I admit I don't see the problem with the Redditors either. It's not like hedge funds haven't put the short-squeeze on other investors.

I hope this kills Robinhood and a hedge fund.

"How different was the original Reddit scheme from penny-stock pump-and-dump scams, except plotted partially in public?"

Very. There's no doubt it's a pump in that there's been a rush on /r/wsb to create demand. But the rationale is that $GME has a short interest of ~130%, meaning there's potentially infinite demand for it somewhere in the future. Hedge funds overextended and now they're seeing huge losses. It's absolutely a play, but it's an entirely rational play. That it now poses a systemic risk has to do with hedge funds not covering their shorts at, say, $30, $40, $50, or pretty much any point before now.

This is pretty clearly a "root for injuries" type situation.

As I see it, The only problems are:

1) People are going to get too excited and some punters are going to be stuck holding the bag when the bubble bursts. People who don't usually gamble are going to find out that oops, they're addicts, and they're going to gamble more than is safe. This is really bad and lives are going to be ruined.

2) People are learning they don't understand the clearing system (I mean, I don't either) and some lives might be ruined because of that. That's why Robinhood and a few of the others had to stop new purchases (and also new shorts, not that anyone noticed; also, not every broker stopped trading, I had no trouble doing it via etrade yesterday). Although it'd be pretty interesting if that is what leads to stronger mass anti-financer sentiment.

So, this is mostly a transfer of wealth from some punters who get caught in the moment, and some hedge funds that were over-leveraged, to smarter punters and more devious hedge funds. I wouldn't get too caught up in the narrative, but if you think you can get in and out safely, have fun. (I just made a quick $300 on AMC, I'm out now.)

Isn't stock market manipulation generally to be deprecated, e.g. hedge funds shouldn't be allowed to short squeeze either? I certainly accept that there is a double standard of outrage being applied against smaller actors versus larger, known actors here..

Per the link, the app Robinhood was apparently selling data on its trades to another hedge fund that specializes in high-frequency trading, so at least one other big'un was probably cleaning up.

It's not so much data, though I'd be surprised if it wasn't that too. It sells order flow to a dealer (Citadel in this case), as all the free trading platforms do. It's their entire business model.

I'm having trouble seeing why there's any problem with what the Redditors have done. What qualifies as anarcho-capitalism and how does it play out in problematic ways? Does Wallstreet itself ever qualify?

It kind of depends on what exactly the individual Redditors did and what they said about what they were doing. Market manipulation law is fuzzy. From what I've read about what was said and done, it probably wasn't illegal (at least the GME action - plenty of room for shenanigans among all the other names that got pumped in its wake). I recommend this for the ins and outs of that aspect.

It was all public. "Outside Trading" isn't a thing.

"People are going to get too excited and some punters are going to be stuck holding the bag when the bubble bursts. People who don't usually gamble are going to find out that oops, they're addicts, and they're going to gamble more than is safe. This is really bad and lives are going to be ruined."

Yesterday when the price of $GME hit $132 and then trading halted the lowest ask price my broker reported was $2,000. That $2,000 is a huge middle finger to the hedge funds. People are not just gambling, the motivation is also resentment and retribution.

Late capitalism.

I figured out at some point yesterday the difference between a short squeeze and a pump and dump. But they're still both manipulative.

Also, highlights need for more regulations on short-selling probably.

Resentment is great, but charging an absurd price for something someone else has to buy is basic capitalism.

It was all public. "Outside Trading" isn't a thing.

As long as it's honest, yes. If people were lying about, say, the extent of the short interest (eg knowingly using the stale public data rather than the daily data from the exchanges), then there might be a case. I've not seen any evidence that was in fact the case though.

Isn't stock market manipulation generally to be deprecated, e.g. hedge funds shouldn't be allowed to short squeeze either?

Short squeezes aren't illegal. Co-ordinating them could be in certain circumstances.

People are not just gambling, the motivation is also resentment and retribution.

See, this also seems like propaganda to me. Some people figured out a clever stock market scheme and then they made up some Point of Honor to bring the punters on board with them for the first phase.

13: I'm not talking about what's currently illegal, but what should be. What do short squeezes benefit anyone? Isn't it yet another kind of zero-sum gambling?

(1.) I heard the name GameStop the other day, but I haven't bothered to read anything about it. Am I really missing out on anything?

(2.) Also, I am thinking about subscribing to The NY Times for 1 year digitally, because it is half the price of my digital WaPo subscription, and I refresh a lot for their COVID coverage. Their data collection is great. Am I a bad person for doing this? I don't want to derail the thread. A one word answer will suffice.

"I figured out at some point yesterday the difference between a short squeeze and a pump and dump. But they're still both manipulative."

Well, the latter isn't so much manipulative as it is exploiting a vulnerability. In this case exploiting that vulnerability meant solving an astoundingly large collective action problem in a very creative way. Which I gather is what Wall Street thinks is... somehow unfair, or something? I guess they're used to being on the right side of information asymmetries. More generally, I agree that the trading of derivatives on the whole should probably be next-to-outlawed by regulations.

16.2: No.

14: "See, this also seems like propaganda to me. Some people figured out a clever stock market scheme and then they made up some Point of Honor to bring the punters on board with them for the first phase."

I mean, maybe? I'll say I'm for sure in it for the resentment and the retribution, but that's me. And some others I know. Not a large enough sample size to draw any conclusions. I also have a vanishingly small amount of money at stake, an amount I don't mind losing. Especially if I get to see more than one hedge fund go down. Less enthusiastic about overall systemic instability, but I'm not crumbling that cookie.

At any rate, the 'some people' is one specific person: /u/deepfuckingvalue, and you can see them document their play on /r/wsb all the way back to 2019.

9: Oh, sure, some people are thinking that. We call those people chumps, and they're going to get totally fucked but the people who started this and better understand market timing. And the better-managed hedge funds; I'd love to know how much Citadel etc. make on this versus how much Melvin etc. lose.

Gambling can be a dumb or smart idea. But gambling while thinking that you're on an ideological crusade is a great way to get owned. People who think like that mostly aren't going to rationally manage their risk. If someone HODLS THE LINE because they got warm feels when someone on Twitter told them to, they are going to have a bad day soon. The people who started this are not the oppressed underclass, they're bored bourgeoise who have figured out how to make money with other people's money. Which is, as always, the best way to do it.

So that's why I think this is bad. I don't see any reason to think this will be a net redistribution downwards, and it's going to ruin some lives.

16.1 No, unless this play tanks the entire market, then maybe.

Is it deep-fucking value or deep fucking-value?

I'm not talking about what's currently illegal, but what should be. What do short squeezes benefit anyone? Isn't it yet another kind of zero-sum gambling?

I'm not sure how (or why) you would ban short squeezes per se. How do you identify which people were engaging in a squeeze and which were simply buying the stocks for buying the stock's sake? Again, co-ordinating them is a different matter, but there's existing law around that. If you are for some reason worried about short squeezes, it would probably be easier/more effective to put limits on the amount of short interest a given stock can have.

Dsquared:

Towards the end of 1636, there was an outbreak of bubonic plague in the Netherlands. The concept of a lockdown was not really established at the time, but merchant trade slowed to a trickle. Idle young men in the town of Haarlem gathered in taverns, and looked for amusement in one of the few commodities still trading - contracts for the delivery of flower bulbs the following spring. What ensued is often regarded as the first financial bubble in recorded history - the "tulip mania".

fucked by, not fucked but.

Hopefully someone smarter than me can comment on how much, if at all, this has temporarily reduced the prices of other securities due to other investments being sold to finance this, and whether there are any particularly good deals.

If you are for some reason worried about short squeezes, it would probably be easier/more effective to put limits on the amount of short interest a given stock can have.

Sure, restricting short selling in general would also make short squeezes obsolete, I see.

20: "But gambling while thinking that you're on an ideological crusade is a great way to get owned."

Except the explicit theme of /r/wsb is to lose more than the other dummies on that subreddt. The whole point is to get wiped out. That is 100% a bad thing. But it's a complex kind of scam that involves informing the marks that they are involved in something that will almost inevitably cost them.

Also more generally the concern for poor retail investors is exactly the right sentiment as long as you don't see exactly how absolutely fucked the whole hedge fund system in the US is at this moment. This play is already going to result in massive changes in the way risk is calculated. I mean, it's happening right now. So that's some support for my 'revenge and resentment' thesis right there.

The important thing is that we first be sure the hedge funds get fucked over before we fix the problem.

Re: Robinhood freezing trades, here's an infodump from another site:

"Robinhood's whole deal is making stock trading "easy." To do that, you have to abstract away a lot of mechanical details of how the system works, including the fact that once you buy a stock the guy you bought it from has three days to actually give it to you. If you have a cash account, the broker has to force you to wait for the shares to be delivered before you can do anything with them, including selling them. For that reason among others, day trading is impossible in a cash account. But how many YOLOers trading on their phones want to worry about that? Sign them up for margin accounts, use the margin to cover the shares while you're waiting for settlement, and you have almost implemented the abstract model the Robinhood customer has in their head.

But the almost there is critical when you start talking about edge cases where normal patterns break down. That's where we're at with GameStop. As an example, anyone who bought GameStop in the last 3 days almost certainly does not have possession of the shares. There is substantial settlement risk associated with that now, and Robinhood is bearing that risk for its customers through its margin. So many of its accounts hold GameStop, probably mostly on margin even if they don't realize it, that it's reasonable to believe Robinhood's own settlement bank forced them to do this because of the risk Robinhood posed to the settlement bank."

Except the explicit theme of /r/wsb is to lose more than the other dummies on that subreddt.

Do you really believe that? Surely lots of profit to be made in getting out at the right time, and convincing all the other dummies that losing their stake was noble. Even better than your classic Ponzi scheme.

28:

They're fucked as we type. So that's taken care of. AOC is tweeting about it and Ted Cruz is agreeing with her about it (though her response was magnificent), so maybe, unlike in 2008, there might be some effort to regulate any of this shit slightly more effectively. So that'll go some way toward fixing the problem. Again, provided a massive equities sell-off to pay for this squeeze doesn't tank the market entirely. But hey, we sprang back up 70% from the last time that happened nine months ago.

30:

Maybe it's an incredibly elaborate and well concealed hoax, but my strong impression has been that the redditors who got this started didn't think they would get rich, they were prepared to lose moderate sums of money for the pleasure of messing with the hedge fund folks.

30:

"Do you really believe that? Surely lots of profit to be made in getting out at the right time, and convincing all the other dummies that losing their stake was noble. Even better than your classic Ponzi scheme."

I believe the explicit theme of the subreddit is that. I'm also sure people made money off others' dumb plays. But the whole "getting out at the right time" thing... that's essentially random chance.

I liked this take https://twitter.com/tomgara/status/1355027033034792965

31: Then the important thing is to revel in that before we fix anything.

32: "but my strong impression has been that the redditors who got this started didn't think they would get rich"

Nope. /u/deepfuckingvalue started this to get rich. And they're rich now! If we're to believe the screencaps of their position they post on a daily basis. That this short squeeze play turned into an exploit of a near-systemic vulnerability has everything to with hedge funds' doubling down on their shorts as the price rose in the past few months.

"The whole point" for who? Ten posters? One hundred? One thousand? And is it the point for the people saying it, or the people they're getting to follow them? Okay, now how many people are trying to play in this? Ten thousand? One hundred thousand? How many people see that and think "Well okay, sure, I want to screw over bankers, but maybe I can make a few bucks in this?" Especially when another big part of the propaganda is all these lovely feel good stories about paying off debt and what not.

If someone's intentionally losing money FOR THE HORDE, my gods, what fucking morons. if I'm reading things right, GME's short interest is less than a fifth of what it was a week ago. Now you're just taking other punters' money.

Can you go deeper into the hypothesis that the whole hedge fund system is absolutely fucked? This is a trick you can only do once. The smarter (or luckier) funds will learn and thrive.

Now, if on the other hand, this leads to regulation on order flow and HFT, or a transaction tax to reduce excessive speculation, fair enough, that'd be meaningful. But continuing the bubble isn't going to do that.

To be clear, I'm not talking about what things were like 10 days ago. I'm talking about now.

35: Can't you see I'm revelling?!

. So many of its accounts hold GameStop, probably mostly on margin even if they don't realize it, that it's reasonable to believe Robinhood's own settlement bank forced them to do this because of the risk Robinhood posed to the settlement ban

They've already said exactly that.

Amid this week's extraordinary circumstances in the market, we made a tough decision today to temporarily limit buying for certain securities. As a brokerage firm, we have many financial requirements, including SEC net capital obligations and clearinghouse deposits. Some of these requirements fluctuate based on volatility in the markets and can be substantial in the current environment. These requirements exist to protect investors and the markets and we take our responsibilities to comply with them seriously, including through the measures we have taken today.

29: "So many of its accounts hold GameStop, probably mostly on margin even if they don't realize it, that it's reasonable to believe Robinhood's own settlement bank forced them to do this because of the risk Robinhood posed to the settlement bank."

I gather the problem is the way Robinhood did it. Other brokerages, seeing what was coming, raised their margin thresholds on $GME slowly over a week. Robinhood issued instant margin calls all at once yesterday. Also, there are rumours (no proof) that Robinhood also unilaterally sold GME out of cash accounts. That's straight-up theft.

My kid got interested in stocks because of this so I let him open an account with his saved money but I made him buy a low cost index ETF. He has one share.

Nope. /u/deepfuckingvalue started this to get rich. And they're rich now!

Him sure. Probably some others as well. My impression was referring to the median redditor who jumped in to help drive the thing once it got going. They seemed (and maybe it's an act) more like deliberate vandals than rubes who thought they would get rich.

40: Chris Cuomo asked Robinhood CEO Vlad Tenev which regulator and which regulations they were following. No answer. Vague hand waving about capital requirements, but he wouldn't admit they were illiquid.

https://twitter.com/i/status/1354994000294522881

43: "My impression was referring to the median redditor who jumped in to help drive the thing once it got going. They seemed (and maybe it's an act) more like deliberate vandals than rubes who thought they would get rich."

You have described my motivations perfectly.

Also, there are rumours (no proof) that Robinhood also unilaterally sold GME out of cash accounts.

I'm very confident these were not in fact cash accounts. Robinhood goes out of its way to disguise the fact that, eg, its Instant Deposit feature is a margin account. They're effectively lending you the money until your deposit clears. But I bet a lot of people using it (especially those signing up in recent days) don't know that.

Chris Cuomo asked Robinhood CEO Vlad Tenev which regulator and which regulations they were following

It's not (primarily) about regulations, although it's entirely possible they were worried about capitalisation at one point - they did draw down a billion dollars in funds yesterday. It's about clearing houses tightening their margin requirements because of the massive volatility (not to mention a big influx of new margin investors.

When I started writing that, I didn't realize that you were describing your own motivations, rarely comment. Apologies, I was rude. I'm a bit fired up about this. I still think that bearing significant regulatory changes, the net result will be that the big players get smarter, while a bunch more small players who don't know what they're doing inject easily takable cash into the market. Which has, to a degree, been the story of coronavirus, but this'll just accelerate it.

37:

Sure. By 'fucked' I mean 'it's going to cost them a shit-tonne of money' and 'several large hedge funds are literally going broke right now.' And when I say it's going to reconfigure the way risk is calculated, I mean now hedging is going to have to account for decentralized finance and the possibility of a large collective action coordinated online and buoyed by simple instructions like 'hold!!!' acting specifically against their plays.

46: That I can believe. I think they're skirting the lines of regulations & best practices but not really fully crossing them.

48: Nah it's ok, my motivations for doing this are not admirable or really morally defensible.

I'm a democratic socialist and an anti-capitalist. I have been all my life. I've marched in the street against capitalism, globalization, and oppression. I've stared down fascists (once, and then kinda ran away). I've been tear-gassed. I've studied capitalism all my adult life, and tried to contribute to the anti-capitalist cause. I work for a non-profit as a fundraiser. This is the first time I've actually felt like I've ever cost anyone anything, though. You know, it's an event. It may not be the event we like or want but we're supposed to be true to the event. If I make some money... mentally I've already donated a full half of it to my own employer (we'll see if that happens!). If I don't, I'll have bought a teeny-tiny slice of an event that hurts some very rich people. Worth it.

47: I can think of two or three ways they could gain liquidity that don't involve barring the sale of a publicly-listed equity.

I think that's admirable, if maybe a little misguided. I'm an ideologically inconsistent bundle of preferences that averages out to social democrat, so I'm not a particularly deep thinker on these sorts of things nor really to be trusted. But I guess where I'm at is:

Do we think, when all is said and done, this will increase or decrease the US's gini coefficient?

Which is empirical, although it's probably hard to measure to what degree this event affected it. My assumption is it'll increase it.

This is the first time I've actually felt like I've ever cost anyone anything, though.

I have a no-fee checking account with Capital One that has had exactly one dollar in it for over twenty years now. Every month for 20+ years, they have printed, folded, enveloped, and mailed me a statement confirming that they still have my 1997 dollar. I'll never fully recoup the interest I paid to them over the years that I carried credit card debt, but I'm clawing back little bits one bit at a time.

47: I can think of two or three ways they could gain liquidity that don't involve barring the sale of a publicly-listed equity.

I mean, they did at least two of the things, probably at considerable cost. But if you're facing tightening margin, then preventing people from adding risk is a rational response (and may have been their only possible response until they were able to get the funds to post with the clearers).

Heh.

52: "Do we think, when all is said and done, this will increase or decrease the US's gini coefficient?"

I think it's a wash if the short squeeze happens the way I think it's going to happen. Retail & institutions gain in equal proportions. I think there's a small but real chance this produces a severe market crash and a lengthy bear market afterward, in which case it increases GINI.

A better question is: does it affect the rate of change in GINI. Maybe this slows it down. Maybe it's a meaningful redistribution of wealth from the 1% to (admittedly) one of the upper portions of the 99%. Also, there are goals here other than wealth distribution. We all know the game is rigged, but it's a rare event where we actually see it happen in real-time, and in public. That's worth something.

Maybe someone can explain to me as if I was 8 -- not 10 or older! -- why short selling should be allowed at all.

I get that it's a way to let people profit from thinking a company is overvalued, but what's the social utility, really, in that?

My understanding of ancap-ism is "government should not exist but private property and contracts should." So they either want to be absolute dictators of their own mining towns (abhorrent) or they believe that won't happen because magic of the market even without any night-watchman state (childish).

54: With the merely happy consequence of also easing demand for the stock in the process.

57: Theoretically, it corrects overvalued stocks toward a fair price.

I get that it's a way to let people profit from thinking a company is overvalued, but what's the social utility, really, in that?

Theoretically, that the capital would be more socially useful invested in a different company, and pushing down its stock share is a way to do it?

But you could still have that function regulating away short-sales as we know them - maybe require the bets to be held in whole-year numbers, so nobody's taking advantage of short-term news or swings.

53: I feel the same way. I get revenge on the big cable company where I live for running a particularly annoying series of ads in the early 2000s. Every time I think about signing up and decide not to, I think, "that's what you get for that fucking annoying ad from 2001."

My kid got interested in stocks because of this so I let him open an account with his saved money but I made him buy a low cost index ETF. He has one share.

Had he just read The Westing Game? That was why my dad let me do a similar thing.

My dad had us buy 4 shares of ATT each (a client had sixteen to sell). They were on actual paper. It was fun.

This thread is reminding me that I probably still have the shares of Southern California Edison that my grandparents bought for me when I was 7. I remember getting dividend checks for about 2 dollars back in the 80s.

56: On net, that doesn't sound great, except perhaps for building class solidarity, if it even does that. And if it did that the part that people feel is rigged isn't even the rigged part so it's darkly ironic. And for those of us over 30 it's not like we don't remember "too big to fail." But if you can find value in this, more power to you.

61: To go further into this, it helps find fraud (shorting leads to a lot of oppo research) and it helps prevent bubbles. If you think something is developing into a bubble and can't short (or write a call option, or do something more exotic), the most you could deflate it is by selling any long position you happen to have. I don't short stuff because I don't have the risk tolerance for it (they have bounded gains and unbounded risk), but I think it does serve a purpose and your proposed regulatory fix would be a bit too strong.

If you think something is developing into a bubble and can't short (or write a call option, or do something more exotic), the most you could deflate it is by selling any long position you happen to have

And perhaps more importantly you have no incentive to publicise your opinion, because you want to get the highest price for your asset. Without shorting, pretty much all the incentives in financial markets are to keep bubbles inflated and to cover up or at least not root out fraud.

Slight quibble, I think you mean "put" where you said "call".

So accepting the legitimate value of shorting (which i think I agree with), isn't GY's 23.last it would probably be easier/more effective to put limits on the amount of short interest a given stock can have a sensible control?

I don;t see a downside, although I guess you could say you are potentially creating an artificial scarcity whose affect I will let more knowledgeable people speculate about.

To be honest, I don't really know enough about equity market structure to have an informed opinion on it. I do know that the equivalent (outstanding CDS exceeds deliverables) happens in bonds all the time, and while it creates oddities in the occasional CDS auction, it doesn't seem to be a huge problem. Until recently, major equity short squeezes were relatively rare, and didn't really cause any financial stability issues. But it may need revisiting given the changes to market structure and the massive increase in options trading over the last year.

When people who aren't me experience consequences for bad decisions, that's the system working.

Investor: I'm thinking of getting into retail. What do you think of Gamestop?

Analyst: Are you nuts? A store locked into selling an ever more obsolete product in failing legacy malls? You can buy the stock for $20 now, but you'd be lucky to see $10 a year from now.

Investor: Gosh, thanks. Who do you like in the renewable energy sector?

*That* is allocating capital where it should go.

Instead it's

Investor: Cool. Any chance we can capture some of that $10 loss of value for ourselves? Because that would be neat.

Weirdly enough, Gamestop is a company that I hadn't dealt with much at all, but for War on Christmas I wanted to get a VR thing for the house. Gamestop was the only place that had it and could ship in time.

The tricky thing about "dying" businesses is that they can linger for a long time. That Gamestop's business model was doomed was already clear 10 years ago, but they're not dead yet.

God forbid a security have an inaccurate price.

Someone on Reddit (not WFB), identifying themselves as an attorney in the finance world, and an account with what looks like a long contribution history (so at least not a throwaway), writes:

I have been monitoring the WSB threads, and while the WSB veterans know that they're making a suicide charge for the memes, they have brought thousands of naive, new investors with them - who predominantly think that they're going to somehow come out on top, not realizing that they're cannon fodder for the more savvy WSB users to exit with gains.

Redditors never seem to stop and think about why the WSB guys know so much about derivatives trading. Or how they seem to know how to access and read from a Bloomberg terminal. Or why there are so many users there that can seemingly drop tens or hundreds of thousands of dollars on complicated meme plays.

How do you think that WSB knew that GME was open to a short squeeze and a gamma squeeze play?

WSB's power users are younger finance bros. It's 30-something investment bankers and portfolio managers memeing with each other and cosplaying as "autists."

If you didn't know what a gamma squeeze was 48 hours ago, you are their exit strategy and the down payment on their next Porsche.

I'm still not clear on why you need a mechanism to correct for overvalued stock. Isn't the point of econ 101 that eventually, the people stop buying it until the price comes down?

Also: why is there a unified price on a publicly traded stock in the first place? Can different sellers not offer it at different prices? I can buy the same GAP t-shirt on eBay for 12 different prices. What if I want to unload my Amazon stock for pennies - how do I even do that?

Why assume a rational market? Haven't we beaten that horse to death? People who work with stocks don't believe in a rational market in their own day-to-day, although they might pretend to in other, political contexts.

67: I've had trouble with this, so let me see if I have this straight. A call option is the right to buy an asset at a strike price, for which you pay a premium to the seller, right? And selling options is also called "writing" them? So if I sell/write a call option, I can make as much as the option's premium so long as the underlying asset remains below the strike price (and a smaller amount so long as it trades less than the strike price plus the premium), so it's a bet that the price stays low, but is a weaker push at keeping it low than short selling. If I still have that off, apologies, I have trouble keeping the terminology straight. I probably should have used put options as an example as that is more straightforward.

71: If all that money is bound up in GameStop, it can't go into renewable energy. Shorts push money away from bad stocks. Or to look at it another way, see how GameStop is booming? All that investment had to come from somewhere, and some portion of it is from people removing their money from long positions in Things With Actual Value, somewhat depressing their market price and thus indirectly reducing investment in them. If the shorts had been more successful, that wouldn't happen. But...

73: Part of the thing that inspired this is that GameStop is probably transitioning to a new business model under a new activist investor (the Chewy.com guy). So it probably genuinely is worth more than it was going for last month, even if it isn't worth its current market cap of $24 billion. (Or maybe it is! Correctly valuing firms is hard.)

75: That'd make sense if the finance-bros on WSB didn't openly brag about being finance bros. People post screenshots of positions in the millions. None of this is concealed. It's all an explicit part of the subreddit.

Also, how do I think WSB knew that GME was open to a short squeeze? Because /u/deepfuckingvalue has been making the case for it since September 2019. It is not out of the realm of possibility that people found them convincing. (BTW DFV has been doxed, and gave an interview to the WSJ.)

I'd say the issue boils down to this: do you believe in the short squeeze thesis or do you not?

Because a large group of people have been genuniely convinced there's a short squeeze. They've considered the evidence and made their play. They could be wrong, or they could be fooled, but let's say there's at least a 33% chance that they're taking rational risks based on the available information. I'm finding the 'duped masses' thesis unconvincing. Especially seeing as that's always the reaction when a big collective action starts seeing results. ("Those protesters don't even know why they're protesting!")

Finally, I have access to a Bloomberg terminal at the cost of $150 a year at my local university library. So does pretty much everyone with ~$150 to spare and a need for research resources. Lexis-Nexis, Westlaw, all the big expensive services. Sheesh.

OK, I don't know enough about this subreddit to comment on what's actually happening, I guess. I'm still dubious the whole story and strategy is right there in the public posts.

66: Well I don't usually measure the value of political action based on its measurable effect on GINI. Also, my day job involves redistributing resources from the centre to the periphery, mostly by begging. But not in the United States, so that doesn't really balance out.

Anyway, not only am I over 30, I am also over 40.

And finally, I am also motivated by the possibility that my very small investment might turn into a pretty good amount of money. And in that case a lot of it will get plouged back into an index fund anyway.

78.1: Ah, I see what you're getting at. Yes, selling a call option is the opposite of buying one, so in some sense a "short", but it's not what you'd actually do to short something - the optionality is the wrong way round. You'd buy a put option (ie the right to sell shares at a given strike price). The people selling call options are by and large the market makers, not the end users.

I don't have any money at stake here, but I want to say how delightful I find this event.

I love everything about it. That Robinhood should have been called reverse Robinhood makes me angry, but I still love how out in the open everything is becoming. Investing in the stock market is and always has been Calvinball. Sure, Wall Street types are gonna say whatever, but the fact that the rules have to be changed for a once in a blue moon man bites dog story says everything.

76: The market is not rational in the short term. If everybody puts their money into tulips and a random selection of people get wiped out, is that good? Decreasing volatility is beneficial. And would you rather your retirement fund put all its money in consistently overvalued assets?

There's a unified price because there's a market maker whose job is to provide it (but it also somewhat happens organically). Market making is complicated but is provided to guarantee there's (usually) liquidity and counterparties for most sane sales. (This is far beyond my ken and it seems like it's really complicated, so if GY says anything that contradicts me, prefer what he says.) If you want to sell right now you can use a limit order to basically say "I want to sell my Amazon for at least $0.02, but give me whatever you can get" and you'll sell it for whatever the market has right then. That your sale won't actually go for $0.02 is because of the interface given to retail investors and all the market making apparatus that supports that.

If different sellers provide the same GAP T-shirt at different prices, and buyers have the exact same information about the existence and identicalness of all these sellers, and you aren't like trying to help out your cousin's GAP resale store or something, everybody's just going to buy the cheapest one. Financial markets are structured so all these qualifying factors go away. (There can be cases where they still exist: a stock can be traded on multiple exchanges, say via ADRs, so it's possible that the prices might be different between them, especially if the exchanges are based on different currencies. Again, beyond my ken.)

Markets are fucking weird, but I've screwed around on PredictIt for five years or so and it's been helpful to get a bit more of a feel of how they work (and also learn that no, I don't understand them well enough to try to trade on volatility). You can see everybody who has put up offers to sell at a given price, and everybody who has put up offers to buy at a given price. When there's a price that has both, sales get made in FIFO order. (Relevantly, that's not how the real market works.) So that gives a "unified price" of the last price that a sale happened at. This doesn't mean you'll get the same price if you decide to sell right then, though (since trades would occur until either all the buyers or sellers at that price are exhausted), but you'll probably get a price close to it.

81: Yeah, I think this is somewhat unusual for political actions. If people are saying "Yes! Let's stick it to the rich!" and it makes the rich richer, fully validating more effective wealth extraction strategies, somebody done goofed. I didn't mean to imply you weren't over 40, I picked 30 because that's approximately the age someone who became an adult during the beginning of the recession in 2008 would be now.

82: Thanks! I feel like I get options at a basic level but the strategies they allow rapidly mystify me.

I still can't get past the joy at somebody fucking over a hedge fund.

The stock market in general is used for things it's not optimized for. The largest use, as a retirement investment vehicle, works very much like Social Security does- current workers contribute to retired workers' income by buying shares from them. Stock ownership itself isn't really worth much without the fact that other people will buy it because later on they will be able to sell it. Very few companies pay dividends, almost no one uses the voting ownership aspect (and many share classes are explicitly excluded from that.) Maybe a company gets bought by another in which case you get money but more likely just shares of the new owner. These days, stock buybacks seem like the only way that money actually flows back from a profitable business to the owners.
Companies that hold many of their own shares can use it to raise capital by releasing more shares into the market, or as an alternate form of compensation by giving it to their employees who can then sell it, which again depends on willing buyers who are only buying it because they'll be able to sell it later.
That reminds me, since most people get paid either on Fridays or the last business day of the month, there must be someone exploiting those predictable purchases of 401k funds and selling into the demand then buying back at lower demand. I've never noticed an obvious trend around paydays but if there's a way to exploit the system someone is.

Very few companies pay dividends, almost no one uses the voting ownership aspect (and many share classes are explicitly excluded from that.)

This is a pretty recent phenomenon, and also a fairly localised one, based on the disproportionate* weight of tech stocks in the US markets. I really don't think it's true elsewhere. The FTSE 100 dividend yield seems to be around 4% at the moment. Which is a hell of a lot better than its total return over the last year.

* Compared to other jurisdictions, and at least in some cases, to their economic contribution.

I do get paid today. I should put in a liquor order.

I should add, that 4% yield is after a bunch of firms were either required to or chose to suspend dividends because of the pandemic.

Isn't that what rich old people do? Buy dividend-paying stocks and go on Nextdoor to bitch about kids playing too loudly?

And shift from stocks to bonds.

I own a bunch of dividend-paying shares because of my risk aversion. And tech will probably change at some point, as they run out of worlds to conquer (unless Elon gets his wish); Apple has a relatively sane P/E ratio of 35 and pays a dividend now.

Municipal bonds, Ted.

I like to tell people in bars going on about government spending that every month the state of NY and various municipalities send me a check for which I do no work. I get questions about whether I am disabled. I change nobody's view when I explain. That is entirely fair, they say. Now all these Others, ...

I suppose damaging the operation of securities markets could tend to discredit capitalism, but Abbie Hoffman made the same point more straightforwardly and seemingly had a lot more fun.

He didn't wreck a single hedge fund.

It's reasonable to be worried about WSB hucksters roping poor marks in on this scam. On the other hand, here's the reassuringly-named WSB moderator chainsaw_vasectomy dropping the act and talking sense in a post that has 26,000 upvotes.

That seems unnecessary. I've never heard of a chainsaw that produces sperm.

88: Increased liquidity for the weekend.

93: Are we supposed to ask, or are we supposed to know? Ok, I'll bite. Why do the state of New York and various municipalities send you a check every month?

Municipal bonds, peep. No matter the chaos in the skies or in the markets, municipal bonds have long been seen as unimpeachably mundane, stalwart sources of tax-free....

100: How can I get these magical money trees, Rex?

I was holding out for "assassin on retainer."

102: That makes more sense really.

I know that you can't walk into a bank and buy a savings bond anymore. I was going to get one for a baby, as one apparently does not do anymore.

I was going to get one for a baby

You know, you can make your own babies for free.

(Plus shipping and handling)

104: The modern thing to do is take out a loan in the baby's name and by as many shares of Gamestop as you can.

I'm a prime member, laydeez.

99:

Peep, I apologize for not starting my comment with "92:". I lurk enough that I should know enough that it is not obvious who is responding to what.

I know that there is no virtue to being rich or poor. I don't think it makes any sense to talk about "earning" income. Part of my problem is I take (some) parts of the bible seriously. Matthew 6: 26: Consider the birds of the sky...

I hadn't realized why there we so many bird watchers until now.

Anyway, Protestants are so literal.

OT: They made a mistake in Aeon Flux not to have Francis Mcdermott use the same voice as she used in Fargo.

109.2:. So the birds own municipal bonds too?

The birds learned to code.

I use Chase's trading app (to buy and hold an index fund and a money market fund) and they just sent out an email that starts:

"Dear client,

Individual investors demonstrated their market impact this week like never before. While the past year has been unpredictable, the record-level trading volumes and market volatility of this week may have been exhilarating for some and exhausting for others."

It looks like I am kind of late to the party but there have been some really enlightening comments here from people who know how this works. I don't have much to add other than my only real worry is that all this buying on margin brings down the brokerage where my stocks are held in street name. In my 40+ years of owning stocks I have only tried to short a company once and was unable to do so because my broker could not find any shares to borrow. That was unfortunate because I was right and would have made some money.

In other news, I found my new lair.

117:. Nice!

That looks like a surprisingly reasonably priced lair, unless "and was unstable" means "and still is unstable". But such a shape!

But there isn't really a good place to park the ekranoplan, so that's a drawback.

My carefully considered opinion is that the GameStop bubble is a disaster that has broken the stock market for the next couple of years, and that what happened should be made illegal as soon as possible, that the ringleaders on WSB should go to prison, and that everyone who thinks this is a populist revolution is a dupe.

But now that it's happened, fuck it, I'm cashing in. Now that the short side of the market has been destroyed, we are guaranteed a stock market bubble over the next couple of years. The fact that Tesla is so overvalued was the first sign of it, and GameStop is sign #2. The question is what will be next. Right now all of the trading bots are being retooled to spot the next bubble that WSB tries to create, which is a self-fulfilling prophecy. Pets.com, here we come.

Probably have issues with water in the basement.

Now that the short side of the market has been destroyed, we are guaranteed a stock market bubble over the next couple of years.

I don't get it. They ruined one hedge fund, it was actually named "Melvin" so nerds could pick on it without getting a complex. It's just a good reminder that even rich people are stupid and that, if they are stupid enough, even now they can face a consequence.

121. I can't tell if this is sarcasm-- options still exist, and are a way to profit from correctly-timed recognition that a company's overvalued. Not much professional trading in those more than a few months into the future, which practice I don't understand.

Okay, Walt & co, let's make a point of coming back to 121 in the future. In six months? In a year? Less time? (I'm not scoffing at you; I just really want to know if this take gets borne out or not.)

I think we must be in some kind of bubble. I had bunches of money in 2007 and that was a bubble. I had bunches of money in 1999 and that was a bubble. I just don't see what Game Stop matters except at the edges of the margins. The stock market has been shooting up for most of the year, house prices too, and unemployment is very high.

Which reminds me. I should redo the bathroom and buy a new computer before the crash.

124: You can find out the volume of put contracts.

125: I don't know. I'm not sure when the trading frenzy started (maybe Netscape IPO?), but I wouldn't have guessed it would end in March 2020. It could be a product of COVID and will go away once people can go outside safely, or it's the beginning of a self-sustaining bubble. The stock market is already historically high, which I thought was a result of people not spending and not having anything else to do with their money, but maybe it's already bubbly?

March 2000. March 2020 just feels like 20 years ago.

128.2 Perhaps, but interest rates are basically zero, which is a pretty recent development. Both implied equity risk and reciprocal CAPE less 10-year don't look like a bubble. If there's a better way to reasonably incorporate the effect of low interest rates, I'd be interested.

128.1 Agreed, which is how it's possible to see that not much happens more than six months ahead of present. Or are you saying that the disclosure discourages using them?

I coincidentally had a few share in SLV that I bought at too high a price, so once again I'm thankful to these maniacs for the opportunity to get out at a small profit.

Is the short side of the market really been "destroyed?" It seems like this is somewhat defensible against by shorting on slightly long timescales and getting out of the short early if everything's going according to plan. GameStop went down 90 today, this targeted pumping can't be sustained forever. People will get bored--it won't be as fun to pump the fifth one of these--and there'll be stories in the media about non-ideological regular people who lost their life savings.

There's probably a bored-during-lockdown bubble, to a degree, but that's only part of it. The market was doing great before covid and if last March couldn't pop it, it can probably continue on for a while. I would still expect things to go badly once people stop day-trading, but I doubt it'd crash the market.

My kid told me that the silver pump today was different from the GME. People say there aren't many actual posters promoting it, it all seems to be bots that are suspected to be hedge fund related. I have no idea if he is right.

Oooo, I might own some SLV somewhere. I guess I should find it and dump it.

One of the Hunt brothers isn't even dead yet.

131.2: You could be right. I wondered if it was a COVID-only event.

Welp, the stocks in question haven't quite returned to their pre-pump values, but anyone riding the wave who didn't get off is left holding a very expensive underwater bag. (Of...more water? Not sure where this mixed metaphor is going.)

I looked at WSB, and it's full of impassioned screeds to "hold the line", but I'm not sure their heart is in it anymore. They have some conspiracy theory about short ladders and how short interest isn't really down to 30%, but it didn't make any sense to me.

Hold the line. Love isn't always on time.

Etrade wouldn't let me short GME because there wasn't anybody to borrow stock from. The system is rigged, rigged!

138: TIL. I had no idea they were saying "Hold the line."

" I'm not sure their heart is in it anymore. "
It's not in the way that they look or the things that they say that they'll do.

Today I learned that 'TIL' is a commonly used acronym.

Rule No. 1 of the Toto Fan Club -- Never try to understand Toto lyrics.

Hold the line, bright eyes. Every now and then love's not on time.

Coming out of my cage and I'm doing just fine.
I'm Mister Bright Eyes.

It's the bright eye of the love, it's the thrill of the cage.
Rising up to the power of your true love
and the last known time-holder holds the line in the night,
and they're watching you all with Mister Bright Eyes' bright eye.

141: It's way better than the dumb "today years old" construction. Which amused me the first few times, but then no.

145: You had me until that last line. How the hell am I supposed to sing that?

Maybe this should be signed "Opinionated Roger Daltrey".