Anyone want to explain the Gamestop thing

[katilac]

3 hours ago, frogger said:

Reddit investors are actually colluding and since none of this is based on real value,  there will be losers. 

There are always losers. 

I disagree that Reddit users are colluding - they are not competitors who are secretly working together. 

2 hours ago, hjffkj said:

only if he sells before this crashes because it will.  My bet is most people who jumped on this bandwagon will not sell in time and will be stuck holding the bag

A bunch will, sure. That's the nature of gambling, you have to have losers. But I will say that I know several people who have cashed out already. 

2 hours ago, hjffkj said:

I think this is going to be ultimately bad for retail investors.  Regulations aren't going to be put on the hedge funds who created this issue.  It is going to be on the smaller investors who found a way to take advantage of this.

I mean, maybe? But why should individual investors of modest means be on the hook to intentionally not try to make money so that other investors are protected? What I hope happens is that there is a Great Awakening to the fact that the game is rigged, and no one expects average people to really be able to gain wealth in the stock market. That's for already wealthy people. I hope average people flip the roulette table over. 

[katilac]

[JustEm]

37 minutes ago, Arcadia said:

The lowest was around $2 and the highest was around $97. The person must be holding a substantial amount of AMD stocks to make that high a gain if he didn’t sell. My husband has AMD stock from the early 2000s because he used to work there and the gain is low.

He bought a significant amount of shares when it was about $3/share. It was a significant part of his portfolio but he was 21 at the time and had no real responsibilities.

[Lady Florida.]

2 hours ago, Pam in CT said:

 

But the house has house advantage.

This. Never forget this.

[Bootsie]

Someone enters into SHORT position when they sell shares of stock that they have borrowed.  Someone would do this when they think that the price of a stock will fall:

I borrow 100 shares of GME and sell them for $18 per share ($1800).  I now owe someone 100 shares of GME.  If I can buy the shares next week for $10 per share ($1000) and pay the person back, I have made $800.  

It is possible for more shares to be shorted than the number of shares available in the market (as was the case with GME).  It is like Betty borrows a cup of sugar from Alice and then Caroline borrows the cup of sugar from Betty.  Now Caroline owes Betty a cup of sugar AND Betty owes Alice a cup of sugar.  But, there is only one cup of sugar.  

A "naked short" would be illegal.  A naked short would occur if I sell shares of a stock I do not have control over (so I didn't really borrow the 100 shares).  It would be like I told you that I was selling you a cup of sugar--come and get it-- (but I didn't have any in the house)  AND then I was counting on going and finding some sugar to buy or borrow before you got to my house.  

The problem (danger)  is  that if I borrowed 100 shares of GME and sold them, I owe 100 shares of GME; it is not like I owe a constant $1800.  So, if GME goes up to $60 per share, it will cost me $6000 to buy the shares I owe; if the price goes to $70 per share, it will cost me $7000 to buy the shares I owe.  My broker becomes worried about whether I will actually be able to afford to buy the shares I owe, so the broker forces me to buy the shares and pay back the loan NOW.  As a lot of people are in this position and have to buy shares, the increased demand can drive prices up even more, causing a domino effect.  

[Bootsie]

12 minutes ago, Thatboyofmine said:

So, how do you buy stock if you don't have money first?   There is something (don't know what it's called) that Robinhood has 'asked' me to do which sounds like I can basically buy on credit, kind of 🤷🏻‍♀️.   At least that's what it sounds like.   Is that what has happened in this case?   When I signed up, I put in $100 and that's it for now.   So for two months, I've only bought and sold on that $100.   Did those people 'borrow' to buy GameStop and whatever? 

If you place $100 in a brokerage account and can purchase up to $100 of stock, it is known as a "cash account".  

If you place $100 in a brokerage account and the broker will make you a loan of $50, so that you can purchase $150 in stock, it is called a "margin account".  Buying $150 with $100 of your own money and $50 of borrowed money is called "Buying on margin"  The $100 of your money is the "margin" and the $50 is a margin loan that the broker will charge you interest on.  

 

[HeartString]

26 minutes ago, Thatboyofmine said:

 

So, how do you buy stock if you don't have money first?   There is something (don't know what it's called) that Robinhood has 'asked' me to do which sounds like I can basically buy on credit, kind of 🤷🏻‍♀️.   At least that's what it sounds like.   Is that what has happened in this case?   When I signed up, I put in $100 and that's it for now.   So for two months, I've only bought and sold on that $100.   Did those people 'borrow' to buy GameStop and whatever? 

 

 There is also insurance the hedge funds can buy to insure themselves against loses when they short stocks, which I understand even less. 

 

The people buying through Robinhood weren’t shorting though, were they?  I thought the hedge funds were shorting the stock (betting it would go down) so the Redditors bought the stock the normal way to drive the price up to mess with the hedgefunds? 

[Carrie12345]

14 minutes ago, Cnew02 said:

 There is also insurance the hedge funds can buy to insure themselves against loses when they short stocks, which I understand even less. 

 

The people buying through Robinhood weren’t shorting though, were they?  I thought the hedge funds were shorting the stock (betting it would go down) so the Redditors bought the stock the normal way to drive the price up to mess with the hedgefunds? 

Until Robinhood (and others) stopped allowing newbies to buy certain involved stocks. 🧐

[Lecka]

I have thought mean short sellers were trying to put Game Stop out of business.  
 

And then people want to save it because it’s a cool store to go into and browse and chat with store clerks.  
 

I’m sure it’s suffering during the pandemic, but there are always people in there when I go in.  
 

I would be sorry to see them go out of business.  
 

 

[TravelingChris]

On 1/29/2021 at 5:39 AM, Murphy101 said:

It is just as legal as any hedge fund.  Which was the point of Reddit’s outrage. That hedge funds and billionaire investors target companies to purposely propel a decline for those 3rd parties profit. 
 

And I *think* it is illegal to freeze the market sales but only for some buyers/sellers.  I think that on kitty allowing hedge funds to deal to cut off all other buyers is crap that needs investigated.  Either the market is open or it isn’t. But they shouldn’t be allowed to say this hedge fund can mitigate their bad gamble and these other guys can’t. 
 

[Sentence deleted because ugh, don't bring politics into this.] 

[Deleted by moderator]

[Bootsie]

24 minutes ago, Thatboyofmine said:

Margin acct!  That's what they've asked me about.    I'm not doing that, it seems too risky for me.    
Thanks for the explanation, bootsie!

I have heard some complaints about Robinhood encouraging margin accounts for people who do not understand what they are 😞   I know some of the other brokerage firms have been highly critical of Robinhood for this practice.

[Bootsie]

1 minute ago, Lecka said:

I have thought mean short sellers were trying to put Game Stop out of business.  
 

And then people want to save it because it’s a cool store to go into and browse and chat with store clerks.  
 

I’m sure it’s suffering during the pandemic, but there are always people in there when I go in.  
 

I would be sorry to see them go out of business.  
 

 

Short sellers wouldn't be trying to put GameStop out of business.  They simply think that the stock of the company is going to go down in price and want to sell it now and then buy it at a lower price later.  (Or, if I think they will go out of business, then I might want to short the stock.)

[HeartString]

10 minutes ago, Carrie12345 said:

Until Robinhood (and others) stopped allowing newbies to buy certain involved stocks

A lawsuit was filed against RobinHood and the other places that did that already.  Seems like it was ready to go.  So there’s that.  I agree, it’s awful, why try to protect the hedge funds?  

[Carrie12345]

2 minutes ago, Cnew02 said:

 

A lawsuit was filed against RobinHood and the other places that did that already.  Seems like it was ready to go.  So there’s that.  I agree, it’s awful, why try to protect the hedge funds?  

I’ve learned more about the stock market in the past 24 hours than in 43 years, and now I’m completely fascinated.  Still trying to wrap my head around some of the whys.

[Forget-Me-Not]

5 hours ago, frogger said:

With a name like Robinhood...

 

I saw something on Twitter this morning where people were saying Robinhood should change its name to Sheriff of Nottingham 😂

I have a (hopefully not too dumb) question about the borrowing part of the shorting. Do the people who own the shares have any say in whether they are borrowed or by whom they are borrowed? 
 

Trying to wrap my head around this. We’ve had a good couple of weeks of civics lessons; now on to economics I guess 😄

Edited January 29, 2021 by Forget-Me-Not

[Carrie12345]

3 minutes ago, Forget-Me-Not said:

I have a (hopefully not too dumb) question about the borrowing part of the shorting. Do the people who own the shares have any say in whether they are borrowed or by whom they are borrowed? 

“Most shares held by brokerage firms on behalf of their clients are in “Street name,” which means that they are held in the name of the brokerage firm or other nominee rather than in the name of the client. This way the brokerage can loan the stock out to other investors.”

https://www.investopedia.com/terms/s/stock-loan-fee.asp

[Lilaclady]

8 minutes ago, Forget-Me-Not said:

orrowing part of the shorting. Do the people who own the shares have any say in whether they are borrowed or by whom they are borrowed? 

No they don’t. The people who short stocks don’t pay the full price of the stock. They are paying for the ‘movement’ of the stock. So a $100 can be shorted for $10. 

Edited January 29, 2021 by Lilaclady

[Forget-Me-Not]

4 minutes ago, Carrie12345 said:

“Most shares held by brokerage firms on behalf of their clients are in “Street name,” which means that they are held in the name of the brokerage firm or other nominee rather than in the name of the client. This way the brokerage can loan the stock out to other investors.”

https://www.investopedia.com/terms/s/stock-loan-fee.asp

Oh I think I see. Similar to the way the bank lends out the money I deposit to make interest on it? 

[Lecka]

Good to know nobody is trying to put Game Stop out of business!

Thanks!

I can see why people would think there stock would fall, unfortunately.  Their online is nothing special.  

[Lilaclady]

But the fundamentals of the GameStop

4 minutes ago, Lecka said:

Good to know nobody is trying to put Game Stop out of business!

Thanks!

I can see why people would think there stock would fall, unfortunately.  Their online is nothing special.  

business is still that it is not doing well and may well go out of business. Short selling while I personally do not care for it, supposedly has helped the market to see businesses like Enronnthat has issues and brought it to light. 

[Corraleno]

I hope there is a mass exodus from Robinhood over this. They were fined $65 million by the SEC last year for misleading customers about how they earn their money and for encouraging naive and inexperienced newbies to make risky investments they didn't understand. They offer "no-fee trades" but were hiding the fact that they make money by collecting fees from the Wall Street firms they place the trades with, and they would use whichever firm paid them the highest fees, which often meant their clients paid higher prices than if they had gone through a different  broker.

[Bootsie]

1 hour ago, Cnew02 said:

 There is also insurance the hedge funds can buy to insure themselves against loses when they short stocks, which I understand even less. 

 

The people buying through Robinhood weren’t shorting though, were they?  I thought the hedge funds were shorting the stock (betting it would go down) so the Redditors bought the stock the normal way to drive the price up to mess with the hedgefunds? 

From my understanding (I am not a Robinhood customer) Robinhood does not allow for shorting of stocks on its platform.  However, they do allow for options trading, which is another way to bet that a stock will fall in value and profit if it does.  

[Murphy101]

54 minutes ago, Lilaclady said:

But the fundamentals of the GameStop

business is still that it is not doing well and may well go out of business. Short selling while I personally do not care for it, supposedly has helped the market to see businesses like Enronnthat has issues and brought it to light. 

That’s not a very sensible reason for short selling or options selling. If investors think the company is going in the tank - there’s literally hundreds of options for getting that message out.

I’m not a fan of GameStop. We used to be.  But then they jacked their buys down to nothing which made trades/resells via them pointless. And then I despised the way they handled Covid and we completely stopped shopping with them over that. 
 

But. It appears many people with that view burnt them enough to leave a lasting impression. They ousted their CEO and got a new one that has decided to take the company into a new business model and attitude. Here is hoping this new surge in possible capitol and free publicity helps that happen. 

Edited January 29, 2021 by Murphy101

[BeachGal]

Hedge fund bigwigs give a lot of money to politicians. I just hope the Reddit masterminds can remain safe.

 

[Murphy101]

On 1/29/2021 at 11:35 AM, TravelingChris said:

[Deleted by moderator]

[Deleted by moderator]

[Bootsie]

58 minutes ago, Lilaclady said:

No they don’t. The people who short stocks don’t pay the full price of the stock. They are paying for the ‘movement’ of the stock. So a $100 can be shorted for $10. 

I am not sure what you mean by those who short the stock do not pay the full price.  A short sell may be like this:

I have $1500 in my brokerage account.  I want to short stock X that is selling for $30 per share.  I borrow 100 shares of X (currently $3000 worth of stock).  Now, I have $4500 cash in my account but I also own 100 shares of X in my account.  I have to pay the full price of X to purchase those shares and pay them back.  If the price goes UP to $35, then I have to pay $3500 to buy the shares (MY loan is in number of shares not a $ amount).  So, now I only have $1000 in my account.  

If the stock price went down to $25, then I could buy the stock for $2500, pay off the stock loan, and I would have $2000 in my account--I made $500 profit.  

In bot cases I have to pay the full price of the stock.  

[Bootsie]

1 hour ago, Corraleno said:

I hope there is a mass exodus from Robinhood over this. They were fined $65 million by the SEC last year for misleading customers about how they earn their money and for encouraging naive and inexperienced newbies to make risky investments they didn't understand. They offer "no-fee trades" but were hiding the fact that they make money by collecting fees from the Wall Street firms they place the trades with, and they would use whichever firm paid them the highest fees, which often meant their clients paid higher prices than if they had gone through a different  broker.

Robinhood makes money from selling its order flow.  They have an incentive to encourage a high volume of trading.  The volume of trading in GameStop has been much higher in the past two weeks than normal.  

[Bootsie]

1 hour ago, Cnew02 said:

 There is also insurance the hedge funds can buy to insure themselves against loses when they short stocks, which I understand even less. 

 

The people buying through Robinhood weren’t shorting though, were they?  I thought the hedge funds were shorting the stock (betting it would go down) so the Redditors bought the stock the normal way to drive the price up to mess with the hedgefunds? 

This could be a very expensive thing for the Redditors to do.  If GameStop was selling for $18 per share at the beginning of the year and a couple of weeks later I buy it for $360 per share to mess someone else up, what do I think is going to happen to me?  So, I buy 1 million shares at $360?  Spending $360,000,000 on GameStop (or a group of us does )  If it is our desire to mess up the hedge funds--what happens next week?  Do I think I will be able to sell my GameStop at $360 per share?  If so, to whom?  Or if its value is really only in the $20 per share ballpark, that is all I will be able to sell it for.  I maybe can cause a headache for hedgefunds, but I will end up paying a high cost.  

[HeartString]

1 hour ago, Forget-Me-Not said:

I have a (hopefully not too dumb) question about the borrowing part of the shorting. Do the people who own the shares have any say in whether they are borrowed or by whom they are borrowed? 

The vast majority of stock shorting is done by large hedgefunds not regular people.   

[HS Mom in NC]

I know nothing about the stock market. 

Someone on my FB feed posted this:

[HeartString]

14 minutes ago, Bootsie said:

This could be a very expensive thing for the Redditors to do.  If GameStop was selling for $18 per share at the beginning of the year and a couple of weeks later I buy it for $360 per share to mess someone else up, what do I think is going to happen to me?  So, I buy 1 million shares at $360?  Spending $360,000,000 on GameStop (or a group of us does )  If it is our desire to mess up the hedge funds--what happens next week?  Do I think I will be able to sell my GameStop at $360 per share?  If so, to whom?  Or if its value is really only in the $20 per share ballpark, that is all I will be able to sell it for.  I maybe can cause a headache for hedgefunds, but I will end up paying a high cost.  

My understanding is that it’s a very short term thing like a day or two.  And it’s literally a game for them.  It’s entertainment like playing the slots or blackjack.  If I feed quarters into a slit I might hit the jackpot and get a million dollars or I might get nothing but the joy of thinking about it.  (I do not gamble ever myself, so I’m guessing at why people play slots).  
The idea is that they are people who play stocks for fun, found a way to irritate the billionaire class and had a super fun day doing it.  Some of them will make a windfall if they tune it right, some won’t.  Its just for fun.  And since it’s an established Reddit group I assume there is a social aspect to it.  

 

 

 

Edit-  I think some people are missing an important part.  They only needed to drive the price up TODAY. When the hedge funds short a stock they have a certain amount of time to pay back the short.  The hope of the hedgefund is that the stock price drops and they make money.  But the redditors drove the price up today on purpose, making the hedgefunds that HAD to buy the stock TODAY buy it high, which drove the price even higher.   This was not a long term investment strategy on the part if the hedgefunds or the redditors. 

 

The Redditors weren’t paying the $360.  They paid $18-$35, some probably for $150 or so, although I bet the people buying at that point were hangers on, not the redditors. Then the hedgefund had to buy at $200 and drove the price to $350 at which point the redditors SOLD! 

Edited January 29, 2021 by Cnew02

[Corraleno]

Well here's a totally crazy and incredibly misogynistic take on the GameStop thing: It's women's fault for depriving men of sex! This is what happens when guys don't get laid enough!  

(And lest you think this is just some rando on twitter, he is a professor of marketing at NYU's business school!)

[Bootsie]

14 minutes ago, Cnew02 said:

 

My understanding is that it’s a very short term thing like a day or two.  And it’s literally a game for them.  It’s entertainment like playing the slots or blackjack.  If I feed quarters into a slit I might hit the jackpot and get a million dollars or I might get nothing but the joy of thinking about it.  (I do not gamble ever myself, so I’m guessing at why people play slots).  
The idea is that they are people who play stocks for fun, found a way to irritate the billionaire class and had a super fun day doing it.  Some of them will make a windfall if they tune it right, some won’t.  Its just for fun.  And since it’s an established Reddit group I assume there is a social aspect to it.  

 

 

 

Edit-  I think some people are missing an important part.  They only needed to drive the price up TODAY. When the hedge funds short a stock they have a certain amount of time to pay back the short.  The hope of the hedgefund is that the stock price drops and they make money.  But the redditors drove the price up today on purpose, making the hedgefunds that HAD to buy the stock TODAY buy it high, which drove the price even higher.   This was not a long term investment strategy on the part if the hedgefunds or the redditors. 

It doesn't matter if the Redditors were doing it for a long term play or not.  If I pay $350 today to help drive a stock up and the stock goes back down to $18 tomorrow --I lose $332.  Maybe they think they are playing a game--but it is an expensive game.  And, not even much of a gamble, because the only wat to make a profit is for the stock to go up even more than the Redditors have artificially driven it up.  

[HeartString]

18 minutes ago, Bootsie said:

t doesn't matter if the Redditors were doing it for a long term play or not.  If I pay $350 today to help drive a stock up and the stock goes back down to $18 tomorrow --I lose $332.  Maybe they think they are playing a game--but it is an expensive game.  And, not even much of a gamble, because the only wat to make a profit is for the stock to go up even more than the Redditors have artificially driven it up.  

But the Redditors aren’t *buying* at $350.  They did all of their buying at less than $100.It’s the *Hedgefunds* buying at $350 because they don’t have a choice.  The terms of their short require them to buy GameStop stocks *today* no matter what the price is. It’s called a “short squeeze”.

 The Redditors knew this and bought up the stock while it was cheap.  I’m sure some late-to-the-party day trader types bought while it was high, but the OG Redditors all bought in bulk while it was super cheap. That was the whole point.  

Edited January 29, 2021 by Cnew02

[BeachGal]

The truth is, some of the big hedge fund managers wield a lot of clout and they can do things to people who irk them. Unjust things. If you want to read about some of the craziness, check out Flash Boys: A Wall Street Revolt.

[HeartString]

3 minutes ago, BeachGal said:

 

The truth is, some of the big hedge fund managers wield a lot of clout and they can do things to people who irk them. Unjust things. If you want to read about some of the craziness, check out Flash Boys: A Wall Street Revolt.

 

That’s true, I’m sure the Redditors never thought about what sort of horrors a bunch of angry billionaires could visit on them. I sure hope none of them have their lives destroyed for this bit of fun.  I doubt they expected it to get as big as it did though.  

Edited January 29, 2021 by Cnew02

[Bootsie]

1 minute ago, Cnew02 said:

But the Redditors aren’t *buying* at $350.  They did all of their buying at less than $100.It’s the *Hedgefunds* buying at $350 because they don’t have a choice.  The terms of their short require them to buy GameStop stocks *today* no matter what the price is. This called a “short squeeze”.

 The Redditors knew this and bought up the stock while it was cheap.  I’m sure some late to the party day trader types bought while it was high, but the OG Redditors all bought in bulk while it was super cheap. That was the whole point.  

I doubt this really occurred to this extreme.  The HedgeFunds are watching trading.  They will have limit and stop orders in place to protect their portfolios from sudden, extreme price moves.  Not perfectly protect, but at least help.  They can probably initiate trades more quickly than the Redditors.  They will also be using some advanced options strategies that will allow them to buy GameStop at a guaranteed price rather than the current market price.  Yes, the short squeeze can be real, but I think that when all is said and done I think we will find that there were a lot of small, individual traders who bought GameStop at inflated prices over the last few days.   

[HeartString]

This is a good, but kind of technical, explanation on how it all ends.  The smart reddit people have already cashed out and the price is being kept up right now by people who are jumping on the bandwagon today after all of the news.  The hedgefunds that can hold on until the price drops will do so, the ones that can’t are getting out now and taking the loss. 
 

https://www.google.com/amp/s/www.bloomberg.com/amp/opinion/articles/2021-01-28/knowing-when-to-sell-gamestop-stock-at-the-top-is-impossible

 

Anyone still in at this point is probably going to be hurt.  The Redditors guys should have sold already.  And anyone that jumped on the bandwagon today should have known better. 

Edited January 29, 2021 by Cnew02

[fraidycat]

47 minutes ago, Corraleno said:

Well here's a totally crazy and incredibly misogynistic take on the GameStop thing: It's women's fault for depriving men of sex! This is what happens when guys don't get laid enough!  

(And lest you think this is just some rando on twitter, he is a professor of marketing at NYU's business school!)

Is it totally crazy and misogynistic, though? Or is it an anthropological understanding of human nature, and more specifically young, adult male human nature and their need to "be strong" and "conquer" (in the general sense, not individual).

I know we've had whole discussions on here in the past about young males needing to roughhouse, chop wood, get plenty of exercise, etc. to "civilize" them for family harmony. I see this tweet as the more grown-up version of that premise. Give them responsibilities and age appropriate socialization (being as we're social creatures with the biological drive to procreate) to keep them out of wars.

 

Edited January 29, 2021 by fraidycat

[BusyMom5]

My DH does stock market stuff for most of our living- dividend paying stocks,  puts and calls.  We have been watching this all unfold and here is my take - the Robinhood investors have been doing crazy stuff to the market all year.  This one has made big headlines, but they have bought stocks worth very little on bankrupt companies, driving prices up.  When they got stimulus checks,  it went crazy.  We are all about the fundamentals of a company- the long term solvency and stability.   Robinhood traders are crazy!  They jump on a stock, tell everyone, and drive the price crazy.  It doesn't have anything to do with the health of the company, it's like like a popularity contest, a fad, and they keep doing it!  Its worked so far bc the market has been going strong, but it isn't a good long term strategy.   I'm kinda with the guy quoted above- I think there is a huge amount of guys out there bored, who are deciding to speculate on stocks  (I refuse to use the word invest bc that involves a strategy, research, ect).  My DH has received calls from several younger 30-40 year old and they all just read a few things and want to jump in!  He will send them deeper articles, but they don't want to research!  The idea is put money in, make money.  They don't realize how much they could loose!!!!!  (And for the record there have been stocks we lost on, particularly when we first bought and weren't as good at research).  They don't want to put in the time or effort.

I guess what I'm saying is that I don't think this is about the hedge fund or companies like GS- its about large numbers of people following trends online without any research- gambling with their money.   I think large numbers of them will loose- Bigly!  And frankly I feel like Robinhood has encouraged it.  

People who think these hedge funds didn't have strategies in place to limit their risk don't understand advanced trading strategies- *I* don't even understand them!  But they are not going down.  It will be those jumping on the bandwagon in the last day who loose.  The little guy sitting in his basement laughing, thinking he tricked the Big Man.  Read about FoMo- Fear of Missing Out.  Its what has these guys jumping on bandwagon. 

Anyone who bought GS should sell- now.  It is not worth the current price and will go down- and a lot of the inexperienced Robinhood traders will loose.  

[fraidycat]

Beware, fellow plutocrats, the pitchforks are coming.... 

Are these RH investors the first line of pitchfork carriers? 🤔

 

Edited January 29, 2021 by fraidycat
Add title of video

[HeartString]

I keep hearing the theory that the people on Robin Hood are mostly bored because there’s nothing to do right now with the pandemic so they are playing with stocks.  I used to read about “playing with penny stocks” and I think the RobinHood people are doing that on steroids.  Young people that still have jobs and have no where to spend money right now are gambling with stocks.  I guess I don’t see the harm in it?  If they put in $100 a month in to gamble with it’s not really much worse than drinking it away in the bar.  Am I wrong?  I don’t think it’s a good investment strategy, but assuming they aren’t using 401k money.  Is it fundamentally worse than feeding quarters into slots or buying lotto tickets? 

Edited January 29, 2021 by Cnew02

[Murphy101]

53 minutes ago, Cnew02 said:

My understanding is that it’s a very short term thing like a day or two.  And it’s literally a game for them.  It’s entertainment like playing the slots or blackjack.  If I feed quarters into a slit I might hit the jackpot and get a million dollars or I might get nothing but the joy of thinking about it.  (I do not gamble ever myself, so I’m guessing at why people play slots).  
The idea is that they are people who play stocks for fun, found a way to irritate the billionaire class and had a super fun day doing it.  Some of them will make a windfall if they tune it right, some won’t.  Its just for fun.  And since it’s an established Reddit group I assume there is a social aspect to it.  

 

Edit-  I think some people are missing an important part.  They only needed to drive the price up TODAY. When the hedge funds short a stock they have a certain amount of time to pay back the short.  The hope of the hedgefund is that the stock price drops and they make money.  But the redditors drove the price up today on purpose, making the hedgefunds that HAD to buy the stock TODAY buy it high, which drove the price even higher.   This was not a long term investment strategy on the part if the hedgefunds or the redditors. 

 

The Redditors weren’t paying the $360.  They paid $18-$35, some probably for $150 or so, although I bet the people buying at that point were hangers on, not the redditors. Then the hedgefund had to buy at $200 and drove the price to $350 at which point the redditors SOLD! 

This. First rule of gambling is never ever bet money you can’t afford to never see again. First rule of stock market. Buy low. Sell high.   The entire premise was to not play a long game. Buy low and the minute it doubles or triples - sell it like a flaming hot potato. Smart people who understood the entire point of this maneuver weren’t waiting to sell at $200 or $300.  They happily sold at probably $50-100. 

15 minutes ago, Bootsie said:

I doubt this really occurred to this extreme.  The HedgeFunds are watching trading.  They will have limit and stop orders in place to protect their portfolios from sudden, extreme price moves.  Not perfectly protect, but at least help.  They can probably initiate trades more quickly than the Redditors.  They will also be using some advanced options strategies that will allow them to buy GameStop at a guaranteed price rather than the current market price.  Yes, the short squeeze can be real, but I think that when all is said and done I think we will find that there were a lot of small, individual traders who bought GameStop at inflated prices over the last few days.   

I doubt it happened to extreme in the sense of putting them out of business. Though I’d be okay with that, it seems the one thing our government consistently manages to do is protect billionaires ass(ets).
 

But it’s currently estimated that hedge funds have suffered a $12+billion loss on this. Probably and ridiculously not enough to put them out of business. But to us normal peons? Yes. That’s an extreme loss. 

[BeachGal]

I have family members who are traders and fund managers. Halting the legal buying of securities is questionable in this situation. The squeeze was put on Robinhood almost certainly. It’ll be interesting to see how it all plays out.

[BeachGal]

9 minutes ago, Cnew02 said:

I keep hearing the theory that the people on Robin Hood are mostly bored because there’s nothing to do right now with the pandemic so they are playing with stocks.  I used to read about “playing with penny stocks” and I think the RobinHood people are doing that on steroids.  Young people that still have jobs and have no where to spend money right now are gambling with stocks.  I guess I don’t see the harm in it?  If they put in $100 a month in to gamble with it’s not really much worse than drinking it away in the bar.  Am I wrong?  I don’t think it’s a good investment strategy, but assuming they aren’t using 401k money.  Is it fundamentally worse than feeding quarters into slots or buying lotto tickets? 

I agree. I used to know some old-timers who bought and sold penny stocks when they were younger. One of them was an old lady named Rose who came here from Italy, learned about penny stocks and made a mint. She was a hoot even in her old age.

I don’t know what’s going to happen to the key players behind this but they are definitely poking the bear.

[Murphy101]

21 minutes ago, Cnew02 said:

I keep hearing the theory that the people on Robin Hood are mostly bored because there’s nothing to do right now with the pandemic so they are playing with stocks.  I used to read about “playing with penny stocks” and I think the RobinHood people are doing that on steroids.  Young people that still have jobs and have no where to spend money right now are gambling with stocks.  I guess I don’t see the harm in it?  If they put in $100 a month in to gamble with it’s not really much worse than drinking it away in the bar.  Am I wrong?  I don’t think it’s a good investment strategy, but assuming they aren’t using 401k money.  Is it fundamentally worse than feeding quarters into slots or buying lotto tickets? 

Not really directed at you but this concept of they are all just bored and screwing with the system for funnies. I’m no spring chicken. I’m not bored. 
 

This is really rather insulting - yes? 
 

That only bored basement dwelling losers (all men of course bc I guess females lack investing anatomy?) who can’t get laid or get a real job would be fed up with an economic system that is screwy as all heck and decide to join forces so to speak to do a little something to screw the big guys back a bit?

I guess it might make the big guys feel less threatened but I don’t think it’s accurate. I think that’s petty BS considering the Reddit folks simply took advantage of the exact same methodologies as the hedge funds. 

Edited January 29, 2021 by Murphy101

[HeartString]

Just now, Murphy101 said:

Not really directed at you but this concept of they are all just bored and screwing with the system for funnies. I’m no spring chicken. I’m not bored. 
 

This is really rather insulting - yes? 
 

That only bored basement dwelling losers who can’t get laid or get a real job would be fed up with an economic system that is screwy as all heck and decide to join forces so to speak to do a little something to screw the big guys back a bit?

I guess it might make the big guys feel less threatened but I don’t think it’s accurate. I think that’s petty BS considering the Reddit folks simply took advantage of the exact same methodologies as the hedge funds. 

I was talking about the rise of RobinHood in general when I mentioned boredom.  For months its been a topic on some of the economics podcast that I listen to.  Trying to tease out if its more of a game, more of day trading thing, is it  good, is it bad.  Some put RobinHoods popularity and growth down to the pandemic and boredom because it has grown so much so quickly.  I haven't heard the basement dweller thing in relation to this at all, outside of the post here earlier.  Mostly what I'm hearing is that it's young professionals, white-collar types who still have a job and now have no where fun to spend their money because its not safe to go out to bars or clubs or plays or whatever it is people without kids do for fun.   

 

That's a separate issue from the Redditors who decided to take it to the HedgeFunds and "poke the bear" a bit.  While reading about this today I learned that these Redditors and others like them have caused some real havoc on the shorts market outside of this big one with Game Stop and I had no idea! They do seem to be making a point about the economic system, which I find really interesting.  I find it sad that so many on here have said, probably correctly, that these people will probably be in some sort of danger for doing this.  I don't know enough yet to have developed a lot of thoughts on this. 

I do think the question that FraidyCat posed earlier is spot on.  Pitchforks.  The system can only concentrate wealth at the top for so long before the masses start to object.  "Let them eat cake" only works for so long.

[vonfirmath]

IT seems day trading was a big deal about 20-25 years ago too (When I was a young, single professional, actually... Interesting). People who sat and tried to buy-sell to make as much as possible. Then the chatter died out and I didn't hear much about it for a while. Until this week.

 

Edited January 29, 2021 by vonfirmath

[Corraleno]

1 hour ago, fraidycat said:

Is it totally crazy and misogynistic, though? Or is it an anthropological understanding of human nature, and more specifically young, adult male human nature and their need to "be strong" and "conquer" (in the general sense, not individual).

I know we've had whole discussions on here in the past about young males needing to roughhouse, chop wood, get plenty of exercise, etc. to "civilize" them for family harmony. I see this tweet as the more grown-up version of that premise. Give them responsibilities and age appropriate socialization (being as we're social creatures with the biological drive to procreate) to keep them out of wars.

 

Do you really think the people (men and women) who decided to make some money by screwing with hedge funds would not have done that if they were just getting laid more often??? Because that is Galloway's exact premise — that this occurred because young men were not having enough sex. It's not about people being fed up with an economic system that allows the uber-wealthy to get richer and richer in the middle of a pandemic while the poor and middle class get screwed, it's just a bunch of horny incels in their mama's basements taking their frustrations out on poor innocent hedge fund managers, because young women aren't providing the sexual services these men need to be civilized human beings. That is just so incredibly insulting on so many levels.

 

[katilac]

On 1/29/2021 at 11:35 AM, TravelingChris said:

[Deleted by moderator]

[Deleted by moderator]

On 1/29/2021 at 1:20 PM, Corraleno said:

Well here's a totally crazy and incredibly misogynistic take on the GameStop thing: It's women's fault for depriving men of sex! This is what happens when guys don't get laid enough!  

(And lest you think this is just some rando on twitter, he is a professor of marketing at NYU's business school!)

 

Damn, it's not enough to blame us for mass shootings, now we're responsible for the stock market, too? 

On 1/29/2021 at 1:36 PM, Bootsie said:

It doesn't matter if the Redditors were doing it for a long term play or not.  If I pay $350 today to help drive a stock up and the stock goes back down to $18 tomorrow --I lose $332.  Maybe they think they are playing a game--but it is an expensive game.  And, not even much of a gamble, because the only wat to make a profit is for the stock to go up even more than the Redditors have artificially driven it up.  

I think the big buy-in was way before the $350 mark - I'm pretty sure it just hit $347 yesterday. It was $146 two days ago, $45 on January 21, $36 on January 15. I started seeing the more mainstream chatter about it a bit before that, about January 12, so I'd imagine most of the Redditors bought in way, way below $350. Even people who heard about it on Facebook mostly bought in below $100. 

Either way, ya pays your money and takes your chances. I'm kind of cheering them on and hoping that a bunch of them make some money. Could it be an expensive game? Yes, but I'm not sure how that's different from the stock market on any given day. 

On 1/29/2021 at 1:57 PM, Bootsie said:

 Yes, the short squeeze can be real, but I think that when all is said and done I think we will find that there were a lot of small, individual traders who bought GameStop at inflated prices over the last few days.   

I mean, probably, just like a lot of individual people sink too much money into the latest MLM that's going to make them rich. There are definitely small, individual traders who made hella money, too, though. 

23 hours ago, Murphy101 said:

Not really directed at you but this concept of they are all just bored and screwing with the system for funnies. I’m no spring chicken. I’m not bored. 
 

This is really rather insulting - yes? 

That only bored basement dwelling losers (all men of course bc I guess females lack investing anatomy?) who can’t get laid or get a real job would be fed up with an economic system that is screwy as all heck and decide to join forces so to speak to do a little something to screw the big guys back a bit?

I guess it might make the big guys feel less threatened but I don’t think it’s accurate. I think that’s petty BS considering the Reddit folks simply took advantage of the exact same methodologies as the hedge funds. 

I don't think it's accurate, either. It's kind of funny to me, the idea of these apparently huge swathes of young men who can't get laid, getting turned down yet again and going Fine, whatever, I will get my dopamine hit from Gamestop stock! And there's so many of them having this reaction that they roil the entire stock market 😄

Wouldn't large numbers of men not having sex mean that there are also large numbers of women not having sex? Why don't they plunge the stock market into chaos?