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99.99% (or more) of people who buy lotteries, lose ALL their money. However, government allows anyone to buy them. There is no meaningful restriction for an ass

by pdevr 6y ago

99.99% (or more) of people who buy lotteries, lose ALL their money. However, government allows anyone to buy them. There is no meaningful restriction for an assured destruction of wealth for most of those who buy them. While this GME/AMC run will not end well for many people, restricting people from buying those stocks - whether it is through actions of trading platforms or governing agencies - smacks not just of paternalism, but downright favoritism. Only certain parties benefit from this.

batmenace 6y ago
Im guessing their argument would be that while a majority of people know what they're doing / the risk they are exposed to, a lot of people are seeing the gains online right now and are jumping into it blindly. Big difference between WSBers buying in at 10-30$, and people from all around the internet now buying in at 300$
- stonesweep 6y ago
  Back in 1999 when Red Hat went IPO (dsiclaimer: I had FoC options), eTrade denied a very large swath of first-time investors with their platform trying to take advantage of Red Hat's FoC share options; I was one of them. There was a followup round of reach-out "hey, you might want to take this quiz again and maybe we'll let you play" (meaning go answer the questions and lie that you're an experienced investor) to try and get the disenfranchised back into the game.
- VikingCoder 6y ago
  ...and yet cigarettes are still legal.
llampx 6y ago
Yes. The way the short squeeze has been working so far is the hedge funds do a ladder short to drive the price down, and retail buys up shares, sending price back up. Without retail to buy shares, price can keep falling until people get freaked out and sell their shares, which is what the hedge funds want.
treis 6y ago
Stock market regulation stems largely from the experience of the Great Depression. So even if 99.99% of people lose all their money in lotteries we haven't seen an economic crisis caused by lotteries. We're not likely to see an economic crisis due to a Gamestop short squeeze, but it is a bit of a worrying sign.
- chrisco255 6y ago
  And how much did that regulation help prevent the Great Recession and Global Financial Crisis of 2008?
  - treis 6y ago
    There's a pretty direct line of causation from the rollback of some regulations and lack of enforcement of others to that. That crisis was a reminder of why we have these sorts of regulations and an example of why we should enforce them.
    - chrisco255 6y ago
      I disagree on that point. The '08 financial crisis was not so clear-cut as to trace back to one single regulation being "rolled back". And it's not clear to me, that whatever vulnerabilities existed in the system then, have somehow been patched up today. We could and still very well might have another large meltdown in the markets in the near future.
buildbuildbuild 6y ago
I agree with you. But it is also much higher friction to invest large sums in lotteries. Casinos feel the more apt analogy.
0x008 6y ago
It's basically corruption and shows why we need free markets and why it is a problem that exchanges are private companies.
- MrMan 6y ago
  what
- imtringued 6y ago
  If anything, this proves that free markets cannot exist. If rich people showed even a tiny shred of humility this wouldn't have happened.
notahacker 6y ago
99.99% of people who buy lotteries know it's a gamble rather than a moneymaking strategy. Nobody is advising people buying lottery tickets that they should borrow money to buy as many of them as possible because they will make a nice easy profit at the expense of the rich. It's often said lotteries are a tax on people that don't understand probability, but at least people playing don't think they're doing arbitrage. And governments often do restrict other forms of gambling associated with more problematic losses. There are those who would like them more restrictions on it, and those who would like fewer, but at least the latter group don't argue that without loosening gambling laws, the little guy doesn't stand a chance of wealth improvement.
- bufferoverflow 6y ago
  > Nobody is advising people buying lottery tickets That's demonstrably false. There are literal ads on TV that show how wealthy you can become if you just buy a lottery ticket. > that they should borrow money to buy as many of them as possible because they will make a nice easy profit You clearly haven't read any of the GME threads on WSB. Pretty much everyone is saying to only invest what you can afford to lose. Most people are buying small amounts just to f##k with the hedge funds, and they are outspoken about it. > but at least people playing don't think they're doing arbitrage. Buying a lottery ticket for a dollar, hoping they make much more? Isn't that the whole point of a lottery? > And governments often do restrict other forms of gambling associated with more problematic losses. That's the whole point of the criticism that you're missing. These restrictions are completely arbitrary and don't follow any rules. You can go to a casino and lose your life savings. You can buy 1 million lottery tickets and lose your life savings. You can buy one of thousands of penny stocks and lose your life savings. The government won't stop you. The brokers won't stop you. But suddenly, when a big hedge fund is caught with their pants down, people like you come out and pretend like what's happening is a big problem, and we have to stop the trading "because some people can lose money". Sorry, I'm not buying your narrative at all.
  - henrikschroder 6y ago
    > Most people are buying small amounts just to f##k with the hedge funds, and they are outspoken about it. I think the funniest part about this is that it is rationally irrational. It's irrational from a market perspective, Gamestop really isn't fundamentally worth this much, everyone who invests ought to lose the money. Short sellers ought to make bank on it. And then comes WSB and offers a different reason: Buy a couple of shares and hold just to punish the short sellers. It's irrational in the market sense, but it's completely rational from an internet mob sense. They're not out to make money, which is the normal rational decision-making process that all the big players are accustomed to. This mob is out for blood, and they're doing it for shits and giggles. Of course the big market players are upset, because the mob has money and are wielding it "wrong"!

by pdevr 6y ago

batmenace 6y ago

Im guessing their argument would be that while a majority of people know what they're doing / the risk they are exposed to, a lot of people are seeing the gains online right now and are jumping into it blindly. Big difference between WSBers buying in at 10-30$, and people from all around the internet now buying in at 300$

stonesweep 6y ago
Back in 1999 when Red Hat went IPO (dsiclaimer: I had FoC options), eTrade denied a very large swath of first-time investors with their platform trying to take advantage of Red Hat's FoC share options; I was one of them. There was a followup round of reach-out "hey, you might want to take this quiz again and maybe we'll let you play" (meaning go answer the questions and lie that you're an experienced investor) to try and get the disenfranchised back into the game.
VikingCoder 6y ago
...and yet cigarettes are still legal.

llampx 6y ago

Yes. The way the short squeeze has been working so far is the hedge funds do a ladder short to drive the price down, and retail buys up shares, sending price back up. Without retail to buy shares, price can keep falling until people get freaked out and sell their shares, which is what the hedge funds want.

treis 6y ago

Stock market regulation stems largely from the experience of the Great Depression. So even if 99.99% of people lose all their money in lotteries we haven't seen an economic crisis caused by lotteries. We're not likely to see an economic crisis due to a Gamestop short squeeze, but it is a bit of a worrying sign.

chrisco255 6y ago
And how much did that regulation help prevent the Great Recession and Global Financial Crisis of 2008?
- treis 6y ago
  There's a pretty direct line of causation from the rollback of some regulations and lack of enforcement of others to that. That crisis was a reminder of why we have these sorts of regulations and an example of why we should enforce them.
  - chrisco255 6y ago
    I disagree on that point. The '08 financial crisis was not so clear-cut as to trace back to one single regulation being "rolled back". And it's not clear to me, that whatever vulnerabilities existed in the system then, have somehow been patched up today. We could and still very well might have another large meltdown in the markets in the near future.

buildbuildbuild 6y ago

I agree with you. But it is also much higher friction to invest large sums in lotteries. Casinos feel the more apt analogy.

0x008 6y ago

It's basically corruption and shows why we need free markets and why it is a problem that exchanges are private companies.

MrMan 6y ago
what
imtringued 6y ago
If anything, this proves that free markets cannot exist. If rich people showed even a tiny shred of humility this wouldn't have happened.

notahacker 6y ago

99.99% of people who buy lotteries know it's a gamble rather than a moneymaking strategy. Nobody is advising people buying lottery tickets that they should borrow money to buy as many of them as possible because they will make a nice easy profit at the expense of the rich. It's often said lotteries are a tax on people that don't understand probability, but at least people playing don't think they're doing arbitrage. And governments often do restrict other forms of gambling associated with more problematic losses. There are those who would like them more restrictions on it, and those who would like fewer, but at least the latter group don't argue that without loosening gambling laws, the little guy doesn't stand a chance of wealth improvement.

bufferoverflow 6y ago
> Nobody is advising people buying lottery tickets That's demonstrably false. There are literal ads on TV that show how wealthy you can become if you just buy a lottery ticket. > that they should borrow money to buy as many of them as possible because they will make a nice easy profit You clearly haven't read any of the GME threads on WSB. Pretty much everyone is saying to only invest what you can afford to lose. Most people are buying small amounts just to f##k with the hedge funds, and they are outspoken about it. > but at least people playing don't think they're doing arbitrage. Buying a lottery ticket for a dollar, hoping they make much more? Isn't that the whole point of a lottery? > And governments often do restrict other forms of gambling associated with more problematic losses. That's the whole point of the criticism that you're missing. These restrictions are completely arbitrary and don't follow any rules. You can go to a casino and lose your life savings. You can buy 1 million lottery tickets and lose your life savings. You can buy one of thousands of penny stocks and lose your life savings. The government won't stop you. The brokers won't stop you. But suddenly, when a big hedge fund is caught with their pants down, people like you come out and pretend like what's happening is a big problem, and we have to stop the trading "because some people can lose money". Sorry, I'm not buying your narrative at all.
- henrikschroder 6y ago
  > Most people are buying small amounts just to f##k with the hedge funds, and they are outspoken about it. I think the funniest part about this is that it is rationally irrational. It's irrational from a market perspective, Gamestop really isn't fundamentally worth this much, everyone who invests ought to lose the money. Short sellers ought to make bank on it. And then comes WSB and offers a different reason: Buy a couple of shares and hold just to punish the short sellers. It's irrational in the market sense, but it's completely rational from an internet mob sense. They're not out to make money, which is the normal rational decision-making process that all the big players are accustomed to. This mob is out for blood, and they're doing it for shits and giggles. Of course the big market players are upset, because the mob has money and are wielding it "wrong"!