This is my current problem. The Reddit r/wallstreetbets forum (is "forum" the term they use on Reddi? I'm so new to using it, that I don't know - haha) mostly has a bunch of one-liner posts by kids (presumably) with very little useful info, and I'm so new to their forum that I wouldn't even know who the experts are there. I'd like to see some actual, reliable-looking data sources for better gauging/timing everything. Instead, I just see people saying to "hold the line."doodle wrote: ↑Thu Jan 28, 2021 9:14 pmSupposedly sometime Friday I have heard.Kriegsspiel wrote: ↑Thu Jan 28, 2021 6:48 pmI wonder when the hedge funds' contracts expire on GME? The WSB people (well, it seems like everyone, at this point) think they're still sticking it to the hedge funds, but from what I understand, it could have already expired.
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Re: GME
- vnatale
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Re: GME
How Should Advisors React to the GameStop Squeeze?
https://www.thinkadvisor.com/2021/01/28 ... _term=tadv
A short squeeze “doesn’t end well for anybody except those that got in and got out early,” said Michael Finke, a professor at the American College of Financial Services, as “prices eventually have to fall down to their fundamental value … .”
Also, this is bad news for the market, according to Finke, “because short sellers provide a value price correction mechanism. Punishing short sellers means that markets won’t be as efficient. This has implications for everyone, including index investors who may be buying inflated stocks for a while.”
https://www.thinkadvisor.com/2021/01/28 ... _term=tadv
A short squeeze “doesn’t end well for anybody except those that got in and got out early,” said Michael Finke, a professor at the American College of Financial Services, as “prices eventually have to fall down to their fundamental value … .”
Also, this is bad news for the market, according to Finke, “because short sellers provide a value price correction mechanism. Punishing short sellers means that markets won’t be as efficient. This has implications for everyone, including index investors who may be buying inflated stocks for a while.”
Above provided by: Vinny, who always says: "I only regret that I have but one lap to give to my cats." AND "I'm a more-is-more person."
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Re: GME
Maybe this is more of a Keynesian Beauty Contest/Animal Spirits situation than something where you have to understand what you're doingCT-Scott wrote: ↑Fri Jan 29, 2021 8:30 amThis is my current problem. The Reddit r/wallstreetbets forum (is "forum" the term they use on Reddi? I'm so new to using it, that I don't know - haha) mostly has a bunch of one-liner posts by kids (presumably) with very little useful info, and I'm so new to their forum that I wouldn't even know who the experts are there. I'd like to see some actual, reliable-looking data sources for better gauging/timing everything. Instead, I just see people saying to "hold the line."doodle wrote: ↑Thu Jan 28, 2021 9:14 pmSupposedly sometime Friday I have heard.Kriegsspiel wrote: ↑Thu Jan 28, 2021 6:48 pmI wonder when the hedge funds' contracts expire on GME? The WSB people (well, it seems like everyone, at this point) think they're still sticking it to the hedge funds, but from what I understand, it could have already expired.
Too bad "Barbarians At The Gates" was already used as a book title. This is a much more appropriate situation to use that title in than the RJR-Nabisco one.
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Re: GME
I have mixed feeligs about short sellers but I agree to an extent. They’re kind of like the vultures of the stock world. And nature needs vultures to do their thing.vnatale wrote: ↑Fri Jan 29, 2021 9:11 amHow Should Advisors React to the GameStop Squeeze?
https://www.thinkadvisor.com/2021/01/28 ... p-squeeze/
...
Also, this is bad news for the market, according to Finke, “because short sellers provide a value price correction mechanism. Punishing short sellers means that markets won’t be as efficient. This has implications for everyone, including index investors who may be buying inflated stocks for a while.”
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Re: GME
I don't think there's anything wrong with short sellers existing, but they're playing a risky game, and they know that. "Punishing" short sellers... hmm. If they've gone so short that they're vulnerable to this (more than 100% of available shares are short?), then they are the ones who have caused this situation.dualstow wrote: ↑Fri Jan 29, 2021 9:34 amI have mixed feeligs about short sellers but I agree to an extent. They’re kind of like the vultures of the stock world. And nature needs vultures to do their thing.vnatale wrote: ↑Fri Jan 29, 2021 9:11 amHow Should Advisors React to the GameStop Squeeze?
https://www.thinkadvisor.com/2021/01/28 ... p-squeeze/
...
Also, this is bad news for the market, according to Finke, “because short sellers provide a value price correction mechanism. Punishing short sellers means that markets won’t be as efficient. This has implications for everyone, including index investors who may be buying inflated stocks for a while.”
- Kriegsspiel
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Re: GME
If my understanding is correct, I disagree.dualstow wrote: ↑Fri Jan 29, 2021 9:34 amI have mixed feeligs about short sellers but I agree to an extent. They’re kind of like the vultures of the stock world. And nature needs vultures to do their thing.vnatale wrote: ↑Fri Jan 29, 2021 9:11 amHow Should Advisors React to the GameStop Squeeze?
https://www.thinkadvisor.com/2021/01/28 ... p-squeeze/
...
Also, this is bad news for the market, according to Finke, “because short sellers provide a value price correction mechanism. Punishing short sellers means that markets won’t be as efficient. This has implications for everyone, including index investors who may be buying inflated stocks for a while.”
Hedge funds shorting stocks are not vulture investors. Shorting a stock is a purely financial transaction (a bet, really) between the put and call options. So whichever one placed the correct bet will get paid by the one who placed the wrong bet. The corporation itself is a pawn in the game between the two. Sure, if a short has figured out something about a company that should cause its share price to go down, and they short the stock and then tell everyone about it, more power to them. But if other people squeeze the short... that's the risk you take with options. I don't really have much sympathy for them. Options are not necessary for price discovery.
A vulture investor, on the other hand, would be more like an activist investor who wants to gain a controlling stake in a company in order to make it more profitable (again, Barbarians At The Gates), or (more true to the original meaning of vulture investor), someone who finds a company that can be liquidated for more than the cost of the company, so they buy it and sell it off. EDIT: I think Bain Capital/Mitt Romney were into this.
IMO, neither one is bad per-se, as long as they aren't able to obtain loans to do it. Or if they do, that the lenders aren't able to be bailed out, because this creates moral hazard in the lending market which privatizes gains and socializes losses.
Last edited by Kriegsspiel on Fri Jan 29, 2021 10:28 am, edited 2 times in total.
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Re: GME
Again, I'm just an egg, but each short needs to have a corresponding share that it's shorting. I know we've discussed this before in the context of ETFs (TLT, IIRC), but the shares that WSB are buying are the ones that people are shorting. So if over 100% of the stocks are being shorted, that means people are illegally purchasing "naked shorts," or shorting stock that's already been shorted.Xan wrote: ↑Fri Jan 29, 2021 9:39 amI don't think there's anything wrong with short sellers existing, but they're playing a risky game, and they know that. "Punishing" short sellers... hmm. If they've gone so short that they're vulnerable to this (more than 100% of available shares are short?), then they are the ones who have caused this situation.
This is all very interesting stuff.
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- dualstow
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Re: GME
Kriegs, I don't agree with what you wrote.
I don't mean vulture in a negative way. Perhaps the way I mean vulture is not a good analogy in the first place, but I don't mean it in a pejorative way. (Off-topic: I don't quite understand why humans prefer the lion, which kills other other animals, to scavengers, which aren't hurting anyone. Maybe if you're shaking your fist at vultures circling the sky over a dying friend, but only that).
I don't mean vulture in a negative way. Perhaps the way I mean vulture is not a good analogy in the first place, but I don't mean it in a pejorative way. (Off-topic: I don't quite understand why humans prefer the lion, which kills other other animals, to scavengers, which aren't hurting anyone. Maybe if you're shaking your fist at vultures circling the sky over a dying friend, but only that).
That's really what I mean. It's a natural process and there's a reason it's not illegal.Sure, if a short has figured out something about a company that should cause its share price to go down, and they short the stock and then tell everyone about it, more power to them.
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- vnatale
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Re: GME
Dismiss All the Populist GameStop Hype: Short Sellers Are Heroes
John-TamnyJohn Tamny
– January 29, 2021Reading Time: 4 minutes
https://www.aier.org/article/dismiss-al ... re-heroes/
“Serves them right,” some will say. “Short selling is a seedy act whereby big investors attack an innocent company and drive its shares down to nothing. Maybe GameStop will serve as a lesson so that this vindictive form of trading ceases to exist.” Let’s hope not.
To see why, please re-read the last few paragraphs. A short seller borrows shares, sells them, and pockets the proceeds on the assumption that re-purchase of shorted shares will come at a cost that is less than the proceeds gained from the sale. Stop and think about this for second. Maybe a few. Short sellers are by definition buyers. In order for them to take profits on their speculation, they must re-enter the market and buy back the shares they previously sold.
Short sellers don’t drive down markets in vicious fashion as much as their presence as size sellers is a happy sign of growing buying power in size. Again, buying is an essential part of any short sell.
After which it’s time for everyone to get real. Prices are the way that market economies organize themselves. It’s through prices arrived at freely that retailers know which items to stock and which ones to not, plus it’s through share prices that those with precious capital to allocate know where investment is needed, where it isn’t, where it will be wasted (think mortgages back in 2008), and where it will be rewarded. Without honest prices in the marketplace, the economy and stock market would plummet.
Please keep this in mind as pundits make their silly arguments about GameStop’s price action signaling a shift of power away from hedge funds, and back to the little guy. Such a view isn’t true, plus it ignores the heroics of short sellers. They’re in truth price givers, and the economy couldn’t function without them.
John-TamnyJohn Tamny
– January 29, 2021Reading Time: 4 minutes
https://www.aier.org/article/dismiss-al ... re-heroes/
“Serves them right,” some will say. “Short selling is a seedy act whereby big investors attack an innocent company and drive its shares down to nothing. Maybe GameStop will serve as a lesson so that this vindictive form of trading ceases to exist.” Let’s hope not.
To see why, please re-read the last few paragraphs. A short seller borrows shares, sells them, and pockets the proceeds on the assumption that re-purchase of shorted shares will come at a cost that is less than the proceeds gained from the sale. Stop and think about this for second. Maybe a few. Short sellers are by definition buyers. In order for them to take profits on their speculation, they must re-enter the market and buy back the shares they previously sold.
Short sellers don’t drive down markets in vicious fashion as much as their presence as size sellers is a happy sign of growing buying power in size. Again, buying is an essential part of any short sell.
After which it’s time for everyone to get real. Prices are the way that market economies organize themselves. It’s through prices arrived at freely that retailers know which items to stock and which ones to not, plus it’s through share prices that those with precious capital to allocate know where investment is needed, where it isn’t, where it will be wasted (think mortgages back in 2008), and where it will be rewarded. Without honest prices in the marketplace, the economy and stock market would plummet.
Please keep this in mind as pundits make their silly arguments about GameStop’s price action signaling a shift of power away from hedge funds, and back to the little guy. Such a view isn’t true, plus it ignores the heroics of short sellers. They’re in truth price givers, and the economy couldn’t function without them.
Above provided by: Vinny, who always says: "I only regret that I have but one lap to give to my cats." AND "I'm a more-is-more person."
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Re: GME
SLV definitely is getting traction the past couple days, reddit or not.Cortopassi wrote: ↑Thu Jan 28, 2021 1:13 pmHope you are right, my PP has 5% silver!Smith1776 wrote: ↑Thu Jan 28, 2021 12:28 pmThere's rumblings in the subreddit about potentially making SLV the next short squeeze target. A coordinated SLV effort could be truly disruptive as there simply isn't enough physical metal to cover all of the paper trades in the market.
It looks like the "System" is ready to start implementing guardrails to limit this type of behaviour though.
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Re: GME
I wasn't being pejorative either; AFAIK "vulture investors" is industry jargon. I read a good book on them a while ago, The Vulture Investors by Rosenberg.dualstow wrote: ↑Fri Jan 29, 2021 10:55 amKriegs, I don't agree with what you wrote.
I don't mean vulture in a negative way. Perhaps the way I mean vulture is not a good analogy in the first place, but I don't mean it in a pejorative way. (Off-topic: I don't quite understand why humans prefer the lion, which kills other other animals, to scavengers, which aren't hurting anyone. Maybe if you're shaking your fist at vultures circling the sky over a dying friend, but only that).
That's really what I mean. It's a natural process and there's a reason it's not illegal.Sure, if a short has figured out something about a company that should cause its share price to go down, and they short the stock and then tell everyone about it, more power to them.
But to your point, and the point the person is trying to make in the aeir article Vinny posted... what if a financier shorts a stock and tells everyone about it... but they're wrong? They might be maliciously wrong, where they're lying/stretching the truth about the woes in a corporation, or they just did the numbers wrong. They wouldn't be helping price discovery in the way that we all are talking about. Apparently, the viewpoint that the market respects is that the shorts were wrong about Gamestop. And if the WSB people are incorrect in their view that the shorts are wrong, then they'll eventually get broken off too and the market will show that. What's the Buffett quote? "In the short term, the market is a counting device, but in the long term it's a weighing device."
I think these kinds of battles happen pretty regularly, but they're usually not covered like this particular one.
Last edited by Kriegsspiel on Fri Jan 29, 2021 11:31 am, edited 1 time in total.
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Re: GME
Evidence of a GME-style short squeeze would be SLV skyrocketing while the price of the metal did not. As long as SLV is tracking the metal, nothing interesting is happening. (At least in terms of buying and selling the fund.)Cortopassi wrote: ↑Fri Jan 29, 2021 11:20 amSLV definitely is getting traction the past couple days, reddit or not.Cortopassi wrote: ↑Thu Jan 28, 2021 1:13 pmHope you are right, my PP has 5% silver!Smith1776 wrote: ↑Thu Jan 28, 2021 12:28 pmThere's rumblings in the subreddit about potentially making SLV the next short squeeze target. A coordinated SLV effort could be truly disruptive as there simply isn't enough physical metal to cover all of the paper trades in the market.
It looks like the "System" is ready to start implementing guardrails to limit this type of behaviour though.
Re: GME
I support short sellers and short selling in principle. Short sellers on the whole help keep the market efficient and prices correct. Otherwise there are too many people who are just systematically long everything.
That said...
CAN'T STOP. WON'T STOP. GAMESTOP.
That said...
CAN'T STOP. WON'T STOP. GAMESTOP.
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Re: GME
My wife's boyfriend likes short sellers, too. So there's that.
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Re: GME
My concern with short selling is the downward momentum it would put on stock price.
If you think a company is not worth a price, then don't buy it. That would work itself out in long run.
I would like to say it is equal trade if the lender of the stock is lending it but aren't the brokerages lending your stock whether you want to or not?
If you think a company is not worth a price, then don't buy it. That would work itself out in long run.
I would like to say it is equal trade if the lender of the stock is lending it but aren't the brokerages lending your stock whether you want to or not?
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Re: GME
Were they wrong? I mean were they wrong about the underlying value of the company, or did they just get smacked by an army of redditors who clearly artificially drove up the price?Kriegsspiel wrote: ↑Fri Jan 29, 2021 11:21 amApparently, the viewpoint that the market respects is that the shorts were wrong about Gamestop.
I'm still reading through the WSJ article on Keith Gill/roaring kitty/deep f_ value. Very interesting.
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- Kriegsspiel
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Re: GME
The price of the stock went up, so.... yes?
If/when the price crashes, then they (the shorts) will be right, they just got the timing wrong and got wiped out
If/when the price crashes, then they (the shorts) will be right, they just got the timing wrong and got wiped out
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Re: GME
Oh, so that's what 'right' means.Kriegsspiel wrote: ↑Fri Jan 29, 2021 12:50 pmThe price of the stock went up, so.... yes?
If/when the price crashes, then they (the shorts) will be right, they just got the timing wrong and got wiped out
I think it's interesting that Gill had no desire to "stick it to the man" and was genuinely into Gamestop as early as 2019. But, it didn't hurt him that so many on social media did and do harbor that desire.
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Re: GME
A couple of random thoughts...
1) I don't consider myself knowledgeable enough to have any strong opinions pro/con short-sellers (or hedge funds, for that matter). I did find this thread on Twitter by Cory Doctorow pretty informative (if accurate). Here's the specific quote of interest re:short selling:
2) I was late to the game on GME (no pun intended) and am just playing with some gambling money. Enough that I'll be sad if I lose it, but won't lose much sleep. But also enough that if it skyrockets and I get out in time, I could be very happy with myself for not sitting on the sidelines. Again, though...how do I know when to time my exit? Surely someone/somewhere has written up some markers for people to look for (e.g., to detect when the bulk of the shorts have been squeezed).
1) I don't consider myself knowledgeable enough to have any strong opinions pro/con short-sellers (or hedge funds, for that matter). I did find this thread on Twitter by Cory Doctorow pretty informative (if accurate). Here's the specific quote of interest re:short selling:
I do think that an argument can be made that people with much more power and wealth than the "little guys" trying to get involved have been manipulating markets for a long time now, and there is a lot of corruption involved with politicians, the mere existence of the Fed, etc., such that it's easy (for me, anyway) to root for the little guys and, perhaps more importantly, to root for some of the corruption and hypocricy to get exposed. I also feel, however, that this will all likely end with corrupt billionaires and politicians being unaffected long-term and the average person having an even harder time of being able to "win" the game that already favors the corrupt.Shorting isn't just a bet on someone else's failure - it's a way to fund bullshit-detection. If you know (or suspect) that a company is lying about its prospects, you can bet against it.
2) I was late to the game on GME (no pun intended) and am just playing with some gambling money. Enough that I'll be sad if I lose it, but won't lose much sleep. But also enough that if it skyrockets and I get out in time, I could be very happy with myself for not sitting on the sidelines. Again, though...how do I know when to time my exit? Surely someone/somewhere has written up some markers for people to look for (e.g., to detect when the bulk of the shorts have been squeezed).
Re: GME
On that note, that's part of the reason why I haven't (yet, anyway) jumped on AMC, Nokia, Naked, or whatever else is being chatted about. I'm not impressed with the GameStop stores, but the kids sure do love their videogames, so that industry isn't going anywhere, and the lockdowns have to be working to their favor. Whereas, for example, I don't know that I see AMC movie theaters being long for this world, when large 4K TVs and streaming is available now.
I've been a bit surprised that GameStop's communications team seems to have been completely silent on these recent events. Shouldn't they be announcing a stock split, or how they plan to take on some ambitious new investment, with all of this new money that they should be able to tap into? Any sort of positive-sounding announcement by them should result in a positive movement on their stock. Don't they *want* their stock price to go up?
Last edited by CT-Scott on Fri Jan 29, 2021 1:10 pm, edited 1 time in total.
Re: GME
If I were running GameStop I'd be issuing shares to raise capital right about now.
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Re: GME
There is no reason for kids (or anyone else) to visit a GameStop store to pursue their passion for video games. Consoles and accessories can be purchased online (or at lots of other local retailers) and games can be downloaded. Social events around gaming happen online via live streaming, etc.CT-Scott wrote: ↑Fri Jan 29, 2021 1:10 pmI'm not impressed with the GameStop stores, but the kids sure do love their videogames, so that industry isn't going anywhere, and the lockdowns have to be working to their favor. Whereas, for example, I don't know that I see AMC movie theaters being long for this world, when large 4K TVs and streaming is available now.
On the other hand, a lot of people still like the social aspect of going to the movies, watching with other people, and combining it with dinner, etc., albeit at a lower rate than before streaming and other new technology.