AMC Spikes 260% as Day Traders Ignite Shorted Stocks like GameStop, BlackBerry, and Bed Bath & Beyond (businessinsider.com) 174
AMC shares skyrocketed as much as 260% in premarket trading on Wednesday as day traders piled into heavily shorted stocks for a third consecutive day. From a report: Frenzied buying also drove GameStop shares up as much as 147%, BlackBerry up 31%, and Bed Bath & Beyond up 27%. Amateur investors have gathered, most notably on Reddit forum r/wallstreet bets, to pinpoint stocks they can buy en masse and score fast profits. They frequently target stocks that are popular shorts, as driving their stock prices up can pressure short-sellers into buying shares back to cover their positions, which sends prices even higher. Day traders also see the strategy as a way to stick it to Wall Street. They have targeted hedge funds such as Melvin Capital, which had negative positions in 17 US-listed stocks at the last count. Four of those - GameStop, Bed Bath & Beyond, Dillard's, and Ligand Pharmaceuticals - jumped at least 10% in premarket trading on Wednesday.
New regulation incoming in 3... 2... 1... (Score:2)
Re:New regulation incoming in 3... 2... 1... (Score:5, Informative)
But you can't keep targeting major short sellers, they've got money and power and they're happy to use it.
My potential loss going long on a stock is the amount of my investment. The potential loss for a short seller is (theoretically) infinite.
Re:New regulation incoming in 3... 2... 1... (Score:5, Insightful)
This is where people who don't understand the stock market get confused. If you buy a stock, the worst thing that can happen is the company goes completely out of business and your stock is worth nothing, so you lose the money you put in. When you short a stock, you are taking control of the stock today and agreeing to pay for it in a week (or some other amount of time).The plan is you get the stock today when it costs $0 and you sell it and have $10. If things go well, in a week you plan on the stock costing less (say $5) and that is what you actually have to pay back. So you made $10 by selling the stock and have to pay $5 in a week, so you made $5. The issue is, if the stock goes up instead of down, you end up paying more. So you sold the stock and have $10, but if the stock goes up to $20, you now have to pay $20 back. And since there is no limit to how high the stock could rise in that time, there is no limit (in theory) to what they could haver to pay. Add in that these places go all in on these bets, they could potentially end up going under (it is unlikely given how much money they have and the connections they have, but it is possible). And before anyone feels bad, they take these very risky bets, so if they get screwed, it is on them.
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Thank you for that. I've never understood the process (admittedly, rarely if ever bothered looking into shorting as I always thought it was kind of sleezy to hope that something does poorly) and your explanation is the first time it's truly made much sense to me.
Re:New regulation incoming in 3... 2... 1... (Score:5, Insightful)
This is where people who don't understand the stock market get confused. If you buy a stock, the worst thing that can happen is the company goes completely out of business and your stock is worth nothing, so you lose the money you put in. When you short a stock, you are taking control of the stock today and agreeing to pay for it in a week (or some other amount of time).The plan is you get the stock today when it costs $0 and you sell it and have $10. If things go well, in a week you plan on the stock costing less (say $5) and that is what you actually have to pay back. So you made $10 by selling the stock and have to pay $5 in a week, so you made $5. The issue is, if the stock goes up instead of down, you end up paying more. So you sold the stock and have $10, but if the stock goes up to $20, you now have to pay $20 back. And since there is no limit to how high the stock could rise in that time, there is no limit (in theory) to what they could haver to pay. Add in that these places go all in on these bets, they could potentially end up going under (it is unlikely given how much money they have and the connections they have, but it is possible). And before anyone feels bad, they take these very risky bets, so if they get screwed, it is on them.
This isn't quite right.
It's not that you have to pay $20 back. You didn't borrow money. You borrowed stock, and you have to return the stock you borrowed. Since you sold it you have to buy it first at the current price, which drives the price even higher.
Re:New regulation incoming in 3... 2... 1... (Score:5, Informative)
Yes, you "borrowed" a share. You are not sitting on that share holding in your name. The borrowed share is sold immediately. And you got it as cash. You need to buy back the stock are market price to "return" the borrowed stock.
Borrowing and holding the stock in your name makes absolutely no sense.
For every day till to "return" the stock, you need to pay a borrow fee that depends on the value of the borrowed stock. Typically 0.3% /360 per day.
Most sane shorts do not take on unlimited risk. They would buy a corresponding risk limiting trade. Example stock is at 10$. You borrow and sell it immediately and get 10$ cash. You also buy a call at 20$. This gives you the right to buy the stock at 20$ no matter what the market price is. So if the stock spikes and goes to 100$, you can exercise the call to buy it for 20$ to close the deal. Your loss is limited to 10$. There are trading costs, cost of the call option etc that will add to this loss or take away from profit.
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You don't understand short trading.
Yes, you "borrowed" a share. You are not sitting on that share holding in your name. The borrowed share is sold immediately. And you got it as cash. You need to buy back the stock are market price to "return" the borrowed stock.
Borrowing and holding the stock in your name makes absolutely no sense.
For every day till to "return" the stock, you need to pay a borrow fee that depends on the value of the borrowed stock. Typically 0.3% /360 per day.
Most sane shorts do not take on unlimited risk. They would buy a corresponding risk limiting trade. Example stock is at 10$. You borrow and sell it immediately and get 10$ cash. You also buy a call at 20$. This gives you the right to buy the stock at 20$ no matter what the market price is. So if the stock spikes and goes to 100$, you can exercise the call to buy it for 20$ to close the deal. Your loss is limited to 10$. There are trading costs, cost of the call option etc that will add to this loss or take away from profit.
Poster wrote: " So you sold the stock and have $10, but if the stock goes up to $20, you now have to pay $20 back."
I corrected that statement. You are on the hook to return the stock you borrowed, not the difference in price at a moment in time. What you did with the borrowed stock and whether or not you hedged short sales with calls is not relevant to your obligation to the lender.
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Second, legally you owe the stock. Practically it is the cash value of the borrowed stock. The only way to close a short sale is to buy the sto
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You also buy a call at 20$. This gives you the right to buy the stock at 20$ no matter what the market price is. So if the stock spikes and goes to 100$, you can exercise the call to buy it for 20$ to close the deal. Your loss is limited to 10$.
This is the tricky part; the shorts probably covered as you describe. And it isn't the short squeeze driving the price up, it is the desire for a short squeeze. But if they passed that limit threshold, there is no squeeze, they already took their losses! It is the people driving the price up that must lose it. The only profits were the people already long before the shorts came in, who already exited the first day it was up.
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Re:New regulation incoming in 3... 2... 1... (Score:4, Informative)
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''The issue is, if the stock goes up instead of down, you end up paying more.''
Kinda, sorta. In order to sell short your broker must have sufficient inventory to loan you. Short sellers [as well as holders of securities] don't loose anything until the point the short seller buys back to cover, or holder sells for liquidity.
The problem a short seller is exposed to is, the value of the liquid assets they hold. If the broker who loaned the seller sees the account could be at a loss if the seller had to cover,
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I'm not sure why we need an entire paragraph to explain something so simple: you've made an agreement to sell a stock you don't own at some future date at an agreed upon price. If at that later date, the stock is lower than that price, you buy the stock in the open market and sell it at the agreed price. If the stock is higher, you're still responsible for acquiring shares to sell at the agreed price, and you're going to suffer a loss as a consequence. As there is no intrinsic ceiling to how high the stock could be in the future, your potential loss has no upper bound.
You are describing selling naked call options. This is about short selling.
Re:New regulation incoming in 3... 2... 1... (Score:5, Insightful)
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''For every hedge fund that goes bust on this, there's 2 that are going to make a fortune.''
It's a zero sum game. The ones that really make the money are the ones that make money on order flow, specialists and market makers that make money on the spread. The big fish also have more accurate pricing, a few milliseconds pricing latency we see allows millions of dollars to be earned.
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It's a zero sum game.
It is not a zero sum game. If it were, the stock market could not even have bubbles!
For it to be a zero-sum game the prices would have to all be set by fundamentals, or imposed by a market maker.
For example, I like to buy stocks that are wandering down on low volume. This is the opposite of zero-sum. The price wanders downward on "no news" simply because some people will need to cash the money out, and there isn't much new interest with "news." Then when there is news, even neutral news, there will be a sma
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Agreed, so the very people the Redditters think they're hurting are actually making more money. Yes, one or two might go under, but the rest keep raking in the money and becoming even richer, they very thing these folks are complaining about.
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people attempting VERY large-scale market manipulations and destruction of companies (like GameStop
*ROFLCOPTER* now look up "GameStop fundamentals"
This actually isn't an abberation (Score:4, Informative)
This kind of arbitrage is what is natural. It's short selling en-masse that is an aberration. This kind of buying is actually just arbitrage which is a very good thing in a market. The only surprising thing is it didn't happen before!
In a healthy market any way to take advantage of a price that is too low or too high encourages people to buy or sell the stock in ways that can profit on the difference. The result is a price that should track to value of the stock more closely. One can argue about what the value of a stock is but notionally there is some proper price which integrates all the information people can determine about it's likely future value. The problem is that short selling a stock which is not overpriced creates a self fullfilling perception that isn't right. Mass buying however is the arbitrage that restores this.
Re:This actually isn't an abberation (Score:5, Interesting)
>This kind of arbitrage is what is natural. It's short selling en-masse that is an aberration.
Yep. This was an aberration. The short interest in GME was around 100%. So there were almost no shares available. It acted like a stock with very few shares on the market. This was discussed on wallstreetbets, where they worked out they could buy GME and due to the extra leverage caused by the zombie shorting of the hedge funds, it would have an amplified effect on the GME price. So they piled in and the market makers didn't have the shares to close the positions, so they had to raise the price to shake out some shares, but with the limited shares, the longs could soak them up just by buying them. The price will go up until the shorts close some of their positions.
And the plan worked.
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But you can't keep targeting major short sellers, they've got money and power and they're happy to use it.
My potential loss going long on a stock is the amount of my investment. The potential loss for a short seller is (theoretically) infinite.
And yet, there are two sides to a trade and the amount of risk that they're taking going long on this is nearly the same as the amount of pain they can deliver to the shorts. Sure, the shorts "could" theoretically have it even worse than this worst-case scenario that is playing out, but in this actual scenario, the risk is symmetrical. Collectively, if they had actually cashed out, the squeeze would have failed. And they don't really have any way of telling their own activity from shorts covering. If the sh
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Well, here it comes again. When commoners get into the stock manipulation game we see a big run up, and then a crash, and the only ones to clean up in a crash are the pros. Every single time.
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Shorting has its place in the market, but these people have significantly upped the risk for the practice. Momentum trading used to be popular for stocks like Apple, which wasn’t quite the same thing but had similar effect. You cannot stop it in lightly-traded stocks, but it is very hard to pull off with big companies, and this makes it harder.
Honestly not sure if I am optimistic about the change. It was always so easy to make money with oversold good companies that you can be patient with your invest
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You don't necessarily need to target Short Sellers. While the community generally dislikes them, they are for the most part punishing themselves, as Short Selling is normally a failing model, and is just high risk with low reward. Overall Stocks will go up, so selling short will be playing against the odds. If you don't like a company or don't think it will succeed, it is better to just not deal with it at all, as it will just be a no risk, no reward option. Vs a High Risk low reward option.
pay no mind to the man behind the curtain (Score:3)
The Motley Fool Predicted this (Score:2)
Last week sometime. Same set of stocks. Recommended buy because they had been shorted, and because all are potentially post-covid big business.
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Maybe it hurts short sellers. But maybe it hurts the companies too when it crashes back down again. Volatility of this type is not good for the market.
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Re:New regulation incoming in 3... 2... 1... (Score:5, Insightful)
Whereas, in the casino, the longer you play, the more broke and drunk you get.
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In the market, the longer you play, the more money you (should) make, as the market averages 8-10% gains annually.
Whereas, in the casino, the longer you play, the more broke and drunk you get.
It really depends on your capacity to consume large amounts of free drinks over time.
If you count the price of the drinks, some gambling strategies are quite profitable, as long as you can make it to the bathroom in time.
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Amateur investors trading on margin? (Score:2)
Re:Amateur investors trading on margin? (Score:5, Informative)
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That's gotta be a lot of small investors. AMC has a current market cap of nearly $800 million, while it was around $230 million a few weeks ago.
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Market cap is extrapolated from the portion that is moving, making a valuation of the portion of the company 'at rest' that would actually change if that portion were offered for sale.
If 99% of AMC stock is really sitting still, and only 1% of the stock is actually trading, then it's $8 million dollars worth of activity used to declare $800 million market cap.
I'm sure someone more on this can discuss this statistic. I thought volume, but volume can be the same small portion being traded over and over again.
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Right, they make their bet using options, so the amount of money they put at risk is only a fraction of the total value. Maybe someone else experienced with options trading could say how much you typically invest (I have no idea if it's 1%, 10%, or more)
Re:Amateur investors trading on margin? (Score:5, Insightful)
I am trying to understand how amateur investors could have enough capital to squeeze established players
There's 2m of them sharing the load and consciously setting out to punish short-sellers who have over reached. Given that 120% of GameStop shares were shorted at one point, it's not hard to see where the risk was.
But then Musk has had an influence because he specifically wanted to sink Melvin Capital because of their previous record of shorting Tesla.
So, basically, it's a big old Nelson Ha-ha to the professional gamblers at the Stock Exchange who have had their fingers burnt.
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But then Musk has had an influence because he specifically wanted to sink Melvin Capital because of their previous record of shorting Tesla.
No joke here, that one tweet just after market close yesterday acknowledging GME and wallstreetbets (literally just the word Gamestonks and a
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Yeah, as I see it, the shorters betted on all the shorting causing the stock to crash. (or crash faster than it would have otherwise, Gamestop still is a failing company regardless of what their stock price is)
They are getting burnt when a couple of million redditors (well, a percentage of them that actually bought the stock, any how) jumped in.
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The Motley Fool Mailing list is large enough. And in fact recommended these actions just a week ago.
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So, basically, it's a big old Nelson Ha-ha to the professional gamblers at the Stock Exchange who have had their fingers burnt.
Oh, sure, for now. Do you really think GME is worth $320+ per share? GME has been in trouble for years because it's business model is becoming obsolete. It isn't profitable and it's primary product is being delivered digitally by publishers, cutting GME out of the loop. All these redditors who are working this short squeeze to hurt a hedge fund will end up holding the bag after spending $300+ per share for a stock that is now worth $3.00 per share.
Who will be laughing then?
Re:Amateur investors trading on margin? (Score:5, Informative)
I don't think people understand this. These hedge funds go all-in on shorting a stock. Then they release their own analysis on why they shorted the stock and others should too. They do the same thing via their cronies at all the media outlets. Pretty soon, they create a self-fulfilling prophecy. Essentially, they use their money, power, and position to damage a company and its investors - bringing the value as low as possible. To make it worse, some venture capital buddy eventually swoops in and picks up the company for pennies on the dollar, restructures it so that they can sell off all the assets and then wrap up all the debt for a nice bankruptcy action. Meanwhile, thousands lose jobs and the long investors lose all their money. It's so many things that are wrong about the current design of the market all wrapped up in a nice, neat package.
Now a group of people on Reddit have organized to slap a couple of these fund managers hard in the face (figuratively of course). Suddenly, the fund managers are crying collusion. Look at the mean Reddit people! They are conspiring against me! Like the fund managers haven't been doing the same thing the whole time and in more egregious fashion (and with far more egregious results). The fund managers pulled the pin and tossed the grenade and now they're all upset that someone had the sheer audacity to toss it back. "But only I get to use grenades!!"
Re:Amateur investors trading on margin? (Score:5, Insightful)
In some corner cases like GME its because these are companies with very small floats. Most of these other examples are the usual institutional players and market makers moving the needles. The reddit guys are just chattering about it running with herd.
Its all happening because there is a ton money running around in the market with nothing to chase. So everyone is piling into equity assets as interest rates and near 0 there isnt anything else to do. Does matter if you are retail guy or the Vangard running a target date fund. There is however palpable fear the bubble will pop; because all bubbles pop they always have. So you have some of the big fund managers remaining bullish (buying like crazy) and others insisting the bottom is about to fallout any day now (shorting). You can see both sides on pages of WSJ or any other financial rag. Of course most of those articles are BS writing by managers that want to keep their funds in the news who will a week from now publish the opposite view themselves but at least some of it is sincere too and there is no real consensus.
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I can't quite decide if it's right that we don't use the word "inflation" for this.
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The established players failed to manage their short positions properly, got greedy and left the door open to this exact situation. In fact the credit extended to short sellers allowed them to be this reckless with their own 'investment'.
If it gets really ugly, hopefully the short selling rules will be changed for the better (whatever that is).
Re:Amateur investors trading on margin? (Score:5, Interesting)
I doubt the rules change. They're operating exactly as intended -- someone extends credit beyond reasonable point, someone else in the market notices and takes advantage, and then the overextension gets punished and pulls back. Short selling is *supposed* to be high risk. It's an important part of pushing companies not to do bad practices to their shareholders, but we don't want it rampantly used to take down good companies. So it carries big risk.
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AMC (Score:4, Funny)
Oh I do hope they bring back the Gremlin.
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Former holder of the record number of wins for "The Ugliest Car Made In America", surpassed only by its successor the Pacer.
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You forgot about the Aztek.
The Gremlin of course will always be ugly, but the Aztek is basically a Pacer without any smooth, flowing lines at all. It successfully makes the Pacer look... well, not good, but at least not that bad.
Re: AMC (Score:2)
My nickname for that car was the Asstech, because when you drove behind it, it just looked like a huge ass on the road.
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I once had a neighbor with an Aztek parked in their driveway. It didn't move for about two years. Then one day, out of nowhere, I woke up and it was gone. Not a week later, I get a letter from the county that my home value went up about 10%. Coincidence? I'm still not sure.
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I hadn't heard of them before the first time I saw an Aztec on the street.
My *immediate* reaction was, "I didn't know AMC was making cars again!"
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Keep that joke handy. The way the movie industry is going, I was actually thinking lately that Gremlins is ripe for a remake.
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With Billy's daughter finding Mogwi in a trunk after her father's funeral...and no instructions
Stonks (Score:2)
The Stonks meme has actually come to life
The most amusing thing I've seen in awhile.... (Score:5, Interesting)
If you want to follow the chaos, here is the homebase
https://www.reddit.com/r/walls... [reddit.com]
Karma has come for the short sellers, and it is hilarious!
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Like 4chan found a Bloomberg Terminal
Re:The most amusing thing I've seen in awhile.... (Score:5, Insightful)
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Odd. It's January so I'm getting notices to vote on motions every couple of days. Do you have some weird policy of only buying non-voting shares?
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Ah yes. The old my vote doesn't overrule everybody elses' votes so it's worthless complaint. It's kind of a wonder democracy manages to persist.
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It's kind of a wonder democracy manages to persist.
Honestly, it really is. Even with as contested and divisive as the 2020 election was, we still only managed to get 66% of the population to vote.
The old my vote doesn't overrule everybody elses' votes so it's worthless complaint.
Worthless and meaningless are two different things. In order to have meaningful input you either have to have enough shares, or enough influence on other shareholders to guide their votes. The average-joe-investor has neither of those, that's the only reason I'm in agreement with GP.
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I think we should all view this as a form of social justice. What these hedge fund managers have been doing has no
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These day traders are not investors, they're gamblers hoping to cash in on a modified pyramid scheme.
It's hard to see how they're any different from short-sellers. It's gambling all the way down.
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In this case, the short sellers are institutions and hedge funds, and the day traders are a bunch of people on reddit.
Its hard to have sympathy for day traders, but impossible for corporations that intentionally manipulate markets.
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As opposed to all the serious people who are investing to maintain society and civilization rather than making money.
I'm sure they exist somewhere.
Market irrationality and trader solvency (Score:2)
The market can remain irrational for far longer than you can remain solvent.
is the well known maxim.
If enough people band together and remain irrational for a long time sustaining losses, they can drive lots of rational players into bankruptcy. It depends on relative pain tolerance of irrational players and size and strength of rational players.
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Keynes said that as a lament. To WSB, it's more a rallying cry. I think I saw it paraphrased as "we can stay retarded longer than they can stay solvent" in there.
Of course, when the stock is so shorted, they may well be right.
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Who's the rational one right now, though? Is the hedge fund shorting 130% of a stock rational?
The truth is that the stock market has been so disconnected from reality that this was bound to happen sooner or later. The tech allowed small random "investors" to push the domino instead of a big player.
This is not about the particular stocks (Score:2)
This is not about GameStop, AMC, or others. Sure there would be some who really believe in those companies, but most of the action is to "squeeze the short sellers". The big institutions are the ones who gambled, and they are losing badly.
GameStop is shorted for 139% of its shares: https://www.bloomberg.com/news... [bloomberg.com]
What that means is there are people out there with contracts to purchase nearly 140% of the GameStop shares. If the stock continues rising, that is what could be legally necessary next Monday. Whi
Already done (Score:2)
AMC is surging.
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I read about this on another site a couple of hours ago. Melvin needed - and got - almost $3B support from some other Hedge Funds and claim to now have no remaining exposure to Gamestop. The focus has now moved on to other companies, Nikola and Evotec were named.
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WSB says that's a lie, and I agree it sounds fishy. With trouble on this scale, I won't put it past hedge fund managers to mislead, to put it mildly. Better to risk the SEC's wrath than to jump from that 22nd floor of theirs.
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So much confidence (Score:4, Insightful)
I am so glad that this system that is so easily manipulated by the autists over at Reddit is the exact system that everyone has pointed to as being the BEST place for the vast majority of Americans to pin their retirement on. It just restores my confidence in the system of 401(k)s and what not to know that a small mob of weebs over at Reddit can pump and dump so easily. I mean shoot, give them some more time, I'm sure they'll find even more creative "methods of investment". I don't know about anyone else, but I'm absolutely sure that there will zero negative consequences with how easily a large enough group of people can fuck with this system.
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I don't know about anyone else, but I'm absolutely sure that there will zero negative consequences with how easily a large enough group of people can fuck with this system.
I'm not disagreeing with your premise, but the real people messing with the system isn't the crowd on Reddit, it's the people shorting the stock.
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Not even them. Shorting a stock such as Gamestop is easy money because the company is going under. As the masses move away from physical discs to streaming (or stealing), there isn't a reason for Gamestop to exist. Thus, the company goes under.
Short sellers know it's only a matter of time before the company goes under and are rightfully shorting the st
Re:So much confidence (Score:5, Insightful)
It's one thing to short the stock of a company you think will go under. It's another thing to short a stock way below the value of the assets of that company then use your cronies at all the media outlets to encourage everyone else to do the same. Once you've brought the value of that company far below its cash value you or one of your buddies goes in to purchase a controlling share at pennies on the cash value, liquidate the assets and then plow all the debt into bankruptcy - all resulting the loss of thousands of jobs and pushing huge losses on the debt holders.
The original intent of shorting was to be used as a hedging technique - not as a way to destroy companies and reap the profits. Just because these funds have made this activity look normal doesn't mean that it isn't manipulating the market. The bottom line is that it's the large players that kicked off the manipulation. The folk on Reddit are just exposing it. This is like a cat burglar crying that it's unfair that someone turned on the lights.
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Good comments.
The original intent of shorting was to be used as a hedging technique
And I would like to point out how absurd it is that straight up gambling is encouraged for hedging, especially when you're borrowing the money without any upper limit to how much you will have to pay back. This sounds exactly like borrowing money from the mob.
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If you're an investor, as opposed to a trader, you just watch this stuff and congratulate yourself on being a trader. This kind of thing has no effect at all on you. If you're an investor who happens to frequent Reddit, you saw this happening, and you happened to already have some of the stock mentioned, you might have put a limit order on it and made a bit of money.
If you work at a place that's handed over your retirement savings to a hedge fund for risky trading in shorts, well, you should probably try an
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>the exact system that everyone has pointed to as being the BEST
>place for the vast majority of Americans to pin their retirement on.
Gee, I missed the part where index funds were affected by this . . .
The next non-idiot that I see suggesting individuals day trade in their 401ks and IRAs will be the first . . .
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I'm pretty sure pension funds aren't playing high-risk games like shorting 140% of a company's stock.
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I wouldn't be so sure. The manager of the Texas Teachers Retirement Fund was buying up every share of Enron he could get his grubby paws on until the day that trading was stopped. The teachers got screwed, but of course he still got paid.
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Enron is a special case - traders were believing Enron's filings and by all indications, Enron is a safe bet. You can bet that Enron is basically being a recommended buy for all investors because they had good numbers (on paper).
Of course, everyone knows they cooked the boo
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Actually it turned out that sleazebag was moving the Enron shares from other customers whose funds he managed as the price went into free fall, while telling the Teachers Fund that all was well. While definitely unethical it wasn't illegal, and plenty of other pension funds have been looted in similar ways such as GM forcing its employee pension funds to load up on GM stock.
Short it after rediters have run it up (Score:2)
However, that doesn't intrinsically change my valuation of the stock, and I still think it's worth less than 5. So I short the stock at its grossly overvalued current price. I may not be able to afford as many stocks now at the higher pr
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The problem with this is Musk tweeted twice, so the people that shorted it on the first peak are now underwater (like it could bury your account).
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(unless I can short the same number I originally did),
Yea, wouldn't that be a dream. Actually if you were able to short the same number as you covered, you would never have had to cover in the first place.. right.
If you were so sure of what you thought the security would end up valued at, the liquidity you had to add to reduce your margin, wouldn't be lost until you purchased to settle the account. As well you know a POS is a POS, but humans sometime think a POS is worth having.
21st century version of an old stock play (Score:2)
Once this is untangled we're going to find a handful of people at the top who profited huge off this followed by a whole lot of schmucks who lost their contribution.
Rallying a bunch of reddit sheep and yelling "for the horde!" under the guise of sticking it to the proletariat looks fine and all, but it's merely a glorified pump and dump. They can't keep the capital flowing in forever. At some point the "leaders" of this are going to decide to pull. Those who got in early and get out first will reap fat p
I watched the L2 prices on gamestop (Score:2)
People would buy the stock and then sell it for 10$ higher at 260$, they were doing this with 1000's of shares. So someone is losing money. Another thing is most of these companies prices will fall back down after quarterly reports come in. I wouldn't want to be in the fray. The problem is all the other hype curves die off in a few days and someone is left holding the bill.
Most of these investors don't know what a P/E ratio is or what revenue is, they will find out someday.
Worthless (Score:2)
What I'm pretty sure of is that none of this has a thing to do with optimal allocation of capital to societal needs, the theoretical reason for the entire shitshow.
From a societal point of view, it's just a bunch of people pushing around paper, in an effort to see who gets to screw the workers and customers that provide the value they'll take away.
Forgetting a true saying.... (Score:2)
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Many of those are probably doing it with the only purpose of causing damage to the hedge funds, so profiting or not, their goal is achieved.
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This is basically a crowdsourced "pump and dump" scheme
Yes, but not as big of a pump and dump scheme as Tesla
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Tesla was the dress rehearsal for this performance. It was aggressively shorted, and the shorts were punished by people willing to just buy and hold without leverage. Basically treating the stock as if it was some piece of modern art, that they decide to personally value very highly despite it "objectively" being junk.
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Tesla shorts lost $32 billion. Stock is still at an all time high.
No exactly pump and dump.
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The ones buying Gamestop at 200% premium are the short sellers this is designed to hurt.
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Not quite. While they do pump up the price without really thinking much about the company's long term prospects, they have a "rational" reason to think they will get their money back, and it isn't a bigger sucker coming along wanting to get rich. It's making the short sellers that already are in it into the suckers.
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It can start to get out of control because there is