Maybe we should short the stock of the studio movie company.... Or they were reading this thread and actually did not have a new idea at all.Quote:
Originally Posted by BmillsSkier
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Maybe we should short the stock of the studio movie company.... Or they were reading this thread and actually did not have a new idea at all.Quote:
Originally Posted by BmillsSkier
Now that’s the out of the box kind of thinking we need.Quote:
Originally Posted by RShea
And you’re right. Wouldn’t be the first time this forum was tapped for its excellence.
This is the part this jong doesn't understand. Why does RH need so much cash to support the GME market? Doesn't the market create the cash when a shareholder wants to sell? Or perhaps they hold a part of the margin accounts? I know nada.Quote:
Originally Posted by Stu Gotz
Incidentally, they just raised $3.3B over the past few days and are rumored to be considering another $1B on top of that.
I can't believe this story is still getting traction? We are supposed to be taking about the royal family and birth certificate's.
What's wrong with you guys
I texted my brother this weekend (works in finance) and asked if he'd dabbled in the GME craze. He said yeah, he'd got a nice return from a small bet. I pressed him for details:Quote:
Originally Posted by nickwm21
He bought GME in August at $4.50 on a whim. Sold half when it hit $10 and was happy; decided to sit on the rest. Sold the rest on Tuesday at $330. 6000% return...
.Quote:
The GameStop stock situation isn’t about populism. It’s about whether the market is ‘real.’
By
Mikhail Klimentov
Feb. 1, 2021 at 8:33 a.m. MST
Last week, my younger sister, who is still in high school, texted me. “how can i buy stocks i wanna be rich,” she wrote. She hoped to buy stock in GameStop and AMC, as well as the cryptocurrency Dogecoin.
GameStop is a company that owns stores, many based in malls, that sell video games, consoles, peripherals and assorted knickknacks and merchandise. But these days, GameStop is also an inkblot. Talking heads on stock-watching panel shows have compared the stock’s surge to the storming of the Capitol. Scott Galloway, the podcaster/professor/thought-leader/influencer, tweeted that the situation indicated that young men weren’t having sex. Video-game-related media has conflated the people buying GameStop stock with gamers. MAGA, Stephen K. Bannon, GamerGate and Occupy Wall Street have all been raised in an effort to explain the situation.
The most popular narrative framing has been that of the populists (a phrase that doesn’t really mean much anymore, beyond just “a collection of guys who are mad”) versus the Institutions — and there’s some merit to this. On r/wallstreetbets, the Reddit forum that sparked GameStop’s explosive growth, you’ll find tons of posts about growing up with little and a near-Zen comfort with losing it all just to stick it to the hedge funds. (Never mind the lessons learned from some of the juiciest and most viral r/relationships posts.) The New York Times’s write-up closed with this quote from the wife of a retail investor: “Eat the rich.”
This is an easy way of understanding this issue because it’s the lens through which we’ve viewed much of the past half-decade. But my sister’s text reminded me that there’s an underlying distinction that is maybe a bit more accurate, at least as it pertains to movement in the stock market; it informs the insurgent versus establishment narrative. It’s this: Do you think value in the market is merely socially constructed smoke and mirrors, or the representation of an efficient, working market that follows certain rules and trends?
A brief explainer
A brief explanation is in order.
What is a stock? There’s a technical definition, but for most nonprofessional investors, a stock is a thing you spend money on in hopes that it increases in value. When it goes down too much for you to bear, you sell. In theory, whether the value goes up or down depends on news surrounding the stock, which usually has to do with the underlying company. The underlying assumption is that the market as a whole generally goes up, so if you buy a diverse enough set of stocks, over time you are bound to make a profit. (This is the simplest explanation.)
How do people decide what to invest in? The traditional, econ 101 approach to smart investing is to look at fundamentals — the core facts about a company you might invest in. Do you think the CEO is smart or surrounded by smart people? Does the business model make sense? Does the business have long-term prospects?
About GameStop, two pictures formed. The conventional wisdom, based on one view of the fundamentals, was that the company was going the way of Blockbuster. The firm hadn’t posted profits in years. Many of its stores were based in malls — the subjects of their own, parallel panic regarding the future of retail. Meanwhile, game purchases are swinging in the direction of digital downloads and even streaming.
What you need to know about GameStop’s stock price chaos
The other perspective, associated most closely with Keith Gill, the Reddit user known as DeepF---ingValue and a prominent first mover on GameStop, was that the company had underlying strengths: a big base of reward points members, an upcoming inflow of money from the release of the new console generation, a new set of activist board members with a background in e-commerce. Once other people noticed, the price would go up.
Another data point also merits attention: Even in a pandemic, e-commerce makes up only a small percentage of total retail.
“If your memory of the past year was erased, and I told you that a pandemic would rip across the world, rendering us all loyal supplicants to online shopping, what percent of sales would you assume e-commerce would be of overall consumption?” wrote the analyst Elena Burger. “The reality — a little over 14% of sales — is actually shocking. The takeaway shouldn’t be ‘e-commerce is eating the world’ it should be ‘despite lockdown, store closures, mass layoffs, and global logistics networks that rival militaries in terms of sophistication, e-commerce was less than 1/6th of sales in the US.’”
Still, the people who aligned with the former view, believing the stock was primed to go down, bet heavily on that outcome, in overwhelming numbers usually associated with companies at imminent risk of failure.
“Unless they thought there was obvious malfeasance, or they thought that something really bad was going to happen, then you can justify it,” said Harrison Hong, professor of financial economics at Columbia. “When you put on that big of a trade, you have to pretty much expect on the short seller side that news is imminent. … The stock is finished.”
Their bet backfired, and several prominent hedge funds suffered heavy losses as a result.
An efficient market?
Last week, the conventional wisdom that had overtaken Twitter was that the market was all fake and not reflective of the real economy. There’s merit to that perspective, and it’s clear how a rational person might arrive at that conclusion. But it doesn’t really help to hear that the market is imaginary or fake, especially in the context of people making heaps of real money.
So when the GameStop story began to catch the media’s attention, I sought the advice of experts. How normal was all this? And did it matter if a stock was wildly mispriced?
The overwhelming answer was that all of this had happened before, in varying configurations and with different valences. Short squeezes — the technical name for when the price of a stock goes up, hurting those who bet against the stock — had happened in the past. Prominent examples, like that of Volkswagen in 2008, are taught in econ courses. And prices changing in response to signals sent by prominent investors certainly wasn’t new. Gill convincing posters on wallstreetbets to invest in GameStop isn’t materially different from Warren Buffett saying that he likes a stock, with individual investors taking that as a signal to buy.
Reddit’s r/wallstreetbets astronomical rise
The issue that seemed to concern the more measured economists was that GameStop’s stock price appeared to be ballooning beyond the merits. For investors who think in terms of fundamentals, what was happening with GameStop’s stock was a slap in the face — anathema to “the point” of the market. On Friday, Sen. Elizabeth Warren (D-Mass.) penned a letter to the acting chair of the U.S. Securities and Exchange Commission, asking: “What steps will the SEC take to ensure that securities markets better reflect prices that are in line with the intrinsic and fundamental value of underlying companies?”
There’s a problem with this line of thinking. There’s compelling academic literature that suggests fluctuations in stock price often have very little to do with underlying news. In 1988, three academics from MIT and Harvard found that only about one-third of fluctuations in stock returns can be traced to specific news about a stock or company. A reassessment of that paper in 2013 was even more critical. “It is (if anything) more difficult to tie major stock price movements to fundamental economic news in a way that’s sufficient to rationalize the size of the observed move,” wrote Bradford Cornell, author of the 2013 paper and a professor at UCLA.
But popular culture is rarely moved by academic papers. More viscerally, people observed the market going up — even as a pandemic killed hundreds of thousands and decimated the business landscape. A rational observer could find the market’s logic inscrutable: Why, for example, is Tesla valued more than big automakers that sell many more cars than Tesla? And so: If the market seems to be primed for gaming, why not get in on the fun of boosting GameStop, and make a pretty penny doing so?
More confusing still is the fact that GameStop’s inflated price could easily be rationalized.
“We only know after the fact if it was mispriced or not,” said Andy Wu, assistant professor at Harvard Business School. “If GameStop was able to raise additional capital and reposition the company, especially with the help of its activist board members, and reposition the company in a stable position to justify the stock price, then it could be a self-fulfilling, positive prophecy.”
The example of Blockbuster is instructive, Wu said. “It turns out Netflix didn’t actually take that much market share away from Blockbuster. But the problem is, they have a large store footprint and a large fixed-cost base. And so you don’t have to steal that much share from Blockbuster in order for Blockbuster to go bankrupt,” Wu said. “Imagine now if Blockbuster suddenly had access to an overpriced stock price and could have extra capital to sustain itself as it bought itself time to sell off its stores. Then that time selling off the stores is enough time to avoid the bankruptcy risk and justify a higher stock price.”
Robinhood and Citadel’s relationship comes into focus as Washington vows to examine stock market moves
.Quote:
There’s a continuum of outcomes when it comes to mispriced stocks. Melvin Capital, which lost billions of dollars shorting GameStop stock, is not really essential to the health of the financial system. But if the FAANG stocks (Facebook, Amazon, Apple, Netflix and Google/Alphabet) were found to be severely mispriced, that could have enormous consequences.
“If you’re just wrong as a society in terms of where you place your bets about businesses, ultimately that’s pretty bad,” Hong said. “These companies won’t grow, your money won’t grow. People who decide to work for these sectors — their careers won’t grow.” One targeted mispriced stock, especially at GameStop’s tier, probably doesn’t matter, though.
That’s where the insurgency narrative starts to fall apart. Gill and the hedge fund managers have a roughly similar understanding of the mechanics of the market; they simply disagreed on the prospects of one or several stocks at the margins. But the people who have driven GameStop’s stock up — those amused by the prospect of buying stock in a store with an annoying-to-bad reputation among gamers, those who wanted to get into the communal aspect of investing with their friends, and now those, like my sister, who simply want to get rich — don’t view the market in those terms.
Meme stonks
Some analysts have described GameStop and other stocks like it as “meme stocks.” They’re right, in a sense.
If you are a younger person, you’ve probably encountered an older relative or friend sharing a meme well after it expired from popular culture. On Inauguration Day, everyone got a kick out of Sen. Bernie Sanders’s mittens. A few days later, the meme was over, driven into the ground by the zealously online. Not so to your extremely offline relatives. But by the time they got to the joke, the spark was gone. So it will be (probably) with GameStop.
The conventional wisdom about stocks is to buy index funds — assets that fluctuate up and down parallel to the general market (which, as we’ve learned, tends to go up in the long run). The underlying logic is that by the time you, a nonprofessional, learn about a promising new stock, institutional investors have already taken action. You’ve missed out on the biggest moves.
Some brokerages, such as Robinhood, have been accused of encouraging amateur investors with little experience in or understanding of the market to use the app. In December, regulators in Massachusetts accused Robinhood of using gamification — such as colorful confetti that appeared on-screen after deposits and trades — to “incentivize continuous and repeated engagement with the application.” The securities regulators listed examples of the kinds of traders on the platform: “Since February 1, 2020, Customer One has made 12,748 trades with Robinhood, an average of approximately 92 trades per day during that time frame. Customer One had no investment experience prior to trading with Robinhood,” the filing alleges.
By prioritizing onboarding investors over educating them, brokerages such as Robinhood might exacerbate the risks around volatile stocks including GameStop. If you just learned about GameStop’s promising stock, you’ve probably already missed out on the most astronomic growth. But even if GameStop goes on to reach progressively higher peaks, if you’re not a wallstreetbets lurker or hanging around the Discord server — in other words, if the GameStop news takes a while to reach you — you might miss the signal, spoken or implicit, to sell.
That sell signal can come from anywhere, at any time. Gill might announce he’s selling his shares. Elon Musk might tweet that he’s done with GameStop. However improbably, the SEC might take action. Brokerages might restrict your ability to buy or sell shares, as Robinhood did last week. And if you’re just not plugged in — if you’re in a meeting or in class or asleep — you still open yourself up to risk.
“At some point, it ends. Famously, the market can stay irrational longer than people can stay solvent,” said Harry Mamaysky, professor at the Columbia Business School. “I feel like this is the kind of thing that everyone can lose money on. It’s one of those situations where it’s not obvious that it ends well for anyone. … I think when it all ends, it’ll be very, very obvious to everyone how it should have ended.”
Yeah it was a typo or whatever, but it was what was written so I left it there rather than changing what they wrote.Quote:
Originally Posted by billyk
Can LeeLau or someone else who at least has me fooled in to thinking they know what the fuck they're talking about please explain "Fails to Deliver" and how they would matter in this GME situation? And if they are sky-high for this stock in January? Does this question even make sense?
I feel like a guy who's doing well at an interview but has no idea what the job is even about...
There already are!Quote:
Originally Posted by Cono Este
Bunch of brokers won't let people buy more than 5 shares (sometimes less) of these terrible "meme stocks." But you can of course SELL as many back as you want! - NEW FOR 2021
NYSE now won't let me put in a sell limit order for each share at $10,000. I could last week, and early this am, but not now. Dunno what the limit is now. - NEW FOR 2021
And this is just what these cheating scumbags have come up with in the past 72 hours. Give 'em time, and they'll screw us even better!
This. It's all about trading VOLUME, not the price. Now, if we see a price drop with huge volume, then there's a problem. This short ladder shit is so transparent. I keep buying more at the dips.Quote:
Originally Posted by paulster2626
Had to dip a toe back in AH when it hit $175, can't get off this dragon!Quote:
Originally Posted by TahoeJ
It’s a settlement reference. For an option buyer they need the cash to exercise an option. For ex. Feb 30 call. Need the first 30 bucks to take possessin of stock, or u sell call on ex.Quote:
Originally Posted by paulster2626
It effects expiration, volume is up, people are “closing” positions. In general, if the big guys are short everything, don’t expect big movement. If they long it all, you’re going to get screwed. Very hard to hedge options that are either 0 delta, or 100 delta. And you do nit want to just do nothing, and go home thinking shit youre still short expired worthless. Settlement is Saturday night, news can come out and you could be assigned on options that were out of the money.
Have not looked, I bet you these puts all are bid until the bell rings, probably calls too of course.
Lots of settlement worry’s for clearinghouse in this piece of shit.
If BofA didn’t take us all down, maybe gameshit will.
Sent from my iPhone using TGR Forums
i got some at 185- what could possibly go wrongQuote:
Originally Posted by CovertM
I'm fully out now. Not sure I have FOMO on you guys doubling down yet, but I'll be watching closely tomorrow.
Am deep into the house money that I'm good to get some lottery tixQuote:
Originally Posted by kathleenturneroverdrive
Shares in the RSP to let it YOLO. I want to sell covered calls on this till the cows come home
A few via the 185s "naked long"
The rest are all nicely collared (long calls, long puts) at 450.
Hate to admit I cashed out Friday with some solid gains for the year. Paperhand or smart? So hard to get off this damn dragon out of constant FOMO!Quote:
Originally Posted by kathleenturneroverdrive
Heard a segment tonight on the news about a 10 year old and his Mom wanting to teach him a bit about the market and investing. She let him pick a stock and he bought some shares of GME sometime back when it was trading at $6. He just cashed out last week and his profit was $3000. He was interviewed and stated he is saving $2200 of it.
It's only a good idea to cash out if a bunch of you keep fucking doing it! ugh... HOLD. Or if you're really nervous and can't afford the risk, just cash out your original investment and at least let the rest of it ride as play money and help the overall cause.
Set to buy more with this aftermarket dip.
CME raised margin on silver. another collar from the establishment against the individual.
I really, really hope they aren't dumb enough to introduce new regulations that only apply to retail investors. You could see an outright revolt with people cashing out all of their investment accounts in protest...
What cause? Somebody wins. Somebody loses. That’s it.. place your bet.Quote:
Originally Posted by TahoeJ
Why would it go higher again?Quote:
Originally Posted by TahoeJ
From my opinion, this was a liquidity issue, triggered by margin calls and short stock buy ins. That much has already happened. Maybe it will continue to happen, that’s anyone’s guess, but there is nothing else, no fundamentals, to send this any higher.
Sent from my iPhone using TGR Forums
I think we missed the “cause” by maybe seconds last week, but now the deck (and maybe the fundamentals) are stacked against it happening again. I hope that changes.Quote:
Originally Posted by 4matic
"That much has already happened." Not really. There's still a shit ton of shorts remaining, that's the whole point of all this. There's also some activity that suggests there may be big money hedging on the upside.
Not really. This was before today’s trade:Quote:
Originally Posted by TahoeJ
“Short interest in the video-game retailer plummeted to 39% of free-floating shares, from 114% in mid-January, according to IHS Markit Ltd. data”
Lies! We shall hold strong until the very end!! Well, except those paper hand bitches above. But still! LIES!!Quote:
Originally Posted by 4matic
Sent from my iPhone using TGR Forums
I imagine once this ticker tripped the activity scans, it was game on, so to speak, for the hedge guys; even if Reddit folks set off the squeeze, I'm guessing it was the big money that mostly rode it upward from there.Quote:
Originally Posted by TahoeJ
Nice that some little guys made a bit of money, but it's shark infested waters at this point, and I expect playing this will be a net loss for little guys in aggregate from here on.
So like pretty much every single stock-picking endeavour out there. Again, this is normal and happened the other 51 weeks in the past year that nobody cared about. Only time anyone started caring about the little guy was when the billionaires started bleeding. Doesn't anyone else think this is strange?Quote:
Originally Posted by bobz
Maybe new traders should have to read the entire investopedia site before their $600 account kicks in.
The "cause" being to properly trigger the short squeeze and make money, of course. And hopefully the longer term effect is this will scare hedges from overplaying their short positions, which can have real life consequences for companies.Quote:
Originally Posted by 4matic
Careful on what data you actually trust right now (most of those providing it say as much). There are currently more positions being held than actual shares exist, so there's a few ways of calculating this that can show a different picture. This is also why the squeeze is still in play. Will it happen? Maybe... maybe not. I got in early enough it's house money at this point. Like Lee said above, comfortable buying some dip lottery tickets on top of it.Quote:
Originally Posted by 4matic
The short ladder attacks are definitely real (and pretty blatant), and that suggests there are still some very scared big money shorts out there.
Conspiracy theories and investing. What could possibly go wrong.
Markit data is really solid.Quote:
Originally Posted by TahoeJ
Interesting morning so far!
Yep. I don’t believe in any of it. Sure, you’re all getting ripped off for a few pennies here and there, but to think in today’s market it’s that easy to manipulate anything is wrong. That’s one reason I quit trading, they stopped us from just pricing options for almost whatever we wanted. Those days are long gone.Quote:
Originally Posted by Bunion 2020
Sent from my iPhone using TGR Forums
Wall Street engaging in shady behavior is a conspiracy theory now?Quote:
Originally Posted by Bunion 2020
Even if you don't buy the short ladder theory, there's zero doubt that restrictions even on cash accounts happened. That's shady AF.
There’s nothing shady about it. Short interest is public information. What you saw is the power of short selling gone wrong. It’s been like that forever.Quote:
Originally Posted by TahoeJ
A bigger problem is so much of the float is tied up in index funds there is no supply.
Here's an interesting quirk regarding option volatility. If you bought a GME put option with a $10 strike when the stock was around $50, and sold the same put at the recent high you would have been up around 400%.
So everyone wins!
No it isn’t. It’s all spelled out in your brokerage and clearing agreement.Quote:
Originally Posted by TahoeJ
RH is responsible to clearing for any debit balances.
Just one snip from SEC.GOV
B. On all transactions, the Introducing Firm shall be solely and exclusively responsible to the Clearing Firm for any loss, liability, damage, cost or expense (including but not otherwise limited to fees and expenses of legal counsel), as incurred, incurred or sustained by the Introducing Firm or the Clearing Firm as a result of the failure of any Introduced Account to make timely payment for the securities purchased by it or timely and good delivery of securities sold for it. The Introducing Firm furthermore agrees to be solely and exclusively responsible for the payment and delivery of all "when issued" or "when distributed" transactions which the Clearing Firm may accept, forward or execute for Introduced Accounts.