GameStop short squeeze - pogibija hedžera

[CPP]

6 minutes ago, Skyhighatrist said:

Doug Henwood kaže (ali ne obrazlaže): "In this particular case, right now, the hedge fund guys are getting killed. But it’s not going to end well for the amateurs. At some point it’s going to collapse and all these people will be left holding an empty bag."

 

I meni kao laiku zvuči da balon mora da pukne, ali ne kapiram te mehanizme, dakle, kako ovo može da se završi?

 

Fondovi koji su shortovali GameStop moraju u odredjenom roku da kupe deonice. Kad taj rok istekne, cena ce se strmoglaviti tako da ce ekipa koja je usla znacajno iznad "realne" cene takodje da izgubi.

[mustang]

Regulisace nikad al ce zabraniti klincima da se druze u slobodno vreme. Al okej je kada expert na cnbc kaze gledaocima kupujte zlato sada. 

 

Ovi klinci nisu sisali vesla. Znaju tacno sta rade sto se zarade tice.

 

Danas je rok za hedge funds da plate. Od jutros je ceo market crven osim gnc .. Nisam se ovoliko zabavila na neki film ne pamtim! Prava drama za kokice. I trampovi neprijatelji odose u pa pa... Danas je citadel na redu

 

Edited January 29, 2021 by mustang

[Baldrick S.]

Just now, CPP said:

 

Fondovi koji su shortovali GameStop moraju u odredjenom roku da kupe deonice. Kad taj rok istekne, cena ce se strmoglaviti tako da ce ekipa koja je usla znacajno iznad "realne" cene takodje da izgubi.

 

O tome se i radi, sto malo ljudi prodaje te cena ovoliko skace. Najveci je problem fondova sto u normalnim situacijama imaju posao sa par akcionara te njihove akcije otkupe relativno brzo. Ovde se radi o milionima naloga/ljudi koji su kupili makar i jednu akciju a i ne zele da ih prodaju jer su ih kupili za relativno smesne pare. Drugi problem fondova je taj sto za svaki short koji su uvalili moraju da imaju podjednaki broj akcija da bi levelovali.

[mustang]

Elon musk ih je lepo doveo u red kada su krenuli da obaraju njegove akcije, ostavljala sam ovde njegove tweets... Tada su izgubili par biliona. Najduhovitiji tvit ikada "short shorts".. Najsli oni da se zajebavaju sa genijem. Jaoooooo jedva cekam kad krene da rusi gugl, amazon, fejsbuk. Ima satelite, sad kad napravi app za nas antilevicare...pa sve po redu

 

Kralj, kralj, kralj

 

 

[Skyhighatrist]

Btw, evo celog intervjua (mazno sa Burundija):

 

Spoiler

Basically as I understand it some hedge fund guys bet on GameStop’s stock price falling even further than it already was, then some Reddit-based amateur investors decided to buy a bunch of the stock, either to purposefully fuck with the rich pricks, or because some of them thought they could make a quick buck themselves, and now things are really chaotic.
Is that right?
To talk me through it I called up Doug Henwood for help. Henwood is an economic journalist and the host of Behind the News, a weekly radio show covering economics and politics on KPFA Berkeley . His book Wall Street is available to download for free at his website LBO News . 

This whole thing is really confusing. I’ve tried to read a few articles explaining it, then this wall goes down in my brain instantly that prevents me from understanding. So I guess my first question would be: What is the stock market?
Well that's a complicated question! Let me put it this way: Going back to the 19th century, most capitalist firms were owned either by an individual or a small group of partners. As the century went on, and they realized that they just didn't have the financial resources to carry on operations at a larger scale, they needed outside money, so they sold stock to outside investors instead of holding it closely themselves. This created a host of problems, because the stockholders, who were technically the owners of the company, couldn’t necessarily trust that management would run the company in their interest. So there were a whole lot of struggles over what’s called the principal-agent problem for decades and decades. The important thing to realize is that once they sell that initial range of stock, the initial public offering, stockholders provide no money to the company. They own it, but don’t provide any money. They take out dividends, and companies buy back stocks to boost its price, so in fact most of the flow is in the other direction from the company to the stock owners. Basically stocks are certificates of ownership in a corporation. 

In theory the basic idea of: I own a company, I want to do something on a larger scale, some guy is going to give me money so I can do it, and in exchange I give him 10% ownership or whatever… That’s straightforward and normal I guess. There’s no real problem with that. 
No. The problem is from the point of view on how to run these things, because in practice they’ve got thousands or millions of shareholders who have a hard time exerting their collective ownership rights over the company. In the eighties a lot of this went crazy when the shareholders basically wanted management to cut costs, screw the workers, and give them more money. 

Generally speaking when you go public, that’s setting things into motion to be bad for workers at a company right?
It didn’t matter so much when the economy was doing well. In the immediate post World War II decades everybody was happy. Workers were getting well paid, shareholders got dividends, the stock prices rose, and everything was pretty alright. Then things turned sour in the seventies with inflation and stagnation. Profits were down and the financial markets were doing badly. By the late seventies, early eighties we saw a big crackdown on the working class. That came through government policy, the Volker squeeze, the Federal Reserve, Reagan firing air traffic controllers as a sign it was ok to bust unions, cuts to social spending, letting the value of the minimum wage erode, and a whole host of anti-worker policies that became standard years ago. 
Along with that, which people don’t pay as much attention to, was investors really pressuring management to cut costs and give them more money. That has since become standard operating procedure. The judgment of whether or not a company is doing the right thing is if the stock price is going up. Whether it’s serving its customers or workers or other stakeholders is really secondary to getting the stock price up. So that part is really bad for the working class. 
The market sometimes looks like a giant gambling casino, which it often is, but hidden behind that is that these people are the owners of the company. Say you’re a rich person in the 19th century, your economic fate is entirely tied to the company you own. Now, since the stock market became generalized, as a rich person you can diversify your wealth across a bunch of companies, so you’re not tied to any one in particular. From the rich person’s point of view it gives them a lot more freedom. 

But it makes a mess of the word “owner” right? A lot of times you're just the owner for five minutes, passing through, collecting a profit and moving on. 
Yes. I wrote about all of this in my book Wall Street. There’s a chapter on corporate governance that goes into all this stuff. Marx made a very interesting speculative point in the third volume of Das Kapital where he said that the joint stock companies, public corporations, are a kind of abolition of the capitalist mode of production within capitalism itself in that owners become completely separated from people who manage the company’s day to day affairs. At this point who needs these people? What do they contribute besides demands to management to give them more and more? The owners are a completely parasitic and vestigial force really. Marx made the argument that this was progressive in some ways because it pointed toward a different model of ownership, worker ownership or collective ownership of some sort. It used to be thought the owner was the one who had the incentive to manage the company well. If the owners are divided into millions of distant shareholders with no way to pressure management, it’s a whole different world. 

As far as I understand with GameStop, this was a company that sold games, laregely brick and mortar, and that model was on the downtrend already, then came Covid. Some investor came along and bought a bunch of stocks in the company on the gamble that the company was going to get even worse?
This is one of the vulnerabilities of a public company. Every now and again some big operator can buy up the shares, shake things up, say he wants to kick out current management. There was an awful lot of that that went on in the eighties, which really helped create the world we live in today. It’s calmed down since, but it was a daily occurrence in the eighties. These outside operators with a lot of money would come in and attack very established companies and shake things up. When John Kenneth Galbraith wrote The Industrial State in the mid-fifties, he was writing about a corporate landscape in which managers were well paid but nothing like they are today. There was a comfortable mediocrity. Everybody was pretty happy. Then these guys in the eighties started saying, no, this isn’t good enough, we want to maximize profit. That had a lot to do with transforming how companies are run and became kind of the norm. You used to see much less of these unaffiliated corporate restructures, as Alan Greenspan called them, these guys with money who would come in and fuck things up. Disrupters as we call them now. 
So one of these guys came into GameStop. Wanted to reduce their reliance on brick and mortar, do more online stuff. The company was doing quite badly. There was a little excitement over the fact that the prospects for GameStop might improve. This is often when you get a bubble going. There’s some bit of good news that leads to speculation, then things get way out of control. So that’s what set things off. 
Now, shorting is a concept that most civilians find really weird. What you’re trying to do is bet on the value of a stock or another asset going down. What you do is borrow shares from someone who owns them, sell those shares, and hope that the price goes down so you can buy them back at a lower price. 

And then you give them back to the guy you borrowed them from?
Yeah. When you buy it back you’re returning the shares to the person that lent them to you. This is all anonymous and done through computers. We don’t know who’s on the other side, who’s lending the stock. 
One of the things with GameStop that left it so vulnerable is what’s called short interest. The number of shares that have been shorted in the company exceeded the shares outstanding. So some shares had been lent twice, like a Ponzi scheme. This Reddit group got a hold of Goldman Sachs’ list of companies with high short interest and they started going after them. GameStop was one of them. 
Stocks are a funny thing. Most times when prices rise, people are less inclined to buy something. They’re more inclined to buy when a price is lower. But sometimes rising prices draw people into the stock market because, oh wow look, look at it rising. It’s going to continue to rise!
So you had the initial rise coming from this outside guy trying to reorient the strategy of GameStop. People said, oh, look at this, let’s buy it. Then the Redditors saw there was this enormous amount of short interest in the stock, and it went crazy. A lot of them are on Robinhood, so it doesn’t cost them anything. No commissions. Robinhood doesn’t charge any fees to buy or sell stocks. The way they make money is by selling information about the trade-flow to individual speculators, and then the speculators can do what’s called frontrunning. You know orders are coming in for a stock, so you buy them ahead. All of this is done with computers in microseconds. So the speculator makes money because these order flows are coming in. 

So the speculator sees, oh, ok, a hundred people are buying this stock, I bet a thousand people are going to soon, so he gets in in between? 
Yeah. Wall Street loves this concept of smart money versus dumb money. Everyone else of course is the dumb money. If you look at a hedge fund guy versus a bunch of amateurs spending their stimulus checks on Robinhood, there’s not much question about who the dumb money is there. So having all this inside information, basically inside information, about what dumb money is doing is like gold to Wall Street. But on the other hand you have all these hedge fund guys that really shorted GameStop and these other companies they were targeting, like Nokia, weirdly, and I think Bed Bath & Beyond for reasons I don't understand. But since there was so much short interest, and the price started rising… If you short a stock and the price goes up, your broker is going to demand more money. You have to have some collateral in your account, cash or assets, to cover the risk in case the stock goes so far up in price that you’re going to have a hard time buying it back. So as the stock rises the brokers demand more money to make sure you still have the collateral. At some point a lot of people will say I’m not going to put any more money into this, so they’ll close the position and buy back the stock. Suddenly there’s this big scramble to buy the stock because all these people were shorting it. That’s what drove the price higher. 
I don't know what the price is now, but you look at the trend of the thing... It didn’t start rising until I think sometime in November, then really took off a couple weeks ago. It’s up like 27 fold just in a couple weeks. 

Who is Melvin? One of the firms that shorted GameStop and are getting killed now? They’re losing billions? 
Oh yeah, some of these guys are going to lose their shirts. And it’s really funny, these Wall Street guys are like, oh, this isn’t fair. It’s not right. Of course that’s what they do themselves. They’re all a bunch of worthless conspiring criminals. It’s just that these outsiders, who knows who these Redditors are, but they’re obviously small operators... The pros are really annoyed they’re losing their shirts to these novices who didn’t go to Wharton and aren’t as cool as they are. 

So wait let me try to unpack it. You’re a hedge fund guy, you borrow the GameStop stocks from somebody, counting on the fact that you’re going to be able to sell them back for more at some point. 
No they were hoping to buy it back at a lower price. They thought GameStop was collapsing. 

So the first party is the guy who owns the stock, the second party is the shorter who borrows it from him, on the gamble that…
That the price is going to go down. 

So they can sell it to… whom? What’s the third step?
There’s always someone who’s willing to buy something at a price. There’s almost never a problem selling a stock. Especially one that’s for an established firm with a large number of shares outstanding. There’s never a problem finding a buyer, the question is at what price. 

Am I dumb or is this really hard to understand? 
I've been following this for so long it seems like second nature to me, but I think most people find it really obscure. I think people really find the idea of short selling extremely obscure. There’s an old saying attributed to the 19th century financier Daniel Drew: "He who sells what isn't his'n, must buy it back or go to pris'n."
I think people just find that idea that you can sell something that you don’t own really weird. 

It’s like finding out, I don’t know, that ghosts exist. It’s all vaporous to me. 
Well yeah, as I wrote in my book, a naive person learning about this for the first time would say, well this is just crazy. But you don’t really want to lose that sense that this is crazy, because it is crazy. As Marx said, interest-bearing capital is the mother of every insane form. These are insane forms if you really think about them. If an economy exists to serve human needs, you can say well then what does this have to do with human need? It doesn’t really. It’s just this super structure of speculative insanity.

And they’re shutting things down now? Basically saying no fair and taking the ball and going home?
The exchanges are supposed to keep an orderly market. If things get too frenzied where buyers and sellers can’t be matched and they can’t keep up they’ll suspend trading for a short time until things calm down. When you have things moving this quickly with so many crazed buyers and sellers they’re not very orderly. 

So it’s a reasonable move?
Yeah it’s totally reasonable. Otherwise things would freeze up. They do this with the market in general. If there’s some kind of collapse on the way they’ll suspend things for an hour or so. They can’t stop it, but it’s a way of managing the pace of the decline or rise. 

What makes this different from a traditional bubble? 
The great bubble of the nineties was the dotcom bubble. The internet was new and there was a real world basis to excitement over it. Usually the frenzy is one of optimism. There’s an old saying in the markets that the stock markets peak on frenzies of optimism, whereas commodities markets, oil and gold and food, peak on fear. So there’s a very different psychology. The stock market is normally filled with pathological optimists. But there are these professional short sellers, who are kind of sour and strange, they don’t have that optimism. They’re the cynics or malcontents of the fraternity. So it’s weird to see this kind of frenzy develop around short selling. It’s not a normal bubble in that sense. It’s also not normal in that it’s being driven by novices. 
I was just reading a paper that demonstrates people are more likely to buy crazy speculative stocks if they’re trading on their phones than if they’re doing it by telephone or computer. There’s something about doing it on a phone app that makes people more reckless. 
A lot of gambling is shut down right now. Casinos have been shut down. So people have a new outlet for their gambling instincts. Then Robinhood comes along offering no commission trading on your phone and it’s like, oh, this is fun. 

On Robinhood some of these average people can lose a lot of money right?
In this particular case, right now, the hedge fund guys are getting killed. But it’s not going to end well for the amateurs. At some point it’s going to collapse and all these people will be left holding an empty bag. 

The house always wins type of thing?
Basically. There’s an old joke that goes: in a bear market, money returns to its rightful owners. I asked a trader who? And he said, oh, you know, like the Rockefellers. But now it’s the private equity guys, the insiders, they’re the rightful owners. And they’re going to get hit. 

A few of them will get fucked though right? This isn’t some rebellion, it’s more like let’s fuck over one or two billionaires because it’s funny.
Yeah there’s a lot of that sensibility. Let’s fuck over the establishment. Robinhood presents itself as democratizing the financial markets. Like some of the folks who stormed the Capitol. There’s some of that sensibility here. And the hedge fund centimillionaire or billionaire is not a very sympathetic character, so…

It’s probably never been a case where the market had to react to people behaving just because something is funny?
Right! lol world is really alien to Wall Street. There are bear raids, where professional traders will note there’s a lot of short interest in a stock and organize a raid like this, but it was always done within a relatively small community of professionals. What’s new is this band of outsiders just fucking things up for the hell of it. 
And some of them also think they’re going to make a lot of money. I saw one guy who said I took all my father’s money and put it into bitcoin. He’s either going to be spending his retirement on a yacht or on food stamps. Jesus. 
In a bubble you always think you can get out before it falls apart. I’m sure a lot of these people don’t even know what a bubble is. They’re just having fun right now. In many ways this is classic bubble, what’s new about it is some of the actors. 

Does this highlight how absurd it is that we talk about the economic health of the country by tying it to the stock market when it can just be gamed all the time?
Yeah. This is a really egregious instance of it, but that’s always the case. The stock market has a really tenuous relationship with economic health or people’s wealth or anything like that. 

We shouldn’t have any sympathy for these guys right?
The hedge fund guys? No sympathy at all. They play this game, they know the risks. That’s their job. Stop whining. But I do feel a little sympathy for the Reddit guys. They’re eventually going to get killed. On the other hand they wanted to play the game too. But one has more sympathy for naifes without much money. I was just looking at a story about two of the hedge fund guys and I was like fuck you. 

Ok if you had to try one more time to summarize all this how would you do it?
A bunch of professionals thought they were going to make money by betting on the demise of GameStop. Turns out GameStop is not going under. A bunch of amateurs with a desire to fuck things up really put the screws to the professionals. If you stand back it’s kind of entertaining. 
The entire financial system is a giant bubble. Stocks overall are valued either close to or at the highest level relative to underlying value in history. The stock market is just insanely overvalued right now, at a time when scores of people are having trouble putting food on the table. It’s really grotesque. People are barely getting by and these characters are speculating with tons of money. Somehow it’s all going to burst. I don't know how, what will be the spark toward a collapse, but it’s all wildly over done. The difference between the stock market and economic reality has never been this wide.

 

U orahovoj ljusci^tm:

The entire financial system is a giant bubble. Stocks overall are valued either close to or at the highest level relative to underlying value in history. The stock market is just insanely overvalued right now, at a time when scores of people are having trouble putting food on the table. It’s really grotesque. People are barely getting by and these characters are speculating with tons of money. Somehow it’s all going to burst. I don't know how, what will be the spark toward a collapse, but it’s all wildly over done. The difference between the stock market and economic reality has never been this wide.

[mustang]

Ceo marker krvav

Samo

 

 

Sve do jednog ih jebati

[mraki]

35 minutes ago, Skyhighatrist said:

Doug Henwood kaže (ali ne obrazlaže): "In this particular case, right now, the hedge fund guys are getting killed. But it’s not going to end well for the amateurs. At some point it’s going to collapse and all these people will be left holding an empty bag."

 

I meni kao laiku zvuči da balon mora da pukne, ali ne kapiram te mehanizme, dakle, kako ovo može da se završi?

Klinci koji su pokupovali ove akcije nikada nisu ni računali da zarade na njima, samo su se dobro zabavljali i hteli da zeznu hedž fondove. Nije isključeno da im se sada motivi promene.
Gomila njih je uložila sitne pare, džeparac, koji ne verujem da će izgubiti u momentu kada ih budu prodavali, odnosno teško da će ih prodati za manje para i kada taj balon pukne.

Što se tiče celokupnog tržišta kao jednog velikog balona koji će uskoro pući, ja nisam tako siguran u to. O tome se priča godinama i ništa, tehnološke kompanije koje predvode rast su za to vreme utrostručile tržišne vrednosti.

Pre dve godine je Apple bila prva kompanija koja je premašila vrednost od trilion dolara, i svi su tad očekivali neki pad, u najgorem slučaju vrlo slab rast. Dve godine kasnije oni vrede ~ 2.5 triliona i teško da će stati na tome, pre par dana su predstavili neverovatne rezultate prodaje za poslednji fiskalni kvartal 2020. Što se kaže, STONKS ONLY GO UP!

[Lezilebovich]

taman sam mislio da sam razumeo ... jedan imao deonice, pa ih pozajmi drugom koji ih proda sa nadom da ce ih pre vracanja kupiti po manjoj ceni ... i onda dodje ova recenica

Quote

 So some shares had been lent twice, like a Ponzi scheme.

 

kako je sad to moguce ?

[Skyhighatrist]

Dada, ovo sam i ja hteo da pitam, na par mesta sam naleteo na to da je broj shortovanih akcija veći od stvarnog broja. Kako to, stvarno?

[CPP]

3 minutes ago, Skyhighatrist said:

U orahovoj ljusci^tm:

The entire financial system is a giant bubble. Stocks overall are valued either close to or at the highest level relative to underlying value in history. The stock market is just insanely overvalued right now, at a time when scores of people are having trouble putting food on the table. It’s really grotesque. People are barely getting by and these characters are speculating with tons of money. Somehow it’s all going to burst. I don't know how, what will be the spark toward a collapse, but it’s all wildly over done. The difference between the stock market and economic reality has never been this wide.

 

Pa ne bih se slozio. Novac je medijum razmene i nema inherentnu vrednost tako da prica o precenjenosti masi sustinu, a sustina je redistribucija vlasnistva i posledicno moci upumpavanjem dodatnog novca u sistem. Sistem skripi -> podmazuje se kreiranjem novca, taj novac podrzava trenutnu vlasnicku strukturu (umesto da reflektuje rast ekonomske aktivnosti). 

 

Ukratko, lude cifre na berzi su indikator osiromasenja regular Dzoa jer se pare stampaju, al ne za njega.

[mustang]

@mraki

Ne slazem se sa tobom u vezi klinaca.mislim da im je prva stavka brza zarada a onda kolektivan dogovor. Pratim neke klince na tik toku, iskreno, ucim od njih nov pogled na svet, a i cine me mentalno fleksibilnijom. 

 

Ovo trziste nece puci ali mora da se desi nedelju dve kolapsa, napumpano je previse, volatile market sto bi rekli. Vece su sanse u kazinu da znas hoces li dobiti ruku ili ne u odnosu na trenutno stanje marketa. 

 

 

Svasta se desava na berzi pa i da puste vise akcije, tj jedna prodje vise ruku sto citi lezilebovic

 

Ja sam na penny stock gde je short selling zabranjen i opet vidis samo jednog dana da te ajkule progutaju zbog shorta. I nikom nista. Nema pravde. 

[Lezilebovich]

@James Marshall @Redoran - s obzirom da je mod tema zaključana, možda bi mogao split sa ekonomije za decu (npr tema bi se mogla zvati gamestop ili WallStreetBets ili nešto smislenije). tema je interesantna, možda bi privukla još diskutanata ...

[Lezilebovich]

Što više čitam sve više ima zanimljivijih aspekata. Prvo se desila platforma za trgovanje akcija koja ne naplaćuje svoju uslugu i ne komplikuje je jer zarađuje od podataka koje skupi i prosledi drugim zainteresovanim stranama. Zatim, community koji se napravio na redditu, a baziran na toj platformi sa svojim jezikom, ponašanjem, pravilima. Trejdovanje akcijama je za dosta njih u stvari bila igrica. Plakanje "ozbiljnih" brokera kako im se unižava posao i eto neko se sprda sa njihovom profesijom ... I na kraju dolazi gamestop ekplozija

Edited January 29, 2021 by Lezilebovich

[CPP]

21 minutes ago, Skyhighatrist said:

Dada, ovo sam i ja hteo da pitam, na par mesta sam naleteo na to da je broj shortovanih akcija veći od stvarnog broja. Kako to, stvarno?

 

Firma A ima 10 deonica. Firma B pozajmi 4 od A i proda firmi C (shortuje stock). Firma A racuna da ima 10, Firma C racuna da ima 4. Firma B ceka da cena padne da kupi nazad 4 i vrati firmi A uz profit. Cena ne pada.  140% znaci da su shorteri kratki 40% ukupnog broja deonica (mnogo).

[mustang]

Sad ce da krenu sa far-right, russians, white-supremacy sranjem.. Jadni hedge menadzwri i brokeri. Suze mi na oci.