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Well if a stock market crash triggered by this is realistic (which I agree is), doesn't it make sense to hold a bit of GME for insurance? I understand that the

• afterburner 6y ago
  > Well if a stock market crash triggered by this is realistic (which I agree is), doesn't it make sense to hold a bit of GME for insurance What is the reasoning here? Are you under the impression GME wouldn't crash right alongside the market? This isn't BTC or gold we're talking about. It's just another stock.
  • yreg 6y ago
    Presumably the crash would occur after the GME price skyrockets and shorts (and then their brokers and clearing houses) go broke trying to close the short positions. The insurance pays up if they buy your share. Do you have another idea how it could end?
    • SpicyLemonZest 6y ago
      It could end by simply crashing without shorts going broke. There's not much reason to believe a larger short squeeze is forthcoming.
      • yreg 6y ago
        Why would that crash the entire stock market?
        • SpicyLemonZest 6y ago
          The theory I've seen is that there could be hidden systemic risks here. If GME tanks suddenly, there's some possibility that traders bailing out of their trades will take down Robinhood (who doesn't seem to be very healthy right now), and a major broker collapsing is never gonna be great for the market. I share your skepticism that it would actually happen this way, but it seems at least somewhat plausible.
          • girvo 6y ago
            Robinhood are tiny on the brokerage stage. Important to retail, barely matter otherwise. That’s my understanding at least
            • deleted 6y ago
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            • SpicyLemonZest 6y ago
              That seems consistent with what I've read recently. Good news.
          • lwigo 6y ago
            It's got nothing to do with Robinhood. If a hedge decides to cover the short so they don't have to admit defeat and go bankrupt, then the entire market goes down because they'll end up selling thousands of unrelated shares for their cover.
            • SpicyLemonZest 6y ago
              You've fallen victim to some common misinformation that's spreading. Multiple hedge funds have already been able to cover their shorts, and there's not much reason to believe this will change.
              • lwigo 6y ago
                Not an endorsement but this was retweeted by Kai Ryssdal: https://twitter.com/TheStalwart/status/1355531873896824834 https://twitter.com/TheStalwart/status/1355531873896824834
    • deleted 6y ago
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  • leadingthenet 6y ago
    > Are you under the impression GME wouldn't crash right alongside the market? Well ... yeah. Today it hasn't.
    • tinyhouse 6y ago
      We all know why it hasn't. Do you really believe it will last forever? or even 6 months from now? People are trying to make money. Once the momentum slows down the big sell off will start and nobody would be able to stop it. Not DFV or even the biggest troll of all, mr. Elon Musk.
      • leadingthenet 6y ago
        Forever is a long time. No, I do not believe it will last forever, or even six months. I do believe it will last at least one more week, though, yeah. And I'm putting money where my mouth is. The best part in all of this is that you're free to short it if you disagree. See where that leads you.
        • tinyhouse 6y ago
          So you basically agree with me. You still wrote your last paragraph. That is because you're invested emotionally in this. Never shorted a stock in my life. Not going to start now. I cannot predict when this will stop. Nither can you. What currently holds everything together is the unknown. People don't know who, when, and how the shorter s are going to close their positions. Once things will clear out I predict it's gonna be the beginning of the end. Just to be clear. I don't think it will crash to nothing any time soon. It will keep trading much higher than what it was pre this saga. When I say crash I mean down around 70-80% from its current value of $330.
• rzz3 6y ago
  That seems like sound logic to me. GME has been a vortex this week sucking up value from the rest of the market. Seems smart for the next few days/week at least until we learn otherwise.
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• tinyhouse 6y ago
  The problem for GME is that it will crash regardless if there's stock market crash or not. When a market crash happens you're much better off holding value stocks of solid companies. As of mr. DFV, I'm sure he'd like to close his position at the current price. But my guess is that he prefers to hold for his reputation. Since he already guaranteed more money than he would ever need, it's not a bad decision. The other option is that he believes it's going climb even more, which is possible. But don't assume people hold for any reason other than making money. Once the squeeze is over it will fall like dominoes.
  • conductr 6y ago
    That's what makes it an infinite short. Short makes complete sense every dollar it goes up it makes more sense. Timing it is one hell of a dice roll.
  • xiphias2 6y ago
    > But don't assume people hold for any reason other than making money This is true for every market participant, the fun situation here is that the short squeezers know that what they are doing is risky, but they don't care, because it's fun to take risks, and anyways they have better chances than buying lottery or going to casino.
  • deleted 6y ago
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  • yreg 6y ago
    Why do you think a crash of GME would cause a full blown crash of the stock market?
    • tinyhouse 6y ago
      I don't think that.
      • yreg 6y ago
        You replied to a comment discussing making use of GME as an insurance against a market crash related to this possible short squeeze. If the market doesn't crash then GME can go to $0, as it won't be needed for the insurance purpose anymore.
• redkoala 6y ago
  This isn't really the place for financial advice. Matt Levine does publish a newsletter that attempts to unpack the GameStop Reddit mania situation and what it means for the retail investors piling on.
• delaaxe 6y ago
  You can always place limit sell orders
  • vanattab 6y ago
    Limit sell orders with this kind of volatility is not as safe as you might think. Just because you set a sell limit does not mean your trades will execute at that price.
    • jaycroft 6y ago
      A limit sell order guarantees the limit price or better. A Stop Loss triggers a market order (at any price available) once crossed to the downside.
    • delaaxe 6y ago
      Yes it does mean that, by definition
• tootie 6y ago
  GME is absolutely going to crash and everyone knows it. There was a mod post just today reminding everyone to be ready. The stock is worth $10-20 on it's merits and that's where it will land. We just don't know when. The chance of this as a contagion that brings down indexes seems very unlikely.
  • hntrader 6y ago
    I think this whole episode might cause the next market sell-off: (1) fund degrossing as the initial driver - already happening (2) everyone is being reminded of 99/00 mania (3) uncertain regulatory environment surrounding trading (4) worries of systemic risks created by bubble GME going higher is likely to trigger it more than it dropping off right now
    • Blammar 6y ago
      All we need to wait for now is the shoeshine boy's tip and it'll be time to get out! See https://seekingalpha.com/instablog/661124-brijwanth/73895-hidenburg-shoe-shine-boy https://seekingalpha.com/instablog/661124-brijwanth/73895-hi... for a humorous variation on that classic theme.
    • cauthon 6y ago
      What is fund degrossing?
      • hntrader 6y ago
        Long short funds having to sell longs to cover losses on their shorts
        • cauthon 6y ago
          Thanks!
    • jaycroft 6y ago
      I think there's also evidence that the "short bubble" might be more widespread than we think. I'm not entirely convinced that Melvin was able to unwind their 50mln short position and drive the short interest down on Ortex (they're the best thing we've got in terms of guessing how much true short interest there is, because exchanges only report once or twice a month on a week or more delay) by covering. Equally likely in my mind is that Citadel bought Melvin's book thinking that it had a better plan than unwinding the short just yet. Instead, "hide" the short someplace that Ortex isn't looking and that the exchanges won't report on for another 3 weeks. That would be their order flow with a company they are in a unique position with - Robinhood - where lots of the buy orders are coming from. If you were Citadel and a little unscrupulous, you could immediately route every sell order on RH to the market but keep the buy orders for yourself. This positions you as short to Robinhood users, and you get to send those sold shares back to the book you bought from Melvin to unwind that short. So, the short does still exist, but now it's not visible to outside brokers. Outside brokers, when Ortex calls them up, will say, no no, Melvin covered a bunch today and short interest actually went down! So Ortex publishes a lower SI number. But, that short didn't actually just disappear. Either Citadel, or Robinhood, now are short to their customers. Are there other companies that have "hidden" short interest in this way? Are some of the big unexplained market moves in companies without short interest some of these "hidden" shorts unwinding before everyone finds out?
• IntFee588 6y ago
  > if a stock market crash triggered by this is realistic Honestly, I don't think it is and there would be more media attention if it was. The firms that are shorting GME only have something like $50 billion AUM. Lehman Bros was around $600 billion and was a lot more integral to the markets. The only real issue would be a lack of liquidity, which isn't going to cause a crash alone.