Redditors vs the hedge funds

[8ball]

And in this case you're borrowing to buy a house that was only worth £100k last week and is likely to be worth even less then that next week.

I think I'm missing a big point of what's going on here. What's the end game, lose a load of personal money in order to make some hedge funds lose some of their clients money? Is there some mechanism I'm don't know of where the short sellers will be forced to buy the shares at a higher price in order to fulfil their position? Even then surely people will start to sell at that point bringing the price down.

As far as I can see the only people who will win are those who got in early (and probably the people pumping the stock on WSB). The underlying stock is still a shitty old game store that's running on limited time.

Yeah, it's very bizarre. I think once the ball started rolling it just became a "greater fool" game with a side dish of Trump-logic revolutionary LARPism.

 

[ferrelhadley]

TBF WSB is pretty self aware on that.
Unlike... oh I dont know, other places.

 

[redsquirrel]

No, they aren't. You'd have to foster growth in unions and work toward democratizing the workplace to start moving that direction. The point I'm making is that it doesn't have to be a huge change all at once, it only has to move that direction over time until the old system isn't viable.

Greater union strength and more democratic workplaces would be excellent things but neither would alter the fundamental nature of the system. And both will be, are, resisted by capital.

The move from feudalism to capitalism was bloody. The occasions when workers have achieved a measure of control (Paris Commune, Russia 1917, Spain) have been resisted with violence from the state and capital. That the move from capitalism to socialism could be either so subtle that it is not noticed or that it will not be violent to a greater to lesser extent is contradicted by the past evidence.

This is part of the confusion that seems to be on this thread about "postcapitalism" or similar. These will be changes within the system not to the system.

 

[SpookyFrank]

If the hedge fund types are all about to be ruined then this is probably a great time to short sell cocaine.

 

[stdP]

If the hedge fund types are all about to be ruined then this is probably a great time to short sell cocaine.

I think a few billion has already gone up in smoke as a result, but I doubt the effects will be that far ranging as far as damage to hedge funds go. Hopefully it'll make them less vampiric in their short positions at least for the near future.

What's most interesting IMHO is if firms like Robin Hood really are acting on the behest of the hedge funds and Big Capital here since that could have a big knock-on effect if people start to think the game is rigged and confidence in the stock market falls as a result.

 

[ferrelhadley]

If the hedge fund types are all about to be ruined then this is probably a great time to short sell cocaine.

At worst a couple will lose a tiny portion of their annual turnover. Gamestop is hardly Lehman\Countrywide\Bear Stearn imploding.

 

[stdP]

At worst a couple will lose a tiny portion of their annual turnover. Gamestop is hardly Lehman\Countrywide\Bear Stearn imploding.

Melvin apparently managed to lose 30% of their shirt over it yesterday and had to be bailed out to the tune of $3bn to cover their shorts. No Lehman's for sure, but definitely not a tiny portion.

 

[steveseagull]

At worst a couple will lose a tiny portion of their annual turnover. Gamestop is hardly Lehman\Countrywide\Bear Stearn imploding.

Take a high profile one down as a warning shot to others.

 

[teqniq]

That didn't take long did it?



e2a it has precipitated this:

 

[chilango]

All of this fucking around with millions (billions?) in the middle of a pandemic.

Capitalism is a death cult.

 

[teqniq]

 

[killer b]

View attachment 251825

This is made up.

 

[teqniq]

Hence the suspicious emoj. I'm not sure if it's true or not either.

 

[teqniq]

This however would appear to be true:

 

[Graymalkin]

Are there any examples of short selling killing off a verifiable healthy business? Quite often it is a good thing - killing off fraudulent operations like Wirecard before they suck in too much institutional capital (I.e. people's pensions).

It's not just companies though. Currency speculation and short selling was a major contributor to the 98 asian financial crisis. Thailand was hit particularily hard as I recall.

 

[Serge Forward]

I don't want to smash the system. That would hurt a lot of innocent people. I'd rather replace it with something better in such a way that no one really noticed until it was the dominant paradigm.

Something like fabianism? Gradualism has never worked, beyond 'socialists' becoming ensconced in the system and increasingly right wing. See the British Labour Party for more info.

 

[not-bono-ever]

Essentially the never never, but to make it a little clearer to posters, the intention is more like, say, if you thought the price of a house was going to go up, and it was sat on the market, it's like paying someone to sort you a very short-term mortgage on the house (let's say the house costs 250k), and when it goes up to say 275k, then you sell the house and pocket the 25k (minus fees, taxes etc.).

As opposed to getting a proper mortgage where you need to convince someone you can afford the actual house and not a little just a little stop-gap dodgy mortgage setup fee.

The problem is that you were never good for a 250k mortgage in the first place, so if the house price drops to 225k, you're 25k in the hole on the deal and someone is looking for you to pay back the 250k you borrowed in the first place, which you weren't good for.

At least I think that makes it kind of clearer...

the yank mortgage system has effectively been doing this for years anyway

 

[Puddy_Tat]

from teh tweeter

 

[muscovyduck]

I'm crying, the app's called Robin Hood?

 

[ddraig]

I'm crying, the app's called Robin Hood?

yup

 

[killer b]

Hence the suspicious emoj. I'm not sure if it's true or not either.

I'm sure. it's just some nonsense made up by some dude for suckers to share credulously round the internet. putting a after you've shared it doesn't make you any less of a sucker.

 

[muscovyduck]

This is very interesting actually. They're describing it as 'non-political' but there's definitely a somewhat political goal to their current actions reading through the comments on the subreddit, just not party politicial. I think the 'non political' thing is to make it difficult for outside groups or people to appropriate the action

 

[Nylock]

This is very interesting actually. They're describing it as 'non-political' but there's definitely a somewhat political goal to their current actions reading through the comments on the subreddit, just not party politicial. I think the 'non political' thing is to make it difficult for outside groups or people to appropriate the action

It could also be a euphemism for bipartisan. Those wall street hedge funds have bitter enemies across the full spectrum of political outlooks.

 

[Boris Sprinkler]

 

[stdP]

A nice summary of what's gone on up until now from a slashdot poster:

We already know what motivated Robinhood. Robinhoods trades are handled by Citadel (Citadel handles the trades for about 40% of the individual investor market, and Citadel is also a large source of Robinhood's revenue). Citadel recently invested $2 billion into Melvin Capital Management, the firm that is making all the short trades which the WSB folks are trying to squeeze. So Citadel has a vested interest in making sure Melvin doesn't lose money.

Melvin shorted the stock, hoping it would drop and they can profit. But the stock price has gone up, so Melvin is actually in the red right now. Normally they could just ride it back out (nobody in their right mind believes the current GME value is representative of the company's real value...it's a bubble, and it's going to burst), but if the WSB folks can push the stock price high enough, Melvin can be forced to close out their position to cover their short (alternatively they can inject more money to cover their position, if they can get someone to give them more money, which is how Citadel got involved in the first place).

So Melvin (and thus Citadel) would like to see the stock price not go up, or better yet, drop. Well, what happens when holders of GME stock want to sell their position but a large portion of the market is forbidden from buying? Well, with less buyer competition, the price drops.

It's clear as day how the manipulation is working here.

I wouldn't call any of this political myself, but there's definitely a great deal of punters who relished the opportunity to put the boot in to a hedge fund. Money of this magnitude usually does have a certain degree of political import however so it's going to be very interesting to see what the regulatory bodies end up doing about this.

the yank mortgage system has effectively been doing this for years anyway

Have you got any links on that? I'm aware it was rampant speculation on dodgy MBS like this that landed us with the subprime mortgage crisis, but would have hoped they'd cleaned up their act a bit since then insofar as standard mortgages go...

 

[magneze]

Seems to be dragging other players in: Google salvaged Robinhood’s one-star rating by deleting nearly 100,000 negative reviews

 

[stdP]

Ninja'd by magneze (the verge page was also posted to slashdot); normally I trust google about as far as I can projectile-vomit a whole lobster but they're saying this was their AI-assisted system to prevent "manipulating an app rating", which seems to be purposefully ignoring what seems to be a legitimate gripe of Robin Hood banning perfectly legal trades.

A further take on it that covers a fair amount of ground:

Corrupt Establishment Moves To Screw Retail Investors, Bail Out Hedge Funds « Lawrence Person's BattleSwarm Blog

www.battleswarmblog.com

 

[platinumsage]

I'd be amazed if their T&C didn't cover them for refusing to accept any trade they didn't want to. I can't think of any online broker that guarantees service in all market conditions, it's quite common for them all to fall over on busy days.

 

[stdP]

I'd be amazed if their T&C didn't cover them for refusing to accept any trade they didn't want to. I can't think of any online broker that guarantees service in all market conditions, it's quite common for them all to fall over on busy days.

Contract does stipulate that, as I imagine most middle-men and brokers would. From another post on Verge:

Robinhood’s terms of service grant it permission to close a trader’s position under a number of circumstances.

I'm not familiar with the specifics, but I doubt a shrinkwrap EULA would indemnify them from what could be out and out fraud - especially if those posts of user's stock being sold against their wishes are true (although there's not really enough evidence to support that POV currently). Think I'll need a bigger bucket of popcorn today.

 

[wayward bob]

mr b is even sadder for his dogecoins since they went through the roof after he sold them last night