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Old 28th January 2021, 08:23 AM   #121
Beelzebuddy
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Originally Posted by JoeMorgue View Post
Even beyond this one, specific incident I wonder how many companies really could function without any low level employees at all but keep them around for, as you say, "human shield" purposes.
None, I think. If that's all they need them for, they just wave their arms around and say "jobs!" For example, that imaginary Foxconn factory in Wisconsin.
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Old 28th January 2021, 08:39 AM   #122
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Originally Posted by theprestige View Post
"Rooting for Gamestop" is an interesting position to take.

I'm still thinking about the ethics of short-selling, but I'm pretty sure Gamestop isn't worth rooting for. Could you tell us a little bit more about what that position means to you?
TBF Gamestop was, and still is, probably heading for bankruptcy. The shorters are just hastening their demise. That said, they are making money off other peoples misfortune. If GME could at least make it to the end of the pandemic they'd have a better chance of finding a buyer to keep their stores open. That means, people have jobs, the holder of the mortgage is still getting rent. Its better than stores sitting empty which is probably what would've happened in the next few weeks if not for the degens on reddit. More than that are the shorts on AMC. These are vultures closing in during a pandemic, that may cause the closure of a viable business. If they can hold out until the world returns to normal, I could see them turning a profit again.

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Old 28th January 2021, 08:45 AM   #123
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Having your stock shorted seems like all the fun of going through a leveraged buyout without the pesky "I have a say in this matter" and "I'll get anything out of it in the rare chance this does turn my business around" parts.
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Old 28th January 2021, 09:22 AM   #124
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Originally Posted by SuburbanTurkey View Post
I'm seeing a lot of both. Especially for late buyers, the risk is super high. The price will crash eventually, and if these later buyers are too slow on the selloff, they're going to lose basically everything.

Some are, like you say, buying it as a form of activism. A suicide bombing of the short-sellers, knowing that the shorted hedge funds will lose a lot more. They seem willing to lose whatever they put in.

But I'm definitely seeing a lot of people jumping on the bandwagon because it appears to be a money-printing machine. I'm seeing tons of people bragging about paper gains and getting ecstatic, but not seeing much evidence of anyone actually cashing out and securing those gains. It's not real money until it's out of the market, but I'm seeing a lot of bragging about numbers on screens.

I think we're going to see a lot of stories about people that were up tens of thousands of dollars that missed their opportunity to cash out and are now negative.
I saw a guy who had reportedly put in $53,000 and was, at the time of reporting, worth $48,000,000. If I were him, I'd probably go "yep, that's enough" and cash out regardless. And if it later turned out that I could have doubled that amount, well, who cares? Once you get above a certain threshold then the actual amount is pretty meaningless.

There was one guy who said he got out before a potential crash. He says he got a single share free with a game purchase, when it was worth $4. He says he sold it today for around about $250.
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Old 28th January 2021, 09:24 AM   #125
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I get there's probably deep psychological reasons why this isn't the case, but yeah it does seem like, mathematically, a lot more people really could "get rich quick" (for certain values of rich and certain values of quick) if they went in with a firm number in their head just got out when they reached it.
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Old 28th January 2021, 09:52 AM   #126
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Originally Posted by JoeMorgue View Post
I get there's probably deep psychological reasons why this isn't the case, but yeah it does seem like, mathematically, a lot more people really could "get rich quick" (for certain values of rich and certain values of quick) if they went in with a firm number in their head just got out when they reached it.
I always wonder when people win at casinos why they don't remove their original stake and put that back into their pocket, then continue playing with the winnings. That way even if they lose after that they'll end the day no worse off than they were before they started.

But then I realized that someone who thought that practically would probably not be gambling in a casino in the first place, so that's why it doesn't happen much.
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Old 28th January 2021, 09:56 AM   #127
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Originally Posted by JoeMorgue View Post

The SEC will (near as I can tell. Financial law is stupidly massively complex obvious caveat here) have to prove that r/wallstreetbets intentionally spread false information with the intent to get people to buy/sell stocks in order to really get firm traction on any direct legal reprisals.
All they need to do is prove that they traded with the intent of changing the market price in order to get others to buy/sell the stock, which is of course exactly what's happening.

Quote:
PROHIBITION AGAINST MANIPULATION OF SECURITY PRICES
SEC. 9. 78i (a) It shall be unlawful for any person, directly or indirectly, by the use of the mails or any means or instrumentality of interstate commerce, or of any facility of any national securities exchange, or for any member of a national securities exchange—

(1) For the purpose of creating a false or misleading appearance of active trading in any security other than a government security, or a false or misleading appearance with respect to the market for any such security, (A) to effect any transaction in such security which involves no change in the beneficial ownership thereof,or (B) to enter an order or orders for the purchase of such security with the knowledge that an order or orders of substantially the same size, at substantially the same time, and at substantially the same price, for the sale of any such security, has been or will be entered by or for the same or different parties, or (C) to enter any order or orders for the sale of any such security with the knowledge that an order or orders of substantially the same size, at substantially the same time, and at substantially the same price, for the purchase of such security, has been or will be entered by or for the same or different parties.

(2) To effect, alone or with 1 or more other persons, a series of transactions in any security registered on a national securities exchange, any security not so registered, or in connection with any security-based swap or security-based swap agreement with respect to such security creating actual or apparent active trading in such security, or raising or depressing the price of such security, for the purpose of inducing the purchase or sale of such security by others.
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Old 28th January 2021, 10:04 AM   #128
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Originally Posted by lomiller View Post
All they need to do is prove that they traded with the intent of changing the market price in order to get others to buy/sell the stock, which is of course exactly what's happening.
That doesn't seem right. They are using their words, not the trading of the security, to induce purchases.
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Old 28th January 2021, 10:14 AM   #129
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Originally Posted by TragicMonkey View Post
I always wonder when people win at casinos why they don't remove their original stake and put that back into their pocket, then continue playing with the winnings. That way even if they lose after that they'll end the day no worse off than they were before they started.

But then I realized that someone who thought that practically would probably not be gambling in a casino in the first place, so that's why it doesn't happen much.

You do hear it a lot on stock message boards. Someone doubles up, sells half, then says they are "playing with free money". I guess it's psychologically helpful and allows them to feel comfortable staying in on a high-risk-high-reward stock.
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Old 28th January 2021, 10:17 AM   #130
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Originally Posted by lomiller View Post
All they need to do is prove that they traded with the intent of changing the market price in order to get others to buy/sell the stock, which is of course exactly what's happening.
Yeah but isn't the whole point of this stunt largely "This is what Wall Street does all the time, it shouldn't be different because it's a bunch of Reddit bros."

The "Oh my God how dare poor people game the system. That's only for rich people to do!" reaction does seem to sort of prove the point.
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Old 28th January 2021, 10:23 AM   #131
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Originally Posted by lomiller View Post
All they need to do is prove that they traded with the intent of changing the market price in order to get others to buy/sell the stock, which is of course exactly what's happening.
Exactly. As soon as I saw this thread I thought of the once mighty Vancouver Stock Exchange: https://www.vancouverisawesome.com/c...istory-2927226 There money was to be made from the gullible by trading penny mining stocks.

What is being done here is a slight variation of Pump and Dump. See: https://www.investopedia.com/terms/p/pumpanddump.asp
Quote:
People found guilty of running pump-and-dump schemes are subject to heavy fines.
Trusting Influences, Faceboob*, et al for financial advice is akin to trusting them for all the silly **** conspiracy theories promoted therein.

------------
* Originally a typo but it was too good not to leave in.
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Old 28th January 2021, 10:28 AM   #132
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"This is different because the advice is coming from Reddit and not brokers" is

- Massively arbitrary in the age of democratization of knowledge.
- Massively self-serving if you've spend your entire life turning investment economics into a complicated wizards duel of a shadow theater version of a shell game that only you and a handful of others actually fully understand.
- Again seems to be the point of what is being done.

Again all that is happening is a bunch of rich old farts got really good at reading the tea leaves because they specifically built the system so they could do it and learned to swoop in at the last minute and suck the last drops of economic moisture dry from dying stocks via shenanigans are now mad that a bunch of internet trolls are upsetting their apple cart.

It's a blustering "Bad form! Bad form I say!" at best, many other much worst things at worst. "How dare you steal the money I'm as close to literally conjuring out of thin air as possible!" at worst worst.
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Old 28th January 2021, 10:30 AM   #133
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Wall Street: I know we agreed to play by these terrible rules and I was doing really well with them but now regular folks are beating me this way so we should change the rules.
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Old 28th January 2021, 10:33 AM   #134
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Originally Posted by Beelzebuddy View Post

[ETA] Actually, it may be too late for that as well. I'm starting to see stories of brokerages and trading apps disabling further buys of Gamestop.
For individual investors. You can bet your ass that as long as NASDAQ allows GME to be traded, the big firms will have no trouble doing so. I have no desire to see Internet trolls win at anything, but this is clearly a class war and the upper class is deploying their nukes.
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Old 28th January 2021, 10:35 AM   #135
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Also just out of pure morbid curiosity has Gamestop as a corporation responded to or reacted to this at all?
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Old 28th January 2021, 10:36 AM   #136
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As an aside, we don't know if the people buying the stock are the same people advocating doing it. We don't know how many people running their mouth to buy it bothered to buy it (even if they said they did).
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Old 28th January 2021, 10:38 AM   #137
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Originally Posted by BobTheCoward View Post
As an aside, we don't know if the people buying the stock are the same people advocating doing it. We don't know how many people running their mouth to buy it bothered to buy it (even if they said they did).
If some authority (like the SEC) wants to investigate, all the transactions are recorded.
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Old 28th January 2021, 10:42 AM   #138
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Originally Posted by Gord_in_Toronto View Post
If some authority (like the SEC) wants to investigate, all the transactions are recorded.
Yes. But tying the transaction to a reddit user account may prove rather difficult. You can sign up for a reddit account with an anonymous email, and a VPN.
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Old 28th January 2021, 10:46 AM   #139
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I just got off the phone with my son, who is not taking classes this semester and so is basically an idle bum, but was following WallStreadBets on reddit before this thing took off.

It's pretty amazing stuff going on. It will take some time to figure it out, but there are at least thousands, and possibly hundreds of thousands, just like him, how are buying one and two shares at a time, making, or losing, thousands of dollars individually.

Meanwhile, the "big players", who are trading millions and billions of dollars in this stock at the same time, are going nuts as they are tossed around on the ocean of hundreds of thousands of penny ante investors.
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Old 28th January 2021, 10:52 AM   #140
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Originally Posted by theprestige View Post
All this reinforces my view that justice is about people's need for retribution.
History shows that "rich, tree, rope, some assembly required" equation is popular. Wonder why?

Originally Posted by Cavemonster View Post
Fun update, apparently a number of trading apps are not allowing users to buy GME.
So much for "free" market, eh? Only 1%s are allowed to do shenanigans like that.

Life spoiler for ya all: capitalism is way to funnel money from poor to rich. Rest is just incidental bonus.
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Old 28th January 2021, 10:54 AM   #141
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I had a (sarcastic, non-serious lest any pearl clutching starts) observation during the last round of stimulus checks that given how the government is treating people giving them just enough money to buy a gun wasn't the best plan.

I wonder if this is a near real world version of that.

"Ah yes we will gives the peasants just enough money to last a few more weeks... and they are using it to short-circuit our stock shorting plan."
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Old 28th January 2021, 11:03 AM   #142
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Originally Posted by lobosrul5 View Post
TBF Gamestop was, and still is, probably heading for bankruptcy. The shorters are just hastening their demise. That said, they are making money off other peoples misfortune. If GME could at least make it to the end of the pandemic they'd have a better chance of finding a buyer to keep their stores open.
Short selling doesn't make the bankruptcy come any faster. It normally drives down the price closer to it's real value. People that own the stock don't like this because they want to sell it before the price collapses.

Think about that for a min. People own stock they know is worthless in the long run and want to sell it to someone else to take the loss. How ethical is that? How would you feel about a used car salesman that has a car with serious drive train problems that will be on the scrapheap soon and tries to hide the problems so they can sell it at full price.

Short selling gets a stigma because they make money when other people are loosing money, so it's easy to believe "they are the ones who took my money" but this isn't really the case. Short sellers keep the losses from being even larger.

When short sellers start to abandon the markets, as they are currently, it's a good indicator the market is entering a bubble. In fact they pay a role in preventing such bubbles in the first place, so the fact they exit the market causes the bubble to accelerate. When the bubble collapses many people will lose a lot of money, they will be economic chaos and probabaly a recession.
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Old 28th January 2021, 11:08 AM   #143
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Originally Posted by Babbylonian View Post
For individual investors. You can bet your ass that as long as NASDAQ allows GME to be traded, the big firms will have no trouble doing so. I have no desire to see Internet trolls win at anything, but this is clearly a class war and the upper class is deploying their nukes.
Mmmmmm, maybe. Or not.
It's interesting to see who's actually profiting on a large scale. And it isn't small investors.
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Old 28th January 2021, 11:09 AM   #144
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Originally Posted by BobTheCoward View Post
As an aside, we don't know if the people buying the stock are the same people advocating doing it. We don't know how many people running their mouth to buy it bothered to buy it (even if they said they did).
It doesn't matter. Both are illegal.
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Old 28th January 2021, 11:11 AM   #145
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Originally Posted by Gord_in_Toronto View Post
If some authority (like the SEC) wants to investigate, all the transactions are recorded.
The difficulty in this case isn't proving criminal activity it's identifying the criminal.
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Old 28th January 2021, 11:11 AM   #146
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Originally Posted by lomiller View Post
Short selling gets a stigma because they make money when other people are loosing money, so it's easy to believe "they are the ones who took my money" but this isn't really the case. Short sellers keep the losses from being even larger.
"We've created system that let's us everything short of make money out of nothing" isn't much better.

And while the economy isn't a zero sum game on a purely mathematical level, I'm skeptical that making the amount of money hedge fund managers make appear out thin air actually comes into existences without some ledgers being balanced in the opposite direction somewhere. Not in anything resembling a perfect 1:1 ratio, but you going to have to try hard to convince me that nobody nowhere is holding the short end of some stick because of shorting stocks in most day to day transactions.

And again where does that leave them to complain about what Reddit is doing? Reddit is taking "their" money anymore then they are taking the stocks money by this logic. You can't get mad when your play gets played.
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Old 28th January 2021, 11:15 AM   #147
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Originally Posted by lomiller View Post
All they need to do is prove that they traded with the intent of changing the market price in order to get others to buy/sell the stock, which is of course exactly what's happening.
I think if you take that broad of an interpretation of that section you would rope in a lot of short sellers, too. Not my field, but my impression from a cursory reading.
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Old 28th January 2021, 11:16 AM   #148
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Originally Posted by lobosrul5 View Post
Yes. But tying the transaction to a reddit user account may prove rather difficult. You can sign up for a reddit account with an anonymous email, and a VPN.
I'd bet Apple and Google could identify them easily. Whether they would cooperate is another matter, but that only protects Americans.
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Old 28th January 2021, 11:17 AM   #149
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Originally Posted by lomiller View Post
It doesn't matter. Both are illegal.
It is not illegal for me to tell you to buy stock.
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Old 28th January 2021, 11:18 AM   #150
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Originally Posted by Dr. Keith View Post
I think if you take that broad of an interpretation of that section you would rope in a lot of short sellers, too. Not my field, but my impression from a cursory reading.
This.

We're going to spend the next few weeks watching a lot of people jump through a lot of hoops trying to make "It's unfair that Reddit manipulated Wall Street's manipulation of stocks" not sound insanely stupid.
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Old 28th January 2021, 11:19 AM   #151
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Originally Posted by JoeMorgue View Post
"We've created system that let's us everything short of make money out of nothing" isn't much better.

And while the economy isn't a zero sum game on a purely mathematical level, I'm skeptical that making the amount of money hedge fund managers make appear out thin air actually comes into existences without some ledgers being balanced in the opposite direction somewhere. Not in anything resembling a perfect 1:1 ratio, but you going to have to try hard to convince me that nobody nowhere is holding the short end of some stick because of shorting stocks in most day to day transactions.

And again where does that leave them to complain about what Reddit is doing? Reddit is taking "their" money anymore then they are taking the stocks money by this logic. You can't get mad when your play gets played.
Umm, someone is holding the short end of the stick. To make a profit from shorting, either through borrowing shares and buying them back later, or buying puts, or selling calls, someone else has to lose a dollar. It is precisely zero sum. In fact its potentially even much worse than that. It can destroy wealth. GMS goes under, they can't pay anyone that lent them credit. The stores are either rented or mortgaged, thats money someone else is going to lose out on (many of which are back by bonds held by pensions etc because its generally a safe investment). Think they're gonna find another tenant in the present circumstance?

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Old 28th January 2021, 11:22 AM   #152
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Originally Posted by JoeMorgue View Post
Wall Street: I know we agreed to play by these terrible rules and I was doing really well with them but now regular folks are beating me this way so we should change the rules.
Did anyone else hear that in Lindsey Graham's voice?
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Old 28th January 2021, 11:31 AM   #153
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Somebody is going to be left holding the bag, so why not you!
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Old 28th January 2021, 11:34 AM   #154
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Originally Posted by lomiller View Post
Short selling doesn't make the bankruptcy come any faster. It normally drives down the price closer to it's real value. People that own the stock don't like this because they want to sell it before the price collapses.

For Gamestop probably, but it is not always the case. High-risk-high-reward companies that need to raise money, such as a single-shot drug company that needs just a bit more cash to run a trial, can be ruined by shorting.
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Old 28th January 2021, 11:37 AM   #155
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Originally Posted by lomiller View Post
All they need to do is prove that they traded with the intent of changing the market price in order to get others to buy/sell the stock, which is of course exactly what's happening.
IANAL, but the intent of that statute that's relevant seems to hang on that last line.

Quote:
inducing the purchase or sale of such security by others.
The action of buying a stock to increase its value would need to be done with the aim to get someone to buy it.

The law is clearly intended to prevent misrepresentation, buy a bunch of stock so people will think it's more valuable than it is when they see it going up, or sell a bunch to artificially depress the price and then buy it up again when dumb people sell.

The relevant chain of intent doesn't seem to hold in this case. Their ultimate aim isn't to get people to buy or sell based on the inflated price they're creating.

Again, I'm not a lawyer. And while I suspect the people who created our current trading laws would frown on this action, it doesn't look like it meets the spirit or letter of that law.
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Old 28th January 2021, 11:42 AM   #156
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Every decade or so we have to pull the country back from financial ruin because a small handful of ultra-rich Wall Street insiders almost pull the whole house of cards down by bending the rules that they largely made up for themselves just a little too hard buying and selling hypothetical money that maybe might exist one day.

But let one subreddit of trolls destroy one hedge fund using equally moral and legal tactics and Wall Street turns into the Emperor in Episode 3 "This attack on my life has left me scarred..."
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Old 28th January 2021, 11:50 AM   #157
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Originally Posted by Babbylonian View Post
For individual investors. You can bet your ass that as long as NASDAQ allows GME to be traded, the big firms will have no trouble doing so. I have no desire to see Internet trolls win at anything, but this is clearly a class war and the upper class is deploying their nukes.
Are they trolls in this context though? I can see why this action sort of FEELS like trolling, but i don't think it really fits the definition.
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Old 28th January 2021, 11:51 AM   #158
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Originally Posted by lomiller View Post
Short selling doesn't make the bankruptcy come any faster. It normally drives down the price closer to it's real value. People that own the stock don't like this because they want to sell it before the price collapses.

Think about that for a min. People own stock they know is worthless in the long run and want to sell it to someone else to take the loss. How ethical is that? How would you feel about a used car salesman that has a car with serious drive train problems that will be on the scrapheap soon and tries to hide the problems so they can sell it at full price.

Short selling gets a stigma because they make money when other people are loosing money, so it's easy to believe "they are the ones who took my money" but this isn't really the case. Short sellers keep the losses from being even larger.

When short sellers start to abandon the markets, as they are currently, it's a good indicator the market is entering a bubble. In fact they pay a role in preventing such bubbles in the first place, so the fact they exit the market causes the bubble to accelerate. When the bubble collapses many people will lose a lot of money, they will be economic chaos and probabaly a recession.
Driving share prices down certainly effects the viability of a corporation, one thats in trouble anyways. The corp itself will almost always own some shares of itself ("Treasury Shares"), they can sell those if they need to raise capital. The less those shares are worth the less money they will be able to raise. If Gamestop actually has any, or they've sold them off already through desperation, I don't know.
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Old 28th January 2021, 12:06 PM   #159
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Originally Posted by Dr. Keith View Post
I think if you take that broad of an interpretation of that section you would rope in a lot of short sellers, too. Not my field, but my impression from a cursory reading.
Short sellers are anticipating that the price will drop regardless of the impact of their transactions. For them to be guilty of market manipulation you'd they would need to be trying to profit by creating a short term price drop though their selling then closing their position before the price goes back up. That doesn't fit with what's going on here.


If\when GME files for bankruptcy and is liquidated shareholders will get a few pennies per share and that's it. Anyone who paid more than that (aka the would be raiders) will lose money and the people who sold them (aka the hedge funds) will receive that money.

The play for the would be raiders is that they are trying to use liquidity requirements to force the hedge funds to be the ones to sell at very high prices. In that case the raiders who times their exit correctly would make a profit at the expense of the hedge funds and any raiders who don't get out on time.

IMO no matter which way it goes, some or most of these people will end up loosing money even though they have a big "on paper" gain right now. Buying into a bubble under the assumption someone else will pay more later usually isn't a winning strategy.
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Old 28th January 2021, 12:07 PM   #160
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Originally Posted by lobosrul5 View Post
Umm, someone is holding the short end of the stick. To make a profit from shorting, either through borrowing shares and buying them back later, or buying puts, or selling calls, someone else has to lose a dollar. It is precisely zero sum. In fact its potentially even much worse than that. It can destroy wealth. GMS goes under, they can't pay anyone that lent them credit. The stores are either rented or mortgaged, thats money someone else is going to lose out on (many of which are back by bonds held by pensions etc because its generally a safe investment). Think they're gonna find another tenant in the present circumstance?
AFAIK...

There are brokers for stock lending. The stock owner gets whatever benefit they can by aggregating their stock with the broker. The broker can fulfill their owner request to sell their stock even if they loaned out that person's exact stock (by using someone else's). They collect a fee for lending. Then the short sellers gets their profit from the later sell.

That doesn't appear to be zero sum.
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