GME / AMC please watch
Comments
-
Thank you for this. Will need time to digest. And to learn how to read1to392831weretaken said:
There is a difference between shorting a stock and naked shorting. An argument could be made that, yes, shorting itself is unnecessary and opens a huge window for fraud to climb through, but I'm not ready to go that far yet. Naked short selling, however, is illegal but rarely punished. So much so, that they created the Reg Sho list to track companies shorted beyond their value for x number of days (I can't remember the exact details). In other words, "Here's a list of companies whose stock price is being manipulated, buttfuck if we're going to actually step in and do something about it." To make matters worse, it's not even an illegal practice for market makers.RaceBannon said:
Do you think the concept of shorting itself could be eliminated? Is that what you mean by locate shares? I'm just a dumb hippie but it does seem like a lot of agreement here1to392831weretaken said:
Maybe I'm missing something, but that sounds like complete agree on all points. Did not know it was still shorted to that extent, though. But I guess that's my point: That never should have been allowed to happen in the first place. Make investors actually locate shares.HoustonHusky said:
Agree and disagree...Chamath got rich being a dick at early Facebook, and advertising the short squeeze followed by quietly exiting out and donating it to charity is chickenshit.1to392831weretaken said:This is nothing new. Large quantities of naked shorts were the catalyst for the 2008 collapse. To me, it's a little late getting all pissed off about retaliatory actions. Where was the anger that the stock was allowed to be shorted to a greater extent than it was even valued in the first place? The time for regulation was a long time ago, to prevent the problem in the first place.
The long interview posted above was great, and I finally have an understanding of what this story is about (wasn't following it at all), but I have to admit that, although whoever the guy is that was being interviewed owned that anchor completely, the anchor did land one point: The stock is ridiculously overvalued now, and it's going to be all of these Joe Blow retail investors who are going to take it in the shorts when it comes back to Earth. The rich guys who fomented the stock buy and bailed before it crashed are going to make out like bandits. There's a reason the guy is claiming he's going to give the profit from the trade to charity: He, too, knows it's going to get ugly, and he was quite the contortionist in dodging that question multiple times. Two wrongs don't make a right, and the only reason hedge funds manipulating stocks directly is worse than billionaires manipulating stocks in the opposite direction by riling up useful idiots is that the latter is way funnier.
I don't like that there is an investor class with different rules and rights than the average schmuck. I'm enjoying that this institutional investor class got fucked in the ass (a little payback for 2008). But the anchor was right (for the wrong reason): Gamestop's fundamentals aren't there. It's a company that hasn't had a reason to exist for at least three or four years, no plan that I'm aware of to change that, etc.
TL;DR: The answer to retail investors colluding to "break" the market right out in the open in the same way institutional investors collude in private to break the market and destroy companies for profit isn't to widen the investor class gap even further by imposing yet more restriction on retail investors, it's to impose stricter regulation on ALL investors that makes market manipulation illegal in the first place.
Make short sellers ACTUALLY locate the stock they're selling. Done. After that, if idiots on Reddit want to pump up a stock, it's their dumb asses when it crashes. Am I taking crazy pills here?
Gamestop as a business isn't worth the stock price, but you can say that about a lot of companies right now. The short guys sold 40% more stock than in existence on a bet that the price will drop and they can buy it back cheaper...in effect they have been depressing the price of the stock for a long while now by flooding the market with non-existent shares forcing the price down. They changed the game to make it a market for those shares (and not the business itself), and if people want to own the shares to hold over their head and force them to buy it back at 10x that is their right...eventually the market will find a price where enough people give in and sell that they can start covering and the inherit value of the shares goes back to the value of the company itself. But as of yesterday GME was still shorted something like 135%.
It is completely unfair that Citadel and others stepped in and forced that price lower by preventing people from buying and only allowed selling, much less prevented people from participating.
Matt Taibbi was my favorite financial beat reporter in the lead up to and aftermath of the 2008 collapse. Learned a lot about just how dirty Wall Street is back then. Anyway, here's a nice read on the Bear Stearns collapse.
In the process of searching for this article, I found a great post on Seeking Alpha that (sort of?) refutes small points in Taibbi's article, but is also a pretty good summary. You can read it here.
That last article covers even more than just naked short selling. It's not a free site, but you get to read two articles for free. If there's interest, I can copy to WAM. A snippet very relevant to the current GameStop fiasco:
The same problem exists on the long side. When a naked short has to be bought back, there are insufficient shares available to do so. This creates a dislocation in price to the upside. While everyone talks about "bear raids" nobody talks about synthetic and fraudulently-generated short squeezes - yet they are just as pervasive in impact as naked shorting, but in the opposite direction.
How many of the so-called "vertical" moves we have so often seen in stocks since last fall, in both directions, can be attributed to this?
The answer? Most of them.
The only check and balance on this is to not exempt market makers from the constraints that everyone else must follow - that is, you can't short shares you cannot actually borrow, and you can't buy something that nobody is willing to sell at the desired price. Put more simply, the quantity of a given stock in "float" is in fact fixed, determination of the float is made by the corporation when they decide how many shares to issue, and nobody can be allowed to count a given share twice, no matter how that double-counting would otherwise occur. -
As of mid-day yesterday...1to392831weretaken said:
Maybe I'm missing something, but that sounds like complete agree on all points. Did not know it was still shorted to that extent, though. But I guess that's my point: That never should have been allowed to happen in the first place. Make investors actually locate shares.HoustonHusky said:
Agree and disagree...Chamath got rich being a dick at early Facebook, and advertising the short squeeze followed by quietly exiting out and donating it to charity is chickenshit.1to392831weretaken said:This is nothing new. Large quantities of naked shorts were the catalyst for the 2008 collapse. To me, it's a little late getting all pissed off about retaliatory actions. Where was the anger that the stock was allowed to be shorted to a greater extent than it was even valued in the first place? The time for regulation was a long time ago, to prevent the problem in the first place.
The long interview posted above was great, and I finally have an understanding of what this story is about (wasn't following it at all), but I have to admit that, although whoever the guy is that was being interviewed owned that anchor completely, the anchor did land one point: The stock is ridiculously overvalued now, and it's going to be all of these Joe Blow retail investors who are going to take it in the shorts when it comes back to Earth. The rich guys who fomented the stock buy and bailed before it crashed are going to make out like bandits. There's a reason the guy is claiming he's going to give the profit from the trade to charity: He, too, knows it's going to get ugly, and he was quite the contortionist in dodging that question multiple times. Two wrongs don't make a right, and the only reason hedge funds manipulating stocks directly is worse than billionaires manipulating stocks in the opposite direction by riling up useful idiots is that the latter is way funnier.
I don't like that there is an investor class with different rules and rights than the average schmuck. I'm enjoying that this institutional investor class got fucked in the ass (a little payback for 2008). But the anchor was right (for the wrong reason): Gamestop's fundamentals aren't there. It's a company that hasn't had a reason to exist for at least three or four years, no plan that I'm aware of to change that, etc.
TL;DR: The answer to retail investors colluding to "break" the market right out in the open in the same way institutional investors collude in private to break the market and destroy companies for profit isn't to widen the investor class gap even further by imposing yet more restriction on retail investors, it's to impose stricter regulation on ALL investors that makes market manipulation illegal in the first place.
Make short sellers ACTUALLY locate the stock they're selling. Done. After that, if idiots on Reddit want to pump up a stock, it's their dumb asses when it crashes. Am I taking crazy pills here?
Gamestop as a business isn't worth the stock price, but you can say that about a lot of companies right now. The short guys sold 40% more stock than in existence on a bet that the price will drop and they can buy it back cheaper...in effect they have been depressing the price of the stock for a long while now by flooding the market with non-existent shares forcing the price down. They changed the game to make it a market for those shares (and not the business itself), and if people want to own the shares to hold over their head and force them to buy it back at 10x that is their right...eventually the market will find a price where enough people give in and sell that they can start covering and the inherit value of the shares goes back to the value of the company itself. But as of yesterday GME was still shorted something like 135%.
It is completely unfair that Citadel and others stepped in and forced that price lower by preventing people from buying and only allowed selling, much less prevented people from participating.
Down a little more today:
Of course, corrupt actions like this may be helping...
-
Its Twitter so who knows if its true (don't have RH account so no idea what the interface looks like) but a lot of these claims going around:
Note its currently trading at ~$240/share... -
A few brokerages opened up trading on everything. Seems to be helping the price action. Tomorrow is when a lot of the shorts have to be covered. Will be interesting to see how that affects things, not to mention if the moratorium on trades holds - been several class action suits filed already.HoustonHusky said:Its Twitter so who knows if its true (don't have RH account so no idea what the interface looks like) but a lot of these claims going around:
Note its currently trading at ~$240/share... -
Just chiming in to say that just because 140% of the float is shorted doesn’t necessarily mean anyone was naked shorting.
If you don’t understand that then you don’t understand short selling. -
Raises handFremontTroll said:Just chiming in to say that just because 140% of the float is shorted doesn’t necessarily mean anyone was naked shorting.
If you don’t understand that then you don’t understand short selling. -
You own one share of $gme. You lend it to me and I sell it short. @Swaye hears in a peyote filled vision that the white people are making all the money again and decides to jump in and buys that share from me. But then Swaye lends his share (which is really still your share) out to another short seller who sells it to someone else.RaceBannon said:
Raises handFremontTroll said:Just chiming in to say that just because 140% of the float is shorted doesn’t necessarily mean anyone was naked shorting.
If you don’t understand that then you don’t understand short selling.
Now 200% are short and 300% are long. -
Will ponder this as well. ThanksFremontTroll said:
You own one share of $gme. You lend it to me and I sell it short. @Swaye hears in a peyote filled vision that the white people are making all the money again and decides to jump in and buys that share from me. But then Swaye lends his share (which is really still your share) out to another short seller who sells it to someone else.RaceBannon said:
Raises handFremontTroll said:Just chiming in to say that just because 140% of the float is shorted doesn’t necessarily mean anyone was naked shorting.
If you don’t understand that then you don’t understand short selling.
Now 200% are short and 300% are long. -
This seems disturbing, yet predictable.
