Reddittors vs Wall Street

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lpm
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Re: Reddittors vs Wall Street

Post by lpm » Tue Feb 16, 2021 11:42 am

lpm wrote:
Tue Feb 02, 2021 4:45 pm
GameStop still amazingly high at $130, about 6x higher than what it's worth on fundamentals. A long way down from the $483 peak obviously but a slower de-bubbling than I expected. Will be interesting to learn if any of the long term investors who went in hoping for better management and a steady turnaround have instead cashed in the easy immediate profit.
After all that, GameStop appears to have settled at around $52 for the past week. Probably still inflated compared to being worth around $20 on fundamentals, but nothing stock markets haven't seen before.

Wall Street still exists.

Some individuals won the lottery. Many lost heavily. You have to feel for the idiot who bought at $483 - and probably still believes the fairy story. A $600 investment made by many people at around the $300 mark will have lost $500. That's an expensive price for playing a temporary fantasy game of destroying Wall Street.

There's a lot of bravado around being a big man able to afford heavy gambling debts, seen at every casino, racecourse and betting shop in the land. That bravado often hides real pain. At lot of people will suffer because they couldn't afford to lose $500. I really hope some of the worst Reddit pump-and-dump con artists crossed the line into illegality and get prosecuted for this fraud.
What ever happened to that Trump guy, you know, the one who was president for a bit?

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Re: Reddittors vs Wall Street

Post by Herainestold » Tue Feb 16, 2021 7:27 pm

https://www.wsj.com/articles/gamestop-i ... 1613385002

GameStop Investors Who Bet Big—and Lost Big
GameStop and the Reddit-fueled frenzy around it have been celebrated as a triumph for small investors. But lots of them are in the red.

The system is obviously rigged against the little guy. Who is the big loser from this imbroglio? The guys trying to stick it to the man on WSB

Short selling and hedge funds need to be banned.

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lpm
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Re: Reddittors vs Wall Street

Post by lpm » Tue Feb 16, 2021 8:57 pm

Lol.

Obviously the system is biased against idiots. But it takes an idiot squared to lose under the system and then complain about the system.
What ever happened to that Trump guy, you know, the one who was president for a bit?

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Re: Reddittors vs Wall Street

Post by Grumble » Tue Feb 16, 2021 9:13 pm

What’s the difference between what the Reddit GameStop guys did and insider trading?
I know this is vitriol, no solution, spleen venting, but I feel better having screamed, don’t you?

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Re: Reddittors vs Wall Street

Post by dyqik » Tue Feb 16, 2021 9:35 pm

Grumble wrote:
Tue Feb 16, 2021 9:13 pm
What’s the difference between what the Reddit GameStop guys did and insider trading?
The Reddit WSB folks were using public information, available to anyone. There was no "insider" knowledge.

But there are also rules against market manipulation. However, the WSB folks assert that the shorting hedge funds were doing that as well - talking down GameStop.

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Re: Reddittors vs Wall Street

Post by Bird on a Fire » Tue Feb 16, 2021 10:38 pm

In a lot of way this was just a fairly typical internet prank of the Boaty McBoatFace variety - some online nerds found that a publicly-available voting system was vulnerable to a concerted mass effort of some sort. In this case, the mass effort involved gambling money, but anecdotally at least there does seem to be a trend for people to do low-stakes stock betting in the same way they bet on sports, with apps and banter. (I look at reddit a bit, but never really understood WSB as it's very memey and in-joke based. I wouldn't trust many journalists to understand a single thread on there)

Taken on its own terms, causing a hedge fund to lose billions and potentially causing changes to both public perception and statutory regulation of markets is a pretty "epic win". It's much, much funnier than just (not) giving a boat a funnyish name. There are people who pay for pointless kickstarters and all sorts of stupid online pranks that cost money to participate, so nothing too unusual in that regard. I will be very disappointed if it turns out to have been a deliberate scam, but I've not seen any convincing evidence that it was.

I hope nobody lost money that couldn't afford to and cares about the consequences, but I'm sure there were a fair few. Nevertheless, lol.
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Re: Reddittors vs Wall Street

Post by Herainestold » Tue Feb 16, 2021 11:38 pm

Its a draw. Hedge funds lose billions, little guys lose their life savings.

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Re: Reddittors vs Wall Street

Post by secret squirrel » Wed Feb 17, 2021 5:08 am

I'm sure the WSB guys diversified by buying some $50,000 bitcoin.

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Re: Reddittors vs Wall Street

Post by lpm » Wed Feb 17, 2021 9:43 am

Bird on a Fire wrote:
Tue Feb 16, 2021 10:38 pm
Taken on its own terms, causing a hedge fund to lose billions and potentially causing changes to both public perception and statutory regulation of markets is a pretty "epic win".
Herainestold wrote:
Tue Feb 16, 2021 11:38 pm
Its a draw. Hedge funds lose billions, little guys lose their life savings.
Let's not rewrite history before it's even cold.

- Bubbles are a feature of stock markets, not a rare anomoly, and having more bubbles helps sophisticated players at the expense of the unsophisticated
- Much regulation is intended to stop bubbles, because a healthy market needs to protect small retail investors from being damaged by bubbles
- There are thousands and thousands of hedge funds
- Every month or so, one of them will do something stupid and lose a lot of money
- Here one particular fund was particularly stupid and lost a particularly large amount of money, and a couple more might have lost money
- Some of the other thousands of hedge funds will have profited, such as the one who made $100m+ on AMC
- Other Wall Street traders will have been quick enough to develop a profitable trading strategy
- There have been no change to regulations of hedge funds or the use of shorts
- Any changes to regulations are likely to be focused on preventing small retail investors from being exploited by meme scams
- Chat among London bankers is that key orchestrators were aggressive and smart-as-hell Wall Street traders; I've no way of knowing if this is true but it's consistent with the exceptional technical sophistication and use of Bloomberg terminals shown by orchestrators
- naive romanticising of this foolish episode will lead to even more damage and risk for small retail investors

This has been a pretty "epic loss" for the little guys.
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Re: Reddittors vs Wall Street

Post by noggins » Wed Feb 17, 2021 11:44 am

Would making short positions public improve anything?

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Re: Reddittors vs Wall Street

Post by lpm » Wed Feb 17, 2021 11:59 am

No, because they are already public.

(If they're above a certain size, I think they are disclosed privately to the regulators at any size.)
What ever happened to that Trump guy, you know, the one who was president for a bit?

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Re: Reddittors vs Wall Street

Post by Martin Y » Wed Feb 17, 2021 2:22 pm

Whether you see this as a jolly prank, where everyone chips in to f.ck over the guys trying to manipulate the price down, or a cynical ploy to persuade everyone it was, for the opportunity to rake in a big chunk of those little contributions by bailing out at the right moment when the fun was over, there's no reason it couldn't be both.

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Re: Reddittors vs Wall Street

Post by plodder » Wed Feb 17, 2021 2:24 pm

I think the whole point of WSB was to demonstrate that the little pond life people can punch at the same level as the professional parasites. I doubt if many people have lost their life savings - this appears (at least initially) to have been a high-volume low-value thing.

I think it also shows that the professional parasites are more than capable of manipulating whatever situations arise to their own benefit.

At which point we need to ask ourselves, in a capitalist world, where one of my dollars is supposedly worth just as much as one of Jeff Bezos' dollars, do we need to level the playing field, and if so, how?

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Re: Reddittors vs Wall Street

Post by lpm » Wed Feb 17, 2021 3:01 pm

Yes, it's comprehensively demonstrated the little pond life people are nowhere close to being in the same level as the professional parasites. A big collective effort - and all it achieved was putting a dent in 0.05% of hedge funds, while 99.95% of hedge funds either cashed in or laughed.
What ever happened to that Trump guy, you know, the one who was president for a bit?

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Re: Reddittors vs Wall Street

Post by lpm » Wed Feb 17, 2021 3:46 pm

I'm still bemused why people on this forum instinctively sided with the Reddittors.

We don't usually side with scum. This is the Reddit that was once moderated by Martin Shkreli, the guy who increased the price of life-saving drugs by 100x and is now in federal prison for fraud. The abusive language reeks of misogyny and overlaps with right-wing hate memes. There was bullying of anyone questioning the bubble and awarding of social credit to the bullies' sidekicks. There are people with multiple anonymous user names. There's a pretence that it's a noble cause in aid of those who were victims of the collapse of 2007/08 US housing bubble - while engineering another bubble that will also hurt the naive.

And now there's an instinct to minimise the damage. Did you not read the WSJ article linked to? There was:

- a 25-year-old security guard who "eats a lot of rice and lives with his dad", borrowed $20,000 at 11.19% and bought when the price was at $234. "I thought it could go up to $1,000. I really believed in that hype, which was an awful thing to do."
- a dog walker who lost work during the pandemic, invested $3,000 at $300
- an artist who lost most of his income in 2020 as he relied on selling work at comic conventions, invested $1,200 at $379 and $228

This story is clearly one of countless novice investors being tricked into buying an unsuitable investment. Cardify found 60% of people who bought GameStop during in January had never bought a share before.

Should I be blaming "The Wolf of Wall Street" for the mental lapse of so many on this thread? Leonardo DiCaprio glorifying scamming, drug taking and swearing - the image adopted by a lot of reddittors - while the movie didn't show the awful fallout for those who were victims of the fraud.
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Re: Reddittors vs Wall Street

Post by Martin Y » Wed Feb 17, 2021 4:11 pm

Who lent a 25-year-old security guard who "eats a lot of rice and lives with his dad" twenty grand to gamble on shares?

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Re: Reddittors vs Wall Street

Post by lpm » Wed Feb 17, 2021 4:20 pm

A credit union. Which are not-for-profit institutions usually intended to help community members get affordable credit for necessities.
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Re: Reddittors vs Wall Street

Post by monkey » Wed Feb 17, 2021 4:58 pm

Martin Y wrote:
Wed Feb 17, 2021 4:11 pm
Who lent a 25-year-old security guard who "eats a lot of rice and lives with his dad" twenty grand to gamble on shares?
While I feel for the bloke losing getting suckered in losing so much money, LPM isn't letting on the whole story with that guy. I couldn't read the whole article, if I found the same one*, but the preview says:
Mr. Vergara, a 25-year-old security guard in Virginia, started investing four years ago after deciding he wanted to retire young. To save money, he drives a 1998 Honda Civic, eats a lot of rice and lives with his dad. He stashed his savings mostly in diversified index funds, which are now valued at about $50,000. Then Mr. Vergara, a longtime reader of the WallStreetBets page on Reddit, saw others posting about buying GameStop shares and the stock’s colossal rise.

He didn’t want to touch his index-fund investments, so instead he got a personal loan with an 11.19% interest rate from a credit union and used it to fund most of his GameStop purchase. He bought shares at $234 each.
So he wasn't exactly poor, because he was choosing to live frugaly and was presumably given $20k because he had $50k in assets. But also, security guards aren't usually paid that well, so it is still a hard hit for him.
lpm wrote:
Wed Feb 17, 2021 4:20 pm
A credit union. Which are not-for-profit institutions usually intended to help community members get affordable credit for necessities.
They may be more community driven than banks, but usually they do a lot more than that. More like a building society, rather than just microfinance.

(I reckon the big winners in all this are RobinHood)


*I tried to read this one, clicky. It's possible LPM posted a different piece, but I couldn't find their link quickly, so I just gave up and googled.

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Re: Reddittors vs Wall Street

Post by plodder » Wed Feb 17, 2021 5:06 pm

lpm is of course correct. The stock market (and therefore the capitalist stakeholder ideal) clearly isn't for the little people, who can't afford the expensive lunches (sorry, should read "algorithms") to stay ahead of the game.

What should the little people do then? Trust the w.nkers? Don't think that's been particularly successful, on a number of fronts. Revolt? Can't do that, there might be some right-wing memes or something, and the little people will only hurt themselves in the big boy's playground.

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Re: Reddittors vs Wall Street

Post by Herainestold » Wed Feb 17, 2021 5:21 pm

plodder wrote:
Wed Feb 17, 2021 5:06 pm
lpm is of course correct. The stock market (and therefore the capitalist stakeholder ideal) clearly isn't for the little people, who can't afford the expensive lunches (sorry, should read "algorithms") to stay ahead of the game.

What should the little people do then? Trust the w.nkers? Don't think that's been particularly successful, on a number of fronts. Revolt? Can't do that, there might be some right-wing memes or something, and the little people will only hurt themselves in the big boy's playground.
You could vote the bums out.
That doesn't work because all parties are controlled by the same people who profit from the stock market.
What should you do with your money, if you have any? I would say spend it, if you invest it, somebody will steal it, one way or another.

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Re: Reddittors vs Wall Street

Post by plodder » Wed Feb 17, 2021 5:31 pm

It doesn't make a jot of difference what you do with your money - it's such an inconsequential proportion of the net wealth that you've actually helped create that you might as well spend it. You're never going to be able to quit work (if you're under 35) or be free of needing to rely on the state for some sort of handout. All the actual wealth is being hoovered up, much of it by the Good Guys in lpm's narrative.

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Re: Reddittors vs Wall Street

Post by lpm » Wed Feb 17, 2021 5:38 pm

Why would anyone want to be free of a state handout and why is relying on the state a bad thing?

We all want a society where that happens, surely?
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Re: Reddittors vs Wall Street

Post by plodder » Wed Feb 17, 2021 5:46 pm

lpm wrote:
Wed Feb 17, 2021 5:38 pm
Why would anyone want to be free of a state handout and why is relying on the state a bad thing?

We all want a society where that happens, surely?
Lol. And f.ck off, frankly.

It's one thing having a state that helps us. It's another having so little cash you need to rely on it. Young people especially are never going to be financially independent, and very few of get an equitable share of the wealth we've created. It all goes to the top.

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Re: Reddittors vs Wall Street

Post by lpm » Wed Feb 17, 2021 6:06 pm

All of us have relied on the state at some point, some of us quite heavily. This is a boringly normal thing to do.

Things are not equitable. If there was only some long-established method of taking from the top 25% and redistributing to the bottom 25%, a method that's used around the world and is seen as commonplace, a method proven to work across decades and across a range of economies.

The fact that sh.t-hole Britain chooses not to do this well-known method isn't a reflection of the method itself. Instead of calling for revolution, why not call for long term fiscal distribution? While you're at it you could also call for more equitable schooling, more equitable healthcare and an increase in the minimum wage.
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Re: Reddittors vs Wall Street

Post by plodder » Wed Feb 17, 2021 6:22 pm

lpm wrote:
Wed Feb 17, 2021 6:06 pm
All of us have relied on the state at some point, some of us quite heavily. This is a boringly normal thing to do.

Things are not equitable. If there was only some long-established method of taking from the top 25% and redistributing to the bottom 25%, a method that's used around the world and is seen as commonplace, a method proven to work across decades and across a range of economies.

The fact that sh.t-hole Britain chooses not to do this well-known method isn't a reflection of the method itself. Instead of calling for revolution, why not call for long term fiscal distribution? While you're at it you could also call for more equitable schooling, more equitable healthcare and an increase in the minimum wage.
That doesn't preclude me from pointing out that if the philosophy of our whole economy insists that we all need to be independent and rational economic actors, then it seems somewhat counter productive to give rational individuals a fair crack at a hugely important and individual economic endeavour.

Maybe we should just break up the financial services companies in order to ensure that, say, 75% of money invested is by SME investment firms. If we're serious about capitalism, that is. If we're just interested in propping up kleptocrats then fair enough.

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