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Looking for this stock to continue to take a beating, as video game sales continue to decline, and as next gen consoles push to eliminate used game sales.
Mike
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EDIT: JANUARY 2021
Thread title changed to expand to all WallStreetBets discussion.
There is a trader over on Reddit who has been posting his long position in GME since the run up has started. It’s currently at 13.8mm. Crazy! The recent moves in stocks remind me of 99/2000 before the crash.
Robert
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I was reading about that today too... they say a whole bunch of little retail traders getting together on the same trades to squeeze the big dogs who are short. CNBC says a couple hedge funds are going under because of it. Pretty amazing really... new paradigm???
We all have two lives...the second one starts when we realize...we only have one.
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No.. I think it’s just a phase. Seen it before in 99 and 2007. I don’t think a small group of traders can move the stock from 10 to 160. There has to be big money behind it somewhere. Seems like a pump and dump to me but on a grander scale.
Robert
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Actually, the "herd" is short GME. This is just a classic squeeze, with a smaller retail herd joining in on the fun.
Squeezes are nothing new; the only thing that has changed is that the massive flood of liquidity from both fiscal and monetary authorities is drowing shorts on a much larger and faster scale than we've ever witnessed.
Still, it's a good reminder of the value of speculator positioning studies in revealing potential risk asymmetries.
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I don’t know.. I just can’t see a small group of traders driving the price to 200+. They don’t have that much capital. There had to be some other big money behind it pushing it up. This seems like the classic pump and dump penny stock trade but at a much larger scale.
Robert
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Retail isn't just a small group anymore, everyone has access to stock accounts with zero commission and dreams of hitting a grand slam. Adding to this is that we have been in an uptrend so long that most have not experienced any loses. I have friends and family sending me messages that they saw GME on the news and decided to buy some stock or calls.
You add that to the insane short interest in this stock and the market makers hedging themselves by buying tons of stock to cover all the calls they are selling and its the perfect storm. Of course there are probably other hedge funds that see blood in the water and wouldn't mind taking a shot at Melvin, Citron, Citadel, Point 72 and whoever else might have gotten caught short. Pretty sure even Michael Burry was long Gamestop.
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Do retail/WSB traders really have that much coordinated collective power? I think various hedge funds are going along with the narrative to scapegoat retail traders. I'm just assuming you need hundreds of millions $ to wage a war like this. Most retail have less than $10MM, and the majority are under $1M.
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1. If these people think collectively they can buy random 'dead' stocks and play against hedge funds to 'drain' them, then there are chances they will go for more similar stocks in the future.
2. Try doing this against ES and see what happens.
On a similar note Mike, forgot the name of that person, he's also a legendary short seller. He is short for Tesla since a while now. I bet he will have to exit sooner or later because it doesn't look like Tesla is going short anytime, especially with Musk being world's richest person.
I really enjoyed Matt Levine’s thoughts on the legality of the GME pump and the overall situation. Pretty good and informative read.
I used to read WallStreetBets on Reddit a few years ago before it took off. It used to be a great resource where people did decent stock research with the occasional meme play. Unfortunately it exploded in popularity about a year or so ago and then turned into a classic large subreddit - lots of edgy early 20 year old know-it-all’s. Can’t say I follow it much anymore. I do miss the old WSB though.
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When the earlier buyers, the one's who've done the research and noticed that the %short relative to float was over 100%... start selling to take massive profits, there will be a bloodbath amongst the latter buyers.
What comes next is more regulation to protect the "stupids" from themselves.
Think of PDT rules and why it came about.
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Although different exchange... looks like they are getting prepared.
It would be crazy if we have a new paradigm developing? Wonder how they'll respond to stop average joes from banding together to accomplish this against the money'ed funds?
I wonder how much of this you could tie into stimulus money? You could imagine someone getting a stimulus check for $600-1400, and having the attitude of... "Well, I'll throw $500 at something on wsb." They could do this for instruments that should have no reason to be mooning, like AMC or GME.
Worst case, they loose $500, of money they didn't really need. Best case... a whole lot of other people with the same mentality about that $500 force big money to exit at a loss?
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Unfortunately this event has only worsened that effect. Lots of astroturfing, spam posts, people that should obviously not be throwing their money into the market asking what a short is.... WSB needs to host another paper trading competition, that weeds out a TON of weenies who aren't really there to learn or do anything.
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Sort of but in reverse. Bunch of people on reddit found some stocks that everybody was short and is squeezing them/sending them to the moon. And yes certain hedge funds are literally losing Billions! It's big news.
Gamestop is up 800% in a week, and 1700% this year. AMC (movie chains) is up 570% in a week.
Blackberry is up 100% in a week.
Nokia was up 133% in a week at its high today but has retraced a lot.
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The amount of short interest in GME was astonishingly high. With short interest already exceeding 100% of the float, you'd have to be an absolute moron to be short this thing.
Where the heck was Melvin's risk management on this one? Seriously those clowns deserve to be out of a job.
And whether it was Redditors, momentum players, or other hedge funds that put this squeeze on (probably, a combination of all three) doesn't really matter. Wall Street has played this game over and over again since long before any of us were even born.
People did their research, ID'd a huge positioning imbalance in GME, recognized a hugely asymmetrical r/r setup, and positioned accordingly. Good for them. Well played.
As for Melvin and his point 72 buddies, let's hope they learned a lesson in risk management (knowing these guys, I wouldn't hold my breath)
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Now TDA is blocking AMC and GME. Wonder who will follow suit.
I explained the situation to my wife and she instantly told me we should buy in and participate in this. I think that is exactly what is happening worldwide right now, and I wonder what the pain tolerance will be when it heads south a bit.
I do agree with @SMCJB on GME, not a good short opportunity regardless of what's transpired these days.
Tom Sosnoff & Dylan Ratigan discuss the GME and the potential impact on the market. From an investor and regulation side. Interestingly, many of the comments in this thread are cited in this video.
They also do a good job explaining how all the shorts got caught with their pants down. At a high level; the reddit users drove the price up initially then prop firms and wall street institutions came in and started shorting it. Then more individual investors started piling in and suddenly the prop firms had to cover and drove the price higher. Then the larger firms like Melvin capital started feeling the heat and they started to cover. Basically the run up became a self fulfilling prophecy of shorts covering and individual investors rushing in to participate in the run up.
The question: is run ups like this the new norm?
Robert
Gamestop Won't Stop | Sosnoff & Ratigan Podcast
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I doubt it becomes the new norm, but I bet these hedge funds and investment firms stop cheerleading their short positions like they've been doing in the past.
@Silver Dragon I think that's probably a better explanation. Retail wasn't the cause of the squeeze, but maybe had a hand in tipping the first domino.
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There have been several runups which have defied logic in recent months. Tesla probably being the most notable. Actually, I think the prop firms will see this as a opportunity to make money. They may embrace it. Time will tell if this is the norm.
Robert
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Kinda wish I had signed up at some point, but never bothered because I just browsed and read posts. I wouldn't be surprised if they purge all the new members in the last few days if they can.
this marks the pivotal moment when gamers figure out the way to beat greedy short hedge fund using the power of crowdfunding, remind me of another bubble time
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CNBC interviewed Chamath Palihapitiya who bought 50 GME calls and claimed he would donate the initial position and any gains on it to the Barstool Small Business fund.
He claimed hedge funds were wrong about GME just like they have been wrong about Tesla and that hedge funds don't get to just change the rules because they were wrong.
I think there is an argument for the gamestop valuation here. Think NFL. Gamestop could be in the early stages of being the NFL of esports. Not just a team but the entire league. Demographics are ideal, ability to expand is virtually infinite. Subscriptions, low overhead, platform neutral. Retail real estate very cheap to facilitate live performance (AMC?). Crazy right?? I think the market cap is 25bln- what is the NFL worth?
I think my question still stands, even though I made a joke on it: Is this possible to do on ES? Afaik, the whales will wipe out small fishes in one shot!
Another thought is I can't imagine this is terrific for Gamestop management. I mean if they ever need to raise capital they will need wall street - will this sour their relationship? Would it be smart for gamestop to issue a secondary offering here? Seems like they could potentially raise billions quite easily. I know nothing about that process though so anyone with insight please share.
Anything is possible but I don't think it would work the same way. For one you don't borrow shares to short /es. Another is that there's not a fixed quantity of futures contracts available like there is with a stock, as far as I understand.
Possibly on a commodity future like silver (search Hunt brothers) but I think that would be considered cornering the market which is illegal I believe.
They are saving you from yourself. Realistically, GME could go back to 20 dollars tomorrow. There would be lots of margin calls and a lot of people out of a lot of money. Then individual investors would scream why didn’t you tell me the risk? Then they would sue. So RH along with a lot of other brokers are taking a proactive approach to save you and them from the headache and pain which is sure to come.
Back in 99 during the tech boom they did the same thing. Stocks would move insane amount during the day. They had a list of stocks you couldn’t short and a list of stocks which was cash only and a list of stocks which couldn’t trade. This is nothing new.
Robert
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No not in the same way because there is no "fixed supply of ES futures." Open interest changes depending on the number of open positions. At best, OI is a measure of potential liquidity. Whereas with stocks, there is a fixed supply of shares and a fixed supply available to short(borrow). With futures, if you want to go short, you simply open a short position. No future's contract to borrow and then sell.
However, what can be done as is often done is stop hunting and front running either by market makers or larger players. There's other little tricks used to fool volume players, like flash order then cancel games, but the ES is so liquid that the effect intra-day is often short lived and slippage is minimal (unless you're a tick scalper).
The other beauty of the ES is that games played on it result in arbitrage plays with the ETFs that closely track it as well as the underlying stocks that have the most influence upon the cash index - all of which renders large scale short term manipulation moot and keeps things relatively orderly. It's the after market hours where things can get the most dicey, but there are lock limits to end that non-sense (and consequently slow your roll). Stops are your friend.
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Nah. Management had nothing to do with this fiasco. If anything, it helps them. Free publicity for their brand. Besides, the street loves a good "story".
It would be difficult. There's a fair bit of legal and administrative work involved, which, once completed, may have already missed the window. Besides, the large institutional investors needed for this type of a capital raise likely wouldn't be interested anywhere near these levels. Just picture a pension fund manager trying to explain this one to his investment committee. Ain't gonna happen
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Seems like most of the brokers are doing the same. I know Tradestation restricted GME yesterday. I believe @Big Mike said TDA and one other he knows about have restricted it as well.
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Apologies if this is behind the paywall. Interesting story of the person who founded WallStreetBets back in 2012 and was eventually kicked by his own moderators last year when he tried to clean the forum up.
WSJ :- WallStreetBets Founder Reckons With Legacy
Jaime Rogozinski likens recent surge in GameStop shares to a ‘train wreck happening in real time’
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Andrew Sorkin in the NY Times Deal Book.
Words of warning
Andrew here. Let’s have an honest conversation about the mania around GameStop — and its larger implications.
Is there something fun about watching the little guys beat the big guys at their own game? Sure.
But that assumes that the game is over. It isn’t.
The truth is that many of the small investors who look like winners after pushing up shares of GameStop could soon become losers, especially those who jumped into the frenzy in the past day or so. And unlike the wealthy hedge-fund managers on the losing side of the trade so far — who probably have more than enough money to cover the mortgages on their second or third homes, if they have mortgages at all — many of these retail investors can’t afford to take a big hit.
Remember when a 20-year-old Robinhood trader killed himself last June after seeing a negative balance of $730,000 in his account?
There is a risk that this trading mania has already gone too far. It looks divorced from any sense of reality or fundamental analysis. On the day GameStop more than doubled in price, the broader stock market recorded its biggest decline in months.
In truth, saying aloud that some small investors may not fully understand the risks they are taking is an invitation for scorn from an angry mob online. I know because I’ve been on the receiving end of it. And it is a fair argument: The markets shouldn’t just serve professionals and wealthy elites — and for far too long, the markets have been rigged against the little guy.
When the GameStop music ends, there will be big losses and finger pointing. The speculators rarely blame themselves. Were brokerages too lax in allowing retail investors to trade options using leverage? Should the stock exchanges have jumped in? Where was the S.E.C.? And backers of GameStop may ask why more than 100 percent of the company’s shares could be shorted in the first place: Isn’t that manipulation?
So what happens next? Bands of investors are already pushing up the stocks of other companies like AMC, BlackBerry and Bed Bath & Beyond.
This likely won’t end well. But imagine a happy, fairy-tale ending to this story: Perhaps GameStop sells shares to reinvent itself. In this scenario, the company would raise billions of dollars to become a genuine e-commerce platform with its own games. Think of Netflix’s transformation from a DVD-by-mail company to a streaming giant. Perhaps GameStop and other beleaguered companies boosted by traders this week could use an unexpected windfall to make a similar leap. Still, a fairy tale is called a fairy tale for a reason.
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The narrative by the media seems to always be something to the effect of, "...these poor people don't know what they're doing, and they're going to get hurt."
That may be so for some people, but I get a sense that a LOT of people just don't care. Interesting commentary from a reddit poster:
Well said my man or woman.
No regaling with tales of poor childhood or struggles. I think at this point this is a common denominator for the majority in on the movement.
The 1% truly do not understand the movement. They are using the same old tactics and are convinced we will be scared. The more they say I am stupid, and the more they say I will not win, only gives me more resolve. I have been told that I will fail more times than I can count.
Alot of us have watched for decades and felt cheated, deceived, or outright manipulated. Whether that is via stocks, pay structure in jobs, exclusivity, does not matter.
There is and has been a ruling class whose sole purpose is to retain power. They gaslight us into thinking they know what is best for us. 1% knows better than 99%.
This is not stocks, this is a financial revolution never seen before. And let's be honest, the outcome will be a governing revolution.
I yolo'd $54k yesterday, and set a buy order for another $12k (Look at my history). I am not a money man, I lost my job in February last year and used my severance and took a risk.
Thanks to my military service and entering the market in the middle of the COVID shit I am fortunate enough to be in my last semester for a Chemistry degree.
I don't want to live the life of Wallstreet. I just want to live my life. My kids will learn the value of hard work and honesty; hopefully, with less pitfalls than I have experienced.
Prior to this I invested for personal gain. This YOLO money I am truly willing to lose in pursuit of changing the system. I will hold beyond the peak, not because I am stupid, but because I know we have a better chance of breaking the system if we force the shorts to cover everything. Every last fucking cent.
I fucking mean it. I LOVE THIS STONK. $PEOPLE all in.
Edit: Spelling, and I'm Just a Believer $GME, The Idea
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Is it a revolution or is anti-short selling? I'm unlcear. Why is short selling considered to be evil. Short sellers routed out the fraud at Enron. They perform a roll in this market.
Right now this is great because the retailers are making money off of the pros. If this continues at some point that will reverse. Some will make money but most won't and then we will hear the crying.
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Nothing wrong with short selling. The problem is these firms can borrow more shares for shorting than is in the float. This is bit of a unfair advantage to the retail trader who can only sell shorts what’s available.
Robert
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That's wrong and shouldn't be allowed to happen but it does. There are documented occurrences of companies issuing tender offers to rebuy their shares, and the tender offer is accepted for more shares than exist. Was reading the story about Falcone buying MAAX Holdings Bonds on this site yesterday. He bought 140% of the existing float! That shouldn't be possible. The problem is we're using a very old settlement system that is now antiquated and not capable of doing the job we need. But fixing that problem is a job so big nobody wants to touch it, plus of course, there's a lot of people whose best interest is for it to remain the way it is.
(Off subject:- Heard an interesting interview recently where they were talking about 'infrastructure bills'. The interviewee was making the point that people think about 'infrastucture' wrongly. It doesn't have to be building roads and bridges. It could be a massive computer project that replaces all the government systems, it could be a project that gives the fed the ability to directly deposit funds into peoples account rather than mailing checks. Found it interesting)
The media narrative is always about what sells the most advertising - that's all they care about. But as Sorkin said ...
The truth is that many of the small investors who look like winners after pushing up shares of GameStop could soon become losers, especially those who jumped into the frenzy in the past day or so. And unlike the wealthy hedge-fund managers on the losing side of the trade so far — who probably have more than enough money to cover the mortgages on their second or third homes, if they have mortgages at all — many of these retail investors can’t afford to take a big hit.
Gamestop currently has a $370 range today, $113 to $483. There is a lot of money changing hands. Some people are losing money they can not afford to lose. That's why they have the 'sophisticated investor' category. It's basically a group of people who theoretically dont need protecting from themselves.
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That Andrew Sorkin quote is the equivalent of a "won't you think of the children?" argument.
The fact of the matter is that people get cleaned up and lose money on stocks all the time, with brokers recommending stocks that don't turn out well, or large firms/banks recommending shares to their retail customers while shorting it in another section of the business. Or you've got the corporate business channels pumping out news all the time and talking guff about stocks (looking at you Jim Cramer et al). All of this is perfectly acceptable.
The ONLY thing different this time is that these same people are on the wrong side of the trade. And as 2008 has shown, capitalism (where you lose as well as win) is just for the little people.
This so called concern for the plight of the small investor completely misreads the bulk of people buying GME. They want to do it to wreck the big guys. They're happy with the risk. And if there are others who are piling in as well? As stated, that's never been a problem before has it? Seen Netflix/Tesla recently?
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I wonder what happened to old wisdom "if social media says buy, then sell"
Well, either way, I can already see margin calls happening, I wont be surprised if those "funds" make more than what they lost by shorting it soon enough.
I kind of feel bad for the stock though, this kinds of thing, might ruin it permanently.
"If you don't design your own life plan, chances are you'll fall into someone else's plan. And guess what they have planned for you? Not much." - Jim Rohn
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So help me out here. If the stock is short 140% of the float and the stock goes to zero, where is the 40% of the money coming from to cover the shorts. Have some shares been lend away twice?
I'm trying to wrap my head around the shorts being over 100% float.
US-Senator Elizabeth Warren (D) will release a statement and start a discussion on market manipulation in a few minutes on CNBC...
"If you don't design your own life plan, chances are you'll fall into someone else's plan. And guess what they have planned for you? Not much." - Jim Rohn
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You hit the nail on the head, and if you go over to WSB this is very clear.
Although in this case the 'big guys' is limited to short selling hedge funds. That's the bit I don't like about the whole situation. I never do anything, with the intention of hurting somebody else. I trade every day, amd I try and make as much money as I can every day, but I don't approach it with the attitude that I'm trying to screw others over and hurt them as much as possible. That's a pretty poor outlook on life, no matter how bad a situation you have been dealt. Unfortunately I think it is a fair reflection of humanity.
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It is a poor outlook to have that as your goal... but, let's say the hedge funds have the goal of simply making as much money as possible, and they really don't care about consequences of people other than their own firm. So long as they get the green light on risk, it's a go.
Using the same philosophy, is it acceptable for a group of people to form together in order to make as much money as possible?
What is the difference between the "group" at the hedge fund, vs the group from FIO or group from WSB in this case -- except for the raw number.
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That's the point of many here and on WSB. The system is being abused if people can short more shares than are outstanding. In reality its a timing issue. You don't have to have the borrow in your account before you short it. So you short it assuming you can get the borrow. Then tomorrow when you find out you didnt get the borrow, and have no prospect of getting the borrow, you can unwind your short with no penalty. So for that day, you were short with no borrow. That is happening all over the place.
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If that was what was happening that would be okay, but that's not what's happening. As @kaeb said, they are banding together to "wreck the big guys." Go over to WSB. This is not people celebrating the trading prowess. Its people reveling in the damage they are doing.
Why do AOC and Cruz suddenly care about this? Didn't see them talking about this when crude went negative and brokers stopped people trading crude. Their motivations are not honest.
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That explanation doesn't make much sense to me. The hedge funds and investment firms aren't clicking a sell button and getting told the next day by the trade desk they couldn't get shares. They had their positions. Retail isn't big enough to short 40% of the float. The short interest being 140% of the float is absolutely kooky. There's something going one here, and no one knows what yet but I don't think it's a timing issue.
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Also, can we not pretend that professional traders don't commonly laugh and joke about "ripping people's faces off" etc. or that these gigantic short trades basically profit off a retailer going out of business and laying off 40,000 low paid workers? You don't think Melvin Capital wants that to happen? Think they care about that damage? Huge financial blowups are almost a badge of honor on Wall Street. It's part of the industry. Your gain is proportional to the other guy's loss - especially in futures markets. You do financial damage to the loser whether you think about it, or like it, or not but that money still spends, right?
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Robinhood has every right to close positions secured by margin. They do not have to lend money to anyone if they don't want to. Isn't that what happened? If so the lawsuit is DOA. If it was a cash account then there's something to it I think...
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I dont think it was just margin it was set to close only for all positions. Saw someone post they could not even search GME in the Robinhood app will try to find that.
I think that that was predominately the case. But then again, a fair contingent of RobinHood users have no idea what margin really is and how it relates to Reg-T. But I think the lawsuit is DOA (depending on judge) but may end up in a settlement without acknowledging any wrongdoing. Usually cheaper to settle.
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