Recent Posts

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91
General Discussion / Re: Good piece on r/WallStreetBets
« Last post by Santayana on January 27, 2021, 02:19:13 PM »
this is a fascinating question.  there is a market manipulation prohibition in the 34 Act, directed to for example boiler room activity where such shops would build a position and engage in activities to induce a market (calling widows) to unload the position. is this reddit site tantamount to that? doesn't seem so to me. lots of "professional investors" use technical factors to make a buck. here these guys took on a stupid name that was >100% of float short and created a short squeeze...seems to be legit, and they have a 1st A right (commercial speech) to talk to each other about the idea. I just think shorting has moved into a new era where the squeeze risk has increased...caveat emptor

This is more a case of caveat venditor,
92
General Discussion / Re: Good piece on r/WallStreetBets
« Last post by Jurgis on January 27, 2021, 02:15:27 PM »
I'm certainly no libertarian, but I fail to see why any regulation is necessary here.

If you're a sophisticated institution and you decide to be short on a position where the aggregate short interest is 100%+ of the float, then you're the proverbial pig that deserves to be slaughtered. It's the classic greed described by Buffett: Risking what you have and need in a vain effort to gain what you don't have and don't need.

Short squeezes have been happening for decades. What's different now is that it's retail orchestrating the short squeeze and thus the "wrong kind" of person is making money from the trade. The calls for regulation are being driven by envy, pure and simple.

+1

It's not just short-squeezes though, right? I mean that exacerbated this, but short squeeze lifted the shares from $140 to $300. It was redditors and Gamma that lifted it from $4 to $140. The idea that a board of 2+ million members can be mobilized/weaponized to lever the F up and distort the trading of ANY asset/market IS problematic - for businesses, for pensions, for markets in general.

What if Pepsi makes a political donation reddit decides it doesn't like and they short its shares into oblivion taking down pensioners assets with it? Is that ok?

What if these guys get into FX futures/future options and all simultaneously enter longs into the EUR/USD pairing and blow the EUR USD pair to 3-4 USD temporarily? You don't think that could be problematic for businesses all over the world?

What if they decide that they all think the Fed is exploding the dollar and decide to drive oil into the stratosphere by all loading into the front-month contract (the exact opposite of negative prices in April)?

These things matter. Yes - those are all bigger markets. But it's a growing community now (1+ million recent member adds). More on the way. And HFT/trend follower/momo strategies that will ride their coattails. This is a HUGE pile of liquidity that can really slosh anywhere it wants that that is NOT healthy.

I wonder how you propose to regulate this.

Forget concerted shorting.
How do you propose to regulate people going long because they read something somewhere?
Are you proposing to ban social networks?
Are you proposing to ban/moderate posts about stocks? Based on what metrics?
If Jim Cramer or Chamath or Elon posts to use Signal and people buy unrelated stock to stratosphere how are you going to regulate that?
Ban every post that mentions a stock that reaches more than 1M people? How?

Just FYI, there is no cartel or monopoly here. There is no agreement that WSB bros will actually buy anything. There is no central authority that makes people buy GME. There is no single person who "did it". And even if there was - as is the case with Chamath or Elon - what exactly is their crime in saying "buy GME"?

You might be able to persuade regulators to ban options (not a big loss IMO), although I'm sure there's gonna be yuge pushback on this. Or maybe change some rules to make gamma squeeze unlikely. But I don't see how you expect to prevent millions of people from deciding that they want to buy some crappy stonk at the same time.

@Sanjeev: if this crosses no-politics line, please delete and let me know.
93
General Discussion / Re: Good piece on r/WallStreetBets
« Last post by cherzeca on January 27, 2021, 02:12:45 PM »
this is a fascinating question.  there is a market manipulation prohibition in the 34 Act, directed to for example boiler room activity where such shops would build a position and engage in activities to induce a market (calling widows) to unload the position. is this reddit site tantamount to that? doesn't seem so to me. lots of "professional investors" use technical factors to make a buck. here these guys took on a stupid name that was >100% of float short and created a short squeeze...seems to be legit, and they have a 1st A right (commercial speech) to talk to each other about the idea. I just think shorting has moved into a new era where the squeeze risk has increased...caveat emptor
94
General Discussion / Re: Good piece on r/WallStreetBets
« Last post by compoundinglife on January 27, 2021, 02:06:57 PM »
I'm certainly no libertarian, but I fail to see why any regulation is necessary here.

If you're a sophisticated institution and you decide to be short on a position where the aggregate short interest is 100%+ of the float, then you're the proverbial pig that deserves to be slaughtered. It's the classic greed described by Buffett: Risking what you have and need in a vain effort to gain what you don't have and don't need.

Short squeezes have been happening for decades. What's different now is that it's retail orchestrating the short squeeze and thus the "wrong kind" of person is making money from the trade. The calls for regulation are being driven by envy, pure and simple.

+1

It's not just short-squeezes though, right? I mean that exacerbated this, but short squeeze lifted the shares from $140 to $300. It was redditors and Gamma that lifted it from $4 to $140. The idea that a board of 2+ million members can be mobilized/weaponized to lever the F up and distort the trading of ANY asset/market IS problematic - for businesses, for pensions, for markets in general.

What if Pepsi makes a political donation reddit decides it doesn't like and they short its shares into oblivion taking down pensioners assets with it? Is that ok?

What if these guys get into FX futures/future options and all simultaneously enter longs into the EUR/USD pairing and blow the EUR USD pair to 3-4 USD temporarily? You don't think that could be problematic for businesses all over the world?

What if they decide that they all think the Fed is exploding the dollar and decide to drive oil into the stratosphere by all loading into the front-month contract (the exact opposite of negative prices in April)?

These things matter. Yes - those are all bigger markets. But it's a growing community now (1+ million recent member adds). More on the way. And HFT/trend follower/momo strategies that will ride their coattails. This is a HUGE pile of liquidity that can really slosh anywhere it wants that that is NOT healthy.

Everything I have seen so far (GME, BB, AMC) has been low float or free float. I don't think there is as much capital sloshing around as people think. Also I imagine there is a decent amount of leverage involved for many larger participants and we all know how that eventually plays out. A bunch of people jump on the wagon most of them unfortunately will get burned and this too shall pass IMO.
95
General Discussion / Re: 1999 again?
« Last post by Jurgis on January 27, 2021, 02:03:42 PM »

3 years ago I walked into my barbershop and there were 3 customers with their smartphones out discussing their day trading strategies and weed stocks along with one of the barbers, I thought for sure that was the top of the cycle... 3 years later here we are ...  ???

That is also true.  8)
96
General Discussion / Re: Good piece on r/WallStreetBets
« Last post by TwoCitiesCapital on January 27, 2021, 02:00:23 PM »
I'm certainly no libertarian, but I fail to see why any regulation is necessary here.

If you're a sophisticated institution and you decide to be short on a position where the aggregate short interest is 100%+ of the float, then you're the proverbial pig that deserves to be slaughtered. It's the classic greed described by Buffett: Risking what you have and need in a vain effort to gain what you don't have and don't need.

Short squeezes have been happening for decades. What's different now is that it's retail orchestrating the short squeeze and thus the "wrong kind" of person is making money from the trade. The calls for regulation are being driven by envy, pure and simple.

+1

It's not just short-squeezes though, right? I mean that exacerbated this, but short squeeze lifted the shares from $140 to $300. It was redditors and Gamma that lifted it from $4 to $140. The idea that a board of 2+ million members can be mobilized/weaponized to lever the F up and distort the trading of ANY asset/market IS problematic - for businesses, for pensions, for markets in general.

What if Pepsi makes a political donation reddit decides it doesn't like and they short its shares into oblivion taking down pensioners assets with it? Is that ok?

What if these guys get into FX futures/future options and all simultaneously enter longs into the EUR/USD pairing and blow the EUR USD pair to 3-4 USD temporarily? You don't think that could be problematic for businesses all over the world?

What if they decide that they all think the Fed is exploding the dollar and decide to drive oil into the stratosphere by all loading into the front-month contract (the exact opposite of negative prices in April)?

These things matter. Yes - those are all bigger markets. But it's a growing community now (1+ million recent member adds). More on the way. And HFT/trend follower/momo strategies that will ride their coattails. This is a HUGE pile of liquidity that can really slosh anywhere it wants that that is NOT healthy.
97
Fairfax Financial / Re: Fairfax 2021
« Last post by bluedevil on January 27, 2021, 01:57:06 PM »
Converting the note now would serve no purpose unless they're selling everything.

-- Right.  I am hoping they convert the note and sell everything!  Take the 1B of profit on the note and run before reality reasserts itself.   
98
General Discussion / Re: what are you selling today?
« Last post by formthirteen on January 27, 2021, 01:54:46 PM »
Exited SCHW.
99
Investment Ideas / Re: GME - Game Stop Corp
« Last post by lessthaniv on January 27, 2021, 01:51:36 PM »
I think it's closer to a Tilray than a VW.  TLRY topped out at 300.00 exactly.  Maybe GME will do something close to that.  The shares outstanding of GME is about the same as it was for TLRY too, topping out around $25b market cap.

Just going to point out that if today's high of $370-ish holds, the market cap topped @ 26B and this dude nailed it.

Tomorrow we should see the net affect of the margin changes too

GME, AMC and BB - all dropping in after hours so far
100
Fairfax Financial / Re: Fairfax 2021
« Last post by Santayana on January 27, 2021, 01:50:39 PM »
We'll find out they sold BB but had to use the proceeds to cover the TSLA short.
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