OT: Game Stop

[Niastri]

I found it pretty telling MassMutual's only comment when contacted was he is no longer employed there. FINRA still has him on staff presently.

I just read the WSJ article about him... He had a 20 million dollar paper gain on his GameStop position. He probably quit. Now the regulatory ramifications might be severe if they think he manipulated the market, but 20 million is definitely retire early money for almost everyone

 

[Fat tire 13]

So, we are 8 pages into this thread and, other than the margin-related restrictions mentioned in one of the posts by Fat Tire, there has been zero mention of the fact that DTCC raised industrywide collateral requirements by 27% overnight and that Robinhood had to raise an additional 1BN of capital and draw down on 500MM of credit lines in order to meet the increased margin requirements.

So, while I would not put it past people like Cohen and Griffin to exert whatever pressure they could if they felt financially threatened, there is an equally, if not more, plausible explanation for Robinhood restricting trading in certain names: jacked-up margin requirements.

It isn't s e xy; it doesn't generate outrage. It doesn't get your tweet retweeted a gazillion times and pasted into this thread. It doesn't get AOC and Cruz into the headlines but it is a very real alternative for what happened this week.

Instead of rushing to judgement and embracing the worst possible alternative, how about waiting for the facts to come out?

This thread reminds me of so much of what happened post-election: so many claims and accusations of fraud that were immediately embraced and perpetuated that were all ultimately decreed to have no merit by the courts.

This is a great response, and you cover a lot of the mechanics on the "plumbing" that don't get enough press coverage. It doesn't help the RH CEO is unable to articulate it in an interview, which makes him seem shady by default.

I'll add one point. The daily volatility in the stocks like GME is truly unprecedented. In a crisis, everything goes down. In this case, you have random stocks moving 50-100%/day, and they are dominating market volume. For example, one day GME was the #1 traded stock in the market.

That is why DTCC raises this requirements. And a smaller clearing broker like RH will have some stress posting collateral. Other brokers had this problem too. For those saying this never happened before, it is true but there is a reason

The more I read, I think it is possible there was some shadiness (because of the connections among players), but more probable it was related to the extreme volatility

As another posted pointed out, Citidel makes most of their money as a market maker. When stocks prices jump around like that, it actually makes it more difficult for them to make money

I would encourage everyone to read articles from Matt Levine from Bloomberg. It is free to get on his mailing list. And he explains many of these topics in a clear way, without an agenda. And he does call people out for shady behavior when it happens

 

[Todoubled23]

This is a great response, and you cover a lot of the mechanics on the "plumbing" that don't get enough press coverage. It doesn't help the RH CEO is unable to articulate it in an interview, which makes him seem shady by default.

I'll add one point. The daily volatility in the stocks like GME is truly unprecedented. In a crisis, everything goes down. In this case, you have random stocks moving 50-100%/day, and they are dominating market volume. For example, one day GME was the #1 traded stock in the market.

That is why DTCC raises this requirements. And a smaller clearing broker like RH will have some stress posting collateral. Other brokers had this problem too. For those saying this never happened before, it is true but there is a reason

The more I read, I think it is possible there was some shadiness (because of the connections among players), but more probable it was related to the extreme volatility

As another posted pointed out, Citidel makes most of their money as a market maker. When stocks prices jump around like that, it actually makes it more difficult for them to make money

I would encourage everyone to read articles from Matt Levine from Bloomberg. It is free to get on his mailing list. And he explains many of these topics in a clear way, without an agenda. And he does call people out for shady behavior when it happens

IMO a big issue here is alot of these "traders" dont even understand regulation T margin requirements, excess all that. Let alone broker specific margin requirements for different securities. Mass disinformation howling at the wrong counterparty.

 

[OttoinGrotto]

IMO a big issue here is alot of these "traders" dont even understand regulation T margin requirements, excess all that. Let alone broker specific margin requirements for different securities.

Look, let's be honest here - you made that all up.

Much like when the mechanic tells you you should replace the serpentine belt.

Sure, buddy. I wasn't born yesterday.

 

[Todoubled23]

I just read the WSJ article about him... He had a 20 million dollar paper gain on his GameStop position. He probably quit. Now the regulatory ramifications might be severe if they think he manipulated the market, but 20 million is definitely retire early money for almost everyone

Give this a read if you want, you might find some details I haven't seen mainstream media present.

GameStop Promoter Keith Gill Was No “Amateur” Trader; He Held Sophisticated Trading Licenses and Worked in the Finance Industry

By Pam Martens and Russ Martens: January 30, 2021 ~ Yesterday evening, CNN’s Erin Burnett told millions of viewers that it was “amateur traders” who had

wallstreetonparade.com

 

[Niastri]

Give this a read if you want, you might find some details I haven't seen mainstream media present.

GameStop Promoter Keith Gill Was No “Amateur” Trader; He Held Sophisticated Trading Licenses and Worked in the Finance Industry

By Pam Martens and Russ Martens: January 30, 2021 ~ Yesterday evening, CNN’s Erin Burnett told millions of viewers that it was “amateur traders” who had

wallstreetonparade.com

As soon as I saw his licenses, I knew his deal. He definitely violated company policy and almost certainly would have been fired. Knowing this, he probably resigned after making fu money last week... Before they could get to it.

He could still be in trouble for breaking a variety of rules. We have 11 different regulatory agencies overseeing our activities. It is highly unlikely he keeps all of his money, and since he foolishly became the face of the insurrection, he might get the regulatory book thrown at him.

"Mr Gill, the SEC, FINRA and the NY department of insurance are all in the lobby... Some of them have handcuffs. Shall I get them coffee?"

 

[bozophobe]

No, that isn't what I was saying. I wasn't saying that margined customer assets can be posted as collateral to DTCC.

What I was unsure about was, if RH is shut down and goes under, a la Lehman Bros, do margined assets become part of the general asset pool that can be used to satisfy creditors or are they ring-fenced.

I don't know the answer to that question.

When I signed up with RH last year, the fine print stated that the shareholders (which we technically aren't, of course) would be made whole up to a certain amount (offhand, I think it was 100,000 or 250,000; I get it confused with my other app and will have to check), provided that the loss was caused by something wrong on the administrator's end, but not the user side (say, lax security and password use).

Problems - this is still in the finger-pointing phase. And during a recent security breach, RH administrators accused some users of carelessness, but those who had their accounts hacked and siphoned off the most swear they used dual authentication. But even that level of care is no longer a guarantee of safety. I'm getting reassurance (or CYA) emails from RH regarding their commitment to us, yada yada.

 

[Orangezoo]

Give this a read if you want, you might find some details I haven't seen mainstream media present.

GameStop Promoter Keith Gill Was No “Amateur” Trader; He Held Sophisticated Trading Licenses and Worked in the Finance Industry

By Pam Martens and Russ Martens: January 30, 2021 ~ Yesterday evening, CNN’s Erin Burnett told millions of viewers that it was “amateur traders” who had

wallstreetonparade.com

Yeah I mean this should surprise no one unless you read and follow headlines alone. Very few go out to level the playing field as their only angle. Same thing in non profit work. There is always someone or a few someones who take an executive role and can get a nice payday.

 

[bpo57]

Sadly I was on the sidelines for this.
I lost a bunch this week on Apple, Tesla, and Palantir. All paper losses, doesn't affect me.
Having worked with AMC (and their Chinese owners) I'd stay 1000000 miles away from their stock. They have nowhere to go to reinvent their business. Then again, same with GameStop - fundamentals are awful since games are going digital now and there's no resale market.
(also in Atlanta our malls are more dangerous than the OK Corral in the 1870's)

Both AMC and GME will eventually fall hard. In a few days or a few weeks? I don't know but many will be caught holding the bag. I've seen this movie before - no pun intended. It doesn't end well. AMC's bank debt was trading at 65 cents on the dollar in December. Shows you their plight. They may have avoided bankruptcy by issuing so many new shares. That's good but they've diluted the hell out of their existing shareholders.

 

[Todoubled23]

After some sluicing around on crunchbase and cross referencing. Several hedge funds that are stakeholders in Robinhood also have stakes in Reddit. Cant make this stuff up LOL

 

[Cusefan0307]

I don’t know anybody who planned on holding onto AMC or GME. There have been quite a few people who have made money playing the volatility and turned those trades into holding blue chips. Much easier to do this than betting on college basketball.

 

[bpo57]

I don’t know anybody who planned on holding onto AMC or GME. There have been quite a few people who have made money playing the volatility and turned those trades into holding blue chips. Much easier to do this than betting on college basketball.

Ah, I believe they call that the greater fool theory.

 

[Cusefan0307]

Ah, I believe they call that the greater fool theory.

ok boomer

 

[bpo57]

ok boomer

lol. Reminds me of one of my favorite quotes - "this time it's different"

 

[bpo57]

ok boomer

You recommending investors buy either one of those two stocks right now?

 

[Cusefan0307]

You recommending investors buy either one of those two stocks right now?

Lol of course not, but anywhere you can get information is good and if people(me) used that information to make money(me) and turned that money into blue chips(me) I am not going to feel bad about it.

Oh and by the way when bags start dropping to get us 5 star recruits again just remember who is holding...

 

[OttoinGrotto]

Lol of course not, but anywhere you can get information is good and if people(me) used that information to make money(me) and turned that money into blue chips(me) I am not going to feel bad about it.

Oh and by the way when bags start dropping to get us 5 star recruits again just remember who is holding...View attachment 195742

Bags of soup?

More like bags of dogecoin.

amirite?

 

[bpo57]

Lol of course not, but anywhere you can get information is good and if people(me) used that information to make money(me) and turned that money into blue chips(me) I am not going to feel bad about it.

Oh and by the way when bags start dropping to get us 5 star recruits again just remember who is holding...View attachment 195742

Hey that's fine, go for it. If you're basing your investing decisions heavily on what u read on stock message boards then ultimately that won't end very well. A lot of pump and dump action there. Better to do your own DD.

Personally I'd bet you that GME will trade below 100 by the end of this coming month (Feb) and by March will never see triple digits again. In the meantime there will be people that made out nicely and people that got smoked. That's the stock market for ya. Even a boomer knows that.

 

[bpo57]

This is a great response, and you cover a lot of the mechanics on the "plumbing" that don't get enough press coverage. It doesn't help the RH CEO is unable to articulate it in an interview, which makes him seem shady by default.

I'll add one point. The daily volatility in the stocks like GME is truly unprecedented. In a crisis, everything goes down. In this case, you have random stocks moving 50-100%/day, and they are dominating market volume. For example, one day GME was the #1 traded stock in the market.

That is why DTCC raises this requirements. And a smaller clearing broker like RH will have some stress posting collateral. Other brokers had this problem too. For those saying this never happened before, it is true but there is a reason

The more I read, I think it is possible there was some shadiness (because of the connections among players), but more probable it was related to the extreme volatility

As another posted pointed out, Citidel makes most of their money as a market maker. When stocks prices jump around like that, it actually makes it more difficult for them to make money

I would encourage everyone to read articles from Matt Levine from Bloomberg. It is free to get on his mailing list. And he explains many of these topics in a clear way, without an agenda. And he does call people out for shady behavior when it happens

Very good points with one minor quibble. Citadel is a large financial player and market making is a small contributor to their overall bottom line.

 

[Shrmdougluvr]

Lol of course not, but anywhere you can get information is good and if people(me) used that information to make money(me) and turned that money into blue chips(me) I am not going to feel bad about it.

Oh and by the way when bags start dropping to get us 5 star recruits again just remember who is holding...View attachment 195742

I thought this was class warfare though? Anyone in the market just wants to make money (the easier the better). The retailers are just as self interested and full of it as the institutions.

 

[OburgOrange]

You recommending investors buy either one of those two stocks right now?

I’m all in on coal

 

[OttoinGrotto]

I’m all in on coal

 

[bpo57]

I’m all in on coal

Good move. I didn't peg u as all that bright. Peabody up 50%+ in January while Consol up 25%+.

 

[OburgOrange]

Good move. I didn't peg u as all that bright. Peabody up 50%+ in January while Consol up 25%+.

 

[Alsacs]