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No one remembers that most short positions are actually held by retail investors. I myself regularly take short positions. The reason trading was stopped is th

No one remembers that most short positions are actually held by retail investors. I myself regularly take short positions. The reason trading was stopped is that if a stock price suddenly gaps then the retail investors can lose more money than they have in their accounts. Then the brokerage or their clearing firm have to take the losses. They are not willing to do so, so they stop allowing trading. The brokerages are not somehow colluding to make hedge funds money, they are just trying to make sure that they do not lose money themselves.

ScoutOrgo 6y ago
FUD, the ability to buy a stock is not an option that exposes the broker.
- silexia 6y ago
  Short squeezes are illegal, and Robinhood continuing to allow blatant short squeeze activity could be construed to be aiding and abetting it, giving it huge legal liability. Hence, the shutdown of trading.
nawgz 6y ago
There are a lot of disingenuous comments designed to obfuscate the situation and this is unquestionably one of them. Why would you lead with this "most short positions are actually held by retail investors" quote, exactly? What does this have to do with RobinHood restricting the ability to Buy - yes, just purchase normally with no leverage - the GME stock? You are a shill and I have reported you.
- silexia 6y ago
  Lol look at my history and profile. I know lots of people are upset over losing money here, but that does not make me a shill or a bad person or even incorrect.
  - nawgz 6y ago
    Ok, then source this quote please: > most short positions are actually held by retail investors Shilling doesn't mean you haven't used this account before.
    - silexia 6y ago
      Once again, I am a real person. Here is an research article going in depth on retail short selling. https://www0.gsb.columbia.edu/faculty/ptetlock/papers/Kelley_Tetlock_May16_Retail_Short_Selling_and_Stock_Prices.pdf https://www0.gsb.columbia.edu/faculty/ptetlock/papers/Kelley...
      - nawgz 6y ago
        > most short positions are actually held by retail investors This is the claim you sought to support. Within this very long document you have linked and handily not shortlinked or hinted at the source data, there is no conversation towards this end. Not surprising. In fact, there is, on page 39, a table looking at some statistics using their defined measures: AllShort (all short trades), InstlShort (institutional shorts), RtlShort (retail shorts). This table holds the "mean" value of these items to be: AllShort: 26.219% of volume InstlShort: 26.045% of volume RtlShort: 0.127% of volume You have just shown the very opposite of what you claim amidst these extended length diatribes purporting that RobinHood and others are acting legally and in good faith all while acting as if you are very knowledgeable about the entire domain. Sickening. Shill.
- UncleMeat 6y ago
  > You are a shill and I have reported you. This is surely against the HN community guidelines. "Please don't post insinuations about astroturfing, shilling, brigading, foreign agents and the like. It degrades discussion and is usually mistaken. If you're worried about abuse, email hn@ycombinator.com and we'll look at the data."
  - nawgz 6y ago
    Surely, posting unsourced FUD is too? > most short positions are actually held by retail investors That is an unsourced lie, told at a time to cause maximum confusion about what is happening in a situation where large financial entities are colluding to mitigate a situation wherein large amounts of capital are at risk. These illogical comments are, via Occam's razor, literally most easily explained by astroturfing.
    - silexia 6y ago
      I am not a shill, I am a real person and here is my blog. https://joelx.com/ https://joelx.com/
- JumpCrisscross 6y ago
  > Why would you lead with this "most short positions are actually held by retail investors" quote OP mis-spoke. Most institutional investors do not short sell [1]. But the ones that do short in greater volumes than retail [2]. [1] https://scholarship.law.ufl.edu/cgi/viewcontent.cgi?article=1980&=&context=facultypub&=&sei-redir=1&referer=https%253A%252F%252Fscholar.google.com%252Fscholar%253Fhl%253Den%2526as_sdt%253D0%25252C33%2526q%253Dshort%252Bsellers%252Bindividual%252Binvestors%2526btnG%253D#search=%22short%20sellers%20individual%20investors%22 https://scholarship.law.ufl.edu/cgi/viewcontent.cgi?article=... [2] https://www0.gsb.columbia.edu/mygsb/faculty/research/pubfiles/6123/Kelley%20Tetlock%20-%20Nov%202013%20-%20Retail%20Short%20Selling%20and%20Stock%20Prices.pdf https://www0.gsb.columbia.edu/mygsb/faculty/research/pubfile...
  - nawgz 6y ago
    Right, OP mis-spoke about some critical, leading detail of their argument, while going on to support questionably legal action giving off a great appearance of market manipulation by large entities with great vigor. I think this supports my point. This user is spreading misinformation and arguing against a point their past blogging and commentary would not suggest them to be an expert about nor impassioned by.
horsawlarway 6y ago
But trading wasn't stopped. Avenues for non-professional investors to continue buying shares were cut off. They were still allowed to sell shares as desired. I don't really have an opinion on whether the GME thing is a pump and dump scam, or a real opportunity to enforce a classic "The market can remain irrational longer than you can remain solvent" lesson to those shorting these stocks. But I do have a real issue with removing just the "buy" side of the equation. Price is always a function of supply and demand, and I don't understand how anyone could justify halting just buy orders. The obvious impact of artificially reduced demand is that the price will drop. Further - if this price drop was designed to protect these firms from possible losses (and I don't really care whether that loss was by allowing unvetted shorts by investors who don't have the capital to cover, or whether it was collusion to protect other parties) then I still don't see how you can reasonably come to a conclusion that looks good for these firms here - They're manipulating stock prices to avoid losses.
- silexia 6y ago
  Short squeezes are illegal according to the SEC. WSB shows many people clearly collaborating to create a short squeeze, example - https://www.reddit.com/r/wallstreetbets/comments/l594yg/gme_short_interest_remains_at_139_bloomberg_the/ https://www.reddit.com/r/wallstreetbets/comments/l594yg/gme_.... Robinhood would have legal liability for aiding and abetting an illegal short squeeze had they continued.
  - horsawlarway 6y ago
    Short squeezes are absolutely not illegal - They're a natural property of how the investment vehicle operates when the price of shares spikes. The illegal part is a scheme to collude and manipulate the availability or price of the stock to intentionally cause a short squeeze. I'm not entirely sure I agree with you that posts like that are "collusion" (Cornell def here is interesting as a refresher - https://www.law.cornell.edu/wex/collusion https://www.law.cornell.edu/wex/collusion), but I can certainly concede there's plenty of shades of gray here.

ScoutOrgo 6y ago

FUD, the ability to buy a stock is not an option that exposes the broker.

silexia 6y ago
Short squeezes are illegal, and Robinhood continuing to allow blatant short squeeze activity could be construed to be aiding and abetting it, giving it huge legal liability. Hence, the shutdown of trading.

nawgz 6y ago

There are a lot of disingenuous comments designed to obfuscate the situation and this is unquestionably one of them. Why would you lead with this "most short positions are actually held by retail investors" quote, exactly? What does this have to do with RobinHood restricting the ability to Buy - yes, just purchase normally with no leverage - the GME stock? You are a shill and I have reported you.

silexia 6y ago
Lol look at my history and profile. I know lots of people are upset over losing money here, but that does not make me a shill or a bad person or even incorrect.
- nawgz 6y ago
  Ok, then source this quote please: > most short positions are actually held by retail investors Shilling doesn't mean you haven't used this account before.
  - silexia 6y ago
    Once again, I am a real person. Here is an research article going in depth on retail short selling. https://www0.gsb.columbia.edu/faculty/ptetlock/papers/Kelley_Tetlock_May16_Retail_Short_Selling_and_Stock_Prices.pdf https://www0.gsb.columbia.edu/faculty/ptetlock/papers/Kelley...
    - nawgz 6y ago
      > most short positions are actually held by retail investors This is the claim you sought to support. Within this very long document you have linked and handily not shortlinked or hinted at the source data, there is no conversation towards this end. Not surprising. In fact, there is, on page 39, a table looking at some statistics using their defined measures: AllShort (all short trades), InstlShort (institutional shorts), RtlShort (retail shorts). This table holds the "mean" value of these items to be: AllShort: 26.219% of volume InstlShort: 26.045% of volume RtlShort: 0.127% of volume You have just shown the very opposite of what you claim amidst these extended length diatribes purporting that RobinHood and others are acting legally and in good faith all while acting as if you are very knowledgeable about the entire domain. Sickening. Shill.
UncleMeat 6y ago
> You are a shill and I have reported you. This is surely against the HN community guidelines. "Please don't post insinuations about astroturfing, shilling, brigading, foreign agents and the like. It degrades discussion and is usually mistaken. If you're worried about abuse, email hn@ycombinator.com and we'll look at the data."
- nawgz 6y ago
  Surely, posting unsourced FUD is too? > most short positions are actually held by retail investors That is an unsourced lie, told at a time to cause maximum confusion about what is happening in a situation where large financial entities are colluding to mitigate a situation wherein large amounts of capital are at risk. These illogical comments are, via Occam's razor, literally most easily explained by astroturfing.
  - silexia 6y ago
    I am not a shill, I am a real person and here is my blog. https://joelx.com/ https://joelx.com/
JumpCrisscross 6y ago
> Why would you lead with this "most short positions are actually held by retail investors" quote OP mis-spoke. Most institutional investors do not short sell [1]. But the ones that do short in greater volumes than retail [2]. [1] https://scholarship.law.ufl.edu/cgi/viewcontent.cgi?article=1980&=&context=facultypub&=&sei-redir=1&referer=https%253A%252F%252Fscholar.google.com%252Fscholar%253Fhl%253Den%2526as_sdt%253D0%25252C33%2526q%253Dshort%252Bsellers%252Bindividual%252Binvestors%2526btnG%253D#search=%22short%20sellers%20individual%20investors%22 https://scholarship.law.ufl.edu/cgi/viewcontent.cgi?article=... [2] https://www0.gsb.columbia.edu/mygsb/faculty/research/pubfiles/6123/Kelley%20Tetlock%20-%20Nov%202013%20-%20Retail%20Short%20Selling%20and%20Stock%20Prices.pdf https://www0.gsb.columbia.edu/mygsb/faculty/research/pubfile...
- nawgz 6y ago
  Right, OP mis-spoke about some critical, leading detail of their argument, while going on to support questionably legal action giving off a great appearance of market manipulation by large entities with great vigor. I think this supports my point. This user is spreading misinformation and arguing against a point their past blogging and commentary would not suggest them to be an expert about nor impassioned by.

horsawlarway 6y ago

But trading wasn't stopped. Avenues for non-professional investors to continue buying shares were cut off. They were still allowed to sell shares as desired. I don't really have an opinion on whether the GME thing is a pump and dump scam, or a real opportunity to enforce a classic "The market can remain irrational longer than you can remain solvent" lesson to those shorting these stocks. But I do have a real issue with removing just the "buy" side of the equation. Price is always a function of supply and demand, and I don't understand how anyone could justify halting just buy orders. The obvious impact of artificially reduced demand is that the price will drop. Further - if this price drop was designed to protect these firms from possible losses (and I don't really care whether that loss was by allowing unvetted shorts by investors who don't have the capital to cover, or whether it was collusion to protect other parties) then I still don't see how you can reasonably come to a conclusion that looks good for these firms here - They're manipulating stock prices to avoid losses.

silexia 6y ago
Short squeezes are illegal according to the SEC. WSB shows many people clearly collaborating to create a short squeeze, example - https://www.reddit.com/r/wallstreetbets/comments/l594yg/gme_short_interest_remains_at_139_bloomberg_the/ https://www.reddit.com/r/wallstreetbets/comments/l594yg/gme_.... Robinhood would have legal liability for aiding and abetting an illegal short squeeze had they continued.
- horsawlarway 6y ago
  Short squeezes are absolutely not illegal - They're a natural property of how the investment vehicle operates when the price of shares spikes. The illegal part is a scheme to collude and manipulate the availability or price of the stock to intentionally cause a short squeeze. I'm not entirely sure I agree with you that posts like that are "collusion" (Cornell def here is interesting as a refresher - https://www.law.cornell.edu/wex/collusion https://www.law.cornell.edu/wex/collusion), but I can certainly concede there's plenty of shades of gray here.