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GME and hedge funds

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I can't help but play a little bit, although with money I can afford to lose. I've been picking at AMC today and have made a bit, so may go in stronger tomorrow. We'll see.

Aside from the fact that someone is going to be left holding the bag and the people who don't cash out soon enough will potentially lose everything, I'm also worried a bit for the younger guys investing for another reason.

I'm not a tax guy, but I think that this would likely be taxed as short term capital gains, and I think the rate on that is around 30%. I'm worried that a bunch of guys who made say 20K+ on it are going to spend it now(even if it's for "good" things like paying student loans) and then get hit with a 6K tax bill next year.

If you're someone who has made it big, I'd think a chat with a CPA sooner rather than later would be prudent.
 
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Geepaw said:
I do not understand how the SEC allows this to happen. It's damaging to the capital markets to allow such blatant manipulation. In the end the shorts are getting justice but it's not good for the markets generally and the fallout will be harmful to some retail investors who are now piling in. I hope GME management is smart and does a shelf offering if possible to at least benefit from all this as well.
Click to expand...

it’s interesting bc usually if you’re holding 5% or more of a publicly held firm you’re held to a different set of rules.

what’s happening though is not a typical “hedge fund” or one individual but a collective “entity” in the form of Wall Street bets which btw, kudos on them for getting recognized on multiple media channels.

and apparently folks in congress are held to a different subset of rules but it’s perfectly fine to say all is calm with the market and then have your spouse sell huge positions only to turn around and then admit publicly that covid is real.

I for one, think it’s interesting that for ages we’ve been told retailers make no impact that the market is essentially (bid/ask market mind you, not ipo or “spacs”) manipulated, I mean more heavily influenced by institutional more than the lil ol retailer holders like the ones you’ll find on WSB.

And yet here we are today.

ps, Tesla was also heavily favorited by them.
 
Apparently BlackBerry stock is getting pumped too, according to my broker’s email today.

I bought BB almost 10 years ago for $4.35 or something... after their phone market was crashing in burning. Despite this, they have a ton of cash, tons of patents they license, QNX car OS software, enterprise software, etc. At the time I figured it was pretty under valued.

I was surprised to hear the stock was around $26 today. I’m selling 60% of it and see where the rest goes.
 
Someone please clear me up on somethings.

1-The short seller, doesn't he have a maturity date? As in when 28th of January comes they have to buy the stock at whatever its price is?

2-Are they still selling these short sale stocks or people actually planned to buy them all prior and now holding on to it without the short seller being on the plan?

3-If the price is going up towards 350, then this means someone is willing to purchase at that price, but who is that one? Is it the short sellers trying to buy back the stock?
 
A.Goldberg said:
Apparently BlackBerry stock is getting pumped too, according to my broker’s email today.

I bought BB almost 10 years ago for $4.35 or something... after their phone market was crashing in burning. Despite this, they have a ton of cash, tons of patents they license, QNX car OS software, enterprise software, etc. At the time I figured it was pretty under valued.

I was surprised to hear the stock was around $26 today. I’m selling 60% of it and see where the rest goes.
Click to expand...
You bought blackberry when it died to the iPhone and Android and held it for 10 years? If I had a courage medal I'd give it to you
 
Looks like the party’s over at the hands of Robinhood. They made it so you can only sell your position on GME and other hot stocks. Unbelievable honestly. Hope they get sued or punished by regulators. Can’t have plebes making money, that’s only for the rich.

I got out with $86 in all this madness. Not much, but at least it was fun.

Edit: Guess I spoke too soon about the party being over. GME back up to near $500.
 
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MacBH928 said:
You bought blackberry when it died to the iPhone and Android and held it for 10 years? If I had a courage medal I'd give it to you
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They do a lot more than make phones, as I mentioned.

I did the same thing with Palm years ago, more than doubling my money, investing 2 weeks before they got bought by HP. PalmOS was obsolete but their new WebOS was actually very good (featured a lot of things we now have on iOS years earlier) but had zero developer support. Apple was actually in line to buy Palm but HP sniped them and subsequently drove it into the ground.
 
They highlighted GameStop last night on MSNBC. Great story, lol. So a hedge fund likes making money by selling stocks short, taking a bet, the stock will go down. Does that in itself qualify as manipulation?

Anyway a group of small investors on Reddit decided to buy Game stop to drive the price up, and cause that hedge fund to hemorrhage a lot of money. I can’t see buying a stock as manipulating the market, while you have caused an event.

What I don’t understand is how could a group of small investors muster enough strength to turn a stock around, how much money would have to be invested in it, to drive it up? But last night I heard something about the Tesla guy joining in, because the stock in his company if frequently sold short, so maybe he pumped in a large amount of Capital.

news.yahoo.com

GameStop? Reddit? Explaining what's happening in the stock market

Here's a guide to understanding what's going on with GameStop and what the frenzy means for the stock market.
news.yahoo.com news.yahoo.com
 
A.Goldberg said:
Apparently BlackBerry stock is getting pumped too, according to my broker’s email today.

I bought BB almost 10 years ago for $4.35 or something... after their phone market was crashing in burning. Despite this, they have a ton of cash, tons of patents they license, QNX car OS software, enterprise software, etc. At the time I figured it was pretty under valued.

I was surprised to hear the stock was around $26 today. I’m selling 60% of it and see where the rest goes.
Click to expand...
That’s the thing about long term investing, it’s a leap of faith is it not?
 
rainafterthesun said:
it’s interesting bc usually if you’re holding 5% or more of a publicly held firm you’re held to a different set of rules.

what’s happening though is not a typical “hedge fund” or one individual but a collective “entity” in the form of Wall Street bets which btw, kudos on them for getting recognized on multiple media channels.

and apparently folks in congress are held to a different subset of rules but it’s perfectly fine to say all is calm with the market and then have your spouse sell huge positions only to turn around and then admit publicly that covid is real.

I for one, think it’s interesting that for ages we’ve been told retailers make no impact that the market is essentially (bid/ask market mind you, not ipo or “spacs”) manipulated, I mean more heavily influenced by institutional more than the lil ol retailer holders like the ones you’ll find on WSB.

And yet here we are today.

ps, Tesla was also heavily favorited by them.
Click to expand...
I'm fine with the price action but I am not fine with the cause of the price action. A short interest of 140% of a company's market cap should not be legal given the purpose of the law against naked shorting. This is caused by lending out 1 share of stock multiple times. It really should be illegal. Other than that, I think that WSB, reddit investors, hedge funds who short, and all other market participants are completely good to go on realizing profit from market inefficiencies in a free market. Shorting, in theory, should be good for the markets so my objection this is purely a market structure issue that need to be addressed.
 
How is it legal to allow hedge funds to buy and sell shares but not retail investors?

No one, especially hedge funds, gives a damn when us regular folk loses our shirt. No brokerages step in. Once it impacts the rich, they cry foul and actively manipulate the market

This is a corrupt system

The rich enjoy the free market when it suits them and socialized losses when it doesn't
 
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Huntn said:
They highlighted GameStop last night on MSNBC. Great story, lol. So a hedge fund likes making money by selling stocks short, taking a bet, the stock will go down. Does that in itself qualify as manipulation?

Anyway a group of small investors on Reddit decided to buy Game stop to drive the price up, and cause that hedge fund to hemorrhage a lot of money. I can’t see buying a stock as manipulating the market, while you have caused an event.

What I don’t understand is how could a group of small investors muster enough strength to turn a stock around, how much money would have to be invested in it, to drive it up? But last night I heard something about the Tesla guy joining in, because the stock in his company if frequently sold short, so maybe he pumped in a large amount of Capital.

news.yahoo.com

GameStop? Reddit? Explaining what's happening in the stock market

Here's a guide to understanding what's going on with GameStop and what the frenzy means for the stock market.
news.yahoo.com news.yahoo.com
Click to expand...
I'll try to explain as best I can, though I'm not a professional and parts may need correction. This was caused by multiple factors. First it was shorted to 140% of available shares, which is an insane level. Second, the float is relatively low (few trading shares). When the trading really picked up, shares were scarce driving up the price further. When the short squeeze started and shorts began to buy shares to cover, this drove up price yet again. Then you had something called a gamma squeeze going on where calls (options to purchase shares) that were previously out of the money, were now suddenly in the money. People holding those calls then optioned their shares, causing yet another increase. These things were all going on more or less simultaneously, but basically a bunch of positive feedback loops stacked and caused a simply massive increase in share price.
 
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dukebound85 said:
How is it legal to allow hedge funds to buy and sell shares but not retail investors?

No one, especially hedge funds, gives a damn when us regular folk loses our shirt. No brokerages step in. Once it impacts the rich, they cry foul and actively manipulate the market

This is a corrupt system

The rich enjoy the free market when it suits them and socialized losses when it doesn't
Click to expand...
I can understand them cutting off margin but not cutting off trading. I agree that cutting off market access is a form of manipulation. I would leave Robinhood immediately if I had an account there.
 
I was going to post some somewhat technical comments about what's driving the uncoupled-from-financial-reality activity in companies like GameStop, Blackberry, and American Airlines but Motley Fool has done an excellent writeup here:
www.fool.com

GameStop's Gargantuan Gamma Squeeze | The Motley Fool

It's not just a short squeeze that's driving the video game retailer's epic volatility.
www.fool.com www.fool.com
 
vipergts2207 said:
Looks like the party’s over at the hands of Robinhood. They made it so you can only sell your position on GME and other hot stocks. Unbelievable honestly. Hope they get sued or punished by regulators. Can’t have plebes making money, that’s only for the rich.

I got out with $86 in all this madness. Not much, but at least it was fun.

Edit: Guess I spoke too soon about the party being over. GME back up to near $500.
Click to expand...
In theory, it will end in either institutions/hedge funds beginning to declare bankruptcy because they will be unable to cover their shorts or the price continues higher until the short interest in the company goes way down. Everybody has their price. What we see now is brokers creating force sellers by cutting off access -- which is manipulation even if it's in the name of protecting the public.
 
MacBH928 said:
Someone please clear me up on somethings.

1-The short seller, doesn't he have a maturity date? As in when 28th of January comes they have to buy the stock at whatever its price is?

2-Are they still selling these short sale stocks or people actually planned to buy them all prior and now holding on to it without the short seller being on the plan?

3-If the price is going up towards 350, then this means someone is willing to purchase at that price, but who is that one? Is it the short sellers trying to buy back the stock?
Click to expand...

1. Short selling shares does not have an expiration date. Option contracts do expire. Specific to your question, you are referring to a call option. Options give the option buyer the right but not the obligation to take the action described by the option. Further, most options consist of an expiration date, a strike price (the price at which the seller of the option must deliver or buy the shares), and either call or put status.

2. I'm not clear who "they" refers to. If you mean actual owners of shares, then as long as at least one stock exchange allows trading of the equity, selling is possible if there are buyers.

3. It depends on what you mean by "price". A last trade quote is a price at which an actual transaction occurred. Bids and Asks, however, are offers to trade only. They do not indicate a trade happened.
 
Geepaw said:
In theory, it will end in either institutions/hedge funds beginning to declare bankruptcy because they will be unable to cover their shorts or the price continues higher until the short interest in the company goes way down. Everybody has their price. What we see now is brokers creating force sellers by cutting off access -- which is manipulation even if it's in the name of protecting the public.
Click to expand...

Perhaps. But another, very significant factor is that market makers and exchange specialists–who play a big role in providing liquidity to all market participants, especially in times of high volatility or panicky trading–can get severely hurt by what's going on here.
 
The rumors on reddit suggest that the White House and/or Federal Reserve are pressuring brokers to cut off access. So inappropriate if true.
 
Geepaw said:
The rumors on reddit suggest that the White House and/or Federal Reserve are pressuring brokers to cut off access. So inappropriate if true.
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I’m guessing it’s due to the fact that Citadel and Robinhood have a relationship.

Edit: Just saw that some other brokerages like WeBull also did the same thing, so maybe there is some larger conspiracy. I use TDA and they’ve only increased margin requirements, which is arguably a sensible action to prevent people from completely gambling away their life savings. Any broker that cuts off trading on these names completely should be investigated and their user base should move elsewhere. Now that most brokers offer free trades there’s no reason to not move to a big boy brokerage like TDA, Etrade, or Fidelity.
 
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KaliYoni said:
Perhaps. But another, very significant factor is that market makers and exchange specialists–who play a big role in providing liquidity to all market participants, especially in times of high volatility or panicky trading–can get severely hurt by what's going on here.
Click to expand...
Too bad. They've been doing this for decades at the expense of the middle and lower classes and increasing the wealth gap by exploiting the system. Don't care if they all lose everything, and they all should. They've cost people their savings, their houses, and there have been people that have committed suicide because these hedge fund managers have not cared about anything but making money and exploiting everyone over the years and decades. Once they lose, and lose hold of the market they manipulate and dictate, for what was only two days total thus far, they panic and shut everything down.

Eff'em. Eff'em all.
 
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