Stocks and Trading Thread - Channeling your inner Mono

[garbon]

AOC has called for an investigation of brokers who blocked purchases.

Joined by Donald Trump Jr. and Ted Cruz.

My first thought is that the brokers overstepped by cutting off their own clients, but I'm not sure i want to join this coalition.

I don't think you need to worry about this as a coalition.

https://www.theguardian.com/us-news/2021/jan/28/aoc-ted-cruz-gamestop-twitter-capitol

Ocasio-Cortez rejects support from Ted Cruz: 'You almost had me murdered'

The Democratic representative Alexandria Ocasio-Cortez has rejected a message of support from Ted Cruz, adding the Texas senator "almost had me murdered three weeks ago".

Cruz on Thursday had endorsed Ocasio-Cortez's call on Twitter for a congressional hearing about the decision by the online trading platform Robinhood to restrict trading in GameStop shares. But while welcoming the chance to work across party lines on the issue, Ocasio-Cortez had harsh words for Cruz.

"I am happy to work with Republicans on this issue where there's common ground, but you almost had me murdered 3 weeks ago so you can sit this one out," Ocasio-Cortez tweeted. "Happy to work w/ almost any other GOP that aren't trying to get me killed. In the meantime if you want to help, you can resign."

"While you conveniently talk about 'moving on', a second Capitol police officer lost their life yesterday in the still-raging aftermath of the attacks you had a role in," she said. "This isn't a joke. We need accountability, and that includes a new senator from Texas."

...

[garbon]

When I see articles like this (on game/entertainment sites even), I get worried those elements of frustration (and the sense that nothing really matters) on the right and their manifestations in society in general.

https://kotaku.com/i-threw-1-000-into-that-stonks-game-because-why-not-1846152366

I Threw $1,000 Into That Stonks Game Because Why Not

My partner and I spent $1000 on a game yesterday. We didn't spend it on Pokémon cards, or Fortnite V-bucks, or decide to become whales in Genshin Impact. But, at my insistence, we combined some funds, downloaded the Robinhood trading app, and bought some stock.

I mean, why the hell not right? We've seen the news about billion-dollar hedge funds flinching because of an organized group of Redditors with an affinity for GameStop. We've seen just about every jokified explanation of what in the actual fuck "shorting stock" means. Hell, we've even seen all the rocket emojis and "TO THE MOON!!" memes taking over Reddit and Twitter.

In short, this shit looked fun.

We didn't buy GameStop stock, the $300 per share price was a little too rich for our blood, and I didn't want to court any potential conflict of interest quagmires in case the stock did indeed rocket "TO THE MOON." AMC Entertainment stock looked nice at around $11 a share. The subreddit WallStreetBets started to throw around $AMC peppered with the rocket emojis in its daily discussion thread, suggesting it was about to become the next GameStop. So my partner put in the order, and away we went.

I should say, we didn't invest anything that would hurt us to lose. Both of us had a clear understanding of what was at stake playing this little game together (so invest responsibly, kiddos!) We knew we weren't gonna get rich if we did earn some money. And if we lost it all, well, that's how the stock market goes.

There's a phenomenon in gaming (and life) that people like to call "numbers go up." It's when satisfaction is derived from seemingly boring tasks like resource management or finding the right piece of gear to minutely increase a character's stats because it makes numbers go up. And, unless it's golf, numbers going up in a game is good. My partner and I are "numbers go up" people (him more than me) so watching that thin green line representing AMC's stock price rise felt good. Conversely, when it went down, panic ensued. I could always tell when the stock price was doing something because I could hear my partner's loud groans or "holy shits!" from my work station on the opposite end of our apartment.

I spent the day with an r/WallStreetBets tab open, occasionally refreshing its daily discussion thread to see if they had any wisdom regarding which stock to pick next or when to sell. I saw a lot of diamond hands (I feel pretty adept at parsing what memes are supposed to mean, but I could not figure this out at all), the standard "TO THE MOON," and an endless spam of the hallowed ticker symbols $GME, $NOK, and my own $AMC. It felt like a weird cross between all of Michael Douglas' scenes in Wall Street and 4chan.

It reminded me of my days lurking Trade Chat in World of Warcraft. Just being a fly on the subreddit's wall felt like watching a vaguely funny and entertaining drama unfold (when they weren't hurling ableist slurs everywhere).

Still, the subreddit evoked that same weird sense of community, that seductive feeling of camaraderie combined with the notion that not only are the people there making money, but they're also doing so in a way that completely fucks the morally corrupt billionaires on Wall Street. I started to think that I could make a habit of this. I really liked the idea of keeping an eye on this subreddit over time and jumping in on the newest squeeze to make enough money to keep my savings padded with enough cash on hand to cover any catastrophes. No visions of grandeur, no million-dollar days, just a small way to make my little bit of money work for me in the short-term instead of waiting the decades it takes traditional investments to grow. And if it dicked over some billionaires—hell yeah!

I left the decision of when to sell to my partner. He pulled the parachute cord around $16 a share. We didn't make a ton of money, maybe $250 bucks all told in a mere handful of hours. We could have made a little more if we held on longer, and I secretly lamented that he didn't leave some money behind so we could try again the next day. But as it turns out, we made the right decision. We played on the last day the game was still fun. We got in on the joke, made a little money, and got out. Damn, were we lucky.

Now, those plans to reinvest are shot. We can't buy any of the stock we want, and if we had left some cash behind, we would have lost out big. r/WallStreetBets is furious. Numerous top threads on the subreddit are threatening a class action suit against Robinhood (there's now a dedicated subreddit for it) for blocking the ability to trade certain stocks, and almost everyone I follow on Twitter is crying murder most foul—Ja Rule too.

More than the spigot being arbitrarily turned off, the people really being hurt by this do not have the resources hedge fund managers do. They won't be able to ask wealthy friends (like the government) for bailouts. They'll just be left out. It sucks. All of this is so deeply fake, and now, before our eyes, the facade is ripped away. The irony that all of this is going down because of an app called Robinhood is not lost on me. Rob from the rich, give to the—no not like that.

When things calm down, maybe I'll go back to Robinhood or find another app to do some longer-term investing. It seems like all the trading apps are capitulating to their Wall Street overlords, so it'll be hard to find one reputable enough that still has a spine.

The comment section is all then a howling of rage at the elite.  When someone noted:

Sounds a little like the sentiments I heard from the very few Trump supporters in my circles. They were so tired of being passive-aggressively fucked by the status quo that some dark part of them was willing to buy in to impossible/incoherent promises (remember when people could buy homes and support a family on a single income?! lets be great again!) or... in extremis... maybe they could watch it all burn and that would be ok too.

The author basically replied that it wasn't the same as this rage didn't hurt 'black, brown and queer folk'.

[Habbaku]

Today is the day shorts are meant to hit the end of the road and have to buy.

I think you're still confusing short selling and put options.

He might be elsewhere, but at least in this situation he's accurate. Today is supposed to be the day that the prophecy foretold as the forced-buy to cover all the short positions that other hedges have taken.

[garbon]

Another worrying example is the cognitive dissonance between the below and the fact that these individuals are being encouraged by the current richest man in the world.

https://www.theguardian.com/business/2021/jan/28/gamestop-fun-turns-deadly-serious-reddit-wallstreetbets

"You're a firm who makes money off of exploiting a company and manipulating markets and media to your advantage," the poster writes to Melvin Capital, the most prominent of the GameStop short-selling hedge funds. "I dumped my savings into GME [GameStop's trading symbol], paid my rent for this month with my credit card, and dumped my rent money into more GME. This is personal for me, and millions of others. I'm making this as painful as I can for you."

[Tamas]

Another worrying example is the cognitive dissonance between the below and the fact that these individuals are being encouraged by the current richest man in the world.

https://www.theguardian.com/business/2021/jan/28/gamestop-fun-turns-deadly-serious-reddit-wallstreetbets

"You're a firm who makes money off of exploiting a company and manipulating markets and media to your advantage," the poster writes to Melvin Capital, the most prominent of the GameStop short-selling hedge funds. "I dumped my savings into GME [GameStop's trading symbol], paid my rent for this month with my credit card, and dumped my rent money into more GME. This is personal for me, and millions of others. I'm making this as painful as I can for you."

Well yeah but Musk got rich on selling services and products (and doing that with good marketing). Yes he rode the previous stock craze to the top but he didn't instigate it.

People are hating on the reckless unfair gambling that is allowed unpunished for Wall Street and the rich in general, who are operating a rigged game disguised as open and fair. And I think what really got the anger flowing is that the "elite's" reaction to a group of individuals exploiting the rigged game to the "elite's" disadvantage has been EXACTLY as bad as their worst dectractors thought it would be.

Now of course, trying to make a crusade out of stock speculation is silly and what's happening is clearly a game of musical chairs. But I think Wall Street's handling of this, especially with the crap pulled yesterday, plus the broad media campaign before it are despicable and they deserve all the hate directed toward them.

[Zoupa]

You seem to be worrying about weird things, garbon. I don't think the salient points to this story are nihilism and Musk, but more how the game is blatantly rigged against the average Joe on Wall Street.

[Tamas]

https://gizmodo.com/google-deletes-100-000-negative-reviews-of-robinhood-ap-1846156699


Well we don't want an unreliable manipulative service handling money for their customers be disadvantaged by being known as unreliable and manipulative, do we.

[Tamas]

You seem to be worrying about weird things, garbon. I don't think the salient points to this story are nihilism and Musk, but more how the game is blatantly rigged against the average Joe on Wall Street.

Exactly, and as I said, it is astonishing how seemingly little it took for this to be admitted in public, in practice.

What it makes me think is that despite the 2008 crisis, these various funds and banks are exactly as insanely leveraged in stupid shit as then, except maybe not specifically in mortgages.

[Josquius]

Totally agreed with Tamas.
Not many people hate the rich just for being rich. Musk got to where he is for actual innovation and clever marketing. He is really trying to push forward civilization with his space stuff too. This is absolutely the kind of thing that should see success for you.
As opposed to the shorters who are looking to profit from driving a company that employs 10s of thousands of largely poor young people into the ground.

[alfred russel]

Totally agreed with Tamas.
Not many people hate the rich just for being rich. Musk got to where he is for actual innovation and clever marketing. He is really trying to push forward civilization with his space stuff too. This is absolutely the kind of thing that should see success for you.
As opposed to the shorters who are looking to profit from driving a company that employs 10s of thousands of largely poor young people into the ground.

If your company goes bankrupt and blames the people shorting stock, and you buy that, you are a fool. You are the sort of person I would want to short, but Americans aren't allowed to short people these days (since 1865 anyway).

[Sheilbh]

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[garbon]

You seem to be worrying about weird things, garbon. I don't think the salient points to this story are nihilism and Musk, but more how the game is blatantly rigged against the average Joe on Wall Street.

But we already knew that the economic structure is set up in such a way that if favors those who already have the money. If it wasn't, we wouldn't have the terrible degree of wealth inequality that we have.

This example to be seems to have at its core a foundational narrative about how this is the little guy sticking it to the billionaires but that doesn't appear to be true and as Tamas said "trying to make a crusade out of stock speculation is silly and what's happening is clearly a game of musical chairs".  It is definitely even sillier when one of the key figures encouraging you is the wealthiest individual alive. So you have another situation where social media and a wealthy guy, are encouraging people to engage in a) risky behaviors and b) engage in fantastical narratives about fighting the good fight.

After all, what's going to happen to the individuals who elect to pay their rent on their credit card so they can put their money into the stock and #holdtheline? The poor get poorer and victimization complex escalates.

[garbon]

Totally agreed with Tamas.
Not many people hate the rich just for being rich. Musk got to where he is for actual innovation and clever marketing. He is really trying to push forward civilization with his space stuff too. This is absolutely the kind of thing that should see success for you.

They probably should. It is heartbreaking to think about how much wealth a single individual can have, while we having people dying because they can't afford food/healthy food, healthcare and/or a place to live.

As opposed to the shorters who are looking to profit from driving a company that employs 10s of thousands of largely poor young people into the ground.

Gamestop is a piece of shit company that exploits its employees and is overly reliant on a dying business model. I don't think many will be sad to see it go.

[alfred russel]

After all, what's going to happen to the individuals who elect to pay their rent on their credit card so they can put their money into the stock and #holdtheline? The poor get poorer and victimization complex escalates.

There are always suckers. In the past these people invested in snake oil, land speculation schemes that turned out to be swampland, or enrolled in Donald Trump's real estate university. They aren't really victims, they are just stupid, and like previous generations of stupid, they will be bitter, but that bitterness will die with them.

It is better for them than before because right now we have an eviction moratorium.

[The Minsky Moment]

3) Over rehypothication is problematic because in a crisis event collateral that is supposed to there has already been moved and lent out, perhaps multiple times.  This was one of the problems that manifested in the 08 crisis which led the SEC to put some limits on it - but arguably not enough.

But isn't that a problem with rehypothecation rather than with shorting +100% of the float?

Yes.  The only issue with shorting so much of the float is that if there is a successful squeeze the effects will be heightened because of the scramble to secure shares to close out the shorts.