4 ms·

Meh. GME didn't stop trading because some fund had shorted the shares. They stopped trading because people couldn't be sure firms like Robin Hood would be good

Meh. GME didn't stop trading because some fund had shorted the shares. They stopped trading because people couldn't be sure firms like Robin Hood would be good for the money. No one was prepared to go to bat and procure millions of dollars in meme-stocks for them, then be on the hook when those millions in dollars didn't show up. And everyone whined and whined and whined about "different rules for hedge funds!!!" Of course the big players pay the big fees to put their millions of dollars on the exchange directly, and have to do many things to limit the exchange's risk, like comply with rules and get audited and post collateral — oh, hey, that's what Robinhood didn't have enough of to execute your trade; maybe we're playing by the same rules after all...

rapsey 5y ago
> Meh. GME didn't stop trading because some fund had shorted the shares The entire issue is a fund was allowed to short shares they did not have. An illegal act unless you are powerful enough. That is the origin and cause of the entire story. No one disagrees that Robin Hood is garbage. But them being that is not the main issue at all. RH having collateral is something entirely different from the shares you have suppose to have been owning being nothing but an IOU
- UncleMeat 5y ago
  > The entire issue is a fund was allowed to short shares they did not have. Has this ever been demonstrated?
  - rapsey 5y ago
    The float was shorted 120%. This is not disputed.
    - gruez 5y ago
      and that's not evidence of naked shorting, because of synthetic longs. see: footnote 3 of this article https://www.bloomberg.com/opinion/articles/2021-01-25/the-game-never-stops#footnote-3 https://www.bloomberg.com/opinion/articles/2021-01-25/the-ga...
    - jandrewrogers 5y ago
      Shorting 120% of float does not imply naked shorting. It means some shares were re-loaned. You are only looking at the debtor side of the ledger and ignoring the creditor side. If I lend $1 to friend A, and friend A lends that same $1 to friend B, then the total debt obligation is $2 (A & B both owe $1 to someone else) i.e. 200% of the original dollar. In the case of person A, that both owes $1 and is owed $1, which effectively cancels out, no new dollar was created and they become a middleman in the chain of debt obligations. The primary implication of shorting >100% of float is the settlement time and capital required to close out that chain of loans and return the share to the original lender.
- fennecfoxen 5y ago
  Okay, since you're so hung up on this shorting as a reason to call the market a "scam". I hear some hedge funds owed stock, and held "synthetic" stock, in the form of options, but did not hold the stock itself. Maybe some funds didn't even hold those! Let's assume all of this is truer than true and put it beyond dispute. It sounds a little dodgy, possibly a violation of contracts, possibly illegal. It also sounds like they lost a fair amount of money acquiring stock to cover their obligations, and it sounds like some retail investors were able to make money from the processes related to their need for this stock. So let's put this in perspective. If all of this is such a scam, tell me: who are the victims of this "scam?" Who precisely thought they owned stock, and found out that they did not in fact own stock, and lost some or all of their money? Does this person or legal entity actually exist? Where can we read a story of their woes as their stock evaporated? And if this is such a scam, how common is all this? We are discussing a very broad claim: "The stock market is a scam.... Don't fall for it." What saliency does the Gamestop story have to this claim? Tell me, sir: if I am an average investor, and I am investing $10,000 in the market, in the statistically average way that people invest, how many of these dollars will I expect to lose to a scam such as this one? On average? I hold that the answer is probably somewhere between $0.00 and $0.00. Oh, there are some very real scams and fraud out there on the market, but they tend to be more like Enron, or some firm like Theranos (except public) — not "failure to deliver shares" risk. And they're still a tiny risk to any index fund owner.

rapsey 5y ago

> Meh. GME didn't stop trading because some fund had shorted the shares The entire issue is a fund was allowed to short shares they did not have. An illegal act unless you are powerful enough. That is the origin and cause of the entire story. No one disagrees that Robin Hood is garbage. But them being that is not the main issue at all. RH having collateral is something entirely different from the shares you have suppose to have been owning being nothing but an IOU

UncleMeat 5y ago
> The entire issue is a fund was allowed to short shares they did not have. Has this ever been demonstrated?
- rapsey 5y ago
  The float was shorted 120%. This is not disputed.
  - gruez 5y ago
    and that's not evidence of naked shorting, because of synthetic longs. see: footnote 3 of this article https://www.bloomberg.com/opinion/articles/2021-01-25/the-game-never-stops#footnote-3 https://www.bloomberg.com/opinion/articles/2021-01-25/the-ga...
  - jandrewrogers 5y ago
    Shorting 120% of float does not imply naked shorting. It means some shares were re-loaned. You are only looking at the debtor side of the ledger and ignoring the creditor side. If I lend $1 to friend A, and friend A lends that same $1 to friend B, then the total debt obligation is $2 (A & B both owe $1 to someone else) i.e. 200% of the original dollar. In the case of person A, that both owes $1 and is owed $1, which effectively cancels out, no new dollar was created and they become a middleman in the chain of debt obligations. The primary implication of shorting >100% of float is the settlement time and capital required to close out that chain of loans and return the share to the original lender.
fennecfoxen 5y ago
Okay, since you're so hung up on this shorting as a reason to call the market a "scam". I hear some hedge funds owed stock, and held "synthetic" stock, in the form of options, but did not hold the stock itself. Maybe some funds didn't even hold those! Let's assume all of this is truer than true and put it beyond dispute. It sounds a little dodgy, possibly a violation of contracts, possibly illegal. It also sounds like they lost a fair amount of money acquiring stock to cover their obligations, and it sounds like some retail investors were able to make money from the processes related to their need for this stock. So let's put this in perspective. If all of this is such a scam, tell me: who are the victims of this "scam?" Who precisely thought they owned stock, and found out that they did not in fact own stock, and lost some or all of their money? Does this person or legal entity actually exist? Where can we read a story of their woes as their stock evaporated? And if this is such a scam, how common is all this? We are discussing a very broad claim: "The stock market is a scam.... Don't fall for it." What saliency does the Gamestop story have to this claim? Tell me, sir: if I am an average investor, and I am investing $10,000 in the market, in the statistically average way that people invest, how many of these dollars will I expect to lose to a scam such as this one? On average? I hold that the answer is probably somewhere between $0.00 and $0.00. Oh, there are some very real scams and fraud out there on the market, but they tend to be more like Enron, or some firm like Theranos (except public) — not "failure to deliver shares" risk. And they're still a tiny risk to any index fund owner.