I think most legacy users from WSB know very well what they are doing.
I've been on this sub for 5 years and it has always been so that everytime the wsb hivemind finds a good deal it gets media attention and the number of clueless users/investors skyrockets. But people who stick around outside of these short periods under the spotlights know very well what they are doing despite the memes.
I don't believe in the theory that there are few people manipulating the entire sub for a pump and dump, rather the entire sub (the few tens of thousands regular active users) knew it was a pump and dump. That this story attracted the attention and money of thousands of clueless newbies is to be blamed on people that reported on it carelessly (medias, celebritites, etc.), not on the people who were doing their things on an internet forum expecting nothing out of it.
This was a unique setup for a lot of reasons. It started purely as a value play, then dynamically morphed into a growth play _and_ an attack on the shorts based on technicals. Once the price broke ~30 it then escalated into a full on short-attack and ultimately became pump-and-dump (in my opinion). The whole thing was fluid though, and its important to understand that the initial snowball was formed on the back of fundamentals analysis and through a lens of value investing, so you had plenty of "true believers" gathering together to form the initial crowd attacking the shorts.
Once it became clear the momentum was dead (i.e. when brokerages forbade buys) a lot of the "in the know" crowd had already planned their exit and took it. The only reason it hasnt plummeted to ~40$ at this point is that there were a lot of "true believer converts" picked up along the way that are now stubbornly bagholding in disbelief. This is where the _real_ pump and dump starts to occur, because this whole crowd is now on the hook for massive losses unless they can recreate the initial rise.
On the day the price was $350, I tried making a bunch of comments on HN to warn people this was a pump and dump. I got called a shill and downvoted repeatedly. Check my comment history. I hope those people got out in time.
the people who are sitting on unrealize gains are the ones that keep creating the threads with rocket emojis and some pseudo academic reasons for why the short squeeze hasn't happened yet.
The reality that they have created seem awfully like the ones that Trump supporters created including conspiracy involving the deep state, hedge fund colluding with journalists and pinning the blame on just a few people.
They are very good at hyping things up like they do over at r/bitcoin, absolutely refusing to believe that the market price is whatever they hype it to be (note that strong correlation of US equities and bitcoin when it shouldn't if it was like Gold, contrary to their storage of value argument.)
I think that WSB overplayed their hand and now will bring scrutiny and severe restrictions on retail margin option traders.
Not only that I think there will be new rules talking about stocks on social media, similar to how email spammers took advantage of the exact same FOMO narratives to pump up penny stocks in the early days of the internet.
Right now there is nothing that stops a group of people from purchasing large number of aged reddit accounts and using the downvote, upvotes to shape the narrative. The SEC has NO resources to fight this type of sophisticated mass social engineering and the laws are murky too.
> this story attracted the attention and money of thousands of clueless newbies
As an exercise in this theory earlier today I looked up the profile for 5 or 6 of the top posts on the subreddit advocating for "diamond hands", and about half of them made their first post on WSB within the past 5 days. It's very clear that the users going down with the ship are not the same users who pumped it up for massive profits in the first place.
I like following WSB, been there for years as well. There has been some incredible gains for me -- AMD, NIO, and TLRY to name a few. They were spotted early by the sub, it's up to the individual to decide when they want to exit their trade.
All but a small percentage of the newcomers will angrily disappear once this all blows over. This is by far the largest growth wave but not the first or the last.
I still don't understand how they successfully managed to make people think buying shares of a bankrupt company for $350 a pop was a good idea. They pitched it as the new BTC or TSLA but it really is just a text book example of pump and dump. They're not "owning wallstreet", at best they're owning a few investors/entities who took way to much risks, and that's it. The smart ones bought their shares at $5 and sold last week at the peak, any one getting in from now is suffering from massive FOMO.
Ronbinhood &co enabled this by gamifying trading, people are just one click away from betting their entire savings based on random social media posts amplified by mainstream media over coverage.
If you learn about something like this via mainstream medias or your friend who had no idea what trading was 2 days ago you can be 100% sure that you're too late to the party
edit: ok, not bankrupt, but clearly not going in the right direction. Either way, not anywhere close to make investors rich quick
No, they didn't pitch it as a BTC or Tesla. Clearly you haven't been following at all what is happening. The pitch was to cause a short squeeze and then selling when it happens. So that only losers would be the short selling hedge funds.
And then the hedge funds said they did indeed sell their short positions, but no-one believed them and the rise continues. There is no way the only losers will be hedge funds at this point, lots of retail investors will lose money.
So the idea is everyone who buys late can sell high and jump off the ship at the same time? Maybe I'm missing something, but if a whole bunch of people offload a stock, wouldn't that drive the price down, meaning a lot of people outside of the original short-sellers would still lose money?
Time will tell but my little finger told me that there will be plenty of losers, that the wall street people supposedly "owned" will be 100% bailed out, and that nothing of interest will change at wallstreet. The only thing that will change is that mobile trading apps will get major nerfs
> No, they didn't pitch it as a BTC or Tesla
It was a figure of speech, "we'll transform your $300 in $10000 in 2 weeks". People internally think about all the past opportunities they missed, we're talking about life changing money for a lot of people
The current (and historical pitch has always be to "cause a short squeeze and hold indefinetely...). Literally every other message is about "do not sell"
Gamestop is nowhere near bankrupt. One of the reasons that the trade took off is that Gamestop still has cash on hand and has reasonable (if declining) revenue. On their current trajectory they will go bankrupt, but it could take years. On fundamentals they could be a $20 stock but they were at $4 and still being heavily shorted, which made some people angry.
>> On their current trajectory they will go bankrupt, but it could take years.
A company with declining revenues, but lots of cash on hand, is ripe for takeover and liquidation. That places GameStop right alongside the quintessential takeover target: New England Wire and Cable. That was a good movie. Whether from bankruptcy or takeover, this could be the last party for GameStop.
I don't think people were angry that the price was undervalued, the anger came about when it became apparent that hedge funds had been over-shorting the stock to the point of potential naked short selling.
> On their current trajectory they will go bankrupt
...what?
this whole thing started because some high-profile redditors were bullish on GME, and then it turned into an anti-1% movement once the short positions were discovered.
so, there are two activities: speculation and investing. the whole problem here is that unwitting retailers were tricked, thinking they were investing when really they were "speculating" (more accurately called a pump and dump scheme). now its morphing into this "jail the oligarchs" nonsense because the people that lost money think they were wronged, when really it was their own damn fault the whole time.
Roaring Kitty (Deep fing value)'s first video from 6 months ago on $GME answers your questions. It started as legitimate investing with some memes on the side, and then turned in memes with some legitimate investing on the side.
This is indeed how it started. Bloomberg's Odd Lots podcast also had a recent episode with one of the other main guys behind the original, fundamentally driven trade. It's well worth listening to. He makes some good points that the company was indeed undervalued in the teens and lower. Obviously, that is no longer where it is trading, and unless they turn into the Amazon of video games somehow, a valuation of well above $100 seems excessive.
The hype had nothing to do with the fundamentals of the company. It was about short squeeze and gamma squeeze. The pitching point to buy the stock was that if all the retail investors buy and hold the shares, then ultimately squeeze would drive the price higher. Partially this is true and more than one squeeze happened for GameStop.
But for other shorted stocks like AMC, Blackberry or Nokia I'm not sure if the squeeze ever happened and I feel sorry for the people who are still clinging on to those stocks. It could take months, or maybe years to sell them with a break even price.
>> The smart ones bought their shares at $5 and sold last week at the peak
Loosing a bet doesn't make you a not-smart investor. High risk ventures can be part of any portfolio. In a game of high risk and high returns most bets don't work out. I don't think any less of hedge fund people who "lost their shirts" on this. That is a normal part of the game.
> Loosing a bet doesn't make you a not-smart investor.
People who never traded in their life and bought GME at $350 because reddit promised them big returns (I know a few in my friend circle) aren't smart investors taking part in a risky venture, they just suffer from fomo and have no idea of the risks
People who bought a few weeks ago may have made a risky calculated move though, I'm not denying that.
People who bought a long time ago and fomented the whole thing for a massive profit are definitely the only one I'd call smart, low risk, perfect execution, comfortable exit.
No one will make me believe that the people who bought at $350 are just as smart and taking the same risks as the people who bought at $5. They're not playing the same "game" you're talking about. Head or tails isn't the same as "guess the number I chose between 1 and 5000"
In today's QE-Infinity Climate - it's not unreasonable to see Chewy's executive management turning GME into a successful e-commerce and brick and mortar play.
The e-commerce business is valued at 10x in QE-infinity terms, on adjusted EBITDA, which means it's not far fetched for the story to become $888/share right now.
The only thing missing is a constant parade of upgrades from the analysts.
Maybe if Gamestop pivots to e-commerce they can eventually come up with some way that you could buy a game online and have it delivered fully digitally, without even having to wait for shipping. Especially if they had vendor lock-in, where the games you've purchased digitally are available to you on any device -- but only through your GameStop account. Every time you log into your GameStop account to play the games you've purchased you would see the front page of their store with all the new games they've listed and the sales they're promoting.
That business model could really be worth $20B. It would be huge. Like what Netflix did to BlockBuster, but for video games.
While the greater fool strategy may generally be a losing one over enough iterations and time, it is very possible to make huge money on these plays in the short term. It is not always irrational to buy into an overpriced asset.
For example GME was wildly overpriced at $100 relative to basically every metric and yet it would have been an incredible buy.
I'm not advocating that anyone actually do this, I'm just saying that you are over simplifying by only acknowledging the value side of the equation.
The problem is that you need to sell quickly to take advantage of a short squeeze, and the people who bought at $200 could have made a big pile of money last week -- but if they still have those shares today, they will probably never recover their losses. Right now GME is trading at slightly more than $100/share, and while it might spike again tomorrow it will probably continue to decline. The squeeze is over and by now the remaining shorts are hedge funds who sold when the share price was above $300.
From what I've seen on Reddit and TikTok, many involved are young and holding to make a point, regardless of the pump. A portion of these are also hoping to make it rich, and get rich quick schemes rarely pan out.
What if they've been tricked into buying now to cover the exit of early investors? People keep saying it's not about the money but the ones who keep quiet are making millions
I think the legislation that may come from all of this is to limit margin accounts. When I signed up for an online brokerage years ago you couldn't trade on margin, which meant no option trading or day trading since when trading without a margin account, your cash has to clear. You had to go to their office and fill out forms and have a minimum balance.
With Robinhood everyone gets a margin account and the brokerage clearly can't support it with the tiny balances so many of their users carry. Their business model has forced other brokers to follow by offering free trades and everyone is on a margin account. This is a poor practice.
I'd support requirements like ensuring balances of at least $10k or more to qualify for margin. Robinhood is purposely designed to encourage day trading and other margin trades many users don't understand or that the infrastructure (not just RH, but the clearing houses, etc) can't and shouldn't support.
There's going to be a whole new world of pump and dumps like never before as so many people are hungry for quick money now and taking risks with their rent money they shouldn't be.
For what it's worth, the original guy betting on GME had a smart and well researched hypothesis and I hope he made his fortune. But the lemmings following have no business in this kind of thing.
> WSB's power users are younger finance bros. It's 30-something investment bankers and portfolio managers memeing with each other and cosplaying as "autists."
> If you didn't know what a gamma squeeze was 48 hours ago, you are their exit strategy and the down payment on their next Porsche.
For a comment that is this cynical, I think it's largely correct. I've been struggling to communicate how a million retail clients are going to lose their life savings (or more) in this (and what comes after it) and get burnt badly, ending with devastation and even suicides, but it appears to fall upon deaf or otherwise indifferent ears continually, so it seems like the cycle simple cannot be helped.
I hesitate to ask -- do we really think people are stupid enough to gamble away lots of money they can't afford to lose?
I'm hoping that instead there are hundreds of thousands of people who only bought a couple of stocks, understanding that they were likely to lose the money.
> do we really think people are stupid enough to gamble away lots of money they can't afford to lose?
Yes. Yes we do. Because "people" have done exactly that in every previous stock market bubble, and at every casino, and in sure-fire get-rich-quick "investment" schemes, and 3-card monte games...
A better way to frame the question is "do we really think people as a whole have gotten fundamentally smarter since the last time this happened?"
> I hesitate to ask -- do we really think people are stupid enough to gamble away lots of money they can't afford to lose?
Oh. Yes. Yes, yes, yes. And it's not just the stupid people. Isaac Newton famously lost a fortune in speculation.
That's the thing about manias. It takes over and so many people all over go broke by the end. They are famous for it: they are a predictable and repeating tragedy.
Recognizing a mania is one of the first lessons someone who wants to do anything with stocks beyond INSERT 15% INTO VANGUARD 500 INDEX should do.
Yes. Look at the history of the dot com bubble bursting in 2000 or the 2008 financial crisis and you’ll find tons of people who were massively exposed, often writing books or blogging about how they were making crazy amounts of money, and then the party stopped and their can’t-lose “investments” weren’t.
Every decade or so you’ll find people who didn’t pay attention the previous time learning about the market the hard way.
If you assume that half the posts on WSB are true, and then assume the usual 100:1 poster:lurker ratio, that’s thousands of retail traders who’ve dumped student loans, college funds, retirement, life savings, etc. into the stock. Obviously this is not a precise or highly accurate estimate, but it is an estimate.
There were students when I was in university who spent their student loans on Bitcoin. They had to take a year off to do an internship to earn some money.
I was at the supermarket saturday and overheard 2 people talking (shouting really) about the price of Gamestop and how it was BS that Robinhood only let them buy 5 shares. It was pretty surprising to me that this had spread so much. But yeah I definitely believe it.
I've seen multiple posts, some here on HN, claiming that GME is mathematically guaranteed to surpass $1000. If people actually believe this, why wouldn't they put every spare dollar into it?
One of the jobs of financial markets is to correctly distribute capital. Moving money from people who do dumb things with it, to people who don't, is a good thing because more capital ultimately ends up in the right place. A good thing economically over all that is. The individuals losing the capital are likely butt hurt. But they should have stuck to indexes...
They've already bought into the narrative that WSB is "their side" and long the stock, while hedge funds are all "the enemy" and shorting the stock. Plus conspiracy theories about hedge funds (and not liquidity issues) forcing Robinhood to disable trading.
So even if they lose everything they won't blame WSB, they'll just demand Congress make short buying illegal or something.
actually im glad you said this. this is the core problem with this WSB/RH/GME event.
a certain percentage of people in WSB only want to light a pile of their money on fire for the sole purpose of bankrupting some hedge funds. they expect no returns and only want to cause pain to people with more money than them that they dont like.
another percentage of people (i think this group is much, much larger than the first) think bankrupting the short positions is gonna make them huge returns. they think theyre all david collectively fighting a goliath as the proletariat rises up. most of these people are sorely mistaken and will lose everything, but some will make money.
the RH trade halt (EDIT: only buying was halted, a "trade halt" technically means both) is allowing the shorts to unwind more gracefully, making the first group of people angry. theyre not getting their witchburning, or public execution, or lynching - however you want to frame it.
the problem is the second group of people think theyre being defrauded out of huge returns by an artificial exit from the short squeeze. these people are wrong to begin with. most of them were never going to make huge returns. even if they successfully bankrupted the shorts, most of them are left holding stock they bought for $100, $200, $300, or $400 a share (WSB was memeing share price was gonna go into the thousands) that is worth <$90. those people were always going to lose, they just didnt know it. but now they have a scape goat, even though they were on the wrong side of the trade to begin with.
This is very similar to a witch hunt. WSB had no idea whether the shorters were the original hedge funds (e.g. Melvin) or random opportunists who wanted to make money from this obviously overvalued stock.
WSB is classic pump and dump wrapped up in memes. The forum deletes any postings that do not align with the current echo chamber that is pushing just a few stocks. It is a bro-filled boiler room that has suckered a lot of people. Brutal.
The key insight to why this is pump and dump and nothing more is that there was never a right time to sell for the masses on WSB, it was HLD all the way down.
If you mean that posts that don't align with the hivemind get downvoted to the point of being hidden, then yes, that is true. It's how reddit's voting system works.
In the short term, it is possible for mob mentality to take over, but in the long term, you will see this fade and WSB will return to a point where there's a little (but not much) more nuance to the conversation.
If you meant that "the forum" as in "the moderators" delete things that do not align with the echo chamber, then you are incorrect. On an absolute basis, more pro-"meme stock" content is removed than anti-"meme stock". You can verify this yourself with PRAW, or simply by refreshing /new.
If anyone actually thought this was going to be successful, they were caught up in the biggest tulip-bulb delusion in the last 20 years. Melvin Capital may have lost a ton being caught off guard, but I bet they made all their money back shorting at the top. I said a few days ago that retail doesn't have enough power to make a real difference, and it was hedge funds and prop trader that were really moving the stock, especially when new highs were being hit. There's simply not enough money for retail to propel a stock like that.
And now retail will lose all their money. Everyone on reddit claiming "Hold the line!" is likely those same hedge fund/prop traders trying to squeeze every dollar from these poor retail suckers.
The goal posts of an exit were successfully moved several times in the course of the rise. From 100 to 200 to 300. Some of the initial traders successfully exited at the original meme price of $420.69. The fact that it was _so_ successful is why people even then began to beat the drum of a $1000/share exit. Even now the price has has settled around $90 which is probably at least twice its "fair" value of $20-$40.
So yeah, some people purely chasing a hype lost but a lot of retail investors that had their finger on the pulse before the hype successfully called their shot and made it out the other end much richer than when they started.
The "memes" and talking points surrounding GME on reddit remind me a lot of the early days of the 2016 trump campaign on reddit. I would not be surprised if there was a large overlap of "influencers" between the two.
Yeah. Copying my post from yesterday's thread -- which only looks more and more real today with increasing rationalization leading to explanations like that hedge funds are "short ladder attacking" GME.
------------------------------------------
The claims and the consequences are very different, but I definitely get the same sense I got reading Q stuff when I skim the current WSB page.
- The media, government, and elites are conspiring against us.
- Info that says short interest has decreased / shorts have covered is propaganda and should be ignored.
- Info that says short interest is still sky-high is to be believed without question.
- Parties who were on our side of the bet but are now advising caution (e.g. Burry or S3) must be malicious or compromised, can't possibly be genuine.
- Mix of facts with misunderstood interpretations thereof: 140% short interest is very high (fact), 140% short interest should not be legally possible (misunderstanding).
- The dark truth we are about to reveal (counterfeit stocks?) has been going on for a long time, but now the wool will be lifted from the eyes of the nonbelievers.
- Your continued belief in "the plan" is important. You must keep the faith!
- "The Event" will take place on X date, but when it doesn't, no problem: it was always going to be Y date that It Happens.
- We all KNOW our version of the story is right. What particular pieces of evidence are so rock-solid and convincing? Oh, well, there's SO MUCH, but it's not my job to spoon feed you the facts. If you don't know, you clearly haven't been paying attention and should do your own research.
- If somebody published something saying that we're wrong, it means that "They" are scared of us. We must be getting close.
I don't know whether WSB's narrative is right or wrong, which is why I am on neither side of this trade and merely watching with interest from the sidelines. They could very well be correct about all of this.
I also am not trying to allege that being a "GME to the moon" person makes you a "Q person". They are completely different sets of beliefs. All that I'm observing is that the marketing of the ideas is similar.
Thanks for laying that all out so I don't have to. Here are some other examples I noticed.
"Memes" that are outright out of a WW2 propagandist playbook with phrases like "Hold the line" or the WSB kid with sunglasses seen taking out the enemy.
People trying prove their devotion to the cause is so much higher than their fellow brethren. "For every upvote I'll donate to the campaign/I'll buy stock in GME"
I never read Q stuff, but from watching how this has unfolded on WSB I thought to myself "this sounds exactly like what the Q stuff must be like". That sucks, because I would hate to lose the raw WSB energy to this.
I have seen several articles in the past week outright rejecting the idea that anyone is in on GME for the "cause" of shitting on the funds (even if it turns out ineffective). If I see an article failing to recognize the legitimate populist (and correct) element of the moment, while hand-wringing about the fund managers, my bullshit detector goes off.
Also, can you explain, or link, or anything, as to why shorting more shares than there are to trade a good thing? Why short selling is legal at all?
Shorting seems like a terrible tool in society, a way for people with money to gamble, win big, but occasionally fail so hard the federal government needs to step in.
yeah the "Deepstate" is now "Hedgefund + Mainstream Media"
if you actually swap out the words, it reads almost exactly like the Q conspiracy and the other crap Trump supporters been echoing in their chambers.
I wonder if there is a math formula to these conspiracy/pseudo realities. They seem to have very similar structures and literally just the variables are different each time.
Coupled with attaching legitimacy to numbers (your account is too new therefore untrustworthy, you have lot of karma points so you can't be lying), it would be very easy to paint any type of narrative while signaling trustworthiness.
Also, people often claim to be part of X or in position Y without any verification to win confidence.
Literally the psychology of confidence man has now taken the form of some integer attached to a username in a database somewhere.
We also see this blind trust in large numbers on Instagram and Youtube where the number of subscribers and likes automatically signals importance, legitimacy when all of it are easily manipulated, paid for.
To use the vernacular, I am very bullish on this take.
In 2016, the Internet discovered they can mess with politics.
In 2021, the Internet discovered they can mess with finance.
There are other instances of this, but the general theme is people who traditionally only operate on the Internet occasionally discover ways to have an impact on the "real" world. They get so drunk with power, they do something stupid with it, and the rest of the world sighs as we get to work cleaning up the mess they've made after they get bored.
100% agree. Of course the connection is going to be very difficult to prove if it in fact exists, but I also got the same vibes. Large masses of people making an objectively bad decision on the basis of hyped up memes disseminated by grifters and other bad actors.
The front page of WSB could very well be a QAnon forum. Everything is a conspiracy. All the players in power are fully united against them. If you aren't 100% bought in to the cult, and do as much as advise people to be cautious, you will be silenced.
It depends on which echo chamber you look at. Reddit at large has long been libleft. If you read comments from posts that hit front page, you will find overwhelming support for left-leaning policies (exception: Reddit has a distinct pro-gun streak).
You had to go to specific subreddits to see the type of exuberant, memespeak support for Trump. In 2016 that was r/The_Donald. By the time we got to the 2020 election that subreddit and any replacement that got too close to it was banned. But you could still find the same vibe on TheDonald.win, an independently hosted recreation of the subreddit. Or on the chan sites.
The meme culture of The_Donald never constituted the mainstream image or talking points for Trump. it wasn't promoted or even referenced directly by the Trump campaign. But it was a weird world where you never knew exactly how serious people were about their love for Trump -- it was so obviously exaggerated as to look like satire, but the participants were at least somewhat serious: they really did want Trump to win.
Readit News
I've been on this sub for 5 years and it has always been so that everytime the wsb hivemind finds a good deal it gets media attention and the number of clueless users/investors skyrockets. But people who stick around outside of these short periods under the spotlights know very well what they are doing despite the memes.
I don't believe in the theory that there are few people manipulating the entire sub for a pump and dump, rather the entire sub (the few tens of thousands regular active users) knew it was a pump and dump. That this story attracted the attention and money of thousands of clueless newbies is to be blamed on people that reported on it carelessly (medias, celebritites, etc.), not on the people who were doing their things on an internet forum expecting nothing out of it.
Once it became clear the momentum was dead (i.e. when brokerages forbade buys) a lot of the "in the know" crowd had already planned their exit and took it. The only reason it hasnt plummeted to ~40$ at this point is that there were a lot of "true believer converts" picked up along the way that are now stubbornly bagholding in disbelief. This is where the _real_ pump and dump starts to occur, because this whole crowd is now on the hook for massive losses unless they can recreate the initial rise.
The reality that they have created seem awfully like the ones that Trump supporters created including conspiracy involving the deep state, hedge fund colluding with journalists and pinning the blame on just a few people.
They are very good at hyping things up like they do over at r/bitcoin, absolutely refusing to believe that the market price is whatever they hype it to be (note that strong correlation of US equities and bitcoin when it shouldn't if it was like Gold, contrary to their storage of value argument.)
I think that WSB overplayed their hand and now will bring scrutiny and severe restrictions on retail margin option traders.
Not only that I think there will be new rules talking about stocks on social media, similar to how email spammers took advantage of the exact same FOMO narratives to pump up penny stocks in the early days of the internet.
Right now there is nothing that stops a group of people from purchasing large number of aged reddit accounts and using the downvote, upvotes to shape the narrative. The SEC has NO resources to fight this type of sophisticated mass social engineering and the laws are murky too.
As an exercise in this theory earlier today I looked up the profile for 5 or 6 of the top posts on the subreddit advocating for "diamond hands", and about half of them made their first post on WSB within the past 5 days. It's very clear that the users going down with the ship are not the same users who pumped it up for massive profits in the first place.
Same as every pump and dump ever.
I've been looking for alternative subs, but besides e.g. theta gang I haven't really found anything useful
Deleted Comment
Ronbinhood &co enabled this by gamifying trading, people are just one click away from betting their entire savings based on random social media posts amplified by mainstream media over coverage.
If you learn about something like this via mainstream medias or your friend who had no idea what trading was 2 days ago you can be 100% sure that you're too late to the party
edit: ok, not bankrupt, but clearly not going in the right direction. Either way, not anywhere close to make investors rich quick
https://gamerant.com/gamestop-out-of-business-in-digital-age...
https://gamerant.com/is-gamestop-going-out-of-business-dying...
https://edition.cnn.com/2020/09/10/investing/gamestop-store-...
https://www.ccn.com/gamestops-ultimate-destiny-buyout-or-ban...
That's true for when stock went from $4 to $350, but who are the "losers" when stock goes from $350 to, let's say $7?
Also, who are the "winners" on that $350 -> $7 journey?
> No, they didn't pitch it as a BTC or Tesla
It was a figure of speech, "we'll transform your $300 in $10000 in 2 weeks". People internally think about all the past opportunities they missed, we're talking about life changing money for a lot of people
A company with declining revenues, but lots of cash on hand, is ripe for takeover and liquidation. That places GameStop right alongside the quintessential takeover target: New England Wire and Cable. That was a good movie. Whether from bankruptcy or takeover, this could be the last party for GameStop.
> On their current trajectory they will go bankrupt
...what?
this whole thing started because some high-profile redditors were bullish on GME, and then it turned into an anti-1% movement once the short positions were discovered.
so, there are two activities: speculation and investing. the whole problem here is that unwitting retailers were tricked, thinking they were investing when really they were "speculating" (more accurately called a pump and dump scheme). now its morphing into this "jail the oligarchs" nonsense because the people that lost money think they were wronged, when really it was their own damn fault the whole time.
Dead Comment
Roaring Kitty (Deep fing value)'s first video from 6 months ago on $GME answers your questions. It started as legitimate investing with some memes on the side, and then turned in memes with some legitimate investing on the side.
https://www.bloomberg.com/news/audio/2021-01-29/how-to-make-...
But for other shorted stocks like AMC, Blackberry or Nokia I'm not sure if the squeeze ever happened and I feel sorry for the people who are still clinging on to those stocks. It could take months, or maybe years to sell them with a break even price.
Break even price? Through what, innovation? Currency inflation?
Loosing a bet doesn't make you a not-smart investor. High risk ventures can be part of any portfolio. In a game of high risk and high returns most bets don't work out. I don't think any less of hedge fund people who "lost their shirts" on this. That is a normal part of the game.
People who never traded in their life and bought GME at $350 because reddit promised them big returns (I know a few in my friend circle) aren't smart investors taking part in a risky venture, they just suffer from fomo and have no idea of the risks
People who bought a few weeks ago may have made a risky calculated move though, I'm not denying that.
People who bought a long time ago and fomented the whole thing for a massive profit are definitely the only one I'd call smart, low risk, perfect execution, comfortable exit.
No one will make me believe that the people who bought at $350 are just as smart and taking the same risks as the people who bought at $5. They're not playing the same "game" you're talking about. Head or tails isn't the same as "guess the number I chose between 1 and 5000"
I'm not sure what's left that is "good".
This is not a normal part of the game.
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The e-commerce business is valued at 10x in QE-infinity terms, on adjusted EBITDA, which means it's not far fetched for the story to become $888/share right now.
The only thing missing is a constant parade of upgrades from the analysts.
That business model could really be worth $20B. It would be huge. Like what Netflix did to BlockBuster, but for video games.
For example GME was wildly overpriced at $100 relative to basically every metric and yet it would have been an incredible buy.
I'm not advocating that anyone actually do this, I'm just saying that you are over simplifying by only acknowledging the value side of the equation.
Can confirm.
Most of them bought in highly concentrated margin accounts. They will be force sold by the broker as a result of a margin call.
With Robinhood everyone gets a margin account and the brokerage clearly can't support it with the tiny balances so many of their users carry. Their business model has forced other brokers to follow by offering free trades and everyone is on a margin account. This is a poor practice.
I'd support requirements like ensuring balances of at least $10k or more to qualify for margin. Robinhood is purposely designed to encourage day trading and other margin trades many users don't understand or that the infrastructure (not just RH, but the clearing houses, etc) can't and shouldn't support.
There's going to be a whole new world of pump and dumps like never before as so many people are hungry for quick money now and taking risks with their rent money they shouldn't be.
For what it's worth, the original guy betting on GME had a smart and well researched hypothesis and I hope he made his fortune. But the lemmings following have no business in this kind of thing.
Just because GME-as-ownership-unit may be overvalued, does not necessarily mean it is overvalued for GME-as-contract-closure-instrument.
If you want to focus on GME-as-ownership-unit, as a share in a retail business, that's perfectly valid. But that's not the only perspective.
- https://newrepublic.com/article/161182/bought-tens-thousands...
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> WSB's power users are younger finance bros. It's 30-something investment bankers and portfolio managers memeing with each other and cosplaying as "autists."
> If you didn't know what a gamma squeeze was 48 hours ago, you are their exit strategy and the down payment on their next Porsche.
> This page does not exist. The deletion, protection, and move log for the page are provided below for reference.
> 02:43, 2 February 2021 ST47 deleted page Gamma squeeze (G12: Unambiguous copyright infringement of https://www.swfinstitute.org/news/83341/what-is-a-gamma-sque...)
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I'm hoping that instead there are hundreds of thousands of people who only bought a couple of stocks, understanding that they were likely to lose the money.
Yes. Yes we do. Because "people" have done exactly that in every previous stock market bubble, and at every casino, and in sure-fire get-rich-quick "investment" schemes, and 3-card monte games...
A better way to frame the question is "do we really think people as a whole have gotten fundamentally smarter since the last time this happened?"
Oh. Yes. Yes, yes, yes. And it's not just the stupid people. Isaac Newton famously lost a fortune in speculation.
That's the thing about manias. It takes over and so many people all over go broke by the end. They are famous for it: they are a predictable and repeating tragedy.
Recognizing a mania is one of the first lessons someone who wants to do anything with stocks beyond INSERT 15% INTO VANGUARD 500 INDEX should do.
Every decade or so you’ll find people who didn’t pay attention the previous time learning about the market the hard way.
yes. https://www.reddit.com/r/wallstreetbets/comments/la53nh/help...
https://i.imgur.com/zy9I3IZ.jpg
Which is why step 1 is always convincing people it's such a sure thing that it's not gambling. Even if it is.
This is why financial regulation exists. To protect people from themselves.
One of the jobs of financial markets is to correctly distribute capital. Moving money from people who do dumb things with it, to people who don't, is a good thing because more capital ultimately ends up in the right place. A good thing economically over all that is. The individuals losing the capital are likely butt hurt. But they should have stuck to indexes...
So even if they lose everything they won't blame WSB, they'll just demand Congress make short buying illegal or something.
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actually im glad you said this. this is the core problem with this WSB/RH/GME event.
a certain percentage of people in WSB only want to light a pile of their money on fire for the sole purpose of bankrupting some hedge funds. they expect no returns and only want to cause pain to people with more money than them that they dont like.
another percentage of people (i think this group is much, much larger than the first) think bankrupting the short positions is gonna make them huge returns. they think theyre all david collectively fighting a goliath as the proletariat rises up. most of these people are sorely mistaken and will lose everything, but some will make money.
the RH trade halt (EDIT: only buying was halted, a "trade halt" technically means both) is allowing the shorts to unwind more gracefully, making the first group of people angry. theyre not getting their witchburning, or public execution, or lynching - however you want to frame it.
the problem is the second group of people think theyre being defrauded out of huge returns by an artificial exit from the short squeeze. these people are wrong to begin with. most of them were never going to make huge returns. even if they successfully bankrupted the shorts, most of them are left holding stock they bought for $100, $200, $300, or $400 a share (WSB was memeing share price was gonna go into the thousands) that is worth <$90. those people were always going to lose, they just didnt know it. but now they have a scape goat, even though they were on the wrong side of the trade to begin with.
it is to me. do hedge funds do something besides fulfill their fiduciary requirement of making their investors money?
The key insight to why this is pump and dump and nothing more is that there was never a right time to sell for the masses on WSB, it was HLD all the way down.
In the short term, it is possible for mob mentality to take over, but in the long term, you will see this fade and WSB will return to a point where there's a little (but not much) more nuance to the conversation.
If you meant that "the forum" as in "the moderators" delete things that do not align with the echo chamber, then you are incorrect. On an absolute basis, more pro-"meme stock" content is removed than anti-"meme stock". You can verify this yourself with PRAW, or simply by refreshing /new.
And now retail will lose all their money. Everyone on reddit claiming "Hold the line!" is likely those same hedge fund/prop traders trying to squeeze every dollar from these poor retail suckers.
The goal posts of an exit were successfully moved several times in the course of the rise. From 100 to 200 to 300. Some of the initial traders successfully exited at the original meme price of $420.69. The fact that it was _so_ successful is why people even then began to beat the drum of a $1000/share exit. Even now the price has has settled around $90 which is probably at least twice its "fair" value of $20-$40.
So yeah, some people purely chasing a hype lost but a lot of retail investors that had their finger on the pulse before the hype successfully called their shot and made it out the other end much richer than when they started.
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The claims and the consequences are very different, but I definitely get the same sense I got reading Q stuff when I skim the current WSB page.
- The media, government, and elites are conspiring against us.
- Info that says short interest has decreased / shorts have covered is propaganda and should be ignored.
- Info that says short interest is still sky-high is to be believed without question.
- Parties who were on our side of the bet but are now advising caution (e.g. Burry or S3) must be malicious or compromised, can't possibly be genuine.
- Mix of facts with misunderstood interpretations thereof: 140% short interest is very high (fact), 140% short interest should not be legally possible (misunderstanding).
- The dark truth we are about to reveal (counterfeit stocks?) has been going on for a long time, but now the wool will be lifted from the eyes of the nonbelievers.
- Your continued belief in "the plan" is important. You must keep the faith!
- "The Event" will take place on X date, but when it doesn't, no problem: it was always going to be Y date that It Happens.
- We all KNOW our version of the story is right. What particular pieces of evidence are so rock-solid and convincing? Oh, well, there's SO MUCH, but it's not my job to spoon feed you the facts. If you don't know, you clearly haven't been paying attention and should do your own research.
- If somebody published something saying that we're wrong, it means that "They" are scared of us. We must be getting close.
I don't know whether WSB's narrative is right or wrong, which is why I am on neither side of this trade and merely watching with interest from the sidelines. They could very well be correct about all of this.
I also am not trying to allege that being a "GME to the moon" person makes you a "Q person". They are completely different sets of beliefs. All that I'm observing is that the marketing of the ideas is similar.
"Memes" that are outright out of a WW2 propagandist playbook with phrases like "Hold the line" or the WSB kid with sunglasses seen taking out the enemy.
People trying prove their devotion to the cause is so much higher than their fellow brethren. "For every upvote I'll donate to the campaign/I'll buy stock in GME"
I have seen several articles in the past week outright rejecting the idea that anyone is in on GME for the "cause" of shitting on the funds (even if it turns out ineffective). If I see an article failing to recognize the legitimate populist (and correct) element of the moment, while hand-wringing about the fund managers, my bullshit detector goes off.
Also, can you explain, or link, or anything, as to why shorting more shares than there are to trade a good thing? Why short selling is legal at all?
Shorting seems like a terrible tool in society, a way for people with money to gamble, win big, but occasionally fail so hard the federal government needs to step in.
if you actually swap out the words, it reads almost exactly like the Q conspiracy and the other crap Trump supporters been echoing in their chambers.
I wonder if there is a math formula to these conspiracy/pseudo realities. They seem to have very similar structures and literally just the variables are different each time.
Coupled with attaching legitimacy to numbers (your account is too new therefore untrustworthy, you have lot of karma points so you can't be lying), it would be very easy to paint any type of narrative while signaling trustworthiness.
Also, people often claim to be part of X or in position Y without any verification to win confidence.
Literally the psychology of confidence man has now taken the form of some integer attached to a username in a database somewhere.
We also see this blind trust in large numbers on Instagram and Youtube where the number of subscribers and likes automatically signals importance, legitimacy when all of it are easily manipulated, paid for.
In 2016, the Internet discovered they can mess with politics.
In 2021, the Internet discovered they can mess with finance.
There are other instances of this, but the general theme is people who traditionally only operate on the Internet occasionally discover ways to have an impact on the "real" world. They get so drunk with power, they do something stupid with it, and the rest of the world sighs as we get to work cleaning up the mess they've made after they get bored.
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The spirit of these meme cults seems to be, "Isn't it invigorating and hilarious how un-ironically obsessed with X we all are?"
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You had to go to specific subreddits to see the type of exuberant, memespeak support for Trump. In 2016 that was r/The_Donald. By the time we got to the 2020 election that subreddit and any replacement that got too close to it was banned. But you could still find the same vibe on TheDonald.win, an independently hosted recreation of the subreddit. Or on the chan sites.
The meme culture of The_Donald never constituted the mainstream image or talking points for Trump. it wasn't promoted or even referenced directly by the Trump campaign. But it was a weird world where you never knew exactly how serious people were about their love for Trump -- it was so obviously exaggerated as to look like satire, but the participants were at least somewhat serious: they really did want Trump to win.