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Old 01-27-2021, 23:09   #1
Last hard class
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Social Media Vs. Wallstreet

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


https://www.cnet.com/personal-financ...es-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.




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Old 01-28-2021, 04:34   #2
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My Son in Law got 9 shares of Gamestop before this all started. Bought it on a whim and is happy right now.
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Old 01-28-2021, 06:59   #3
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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.
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Old 01-28-2021, 07:54   #4
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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.
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Old 01-28-2021, 11:17   #5
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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?
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Old 01-28-2021, 12:55   #6
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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.
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Last edited by Box; 01-28-2021 at 13:11.
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Old 01-28-2021, 13:52   #7
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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.
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Old 01-28-2021, 15:24   #8
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Originally Posted by GratefulCitizen View Post
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.
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Old 01-28-2021, 16:37   #9
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Class Action

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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/2020/0...navirus-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.
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Old 01-28-2021, 16:44   #10
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'Investopedia' lays it out
Trackin' - 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.

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Old 01-28-2021, 16:51   #11
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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-r...-idUSKBN29X1SW
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Old 01-28-2021, 17:09   #12
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Lawsuits

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.
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Old 01-28-2021, 20:49   #13
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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.
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Old 01-29-2021, 03:11   #14
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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.
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Old 01-29-2021, 07:42   #15
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The Reddit investor pirate horde story pea king hedge funds for profit is legit super cool though.
This article 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.
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