Reddit/Gamestop vs.Wall Street

strandroad wrote: »

A lot more people just got a lot more informed, I consider it a plus!

so asymmetry of information benefits society as a whole by......

strandroad wrote: »

It's removing the asymmetry of information, no? Hedge funds and short selling practices are less opaque to the masses now. It's socialisation of information.

possibly, but again, the overall outcome could possibly increase job losses of those masses

Doctor Roast wrote: »

What I've noticed on the wsb forum and a lot of comments on YouTube etc, is these small time investors are perfectly fine with losing any money they've invested in gamestop shares just to stick it to Wall St, it shows just how much of a mess the financial system is

Exactly. I know several people who got in on this and it's the same attitude across the board - "I'm not hoping to get this money back, but a few hundred quid is a fair price for a front row ticket to watching the financial system burn".

It goes a lot deeper than anyone really seems to realise as well, tbh. People are starting to wake up to a lot of the generally opaque aspects of the current financial system's incarnation - for example, the fact that a lot of the investment funds who trade in residential property and price or rent gouge are owned by investment or pension funds. This is fuelling the widespread anger at a system which is increasingly seen as designed to leech money from one generation to another, and attacking the system like this is seen as a way of attacking that ongoing wealth transfer from the opposite direction.

I've been saying it for ten years on Boards but there are a lot of people who seriously underestimate (a) how much people are starting to understand about how the economy works, where money comes from, who has the power over its circulation etc, and (b) how many of those people absolutely despise that system as it is currently engineered and would be genuinely willing to live through a horrific period of financial chaos in the aftermath of a total collapse if it meant that we could build a new system afterwards which didn't involve this kind of exploitation on such a gigantic scale.

Fundamentally it's the players at the top, both on the financial and political establishment side, who are responsible for this. The house of cards relied upon the illusion that things would work out reasonably well for everyone as long as nobody rocked the boat. The aftermath of 2008 combined with the ever increasing stagflation brought on primarily by the hoarding and unproductive, speculative trading of assets thereby driving prices up, shattered that illusion and now many, many people just want the whole thing to burn.

It's not a left v right issue, which is something a lot of people are also failing to understand. To paraphrase something I wrote for Reddit last night, the right wing despises socialism and the left wing despises inequality. Where the two are perfectly intertwined is when socialism is applied to some people but not others - the right hate that because they believe socialism should apply to nobody, the left hate it because they believe socialism should apply to everybody.

What the two sides are united on is that whatever else happens, everyone should be subject to the same rules and the same system. The aftermath of 2008 showed that this was not the case - for instance, investment funds and banks got bailed out, homeowners who could no longer pay their mortgages through no fault of their own did not.

Hatred of a system which operates like that transcends partisan politics, which is why the divide and conquer tactics being employed (such as the pathetic attempts to frame WSB as an alt-right phenomenon a couple of days ago) simple will not work. This entire issue is now extremely personal for everyone involved, and they are more than happy to pay fairly large amounts of money for the privilege of being part of an uprising against what they see as a system which is explicitly designed to f*ck ordinary people over.

Seems Robinhood is now autoselling peoples shares today, at a price of its choosing. Sure that's on the up and up

hatrickpatrick wrote: »

There was a very good article in the Irish Times about this a couple of days ago actually, it was specifically about how the trend of pension funds owning large amounts of rental housing and making bank on the current housing crisis was essentially a case of the currently retired generation leeching wealth actually generated by millennials from those who generated it, without actually creating or contributing anything to earn that wealth.

I didn't read it, but that seems a bit off to me. The people with pension funds are largely those that are working - generally from around 18 to 65 years of age. They're the ones that are putting money into pension funds that require significant growth. And the younger the person, the more invested they're likely to be in volatile assets (property, shares).

As a person approaches retirement age, their fund is gradually shifted into cash, bonds etc - considered more stable. And as the person retires, they traditionally buy an annuity*, and so remove themselves from the vagaries of the market. At that point they own an annual income rather than a fund. They don't care what happens to the markets. Defined Benefit retirees are similar except they never had a fund to begin with.

So the Millennial paying into a pension fund may be both benefiting and suffering from his/her investment. The retiree may very well no longer have such a pension fund. I don't see this as the Boomers screwing the Millennials.

(* Of course there are exceptions; annuities are less popular in the age of low interest rates. But I'd guess that the vast majority of pension funds are owned by workers)

Deleted User wrote: »

It was the argument made in defence of the censorship/deplatforming of the last few months..

This is just the next step really in a way..

It's completely different to censorship/deplatforming. They are bound by SEC regulations so they can't just turn around and sell shares oh a whim.

The head of the NASDAQ is calling for more regulation in investment banking. That's a sentence I never thought I would be reporting. For those who don't know regulation and investment bankers go together like Superman and kryptonite.

To say this guy has a brass neck would be a massive understatement.

The president of the NASDAQ has called on financial regulators to step in after a group of Reddit users drove up the price of GameStop stock.

The Redditors — members of a forum called WallStreetBets, which has more than 2.5 million members — banded together to buy up GameStop stock after realizing that the hedge fund Melvin Capital had shorted the stock to a massive extent. GameStop’s shares have soared as a result, while Melvin Capital was forced to receive a $2.75 billion cash infusion from fellow hedge funds Citadel and Point72 Capital Management to cover their losses.

Meanwhile, the Redditors have seen massive returns on their investments, with user Roaring Kitty, who first exposed Melvin’s short position, reportedly turning a $50,000 bet on GameStop into more than $30 million as of Wednesday afternoon.

With Melvin Capital reeling from the Redditor short squeeze, NASDAQ president and CEO Adena Friedman suggested that additional regulations may be necessary to prevent retail investors from coordinating on social media

“As we look at these new technologies that are available to anyone, including investors, I think it’s also important for regulators to understand that manipulation is manipulation, whether it’s happening through a new technology medium or it’s happening through traditional mail,” Friedman told CNBC’s Squawk Box on Wednesday. “I think it’s just a matter of making sure we understand what the behavior is, what’s underpinning the behavior, and working appropriately with regulators to manage the situation.”

Reddit WSB have certainly exposed how rotten wallstreet and how the entire financial system is. It has no bearing in reality and is actively destructive to the real economy. A major example of this was Toy R Us, which was bought by investors and saddled with debt, which tanked the business on purpose. This destroyed a viable business and cost people jobs.

The feckless media tried to initially blame millennials not having kids (millennials not having kids due to being screwed by the financial system), and online competition etc., but none of that killed Toys R Us, it was deliberately bankrupted and what was worse is that is was perfectly legal for the fat cats to do. Destroy peoples livelihoods and destroy a real business, to cover the debts they made gambling on a bull**** financial system.

Muahahaha wrote: »

Truly incredible. Anyone know has this user taken any profits along the way? And how the hell can he be sitting on $30m and not sell out, its a sum that would give even his great grandchildern financial independence for life.

Something tells that lad's political opinions will turn sharply right any day now...

AbusesToilets wrote: »

Seems Robinhood is now autoselling peoples shares today, at a price of its choosing. Sure that's on the up and up

After reading this article on the New York Times it looks like Robinhoods hands may have been tied by the Depository Trust & Clearing Corporation.
Robinhood had to suspend buying of Gamestop shares or they would effectively be out of business.

https://www.nytimes.com/2021/01/30/business/robinhood-wall-street-gamestop.html?smid=tw-nytimes&smtyp=cur

One institution that tripped up Robinhood this past week is a clearinghouse called the Depository Trust & Clearing Corporation.
To do its job, the D.T.C.C. requires its members to keep a cushion of cash that can be put toward stabilizing the system if needed. And when stocks are swinging wildly or there’s a flurry of trading, the size of the cushion it demands from each member — known as a margin call — can grow on short notice.

That’s what happened on Thursday morning. The D.T.C.C. notified its member firms that the total cushion, which was then $26 billion, needed to grow to $33.5 billion — within hours. Because Robinhood customers were responsible for so much trading, they were responsible for footing a significant portion of the bill.
A firm that can’t meet its margin call is effectively out of the stock trading business because D.T.C.C. won’t clear its trades any more.

For veteran players like Citadel Securities and JPMorgan Chase, generating additional hundreds of millions of dollars on short notice was not a problem. But for a start-up like Robinhood, it was a mad scramble.

While it cobbled together the needed cash from its credit line and investors, Robinhood limited customers from buying GameStop, AMC and other shares. Allowing its investors to sell these volatile stocks — but not buy them — reduced its risk level and helped it meet requirements for additional cash, Robinhood said in its blog post.

Ultimately, the company succeeded in pulling together roughly $1 billion from some of its existing investors, including the venture firms Sequoia Capital and Ribbit Capital.

MisterAnarchy wrote: »

After reading this article on the New York Times it looks like Robinhoods hands may have been tied by the Depository Trust & Clearing Corporation.
Robinhood had to suspend buying of Gamestop shares or they would effectively be out of business.

https://www.nytimes.com/2021/01/30/business/robinhood-wall-street-gamestop.html?smid=tw-nytimes&smtyp=cur

I'd they had said that at the start I think people would be more forgiving but what they were saying was that it was for the good of the investors. Then they started selling off their shares for lower prices than they were worth