SOOPOO
SOOPOO
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January 29th, 2021 at 6:27:53 AM permalink
Quote: Wizard

I honestly don't get why anybody would restrict those trades. Isn't it supposed to be a free market?



Yes.... but apparently the owner of Robinhood had some sort of interest in the hedge funds which were being killed by the Reddit attack. So as opposed to thinking it just provided a service, these companies are not as independent as we would think. This is third hand from younger son......
lilredrooster
lilredrooster
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January 29th, 2021 at 6:48:47 AM permalink
.............................


it's a gigantic issue for Wall Street and for the SEC
the reddit "Wall Street Bets" gang has a play in their playbook now
they could gang up and push up many stocks that are being shorted by hedge funds and the funds will be caught in a short squeeze
if they buy to close out their short position that will push the stock even higher and make it worse for other funds still short
not to mention that in this situation the funds that buy to get out would lose a ton of money
if the Street somehow protects those funds it looks really, really bad - especially since these funds make money on the misery of others when shorting




*
"𝘣𝘦𝘭𝘪𝘦𝘷𝘦 𝘩𝘢𝘭𝘧 𝘰𝘧 𝘸𝘩𝘢𝘵 𝘺𝘰𝘶 𝘴𝘦𝘦 𝘢𝘯𝘥 𝘯𝘰𝘯𝘦 𝘰𝘧 𝘸𝘩𝘢𝘵 𝘺𝘰𝘶 𝘩𝘦𝘢𝘳"______Edgar Allan Poe
Wizard
Administrator
Wizard
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Thanks for this post from:
RogerKint
January 29th, 2021 at 6:52:30 AM permalink
Quote: lilredrooster

the reddit "Wall Street Bets" gang has a play in their playbook now
they could gang up and push up many stocks that are being shorted by hedge funds and the funds will be caught in a short squeeze
if they buy to close out their short position that will push the stock even higher and make it worse for other funds still short
not to mention that in this situation the funds would lose a ton of money



This is getting out of my area, but this would seem to me a part of the gamble of a short sale.
It's not whether you win or lose; it's whether or not you had a good bet.
gamerfreak
gamerfreak
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January 29th, 2021 at 6:57:31 AM permalink
Quote: lilredrooster

.............................


it's a gigantic issue for Wall Street and for the SEC
the reddit "Wall Street Bets" gang has a play in their playbook now
they could gang up and push up many stocks that are being shorted by hedge funds and the funds will be caught in a short squeeze
if they buy to close out their short position that will push the stock even higher and make it worse for other funds still short
not to mention that in this situation the funds that buy to get out would lose a ton of money
if the Street somehow protects those funds it looks really, really bad - especially since these funds make money on the misery of others when shorting
*


If this becomes an ongoing thing, how will Reddit know what stocks hedge funds are shorting?

I thought Melvin capital said something publicly about shorting GME this time. Obviously they won’t be doing that in the future.
lilredrooster
lilredrooster
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January 29th, 2021 at 7:00:49 AM permalink
Quote: Wizard

This is getting out of my area, but this would seem to me a part of the gamble of a short sale.





yes, you're correct - the problem for the funds is that this is a new and powerful gang they're facing off against
and they have billions invested in some of their shorts

I think it's unlikely but the hedge fund Long Term Capital went down in 1998 - there were massive losses (it was run by a Nobel prize winner) there was a fear, perhaps unrealistic, that it could bring the entire economy down with it




*
"𝘣𝘦𝘭𝘪𝘦𝘷𝘦 𝘩𝘢𝘭𝘧 𝘰𝘧 𝘸𝘩𝘢𝘵 𝘺𝘰𝘶 𝘴𝘦𝘦 𝘢𝘯𝘥 𝘯𝘰𝘯𝘦 𝘰𝘧 𝘸𝘩𝘢𝘵 𝘺𝘰𝘶 𝘩𝘦𝘢𝘳"______Edgar Allan Poe
lilredrooster
lilredrooster
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January 29th, 2021 at 7:03:59 AM permalink
Quote: gamerfreak

If this becomes an ongoing thing, how will Reddit know what stocks hedge funds are shorting?




that stuff becomes known - journalists - loose lips, rumors, chat rooms, etc.
and I think the funds may be required to publicly post some info by the SEC



*
"𝘣𝘦𝘭𝘪𝘦𝘷𝘦 𝘩𝘢𝘭𝘧 𝘰𝘧 𝘸𝘩𝘢𝘵 𝘺𝘰𝘶 𝘴𝘦𝘦 𝘢𝘯𝘥 𝘯𝘰𝘯𝘦 𝘰𝘧 𝘸𝘩𝘢𝘵 𝘺𝘰𝘶 𝘩𝘦𝘢𝘳"______Edgar Allan Poe
Joeman
Joeman
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January 29th, 2021 at 7:12:23 AM permalink
Quote: gamerfreak

If this becomes an ongoing thing, how will Reddit know what stocks hedge funds are shorting?

I pay it minimal attention, but "Short Interest" is a fundamental that indicates what percentage of a stock is currently shorted. This metric is freely available on Seeking Alpha, and likely many others. I'm sure somewhere, you can find a stock screener that will filter stocks based on Short Interest.
"Dealer has 'rock'... Pay 'paper!'"
SOOPOO
SOOPOO
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January 29th, 2021 at 7:33:48 AM permalink
Quote: Joeman

I pay it minimal attention, but "Short Interest" is a fundamental that indicates what percentage of a stock is currently shorted. This metric is freely available on Seeking Alpha, and likely many others. I'm sure somewhere, you can find a stock screener that will filter stocks based on Short Interest.



Correct. Before this new Reddit attack, high short interest implied ‘those in the know’ expected the stock to go down. Joe Blow (me!) would AVOID stocks with lots of shorted shares!

This is going to be super interesting from a legal standpoint. Will this type of stock price manipulation end up being a legal technique, or a felony? I’ve heard 100% opinions on both sides!
gamerfreak
gamerfreak
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January 29th, 2021 at 8:31:15 AM permalink
Quote: Joeman

I pay it minimal attention, but "Short Interest" is a fundamental that indicates what percentage of a stock is currently shorted. This metric is freely available on Seeking Alpha, and likely many others. I'm sure somewhere, you can find a stock screener that will filter stocks based on Short Interest.


Thanks I figured there might be some sort of technical indication
fantom
fantom
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January 29th, 2021 at 8:32:35 AM permalink
My admittedly shallow knowledge of the crash of 1929 was that margin calls - borrowing money against the current price of your stock results in calls to make up the difference when the price goes down - was what got the avalanche started.

Shorting stocks that go up, and borrowing money to pay for the investment - isn't that the same thing only in reverse?

And isn't this whole mess essentially a manipulation of the market in the extremely short term having nothing to do with the underlying company? Pick a stock, any stock, and just keep hitting on it - in either direction, short or long - and turn a profit on the totally artificial swing?

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