLSA and buy F, whose value is "more correct"? And if not: what makes the value based on this more correct than the value you can access through trades?
throw0101a 6y ago
> fundamental value Money is a made up thing. From another comment I made: > Why is a Audi "worth" $60K but a VW "worth" $30K? A Porsche "worth" over $100K? Why is a Patek Philippe or A. Lange & Söhne Tourbillon watch worth $100K? Why should I pay $300 for one All-Clad pan when for the same price I can get a 10-piece set at Costco? […] > And to go back to my first paragraph: a Porsche is not "worth" $100K to me—because I'm not willing to pay for it, or even for an Audi. But it may be "worth" it to someone else because they are willing to pay for it. * https://news.ycombinator.com/item?id=25935968 https://news.ycombinator.com/item?id=25935968 It's a convenient fiction that allows for a complicated society to run relatively smoothly, but it's a fiction nonetheless when you get down to it (IMHO).
- rank0 6y ago
  so you're okay with market manipulation? If value isn't real there should be no rules right?
  - Judgmentality 6y ago
    I don't think that's what he's saying. I think he's saying it's not manipulation, but simply a bet. If I buy GameStop at $100 believing I can sell it for $120 tomorrow, I am buying that stock honestly believing in its current value so I'm not sure you can call it manipulation any more than another investor hoping to cash in on an expectation that a stock will appreciate. How do you decide whether or not something is manipulation? Everybody invests in stocks expecting them to go up - at what point is it nefarious?
    - rank0 6y ago
      It becomes manipulation when its coordinated. A massive investment forum is blatantly talking about inducing a short squeeze as a collective. This has been advertised non-stop on WSB as some kind of populist uprising for months. All the rhetoric about the little guy sticking it to "the man" is necessary for attracting new buyers and keeping the squeeze alive. In reality, many institutions are also long GME and capitalizing on the squeeze as well. It's a pump-dump...which is illegal.

by darawk 6y ago

strken 6y ago

You seem to be equating "is moral" with "moves prices towards the fundamental value of the underlying asset", which is an interesting position to take. That being said, if you're worried about pushing prices away from fundamental value, how about negative crude prices?

darawk 6y ago
> You seem to be equating "is moral" with "moves prices towards the fundamental value of the underlying asset", which is an interesting position to take I didn't say anything about morality. This is a purely functional argument. When something is sold for its fundamental value, nobody loses. That's why its good for society for things to transact at their intrinsic value. > That being said, if you're worried about pushing prices away from fundamental value, how about negative crude prices? It was crude futures that were negative. Crude oil has storage costs. Those costs rarely overwhelm the value of the asset, but in particular circumstances they can. That is what happened when crude futures went negative. It seems illogical, but if you actually understand it, it all makes sense and fits neatly inside an intrinsic value narrative.
- strken 6y ago
  > I didn't say anything about morality. The original claim was that squeezing an ill-advised short wasn't less moral than deliberately collapsing a currency and taking $1bn of funds from a government, or engaging in sketchy HFT practices. You said "then you don't understand this, or any of the things listed", implying that you believe that squeezing the short WAS less moral. > Crude oil has storage costs. Those costs rarely overwhelm the value of the asset, but in particular circumstances they can. "Storage costs" is a convenient and inoffensive way to say "the few remaining buyers with enough spare capacity smelled blood in the water and were able to price gouge".
  - darawk 6y ago
    > The original claim was that squeezing an ill-advised short wasn't less moral than deliberately collapsing a currency and taking $1bn of funds from a government, or engaging in sketchy HFT practices. You said "then you don't understand this, or any of the things listed", implying that you believe that squeezing the short WAS less moral. Sure. But you don't need morality to make the point. I will make that point though: things trading at their intrinsic value is more moral than not doing so, because it means nobody loses. > "Storage costs" is a convenient and inoffensive way to say "the few remaining buyers with enough spare capacity smelled blood in the water and were able to price gouge". Err. No. It means the storage capacity was completely gone, and people were scrambling to find new storage capacity. It doesn't seem like you're very familiar with how these things work.

freeone3000 6y ago

Why does a stock, or anything, have a fundamental value? You can't eat a share of gamestop, you can't build a house with it, you can't even sell games with it because it represents an abstract stake in the company's future profits, but doesn't actually pay out based on the company's performance except when we agree it should. What does "fundamental value" have to do with anything involved in the stock market?

nrmitchi 6y ago
I'm not sure if you're actually expecting an answer here or just raging, but one reason that Gamestop (and many other stocks) have a fundamental value is because they pay out a dividend to the holder. For example, if the dividend that was paid out per share of GME on, for example, March 15th, 2019 was $0.38, and you owned 1000 shares (and ~4k investment), then you received a payment of $380. In many companies, these dividend amounts and schedules are extremely predictable. You can then use that money to buy food, or build a house, if you wanted. The fundamental value of many stocks is tied to the dividend that it will pay you for owning it. Obviously "growth" stocks (stocks that as designed to increase in value, rather than pay a dividend, because funds are used to buy-back stock instead, thus raising the price) is valued differently, but there is still a fundamental value based on the financial situation of the underlying company.
- freeone3000 6y ago
  If that were true, we'd be able to value stocks simply by summing the expected dividend over the next 20 years. This makes no sense for GME, but, it also makes no sense for MSFT, whose value has more than doubled in price since three years ago with no increase in dividends. It doesn't make sense for TLSA, which doesn't even have dividends and doesn't do buybacks (and even has outstanding ATMs!). It doesn't make sense for GOOG, it doesn't make sense for AMD, it doesn't make sense for NVDA. Let's assume that you're right, and that nearly every tech stock, automotive stock, and stock for any company the average person has heard of, or is in an index, is drastically overvalued. Is there any event that would cause the value to "correct"? Some shift causing people to sell their TLSA and buy F, whose value is "more correct"? And if not: what makes the value based on this more correct than the value you can access through trades?

throw0101a 6y ago

> fundamental value Money is a made up thing. From another comment I made: > Why is a Audi "worth" $60K but a VW "worth" $30K? A Porsche "worth" over $100K? Why is a Patek Philippe or A. Lange & Söhne Tourbillon watch worth $100K? Why should I pay $300 for one All-Clad pan when for the same price I can get a 10-piece set at Costco? […] > And to go back to my first paragraph: a Porsche is not "worth" $100K to me—because I'm not willing to pay for it, or even for an Audi. But it may be "worth" it to someone else because they are willing to pay for it. * https://news.ycombinator.com/item?id=25935968 https://news.ycombinator.com/item?id=25935968 It's a convenient fiction that allows for a complicated society to run relatively smoothly, but it's a fiction nonetheless when you get down to it (IMHO).

rank0 6y ago
so you're okay with market manipulation? If value isn't real there should be no rules right?
- Judgmentality 6y ago
  I don't think that's what he's saying. I think he's saying it's not manipulation, but simply a bet. If I buy GameStop at $100 believing I can sell it for $120 tomorrow, I am buying that stock honestly believing in its current value so I'm not sure you can call it manipulation any more than another investor hoping to cash in on an expectation that a stock will appreciate. How do you decide whether or not something is manipulation? Everybody invests in stocks expecting them to go up - at what point is it nefarious?
  - rank0 6y ago
    It becomes manipulation when its coordinated. A massive investment forum is blatantly talking about inducing a short squeeze as a collective. This has been advertised non-stop on WSB as some kind of populist uprising for months. All the rhetoric about the little guy sticking it to "the man" is necessary for attracting new buyers and keeping the squeeze alive. In reality, many institutions are also long GME and capitalizing on the squeeze as well. It's a pump-dump...which is illegal.