What a show! Smallish traders, by ganging together on Reddit, succeeded fabulously in what famed big short-sellers have done for years in the opposite direction. And it’s pump & dump for both.
By Wolf Richter for WOLF STREET.
When I say that “the zoo has gone nuts,” I mean, “literally,” as in scientifically proven and peer-reviewed. But what an incredible show it is. Why exactly the zoo has gone nuts is still up for debate, but the Fed with its $3 trillion of printed money in three months has a prominent position in this discussion.
So now we have GameStop, a brick and mortar retailer of video games whose sales in Q3 have plunged by 30% from already beaten down levels a year earlier, despite the greatest boom in video games ever brought on by people having to spend lots of time at home, and whose sales have plunged by 52% since 2016 as video game sales have migrated to ecommerce.
The shares of GameStop [GME], however, one of the most shorted stocks in the universe, performed a miracle: First, they wiped out the early short sellers in an astounding short squeeze engineered by traders ganging up on those short sellers on the social media; and then, the shares whipped around and wiped out those very traders that had gotten in late and had gotten caught in a classic pump-and-dump by those traders that had gotten in early.
And hedge funds are on both sides of the trade, and they too are reading — or machine reading — the trading mania in the social media and trade with it or against it, thereby accelerating the moves.
In the process, they all changed forever what famed short-sellers will have to face when they try to knock down a specific stock – usually one with a small float that’s easy to knock down – with their pronouncements and reports that are then eagerly multiplied by the financial media which create more downward momentum, off which short sellers expect to profit.
Back in July 2020, GME was trading at around $4 a share. This morning at around 10:45 AM, after several days of blistering ride, shares briefly hit $159, giving the company a market capitalization (share price times shares outstanding) of something like $11 billion. Alas, from that moment on, shares collapsed by 54%, interrupted by several trading halts, to $73.25 at the moment. This is what today looked like through about 3:16 p.m. (price data via YCharts). Note the trading halts:
And this is what the five-year chart looks like, cut off at the peak today at around 10:45 AM, of $159, to mark a historic moment in time (price data via YCharts):
There has been a huge surge in video game sales during the pandemic, as people spent more time working and playing video games at home. And there has been solid growth in video game sales in prior years, as video games have become a big part of the entertainment industry. But those sales have long ago started to wander off to ecommerce.
GameStop’s revenues began dropping in 2016. You can buy video games on GameStop’s various websites, but you can buy video games on many other websites, and as GameStop has been finding out, that’s what people have been doing.
Revenues in the first three quarters of 2020 were down about 30% from a year ago – despite the boom in video games for the industry. Based on the performance of Q1-Q3, we can estimate that total sales for fiscal 2020, which goes through the end of January 2021, are on track to be around $4.6 billion, down 52% from 2016.
In January 2017, it had 7,535 stores. By October 2020, this was down to about 5,000 stores. Despite the efforts to close stores, shed employees, and cut expenses, the company is on track to generate a net loss for the third year in a row.
When shares surge despite plunging revenues and a doomed brick-and-mortar business model, the stock becomes an all too obvious fodder for short sellers, including Andrew Left of short-selling firm Citron Research. GameStop has become one of the most shorted stocks out there. To close out their positions, short sellers have to buy those shares.
And then folks on the social media, particularly on Reddit, started encouraging each other to buy the shares, drive up the share price, and generate a short squeeze that would send the shares skyrocketing while panicked short sellers would have to chase those shares higher to buy them back in order to cover their positions.
And this is what happened beautifully, amplified by hedge funds trading with this crowd. It’s not the first time this happened. Tesla shares, for example, have gone through this for years. But there is at least a fantastical story for Tesla: it’s not a niche automaker with a global market share of 0.7% but some kind of information company or whatever run by a CEO who walks on water. GameStop has no story other than being a brick-and-mortar retailer caught up in the brick-and-mortar meltdown that has been going on for years.
What is hilarious about this show is how these smallish traders that were ganging together on Reddit have succeeded in doing the same thing that a few big short-sellers have done successfully for years in the opposite direction.
Short sellers, after they take their short position in a target company, come out with devastating reports – some true, some not – about that company and announce their short position. The financial media then multiplies this gleefully across the globe, and the selling of the shares sets in, by other short sellers that want to tag along and by longs dumping their holdings. And shares plunge.
Some of those cases have been called “short and distort,” sometimes laced with dubious allegations of “fraud” that then never materialized.
In other cases, short sellers turned out to be the only sheriff on Wall Street, exposing the shenanigans that should have been exposed years earlier by our cutesy watchpuppies.
The Reddit traders have now proven that both short and long traders have access to the same tools and power to manipulate share prices, and that they can make tons of money if they got in and out at the right time, or lose tons of money if they didn’t.
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The sweet smell of napalm
“Cutesy Watchpuppies”.
Wolf, thank you.
Super – best article!!! Beyond Diamond Level!
Nuts is the entry fee for large scale trading. Shenanigans in the stockmarket are SOP.
I love the story of the “Hound of Hounslow: Who is Navinder Sarao, the ‘flash crash trader’?” in BBC.com and other media. It accidentally gives the public an accidental flash of the covert, continuing, insider trading that is reportedly endemic. Think about it.
He was placing fake trades and then cancelling them, so the banksters became furious with him and had him charged then SUDDENLY, his charges were dropped. Why?
Assume that maybe the Wall Streeters/banksters were engaged in insider trading and defrauding all of their customers. Say one customer (Moron1) wanted to buy stock of company X and began to place an order. His brokerage, which I will call ScumRUs1 would report his initial trade to a crony brokerage/bank/other Wall Streeter rapidly via computer.
They would then buy the stock of company X at $100 and resell it to Moron1 at $102, particularly if they had reports of Morons2 through Morons23455 all wanting to buy that same stock. The insider traders’ profits would be the difference between their $100 purchase price and their $102 selling price. Of course, ScumRUs1 would get a secret, covert share of the profits: e.g., by the other scumbags allowing it to sell or buy other stock to them at favorable prices.
Navinder ruined all of that nice, massive, insider trading: how mean! He noticed the corruption and placed large, fake orders, e.g., for stock of company Y, so the scumbags would go and purchase that stock that he was going to buy to then harvest their insider profits from him. Then, he cancelled the orders and the scumbag Wall Streeters were then stuck with the large amount of stock of company Y, which may have actually gone down in value! Outrageous!
His trial would have required allowing his lawyers to conduct discovery of these issues. It might also have proved, shall we say, “embarrassing” to the Wall Streeters/banksters by revealing to their sheep how they are being fleeced regularly. Hence, it was quietly shelved when he was himself fleeced by other financial crooks.
Think about it for a moment.
The Elite, have all the money, all the connections (Family, Business, Marriage..) they hire the best of the best trading masters, lawyers.. law firms.. Tech companies.. Best Politicians (on every side) that money can buy.. They set up and control the Judges, courts, legal system…
They have the law firms write the legislation for each group for the politicians they own.. and the “Machin” they own, plans out how to take advantage of the systems they control…
Who do you think is going to win in this scenario?
This is pretty interesting, and I have a feeling the SEC is going to step in soon and somehow limit viral social media and how thousands of small traders can manipulate a stock price real-time, and even beat the Wall Street pro’s. Until then, there’s going to be a bunch more of these short squeeze-cover-dumps. I’m not going to play this thing but it is fun to watch.
First amendment would make that really problematic to enforce on people without insider status. Besides, anyone participating in this kind of behavior is gambling and doesn’t deserve protection in my opinion.
How about telling the FED to stop manipulating the interest rate? The articallly suppressed rate combined with endless QEs are enabling and encouraging this gambling mentality.
You do realize that every other large central bank is doing the same thing and on a larger scale (i.e negative rates) right?
No larger scale than the US economy.
Naw. It went from 90 to 70 not a big deal. If a stock behavior continues to be too troublesome for regulators, they would just delist it. Only people who got penalized would be day traders, and that is no baring on a usable stock market, so regulators don’t care.
Keepcalmeverythingisfine,
More likely is the scenario where big companies try to find a way to take advantage of social media posts and analyze them to front run and encourage their behavior before massive sell offs, which plunge the small guys. Afterwards, the big guys have bots claiming to be small guys and brag about their successes. Rinse and repeat. Eventually, the big guys pretending to be small guys will start trends, that they will then use to sell off, the toxic underperforming assets the big guys already own and want to get rid of.
Right.
Also more likely, some foreign entity influencing the stock market like it was done with elections.
If someone had to invent a story to show how crazy are conspiracy theories about the election, they could not do better than to
suggest the same folks think the GameStop short squeeze was also by foreign actors.
Except that everyone would laugh and say that’s too farfetched.
Wolf’s piece explains the phenom. The trading records are not anonymous posts on FB.
@nick kelly
We are speculating what scenarios could be in the future — not what happened with GME.
Pay attention before replying.
Already happening for longer than most are aware
It’s crazy how they do it, by purchasing hundreds of thousands of short dated OTM calls.
Look at AMC’s Jan 29 call volume, even at a $7 strike with a $4.50 share price. The next 2 weeks have hardly any volume in comparison, they go for short times to maximize gamma squeeze.
I actually joined the game on AMC today, by purchasing shares and selling high priced OTM covered calls. GME shows the power of the strategy, and the crazy high volume on options expiring in 4 days or less makes it obvious when they’re targeting a stock. The ones they target are simple – whatever has a high short interest. Might as well make hay while the sun shines.
The very idea of selling short is a scam. Why should betting on price movements affect the stock market where you buy and sell? Make short selling illegal and move the casino across the street from the stock market.
That means making the options market illegal too. And create more downsides volatility.
Yeah Joe, Isn’t the original purpose of a stock “market” a lot of people combined to get to get a good approximation of company’s value, e.g., “price discovery”?
Like why I never get an extended warranty on anything, it’s either a good piece of machinery or it isn’t, and I’ll find out eventually and have to deal with it accordingly.
Being “short” a stock should just mean you don’t own it. Or much of it, I guess, for the mutual fund folks with no time to investigate them all….another story.
You are right, move the momentum and derivate, etc, trading bunch across the street and let them go hog wild gambling with each other.
Kinda like investment and commercial banks were supposed to be.
Although I know there are people with their lobbyists ready to do whatever it takes to get around anything in their way, sadly.
at what point does this up squeeze cause contagion with these Hedge funds getting crushed on the shorts. Seems like 1928 type of scenario of exuberance and stupidity rolled into an entire generation of new investors to speculate without knowing the rules of the game.
Melvin Capital Gets $2.75BN Bailout From Citadel – they got Robinhooded!
“Seems like 1928 type of scenario of exuberance and stupidity…”
Good point Pieter. The market was definitely inflated then with too many buyers with too much money (much of which was borrowed). Too much speculation.
But I’m sure it will work out just fine…
Check out the Gerry Grantham Bubble vid on youtube today , sobering
U got it loud and clear
That isn’t likely to happen because Robinhood is selling the little guys’ behavioral data to the hedge fund.
I found that “bailout” pretty disgusting. And evidence of the even more disgusting crap constantly going on.
Maybe the “worship the guy who entertains these sickening rich” to “pay for his gang’s own sickeningly rich lifestyle” bunch, will eventually turn their anger to the more deserving of their rage?
Anyone has a link to Reddit forum, where these small players are, khm, organizing?
reddit.com/r/wallstreetbets
Thank you very much, will check them out here and there to see what is going on in financial world ;)
/r/wallstreetbets
reddit.com/r/wallstreetbets
my son gave this link, not from me. he has been talking and playing on this for the last couple days. Too speculative for me.
I took a look at the Reddit thread you posted. It’s a nuthouse gang of kids posting like crazy about their buys and sells today along with what their plan is for GME tomorrow. Plus they are trying to pump BB and another companies stock.
This is just crazy.
Stock Market Antifa’s?
I wonder if GameStop is filing to sell more stock and take advantage of this craziness?
They would be stupid, not to. At these elevated prices, they can probably cover all their debt and have left over cash on hand…
Gameplan:
– Issue new shares to get lots of $$$
– When shares drop far enough, whit new cash buy all available stocks and create new short squeeze.
– At the top of the new short squeeze, issue more shares
Hmm, interesting business plan. What name would be appropriate for it?
My head Hertz just thinking of a name for it.
former
I know (hope?) you’re being rhetorical, but I believe “stock manipulation” answers your question.
To say the least, the SEC frowns on insider trading. Insider pump/dump probably qualifies for this and several other flavors of felonies.
The SEC is at least somewhat rigorous (and sophisticated) at detecting & prosecuting insider trading. Classically, the OTC (aka “pink sheets”) have been the home field for pump/dump.
Given that a market cap of $11B has appeared and soon will vanish in the space of mere days, it’ll be interesting to see how (if?) the SEC responds.
SEC is captive to the industry they are supposed to regulate just FAA to aviation industry! Their credibility is no better than that of FAA.
Foxes are running the hen houses!
Javert, yes I was having some fun ;) but don’t count too much on SEC, just look at Tesla…
If history is any guide the bureaucrats at the SEC are busy watching porn on their government issued computers.
The SEC is a joke. All they do is extort their cut of ill-gotten loot.
When the author of ‘No One Would Listen’, Harry Markopolos, serious math guy, went to the SEC and showed them that Madoff’s returns were mathematically impossible, a few SEC folks dropped in on Madoff and watched in awe at his maze of flickering screens.
This was all fake, he never a trade, all the SEC guys had it do was confirm them instead of just reading Madoff’s printouts.
A few of the ‘investigators’ dropped of their resumes.
Nick- A variation on sham Gov’t regulation:
Several of us called OSHA because we were being constantly ordered to work on new machines we had zero training on. Was dangerous, had to crawl inside, on top of electronics/machinery as best we could, sometimes running and most always electrically hot, can’t trouble shoot much otherwise. (It was bad enough with training.)
We had no idea (other than a good guess) where exposed 120vac, or 220/440 3 phase was, or even 5, 24, 40 volt DC with more than enough enough amperage to “try to weld your tools to your hands”. Their were plenty of small wires all over going to sampling components for machine control. And we were TOTALLY grounded, and couldn’t possibly work in gloves.
They gave the OSHA kid a huge pile of training records and other cherry picked crap to go through. When he was leaving, I talked to him, and he said, “Look, you are a GS-9 and I am a GS-5. I have no idea what any of this stuff is.”
In this day and age, effective Gov’t regulation HAS to use well trained regulators, or they might as well drop it ALL, which is, unfortunately, the end goal of our own local “CCCP” oligarchs, who they have managed to instill that goal in roughly 1/2 of us. Hence, voting against themselves…and happily.
“Make government small enough so you can drown it in a bathtub”, is the way they put it.
I wouldn’t put 5 cents into this company. If management didn’t cash out with this upswing, they missed the boat, again. I hear the only money they make is on reselling old phones to the third world. Sounds like a great business opportunity.
It is, the problem is that gamestop has for years continually pushed it’s offers on unwanting customers, which, has pushed customers away. Just trying to buy something (or walk in the door) at gamestop causes the employee (who is forced to) to potentially start asking questions about your phone and pressure you to sell it, in many stores if a employee doesn’t get enough phones in a week, they are fired. This kind of behavior at specifically gamestop has been blamed for exacerbating the switch to digital. This kind of behavior is always good for the next quarter, but, bad in the long term. In some stores, the managers tell their employees that if a customer doesn’t speak English, to ring up preorders and subscriptions on their bill at the register (this kind of stuff is very common there).
Also, while some throw it in together, digital is separate from e-commerce. There’s a difference between buying a physical item at B&M or online vs buying a non physical item on a digital storefront. Digital items can also be bought (or be preloaded on items) at B&M or online stores. Digital media and streaming services are more similar to product categories like satellite/cable TV which can be bought over the phone and can be even paid with check. Radio and satellite radio compete with internet radio not with CD’s bought at Walmart or Amazon.
It’s worth mentioning, digital content for game systems predate the internet, in japan during the NES/Famicom days, they had kiosks where you could buy games and put them on basically special floppy disks (the kiosks sold them) and if you didn’t want to buy more of these disks you could overwrite old games on disks you already owned. During the Super Nintendo/Famicom days in Japan, Nintendo ran a subscription satellite service, where you could get digital timed games and other such content. Other such game services existed as well. Digital content is not always equal to the internet and predates it for every type of media.
These days, the younger generations want to get rich quick. Perhaps this is a side-effect of the internet age, where everybody wants to get information in one minute or less. They want to make decisions just as fast.
Or, has Fed policy eliminated all reasonable investment opportunities, leaving them have no alternative but to gamble, and dream?
Or, have they lost all faith in the system, believing it’s rigged against them, as they watch the Federal Reserve and government grease the squeaky wheels (corporations and the top .1%). They throw their money away because they believe nothing matters and the future is hopeless (i.e., financial suicide).
It’s probably a little bit of everything.
I think you got it right the first time. There are a lot of new investors playing the stock market game with the new tools of this generation.
“younger generations want to get rich quick”
A problem inherent in every generation. But now pumped with ‘stimulus” money from the Feds. With rent and mortgage moratoriums, why not play the markets?
“Nothing can save a society that has decided to get rich fast” – famous author I can’t remember
Well, Today, the young also get access to powerful and cheap real time trading platforms, offering not only boring stocks and bonds, but also derivatives, double-digit leverage with lose checks and exotic options. All on their mobiles.
R/RobinHood – f.ex. Fun too.
Being part of the young generation (in my late twenties), I think it is a bit of everything. I’m from the low countries, living in Scandinavia now
On the first point, there’s a lot of people getting rich without working that hard for it, be it on Youtube or other social media, or working in finance or doing some easy programming job. Working with your hands doesn’t pay much here in Europe, neither is it financially rewarding to be a nurse or teacher or policeman.
On your second point, putting your money on a bank account like most people are used to in Europe just doesn’t yield anything, even less than in the states. That was a reason for me to look at stocks.
I feel for you.
All the welfare schemes, like other ponzi schemes sound and look very good first few time intervals. Then the mathematical reality hits. There is no way to sustain the gig without broadening the base, by diluting benefits or both.
Extending welfare to population that didn’t buy into it is very popular with politicians. It costs them nothing and they get all the new votes.
Social Security and Medicare is very popular with voters.
Harrold, of course it is. People love getting free stuff as long as they think someone else is paying for it.
Henk
Your cohort has been born into the most prosperous, healthiest, long-lived, lowest infant mortality, best educated, most peaceful, best fed, best-traveled times in human history…and you look around at this spectacular inheritance, and you feel cheated.
Not challenged, but cheated.
Interesting.
Yeah, with houses costing 10x the average salary, crushing school debt, a lack of good jobs that were available on generation ago.
Some real spectacular inheritance!
What are you smoking, Javert? It’s all an illusion, based upon debt.
– “born into the most prosperous, healthiest,…”
You forgot to add: “most regulated”.
Javert –
There are a lot of individuals within a cohort. Some born into a lot, some born into nothing.
Longest lived BECAUSE of lowered infant mortality. Other than that effect, iife span has NOT changed at all since PUBLIC HEALTH, i.e., water, sewage, pollution control by GOV’T got serious….. 100 yrs ago.
And also thanks to the ER trauma folks, where any other slight improvements likely shows up.
Depth Charge & RightNYer
Here’s exactly what I’ve been smoking:
1) Delicate snowflake goes to one of the most expensive cost-of-living areas and discovers their talent/skills earning power means cost of housing is 10x average salary
2) Delicate snowflake is unaware or doesn’t care that in the other 99% of US, average cost of house is $266,000 (Zillow).
3) Delicate snowflake whines about the horrible injustice and has feelings hurt when referred to as entitled
NBay
If I understand your post, you’re not really arguing with my claim that the current time is the era of highest life human expectancy. You’ve created a straw man argument over why life expectancy has increased (which I didn’t address).
Even so, I could not find a singe cite supporting your claim that 20th century life expectancy increased by 30 years “… BECAUSE of lowered infant mortality. Other than that effect, iife span has NOT changed at all since PUBLIC HEALTH, i.e., water, sewage, pollution control by GOV’T got serious…”.
Most cites acknowledge reduction of infant (and maternal) mortality in early 20th century, but also identify mid-century vaccinations, and late-century reductions in cardiac, cancer & stroke mortality.
LINK: https://academic.oup.com/gerontologist/article/55/6/901/2605490https://academic.oup.com/gerontologist/article/55/6/901/2605490
Sounds like you just don’t understand my post, or don’t want to, and that “link” goes nowhere.
Good luck with modern miracle medicine, and go pick an argument elsewhere.
The circular logic of central banking. Inflate financial assets, housing and real income can’t keep up. Peg real rates negative so Congress can hand out money and pass laws to raise wages and create inflation. Now the guy collecting grocery carts at store makes $15/ hot and bread is $10 a loaf. Those guys sure are smart.
“there’s a lot of people getting rich without working that hard for it, be it on Youtube or other social media”
Henk,
I appreciate your insights and perspective but there are some additional questions to be asked.
1) Don’t people understand that many (most? nearly all?) people lie about getting rich quick? Especially in hyperventilating spaces like social media? Perhaps this level of cupidity is comprehensible (barely) in the (very) young, but this disease of delusion seems to be spreading.
2) The point about NIRP induced financial psychosis is well taken, but, again, don’t people realize there are worse things than losing 1% on savings…like losing 50% on vastly overvalued stocks?
Any generation that was given unlimited, free access to porn and the “instant dating/FB phenom that is available online, is going to have a significant portion having other problems cropping up; apathy, nihilism, narcissism, gaming and gambling addiction, and such. I’m glad I grew up in possibly the last generation that had some barriers to access. I’m not so sure I would have fared better than some poor souls I see out there, rich as some seem to be.
The same technologies provide unprecedented access to useful, productive information as well.
As a millenial, I can tell you that it’s primarily your last point. The Fed and our current gerontocracy have done everything in their power to prop up assets held by older generations/the wealthy at the expense of wages, income equality, our manufacturing base, and the environment. I can’t really overstate how nihilistic and blackpilled millenials and zoomers are. Especially in the areas of the internet driving these sort of meme stocks.
If I were young today, I would hope for a systematic collapse as soon as possible. Even if we get a 5-10 year economic depression, you haven’t much to lose yet and you are still young enough to rebuild afterwards. Not so much for people now in their 50’s and 60’s. If they lose in a crash, they will never be able to rebuild.
Bingo.
Rather than let fire burn through the forest, the older folks in charge keep propping things up to be sure their pensions and retirement plans remain whole. If those fall, a lot of people will want some heads to roll and politicians know that.. so we extend and pretend.
Bailouts put out today’s fire but it do not clear out the dead wood making way for new growth. One side effect is the asset bubbles keeping younger folks from climbing the economic ladder. Another major problem (that most here intuitively feel) is that we’re building up way too much “dead wood” and one of these days the fire will be too big for the feds to control.
If you think this GME thing is driven by entitlement or greed, you’re missing the point. These guys are savoring every second of beating the market makers at their own game… so far.
People my age, in general, don’t understand the concept of taxpayers paying for what is spent by the federal government. The demand for more stimulus checks is a great example of that. The concept of debt service is conveniently left out of today’s politics, due to the crisis, and consider me one of the uneducated on how it all works. I do think the pendulum will eventually swing back towards austerity, and the wackiness will fade. The fed has 1 trillion in 10 year notes, that’s a lot of future borrowing already borrowed.
I believe there’s some Bernanke engineered mechanism where the banks have to pay interest for inflation on their reserve balances with the fed. So, it probably does all boil down to keep spending/loaning until there’s inflation, and then things will have to tighten up. But, unfortunately for us, if the spending is on nonproductive things, the cost of the next crisis will include paying the debt on all of the worthless spending that occurred this time around. If another crisis happens within that 10 year window that would be the hyperinflation scenario, in my opinion. Or, they could borrow from 30 years in the future, then 50 years, then 100 years…etc…
Yes, that is the problem. Most of the stimulus was unproductive, because it didn’t stimulate the businesses like restaurants and hotels that were in danger of failing, but stimulated Amazon, BestBuy, and the Chinese manufacturers.
Austerity is a terrible idea. It just shrinks the economy.
eg,
“Austerity” is simply “not sticking someone else with the bill for gvt spending *you* desire”.
It shrinks the “empire of bullsh*t” economy that is almost by definition not self-sustaining.
Buying the political support of government worker unions through printed money (devaluing everyone else’s savings and earning power) is not the foundation of a healthy, productive economy.
A few years ago, we used to buy used (and some new) video games in their stores for our grandson who plays them. They were on a cartridge you stuck in your game player.
All of a sudden, most new games were only bought online and downloaded onto your player. New players (X-Box, Playstation) have massive memory and very fast processors to handle the bigger games. It’s all online now.
Goodbye GameStop.
According to my son, who is an avid gamer and writes patents for video game companies for a living, even when you buy a physical game these days it is just often an avatar ( or a key) that unlocks your ability to download the game from the internet. The game companies like to think of these products as being licensed to one user so you can’t just sell them to someone else when you get tired of them. This model spells eventual doom for Gamestop.
Agreed, my daughter and grandson EACH got the new X-Boxes this winter and the games are purchased for each machine. Costly stuff.
I believe the key is for their Microsoft account, so if they shared a log in they could use the same games.
So the games go with your account. If your x-box breaks, you can simply log in to your account on any x-box and redownload your games.
Thanks Jeremey, I wasn’t sure how they did that with games. The graphics on those machines are fantastic.
Yeah. This is crazy. Combination of a gamma squeeze on top of a short squeeze. It makes no sense. But not going to lie, it’s easy to make fun of the tulip mania when you are not living in it. It’s a whole other beast when you are in the tulip mania yourself. I think even many of those on wallstreetbets knows this is nuts, but who cares if we are a chair short when the music stops so long as you already staked out your chair.
TLDR: Hindsight is 20/20
Which I had bought and executed some options on that gme!
Jeremy Wolff
Oh there’s still plenty of time…
The question is…what’s the right direction of the option bet?
Was looking at buying put option at the money…
The share price was 70ish..and put price was 30ish.. expiring this week if irc.
Too expensive
I have up
I tried to short but my brokerage decline saying no shares to sell
Iam given to understand this stock used to trade below 10 ,now went to up to 160 or so & now trading at 70+ !! Buying stock at 70 is dangerous -may go down to 20’s . Short selling stock is not possible as brokerage can ask for lent stock back any day & squeezze you. If you have balls of steel,
1.If the 70’s end of the month put option is 30, sell the put with full cash margin ( your cost for the share is 40)
2. sell 70 at the money call (will be 20+ cheaper than put) .but buy protection 90 otm call
3. if you want to play safe to cover your put, buy otm put at the strike 40.
4. If the stock trades between 40-90 at expiry , you will still be marginally profitable.
5. you are in essence short straddle (sell 70 atm call & 70 atm put ,(earn credit 30 in put+say 25 in call ) & long the wings (buy OTM 90call + buy 40 otm put)
6. only if the stocks goes above 90 or below 40 – you may have to adjust
If I were a young man, 25 or so, I would have been involved also. I pretty much did the same thing with Penny stocks in the 70’s, but not with borrowed money, but only money I felt I could afford to lose. It was the right time, and I guess I was lucky. Not interested now, but I wish the young guys Good Luck.
Late twenties, and have a few shares to my name. It cost me two months to save for that but these days it surely paid off. Thanks for the good luck, I think we can use it.
If you don’t plan to make a career out of it, set a goal, get out and go on with your life. For me, I took the profits after about 5 years, and bought a property from an oil company that has turned into an excellent investment, and still going today. My brother in law stayed in and gave it all back, even though he was using money he could afford to lose.
I’m saving up to buy a piece of property that will be able to feed me and my future family and supply me with water and firewood, and perhaps a bit on the side to deal with things I can’t produce myself and property taxes and the like. But thanks for the advice
Marbles, the problem in the 70’s is it cost $100 in broker fees for a round trip on 100 shares. Free now.
I am planning the same but waiting for property price to come down to earth
Re: While day trading and waiting to feed the table when land is available and one is still able.
Along the way to that, a necessary if not equal or better investment in life (before starting to train an older physical body that says ‘You want me to do what? now? how? unh unh’), may be to familiarize now with:
– Becoming one with a long handled axe and how to use and sharpen it. Chainsaws have their place but aside from the nirvana of gas/oil/fumes and ear/nerve vibration/damage nothing quite spells ‘give up’ like a cranky non starting saw. A good axe always starts.
– Felling a big firewood, snag or widow maker tree properly so it lands where, when and how you want it without damaging self, others, dogs, trucks, chainsaws, cabins, equipment, lunches, power lines.
– Leveraging/moving/splitting/stacking heavy chunks of wood without the resulting joys of a hernia.
– Keeping chimney pipes unclogged, clean, safe and fireproof.
– Pumping diesel fuel by hand and at what temperature it gels and becomes useless.
– What those tick marks on a propane nut etc. are for and why to never use a crescent wrench.
– The how to and beauty of hot water and plumbing/insulating/providing/troubleshooting it in a remote setting.
– Framing a window, which way it should face and insulating outside walls with snow.
– Eight second tiger torch coffee when all else fails.
Mora,
Pretty good synopsis, I was usually non-snow, but similar.
Just wanted to add wood stoves and chainsaws train YOU…
just takes time.
Oh, yeah, “widow maker” to us was big limb that broke off felled tree and hung up way up in nearby one. Had to keep one eye on it all day, especially when windy. Saw one (natural) punch deep dent in car top earlier as a kid. Got message.
Always glad coming back and seeing it had dropped, too many other things to keep eye on in the woods.
Was one of the reasons why pro faller and humper trainee did their thing way before logging show moved in.
“As long as the music is playing, you’ve got to get up and dance”
“our cutesy watchpuppies.”
ROFL
Isn’t naked shorting supposed to be illegal after 2008? But we are seeing shorts amounting to 140% of outstanding shares.
I am sure someone here will lay the blame on the feet of the CCP ;)
Our regulators are scums.
check out SUPN, 104% institutions, loaning shares against there shares…they big boys just move it up and down for each other..cash per share $7 12 PE, past 31 should get up to 40
Not supposed to happen. Naked shorting means that no shares were borrowed prior to selling. As I said, this is supposed to be illegal, but our regulars are scums, so …….
Regulators not regulars.
It wasn’t the outstanding shares, but shares floated.
Still stupid either way.
the is one of signs of market topping process…
You know what I found to be pretty funny? The word Zoo being used in numbers of Wolf’s articles in the last 2 weeks. Personally, I am just wondering how many more times the word zoo will be used before reality will ever set in or is zoo the real world and we’re all bunch of trapped animals that have enough sanity left to realize all this is not real and there’s real consequences at some point?
I’m studying zoology so I can try to understand what’s going on in Wise Wolf’s Weirdest Economy Ever.
No it’s an Amazon JUNGLE – it’s nice in the zoo – the animals get fed quite regularly- yummy yummy – just be careful it’s not your tummy
Not a Zoo … Animal Farm is more like it.
So this is what the Fed wants us to do: quit are jobs and day trade.
No wonder China is wiping us off the board on all fronts. Like, it’s not even hard to do now.
What is the difference between a Banana republic and the US?
The banana republic produces something useful- bananas
The US just drops bombshell shuffles papers with one another.
China is just doing what the West used to do, make goods and sell them at a profit. The old time Colonizers have become the Colony.
It is interesting that the leadersh*t in the West is incapable of perceiving that China is more or less fighting (and winning) an Opium War (21st Century edition) using goods exports.
China is an enduring society with a long and great cultural heritage.
Though it is currently ruled by a communist dictatorship the Chinese have not forgotten their heritage and seek their place in the sun again.
USA has forgotten its roots of greatness and is degenerating into a sad spectacle of a mob democracy governed by an elitist corporatocracy.
US about to be flushed down the bowl of history as a serious world leader contender.
Whenever a people choose physical comfort and security over liberty and self-reliance the consequences are dire.
would you rather be free, self reliant and broke,
or comfortable and secure?
Without being free and self reliant, you won’t long be comfortable and secure.
DC possesses no productive “magic”…just a monetary printing press and the lies, fraud, and inevitable ruin that issue from it.
DC is the *opposite* of magic.
I’m usually too timid to buy even blue chips with confidence and I’m in on the GameStop speculation. Up 35% in 5 days even after today’s cool down.
BlackBerry is emerging as the next cynical pump. I am the shoeshine boy and I just gave you a stock tip.
I sure hope they go bold on stimulus and QE, you know to keep the economic ship sailing right and steady. It’s the prudent thing to do har har har /s
Hope you closed those positions before the market closed today.
All these “investors” driving up Gamestop to insane level must have seen the future we are all incapable for seeing, just like Tesla, except in this case, they must think Funko Pop is the thing that will revolutionize our future. Afterall, Gamestop is all in with Funko Pop as their main business growth engine…how else can you explain the rationality of this kind of P/E level at -4….
Whatever the craziness, it feels good if some of the big guys get their comeuppance delivered by a bunch of 20 year old retail ‘investors’ trading out of their basement while colluding on Reddit.
It reminds me of Wallstreet medias reaction of Dave Portnoy’s stock picks, saying that one does not need an investment bankers advice if one has a bag of scrabble chips to draw from.
Congratulations Wall Street, you have created this monstrosity of a ‘market’ with your lobbying money and influence on FED policy and bailouts. Let’s hope you will get swept away with its eventual implosion at least as much as anyone else.
It seems everyone is still sleeping well at night, even with their life savings held in some form by these ‘Too Big to Go To Jail’ Top Dogs.
Good luck pulling your funds out of the financial oblivion when the real crunch comes. But don’t worry, you can get on the phone with the huge banks and firms, they will be right with you with a recording: “Thank you for contacting, your call is so important to us…”
A few of them will make some money and most will be eaten alive.
What you are not getting is they don’t care. For them it’s like using Microsoft points to make micro-transactions which help you keep playing the game longer. It’s one giant video game.
Yuan’s comment is right about Wall St. creating this monstrosity. Now they have lost all control. And these millennials have lots of points to keep playing.
It’s not just the FED and Wall St. Idiotic politicians broke contract law with rent and foreclosure moratoriums, and then went ahead and added “an extra $600 per week” on top of regular UE bennies, and didn’t make the beneficiaries use that towards their housing expenses. In turn, these people never had more money in their lives, and they turned to reckless gambling in the stock market and crypto.
I see politicians and Yellen similar to the gambler who keeps doubling down after a loss. Stimulus of $3.6 trillion wasn’t enough to save the day, let’s make it $5.5. They are spraying money into the economy and are going to try to claw it back with taxes when things get better. People like free stuff, but not taxes. The Fed has the power to print and Congress has the power to tax. That’s a lot of power. It’s enough to kill the real economy as history has proven over and over.
Of what significance is contract law in a system where inside players get to create money out of nothing,,,,
creating winners and losers all long the way?
A short is someone who agrees to buy the stock which another person already owns. Short selling is still allowed in this convoluted form while it feeds the buying frenzy and levitates markets in general. Outlawing short selling is like taking the 0 and 00 off the roulette wheel, those numbers are the casinos edge! If I were a CEO of a new high tech company I would hire a front agency to whip up the short sellers. That is why you can short GM but not Tesla. The methods of some inverse ETFs is to use swaps and derivates and futures. When stock futures begin leading stock equities then be certain the shorts are closing in, especially when a large volume of buying is individuals who cannot buy futures to hedge their overnight positions. This unhedged buying creates divergences in money flows, institutions don’t have to sell into rallies to create distribution, which is the classic indicator, they just have to slow their rate of buying. Conversley it would make sense if share buybacks had be done on a downtick, but that you are never going to see that rule.
Ambrose Bierce
You want to short TSLA?
o Feb 26, 2021 put is $59/share
o Jan 21, 2022 put is $240/share
o Jan 20,2023 put is $331/shr
You’re welcome.
Can you believe about Gamestop stocks?! I never would have guessed that GME would shoot up like it has. Have you ever profited off a short squeeze like that before? I wish I would have bought the stock a while ago.
Taylor Coover
No you don’t.
As an old retired CFO, with all due respect, and referring only to what appears to be your investment acumen, you appear to be a shining example of what is ingloriously referred to as one of investing’s “greater fools”.
For the Reddit/RobinHood crowd, profitably getting out of a dog stock that’s been pumped from $17 to $340 (soon to go back to $17…or less) in the space of 2-3 weeks will not be easy & will involve lots of losses. Yet, everyone involved will claim to have made an absolute killing (except on their income tax return).
By sitting on your hands, you’ve done exactly the right thing so far; keep up the good work.
98% of Robinhood call options trades result in loss, obviously they will brag about winning but there is more to this market than meets the eye, sure they trade, is it them really moving markets?? I don’t think so, with the big players able to spoof prices (initiate a trade for massive buy spiking the price & some idiot buys just one at that spiked price as they then cancel the big trade locking in the last price traded), so any robinhood trader can buy at a spoofed price & markets are like auctions, the last price becomes the price. In a market full of traders who rely on nothing & willing to press buy at any price markets will rise, that does not mean the real price is what it says it is, when sellers come in they will realize to their horror there is no floor below them, this strategy by the big players allows them to exit orderly selling just below the volume of buys ensuring markets don’t go lower, when they are all out as they are right now the markets will crash, just like Feb 2020, those kind of moves, people fail to understand that when all juice has been squeezed out without them realizing the slightest selling will result in epic falls, the greater fool theory is in full display on all assets, the Robinhooders & their access to options will be the scapegoat, options are hedging tool & are not designed to move markets, the tail wagging the dog, soon the dog will bite them hard.
>>98% of Robinhood call options trades result in loss
Source of that claim?
NARmageddon,
He won’t provide you with an answer, because he doesn’t have any!!!
It’s all concocted out of his imagination!
What is it with you people, so combative to real facts when they don’t fit your narrative, it’s a fact based on research, it’s commonly known at the top funds, if you do not believe me ask Mike Green, he knows the truth, perhaps tweet him, the fact ya not aware yet disbelieve my comment shows how crazy the markets are & how they will collapse, just proof the only thing pushing these markets is delusion.
One last thing to both of you, why do you think Goldman sachs, Jp Morgan, Morgan Stanley Bank of America & the rest made unbelievable once in a lifetime profits from trading?? Do you think they lose or win from Robinhoodiots?? It’s because all the have to do is sell options & take the fee 98% of the time while holding the same stocks for the most part. Just trying to enlighten people, it is commonly known in bubbles everybody rubbishes the warnings, that’s the way it is, if people were not delusional there wouldn’t be a bubble, but ya welcome to do the research yourselves, makes no difference to me whether you believe it or not. Robinhhodiots will brag of winnings like males brag how many girls they have, reality is they are lying, if ya all in you two, ya might want to get out quick, denial can be a dangerous mistake.
I don’t know about 98%, but quick Googling will indicate that a large (very large) percent of out of the money options (calls and puts) have historically ended up worth zero upon expiration.
And it is basically common sense…long, sustained price movements all in one direction are rare over short to medium time periods.
The majority of stocks do have an upward trend…but only over the long term. In the near term, there is a lot of zig zagging up and down within a narrowish band…leading to short term options out of the money expiring worthless.
Jack
Not quite true.
Admittedly, it’s extremely difficult to get credible numbers for any sizable group, but there are plenty of meaningful attempts (see link) and the consensus is pretty grim. THERE ARE ABSOLUTELY ZERO CREDIBLE STUDIES OF MOST DAY TRADERS BEING PROFITABLE.
On the flip side, as a retired CFO, and with with few exceptions, I’ve only heard day traders (generic term) claim to have made “a little ” to “a whole lot” of money.
My guess is 90+% of day traders net well under $1,000/year (including losing up to 100% of their capital).
LINK: https://work.chron.com/much-day-trader-make-27752.html
I’m not here to provide sources do your own research, I’m not wasting my time, charity is one thing, working for strangers & no fee is stupidity.
What a pitiful response to a request that you provide a source for a claim. Why would you even post in the first place?
What kind of split personality we got going on here Jack?
Young Buck & Wolf,
Young Buck,
Ask Wolf!
@Wolf,
Please sort this out , I am begging you, thank you!!
Jack,
I’ve asked the other Jack to add something to his alias to distinguish his alias from yours. This isn’t happening, it seems. It might be a good idea for you to start using something like Jack01. If not, you’re going to keep running into this issue.
No “split personality” here. Just two different commenters with the alias “Jack” commenting here.
This can get very confusing. I exhort all commenters with common brief aliases like Jack or Mike to attach some alphanumeric tag.
Wolf,
Okay, Then, from now on
“I SHALL BE KNOWN AS JACK 07”!
Thank you
Thanks!
I’ve been saying for a long time that, outside of the Boomers who were sent to Vietnam, that entire generation has seen nothing but prosperity and easy street.
Baby boomers “are a plague upon younger generations scouring all in their path leaving nothing but their messages of entitlement and false comparisons about how easy the young have it today vs. their generation.”
Agree with your point, except for one thing: What you very correctly note is a political ideology called Neo-liberalism and has much less/nothing to do with generations.
Blaming an entire generation for your perceived grievances is nonsensical.
Nah it’s not, it’s a fact. Never a truer word spoken by North, lifetime jobs, massive pensions, one parent working able to buy homes, cars, holidays, clothes, entertainment cheap, enough for a family of 7 or more, cheap energy, then they changed it all to reap some more, they also had a world where there was zero competition, they just waged war to rid any competition, then they changed all the rules to profit some more, guess they couldn’t bully countries no more so decided lets just explode the debt and pretend, lets enslave the next generations, I could go on and on, great comment from North. The first generation in history the boomers who left their children & grand children a worse life than they had, first time.
Two-incomes have been the norm for most of the last 40 years.
Heinz has it right. Baby boomers are the problem, public policy is.
Baby boomers didn’t force the Fed to do QE, maybe the greatest transfer of wealth away from lower to higher income and asset owners. Public policy did this.
Baby boomers didn’t cause profits as a percent of the total economy to go from 4% to 14%(?). Public policy did.
Baby boomers didn’t reduce the percent of the total economy comprised of wages to plunge to recent all time lows. Public policy caused this.
Baby boomers didn’t create the policy of moving good paying jobs in the US to cheap labor nations. Public policy is responsible for this.
S/B baby boomers are NOT the problem…(public policy is)
Anyone who thinks robin hooders are behind this is naive. The scuzzy Wall Streeters are very aware of all the social sites and blogs and have access to order flows.Among other things , they pretend that they are small traders and spread all types of rumors.
Eventually reality will set in . Those lucky very few will walk away as winners, while most will get annihilated .
I am a professional trader and have shorted millions of shares over the years, but would not touch GME or others in a similar category. Anytime the short interest is so high and it costs so much to borrow is a sure sign that the stock is easily capable of manipulation at any time.
Yes, since yesterday was pretty public that ‘boys’ were trying to take down Mervin. They were going after other potential Melvin’s short positions such as Dillards (DDS).
Problem was, if Melvin goes down, it could cause some troubles for Prime brokers. So rescue was probably coordinated.
But you are correct, they may have leaked some msgs on few msg boards, to get some help, but in this fight were big guns.
Sounds like little Melvin was “too big to fail”!
Seems like the definition of “too big to fail” has gotten smaller!
Doesn’t say much about the financial system’s current stability!
How can it be retail investors if a large % of all stock is owned by a small % of the population?
Rchon
So? To coin a phrase “who brings a knife to a gun fight?”.
The amount of money being made on stock-loan and margin debt during this short interlude is impressive.
Somebody’s paying for all that overhead and, there’s significant bleeding on both sides, with shorts are taking the biggest beating.
In the near future, it’ll be interesting to hear anybody & everybody on the Reddit/RobinHood side this claim to have made a financial killing.
Thanks all for the Reddit link.
I have idea. I will try (beginner programming challenge) to code something up, that will give me top (most mentioned) ticker for the day and week and watch… Not participating though, I’m too old for this.
I have my picks, precious metals, uranium… for next few years.
Someone already built it. search: swaggy stocks
I thought Robin Hood already did this for the “greater fool” crowd
Is nobody talking about the situation, that made this possible? The possibility of shorting more shares then exist.
The creation of derivates that multiple wins, or losses in extreme highs.
Big short-sellers who make money with destroying companies. Maybe sometimes the scammers, but mostly the ones they just see money in.
So all the big guys playing that fucking game and everybody just can watch.
Now you give a younger generation the possibility, to participate in the game. And what do they have to lose? Most of them already are broken. Starting their working life with a shitload of loan, but old guys telling them that they can reach everything.
So why is everybody surprised when they start playing the same game like the big ones. Even better. Becaus they don’t care about fundamentals, charts, numbers. Just buying and selling. The raw essence of capitalism. With a small chance of becoming rich. Or losing the last dollar. But when you are broke, what do you have to lose?
That all is the result of a completely fucked up system. The difference is, that this time the rules aren’t set by old, white Wall-Street-Guys. They are set in crazy Reddit-Threads with a shitload of Emojis.
And i love it. Probably they are not going to win. But they get the feeling that as a mass change is possible.
Its not complicated, we’re just sowing the next crop of Capitalists.
This isn’t a story of old vs. young but of rich vs. the rest of us. When we were raising you, mortgage rates were in the double digits, the bosses gave us 2-3% every year, if at all, nothing in ’91 – you kept your job if you were young and cheap. Then they started making us pay for our healthcare and our retirement. And all the while they took home double-digit pay increases every year and expanded their power busting unions, regulators, cutting their own taxes, outsourcing, offshoring and buying up influence. Over the Boomer’s working years the top 1 percent’s share of national income has more than doubled from roughly 10 percent in the late 1970s to over 20 percent today. But sure, let’s blame the old people who lost homes in the last recession, and lost stocks in the recession before that, who lost jobs in ’91, couldn’t GET jobs in ’81 and who now pay ACA premiums 3x that of younger people.
And if you want to complain about the debt you’ll have to give up all the technology too – no smartphones, hell, no cell phones, no internet and no life-saving and life-extending treatments. Get out your checkbook because you’ll have to stand in line at the bank and the DMV on payday. You can have a PC but no GUI, maybe a modem, and no iPod – turn on the radio or put in a tape. On the plus side you won’t have to worry about it lasting longer than 4 hours, but on the downside you still won’t want to get the Corona virus for another 30 years.
A friend’s son called him up last Saturday and said – Hey I’ve opened a stock account and I entered a trade but nothing is happening. The father, after first asking where the perennial broke kid had gotten money to play the market, had to explain that the stock market is only open on weekdays and only between 9:30 and 4. Yup … that is where we are at in the market. Not sure who else is left to climb aboard. (Note: the kid had a good week in his first try – his BB did very well)
It’s not like anything we ever learned about ratio analysis has made any difference so what the hell.
In the short term the market is a voting machine (sometimes made by Dominion…).
In the long term, it is a weighing machine.
Love that quote
E-mini futures (ES,YM,NQ ) trade almost 24 hours a day continously .easy ro trade if undertand open auction fundamentals . Stocks or Etf’s like SPY/DIA/QQQ/SLV/GLD always open gap up or gap down (during 9.30am-4pm)
Kid not so dumb, PREMARKET or AFTERMARKET
trades have been around for years
Of course but with his simple brokerage account (with cdn bank, in C$) and him barely knowing how to enter a trade, might be a bit early for him to be doing that.
So, a tsunami of incongruity amongst wagerers .. but on equal playing terms.
O boy!!!
There is some power behind hooders also. This thread has over 77,600 comments!
https://www.reddit.com/r/wallstreetbets/comments/l4syrd/gme_megathread_part_2/
Another one over 20k comments.
Btw, what is the point posting into such populated thread. No one will ever see your post.
But beside that, knowing not everyone is posting, the potential number of participants is huge! I though there will be a few hundred… wau!
Held GME for years at a loss, then it goes to the moon. Find Wallstreetbets, think hey this is fun. BB looks cool, why not. May as well get some popcorn at AMC.
Generational shift, memes have taken over the markets, Fed made it a clown show, may as well enjoy the joke.
I’m getting such a kick at all of this. Wolf I hope you’re reading all the hilarity on Twitter about this. For 2years I’ve been reading your site for the housing data, but i found myself getting sucked into the zany world of the stock market from your insightful articles. You’ve been calling out shenanigans for some time now. Seems like this is just part of the “this won’t end well” predictions. ?
GirlInOC,
This whole thing — the masses ganging up via the social medial on the other side of the trade — is fascinating. They’ve done it with TSLA for a long time, but not like this. This is truly spectacular. An amazing show. Lots of people will lose much of their bet, or all of their bet — on both sides of the trade, first one side, than the other side.
Grimm’s Zirp and Nirp Fairy Tale
The Fed, using Zirp and Nirp, forces as many people as possible up the tree and out into the farthest reaches of the tree’s branches.
Zirp and Nirp rot the tree’s hidden roots. Then the leaves dry up and fall off, dry twigs snap, branches break, and the trunk falls.
No one saw the rotting roots!
You are absolutely correct. I am really surprised that there is not more pushback from academics about Fed policy. There must be mathematical models that show that Fed policy is net destructive force in the real economy.
It would seem any major hedge fund could pump a small cap stock up 100%. then short it as they sold all their shares.
Or is this illegal?
It’s not about the market cap it is the size of the float and the size of the short position. Nothing illegal about what you propose. Exactly what Wall St. has been predicated on since they met under an actual tree. There is risk involved however in what you propose, and the smaller the float, the less liquid the market, the bigger the risk.
The problem for the big money is getting out of a small-cap stock after it got pumped. Trying to get out may cause the shares to crash before you can get out completely.
I’m no lawyer, but the same group pumping a stock & quickly short ing it probably is the fast path to felony something-or-other.
However…
Very quietly shorting a stock and then (very publicly) announcing that you’ve determined the stock is overpriced and you’ve shorted it is the road to fame & fortune.
When you are in a fake interest rate environment, asset valuations become impossible, for the premises are fake.
For the 10% of risk money in my portfolio I research small caps and try to find one that I think the shorts have overdone and really research it. My main criteria is a sound balance sheet, it will pass a reasonable discounted cash flow model, 40% plus short interest and greater than 15 days to cover. Then just try to outlast the shorts. If the company beats expectations, the shorts have to get through a narrow door and the price overshoots the fundamental value. A lot of things work in a rising market though. Things will look different when the bubble bursts.
Super – best article!!! Diamond Level!
This is the last gyrations of a bull market. The money is rolling downhill into the garbage. Seen this movie before
Pink sheets ,OTC flying up in moonshots. SPAQs, gap ups every morning. It’s too dangerous to hold small caps overnight as it seems like secondary offerings happen daily. Big tech on the move now as jello slosh out of the financials. There won’t be much warning this time. The bidless beast will be merciless It’s taken 20’years but the markets now has their fresh round of muppets to rip off their face. Going to be very sad….. again. It’s just when
We’ve been hearing this for years. The market was supposedly going to crash in 2018. Meanwhile, more than 2 years later, here we are.
Overall stock and bond market prices are being assigned by the Fed with fiat currency. Unless they have created magic money tree, it will not end well for the country. I still think it’s going to be a quick reset scenario. How else are they going to get out of this mess?
Why do they need a magic money tree? They digitize all the money they want.
or has anyone not noticed?
Great “ the whole ZOO “ is now dancing outside the ZOO :)
The animals are out on a bender too!!!
No really, looking at the second chart, you’d think $GME have invented the” Methuselah Elixir “ or something akin to that!
C’mon guys ( we’re only selling F&)?!G games)!
Go Wolf, skewer them all! They’re all ripe for a great bbq :)
Wow.. this is the same thing that is happening to bitcoin and every other ***coin.. fascinating…
They really are partying like it is 1999 :-)
They replaced those weekends in Las Vegas and Miami with Robinhood.
This stock has been a good money maker in the portfolio of stocks I’m trading for January. I was wondering what happened today though as a purchase long was made at $120, it went up to $159 & then cratered to down to $61 in under 2 hrs. Something was up.
Perusing Twitter I came across various “short squeeze” analogies & a contrarian view from someone on Reddit talking about $GME. This person says a guy by the name of Cohen who founded the ecommerce company Chewy.com. has visions of gaining control of the Gamestop & becoming CEO. Sees it as an untapped goldmine & if successful, the share price will soar into the stratosphere based on it’s current massively undervalued market cap.
“Cohen sees a $200BN+ total addressable market cap for gaming by 2023. For contrast, Chewy was playing in the pet food/supplies market, which has a total addressable market (TAM) of under $50BN annually. GME’s potential is at base 4x that of Chewy. This does not even account for the pc gaming hardware market, which is another $35BN+”.
Zerohedge has a list of Melvin’s puts. Sounds like a game for vultures!
I am sure it is not lost on Wolf that today, TSLA was trading at about the same price a year ago.
There is some kind of awful symmetry there. Literally if you went in a coma at the end of January last year and woke up today and just looked at TSLA’s price, the reaction would have been, oh, didn’t change much in a year.
?
BTW, wolf, didn’t you inaugurate the WTF chart on TSLA around this time last year?
Finally, closed out your last short yet? Forget if you ever shut that down.
The Robinhood crowd loves Tesla. I keep commenting that it was never about the cars, its about the tech. A geek love story. I too think Musk is the smartest guy in tech.
Give me billions upon billions in borrowed money and I will appear to be a genius, too.
I feel kind of odd, in a way, everything is disconnected from reality. And even though I know it, I couldn’t help join in the madness.
Yesterday, I actually bought 20 shares of GME just for the heck of it. Doing so while every instinct of my being screamed: “INSANE.”
This morning I flipped the 20 shares for a 9% gain. Glad I got that out of the system. I saw though that I missed the boat, had I tried after hours yesterday, I might have been able to get away with $140/share.
But today, the world went nuts because Chamath took some spare change out of his pocket, and dumped it into GME call.
Yep, this world has gone nuts. GME actually makes TSLA look tame right now.
“Yesterday, I actually bought 20 shares of GME just for the heck of it. Doing so while every instinct of my being screamed: “INSANE.”
This morning I flipped the 20 shares for a 9% gain.”
We’re always regaled with stories like this, but never the losses. YAWN.
Hmmm, that was a story about being stupid and lucky.
I actually considered that a failure on my part, a loss of control/sanity. Something to learn from.
If you can’t take a lesson away from that. Well, that’s not really my problem.
Except Elon sold an additional $5B in treasury stock.
This disabled autist put a $20 bet on $GME last night and $5 on $AMC.
I hope it will double so I can buy a better mask so I do not die of COVID.
Shorting anything in a crazy bull market is just dumb.
The only ones making steady profits from shorting are those selling e-books and courses on how to make money shorting.
Information publishers never go out of business…
There will be a few commoners who profit short term but don’t be fooled the elites will persevere and win. Anyone who supports ANY financial or social engineering is pretending that markets are inefficient just to satiate the human need for control. Wake up people the elites run a small cult and you’re not in it.
The money is cashing out of everything, cars, memorabilia, expensive houses in blue states.
Real estate prices are breaking records in all major cities. For some the glass is half full….
Yeah, but real estate prices going up without corresponding increase in wages or societal economic activity is BAD, as it means that more and more people are becoming priced out of the housing market.
Do you think rampant speculation, buying without seeing the house or doing an inspection, bidding wars, and sale prices 10x the average income in a given area is a good thing?
If you listen carefully listen to Janet Yellen she is telling you what the hardoney people said a century ago. Debt created out of thin air just leads to bubble after bubble with each requirement for debt getting bigger. She is saying in a central banker way that we need to do stimulus of $1.9 trillion or debt addicted system will implode. Stimulus = Government borrowing = Fed printing = phony savings diluting real savings = stealing from a saver to give to a debtor = moral hazard of people not saving and country sliding to socialist paradise.
I read that in manias, the top is marked when shorts are literally driven out of the market, and none are left. I never understood that until now.
Here, the mob has driven the shorts out. There will be a lingering fear of shorting for a while. Everybody is a margined long.
Clearest sign of the top.
This article need an update because the stock is going crazy again today.
Central bankers know their policy is on a bad path, but they won’t change it.
This means there’s something more to it than avoiding a recession. A recession hurts everybody for a year or two, but then the economy comes back fast because people are able to invest in great reliable endeavors at much lower prices. A lot of debt gets partially written off and some banks fail, but all the bad assets transfer to good hands with stronger balance sheets. And, the most important part is that people play by common sense. They learn you more often lose on a speculative investment, so it’s important to have your priorities in place and your balance sheet strong beforehand. You don’t rely on the generosity of government to fund your speculative losses. That is taking advantage of government (other people) to fund your own reckless greed.
Leaders today, however, are unreasonably afraid of a recession, so its like not the general economy they are worried about. I believe it’s the transfer of power and money to new hands that worries them.
As long as central bank policy works hard to avoid a market clearing, the younger generations will have nothing “good” to work for or invest in.
Chamath Palihapitiya has entered the GME chat!!!
Looks like it’s Chamath vs Ken Griffin.
I am loving it.
In another piece of news, Nancy Pelosi and husband bought over one million dollars worth of Tesla, Disney, and Apple calls in December.
Awesome stuff!!!
yep, this is so weird, Chamath is tossing in his pocket change, and he is going to yank it out (if he hasn’t already) and make a little pocket money for his doggie.
This is like the Twilight zone. I don’t know what TSLA has going on, but it’s not enough.
Insane doesn’t even begin to cover this situation. And most oddly, the markets are down.
Zimbabwe stock market.
There’s going to be some rumor tomorrow probably about “Gamestop exploring a strategic sale at some X price”.
Just to relieve pressure on brokers/dealers.
How many are having to sell their longs to cover their GME shorts. That could be why the market is down.
That’s what I thought too. Who knew the same crowd that drove shares higher will also cause long positions to be liquidated.
Good stuff.
If you’re not trading this right now, you’re idiots!!!!!!!
Bawhahahahw
If this was happening in Las Vegas, the pit boss has the situation(!) under control.
But, it is Jay and Janet show now. They will let it blow-up since the scapegoat is identified for this round.
GME closed way up and is high after closing….somewhere around $150. I guess the shorts have doubled down thinking the crash is near.
This is real nutty.
Whoh! $231 after hours. @5:15 PM eastern time.
Anthony A.,
After Musk’s tweet, GME jumped (now at $210 late). They’re ganging up to crucify the shorts. They don’t even have to buy anything. They just tweet. They’re now going after the hedge funds. This crucifixion of the hedge funds has become a public spectacle.
In 1922, when a group of bears began selling Piggly Wiggly short to force the price of the stock down, Saunders began a buying campaign to support the price of the stock in order to protect his own investment & that of other Piggly Wiggly stockholders. He supplemented his own funds with a loan of about ten million dollars from a group of bankers. His buying campaign was an attempt at a corner. The stock went up wildly, reaching a high of 124. At this point the Exchange suspended further trading & postponed the short sellers’ delivery deadline. This resulted in eventual bankruptcy for Saunders & he was finally forced to step out of the Pigp]y Wiggly Company. History doesn’t repeat itself, but it often rhymes.
I’ve been reading some of the Reddit active threads. Those folks (mostly youngsters) are on a mission. And there’s a whole lot of them and they seem relentless.
I’ve followed the wsb thread for a few years now. In the last 24 hours they have added half a million new subscribers. It’s approaching 3 million people now. There’s no telling what can happen if it keeps growing the influence they can have collectively.
One wonders, Citadel backed up Melvin capital, one would assume all of those guys are out of their short positions by now. But seriously. Who is still holding all of those puts and shorts at this point on GME. Seems like a suicide mission
Wolf,
Not a crucifixion – which was an action by the State (i.e., the Roman empire) for the protection of the interests of the State. The actors here are not Roman legions, rather the put-upon neofeudal serfs of 2021. The sentiment: “Occupy Wallstreet” or “Feeling the Bern” for Bernie among the youth of the nation — this is a Robin Hood or Cinderella Man story playing out before us in realtime. And I think much of the public would not support either the SEC or any regulatory body taking extraordinary steps or unusual measures to protect those who are taking overzealous bets (~130% of float) on the failure of U.S. companies, which create jobs, tax revenue, etc.
If this goes on much longer, I would wager that public polling would show major support for the “underdog” r/wsb — and nothing but resentment toward the plutocrats of the net-short vulture funds!
What we’re seeing here is civilization evaporating before our very eyes.
This type of nonsense in the stock market is not the cause, it’s a symptom of a very sick society.
Yes but the mob is stupid. The company has almost no intrinsic worth. This will end with all the robinhood types getting fleeced. Likely within days.
Musk’s revenge against all those shorts who tried to take out Tesla. What he is doing now is kind of like a random drive by. Except instead of a machine gun and a Tesla, he is dropping a single word on Twitter.
I tell you, Twitter needs to be shut down, it has got to be one of the most destructive mediums around. (This is certainly what short sellers like Melvin Capital is saying today, although those same short seller would be screaming off the top of their lungs about their latest thesis on what stock deserves to die while raking in the profits)
SA article this afternoon after the market closed stated this:
“In regard to some of the pain for those negative on GameStop, S3 Partners estimated earlier today that GameStop shorts are down $5B this year. Running down the details, S3’s Ihor Dusaniwsky says GME short interest is $5.51B; 71.79M shares are shorted; the short interest as a percentage of float is 139.57% and there is a 31% stock borrow fee on existing shorts and new shorts are paying over 80% fee.”
Crazy game being played. No wonder this stock market is gone to the dogs.
I sense many people feel the financial environment is one big manipulated joke, and they are treating it as such. Investing fundamentals are worthless.
I find myself surrounded by techno-optimist #wallstbets types at work.
And they do see it as one big joke.
And who can blame them for wanting to crucify hedge funds?
The sharemarket has been a game, rather than a useful mechanism for allocating capital productively, for a long time. Central banks have decided to make it a game no one can lose. So I can’t say my workmates are wrong for treating as such, even though it gives me the ***ts.
Correct Bobber, and it’s getting worse. Not from just these kids trying to sink the hedge funds that are short some of these companies, but from all angles. Seems like a cartoon show.
Both my kids 24 and 22 have robin-hood accounts, I try to keep informed so they don’t blow themselves up. Anyways if you get someone else to open an account Robin-good gave them one share of GameStop. They both sold that share at about $14.00, but I just find it interesting that the stock they got for free is now the stock blowing out the market. We live in crazy times.
The Robinhood CEO using the example of real estate is very interesting to me. I think the real estate platforms, that invest, are manipulating real estate prices across the country. You can see it by looking at the price convergence across regions with dissimilar economies and incomes. I suspect the next target might be real estate.
I bought two (2) AMC shares at 16 (hahahaha) to do my part and help bring the system down.
This situation is hilarious.
“Jay Pow! : “I’m not thinking of even thinking…””
Correction: “I’m not even thinking about thinking!”
?
Captures the zeitgeist very well. A natural evolution of a financialized economy. No manufacturing, no real goods, just pushing paper around, fueled by easy money.
???????
Brilliant !
Interesting, TD Ameritrade has indicated restrictions on trading GME and AMC. Then the White House is indicating that they are monitoring the situation around GME.
So color me curious, nobody stopped TSLA from going parabolic (yeah, still insanity), why this crazed action by TD Am to restrict trading, (no idea what that even means). I didn’t see them restrict trading on the melt down in 2008 as everybody got slaughtered, or in March. Now, stock is going up, and there is restriction?
Then, why the heck is the White House monitoring GME? Don’t they have better things to do? Like running the country… saving everyone from Covid, and such?
Did some hedge funds call up the White House and ask for a Federal halt to trade or something so they can get out of their shorts.
GME and a few other stocks that are going up is a consequence of hedge funds who manipulate the market losing control, but they are such a small part of the stock market, why does anyone give a s*** if Melvin or other hedge funds lose their shirts. It’s called market risk.
You don’t get it. Only some are allowed to make money on Wall St. The rest of them are only allowed to donate. Don’t forget to keep investing.
Yeah, silly, silly me, the plebs like us aren’t allowed to make money. Only the megadonor smart money are privileged enough for that, cause heaven forbid if we have a direct line to the White House that’s actually live and has meaningful responses.
Apologies, the retail investors and their ilk must be crushed like insects and put in their place, how dare they ruin investing for the monied class. As if they are on the same level as Nancy, Kelly, and the rest of their types, such arrogance. (oh, forgot, Kelly no longer holds public office)
Only rich people are allowed to make money in the USA. They have to be protected at every cost.
Forget impeachment. GME is more important. Would someone please think of Melvin’s clients??
That’s right, convene the committees, we must have hearings, a study group, a godd*** commission to make sure innocent, vulnerable firms like Melvin Capital are never harmed again. If needed, special prosecutors must be appointed to teach those Reddit seditionists who have the gall to try to pay off their college loans by themselves a lesson.
Nice ring to it! Just not sure when/how to use it.
Their description of themselves is apt.
Just the 2021 version of the storming of the Bastille. Only instead of torches and pitchforks, the Crowd is armed with smartphones and Robinhood accounts. Heads will be rolling this time around, too.