Merged Wall Street Bets subreddit / Too late to buy Gamestop stock?

[lobosrul5]

Of course it will crash eventually. The sell-off is going to be brutal for a lot of the late-comers who bought in at the highs. There’s no question about that.

The real question is how long can the average retail investor hold on with all their money on this one stock hoping for a moon shot? Can they hold out long enough to really put the real squeeze on all the shorts? I don’t think so. The Big Boys in all this have the resources to out-wait them. Once the Little Guys start panicking, that’s when the real short-sell opportunities will arise and the Big Boys who are still standing will end up making a killing. If this thing gets to $500...$1000? It won’t be long before the evil temptation to take profit overcomes the Little Guys, principles be damned, and the Big Boys will clean up.

If I had the money, I might think about shorting GME soon...

I was looking at buying PUTS, but man they're expensive. Like $35 for $100 February strikes. Meaning the stock would need to fall to $65 to just break even. I don't even know what I'd need to do to actually sell short and I'm not really willing to do it anyways.

 

[marting]

If you can clarify some of the timing on this prediction we can translate that into an investment position and get you in on the action.

There's a classic phrase along the lines of:

Irrational exuberance (an overpriced stock) can last longer than your bank account.

 

[Checkmite]

Case in point. Allegedly, the WSB subreddit went private about 20 minutes ago, and the Discord was either banned or deleted.

Now watch the pumped stocks fall.

 

[RecoveringYuppy]

I have no idea what to make of this, but it is objectively hilarious that hedge fund ghouls are looking to lose their shirts to a bunch of keyboard warriors.

Does anyone know who the "ghouls" actually are? Hedge funds manage money for a lot of people and not everyone in a hedge fund is a member of the 1%. Who actually are they trying to drive in to bankruptcy and does this scheme actually target the people they want to?

Hedge funds do tend to attract the richer investors, but still I wonder if these people aren't risking their own money to "take down" other investors who aren't much different than themselves.

 

[theprestige]

All this reinforces my view that justice is about people's need for retribution.

 

[lobosrul5]

Does anyone know who the "ghouls" actually are? Hedge funds manage money for a lot of people and not everyone in a hedge fund is a member of the 1%. Who actually are they trying to drive in to bankruptcy and does this scheme actually target the people they want to?

Hedge funds do tend to attract the richer investors, but still I wonder if these people aren't risking their own money to "take down" other investors who aren't much different than themselves.

Generally speaking no, the low and middle class cannot invest in hedge funds.

https://smartasset.com/investing/how-to-invest-in-a-hedge-fund

You do realize that Melvin Capital was trying to drive Gamestop into liquidation. That's the end game of selling short more than their total market cap. I wouldn't feel sorry for them.

FYI, and eta: what Melvin was doing is a "zero sum" game. For every dollar made shorting, someone else lost a dollar. That's different than buying shares.

 

[JoeMorgue]

Here's a question that, personal opinion, isn't addressed enough in the legal concept of "intent."

Is there a reasonable assumption of "under currant and accepted motivations" when talking about intent?

That probably didn't make much sense, but look at it this way.

The SEC will (near as I can tell. Financial law is stupidly massively complex obvious caveat here) have to prove that r/wallstreetbets intentionally spread false information with the intent to get people to buy/sell stocks in order to really get firm traction on any direct legal reprisals.

Is it... dishonest (in the legal sense mostly, although of course broader discussions are to be had as well) to tell people to buy/sell stocks without lying if your intent isn't for them to make money.

I mean if you went to your doctor for medical advice and he said "Oh yeah smoke a pack a day, lift with your knees, and get more transfats in your diet" I doubt the Medical Board would be overly impressed with a "Well he never specified getting healthier and living longer was his goal." That's a reasonable assumption for someone seeking medical advice from a Doctor.

Same thing here, sorta. Is it reasonable to assume that "financial advice" already has the "I want to make money, not loss it" modifier in there, so even if you aren't lying in the sense of spreading false facts about an individual stock could maybe be a problem.

There's a B-plot in a Tom Clancy novel where Japan takes advantage of this. They pay off a disgruntled worker at a major financial firm to plant a logic bomb in the trading software of one of the big movies and shakers (hinted at but not directly said to be Merril Lynch in the novel) that causes a market panic by intentionally buying up massive amounts of worthless stock. All the automatic safeguards don't work because they were designed around the idea that someone would be making too much money, not that everyone would be losing too much.

Too Long; Didn't Read can you really defend yourself from causing massive financial damage with the defense of "Well we never said we wanted to make money."

Hopefully that flowed. What I was trying to say made sense in my head but I'm not sure if I really explained it well.

 

[lobosrul5]

Here's a question that, personal opinion, isn't addressed enough in the legal concept of "intent."

Is there a reasonable assumption of "under currant and accepted motivations" when talking about intent?

That probably didn't make much sense, but look at it this way.

The SEC will (near as I can tell. Financial law is stupidly massively complex obvious caveat here) have to prove that r/wallstreetbets intentionally spread false information with the intent to get people to buy/sell stocks in order to really get firm traction on any direct legal reprisals.

Is it... dishonest (in the legal sense mostly, although of course broader discussions are to be had as well) to tell people to buy/sell stocks without lying if your intent isn't for them to make money.

I mean if you went to your doctor for medical advice and he said "Oh yeah smoke a pack a day, lift with your knees, and get more transfats in your diet" I doubt the Medical Board would be overly impressed with a "Well he never specified getting healthier and living longer was his goal." That's a reasonable assumption for someone seeking medical advice from a Doctor.

Same thing here, sorta. Is it reasonable to assume that "financial advice" already has the "I want to make money, not loss it" modifier in there, so even if you aren't lying in the sense of spreading false facts about an individual stock could maybe be a problem.

There's a B-plot in a Tom Clancy novel where Japan takes advantage of this. They pay off a disgruntled worker at a major financial firm to plant a logic bomb in the trading software of one of the big movies and shakers (hinted at but not directly said to be Merril Lynch in the novel) that causes a market panic by intentionally buying up massive amounts of worthless stock. All the automatic safeguards don't work because they were designed around the idea that someone would be making too much money, not that everyone would be losing too much.

Too Long; Didn't Read can you really defend yourself from causing massive financial damage with the defense of "Well we never said we wanted to make money."

Hopefully that flowed. What I was trying to say made sense in my head but I'm not sure if I really explained it well.

Your comparison is flawed. A doctor is licensed, they take an oath. The people of WSB are self described "tards". They are laymen. Now if any of them are licensed fiduciarys, the you'd have a point

 

[JoeMorgue]

Your comparison is flawed. A doctor is licensed, they take an oath. The people of WSB are self described "tards". They are laymen. Now if any of them are licensed fiduciarys, the you'd have a point

I'd wager if you matched up all the members of r/wallstreetbets up against their real offline selves, you'd have at least a few actual stock brokers.

I mean you're not wrong, but there has to be some point at which "official" people got involved in this.

But I guess brokers don't have a responsibility to tell their clients what to buy and sell, even if they can see consequences coming.

*Shrugs* Sorry mostly just thinking out loud a little.

 

[JoeMorgue]

I wouldn't feel sorry for them.

We can have concerns/questions about this without "feeling sorry" for any of the people involved in it.

Especially since the main point seems to be "This is happening behind closed doors in secret all the time, look how absolutely absurd it looks done out in the open."

 

[marting]

The SEC will (near as I can tell. Financial law is stupidly massively complex obvious caveat here) have to prove that r/wallstreetbets intentionally spread false information with the intent to get people to buy/sell stocks in order to really get firm traction on any direct legal reprisals.

Is it... dishonest (in the legal sense mostly, although of course broader discussions are to be had as well) to tell people to buy/sell stocks without lying if your intent isn't for them to make money.

Financial advisers and stock brokers have legal obligations and telling clients to buy a stock with no expectation they will make money does violate that. And posting false information that a company is being acquired while secretly making money on opposing trades is illegal as is trading on inside information of actual M&A.

But simply saying something like "screw the shorts, lets all by stock X" would be legal. There is no misrepresentation or dissemination of false information to manipulate the market. It is, of course, likely to lead to a lot of people losing a lot of money but that's a different issue unaddressed in current law.

 

[lobosrul5]

Financial advisers and stock brokers have legal obligations and telling clients to buy a stock with no expectation they will make money does violate that. And posting false information that a company is being acquired while secretly making money on opposing trades is illegal as is trading on inside information of actual M&A.

But simply saying something like "screw the shorts, lets all by stock X" would be legal. There is no misrepresentation or dissemination of false information to manipulate the market. It is, of course, likely to lead to a lot of people losing a lot of money but that's a different issue unaddressed in current law.

I cannot see any possible legislation in the USA prohibiting a group of people getting together and exhorting others to buy shares in a company, that would not obviously fall afoul of 1st amendment protections.

Eta: and if they did, how on earth would it be written so that social media sites can't... But pundits like Jim Cramer can tell you what stocks to buy?

 

[marting]

I cannot see any possible legislation in the USA prohibiting a group of people getting together and exhorting others to buy shares in a company, that would not obviously fall afoul of 1st amendment protections.

Exactly so. What would be possible is increased regulation on the trading side. There are some limited regulations currently such as the stock market circuit breakers that impose cooling off periods. But the speech alone can't be regulated.

 

[Checkmite]

Generally speaking no, the low and middle class cannot invest in hedge funds.

Citadel, which happens to be the primary purchaser for orders through Robin Hood, can though. Evidently, while internetters have been buying GameStop shares through the Robin Hood app, Citadel has begun turning their money around and buying Melvin at rock-bottom. They know how this is most likely going to end.

 

[xjx388]

Theres apparently nothing wrong with a hedge fund manager that shorts a struggling company’s stock then goes on CNBC and tells everyone what a dog that stock is -even though they have a financial interest in people selling the stock. Therefore, there’s nothing wrong with a bunch of people seeing an opportunity to squeeze the short sellers and going on social media to tell others about it -even though they have a financial interest in people buying the stock.

As long as no one is making false or misleading statements, it’s all good.

I think if the SEC or other authority takes action to stop this somehow, by threatening people into silence, halting trading, etc, we haven’t even begun to see the fury of the WSB crowd.

 

[marting]

Theres apparently nothing wrong with a hedge fund manager that shorts a struggling company’s stock then goes on CNBC and tells everyone what a dog that stock is -even though they have a financial interest in people selling the stock. Therefore, there’s nothing wrong with a bunch of people seeing an opportunity to squeeze the short sellers and going on social media to tell others about it -even though they have a financial interest in people buying the stock.

As long as no one is making false or misleading statements, it’s all good.

I think if the SEC or other authority takes action to stop this somehow, by threatening people into silence, halting trading, etc, we haven’t even begun to see the fury of the WSB crowd.

Right. But don't worry about the SEC. While a lot of ignorant people will make a lot of noise, SEC regulations and enabling laws are almost entirely about disclosure. A company can be near bankruptcy but have stock trading with a company valuation of billions and the SEC can't do a thing other than make sure the company's filings accurately reflect it's financial situation. If people trade stocks like playing slot machines it's on them. You pays your money and you takes your chances.

 

[Modified]

I was looking at buying PUTS, but man they're expensive. Like $35 for $100 February strikes. Meaning the stock would need to fall to $65 to just break even. I don't even know what I'd need to do to actually sell short and I'm not really willing to do it anyways.

Same here, there was nothing that looked even remotely attractive.

Years ago, I made what for me at the time was a big upside bet on Spongetech and got out the next day with a good profit, but I felt sick the whole time. Many of the investors were incredibly deluded, and there were probably lots like me who were depending on the bigger idiots.

 

[bobdroege7]

The way I understand options is that it is a license to buy or sell a certain stock at a certain price for a certain period of time.

I just heard on MSNBC that the hedge funds lost 14.5 billion dollars today on the Gamestop stock.

Am I missing something, did some of the options expire today or was this a paper loss?

Off to google to see if I am missing something or not.

But if the little guys can keep the stock price up until the hedge funds options expire and become worthless, well, I tip my hat.

 

[lobosrul5]

The way I understand options is that it is a license to buy or sell a certain stock at a certain price for a certain period of time.

I just heard on MSNBC that the hedge funds lost 14.5 billion dollars today on the Gamestop stock.

Am I missing something, did some of the options expire today or was this a paper loss?

Off to google to see if I am missing something or not.

But if the little guys can keep the stock price up until the hedge funds options expire and become worthless, well, I tip my hat.

I know CNBC (you said MSNBC) said they have closed their position. So, yes its a paper loss. And actually, when you buy puts you just get cash when they expire, assuming the underlying asset is under the strike price. Its only calls where you get the stock, commodity, etc.

FYI, I messed around with options a number of years ago, and got burned badly.

 

[bobdroege7]

I know CNBC (you said MSNBC) said they have closed their position. So, yes its a paper loss. And actually, when you buy puts you just get cash when they expire, assuming the underlying asset is under the strike price. Its only calls where you get the stock, commodity, etc.

FYI, I messed around with options a number of years ago, and got burned badly.

I checked the options for Gamestop

https://www.barchart.com/stocks/quotes/GME/options?expiration=2023-01-20-m

Looks like options expire every Friday for that stock.

Short sellers might be taking it in the shorts.

I am rooting for Gamestock and the little guys, no guts to put any money on the line.

If I wouldn't buy Apple at 400, Gamestop is a no go, I'll stick to mutual funds.