WSB vs Wall Street / Gamestop Stock and others blown up by Subreddit

Zarlak said:
This is all common sense, applies to literally any trade anyone ever makes and not at all the point I was making. If you got in at 280 before the crash to 50 but firmly believe the stock will return to, say $100 then you're losing a small amount on your initial investment if you wait to sell til that point and losing more if you sell now. If you lower your average while the stock is at 50 then you can eliminate your loss entirely. It's just simple math, not advice, just a fundamental truth. I'm not doing it myself, but it's not the worst idea if you believe in the company. If you don't, then obviously it's a bad idea and just a gamble.
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I know, which is why I just said my head exploded.

I didn't communicate it, so it's my fault, but it was a Reddit comment by someone who clearly had no idea. He just wanted a lower average to make his losses look smaller.
 
Sied said:
'In short, I like the stock.' :lol:
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I enjoyed that bit!

Whether or not you believe that the Hedge Funds/Brokers etc actively manipulated the markets during this whole saga, it seems utterly obvious that most of the major events (eg restricting share purchases etc) very much favoured the hedge funds. That interview only reinforces that view.
 
Sied said:
https://www.cnbc.com/video/2021/02/17/interactive-brokers-thomas-peterffy-on-gamestop-hearing.html?__source=iosappshare|com.apple.UIKit.activity.CopyToPasteboard this interview is worth a watch. Explains how close the share price was to getting into the thousands if RH & Co hadn't stepped in.
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Walrus said:
Whether or not you believe that the Hedge Funds/Brokers etc actively manipulated the markets during this whole saga, it seems utterly obvious that most of the major events (eg restricting share purchases etc) very much favoured the hedge funds. That interview only reinforces that view.
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I think that's a misconception. The actions of the brokers protected the brokers themselves and the market clearing infrastructure in general. While all of the retail money was on the long side of the GME trade, and the short side was essentially just institutional money, what's missing is the realization that most of the long side was also institutional money. On a net basis institutions would still be the biggest winners of a price in the $1000s, just that some institutions would be owed billions and other would owe billions, while retail as a whole would also be owed billions.

Also to point out, he's basing his narrative on an outdated set of data. He said short interest was 70m shares, and that was indeed the high of it but on Dec 31st 2020. By mid-Jan 2021 short interest was already down to 60m shares, and then by Jan 29th it turns out it was 21m shares (we didn't know this until 1.5 weeks later). But that means that as the stock skyrocketed on the 27th through 29th, short interest was already making its way down to the 21m shares. Essentially, 27th to 29th was both the frenzy and the squeeze (shorts buying at any price to close out positions). By the end of the week the conditions for a huge short squeeze had already significantly dissolved (not entirely because short interest was still high but not a nuclear weapon anymore).

Then on the options part he talks about on outstanding calls, it is generally uncommon that people actually exercise their money-making options, especially those that are using options to essentially get leverage on their trade which is what most retail investors were doing. So it doesn't automatically generate the need to go to market and buy whatever hundreds of millions of shares he was talking about, because a lot of the options trades will close out without requiring delivery (essentially like futures contracts). And he's also not taking into account delta hedging that any options market makers would already have been doing before on options that had lower strikes and were already deep in the money by the week before.

In summary, cool narrative and his view of the mechanics generally holds up (he owns a broker so he knows more about clearing rules and mechanics than I do) but he's painting the most apocalyptic scenario possible instead of a more realistic one.
 
Today, after a 12 year bull market: retail investors deserve every last ounce of access to the stock market, regardless of Know Your Client depth, collateral posted, assets in accounts, etc.

Sometime in the future, in a hypothetical crash: brokers/apps/platforms, why did you not further protect retail investors from taking so much risk?!
 
MTF said:
Today, after a 12 year bull market: retail investor deserve every last ounce of access to the stock market, regardless of Know Your Client depth, collateral posted, assets in accounts, etc.

Sometime in the future, in a hypothetical crash: brokers/apps/platforms, why did you not further protect retail investors from taking so much risk?!
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It should be a level playing field and clearly isn't.
 
caid said:
It should be a level playing field and clearly isn't.
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I don't even know what you're thinking when you say that. Institutions do this professionally with people employed in analysis, risk management, operations... counterparties (Prime Brokers in particular) have a better view of institutions' assets, cash, risk exposure, than any broker has for any retail client of theirs. What about this is supposed to be level and in what way?
 
MTF said:
I don't even know what you're thinking when you say that. Institutions do this professionally with people employed in analysis, risk management, operations... counterparties (Prime Brokers in particular) have a better view of institutions' assets, cash, risk exposure, than any broker has for any retail client of theirs. What about this is supposed to be level and in what way?
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Its not that its not level in terms of education and expertise on the stock market. Its not level in terms of the hedge funds, brokers etc clearly being able to exert their own pressure and influence on the market itself. They have more options in terms of trading out of hours, with brokerages and options that are not available to retail investors.
 
Walrus said:
Its not that its not level in terms of education and expertise on the stock market. Its not level in terms of the hedge funds, brokers etc clearly being able to exert their own pressure and influence on the market itself. They have more options in terms of trading out of hours, with brokerages and options that are not available to retail investors.
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Neither of the things you quoted are particularly lucrative in my opinion. I've said this here before: when you execute a trade you want the least price dislocation possible. People are talking like a large institution gets to, for example, buy a stock and pressure it up in the process, and then turn around and magically sell that same amount at the new higher price without pressuring the price back down.

I do trade execution, and if the portfolio manager tells me to buy something and then later sees that ever since he ordered that the stock basically went on a tear and our avg price is much higher than when we started, I'm getting a bollocking and not a pat on the back. The objective is not to pressure the market with your trading.

On after-hours trading, its also not some nadir of free money. Retail investors can trade after-hours too btw. But to my point, stock moves tend to be exacerbated in after-hours trading because liquidity is a fraction of regular hours. I've traded after-hours hundreds of times because my PMs are always impatient characters, and my assessment is that on average it's money losing vs trading in regular hours exactly because prices suffer a lot more pressure from small trades in the low liquidity.

In this particular case I think there's a misunderstanding about access to the market. People are supposing that their access to the market by signing up and making a small deposit at Robinhood should somehow be equal to other forms, be them for institutional and retail investors. But they're not realizing that the nature of Robinhood not really knowing you, not having a fuller picture of someone's assets, means that it is a more restricted form of accessing the market than others available to retail investors like having an account with a traditional broker that maybe still charges commissions on trades. Not all retail brokers restricted trading on GME and other tickers on Thursday, but the least robust ones did.
 
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MTF said:
I think that's a misconception. The actions of the brokers protected the brokers themselves and the market clearing infrastructure in general. While all of the retail money was on the long side of the GME trade, and the short side was essentially just institutional money, what's missing is the realization that most of the long side was also institutional money. On a net basis institutions would still be the biggest winners of a price in the $1000s, just that some institutions would be owed billions and other would owe billions, while retail as a whole would also be owed billions.

Also to point out, he's basing his narrative on an outdated set of data. He said short interest was 70m shares, and that was indeed the high of it but on Dec 31st 2020. By mid-Jan 2021 short interest was already down to 60m shares, and then by Jan 29th it turns out it was 21m shares (we didn't know this until 1.5 weeks later). But that means that as the stock skyrocketed on the 27th through 29th, short interest was already making its way down to the 21m shares. Essentially, 27th to 29th was both the frenzy and the squeeze (shorts buying at any price to close out positions). By the end of the week the conditions for a huge short squeeze had already significantly dissolved (not entirely because short interest was still high but not a nuclear weapon anymore).

Then on the options part he talks about on outstanding calls, it is generally uncommon that people actually exercise their money-making options, especially those that are using options to essentially get leverage on their trade which is what most retail investors were doing. So it doesn't automatically generate the need to go to market and buy whatever hundreds of millions of shares he was talking about, because a lot of the options trades will close out without requiring delivery (essentially like futures contracts). And he's also not taking into account delta hedging that any options market makers would already have been doing before on options that had lower strikes and were already deep in the money by the week before.

In summary, cool narrative and his view of the mechanics generally holds up (he owns a broker so he knows more about clearing rules and mechanics than I do) but he's painting the most apocalyptic scenario possible instead of a more realistic one.
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I understand his point to be that the system should prepare for the most apocalyptic scenario possible, so in the unlikely event it transpires, the system isn't brought down by it. Sure calls aren't generally exercised en-masse like that, but that doesn't mean the possibility and consequences shouldn't be safeguarded.
 
RH was pretty much roasted during yesterdays congressional hearing, whereas Melvin Capital got off very lightly.

Most infuriating part was when AOC was asking a challenging question to Melvin about short selling, and she got cut off due some dumbass not turing of their mic. Then she was not allowed to finish her question because her time was up.

The feeling was that Congress, Citadel and Melvin had all decided that RH was to be the designated scapegoat.
 
Well there were still shorts in play, this was never over.

ha, it hit $200 after close before boucing back to $140 now. Game on.
 
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WSB now rallying together and donating to adopt gorillas and other wildlife. Has apparently raised $100k for the Dian Fossey Gorilla Fund alone, who has responded with a thank you video. Most are donating under the name 'GME', but some are being more creative and using names such as 'Feck Melvin Capital' and 'Jim Cramer's Tears' :lol:

 
I’m still involved with AMC, probably won’t go as high as people hope but I’m up an okay amount already and will let it ride some more.
 
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