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Wall Street and GameStop

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mrmhead On about 2 hours ago




NE, Ohio
#1New Post! Jan 28, 2021 @ 13:56:21
link

Basically some Wall Street investors bet that GameStop stock would tank.

Then some (nostalgic) day traders got together and started buying up the stock to make it go up.
This, apparently, is costing the Wall Street investors a lot of money.
I'm not completely clear on how all that "shorting" works, but I get the general idea.

What these guys are doing is not illegal ... yet.

I read they are now starting on AMC stock.

The big boys are not happy. And as someone posted:
The speed in which Congress will probably pass legislation to prevent something like this GameStop thing from happening again will show you the difference between “immediate” for Wall St and “immediate” for people waiting on those $2k checks

In some sense, I think its funny that "the little guys" can screw up the big boys game. ... until they hit something my 401k may be invested in ...
4d4m On June 12, 2021




4dforum.org,
#2New Post! Jan 29, 2021 @ 03:33:11
I agree. Stock moves can be influenced by big money and a group of little guys doing this is comical. The thing they will accomplish is showing the world that the big money can influence the market. The down side is they are all going to loose their butts when the thing settles back down to it's real value.
The other thing is that short sellers, often blamed for price decreases, get a bum rap. Short selling does not cause undo downward pressure on stock prices. All they are doing is filling orders before actually buying. The price is still set by the market. They are hoping for a price drop, but that hope doesn't make it actually happen.
Leon On June 04, 2021




San Diego, California
#3New Post! Jan 29, 2021 @ 06:28:28
Short sellers CAN drive up the price when there is a squeeze, which is basically a panic buying spree.

The way short selling works can be best illustrated with car buying and selling, since that is one thing that always consistently loses value over time:

1. You borrow a car from somebody and immediately sell it to someone else for $20,000.
2. Then you wait 5-10 years for the value of that car to go down to $10,000.
3. You buy it back at that decreased price and give the car back to the person you initially borrowed it from.

This netted you a $10,000 profit.

Short selling of stock is the same thing, but sped up heavily (people don’t normally wait 5-10 years).

A squeeze occurs when too many short sellers do step #3 at the same time when attempting to buy back the shares, creating a bottleneck, and driving up the price. This occurs when the short sellers all panic in thinking the stock price has hit bottom and will start going up, and then, in essence, fuel their own fears with the massive buyback.

The difference this time is that Reddit users fueled this rather than short sellers themselves.

It is definitely a “stick it to the man” event. With “the man” in this instance being the 1% and their Wall Street ties. The wealth gap is ever widening, and all those millennials on the lower end have suffered the most from a financial standpoint in the decade between the Great Recession and COVID-19. But nobody ever figured out how to play Robin Hood legally until now. It’s no wonder AOC is on board with this. Warren is taking advantage of this as well to rail against Wall Street in general on the top end.

It’s definitely fascinating to watch. From afar. I have zero interest in trading and don’t do it other than max out all our Roths every year with a lazy 3-index fund retirement portfolio, but can see how easy it is for people to get caught up in this if they are at either end of the wealth spectrum.

GameStop is the new bitcoin for now.
4d4m On June 12, 2021




4dforum.org,
#4New Post! Jan 29, 2021 @ 20:29:03
They can drive the price up but only in accordance with the amount of funds they have to play with. Because anyone who short sells with money they can't afford to lose is a fool.

They have been accused in the past of driving the price down and that is simply not the case. When they promise to fill an order it puts upward pressure on the price or slows a downward trend. When they purchase the stock at a lower price (if their bet is successful) they are again adding upward pressure.

My point was you can't blame short traders for price drops (as they tried to in 2008), it simply is not true.
4d4m On June 12, 2021




4dforum.org,
#5New Post! Jan 30, 2021 @ 04:29:59
Short sellers have to fill the order the same day.

To be a short seller you must have $10K in your account. If your account goes under you are disqualified. You fill a bid for a stock. Basically you are acting as another broker, it's a promise the buyer will have the shares they requested by the end of the day. Then the short seller watches and waits for the price to drop. When it does they buy at a price lower than the price their buyer bid. They keep the difference. All bids must be filled by the end of trading.

Short sellers are not going to be working with stocks that are going up. I guarantee you there are no short sellers trading GME until they believe the price is going to drop. They'll be watching the short term moving averages and volatility to determine when to try to short the stock.
4d4m On June 12, 2021




4dforum.org,
#6New Post! Jan 30, 2021 @ 04:38:36
I have noticed in the past short sellers get the bad press when something goes south in the stock market. This was the case in 2008. There was a lot of press saying short sellers were driving down the price. This is not possible. They even suspended short selling on certain stocks.

The reason the stocks tanked in 2008 was because the Glass Steigal Act had been revoked and Bear Sterns (with advisor Jeffrey Epstein) was cranking away doing things that should have been illegal for 8 years. The resultant junk bond market meant there was no value in the stocks. Greenspan saw this coming and resigned before it all got flushed.

Blaming short sellers was a way to get attention off the real problem.

Now it seems to be happening again. This market manipulation is showcasing the now obvious fact; with enough money it is possible to manipulate stock prices.
4d4m On June 12, 2021




4dforum.org,
#7New Post! Jan 30, 2021 @ 04:43:34
This has, of course. always been the case. It's super embarrassing now however because everyone's retirement funds are held in 401K plans. This very tricky trend has allowed companies to no longer be held responsible for employee retirement. If the stock market tanks and you lose your retirement that just Tango Foxtrot Bravo

Market manipulation can be used to suck money out of stocks and do exactly that, rip off people, some of them are using 401Ks for their retirement. It's important to understand that if the stock was tanking for any reason other than it being overpriced there may have been manipulation involved (someone dumping shares for instance). It could not have been short sellers.
4d4m On June 12, 2021




4dforum.org,
#8New Post! Feb 24, 2021 @ 23:22:29
GME is up over 100% today. Something I've thought about; if these economic activists are going to try to keep their favorite company alive, the thing for the Game Stop to do is sell some shares and build up some fluid capital. Then reinvest that capital to help their company survive. They could diversify, expand their online services or something like that. I would call that prudent and ethical corporate action. Any thoughts?
mrmhead On about 2 hours ago




NE, Ohio
#9New Post! Feb 25, 2021 @ 01:38:52
@4d4m Said

GME is up over 100% today. Something I've thought about; if these economic activists are going to try to keep their favorite company alive, the thing for the Game Stop to do is sell some shares and build up some fluid capital. Then reinvest that capital to help their company survive. They could diversify, expand their online services or something like that. I would call that prudent and ethical corporate action. Any thoughts?



"Or something like that" ... yeah. They would need a plan.

Like investing in cryptomining malware.
4d4m On June 12, 2021




4dforum.org,
#10New Post! Feb 25, 2021 @ 04:46:48
There you go, collect personal data with gaming consoles and sell them to who the hell ever buys that stuff. Actuaries I believe they are called.
Leon On June 04, 2021




San Diego, California
#11New Post! Feb 25, 2021 @ 05:41:09
@4d4m Said

GME is up over 100% today. Something I've thought about; if these economic activists are going to try to keep their favorite company alive, the thing for the Game Stop to do is sell some shares and build up some fluid capital. Then reinvest that capital to help their company survive. They could diversify, expand their online services or something like that. I would call that prudent and ethical corporate action. Any thoughts?


Like I stated earlier, GME is the new bitcoin. And that’s all it is. They have no future in regards to what their business actually is - selling game discs and electronic hardware.

Think about it. Both of these types of businesses have, for several years now, been in the decline for brick and mortar chains, if not longer. Remember Circuit City? Radio Shack? Yesterday, word got out that Fry’s Electronics announced they are closing all their stores nationwide. And game discs? Please. Digital is trending upwards, bypassing the middleman. Look at what happed to Blockbuster.

To survive, they will have to go into something completely else. And even that is no given, as usually innovation comes from startups rather than those behemoths lumbering behind trying to keep up. Netflix was not a brick and mortar chain before they took over home video.

Invest elsewhere.
4d4m On June 12, 2021




4dforum.org,
#12New Post! Feb 28, 2021 @ 04:57:02
I agree. The analysts will come back next quarter and give a estimated value of the company. That estimate will be pretty accurate. If the thing is over valued it's going to drop. Get that short seller account set up and wait to pounce.
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