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Thanks for that summary, this saga fascinates me as well. As someone with no real knowledge of the financial industry (which seems incomprehensibly vast and obf

Thanks for that summary, this saga fascinates me as well. As someone with no real knowledge of the financial industry (which seems incomprehensibly vast and obfuscated by design) it's fun to wander down the rabbit hole of theories and wonder what's going on behind the curtain. The details of the complicated financial instruments that supposedly create "phantom shares" are lost on me, but I would really love to see a layman's breakdown of how this supposedly works and how large players are said to use this to their advantage for price suppression. It's awesome that Gill is testing this theory, very publicly, for the world to witness. I'm also excited to see if the domino effects at work will shed light on other, deeper layers of the rabbit hole (shorts never closed?).

therobots927 2y ago
Don’t go down the rabbit hole, there’s nothing there.
- vessenes 2y ago
  I mean, this has been an extremely good trade in the last seven days. Closing it out tomorrow would put Gills in unusually elite company anywhere in the world, working for any bank or fund. Rennaissance revenue per trader per year is on the order of like $30mm, and overall fund returns are not usually more than 30%, implying those traders run like $100mm. Gills has turned nearly a 2x in seven days on a $170mm or so base. Please tell me you find that unimpressive.
  - therobots927 2y ago
    How do you not understand the difference between Gill making a good trade and a bunch of average joes deciding they’ve discovered a vast Wall Street conspiracy? Do you understand the context here or not? Gill is getting rich because people are buying the stock, many of whom are buying it for conspiratorial reasons.
    - vessenes 2y ago
      I didn't push any conspiracy language at all. The market is a bustling place with quite a lot of collusion, conversation, planning and coordinating. It also has a number of macro dynamics that are ... not what retail investors think happens when they buy a stock. There's a lot of continuous process innovation, business model innovation, and new ideas people / companies / hedge funds try all the time. The system is immensely complex, and has some unintended consequences. With all that, who needs weirdo conspiracy theories? I see this as one group of people found out they have more power than expected given some relatively novel market dynamics, and someone is very efficiently making a point about it in the capitalized market of ideas. No conspiracy needed. No need to be hostile about people marching behind RoaringKitty with pitchforks either though; this is fun and interesting stuff.
      - therobots927 2y ago
        The original comment I was replying to explicitly asked about the “phantom shares” theories. When I said don’t go down that rabbit role, that is what I was referring to. Not the real market dynamics behind the price movement. And I’m not hostile towards anyone who believes in that, I myself used to believe it. I just think it’s a waste of time because there is zero proof that phantom shares of GameStop even exist. GameStop has also carried out two dilutions since this whole thing started, raising about $2B. If anyone is creating “phantom shares” and selling them to people, it’s the company itself. These theories are dangerous because they rope in people who don’t know enough to know better.
vessenes 2y ago
The idea of these phantom shares is pretty simple -- DTCC keeps the internal ledger of who has what in most cases. It usually takes a few days from when you buy a stock to when it's actually 'delivered' to your account. In the interim, your account shows you have the stock, but settlement and clearing are processes that were largely set up before we had telephones, and relied on paper. So, for a minute (day or two, long weekend), any purchase of shares you make means you in fact don't have the shares yet, you have a promise of the shares from ... someone. Behind the scenes your broker works with settlement and clearing and exchanges to make sure you actually get them. There are a bunch of good reasons we have this system now, and some bad ones, but it is the system we have. So, the homework assignment is - what if everyone mostly used the same place to swap shares? That is DTCC; you save time and money every time you clear a trade against someone else who uses DTCC for clearing. Over time, DTCC has become a large multi-billion dollar company. Next question - why can't DTCC 'print' shares for you against your balance sheet elsewhere, when it's hard to procure them in the market? They already do it all the time for a few days while waiting for shares to show up. The speculation, and I emphasize that word, I do NOT have any knowledge of how true this is, is that DTCC + some large participants have turned this into a line of business, and that there are times (a short squeeze being the obvious one), when large numbers of shares are magicked up to ease the delivery / deal with buyside liquidity problems. By the way, it's not clear that this would be bad for the market as a whole. Stocks going to infinite because shorts got overexuberant isn't like the best thing for the market. And, obviously, neither is shorts having infinite credit to pick on companies whenever they want. You want some sort of fair playing field to play on. r/superstonk and r/wsb feel the current system is not fair. What seems fairly incontrovertible is that more shares are passed around and traded on exchanges than are issued for many companies; that might be a fun rabbit hole to go down. When I read about this in 2019, there were some interesting detailed cases that were mentioned in the reporting. It's a real problem with the existing markets for issuers -- corporations -- that go public.

therobots927 2y ago

Don’t go down the rabbit hole, there’s nothing there.

vessenes 2y ago
I mean, this has been an extremely good trade in the last seven days. Closing it out tomorrow would put Gills in unusually elite company anywhere in the world, working for any bank or fund. Rennaissance revenue per trader per year is on the order of like $30mm, and overall fund returns are not usually more than 30%, implying those traders run like $100mm. Gills has turned nearly a 2x in seven days on a $170mm or so base. Please tell me you find that unimpressive.
- therobots927 2y ago
  How do you not understand the difference between Gill making a good trade and a bunch of average joes deciding they’ve discovered a vast Wall Street conspiracy? Do you understand the context here or not? Gill is getting rich because people are buying the stock, many of whom are buying it for conspiratorial reasons.
  - vessenes 2y ago
    I didn't push any conspiracy language at all. The market is a bustling place with quite a lot of collusion, conversation, planning and coordinating. It also has a number of macro dynamics that are ... not what retail investors think happens when they buy a stock. There's a lot of continuous process innovation, business model innovation, and new ideas people / companies / hedge funds try all the time. The system is immensely complex, and has some unintended consequences. With all that, who needs weirdo conspiracy theories? I see this as one group of people found out they have more power than expected given some relatively novel market dynamics, and someone is very efficiently making a point about it in the capitalized market of ideas. No conspiracy needed. No need to be hostile about people marching behind RoaringKitty with pitchforks either though; this is fun and interesting stuff.
    - therobots927 2y ago
      The original comment I was replying to explicitly asked about the “phantom shares” theories. When I said don’t go down that rabbit role, that is what I was referring to. Not the real market dynamics behind the price movement. And I’m not hostile towards anyone who believes in that, I myself used to believe it. I just think it’s a waste of time because there is zero proof that phantom shares of GameStop even exist. GameStop has also carried out two dilutions since this whole thing started, raising about $2B. If anyone is creating “phantom shares” and selling them to people, it’s the company itself. These theories are dangerous because they rope in people who don’t know enough to know better.

vessenes 2y ago

The idea of these phantom shares is pretty simple -- DTCC keeps the internal ledger of who has what in most cases. It usually takes a few days from when you buy a stock to when it's actually 'delivered' to your account. In the interim, your account shows you have the stock, but settlement and clearing are processes that were largely set up before we had telephones, and relied on paper. So, for a minute (day or two, long weekend), any purchase of shares you make means you in fact don't have the shares yet, you have a promise of the shares from ... someone. Behind the scenes your broker works with settlement and clearing and exchanges to make sure you actually get them. There are a bunch of good reasons we have this system now, and some bad ones, but it is the system we have. So, the homework assignment is - what if everyone mostly used the same place to swap shares? That is DTCC; you save time and money every time you clear a trade against someone else who uses DTCC for clearing. Over time, DTCC has become a large multi-billion dollar company. Next question - why can't DTCC 'print' shares for you against your balance sheet elsewhere, when it's hard to procure them in the market? They already do it all the time for a few days while waiting for shares to show up. The speculation, and I emphasize that word, I do NOT have any knowledge of how true this is, is that DTCC + some large participants have turned this into a line of business, and that there are times (a short squeeze being the obvious one), when large numbers of shares are magicked up to ease the delivery / deal with buyside liquidity problems. By the way, it's not clear that this would be bad for the market as a whole. Stocks going to infinite because shorts got overexuberant isn't like the best thing for the market. And, obviously, neither is shorts having infinite credit to pick on companies whenever they want. You want some sort of fair playing field to play on. r/superstonk and r/wsb feel the current system is not fair. What seems fairly incontrovertible is that more shares are passed around and traded on exchanges than are issued for many companies; that might be a fun rabbit hole to go down. When I read about this in 2019, there were some interesting detailed cases that were mentioned in the reporting. It's a real problem with the existing markets for issuers -- corporations -- that go public.