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I also don't care about a hedge fund losing out but Id hardly call the current value of Gamestop to be "real" Economics. And for the few /r/wsb guys and girls

I also don't care about a hedge fund losing out but Id hardly call the current value of Gamestop to be "real" Economics. And for the few /r/wsb guys and girls making a killing there are a lot more late comers who will lose big, and can't afford to.

agildehaus 6y ago
No, it's not real economics. It's the little guys coming together to fight the big guys at their own game.
- ceejayoz 6y ago
  A lot of little guys are gonna be left holding the bag at the end, though. The stock was probably overvalued at $10. It's definitely overvalued at $400.
  - vsareto 6y ago
    Based on how people acted during the pandemic, these people will be more than willing to be bagholders, constantly deny they are bagholders, and constantly deny anyone else is a bagholder.
  - criddell 6y ago
    People were shorting this stock when it was an order of magnitude less expensive. Isn't it an even more attractive short target now?
    - ceejayoz 6y ago
      Yes, but there's a fairly hefty risk of it rocketing up again before collapsing, which could wipe out such short positions. (Again!) Not a move I'd make with my retirement funds.
      - FabHK 6y ago
        Not a move you should make highly leveraged. Perfectly legitimate move to make if you have a sufficient capital cushion. (yes, I now, shorts carry unlimited risk in theory, but in practice the risk is limited. Regulators will (correctly) step in when the market cap of some retailer during the pandemic eclipses the market cap of, dunno, Apple and Tesla or whatever.)
    - milesvp 6y ago
      Maybe. Part of the problem currently, is there are too many short positions compared to the total issued shares. It’s what makes this a short squeeze. If you try to short now you’ll help elleviate the squeeze, though you may have problems finding people to lend the stock to short. But what makes shorting even scarier right now is the price is based on the marginal willingness to sell right now, vs the marginal willingness to buy + the forced buying due to margin calls. There is a major assymmetry that is driving the stock to positive infinity. And while we both know the price can’t go to infinity, we can’t be sure that a short right now won’t have it’s margin called due to all the margin calls before triggering a margin call on the stock just shorted. So risk is very real for a short at the moment, and you need a lot of cash reserves to try to weather the current situation.
emteycz 6y ago
What is "real economics" if law, contracts and supply/demand isn't real economics? Stock price was never supposed to closely mirror company's financials, that's a meme pushed by socialists that want to portray the stock market as wrong ("out of reality"). The financials are merely a indicator. It's stock market and what matters are the dynamics of that market, and the company itself is only a small part of that.
- Karunamon 6y ago
  It's hard to not read this as a pathological corner case.
  - emteycz 6y ago
    Yes, that it surely is - but from the Wall Street side; shorting 140% of stock should've been caught by regulators as it's illegal and totally impossible for retail investors. I don't think it was missed by mistake, though. People rallying to make profit from their mistake is nothing wrong, just new - this is the first time the small boys (instead of other big boys - but you can just ping them on Bloomberg terminal and make a deal with them) were able to catch them and coordinate their capital (the same thing the Wall Street guys are doing together, just bigger scale). It won't happen again as long as the big boys play according to the rules.
zwkrt 6y ago
And who’s responsibility is that? WSB has been rallying around GameStop for over a month. It has 2 million subscribers. GME shows up 10s of times per day. There have been endless squabbles over it. If some rubberneckers come in now and lose money they could just as easily lost it by doing a thousand other silly things. TSLA and other meme stocks show that value is relative and fickle. We used to think advertising and social media were just used to tell people to buy a company’s products, but it is obvious that they are just as good for directly raising capital. Is it a capitalist utopia or a populist dystopia? I think it’s both.
krona 6y ago
Nobody on wsb went out to make a 'killing', or at least not in the way you think. You don't know the half of it.
monoideism 6y ago
Parent isn't claiming GME is "real" economics. Parent is claiming GME will help pull down our current fake system, and help the middle and lower classes receive fair compensation from the system. Whether this approach works or not, I don't know. But the status quo isn't tenable for a democratic society. This chart says it all: https://www.epi.org/productivity-pay-gap/ https://www.epi.org/productivity-pay-gap/
- kuu 6y ago
  What did happen around 1979 to have such a clear change?
  - atombum 6y ago
    Ronald Reagan happened.
  - sokoloff 6y ago
    It's not at all clear to me that 1979 is even the best reference year to pick. It looks to me like the trend lines broke in 1973-1975, but by the nature of this type of chart, careful choice in starting year can provide a chart that suggests a different break point. (It's probably better to think of these as "fuzzy" lines, which are 10% starting in each of 1946, 1947...1955.)
    - nostrademons 6y ago
      Yeah, 1973 is a much better reference year. Both because that's what the data actually says, and because there was a very clear cause: inflation. 1973 was the year of the oil crisis, the year that fixed exchange rates under Bretton Woods became floating exchange rates, and the year that the 1970s inflation happened. Inflation doesn't affect all professions equally. Differentiated professions (those where there's only a limited supply of workers, and a limited number of positions) can bargain for higher wages, because there's nobody else that can take the job if you don't. The common people can't, because that's what it means to be common: you are easily replaceable. Hence when inflation hits, the upper classes capture the vast majority of the new money and new wealth created, while the lower classes get stuck with the same nominal wage, which purchases far less.
mrh0057 6y ago
Why do they care this time. No one cared in 2000 and the 2008 bubble. No one cared that new investors are bidding up worthless SPAC and new public companies. Why do they all a suddenly care that retail is going to lose a ton of money when retail always loses a ton of money. Retail always joins the bubble towards the end of the cycle.
mdoms 6y ago
> Id hardly call the current value of Gamestop to be "real" Economics. Yeah that's the whole damn point. Some normies figured out how to play their fake little game.

agildehaus 6y ago

No, it's not real economics. It's the little guys coming together to fight the big guys at their own game.

ceejayoz 6y ago
A lot of little guys are gonna be left holding the bag at the end, though. The stock was probably overvalued at $10. It's definitely overvalued at $400.
- vsareto 6y ago
  Based on how people acted during the pandemic, these people will be more than willing to be bagholders, constantly deny they are bagholders, and constantly deny anyone else is a bagholder.
- criddell 6y ago
  People were shorting this stock when it was an order of magnitude less expensive. Isn't it an even more attractive short target now?
  - ceejayoz 6y ago
    Yes, but there's a fairly hefty risk of it rocketing up again before collapsing, which could wipe out such short positions. (Again!) Not a move I'd make with my retirement funds.
    - FabHK 6y ago
      Not a move you should make highly leveraged. Perfectly legitimate move to make if you have a sufficient capital cushion. (yes, I now, shorts carry unlimited risk in theory, but in practice the risk is limited. Regulators will (correctly) step in when the market cap of some retailer during the pandemic eclipses the market cap of, dunno, Apple and Tesla or whatever.)
  - milesvp 6y ago
    Maybe. Part of the problem currently, is there are too many short positions compared to the total issued shares. It’s what makes this a short squeeze. If you try to short now you’ll help elleviate the squeeze, though you may have problems finding people to lend the stock to short. But what makes shorting even scarier right now is the price is based on the marginal willingness to sell right now, vs the marginal willingness to buy + the forced buying due to margin calls. There is a major assymmetry that is driving the stock to positive infinity. And while we both know the price can’t go to infinity, we can’t be sure that a short right now won’t have it’s margin called due to all the margin calls before triggering a margin call on the stock just shorted. So risk is very real for a short at the moment, and you need a lot of cash reserves to try to weather the current situation.

emteycz 6y ago

What is "real economics" if law, contracts and supply/demand isn't real economics? Stock price was never supposed to closely mirror company's financials, that's a meme pushed by socialists that want to portray the stock market as wrong ("out of reality"). The financials are merely a indicator. It's stock market and what matters are the dynamics of that market, and the company itself is only a small part of that.

Karunamon 6y ago
It's hard to not read this as a pathological corner case.
- emteycz 6y ago
  Yes, that it surely is - but from the Wall Street side; shorting 140% of stock should've been caught by regulators as it's illegal and totally impossible for retail investors. I don't think it was missed by mistake, though. People rallying to make profit from their mistake is nothing wrong, just new - this is the first time the small boys (instead of other big boys - but you can just ping them on Bloomberg terminal and make a deal with them) were able to catch them and coordinate their capital (the same thing the Wall Street guys are doing together, just bigger scale). It won't happen again as long as the big boys play according to the rules.

zwkrt 6y ago

And who’s responsibility is that? WSB has been rallying around GameStop for over a month. It has 2 million subscribers. GME shows up 10s of times per day. There have been endless squabbles over it. If some rubberneckers come in now and lose money they could just as easily lost it by doing a thousand other silly things. TSLA and other meme stocks show that value is relative and fickle. We used to think advertising and social media were just used to tell people to buy a company’s products, but it is obvious that they are just as good for directly raising capital. Is it a capitalist utopia or a populist dystopia? I think it’s both.

krona 6y ago

Nobody on wsb went out to make a 'killing', or at least not in the way you think. You don't know the half of it.

monoideism 6y ago

Parent isn't claiming GME is "real" economics. Parent is claiming GME will help pull down our current fake system, and help the middle and lower classes receive fair compensation from the system. Whether this approach works or not, I don't know. But the status quo isn't tenable for a democratic society. This chart says it all: https://www.epi.org/productivity-pay-gap/ https://www.epi.org/productivity-pay-gap/

kuu 6y ago
What did happen around 1979 to have such a clear change?
- atombum 6y ago
  Ronald Reagan happened.
- sokoloff 6y ago
  It's not at all clear to me that 1979 is even the best reference year to pick. It looks to me like the trend lines broke in 1973-1975, but by the nature of this type of chart, careful choice in starting year can provide a chart that suggests a different break point. (It's probably better to think of these as "fuzzy" lines, which are 10% starting in each of 1946, 1947...1955.)
  - nostrademons 6y ago
    Yeah, 1973 is a much better reference year. Both because that's what the data actually says, and because there was a very clear cause: inflation. 1973 was the year of the oil crisis, the year that fixed exchange rates under Bretton Woods became floating exchange rates, and the year that the 1970s inflation happened. Inflation doesn't affect all professions equally. Differentiated professions (those where there's only a limited supply of workers, and a limited number of positions) can bargain for higher wages, because there's nobody else that can take the job if you don't. The common people can't, because that's what it means to be common: you are easily replaceable. Hence when inflation hits, the upper classes capture the vast majority of the new money and new wealth created, while the lower classes get stuck with the same nominal wage, which purchases far less.

mrh0057 6y ago

Why do they care this time. No one cared in 2000 and the 2008 bubble. No one cared that new investors are bidding up worthless SPAC and new public companies. Why do they all a suddenly care that retail is going to lose a ton of money when retail always loses a ton of money. Retail always joins the bubble towards the end of the cycle.

mdoms 6y ago

> Id hardly call the current value of Gamestop to be "real" Economics. Yeah that's the whole damn point. Some normies figured out how to play their fake little game.