5 ms·

This is the exact thing I have been trying to convince people of since this began. It started with a kernel of truth and a case to be made for a potential short

by dkrich 6y ago

This is the exact thing I have been trying to convince people of since this began. It started with a kernel of truth and a case to be made for a potential short squeeze but at some point along the way transitioned from a squeeze to a bubble with more and more chasing gains out of fomo and some ridiculous concocted story about the little guy vs the big bad Wall Street. This is further evident from the spillover effect seen in amc, Nokia, and many others. All that said you do need to understand that if your impulse is to short or buy puts you’re almost certainly early as bubbles always go much further than anyone thinks possible and the extraordinary IV of the options makes it very difficult to profit from.

tenpies 6y ago
It's literally impossible for it all to be retail money. What I think people are missing is that in about a month we'll find that "Wallstreetbets" and "retail" were also other fund managers like Ackman. This is not the first time one fund manager messed up with their short and got absolutely eaten up by other fund managers (see, famously, Herbalife where Ackman and Icahn were direct adversaries). Melvin Capital clearly messed up - their losses exceed any reasonable risk-managed short position and it's clear there was some naked shorting in there because you cannot lost 30% of your fund in a week unless you're being reckless. The media - in classic post-Trumpian mentality - is just fabricating a reality about market insurrections, how male traders are incels, or how Trumpism has spread into the market. The reality is we're witnessing another classic short squeeze between fund managers - and sure - retail got in on this one too, but they are at best a spark, rather than the gun powder.
- TedDoesntTalk 6y ago
  First I’ve heard this conspiracy theory and... I love it!
- toomuchtodo 6y ago
  Here here. It’s plainly obvious from the large block buys happening in extended hours trading that most retail doesn’t have access to. This is substantial money moving. Retail isn’t the driving force, but they’re riding shotgun and being used as a scapegoat for risk management failures.
- jethro_tell 6y ago
  Some guy makes 50mm (mostly unrealized at this point). Where do you think the rest of the 14 billion is owed? Probably institutional investors and HFT guys that have been playing market volitility, as they do. There's a couple guys that are fucked, but most of that money is going back into the pockets of 'the big bad fund managers' Same with Tesla, I don't think the institutions that profited handsomely in that run up think it's worth the price, but they think that the real gains are good for their funds. Also note, retail guys are still probably pretty close to the one percent. Who else has 50k lying around for something like this. Sure he might not be a hedge fund, but he's probably not working a minimum wage job and fixing inequality with his trades.
- dkrich 6y ago
  I don’t recall saying anything about retail money. There are many things at play- short squeezing, gamma squeezing, retail buying, trend based algo buying. Trying to attribute a move to any one thing is folly because it’s never one thing. But, when you get mass hysteria around a certain asset class and frenzied buying with the expectation said asset will just keep going up without regard for the fair value (in this case heavily shorted stocks), that’s a bubble. Just because you’re a large institutional buyer doesn’t make you immune from participation.

by dkrich 6y ago

tenpies 6y ago

It's literally impossible for it all to be retail money. What I think people are missing is that in about a month we'll find that "Wallstreetbets" and "retail" were also other fund managers like Ackman. This is not the first time one fund manager messed up with their short and got absolutely eaten up by other fund managers (see, famously, Herbalife where Ackman and Icahn were direct adversaries). Melvin Capital clearly messed up - their losses exceed any reasonable risk-managed short position and it's clear there was some naked shorting in there because you cannot lost 30% of your fund in a week unless you're being reckless. The media - in classic post-Trumpian mentality - is just fabricating a reality about market insurrections, how male traders are incels, or how Trumpism has spread into the market. The reality is we're witnessing another classic short squeeze between fund managers - and sure - retail got in on this one too, but they are at best a spark, rather than the gun powder.

TedDoesntTalk 6y ago
First I’ve heard this conspiracy theory and... I love it!
toomuchtodo 6y ago
Here here. It’s plainly obvious from the large block buys happening in extended hours trading that most retail doesn’t have access to. This is substantial money moving. Retail isn’t the driving force, but they’re riding shotgun and being used as a scapegoat for risk management failures.
jethro_tell 6y ago
Some guy makes 50mm (mostly unrealized at this point). Where do you think the rest of the 14 billion is owed? Probably institutional investors and HFT guys that have been playing market volitility, as they do. There's a couple guys that are fucked, but most of that money is going back into the pockets of 'the big bad fund managers' Same with Tesla, I don't think the institutions that profited handsomely in that run up think it's worth the price, but they think that the real gains are good for their funds. Also note, retail guys are still probably pretty close to the one percent. Who else has 50k lying around for something like this. Sure he might not be a hedge fund, but he's probably not working a minimum wage job and fixing inequality with his trades.
dkrich 6y ago
I don’t recall saying anything about retail money. There are many things at play- short squeezing, gamma squeezing, retail buying, trend based algo buying. Trying to attribute a move to any one thing is folly because it’s never one thing. But, when you get mass hysteria around a certain asset class and frenzied buying with the expectation said asset will just keep going up without regard for the fair value (in this case heavily shorted stocks), that’s a bubble. Just because you’re a large institutional buyer doesn’t make you immune from participation.