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Old 29th January 2021, 11:58 AM   #281
Dr. Keith
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Originally Posted by Checkmite View Post
I do not understand this schizophrenic sentiment towards this situation, where on one hand we're supposed to be cheering this bubble because it allegedly represents "Joe Six-Pack breaking Wall Street", but when it's pointed out that Joe Six-Pack is going to suffer potentially serious damage when the bubble bursts it's now a dismissive "well that's what he deserves for being getting involved".
Think of it as a grass roots political campaign. If you donated to the campaign of Ross Perot in 1992 for the sole purpose of disrupting the Bush dynasty, you succeeded. If you did so expecting a cash return on your investment, you failed. If you donated so much that you now can't pay rent, well that's just beyond stupid. But does that mean we can't have grass roots political campaigns?
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Old 29th January 2021, 11:59 AM   #282
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Originally Posted by TragicMonkey View Post
No, you haven't. You have gained or lost nothing until you sell that stock.
I disagree, unless you are saying nothing has value except currency.


Quote:
If the little guy wasn't prepared to risk $10,000 he should not have invested $10,000. He knew it was a gamble. Fairness is everybody gets treated the same, not everybody gets the outcome they desire.
Maybe I should've said what seems fair. Remember I was answer the question: "why are some people obsessed by "short sellers"?".

Although it could go back to the financial system in place today forces people to take risk. Returns on safe investments, ie bonds have been very low. Most people don't have an employer back pension plan. So, to have any chance at a good retirement everyone is locked into investing in stocks. Saying the little guy should be prepared for the risk is like saying, or just sit there and watch your money slowly lose value.
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Old 29th January 2021, 11:59 AM   #283
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Originally Posted by Suddenly View Post
Well, yes. That is how psychology works. Sometimes it is stupid, but short selling is literally wanting a company to crash and for the vast majority of people that is a hateful desire no matter what abstract arguments about market efficiency exist.
Are retail traders who buy inverse stock ETFs also guilty of hateful desires? What about the manager of a retirement fund, servicing primarily working class union members, who calculates a large company is not going to be a large company for much longer, and decides shorting that corp is the responsible thing to do for the benefit of those regular people trusting their hard earned money is being allocated intelligently?
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Old 29th January 2021, 12:04 PM   #284
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Originally Posted by lobosrul5 View Post
I disagree, unless you are saying nothing has value except currency.
...Things that are not money have a monetary value based on what you sell them for. If you do not sell them then any monetary value is theoretical only.
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Old 29th January 2021, 12:06 PM   #285
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Originally Posted by Checkmite View Post
Again, "Wall Street" at large, doesn't even care about this. A handful of hedge funders at best are perturbed; but aside from complaining, there's nothing they can really do about it.

The far bigger problem is all of the people who were manipulated into joining this pump as a form of "activism", and invested money they really couldn't afford, and who are about to lose everything when the pop comes.
Even the hedge funds shorting Game Stop will end up making money if they have the capital to wait things out. The ones that don't will just get gobbled up by even larger funds.

Even in a short squeeze people need to sell their shares to actually make money, and as soon as that starts to happen in significant numbers to price will collapse.
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Old 29th January 2021, 12:09 PM   #286
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I would tax or outright ban high-speed trading.

Of course, this will actually happen only after next round of "rich, rope, tree, some assembly required". Then sooner or latter (about one nanosecond later) some new rot, exploitation and abuse sets in and fester.

Rinse, lather, repeat - forever. This will happen as long as humans are humans and beyond, since parasitism is property of all kinds of systems and societes. Hell, even artificial life evolved parasites and hyperparasites.
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Old 29th January 2021, 12:10 PM   #287
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Originally Posted by lobosrul5 View Post
Lets say you hold $10,000 worth of a company in stock. You are a normal buy and hold investor. You don't pay attention to the stock market every single second of the day. A capital investoment group opens a short position on the company then puts out a press release saying how they think its going to tank. Within a few milliseconds of that press release going out, algorithmic traders have sold millions of shares and the stock is now trading 25% lower. You just lost $2500.

Conversely, someone does the opposite and wants the stock to go up, well you just instantly made a bunch of money.

Which is more fair to the little guy?
Except in the latter case you just made it more expensive for other investors to purchase stock. Where is the fairness in that?
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Old 29th January 2021, 12:11 PM   #288
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Originally Posted by Dr. Keith View Post
Think of it as a grass roots political campaign.
If that's what it was maybe that kind of logic could work; but I'm not convinced that's what it is. I think there's a very decent chance that it is more like an astroturfed political campaign that was consciously encouraging risky behavior by people who didn't know any better.
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Old 29th January 2021, 12:13 PM   #289
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Originally Posted by lomiller View Post
Even the hedge funds shorting Game Stop will end up making money if they have the capital to wait things out. The ones that don't will just get gobbled up by even larger funds.

Even in a short squeeze people need to sell their shares to actually make money, and as soon as that starts to happen in significant numbers to price will collapse.
And in a situation similar to this one, that collapse could involve several massive overnight gap-downs. Waking up to find the opening price of your crowd sourced short squeeze target, in to which you recently invested a second mortgage, has now fallen off a steep cliff is the kind of thing that can crush a person's soul.
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Old 29th January 2021, 12:16 PM   #290
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Originally Posted by Suddenly View Post
People who root for other people's misfortune are not generally held in esteem.
Short sellers are not the root of misfortune, they just capitalize off other peoples mistakes. In doing so they actually limit the damage people can inflict on themselves. They are a circuit breaker that helps limit the damage bubbles cause, when they get chased out of the market the writing is on the wall for a massive bubble and subsequent collapse. While some of the big boys will take a hit at this point it will be a bloodbath for small inexperienced investors may of whome will lose their retirement plans.
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Old 29th January 2021, 12:20 PM   #291
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Originally Posted by lomiller View Post
Short sellers are not the root of misfortune, they just capitalize off other peoples mistakes. (rest of nonsense cut out)
More BS rationalizations. Multiple people, me included, already pointed out how shorts can harm companies that otherwise would be fine. You, of course, pretend to not see it.
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Old 29th January 2021, 12:23 PM   #292
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Originally Posted by lobosrul5 View Post
Lets say you hold $10,000 worth of a company in stock. You are a normal buy and hold investor. You don't pay attention to the stock market every single second of the day. A capital investoment group opens a short position on the company then puts out a press release saying how they think its going to tank. Within a few milliseconds of that press release going out, algorithmic traders have sold millions of shares and the stock is now trading 25% lower. You just lost $2500.

Only of you sell. In the longer term the price will go right back to the range it should have been in to begin with. If capital investoment group was right and the price WAS to high, the small investor had already lost that money. The price was going down anyway and anyone holding the stock would have gone down with it.
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Old 29th January 2021, 12:23 PM   #293
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Originally Posted by Mader Levap View Post
More BS rationalizations. Multiple people, me included, already pointed out how shorts can harm companies that otherwise would be fine. You, of course, pretend to not see it.
Companies don't have to be publicly traded. They chose to enter the game and gamble as well, just as much as any of the investors do. If Precious Mom-n-Pop Old-Fashioned Nostalgia Dearie Me Just Folks, Inc was truly, truly concerned with protecting themselves from the eeevuls of the market they could have simply stayed private.
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Old 29th January 2021, 12:23 PM   #294
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Originally Posted by lobosrul5 View Post
Although it could go back to the financial system in place today forces people to take risk. Returns on safe investments, ie bonds have been very low. Most people don't have an employer back pension plan. So, to have any chance at a good retirement everyone is locked into investing in stocks. Saying the little guy should be prepared for the risk is like saying, or just sit there and watch your money slowly lose value.
Do banks not offer mutual funds where you live?
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Old 29th January 2021, 12:24 PM   #295
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Originally Posted by Checkmite View Post
If that's what it was maybe that kind of logic could work; but I'm not convinced that's what it is. I think there's a very decent chance that it is more like an astroturfed political campaign that was consciously encouraging risky behavior by people who didn't know any better.
If so, then there could be some people looking at jail time.
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Old 29th January 2021, 12:37 PM   #296
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Originally Posted by TragicMonkey View Post
No, you haven't. You have gained or lost nothing until you sell that stock.
Seriously, don't do your own investing.
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Old 29th January 2021, 12:38 PM   #297
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Originally Posted by Mader Levap View Post
More BS rationalizations. Multiple people, me included, already pointed out how shorts can harm companies that otherwise would be fine.
And I already explained why this was wrong.

The argument amounts to suggesting that with an overvalued share price *may* be able to "save itself" by selling it's own stock at an unreasonably high price." In most cases all this is going to do is inflict even more harm on the average investors who buy these new shares and the inflated price.

If a company's business model no longer works the best thing for everyone is end it quickly. If the business model still works you can bet that there will be institutional investors ready to step in, so selling shares to the public isn't required.
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Old 29th January 2021, 12:43 PM   #298
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Originally Posted by TragicMonkey View Post
...Things that are not money have a monetary value based on what you sell them for. If you do not sell them then any monetary value is theoretical only.
Then the same thing applies to money. It's value is only determined when you see what you can buy with it, which changes.

Your stocks have a current value that is real. Banks will loan money to you based more on what your investments are worth now, not what you originally paid for them. Applies the same whether they are worth more or less than what you paid for them.

Some risky/less liquid investments may be less likely to secure a loan and some very stable/more liquid ones might be more likely, but in no case will the original purchase price actually matter to anything.
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Old 29th January 2021, 12:48 PM   #299
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Odd that we need to discuss whether or not the loss is real before you sell on this board, this is the epitome of the sunk cost fallacy.
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Old 29th January 2021, 12:50 PM   #300
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Originally Posted by RecoveringYuppy View Post
Seriously, don't do your own investing.
Seriously, I do. And I've done well at it, too, by following simple practical rules:

1. Never spend what I can't afford to.
2. Only buy sensible things like mutual funds.
3. Hold them. For years and years and years and years.

It's not exciting, I don't get lots of great stories from it to liven up Reddit or make the news. All I've gotten out of it so far is more money than I had before. Which, being the point of the exercise, is quite satisfactory.
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Old 29th January 2021, 12:53 PM   #301
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Originally Posted by RecoveringYuppy View Post
Then the same thing applies to money. It's value is only determined when you see what you can buy with it, which changes.

Your stocks have a current value that is real. Banks will loan
And you've lost me. "Loan"? Darling, sweetie, if you're borrowing money you're already violating basic sense. Gamble only with your own money that you actually have, never with borrowed money. And if you're borrowing because you have debts then you should pay off those debts before you gamble at all. The object is to make money, not continue losing it or lose even more!
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Old 29th January 2021, 12:54 PM   #302
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Originally Posted by Checkmite View Post
No; you're supposed to seriously consider that maybe decidedly-non-amateurs on Reddit "crafted" a perfectly open social media campaign aimed at amateurs on Reddit, for the purpose of facilitating a pump-and-dump scheme.
Fair enough; but it's your idea, so probably you should lead the way in seriously considering it.

Tracking down the original proponents of the idea the Reddit sub, and seeing if you can confirm that they are in fact non-amateurs running a pump-and-dump.
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Old 29th January 2021, 12:55 PM   #303
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"But the people who exposed our shady shell game of good old boy shadow economics aren't all angels!" is pretty much all you need to hear to read the entire landscape of what is happening and who's on what side of what.
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Old 29th January 2021, 12:58 PM   #304
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Originally Posted by TragicMonkey View Post
Nonsense. It's the turnaround time of the investments, not the total amount, that matters. Ordinary folks can (and should) be investing their pittances for the long haul, years at a time, they shouldn't be playing at day-trading. Just like ordinary folks drive cars but shouldn't race them, sing but shouldn't release albums, and play computer games but shouldn't quit their jobs to become "streamers".
Best financial advice I ever got was, "are you a professional stockbroker? No? Then don't play the market. You get your ESPP stocks, just turn around and sell them the same day for the guaranteed profit. Everything else, put it in long term low risk funds."
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Old 29th January 2021, 01:08 PM   #305
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Originally Posted by TragicMonkey View Post
Seriously, I do. And I've done well at it, too, by following simple practical rules:

1. Never spend what I can't afford to.
2. Only buy sensible things like mutual funds.
3. Hold them. For years and years and years and years.

It's not exciting, I don't get lots of great stories from it to liven up Reddit or make the news. All I've gotten out of it so far is more money than I had before. Which, being the point of the exercise, is quite satisfactory.

Oh good, for the yellow part. Those mutual funds will understand the sunk cost fallacy and avoid it.
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Old 29th January 2021, 01:09 PM   #306
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Originally Posted by TragicMonkey View Post
Gamble only with your own money that you actually have, never with borrowed money
Huh? Where did you see anything about using the borrowed money to gamble? I had in mind things like buying a house. Most people can't do that with cash, at least not the first one.

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Old 29th January 2021, 01:12 PM   #307
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Originally Posted by RecoveringYuppy View Post
Huh? Where did you see anything about using the borrowed money to gamble? I had in mind things like buying a house. Most people can't do that with cash at least not the first one.
A necessary evil, but not as necessary as people assume. I think far fewer people should buy houses. But you were speaking of stocks' valuation as being a factor in getting loans. Would a bank really use someone's holding stocks as a factor in loaning them money? That seems like mad recklessness on their part.
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Old 29th January 2021, 01:16 PM   #308
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The whole "Oh just stay out of high end investing if you don't understand it" thing is sort of dishonest because it's not like high end investing being so complicated that the average person can't understand happened by accident.

And not this isn't like brain surgery or rocket science where the complication is inherent to the task. It's manufactured complexity put into a system where the people in it have a vested interested in the general public not being able to understand what they are doing.

"High level economics is functionally magic to 99% of the population (even if only 90% of the population admits it)" is a feature, not a bug. But it's a feature that needs to be removed.
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Old 29th January 2021, 01:18 PM   #309
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Originally Posted by TragicMonkey View Post
A necessary evil, but not as necessary as people assume. I think far fewer people should buy houses. But you were speaking of stocks' valuation as being a factor in getting loans. Would a bank really use someone's holding stocks as a factor in loaning them money? That seems like mad recklessness on their part.
Yes actually, the value of my brokerage account was accepted as collateral when I refinanced my mortgage last year. It only counted at 50% rather than 100 if I'm not mistaken and retirement accounts counted at 25%. And good lord I'm glad I bought a house 6 years ago instead of continuing to rent. Every year my payment goes down in real dollars, while rent keeps going up.
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Old 29th January 2021, 01:25 PM   #310
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Originally Posted by lobosrul5 View Post
Yes actually, the value of my brokerage account was accepted as collateral when I refinanced my mortgage last year. It only counted at 50% rather than 100 if I'm not mistaken and retirement accounts counted at 25%. And good lord I'm glad I bought a house 6 years ago instead of continuing to rent. Every year my payment goes down in real dollars, while rent keeps going up.
Wait, does that mean if you default on your mortgage they can go after your accounts instead of just getting the house?
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Old 29th January 2021, 01:28 PM   #311
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Originally Posted by Checkmite View Post
I do not understand this schizophrenic sentiment towards this situation, where on one hand we're supposed to be cheering this bubble because it allegedly represents "Joe Six-Pack breaking Wall Street", but when it's pointed out that Joe Six-Pack is going to suffer potentially serious damage when the bubble bursts it's now a dismissive "well that's what he deserves for being getting involved".
If Joe Six Pack is punting more than he can afford to lose on this then he's not exactly worthy of policy change to protect him. If he's taking a flyer with responsible bankroll management (or what ever you call that in stock gambling) then there is no reason to wring hands over his well being.

That is the distinction. If someone is leveraging themselves into a reddit scheme they are going to go down in flames sooner or later so preventing this specific way to self-destruct would be pointless. Maybe start with not advertising the state lottery if we are so concerned about financial foolishness.
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Old 29th January 2021, 01:33 PM   #312
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Originally Posted by TragicMonkey View Post
Wait, does that mean if you default on your mortgage they can go after your accounts instead of just getting the house?
Hmm, I'm not sure. I believe they just want to see that you have the ability to pay your mortgage even if given short term financial difficulties, ie losing your job.

I know in some states if you are upside down on your mortgage they can come after you for more even after taking your house. I forget the term, saw it come up in some articles after the mortgage burst a decade ago.
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Old 29th January 2021, 01:36 PM   #313
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Originally Posted by JoeMorgue View Post
The whole "Oh just stay out of high end investing if you don't understand it" thing is sort of dishonest because it's not like high end investing being so complicated that the average person can't understand happened by accident.

And not this isn't like brain surgery or rocket science where the complication is inherent to the task. It's manufactured complexity put into a system where the people in it have a vested interested in the general public not being able to understand what they are doing.

"High level economics is functionally magic to 99% of the population (even if only 90% of the population admits it)" is a feature, not a bug. But it's a feature that needs to be removed.
I mean, I'm fine with not understanding things outside of my area of expertise. I don't so much want them to dumb it down to my level as much as pay a ton more taxes so next time some math whiz comes up with a new way to bet more money than has ever existed on next year's egg prices we can bail it out with their money when it melts down the casino.
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Old 29th January 2021, 01:37 PM   #314
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Originally Posted by lobosrul5 View Post
Hmm, I'm not sure. I believe they just want to see that you have the ability to pay your mortgage even if given short term financial difficulties, ie losing your job.

I know in some states if you are upside down on your mortgage they can come after you for more even after taking your house. I forget the term, saw it come up in some articles after the mortgage burst a decade ago.
Recourse / non-recourse.
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Old 29th January 2021, 01:38 PM   #315
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Originally Posted by Suddenly View Post
I mean, I'm fine with not understanding things outside of my area of expertise.
As I said so am I... if the complexity of the system is organic and honest.

Brain surgery is out of my area of expertise because it's inherently complicated.

High end economics of the kind being discussed here are out of my area of expertise because the people running them make them complicated on purpose because people not understanding them means nobody knows when they do it shadily.
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Old 29th January 2021, 01:40 PM   #316
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Originally Posted by TragicMonkey View Post
A necessary evil, but not as necessary as people assume. I think far fewer people should buy houses. But you were speaking of stocks' valuation as being a factor in getting loans. Would a bank really use someone's holding stocks as a factor in loaning them money? That seems like mad recklessness on their part.
It happens all the time. It's not the primary way to secure a mortgage though as I can see you understand.

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Old 29th January 2021, 01:56 PM   #317
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Originally Posted by RecoveringYuppy View Post
Odd that we need to discuss whether or not the loss is real before you sell on this board, this is the epitome of the sunk cost fallacy.

Well, unless the stock is illiquid, but that doesn't apply to anything we're discussing here.
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Old 29th January 2021, 01:57 PM   #318
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Originally Posted by lobosrul5 View Post
Hmm, I'm not sure. I believe they just want to see that you have the ability to pay your mortgage even if given short term financial difficulties, ie losing your job.

I know in some states if you are upside down on your mortgage they can come after you for more even after taking your house. I forget the term, saw it come up in some articles after the mortgage burst a decade ago.
Deficiency judgement.

Laws do vary from state to state and there are varying levels of debt forgiveness options concerning a persons primary house but generally, the mortgage is a loan of money and you owe the money, not just the house. You can't just walk away from the money you owe when you're underwater. Details vary.

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Old 29th January 2021, 02:05 PM   #319
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Originally Posted by RecoveringYuppy View Post
Deficiency judgement.

Laws do vary from state to state and there are varying levels of debt forgiveness options concerning a persons primary house but generally, the mortgage is a loan of money and you owe the money, not just the house. You can't just walk away from the money you owe when you're underwater. Details vary.
Suddenly, had it correct a few posts up. Recourse vs non-recourse states.

https://www.forbes.com/advisor/loans...d%20Washington.

I believe its common thought that a mortgage lender gets the collateral for the loan (ie your house), but beyond that you can walk away. In reality thats only true in 12 states. Although given that 2 are Texas and Cali, it is true for a lot of people.

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Old 29th January 2021, 02:05 PM   #320
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Originally Posted by timhau View Post
Yup. I'm kot going to shed a tear for the funds on the wrong side of a short squeeze. You take a risk, and sometimes it bites you in the ass.

I'm also not going to have any sympathy for the market trolls or followers of market trolls who lose their shirt. Play stupid games, win stupid prizes.
Thing about selling short..leaving out the ethical questions....is your timing has to be precise and exact; you really do have to know when to fold.
A lot of the Day traders/reddit yahoos are clueless here,which is why they will get soaked.
It works a little like the classic Ponzi/Pyramid scheme; the people who started it and got in early will make money;everybody else will get soaked.
I dislike the big Hedgefunds as much as anybody an if possible I would make selling short illegal (not sure that is feasible) but don't tell me a bunch of yahoos on Reddit are some kind of Heroic Proletarian Resistence to THE MAN when they are bunch of wannabe gamblers
who are not very good at it.
One take away from the sanctification of the day traders I see from many on the left;The left is a prone to fall for the "wisdom of the common man" malarkey as the right is. Populism in any form is poison.
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