Social Media Vs. Wallstreet

[Last hard class]

Not just politics. The power of social media keeps finding new ways to shake up the old guard.


https://www.cnet.com/personal-finance/reddit-is-sending-gamestop-amc-stock-to-the-moon-heres-whats-next/


I don't invest in what I don't understand. But sure has been fun to watch. Will be interesting to see who doesn't have a chair when the music stops.




LHC

[Pete]

My Son in Law got 9 shares of Gamestop before this all started. Bought it on a whim and is happy right now.

[Badger52]

My Son in Law got 9 shares of Gamestop before this all started. Bought it on a whim and is happy right now.Heh cool, hope that continues to work out.


Coincidence: The local Gamestop® on the north end of town strip mall is in the exact location of the previous Blockbuster.
:munchin

[tonyz]

It appears that the megaphone of the internet provided to the mob brings new avenues to exploit - creating ever more rapid and more volatile variations - of the old “pump and dump” and “short and distort” games.

[Badger52]

Not understanding (or normally following) this kind of thing (which is why Box explains "over/under" to me), I wonder how much of the rather violent gastroenteritis that Wall St. is experiencing adversely affects down to the fairly small biz that has some employees with $$$ wrapped up in 401k's that are run by the currently ill patient in NY.

It is interesting to track the David v. Goliath aspect of it (I wonder if someone on reddit did a CARVER analysis). But what is the potential for unintended consequences hammering the theoretical hardware store demographic,with 2 or 3 area locations and maybe 100 local folks with "mah retirement plan" ?

In fact, does it affect folks on FERS?
:munchin

[Box]

It is interesting to track the David v. Goliath aspect of it (I wonder if someone on reddit did a CARVER analysis).


'Investopedia' lays it out pretty clearly (paraphrasing) short selling is basically gambling that the stock you are buying is going to loose value right after you sell it. Then you can turn around and buy it back at a lower price. The "short" part comes into play because you dont own the stock - you are BORROWING the stock....

I own 100 shares of stock.
You own ZERO.
That stock is selling at 50 bucks a share.
I let you "borrow" my 100 shares against your margin account
You are now "short" the cost of those 100 shares.
You sell those shares at 50 bucks a piece - and wait
The cost drops to 40 bucks a share, and you buy back all 100 shares at 40 bucks a share.
-Margin call - you return my shares to me and I charge you a fee for using my stock - we both win.

OR...

I own 100 shares of stock.
You own ZERO.
That stock is selling at 50 bucks a share.
I let you "borrow" my 100 shares against your margin account
You are now "short" the cost of those 100 shares.
You sell those shares at 50 bucks a piece - and wait
The cost shoots up to 60 bucks a share, you take a loss and are forced to pay 60 bucks a share to get back my 100 shares of stock.
-Margin call - you return my shares to me.
I charge you a fee for using my stock - I win - you loose.

OR...

I own 100 shares of stock.
You own ZERO.
That stock is selling at 50 bucks a share.
I let you "borrow" my 100 shares against your margin account
You are now "short" the cost of those 100 shares.
You sell those shares at 50 bucks a piece - and wait
The cost shoots up to 100 bucks a share; suddenly you cannot afford to buy back my 100 shares of stock because you don't have enough money.
-Margin call - you can't return my shares to me. I loose 100 shares of stock that are now worth twice what I paid for them.
I still charge you a fee for using my stock - but now, I'm making a call to Knuckles McGee and Punchy Bigfist, and they are going to come and fuck you up.
They are going to come and fuck you up real bad.



Go back and watch "Trading Places"
Winthorpe and Valentine bankrupted the Duke Brothers by short-selling Frozen Orange Juice commodities.

[GratefulCitizen]

The broker for many of these Reddit raiders is something called Robin Hood.
Robin Hood has recently restricted trading on certain stocks where hedge funds were getting short squeezed.

Customers are allowed to sell, but not buy these specific stocks.
Ummm...if you’re allowed to sell, then WHO IS BUYING?

This can’t be legal.
Some people need to go to jail and/or be sued into oblivion.

[Paslode]

The broker for many of these Reddit raiders is something called Robin Hood.
Robin Hood has recently restricted trading on certain stocks where hedge funds were getting short squeezed.

Customers are allowed to sell, but not buy these specific stocks.
Ummm...if you’re allowed to sell, then WHO IS BUYING?

This can’t be legal.
Some people need to go to jail and/or be sued into oblivion.

I was listening to a live chat this morning, as soon as the market opened there were massive buys taking place for NOK and AMC and then all of a sudden things went dark so to speak. The Hedge Funds were allowed to trade while the Retail sector was blocked from trading. At some periods this morning I couldn't login in to my TD account and when I did the system said I had the wrong password. Lots of Monkey business, reminds me of the 2020 Presidential Election.

[Texas_Shooter]

This can’t be legal.
Some people need to go to jail and/or be sued into oblivion.

The class action lawsuits have already been filed. SEC needs to investigate the communication between Robinhood and the actually brokerage firm that executes the trades for robinhood. I am sure there you will see that Robinhood was helping the institutional investors by only allowing the retail investors to sell their positions. Helping the short sellers (aka institutional investors/hedge funds).

Robinhood was supposed to go public this year at some point but this may derail their efforts because of the pending lawsuits and SEC investigation that I am sure is to follow. Market manipulation is great for hedge funds but for the 99% it is unacceptable and I get labeled a white supremacist or some other derogatory term that affiliates me with Trump.

https://www.politico.com/news/2020/04/29/congress-stocks-coronavirus-221742

Oh yeah it is also acceptable for lawmakers to use insider information from classified briefings to perform trades as well...but for the little guy to turn the table in our favor and make some money...it is not.

[Badger52]

'Investopedia' lays it outTrackin' - many thanks. You are my investopedia. I was pretty close on that stuff then. Just unsure of the collateral effects on small biz employee 401k's, or whether they might be apples/oranges. At some point this is going to fall off at a steeper glideslope than Biden took the lead in WI on 4 November at 0432 Local. Seems like Wall St. doth protesteth when it's done to them.

"Do unto others lest ye be done unto."
- Heinlein

[GratefulCitizen]

They are being absolutely brazen about their market manipulation.
They stand to lose far less in lawsuits than what they would lose playing by the rules.

This is the type of thing that, left unchecked, could pop the latest monetary bubble.
The people at the Fed are probably sweating over the potential fallout.

My guess is that the big players will get away with it...in the short term.
Just another domino in the destabilization of society.

https://www.reuters.com/article/us-retail-trading-shortbets-idUSKBN29X1SW

[Texas_Shooter]

It'll be interesting how the lawsuits pan out. The investors could potential show that their losses or gains in this matter could cost Robinhood millions if not billions. I don't know probably buried in the fine print is something saying that Robinhood can restrict trading in times of volatility. Hopefully there wasn't a mediation clause in the fine print.

[Penn]

GC Just another domino in the destabilization of society.

A recent article in Market Watch, included a comment from a Reddit Wallstreetbets member, who stated plainly: This is about the redistribution of wealth.

A generation of financial savvy computer geeks crushing Wall Street and unmasking the collusion between power centers.

As a small retail investor who recently was F/over by an SPAC deal, locked out of trading a position for 5 hours, when finally able to sign in, the 3K profit had disappeared. It was pure manipulation.

If this is part of the narrative, disruption of the market and risking a possible market crash to redesign society, it will not end well for those who are pushing this reset.

[Flagg]

The broker for many of these Reddit raiders is something called Robin Hood.
Robin Hood has recently restricted trading on certain stocks where hedge funds were getting short squeezed.

Customers are allowed to sell, but not buy these specific stocks.
Ummm...if you’re allowed to sell, then WHO IS BUYING?

This can’t be legal.
Some people need to go to jail and/or be sued into oblivion.


A brokerage like Robinhood is I n some ways not indifferent from an internet business using cloud services.

When internet traffic spikes, the associated cloud services bill explodes(that’s where Amazon makes all their money with AWS by the way).

Now with a brokerage, if they see a sharp spike in trades they need a sharp increase in their collateral for clearing trades with DTCC(of which Robinhood and every other brokerage is a member).

Collateral requirements don’t just increase with volume, but also with volatility.

Here we saw super duper increase in both volume and volatility.

1Volume x 1volatility = 1 collateral

10Volume x 10Volatility = 100 collateral(suddenly insolvent insolvent)

So Robinhood was dealing with a huge cash crunch requiring them to draw down on new credit lines.

And it’s why they temporarily halted buy trades in certain equities.

Reportedly, the majority of Robinhood’s 13 million users had purchased And gone long on Gameshop, with spiking volatility and collateral trade clearance collateral requirements.

The Robinhood CEO screwed up and should have fronted up about the cash crunch that would have made them technically, and from a financial regulatory perspective, insolvent.

Instead he didn’t answer anything and he is a sh!tty CEO way out of his depth.

And also instead, we get conspiracy theories because we live in a record low trust environment where trust in Wall Street is battling with Congress and conventional news media for lowest trust institutions ever.

There’s a lot of legit badness going on with Wall Street malevolent influence and moral hazard, but the Robinhood story is likely one about a sh!tty rookie brokerage with a nice user interface that naive folks thought was actually as good as it looked.

StartUps, including very successful ones, are typically built only good enough to get initial users.

Then as they scale and money is raised the battle shifts to trying to permanently transform all the experimental and temporary duct tape fuelled processes and platform into a mature business.

The Reddit investor pirate horde story pea king hedge funds for profit is legit super cool though.

[Badger52]

The Reddit investor pirate horde story pea king hedge funds for profit is legit super cool though.This article (https://taibbi.substack.com/p/suck-it-wall-street) seems an appropriate take on the visual "turnabout" that rank & file Mom/Pop might have some empathy for. Not attesting to the technical details of the stock stuff, just the tenor of the article which probably resonates with many.

[Costa]

Yet another example of how velocity of information yields results. In this case, leveling the playing field.

Remember, this is an industry that spent boatloads of money to shave milliseconds off of transmittal time for a quantifiable edge in the game.

About 4-5 years ago, one of the portfolio managers of a very large group of funds shared with me his take on the coming information crisis in the financial industry and it made sense-

His question was: What happens when there is no buyer? Institutions in part rely on "odd lot" investors to be the buyers of whatever the institution sells. This works because the institution typically has more information than the average joe.

However...

More and more, the "average joe" investor has their money managed by an advisor with discretionary trading authority that utilizes software to emulate "block trading" as a practice because it's more efficient. Advisors don't typically "customize" a portfolio of 30-40 single securities anymore-- they run 4-5 "managed models" at an institutional level and fit a client into one based off of risk/reward profiles. When a client (or multiple) go to the advisor to make an adjustment (based off of a more complete information set), the advisor doesn't execute individual trades. The advisor presses a button to adjust allocations across clients and models/SMAs and executes hundreds of trades at once, thus trading in aggregate. Historically, only institutions traded this way, but this is now a common practice for the retail investor. Given there is anywhere from 70-90% overlap among the major common funds across different managers and there has been a flight to equities in an effort to achieve more yield for retirees (resulting from historically low interest rates), there is a major market imbalance. The question becomes: when the fed decides to raise rates and does it too quickly (and encourages everyone to sell their index funds), what happens when there is no buyer?

The follow-up advice was to buy lead instead of gold as a hedge against this scenario. As the saying goes, those with the lead will take the gold if this comes to pass.

Are we about to see an "Arab Spring" of sorts in the financial world?

[GratefulCitizen]

It will be telling if the lawsuits discover any conflicting interests.
Regardless, it was a very convenient “time out” for some on the losing side of this game.

https://techcrunch.com/2021/01/28/webull-and-public-remove-restrictions-on-memestocks-after-citing-trade-settlement-firm-as-the-cause/

[tom kelly]

If you are not on the inside (a hedge fund manager) your are programed to lose. This one hedge fund manager Ackerman drove the Hilton stock down & shorted it to make more than a billion dollars, but when he tried to do the same thing with GameStop using Robin Hood he got beat by a group of investors who kept buying the stock & drove the price up...NOW Robinhood is in trouble they needed to raise 1 billion from it's investors, Hedge Funds, because Game Stop & AMC stock prices soar higher. People are seeing how the stock market trading game is fixed for the Hedge Funds to make enormous profits....

[Badger52]

It will be telling if the lawsuits discover any conflicting interests.
Regardless, it was a very convenient “time out” for some on the losing side of this game.

https://techcrunch.com/2021/01/28/webull-and-public-remove-restrictions-on-memestocks-after-citing-trade-settlement-firm-as-the-cause/Interesting that RUMINT has Pelosi's Financial Disclosure Form indicating that she put out a call to buy a million bucks of Tesla back on 22 December. I'm sure it's only coincidence that one of 37 EO's Biden signed is shooting the Big Guv off in the direction of bigtime going electric on their fleet, some 650,000 vehicles.

My guess is that, like the Maricopa County election audit, any investigation will be done by those best equipped to boot it over to a wormhole.
:munchin

[Badger52]

From a Wall St. Bets social media user. It is interesting in the context of media (CNBC) running a story that Melvin Capital is "covering" their shorts. If that's true, so what, good for them. Why spend money to run ads telling people that Melvin is doing Ok?

I would recommend pulling the image up in your favorite viewer, then Zooming in to read it all. (Some of the phrasing is Box-like.) But it's an interesting read, Melvin Capital being one of those AIG-associated firms that took LOTS of YOUR MONEY in the last bailout. You'd almost think someone had a grudge against ol' Melvin. And this shit has not stopped.

[bblhead672]

Looks like the silver market is this week's target of the Reddit bunch.

https://www.zerohedge.com/commodities/its-been-nuts-silver-surges-most-lehman-bankruptcy-hits-7-year-high-over-30

https://kunstler.com/clusterfuck-nation/the-game-is-on/

[Flagg]

This article (https://taibbi.substack.com/p/suck-it-wall-street) seems an appropriate take on the visual "turnabout" that rank & file Mom/Pop might have some empathy for. Not attesting to the technical details of the stock stuff, just the tenor of the article which probably resonates with many.

Matt Taibbi does a pretty good job of measuring the temperature of the room and prevailing wind direction.

Everyone involved in the GameStop caper will be familiar-to-fluent with online gaming.

Everyone involved in gaming pays $100+ a few times a year for the latest big game titles.

The biggest game titles generate $1B in a few days.

The biggest crowdfunding campaigns(gaming and cryptocurrency) generate $200M-$4B in weeks to months.

Everyone involved in this caper will be familiar-to-fluent with childhood nostalgia GameStop as well as Fight Club’s Project Mayhem and Batman’s Bain & Joker community driven anti-establishment disruption, rebellion, and subversion.

The overwhelming majority involved will have very low trust in Congress, large financial institutions, and news media. So if those groups portray the GameStop caper as “bad”, I think it’s likely to be counterproductive and expand support for it.

Pay some money, watch stuff(“fat cats”) burn in the real world.

The possibility of a decentralised group rapidly massing and precisely deploying $1B to exploit vulnerabilities is now a reality.

Looks like the silver market is this week's target of the Reddit bunch.

https://www.zerohedge.com/commodities/its-been-nuts-silver-surges-most-lehman-bankruptcy-hits-7-year-high-over-30

https://kunstler.com/clusterfuck-nation/the-game-is-on/

GameStop had a few unique conditions making it vulnerable.

Way oversold naked short selling well in excess of float
Small-to-mid cap equity with narrow float within a distributed network’s capacity to influence/exploit
Nostalgic childhood gamer memory/story as defensible rally point for a distributed network

Silver market is quite a bit different in terms of its aggregate size and depth.

However, it does appear to be moving the needle on silver, at least temporarily. Influence, actual impact, or just story narrative?

If I had to guess, the Silver market may be biting off far more than the current community/crowd driven model can chew, at this stage.

Perhaps a poor analogy:

A few hundred pipehitters taking on Afghanistan in 2001(GameStop)

A few hundred pipehitters taking on Warsaw Pact at Fulda Gap in 1985(Silver)

In any case, it’s an extremely interesting case study

[Badger52]

A few hundred pipehitters taking on Afghanistan in 2001(GameStop)

A few hundred pipehitters taking on Warsaw Pact at Fulda Gap in 1985(Silver)

In any case, it’s an extremely interesting case study

That's a terrific analogy. In fact, on social media yesterday there were (alleged) Redditors posting into Gab saying basically, "Yeah, GameStop, we get it. But this silver thing is NOT us, it's you guys at Gab. This is a BAD idea, and we're (Reddit) not part of this one."

It's like Antifa and Trump supporters with fingers pointing both ways at the Capitol. And a not small number of those on Gab's WSB group are former or still current Redditors. Like a warlord came on to chastise the young upstart that doesn't see the 22 mechanized rifle divisions just below the military crest out yonder.

[Flagg]

That's a terrific analogy. In fact, on social media yesterday there were (alleged) Redditors posting into Gab saying basically, "Yeah, GameStop, we get it. But this silver thing is NOT us, it's you guys at Gab. This is a BAD idea, and we're (Reddit) not part of this one."

It's like Antifa and Trump supporters with fingers pointing both ways at the Capitol. And a not small number of those on Gab's WSB group are former or still current Redditors. Like a warlord came on to chastise the young upstart that doesn't see the 22 mechanized rifle divisions just below the military crest out yonder.

I'm also reminded of Tea Party and Occupy Wall Street.

Enough time has passed to discuss it rationally and cover the fact that both movements possessed some legitimate common ground, beyond partisan antipathy.

I reckon this stuff falls under that common ground.

Which makes it even more dangerous to entrenched interests opposed by virtually everyone.

So I'm guessing it's now doubly important to disrupt the network, much like the hijacking of the Tea Party movement.

So it's maybe not surprising if Silver(and other markets) with lousy CARVER scores are used as dangles to ambush the latecomers and bandwagon jumpers to discourage them from further successful efforts.

I've received some info from a classmate of mine who is fairly senior in EU I-banking(and a coalition Vet).

I'll post some bullet points once I go thru it, but my initial take is the GameStop caper is a very serious disruptor case study, especially in light of changes to market-making and market depth over the last 12+ years.

The same basic doctrine and methodology could be used again, not just by lots of little people out for the possibility of profit and mob justice, but also by mutated Advanced Persistent Threats(APTs) using meat robot attack arrays to go along with their IoT attack arrays.

It could be used to go after nations in economic distress with convertible currency.

[GratefulCitizen]

Looks like the silver market is this week's target of the Reddit bunch.

https://www.zerohedge.com/commodities/its-been-nuts-silver-surges-most-lehman-bankruptcy-hits-7-year-high-over-30

https://kunstler.com/clusterfuck-nation/the-game-is-on/

How much silver is held by the struggling hedge funds?
A convenient bubble in silver would help them raise some capital to cover their short losses.

I’m betting fake news.
The Reddit boards are saying silver is a trap.

[Badger52]

I'll post some bullet points once I go thru it, but my initial take is the GameStop caper is a very serious disruptor case study, especially in light of changes to market-making and market depth over the last 12+ years.
Looking forward to that sir.

[Paslode]

A video on todays events by one of the Autist..

https://www.XXXXXXX.com/watch?v=RZHn--2wfwQ&feature=youtu.be

[Penn]

Interesting article with several comments that attach MSM overwhelming influence in the public sphere.

The Netflix documentary film "The Social Dilemma" shows how social media companies [see linked trailer] utilize algorithms used by Facebook and other social media companies to trigger responses that reinforce any idea to increase user traffic and create "fake news" for their financial benefit. Social media algorithms combined with today's news media's "narrative" focused business models are driving extreme views - on all sides - that are inherently dangerous. Five-time Emmy Award winning journalist and New York Times bestselling author Sharyl Attkisson details this narrative phenomenon her book "Slanted: How the News Media Taught Us to Love Censorship and Hate Journalism." This toxic culture is leading to an onslaught of legal and regulatory actions against social media companies and could reverse social media's meteoric rise.


https://seekingalpha.com/article/4402441-final-stages-of-historic-market-bubble

[Fonzy]

This is what happens when the internet realizes you can cyber bully billionaires and i love it.

[Box]

Not to invoke the name of the bogeyman - but trying to follow what happened seems pretty similar to what George Soros did to the British economy in the early 90's.

Soros shorted the British pound - stuck it to them good - Britain tried so hard to maintain the value of their currency that it fell 25% against the US dollar.

Then he spent billions shorting Thai money in the late 90's - fucked them good too.

Then he spent billions shorting the Japanese yen about ten years ago - same old chestnut - currency manipulation for fun and profit.



Currency manipulation is awesome if you have billions of dollars in pocket change to play with.
...meanwhile, I cant even afford the rising prices of pistol ammo

[tom kelly]

9mm if you can find it cost @ $1.00/round...What is really going on with the shortage of all ammo & components for reloading ? Foreign ammo manufactures, Norma, Ficcoi and others are now in the U S market in a larger way.