GameStop short squeeze

Investing / Brokers
126

The media focus has suddenly and not surprisingly turned against the retail trader. Accusations of market manipulation on Reddit, investigation threats etc. Not much mention of the players who do that with billions - unless they need a bailout of course. I really don’t see the legal difference between the following two behaviours:

  1. ”Hey everyone, I like this stock. Here’s a couple of rocket emojis: :rocket::rocket::rocket:”

  2. A hedge fund taking a short position, then writing a hit piece and going to Twitter to drive the price down.

I bet founders like Elon Musk feel at least a little vindicated right now.

5 Likes
127

I am not sure if this page is up to date (shows as 27th though), but it claims that the %shorted has gone below 100.

(I noticed that previously linked https://www.highshortinterest.com/ was last updated on 23rd Jan)

128

Well, since the repo crisis (September 2019, so even before the COVID outbreak) they are in permanent bailout mode. Of course they will continue to rescue hedge funds in distress, it’s part of their job.

129

That should be unrelated, the market is waiting for Fed announcement afaik.

1 Like
130

Do you have a link to hedge funds bailouts? I didn’t know that was part of their job (unlike providing liquidity to avoid bank runs).

131

You honestly don’t see the difference between “I like this stock, everyone let’s pump it” and “wirecard is a fraud”?

132

Haha - please spend it on VT as you normally would. Do not put any more money into GME now, those of us that are in should risk manage accordingly.

This is going to very volatile and my biggest worry now is that the broker websites could go offline so I wont be able to unwind my position - this just happened to all the US brokers earlier at market start.

I am setting my limit sell order for 1000 :wink: I am playing with house money now too.

2 Likes
134

Well, the most prominent case that comes to my mind is the LTCM bailout in 1998. Then the Bear Stearns hedge funds in spring 2008. Then the repo crisis. There are surely other, more discrete, bailouts.
Of course the Fed won’t label its action as “hedge fund rescue”.
“Providing liquidity to the markets for a smooth functioning” sounds better :slight_smile: .
In a way, the Fed is hostage of hedge funds (and markets more generally).
They know the Fed will rescue them (otherwise the system collapses), and this allows them to take more risks and leverage each time, since 1987.

1 Like
136

I meant that at least until now hit pieces and tweets like in option 2 have been allowed. I meant that the ”I like this stock” way is surely no worse but the media sentiment is trying to make it look like devious manipulation. That’s why I added the qualifier ”legal difference” after the fact.

138

I’ve heard this before but I need to look more into it to understand the stability aspect.

In the GME case the thin line was definitely crossed. Over 100% of outstanding shares shorted and even more so (>200%) of the available float. Failures to deliver and 30 days on the SEC Regulation SHO Threshold list at least sound a lot like naked short selling was done.

I’m not against short selling per se. The increasing outcry about retail investors manipulating the market without touching the root cause is what’s grinding my gears.

139

Well, there have been very prominent calls to gang up on Melvin Capital, systematically hunt them down on their market positions and literally bankrupt them.
That’s not merely “liking” a stock anymore either, is it? Some would even call it devious.

140

Only looked at the Bear Stearns one, it doesn’t sound like the FED was handing out gifts tho. They just saved the good assets (from what I can tell they unwind it later and didn’t really lose money) and the shareholders lost 93% of the stock value (and didn’t the bear stearns subprime fund investor also lose (all?) their money?).

That sounds like providing liquidity, or you’d rather have the good assets be embroiled in the crisis too?

141

How about multiple trade platforms barring people from buying and selling GME right now? IBKR wont let people buy and sell GME shares for example. Multiple other traders seem to do the same. I have been on the IBKR helpline for 80 minutes at this point waiting, other people state they have been waiting for three hours…

142

I hope you get it sorted. I could sell earlier today and I just submitted a limit sell as a test. It was accepted. I’ve been using the mobile app - it seems to work better than the web when the lines are hot.

143

The Fed is only lending to my knowledge. But practically, the balance sheet cannot shrink, then the money lent is perpetually refinanced and actually given.

144

Is ACM the next GME :rocket:? I bought today 2 shares of ACM just for fun :laughing: with my USD leftovers in IBKR and wondering if I should buy more tomorrow after deposit the account… FOMO mode

1 Like
145

The LLCs from that bailout have been unwind.

146

If you’re not doing options you’re not doing it the wsb way.

2 Likes
147

Kinda off-topic: I wanna get in on this options trading thing.
Can anyone recommend a good (though affordable) options broker for Swiss retards?

No biggie if I get wiped out and dragged to the bottom of the sea.
But I really don’t want to do this against my IBKR margin.

1 Like
148

Look at the big picture - that is, the balance sheet. Even if A gives the money back to the Fed, the Fed lends to B (which will perhaps even lend to A). Basically the Fed (and other CB’s) are trapped to increase their balance sheet. As a whole the Fed concretely is giving free money to the markets.