He's right. Especially the first paragraph under "points of interest".
January 28, 2021, 06:32 PM
mark123
quote:
Originally posted by stu1000rr: Maybe, just maybe, these people, the Melvins, the Seqoias, the Citadels ...
... should learn to code.
January 28, 2021, 06:33 PM
Balzé Halzé
Here's another great rant. This one from Charles Payne. Love it.
~Alan Acta Non Verba NRA Life Member (Patron) God, Family, Guns, Country
Men will fight and die to protect women... because women protect everything else. ~Andrew Klavan
January 28, 2021, 06:51 PM
Aeteocles
I'm going to be glad when this is all over. I need more sleep, lol.
January 28, 2021, 06:59 PM
1967Goat
Shorting is a dangerous game. You have the potential for unlimited losses. Let that sink in... unlimited losses.
If you're long on a stock, the most you can lose is 100% of your investment. Not the same with shorting.
January 28, 2021, 07:01 PM
ZSMICHAEL
quote:
Charles Payne
^^^^^^^^^^^^ Thanks for posting. He should coach ball, he sure gets excited!
January 28, 2021, 07:04 PM
ZSMICHAEL
For more insight here. WSJ:
WASHINGTON—Bullish day traders have rallied together to buy shares of GameStop Corp. GME -44.29% in recent weeks, driving up the price more than 10-fold and prompting complaints that the frenetic activity is manipulative.
The frenzy has played out on public websites such as Reddit’s WallStreetBets, where small investors brag about their gains and exhort others to buy more shares and options. That transparency could make it easier for regulators to levy claims of manipulation, which historically has been a difficult offense for regulators to prove.
“If they are all egging each other on using a social-media platform, they are effectively engaged in a crowdsourced pump-and-dump scheme,” said Daniel Hawke, a partner at Arnold & Porter Kaye Scholer LLP.
The traders “are making no effort to conceal their apparent intent to manipulate the price of the stock,” added Mr. Hawke, a former chief of the Securities and Exchange Commission’s market abuse unit.
The two-week rally in shares of GameStop, once one of the most heavily shorted stocks, has captivated the stock market. The winners have been smaller investors whose feverish buying has also pushed up prices of AMC Entertainment Holdings Inc. AMC -56.63% and Bed Bath & Beyond Inc. BBBY -36.40% The losers have been some hedge-fund managers and other contrarian investors who had bet against the future of the struggling videogame retailer.
Broker TD Ameritrade on Wednesday blocked some trades in GameStop and AMC, according to a notification that some clients received.
Securities lawyers expect the SEC to probe the trading. The SEC said late Wednesday that it is monitoring the “volatility in the options and equities markets” and “working with our fellow regulators to assess the situation.” An agency spokesman declined to comment further.
Tipsters have urged the regulator in recent weeks to review statements made on Reddit and other websites, and determine whether any of them constituted fraud, according to people familiar with the matter.
An investigation would take time and require regulators to dig into who bought and sold and who made statements on websites such as Reddit, where users are anonymous. Suing hundreds of defendants who likely traded in small increments probably isn’t practical for the agency, according to securities lawyers, while a case that alleged a few key individuals instigated any problematic trading could be feasible. Market manipulation has historically been a difficult offense to prove, according to securities lawyers, because it can require showing that perpetrators spread false information and intended to rig prices. In some cases, the trading itself can be seen as misleading, if the transactions are done in a way that arguably creates an artificial price and then allows sellers to unload shares on uninformed investors.
“I am sure the commission views this as disruptive, and I can imagine at this moment they might be gathering facts to figure out if there is a legal theory they could bring here,” said Robert Cohen, a partner at Davis Polk & Wardwell LLP and a former senior regulator at the SEC.
In a classic pump and dump, fraudsters buy up shares of a lightly traded company, spread rumors or false news about its prospects, and then sell at a higher price to investors who were tricked by the fake news. Once the instigators of the scheme have sold, the price typically falls back to earth, saddling late buyers with losses.
“This is the worst kind of market manipulation,” said John Chachas, a veteran Wall Street deal-maker who leads Methuselah Advisors, a boutique investment banking and financial advisory firm. “People are buying and selling shares of GameStop at absurd prices largely engineered by a short squeeze and the buyers are being fleeced, in my opinion.”
Securities lawyers expect the Securities and Exchange Commission to probe the trading of GameStop shares. PHOTO: GABRIELLA DEMCZUK FOR THE WALL STREET JOURNAL Some investors, though, said the trading talked about in Reddit’s WallStreetBets forum isn’t manipulative and reflects an earnest effort by individual investors to seize on opportunities that have always been available to establishment players. A Reddit spokeswoman said the company prohibits content that facilitates illegal transactions, and the company would “cooperate with valid law enforcement investigations or actions as needed.”
Venture-capital investor Chamath Palihapitiya has defended the trading, and said he closed out his own profitable trade in GameStop options.
SHARE YOUR THOUGHTS In what ways do you think internet communities might continue to affect the stock market? Join the conversation below.
Signs of individual investor interest in GameStop, whose shares have been heavily shorted by hedge funds, began to emerge in 2019 on Reddit forums. At the time, some users began posting screenshots of bullish options positions and debating why the stock could rise.
That same year, one Reddit user posted in March that the company was a “deep-value play.” Another poster recently claimed he made $34 million trading GameStop shares and options.
GameStop has risen like a pump and dump, but the stock has yet to fall. It closed Wednesday at $347.51, up from about $39 one week ago. The rise doesn’t appear to have been aided by false information—but regulators could only confirm that by learning who traded and who was behind the posts on forums such as Reddit’s.
Reddit’s WallStreetBets forum is full of brash amateur traders using foul-language commentary and positioning themselves as little guys beating up big investors who normally control the market.
“This is the ultimate triumph of the newbies over the old pros,” said Steve Sosnick, chief strategist at Interactive Brokers. “But what’s frustrating to the old pros is that they can’t engage in the sort of behavior that the newbies can do.”
Someone smart explain why this (shorts) should even be legal. My understanding is that it hasn’t always been. Other than culling the ranks of asshole billionaire WS types what’s the downside to outlawing by regulation shorting in general?
January 28, 2021, 07:15 PM
Balzé Halzé
From TD Ameritrade.
Dear Alan,
We are in the midst of an unprecedented week in investing. It has included some of the highest-volume days in history.
I want to acknowledge that this week's trading volume and volatility across our entire industry has led to significantly increased call volumes and hold times for our clients, as well as challenges for some with our platforms at market open. Nothing is more important to us than serving you. We understand that service disruptions are frustrating and want you to know that we take these issues very seriously and sincerely apologize for any problems this may have caused.
In some cases, the volatility we are seeing in a small number of stocks has forced us to put restrictions in place. These restrictions will not prevent clients from buy and sell transactions. For the latest list of impacted stocks, visit tdameritrade.com/restricted.
We appreciate your patience and are committed to providing the high level of service and reliability you have come to expect from us.
To help you stay up to date on the current market conditions, our latest expert perspectives are always available at tdameritrade.com/marketupdate.
Sincerely,
Thomas W Butch President, TD Ameritrade Retail
Securities with trading restrictions
We have placed some restrictions on the following securities. These restrictions will not prevent clients from making basic buy and sell transactions. This list is as of January 28, 2021, 4:00PM ET.
Covered call and short put orders may only be placed with a broker. Please be aware that wait times to speak with a broker may be longer than normal due to current market conditions.
Covered calls only allowed if your account currently has the sharesShort puts only if you have the maintenance/cash to cover the entire exercise amount of the short puts
All other complex options orders will not be accepted
We may also implement additional restrictions on the opening of option trades that expire Friday, January 29th
Please keep in mind that this list is not inclusive of every security restriction and may change at any time.
Plot Twist: Man Claims To Be Robinhood Employee & Says The White House Pressured Halt of GameStop Trading
January 28, 2021, 07:20 PM
Aeteocles
quote:
Originally posted by pedropcola: Someone smart explain why this (shorts) should even be legal. My understanding is that it hasn’t always been. Other than culling the ranks of asshole billionaire WS types what’s the downside to outlawing by regulation shorting in general?
There are a few ways to take a short position. Not all involve borrowing shares and selling them--others methods involve writing option contracts or futures contracts, etc.
Shorting a stock is a perfectly reasonable strategy to grow investments in a down market.
Also, some companies are legitimately on the verge of failing.
The issue isn't short selling. The issue is that a large hedge fund like Melvin Capital can short sell 140% of the shares available to trade. Such purchase pressure moves the market around in and of itself. That's playing dirty.
Plot Twist: Man Claims To Be Robinhood Employee & Says The White House Pressured Halt of GameStop Trading
So far, unsubstantiated. Don't fall to fake news.
January 28, 2021, 07:29 PM
ZSMICHAEL
quote:
Plot Twist: Man Claims To Be Robinhood Employee & Says The White House Pressured Halt of GameStop Trading
^^^^^^^^^^^ I call bullshit That does not pass the smell test
January 28, 2021, 07:37 PM
Lefty Sig
I find this all very amusing and reminiscent of "Trading Places", with a new social media twist.
I don't think the Reddit people are guilty of securities fraud because they do not appear to have lied about anything. They said they are squeezing the hedge fund short sellers, how they are doing it, and what the result will be if it works.
They are simply crowdsourcing the capital needed to manipulate the market the same way the hedge funds do. If you are so bold as to short 140% of the available shares (I can't begin to understand how this is even possible) and then tell people about your short position, don't complain when you get beaten at your own game.
The same assholes doing this stuff now are the guys that almost killed the economy more than a decade ago with mortgage baked securities, none of which were every prosecuted.
And despite the "bombshell" news above that is probably fake, I would be even more amused if the new administration intervened to tell Robinhood to stop trading Game Stop to protect Sequoia Capital.
I can't wait to see the fallout of forced sales and trading restrictions. Only problem is the Biden DoJ administration is unlikely to do anything to the big fish, so this will have to be done with class actions.
January 28, 2021, 07:40 PM
RAMIUS
quote:
Originally posted by ZSMICHAEL:
quote:
Plot Twist: Man Claims To Be Robinhood Employee & Says The White House Pressured Halt of GameStop Trading
^^^^^^^^^^^ I call bullshit That does not pass the smell test
An upset dentist. It is interesting he signs his letter with his credentials. A Republican no less who is in trouble with Democrats over the Capitol Hill demonstrations.
That's $70bn to people who are willing to take a risk for it, rather than a blanket distribution to people based on previous income. All while generating tax revenue.
Not really a solid argument, but still makes me smile.
