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Everything on WSB states this is a bad investment plan and is more to bankrupt Melvin because they tried to bankrupt Gamestop. Short sellers have been using the

Everything on WSB states this is a bad investment plan and is more to bankrupt Melvin because they tried to bankrupt Gamestop. Short sellers have been using the down turned economy to collapse struggling companies that hire everyday people. What's funny is how the HN community tries to defend the firms they've whined about for years. Is what's going on irrational? Yup. But it pulls back the curtain of what the financial firms do to the economy and their own manipulation tactics.

sanderjd 6y ago
Here's what oh-so-many people are missing: the gigantic volume in these stocks is no longer coming from the WSB YOLO bros who know they'll lose money but think that's worth it to stick it to hedge funds. That may well be who was getting into the stock on Monday and Tuesday. But now it is people who saw the story on Good Morning America, having never previously heard of WSB or Robinhood, who don't care about hedge funds or any of that, but just got the impression from the news that hey this stock is going way up and that must mean it is a way to make a quick buck. And those are the people who are actually going to get screwed, not the hedge fund managers, who will be just fine.
- NoOneNew 6y ago
  So it's WSB fault that the news outlets spun the narrative to confuse people? Sorry, but hasn't the news spinning and generally misconstruing news stories to the benefit of their advertisers and financiers agendas been the issue the past few years?
  - chrisdhoover 6y ago
    The news has a long history of prevaricating. “Remember the Maine.” It is only recently that folks are waking up to what Chomsky spent a lifetime explaining. The awakening is accelerating. Assange and Snowden, the naked media lying in the 2020 election, and now Wall Street manipulation is being exposed. We never had a reckoning after 2008. If this becomes an infinite runaway squeeze. Who will get bailed out?
  - sanderjd 6y ago
    What about my comment seems to say that it is WSB's fault? I didn't comment on whose fault it is and I don't care, I just think pretty much everyone is acting like the only two parties involved are WSB memers and hedge funds. And maybe that was true for awhile. But it isn't now, there are lots of unsophisticated people who have bought into the frenzy and in a few months all the stories will be about how those people got screwed. Meanwhile, both the WSB folks and the hedge funds will be doing just fine.
    - khawkins 6y ago
      Nobody cares about the people who are "unsophistocated people who have bought into the frenzy", especially if they get screwed. Further, they shouldn't care about them because anyone who doesn't understand what's going on deserves to get whatever happens to them. Stock trading is high risk, high reward, and that should be clear to everyone. The problem is that hedge funds constantly benefit from a much lower risk due to market structures designed to stabilize the market. Many of the WSB people are willing to risk a big large loss in order to reveal this flaw of the system. Many of them will not be fine, and, if they're successful, some hedge funds will be bankrupt and all of them will be scared moving forward.
      - sanderjd 6y ago
        > Nobody cares about the people who are "unsophistocated people who have bought into the frenzy", especially if they get screwed. This is in fact exactly who most people care about, in this situation. It may not be who the extremely-online people that this board is mostly comprised of care about, but they are not most people. > Further, they shouldn't care about them because anyone who doesn't understand what's going on deserves to get whatever happens to them. This is directly at odds with how markets are regulated, because there is a long history of this thinking leading to widespread scams and cons.
  - UncleMeat 6y ago
    What narrative? I've seen every possible article on the topic in the last two days. Every single narrative exists. Brilliant retail investors. David and Goliath. Idiotic YOLOing. Claims that Robinhood, etc are in cahoots to sabotage people. Claims that this isn't about the money and actually it is about screwing the rich. The squeeze is illegal/legal. The trading halts are illegal/legal. There is clearly no coordinated agenda among news agencies here. It is a compelling story and a bunch of people wrote their hot takes on the topic.
- whatshisface 6y ago
  That's quite plausible, but where could we look to see if that was true?
  - lyjackal 6y ago
    One point of evidence is the massive influx of members to /r/wallstreetbets
  - sanderjd 6y ago
    The volume in the stock since this became the big news on Wednesday, and the performance of the Robinhood app in app stores.
- dzmien 6y ago
  When you discover something like this on a nationally syndicated talk show, it is probably too late for you to get in on the action.
  - sanderjd 6y ago
    Yes exactly, but many people who discover things like this in mainstream media don't know that.
- snarf21 6y ago
  And what about all the people who watch MSNBC and CNBC and Cramer, do they need to stop pushing stops as good or bad too? They tell lots of people "who don't care about hedge funds or any of that, but just got the impression from the news that hey this stock is going way up and that must mean it is a way to make a quick buck" too. None of this could have happened if they weren't shorting GME at 143%+ of float. They were greedy, this is the consequence. In 2006-2008, they ALL were greedy and so the government had to bail them out. No lessons were learned. If the SEC wants to do something, remove these instruments that allow infinite leverage and collapses.
  - shakezula 6y ago
    They were greedy, they over leveraged their positions, and when the market called them out on it exactly like it’s supposed to, they just turned the market off. Im almost surprised someone hasn’t been arrested for that move yet.
  - fairity 6y ago
    Greed is really only a problem when your actions ultimately hurt someone else. In general, shorting stocks is a beneficial action because it helps prevent shares from becoming overvalued. So, yea, the fact that GME had 143% of its shares shorted is a function of greed. But, no, greed in this case was not a problem so long as GME's share price was fairly valued.
    - InvertedRhodium 6y ago
      Is "fair value" an objective metric in this context?
      - fairity 6y ago
        Yea, it's objective in the sense that it's the net present value of all future cash flow. Many unknowns in that formula, of course.
  - pas 6y ago
    You're mushing together two separate issues. Shorting GME at 100+ is not in itself a problem. (There's an argument that it dilutes the stock, makes it harder for the underlying company to turn around, because market sentiment is already against them, see investment reflexivity theory, etc.) There's a problem with bailing out big companies again and again. While not bailing out small investors (directly). The other problem is that there's no real defense against CNBC/Twitter amplified end-user stupidity: https://www.youtube.com/watch?v=lMUtU0tOmNE https://www.youtube.com/watch?v=lMUtU0tOmNE Every stock trading app/site/service requires submitting tons of "risk declaration" forms. (Sure, all of it is next next finish. It's the EULA/TOS all again, but with money.) And that's the problem.
- allenu 6y ago
  I know people at work joining Slack conversations about this and asking how to set up an account and how to buy the stock, while fully admitting they don't know anything about stock and have never bought any before. From their comments, it seems like they just want to throw their money at this since it seems like a good bet.
  - sanderjd 6y ago
    Yep, of course that's what is happening. There is a story all over the news that reads to most people as exactly this: "this stock is going up and making everyone rich, you are missing out".
- einpoklum 6y ago
  > But now it is people who saw the story on Good Morning America Most of those people don't own stock and don't know how to buy stock. And I would guess most of them tune out stories about stocks going up or down like they tune out commercial breaks or the business segment of news shows.
  - sanderjd 6y ago
    They don't know how to buy stock until they see the mainstream news say "download this app called Robinhood in order to buy this stock that will make you rich", which is why Robinhood rocketed to the top of the app store charts this week. Most people do not tune out stories of the form "do this simple thing to get rich". It's the same reason endless coverage of the lottery gets good ratings. Your mental model of how stock bubbles work is not accurate.
vegesm 6y ago
Why would shorting Gamestop mean making it to go bankrupt? The falling stock price of a company doesn't cause a company to go bankrupt, the causality is in the other direction. Putting downward pressure on price is useful only if you want to do a hostile takeover.
- NoOneNew 6y ago
  Hi, let me google "how short sellers hurt companies" for you. First link of one practice: short and distort https://www.investopedia.com/articles/analyst/030102.asp https://www.investopedia.com/articles/analyst/030102.asp You can google more yourself.
  - vegesm 6y ago
    which is all illegal and there is no indication that was happening with Gamestop
    - orestarod 6y ago
      Well your average Joe buying stocks with his hard earned money and then doing whatever he wants with them is not illegal too, but that's being debated by the parties with the appropriate interests.
  - hinkley 6y ago
    I believe I learned the term Short Squeeze while holding Maxwell (MXWL) shares. I sold that position years before Tesla bought them, but one thing I recall is that there were a few people on the message boards that were pointing out how silly-high the short interest was, and that was, IIRC, in the 30% of float range. As we all know, MXWL wasn't bankrupted, but neither did they thrive on their own. GME also has 4 times the short interest that those people were talking about. It also lacks a trove of patents that are worth something even in a fire sale. In fact the only thing they really have, IMO, is ThinkGeek, and the last time I looked they had fucked that up by merging its catalog into their own hamfisted storefront. Honestly, given the current generation of consoles, I think they may be better off rebranding as ThinkGeek and having a Gamestop section at each store. We'll see if the new guy has any ideas like that.
mike00632 6y ago
According to the best evidence, Melvin has no short position (they may even actually be long now). So the entire WSB narrative is a lie being used to pump up the stock. The subtleties matter here.
shakezula 6y ago
I think what really turned up the anger level on this specific instance is that they just turned the market off when it didn’t go their way. That’s just such a colossal breach of trust.
nuusr120121 6y ago
I noticed this recent trend of stuff turning annoying political in that sub. There is so much trash being posted now drowning out useful DD. I think at the end of the day, the original WSB crowd cares way less about political statements and solely making money.
- orestarod 6y ago
  Correct me if my understanding is wrong, but more than a political statement, this seems to be indeed a way to make the most money possible. Political tones are a satisfying sprinkle for many, but what everyone understands there is the more they hold, the higher the value gets. We will be able to judge by the result shortly.
einpoklum 6y ago
> What's funny is how the HN community tries to defend the firms they've whined about for years. Aren't you over-generalizing just slightly? Even in a post with many comments, only a small number of community members (if this is a community at all) post anything. And not a huge number vote, either.

sanderjd 6y ago

Here's what oh-so-many people are missing: the gigantic volume in these stocks is no longer coming from the WSB YOLO bros who know they'll lose money but think that's worth it to stick it to hedge funds. That may well be who was getting into the stock on Monday and Tuesday. But now it is people who saw the story on Good Morning America, having never previously heard of WSB or Robinhood, who don't care about hedge funds or any of that, but just got the impression from the news that hey this stock is going way up and that must mean it is a way to make a quick buck. And those are the people who are actually going to get screwed, not the hedge fund managers, who will be just fine.

NoOneNew 6y ago
So it's WSB fault that the news outlets spun the narrative to confuse people? Sorry, but hasn't the news spinning and generally misconstruing news stories to the benefit of their advertisers and financiers agendas been the issue the past few years?
- chrisdhoover 6y ago
  The news has a long history of prevaricating. “Remember the Maine.” It is only recently that folks are waking up to what Chomsky spent a lifetime explaining. The awakening is accelerating. Assange and Snowden, the naked media lying in the 2020 election, and now Wall Street manipulation is being exposed. We never had a reckoning after 2008. If this becomes an infinite runaway squeeze. Who will get bailed out?
- sanderjd 6y ago
  What about my comment seems to say that it is WSB's fault? I didn't comment on whose fault it is and I don't care, I just think pretty much everyone is acting like the only two parties involved are WSB memers and hedge funds. And maybe that was true for awhile. But it isn't now, there are lots of unsophisticated people who have bought into the frenzy and in a few months all the stories will be about how those people got screwed. Meanwhile, both the WSB folks and the hedge funds will be doing just fine.
  - khawkins 6y ago
    Nobody cares about the people who are "unsophistocated people who have bought into the frenzy", especially if they get screwed. Further, they shouldn't care about them because anyone who doesn't understand what's going on deserves to get whatever happens to them. Stock trading is high risk, high reward, and that should be clear to everyone. The problem is that hedge funds constantly benefit from a much lower risk due to market structures designed to stabilize the market. Many of the WSB people are willing to risk a big large loss in order to reveal this flaw of the system. Many of them will not be fine, and, if they're successful, some hedge funds will be bankrupt and all of them will be scared moving forward.
    - sanderjd 6y ago
      > Nobody cares about the people who are "unsophistocated people who have bought into the frenzy", especially if they get screwed. This is in fact exactly who most people care about, in this situation. It may not be who the extremely-online people that this board is mostly comprised of care about, but they are not most people. > Further, they shouldn't care about them because anyone who doesn't understand what's going on deserves to get whatever happens to them. This is directly at odds with how markets are regulated, because there is a long history of this thinking leading to widespread scams and cons.
- UncleMeat 6y ago
  What narrative? I've seen every possible article on the topic in the last two days. Every single narrative exists. Brilliant retail investors. David and Goliath. Idiotic YOLOing. Claims that Robinhood, etc are in cahoots to sabotage people. Claims that this isn't about the money and actually it is about screwing the rich. The squeeze is illegal/legal. The trading halts are illegal/legal. There is clearly no coordinated agenda among news agencies here. It is a compelling story and a bunch of people wrote their hot takes on the topic.
whatshisface 6y ago
That's quite plausible, but where could we look to see if that was true?
- lyjackal 6y ago
  One point of evidence is the massive influx of members to /r/wallstreetbets
- sanderjd 6y ago
  The volume in the stock since this became the big news on Wednesday, and the performance of the Robinhood app in app stores.
dzmien 6y ago
When you discover something like this on a nationally syndicated talk show, it is probably too late for you to get in on the action.
- sanderjd 6y ago
  Yes exactly, but many people who discover things like this in mainstream media don't know that.
snarf21 6y ago
And what about all the people who watch MSNBC and CNBC and Cramer, do they need to stop pushing stops as good or bad too? They tell lots of people "who don't care about hedge funds or any of that, but just got the impression from the news that hey this stock is going way up and that must mean it is a way to make a quick buck" too. None of this could have happened if they weren't shorting GME at 143%+ of float. They were greedy, this is the consequence. In 2006-2008, they ALL were greedy and so the government had to bail them out. No lessons were learned. If the SEC wants to do something, remove these instruments that allow infinite leverage and collapses.
- shakezula 6y ago
  They were greedy, they over leveraged their positions, and when the market called them out on it exactly like it’s supposed to, they just turned the market off. Im almost surprised someone hasn’t been arrested for that move yet.
- fairity 6y ago
  Greed is really only a problem when your actions ultimately hurt someone else. In general, shorting stocks is a beneficial action because it helps prevent shares from becoming overvalued. So, yea, the fact that GME had 143% of its shares shorted is a function of greed. But, no, greed in this case was not a problem so long as GME's share price was fairly valued.
  - InvertedRhodium 6y ago
    Is "fair value" an objective metric in this context?
    - fairity 6y ago
      Yea, it's objective in the sense that it's the net present value of all future cash flow. Many unknowns in that formula, of course.
- pas 6y ago
  You're mushing together two separate issues. Shorting GME at 100+ is not in itself a problem. (There's an argument that it dilutes the stock, makes it harder for the underlying company to turn around, because market sentiment is already against them, see investment reflexivity theory, etc.) There's a problem with bailing out big companies again and again. While not bailing out small investors (directly). The other problem is that there's no real defense against CNBC/Twitter amplified end-user stupidity: https://www.youtube.com/watch?v=lMUtU0tOmNE https://www.youtube.com/watch?v=lMUtU0tOmNE Every stock trading app/site/service requires submitting tons of "risk declaration" forms. (Sure, all of it is next next finish. It's the EULA/TOS all again, but with money.) And that's the problem.
allenu 6y ago
I know people at work joining Slack conversations about this and asking how to set up an account and how to buy the stock, while fully admitting they don't know anything about stock and have never bought any before. From their comments, it seems like they just want to throw their money at this since it seems like a good bet.
- sanderjd 6y ago
  Yep, of course that's what is happening. There is a story all over the news that reads to most people as exactly this: "this stock is going up and making everyone rich, you are missing out".
einpoklum 6y ago
> But now it is people who saw the story on Good Morning America Most of those people don't own stock and don't know how to buy stock. And I would guess most of them tune out stories about stocks going up or down like they tune out commercial breaks or the business segment of news shows.
- sanderjd 6y ago
  They don't know how to buy stock until they see the mainstream news say "download this app called Robinhood in order to buy this stock that will make you rich", which is why Robinhood rocketed to the top of the app store charts this week. Most people do not tune out stories of the form "do this simple thing to get rich". It's the same reason endless coverage of the lottery gets good ratings. Your mental model of how stock bubbles work is not accurate.

vegesm 6y ago

Why would shorting Gamestop mean making it to go bankrupt? The falling stock price of a company doesn't cause a company to go bankrupt, the causality is in the other direction. Putting downward pressure on price is useful only if you want to do a hostile takeover.

NoOneNew 6y ago
Hi, let me google "how short sellers hurt companies" for you. First link of one practice: short and distort https://www.investopedia.com/articles/analyst/030102.asp https://www.investopedia.com/articles/analyst/030102.asp You can google more yourself.
- vegesm 6y ago
  which is all illegal and there is no indication that was happening with Gamestop
  - orestarod 6y ago
    Well your average Joe buying stocks with his hard earned money and then doing whatever he wants with them is not illegal too, but that's being debated by the parties with the appropriate interests.
- hinkley 6y ago
  I believe I learned the term Short Squeeze while holding Maxwell (MXWL) shares. I sold that position years before Tesla bought them, but one thing I recall is that there were a few people on the message boards that were pointing out how silly-high the short interest was, and that was, IIRC, in the 30% of float range. As we all know, MXWL wasn't bankrupted, but neither did they thrive on their own. GME also has 4 times the short interest that those people were talking about. It also lacks a trove of patents that are worth something even in a fire sale. In fact the only thing they really have, IMO, is ThinkGeek, and the last time I looked they had fucked that up by merging its catalog into their own hamfisted storefront. Honestly, given the current generation of consoles, I think they may be better off rebranding as ThinkGeek and having a Gamestop section at each store. We'll see if the new guy has any ideas like that.

mike00632 6y ago

According to the best evidence, Melvin has no short position (they may even actually be long now). So the entire WSB narrative is a lie being used to pump up the stock. The subtleties matter here.

shakezula 6y ago

I think what really turned up the anger level on this specific instance is that they just turned the market off when it didn’t go their way. That’s just such a colossal breach of trust.

nuusr120121 6y ago

I noticed this recent trend of stuff turning annoying political in that sub. There is so much trash being posted now drowning out useful DD. I think at the end of the day, the original WSB crowd cares way less about political statements and solely making money.

orestarod 6y ago
Correct me if my understanding is wrong, but more than a political statement, this seems to be indeed a way to make the most money possible. Political tones are a satisfying sprinkle for many, but what everyone understands there is the more they hold, the higher the value gets. We will be able to judge by the result shortly.

einpoklum 6y ago

> What's funny is how the HN community tries to defend the firms they've whined about for years. Aren't you over-generalizing just slightly? Even in a post with many comments, only a small number of community members (if this is a community at all) post anything. And not a huge number vote, either.