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This is a financial version of the social media effect we have seen spreading misinformation and causing people to act in real life. All of the ingredients are

This is a financial version of the social media effect we have seen spreading misinformation and causing people to act in real life. All of the ingredients are there. 1) Use social media to organize motivated groups of people 2) Align the mob to a target that is inherently disliked. Hedge funds and wall street more generally. 3) Cause world wide market volatility. In this case, it's moving institutional investors out of the market, eventually causing a lack of liquidity that reveals structural problems. In other words, How many Lehman Brothers does it take to cause a 2008 type crash?

bhawks 6y ago
You lost me at 3 - how can having hidden structural problems be a desirable position to be in? Hedge funds entered a crowded trade that has unlimited downside without an exit strategy. They are not naive and although they're obviously upset I doubt they're shocked about what happened. They went in with confidence thinking they knew the 'market' (aka other hedge funds) and discounted the possibility of a short squeeze. This type of risk taking behavior must have the associated consequences, otherwise there is no reason to stop behaving this way at larger and larger scales. Moral hazard - again a finance / trading 101 concept - just like shorting can result in infinite loss.
- Threeve303 6y ago
  Investors have been known to want increased volatility because playing it right increases profit. If you can target that volatility to specific industries or companies, all the better. If a foreign adversary was using bots or social media manipulation to drive up this behavior, perhaps they could target the right companies in the market to reveal structural weakness. Similar to how the 2016 election interference happened. Though that is getting much more on the conspiratorial side.
hippich 6y ago
Re "spreading misinformation" - not sure which pieces you are specifically talking about. In case of r/WSB I doubt anyone has any illusions what it is about. It is done either for lulz or as a form of protest/activism. In a way - it is form of speech.
- Threeve303 6y ago
  If bots can hype up conspiracies to target political opponents then why not try it with something in finance? Basically, astroturf these campaigns to target specific companies in the market. You only need a small dedicated core then the herd follows. As we have seen time and again with social media manipulation.

bhawks 6y ago

You lost me at 3 - how can having hidden structural problems be a desirable position to be in? Hedge funds entered a crowded trade that has unlimited downside without an exit strategy. They are not naive and although they're obviously upset I doubt they're shocked about what happened. They went in with confidence thinking they knew the 'market' (aka other hedge funds) and discounted the possibility of a short squeeze. This type of risk taking behavior must have the associated consequences, otherwise there is no reason to stop behaving this way at larger and larger scales. Moral hazard - again a finance / trading 101 concept - just like shorting can result in infinite loss.

Threeve303 6y ago
Investors have been known to want increased volatility because playing it right increases profit. If you can target that volatility to specific industries or companies, all the better. If a foreign adversary was using bots or social media manipulation to drive up this behavior, perhaps they could target the right companies in the market to reveal structural weakness. Similar to how the 2016 election interference happened. Though that is getting much more on the conspiratorial side.

hippich 6y ago

Re "spreading misinformation" - not sure which pieces you are specifically talking about. In case of r/WSB I doubt anyone has any illusions what it is about. It is done either for lulz or as a form of protest/activism. In a way - it is form of speech.

Threeve303 6y ago
If bots can hype up conspiracies to target political opponents then why not try it with something in finance? Basically, astroturf these campaigns to target specific companies in the market. You only need a small dedicated core then the herd follows. As we have seen time and again with social media manipulation.