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I'm honestly confused by the press around this event. I get it, /DFV started a short squeeze and got rich, that is great for him. I don't support naked shortin

I'm honestly confused by the press around this event. I get it, /DFV started a short squeeze and got rich, that is great for him. I don't support naked shorting, it should probably be illegal (if it is not already) and it looks that was part of the reason this happened. Everyone has been suspecting for a while (especially here) that a lot of volatility in stocks like TSLA etc was due to Robinhood. As of 5:33 EST, I'm on CNN right now and the main headline "Inside the Reddit army that's crushing Wall Street" (And the reddit army isnt crushing Wall Street, it's crushing a few hedge funds that happened to hold short positions in a few stocks. ) , so now a lot portion of America (and the world) is paying attention. Hedge funds blow up all the time. Enron blew up, basically all of the Investment Banks blew up in 2008, LTCM blew up. Why is this such a big deal?

MuffinFlavored 6y ago
> I'm honestly confused by the press around this event. A lot of people wish they struck it rich, just like him. Money (to some degree) buys happiness. Gets you out of a job you don't like. Gets you more time with your family, less time doing stuff you don't like (like working). If the poor can "eat the rich" and "catch them with their shorts down" in a stock trade that literally millions of others are pouring into (check how many subscribers r/wsb has gained past 7 days), it's literal herd mentality.
- misiti3780 6y ago
  ya sure, i get it .... but he took a bet and won, He could have easily lost everything. For every winner in the options game there are probably 99 losers. It's call survivorship bias.
  - afterburner 6y ago
    He could have lost 50k, his initial investment, and considering he's young, and has a house, this would not represent ruin for him.
    - notahacker 6y ago
      Sure. He was smart, understood investment and had 50k to spare. And at least a bit lucky. This does not apply to most people who want to be him. Much as the narrative that this is the little guys 'crushing Wall St' sells more clicks than a lot of betting going on with plenty of Wall St winners and plenty more little guy losers, mainstream media really ought to know better. (That said, I think this particular profile is a lot more illuminating than a lot of the rubbish being written)
    - baby-yoda 6y ago
      > and has a house he rents [0] [0] - https://www.wsj.com/articles/keith-gill-drove-the-gamestop-reddit-mania-he-talked-to-the-journal-11611931696?mod=e2tw https://www.wsj.com/articles/keith-gill-drove-the-gamestop-r...
  - arcticfox 6y ago
    > For every winner in the options game there are probably 99 losers. It's call survivorship bias. Sure, if people are taking aggressive positions. I'm not sure his initial YOLO was that insane, it had a fair chance of being OK. (In this unique case, the massive naked short position turned out to be the insane play.) But it's approximately a zero-sum game, so it's not irrational in general to be betting on options.
deleted 6y ago
[deleted]
sumedh 6y ago
> it's crushing a few hedge funds To be fair Robinhood also had to get extra funding to cover its liquidity issues. IB CEO also said they had to stop GME buying or else it might take down the system.
kzrdude 6y ago
But he didn't start a short squeeze, he invested in it before thinking it would be a short squeeze.
afterburner 6y ago
> Everyone has been suspecting for a while (especially here) that a lot of volatility in stocks like TSLA etc was due to Robinhood. You sure about that? TSLA has a market cap of 750b. GME, now, is at 20b. Before this insanity it was a fraction of that.
semi-extrinsic 6y ago
I've also seen some speculation that Citadel may have been intentionally amplifying the short squeeze caused by Redditors, and then getting a sweet deal with Melvin capital by injecting money the latter sorely needed in exchange for a share of future revenue. I don't understand exactly how the math works out there to be able to evaluate if it was an extra good deal or not, but I find it credible that institutional investors jumping on the Reddit hype would be necessary in ordet to sustain the kind of momentum we are seeing. Edit - or as people on Twitter put it: any story that doesn't say how, past the retail ignition, the rocket ship was mostly intra-fast money warfare, simply isn't telling the truth https://twitter.com/zatapatique/status/1354904995901136896?s=19 https://twitter.com/zatapatique/status/1354904995901136896?s...
- deleted 6y ago
  [deleted]
misiti3780 6y ago
If you are downvoting me, please say why.
cma 6y ago
Wasn't LTCM blowing up a pretty big deal?
- misiti3780 6y ago
  yes, but there were nobel laureates involved.
avereveard 6y ago
> Why is this such a big deal? Speculation is that it's not your "average" hedge fund bust, but that brokers accepted too much shorts/options without securing shares and some of them might go out as well trying to find shares to cover calls
stcredzero 6y ago
Robinhood investors, collectively account for something like 10% of the money thrown at TSLA. The reason why TSLA surged after S&P inclusion is because the "smart money" (huge benchmarked funds) was waiting to buy TSLA in a post S&P dip, but were caught out. Now, the really smart money is buying equal weight into TSLA on this dip!
myownpetard 6y ago
It's a compelling story with multiple, interesting and intertwining narratives. - An unprecedented and uncoordinated but sophisticated financial engineering play driven by an internet community. - There is a loose analogy to the terrorist attack on the Capitol, an internet community organizing to destroy existing institutions. - The ongoing class warfare that was highlighted by Occupy Wallstreet, 2008 crash and bailout. - The frustration with the completely disjoint experience of the pandemic that the average American has had in contrast to the record highs of the stock market. - America loves an underdog story. It has something for everyone. But if you ignore all other context of the story and have tunnel vision on just /DFV gains then it's less interesting I guess.
- runawaybottle 6y ago
  Plus the story had somehow intertwined all these big named hedge funds, Melvin, Citadel, with real losses in the Billions (capital B), all being covered by every major news outlet and commented on by major politicians and celebrities. Life is strange. It’s a Cinderella story if you look at it from the pure narrative perspective. If anyone ever makes a documentary/movie about it, it should be a dark comedy - money is just depressingly funny. The things we justify and do for it.
  - myownpetard 6y ago
    I watched Congresswoman Ocasio-Cortez's Twitch stream last night. She had on Alexis Ohanian, Alexis Goldstein, and TheStockGuy as guests to discuss the event and the current political/economic environment. Amazing to see this new model for the 'fireside chat' unfolding in real time. Personally I'm looking forward to reading the Michael Lewis book.
heimatau 6y ago
> it's crushing a few hedge funds that happened to hold short positions in a few stocks You haven't noticed that the big three indexes are DOWN ~2% today? They were down 2% when this first took off. [If you want to split hairs...go for it but...the correlation is very strong, news cycles are soaking it up and the White House talks about monitoring the situation. This is not a light matter] This is bigger than just a few firms. The added limitations to buying various stocks. The heavy-handed nature is making it clear, let alone the media frenzy. WSB broke their models which in turn is crippling the 'economy'. If you don't think so, please, advocate for the free citizens to buy as much as they want because the hype isn't subsiding, it's only growing.
- harryh 6y ago
  Yes indeed. The stock market has dropped to levels not seen since...early January. The economy is truly crippled!
  - heimatau 6y ago
    > The economy is truly crippled! Great, I love the sarcasm! Can you please help push RH and other brokers to allow the unbridled buying of the current stocks being restricted? Then we can really put the theories to the test.
renewiltord 6y ago
> Enron blew up, basically all of the Investment Banks blew up in 2008, LTCM blew up. Right, and each of those events is news that you can identify it by saying Enron, or 2008, or LTCM. It isn't just about DFV. It's about all the other little guys who have made hundreds of thousands or millions on this.
paulddraper 6y ago
> Why is this such a big deal? You don't see it? You don't see any reason why this is a big deal? When was the last time brokers shut down one direction of trading on stocks? --- EDIT: FWIW, you can't shut down one direction of trading, there's a buy for every sell, but you can skew who get to do the buy and the sell.
- misiti3780 6y ago
  2008. https://www.sec.gov/news/press/2008/2008-211.htm#:~:text=Washington%2C%20D.C.%2C%20Sept.,market%20and%20strengthen%20investor%20confidence https://www.sec.gov/news/press/2008/2008-211.htm#:~:text=Was....
  - paulddraper 6y ago
    1. That was the SEC, not brokers. 2. People could still buy and sell. 3. I'd classify 2008 as a big deal as well.
ffggvv 6y ago
there was no naked shorting and it is illegal. and its because the media likes the narrative and people are running with it. david vs goliath etc. ignoring there are goliaths who were long on gamestop and pensioners who had their money in the hedge fund.

MuffinFlavored 6y ago

> I'm honestly confused by the press around this event. A lot of people wish they struck it rich, just like him. Money (to some degree) buys happiness. Gets you out of a job you don't like. Gets you more time with your family, less time doing stuff you don't like (like working). If the poor can "eat the rich" and "catch them with their shorts down" in a stock trade that literally millions of others are pouring into (check how many subscribers r/wsb has gained past 7 days), it's literal herd mentality.

misiti3780 6y ago
ya sure, i get it .... but he took a bet and won, He could have easily lost everything. For every winner in the options game there are probably 99 losers. It's call survivorship bias.
- afterburner 6y ago
  He could have lost 50k, his initial investment, and considering he's young, and has a house, this would not represent ruin for him.
  - notahacker 6y ago
    Sure. He was smart, understood investment and had 50k to spare. And at least a bit lucky. This does not apply to most people who want to be him. Much as the narrative that this is the little guys 'crushing Wall St' sells more clicks than a lot of betting going on with plenty of Wall St winners and plenty more little guy losers, mainstream media really ought to know better. (That said, I think this particular profile is a lot more illuminating than a lot of the rubbish being written)
  - baby-yoda 6y ago
    > and has a house he rents [0] [0] - https://www.wsj.com/articles/keith-gill-drove-the-gamestop-reddit-mania-he-talked-to-the-journal-11611931696?mod=e2tw https://www.wsj.com/articles/keith-gill-drove-the-gamestop-r...
- arcticfox 6y ago
  > For every winner in the options game there are probably 99 losers. It's call survivorship bias. Sure, if people are taking aggressive positions. I'm not sure his initial YOLO was that insane, it had a fair chance of being OK. (In this unique case, the massive naked short position turned out to be the insane play.) But it's approximately a zero-sum game, so it's not irrational in general to be betting on options.

deleted 6y ago

[deleted]

sumedh 6y ago

> it's crushing a few hedge funds To be fair Robinhood also had to get extra funding to cover its liquidity issues. IB CEO also said they had to stop GME buying or else it might take down the system.

kzrdude 6y ago

But he didn't start a short squeeze, he invested in it before thinking it would be a short squeeze.

afterburner 6y ago

> Everyone has been suspecting for a while (especially here) that a lot of volatility in stocks like TSLA etc was due to Robinhood. You sure about that? TSLA has a market cap of 750b. GME, now, is at 20b. Before this insanity it was a fraction of that.

semi-extrinsic 6y ago

I've also seen some speculation that Citadel may have been intentionally amplifying the short squeeze caused by Redditors, and then getting a sweet deal with Melvin capital by injecting money the latter sorely needed in exchange for a share of future revenue. I don't understand exactly how the math works out there to be able to evaluate if it was an extra good deal or not, but I find it credible that institutional investors jumping on the Reddit hype would be necessary in ordet to sustain the kind of momentum we are seeing. Edit - or as people on Twitter put it: any story that doesn't say how, past the retail ignition, the rocket ship was mostly intra-fast money warfare, simply isn't telling the truth https://twitter.com/zatapatique/status/1354904995901136896?s=19 https://twitter.com/zatapatique/status/1354904995901136896?s...

deleted 6y ago
[deleted]

misiti3780 6y ago

If you are downvoting me, please say why.

cma 6y ago

Wasn't LTCM blowing up a pretty big deal?

misiti3780 6y ago
yes, but there were nobel laureates involved.

avereveard 6y ago

> Why is this such a big deal? Speculation is that it's not your "average" hedge fund bust, but that brokers accepted too much shorts/options without securing shares and some of them might go out as well trying to find shares to cover calls

stcredzero 6y ago

Robinhood investors, collectively account for something like 10% of the money thrown at TSLA. The reason why TSLA surged after S&P inclusion is because the "smart money" (huge benchmarked funds) was waiting to buy TSLA in a post S&P dip, but were caught out. Now, the really smart money is buying equal weight into TSLA on this dip!

myownpetard 6y ago

It's a compelling story with multiple, interesting and intertwining narratives. - An unprecedented and uncoordinated but sophisticated financial engineering play driven by an internet community. - There is a loose analogy to the terrorist attack on the Capitol, an internet community organizing to destroy existing institutions. - The ongoing class warfare that was highlighted by Occupy Wallstreet, 2008 crash and bailout. - The frustration with the completely disjoint experience of the pandemic that the average American has had in contrast to the record highs of the stock market. - America loves an underdog story. It has something for everyone. But if you ignore all other context of the story and have tunnel vision on just /DFV gains then it's less interesting I guess.

runawaybottle 6y ago
Plus the story had somehow intertwined all these big named hedge funds, Melvin, Citadel, with real losses in the Billions (capital B), all being covered by every major news outlet and commented on by major politicians and celebrities. Life is strange. It’s a Cinderella story if you look at it from the pure narrative perspective. If anyone ever makes a documentary/movie about it, it should be a dark comedy - money is just depressingly funny. The things we justify and do for it.
- myownpetard 6y ago
  I watched Congresswoman Ocasio-Cortez's Twitch stream last night. She had on Alexis Ohanian, Alexis Goldstein, and TheStockGuy as guests to discuss the event and the current political/economic environment. Amazing to see this new model for the 'fireside chat' unfolding in real time. Personally I'm looking forward to reading the Michael Lewis book.

heimatau 6y ago

> it's crushing a few hedge funds that happened to hold short positions in a few stocks You haven't noticed that the big three indexes are DOWN ~2% today? They were down 2% when this first took off. [If you want to split hairs...go for it but...the correlation is very strong, news cycles are soaking it up and the White House talks about monitoring the situation. This is not a light matter] This is bigger than just a few firms. The added limitations to buying various stocks. The heavy-handed nature is making it clear, let alone the media frenzy. WSB broke their models which in turn is crippling the 'economy'. If you don't think so, please, advocate for the free citizens to buy as much as they want because the hype isn't subsiding, it's only growing.

harryh 6y ago
Yes indeed. The stock market has dropped to levels not seen since...early January. The economy is truly crippled!
- heimatau 6y ago
  > The economy is truly crippled! Great, I love the sarcasm! Can you please help push RH and other brokers to allow the unbridled buying of the current stocks being restricted? Then we can really put the theories to the test.

renewiltord 6y ago

> Enron blew up, basically all of the Investment Banks blew up in 2008, LTCM blew up. Right, and each of those events is news that you can identify it by saying Enron, or 2008, or LTCM. It isn't just about DFV. It's about all the other little guys who have made hundreds of thousands or millions on this.

paulddraper 6y ago

> Why is this such a big deal? You don't see it? You don't see any reason why this is a big deal? When was the last time brokers shut down one direction of trading on stocks? --- EDIT: FWIW, you can't shut down one direction of trading, there's a buy for every sell, but you can skew who get to do the buy and the sell.

misiti3780 6y ago
2008. https://www.sec.gov/news/press/2008/2008-211.htm#:~:text=Washington%2C%20D.C.%2C%20Sept.,market%20and%20strengthen%20investor%20confidence https://www.sec.gov/news/press/2008/2008-211.htm#:~:text=Was....
- paulddraper 6y ago
  1. That was the SEC, not brokers. 2. People could still buy and sell. 3. I'd classify 2008 as a big deal as well.

ffggvv 6y ago

there was no naked shorting and it is illegal. and its because the media likes the narrative and people are running with it. david vs goliath etc. ignoring there are goliaths who were long on gamestop and pensioners who had their money in the hedge fund.