GameStop Taking Down A Hedge Fund

[M_B]

As regards Hedge Funds.

 

The majority of people's pensions invest in hedge funds, including the folks buying shares in GameStop. Seems ironic that they are investing short term to deprive themselves of money in the long term.

[cochyn]

It goes 'bang' anyway even with shorting. Perhaps there should be a brake or at least a limit on short contracts (maybe as a % of stock or baseline value) to stop precisely the scenario I pointed out: viable firms being sunk by the actions of speculators alone. It's inherently cruel and places honest working folk at the whims of a moneyed elite remote from the shop floor. And then there's the dubious instances where companies' own shareholders have perpetuated a pump and dump to infate their own holdings and bailing just before the inevitable crash. 

[M_B]

8 minutes ago, cochyn said:

It goes 'bang' anyway even with shorting. Perhaps there should be a brake or at least a limit on short contracts (maybe as a % of stock or baseline value) to stop precisely the scenario I pointed out: viable firms being sunk by the actions of speculators alone. It's inherently cruel and places honest working folk at the whims of a moneyed elite remote from the shop floor. And then there's the dubious instances where companies' own shareholders have perpetuated a pump and dump to infate their own holdings and bailing just before the inevitable crash. 

Disagree sorry. Shorting is subject to market forces, just like buying, and should remain that way. If a firm is viable, it is near on impossible to short it without market manipulation, just as its near on impossible to get the price of a worthless firm to rise without telling a porky or two.

 

If shorting had not been in place with the last financial crisis then the debt bubble would have increased even further than it did, to the point that the entire financial system would have collapsed. Shorting is what caused people to question what was happening.

 

I agree on pump and dump. People should go to prison for that. I think this GameStop drama is a pump n dump - the folks encouraging everyone to buy will be the first to sell, and then they'll open short positions as the stock falls. Easy money.

[Rushies tash]

Have I got this right - a hedge fund can short stock, then go around telling everyone that the stock is shit to drive down the price? Legally?

 

If so, is that like me betting on a horse to lose a race, then shooting it?

[Herp McDerp]

4 minutes ago, Rushies tash said:

Have I got this right - a hedge fund can short stock, then go around telling everyone that the stock is shit to drive down the price? Legally?

 

If so, is that like me betting on a horse to lose a race, then shooting it?

 

Yes. And kneecapping the jockey for good measure. They'd have gotten away with it too were it not for those pesky kids.

[M_B]

24 minutes ago, Rushies tash said:

Have I got this right - a hedge fund can short stock, then go around telling everyone that the stock is shit to drive down the price? Legally?

A lot of the news you read is fuelled by market manipulators - they aim to create stock anxiety or excitement to drive the price in a particular direction. The folks who buy or sell are doing so on rumour, rather than facts. And they tend to lose their cash quite quickly.

 

In your analogy, shorting is like finding out one of the horses has a dodgy leg and betting on it to lose.

[Rushies tash]

17 minutes ago, M_B said:

A lot of the news you read is fuelled by market manipulators - they aim to create stock anxiety or excitement to drive the price in a particular direction. The folks who buy or sell are doing so on rumour, rather than facts. And they tend to lose their cash quite quickly.

 

In your analogy, shorting is like finding out one of the horses has a dodgy leg and betting on it to lose.

If I've read it correctly, I think my analogy is more accurate. The funds shorting the stock stand to gain from that stock price falling dramatically. They may identify a company in trouble, they may not. The thing is, it may be legal, but not morally correct, to encourage a stock to fall when you secretly stand to gain from it. In effect, you are giving the horse the dodgy leg yourself.

[Herp McDerp]

Eh its all just a massive shitshow, everything I learned as a part of my finance degree means fuck all, it's all rigged and nothing means anything. My US share portfolio has never performed as well as it has over this past 12 months, in the middle of a pandemic when the entire country has ground to a halt.

 

I do however maintain that this GME shitshow is a win for the little guys, hedge funds have long operated with impunity and had their people on primetime slots in MSNBC etc to influence the market in ways they want, its about time a couple of them got bloodied noses too. Having said that it's almost guaranteed that there will be funds making a killing on the way up as well as the long ride down. Will it change anything in the grand scheme of things? Nope. Is it funny watching literal scum of the earth have a massive sook? Undoubtedly.

[M_B]

6 minutes ago, Rushies tash said:

If I've read it correctly, I think my analogy is more accurate. The funds shorting the stock stand to gain from that stock price falling dramatically. They may identify a company in trouble, they may not. The thing is, it may be legal, but not morally correct, to encourage a stock to fall when you secretly stand to gain from it. In effect, you are giving the horse the dodgy leg yourself.

You can certainly do that - its the opposite of pump and dump. But that's manipulation of shorting just as pump and dump is manipulation of buying.

[cochyn]

52 minutes ago, M_B said:

Disagree sorry. Shorting is subject to market forces, just like buying, and should remain that way. If a firm is viable, it is near on impossible to short it without market manipulation, just as its near on impossible to get the price of a worthless firm to rise without telling a porky or two.

 

If shorting had not been in place with the last financial crisis then the debt bubble would have increased even further than it did, to the point that the entire financial system would have collapsed. Shorting is what caused people to question what was happening.

 

I agree on pump and dump. People should go to prison for that. I think this GameStop drama is a pump n dump - the folks encouraging everyone to buy will be the first to sell, and then they'll open short positions as the stock falls. Easy money.

 

Thanks for the explainer M_B - as you can tell I'm no expert at all! I guess you only need to look at the 1929 Wall Street crash to see where too much optimism leads the market. 

[Herp McDerp]

And it's opened up $200 on yesterday's close, opened at $350 before paring back some of the gains. This is about to get very dirty as these cunts will try every trick in the book to claw back their losses now.

[Mudface]

 

[Strontium]

It all sounds like a lot of fun, but I don't understand what's in it for all the people buying shares in GameStop. When the share price drops to a more realistic level, aren't they going to be left holding a lot of grossly overpriced stock?

[AngryOfTuebrook]

14 hours ago, Herp McDerp said:

 

Give the Big Short a watch if you havent already. It's a hollywoodised version of the shitfuckery these leeches regularly pull.

Excellent film, that.

[M_B]

13 minutes ago, Strontium Dog™ said:

It all sounds like a lot of fun, but I don't understand what's in it for all the people buying shares in GameStop. When the share price drops to a more realistic level, aren't they going to be left holding a lot of grossly overpriced stock?

Yes.

 

But the one's who encouraged everyone to buy in will have bought shares at a low price. They will then dump them at a high price. I doubt the hedge fund is really losing anything at all.

[Aventus]

1 hour ago, M_B said:

Yes.

 

But the one's who encouraged everyone to buy in will have bought shares at a low price. They will then dump them at a high price. I doubt the hedge fund is really losing anything at all.

You underestimate the collective powers of reddit retards and meme magic.

[M_B]

Well if believe what you read then the hedge fund has closed it's short position at a cost of billions.

 

But I find it hard to believe myself because that is what stop losses are for.

 

But yes, if they have achieved what they set out to achieve and have made money in the process then good luck to them.

[Aventus]

The funny thing is the hedge funds will eventually indirectly acquire most of the money again once these redditors go chasing the high and YOLO it all into the next meme stock.

[Red Phoenix]

Spare a thought for the poor elites.

 

 

Melvin Capital are one of the hardest hit apparently and they might be looking for a bailout because they've lost massive amounts due to the unruly plebs on reddit doing them over. Good.

[Red Phoenix]

5 hours ago, Strontium Dog™ said:

It all sounds like a lot of fun, but I don't understand what's in it for all the people buying shares in GameStop. When the share price drops to a more realistic level, aren't they going to be left holding a lot of grossly overpriced stock?

 

If this becomes a huge symbol of us vs the elites and people start investing in Gamestop as a matter of principle the current price could be just the beginning. And a lot of people investing are prepared to keep the stock, I'd guess they're going to have to incase the reports of closed short positions are lies and the hedge fund twats are still in with a chance of coming out on top.

 

edit : haha

 

 

https://www.reddit.com/r/wallstreetbets/comments/l6c5tg/just_read_a_new_york_times_article_saying_the_sec/

[Strontium]

1 minute ago, Red Phoenix said:

If this becomes a huge symbol of us vs the elites and people start investing in Gamestop as a matter of principle the current price could be just the beginning. And a lot of people investing are prepared to keep the stock, I'd guess they're going to have to incase the reports of closed short positions are lies and the hedge fund twats are still in with a chance of coming out on top.

 

Okay, but there are limits to how far you can spin this out with a business that isn't making any money. By any measure, shares in this company are not worth anywhere near what they are going for. It's a bubble, and the one thing we know about bubbles is that they always burst. 

[Red Phoenix]

3 minutes ago, Strontium Dog™ said:

Okay, but there are limits to how far you can spin this out with a business that isn't making any money. By any measure, shares in this company are not worth anywhere near what they are going for. It's a bubble, and the one thing we know about bubbles is that they always burst. 

 

Yeah it might do eventually and the vultures will probably return, but at least this can be a victory for the time being and a signal to the hedge funds that they can't be so relaxed about shorting companies from here on out.

[M_B]

1 hour ago, Red Phoenix said:

 

Yeah it might do eventually and the vultures will probably return, but at least this can be a victory for the time being and a signal to the hedge funds that they can't be so relaxed about shorting companies from here on out.

What do you think is wrong with shorting? Do you believe it's ok for prices to be held artificially high? If so, can you see a danger in that, and again if so, what do you think prevents that happening?

[M_B]

2 hours ago, Red Phoenix said:

I'd guess they're going to have to incase the reports of closed short positions are lies.

Is my guess. Spread the word that you have closed your position and then everyone sells.

[Red Phoenix]

1 hour ago, M_B said:

What do you think is wrong with shorting? Do you believe it's ok for prices to be held artificially high? If so, can you see a danger in that, and again if so, what do you think prevents that happening?

 

I don't think everyone that shorts has to be evil, it's more that a lot of the idiots on wall street are probably abusing it and treating it like a casino so I'm glad that a group of people on reddit can do what they have done. If it happens more often it could redistribute some wealth maybe and let people know that they can do something if it looks like companies are being driven into the ground from stock manipulation.