Their financials are garbage for the last 1-2 years but they’ve been sitting on a lot of cash over the same period.
WSB vs Wall Street / Gamestop Stock and others blown up by Subreddit
- Thread starter Kasper
- Start date
- You're basically saying they're sinking.
I'm saying they were sinking. They shed a lot of shops and had stabilised their business by that time. If there's such fundamental comprehension problems after so many posts exchanged, we might as well stop here.
- Going retro? Lan gaming? That's alot of buzzword with nothing concrete. What are they gonna morph into? Net cafe with hotseat?
Netcafe with retail on the side. I.e. gaming hubs. Though differently focus shops, some competitive gaming focused shops, some retro and casual gaming focused shops.
You haven't noticed gaming hubs popping up in recent years?
- Do you even game? I got hundreds of retro games on my steam account. So unless they come up with actual game they're selling what exactly?
Yes. Both privately and occasionally publicly. They are selling the service of allowing humans to game together in the same room along with the option to buy hard copies and peripherals.
literally
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Right guys I've not been paying attention. How can I cash in in this or am I too late?
We are coming
really, the boat sailed on making it big july last year. You can invest now I believe, but your return wont be worth it.
I was late to the party as well but I'm thinking of trying my luck with Robinhood.
@Pexbo told me this will all lead to huge gains in REQ.
These prob been posted already but I'm just playing catch up with the story of this on reddit...
So the /r/deepfeckingvalue guy starting buying GME back in July 19, up to $53k invested as of Nov 19:
He was well in the red in Jan 20. Post from then when getting some stick on his now losing position, he straight up calls January 2021:
He put out some In-depth analysis in July 20:
At end of July 20 his investment was down less than half, at $23k, he held it. At the end of Aug 20 it was over $600k, and he held it. His regular account updates can be seen here:
https://old.reddit.com/user/DeepfeckingValue/?count=26&before=t3_jl44zz
As of close of play this week his position is at $43mil, having cashed just $13mil of it.
What the absolute feck.
So the /r/deepfeckingvalue guy starting buying GME back in July 19, up to $53k invested as of Nov 19:
He was well in the red in Jan 20. Post from then when getting some stick on his now losing position, he straight up calls January 2021:
He put out some In-depth analysis in July 20:
At end of July 20 his investment was down less than half, at $23k, he held it. At the end of Aug 20 it was over $600k, and he held it. His regular account updates can be seen here:
https://old.reddit.com/user/DeepfeckingValue/?count=26&before=t3_jl44zz
As of close of play this week his position is at $43mil, having cashed just $13mil of it.
What the absolute feck.
Outstanding podcast that highlights a lot of my main problems.
These hedge funds serve zero societal purposes. They aren't investing in companies, they aren't creating value, they aren't performing essential or even luxury services to the public, they are simply manipulating arcane knowledge that 99% of people don't even know exists for massive personal profits in a way that does not benefit the overall economy in any way. They are essentially parasites in a very bad way. I like their suggestion of adding a 0.1% tax on transactions because that would have little to no impact on actual investments, actual wealth building but would serve as a massive disincentive to the cnuts like HFT and other finance manipulators. And when the feckers get it wrong and screw up the overall economy, like in 2006-08, they get bailed out. This wild west capitalization when the wealthy profit but socialism/bailouts for the entities when they fail has to end. Leverage is a massive problem as well in all these crises. This is why financial services deregulation is a fecking disaster. They never "Self-regulate", they just leverage up their own arseholes and hold it works and if it doesn't they expect a bailout.
I come from education in micro/behavioral econ and it's bloody obvious how things like misaligned incentive structures are a huge problem here. All these hedge funds have manipulated the law even to benefit themselves in a way where their incentives completely misalign from what's good for the overall economy and healthy, fair, functioning markets.
(I should caveat that not all funds are bad actors, my comments are reserved for the ones that are like Melvin or Countrywide or LTCM)
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Wrong. It’s going to the moon.
Exactly. So so true
The 'purpose' of hedge funds are not any different from any other secondary market investor, be it institutional or retail investors. There isn't a greater good purpose to the average person on WSB other than to make a quick buck. If people truly cared about Gamestop and the real economy they'd go and spend the actual money in their stores.
The social function of the stock market is to make sure the companies with the best prospects have the cheapest access to capital (should they issue equity), and to reflect intrinsic values of companies (so you can invest today at an adequate return). Neither of those are helped by creating a bubble in the share price of a failing retailer.
If hedge funds and stock markets were such a rigged casino then a lot of these funds wouldn't be struggling to beat the S&P 500 every year (which you or I can invest in freely).
r/wsb has been donating the money. I am not saying all people donated all of their gains they have pocketed, but there are enough screenshots on the sub saying that they have donated to hospitals/bought something for GME emps. Few have even pocketed the gains to pay off their debts and/or hospital expenditure.
Fair enough. But I assume many won't recognise billions some HFs have given to charities (eg CIFF).
except that r/wsb isn't rigging the game like the hedge funds have done.
What do you actually mean by rigging the game? Borrowing shares from shareholders with their consent and at an agreed rate to sell into the market?
Please give a similar example to where hedge funds have openly in concert dominated the flows in one stock and pumped it up 1000 percent? If GME price action was caused by HFs, it would not be tolerated. The stock market isn't the wild west.
Blocking trades for starters...
Going by your own criteria here, we can look at exactly the problem with the financial entities in everything from LCTM to the derivatives crisis that crashed the market in 2008 to the current situation. The financial sector entities were not investing and helping any "company with the best prospects" and that was the problem (we can talk about retail investors in a minute). The problem is quite simple really: look at the incentives. Do the incentives of the private actors align with the stated purpose of making this behavior legal? When things are too deregulated there is simply too much opportunity for misaligned incentives.
There were many moving pieces to the derivatives crash of 2008 but at its heart, it was two tiers of misaligned incentives. The purpose of home loans is to allow people to get into a home they can afford. When banks hold those loans, they have the incentive to make the best loans possible. However, when deregulation and rules changed, the non-bank mortgage lenders (Countrywide and dozens of smaller 'chop shops' who were the bulk of the bad loan origination) had different incentives than what existed in the housing market for decades and decades. Countrywide had no incentive to make good loans, they had incentive (for personal profit) to make bad loans because they were holding those loans. And it wasn't just subprime buyers either, they were making bad loans to people with good jobs by simply selling houses too big than what the buyer could afford. They were chopping up the loans and selling them ASAP to investment banks like Bear and Lehman. Since they were selling their bad loans, their incentives were no longer aligned with the original purpose of home loans. Bear and Lehman had other issues. First, they were manipulating by getting chopping up mortgage rated Triple A when the packages were simply not as safe as US Treasury bonds.
This leads into the problem with over-leveraged entities. These entities simply shouldn't be allowed to leverage up to the 20, 30 times their cash because those problems don't just affect them. That's part of the issue here with GME and the short funds. First, they are deviating from the whole purpose of allowing these actions (in your words "make sure companies with the best prospects have the cheapest access to capital"). These were profiting off of influencing what those best prospects even were. Before any retail investors go involved, these financial sector entities were shorting at 120% of the company shares available and up to 140%. That, in no way, is responsible nor serving your social function. That's groups of people in the know with access to greater tools than the public has available (both larger capital and information) trying to cause a company to go under on their time frame so they can profit. That's not performing a positive social function. It's carving profits out of a naturally functioning market.
Now enter retail investors. First, they didn't initiate this circumstance. They didn't set out to create a bubble.Some smart people saw that 1) these funds were going too far by shorting over 120% of company stock and 2) GME was actually stronger as a company than the shorters were trying to propagate. For instance, many of the actual GME stores were positive - they were turning a profit. The company actually had better prospects than the narrative trying to be enforced by the short-sellers. The short-sellers weren't just investing in companies with the best prospects, they were trying to artificially sink the prospects of a company so they could personally profit. And they were not performing a healthy risk management either.
So the retail investors can't be blamed here for reacting in a perfectly logical manner to the shorts over-leveraging and trying to influence natural market progress. Then sure, some retailer investors got to a point in the story where they weren't even trying to profit. They simply wanted to help crash an overleveraged financial services entity that was failing to perform a beneficial social function.
That is perfectly logical too when we understand that people are not always "utility maximizes". In countless, behavioral economics experiments we've found that people will enforce "fairness" even at the cost of personal profit. The classic example is the ultimatum game. In short:
Two people are set up with $100. The first person divides the $100 between the two. The second person then decides whether both of them keep the divided money or they both get nothing.
The classic theory says that the second person will take whatever deal they get because walking out with $1 is more than walking out of the room with nothing. That is utility maximization. In classic theory, everyone will just accept the division. But what actually happens is people tend to reject offers that are too unfair. Someone divides the $100 with a 90-10 ratio and a large percentage will reject the division and walk out with nothing to "punish" the divider for being too greedy and not sharing fairly.
That concept is what's at play with at least some of the retail investors. They are enforcing a concept of fairness and willing to take or risk a small loss of money in order to help the shorters walk away with 0. That's a perfectly natural reaction to what's going on and it's 100% the fault of the shorts.
The main theme here is that the financial sector needs more regulation not less. Whenever these entities are too deregulated they find ways to risk the greater economy when seeking personal profits at all costs. it wasn't the Redditors that created this current instability it was the short funds.
While researching the potential negative effects of "viral investing" is definitely necessary, they weren't the problem here. The funds were. A viral mass of retail investors did not wake one day and say "hey, lets all overvalue this one stock for shits and giggles and see what happens." Their behavior was, for different reasons, a direct response to the behavior by the short funds. Some began investing because GME was undervalued due to the shorts, others saw a way to make a little money, others jump on just to punish the hedge funds for not being fair, some just wanted to take part for the fun.
And I haven't touched upon the problematic conflict of interested in Robinhood's behavior and their CEO lying his ass off all over media.
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I'm not sure why we are discussing the GFC (mortgage originators, bundled derivatives and banks with too little capital etc) and comparing to an equity hedge fund shorting a stock. It's not even the same type of institution. Is your argument literally that short selling is a systemic risk to financial system? There is a very easy way of stopping short selling, and that is if the actual owners of the company don't lend their shares out. No one is forcing them to except they are presumably confident the shares won't go down and they will make a return on lending it out.
Again please explain how short selling negatively impacts the prospects of Gamestop? Does it make people less likely to go into their stores?
And of course it's a bloody bubble. Look at the share price chart. A brick and mortar store hasn't gotten multiple times more valuable in the middle of a pandemic. And the bubble will burst because lo and behold retail are buying for a quick buck and will cash in, not because they believe the share price actually reflects the worth of the company.
There are plenty of smart (and long term) institutional investors out there who also could have bought into stock when it was heavily shorted, but they didn't because the company is structurally challenged. Only now do you have other hedge funds riding retail and making a killing on the long side because of the bubble situation.
Is there an idiots guide to making some money off this? Without really putting too much in.
I understand none of it.
I understand none of it.
How can you borrow 140% of the shares if it exist only...100%? Who gave the consent of the 40% if they don't exist? I know is legal but please...
That time has passed. Do not buy in now. It saves you from losing money which is also some form of making money, I guess.
To be honest, there isn't an idiots guide really. It would have to leave out too much IMO.
If you wanna start investing or trading my advice would be read a for-dummies book. You'll get a more comprehensive explanation than an idiots guide, but still not too technical or anything.
They get sold a second time. For example person A owns them and lends them to person B. B then sells them to person C. C doesnt know they originally belong to A, and lends them to person D, who then sells them again.
You now have two people, B and D, who will need to return the same share to two different owners.
As mentioned earlier in the thread, it can suppress the actual market value of a company, it can restrict credit lines to the company, and incentive wise it creates a massive incentive for the short sellers to try to affect the outcome both directly and indirectly, a consequence that misaligns with a healthy, functional market.
First, the bubble was created because short sellers went up to 120-140% of the value of the company, which is a current structural flaw that needs to be changed and regulated. They created the conditions for the bubble to grow. Second, when places like Robinhood start to restrict buying to protect their big capital buddies (and themselves), it artificially affects the market to protect the finance sector. They took the risk, they should bear the negative consequences. Admittedly, Robinhood might have done it solely to save themselves but then, that's the fault of Tenev for lying all over media instead of being honest.
That dude with a cap on YT is a Reddit user who started the whole GME mania.
He also turned $50k into $40mill in less than a year
Do keep up
Yeah, you won't see much popular resistance to taxing high frequency trading - problem is Congress moves so slowly and they're completely financially illiterate, therefore likely to listen to what lobbyists advise them to do
I also think Robinhoodapp is done for all intents and purposes. They were targeting a $20B IPO, they can be lucky if they IPO at 1/10 the price.
They were massively insolvent, had to draw credit lines, take additional investment (thus diluting existing ones), and in the process alienating 80% of their user base. You'd be stupid to want to continue trading there if they can prevent you from trading at their whim from 50 stocks.
I had a couple of grand there worth of positions there, closed everything on Friday and initiated a withdrawal back to Fidelity.
They were massively insolvent, had to draw credit lines, take additional investment (thus diluting existing ones), and in the process alienating 80% of their user base. You'd be stupid to want to continue trading there if they can prevent you from trading at their whim from 50 stocks.
I had a couple of grand there worth of positions there, closed everything on Friday and initiated a withdrawal back to Fidelity.
Further on Robinhood - there will be pressure to fix the integrity/complexity of our financial system. I would think that banning Payment for Order Flow which is essentially how Robinhood makes money would be top of the agenda along with restricting short selling to less than 100% of float.
So 2008 over and over again. Just looking for more and more margin till it explodes. Legal but fecking the system over and needing to bailing them out
Yep I just hope that it remains afloat until May, when I pull out my crypto earnings at long-term capital gains rate.
Maybe read the whole thread before you comment?
He found a weak link he exploit. Good for him.
Doesnt change the situation that game stop is still a dying business due to technology.
Not quite that simple.
I'm pretty sure your positions will get assigned elsewhere if indeed RH flame out before May.
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Not even the same ballpark - 2008 was much, much more serious. It impacted fixed income markets with trillions in derivative exposure once you count all the bad mortgages, rolled into MBS, rolled into CDO's rolled into CDO squared - referenced fifteen fecking times, across various tranches, each with their specifics/waterfalls etc and then insurance companies selling protection on the AAA tranches. It was a complete clusterfeck of derivatives going insane.
This is going to be contained to a few hundred billion wins/losses between some hedge funds and some increased vol whilst the long-short HF cover their shorts by selling their longs. This will blow over in a couple of weeks.
Haha ok - as I've said shorting is a mugs game. So many things have to fall right for you to make any money. But there's always righteous vigilantes, eager to get justice as Melvin found out
Haha ok - as I've said shorting is a mugs game. So many things have to fall right for you to make any money. But there's always righteous vigilantes, eager to get justice as Melvin found out
I'm not an elite, I'm just a pleb. I'm happy for the robinhood to get their fame and sucker punch the big whales. But it is what it is, a sucker punch. They will pull another 2-3 hit before the big boys tighten it.
Short selling shouldn't be allowed, it's just fictious trading with no underlying actual stock moving hands principally.
If the funds declared chapter 11, the government would have to bail them out, and they won't like it.
Unfortunately as RH don't actually hold the coins themselves, the positions will be liquidated as cash, which presumably would subject me to tax.
Sorry to hear that. So you don't think the trade will be novated/assigned to another exchange, you think they will have to liquidate your positions for cash?
This is uncharted territory...