OT: Game Stop

[Alsacs]

The deep pockets can outlast the little guys, so there is a bunch of truth to what you're saying.

In the end, Citidel is loaning money to Melvin. But Citidel could give two chits if a company like Melvin is around in a year. But ALL the context is important. If RH itself is forcing people to cut back because they are using margin, that is how the broker/client relationship has worked since the industry was first hatched. What I'm wondering if the shutdowns are because of margin (logical) or some other reason (more sinister)

I mean the Congress could pass a law today to stop this easily.

Just like casinos have to physically have the amount of cash in their vaults that is actually bet in the casino at the time a new law could be passed the same must be true for day trading companies/hedge funds.

You can only take action equivalent to the actual amount of capital you have.

It would destroy these hedge funds in a year.
If you don’t think Warren has this one cooking you would be shocked.

 

[Otto'd]

but odds are the anti-regulatory folks will suddenly want regulation protecting against this type of run.

I wish I could buy stock on that position.


Because its exactly what will happen

 

[Fat tire 13]

Correct. Pump and dumps aren’t based on insider information either.

Like I said though, I don’t think this qualifies as a pump and dump.

The laws on this are not completely clear, and you have to look at precedent. When hedge funds used to have selective dinners, and get into the same stocks, they did get in trouble

Another example - some CNBC host buys a stock, then pitches it on the show the next day. That is pretty cut and dry from the regulators standpoint

For this it is about intent. If it is purely to manipulate the price, it is illegal. However, many of the Reddit posters write their investment case, or notice the short interest is high. Then there is the argument there are other reasons besides pure "pump and dump" to get involved.

I think it will be a long time before the SEC does anything because they are slow moving. And there will likely be 1-2 offenders who take it too far who will end up being the token arrest

 

[Fat tire 13]

I mean the Congress could pass a law today to stop this easily.

Just like casinos have to physically have the amount of cash in their vaults that is actually bet in the casino at the time a new law could be passed the same must be true for day trading companies/hedge funds.

You can only take action equivalent to the actual amount of capital you have.

It would destroy these hedge funds in a year.
If you don’t think Warren has this one cooking you would be shocked.

You are talking about leverage and where it is used in the financial world.

Regulation depends on what type of product and who gets hurt if it goes wrong. For example, after housing blew up in 2008 you had to have bigger down payments and they cut back on ARM mortgages. For the world of futures, it is regulated by the CFTC and it is very mathematical depending on the volatility of the asset

For hedge funds, there is some SEC regulation. The is more "informal" regulation from the fund's custodian and prime broker. If the fund takes too much risk, they force them to cut back. Because if the fund blows up, and there is a deficit, the prime broker is left holding the bag

Now the last point is how these sorts of events percolate through the market, and affect the average person. That is the trickier part and you need good regulators. The problem is most of Congress understands very little about the industry (i.e. Zuckerberg questioning), and the regulation is either too slow, or too influenced by the $$$ from the big players.

 

[bozophobe]

I have a small amount of NOK (for non-US exposure), and thought about selling yesterday when it was up 49%. But I'm strictly a dividend reinvestment/compounding guy. No non-dividend tech for me, thanks. Tesla and Amazon will continue to thrive, but much of that is priced in. I do have a little AMC on Robinhood, but couldn't unload that yesterday, but it doesn't bother me. Also have an account with Stash (free trades and $1/month service fee).

Would have been nice to have some GME, but the only casino I play is some crypto now and then (Litecoin and Dogecoin). Easy money so far. Buy the crashes, and wait for Elon's next tweet.

 

[Alsacs]

You are talking about leverage and where it is used in the financial world.

Regulation depends on what type of product and who gets hurt if it goes wrong. For example, after housing blew up in 2008 you had to have bigger down payments and they cut back on ARM mortgages. For the world of futures, it is regulated by the CFTC and it is very mathematical depending on the volatility of the asset

For hedge funds, there is some SEC regulation. The is more "informal" regulation from the fund's custodian and prime broker. If the fund takes too much risk, they force them to cut back. Because if the fund blows up, and there is a deficit, the prime broker is left holding the bag

Now the last point is how these sorts of events percolate through the market, and affect the average person. That is the trickier part and you need good regulators. The problem is most of Congress understands very little about the industry (i.e. Zuckerberg questioning), and the regulation is either too slow, or too influenced by the $$$ from the big players.

Thanks for the breakdown. This makes sense
The hedge fund managers who get cleaned out by the GameStop revolution can always just get new jobs making solar panels.

 

[Alsacs]

 

[donniesyracuse]

If only there was a forum that would be appropriate for this discussion.

 

[althea]

Thanks for the breakdown. This makes sense
The hedge fund managers who get cleaned out by the GameStop revolution can always just get new jobs making solar panels.

They could learn to code - unlike Journalists' (where this was first used) hedge fund managers can actually learn to code.

 

[Cusefan0307]

Thanks for the breakdown. This makes sense
The hedge fund managers who get cleaned out by the GameStop revolution can always just get new jobs making solar panels.

Should have cut out those lattes at Starbucks.

 

[Fat tire 13]

Thanks for the breakdown. This makes sense
The hedge fund managers who get cleaned out by the GameStop revolution can always just get new jobs making solar panels.

No problem - have to follow this stuff closely so figured would write some things

I'm definitely not trying to defend those hedge funds. Several of them (Melvin/Citron), short stocks, then write bad things, and then profit off the panic. These are not at all sympathetic characters, and there is some satisfaction to seeing them beat at their own game

That's not to be confused with some actions that have perfectly logical explanations (brokers freezing accounts for margin/risk reasons).

With all the noise in the market, it is good to understand how the system works to separate the logical from the darker/conspiratory type stuff

 

[FloridaFan]

I have about 35 AMC shares that I bought about 16 dollars a share. Needless to say I wish I could sue

 

[Cusefan0307]

LOL at Art Cashin saying they are trying protect the little guy buy freezing trades. Do these clowns think Americans are stupid?

 

[Otto'd]

LOL at Art Cashin saying they are trying protect the little guy buy freezing trades. Do these clowns think Americans are stupid?

Yes

Liz Warren (like or hate her politics) looking pretty good right about now.

 

[althea]

I have about 35 AMC shares that I bought about 16 dollars a share. Needless to say I wish I could sue

you probably can sue!

 

[UpstateSM]

I generally don’t get too enraged about political or economical stuff (besides social justice issues) but this has me heated.

What a blatant display of our country’s priorities and faults.

 

[GoSU96]

LOL at Art Cashin saying they are trying protect the little guy buy freezing trades. Do these clowns think Americans are stupid?

Another example of using the excuse that people are unsophisticated rubes that need to be protected from risk as a shield for their exercise of arbitrary power.

 

[Brooky03]

I have about 35 AMC shares that I bought about 16 dollars a share. Needless to say I wish I could sue

I would not be surprised if there are law firms working on starting up class action lawsuits as we speak.

 

[cliftonparksufan]

It's basically over. Hope the amateurs had fun while it lasted and got out with at least a change of clean clothes and a six pack in the fridge. All anyone needs to know is to watch the old Eddie Murphy/Dan Aykroyd movie about stock futures.

 

[Alsacs]

 

[Alsacs]

Portnoy could run for President off this.

 

[Knicks411]

The funny thing about this is, really, RH was doing most of the retail guys a favor. they should've just sold their position and enjoyed their huge gains! Someone was gonna be left holding the bag in the end...

 

[Alsacs]

The funny thing about this is, really, RH was doing most of the retail guys a favor. they should've just sold their position and enjoyed their huge gains! Someone was gonna be left holding the bag in the end...

 

[OttoinGrotto]

It's basically over. Hope the amateurs had fun while it lasted and got out with at least a change of clean clothes and a six pack in the fridge. All anyone needs to know is to watch the old Eddie Murphy/Dan Aykroyd movie about stock futures.

"I made a fortune getting out too soon."

"I never buy at the bottom and I always sell too soon.'

 

[Brooky03]

It's basically over. Hope the amateurs had fun while it lasted and got out with at least a change of clean clothes and a six pack in the fridge. All anyone needs to know is to watch the old Eddie Murphy/Dan Aykroyd movie about stock futures.

Pork bellies!!!