It was a weird, fun ride. My writing partner Lutz and I work in tech, but have a real passion for filmmaking. We lost some money on $GME, so we had to tell the story from our point of view.
The result is STONKS, a comedy/drama feature screenplay [0], fictional but inspired by the GME events, and a love letter of sorts to WSB. We queried Hollywood producers but were ignored; we shared on WSB itself but we were insta-banned and never told why (but given the founder sold the rights to his life story to Hollywood [1], we can make an informed guess).
Jaime Rogozinski is a grifter who repeatedly abused community trust to profit off WSB. This is why he was removed by Reddit admins in January 2020, a full year before the GameStop saga.
The only time he ever came to WSB after 2016 was if someone approached him with a way to make money off the community. It's laughable that anyone would buy the rights to his story when he wasn't around at all.
If WSJ cared about integrity, they would put "DISGRACED" ahead of the word founder.
Most discussion around $GME takes place on r/Superstonk these days anyways. Can't remember why it was banned from WSB. Something to do with the new mods I believe.
GameStop was never banned from WSB. It is the 3rd most discussed ticker in the past 30 days. (After SPY and TSLA) [0]
GME had it's own daily thread well into April, at which point it was still completely dominating with significantly lower quality discussion that extended outside the GME specific daily thread.
Once we ended the daily thread and asked people to move to r/GME or r/SuperStonk, people incorrectly assumed it was banned, and continued to repeat this narrative, despite our repeated mentions that it was not banned.
Also, the WSB mod team is more or less the same as it was in 2019 or earlier. The majority of the team has been around for 6+ years.
/r/superstonk used to show up in my feed on Reddit a lot, and it seemed like most of the highly-upvoted posts were elaborate explanations of how, any day now, there was going to be some sort of massive short squeeze that was going to cause $GME to hit a price of ten or twenty million dollars a share (at which point the outstanding shares of $GME would be worth more than everything else on earth combined), and everybody who bought in was going to be billionaires.
I was never clear if this was some sort of in-joke/meme, or some fringe idea that kept getting upvoted because it was hilarious, or if the people in there actually knew so little about stocks and economics that they thought something like that was possible.
Superstonk has pretty much been a qanon-esque community since day 1. I still hold 10 shares of GME (bought at $220 oof) _just in case_. With that said, every now and then they come up with something that makes me do a double take. Right now they're obsessed with direct registering their shares. I'm guessing they think that if they can lock up the whole float they can force a short squeeze. Also if ryan cohen issues an NFT dividend.
But I can assure you that the members are 100% serious.
Lets just assume the theories are right and that hedge funds have sold far more stock than is in existence, lets assume retail diamond hand HODLers buy every share there is and refuse to sell, for $10k or for $10M.
I can't find it now, but I'm sure there was an example of someone attempting the "buy the float" situation (not just Piggly Wiggly but another one more recent), and despite owning every share they were still being traded on the market. If I remember right it just carried on. Superstonk treat that as proof their theories are correct, I'd treat it as proof that even if they are right they won't get what they think they want.
Nor do they don't seem to account for the government stepping in and doing something like eminent domain and declaring the shares are worth a "more than fair price" and force-buying the shares at a fixed price of say $100/share, or even $500/share, or lets be crazy and call it $1000 per share - over twice as much as a share has ever traded for, and ending the situation.
I suspect a lot of people were waiting for 12 months before selling, as I believe that's preferable for tax purposes in the US, and that explains the high price until Christmas and then the more recent fall.
I also have 10 shares (bought at about $45). I have no idea about NFTs, but I feel like the potential risk is worth not selling for profit now. I don't think I'd buy any more at $100 though. If I could offset capital losses against income (which I believe you can in the US) I'd certainly buy more shares (although probably not in GME), but in the UK you can't, and I can't help but think the tap is going to be turned off on the US markets very soon so putting money into normal stocks isn't a great move either.
> But I can assure you that the members are 100% serious.
< We are, to an extent.
> Direct registering shares
< If the outstanding float of a stock is il-liquid and unable to be lent out, that'll force a short squeeze if the rest of the conditions are met. Lots of due diligence is readily available over there to show that those conditions are only getting more dire for the funds that never actually hedged their bets with authentic shares.
> Issues an NFT dividend
< This forces the hedge funds to also buy those NFT's to pair with the shares, which they'll be forced to buy too = short squeeze.
That "DD" has been debunked numerous times, and I won't waste my time rehashing it. Suffice it to say that Carl Icahn is no stranger to burning short sellers by putting money in, loudly announcing it, and helping his investment through the legal system; and his absence from GME shows just how believable he thinks that DD is.
$220 was a steal compared to what I got mine at. But I was never under the impression that the what /r/wsb was saying was going to come true. I was just rolling the dice on being able to find a greater fool. I knew the price was very high, but I expected the hype to go on for longer than it did.
I followed WSB for a couple of years before the GME thing kicked off. When it did, it was great fun for about a week, then I unsubscribed. It got very repetitive and boring.
I used to visit WSB 5 or 6 years back, whenever I visit it now it all seems to be millionaires pumping their positions in separate trading account as "YOLO" trade trying to get dumb people to pump the stock.
All WSB does now is magnify the winners/pumpers while leaving trail of poor people without their money.
> All WSB does now is magnify the winners/pumpers while leaving trail of poor people without their money.
That's all it ever was from my observation from around the same time; they shill the most absurd stock with emojis and brag about taking losses with diamond hands, but somehow discussing Bitcoin as an actual way to counter-act the ills of the 'hedgies' or central banks was banned so I lost interest.
I occasionally drop back in for certain things.
Like the ape statue at Wallstreet in front of the bull and buying kids those switches was cool, though.
But those incidents were always the exception, not the rule.
Honestly it didnt just take over the sub it ruined the whole sub and community. Im not going to say WSB was civilized pre-pandemic but it was much smaller with a range of interesting takes on things plus funny memes. And also degenerate gamblers who at least knew what they were fucking with.
WSB mods alleged the sub was suffocating with the GME and subsequent squeeze stock posts and shitty memes. I made couple memes myself but after the weeks to come WSB was inundated with all the memes centered around this one topic. WSB is a general investment subreddit that took a turn towards GME everything.
Another problem was GME's foundational investment theory, that it had high short interest. But if you look at DFV's way of investing he preached low valuation high potential stock. Just the mere short interest as a determinant wasn't true but an after thought. From that point on, many people who thought they were late in the GME game started to pile on other high short interest stock like Bed Bath and Beyond, WKHS etc. At that point WSB was becoming less of a shitty DD based stock to shitty meme based stock site. Mods clutched up modding but you can never know the difference between one pile of shit vs another pile of shit when it comes to a post. So post removal felt arbitrary.
Superstonk Side
The GME centered group left WSB because there was a new mod who didn't fit the WSB philosophy. There were some personal hypothesis about her(?). They even alleged I believe that mod made their adolescent child a mod of WSB who were also removing content left and right.
My post about cautioning people about GME which reached some magnitudes of thousand upvotes and plenty of agreeable comments was removed without notice.
There were several highly upvoted and good value posts removed which led to people believing that the real wall street might have infiltrated the WSB. So, in this cloud of distrust groups left and they started their own spinoff version of WSB.
> The GME centered group left WSB because there was a new mod who didn't fit the WSB philosophy. There were some personal hypothesis about her(?). They even alleged I believe that mod made their adolescent child a mod of WSB who were also removing content left and right.
You are confused. This has nothing to do with WSB.
What you are describing happened solely on r/SuperStonk or the other GME subreddits.
I am in the process of reading it. I never understood the disclaimer at start, that "Any resemblance to actual persons, living or dead, or actual events, is purely coincidental." in works were I saw it. Is this usually written to defend one legally, even though the events have clear, non-coincidental resemblance to real-life events?
Precisely. There was a film early in the industry's history (Rasputin and the Empress, early 1930s) that depicted events from a real person's life in a very negative (and most importantly, false) way and the studio got the pants sued off them. Hence the disclaimer
I'm 10 pages in, it's engaging and taps into the whole 'GME is Occupy Wall Street 2.0' narrative that was widespread in late 2020-2021. It reads a lot like 'How to Sell Drugs Fast' to me.
I think we really should have a monthly screen-writer post on HN, throughout the years here I've read a few things that seemed like it had potential if it were fleshed out but usually fell on deaf ears. I have a few pilots and screen plays I go back to when I have down time.
Who knows maybe a FAANG worker has an in at Netflix?
Edit: Just finished it, the last act seems really rushed, like it was meant to meet a page threshold more than finding the protagonist's resolution.
The overall arch was solid, with typical banter and some inside jokes that could still be relatable to the uninitiated.
Thanks for explaining the ban - I messaged you (I suppose) on Reddit asking why, but never received an explanation. I would have imagined a screenplay like this would be of interest to the community, and I couldn't really figure out what rule I had broken, but apologies for breaking the rules nonetheless.
I did in fact announce my (freely available) CG book [0] on Reddit, where it was very well received - 1300 upvotes in gamedev [1], 2500 in programming [2], tons of awards. Turns out Redditors respond positively to original quality content shared for free :)
I like the script but you might want to tone it down at the start. I think it was good up until the christmas tree, and the wishing star was a little over the top. The emotions being expressed are clear already, and you don't need to translate it into symbolism for the audience to understand. :)
Lutz / Co-writer here. Thanks for your feedback! I'm mostly to blame for the excessive use of symbolism as I'm personally a big fan of visual storytelling as opposed to focusing on dialogue to explain the set-up in a scene. But I agree with you, maybe it was a little too much considering the context was already set very early into the scene!
On page 7, it seems that IVANOV is the one that tells ANTHONY to short WeDeliver, but on page 31 it seems that IVANOV is mad at ANTHONY that he (IVANOV) lost money. I understand how a perceived egotistic person that IVANOV seems to be would feel this type of anger, but why would ANTHONY accept this?
Great observation. I don't have a clear answer for this. The relationship between Ivanov and Anthony reflects the power relationship between their respective hedge funds (and later when Feng shows up, Feng > Ivanov > Anthony). Could say that Anthony was responsible for executing Ivanov's plan, so he's blamed when it fails, or that Ivanov is the kind of person who blames everyone but themselves when things go wrong, and Anthony is weak and/or afraid of Ivanov, so he just takes the blame without pushing back. But again, great observation, will try to improve in future drafts.
$GME was always going to be a "Revolution That Wasn’t." Almost everyone playing knew it.
IMO, it was kind of an exemplifier of postmodernism, used colloquially. All the "beat down hedgies" stuff was just part of the game, just like "fuck the fundamentals" was part of the game.
IMO it has had an influence. A neurotic, dramatic lens through which we can look at financial institutions, more abstract economics. What is capital? What is money? Etc. Obviously, it all happens within a context with crypto, a long term bull market, and such. I think one of the features of being a basket case, meme-ish phenomenon is a sort of openness to ideas. Mentality-wise it allows exploring concepts with the vigour of a believer, but without really being bought into the position long term. Meme trading, and maybe trading generally, kind of lends to this. You can believe a "case" a hold the position with caveat.
As is typical of "movements" today, there is no expectation of winning... just as there is no expectation that market rationality "wins." Everything, in our times, is a "just so story," in economic rhetoric terms.
WSB started as a canard to get more drunk tourists to the small stakes poker tables, in this analogy the poker table is low volume options where you can get a handful of robinhood investors to move the price and make a quick thousand bucks. It’s still that today, but larger players with more money figured out that they could do that too, and potentially on a larger scale. That’s what this has always been about. There’s no movement, there’s no postmodern narrative, it’s just a bunch of people pumping and dumping and using the “movement” thing as a fig leaf.
I think it should started a discussion about some excesses of the stock market. Rich people can look for battered companies and severely profit from their accelerated demise which some people wanted to fight against for once. Out of their own motives for profit or just for fun to be able to at least once stick it to speculators looking for easy profit. That trading was halted and "corrected" proved they had an impact.
I don't think the stock market serves a public function with these mechanisms in place and needs further regulation.
> people can look for battered companies and severely profit from their accelerated demise
Gamestop is one of those companies where the demise has been severely delayed IMO; they could've seen the future years ago but chose to stay with their legacy business of selling games in physical stores. Online game stores do what they do but with much lower costs and a much better business model.
There are two ways forward for Gamestop IMO but neither is very positive:
- They try to compete with the giants in the online gaming market, like Steam. I can't see them bootstrap their way into that, Steam and the others have too much network effect going on and GME has not shown any real talent in the online/tech domain.
- They try to revitalize their offline presence. I don't see this happening either. There has been a decades long trend of everything moving from off- to on-line and I don't see that changing anytime soon.
For anyone who agrees with the above assessment, the conclusion would be that the future for Gamestop is not very bright. Depending on the timescale you think it is going to play out, being short is an entirely valid position to be in. Personally, I think the sentimental memories of the ~25-~45 years old generation will keep it alive for a decade or so more.
GameStop has pivoted to some extent. It's incredibly rare that I go into one of their stores, but the last time I did it was less of a games store and more of a gaming merchandise store. Their acquisition of ThinkGeek and subsequent selling of those products in stores is satisfying a niche that nobody else (apart from maybe the mom & pop comic book store) seems interested in.
>it was less of a games store and more of a gaming merchandise store. Their acquisition of ThinkGeek and subsequent selling of those products in stores is satisfying a niche that nobody else (apart from maybe the mom & pop comic book store) seems interested in.
Maybe it's just my personal preferences, but I can't imagine myself or anyone I know buying enough "gaming merchandise" in significant numbers. If I need a game, it's either digital, or physical through amazon with same day delivery. It's the same with other gaming-related merchandise. I go for whatever's cheaper/on sale, which is usually bestbuy or amazon.
Agreed. But I don't really believe that accelerating their demise is a large benefit to anyone aside the capital "investor" getting more money. The company has to do a reorientation, but that could be cut short by the stock market. Don't kid yourself that you are providing anything substantially important to further development.
The stock market can't cut a company short. Even if the stock price goes to $0, the company still exists with all of it's assets, contracts, and employees. The stock price only matters if they do a secondary offering, and to a lesser extent for equity based employee compensation.
There is this thing called a "hostile takeover," where you buy voting shares and then liquidate the company, which becomes very easy when the share price is $0.
C was $564.10 at the end of 2006. By early 2009 it was $10.20 - that's about a 98.2% reduction in the stock price. That's a much larger destruction of capital than GME ever was.
Do you imply that it was excessive short selling between 2006 and 2009 that lowered the price of Citigroup? It seems much more likely that the 2008 financial crisis had a lot to do with it and that Citigroup (which famously only escaped bankruptcy due to a government bailout) indeed lost 98.2% of its equity value.
So it wasn't the stock price falling that brought the company low, it was the company failing that brought the stock price low.
No; not suggesting this has to with excessive short selling. I’m just supplying a data point to support the point that a large decrease in stock price needn’t have a material affect on the ability of a firm to operate.
The purpose of stock markets is to find the "correct" price for a stock. To that end, it needs to be possible to express both bullish and bearish views. However, doing the latter is already more difficult because in order to short the stock, you need to borrow it first, and you need to pay for those borrowed shares for as long as you keep holding them. Furthermore, those borrows can be pulled at any time, forcing you to cover at the most inopportune of times. There are also things like Reg SHO Rule 201(b) ("Uptick rule") that further complicate shorting a stock. Regulators have even been known to ban short sales in certain names outright like they they did for financial stocks during the 2008 financial crisis.
If anything, selling short needs to be made easier as it represents an essential corrective. And this ultimately serves the greater good too as it ensures that the price of a stock is correct and investors don't overpay, which will inevitably lead to losses for them. A good recent example of what happens otherwise is Wirecard. In 2019 the German BaFin enacted a ban on short sales in the stock of the company after reports had been published that were essentially accusing them of fraud. In the end, those reports turned out to be true, and the company collapsed less than 18 months later. The stock fell from over EUR 150 to virtually zero and investors lost pretty much everything. They should have listened to the short sellers rather than fight them.
There are also no "easy profits" in short selling. They only make money if they are right. There are people who have been calling for the immediate collapse of Tesla for the last decade or so. Others have been trying to short Amazon, Google, Apple, Microsoft, because they think that these companies are completely overvalues. Most of these people are probably bankrupt by now.
But GME isn't any of those companies. They are a failing brick and mortar retailer that is boxed in by Steam on one side and Amazon on the other. They have repeatedly attempted to transform the company over the last decade without success. The fact that their plan is to launch some NFT market place, a field in which they have no experience and that is already crowded by established players like OpenSea, demonstrates how much their management is completely out of ideas. And if the shorts make money from the GME stock, it just means they were right.
You don't need short selling for a stock's price to drop. Markets for everything else use the normal mechanism of "if no-one is going to buy this at this price, I need to drop my price if I want to sell it".
For example: you can't go to the bakery, borrow a loaf of bread, sell it to a passing punter, and then pay the baker at 5pm when they drop the price to get rid of their stock before it goes stale.
The rest of the economy manages to find the "correct" price for things without shorts. So could the stock market.
You could absolutely do that bread trade (if you could convince a baker to lend you a loaf of bread), but then a smart baker wouldn't drop their prices at the end of day because they know a short seller needs to buy a bread to cover their position. The example is also wrong because stocks don't go off like bread does. For commodities that keep better like frozen orange juice or steel you can definitely borrow (for a price) a few hundred tons of most commodities if you want to short it.
For some reason people think borrowing a stock and selling it is some super nefarious plot to kill companies, but apart from some special circumstances like secondary offerings or employee equity compensation there is really no reason a company should worry overly much about their stock price. If the company keeps making a profit, no amount of short selling can make it go bankrupt.
But one of the GME points was (is?) that stock is sold without being borrowed first. Or being borrowed without permission and multiple times...
If you sell empty bags on the street, promising the buyers there is bread inside, only to collect those empty bags back when the buyers throw the (supposed) bread away because it became worthless, is not good business. You're the only one profiting, both the bakers and the buyers are loosing money.
I don't understand why you seem to be so sure that there is indeed "no bread inside"? If an investor buys a share of GME on the stock market, it does not matter at all if they buy it from a shorter, a retail investor or even from GME itself. A share is a share, there are no "empty bags" being sold. Shares also don't go off like bread, so if you get your share back at the end it is like nothing happened: you still own one share and it is of exactly the same quality as before. Unless you are a VERY large investor, having your broker lend out shares also has zero impact on being able to sell it at any time.
A short seller making a bet that a stock goes down by selling the stock is simply the same (but in reverse) as someone betting the stock will go up by buying a stock. The underlying business is not affected at all.
The parent's point was that it does matter if it was sold by someone who had never secured a share of their own to sell in the first place, which puts artificial pressure on prices.
(And before someone jumps in to give me the speech about how the future of civilization depends on market makers being able to fabricate shares long enough to cover: Yes, I know about the exception that permits this. The purpose of my comment was just to clarify what the argument was and that the parent of this comment was not replying to it.)
It does put (a little) pressure on prices, sure. Borrowing money to buy stocks puts a little extra upward pressure on prices. But neither is illegal, neither brings guaranteed profits (naked shorting is regulated so much exactly because of the risks to unrelated market participants if the stock goes up) and neither has the capability to directly harm the underlying company.
>> The purpose of stock markets is to find the "correct" price for a stock.
Is it? Who's purpose?
The main purpose of an IPO is (was?) financing. IE, raising money for the company operations... like a bank loan, VC investment, etc. In practice, many of today's IPOs are companies that don't need to raise money (anymore). For those companies, their main purpose when doing an IPO is usually liquidity. IE, letting founders, investors and such cash their shares... or continue owning them with the added benefit of market prices to validate the value of their wealth.
Your argument is quite mainstream, but I can't see how anyone would make it except to justify short selling. It seems to me there's a lot of "you sure about that?" in the whole thing.
Are you sure "finding the correct price" is an actual need? Who needs this, and why? Are you sure short selling makes for better prices?
Liquidity is a similar argument made in favour of derivative HFT and such. I also think its (probably/usually) quite bogus. Do stock markets even have liquidity problems? Stocks are insanely liquid. That's what they're for.
Investors (as opposed to speculators) and anyone interested in general economic efficiency.
After the IPO, a stock ultimately represents a claim on a future revenue stream, and as such the "proper value" would be the (proportional) NPV of the company's future income. To the extent the market price doesn't reflect this, it represents inefficient allocation of investment resources.
Unlike bonds, an equity's future income is very hard to predict, so providing that pricing information, along with liquidity, is what ostensibly distinguishes Wall Street from a casino.
Personally, I don't care about short selling. I trace the root of the problem to the fact that dividends are taxed much more harshly than capital gains because capital gains don't incur taxes until sale, so they compound better. This incentivizes mature companies to retain earnings and grow through M&A (including of competitors), leading to this glorious present of megaconglomerates and oligopolies we are now living in. My prescription would be to incentivize dividends and discourage retained earnings so that some connection to reality is re-established in the market.
Another of the many problems with megaconglomerates, aside from them being anticompetitive, is that it is much harder to accurately predict the combined future income of 100 aggregated businesses than just one, so their very existence distorts prices all the more.
Is it crazy to think dividends should be a requirement for companies after so many years or face delisting? Along with flipping the taxes of capital gains vs dividends.
I don't think it would be quite as simple as that, but that would be better than nothing, definitely.
Loosely, I think corporations should have a progressive income tax based on net income (defined in such a way as to prevent Hollywood-style games) or maybe market cap, to disincentivize getting huge and to encourage divestment. Dividends, I believe, usually already have a nominally lower tax rate than capital gains, but the fundamental problem is related to compounding. I therefore think the capital gains rate should be much, much higher and the dividends rate probably somewhat lower.
> If anything, selling short needs to be made easier as it represents an essential corrective
I disagree since that would give people decision making capabilities who are the least qualified to do so.
> And this ultimately serves the greater good too
You can believe that but you also don't have to.
We don't have to lie to ourselves. Stocks are highly emotional and investors regularly overpay when they buy into hype. I am not against short selling, it is a trade like any other. But let's keep things honest.
>I disagree since that would give people decision making capabilities who are the least qualified to do so.
It's unclear why investing in the belief something is overvalued demands a different or larger set of decision making capabilities than the belief is it undervalued.
Selling short carries much, much more risk than a simple purchase-and-sale. Put simply: if I buy a stock, the most money I can lose is the principal I put in (a stock can’t drop past zero), and any losses I take don’t damage others. In the case of a short sale, my potential losses are limitless (while a stock can’t drop past zero, there’s no potential ceiling), and the party lending their stock may lose out if I’m unable to cover a call.
Perhaps, but honestly, I think Schumpeterian creative destruction is... at this point, more of an idealistic take.
It exists, but it isn't a permanent feature of the big fish economy that stock markets represent. There are processes like online travel retail overtaking travel agenting. That's a sort of creative destruction. Mostly though, travel agents were an SME sector. Like the proverbial (and literal) restaurant trade, they're subject to market forces in this way and the theory often plays out in practice. Heavy price competition. Creative destruction. Etc.
Banking OTOH, doesn't really have a creative destruction dynamic to speak of. Most auto manufacturers are what and who they were 20 or 50 years ago. Big tech, also, doesn't compete like restaurants do. It's more about holding control via network effects, platforms or whatnot. Avoiding head to head competition and market price dynamics entirely.
GME fell somewhere in the middle. They're kind of restaurant like, but also relatively big and publicly traded.
In any case, the financial meta game can often be more relevant and determinant of reality than market dynamics as per Schumpeter, JS Mill and the like.
> Schumpeterian creative destruction is... at this point, more of an idealistic take
Schumpeterian creative destruction is an ideal. But the process of innovation it describes is well documented in the study of entrepreneurship, venture capital, new firm formation and the industrial dynamic of new entrance.
> isn't a permanent feature of the big fish economy that stock markets represent
Most of the stock market isn’t Goliaths. Formation and destruction still reigns in most of the economy. There, short sellers add value. (I’m more sceptical of private equity and its leverage tactics.)
> Banking OTOH, doesn't really have a creative destruction dynamic to speak of. Most auto manufacturers are what and who they were 20 or 50 years ago
Banking and auto manufacturers share a history in being bailed out. Big Tech looks like a classic market failure, though Facebook’s stumbling gives me pause on that conclusion.
>> Schumpeterian creative destruction is an ideal. But the process of innovation it describes is well documented in the study of entrepreneurship, venture capital, new firm formation and the industrial dynamic of new entrance
I'm not sure we disagree, at least not much.
What I meant is that descriptions/theories/models/takes^ such as these are an ideal, I agree. The extent to which this ideal describes what appears to be a dominant process in the part of the world we're describing varies.
What I'm (halfheartedly) arguing is that the Schumpeterian description currently, isn't so dominant. At least, it's not dominant enough to be the basis for understanding short selling... I don't believe. In fact, the share price of a company isn't necessarily very important to the operation of the company... in theory. Short selling is, also in theory, not necessarily all that impactful on share prices.
>>Banking and auto manufacturers share a history in being bailed out.
True, but again, this is markets in practice. The long term, perfect free market ideals are not something that generally exist in reality for a lot of reasons... both good and bad depending on your perspectives.
I don't think Schumpeter meant for his ideas to apply only in hypothetical markets. Creative destruction was as a powerful force, for example, in the early decades of auto manufacturing. Banking has always been somewhat perplexing to economists, who can't really agree on whether or not they should be considered "firms."
We might disagree about short sellers vs leveraged buyouts. I'm more skeptical of short selling and derivatives value add, more willing to entertain the idea that leveraged buyouts have a useful role. At least leveraged buyouts relate directly to financing business activities.
You propose certainty where there is none and I am not talking about preventing it outright. I also do believe that it a profitable endeavour with very little general advantages as it is right now. That is more parasitic than constructive, so in that regard it fails to justify itself and regulation is required. Little would stagnate if modern fintech would be scraped almost entirely. Human impact should be secondary here.
Additionally creative destruction can also mean that I destroy the wealth of those that currently do profit from canceling companies prematurely. It is applicable to economies rebuilding after a war, not applicable to Gamestop. That is an excuse for exploitation.
>I also do believe that it a profitable endeavour with very little general advantages as it is right now.
the "advantage" here is that the true value of the company is reflected in the market, so that capital is allocated to the best companies rather than the most hyped ones.
>That is more parasitic than constructive
Can you explain how it's "parasitic"?
>Additionally creative destruction can also mean that I destroy the wealth of those that currently do profit from canceling companies prematurely
Isn't that what happens if someone thinks a stock will go down, shorts it, and gets it wrong?
> I don't think the stock market serves a public function with these mechanisms in place
The purpose is precisely to zoom in on the correct value of a stock (via crowdsourcing and putting your money where your mouth is), and thereby allow investment to flow to the most advantageous opportunities.
There are still many retail investors who think the saga is far from over, and are now betting on direct registration (DRS) of their GME shares with the goal of triggering another, much bigger short squeeze than last year.
Its easily dismissed as conspiracy but having read many of their supporting arguments and seeing the SI (Short Interest) being over 220% myself along with the SEC report suggesting that shorts never closed their position... I can't say I would dismiss the possibility of another short squeeze...
"In seeking to answer this question, staff observed that during some discrete periods, GME had sharp price increases concurrently with known major short sellers covering their short positions after incurring significant losses. During these times, short sellers covering their positions likely contributed to increases in GME’s price. For example, staff observed that particularly during the earlier rise from January 22 to 27 the price of GME rose as the short interest decreased. Staff also observed discrete periods of sharp price increases during which accounts held by firms known to the staff to be covering short interest in GME were actively buying large volumes of GME shares, in some cases accounting for very significant portions of the net buying pressure during a period. Figure 6 shows that buy volume in GME, including buy volume from participants identified as having large short positions, increased significantly beginning around January 22 and remained high for several days, corresponding to the beginning of the most dramatic phase of the run-up in GME’s price."
Meaning shorts covering causing a small increase in price and then retail FOMOd in.
See also the graph on the next page that show short interest dropping from over 100% to around 20%.
I'd like to add to this the following scenario for explaining why short interest can be high even if the original shorters have closed their positions.
1. Lots of people are short.
2. Price goes up significantly, shorters get margin calls.
3. Price goes up a lot due to buying pressure from shorters closing their positions. (ie, the squeeze itself)
4. Price is now extremely high and fairly disconnected from fundamentals.
5. People notice the price is very high compared to earnings and open new short positions.
After step 5, there can be a ton of shorters in the stock yet there is not a very big chance of a new squeeze since the price at which the new short positions were opened is so high. Imagine how much the price of GME would need to rise to squeeze out the shorters who opened their position in the 300-400 USD price range.
FINRA and the SEC require brokers to report short interest data twice a month [1]. These are share aggregates. FINRA then provides those data for U.S.-listed companies to the exchanges, who publish it. None of those exchanges have changed their publishing methodologies in years.
> Now; SI = [Number of Share Short] + [Float] / [Float]
So you're saying that SI is always reported as higher than 100% now?
Since that's not the cause, are you saying there's negative number of short shares now?
I made a little money of it last year when the squeeze squoze, and I don't see it happening again.
I was late to get in, but not too late; the next morning, the price had doubled, so I sold half. I held on to the rest just to be along for the ride, but I think that morning was the real squeeze. I think I bought some extra on a dip, sold half of that for double again, and sold the rest on a minor bump a few months later.
Hectic stock like this can be an easy way to make a quick profit as long as you remember to buy the dips and sell at any bump that comes along. I bet that's what the big guys on Wallstreet did to make way bigger profits than I'll ever be able to.
Of course. Always check if something changed about the company itself.
And when trading derivatives, even dips caused by the market (rather than fundamentals), can lose you lots of real money. Because even if it will eventually recover, it might dip deeper and longer than you can afford. I lost a ton of money on Tesla that way. (I would have been rich now if I'd been able to keep that.)
Both Gamestop and Tesla were just the market freaking out. The market often does that. Much of the stock market is more about what other investors will do than what the companies themselves will do. It's a bunch of noise on top of the actual value of the companies themselves.
Of course sometimes it is the companies themselves, and then you need to pay attention. And because you rarely know in advance whether a dip is the company or the market, you always need to pay attention. But the Gamestop thing was a clear case of the market freaking out.
Right. So, you were taking a risk trying to buy in the dips and sell in the bumps, you were not following your own advice to "Always check if something changed about the company itself." Which is fine, it worked out for you.
Of course, the bigger picture challenge is that -- modulo market freakouts -- everyone else is also "checking if something changed about the company itself", and that's already built into the market price, that's kind of the model of how the market works. To make money by buying in dips only after checking if something is changed in the company itself, you have to think you are better at noticing or predicting changes in the company itself than everyone else, I guess?
Here's the thing, though: I think most of the time it is market freakout. Even if something did change about the company, quite often the market will freak out about it in one direction or another. I really think Warren Buffett is one of the few investors who really pays attention to the actual value of companies. Most investors just sail on hype.
That doesn't mean that $4 was what it should be, though. I hope GME used the ridiculously high stock price to issue a bunch of new shares, so they have plenty of money to invest in whatever they want.
> There are still many retail investors who think the saga is far from over
I had the misfortune to encounter one of these on reddit the other week. I asked (what I thought was) a fairly simple question - are people still in it because they think the company has a reasonable chance of turning around and making good money, or is this now an idealogical thing about sticking it to the man, or a bit of both?
And I basically got a full-on hard sell as a response, massive amounts of details about business plans and any reservations I expressed were due to me being stupid and/or biased.
It does seem like a good idea on paper, though when you look at the reports of how many people have actually DRSed their shares it becomes painfully obvious that it's so few that it isn't likely to ever make a difference.
What reports have you seen that show the actual numbers? Genuinely curious.
As far as I know, there is only one report that has been released--that was by Gamestop itself for the 3rd Quarter (Aug 1-Oct 30). That number was 5.2 Million.
Now, the DRS movement, for lack of a better term, did not start to take off until late August/Early September. IOW, DRSing shares has not been going on since last January.
The next quarterly results (Nov-Jan) will be released around the end of March and, assuming that Gamestop continues to release the DRS numbers, will provide 2 data points.
The last point I would like to make is that the total number of shares outstanding for Gamestop is only 76.5 Million. 12 Million of those shares are Insider shares. Even if you Ignore institutional holdings and individual investor shares held in brokerage accounts, 5.2 Million is 8% of 64.5 Million. I would say that is not an insignificant percentage, even if the DRS movement stagnated after October.
From what I've seen there are now ~122,000 accounts for DRSed shares, and even if the average numbers we're seeing on reddit hold for all accounts (which I doubt), that's still only around ~18M shares, or 28% using your numbers. That's a lot, but it only matters when it reaches 100%.
I don't want to spread negativity, I have a bit of money invested as well on the off chance that the theories are true, but I'm placing my bets that if anything happens it'll be because of stricter regulations regarding short selling, not because of DRS.
Just to clarify my original statement, I did not mean to imply that after the 4th quarter results come in, that another squeeze will immediately happen.
I've always thought that this would take some time (i.e. DRSing the float). I don't think it necessarily has to reach 100% (although that would fantastic) I do think the higher the number climbs, the harder it will be for investors and regulators to ignore.
DRSing shares will reveal irrefutable, easy-to-digest proof that there is illegal naked shorting of Gamestop. How that plays out (squeeze, investigation etc) is anybodies guess because this exact situation has never happened previously. (individual retail investors directly registering shares in their name to secure the entire inventory of a company).
>I've always thought that this would take some time (i.e. DRSing the float).
Is there any expectation that the number of DRSed shares will continue to climb, rather than asymptotically approach some arbitrary number? At this point you'd think everyone who wanted to DRS their shares already did it, so for that number to increase you either have to target stragglers (not many of them), or buy more shares (I doubt folks on superstonk have enough free cashflow to pull that off).
>I do think the higher the number climbs, the harder it will be for investors and regulators to ignore.
>DRSing shares will reveal irrefutable, easy-to-digest proof that there is illegal naked shorting of Gamestop.
Like, illegal naked shorting that's happening right now? I saw in other comments that the short interest is 20% or 14%. It's pretty obvious that you don't need to do naked short selling to get that kind of short interest. Not to mention, > 100% short interest isn't indicative of naked short selling either, because the same share can be lent over and over again.
March 22nd is when Gamestop 4th quarter results are released. They should also release the number of DRS'd shares.
But to be completely Honest: I will be able to answer your question with more certainty in about 12 months.
That will give us 5 data points. That should be enough to get an approximate number of shares being DRS'd every 3 months.
Through all of the due diligence and personal research, I do believe Illegal naked shorting is taking place. I'm not here to convince anyone to buy GME, but the DRS number seems simple enough for the general public (short attention span--I include myself in that) to wrap their heads around. DRS is the elevator speech, so to speak, for me.
If someone were inclined to listen to me, I can do a quick 2 minute, back of the napkin calculation that may spark interest, using DRS.
>“Some commentators have asked how short interest can get as high as it did in GameStop. Short interest can exceed 100%—as it did with GME—when the same shares are lent multiple times by successive purchasers. If someone purchases a stock from a short seller and subsequently lends the stock out again, it will appear as if the stock was sold short twice for the purpose of the short interest calculation.”
It's just a matter of time before some company insider is paid to manipulate their employers' stock through the power of the /r/WallStreetBets self-defined autists.
Companies use social media for astroturfing and viral marketing, why not market manipulation?
John Mackey himself used a burner account on Yahoo finance message boards to talk trash on Wild Oats to try and lower their stock price before Whole Foods acquired them in the mid 00s.
On the last day of the spike I saw in the pre-market the GME price to go over $500. Figured that this is good enough for me and as everything related to order processing was very slow I set a limit sell order for $490, figuring that it probably hits $500, but wanted to be sure it goes through. Once the price spiked at 483 and started rapidly dropping I was f-ed. Cancelling the sell-order took like an hour (couldn’t add a new sell order without releasing shares from the old one). By that time the price was in the dust.
Thanks for sharing an honest story about your loss. If more people did this people would have a more balanced understanding of how risky these bets truly are.
Because of my GameStop stock play, I am finally debt free for the first time in my life (after 35 years of paying). No car loan, no college loans, no mortgage.
It actually felt good to pay over $10k in taxes for short term gains.
Do you think it's important to acknowledge that you got lucky with a gamble? If you have kids, would you advise them to make a similar move as you did, in the hopes that they also get lucky and win big? If not, advertising only the benefits of your choice just lures desperate people who will statistically lose their investments.
Don't take this the wrong way, but if you worked as a trader and knew how to how to identify and research these opportunities, then why were you paying car, house, and student loans for 35 years until the GameStop opportunity came around?
An even better question is why did he pay off the debt. With the status of inflation and rates at present, it's infinitely smarter to keep the debt and reinvest the profits from the GME trade. He's clearly talking about something like 20%+ interest payments on credit cards but mortgage rates that can be outpaced by bond investments.
All around, he doesn't seem like he knows how to manage his money.
I only draw 65k per year salary but made an extra 80k in investing last year. I usually average draw about 30k let year from 1 year and a day stake. I can do that year after year. I work when I want and am beholden to no one.
The good money in trading is in fees. I worked in risk management (on the Merc) which led to compliance for M&A which led to counter intelligence for the Army which led to IT security. 9 years of college, multiple deployments, a divorce, and lots of living leads to debt.
Yes. Insofar as trading helps reveal the "true" value of a stock and thereby helps solving the allocation problem, it creates public benefit. And the companies financed by the equity markets create huge value, of course (parts of which they distribute by dividends or stock buy backs). But if you look narrowly at the gains and losses of trading, it's strictly a zero-sum game (well, negative sum, as the exchanges and market makers take their cut - though that cut in the good old equity markets is minuscule and far, far smaller than in the fancy new crypto exchanges which charge outrageous fees.)
That’s a really interesting mix of questionable prudence with total responsibility. Obviously things didn’t work out so well for the people in the other side of your trades.
Shorting as a retail investor is mostly a suckers bet that will bankrupt you. I feel nothing for institutional investors as the entire system is heavily tilted in their favor.
Melvin and 2 other institutional investors held almost all of the shorted contracts. They were extremely over-promised and got caught out doing it. That's why the squeeze worked in the first place. They could have exited early, taken the initial loss and walked away. The WSB crowd would have picked up a small profit and it would have been done. Instead, the smaller institutional shorts tried to hold and got crushed.
Well yes, but only one counter-party had to be the "big loser" in order for OP to be a big winner, and there is a decent chance in that trade the loser was Melvin.
What tools do you use for that? I tried similiar strategy just by looking at the publicly available tools (e.g. MartketWatch), but it seemed I'm always too late, so I resorted to mid-long term investments to the companies I believe.
https://unusualwhales.com/ and just following trending on specific targets. Enormous amounts of reading. Basically, if the popular media is hyping something, I go contrarian or least start thinking that way. There's nothing wrong with coming in late or leaving late on something. Go into investing with a realistic set of expectations and goals and you'll do fine. Occasionally, you'll screw up (I missed an options spread that someone else nailed me on and lost $7k in potential profits just a couple months ago).
The best thing is just to go with indexes and spread buys over time (daily if you can) and sell only when you want money to spend, not because you're scared of the market.
No one beats the market... I just try to find the flow and go with it.
Tangentially: I learned a lot while watching Keiths (Roaring Kitty, DFV) streams, even before GameStop took off. It gave me insight in what kind of research and analysis is done for investment and it served almost as a demo for me. It's really a shame that he's not streaming anymore, but I kind of get it.
I have seen so much fuckery with the stock price and ridiculous headlines in het media about GME that can't really believe that we have seen the actual squeeze. Furthermore, the SEC report said that the price run-up was because retail bought in, not because the hedge funds closed their positions. So when did they do this and went from 200% to 20%? Besides all of that, the fundamentals for GME are great. They are hiring great people and seem to be working behind the scenes with some of the biggest companies to, what seems to be, create a NFT marketplace linked to gaming, that will be 'carbon neutral'. all-in-all a good investment on that end I think. time will tell.
I don't necessarily believe in MOASS happening anymore, but I do have a strong believe that introducing an NFT marketplace and what else GME has in store will make sure the long term view for this company is optimistic. Wallstreet might have "won", but it seems that SEC is introducing new bills to prevent some of the stuff that was going on.. Hopefully they will start enforcing it as well.
A more jaded individual would see the introduction of elements like an NFT store to be less long term planning and more capitalizing on its new fan base which is heavily jaded with the current system and so prone to accepting opportunities to upset the market, regardless of actual merit.
a company shoehorning in NFT's is not a "long term" plan, it's a dying brand capitalizing on the latest craze that will almost certainly die out alongside it.
Precisely. Many, many retailers have gone out of business in my country in the last ten years and a lot of them died painfully. Trying desperately to turn things around- unsuccessfully.
Valve essentially stopped making games because selling virtual items is so insanely profitable. Being able to sell digital rights to items and then take a sellers fee no matter what platform that item is resold on later could be a huge deal, if that's what they're building.
I wouldn't agree with that, but even accepting that premise as true, why would gamestop be in any position to benefit from this? If you're, say, activision, why would you possibly sell your digital content on gamestop's platform where you owe gamestop a cut rather than on your own platform where you get the cut? Why would you put it on a blockchain at all? Just use your own boring db.
More than that, it is taking a decentralized tech and centralizing it. The point of this benefitting GME is because it would be a market they absolutely control (so they can get a cut of the profits). What's the point of a crypto tech in that case?
There are facts out there amongst the near constant stream of BS on reddit. GameStop filed a SEC form [0] about disclosing a partnership with Immutable X, which is in the NFT space for games, not art.
The market for in-game purchases (like every mobile game for crying out loud) is huge. Epic games' Fortnite is 100% free to play but has a store for purchasing cosmetic stuff (and a lawsuit with Apple over this). There was $3.7 Billion dollars of revenue associated with Fortnite in 2019 [1]. Billion with a B. All cosmetic, in-game items.
What is reported as being built would be a marketplace for gamers, and possibly content creators (people that build mods, skins, maps, etc. for games if allowed) to buy/sell/trade these in-game items. Not $10k GIF's of apes or whatever nonsense. Instead of spending $5 or $20 on something and it sits on a gamers account, think of it as they could spend that and later on they could re-sell it or trade on a marketplace.
I don't think any of this requires blockchain or NFT. I think the companies involved are using that because it ticks a lot of requirements boxes for basically Digital Rights Management with sales/resales built in (I think via ETH/smart contracts).
As silly as buying pixels for a game may sound, it already is a large market and a company like GameStop getting into that could capture a reliable subscription-like revenue stream not tied to game console refreshes or used physical games.
What would be sad is if this is a revolutionary type of change to an industry (i.e gamers own the digital sword they bought, maybe take it from one game-world to another like in Ready Player One?) but is squashed by the volume of noise about "hedge funds r bad, boo wall st" every time the company is brought up.
Please don't park any money behind this narrative unless it's literally money you'd burn in a campfire for just as much amusement.
There is zero chance of GME of all places becoming some sort of market for NTF game cosmetics. None of that blather matters if you don't have a user base, and there's no way GME is going to get one.
Why would Epic, Valve, etc go along with GME's scheme? If they want to offer unique to a single player items they can do so essentially trivially with their existing platform. They don't need to partner with anyone, just put a dev team or two on it for a short bit. They certainly don't need to partner with anyone like GME, let alone a bunch of shady cryptocoin operations running out of tax havens.
Basically no one cares about this utopia you're imagining to start with, and even if they did, there's no pathway to create it in the form of GME.
Don't you love it when the once in a lifetime opportunity for generational wealth is also a great fundamental investment? In case the biggest short squeeze the market would have ever seen, with the potential to crash the US economy, somehow doesn't happen (damn hedgies!). With all of that that, it doesn't matter that physical sales of video games are dying and that the company is bleeding out money with a loss of $100 millions in Q3 2021 alone.
I think the Q4 earnings report will show massive improvements, furthermore, them moving away from just being a brick-and-mortar store will help valuation in the long run. MOASS is unlikely to happen, but I think in the long term the valuation of GME will keep increasing considering their new plans and their new following/customers. They definitely gained in brand-name in the last year.
This whole saga seems to at least introduce some new rules and regulations. Although enforcing them will be the real game-changer.
I think the Q4 earnings report will show us quantitative reasons to believe the company is turning around to a profitable company. Furthermore, their move to a NFT marketplace will also move them away from just being a brick-and-mortar company to more than just that.
The speed of the turnaround on GME's public perception is crazy. In the beginning of the pandemic they were constantly excoriated for refusing to close stores and let employees go home. But then the squeeze happened and everyone's opinions did a complete 180.
Why is the financial media so obsessed with Gamestop? It's a relatively tiny company and if it truly was the case that it is over they would have stopped talking about it. Instead they publish fear-mongering articles and hit pieces on people like Keith Gill who was just a normal person seeing a value investment and got lucky. hint: http://www.paulgraham.com/submarine.html
You’re expecting far too much objectivity and rational action from the financial media, my sweet summer child. They’ve always been obsessed by trivia and gimmicks. Much more interesting to write about than “buy a few good index funds and hold forever.”
It's the kind of thing that screams that you're nearing the top of a bull market, or of a bubble.
In 2007 it was waiters and the unemployed buying million dollar homes.
In 1720 it was people ploughing their life savings into the South Sea Company though they freely admitted they had no clue what it was (understandable, since it was not much of anything). But many HODLed until it all came crashing down.
It’s an incredibly interesting story, symbolic of the mass influx of retail investors into the market, and also a fascinating example of cultish mass delusion.
The short squeeze is blatantly over in the eyes of basically every investment professional, the incredibly weird price action driven by devotees is not.
I can't speak for financial media at large, but I think this particular article makes it obvious that it is a review of the new book The Revolution That Wasn't by Spencer Jakab.
That's the problem I am trying to solve with finclout.
A lot of investors not only retail lost a bunch of money over the last 18 months.
Personally, I think there is a space for the retail guy in investing.
But it shouldn't be based on FOMO and/or hype. Not stonks and hodling. I think that's very dumb.
> Our society does not learn from the past. And the nature of man doesn't change.
Now that is current madness, IMHO, as insane as Gamestop. Look how society and humanity have changed over history, over the last 10 years, over the last century. The changes are dramatic! And the nature of humans includes those changes; it includes the good as well as the bad, the bad as well as the good (people act like they just discovered the bad part a few years ago!). You and I and all the rest each have the free will to choose between them, decide what we are going to do and what we will make our society.
We got here by people choosing good, choosing optimism, almost always in much worse situations than we are. Shame on us if, standing on their shoulders, living on their accomplishments, we choose to quit and throw it all away.
(Also, what a miserable way to live, drowning yourself in despair!)
So because people traded (sometimes) using services that had associated fees... Wall Street won? There's nothing in this article that supports the click bait title.
Well for sure bagholders of worthless GME stocks aren't winning, but the high volume of transactions spread a lot of money everywhere. 1 or 2 hedge funds are still struggling, but that's their problem, "Wall St" is bigger than these 2.
I'm pretty sure market makers have made a killing off option premiums, especially once they realized the way to kill a gamma squeeze is to jack up premiums to the max to kill momentum (as observed during the despac squeezes)
Market making is a business that avoids taking sides over long time horizons. In this business, they need to be hedged in some way almost all the time, so what you said makes no sense.
Though, yes, if uncertainty rises, market makers will quote wider spreads, which results in huge implied vols when you try to buy options (particularly not at the money).
Well in these zero-sum games there is always someone who wins. And clearly many small investors got out with insane returns for a day of trading.
But more importantly I think that for many small investors the point was not making money. The point was the story. It was worth losing some cash so that they can be a part of these things. Luckily winning is not always defined by money…
Small nitpick but this is a pet peeve of mine :) . The stock market is not zero sum. It grows over time, and there are many situations where people all succeed together. GME specifically is now hanging out at $100 compared to a very flat $5 two years ago.
This seems to be a particularly polarizing topic and I may have some insight into why.
There's a supreme value to the widely-held belief that 'the market' just 'works' and is 'fair' or 'free' or something. The only way features like liquidity were possible to offer in the early days of the emerging globalized financial markets was by appointing Market Makers, Authorized Participants, and other privileged positions that could self-regulate and influence the market. There were all kinds of (legitimate) limits to creating a truly 'free' or 'fair' system during the bootstrapping phase. So the system was justified, once upon a time at least...
So that's how we got here: What now?
Well... many of us still expecting a GME squeeze believe that Market Makers got greedy and instead of contenting themselves with the profit channels they were conceived to capture they used their central position to extract revenue from some less scrupulous places than the bid-ask spread. Once MMs realized the haul they could extract by selling shorts throughout the deaths of certain 'surely dead' companies, it doesn't take a stroke of genius to think about inciting these kinds of events themselves. Here's where the rub comes in: Because of the way things were bootstrapped, most of these Market Makers are self-regulating bodies that self-report a lot of critical positions if they even have to report it _at all_. Regardless of how we got here, the reality is that many privileged positions such as Market Makers do NOT need to report their short positions. Even if they were 'required' there are so many ways to 'hide' the position on a balance sheet that I honestly cannot imagine paperwork exists that would conclusively DISPROVE the possibility of a MOASS.
Many others hold the belief that 'the market' is 'working' just 'fine' whatever those words mean to the individual espousing that belief. Their belief is, in general, that the rules of the game are to be trusted. They don't just quote the SEC report citing Self-Regulating Organization short interested coming in at 0% right after Jan 2021, they actually BELIEVE it. They don't even question that these self reporting organizations may be lying. I mean, with their immaculate records how could you not believe them?
So there you have it: One group believes mostly on principle that markets are 'good' or 'functioning correctly' thus MOASS couldn't happen and anyone still awaiting MOASS is doing so because of ideological reasons more than a single piece of evidence.
Its easily dismissed as conspiracy but having read many of their supporting arguments and seeing the SI (Short Interest) being over 220% myself along with the SEC report suggesting that shorts never closed their position... I can't say I would dismiss the possibility of another short squeeze...
Why do you think not a single institutional investor has rallied behind this cause? Hedge funds love fucking each other over and would embrace popularity with the public. Why hasn’t some firm with a few billion under management taken up this cause if there’s really anything there?
Because that would be illegal market manipulation.
Any institute, including GameStop themselves, would be committing a crime if they knowingly triggered a short squeeze. The SEC rules on this is quite clear.
What's interesting to me is that the official SEC report on GameStop "squeeze" specifically called out that the rise in price WAS NOT due to short covering, but rather a large increase in retail buying and market makers balancing options. So the reported % short went from more than 100% to less than %20 with zero short covering and prices falling? Yeah, sure.
It's not illegal to push a stock up just like it's not illegal to short a stock. Certain rules apply when you become significant share holder.
Buying significant calls will move the market as the market maker buys shares the ensure they can cover. Shorting drops price because it "creates" shares. Even six figure trades can move the market,
> How and why is that illegal? I am stumped that market participants would not be allowed to correct the capital misallocations of others.
I don't think (but someone correct me as I'm no professional) the occurrence of short squeezes are illegal, unless there is a knowing collusion behind it (check previous cases from courts regarding collusion to trigger short squeezes). What is illegal is naked shorting (https://www.investopedia.com/terms/r/regsho.asp) which could be a trigger/condition to future squeezes..
They have? Blackrock just added 10% to their stake recently. Not to mention the former-Amazon staff that GameStop is hiring along with the header of BlockChain at Microsoft mentioning working with GameStop on their new NFT Market Place.
Blackrock and Vanguard own GME because they operate the biggest S&P ETFs and mutual funds.
GME has increased its percentage of the S&P because retail investors have bought the position. Blackrock is not taking a position that a short squeeze is possible they are just reacting to the index.
A bunch of shorts 100% closed their positions. That was the original smaller push that made the stock take off. The rest of it was momentum from retail investors, algorithms, etc.
There was never going to be a flag day though... shorts cover over time as their bet looks less likely to payoff. By the time the "squeeze" day arrived the billion dollar losers had already covered.
wow I had no idea how much time has been dumped into propping up this conspiracy theory. People have a lot of time on their hands (but I guess rationalizing ones own investments is good motivation)
The result is STONKS, a comedy/drama feature screenplay [0], fictional but inspired by the GME events, and a love letter of sorts to WSB. We queried Hollywood producers but were ignored; we shared on WSB itself but we were insta-banned and never told why (but given the founder sold the rights to his life story to Hollywood [1], we can make an informed guess).
Anyway, here it is. Feedback welcome.
[0] https://gabrielgambetta.com/files/STONKS-2022-02-02.pdf
[1] https://www.wsj.com/articles/reddits-wallstreetbets-founder-...