It really lifts the veil on how little research goes into some of these articles when you see the reporting on a topic you have closely followed.
>The stock, which peaked at $482.95 a share when hedge funds that had shorted GameStop were forced to buy at any price, has come back to earth. But it is still at about $112 a share, compared to less than $20 on Jan. 1, 2021.
This is a pretty basic error to make when the SEC investigated and even put out a report showing that the majority of that price movement was from non-short sellers (e.g. retail) and that as a proportion of volume, barely any of it was due to short sellers closing their positions.
The article also completely glossed over the fact that DFV was made fun of and derrided for taking such a large risk in GME. Especially when it was down (for a majority of the time since he started posting that position, if I recall corrected). It instead portrays him as making "consistent returns" and starting a movement to influence the price.
> the SEC investigated and even put out a report showing that the majority of that price movement was from non-short sellers (e.g. retail) and that as a proportion of volume, barely any of it was due to short sellers closing their positions.
That's talking about the longer lasting effects (i.e. the reason GME stayed at $100+)
but from p26:
> particularly during the earlier rise from January 22 to 27 the price of GME rose as the short interest decreased. Staff also observed discrete periods of sharp price increases during which accounts held by firms known to the staff to be covering short interest in GME were actively buying large volumes of GME shares, in some cases accounting for very significant portions of the net buying pressure during a period
The run up to $500 was almost certainly a short squeeze
It also says short covering was only small portion of overall buy volume, so while there might have been a short-squeeze that might not explain the full price dynamic (p27 and also figure 6).
>particularly during the earlier rise from January 22 to 27 the price of GME rose as the short interest decreased. Staff also observed discrete periods of sharp price increases during which accounts held by firms known to the staff to be covering short interest in GME were actively buying large volumes of GME shares, in some cases accounting for very significant portions of the net buying pressure during a period
This is a deceptive way of putting it. Yes, if you fiddle with the window you are looking at, it is possible for the short sellers's volume to make a majority of volume (e.g. for a given 5 minute window). But a reasonable person would look at the graph in the report and come to a completely different conclusion [1].
If you look at that cumulative volume of short seller volume, it is not possible to close out the reported 122.97% short interest. Let alone the "unofficial" short interest of >200% that came out of the RobinHood hearings.
The controversy surrounding the stock stems from this disconnect of short volume and retail volume, and an article that ignores this (especially when talking about the figure who rose to fame off the back figuring this out), speaks to how little research was actually done. Especially when they spin it as a clear cut "short squeeze" when it appears to be anything but.
I believe you are mistaken. Have a look at the report as it's definitely an interesting read. From what I understand, retail was the majority of the volume.
That's because the point of this article is "Don't trust these scam artists!" because collective action motivated by hatred of elite rigging the system... is dangerous to those elite.
I would argue Michael Burry actually sparked GME, that and new CEO and some massive short selling. Burry has much more of a following on twitter then the 400 from Roaring Kitty, and him buying was a trigger for my interest in it.
Now, he usually does proper analysis and did have reasons for stock to run up, it was fun to see his tweets about the mess of trying to track down the shares he bought - https://i.redd.it/utr5k9banpe81.jpg
So I was very active on the Wall Street Bets Reddit forum shortly before and during all of this.
I would agree that Roaring Kitty wasn't much of a catalyst (prior to the price exploding), but was an early proponent of GME.
I do distinctly remember deciding to invest in GME around December 22nd of 2020, based on what I was reading on the Wall Street Bets forum (unfortunately only like 50 shares.) It was a major daily topic on there from mid December (or earlier) on. Michael Burry was rarely mentioned as a holder, he had bought into GME a lot earlier. The conversation mostly centered on short interest, fundamentals and future moves GME would do.
So I would argue it was 'the collective' on WSB that was perhaps one of the larger catalysts.
Thanks for the links that report on the story. I was curious to see more of the original Tweets too, but it’s too bad that Michael Burry deleted his Twitter account in April 2021 [0].
I'm not sure that's true? The stock market is up quite a bit if you look back a few years. Your average boglehead-style buy-and-hold investor has probably done very well.
Overall the market will win, but volatility around retirement is the issue.
EDIT TO ADD: Sincerely, thank you for your comment (and the replies providing additional context). It's given me some much needed information to go research (ala Boglehead investing).
John C. Bogle founded Vanguard, which had the first index funds. Simply put, "Boglehead" refers to someone who invests in index fund(s) and leaves the money there long-term, without trying to time the market, buy individual stocks, etc.
The collective action was motivated by greed, they were very up front about that, including Roaring Kitty. The "elite" that held similar positions in GME got rich too, there wasn't anything dangerous about it.
> This is a pretty basic error to make when the SEC investigated and even put out a report showing that the majority of that price movement was from non-short sellers (e.g. retail) and that as a proportion of volume, barely any of it was due to short sellers closing their positions.
It was apparently also very dangerous to retail investors.
It's pretty clear the GME jig is more than up. It's fascinating to see folks out there thinking the squeeze hasn't happened yet - it clearly has. The stock has fallen to less than 20% of its peak price.
The SHF have not covered their shorts. The price movement can be related to several factors and if you want to believe that it means they've covered, you're welcome to. I would suggest reading more if you're interested.
The people that are holding and directly registering their shares know differently.
I'm glad you're confident. You have to understand that retail is also confident and it is directly registering its shares. When it reaches 100%, let's see.
Your position is not falsifiable. How long has to go on, with the prophecy not coming true for you to admit you are wrong?
As in give me a date. On that exact day, I can come back to you when the prophecy did not come true, and see if you are willing to admit that you were wrong, or if you will just come up with another excuse for why the prophecy is delayed.
Do you see the problem here? No matter what you say, if you give me a day for when the prophecy is going to happen, you can just make up an excuse later.
That's the issue with conspiracy theories. They are not falsifiable.
Your position is not falsifiable either. Show me the proof that they've covered. Of course you can't. But you're confident anyway. Based on what? You're certainly in the minority among retail investors. That makes /you/ the conspiracy nut, not them.
No one said this would take a day or a month. The expression is "diamond hands"; being patient is not easy. No one know when it will happen. But what we do know is that there continues to be a steady flow of investors whom are directly registering their shares every day.
Of course my position is falsifiable. If there is a massive prophetic doomsday, where the price of GME goes to 10 thousand, or a million dollars, and crashes the world economy, then my position would be falsified.
But with the prophecy predictors, the same is not the case. No matter how long goes on, with the doomsday not happening, a doomsday predictor can just make up an excuse for why the doomsday was delayed.
So once again, give me a date. Surely there must be a day, where if this goes on long enough, with no doomsday, that you will admit that you got duped, and this is all nonsense.
because I am happy to come back to you, on that day, to see if you are willing to take in new information, or if you will just come up with some excuse for why doomsday got delayed.
See the difference between your's , and my position? With me, if the doomsday happens, then that is when I am proven wrong. For you, if the doomsday doesn't happen, for however long, you can just make up a reason for why it got delayed.
Or, in other words, the doomsday is not falsifiable.
> /you/ the conspiracy nut
You are the one predicting a doomsday, supposedly right? Every day that the doomsday does not happen, is more evidence that I am right. Just give a date. Give me a day, when you will say "Well I guess the doomsday isn't coming". I will mark it on my calendar.
If you do not give a date, then you are literally admitting that your position cannot be falsified, because you are saying that no matter how long goes by, with the million dollar short squeeze, you will not be convinced.
I can be convinced. If price hits a million dollars, I was wrong. You can't be convinced, if you are unwilling to give a day when you'd admit that you got duped.
Most retail GME investors intend to hold and not set a date or trigger price. That's the strategy, actually.
Institutional investors that got caught naked short selling can manipulate the price and stall but they can't stall forever -- and every single day it gets harder and harder.
Will it go to $10,000? Who knows. There's a price not much above that which would crush world markets to the point where it would usher in the apocalypse. There would be intervention before that happened.
Very few of these GME investors are solely trying to make some money. They see a corrupt market place and they want to take it down. The SEC could have just done its job but it didn't. They could have stopped the naked shorting. They could have curbed the corruption. They didn't. Instead an army (make no mistake) of small retail investors are buying and holding and registering their shares. You may not understand it, but this is war.
And look at the vitriol. Flat-earthers? Conspiracy nut? It's funny because if I buy Netflix because I think the price will go up, no one tells me that. There are no articles saying, "Netflix's growth is over! Everyone sell! Please, God, sell!" Can you imagine the buy button (but not sell button) being turned off for Netflix for a day during a price run-up? Don't be confused. This is war.
If you want a date, let's give it two years. Who knows and frankly the investors don't care.
The vitrol is due to the fact that no matter how long the conspiracy doomsday fails to happen, you will come up with an excuse for why the doomsday got delayed.
> If you want a date, let's give it two years.
So then, if in 2 years, the financial doomsday doesn't happen, you will admit "yep, I got totally tricked by an internet conspiracy, and have no idea what I was thinking, and I will try not be convinced by conspiracy theories anymore, and nobody should listen to what I had to say about any of this stuff previously"?
Or will you just make up another reason why the doomsday didn't happen?
> I think the price will go up
Its not about price going up by a couple percentage points. Instead, the issue is this unfalsifiable conspiracy, of financial collapse and doomsday that people are predicting, and will accept no amount of evidence to the contrary, no matter how long this doomsday fails to materialize.
Your vitriol is because you place a timeline no one else placed on a position you don't hold? So you're angry?
You're not angry at hedge funds for naked short selling? You're not mad at the front running? Did you or did you not see that the buy option was turned off for one stock on a critical day last year during a run-up in price and no one went to jail? You're not furious that the SEC has abandoned its job?
The retail investors doing this are all holding long-term. The motto is, "We just like the stock." Maybe they're sanguine because they think time is on their side or maybe they like the stock. What's the problem? The only one trying to put a date on it and losing their mind and name-calling is you.
You didn't answer the question. Will you admit that you fell for a stupid conspiracy theory and that absolutely nobody should take anything you say seriously ever again, if in a reasonable timeframe, this mythical financial doomsday fails to materialize?
Or will you just make up another excuse?
That is what I mean by falsifiability. If you do not say that you will admit that you were wrong, if this mythical doomsday does not happen, then by definition you are saying that you cannot be convinced out of your position, no matter how long goes by, without the doomsday happening.
So then the answer is yes, after a reasonable timeframe happens, without this financial doomsday happening, you will admit that you just fell for a dumb conspiracy theory, and people should not take what you say seriously?
That would be falsifiability, if you agree that yes you will agree that you fell for a conspiracy theory, in that situation.
If you make up an excuse, then by definition, your opinion is unfalsifiable.
You're making a straw man argument and attacking it with a lot of anger. No one investing in GME is on a timeline. No one. Could it there be a huge gamma short squeeze? Absolutely. The due diligence that Mr. Gill put together is impressive. A tidal wave of investors agree with him. Will it happen? Maybe. But that's all you get to know -- that maybe it could happen. In the meantime they're holding shares of a company that is doing pretty well lately -- and they know that time is on their side. They can just back and hold their registered shares knowing that's all they need to do. They literally use terms like 'infinity pool' meaning they plan to hold for a long, long time.
And being prepared to hold for a long time is key. Here's why: let's say it's true. Let's say that hedge funds did engage in naked shorting of a company seemingly headed for the dust bin. If this buy, register and hold strategy was for only x months, then the hedge funds can wait to close out their position. Right? Is that confusing? By saying, "There's no end," it puts tremendous pressure on these hedge funds.
I've listed several places where the markets have been shown to be corrupt and rigged. People still go to jail for insider trading but not for any of these other, much worse, market manipulations? And you ignored it. What has incurred your wrath, instead, is that a large group of people would buy, register and hold a stock they like and not state unequivocally when they were going to sell. That's what has made you mad.
The math of all of this is that either don't understand what I'm saying or you do, which means you're either a little fool or a giant asshole.
If you do not have a timeline for your predictions of financial doomsday, then that by definition means that your predictions are unfalsifiable. Which is the problem there I have trying to bring up this entire time.
It is a big problem, if you are literally saying that no matter how long goes on, without the doomsday happening, then you will just make up an excuse for why the doomsday got delayed.
That is a problem, because then the belief is not falsifiable.
Man, there’s a few of you left holding a random stock after a pump and dump you fell for faded. That’s it. That’s the reality. And somehow this has morphed into “we didn’t miss it !“, and then lastly into “this is war and we will take down the global financial system”.
Total nonsense, but entertaining in a car-crash kind of way.
And you say this for other positions that you don't like? Puts of $fb? Calls on $nflx? Of course not.
The reality is that hedge funds engaged in illegal naked short selling, confident that they would never get caught because the SEC has essentially abandoned its role. And a group of retail investors decided simply to buy and hold registered shares of that firm, knowing that simply by doing that, they could bleed those SHFs out or force them to close their position at a much higher price. There's a lot of due diligence out there that backs that position up if you want to look -- but you don't.
Here's the thing, you can like it or not like it. No one cares. However, it's worth noting that it's the only position you'll see be called names and screamed at. "Don't hold! Oh God it's been a year why are you still holding?! God! Stop! Please, stop!"
You misunderstand every reply here and elsewhere. Nobody cares that you are still holding. Nobody. What you do with your portfolio is up to you.
What people do care about is telling you that no, there isn’t some shadowy cabal of hedge funds with your name pinned to a wall under the heading “number one risk to the financial system”.
Continue to hold, but please do understand you’re quite deep in a self-reinforcing grandiose doomsday conspiracy that makes you feel special. None of which have ever historically bore fruit, not for lack of waiting and money invested.
> Will it go to $10,000? Who knows. There's a price not much above that which would crush world markets to the point where it would usher in the apocalypse.
> Instead an army (make no mistake) of small retail investors…
> You may not understand it, but this is war.
> Don't be confused. This is war.
I keep diving into hyperbole? I think this conversation has run its course.
There's a reason I've been following the story. There is nothing new about hedge funds naked shorting (essentially counterfitting) shares, and nothing new in the SEC's refusal to do anything about it.
What's new here is that this is the first time in history that retail has simply used collective buying power to catch them out at it. By simply en masse buying and holding directly registered shares, it puts them over a barrel.
The statements that it's war or what could happen aren't hyperbole -- and I find that fascinating. We'll see...
Absurd. You could falsify the opposing position by providing data that shows significant short interest. Of course you will have trouble with this because all of the data confirms the opposing position.
On the other hand, your position cannot be falsified because you dismiss all of the available data as manipulated without proof.
Your account is only four hours old but you have a dozen comments in this thread, all of which are desperately pleading with people that the shorts covered, there's no squeeze possible.
Sure. There is a lot of confidence on this thread both ways. No one will know until all shares are registered, which is why there is a rush by GME holders to DRS their shares with Computershare.
The markets have been corrupt for quite a while. This may be its Bastille moment.
I completely reject this both side thing. Every data point out there shows that these conspiracy theories are unfounded. Even the redditors who believe this nonsense have debunked them themselves through their own experiments (the shareholder vote, the DRS thing) and they keep pushing the goalposts.
There's no global conspiracy to hide shorts of GameStop. It's flat-earth level nonsense. The SEC report spelled everything out, I suggest reading it.
>No one will know until all shares are registered
So we'll never know, because it's obviously not going to happen. Retail doesn't even own half the shares, if redditors manage to hit 10M shares registered I'll be impressed. I really didn't expect to read this drivel on Hacker News frankly.
While this is totally true, let's not forget Gamestop themselves announced that a bit more than 5.2M shares were registered with Computer share at the time of their last earnings report, with the bot estimating something like 7 or 8M based on average shares per post * estimated holder, so not that far off
I see your point. My personal opinion is that sure the bot can't be trusted, but that when GME will give the updated numbers of registered shares, there will at least be 2 official data points on this subject... Depending on how high it is (only a minority of outside-of-the-US holders had been able to DRS as of October 30th, not the case anymore), we'll either get an estimation on when a full lock-up of the float would happen, or a new cycle of trying to find the next catalyst ¯\_(ツ)_/¯
It's been a year, every single prediction made by the weird GME cult has been disproven and they keep digging a deeper hole with ever more far-fetched and all-encompassing conspiracies. Textbook flat-earth nonsense.
>If you honestly believe front-running doesn't happen
This is also textbook conspiracy hogwash. "You really think that illegal things don't happen? How naive of you. Clearly that justifies our bonkers thesis about how millions of people around the world are conspiring to hide shorts for a single random stock". What does front running have to do with the insane theory that billions of short positions have been hidden for over a year now?
Last year's price action was a short squeeze that morphed into a pump and dump as retail poured into it (fueled by boredom and stimulus checks at the start of the pandemic). Then some low cost brokers ran out of liquidity which forced them to disable the buying of the asset, which paradoxically probably saved a lot of retail customers who otherwise would've been holding much heavier bags if the pump-and-dump kept its momentum until even higher valuations. This plus the general (and probably warranted) anti-wallstreet sentiment gave rise to all sorts of conspiracy theories.
That's it. Literally every single data point out there confirms this scenario. GameStop themselves said as much. The GME doomsday cult has been saying that the rapture (uh, sorry, "Mother of all short squeezes") was imminent based on ever more tenuous and far-fetched theories that always end up failing.
>If you're not digesting what you read and your thought merely mirrors what you're told
Your account is only four hours old but you have a dozen comments in this thread, all of which are desperately pleading with people that the shorts covered, there's no squeeze possible.
That's the public information available. There are many ways of hiding short positions like with ETFs. Look at the XRT (an ETF holding GME). Note, I have GME in my portfolio, there's more to GME than the squeeze.
The more that directly register their shares, the smaller the pool to manage the price. It doesn't have to hit 100% for there to be an effect. But if it ever does hit 100%, the price has no upper bound.
Deep reporting and meaningful analysis takes expertise and time, both of which cost money.
If reporting is becoming irrelevant and shallow, we (collectively) have only ourselves to blame by not supporting (with money) deep investigative journalism.
It is a bit lazy to blame the consumer for the lack of quality. Kind of a light version of how consumption but not production is blamed for the climate disaster.
Spending your own money on quality news papers is not the only way to support good journalism. You could also ask your national government to spend more tax money towards your national media company (if you have one) or towards subsidizing independent ones. Or you could champion pro-consumer legislation which might prevent ad monopolies like google from swallowing most of the ad revenue.
Asking consumers to spend their money correctly is probably the least effective way of increasing the quality of production.
I agree, but the article is talking about an event that happened a year ago and how the main actor in said event has not had much social media presence in the last 8 months. They have had plenty of time.
There’s no way to do that without value judgements. Let the masses do it for themselves. All you need are a few dozen data-driven bloggers per million people.
But journalists are the highest of high integrity individuals (just ask them) and they would never engage in deliberate mental poisoning of their 'readers' on behalf of their masters?
It's not clear to me what you think the error is. That the majority of the price action was caused by retail and not short sellers covering their position doesn't negate the fact that shorts were forced to cover their positions and did so. The language and charts in the SEC report show as much.
In the section "Short Selling and Covering Short Positions" is a chart on page 27 that shows the short interest for GME. It shows the short interest dropping precipitously, meaning that the majority of positions were closed.
XRT has been highly shorted for well over a decade because pretty much all of the stocks in it are failing brick and mortars, including gamestop. What does that have to do with GameStop’s short position?
I mean the article basically has no info at all in it. It could have been written by an AI.
Can anyone update me on what the guy is doing now and how much money he made, when he sold, does he still hold any, etc.? The actual interesting part of the story.
Thsi time last year he owned a lot of options -- the ability to buy thousands of shares at a low price (like $5 each, when the shares were selling at $200). Typically you can sell those options and take the cash, but you can simply pay for the shares instead.
Each month he'd post an update which said he bought the shares instead.
Obviously he could have faked the screenshots, but he also swore to congress when the price was c. $40 (after the initial $400 spike) that he would still buy Gamestop at $40. A few days later he posted another screenshot showing not only did he exercise his final options, but he bought even more at around $40.
Now he could have sold most of his shares at any point in the last 9 months, which mostly bounced between $150 and $250, or he could have kept them just like the Gamestop board did (indeed I believe some of the board actually bought more shares at those overinflated (imo) prices. Nobody knows.
I believe one way of making money without selling is to sell options -- you tell someone "I will guarantee to sell 100 shares for $150 a share on May 1st" for example. They will pay you $3 a share for that guarantee, and when the price on May 1st is $140 you just laugh. If the price is $160, you have to sell your shares for less than market price (but still more than you paid), and eat the loss.
DFV was a player but not the ringleader by any means. Basically a bunch of reddit users on r/wallstreetbets came up with a premise to buy into heavily shorted stocks to:
A. Initiate a short squeeze in heavily shorted stocks by having retail traders pile into them by buying shares and..
B. Strike back at market manipulators like Andrew Left and Melvin Capitol by forcing them to buy back their short positions due to skyrocketing share prices of their shorted assets.
On the wallstreetbets forum point B was touted as the reason to buy into these stock positions due to all the issues these wall street short sellers cause with traders and society in general. DFV was just lucky in that his trade was picked up by the crowd due to it being heavily shorted and eligible for point A.
> It really lifts the veil on how little research goes into some of these articles when you see the reporting on a topic you have closely followed.
Briefly stated, the Gell-Mann Amnesia effect is as follows. You open the newspaper to an article on some subject you know well. In Murray's case, physics. In mine, show business. You read the article and see the journalist has absolutely no understanding of either the facts or the issues. Often, the article is so wrong it actually presents the story backward—reversing cause and effect. I call these the "wet streets cause rain" stories. Paper's full of them.
In any case, you read with exasperation or amusement the multiple errors in a story, and then turn the page to national or international affairs, and read as if the rest of the newspaper was somehow more accurate about Palestine than the baloney you just read. You turn the page, and forget what you know.
Shorts covering causes the initial run-up and then retail FOMO’d in causing the rest. The short interest graph and language starting on the bottom of page 26 make it clear that shorts covered.
People have figured out that one of the ways to get to overnight wealth is to solve the collective action problem and they're getting better and better at fostering it and at coming up with legal ways to avoid existing regulations against pump and dump schemes. Doing it "for the lulz" to hose a bunch of hedge fund shorts. Or creating NFTs around "things" you "own" and pumping them up. Knockoff dogcoins that have nothing to do with the playfulness of the original.
The sad part is that we could actually solve some real problems by coordinating collective action on, say, starting a new city that's designed around non-motorized transit within the city limits. But we don't. We get Snoop Dogg crypto instead.
I was following "Roaring Kittys" Youtube Channel when he had less than 400 subscribers. This was never intended to be a pump and dump, he genuinely made a case for a better valuation. The mania and hype started right after the short squeeze in january and I a agree that the community that built around it is mostly a shitshow. However many of the original investors are still invested believing in a business turn-around lead by Ryan Cohen.
600% from what? Price discovery is broken when large market participants and market makers have access to mechanisms that enable unlimited shorting.
Current price is, in part, driven by asymmetrical risk/reward - there's a small potential loss (size of one's position in GME) and subjectively high chance of having a real stock squeeze (and having a 10/100/1000x reward) assuming that original 120%+ short interest was not closed and is still held in the form of various derivatives.
The assumption hasn't been disproved so far, partly because current regulatory environment is very lax on reporting (which makes it very hard to disprove the thesis using public data) and partly due to other indicators (like retail owning over 10% of float as of last earnings report).
This assumption is disproved every day by publicly available short interest data. If you operate on the assumption that all official data is false you can make all the wild claims you want, but you're not being serious and your theory is unfalsifiable.
It's entirely falsifiable in multiple ways: (1) a voluntary share recall triggered by GameStop would force an accurate share count; (2) an extraordinary action triggered by shareholders for a formal accounting; (3) a special dividend with no equivalent cash value (eg NFT); or (4) a majority of shares getting direct registered (DRS) with the company's transfer agent (ComputerShare) rather than through brokerages so that the unique market maker powers at the Depository Trust Company (DTC) cannot mask the underlying share count.
I will also say: you can read SEC sources about RegSHO limitations about how short interest can be manipulated and masked through "Failures to Deliver" (FTD). So this is not exactly an assumption, more of a preposition about magnitude.
> If you operate on the assumption that all official data is false
This is a strawman. It is possible to believe (and there is motive and opportunity in this case) that one "official" statistic is manipulated or does not show the whole picture without being a raving conspiracy theorist who trusts no official.
> Price discovery is broken when large market participants and market makers have access to mechanisms that enable unlimited shorting.
Actually, it's the other way round: you can only have accurate price discovery if people can take both long (buy) and short positions (short sell). If shorting is restricted, price discovery is much less likely, since only current owners of the shares can sell them. That's like only allowing current owners of the shares to buy more of them.
600% from where it sat before the craze, which was the market price for a failing company. The company has seen revenue decline by 40%, lost roughly half a billion dollars in both 2019 and 2020, their EBITDA is negative, cash flow is negative, their margins are negative and falling. Their only plan to turnaround the ship so far seems to be entering the NFT market...
> subjectively high chance of having a real stock squeeze
Ha, that explains a lot. The only way to believe the stock will go up, is the fairy-tale short squeeze. The current valuation is extremely generous based on reality.
Market makers are allowed to be temporarily naked short because it's required for them to do the job they're supposed to do - provide liquidity. A market maker can sell short if they don't have any stock because they will almost certainly be buying it soon after. There's no evidence that any market makers are abusing this privilege with GameStop.
Yeah; it's not exactly what I'd called "unlimited shorting"; all of the pre-borrow and closeout requirements from Regulation SHO apply ... plus, as you say, the market maker exception is specifically there to stabilize markets by providing liquidity in the face of sudden rushes to buy.
I guess one man's price stabilization is another man's market manipulation.
It also needs to be mentioned that the entire business of MMs is to capture the spread by buying at the bid and selling at the offer. As such, they are passive market participants who will only transact if someone executes a marketable order against one of their resting orders. This means, they can only be as (naked) short as someone else is willing to buy from them. But they are also not interested in having directional exposure and will go to great lengths in order to balance their inventory.
The idea that MMs would somehow use their privilege to actively sell massive amounts of non-existent shares into the market in order to manipulate the price downwards is preposterous. That is literally the opposite of their business model and such activity would certainly be flagged by regulators.
Right - the entire Volcker reporting framework would instantly reveal anything of that nature.
Honestly it feels like a lot of the conspiracy theories around these meme stocks are based on reading a lot into a very narrow slice of regulatory text without any real understand of the whole.
This poster knows what they're talking about. The market making exception is there to prevent liquidity completely evaporating as it did during the flash crash. It's not there to encourage them to bend the rules -- it's to compel them to trade when it might be unprofitable.
Every trade has to be marked correctly, whether it's short with a physical locate or short on a riskless principal basis. Equity swaps trade and are marked as riskless principal trades (ie. they're fully hedged positions and the short position is the market maker's aggregate short position). That information gets aggregated at client level and reported to regulators.
After Dodd Frank equity swaps and rehypo became even more heavily restricted. Swaps go through a clearing house and rehypothication was basically dead the last time I worked in the industry (though that might have changed).
I'm 99% sure that the speculation about the "elites" and their sinister role in GME's trading activity is simply caused by booking errors and/or aggregation mistakes.
I think it's also worth pointing out that when selling short (naked or not), there's a big difference between adding liquidity and taking liquidity, and market makers are primarily (if not exclusively) in the business of adding liquidity.
If you're taking liquidity (i.e. "I want to sell right now"), you're directly applying downward price pressure to the market, by removing shares from the buy side.
If you're adding liquidity ("I'm selling, but I'm waiting for a buyer"), that's likely to have much less (if any) effect on the price.
> a market maker engaged in bona fide market making, particularly in a fast-moving market, may need to sell the security short without having arranged to borrow shares
It's literally called the "madoff rule" and the "madoff exemption" because he's the one that pushed the SEC to allow it.
A lot of people got in when the stock was near the peak so they were left holding the bag. They're holding, hoping for a potential return on their investment as selling now would be at a loss.
I can't speak to the claims about potential profitability of GameStop's business ventures, but one theory endorsed by a lot of the /r/wallstreetbets and /r/SuperStonk redditors is that hedge funds still have significant undisclosed shorts and we have yet to see the "mother of all short squeezes" (MoASS), in which case the stock price can be well in excess of what is justified by future profitability.
Related to this theory, a lot of them believe the ease of closing short positions is facilitated by shady phantom shares and are trying to stamp that out by directly registering shares with the broker Computershare.
He genuinely made a case for a better valuation, but the case was on its face ridiculous. Correct me if I'm wrong, but wasn't his idea that there is some big digital play for gamestop? Which...sure..maybe with huge investments, but they'd be going up against the stores already built into the major consoles and mobile devices, and then the number of major game stores available for a PC. I'll wager 1 GME: Gamestop will never be a major digital player and DFV's thesis was wrong.
No, the original thesis was solely to survive another console cycle. As I said elsewhere, the 2020 valuation implied Gamestop defaulting on it's debt in 2021, because most analysts didn't even expect gen5 consoles to have an optical drive. It all blew through the roof when Ryan Cohen stepped in and speculation on Gamestop entering new markets started.
The 2020 valuation implied that it's very likely Gamestop won't ever make much profit again, whether it bankrupts next year or 20, if it never makes profit the stock is worth $0. And as we've seen through the cycle, this was actually true. Gamestop hasn't made an annual profit in over 3 years. With this "undervalued" gaming cycle you talk about, they made $80m in a quarter which they promptly blew in losses the next quarter and are increasingly losing money, to the tune of $100m/quarter. Instead of a typical small cap value company that is making 15 P/E, Gamestop is doing the opposite and losing that much money, -15 P/E, in a dying, declining growth business. Feel free to buy shares for $100, where every year they give you $94 value back, to sell physical copies of video games... Those are the actual fundamentals.
Gamestop stock value represents a lottery ticket that they will ever make some money again. It's not worth much.
> whether it bankrupts next year or 20, if it never makes profit the stock is worth $0.
A business is at least worth it's liquidation value at any time. And $GME was trading near liquidation value. Feel free to read up on Cigar Butt Investing if interested.
> A business is at least worth it's liquidation value at any time.
Only if majority shareholders will actually liquidate. If they are set on a futile attempt to light the money on fire, you don't have that $100 you lent your cousin Johnny to start his door-to-door knife selling business anymore...
It is actually astonishing how much GME/WSB'ers have continuously gotten wrong from this saga and keep trucking along in cognitive dissonance: alleged Robinhood + Citadel collusion, not understanding DTCC collateral requirements spike, short sellers / "wall street" covering and going bankrupt anyday now... First QAnon, then most of these WSB'ers probably derided QAnon'ers imaginary conspiracy world, only to jump on board the same flavor a months later?? Internet is doing some damage.
All my comments were in regard to the original thesis by Roaring Kitty, that it should trade at least in the $20s instead of below $5. I don't understand why you keep making references to current price and the resulted community, which we can agree is full of BS.
> People have figured out that one of the ways to get to overnight wealth is to solve the collective action problem and they're getting better and better at fostering it and at coming up with legal ways to avoid existing regulations against pump and dump schemes.
For what it's worth, Roaring Kitty's original video streams where he analyzes GameStop's stock should still be up on YouTube and probably cross-posted on other sites. He has hours and hours of commentary on the topic so if he said anything urging collective action or pumping the stock in an illegal way, somebody should be able to find it. As far as I remember, he was just doing a fundamental business analysis of GameStop and just pointed out that the stock was drastically underpriced given the upcoming new console cycle and his opinion that the actual business of selling physical games was not yet on the way out. Should commenting on a security that you like be illegal in a free society?
As far as your commentary about the increase of "pump and dump" schemes, I think the technology is more useful than you seem to recognize and that we're in the very early stages of blockchain tech and better uses for it will be found, but that's a separate issue I'd rather not go into here.
But as far as the pumps/dumps go, I think you're more closely looking at the symptom and not the cause. What's closer to the root cause of all of these financial schemes is the mental health crisis impacting young people. Many young people are feeling hopeless about the future for many, many reasons, and feel that financially making it through extreme risk taking is the only way to have a good life. Many are just dropping out of society. You can see this being impacted in some widely popularized stats like the number of young men not having sex, suicide rates, college attendance dropping, and many more things. What's going on with the mental health of the young is much more important to the future of humanity than the fixation society is currently stuck on.
"What's closer to the root cause of all of these financial schemes is the mental health crisis impacting young people." I think this is very true. I do think that it not only applies to young people, there are a lot of middle age plus people waking up and realizing they are probably never going to be able to retire without some sort of miracle moonshot. I know an intelligent 65+ year old nurse that just torched 30k on trying on a bad crypto investment. Imagine all these people that just rode the massive bull market up in stocks nearing retirement age with just enough to retire. Stocks are likely approaching a peak and suddenly these people that had enough to retire will find themselves on much shakier ground while inflation is pumping. Odds are high many of them will make a desperate gamble as well.
"The sad part is that we could actually solve some real problems by coordinating collective action on, say, starting a new city that's designed around non-motorized transit within the city limits."
The incentives are different. The people trying to get rich quick are not likely to do hard work to make/grow a city. Hell, it's hard enough to get people to do the simple act of voting (especially in primaries) or going to municipal or school board meetings.
Agree the cost of the first statement is quite high (time and money) where as clicking to buy a stock for a couple hundred bucks is not much effort at all.
While it is sad that we can't get civic engagement higher I don't think you can equate these problems at all.
"While it is sad that we can't get civic engagement higher I don't think you can equate these problems at all."
That's my entire point - you're not going to get engagement from the vast majority of the GameStop people if it doesn't involve a get rich quick value proposition.
> The sad part is that we could actually solve some real problems by coordinating collective action on, say, starting a new city that's designed around non-motorized transit within the city limits. But we don't. We get Snoop Dogg crypto instead.
Is it perhaps possible that what's been solved is not collective action in a general sense, but transparently self-interested collective action for a narrow easy-engagement rapid-payoff set of problems?
Revamping city design, or setting up a new one, doesn't meet any of those criteria. It's not easy to engage with. It doesn't pay off quickly. It's not immediately obvious why a random person would want to jump on.
So, go ahead. Lament that the teeming masses have collectively made a decision that's not the one we would like them to. It is a modern tragedy. For my own part, I think there are lessons to be learned in why one decision was collectively made and acted on and not another.
Widely profitable for who? For society or directly in dollars for the individuals involved? Righteous by whose definition? Honest by whose definition? How widely shared are those definitions? Rhetorical questions, please don't answer.
Someone has solved a particular kind of collective action problem. Now we have a playbook for addressing a specific type of situation. It doesn't seem to be a general solution or readily adaptable to a general solution.
Perhaps we could be happy that we have gained a useful tool. Even if it's not quite the tool we might have wished for. Otherwise we're essentially lamenting that all the money and effort that goes into, say, consumer goods R&D (or another unworthy cause) isn't instead used for medical research (or another worthy cause).
> The sad part is that we could actually solve some real problems by coordinating collective action on, say, starting a new city that's designed around non-motorized transit within the city limits. But we don't. We get Snoop Dogg crypto instead.
Right. And if only we could all just band together, we could create world peace and end hunger! It's so easy you guys! Just everyone cooperate!
You honestly think starting a meme cryptocoin is equivalent to the effort required to build a new city!? How are these things even remotely related?
Because humans evolved in a tribal setting with at most ~200 people per tribe (see Dunbars number), and as social animals have a very keen instict for in- and outgroups? Any group larger than that number (and often much smaller) will start to fracture into sub-groups that then compete with each other for status and resources. You can see this effect even in groups as small as 200-person startups, where there can be vigorous "us vs them" dynamics between the dev and marketing teams or even between dev and ops.
We can escape the fatalism of Dunbar's number and in/out-groups through leadership and recursively hierarchical structures. See any large (>~200 persons) company, collective action (civil rights, wars, social movements), nations, etc.
The payoff to kickstarting a city is absolutely bonkers. It's long term, but the compounding implied interest rate is still enormous. I don't think it is anywhere close to ending world hunger.
I agree that it's depressing that people don't realise the power of collective action. It would be lovely to see in labour markets or in rental markets for example.
However, the sums of money and level of commitment involved in starting a new city are radically different to that in buying a bit of GameStop or Bitcoin or whatever.
Even if you chucked in ten grand your friends might think you're crazy.
By contrast that's not even getting you half of the materials of a house. Or an apartment. Even if it's a prefab with no interior. And we haven't even started talking about making a city yet, what with all of the roads and power lines and decision makers and those juicy bits.
The collective action problem that’s been solved is getting people to collectively click a button. It’s why you see tons of people upvote things or change their profile pictures in support of a movement. But getting them to go past that is still as hard as it’s ever been.
Collective action, or rather, any effective form of organisation is (arguably) the limiting factor on human progress. Corporation, country, tribe, union... all forms of organisation.
These are all very different, have very different strengths, weaknesses and abilities. Tribal chiefs are not very likely to be effective at the same things, in the same way as a CEO or a prime minister. Linux, GNU, WWW, Wikipedia and such are another form. Rare, relatively. But novel and productive. What these organisations produced is again, qualitatively different from what commercial entities produce. There's a medium-message dynamic between form and product.
A lot of things are clearly doable, but our forms of organisation don't produce them. We're basically limited to the things that are forms of organisation can produce. Organisational methods are a limiting factor to the same extent that resources, science and such are limiting factors.
This starts (according to YNH) at the start of history, or rather, we might define "human history" as the point at which our methods of organisation develop past biological determinants. IE, chimps operate in troops. Gorillas in harems. Geladas in a complex herd structure. Modern humans are (again, according to YNH) the homo subspecies with the ability to switch. That said, we're not that good at it.
For the most part, human cooperation of this epoch is defined by working tirelessly against each other in such a way that sometimes produces emergent benefits. Within
> Modern humans are (again, according to YNH) the homo subspecies with the ability to switch. That said, we're not that good at it.
Our species is very clearly lacking a crucial ingredient for our continued evolution: the ability to align our actions (and motivations, and rewards), on a societal scale. If we're still here in a hundred thousand years, I think the anthropologists of the future will look back to today as falling before some critical phase transition in the way our collective consciousness operates. Whether that's a hive mind, or some technological approach to consensus (which I'm almost loathe to say out loud given the Baby's First Computer approaches we're coming up with these days), or just us all waking up and realizing that we should be living life in service to one another, who knows. Our contemporary penchant for individualism, while producing many interesting emergent artifacts, is causing us to eat ourselves alive.
>>lacking a crucial ingredient for our continued evolution: the ability to align our actions (and motivations, and rewards), on a societal scale.
I don't think these are contradictory statements. Our society is both defined and limited by the quality of our "collective consciousness," ability to operate cooperatively and such. It's not zero, and it's not unlimited either.
Personally, I don't see this as a purely ideological or philosophical limitation. Our ideologies and philosophies tend to trail culture, IMO, not the other way around. Neither do I think that individualism vs collectivism is a defining dichotomy. Both individualism and collectivism are, likely, inevitable. Also both individualism and (especially) collectivism compete within themselves as much as they do with each other.
And yes, the ways that we cooperate are clunky, maybe immoral, and not really designed. Money is a cultural construct, for example, that creates cooperation. So is religion, tribalism, legal systems, etc. Is money a collectivist artefact? I think it's very hard to argue otherwise. Money is useless if you are alone, and requires a collective consciousness to even exist. Equality and collectivism aren't synonyms.
If you truly believe in the concept of a collective consciousness, then would you not also be forced to conclude that there are others that have considered these questions as well, and possibly that they have answers for them?
Just curious, do you believe there is some greater organism or what have you with the ability to integrate human consciousnesses (something like Gaia theory)?
If so, what do you believe that organism/being (or whatever it is) would feel or think about what humans are doing now, acting in the world?
There has been concerted action against collective action for over a century in the west. That the only way people feel comfortable expressing it now is with the cover of financial schemes is a temporary, I agree bullshit, phase. People are building cultural experiences to validate the effort to themselves and will come around to it without the need to be scamming someone. Just give them some time, the pursuit of novelty alone will solve this.
This reminds me of, on a very differently-colored website, someone whining, "Why doesn't 4chan's Anonymous work on cancer?" They were sad about it.
You have confused a short-term low-effort collective action not much more different than a Tweeetstorm with some kind of long-term civilizational megaproject, and all over your very own pet issue. Come on.
What I'm trying to point to here is that in the developed world the vast, vast majority of the value of a dwelling is how many dwellings exist around it. That's because land value is an arms race. So many people want to live in, say, Toronto that large sums are poured into mortgages. The materials cost is only a small fraction of the value of the home.
But it doesn't have to be this way. People could put all this energy they're burning on crypto and apply the same principles into getting everyone to agree to some sort of better city with sustainability and low-cost-of-maintenance built in by default. That way we could have affordable housing spring up. It would take work to vet; escrows, webs-of-trust, etc. But it's totally doable in the new work from anywhere future.
"getting everyone to agree to some sort of better city"
They're talking about creating a new city, not reusing the existing empty housing.
Even if you can work from anywhere (which ignores many industries), this only satisfies that one requirement. Some people might see the snow and cold as a deal breaker. Others might not want to move there because it's far from family. A typical theme on related posts of relocating for remote work is that they want some combination of educated population, technology culture/groups, and some sort of specific government/community resource. The list goes on.
The nature of the housing problem is that people want to live in very specific areas and then it snowballs. Remote work today should allow a considerable number of people to move out of SV, Toronto, etc. Yet most are staying. There are cheaper and better (depending on specific desires) options, yet they are not often explored. It's basically group-think. I don't see a new city solving that, since once it becomes popular, it too will suffer from demand effects.
Right, but like people didn't do all of that negative thinking with some random dogcoin. They poured in. If you told me there were 10k well trusted artistic people with a great deal of interest in starting a high density, non-car-centric city in the middle of Ontario I would join. I would buy the lot of land on Kickstarter. I would list my friends that I trusted. I would help solve the problems around figuring out internet and transit.
But nobody in Canada is offering this to me because even though this is better for the world, this takes real work. Instead they want to pump crypto and stock market scams because the payoff is short term and because they're naturally cynical.
"Right, but like people didn't do all of that negative thinking with some random dogcoin. They poured in."
Because the ante is low. Throw a few hundred or thousand at a chance to be rich is way easier than to uproot your life to move to a fledgling city that nobody knows how it will work out, and you still have to work.
"But nobody in Canada is offering this to me because even though this is better for the world, this takes real work."
Maybe this is an opportunity for you to offer it to yourself and others. Start the movement! If you wait for others to do it, it might not happen. If not you, then who?
Free private cities should be a solution in this case. Finding a better optimum by optimizing the city towards the specific population living in it not taking the mean, where everyone is unhappy to some degree
>The sad part is that we could actually solve some real problems by coordinating collective action on, say, starting a new city that's designed around non-motorized transit within the city limits.
I have been dreaming of doing something like this lately! The issue is where would we do it? How would we get people to move there? Who will fund it?
> The sad part is that we could actually solve some real problems by coordinating collective action on, say, starting a new city that's designed around non-motorized transit within the city limits.
In general it would seem that human beings don't actually want to make the world a better place, but if you can find a way to sell it as a get rich quick scheme it might actually work.
doesn’t that overnight success come at the expense of a lot of the normal people trying to strike it rich too? seems like a few break through but it’s the same old exploitation for most
> Doing it "for the lulz" to hose a bunch of hedge fund shorts. Or creating NFTs around "things" you "own" and pumping them up.
Well... hosing a bunch of hedge funds is at least going to give you a good laugh as a return for your money, not to mention that the entire GME saga showed once again what a house of cards the financial system is and how incompetent hedge fund managers, regulatory agencies and politicians are - while NTFs are just a plain scam.
The "hosing the hedge funds" thing around GME was a big scam, and it seems that people are still falling for it. The GME pump and dump had no effect on the Wall Street establishment, and it's not even clear that any short sellers got squeezed. The pump started on r/wallstreetbets, following their normal modus operandi of sparking upward momentum in stocks by coordinated options purchases. The faux-populist narrative developed as a way to pull in first mainstream Redditors and then lazy journalists. At the height of the frenzy, average people were surrounded by messaging from most media outlets that buying highly leveraged GME options was righteous and would make you rich, and anyone questioning this narrative was derided as a "corporate shill".
By contrast, NFTs are refreshingly honest, even if their long term value is questionable. An NFT is the direct digital equivalent of a numbered print of an artwork, signed by the artist. There is no pretension of political righteousness, and mainstream media is inundated with messaging that they are a scam. Everyone involved knows exactly what they are getting, and has been endlessly warned of every possible downside.
I check the GameStop subreddits every once in a while out of morbid curiosity. The content has become a cross between pump spam and conspiracy theories. It’s hard to tell, but I think the masses of GameStop believers aren’t even interested in the dump portion of the pump-and-dump scheme because all of the smart money exited the trade a while ago. Everyone left is convinced that they’re either performing some sort of activism and/or about to become unbelievably wealthy when their conspiracy theories come true and the stock price is forced into the millions.
The “mother of all short squeezes” theory has been debunked over and over again, but the initial price action due to the media frenzy has convinced a lot of people that there’s something else going on. Any information that contradicts the theory is not welcome in their Reddit bubbles, but any “DD” that supports the theory is upvoted rapidly. It was interesting to watch at first, but it’s becoming increasingly depressing as it becomes clear how many people have put too much of their own money into this pump scheme turned conspiracy theory.
Yeah, no kidding, and I'm surprised I haven't seen them talked about much on the internet...for a complete outsider, they're completely insane and nonsensical. And for somebody that kind of knows the history of the subreddits, it's a super interesting study on how being financially invested in something can totally warp your beliefs and thinking.
I've followed the gme saga off and on for the past few months, I've never once seen the theory debunked. If this is actually the case, could you post a link to it?
As far as I understand it, the core aspect of an impending “MOASS” is that GME stock is still shorted > 100%, but SI is currently reported at around 15%[0].
In other words, the canonical measure that represents the ratio of uncovered shorts to the float is ... wrong? There are people who are short, but are not short?
From what I got, the majority of the actual short would be hidden in some method of put-call options shenanigans (not sure what it is now, but there was at some point the equivalent of 2 times the float in $<2 puts a year out)
A lot the bigger theories that they preach can't be disproven because they get updated to take into account new facts. For example, the entire MOASS theory (Mother of all short squeezes) is founded on the idea that hedge funds have shorted the entire float of GameStop multiple times over. This theory was created when GME's short interest was over 100%, but now that it's reported to be down around 20%, the theory has evolved and to say that the short interest we see is a lie because hedge funds a in cahoots with data providers as well as selling through dark pools to hide the actual short interest.
The first version of the theory WAS disproved, so the theory evolved to account for that. You see that same pattern over and over with everything the preach right now. If they correctly predict something it's proof that they're on the right track. If they make an incorrect prediction, they just didn't have the right data and they "discover" something new that will make their theory right.
That being said, if you stalk their sub (its my guilty pleasure), there's plenty of small things they get wrong that are easily disproven. They love to talk about GME's price movement being unique (GME went up 11% today on no news), but it tends to move in tandem with plenty of other speculative stocks, which they ignore. They love to talk about how the reverse repo update that gets posted every day is a sign that they're on the right track even when the first post that brought that data to their sub claimed it wasn't definitive proof of anything, just a weird thing that was happening.
I think the icing on the cake is the one guy from Florida who is a member of their sub who sued GameStop in an effort to get more information. When they held a stockholder vote sometime in 2021 there were 8 different items to vote on and the total number of shares added up differently in one of the votes. In the last vote, if you add up all the yes and no votes, there was one additional vote. GameStop claimed that the difference was because of rounding fractional share votes, but the guy claimed it was proof of naked shorting, so he sued. GameStop's own lawyers said the guy said there was no proof of naked shorting and that the lawsuit was frivolous and are asking the judge to dismiss the case with prejudice and have the guy pay their legal fees.
It's not debunked at all. You have to remember that this is the same corruption level that had the 'buy' command (but not 'sell') turned off just for that stock for a day on RH -- and no one went to jail.
There is growing pressure as more and more investors DRS their shares to push back, so we'll see more articles like the one above, convincing us that the short squeeze is over, trying to convince people to sell. Because once 100% of shares are registered, it's all over.
> once 100% of shares are registered, it's all over.
IF you can extrapolate the rising trend all the way to 100%, then shorting would be quite a bit more difficult for most market participants. But the fact that some investor have DRSed their shares does not mean all the rest will, too. You might equally ask that if it would be so beneficial for shareholders to do this, why haven't all shareholders done it already?
As someone without any direct interest in the whole saga (neither short nor long), it sure looks like the whole thing has been over for at least six months.
> it sure looks like the whole thing has been over for at least six months
I think for passive spectators it may feel that way. For those people in it (and I was in WSB from before this started), it's absolutely right in the middle of the action. They has a steady march of registering shares for months and it's not letting up.
The more that directly register their shares, the smaller the pool to manage the price. It doesn't have to hit 100% for there to be an effect. But if it ever does hit 100%, wow.
The SEC report confirms that shorts closed their positions and short interest dropped significantly over a year ago, and it has remained low since. You can't have a short squeeze without significant short interest.
Read Section 3.4 "Short Selling and Covering Short Positions". It describes the short covering that took place. Look at the chart of short interest on page 27. It shows the short interest dropping precipitously, meaning the majority of short positions were closed.
It is honestly baffling how many GME conspiracists are apparently illiterate and unable to understand that "X didn't have as much of an effect as Y" doesn't mean "X did not happen". Especially when it is surrounded by multiple paragraphs explicitly talking about the X that was happening.
Look at XRT short interest. There's plenty of information explaining the situation. If you look at the recent votes by the SEC. GG wanted to make better short reporting since that is a big issue. In multiple occasions hedge funds and banks mark their short position long and then get a small fine years later.
Note: I was never a member of WSB. I have researched GME years before this whole saga and hold a position in my portfolio because I saw the value in the turnaround prior to the squeeze saga. That said, as an investor the mechanics of the market need to change.
I think it comes down to priming, at least for those of average intelligence. They don't read the report start to finish with an objective mindset, they are first fed snippets here and there while being told what to read from those snippets. If they ever do decide to really read it, they are primed to take from it only what they have already been told to take from it.
I have read the report multiple times trying to make an educated investment decision. As I mention in other comments, I was following the company way before this saga. Probably for similar reasons than Burry, Ryan Cohen and DFV decided to invest on it, although I admit what caugh my attention was their dividend years ago (no longer pays a dividend). I researched a lot of companies, GME happened to ended up with this craziness all around. I think this is not going be worth millions per share like Reddit says, but it will be worth way more than it is right now. I am far from a bagholder, I've earned a nice return and based on what I have seeing, things are going to be better for the company. The short part of investment is something I had to learn more thanks to the whole saga. I am always looking for bearish thesis about my investments and why this is not going to be worth more in 5 years. Watch DFV youtube videos, he is far from a meme, his videos are very informative about why it is worth it.
That was without counting any work performed by RC and the turnaround.
From for the report:
* Figure 6 shows that the run-up in GME stock price coincided with buying by those with short positions. However, it also shows that such buying was a small fraction of overall buy volume, and that GME share prices continued to be high after the direct effects of covering short positions would have waned.
The SI was 140% of the float. Small fraction of the volume was the short (without counting short volume), you think it was enough volume for both? There's no way to know how much was that. Gabe Plotkin in his testimony even says that short have plenty of time to cover but it didn't seem that was the case. If you look at the SI chart it seems the shorts got closed right away, but the stock manage to have couple of wild runs to 300 and a few to 250. With no retail nor volume to back it up. Why is that? you don't see that with any other company. Maybe some fraud behind?I really don't know.
Anyway, I am not saying there's a 140% short position (nor crazy 1000% like reddit speculate), but the SI is not 10% nor 20%. The price action nor the options market backs those numbers, I may be wrong but I believe there's more to it. It is hard to be sure obviously, but I don't mind to have a few hundred shares and see how it unfolds, long term it is going to be worth more and I am not counting on any squeeze for that. This is not financial advice, it is just my opinion on something I ended up finding fascinating, from the investment side and the human behavior side.
The people still holding AMC are even more deluded given that AMC has already bought back stock multiple times, making plenty of money on the suckers still hanging on.
No, those people lost their own money, since every third word out of DFV (and everyone even remotely reasonable on that site) is that what they're providing is not financial advice.
That's not just boilerplate, it's also 1000% true. If you lose money because you listened to them, the only person you can blame is yourself.
That's like Elon tweeting about Dogecoin and then saying NOT to take his advice. Lol the meme "this is not financial advice" does not follow logic when you create a momentum, get yourself a platform and then essentially trick people. I am NOT saying that is what DFV did though
I watched some of his videos where he went through his setup for finding investment opportunities. It was very informative and it resonated with me since his approach definitely falls under the umbrella of value investing.
He did get very lucky with the way Gamestop played out for him but overall I think he is a person deserving of his luck and he did his work beforehand. This is not some crazy NFT opportunist, he seems like a decent guy and he even has a CFA so he put in the hours in that as well.
There was luck involved but also skill and hard work.
I've seen some comments comparing the recent r/antiwork mod on Fox fiasco to how well spoken and prepared DFV was defending himself in front of congress. The guy knew his stuff and it puts into perspective how bad things could have turned had he not known how to handle his sudden media presence.
Yeah I think this gets lost in this conversation. When you watch his earlier videos it was very clear that he was incredibly sharp. I'm sure even he was dumbfounded at how this all played out but he wasn't some idiot running around trying to low effort pump and dump on forums. He had an extensive portfolio which was incredibly well researched, Gamestop just happened to be one of his higher conviction positions.
I have watched DFV's senate hearing several times. That man is incredibly smart. Seriously have his speaking compilation video a watch. The way he handles bipartisan questions and won the heart of both democrats and republicans is incredible. He was extremely empathatic and personable when it came to responding to questions. He didn't dodge a single question but everything he said made him stronger by word. It is incredible. I have watched a lot senate and cogressional hearing and I can say he was phenomenonal. These hearing almost always make people feel they were being blamed of something or being negligent but in DFV's case.... I have no clue how he formed sentences on the spot to create common ground.
I have been in WSB for ages and there is a very very niche, handful of people who might be the smaetest people I have ever interacted on the internet.
Play a fun game. First listen to a question. Pause the video. Think of an answer yourself. Then unpause and see if you could have answered the question better, more calmly and more empathetically than DFV. I always play this game whenever I watch a senate hearing.
I think it mostly stems from him knowing exactly what he was talking about. When you see CEOs in these hearing.. you have to wonder how close to the work (e.g. algorithms) they actually are.
Usually, I think, that's on purpose. They lose nothing by the CEO seeming in front of Congress to be a bumbling idiot... to provide more substantive material, more meaty answers, etc., is precisely what a company may not want the CEO to do in those circumstances.
What I figured is that, the best strategy for a senate hearing is to be as forgetful as an individual as possible. You have no power over the hearing committe as they control the floor. So giving sophisticated justification will always be overshadowed by political rhetoric that they can filibuster over you. Answer questions with generic repeatable answers. Talk about organizational policies which makes everyone go to sleep. Never ask for clarification or questions.
You shouldn't even really attempt reasoning with them. Do everything that makes the hearing boring tv. Dramatizing anything would result in focusing light on your activity. Don't hear the context of the questions tackle keywords with organizational policy response answers.
You can never win. You might think you are the smartest person in the room but smartness won't work when you don't have the right to speak freely and people can form interpretations of whatever you are saying.
I still have friends that adamantly believe Gamestop stock is going to make them obscenely rich despite losing significant amounts of money on it. Yet at the same time they say things like NFTs are a scam and all crypto is a ponzi scheme. It is very weird to me that they can lack the self awareness of being in a cult while calling other things cults.
If a year of nothing is not enough to convince them that nothing is going to happen I don't know what will. Hopefully in 5 years from now they will realize it was nothing but a retail fueled crazed pump and dump and the vast majority of players lost money.
> It is very weird to me that they can lack the self awareness of being in a cult while calling other things cults.
It isn't weird at all. It's probably one of the hallmark symptoms of being in a cult. Everyone in your outgroup are the ones who are misguided, being misled by lies, etc.
It seems that many people here are convinced that all short positions on GME were closed. This is actually surprisingly hard to prove, given that:
- Market Makers don't fall under the same requirements as other market participants (e.g. broker dealers) and can create artificial short positions without having shares to borrow, and are allowed extra time to deliver them
- Synthetic short positions (e.g. by the means of options) do not have to be reported and FINRA is only now 'considering' asking to report it [1]
- Short positions by the means of shorting ETFs containing GME are reported as ETF SI (and XRT, by the way, has 700% SI)
There are many indicators that suggest the opposite (that short positions were not closed):
- Retail directly registered over 10% of available float (excl. insider shares) as of 3 months ago [2]
- GME still had spikes of failure-to-deliver in August, similar to original FTD & price spike [3]
- GME is IBKR's hottest short by value as of 1/27 [4]
This is not a financial advice, everyone does their own due diligence.
Disclosure: I own directly registered shares of GME.
2 - https://investor.gamestop.com/node/19571/html "As of October 30, 2021, 5.2 million shares of our Class A common stock were directly registered with our transfer agent, ComputerShare"
> Short positions by the means of shorting ETFs containing GME are reported as ETF SI (and XRT, by the way, has 700% SI)
XRT only holds 0.71% GME shares, so seems like an extremely inefficient way of shorting it. The entire XRT short position is around 170k GME shares, or about 0.4% of the float
> Synthetic short positions (e.g. by the means of options) do not have to be reported and FINRA is only now 'considering' asking to report it
But put options don't get squeezed (call options may cause a gamma squeeze)
> Retail directly registered over 10% of available float (excl. insider shares) as of 3 months ago
What relevance does that have? There's still 90% of the float available to be lent with a short interest of just 15%
I still hold some GME shares leftover from last year but fully believe the short squeeze has happened and there's nothing but a collective delusion left
> XRT only holds 0.71% GME shares, so seems like an extremely inefficient way of shorting it.
No, actually it's quite efficient. You short XRT and simultaneously go long all other components except GME. Now you are net short GME without having to report a short position on it or borrow shares in the first place.
Except that you need to buy a _lot_ of stocks to cancel out the non-GME positions. It's probably 100x more expensive to short Game Stop this way. Not economically feasible, even if you could find a broker willing to do it.
Correct - put options don't get squeezed, but short call options do.
The thing is, buying ITM put options usually due to delta hedging causes the counter-party (market maker) to sell shares short. If done directly (OTC) and with prior agreement, this 1) lets the parties create short positions owned by market maker, 2) hide these short positions, since market maker has 6 days to settle the trade (deliver the stock), but can fail to deliver and has in total 21 days for delivery.
The only short positions that need to be reported are "those short positions resulting from short sales that have settled or reached settlement date by the close of the reporting settlement date" [1], so as I understand market makers can hold a large non-delivered not settled 'limbo' position and not report it since it's not settled by the reporting date, and just reset the cycle every 6-21 days.
Oh, and short interest is self-reported and not enforced, so any self-clearing market making firm could make 'mistakes', sometimes even for 6 years straight [2], and go away with a small fine.
What isn't mentioned here is the constant gaslighting by MSM about 'forgetting GameStop'. It can't be measured, but there are some seriously powerful people out there who want people to leave it well alone.
If there is hidden short interest in GME, there is also short interest in countless other companies, including those liquidated like Sears, Blockbuster and Toys R Us.
Although saying that it could be the end of financial markets doesn't help our cult like status.
I agree, I'm not knowledgable to argue about the finance aspect of things, but simply seeing how the media talks about Gamestop decided me to hold on to the few shares I still have
You say that, but Zack Morris (not real name) champions Pump and Dumps every week or so. They might not all work for him, but he pushes a new one, and makes (from what he discloses) millions on them. If you pay something like $250/mo, you can get early access to his buys and get notified when he sells.
I've watched this guy singlehandedly pump a penny stock to 10x its value in days before dumping. Not sure how he doesn't get arrested or investigated by the SEC, but its common place for him and his "crew" Atlas Trading.
Because he needs someone to buy when he wants to dump his shares, is my guess. You're basically paying to get scammed by following the advice you get, those paying are the same ones making the stock pump.
Just to be clear - I don't really follow this guy, and I definitely do not trust him. But just guessing, if he just give it away, it would be less effective, and who doesn't like a few hundred grand - few million extra each month?
Might as well make an additional million a month on a few thousand suckers, on top of the other couple million a month from pumping schemes.
> If actually can pump stocks and make millions, why does he need to sell early access subscription?
Because he starts selling before he tells this group.
People who spend $250/month are going to be convinced that the “buy” and “sell” recommendations are now valuable because they literally spent money on them, and therefore will follow them more closely.
Considering he is being investigated, any lawyer would have told him to lay low and just enjoy his money for the new 2-3 years. Nothing here is surprising.
The fact that the stock is still up >$110 from <$20 suggests that his value hypothesis wasn't completely wrong. Prices reflect current demand and viral meme demand should have long ebbed away by now.
I don't think the current stock price tells you that. You can make an argument that GME was undervalued relative to it's core performance metrics before this whole saga (revenue, eps, etc) but you don't strengthen that by pointing to the current share price, because based on those exact same metrics GME is currently way over valued, which indicates it current share price isn't based on fundamentals now.
I think there's still an aspect of inflation going on right now. iirc, DFV's proposition (as also mentioned in the congress hearings) was that it was a $20 stock that should be more like a $50 stock because rumours of the demise of video game retail were overstated. If it wasn't for covid, he was probably right on that.
He just made the case for a stock which he had an investment in, laying out his reasons, and being upfront about his interest in it.
It was the meme brigade that sent it to $400 which obviously DFV made quite a lot on, but I don't see any evidence that this was planned on his behalf or incited illegally. I think he would have been quite happy if his projections of the PS5/XSX generation had given him the returns he predicted in a 5 year timeframe.
I'm just aghast that they are still trying to figure out if he broke any laws. As in, how in the heck would a retail trader even know if the experts can't figure it out? ...feels like they think his actions results were negative and they want a scapegoat by any means possible.
Ultimately, the sentiment is to protect the financial sector while punishing retail. Business as usual.
I've been watching this for a while now.
/wallstreetbets was infiltrated by shills. Everyone that wanted to keep researching moved to /superstonk they have strict rules. Sure there are shills there too.
Bold of you to assume there was anything to be ruined. The entire subreddit consists mostly of stupid-as-rocks "Due Diligence", screenshots of accounts showing off big gains and losses, and memes.
The subreddit started as a goofy IRC chat back in like 2012. The humor about yachts and such was similar, but there were actual people interested in and (allegedly) good at automated trading setups. Last I saw, jartek moved admin rights to the subreddit to another entity (presumably for $? i forget at this point). It'd been a goof-fest for quite a while, but GME sent it overboard.
We gathered around daily at 1pm ish (GMT) and debated whether to buy JNUG or JDST calls today, shitposted about $4 AMD shares and called each other homosexuals.
r/wallstreetbets is still riding high on the idea they can do it again with another stock and/or that there's still a squeeze just waiting to happen and people holding GME aren't bag holding.
Who exactly is this "r/wallstreetbets" that is riding high on this idea? Unlike other subreddits, WSB is very much not a hivemind. This did not happen by accident.
You can take a look at mention trends [0] and see that most people are talking about stocks that have no "squeeze" story behind them.
You can also take a look at the rules [1] to see that market manipulation (like 95% of the GME discussion that goes on) is not allowed.
Finally you can take a look at the daily thread [2] and note that within the top 1,500 comments, only two mention the word "squeeze".
I skim and see at least a few mentions and threads a week talking about the GME squeeze that's still coming. Combined with seeing people talking about trying the same pump method on other stocks feels to me like there's a lot of people trying to replicate the fluke that GME was.
No doubt the number is non-zero in a subreddit that gets 20-30K comments a day.
Still, the people complaining make it seem like the sub today looks the same as it did on January 28th, 2021.
I took a very cursory look at the front page just now and don't see a single post advocating a short squeeze. Maybe there's one or two mentions within the threads, but it's far from everywhere.
I'm not super familiar the "DD" that happen happened with it but AMC only really popped ~500%. I always thought it was more of your standard pump with a quiet dump than a real short squeeze like GME (maybe already caused).
If you haven't watched his youtube content go watch it. It's unbelievably high quality. He comes of as a genuinely great guy and he the quality of the analysis he is doing is really good. Definitely puts some things around this story in perspective.
GME FUD in HN seems pretty rare. A lot of talk about GME being a 'cult' and that the hedge funds 'closed' their position. Yet the stock is extremely volatile with little to no volume. Seems weird to me but okay
Overly excited investors have been part of the markets since forever. Even Newton remarked on his inability to predict "the madness of the crowds".
The strong EMH has never been taken seriously anywhere outside of academia, precisely because everyone can find abundant counterexamples just by looking around on the trading floor. The weak EMH works on much longer timescales than a few years and will be absolutely fine.
I don't think the retards on Reddit made any serious money, the big guys like chamath, other hedge funds have made good money on betting against shorts.
I don't give a damn about one single upper-middle class guy that seems intelligent, friendly and made his hobby his job hitting the lottery and making 8 digit retirement money in a once-in-a-lifetime way with some lols along the way.
I do give a damn about 9-12 digit old money on Wall Street and elsewhere profiting from rigged systems and trying to deflect the mobs anger from them onto the aforementioned single upper-middle class guy.
Don't such short squeezes happen from time to time? For example I seem to remember somebody squeezing VW? I guess when the professionals do it, it is trading skill, when amateurs ("retail") do it, it is market manipulation and stupid social media minions?
I think in any case that guy deserves his gains. Everything he did was out in the open, and most people had heard about it before the end game.
I'm assuming the shorting is through puts that were bought and held long term, and are being rolled out before expiry? Otherwise a short of the underlying costs money and this has been going on a long time to not close out a position on.
The belief among GME enthusiasts is that the shorting wasn't through puts (options), but rather through straight up short selling.
And that yes, this has been going on a long time and is in fact costing the hedge funds a lot of money. And buying to cover is way too expensive at current market prices, so the hedge funds are bleeding money in hopes that something will change the situation.
Oh, and the belief is also that there are more short sales that need to cover than there are shares of the stock. Hence the squeeze potential.
Truly amazing how well that worked out. I sat watching in disbelief while his returns in a week were more than mine over the last 2 years. Nevertheless I'm content with the steady path of passive investing + my algotrading models guiding my hedging decisions.
It's the best of both worlds to me, I don't have to pick stocks or worry about the markets because the models tell me when it's time to hedge. My strongest model (https://grizzlybulls.com/models/vix-ta-macro-mp-extreme) has returned > 70% ROI since April 2020, and 60% ROI longer term in the backtest with much lower volatility than the market as a whole.
>The stock, which peaked at $482.95 a share when hedge funds that had shorted GameStop were forced to buy at any price, has come back to earth. But it is still at about $112 a share, compared to less than $20 on Jan. 1, 2021.
This is a pretty basic error to make when the SEC investigated and even put out a report showing that the majority of that price movement was from non-short sellers (e.g. retail) and that as a proportion of volume, barely any of it was due to short sellers closing their positions.
The article also completely glossed over the fact that DFV was made fun of and derrided for taking such a large risk in GME. Especially when it was down (for a majority of the time since he started posting that position, if I recall corrected). It instead portrays him as making "consistent returns" and starting a movement to influence the price.
[1] https://www.sec.gov/files/staff-report-equity-options-market... Page 28 if you want a nice graph to take a glance at.