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Incorrect. S3 only shows aggregate short interest. That data does not in anyway indicate Melvin's specific position. Almost certainly what happened is that whil

Incorrect. S3 only shows aggregate short interest. That data does not in anyway indicate Melvin's specific position. Almost certainly what happened is that while Melvin was unwinding other hedge funds were opening up new short positions at the current extremely dislocated prices. And this is exactly why WSB's short squeeze theory is doomed to failure. It's not like once you beat Melvin that all of Wall Street just declares "okay, Gamestop is officially a $30 billion company and we will never bet against it again." The more WSB drives up the price, the more lucrative a short position becomes in the long run. And the more it attracts even more hedge funds into shorting. It's like a video game that has no ending, just the levels get harder and harder. The difference with any traditional short squeeze is that there's always a catalyst that prevents the shorts from keeping their positions open. In the classic case it's a third party buying up a bunch of shares, then recalling them from the stock borrow market. In the Volkswagen squeeze it was the expiration of derivatives tied to Porsche's attempted acquisition of the company. WSB's original theory was that the gamma squeeze from options expiration would be the catalyst. But as of last Monday, those options were all deep in the money with crazy high implied vols. There's no gamma left to squeeze. WSB no longer even has a thesis, just memes. With $3 trillion of AUM in the hedge fund industry, the only feasible end game is if WSB makes Gamestop the most valuable company in the world and criples the global financial system. Is it possible? Sure, lots of things are possible... I wouldn't bet on them. I can virtually guarantee you that there won't be any meaningful short squeeze at current levels. The share price will be well below $100, before the short interest falls below 100%.

emanuelsaringan 6y ago
This is just circular reasoning. More shorting -> fuels retail traders buying -> leads to more shorting -> leads to more buying. This can go on until GME becomes part of S&P 500. At this point WSB doesn't even need to do anything because pension funds, and other institutional investors etc. will end up buying GME.
nrmitchi 6y ago
> only feasible end game is if WSB makes Gamestop the most valuable company in the world and criples the global financial system. Is it possible? Sure, lots of things are possible... I wouldn't bet on them Another good reason to assume this wouldn't happen: the existing system will not let it. You may argue that that is "changing the rules" or "cheating" or "being on the institutions side!", and you're right, but I would assume that the government forces all GME positions to be liquidated and halts all trading, no matter no many retail and/or institutional traders get upset by it, before allowing the collapse of the global financial system (again). No matter what game you're playing, there are always "superior" rules, that are not written down. No matter what game you're playing, one of the over-arching rules is "no crippling the global financial system".
- imtringued 6y ago
  Exposing those superior rules is the reason why people join the short squeeze. Every new special rule only justifies their existing anger.
  - nrmitchi 6y ago
    I disagree that these "superior" rules are really hidden at all, and need exposing. These are basic assumptions that anyone can make if they spec 5 seconds using common sense. Why do you think that the SEC, Fed, and all aspects of the US Government would sit back and knowingly let a new financial crisis happen? It doesn't really matter who it's not fair to, it wouldn't happen. You can argue who will get the short end of the stick in the end, and why it's not fair, but that's secondary to my point. Another good example of this is claims (which yes, have fizzled out over the last couple of days) that Melvin Capital has lost $100B dollars already, and only has $13B in assets (which, if you account for a firesale, is likely much less than that). That amount of money is pretty much the practical maximum that you could get out of Melvin Capital, even if they have done the shady and illegal things that have been alledged. At a point you can't get blood from a stone, no matter how much you feel that you are in the right.
deleted 6y ago
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emanuelsaringan 6y ago

This is just circular reasoning. More shorting -> fuels retail traders buying -> leads to more shorting -> leads to more buying. This can go on until GME becomes part of S&P 500. At this point WSB doesn't even need to do anything because pension funds, and other institutional investors etc. will end up buying GME.

nrmitchi 6y ago

> only feasible end game is if WSB makes Gamestop the most valuable company in the world and criples the global financial system. Is it possible? Sure, lots of things are possible... I wouldn't bet on them Another good reason to assume this wouldn't happen: the existing system will not let it. You may argue that that is "changing the rules" or "cheating" or "being on the institutions side!", and you're right, but I would assume that the government forces all GME positions to be liquidated and halts all trading, no matter no many retail and/or institutional traders get upset by it, before allowing the collapse of the global financial system (again). No matter what game you're playing, there are always "superior" rules, that are not written down. No matter what game you're playing, one of the over-arching rules is "no crippling the global financial system".

imtringued 6y ago
Exposing those superior rules is the reason why people join the short squeeze. Every new special rule only justifies their existing anger.
- nrmitchi 6y ago
  I disagree that these "superior" rules are really hidden at all, and need exposing. These are basic assumptions that anyone can make if they spec 5 seconds using common sense. Why do you think that the SEC, Fed, and all aspects of the US Government would sit back and knowingly let a new financial crisis happen? It doesn't really matter who it's not fair to, it wouldn't happen. You can argue who will get the short end of the stick in the end, and why it's not fair, but that's secondary to my point. Another good example of this is claims (which yes, have fizzled out over the last couple of days) that Melvin Capital has lost $100B dollars already, and only has $13B in assets (which, if you account for a firesale, is likely much less than that). That amount of money is pretty much the practical maximum that you could get out of Melvin Capital, even if they have done the shady and illegal things that have been alledged. At a point you can't get blood from a stone, no matter how much you feel that you are in the right.

deleted 6y ago

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