Gamestop, AMC, and the Angry Hedge Funds

[leon1122]

I believe Rogan's point is that with pyramid schemes, those who get in early make bank while those at the bottom of the pyramid who join in late will lose out. The same is true with GME. bo_sox, you joined early and cashed out for a profit. Those who are buying now at $300 will not be making a profit, and some of them will take a heavy loss. The point where this comparison breaks down is that the people who join a pyramid scheme at the bottom are still expecting to make money, while those who are joining in the GME frenzy now know full well that they're likely to lose their money, and they're okay with it.

[leon1122]

Insiders that are able to sell will also be making windfall profits.

I've heard that board members won't be allowed to sell their shares until March.

[bo_sox48]

What difference does that make?

It means my stake is sold, and you implied that I was unable to speak objectively because I had a stake.

[bo_sox48]

I thought these were "hedge" funds. Surely they would have hedged their shorts with call options?

I am not a fan of what is happening here. Yes, there will be some "ordinary" people that make out like bandits...and some hedge funds are getting hurt. But new hedge funds likely have joined the party making money off the volatility. Insiders that are able to sell will also be making windfall profits. And the vast majority of people that have joined in the frenzy, unless they take profits when they have the chance, will likely lose their investments when the tide turns

Of course some hedge funds are profiting and perhaps driving the effort at this point. Those who are not driving it still profit from the annihilation of their competition even if they never engage directly. Melvin Capital, though, operated dangerously, and, as a theoretically free market would dictate, is paying for the mistakes they made. There is no indication that they hedged (perhaps you would be a better financial manager for them than those currently in charge) with options or really did anything beyond assuming Gamestop would be driven into bankruptcy, freeing them of having to repay their debt.

It’s not as if this is an anticapitalist or anti-market movement. It’s an opportunistic one, based in the fundamentals of shorting and options that drive the markets daily, and just like us retail investor types, hedge fund managers can either lose their shit or be opportunistic and profit too.

The concern that people will lose their money is amusing. Did people not lose money in the dot-com bubble? On VW? Did people not lose everything by the choices of others in 2008, 2020, or the numerous other depressions that seem to arrive in predictable cycles? On stocks alone, will people not lose their money on Apple or Tesla when they eventually fall? Can Amazon grow forever, or could those who bought at $2000 a share lose so much that they default on their mortgages? Free choice, especially when uninformed or when the fear of missing out overrules fundamentals, has driven many into insolvency and that would not have changed if some retail investors hadn’t made a bunch of money, nor should it change in the future (unless some whiny Wall Street suits get their way and regulate normal people out of participating in the market at all “for their own good”).

[RoganJosh]

It means my stake is sold, and you implied that I was unable to speak objectively because I had a stake.

I couldn't care less about whether you have stake or not.

No hedge fund could have done what reddit did in this case, without being held accountable. The problem for regulators, in this case, is the flat structure. No one investor is responsible. But what happened is and was illegal.

I'm not sure if you're trying to argue that you think this should be legal or not.

[Jamiet99uk]

It means my stake is sold, and you implied that I was unable to speak objectively because I had a stake.

I couldn't care less about whether you have stake or not.

No hedge fund could have done what reddit did in this case, without being held accountable. The problem for regulators, in this case, is the flat structure. No one investor is responsible. But what happened is and was illegal.

I'm not sure if you're trying to argue that you think this should be legal or not.

Illegal how?
In violation of which laws, specifically?

[RoganJosh]

http://letmegooglethat.com/?q=Market+ma ... us+illegal

[Jamiet99uk]

http://letmegooglethat.com/?q=Market+ma ... us+illegal

Literally the first news story you get when you Google that phrase is an article with the headline:

"Good luck proving Reddit traders did anything illegal by pumping GameStop"

[Jamiet99uk]

So, let me Google your mom, you self-satisfied fuck.

[Matticus13]

It means my stake is sold, and you implied that I was unable to speak objectively because I had a stake.

No hedge fund could have done what reddit did in this case, without being held accountable. The problem for regulators, in this case, is the flat structure. No one investor is responsible. But what happened is and was illegal.

It would never hold up in court, so I'm not sure how you can definitively call it illegal.

If we can't charge billionaire investors like Carl Ichan, Elon Musk, and others for deliberately tweeting out "how great this company is" to push up the prices of stock they own, you aren't going to be able to charge Joe Blow with manipulation either. People publish advice on which stocks they are shorting or investing in to encourage the masses to pile in ALL THE TIME. How is a Reddit thread any different?

[Matticus13]

I believe Rogan's point is that with pyramid schemes, those who get in early make bank while those at the bottom of the pyramid who join in late will lose out. The same is true with GME. bo_sox, you joined early and cashed out for a profit. Those who are buying now at $300 will not be making a profit, and some of them will take a heavy loss. The point where this comparison breaks down is that the people who join a pyramid scheme at the bottom are still expecting to make money, while those who are joining in the GME frenzy now know full well that they're likely to lose their money, and they're okay with it.

There's still plenty of money to be made. Time to start shorting

[flash2015]

I believe Rogan's point is that with pyramid schemes, those who get in early make bank while those at the bottom of the pyramid who join in late will lose out. The same is true with GME. bo_sox, you joined early and cashed out for a profit. Those who are buying now at $300 will not be making a profit, and some of them will take a heavy loss. The point where this comparison breaks down is that the people who join a pyramid scheme at the bottom are still expecting to make money, while those who are joining in the GME frenzy now know full well that they're likely to lose their money, and they're okay with it.

I don't know whether that is true. I follow the M1Finance thread on reddit (I just switched over to M1 from another firm which shut down) and the thread has been flooded with people showing off their "pies" (portfolio) proud of how much money they are making off GME and questions from people wanting to invest in GME now in the hope of getting in on the fast cash.

[RoganJosh]

http://letmegooglethat.com/?q=Market+ma ... us+illegal

Literally the first news story you get when you Google that phrase is an article with the headline:

"Good luck proving Reddit traders did anything illegal by pumping GameStop"

That's exactly what I said. If a hedge fund did it, they would be held accountable. But with the flat structure of reddit, there's no one to hold accountable.

[RoganJosh]

This is still one of the oldest frauds in the book. That they presented it as being some anti-hedge operation doesn't change that.

[bo_sox48]

Hedges never manipulate the market, oh no.

I don’t know the regulations around market manipulation, but if 10 hedge fund managers sat together in a ritzy hotel lobby drinking obscenely expensive scotch and agreed to pump and dump a stock and agreed on profit targets, is that market manipulation? If agreeing to a strategy because it’s a good one is illegal, I think I’ve manipulated the market at every neighborhood poker game I’ve ever played.

[Matticus13]

This is still one of the oldest frauds in the book. That they presented it as being some anti-hedge operation doesn't change that.

No sir. This will surely be classified as fraud shortly (since the 1% run dis bitch). This is a totally new phenomenon that currently can't be classified as fraud. If this were a crime, they would have all the evidence to prosecute individuals in the Reddit thread. I'm going to bet it all on double zero!

[RoganJosh]

Seriously, are you guys not aware that pump and dump is market manipulation? Are you not aware that pump and dump is illegal?

https://www.fbi.gov/scams-and-safety/co ... dump-fraud

[goldfinger0303]

but if 10 hedge fund managers sat together in a ritzy hotel lobby drinking obscenely expensive scotch and agreed to pump and dump a stock and agreed on profit targets, is that market manipulation?

Yes. That's....that's actually a textbook example of market manipulation.

[Wusti]

Seriously, are you guys not aware that pump and dump is market manipulation? Are you not aware that pump and dump is illegal?

https://www.fbi.gov/scams-and-safety/co ... dump-fraud

I think the point here RoganJosh is that people know it to be nothing less than what established hedge funds and others in the Wall Street bubble do each and every fucking day - so no one give s flying fuck about a law that is flaunted daiy.

[Jamiet99uk]

A law which is not enforced is barely a law at all.