3 ms·

> Why? "I like the stock" or "The new CEO has an amazing plan to go digital!" This, along with "I'm retarded" or "I'm an ape" is needed to avoid acusations of

> Why? "I like the stock" or "The new CEO has an amazing plan to go digital!" This, along with "I'm retarded" or "I'm an ape" is needed to avoid acusations of market manipulation. That said, it were not the fundamentals of GME the ones that pushed the stock price up: it was discovered that some people just shorted too much, and market efficiency tend to pushish those errors. Some people still think that there's still a chance of squeezing, and they're putting money after that. It's a bet, and it's played in r/wallstreetBETS. I don't think they're being manipulated: you can read almost daily a report on volume, open shorts, etc. They know that they are playing in a casino, and they know the rules of the game being played.

UncleMeat 6y ago
The sub grew 10x in days. Whatever culture and jargon existed previously has been blown over and replaced with getting rich and populous rage.
lupire 6y ago
> people just shorted too much, and market efficiency tend to punish those errors. That's not the efficient market, that's the market failing due to logically out of bounds behavior regarding negative numbers of theoretical real objects. The shorters were right, with respect to efficient market ideas about value.
- Olreich 6y ago
  The market doesn’t reflect reality unless everyone in the market agrees to reality. The hedge funds choose their reality and try to convince everyone of it. They’ve been doing that for decades. The only change here is that a bunch of people on social media started doing it too, and it’s working.
fractionalhare 6y ago
That's not what market efficiency means. Market efficiency is specifically a function of liquidity and price discovery. A market is more efficient when the price of assets is derived from some measure of intrinsic value. Technical factors emergent in trading mechanics (such as what causes a short squeeze) do not have intrinsic value. Obviously you can can extract value from them in the short term, but that is not the same thing as market efficiency. When you trade on technical factors like a short squeeze, your orders do not enhance a directional view of the asset or the liquidity of the asset. This is to say that not everything which is profitable is enhancing market efficiency. Generally speaking: long/short strategies are preoccupied with price discovery and valuation, systematic momentum, trend and volatility strategies are concerned with arbitrage, and market makers are concerned with liquidity. These three exist on a spectrum between enhancing price discovery and enhancing liquidity. There isn't really anything inefficient about shorting too much - if that happens, it means there's widespread consensus the asset is overvalued, which is likewise a statement that there should be less of the asset at that value. The valuation and liquidity have a feedback cycle here. In the case of GME, a directional view that could contribute to price discovery would be that GME should actually be valued on future revenues which are mispriced by the market due to a variety of factors (e.g. Ryan Cohen, digital-first transformation, etc). It would still be generous and optimistic, but it would at least be a coherent directional thesis. The process of market efficiency would be to incorporate this view when you stake with an open position, and theoretically if you're right your view will be vindicated. There is nothing efficient about GME at $100, let alone $400.
- rualca 6y ago
  > There is nothing efficient about GME at $100, let alone $400. You've somehow left out the fact that short sellers are on the hook for over 100% of gamestop's stock, thus whoever is buying stock right now is placing themselves to dictate pretty much the price these short sellers will be forced to pay for the stock.

UncleMeat 6y ago

The sub grew 10x in days. Whatever culture and jargon existed previously has been blown over and replaced with getting rich and populous rage.

lupire 6y ago

> people just shorted too much, and market efficiency tend to punish those errors. That's not the efficient market, that's the market failing due to logically out of bounds behavior regarding negative numbers of theoretical real objects. The shorters were right, with respect to efficient market ideas about value.

Olreich 6y ago
The market doesn’t reflect reality unless everyone in the market agrees to reality. The hedge funds choose their reality and try to convince everyone of it. They’ve been doing that for decades. The only change here is that a bunch of people on social media started doing it too, and it’s working.

fractionalhare 6y ago

That's not what market efficiency means. Market efficiency is specifically a function of liquidity and price discovery. A market is more efficient when the price of assets is derived from some measure of intrinsic value. Technical factors emergent in trading mechanics (such as what causes a short squeeze) do not have intrinsic value. Obviously you can can extract value from them in the short term, but that is not the same thing as market efficiency. When you trade on technical factors like a short squeeze, your orders do not enhance a directional view of the asset or the liquidity of the asset. This is to say that not everything which is profitable is enhancing market efficiency. Generally speaking: long/short strategies are preoccupied with price discovery and valuation, systematic momentum, trend and volatility strategies are concerned with arbitrage, and market makers are concerned with liquidity. These three exist on a spectrum between enhancing price discovery and enhancing liquidity. There isn't really anything inefficient about shorting too much - if that happens, it means there's widespread consensus the asset is overvalued, which is likewise a statement that there should be less of the asset at that value. The valuation and liquidity have a feedback cycle here. In the case of GME, a directional view that could contribute to price discovery would be that GME should actually be valued on future revenues which are mispriced by the market due to a variety of factors (e.g. Ryan Cohen, digital-first transformation, etc). It would still be generous and optimistic, but it would at least be a coherent directional thesis. The process of market efficiency would be to incorporate this view when you stake with an open position, and theoretically if you're right your view will be vindicated. There is nothing efficient about GME at $100, let alone $400.

rualca 6y ago
> There is nothing efficient about GME at $100, let alone $400. You've somehow left out the fact that short sellers are on the hook for over 100% of gamestop's stock, thus whoever is buying stock right now is placing themselves to dictate pretty much the price these short sellers will be forced to pay for the stock.