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'Dumb Money' Loses $13.1B in Latest GameStop Stock Mania

15 points by ripjaygn 2y ago

caseyy 2y ago
This article cherry-picks the time window to make such a claim. You can do this for many volatile stocks. GME looks like it was probably pumped and dumped (intentionally or not), but it is up 107% month on month currently. So the report could easily be “investors double their money”. It’s meaningless. The article also doesn't mention the actual reasons people invest into GME. It’s a meme stock. People also claim to buy it in protest of aggressive short-selling by large funds that ruins small businesses. I don’t know if anyone really expects to make money on it beyond the potential pump and dump ride-along. The link is very biased and sensationalist. What’s going on with GME is quite interesting, in contrast.
- bbor 2y ago
  If by “meme stock” you mean “a stock that is bought for fun instead of financial or political gain”, then IMO the article is right on. That’s basically the textbook definition of maniacal/irrational behavior - like a poker strategy unrelated to the cards dealt.
  - troad 2y ago
    The thing about poker strategies unrelated to the cards dealt is that they tend to be short lived, and aren't really all that interesting from an internal poker perspective. Trading stocks for teh memez is a lot like streaking at a football game. It won't last long, no one interested in football cares, and afterwards, if you tried to talk about your 'football career', everyone would laugh.
  - caseyy 2y ago
    Meme stocks are not a strategy to make money. It only looks insane if you cannot imagine that people trade for other reasons than to make money. But these guys have other goals — proving points, protesting short-selling, speculating for fun, and so on. It’s all good. Not everyone has a car to drive from point A to B, some people drive cars for fun. Not everyone plays tennis to compete on the world stage. Same with securities. People just have fun.
    - bbor 2y ago
      To “say the quiet part out loud” and overplay my point for clarity (no offense intended, thanks for the clear response!): I think people are being tricked into thinking they’re having fun, but in the long run they’re harming themselves and falling prey to a variety of opportunists along the way, hedge funds and diamond hands alike. I think I know better than they do whether they’re truly having fun! Like judging the people who spend all day at the slots.
- heybrendan 2y ago
  Quite interesting indeed. From Gamestop's recent Form 10-K (Q4 2023) SEC filing: > "As of March 20, 2024 [...] approximately 75.3 million shares of our Class A common stock were held by registered holders with our transfer agent (or approximately 25% of our outstanding shares)." I've never seen anything like this. It seems absolutely unprecedented. Recently Ian Carroll posted an overview [2] on X where he attempts to untangle the mess of the chaos surrounding Gamestop and its stock. I'm not going to pretend to understand the (dys?)function of our financial markets or everything that he shared, but my eyes are peeled. [1] https://news.gamestop.com/node/20376/html https://news.gamestop.com/node/20376/html [2] https://x.com/Cancelcloco/status/1790524969623175629 https://x.com/Cancelcloco/status/1790524969623175629
  - lfmunoz4 2y ago
    held by registered holders with our transfer agent what does this mean? what is the significance?
    - jcranmer 2y ago
      Short answer: the people doing this think it's going to fuck short sellers over. The longer answer involves trying to make a coherent story by people who are financially illiterate trying to read moderately advanced modern finance textbooks to explain why they were unsuccessful in fleecing Big Bad Finance™ by somehow finding a way to trigger financial apocalypse. The more you try to understand it, the less sense it is going to make.
      - deified 2y ago
        I'd rather say they are trying to prove some things to the general public. People new to the stock market assume that when they buy shares through their broker, they own the share. They also often buy shares in hopes that the stock price will go up. However, more often than not, a broker will hand out an IOU when you "buy" a share, and then proceed to rent out the share to short sellers. You buy a share in hopes that the price will go up, but that share is then used for the opposite. Buying a share through the company's registered custodian prevents this. They also want to show the general public that even when 100% of a company's shares are bought, owned and locked down - short sellers are still able to generate phantom shares to move the stock price down.
meowface 2y ago
Good, long video covering the whole GameStop stock phenomenon (among other things): https://www.youtube.com/watch?v=5pYeoZaoWrA https://www.youtube.com/watch?v=5pYeoZaoWrA
- jcranmer 2y ago
  Even if you think you know the topic, if you haven't seen the video, you probably don't know all of the topic. The TL;DR is that the people involved have gotten to the point where they believe that a) the short squeeze hasn't happened yet, b) when it happens, it will take down the entire financial system, and c) everyone who holds Gamestop stock at the time will become fabulously wealthy.
snihalani 2y ago
wish I had more dumb money so I can short tesla
deleted 2y ago
[deleted]
dash2 2y ago
I think it's kind of sad. Roaring Kitty started off doing pretty deep analysis of Gamestop. He was an early contrarian who confidently and politely disputed critics on r/wallstreetbets, bringing data to show the company was undervalued. Now it seems he's just decided to be one of those guys who tweets a meme, sets off a gambling frenzy, and (presumably) makes bank. It's no different from a pyramid scheme.
- hi-v-rocknroll 2y ago
  The problem is they didn't replace undervaluing with conservative value investing behavior because the composite behavior of a mob is tulip bulb crises. Their sentiment was excessively amplified by social media to Jim Cramer-proportions.
- tempaway355751 2y ago
  Roaring Kitty posted. He still holds the shares. Actually he holds 5 times more than he did 4 years ago https://www.reddit.com/r/Superstonk/comments/1d6r5vp/gme_yolo_update_june_2_2024/ https://www.reddit.com/r/Superstonk/comments/1d6r5vp/gme_yol...
hi-v-rocknroll 2y ago
Meme stock == P/E > 250 There are ~100 major publicly-traded stocks lacking financials in this bucket. https://finviz.com/screener.ashx?v=111&f=fa_pe_o50&ft=2&o=-pe https://finviz.com/screener.ashx?v=111&f=fa_pe_o50&ft=2&o=-p...

15 points by ripjaygn 2y ago

This article cherry-picks the time window to make such a claim. You can do this for many volatile stocks. GME looks like it was probably pumped and dumped (intentionally or not), but it is up 107% month on month currently. So the report could easily be “investors double their money”. It’s meaningless. The article also doesn't mention the actual reasons people invest into GME. It’s a meme stock. People also claim to buy it in protest of aggressive short-selling by large funds that ruins small businesses. I don’t know if anyone really expects to make money on it beyond the potential pump and dump ride-along. The link is very biased and sensationalist. What’s going on with GME is quite interesting, in contrast.

bbor 2y ago
If by “meme stock” you mean “a stock that is bought for fun instead of financial or political gain”, then IMO the article is right on. That’s basically the textbook definition of maniacal/irrational behavior - like a poker strategy unrelated to the cards dealt.
- troad 2y ago
  The thing about poker strategies unrelated to the cards dealt is that they tend to be short lived, and aren't really all that interesting from an internal poker perspective. Trading stocks for teh memez is a lot like streaking at a football game. It won't last long, no one interested in football cares, and afterwards, if you tried to talk about your 'football career', everyone would laugh.
- caseyy 2y ago
  Meme stocks are not a strategy to make money. It only looks insane if you cannot imagine that people trade for other reasons than to make money. But these guys have other goals — proving points, protesting short-selling, speculating for fun, and so on. It’s all good. Not everyone has a car to drive from point A to B, some people drive cars for fun. Not everyone plays tennis to compete on the world stage. Same with securities. People just have fun.
  - bbor 2y ago
    To “say the quiet part out loud” and overplay my point for clarity (no offense intended, thanks for the clear response!): I think people are being tricked into thinking they’re having fun, but in the long run they’re harming themselves and falling prey to a variety of opportunists along the way, hedge funds and diamond hands alike. I think I know better than they do whether they’re truly having fun! Like judging the people who spend all day at the slots.
heybrendan 2y ago
Quite interesting indeed. From Gamestop's recent Form 10-K (Q4 2023) SEC filing: > "As of March 20, 2024 [...] approximately 75.3 million shares of our Class A common stock were held by registered holders with our transfer agent (or approximately 25% of our outstanding shares)." I've never seen anything like this. It seems absolutely unprecedented. Recently Ian Carroll posted an overview [2] on X where he attempts to untangle the mess of the chaos surrounding Gamestop and its stock. I'm not going to pretend to understand the (dys?)function of our financial markets or everything that he shared, but my eyes are peeled. [1] https://news.gamestop.com/node/20376/html https://news.gamestop.com/node/20376/html [2] https://x.com/Cancelcloco/status/1790524969623175629 https://x.com/Cancelcloco/status/1790524969623175629
- lfmunoz4 2y ago
  held by registered holders with our transfer agent what does this mean? what is the significance?
  - jcranmer 2y ago
    Short answer: the people doing this think it's going to fuck short sellers over. The longer answer involves trying to make a coherent story by people who are financially illiterate trying to read moderately advanced modern finance textbooks to explain why they were unsuccessful in fleecing Big Bad Finance™ by somehow finding a way to trigger financial apocalypse. The more you try to understand it, the less sense it is going to make.
    - deified 2y ago
      I'd rather say they are trying to prove some things to the general public. People new to the stock market assume that when they buy shares through their broker, they own the share. They also often buy shares in hopes that the stock price will go up. However, more often than not, a broker will hand out an IOU when you "buy" a share, and then proceed to rent out the share to short sellers. You buy a share in hopes that the price will go up, but that share is then used for the opposite. Buying a share through the company's registered custodian prevents this. They also want to show the general public that even when 100% of a company's shares are bought, owned and locked down - short sellers are still able to generate phantom shares to move the stock price down.

meowface 2y ago

Good, long video covering the whole GameStop stock phenomenon (among other things): https://www.youtube.com/watch?v=5pYeoZaoWrA https://www.youtube.com/watch?v=5pYeoZaoWrA

jcranmer 2y ago
Even if you think you know the topic, if you haven't seen the video, you probably don't know all of the topic. The TL;DR is that the people involved have gotten to the point where they believe that a) the short squeeze hasn't happened yet, b) when it happens, it will take down the entire financial system, and c) everyone who holds Gamestop stock at the time will become fabulously wealthy.

snihalani 2y ago

wish I had more dumb money so I can short tesla

deleted 2y ago

[deleted]

dash2 2y ago

I think it's kind of sad. Roaring Kitty started off doing pretty deep analysis of Gamestop. He was an early contrarian who confidently and politely disputed critics on r/wallstreetbets, bringing data to show the company was undervalued. Now it seems he's just decided to be one of those guys who tweets a meme, sets off a gambling frenzy, and (presumably) makes bank. It's no different from a pyramid scheme.

hi-v-rocknroll 2y ago
The problem is they didn't replace undervaluing with conservative value investing behavior because the composite behavior of a mob is tulip bulb crises. Their sentiment was excessively amplified by social media to Jim Cramer-proportions.
tempaway355751 2y ago
Roaring Kitty posted. He still holds the shares. Actually he holds 5 times more than he did 4 years ago https://www.reddit.com/r/Superstonk/comments/1d6r5vp/gme_yolo_update_june_2_2024/ https://www.reddit.com/r/Superstonk/comments/1d6r5vp/gme_yol...

hi-v-rocknroll 2y ago

Meme stock == P/E > 250 There are ~100 major publicly-traded stocks lacking financials in this bucket. https://finviz.com/screener.ashx?v=111&f=fa_pe_o50&ft=2&o=-pe https://finviz.com/screener.ashx?v=111&f=fa_pe_o50&ft=2&o=-p...