Anyone following the stock market and what the folks at reddit are doing?

gearheadmb said:

Robbie (Forum Supporter) said:

All I have to say is that I hope the SEC regulates the "fix" to this, and does so quickly. 

I can believe that a hedge fund that just lost billions would be willing not only to take this into their own hands, but also to do so a lot less 'legally' than the SEC would. 

What do you suggest the SEC do, ban outsider trading?

But seriously though, I'm a dummy, care to elaborate on the above? 

If nothing else this has made me take an interest in how this stuff works.

I dont really understand it either I just think the SEC should start with some sort of message to hedge funds (or anyone else that lost big in this) that the SEC is taking this very seriously and IF anyone broke the law they will be punished to the 'full force and effect'. Anyone taking matters into their own hands will be similarly punished to the full force and effect. Even it its just for show. Might also be nice to have a quick reminder that 'past performance is not a guarantee of future' blah blah blah to to reinforce that the law sees this as their own blunder and NOT that someone "did this to them". 

Get out in front of it. First thing is to re-establish order, then work out what happened, and then finally work out how to prevent it. 

However, I will say this - why is there not a limit on shorts? You can only buy 100% of the stocks of a company. How in the world have we sold more than 100% short with the intention of buying them back later?

If an over-leveraged, drunk, and desperate hedge fund manager loses a million bucks to a very lucky college kid at your poker table, as the casino you've got to be ready to make sure no fights break out and that the rules are followed. The last thing you need is to chase all of your other patrons off the floor. 

Edit, also, the college kid is probably not nearly as lucky as he thinks. 

Market manipulation by the institutional investors...common place.  

Market manipulation by the casual/individual/Reddit group investors...not common place...so far.  

In reply to Robbie (Forum Supporter) :

A rule like that on shorts would make sense. 

It's hard to say if the Reddit group broke any laws. I'm sure that will be investigated in short order. And if a hedge fund or two go down because they over-extended or exposed themselves to excess risk, then perhaps this whole episode will serve as a warning to other companies to reassess some of their positions and make them get out of positions with similar exposure.

Hedge fund managers need to look at the case of Major league baseball right now. Not a single player was voted in to the Hall of Fame to be inducted in 2021, in large part due to the players that are currently eligible for induction being suspected of having cheated even if never having been caught and generally being surly shiny happy people. Because of that they are now paying the price. 

A large number of people feel that hedge fund managers have at some point cheated or skirted legality or at least violated ethical and moral principle for the sake of monetary gain. They're also generally thought of as self serving  egocentric shiny happy people. As there's no Hall of Fame for them, this is their pool being urinated in. Any rules, regulations or guidelines that come down as a result of this, they have have to abide by as well. 

There's already talk on the discord server of raising the bond markets if the SEC puts in place regulations to cut the little guys out of the stock market. In an effort to sink the market as a whole. Mess around with the bull, and catch the bear by the horns. 

This group is not afraid to cue the pixies during the closing scene of fight club, pyrotechnics will not be needed. 

I wish Elon was on this Forum and could tell us how it really works....

I believe a few Hedge funds have been shorting Tesla for years , maybe for good reason , maybe for  the pissing match with Elon !

I took one Stock Market class in college  , it looked like too low of a  return on one (safe) side and  real gambling on the shorts and Puts !

I gamble buying Beanie babies  

Robbie (Forum Supporter) said:

However, I will say this - why is there not a limit on shorts? You can only buy 100% of the stocks of a company. How in the world have we sold more than 100% short with the intention of buying them back later?

Leveraging. 

pheller said:

Robbie (Forum Supporter) said:

However, I will say this - why is there not a limit on shorts? You can only buy 100% of the stocks of a company. How in the world have we sold more than 100% short with the intention of buying them back later?

Leveraging. 

please explain? leveraging is using someone else's money to buy something. Even with all the leverage in the world you still cannot buy more than 100% of the stocks of a company. 

MWAHAHAHAHAH!!!!!!

Sucks when people exploit the rules for their own gain to take your money, dudnit? Cut out the Starbucks and avocado toast, you'll be fine.

Robbie (Forum Supporter) said:

pheller said:

Robbie (Forum Supporter) said:

However, I will say this - why is there not a limit on shorts? You can only buy 100% of the stocks of a company. How in the world have we sold more than 100% short with the intention of buying them back later?

Leveraging. 

please explain? leveraging is using someone else's money to buy something. Even with all the leverage in the world you still cannot buy more than 100% of the stocks of a company. 

I dont if leveraging is the right term, but isn't the shorting more shares than actually exist done by shorting shares more than once?

californiamilleghia said:

I wish Elon was on this Forum and could tell us how it really works....

I believe a few Hedge funds have been shorting Tesla for years , maybe for good reason , maybe for  the pissing match with Elon !

I took one Stock Market class in college  , it looked like too low of a  return on one (safe) side and  real gambling on the shorts and Puts !

I gamble buying Beanie babies  

The P/E ratio of Tesla is 139, GM is 18. That defies any and all logic. Not that the stock market has represented logic for many decades now.

Since we are in a participatory government, you can send a message to your representative making sure that the real crime here is the collusion to short the company into the ground.  

Not a group of people on an internet site using publicly available information to prevent the above.

I did.

And given the accusation that people are using their COVID checks to do this- it's their money to do as they decide.  If they can afford to make billionaire shake, I'm fine with that.  

AaronT said:

californiamilleghia said:

I wish Elon was on this Forum and could tell us how it really works....

I believe a few Hedge funds have been shorting Tesla for years , maybe for good reason , maybe for  the pissing match with Elon !

I took one Stock Market class in college  , it looked like too low of a  return on one (safe) side and  real gambling on the shorts and Puts !

I gamble buying Beanie babies  

The P/E ratio of Tesla is 139, GM is 18. That defies any and all logic. Not that the stock market has represented logic for many decades now.

Seems to me that Tesla is overvalued by a huge margin.  GIven it's position to expand, I can see it being twice or 3x GM.  But not that.

What if the redditors are really just people running competitive hedge funds? 

In reply to alfadriver (Forum Supporter) :

Crazy thing is, those COVID checks are our money being given back to us in bits. They make it seem like the people investing are using free money from the govt or that their only income is from COVID relief. 

gearheadmb said:

Robbie (Forum Supporter) said:

pheller said:

Robbie (Forum Supporter) said:

However, I will say this - why is there not a limit on shorts? You can only buy 100% of the stocks of a company. How in the world have we sold more than 100% short with the intention of buying them back later?

Leveraging. 

please explain? leveraging is using someone else's money to buy something. Even with all the leverage in the world you still cannot buy more than 100% of the stocks of a company. 

I dont if leveraging is the right term, but isn't the shorting more shares than actually exist done by shorting shares more than once?

Edit: gearheadmb got it right in the last comment.

Shorting works by borrowing shares with the promise to return those shares at a future date, and paying a small fee for doing so.  The entity that borrowed the shares then sells them in the hopes they will buy them back at a lower price before they need to return them.  So, those shares are then recycled back into the market.

Example:

Bob has 100 shares of company A (I'll use CA as their stock ticker)

Bob loans those 100 shares to Melvin, who pays a fee to Bob, and promises to return those shares in a month.

Melvin sells those 100 shares on the market, and they are picked up by Dave.

Dave now owns 100 shares of CA.  Since common stocks are a commodity (1 share is not worth more than any other), he has no idea that these shares were at one point owned by Bob, nor should he.  The shares themselves should not be encumbered.

Dave loans the 100 shares to Sarah, who pays a fee to Dave, and promises to return those shares in a month.

Sarah sells those 100 shares on the market, and they are picked up by Garth.

Now, even though there are only 100 shares, 200 shares have been loaned out for short selling.  Current state:

-Bob has a fee for loaning the shares to Melvin

-Melvin owes Bob 100 shares in a month, and has whatever money he sold the shares for minus the fee he paid to Bob

-Dave has a fee for loaning the shares to Sarah

-Sarah owes Dave 100 shares in a month, and has whatever money she sold the shares for minus the fee she paid to Dave

-Garth has 100 shares of CA.

In ...and out of the DOGE market this afternoon because of all the buzz. Made a quick 20%, but didn't quite understand the reasoning of why 'we' should be buying in. Probably play it in with the Wallstreetbets game tomorrow.

AAZCD (Forum Supporter) said:

In ...and out of the DOGE market this afternoon because of all the buzz. Made a quick 20%, but didn't quite understand the reasoning of why 'we' should be buying in. Probably play it in with the Wallstreetbets game tomorrow.

I'm trying to get setup to buy into doge now.

It's basically a meme coin to make money by sheer value of being a meme. "Haha,, fiat currency" is all the "reasoning" to it.

I love the irony of Gamestop's slogan being "Power To The Player". Indeed.

gearheadmb said:

Robbie (Forum Supporter) said:

pheller said:

Robbie (Forum Supporter) said:

However, I will say this - why is there not a limit on shorts? You can only buy 100% of the stocks of a company. How in the world have we sold more than 100% short with the intention of buying them back later?

Leveraging. 

please explain? leveraging is using someone else's money to buy something. Even with all the leverage in the world you still cannot buy more than 100% of the stocks of a company. 

I dont if leveraging is the right term, but isn't the shorting more shares than actually exist done by shorting shares more than once?

AIUI, when you short a share what you're doing is borrowing a share from someone with a promise to return it at some date in the future and selling that share today with the expectation that the price will drop.  You then buy it back at the lower price, return the share to whoever you borrowed it from, and pocket the difference between the two prices.

Once you sell it that share goes back into the public market, there's nothing to stop whoever buys it from you loaning it out to someone else for them to short sell it again.

eastsideTim said:

Edit: gearheadmb got it right in the last comment.

Shorting works by borrowing shares with the promise to return those shares at a future date, and paying a small fee for doing so.  The entity that borrowed the shares then sells them in the hopes they will buy them back at a lower price before they need to return them.  So, those shares are then recycled back into the market.

Example:

Bob has 100 shares of company A (I'll use CA as their stock ticker)

Bob loans those 100 shares to Melvin, who pays a fee to Bob, and promises to return those shares in a month.

Melvin sells those 100 shares on the market, and they are picked up by Dave.

Dave now owns 100 shares of CA.  Since common stocks are a commodity (1 share is not worth more than any other), he has no idea that these shares were at one point owned by Bob, nor should he.  The shares themselves should not be encumbered.

Dave loans the 100 shares to Sarah, who pays a fee to Dave, and promises to return those shares in a month.

Sarah sells those 100 shares on the market, and they are picked up by Garth.

Now, even though there are only 100 shares, 200 shares have been loaned out for short selling.  Current state:

-Bob has a fee for loaning the shares to Melvin

-Melvin owes Bob 100 shares in a month, and has whatever money he sold the shares for minus the fee he paid to Bob

-Dave has a fee for loaning the shares to Sarah

-Sarah owes Dave 100 shares in a month, and has whatever money she sold the shares for minus the fee she paid to Dave

-Garth has 100 shares of CA.

So... what if only those 100 shares exist, or the prices of 100 shares has risen beyond the ability of either Sarah or Melvin (or both) to repurchase.  So, Melvin and Sarah declare bankruptcy.  Who is harmed?  Dave and Bob?

In reply to WilD :

Good question. In a formal shorting arrangement,  I think the exchange that handled the short trade is on the hook to get shares back to Dave and Bob, and has to try to recover as much as they can from Melvin and Sarah.  But, I may be wrong.  It's been a long while since I looked at this.

GIRTHQUAKE said:

AAZCD (Forum Supporter) said:

In ...and out of the DOGE market this afternoon because of all the buzz. Made a quick 20%, but didn't quite understand the reasoning of why 'we' should be buying in. Probably play it in with the Wallstreetbets game tomorrow.

I'm trying to get setup to buy into doge now.

It's basically a meme coin to make money by sheer value of being a meme. "Haha,, fiat currency" is all the "reasoning" to it.

Oops.. Had to buy back in to the DOGEies after my sell. They are going up stupid fast tonight.