4 ms·

I'm not arguing that shutting down or regulating is the best solution, but it is the most likely outcome. How would one go about educating people? There's been

by bko 6y ago

I'm not arguing that shutting down or regulating is the best solution, but it is the most likely outcome. How would one go about educating people? There's been a lot of ink spilled on this story and it seems to have captured the public's imagination. Not all of the reporting is accurate, but all the major media outlets get out the point that this is essentially reckless market manipulation by a group of loosely banded individuals coordinating online. I doubt anyone participating in this will cut it out if just told to by some authoritative body.

comeonseriously 6y ago
> ... essentially reckless market manipulation by a group of loosely banded individuals coordinating online. You're talking about the hedge funds, right?
- fractionalhare 6y ago
  Despite the fact that there are widely repeated accusations of market manipulation by specific hedge funds on reddit, there is no actual evidence for it. I'm not saying reddit is manipulating the market either (maybe! I dunno). Just clarifying this point.
bcruddy 6y ago
How is borrowing then selling 140% of the available shares legal? How is that not market manipulation? This is the market at work. This was taken too far and the market has a method for correcting this behavior and we're seeing it now. The difference is retail is going to win AND there's no backroom deal to be made to stop the bleeding. We NEED financial reform but we need to look at what allowed this situation in the first place, not ways to silence what are effectively the whistle blowers.
- bko 6y ago
  > How is borrowing then selling 140% of the available shares legal? How is that not market manipulation? Why wouldn't someone be allowed to lend out a security they own to someone else? If not allowed, why wouldn't I be allowed to make an agreement where I pay you the difference between a future stock price and some fixed value? > The difference is retail is going to win AND there's no backroom deal to be made to stop the bleeding. The backroom deal will be a phone call to the CEO of reddit, discord, disqus and similar and tell them to cut it out. Simple as that. No coordinating mechanism, this will die.
  - nixass 6y ago
    > Why wouldn't someone be allowed to lend out a security they own to someone else? Can you explain what individual or company can own 140% of available shares?
- parsimo2010 6y ago
  You seem to be hinting at the idea that naked short selling should be illegal, which it has been for over a decade. So here’s a minor clarification for you: The short interest (140% or more for GME) is calculated on the public float. There is a significant chunk of GameStop shares that are not publicly accessible, but could be borrowed against (the shares do exist). If you consider the total outstanding shares of GME, then only 99% or so of the company was shorted. So it’s a crazy high amount, but there is no proof that any (actually illegal) naked short selling was occurring. So long as the people holding the non-public portion allowed their shares to be borrowed, then nothing illegal is going on. If, in the unlikely situation that EVERYONE needed to close their short positions at once, these non-public shares could actually be sold if the owner wanted to. Of course, they could dictate a really high price if the public market volume isn’t enough to close out the short positions in the standard three day period. The reason that short interest is calculated on public float is because that makes the most sense for normal situations. We just happen to have stumbled into one of those unusual situations.
  - esrauch 6y ago
    Can you explain how it's possible that 99% of shares were held by owners that were willing to loan their share? Surely at least 2% of GME was owned by "regular people" whose shares just sit in their brokerage accounts?
    - dragontamer 6y ago
      Those brokerage accounts loan the shares out and collect some interest %%% while waiting. The shares don't have your name on it. It has like Robinhood's name on it, holding on behalf of the customer.
      - esrauch 6y ago
        I was completely unaware this was a thing: that means there can be a "run on the bank" if all of the customers wanted to sell on a short time period, and they don't actually have the shares to cover the sales?

by bko 6y ago

comeonseriously 6y ago

> ... essentially reckless market manipulation by a group of loosely banded individuals coordinating online. You're talking about the hedge funds, right?

fractionalhare 6y ago
Despite the fact that there are widely repeated accusations of market manipulation by specific hedge funds on reddit, there is no actual evidence for it. I'm not saying reddit is manipulating the market either (maybe! I dunno). Just clarifying this point.

bcruddy 6y ago

How is borrowing then selling 140% of the available shares legal? How is that not market manipulation? This is the market at work. This was taken too far and the market has a method for correcting this behavior and we're seeing it now. The difference is retail is going to win AND there's no backroom deal to be made to stop the bleeding. We NEED financial reform but we need to look at what allowed this situation in the first place, not ways to silence what are effectively the whistle blowers.

bko 6y ago
> How is borrowing then selling 140% of the available shares legal? How is that not market manipulation? Why wouldn't someone be allowed to lend out a security they own to someone else? If not allowed, why wouldn't I be allowed to make an agreement where I pay you the difference between a future stock price and some fixed value? > The difference is retail is going to win AND there's no backroom deal to be made to stop the bleeding. The backroom deal will be a phone call to the CEO of reddit, discord, disqus and similar and tell them to cut it out. Simple as that. No coordinating mechanism, this will die.
- nixass 6y ago
  > Why wouldn't someone be allowed to lend out a security they own to someone else? Can you explain what individual or company can own 140% of available shares?
parsimo2010 6y ago
You seem to be hinting at the idea that naked short selling should be illegal, which it has been for over a decade. So here’s a minor clarification for you: The short interest (140% or more for GME) is calculated on the public float. There is a significant chunk of GameStop shares that are not publicly accessible, but could be borrowed against (the shares do exist). If you consider the total outstanding shares of GME, then only 99% or so of the company was shorted. So it’s a crazy high amount, but there is no proof that any (actually illegal) naked short selling was occurring. So long as the people holding the non-public portion allowed their shares to be borrowed, then nothing illegal is going on. If, in the unlikely situation that EVERYONE needed to close their short positions at once, these non-public shares could actually be sold if the owner wanted to. Of course, they could dictate a really high price if the public market volume isn’t enough to close out the short positions in the standard three day period. The reason that short interest is calculated on public float is because that makes the most sense for normal situations. We just happen to have stumbled into one of those unusual situations.
- esrauch 6y ago
  Can you explain how it's possible that 99% of shares were held by owners that were willing to loan their share? Surely at least 2% of GME was owned by "regular people" whose shares just sit in their brokerage accounts?
  - dragontamer 6y ago
    Those brokerage accounts loan the shares out and collect some interest %%% while waiting. The shares don't have your name on it. It has like Robinhood's name on it, holding on behalf of the customer.
    - esrauch 6y ago
      I was completely unaware this was a thing: that means there can be a "run on the bank" if all of the customers wanted to sell on a short time period, and they don't actually have the shares to cover the sales?