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The thing that I find interesting about the responses to the Gamestop saga on HN is the certainty everyone portrays. Everyone is convinced that the retail inves

The thing that I find interesting about the responses to the Gamestop saga on HN is the certainty everyone portrays. Everyone is convinced that the retail investors and WSB crowd are greater fools, and yet here we are again at practically the same peak as the last time and there is even greater evidence of shorts having increased their positions to an impossible level of leverage. I think there is a bizarre Dunning-Kruger-like effect here, particularly when it comes to finance, where everyone is convinced they know far more than whoever is buying or selling GME. Look through old comment threads and you can see everyone making such convincing arguments that the short squeeze was already over and the GME would never be priced above $300 again...

deleted 6y ago
[deleted]
exclusiv 6y ago
And they said shorts exited their positions. Then we saw Feb 12th's numbers and short interest was still high. New shorts? Definitely possible. And here we are. That big dip today puts it on the short sale restriction list so tomorrow will be interesting. AMC also had a similar big dip at about the same time as GME.
- gruez 6y ago
  > And they said shorts exited their positions. Then we saw Feb 12th's numbers and short interest was still high. High? It was down from 42.0% (2 weeks ago) to 30.2%. The week before unofficial estimates put the short interest at over 100%.
  - exclusiv 6y ago
    Anything over 10% is considered high. The narrative was that shorts exited their positions. In "GME round 1", S3 was reaching out to CNBC to correct them, saying most of the shorts are NOT covering. [1] The 100%+ was based on low float numbers or algorithms developed by companies like S3. Morningstar, as an example, currently reports the float at 27.29M. So their SI is 52% right now. Nobody really knows what it is at any given time. We have 2 week gaps in data. So yes, round 2, there appears to be a big drop in shorts, but who knows. There's a battle going on. After round 1, nobody would want a high short volume come reporting time. So what's the actual short volume. And what are the positions on those? Nobody knows. S3, from their algorithm estimates 20.52% right now. [2] [1] https://twitter.com/ihors3/status/1355226736733073416 https://twitter.com/ihors3/status/1355226736733073416 [2] https://twitter.com/ihors3/status/1369713610432393220 https://twitter.com/ihors3/status/1369713610432393220
afavour 6y ago
The broad argument still holds, for me: trying to beat Wall Street at their own game, on their own turf, is doomed to failure in the long term. That's not to say there isn't money to be made here, clearly there is. But it's not a level playing field: funds can get bailed out to the tune of billions, they can freeze the sale of stocks, so on and so forth. The app everyone is using to buy these stocks is owned by Wall Street, too. If this ever came to the point that WSB wants (or wanted? the anti-Wall Street rhetoric ebbs and flows) my gut instinct is that Wall Street will just pull some trick people haven't thought of yet that wipes out the retail investor threat and tell everyone to get out of their sandbox.
- vkou 6y ago
  > But it's not a level playing field: funds can get bailed out to the tune of billions, they can freeze the sale of stocks, so on and so forth. The app everyone is using to buy these stocks is owned by Wall Street, too. Hedge funds don't get bailed out by taxpayers. Unlike AIG, or Fannie Mae/Freddie Mac, they aren't critical to the function of the economy. Individual funds lose millions of dollars, and go bust all the time, and the rest of Wall Street laughs and moves on with life. [1][2] When they do get bailed out, they get bailed out by predatory-rate loans and hostile takeovers, and other funds who want to buy their positions at a discount. Saying that hedge funds get bailed out when they lose big is like saying that a loan shark bailed me out when I lost all my money at the craps table. Technically true, practically, I am now an indebtured servant, with only one working knee. The funds aren't the ones stopping the sale of stocks - Robinhood being a shitty discount brokerage that didn't bother maintaining sufficient clearinghouse collateral [3] stopped the sale of stocks. Retail investors who were using serious-person brokerages had no problem buying GME. If you want to make this argument, you should go on - because the points you made are insufficient to support it. [1] Remember Knight Capital losing 400 million dollars because of a one-line software configuration bug? They, uh, aren't in business anymore. Uncle Sam wasn't very interested in bailing them out, because their insolvency was not a systemic threat to our entire banking system. [2] If you do think that hedge funds who lose a lot of money in bad options trades get bailed out with public funds, please list examples. If you think that they get bailed out with private funds... Those aren't bailouts. [3] These collateral requirements are computed by pre-determined formulas. Maintaining collateral costs money, and it was money that RobinHood wasn't interested in spending.
imtringued 6y ago
I think the coolheaded responses on HN are refreshing. You only see people who are onn fire on /biz/ and /r/WSB. They are way too emotional.

deleted 6y ago

[deleted]

exclusiv 6y ago

And they said shorts exited their positions. Then we saw Feb 12th's numbers and short interest was still high. New shorts? Definitely possible. And here we are. That big dip today puts it on the short sale restriction list so tomorrow will be interesting. AMC also had a similar big dip at about the same time as GME.

gruez 6y ago
> And they said shorts exited their positions. Then we saw Feb 12th's numbers and short interest was still high. High? It was down from 42.0% (2 weeks ago) to 30.2%. The week before unofficial estimates put the short interest at over 100%.
- exclusiv 6y ago
  Anything over 10% is considered high. The narrative was that shorts exited their positions. In "GME round 1", S3 was reaching out to CNBC to correct them, saying most of the shorts are NOT covering. [1] The 100%+ was based on low float numbers or algorithms developed by companies like S3. Morningstar, as an example, currently reports the float at 27.29M. So their SI is 52% right now. Nobody really knows what it is at any given time. We have 2 week gaps in data. So yes, round 2, there appears to be a big drop in shorts, but who knows. There's a battle going on. After round 1, nobody would want a high short volume come reporting time. So what's the actual short volume. And what are the positions on those? Nobody knows. S3, from their algorithm estimates 20.52% right now. [2] [1] https://twitter.com/ihors3/status/1355226736733073416 https://twitter.com/ihors3/status/1355226736733073416 [2] https://twitter.com/ihors3/status/1369713610432393220 https://twitter.com/ihors3/status/1369713610432393220

afavour 6y ago

The broad argument still holds, for me: trying to beat Wall Street at their own game, on their own turf, is doomed to failure in the long term. That's not to say there isn't money to be made here, clearly there is. But it's not a level playing field: funds can get bailed out to the tune of billions, they can freeze the sale of stocks, so on and so forth. The app everyone is using to buy these stocks is owned by Wall Street, too. If this ever came to the point that WSB wants (or wanted? the anti-Wall Street rhetoric ebbs and flows) my gut instinct is that Wall Street will just pull some trick people haven't thought of yet that wipes out the retail investor threat and tell everyone to get out of their sandbox.

vkou 6y ago
> But it's not a level playing field: funds can get bailed out to the tune of billions, they can freeze the sale of stocks, so on and so forth. The app everyone is using to buy these stocks is owned by Wall Street, too. Hedge funds don't get bailed out by taxpayers. Unlike AIG, or Fannie Mae/Freddie Mac, they aren't critical to the function of the economy. Individual funds lose millions of dollars, and go bust all the time, and the rest of Wall Street laughs and moves on with life. [1][2] When they do get bailed out, they get bailed out by predatory-rate loans and hostile takeovers, and other funds who want to buy their positions at a discount. Saying that hedge funds get bailed out when they lose big is like saying that a loan shark bailed me out when I lost all my money at the craps table. Technically true, practically, I am now an indebtured servant, with only one working knee. The funds aren't the ones stopping the sale of stocks - Robinhood being a shitty discount brokerage that didn't bother maintaining sufficient clearinghouse collateral [3] stopped the sale of stocks. Retail investors who were using serious-person brokerages had no problem buying GME. If you want to make this argument, you should go on - because the points you made are insufficient to support it. [1] Remember Knight Capital losing 400 million dollars because of a one-line software configuration bug? They, uh, aren't in business anymore. Uncle Sam wasn't very interested in bailing them out, because their insolvency was not a systemic threat to our entire banking system. [2] If you do think that hedge funds who lose a lot of money in bad options trades get bailed out with public funds, please list examples. If you think that they get bailed out with private funds... Those aren't bailouts. [3] These collateral requirements are computed by pre-determined formulas. Maintaining collateral costs money, and it was money that RobinHood wasn't interested in spending.

imtringued 6y ago

I think the coolheaded responses on HN are refreshing. You only see people who are onn fire on /biz/ and /r/WSB. They are way too emotional.