20 ms·

I can't find any evidence that a short squeeze is illegal. (https://duckduckgo.com/?q=illegal+short+squeeze&t=ffab&ia=web https://duckduckgo.com/?q=illegal+shor

by EEMac 6y ago

I can't find any evidence that a short squeeze is illegal. (https://duckduckgo.com/?q=illegal+short+squeeze&t=ffab&ia=web https://duckduckgo.com/?q=illegal+short+squeeze&t=ffab&ia=we...) Also: If a big hedge fund shorts a stock, expecting to drive its price down, that's cool. (Search "big short drives down stock price") But if regular people buy a stock expecting to drive its price up, that's terrible. Sorry, this position just isn't credible.

simias 6y ago
Shorting in and of itself has a builtin risk/reward scenario. You're betting on the company's future performance. What's happening here is that people saw that some investors went overboard with shorting, so they started pumping the stock in order to extract money from said investors. Nobody actually cares about Gamestop's actual worth as a company, it's just a metagame effectively. Once the play is over the stock will collapse back. I don't know if it is or should be illegal but I can see why it raises some questions.
- vkou 6y ago
  > Shorting in and of itself has a builtin risk/reward scenario. You're betting on the company's future performance. No, you're betting on the stock's future performance, not the company's future performance. There's an ocean of difference between the two. If the company does poorly, but the stock price rises, or stays the same (Say, because we're in the middle of a COVID recession, and the printing presses are working overtime), you're going to lose a lot of money.
- mynameisvlad 6y ago
  > Nobody actually cares about Gamestop's actual worth as a company, it's just a metagame effectively. How do you know that everyone who bought it actually doesn't care about Gamestop's worth? There isn't really any way to prove that every single person (or even a majority of people, or really even a good portion of the people) don't care about GameStop's success and are solely doing it as a metagame.
  - unityByFreedom 6y ago
    Well there's the rub, we do need proof and that takes investigation. It's obvious what's going on but we will need to wait for whoever is conning this to leave a trail. It's just a matter of time.
    - mynameisvlad 6y ago
      What proof? I'm serious here. Sure, there's threads on WSB about this, but there's no real way to tie that to actual transactions, and not everyone who has bought stock even contributes to that subreddit, let alone the specific threads about this. Furthermore, all it really takes is someone saying "I bought stock because I believe in the company". We don't have thought police; unless someone explicitly posts "I, RH account XXX, bought the stock in a concerted effort to short it" there's no real way to prove intent.
      - unityByFreedom 6y ago
        I've no idea if any proof can be found in this case. I just know that if someone has won big off this they're likely to continue doing it until caught.

by EEMac 6y ago

simias 6y ago

Shorting in and of itself has a builtin risk/reward scenario. You're betting on the company's future performance. What's happening here is that people saw that some investors went overboard with shorting, so they started pumping the stock in order to extract money from said investors. Nobody actually cares about Gamestop's actual worth as a company, it's just a metagame effectively. Once the play is over the stock will collapse back. I don't know if it is or should be illegal but I can see why it raises some questions.

vkou 6y ago
> Shorting in and of itself has a builtin risk/reward scenario. You're betting on the company's future performance. No, you're betting on the stock's future performance, not the company's future performance. There's an ocean of difference between the two. If the company does poorly, but the stock price rises, or stays the same (Say, because we're in the middle of a COVID recession, and the printing presses are working overtime), you're going to lose a lot of money.
mynameisvlad 6y ago
> Nobody actually cares about Gamestop's actual worth as a company, it's just a metagame effectively. How do you know that everyone who bought it actually doesn't care about Gamestop's worth? There isn't really any way to prove that every single person (or even a majority of people, or really even a good portion of the people) don't care about GameStop's success and are solely doing it as a metagame.
- unityByFreedom 6y ago
  Well there's the rub, we do need proof and that takes investigation. It's obvious what's going on but we will need to wait for whoever is conning this to leave a trail. It's just a matter of time.
  - mynameisvlad 6y ago
    What proof? I'm serious here. Sure, there's threads on WSB about this, but there's no real way to tie that to actual transactions, and not everyone who has bought stock even contributes to that subreddit, let alone the specific threads about this. Furthermore, all it really takes is someone saying "I bought stock because I believe in the company". We don't have thought police; unless someone explicitly posts "I, RH account XXX, bought the stock in a concerted effort to short it" there's no real way to prove intent.
    - unityByFreedom 6y ago
      I've no idea if any proof can be found in this case. I just know that if someone has won big off this they're likely to continue doing it until caught.