r/Wallstreet bets vs. Shorters

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User.45

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It's been the most hilarious event of the month really. I've been told many times that stock market people deserve their wealth because they do very risky things every day. Now some of them got to taste what REAL risk looks like.


...a large percentage of investors have borrowed the stock to sell it in anticipation that they will be able to buy it back at a lower price and profit on the trade. But if the stock rises sharply, those investors may be forced to buy back the stock at a loss.

“The unfortunate events in GameStop this week may be building a dangerous precedent for markets whereby retail investors act en masse to leverage their buying powers to spark fragility events,” analysts at J.P. Morgan said in a note.

Using derivatives and coordinating buying on websites such as the Reddit forum wallstreetbets, retail investors have had an outsize impact on markets in recent months. Hedge funds Melvin Capital Management and Citron Capital closed out short positions in GameStop earlier this week after buying pressure pushed up the company’s shares.

Can anybody explain why I should feel sorry for large scale short sellers? I thought the beauty of the stock market was to aggregate knowledge. People gilding stocks do just that. Again, lot's of fun.
 

SuperMatt

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The super-rich are reacting aggressively to this. People should find out what the big hedge funds are betting against and bid it all up. Let them lose their lunch.

 
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User.45

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The super-rich are reacting aggressively to this. People should find out what the big hedge funds are betting against and bid it all up. Let them lose their lunch.

I generally like Reuters' reporting but today's Reuters Now a "stock market analyst" compared this to a pyramid scheme...which isn't untrue, there's a pyramid component to it, but they don't seem to understand that for the majority this seems like a relatively cheap ticket to the "inflicting pain to shorters" show and thus the gains are non-monetary.
 

SuperMatt

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I generally like Reuters' reporting but today's Reuters Now a "stock market analyst" compared this to a pyramid scheme...which isn't untrue, there's a pyramid component to it, but they don't seem to understand that for the majority this seems like a relatively cheap ticket to the "inflicting pain to shorters" show and thus the gains are non-monetary.
Most retail investors don't short stocks - either don’t know how to do it or don’t want to take the risk of the options market... so really this is the way they can do something - bid a stock up to hurt the big players who can short things on a large scale.
 
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User.45

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Most retail investors don't short stocks - either don’t know how to do it or don’t want to take the risk of the options market... so really this is the way they can do something - bid a stock up to hurt the big players who can short things on a large scale.
The whole concept of shorting sounds so absurd I've always wondered how can it be legal to borrow something, do everything to devalue it and then buy it once your devaluation campaign succeeded. So if you have enough influence, this is literally free money for the shorter at the expense of the shorted.

And if this is a game of influence, we all know the fastest recipe for influence: money. Ergo this is a fabulous method to make the rich richer by literally leaching off others.
 

lizkat

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It's been fun to watch the filthy rich crying so much about the "free" market that they shut it down.

Yeh sure, they like free markets while they're testifying in congress, then when they get home they go back to buying out their competitors and killing those products or stashing the know-how in a cupboard off the boardroom.

But this action here the last couple days makes ya wonder what the big boys have had in mind when pitching the whole thing of privatizing Social Security "so every investor can make individual choices with funds set aside for retirement."

Right, until those choices trash plans of the hedge funds and investment bank players. Then suddenly it's time for the regulators to crack down.
 

Chew Toy McCoy

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It's been fun to watch the filthy rich crying so much about the "free" market that they shut it down.

I think we're finally seeing some 4D Chess being played. Whether it's financial gain for the players or exposing these Wall St clowns in trying to defend their "hard work" or calling in high level favors to shut it down, it's all a win for us watching the show.
 

thekev

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The whole concept of shorting sounds so absurd I've always wondered how can it be legal to borrow something, do everything to devalue it and then buy it once your devaluation campaign succeeded. So if you have enough influence, this is literally free money for the shorter at the expense of the shorted.

And if this is a game of influence, we all know the fastest recipe for influence: money. Ergo this is a fabulous method to make the rich richer by literally leaching off others.

It shouldn't be. If they bought these directly, taking their position in the stock would risk locking in a higher price floor. They want it to fall, because they paid someone else to underwrite their position, stipulating that within a certain period, they can sell those shares at a particular price, regardless of what they would otherwise sell at. If someone associated with these jackasses can drive the price down further, they make more money or in some cases may require that to profit at all, due to transaction costs and fees paid for the options themselves.

When this backfires due to some group gilding the stock, it amuses me immensely. I would hope though that regular people are not dumping a lot into this at its current level. The risk is enormous. It's like bitcoin in that regard. If you started at the very beginning and did not suffer a coin bank attack of some kind, you may have profited highly from it.
 
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