“It’s really something to see Wall Streeters with a long history of treating our economy as a casino complain about a message board of posters also treating the market as a casino”: AOC
By Wolf Richter for WOLF STREET.
What a hilarious show this zoo that has gone nuts has turned into. White House Press Secretary Jen Psaki came out today and said the White House “economic team including Secretary Yellen” were “monitoring the situation.” The situation being total utter mania in the most shorted stocks, such as GameStop and AMC.
The SEC came out and said today it too is “actively monitoring” the options and equities markets. “Consistent with our mission to protect investors and maintain fair, orderly, and efficient markets…” which was when humongous laughter drowned out the rest. Did the SEC really say “efficient markets????” Hahahahaha.
Fed Chair Jerome Powell, during the post-meeting press conference today, was asked right off the bat about the mania around GameStop and similar mania stocks, and he refused to comment.
This came after Alexandria Ocasio-Cortez tweeted in her inimitable style: “Gotta admit it’s really something to see Wall Streeters with a long history of treating our economy as a casino complain about a message board of posters also treating the market as a casino.”
The mania revolves around the most shorted stocks, shorted by hedge funds that hoped to make a killing when those stocks collapse. Short sellers have to borrow the shares and sell them, hoping that their prices will collapse, and that they can buy them back for a song and close out their position with a huge profit.
And a bunch of hedge funds jumped into this shorting of the-most-shorted-stocks business, and at one point the short interest of GameStop shares [GME] was over 140% of the float, which is ridiculous, and a sign that hedge funds were taking enormous risks. They will all have to buy those shares to close out their positions. But who is going to sell them those shares?
Well, folks figured this out, and they were ganging up on these hedge funds, organizing their Wall Street revolt on the social media, particularly on the WallStreetBets subreddit. Most of these stocks have a relatively small float – that’s why the hedge funds shorted them in the first place because stocks with a small float are a lot easier to manipulate, and Wall Street has long gotten fat off manipulating stocks.
And those traders on Reddit also figured out that stocks with a small float are the easiest to manipulate if enough people got together. And they figured out that stocks that were massively shorted and didn’t have many sellers left could be driven up to the point where those that were short those stocks would panic-buy those stocks to cover their short positions and curtail their losses, and that panic buying, with no eager sellers on the other side, would trigger a huge surge in prices, which could wipe out those hated hedge funds.
And it’s not just a bunch of small investors playing this game. Hedge funds too jumped into it with both feet, with hedge funds now lined up on both sides of the trade, and this started a cycle where buying by the longs on one side and forced buying by the shorts on the other side made those stocks explode.
And they exploded, even as the rest of the market swooned, with the major three indices down between 2% (DOW) and 2.6% (Nasdaq), the worst day since October, putting the Dow and the S&P 500 into the red for 2021.
In afterhours trading today, all heck broke loose in the other direction – more on that in a moment. But during regular trading hours, these stocks were among those that skyrocketed. And not all of this crazy stock mania was in the most shorted stocks.
It included a tiny no-nothing Chinese insurance broker, Tian Ruixiang Holdings [TIRX] whose American Depositary Receipt (ADR) went public on the NYSE on Tuesday at $4 a share in an IPO that raised $11 million, and started trading today, and amid various trading halts soared by over 1,000% intraday and closed up 538%. That’s how nuts the whole mania was.
Here are the 22 stocks that by the end of regular trading hours today had jumped between 31% and 538%. The names with an “ADR” tag are American Depositary Receipts of foreign companies whose actual shares are traded overseas.
| $ at close | % change today | ||
| 1 | Tian Ruixiang Holdings | 25.50 | 538% |
| 2 | Koss Corp. | 58.00 | 480% |
| 3 | AMC Entertainment | 19.90 | 301% |
| 4 | Naked Brand Group | 1.38 | 252% |
| 5 | Express | 9.55 | 214% |
| 6 | GameStop | 347.51 | 135% |
| 7 | Fossil Group | 23.66 | 87% |
| 8 | Genius Brands | 3.06 | 81% |
| 9 | J.Jill Inc. | 6.50 | 56% |
| 10 | trivago N.V. ADR | 3.19 | 52% |
| 11 | JanOne Inc. | 9.52 | 48% |
| 12 | Sorrento Therapeutics | 15.23 | 46% |
| 13 | Rubius Therapeutics | 14.69 | 44% |
| 14 | Bed Bath & Beyond | 52.89 | 43% |
| 15 | Build-A-Bear Workshop | 6.78 | 42% |
| 16 | National Beverage | 181.51 | 40% |
| 17 | Nokia ADR | 6.55 | 38% |
| 18 | GSX Techedu Inc. ADR | 142.70 | 36% |
| 19 | A. H. Belo Corp. Series A | 2.60 | 35% |
| 20 | PetMed Express | 51.80 | 34% |
| 21 | BlackBerry | 25.10 | 33% |
| 22 | World Acceptance | 164.61 | 31% |
| 23 | iRobot | 161.16 | 28% |
| 24 | Shoals Technologies Group | 30.98 | 24% |
| 25 | Hudson Technologies | 1.66 | 22% |
| 26 | Ebix Inc. | 58.63 | 22% |
After the close of regular trading hours on Wednesday, Reddit briefly made WallStreetBets private, locking out the hordes of onlookers that weren’t subscribed and even locking out many subscribed users, according to the Verge. And when WallStreetBets came back online, the bloodletting started and produced these afterhours results:
- GameStop: -15%
- AMC: -26%
- Koss: -14%
- Express: -24%
This mania, even as the overall markets are swooning, is a sign that something is seriously broken – that highly leveraged hedge funds took on way too much leverage and risks, that too many of them were shorting the most obvious shorts, thereby digging their own grave, and that people and other hedge funds have figured out how to gang up on them and run them over the cliff.
There now remains a problemita for the Reddit traders that have run the hedge funds over the cliff: They have to sell their shares to get out of their positions, and if short sellers are no longer panic-buying those shares, the Reddit traders, by pumping those shares, will have to induce others to buy them at those insane valuations. And the group will spit in two: those that got out successfully with their loot intact, and those that didn’t (the bag holders). Pump and dump on all sides, in classic Wall Street manner.
In a world where valuations are irrelevant and disdained. Read... Time to Worry About Stock Market Leverage Again: Another WTF Sign the Zoo Has Gone Nuts
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They’re “actively monitoring” things alright. And shutting down a community of 250,000 people because they disrupted the “orderly” status quo.
The latest news is that today robinhood began to sell its users, gamestop stock and select other stocks without asking them and without their permission. Other stock trading platforms are blocking the purchase of gamestop and select other stocks.
It’s a pretty insanne move by robinhood and makes reddit actions look tame. Reddit has been in terminal decline for a couple years plus now. Robinhood selling off it’s users financial assets is a big escalation from social media bans. Big tech is starting to make 1984 into a utopian vision of the future.
I am not entirely convinced that some of these Hedge funds were able to cover all of their shorts. They of course want everyone holding a GME stock to believe that they did, what better way to get them to panic and sell. I want to see their bluff called.
Panic? This is like a feeding frenzy. Wolves do turn on their own. It is getting bloody.
The entire stock market is just one big pump and dump scheme if you really think about it.
At this point, yes. How many people would buy the stocks they do if they were told they had to hold them for 20 years?
A number of problems would be solved by:
* Requiring someone to hold an asset for at least 5 years to qualify as a “long term capital gain.”
* Imposing a transaction tax of, say, $1.00/trade + 0.1% of the volume.
This would help cut down on the gambling aspects of the stock market, while encouraging more thought about a company’s future prospects when investing.
Trading Places was a fun movie, but too many small investors end up stuck in a gorilla suit, caged with the real Wall Street gorillas. Southwest Airlines famously used futures to give it stable fuel prices – let’s limit futures to that type of thought, and not “ripping the eyes out of muppets” type behavior.
RepubAnon,
Taxing capital gains as normal income, would be the best approach.
As for the stock market, the average person shouldn’t be involved with it to any significant extent. Instead, social security would have be higher and proportional to where they placed pre-retirement. All non workers get everything from workers so social security as a transfer payment is the only realistic approach.
Also with the stock market, by far most important thing is to ban stock buybacks. The stock market will have to remain a casino to some extent, because, if the economy isn’t really growing, there has to be somewhere to stash excess savings and the stock market would have the least impact on the rest of the economy.
1. Protect the rich!!
2. Protect the rich!!
3. See no 1 and 2.
What say you about the very large percentage of Reddit bagholders that are going to be gutted (after making the short squeeze *initiators* rich) once the utterly insane valuations of deeply distressed companies collapse back?
Rallying a delusional crowd of small investors to pitch themselves off the side of a building in order to crush some top hatted hedge funder below doesn’t strike me as a particularly noble enterprise.
Especially since absolutely nothing has changed for the underlying failing business.
If the exact same behavior were occurring in the absence of squeezed shorts, people would be shrieking “market manipulation” and “pyramid scheme”.
Yes but it wouldnt be happening if it wasnt for the 140% of available stocks shorted
Sure, I don’t really care if careless hedge funds catch it in the neck.
But this goofiness is being sold as some triumph of the little guy…when, in the end, the majority of little guys are going to be left holding the bag of insanely overvalued distressed companies.
Cas127, correct…many of the 3.4 million kids on wallstreetbets with lose their two shares of stock they bought with their monthly allowance. But they had a lot of fun when this was going on. More fun than I am having at my ripe old age. LOL
How is it possible to short 140% of a stocks float? Seems like 100% of float would be the max?
todd,
It’s 140% of the “float,” not of the “shares outstanding.” A lot of GME shares are held by big institutional investors; these shares are part of “shares outstanding,” but are not part of the “float” since they’re not traded. Once these investors sell those shares, and disclose those sales in the filings, they become part of the float.
Wolf, in your response, you seem to present a distinction (float vs. shares outstanding) with no difference (how do you get to 140% of float?). What is your definition of “float” that allows 140% of it to be shorted?
Definition of a company’s float from Investopedia:
“The term float refers to the regular shares a company has issued to the public that are available for investors to trade. This figure is derived by taking a company’s outstanding shares and subtracting any restricted stock, which is stock that is under some sort of sales restriction. Restricted stock can include stock held by insiders but cannot be traded because they are in a lock-up period following an initial public offering (IPO).”
These kinds of shares include the holdings of institutions with big stakes that have to file with the SEC when they sell their shares, such as pension funds, asset managers, etc.
If these institutional holders lend out their shares (they get paid for it), short positions can get over 100% of the float. I’m not sure if this is happening here. But according to SEC filings, well over half of GME shares were owned by institutions (some of which dumped their stakes last week).
Wolf… why would “institution” holdings not be considered “float”? If they are not pledged as collateral or not required by an ETF, it is a discretionary holding and should be part of “float”. I still don’t see how 140% of float can be shorted – unless there was naked shorting. Isn’t that what we have here – illegal naked shorting – something that seems to happen way too often that always goes unpunished. I mean… shouldn’t the Congressional/SEC/FedRes investigation begin with naked shorts (and maybe end there?)?
FatManCometh,
The idea of “float” is to see how many shares are available to be traded in the market. This definition is a just a convention, not a law of physics. To calculate the float: total shares outstanding minus insider holdings (restricted shares) minus holdings of large shareholders (usually institutions that have to report their sales to the SEC).
Wolf, why can’t we both cut to the chase. There is no “convention” – there was naked short selling with media jargon to hide it. Why not lead the charge to have State Attorney Generals put the Wall Street institutions that fostered and performed naked short selling in jail?
I don’t think you guys are getting it. Those reddit investors are dropping coins in a slot machine to let the game play out. It’s just a virtual weekend trip to Vegas for them. They expect to go home broke.
For those of you who have no idea what I just said: The kids are getting even.
Very much like the raid on the capitol. These are people without a plan. They want to disrupt not change, and have little incentive to profit, and assume they will not suffer any consequences.
Petunia, there is a video on Reddit titled “WSB gets emotional on Mad Money”
It’s a dark video, but a great view into the minds of these Redditers.
They don’t care if they lose money. Or so they say
More like, as with the capitol protesters, they think the cards are stacked against them, and just want to burn it down at this point.
I read on one subreddit that some buyers were using stimulus cheques to buy stock in these companies. Can you really lose ‘found’ money?
I was all over that wallstreetbets website yesterday reading the posts. Most are young kids and the money is not what this is all about. Many think they have been screwed by the government in many ways. A lot of the stock is being bought in small lots, like a share or two.
It’s really not about the money spent at this point. They are on a mission, together, and it’s fun.
I recall reading something in Fourth Turning blog years ago about how generation after millennials may be more collective minded (or hive minded) than older generations. As GenX, I am amazed by this behavior in action.
I agree 100%
At least the kids are attempting to burn the correct thing down, as opposed to the ignorant government haters trashing their OWN democracy….such as it is….but still better than the 3rd Reich effort that was made. They don’t watch Fox, I have no idea what they watch, except like me, South Park. I can tell by the ads who the audience is…..don’t think they are into “my pillow” type junk. That guy has talk radio status and is getting filthy rich off it like the rest of them.
My college son and his roommates were among the kids in on this. Undergrad business majors all classes online in off campus apartment, no sports or clubs, with too much free time on their hands. They’ve discovered Robinhood and the Reddit group, and likely other forms of gambling.
Pretty stupid way to get even.
“When the capital development of a country becomes a by-product of a casino, the job is likely to be ill-done,” declared Keynes in The General Theory of Employment, Interest, and Money.
Uncle Joe softens the blow to the retail-little guy who gets creamed with a $2K check, saying it’s only fair and that nowadays everyone gets a trophy just for showing up?
Totally agree. Showing the hedge funds who’s boss by buying something useless and getting wiped out is just stupid.
LOL… this may be the first time that I have ever agreed with AOC on anything whatsoever!!!
Yeah curbing wallstreet’s thinly veiled gambling problem has been part of her platform from the start of her campaign. She’s a smart lady (talk about pulling yourself up by the bootstraps) and understands pushing HUGE lofty idealistic goals makes taking just a few steps forward much easier.
AOC is far smarter than the GOP characterization. 2nd place at the Intel international science and engineering fair (microbiology section), graduated from BU, and interned with Ted Kennedy. Not just a waitress.
Just because she did not graduate from Harvard or have a law degree, does not mean that she is not far smarter than many many members of congress. The GOP continues to look foolish when ever they try to dismiss her.
I would love to see a discussion between her and Chamath, who both in some ways have similar goals, but very different approaches on how to get there.
Chamath apparently made $500,000 off of the GME mess and donated it all and his original investment to The Barstool Fund.
Epic “Pump and Dump” but for a good purpose?
No one is enforcing any kinds of rules in this game. It’s the Wild West of the stock and options markets.
Don’t confuse intelligence with mere cleverness. Clever shysters abound in DC.
Look at her Green New Deal support for a reality check.
Yep, she is smart, no question, I can also name half a dozen other people who are exactly like her, that are incredibly intelligent, charismatic, hard working, all of those positive characteristics.
But I doubt you’d like the comparison. She is for “helping the people.” So were these others, and in their own minds, that’s exactly what they were doing.
If she gains more power and starts shaping the narrative to her world view as they are today, I would strongly suggest that everyone should be terrified.
The problem with zealots with those kind of attributes is that they are wedded to their world view and are more capable of bending large number of people in the same way. Strictly speaking, they are all great leaders.
Rob,
That video “WSB gets emotional on Mad Money”, really nails the socioeconomic divide in this country. The part it doesn’t get quite right is portraying it as a generational divide. It’s not, it’s really a socioeconomic divide.
Previous generations of Americans have also had to go through great suffering, far worse than the Millennials of today – none worse than the “Greatest Generation”, which went through the Great Depression, WWII, and the Korean War.
For many Americans, “pulling yourself up by your bootstraps” by working really hard for a long time just isn’t an acceptable concept anymore.
The alternative American ethos has turned into get rich quick without working hard, or else tune out with video games, drugs, or conspiracy theories and hate
Heinz, I kinda think it you that could use a “reality check”. Also would like to hear more on “intelligence” vs “cleverness”, and don’t just hit a dictionary, give some real life examples.
“pulling yourself up by the bootstraps”
Politicians don’t pull themselves up by their bootstraps…they skim a percentage of the bootstraps they redistribute.
Akin to Warren’s “You didn’t build that”…which was *extremely* arguable…especially in the context of Warren (and all political creatures) never having *built* *anything* (redistributing is very, very, very different from creating – if it weren’t, the USSR would still be in business).
AOC has a copy of “macroeconomics”, the MMT textbook co-created by Australian economists Bill Mitchell, Martin Watts and American economist L. Randall Wray. As such, she is far, far ahead of the mainstream economists we suffer from today.
“More seriously, AOC has made a number of statements that don’t demonstrate a strong grasp of economics”
AOC has a degree in Economics & International relations.
As someone with a Masters in Global Political Economy from an English school…
I can tell you it’s not her grasp that is the problem… It is your lack of international perspective in economics.
In the US you are taught that right wing economics are the only ‘correct’ way to look for solutions.
The rest of the world is taught both sides AND that the US has been actively torturing and executing anyone with Power who tries out left wing economic policies for at least the last 130 years…
So… broaden your horizons so you can see what the rest of the world sees.
“You didn’t build that” was uttered by Obama in 2012……..
@ Cas127 –
Are you a builder Cas127? a creator?
Is Romney a maker or a taker?
Chris Herbert,
“As such, she is far, far ahead of the mainstream economists we suffer from today.”
I have read some of the MMT’ers work and find them to be extremely disingenuous.
Deeply buried within their “countries can’t go broke”/”print our way to growth” politicking, is the intentionally obscured acknowledgment that, “Well…economies *can* be ruined through inflation…but you people said bankruptcy…”.
That is Clintonian level, “depends upon what your definition of is, is” sophistry.
What people care about is government economic policy that does further *damage*…be it through inflation or strangulation.
MMT hypesters present it as some sort of mystical, magical money machine that only governments (as opposed to any seedy forger) have access to.
Wylee,
“So… broaden your horizons so you can see what the rest of the world sees.”
As I’ve said elsewhere, I’ve read some of the MMT’ers work (motivated by their promise of magical consequence-less money printing) only to find them deceptive and dishonest…burying their forced acknowledgment of inflationary harm usually somewhere near page 234…).
And as for other nations’ economics…I don’t see where multiple years worth of NIRP (negative interest rate policies) are rapidly resurrecting the more thoroughly socialized economies of Europe.
Wolf – You censor more than twitter.
Why am I not allowed to point out that the only benefit to killing the Keystone XL is that Buffet will burn more diesel with his railroad hauling the oil? No benefit to the environment. It’s not decreasing our consumption. Payback for election contributions, obviously.
Russell,
I just checked. It’s how you described Obama, nothing to do with the pipeline. I don’t allow that about Trump, I don’t allow it about Obama, and I don’t allow it about Biden or whoever.
@Russell
Bottom line, this is Wolf’s site, he can do what he wants. If you have a problem with it, you don’t have to be here.
I know Wolf has taken off my posts before, and he has every right. I just like to play games with the filters periodically to see what I can get through, but if it gets put in moderation or never gets put out, don’t be annoyed with it.
Like Twitter, Wolfstreet is a private enterprise, and freedom of speech is not a right here.
I think Wall Street should be included in any discussion of compulsive gambling. Tier 1 would be casinos and any other public place where one goes to gamble. It is not masquerading as anything but gambling. Second tier is all the illegal sports gambling, which can be done surreptitiously, concealing serious gambling addiction. Third tier is all the people who “invest” or “trade”, trying to making their addiction socially acceptable. Wall Street is the largest of the gambling venues.
Powell came out and said that “low interest rates have nothing to do with stock prices.” Hey never give up on the lie, it got you this far.
Put Wall Street in tier 1. It’s less honest than para-mutual horse racing, and less transparent.
On Powell’s tomb stone it read “It wasn’t my fault!”
No kidding, but I take solace in the fact that it’s actual hedge fund getting whacked.
If a few of them died, may be they get a bit careful trying to manipulate pricing.
Hilarious is what I call it.
“If a few of them died, may be they get a bit careful trying to manipulate pricing.”
How is shorting a stock of a company you believe to be overvalued or failing “manipulating pricing”?
It’s not. But going on TV to let people you shorted it because it is overpriced is, as you’re hoping to make the failing a self-fulfilling prophecy.
They got greedy and shorted more shares than are available to trade.
I guess only retail stocks can be shorted, still think this is not manipulation?
SEC bans short selling of financial stocks – ABC News
[Search domain abcnews.go.com/Business/story?id=5844171&page=1] https://abcnews.go.com/Business/story?id=5844171&page=1
If the stock does drop, the trader profits on the price difference. It is illegal, however, for short sellers to spread false information or negati
A majority of the shorts build up short positions ahead of time. Usually in smaller caps, cause they can’t move the larger caps.
Then they make their announcements with their prepackaged research, and launch a bunch of lawsuits through their buddies in various law firms, all prearranged. The stock gets dumped, and the short position is covered, and these guys leave with other people’s money laughing all the way to the bank.
So, I call that manipulation. Again, take a look at Jimbo Cramer’s market manipulation video from the late 2000s, apply the theory in reverse, if one can pump and dump, one could also short and dump. Options make this entirely possible and limit the downsides.
Agreed
Actually, if you take the time to read her positions in full there are some very good ideas (and I am very much a moderate registered independent voter). The problem is she is immediately demonized and mocked in order to stop her populist ideas from spreading (protecting the status quo).
I will not vouch for all her ideas and policy positions, but there are moments where she hits on very real truths.
Sometimes her saying simple words changes the course of history. Prior to AOC and MMT we got inundated with “a country’s budget is not the same as a household budget” and “debt is good” and “inflation is good” from Republican pundits. AOC sees a spade for a spade by saying “ok fine you win, let’s use MMT to fund government”
*Surprised pikachu face* “No not like that!”
Litterly the only thing she has to do to change her doubters minds is to agree with them. Then when the heads explode she can continue doing her job.
“we got inundated with “a country’s budget is not the same as a household budget” and “debt is good” and “inflation is good” from Republican pundits.”
That is a complete and total misrepresentation of history.
While the Republicans can be crucified for not actually governing under the economic principles they run on, it is a 100% perversion of the historical record to ascribe *Democrat* talking points to *Republicans*.
Every single statement you object to, has long been in the rhetorical arsenal of the Left…not the Right.
(How long have you been following politics?)
I was not referencing a political opinion. My political opinion is the federal reserve needs to stop easy money and to stop MMT in it’s tracks. No it has not been Republicans stance in recent history and democrats don’t have the political will. Both are throwing gasoline on the fire of “MMT” or previously known as military industrial complex by using inflationary monetary policy.
The puzzle will not come into focus to any political party. It’s not complicated. It’s just too scary to look at.
@ Cas127 –
Was it the “great republican” Dick Cheney who said deficits don’t matter?
or, Bush who, bailing out Wall street said “we have to save Capitalism from itself”?
Every broken clock is right twice a day.
Not the digital kind
The Army clock never was, at least while I was in.
Thank you!!Free speech forever!!She should watch Her speech as it will be used against her.A thorough reading of the Constitution and Bill of Rights which shes supposed to uphold,not destroy,would be useful.She hates this country so much,she should move to China,Venezuela,Russia,or N. Korea where she can crassly peddle overpriced apparel for humans and dogs alike.
Sure. And my desk clock is correct twice a day. I quit replacing the battery and left it at 17:00.
Right on the money lease a hkr!!
Never mind the other two above also right, or at least some what, where, and who correct, part of the time.
Never understood the whole concept of time being so revered,, as it is only one more of the intellectual concepts that have been used SO much and so much more recently to divide and conquer, as these recent very very sketchy and very very worthless constructs in our stock and other markets are showing ever more clearly each day…
Somehow and some when, the concepts of the ”king’s new clothes” fable keep coming again and again, with the same results for those willing to be convinced, and those NOT.
Thanks for your many cogent comments here lh,,,
MCH:
” From my view point,…..”
Yes, from your point of view…….only.
As far as the “reddit” activity to disrupt the “markets” it only adds to the argument that all markets must be tested in every which way to ascertain if they are viable or not.
Isn’t that what Goldman did in the mortgage crash? They cooked up “sh*&” for “sophisticated” traders and got away with it.
This is no different.
Cry your eyes out!
?
The market needs a wake up call. But the problem is all of this BS is grandstanding by the politicians. Seriously, do you think the leaders of either party would do anything to screw up their own money train.
Ask Nancy and Chuck, and Mitch how they’d feel about real regulations against Wall Street. If you get more than nice platitudes… it will be a miracle.
I donate all I can to Bernie, AOC, Wikipedia, and Wolf.
Growth for growth’s sake is the ideology of a cancer cell.
We need a Green New Industry (deal) on the scale of WW2, and need to start it NOW.
Also a Constitutional maximum net wealth and a strong IRS to enforce it.
I see no other rational moves.
#ForceTheVote AOC sold out her own convictions and pledges. Jimmy Dore rocks!!
Me too. Hate her if you like but the gal has her heart in the right place. 20 years ago a hose down the street went for $95k and a teacher bought it. A lady we knew well and she was earning $63k/year. The house across the street from it just came up for sale – priced at $428k. The teacher? She’s pleased but says she couldn’t sell because where would she move to? Moreover, now making $67k per year . . . $4000 more over the course of 20 years. Bottom line, AOC got elected for calling out the obvious, people, I mean regular ordinary Joes have been hosed over the last few decades. So the media, owned by oligarchs wants to make you hate her through the way she is portrayed (waitress, ill educated, big mouth, whatever). That’s fine – just as long as you realize – you’re being played. Hate her? I don’t. Wouldn’t have voted for her, but she’s smart and she’ll learn (seems to be learning fast) and will ultimately represent her constituents well.
My 2¢
I use to believe in AOC and the Fraud Squad. There was a house vote that could’ve been leveraged for a vote on M4A by not using the vote for Pelosi as speaker. She showed her true colors and in the middle of a pandemic. She gaslighted us very disgustingly. You should hate all politicians. They don’t care about you. A new party that unites and is ethical should come out
she is the rep for highest entitlement district in the US….
its a reach to call her economically sound of mind. Amazon center first case….
just a body part of the 2 headed snake
Clinton’s went from zero to well over $100M “helping the downtrodden”. Neat trick.
Todays Dems are far to the right of Eisenhower, and the tax schedules (especially estate taxes) prove it.
Me too.Wonder how her,equity,for the poorpeople,buy my Overpriced hoody and dogwear biz is going?Is she donating proceeds to foodbanks or renthelp charities???! :-)
The amount of play this has got in the media is strange. But even moreso is the fact that people aren’t addressing the main issue. There is too much money sloshing around. So much so, that people with little knowledge are gambling what little money they have on ridiculous schemes through social media groups.
Turns out if you print currency like it’s Monopoly money, people will choose the top hat, race car, or boat and use it like Monopoly money.
Powell was asked about that today, with regards to the stock mania, and he refused to comment on it. “The mania is not my fault,” he wanted to blurt out :-]
Standard issue DC non-response response…
“We will do *everything* to fix the problem…except the thing that will fix the problem”
He’s just a despicable human being. He can lie with absolutely no moral qualms about doing so.
Looks like the last inadvertent truth spoken by a U.S. Fed Head was with Greenspan’s tag placed on the 1990’s equity market of “Irrational Exuberance” uttered well before the stock market peak in 2000 plus. The words of warning were uttered in 1996, wow! Then the Maestro spent the next 4 years back-peddling on that caveat.
Yeah, thats the real problem here, the average shrinking middle class and upper lower class have too much money.
You call it a ridiculous scheme, but the 2million users of WSB that were there before this media sensation hit saw an opportunity and cashed in on the greed of Billionaires. I mean, come on. Combined, holding 140% of available shares in shorts? Talk about gambling and having too much money sloshing around.
The joke is that Technology made “people with little knowledge” pretty equal to those Wall Street Brainiacs running ridiculous schemes with other peoples money (and later, when they lose, taxpayers money). The illusion is being broken!
Anyone opening a broker account today will be faced with an online “eligibility questionnaire” many, many screens long asking questions about ever weirder notes, certificates, OTC derivatives …
The Wall Street Brainiacs grey-gooed “The Market”, by turning Everything into structured products, what used to be “the inner market”, all those scams that “the professionals” ran on each other (and pension funds), is now being made visible to everyone with at broker account. In the hope that somebody will trade the grey-goo product.
And everyone not “in the thing” sees what a farce the entire thing is and loses whatever remaining sense of respect or notion that these are the intricate workings of smarter people, we all become nihilists investors.
Yes but the technology is there to take advantage of the retail investor. Look into Robinhood’s business model and you will see how they are being used.
Stoller has some posts that those whole GME mess reeks of manipulation by other Wall street players. There were not just retail trades going on.
Once something is released into the wild, it iterates and begins to acquire different purposes than the “central planners” imagined.
Maybe RobinHood is like how the British Empire trained colonial soldiers and equipped them with advanced technology of the day, like the Lee Enfield rifle, intended for them to suppress their peers with … and then those ungrateful basterds went and used their training and their new technology to kick the British out?
Social Media did to trading what it has done to politics and personal relationships. Poisoned the process and manipulated results. I did take delight in the hijacking and punishment theme. It kind of reminds me of the Pirate Radio story.
Kurtismayfied:
Yes, but that’s what “free-market capitalism” is all about:
Screw the other guy before he/she realized they can screw you!!!!
Gotta love the system!!!!
(Makes me glad I’m 90 years old!!!!)
Your pals beat and killed a cop, 4 others died. Defiled our House w their feces. Their goal was to overturn a fair and square election and to kill the VP and maybe try and hang members of Congress. This was planned.
Waiting for you to tell us when Lefties did same? Your false equivalence is ignorantly ridiculous.
I’m proud to be part of the crowdsource to find these violent seditionists.
It’s only a battle between law & order vs authoritarian white nationalism.
Sorry Wolf. When you take this down hope you take his too.
10-4 mw,, as an always independent voter and veteran, i was disgusted to see these characters, no matter what their claims to righteousness may be
violence only belongs to the state and all other guv mints
otherwise, anarchy, eh
meanwhile, interesting to see no more calls to defund police since capitol riots, so some reality orientation ensues
the entire holier than thou type of rationalization for abusive behaviours may have ended with that egregious example,,, at least for many folks, as evidenced by the tens of thousands of voters leaving the republicans from recent reports
Where were you this summer?
Make that two Viet Vets, MW.
I was very disheartened by the events of 6 January. Unfortunately, one person’s insurrectionist is another’s freedom fighter. See Ireland, Tunisia, Iraq, &c, &c. Also see 13 American colonies, India, France, &c, &c. The current divide in America will be “interesting.” I hope that it ends well and not in a “democratic” dictatorship.
Look at what actually happened at the Capitol, not the media’s reports on it. And I wouldn’t read too much into people leaving the GOP, supposedly. They haven’t presented any data as to how many people left the Democrats, or left the parties’ historically.
cb,
The dollar serves as an accounting entry or denomination or measure like “miles” or “cubic feet.” Certain things are denominated in “miles,” others are denominated in “dollars.” There is no actual number of “miles” in existence. It’s just a denomination. It could be kilometers or dollars. I have explained this to you many times, but you keep asking the same question because you don’t WANT to understand the answer.
Paper dollars are the exception. They’re physical pieces of paper. Each has a serial number and is accounted for. We know how many there are.
The future “digital dollars” that the Fed is talking about, if they ever come into existence, will be similar to paper dollars in that each dollar will have a sort of a unique serial number and can be tracked across the system. You would have your 1,000 digital dollars in an electronic wallet, and each would have a serial number, and when you spend one of those dollars, it would be tracked. That’s how I understand what the Fed said about it. I don’t know if they will use blockchain for this or some classic centralized data system. We’ll see…
Wolf, the perfect way for Big Brother (a la “1984” novel) to keep track of how each and every one of us are spending or not spending our money. Could come to a point where certain purchases would not be allowed by Uncle Fed or Uncle Empty Pockets AND certain purchases like patriotic buying of rotting Treasuries would be auto-debited each month from our accounts.
Wolf,
I do want to get it. I think we are talking past each other. Right at this moment moment there is a defined number of dollars in existence, and it has nothing to do with measurement.
I have a certain amount of physical dollars and a certain amount of digital dollars in the bank that I can write a valid check for or issue a valid wire transfer for. Multiply that by all the dollar OWNING solvent entities in the world and you should have your supply.
The fact that you denominate the value of a house, car or a stock in dollars has nothing to do with quanity of dollars in existence. A share of Chevron stock valued at $90 is not $90. Same as a car valued at $20,000 or a house valued at $1,000,000. Neither a stock, car or house are dollars.
Money flows move markets. Those flows are regulated by the amount of dollars in existence. Varying values, squeezes, etc. are impacted by the amount of dollars in existence, who owns those dollars, where those dollars are, who controls those dollars and the deployment of those dollars.
cb,
I give up. This is the nonsense you just do not want to give up on: “Right at this moment moment there is a defined number of dollars in existence, and it has nothing to do with measurement.”
No. Nonsense. BS. Gobbledygook. Your house is denominated in dollars. Your driveway is denominated in feet or meters. Shares are denominated in dollars or euros or yen. The Chevron shares in your account are denominated in dollars but there are zero actual dollars tied to it. It doesn’t involve dollars until you sell it, and then it only involves dollars for a brief period before those dollars become an asset for you in from of a deposit (loan to your broker) and a liability for your broker (money it owes you).
There is no “defined number of feet or meters, or dollars,” neither right now, nor ever. What exists is your house and your driveway or some other asset, such as shares, however you denominate them. You can measure those assets. The measures (feet, meters, dollars) are just measures, and there is no “defined number” of them. You’re not going to run out of meters, ever. You really do NOT WANT to get this. I’ve wasted my time. Discussion over.
Good luck trying to count all the meters out there :-]
Wolf and cb are talking past each other. cb wants to know the quantity of dollars. Well, cb, the Fed issues the dollars. So, add up the dollars on the Fed’s balance sheet. There are no unaccounted dollars. (BTW Wolf, I have 2500 meters stashed in my sock drawer. So everything may be a bit shorter now.)
What exists are the assets. And they’re denominated in dollars, euros, yen, etc. or square feet… You can count the assets and “socks in your drawer” and what they may be worth in dollars or yen or whatever. You cannot count all the “dollars” out there in the world anymore than you can count all the “miles” out there in the world.
I think cb is wondering about the quantity of cash and cash equivalents. He’s not including non-cash assets. But I’ve been wrong before. Too often.
NO, he wants to know “How many dollars are in the world.” That has been his persistent question for well over a year.
“Cash” is an asset, denominated in whatever (dollar, yen, euro) and “cash equivalent” is an asset denominated in whatever (dollar, yen, euro). These assets are usually short-term government securities, commercial paper, bank deposits (loans to the bank), and the like.
“The dollar is the poor mans’ credit card..” Marshall McLuhan
cb,
You should look up Jeff Snider’s work on Euro Dollars. He explains how the European banks are printing dollars through loans denominated in dollars. They are giving dollar denominated credits to customers, which can be used to pay dollar denominated debts. They are printing dollars outside our system where the physical dollars do not exist. Nice trick if you can keep it up, except you can’t because eventually you have to pay back the loans in real dollars.
Because of this Euro Dollar shortage, the direction of the velocity is up and the valuation of dollar denominated assets, around the world, is also up.
Thank You Petunia,
I am a Jeff Snider fan, though I think some of his explanations are speculative. Jeff claims that the FED can not print money. He says they can only buy Treasuries by expanding bank reserves and those reserves are trapped unless banks loan those reserves out, which he says the banks are not willing to do in the current risk/reward environment for extending bank credit to borrowers. He says that the reserves can not be used to buy stocks.
I find his explanations lacking. First, why should bank reserves be trapped? There are no longer bank reserve requirements.
Many other questions.
Wolf, what do you think of the current logic on WSB that the shorts cannot possibly have covered yet? That the short interest is still (or was quite recently) several days’ trading volume, so that the shorts will need several days at a minimum to unwind their positions?
(And that therefore this rally has some legs.)
I also wonder how much the rest of the market “swooning” is related to the GameStop nonsense – large players needing to sell other positions to make margin calls or interest payments on their borrowed GME stock.
honestly, the rest of the market is taking this as an excuse to sell off.
Think about it. The value lost on today’s drop across the board is titanic relative to the most bloated market cap of all of the short squeezed stock put together.
Does anyone think these companies have a combined $1T worth of market cap between them at this point? That’s less than half an apple.
Yes, shorts are far from having covered in aggregate. As early shorts cover, new shorts are piling in (by selling short… to the shorts that are buying to cover). This show will go on for a while. GME shorts are still very heavily into it. In other stocks, short interest has dropped. AMC is converting its convertible bond issue to shares, which dumps a lot of new shares on the market. More things like that will happen, where companies issue new shares at these ridiculous prices.
But there is also a rotation going on, with other heavily shorted stocks, such as AAL, getting the new treatment. This system is now firmly in place. And this battle in heavily shorted stocks will play out over and over again.
Wall street adapts. And because they have the money to buy the best and brightest, they’ll adapt far faster than anyone can imagine.
If Melvin goes away tomorrow, there will be two more to take its place. It’s kind of like Hydra.
Wolf and MCH,
as I am writing the Dow has bounced back nearly a 500 point!
So as I stated previously in this Forum ( unless the SEC , or their Masters start to rein in the arrays of ungodly schemes that the big end of town are creating every other day, the redditers or degenerates as they like to call themselves will only add another layer of VOLATILITY TO THE MARKETS)!
They ( the degenerates) have moved to pumping SILVER)!
(Where and When we going to find the Cajones to do right by our oath when assuming the office to protect this country from all enemies foreign or domestic)?!!!
How long does the average man: woman in the street needs to suffer?!
@Jack 07
The average man, woman, dog, cat, rat, rabbit, ox, owl … (you get the idea) are not suffering. How can they possibly suffer from something they don’t know anything about.
The government is going to pass a total of $2400… errr. excuse me… $2000 to them starting from December to March or so. They should shut up and be happy, and not to mention the ENHANCED unemployment benefit. I think the appropriate answer to this comment about suffering is “SHUT UP, SLAVE.”
As for volatility, well, what do we expect when we have a few trillion sloshing around the market
Wolf quoting AOC. What is next?? Bernie memes? ?
I’m here for it all! ??
Big ditto here, Girl in Outrageous Consumption land.
BTW, my niece is really proud of her Rep, Katy Porter. She can really cut through that gibberish.
Wolf why do you say the short sellers are no longer panic buying? Short interest is still over 100% and if you go to the Reddit thread you sense an ENORMOUS amount of people buying. The subreddit has gone from 2 million to 4 million in a day! Don’t the short sellers HAVE to buy at some point if the wave of buyers is endless? I agree with your endgame analysis that some people are left holding the bag but isn’t that when short interest is way less than 100%?
Does a tree grow to the sky? People will eventually take profits and when they do, the ride down will wipe almost everyone out.
Expect Homeland Security to add Reddit traders to its watch lists under the category Stock Market extremists, on par with White extremists. Muppets are supposed to be the ones who lose money trading volatile stocks, not the big hedge funds.
Don’t forget, “even libertarians” are in this “unholy alliance” you allude.
I’m self-censoring…………………..
Don’t you just love it when “your dad “ is the referee in that Saturday soccer game?!
You know you can’t be fouled,,no matter how many “Shins you kick”!! ???
Yep, markets are designed to be efficient in that the vampires fleece the Muppets on the daily. Any challenge to that paradigm and the government will go full “Calvin ball” and shut things down. Probably find a few skeletons in the closet of a handful of redditors and throw them in jail to make it clear how this whole ponzi market is supposed to work.
ZeroHedge says the GME short covering hasn’t even started yet, because the short interest is still 139% of the float. Maybe they’re looking at stale data?
It’s actually a double squeeze, both a short squeeze and a gamma squeeze caused by buying lots of out-of-the-money options (that become in-the-money when the price goes ballistic).
If those-currently-with-power give into the temptation to rescue the hedge funds, it will be another nail in the coffin of “free and fair” markets. They can allow a few fat cat hedgies to be ruined, or they can create a whole lot of angry ex small investors convinced that the markets are rigged.
It will soon get even more exciting. Some of those RobinHood pot-heads now unexpectedly holding options worth hundreds of thousands of GME shares will surely forget to request cash settlement and instead have the default option expiry of shares bought at strike price delivered into their accounts :).
That already happend. This new breed of “investors” don’t even believe there is a market and they know that all “tha rules” are just old-people talk meant for slowing them down and sapping their opportunities. And they do have a point.
I imagine that many of the holders of call options will deliberately exercise them rather than sell them on the closing date, in order to force the counterparties to go out and buy shares on the market, furthering the squeeze.
The same thing is going on in SPY, I call it the “hunt for shares”. Shares are scare (relative to borrowed money, which is cheap, needed to buy them). When a seller drops one share onto the table at below the bid, there are ten takers. I watch this every day. A small burst of selling results in a larger surge of buying. You could attribute the action to algorithms it goes on regardless. The hunt for shares lately involves running the price up to “call away” options written at the higher strike. The option buyer takes shares away from “call sellers” who are risking their closely held shares to gain premium. The (involuntary) seller in turn needs to replace those shares, so prices lift again. Meanwhile company CEOs buyback shares reducing the float and making the problem more acute. Problem?
You would have to be batshit insane to have sold naked calls like that. Buying puts, I can see. Buying puts on margin even, sure, that’s possible, because your downside is theoretically limited.
But selling naked calls is just like shorting shares, except doing it with leverage. I would like to say I can’t imagine hedge funds being so nuts, but you never know.
Thanks AB. I learn a lot from you.
Have been watching the disappearing of public stocks off into PE land for quite a while….maybe “some” M&A accounts for it, but not much, I don’t think.
Rescuing the market elite is what caused this in the first place. You have a bunch of 25-35 year old people on these forums, many of whom saw their families destroyed in 2008, and not a single person punished for the blatant manipulation at the time. They are still living with the generational lack of opportunity that resulted from this, with many measures of success previous generations took for granted (home ownership for instance) hopelessly out of reach. So yea, when we see a bunch of greedy manipulators double down on shorts to drive a company like GME into the ground to the point that their short position exceeds the float (something the SEC should make illegal when this is all said and done), you better believe the payback mindset sets in.
Eastwind,
There has been a LOT of short-covering going on by the shorts that piled in earlier. But as these “old shorts” buy to cover, they’re buying from the “new shorts” that are piling into it at current prices. So the “new shorts” – that reference to my wardrobe is starting to grow on me – are not getting squeezed at current prices and they do not have to panic buy unless prices shoot up another 50% or 100% or so. At some point, this changes the dynamic.
And you can see that today. From $483 in early trading today to $126 now is a 74% drop in just a few hours.
Wolf, it is DEPOSITORY Receipts, no A. I thought for a minute you had created a new security. Basically, the stock certificates, paper or electronic, are held in “depository” trusts by usually a foreign entity FBO the ADR purchaser.
Crazy stuff that makes the 1929 affair look tame since we have so many more ways to lose our money today AND MUCH, MUCH FASTER.
Me bad, when the hence did that handle show up. Have never seen it.
It’s American Depositary Receipt with an “a”
https://www.investopedia.com/terms/a/adr.asp
Your last paragraph indicates you might not fully understand their point: this is one giant F-U. They don’t care if they lose. Many are buying fractions of one share. Vive la re’vo/ution.
Geniuses locked in their basements for 15 years have been unleashed. This is the preview.
I think:
1) the Robin Hood “investors” do not care because a lot of it is free stimulus money.
2) I understand that the shorters have shorted 1.4 times the number of available shares and have to buy them to clear their positions. So surely the Robin Hood holders just hold tight.
I think the GME people not caring because it’s stimulus money is overstated. More likely, none of them are individually putting in much (maybe $100 or $200) so they are willing to lose this relatively small amount to be “part of something bigger,” in this case, bringing down the hedge funds.
I couldn’t stop laughing yesterday when all this went down so I bought two whole shares of AMC to do my part to keep it going. Set a $300 limit to remove the shares from market. I’m still giggling. Best $32 I spent all week.
Petunia nailed it up above as well as no name.
This is a ‘guess who came to dinner F U moment’, that I get. However, these traders will still have to work and be in the system one day, just like the protestors of the ’60s. In my mind I picture them as non-working basement dwellers, but that is just my bias and probably not true.
It would be interesting to see some stories in the media about who these traders really are? The old 5 W formula.
Flash mob trading.
Next up, release chickens in all the Walmarts.
noname,
I read some of the comments. Yes, it’s a giant F-U. But people DO care about the money. People bragged about how they cashed out and paid off their student loans with it. Showed screenshots of the student loan balance payoffs. They were triumphant. They care very much about the money.
“…cashed out and paid off their student loans…” That’s one of the nicest things I’ve heard in a long time.
Don’t they know that student loan debt will likely be forgiven? Man, that’s as bad as my having payed off my mortgage recently.
I think Lisa_H means they are acting like responsible citizens.
Those damned Redditors are sending the wrong message, personal responsibility is so 20th century. Under the new socialist… errr, I mean equality and justice mandate, government should be responsible for making sure that the individual is well taken care of.
Cause you know… it takes a village.
I think these folks see this as a socially-conscious lottery ticket. They know that most of them are not getting their money back and they are ok with that as it is of secondary concern.
Wall Street and the SEC created this casino and it is the height of hypocrisy for them to whine about it now.
This is hi time that the Stupid “SEC” is given real teeth to do its job.
SPACS, hedge-funds, Banks Running Amok by destroying both lives and Capital.
Off course the continuously
diluted regulatory frameworks over the decades has lead us to this war of “ David’s VS Goliath”.
People ( honest people), traders, businesses, real companies that can and have the ability to contribute to our societies ARE SICK TO THEIR STOMACHS of this CASINO like run market!!
You only have to look at the ( appointment of the treasury Secretary) to understand that we’re going NOWHERE in terms of FIXING this broken system and rein in the BS that BIG MONEY have visited on us.
Why on earth, in a talented NATION like the US of 300 million plus people ,do you appoint a“ Burned Card” to the post of Secretary of treasury, WHY?!!
Someone that once got $200,000 for a F$()NG speech from PWC! because she’s “ an outstanding orator “?!!???
We jail people for stealing a Bloody packet of cigarettes!
The more these people shut down and out the underprivileged, the tighter that exploding spring gonna be!
You only have to ask Newton.
SEC , do your job.
Learn from Wolf, who I, for one would like to see running that office. ???
Exactly.
Imagine David — the social media mob, the stock market “terrorists” — brings down Goliath’s casino. Then, the stupid at the Fed, SEC, etc, accomplices of the monumentally distorted market, stand trial for gross incompetence destroying the lives of a generation.
But nothing of that will happen. Those criminals are untouchable; they live in another universe high above the dirt and dust level of the expandable ordinary folks. And the ordinary folks don’t have the conviction for a revolt because many of them are brainwashed in believing the problem is outside the border, brainwashed in believing working harder is the answer, brainwashed in believing that the problem is with the other political party.
You’ll get “moderated” with talk like that. This appears to be a mainstream pro- Wall Street site now.
Not really, Mark. WolfStreet is pretty darn Fair & Balanced if you will forgive the use of that phrase. I am pretty sure that Wolf sees the shenanigans/ rule breaking of Wall Street as part of the Privileged’s / Insiders’ actions that are driving the U.S. bus into a very muddy ditch.
(Um…we KILL people for selling lucy’s on the corner.
-Ghost of Eric Garner.)
Joe Biden earned 15 million in speeches the last couple of years. I would love to know which donors called him over the last two days and you know they demanded action…..their love is not free love. And no question the billionaires are fighting back. My kid lost a lot when Robinhood and TD stopped taking buy orders. Sadly I learned about it afterwards. The brokers said they were shutting down buying but not selling to “protect their customers.” They are trying to break the cycle. Elizabeth Warren is on the case demanding regulation to “protect investors”…….which investors? And then they shut part of WSB down because of “hate speech” aimed at billionaires on Wall Street. But in the end even DFV may get burned if he can’t cash in his chips.
I asked on here only last week how shorting and longing shares benefited a company and do not see why it should be allowed.
It was OK for an investment fund to take a short position and then go on CNBC and Bloomberg to announce a company wasn’t worth what its share was, to then watch the share fall and make a profit and put the actual company in jeopardy.
However, these investment companies call foul play on Robin Hood Retail investors clubbing together to do in effect exactly the same.
I have been reading there is consideration of doing the same on Silver but then demanding delivery.
Bingo. “If you can’t do the time don’t do the crime.”
“put the actual company in jeopardy.”
If a company is actually making and growing profits, how exactly can a transient shorter allegedly lying about the company (in order to lower share price) put the company in danger of bankruptcy?
Healthy companies make and survive off of internally generated profits, not habitual recourse to influenced capital mkts.
If it makes their lenders call an MAE on their revolving credit facilities, the lying CAN put the company in danger of mankruptcy.
RightNYer,
Debtor Creditor rights in large corp loans are laid out in thousands and thousands of pages in loan agreements.
Lenders can’t/won’t pull a corp loan because some shorter on TV is bad mouthing a stock…unless that bad mouthing highlights and pinpoints actual loan covenant violations in those thousands and thousands of pages…that the lender somehow didn’t already know about.
People tend to hate shorts because it looks like they are “destroying” companies…but in general those objectors are getting cause and effect wrong.
The shorts are usually going after companies that are *already* vastly over valued or long broken down/crippled with debt.
Shorters don’t have much power over (or interest in) companies that are organically healthy and making regular profits on their core business.
But shorts *can* p*ss in the punchbowl of companies barely hanging on through endless capital mkt “kindness of suckers”, driven to desperation by ZIRP.
Unfortunately, two decades of doomed ZIRP life support has created a huge backlogged supply of pseudo BBB rated underbrush.
“The danger of mankruptcy”…catchy phrase, typo or not.
May swipe it.
A company could always sell new shares at these prices and invest in development, operations or shore up the balance sheet. Was this what this whole thing was for in the first place or has it always been a scam?
Lenert,
Wouldn’t the company have to offer any new shares to existing shareholders in proportion to their holdings first before offering shares on the open market under company law?
Taking delivery of a single PM contract is a major PITA if you’re not already set up to accept delivery. There are significant additional fees.
as a long time WSB viewer I can say this is not the first time this has been attempted. This GameStop one is has just gone mega VIRAL. This is the virtual flashlight shining lights in corners that are left un-explored by the common investor on Wall Street…. Will anything change this time?
Wolf,
As I have said I don’t understand and like this short/long game.
Surely the Robin Hood holders just keep the shares because the investment funds who shorted have to buy those shares?
And isn’t there 1.4 times the number of shares that need to be bought to close those positions?
I get the impression that a lot of these Robin Hood Retail investors have been using their stimulus payments to buy these shares and are saying they are waiting for the next Biden stimulus payment to escalate things further.
Please!
Can we stop with the Robinhood is moving the markets nonsense. Yesterday, 1.3 BILLION shares of AMC traded at $10 a share or higher; GME traded over 100 million shares at 150-499 per share; NOK moved over 26% on a billion share trading day.
If you think this is people risking $600 stimulus checks you are way too naive to live in this world.
I’m certainly no fan of AOC but her quote was humorous and spot on.
You mean her answer to Teddy about ‘You almost had me murdered 3 weeks ago’
Yep, very humorous. Too bad Teddy isn’t quick enough for a witty come back. I could help him with a few… heh heh
I hope everyone has enough cash holdings in their portfolio to ride out a storm. The new administration is pushing policies that raise taxes and kill jobs in a highly leveraged economy. Throw in some stagflation and this will be rough.
Current Admin wants to raise taxes and kill jobs….vs the prior that cut taxes and killed jobs?
Meet the new boss, same as the old boss.
And killed half a million actual people, too.
So what’s new here? Ask the Canadians about their recent loss of jobs and the ability to sell their heavy crude oil to their next door neighbor.
Friends up there are assuring me NDP, others working to stop plan B.
And remove tariffs on softwood to “next door neighbor”. If you’ve ever been up their you can see that because it’s a rainforest, timber can be replaced as fast as they sell it, and they have super efficient methods of logging. And I’ve only heard about all the timber in up the Queen Charlottes. Let THEM mill it all, too, will probably get just as efficient.
And unlike the Amazon, they aren’t turning logged off areas into farms, it’s all hillside, and steep.
Put USA gypo two bit logging show workers on the Green New Industry.
Plenty macho work on HV power lines or big wind towers, if that’s what they crave.
When rates are FAKED, all else is faked.
Asset evaluations are skewed, and nearly impossible.
Just like yield chasing, these games are entered into in order to make any fair rate of return.
Put interest rates where they should be, normally would be…ie Fed Funds equal to or in excess of inflation rate, and the games will stop.
PCE today.
I agree strongly with this. If no one knows the ocean level, islands look like continents, and vice versa.
Asset inflation is all that matters at that point, and there is only gaming one another in this win-lose scenario, with no increase in purchasing power (growth).
The government would have a hard time even paying the interest on the debt bomb that they have created. It is a literal Ponzi scam that will not allow high rates, just more debt for dollar deflation.
historicus, I agree with your spirit. But, interest rates shouldn’t be “put” anywhere. We need a market where “surplus” cash is made available, and see what interest rates borrowers offer. There would be an equilibrium. Slower but stable growth.
There has been a carefully crafted move to try and get retailers in for almost a year now since March. They are succeeding. When all this is said and done, it will be retailers who are being enticed by stories of success and fast money that will be left holding the bag. Don’t believe the hype or the story, retail is not sticking it to the big guy or the bankers or the hedge funds, retail is bailing them out and they don’t know it yet. Most retail call options where not the ones that started this, they chased it rather. In the end it will be said that the retail mania caused the crash, while the opposite is true. Be careful.
Same old,same old.Get a sucker to hold the empty bag.
GME premarket and up 100% !
Now down 63%! At $126. This show moves fast!
From $483 in early trading to $126 a few hours later is a 74% “dip.”
Now $224. Crazy.
Is this really a reason to celebrate ?
That millenials got scewed again, and did nothing that hedge funds haven’t been doing for decades ?
Some people will make money in all this business, some will lose money. Most of those who lose money–although the group loss may be significant–won’t lose much. Here’s the point: this was never about making money; it was about crashing predatory hedge funds. Hedge funds may have once served a useful purpose, but they are inherently pernicious. Once you invest enough in a company’s possible failure, you are incentivized to make sure it does fail.
“Once you invest enough in a company’s possible failure, you are incentivized to make sure it does fail.”
Okay, sure…but how exactly can shorters *cause* a company making an in demand product, at a profit, to fail?
Healthy companies survive off of internally generated profits…not habitual recourse to capital markets (which is the only thing shorters can theoretically influence).
Shorters target overvalued and failing companies…precisely because those are exactly the ones most likely to fail (ie, run out of cash because of non existent profits in their core business)
Cas 127,
So what is the benefits of shorts and long for the actual company?
They should not be legal.
They were so sure of their position that they bought short 149% of their shares? LOL. Naked shorting is illegal for almost everyone. Waiting for the first indictment.
Cashboy,
I don’t think there is any benefit to the incumbent corporate mgt from shorting.
But I *do* think that the mkt at large benefits from having significantly overvalued and obsolete companies identified and winnowed out…shorting provides an incentive to do so and serves as an offset to the upward hype bias of failing corporate mgt.
There is no shortage of criticism of incumbent corporate managers on this board…yet there is outrage at one of the primary tools of policing them.
As pointed out elsewhere, shorters have no power to bankrupt healthy companies surviving on organic corporate profitability nor do they have the power to lower share price…except by convincing others as to correctness of their appraisal of the companies…that’s why shorters usually issue reports.
Right now, the surplus is not in healthy, undervalued companies with viable, sustainable business models. The capital locked in those companies can be profitably redeployed elsewhere.
Pointing that out isn’t domestic terrorism (TM).
It is only terrifying to those surviving through deceits of their own.
Oh, where are the good old days when you required at least a golf or yachting club membership to get the prime tips on stock market speculation, nowadays anyone can just post it on Reddit for the plebs to read it. But that’s another sign that we and our money won’t be returning to our pre-pandemic life.
Back in the 1970’s, my father subscribed to stock tip newsletters from guys with yachts.
I’m really enjoying this! It’s so funny!
I’m sure that eventually retail investors will be the bagholders again, but hopefully some hedgefunds will get backrupted first.
Once again, it reveals how the whole system is stacked in favour of the oligarchs. Nobody would give a sh!t if it had been the retails that get burned. But now it’s hedgefunds and promptly Yellen comes out of the woods to “monitor” the situation!
Btw, who was “monitoring the situation” when the price of Tesla went parabolic? Ow wait, Nancy Pelosi is $1 million long in call options Tesla. Never mind…
One positive takeaway: it shows again that angry people in large groups DO have some power. I hope this helps inspire more disenfranchised people to organise themselves against the predatory system. Can we have a protest march against the rampant inflation and the low interest rates/ currency devaluation that is causing all this sh!t?
Sure you can have a protest, but don’t bring your phones with you, or if you do- download anti-data theft open software. the drones that the authorities fly over these protests capture that data and find out who the leaders are from text messages, and target them.
The only way to really change things is to get people into office that are being paid by lobbyists. Fourth amendment rights have flown out the window. Any decent protests will have a hot hacker in charge of security.
Not being paid by lobbyists sorry
Not being paid by lobbyists sorry..
Bravo, Yu Shan! Truth, well-stated. Thank you.
Is this the prophesied catalyst ?
Stocks were shorted on margin. When there was a short squeeze, the margin calls happened. The broker took whatever securities were used as collateral and sold them to cover the bet. A person might be a millionaire one day and broke the next due to margin calls. Margin debt has been especially high in recent weeks. Ponzi schemes abound. A stock was up 100%. An advisory letter suggested it has room to grow. Speculation raised the price higher.
A movie theater is down and out. They figure attendance will grow after the vaccine is rolled out. Subscriptions to Netflix grew. A drive in theater that was open when I was teenager is gone. Land is expensive. Someone built a trailer park there.
You see…that high priestess of wokefulness – Mary Daly, the California chick on the San Fran Fed is right…QE and eternal ZIRP are creating lots and lots of jobs.
“Daly has worked to increase diversity and inclusion within the Federal Reserve System and in economics more broadly.”
Maybe Daily can increase diversity and inclusion at the Fed by working to install some of those Reddit day traders into the ranks of the Fed including regional Presidents. After all, that’s where America is head per Janet Jerome Powell Yellin’s policies – and Mary Daly’s…towards a nation of day traders. So we can beat China.
Getting Reddit day traders would also get wokeful Mary off the hook regarding why no working class stiffs with savings aren’t on her wokeful list of diversity and inclusion.
The traders I hang with are not touching these crazy moonshots. Maybe with way out of the money spreads. The implied volitilty is the most insane I have ever seen.
VIR was not on that list it should have been
It hit 141 and closed at 80. Fun this might be now but it exposes how sick the markets are. The wheels are coming loose. TheFED has lost control. I think the FED is having a real DEPENDs moment. I would like to buy some stock in FRUit of the Loom ?
In all seriousness retail will end up being crushed. Again. Pensions. 401k. Ect.
Independent traders hate the fed. They ruin it for everyone
Powell yesterday at the Q&A: I don’t think asset prices are going up because of low interest rates, it’s because of the vaccine.
Robinhood and Ameritrade have disabled entering new positions in GameStop. If they did that to me, I would never EVER use that platform again!
I know I wont be,
Its a mostly free market.
Heheh! $500 now. It would be cool if GameStop offers to sell stock to the shorters at $1000 or so. Then with billions of $ on their balancesheet, the high stock price becomes a self-fulfilling prophecy.
YuShan
Give it Time, they might be able to buy Tesla in the next few months!! ??
Speaking of Tesla, their “day” is coming. Yesterday, it was announced (article I read) that in the EU, the VW id.3 EV has blown away Tesla in sales and that the Renault EV is second. Telsa is losing market share in the EU at a fast pace. Also mentioned in the article I read was that Tesla’s sales in China were not up to expectations.
VW’s new model EV will be on sale here in the U.S. this year. I suspect Tesla will have problems with the competition pretty soon.
But but but… that can’t be allowed to happen! Nancy Pelosi just bought $1 million in call options TSLA!
* I see a new “green” bailout coming
$126 now.
This stuff moves fast.
Yes, everybody who wanted to buy is now locked out! You should read the frustration on Reddit. Many people had just transferred money to their broker and now they cannot buy the stock!
I’ve made more money on Spac’s and OTC pink sheets in the last two months than over forty years of trading.
Sure there’s too much worthless money floating around but what you Wolfsters don’t see is that the under forty crowd have no hope left, no jobs etc
The market is the only game in town.
The powers that be started a casino and now they’re shocked that its packed?
You can close down any platform you like these youngsters will open up another overnight.
Forget your p/e ratios etc, none of it matters
Its not your world any more.
Don’t get me wrong I’m an oldster like you and did the right all these years but now its game on.
It’s musical chairs, just make sure you’re on the last chair or don’t play.
People don’t care anymore, there’s just too many of us on the planet.
Increasing number of people, diminishing amount of resources everyday.
The squeeze is on.
Or –
“We have been reminded that margin clerks can cause forced buying as well as forced selling.”
– Walter Deemer
I do believe that you are right on all accounts. I hope the kids all sell before the music stops. All? Wait a sec…
Exactly right. I cant be the only millennial on here.
What am I supposed to do? I went to college, got a decent job, and saved my money to be rewarded with what? A 0.001% interest rate? Starter houses that were $160K 3 years ago listing for $320K and selling for $50K over that?
What am I supposed to do?
Elders kicked the ladder out after they got to the top. Have to find another way up there.
See if you can get a job in the government.
As I say to my kids: What worked for me has been rigged so that it won’t work in the same way for you. You have to find your own path through this mess. A hack, if you like.
Having said that,
A decent job and savings is not a bad starting point, however. Taking up Budgeting will help “boosting” your cash flow and your savings to the point where they will become useful in their own right. When you can quite comfortably save about 30% of your income, it really changes ones perspective on so many “obvious” things, like home ownership.
Why take on all the loss in cash-flow, the hassle and expenses and taxes that a house will attract? What is the value of ownership? What is the essence of it, what is *your* need? Like “a bunch of friends in the garden with the barbecue on”, if that is the dream, is the house required or is it just the culturally expected scene for playing out the performance on?
It is very important to question why one expects to have or do all these “normal” things: Is it because I really inherently want this, or is it more because “They” programmed me to do something that benefits “Them” more than it does me?
And you just have to invest, even if it’s just in a boring index fund. Whether you like it or not, and while knowing absolutely that there is a 30-60% hit coming up at some point in the future. There is nothing else to be done with savings these days.
Anyways, this was todays rant, I hope it helps a little bit :).
I would suggest a good start is not buying overpriced stock for a bankrupt company.
RobinHood just crashed GME from $500 to $300 in 10 minutes by only allowing their uses to sell, not buy GME. I suspect they got a call by the MMs to “do something” so they could close their shorts 100%. Probably fraud but I’m sure the SEC doesn’t care as they are controlled by the insiders and big money.
What is not controlled by the insiders and the wealthy is Elizabeth Warren. She made a statement she is going to “stop the casino”. What you need to realize is she has been waiting for a moment to wack the Wall Street Elite, so her comment is not directed towards Reddit 1 option traders, it is a clear message, and now justification, to go after Wall Street. They should fear Warren, she is intelligent enough to actually reverse some of the inequality in the markets. She seems to be the real deal, and why the markets went negative when it looked like she might run for President…
I wish her luck as Wall Street has infinite money with Fed support. Maybe she will go after the Fed…
Warren was a Wall St lawyer, she is never going to hurt her future job prospects, by going after her donors and future employers. She talked a good game during the GFC hearings, and then nothing. Expect more of the same.
Warren is 72. She will be 75 when her term ends.
Do you think being 72 or 102 is going to stop her from taking money for providing access. That’s why the average age in congress is almost dead.
Warren has been gonna do something about this for 15 years. So far nada.
I don’t trust anyone in the Democratic party will ever go after WS.
She called for regulation. I think she meant regulation of the muppets, not the denizens of Marthas Vineyard or the Hamptons. They own the democrats having paid a ton of money for them. With Joe Biden at the helm I think it might make sense to not go long on these stocks.
I’m still in awe that 1.15 Billion shares of AMC were traded yesterday.
I’ve never seen that kind of volume in a stock and it was halted 5 or 6 times. The volume was more than all the big tech stocks combined by a lot.
Behold, the power of PissedOff.
Wolf, what are you thoughts on headlines such as “Robinhood restricts trading in stock and options of GameStop, other names involved in frenzy.” Yesterday, it was TD Ameritrade. Isn’t *this* the bigger scandalous story here? This is a free market?
I went through all kinds of trading restrictions and broker outages during the worst days of the dotcom bust. There were stocks I wanted to sell that didn’t have any kind of bid. Back in 1987, during the crash (Black Monday), I wanted to buy some stocks but couldn’t get through on the phone (which was how we traded back then). This isn’t new. But it’s infuriating. I don’t remember how many times I swore up and down during these moments that I would quit my broker, but in the end, they’re all the same, and I stuck with them.
I hear there’s already a class action filed against Robinhood for cancelling buys on the “short” list.
They had no choice. DTC forced them.
Now they are selling out investor positions in GME….What will they take from investors next?
Well, I bet you will find that those bongheads on RobinHood left the “Margin” setting switched “On” (default), which means that the broker can, at their discretion, close any and all positions in the account.
People *really* need to read the T&C’s. And seal off all of those cracks where the tentacles can get in.
Same deal with ISP’s, social media, you name it. The “free” markets are anything but.
It’s important to understand that Robinhood or any broker can’t and won’t block trading for a name just like that without the tacit and expected support of ALL OTHER brokers. Why? Simple. People would just move their cash to others if that broker was the only one who did this and they’d shoot themselves in the foot by going it alone.
This GME thing is just a very public, blatant example of the kinds of shenanigans corporations engage in all the time. From fixing poultry prices (Tyson Foods) to wage-fixing (Apple, Google) to ad-price-fixing (Google, Facebook), this is how monopolies and crony capitalism works.
Welcome to the US of A.
Wolf,
It’s just a bit different with Robinhood.
Robinhood knows where their money is coming from. Like social media firms, their product is YOU.
After all, they can’t piss off Citadel after Citadel just bailed out Melvin. That’s literally biting the hand that feeds you.
There was probably a nice call from the supply chain guy at Citadel to the head of Robinhood that went something like this: “you know about that deal where you sell us your order flow, take a look at page 73, paragraph 5, subsection 2.1. Where it says we may dump you for any reason at any time and broadcast the fact to the world. Anyway, we think it’s time you do something about the following tickers being traded on your app.”
So, yes, Robinhood is in fact Robinhood, except he is the sheriff in disguise. SHHHHHHHH
My ISP was offline when I woke up. I laughed out loud thinking of you’ns.
I assume most of these brokerages are restricting trading because they don’t want to lose their own money. When stocks rise then plummet, the brokerages lose money on margin loans gone bad, lawsuits for promoting risk, etc. This isn’t necessarily about them wanting to crush the little guy in favor of hedge funds.
We shouldn’t blame the brokerage houses for trying to clamp down on excess risks that can boomerang on them. The real problem is the Federal Reserve Board and Congress, which have the money printing and financial risk spigots wide open, forcing people to grasp for air (i.e., investment return).
Quite frankly I’m envious of these stock run-up and admire the people involved. You can bet now that the little guy has figured out to make real Wall Street money from once ‘inside baseball’ scams that there will be new restrictions on collaborative efforts to drive up stock prices.
New future legislation is likely in the works. You will need to be a ‘qualified investor’ with a net worth of at least 1 million to be part of a group of investors that pool their resources. All investment groups must be registered by the SEC.
This is the face of inequality.
Keep feeding them your money. Don’t forget to fully fund those retirement accounts, the ones you can borrow against in an emergency at a high interest rate, the ones you have to pay a penalty to redeem, the ones taxed and skimmed over and over again. Don’t forget, they are doing it for your protection.
Definition of Qualified Investor: someone with enough wealth to be worthwhile fleecing.
EXACTLY r,,,
Been there and done that whole dance a couple decades ago when younger friends wanted me to get in on their very well rehearsed pump and dump (as I now know the term thanks to wolfstreet) ,,,
Not only refused, but also counseled them to stop immediately, as what they were doing was illegal for small timers,,, while totally being done every day by the big folks,, including, of course, all the federal congress and staff who wanted to do the very bad actions illegal for WE the Peedons..
Short time later, another, unrelated guy, went to jail for a long time for doing exactly what the big boys were doing,,
Many years ago, but not changed a bit until this latest event!
Stock market is a zero sum game. The little guys and Wall Street fat cats can’t both win at same time.
Wait tell China and Russia get in the game lights out this country run by idiots big question is who will military stand up for we the people or we the corrupt thoughts
The Stock “Market”, being mostly held by the 1% and fully backstopped by the Fed, has been transformed from a market into that aspect of money called Store of Value. The rich now own stocks for the reason that they are guaranteed, once like gold, and because the dollar is quickly loosing another aspects of Money, namely, the Measure of Value. With zero interest rates, the dollar can’t seek out value, only artificially higher prices.
Not a finance guy here, so I’m obviously winging it, so as Dr. Evil says, “throw me a bone, people!”
Um, most pension funds also have sizable stock and bond investments FYI
So let me see if I understand the Gamestop situation. Institutions, including banks and hedge funds, initiate short positions (I’m not sure why banks are allowed to initiate short positions, maybe its only Australian banks) on a stock, collude with other institutions to increase the outstanding shorts, then issue questionable commentary on the hapless company which is picked up by the media driving the stock down and damaging the company’s reputation and prospects. Now young retail customers are posting on chat boards about companies with reasonable prospects and huge short positions sometimes exceeding total outstanding shares of the stock. The retail investors then begin buying shares along with others on the chat board reversing the downward trajectory of the shares and causing them to raise swiftly. This forces the banks and hedge funds cover their shorts at a loss. The banks and hedge funds are now complaining that they have lost money speculating in the stock market, and the retail traders have made money while saving the company from ruin.
Yeah, that’s it in a nutshell.
Pretty much. Rich suits on MSM can “announce” their shorts, spook everyone else holding positions in the company and make them sell, and then cover their shorts after the price crashes. That’s perfectly legal but YOU? Don’t even think about it.
Real-time stories and blogs are just way too slow, this headline story is stale, Market up, inflation non existent …
Maybe the fact that over 3.8 billion people have little supercomputers in their hands makes things different this time?
Maybe do more than just read the headlines?
The melt up in GME is only prelude to the melt up coming to the general equity markets. The extra trillions added to the monetary system, and new dollars as far as the eye can see. Hussman has a new piece out, and his dire predictions based on all the historical data he can gather still misses the point, what if S&P earnings double in 2020? Pricing power and a weak labor market and monetary expansion. The partnership between government and business, choose your “ism” carefully, is complete. Government builds a safety net by printing money out of thin air, and corporate Amerika raises prices based on the dilution of the currency. No revolution is possible while you feed the plebs enough crumbs they don’t notice what the 1% is getting, or don’t care. After yesterdays 3% down day, VIX back to 30, and SPY puts are cheap? The kids are playing a very grownup game.
The Fed won’t be able to print enough money to keep up with the poor labor market. Plus, the devalued dollar makes imports much more expensive, which will further cut into our purchasing power, leaving less to be purchased from the S&P 500. I don’t think your idea for them works.
1928. Nothing more, nothing less.
no real problems here, lol.
Crazy again. Anybody see some pets.com stock?
Lolz,
this is just making me feel old. Let them get burned, and some will get the message that this is serious.
Meanwhile, the fed, well, meh. Desperation. Simple solution, let rates float up to 3-6-3 era again, and the froth will dissipate with damage.
Everybody is focused on the moment and not seeing the long term effects of these events. Just like 1929 created a generation that hated the banks, Wall St is now creating a generation that distrusts investing. Wall St by abusing their power will reap the distrust of these young people for a generation. Good luck getting them to invest in a 401K.
I’m old and I’ve always hated banks. And insurance companies. But when we were kids at least they kept them all separate and the “investment bankers” couldn’t get their hands on our passbook savings accounts.
“It typically takes a few weeks for the body to produce T-lymphocytes and B-lymphocytes after vaccination. Therefore, it is possible that a person could be infected with the virus that causes COVID-19 just before or just after vaccination and then get sick because the vaccine did not have enough time to provide protection.
Sometimes after vaccination, the process of building immunity can cause symptoms, such as fever. These symptoms are normal and are a sign that the body is building immunity.”
https:// www .cdc.gov/coronavirus/2019-ncov/vaccines/different-vaccines/how-they-work.html
With the myth of money tree having been destroyed (we know now it exists and it’s called Fed) why do we even need a stock market, anyone needing to raise money can go directly to the Fed, and with rates at 0% what’s the point anyway, other than serving as a glorified casino for some rich guys that pretend to contribute to the economy and doing gods work, stocks market has zero purpose.
The fed has an unlimited supply of gasoline… and they are using it. I’m not sure but it’s starting to feel a bit like Zimbabwe.
But that printed money only works so long as foreigners want it. They’re increasingly not. What good does printing money do if foreigners won’t take it in exchange for their manufactured stuff?
God…how I hate this new normal…
Robinhood app now has a 1-star rating in play store.
Free markets? Free elections? Free speech?
The SEC and the platforms changing the rules is tantamount to the election result challenges. Don’t like the results, tear up the contracts and change the rules. Tearing up contracts works in bankruptcy, and the same tactic nearly turned over our Democracy. The extremists want to inaugurate Trump on March 4th, as the 19th president, declaring the US after 1871 is a corporation headed by an office in the City of London, and not the legitimate Republic. Isn’t this what we do? We threw out the rules on mortgage bankruptcy and bank consolidation in 2008. We halt trading, we cancel trades and we provide taxpayer liquidity to the corporate financials in order for them to profit after the retail investor is crushed. Now a few more hedge funds get crushed playing by the rules (fundmentals) and the Fed Put is squeezing the shorts?
Maybe similar in a way to that Twilight Zone ‘To Serve Man’, GameStop is code for something on Wall Street?
My favorite cookbook.
This latest “Banzai charge” was caused by the hopeless situation our Federal Reserve has created for younger generations. They have nothing left, because the Fed has taken it away. No hopes for buying a home. No hope for funding a retirement. No hope for a good-paying job.
The Fed’s policies has taken away all hopes of asset ownership and economic mobility.
Somebody gets it!
~Thank You~
And I’m an OWG Boomer !!!!
My impression was age 75. You’re likely on the elder side of the Boomer distribution then?
My impression was 75. You’re likely on the elder side of the B00mer distribution then?
The problem is that most people don’t understand that the central bank policies are the cause of most of these problems. So I don’t think we are going to see an “Occupy the Fed” movement and a storming of the Eccles Building.
Most people didn’t even show up to support Occupy Wall St when those protesters got hosed by Obama.
“In America, you are on your own”
Fully DESERVED!!!
And sadly, after the kids incinerate their collective micro-investments to make a statement, they are in no better (financial) place…AND….as others have stated, the rules will likely change yet again to their financial detriment.
Feels like a new currency is coming and not Gold, BTC or the like – more like Karma currency / barter.
With respect, as a hopeless older person, the Fed didn’t allow banks, brokerages and insurance companies to merge starting the 80s. The fed didn’t legalize derivatives to the nth degree in ’99. The Fed didn’t expand copyrights and patents to 50 years even on medications. The Fed isn’t responsible for offshoring auto and IT jobs meanwhile protecting doctors from foreign competition. The Fed didn’t cut taxes on the wealthy and subsidize big oil for decades. The Fed didn’t bust any unions and it wasn’t responsible for not raising the minimum wage but once in 30 years. When we voted for Morning in America, this is what we axed for so lay back, close your eyes and try think of something pleasant, i guess.
Lenert:
I wanted to say something after reading so many comments that “….it’s all the Fed’s fault!”
You did it well old timer.
The Fed has wiped out half the value of your savings since 2000.
Inflation is a tax we don’t vote on and the Fed is totally unaccountable. It should be ended. It’s way more important than the other factors you mention.
We in the younger generations are starting to wise up, but it’s still too small a number to change anything. I personally have come to like and understand Ron Paul’s schtick a whole lot more in the past few years.
The Very Important People are going to class action sue the peasants for gambling against their gambling on GameStop.
The Ivy League geniuses on the Supreme Court have made it hard for peasants to class action but the VIP probably are above those rulings.
This whole thing is really fishy. Citadel owns Robinhood AND has a massive short position in GME (and is rumoured to have shorted more recently at high prices). And now it has disabled the Robinhood clients to buy the stock, which of course gives massive price pressure.
Is this even legal? Even if it is, it shouldn’t be. It’s a massive con! After all abuse of power by big tech and now this, it’s no wonder why so many people have no confidence in the system anymore. When will the revolution start?
These brokerages should have simply raised margin requirements to 100% for these latest speculations. That is the usual response to increased risk. Why didn’t they do that? It deserves an answer.
Yes, it is would be reasonable to not allow buying these stocks on margin anymore, because the volatility is so high. A broker must protect itself after all.
But buying with cash should always be allowed. Many Robinhood traders have transferred money to their accounts to buy GME and now they are forbidden to buy the stock with it.
The reason for the ban on these trades appears to be not to cover the brokerage risks but to prevent trades that go against the interest of the hedgefund that owns the Robinhood app.
What if it’s found out that the Robinhood app corporation or founders were short GME?
All these restrictions stink to high heaven. You don’t think hedge funds collaborate every day to pump and dump or bear raid stocks?
I’ve been thinking about this. Someone said the banks are on the hook for the shorts which doesn’t make sense. Its not the shorts they are on the hook for its the call options. I heard a guy from Interactive Brokers who said there are $15 Billion in losses on calls at his firm alone and his firm makes up less than 5% of the market. So this becomes a $300 Billion problem for the banks who sold the call options, a number big enough to get the Feds attention. And raising the margins won’t do enough. They need to drive the share prices of the short squeezed stocks down big and pronto.
The latest Gameshop stuff seems to be all about liquidity and execution. Here’s a recent complaint from last month, FYI:
SEC Charges Robinhood Financial With Misleading Customers About Revenue Sources and Failing to Satisfy Duty of Best Execution
FOR IMMEDIATE RELEASE
2020-321
“Robinhood provided misleading information to customers about the true costs of choosing to trade with the firm,” said Stephanie Avakian, Director of the SEC’s Enforcement Division. “Brokerage firms cannot mislead customers about order execution quality.”
“Robinhood failed to seek to obtain the best reasonably available terms when executing customers’ orders, causing customers to lose tens of millions of dollars,” said Joseph Sansone, Chief of the SEC Enforcement Division’s Market Abuse Unit. “Today’s action sends a clear message that the Commission will not allow brokers to ignore their obligations to customers.”
“There are many new companies seeking to harness the power of technology to provide alternative ways for people to invest their money,” added Erin E. Schneider, Director of the SEC’s San Francisco Regional Office. “But innovation does not negate responsibility under the federal securities laws.”
Ohh. Congress has just found something more to deregulate :)
This is the most significant event in history. Took out the whole system. Snowballed out of control like runaway fusion. Only solution now is emp blackout the planet. See you on the other side.
Remember the good old days when outright, public stock manipulation was illegal?
No. I don’t. My grandmother wasn’t even born back then :p.
Wolf,
I love you…but selectively censoring accurate statements critical of AOC while leaving dubious pro AOC statements up, is to participate in the political tendencies accurately ascribed to AOC.
No Parler games here, please.
Cas127,
I love you too, but I spent the past years blocking and deleting comments about Trump because they used the same and similar descriptions that you used for AOC. Before Trump, it was the Obama descriptors that heated up my delete button. Today. it’s AOC. Other days it’s Biden-Harris.
You can disagree with someone’s policies, but you cannot call them names. “Names” includes descriptors, such as “orange face,” or phrases that include “fascist,” and the like. You know what I mean. Violation of commenting guideline #7
https://wolfstreet.com/2017/10/07/finally-my-guidelines-for-commenting/
And the MMT blocks?
Maybe just a processing issue, since I think you share my disdain for most MMT disingenuousness.
(And I think I deserve pts for getting disingenuousness past the spell checker on the first go…)
Yes. Years ago, I started getting hit by the army of MMT trolls. They posted from all over the world. Clearly some of them were paid. Now I want to make sure I look at all MMT comments before releasing them. I don’t allow this site to be used for spreading any kind of gospel.
It’s funny to see vested interests all over trying to convince their clients and position-holders that WSB is turning attention to their asset and now they’re going to be rich!
Lol, there’s only so much money floating around in the WSB “pool”. Most probably lost money with GME crashing. They’re not just going to keep coming back with more money each time. And the more divided the WSB love, the less the rise in whatever asset you thought WSB was supporting.
An observation for those saying that the Robinhoodies pumping up flatlining companies’ shares are just doing it to wreck the Hedgies, for the LOLs, and don’t really care about the money they are putting at risk…it is pretty telling that once trading restrictions have been put on…those Robinhoodies are selling their shares en masse…causing dramatic daily percentage declines.
Not the behavior of people not in it for the money.
True. And who’s to say that the GME, AMC fervor wasn’t created/stoked by someone with positions in those names? How about some market insider?
I would love to see what would be happening if the RH goons controlled by their owner hedge fund did not place those seemingly uncharacteristic (or possibly illegal?) trading restrictions on their WSB client members.
Is it right that to take a short, a stock owner has to effectively ‘lend’ their position to the shorter who then liquidates it, then buys it back later at a lower price to return to the long holder.
So the short can only exist by willing long holders taking the bet?
Ie, the long holder thinks the shorter is wrong, and will take a small spread on that bet?
Surely if you believe that is the case then you’re best holding and then if it does go down, you’re no worse off, if it goes up beyond the spread, you’re better off… and if it gets short squeezed you’re loads better off (sell)
So why are shorts a thing, if taking the bet appears to leave you only in worse off positions?
Are the spreads really big?
It is ironic that the mainstream media are painting these retail traders as bad guys…
Buying long strategically is now the bad thing…
Words to the effect of “if we see social media people saying stuff, and lots of people buying stuff, we’ll halt the stock”
So you’ll go as far as literally stopping normal market function of price discovery, to protect shorter’s who got their bets wrong, at the cost of existing long holders, and new long holders, who are seen as gamblers more than the shorter’s.
Is this a toppy sign?
Systemic risk when hundreds of billions of MBS and associates products were over-valued. Expected.
Systemic risk when a game retailer is over-valued, alarm bells!
LOL.
Tesla is a “prudent investment” but GME is speculation. Gotta love the rationale.
“Is this a toppy sign?”
Market top or Empire top. Inquiring minds want to know.
Kenny Logouts,
When the market crashes enough, shorts are the only passionate buyers — to close out their positions and take profits. It’s tough to have a real crash when there is a huge amount of short interest out there, because every time the market goes down, they’re buying to take profits.
So effectively, the longs really want there to be a lot of shorts as sort of a protection. That’s why they’re allowed to exist. You need these buyers in a crash.
But things can also get out of hand, and then there’s chaos as we’re seen in these most shorted stocks.
So rentiers care not about being in the red when mortgage payments, taxes, insurance, property management costs, and maintenance costs exceed the unit’s rental income, as they make their money on the appreciation of the price of the rental unit. In this manner, the renter subsidizes the asset’s margin loan and operating costs, and the asset price gain covers the rest and then some, including mortgage payment residual not entirely covered by the rent. This is how people are thinking in a RE market where the average home in King county is increasing 12.9% per year.
Let’s do the math. You have purchased a 3BR crapshack in Seattle for $769,000, putting 20% down.
Est. monthly cost including mortgage, property tax and insurance (Zillow): $3,377.
Monthly property management fee (10% of rental income): $250.
Monthly maintenance (1% of purchase price): $640.
Monthly rental income: $2,500.
Yearly loss on rental unit = $21,204.
Yearly gain on rental unit price at 12.9%/year = $99,201.
Unrealized profit: $77,977
Renter subsidizes 2,500/3,377+250+640= 59% of annual asset cost.
Exemplary home: 13703 Palatine Ave N, Seattle, WA 98133. Zillow data utilized above.
good luck collecting rent with whats coming
Crush the Peasants said: “In this manner, the renter subsidizes the asset’s margin loan and operating costs,”
____________________________________
The renter subsidizes everything
The rentier lives off of the productivity of the renter.
Best quote about Gamestop ever (for anyone remembering OWS’s drum circles)
‘Hold the line’: Reddit’s ‘meme stock’ traders embrace the GameStop chaos
Global News
Posted January 28, 2021 2:10 pm
“Occupy Wall Street didn’t have Robinhood accounts and their figurative drum circle has gotten a LOT bigger thanks to the open internet,” he tweeted.
“This is personal for a lot of people.”
Wolf, not sure if this is true, but apparently Robinhood closed off quite a few GME positions without consent.
Protect the rich!!!!
I think we have to wait till we get more info on this before we decide what actually happened. There is a lot of chaos out there now. And trading was/is totally wild. Look at the GME volatility today. Totally nuts. So when you’re the broker, and this happens, you’ve got all kinds of problems trying execute orders, dealing with margin requirements, margin calls, etc..
There is a similar event unfolding with the meme based doge coin at the moment. I’ve got a few hundred dollars riding on what this might end up at. Downside is minimal but the upside is to the moon….gotta love these frothy markets.
Alright. How do I buy dogecoin. Someone help a noob out.
Robinhood
It shouldn’t surprise anyone that RH is cracking down on its retail mob.
The mob is fine when it makes RH’s investors and real customers (i.e. hedge funds) money, but it is not when it bites the hand that feeds it.
To a real extent – the mob works only because of RH’s literally losing money on every transaction but making up for it in (selling behavioral data) volume.
I have significant doubts whether the same approach would work even in a discount brokerage (and its fees).
“Google is actively removing negative reviews of the Robinhood app from the Google Play Store, the company confirmed to The Verge. After some disgruntled Robinhood users organized campaigns to give the app a one-star review on Google’s Play Store and Apple’s App Store — and succeeded in review-bombing it all the way down to a one-star rating — the company has now deleted enough reviews to bring it back up to nearly four stars.”
There clearly is class solidarity among the oligarchs!
Next up:
The kids get organized, agree on a big bank, and move their deposits to other banks. Just for the power rush.
When the short amount is over 100% of float, there are plenty of buyers. It seems like just desserts unless you are short.
Curious, apparently the short sellers have lost up to $19B on Gamestop if one was to believe the info coming from BI.
At this point, one wonders why they just lay out the money to buy GME out right. Given the fluctuations, I know it’s tough to figure out what the actual market cap is. But I am shocked that the short position is still over 100%.
Replacement of old shorts with new, I’m sure, but when does someone give up the ghost here. This tug of war will eventually end with reality setting in that GME is worth probably back down to the $20/share level. But it might take a while, in the interim, losses could really pile up fast. I looked at the spread on the puts, and it was outrageous, made TSLA look like a sleepy 9 to 5 stock in comparison
The bubble is popping, everywhere. We’re up for bad times.
This GameStop thing reminds me of the Minion movie for some reason.
WE SHOULD BAN “OUTSIDER TRADING” AND MAKE “INSIDER TRADING ” ONLY TRADING LEGAL.
There might be a *lot* more to this story.
The putative short squeeze has allowed some PE firms to exit investments that were on the verge of handing them massive losses.
https://finance.yahoo.com/news/silver-lake-cashes-amc-713-001059970.html
On Wolf Street, the truth often lies in the shadows.
(Walks off, smoking a cigarette, in a trench coat and fedora, across a rain slickened street, against the neon signs, under the mercury arc street lights).
The Robbinhood traders allowed insiders, pension funds, and other institutional investors to sell their shares at a huge profit. These institutional investors did what any investor would do: sell into the most irrational rally ever and take their huge profits and go home. This has happened across all of these most-shorted companies. The Robbinhood traders gave them a huge exit price, and the various buyers, from short-squeezed hedge funds to eager lottery chasers, bought their shares. I’ll talk about it in my upcoming podcast (Sunday).
In every game, there is going to have to be a loser, or losers. I’m not really asking who the loser is here. It will still be the retail investor… they do not have the time or the firepower (money wise) to outlast the hedge funds. The only question is when will these losers become obvious.
After all, there had to be counterparties during the opening minutes on Friday who bought at an average price of lets say around $380. There were something like 1.5M shares that transacted.
Melvin says they’ve exited their short positions, I wonder if they did. Because slapping on a bunch of short positions at $300 is worth a lot more than a short position at $90. Heck, they probably covered the short at $90 to go short again at $400. You could easily see them closing some of the position at $330 on the same day, and make a killing
And for every Reddit guy who screams “DON’T SELL,” there will be hundreds who does sell.
Wolf, so the shares held by institutional investors, though not part of the float, they can still be pledged as collateral (for short sales)?