Stocks and Trading Thread - Channeling your inner Mono

[crazy canuck]

Ok, you approach it like I do, it is just a game with play money 

[Habbaku]

Because I am a degenerate gambler?

We're not so different, you and I...

[The Minsky Moment]

They are trying to profit (or make the world a better place by scaring short positions) by collectively taking action to aggressively speculate in a single stock.

Now that is obfuscation

But they couldn't form a hedge fund because the SEC has income and high net worth tests that most people have to pass to be allowed into the funds.

You are confusing requirements for investing in fund with the requirements for forming one.

The accredited investor bar for investing is not that high - 200k income individually or 300k jointly or 1 million in net worth.  Even if you don't meet the bar you can qualify if you are an employee of the company or hold certain professional qualifications relating to finance.

It is the SEC's judgment that people who do not meet the bar should not be investing in risky ventures and products and the rule is there to protect them. You are free to disagree but in that case the issue is not that the "rules" are against the "little guy"  Your beef is with the paternalism of the SEC.

Being able to work around not being able to get into hedge fund like vehicles is not the same thing. These guys couldn't join a hedge fund like vehicle to squeeze short positions in Gamestop because such a fund doesn't exist.

Well it's true that there is no fund vehicle that pursues a strategy of pursing pump-and-dump market manipulation techniques to inflate the prices of crappy companies.  I don't think that proves your point of unfairness though.

[alfred russel]

The accredited investor bar for investing is not that high - 200k income individually or 300k jointly or 1 million in net worth.  Even if you don't meet the bar you can qualify if you are an employee of the company or hold certain professional qualifications relating to finance.

It is the SEC's judgment that people who do not meet the bar should not be investing in risky ventures and products and the rule is there to protect them. You are free to disagree but in that case the issue is not that the "rules" are against the "little guy"  Your beef is with the paternalism of the SEC.

LOL--and here is the crux. "Not that high". US median household income is $65k. I think the wealth test is $1 million in liquid net worth--excluding residential wealth. Regardless, the vast majority of Americans are excluded from participating in certain types of collaborate investment ventures on the basis of their wealth and income.

"Paternalism" doesn't change that the rules are actually more restrictive for less wealthy investors precisely on the basis of their wealth and income.

[Admiral Yi]

Do you think we should remove the restrictions of hedge fund participation

[Admiral Yi]

GME not collapsing as I had hoped.  I'll probably let it ride till Wednesday then cut my losses.

[Habbaku]

Do you think we should remove the restrictions of hedge fund participation

I could be convinced. I also don't know why anyone would want to go plunk their money down in hedge funds considering their horrid performance.

[Admiral Yi]

https://www.youtube.com/watch?v=Q-AFMM3paOU&t=267s

Interview with Ameritrade ex CEO.  He explains Robinhood's clearing situation some more.

Boils down to the two day lag to transfer funds.  So even though Robinhood is sitting on the customers' cash, when a customer makes a purchase that cash takes two days to get to the clearing house.  So Robinhood has to maintain a deposit at the clearing house to cover that float.

A little surprised it takes BIG FINANCIAL INSTITUTIONS that long to move money.

[Admiral Yi]

Tonto mongered!

[alfred russel]

Do you think we should remove the restrictions of hedge fund participation

I don't care one way or the other.

[Tonitrus]

Tonto mongered!

I realized my post evidenced half-baked thinking.

While, sure, I could sell a covered call on TSLA, at 1000, that expires in April, for $5K...which sounds like a too-easy five grand, especially as I doubt TSLA would make 1000, and if it did, I'd almost certainly sell off there.

BUT...I then realized the downside...I have to hold the stock until April...and if it nose dives, I cannot unload it before then.

[Habbaku]

A little surprised it takes BIG FINANCIAL INSTITUTIONS that long to move money.

There have been pushes to reduce it but, IIRC, there hasn't been a whole lot of need to do so...until...

[crazy canuck]

Do you think we should remove the restrictions of hedge fund participation

I could be convinced. I also don't know why anyone would want to go plunk their money down in hedge funds considering their horrid performance.

AR is arguing for more ways for unsophisticated investors to lose their money.  I am not so sure that is the best regulatory approach.

[alfred russel]

AR is arguing for more ways for unsophisticated investors to lose their money.  I am not so sure that is the best regulatory approach.

I'm unconvinced that income and wealth qualify someone as "sophisticated", but I'm actually not even arguing that. I am arguing that if there are additional options available to the wealthy that are legally closed to the poor--because they have been classified as unsophisticated based on their financial status-- the complaint that the rules are biased against the poor/in favor of the rich is going to have merit.

[Habbaku]

Do you think we should remove the restrictions of hedge fund participation

I could be convinced. I also don't know why anyone would want to go plunk their money down in hedge funds considering their horrid performance.

AR is arguing for more ways for unsophisticated investors to lose their money.  I am not so sure that is the best regulatory approach.

I'm also not sure that's the best step either, but as AR says, I think there's an argument to be had there. It creates poor perceptions even when the reality is that the rich are, on average, fools to put their money into hedge funds.