4 ms·

Your comment neatly summarizes everything that is incorrect about the conventional wisdom of the past couple days. People think this is somehow “taking money fr

by woah 6y ago

Your comment neatly summarizes everything that is incorrect about the conventional wisdom of the past couple days. People think this is somehow “taking money from hedge funds”. When the short squeeze happens (if it happens), do you think that the retail traders who yolo’d their savings (there are many of these) will be the ones to sell at the correct second? No. Maybe one or two hedge funds will declare bankruptcy. The rest will rake in the dough. And a large number of stupid people will find themselves poorer. Personally, I’m not for over-regulation. To some extent, people need to take personal responsibility. But conning the stupid is immoral. The many ill-informed twitterati, pseudo-intellectuals, and political grifters who have taken to cheering a transparent pump n dump will find themselves in an awkward situation in the next few weeks.

perl4ever 6y ago
Can it be transparent, a con, and manipulation all at once?
- global-citizen 6y ago
  I think you just described a real casino.
AnthonyMouse 6y ago
> People think this is somehow “taking money from hedge funds”. The hedge funds used to have money that plausibly soon they won't. It is taking money from hedge funds. > do you think that the retail traders who yolo’d their savings (there are many of these) will be the ones to sell at the correct second? Or any point before that second but after the price has increased above what they paid? Quite a number of them I would expect. Also, it's possible to use limit orders, so that if a short squeeze happens and causes the price to go up above the limit, the person's shares are automatically sold. Or it could all go wrong in several different ways. It isn't a low risk activity. But if the risks are out in the open, where's the scam?
ashtonkem 6y ago
Never mind the fact that per Matt Levine, chances are that hedge funds are opening new short positions. If you're well capitalized you can make a killing when the price eventually crashes back down to the right price, which we all know it will.
- henrikschroder 6y ago
  “The markets can remain irrational longer than you can remain solvent.” Looking at WSB today, a lot of people and comments are clearly market-irrational, because they're smelling blood. They're not buying the stock based on the fundamentals, they're buying the stock in the hope of bankrupting any fund that is trying to short sell the stock. For revenge. For shits and giggles. A friend of mine posted some statistics from a Swedish broker who reported that over 15000 people had bought shares in GME in the past two days. That's just one broker in one small country. Suddenly, that 50 million share float doesn't look very big. It's definitely small enough that what is essentially a global flashmob of angry people can completely disrupt the share. I think if you're shorting the stock right now, thinking it "has to" crash back down, you're severely underestimating the size and irrationality of this mob.
  - Silhouette 6y ago
    A pump and dump is like a pyramid scheme. Some people, mostly those who get in and out early, will make money. The other people involved will lose money. The circumstances at the moment are strange, for sure, but the end result seems all but certain to be the same: the patsies mostly end up giving their money to someone else. It just happens that this time, it's a different group of market manipulators, who may or may not be acting legally and so may or may not get to keep that money anyway. If nothing else, this incident has shown that maverick investment could be dangerous to our financial systems. These stocks do not exist in a vacuum and the people playing games with them are not operating independent of the rest of the markets. Their actions could hurt a lot of innocent people as well -- ordinary people who just have their savings and pensions invested in the market in normal, responsible ways -- at least in the short term. If the same strategy continues, it must be a matter of weeks, if not days or hours, before governments begin heavy-handed regulatory interventions and even new legal restrictions, assuming that hasn't already started behind the scenes and isn't responsible for the interventions in buying certain stocks that have already happened.

by woah 6y ago

perl4ever 6y ago

Can it be transparent, a con, and manipulation all at once?

global-citizen 6y ago
I think you just described a real casino.

AnthonyMouse 6y ago

> People think this is somehow “taking money from hedge funds”. The hedge funds used to have money that plausibly soon they won't. It is taking money from hedge funds. > do you think that the retail traders who yolo’d their savings (there are many of these) will be the ones to sell at the correct second? Or any point before that second but after the price has increased above what they paid? Quite a number of them I would expect. Also, it's possible to use limit orders, so that if a short squeeze happens and causes the price to go up above the limit, the person's shares are automatically sold. Or it could all go wrong in several different ways. It isn't a low risk activity. But if the risks are out in the open, where's the scam?

ashtonkem 6y ago

Never mind the fact that per Matt Levine, chances are that hedge funds are opening new short positions. If you're well capitalized you can make a killing when the price eventually crashes back down to the right price, which we all know it will.

henrikschroder 6y ago
“The markets can remain irrational longer than you can remain solvent.” Looking at WSB today, a lot of people and comments are clearly market-irrational, because they're smelling blood. They're not buying the stock based on the fundamentals, they're buying the stock in the hope of bankrupting any fund that is trying to short sell the stock. For revenge. For shits and giggles. A friend of mine posted some statistics from a Swedish broker who reported that over 15000 people had bought shares in GME in the past two days. That's just one broker in one small country. Suddenly, that 50 million share float doesn't look very big. It's definitely small enough that what is essentially a global flashmob of angry people can completely disrupt the share. I think if you're shorting the stock right now, thinking it "has to" crash back down, you're severely underestimating the size and irrationality of this mob.
- Silhouette 6y ago
  A pump and dump is like a pyramid scheme. Some people, mostly those who get in and out early, will make money. The other people involved will lose money. The circumstances at the moment are strange, for sure, but the end result seems all but certain to be the same: the patsies mostly end up giving their money to someone else. It just happens that this time, it's a different group of market manipulators, who may or may not be acting legally and so may or may not get to keep that money anyway. If nothing else, this incident has shown that maverick investment could be dangerous to our financial systems. These stocks do not exist in a vacuum and the people playing games with them are not operating independent of the rest of the markets. Their actions could hurt a lot of innocent people as well -- ordinary people who just have their savings and pensions invested in the market in normal, responsible ways -- at least in the short term. If the same strategy continues, it must be a matter of weeks, if not days or hours, before governments begin heavy-handed regulatory interventions and even new legal restrictions, assuming that hasn't already started behind the scenes and isn't responsible for the interventions in buying certain stocks that have already happened.