There are essentially two markets though. The primary market sells new stock and performs a useful economic function. However, that's incredibly small compared to the secondary market that deals in existing stock - and has very little useful function. At the margins there are arguably very small benefits, such as providing a mechanism to publicize when a company is in trouble to prevent potential suppliers getting caught out. Essentially though it's just intended as a way to increase the liquidity of investments.
In the early stages of developing capitalism improving liquidity can be important to make the best use of resources, but we're way past that point. I think problems with the markets now are far more associated with too much liquidity than too little. Things like short selling and derivatives are just a way of gearing up gambling on the markets. That always looks attractive when you're the one aiming to manipulate the market, but rather less so when someone else is doing the manipulating. If this sort of action helps make those looking to short stocks think twice, then that's all to the good .
Derivatives are probably the grossest example, but I think that the situation gets weird when you consider, say, the foreign exchange market. It's still basically gambling, but with something a little more tangible than derivatives. Crashes in the derivative market don't worry me, but wild gambling in the ForEx market could end up having effects such as currency devaluation. Anyway, I'm not an expert on this.
It's a hell of a leap in logic to go from "we're monitoring the situation" to "billion dollar bailout for hedge funds within weeks". I'm not sure how self-destructive people are assuming the Biden Administration is, but I'm willing to bet abandoning what will be a tooth and nail effort on the COVID-19 bill is not getting shoved aside for this. Even if you're cynical, action on this would come WAY down the line when no one is paying attention.
In fact, about ten seconds after she says they are monitoring the situation, she says this is a good reminder that the stock market is not a great barometer of the economic health of the nation, and then pivoted back to COVID-19 relief. This is not a woman who is up there saying things by accident.
Even if they were stupid enough to go to bat for the hedge funds, there would be at least a dozen House members and 5 Senators who would stand up to stop it on the left. Whether Yellen can help them without legislation behind closed doors isn't something I have enough knowledge to comment on.
Also, the answer is vague because the last Administration (actually, the President himself) would often make comments that would rock the market within minutes. They aren't going to do that. Volatility is not something they value.
I am fairly confident in my assumption that the Biden Administration is going to govern significantly to the left of the Obama Administration.
It's a hell of a leap in logic to go from "we're monitoring the situation" to "billion dollar bailout for hedge funds within weeks". I'm not sure how self-destructive people are assuming the Biden Administration is, but I'm willing to bet abandoning what will be a tooth and nail effort on the COVID-19 bill is not getting shoved aside for this. Even if you're cynical, action on this would come WAY down the line when no one is paying attention.
In fact, about ten seconds after she says they are monitoring the situation, she says this is a good reminder that the stock market is not a great barometer of the economic health of the nation, and then pivoted back to COVID-19 relief. This is not a woman who is up there saying things by accident.
Even if they were stupid enough to go to bat for the hedge funds, there would be at least a dozen House members and 5 Senators who would stand up to stop it on the left. Whether Yellen can help them without legislation behind closed doors isn't something I have enough knowledge to comment on.
Also, the answer is vague because the last Administration (actually, the President himself) would often make comments that would rock the market within minutes. They aren't going to do that. Volatility is not something they value.
I am fairly confident in my assumption that the Biden Administration is going to govern significantly to the left of the Obama Administration.
I agree with this. I think a far more likely scenario is that there will be some serious lobbying going on in the coming weeks and months for congress to enact some new regulations to make something like this harder to do in the future (if they cannot find a way to loophole it and say it's already illegal. I dont know nearly enough about it to pretend to have an opinion on the likelihood of that).
If congress does end up going after it, it'll probably get buried with some other mundane legislation and done in a way so not to make it a hot ticket issue politically.
I dont think we'll see a hedge fund bailed out by the executive branch.
I mean, I like to see the hedge fund managers taking a bath as much as the next guy, but there is also no way for anyone to say Gamestop should legitimately be trading at it's current price given the current state of how people obtain and purchase video games.
I mean, I like to see the hedge fund managers taking a bath as much as the next guy, but there is also no way for anyone to say Gamestop should legitimately be trading at it's current price given the current state of how people obtain and purchase video games.
Alright, i'm done with the constant updates about this story for now. The reaction that the powers that be have to this story is very important and will tell you exactly where their priorities lie.
I maintain (like @Balrog99) that Wall Street money is entirely make-believe and we simply allow it to manifest itself into actual cash. None of this is real. Society would be better off without the entire operation. Yet we measure our economic "strength" on how well the markets are doing on any given day.
It works for it's intended purpose (helping to capitalize start-ups and small businesses) so I'm not sure getting rid of the market entirely is a good idea. There are going to be people who abuse it for their own gain, but that doesn't make it 'evil' or 'worthless'...
Edit: Upon re-reading my post, I don't mean that the purpose of the market is solely to help start-ups and small businesses. It also helps large corporations raise capital for their ventures as well...
There are essentially two markets though. The primary market sells new stock and performs a useful economic function. However, that's incredibly small compared to the secondary market that deals in existing stock - and has very little useful function. At the margins there are arguably very small benefits, such as providing a mechanism to publicize when a company is in trouble to prevent potential suppliers getting caught out. Essentially though it's just intended as a way to increase the liquidity of investments.
In the early stages of developing capitalism improving liquidity can be important to make the best use of resources, but we're way past that point. I think problems with the markets now are far more associated with too much liquidity than too little. Things like short selling and derivatives are just a way of gearing up gambling on the markets. That always looks attractive when you're the one aiming to manipulate the market, but rather less so when someone else is doing the manipulating. If this sort of action helps make those looking to short stocks think twice, then that's all to the good .
Yep, the point of capital itself is to serve labor. We've unfortunately created an economy that has reversed that. Labor is the thing that makes goods and services. Capital (whether dollars or stocks) is just a way to facilitate that.
While I think this recent Gamestop thing is ultimately just going to end up leaving a lot of regular folks holding the bag on an inflated investment, it does serve a useful purpose for exposing serious problems in how much we let capital dominate.
It’s going to be interesting to see where the stock is tomorrow. I think once two of the short sellers admitted defeat, people sold quickly. Won’t really know until the market opens tomorrow.
I mean, maybe I'm off base here, but it seems to me the overwhelming goal here wasn't necessarily to make a ton of money for everyone involved, but to deal a death-blow to the hedge fund, which has aleady had to be bailed out by their parent investment firm to the tune of billions of dollars.
I mean, maybe I'm off base here, but it seems to me the overwhelming goal here wasn't necessarily to make a ton of money for everyone involved, but to deal a death-blow to the hedge fund, which has aleady had to be bailed out by their parent investment firm to the tune of billions of dollars.
Noble ideals change rapidly when a quick buck can be made...
Just for fun, I decided to see what some major news outlets had to say. Here's a report from the BBC, and I quote:
Analysts blame tech-savvy young day traders, who they say are taking on hedge funds in a conflict with generational overtones.
Talk about pot calling the kettle black. The "analysts" are basically saying, according to that quote, "these snotty millennial hooligans are costing us, respected senior analysts, our rightful dough".
It is, says Neil Wilson from markets.com, getting weird: "We are seeing some serious funny business in some corners of the market."
Right. As opposed to the good ol' savagery of, say, a collusion of hedge funds that forces a third world nation into a credit default.
These people are getting a taste of their own medicine, on their terms, and using their own rules. But, since they're loosing, then surely there must be some "funny business" involved. What's funny is that so-called players and high rollers hate other players instead of hating the game.
r/WallStreetBets gone from both Discord and Reddit.
It's all so tiresome yadda yadda blah blah
Anytime anybody organizes effectively it gets shut down
Sometimes that's a good thing. QAnon ring a bell? They haven't shut down anti-vaxxers yet but that'll probably happen soon. Humanity's flying blind trying to navigate free-speech, free-trade, group think, and the dichotomy of individuality vs. collective good all at once due to smart-phones, the internet and social media. It's interesting from a 'detached observer' perspective, but scary as Hell from a 'wtf is going to happen next?' perspective...
r/WallStreetBets gone from both Discord and Reddit.
It's all so tiresome yadda yadda blah blah
Anytime anybody organizes effectively it gets shut down
Ok, so, interesting point of discussion. Anyone advocating for Google, Twitter, YouTube, Facebook etc not being able to ban people for what they do or say on their platform would have to rely on some sort of anti-trust action or declaring them a public utility. You can probably argue at least 3 of those 4 above are monopolies.
But can that really also apply to sites like Reddit and Discord?? One is basically a message board, the other is community-based voice communication. There are a myriad of alternatives to both. They can't be considered monopolies, and while I can certainly argue the one main internet search engine qualifies as a public utility (in other words, necessary to everyday living), I doubt I can make a persuasive case about Discord in the same way.
With respect I don't really care to rehash the free speech debate at this time, we can agree to disagree. My point is to highlight how quickly everybody gets in line once the megarich gamblers start losing money. I knew this would happen by the end of the day from the time I heard the story, it's just the way things work now. If they didn't, they could be the next target of censorship. It's not like they really had a choice.
r/WallStreetBets gone from both Discord and Reddit.
It's all so tiresome yadda yadda blah blah
Anytime anybody organizes effectively it gets shut down
Sometimes that's a good thing. QAnon ring a bell? They haven't shut down anti-vaxxers yet but that'll probably happen soon. Humanity's flying blind trying to navigate free-speech, free-trade, group think, and the dichotomy of individuality vs. collective good all at once due to smart-phones, the internet and social media. It's interesting from a 'detached observer' perspective, but scary as Hell from a 'wtf is going to happen next?' perspective...
Google knows more about us than we know about ourselves. It's not like anyone really did anything to stop it, and no one is going to give up their smartphones or high speed internet. But, as an example, I got an email from Google Maps the other day that literally had every single location I have visited in the last 7 or 8 years. Since I never went anywhere without my phone in that time, it basically traced every step I took for that time period. My only surprise was how few places I've gone in that time outside the city I live in.
With respect I don't really care to rehash the free speech debate at this time, we can agree to disagree. My point is to highlight how quickly everybody gets in line once the megarich gamblers start losing money. I knew this would happen by the end of the day from the time I heard the story, it's just the way things work now. If they didn't, they could be the next target of censorship. It's not like they really had a choice.
As a side point: The idea that rich investors are going to lose in the end is a mistake, imo. I'm not an expert on finance. But it seems what we're seeing isn't that far off from the 2007-2008 crash, albeit at smaller scale. Investors are inflating certain stocks. Other investors are making bets on the future movement of those stocks. It's the same jenga tower as CDO's and credit default swaps. It's not even just average joes here, Fidelity is holding millions in Gamestop stocks, for example.
This isn't to defend the original shorting of Gamestop. But adding further artificial movement to the market isn't going to leave regular folks in the economy better off. Some hedge funds will lose but some hedge funds will gain because of this. I'm not even sure there's evidence that there will an overall net loss to the hedge fund industry here.
I have been watching the GameStop trade. It is so inflated now it looks like buying pebbles for diamonds. Some unfortunate people will lose and some people will gain, it is a game of chicken at this point. A lot of the investors know nothing about the market but... the turn around I promise has many less than savvy investors panicking. Going to guess that many people that can’t afford to lose will lose a little but there will be those that will lose fortunes because they panic. All they have to do is wait, some of them can’t though. They will burn, most of the rest will be like meh, no biggie. Short now and make a fortune. Lol, like it is that easy, no one will take your short position now. I have been shorting with stops. Buy through it, or in this case short through it. The company cannot sustain this, it is not nearly worth that much. The company is not worth the price of their stocks, period.
Game of chicken. Short now, they have no way of maintaining this. Um... should say, short now if you can. Don’t think it will be that easy, I have stopped trying. If people keep buying, just keep selling because it cannot last.
Also, Gamestop wasn't threatened originally by Wall Street firms. The vultures there started circling because of Steam and digital downloads on modern consoles. Unless Gamestop found a way to become the Netflix of games, it was destined to end up like Blockbuster.
I really wonder it they will put a stop to this. It is like someone is pulling a reverse Trump, this is the right thing to do! I seriously hope no one has spent more than they can afford to lose. Unfortunately they are buying air at this point, there is not enough profit in the company to make up for 1/4 of the stock price... and can’t see the company surviving in the state it is now.
The little guy making a stand can win a moral victory though. If they can maintain a high stock price the people who shorted the stock will be paying out the nose in margin interest. Okay yes, I have been shorting the stock in steadily increasing increments, but I am not spending a lot or more than I can afford at any rate. And I pay no interest because my account is worth more than my positions.
Also, Gamestop wasn't threatened originally by Wall Street firms. The vultures there started circling because of Steam and digital downloads on modern consoles. Unless Gamestop found a way to become the Netflix of games, it was destined to end up like Blockbuster.
They signed a deal with Microsoft to get a portion of the profits from any digital sales that take place from Xbox consoles they sell, but it's a band-aid on a gushing head wound. The only companies that can become the Netflix of gaming are Microsoft and Sony. Gamestop (since they sell so many used games) could, I suppose, have aimed to be the Redbox of gaming, but even that service is going to go the way of Netflix's DVD envelopes sooner rather than later. Physical media is dying, and it's dying fast.
It's really down to the same type of people who buy vinyl records and like to organize things on shelves as their customer base (in other words, people like me). I'm most resistant to this trend on books (I simply cannot abide staring at a flat-screen to read an entire novel). But I've pretty much given up in every other area. Why am I going to waste $15.00 on a CD or even digital album when 99% of all popular music ever released is available for unlimited streaming for $9.99 a month??
I have been watching the GameStop trade. It is so inflated now it looks like buying pebbles for diamonds. Some unfortunate people will lose and some people will gain, it is a game of chicken at this point. A lot of the investors know nothing about the market but... the turn around I promise has many less than savvy investors panicking. Going to guess that many people that can’t afford to lose will lose a little but there will be those that will lose fortunes because they panic. All they have to do is wait, some of them can’t though. They will burn, most of the rest will be like meh, no biggie. Short now and make a fortune. Lol, like it is that easy, no one will take your short position now. I have been shorting with stops. Buy through it, or in this case short through it. The company cannot sustain this, it is not nearly worth that much. The company is not worth the price of their stocks, period.
Game of chicken. Short now, they have no way of maintaining this. Um... should say, short now if you can. Don’t think it will be that easy, I have stopped trying. If people keep buying, just keep selling because it cannot last.
If you're buying short using margins then you're toast if the stock keeps going up. You're one margin call away from disaster!
I don’t use margins but still pay interest, comes with selling something that you do not own. I will never reach a margin call, as I said my account is above my positions. I am not much of a gambler, tried commodities once, shudder. Ugh, never again. At least with stocks you can only lose what you put in, ah... kind of. I can only lose what I leveraged, the money in my account, at this point, plus interest.
Like the horse track though! Take $40 for eight races, $5 per race. Three on one to win and two on another to win each race. I don’t understand the whole betting scheme at the track, just like the horses. Besides, I always have enough for a slice of pizza or a hotdog and a few beers without ever spending more than $40. Just a fun evening! God I miss that so much. Pete spent so much, sometimes he would win big but most of the time he was needing money from my forty bucks for his last bets by the end of the night. If I was out of my forty dollars, it was time to go home at that point, or watch him and cheer for his horses. Gotta have pizza and beer, even if I can’t bet on the last race or two. Usually I came home with money in my pocket though.
The ability of random folks on the Internet to manipulate stock prices so well, for the first time ever, for spite, makes me wonder just how much manipulation financial companies commit every day, for profit. How many schemes like these fly under the radar because they're done behind closed doors by major companies instead of on social media by regular people?
@WarChiefZeke: As of this writing, r/wallstreetbets is still on Reddit. One post said it had been switched to private, and apparently there's a karma threshold of around 1,000, presumably to weed out bots and untrusted newcomers. I can post comments there as well as read everything (I posted a comment to confirm).
The ability of random folks on the Internet to manipulate stock prices so well, for the first time ever, for spite, makes me wonder just how much manipulation financial companies commit every day, for profit. How many schemes like these fly under the radar because they're done behind closed doors by major companies instead of on social media by regular people?
Many to the eighth power? It happens all of the time. Take pharmaceuticals, they work together to manipulate the market.
Give someone a skosh of a chance to manipulate things so that it will work out in their favor and they will. Id est, Trump inciting insurrection. Kind of went sideways on him but hey, he left it all on the field. Eww! Felt slime on my soul just typing that. Y’all know what I mean right? The ability to manipulate is the hierarchy of the the human species.
I'm normally distrustful of directionless spite without a clear agenda behind it, but honestly... a big part of me wants this to escalate. I don't really see the downside of ordinary folks making money by disrupting a bloated, parasitic, and pointless market. AOC implicitly praised the folks behind it on Twitter:
Folks appear to be trying to just keep going indefinitely, increasing the price further rather than cashing out early. I don't know when the Gamestop stocks will stop going up, but I'm hoping that this happens again even after this is over.
Long-term, we really should just have a capital gains tax to limit how rich you can get by gambling on stocks to begin with. That would kill bloated finance companies much more efficiently than ordinary folks on social media.
Mitt Romney's history as a hedge fund manager, combined with his comments about "the 47%", served to create a perfect caricature of a soulless corporate automatron, and it was the main reason Obama beat him in 2012. The Obama campaign was more than willing to insinuate that his work sending companies into death spirals for profit at Bain Capital was responsible for not only people losing their livelihoods, but in some cases their lives. It was the one time I've seen a national Democratic Presidential campaign be as vicious as their opposition.
Comments
Derivatives are probably the grossest example, but I think that the situation gets weird when you consider, say, the foreign exchange market. It's still basically gambling, but with something a little more tangible than derivatives. Crashes in the derivative market don't worry me, but wild gambling in the ForEx market could end up having effects such as currency devaluation. Anyway, I'm not an expert on this.
In fact, about ten seconds after she says they are monitoring the situation, she says this is a good reminder that the stock market is not a great barometer of the economic health of the nation, and then pivoted back to COVID-19 relief. This is not a woman who is up there saying things by accident.
Even if they were stupid enough to go to bat for the hedge funds, there would be at least a dozen House members and 5 Senators who would stand up to stop it on the left. Whether Yellen can help them without legislation behind closed doors isn't something I have enough knowledge to comment on.
Also, the answer is vague because the last Administration (actually, the President himself) would often make comments that would rock the market within minutes. They aren't going to do that. Volatility is not something they value.
I am fairly confident in my assumption that the Biden Administration is going to govern significantly to the left of the Obama Administration.
I agree with this. I think a far more likely scenario is that there will be some serious lobbying going on in the coming weeks and months for congress to enact some new regulations to make something like this harder to do in the future (if they cannot find a way to loophole it and say it's already illegal. I dont know nearly enough about it to pretend to have an opinion on the likelihood of that).
If congress does end up going after it, it'll probably get buried with some other mundane legislation and done in a way so not to make it a hot ticket issue politically.
I dont think we'll see a hedge fund bailed out by the executive branch.
Don't underestimate the Funkopop empire.
"Trumpism caused the Gamestock buying frenzy"
Former SEC chair writes in Bloomberg that they need to investigate those dang peasants making too much money off of their bad bets
And here we get to the end game of all modern political discourse, if you buy Gamestop stock you are associated with nazis
Alright, i'm done with the constant updates about this story for now. The reaction that the powers that be have to this story is very important and will tell you exactly where their priorities lie.
And nope, that has nothing to do with the main points that are being discussed. It's just that I couldn't let this detail pass.
Yep, the point of capital itself is to serve labor. We've unfortunately created an economy that has reversed that. Labor is the thing that makes goods and services. Capital (whether dollars or stocks) is just a way to facilitate that.
While I think this recent Gamestop thing is ultimately just going to end up leaving a lot of regular folks holding the bag on an inflated investment, it does serve a useful purpose for exposing serious problems in how much we let capital dominate.
https://markets.businessinsider.com/news/stocks/gamestop-earnings-chamath-palihapitiya-donate-to-barstool-fund-2021-1-1030011432
It’s going to be interesting to see where the stock is tomorrow. I think once two of the short sellers admitted defeat, people sold quickly. Won’t really know until the market opens tomorrow.
Noble ideals change rapidly when a quick buck can be made...
Just for fun, I decided to see what some major news outlets had to say. Here's a report from the BBC, and I quote:
Talk about pot calling the kettle black. The "analysts" are basically saying, according to that quote, "these snotty millennial hooligans are costing us, respected senior analysts, our rightful dough".
Right. As opposed to the good ol' savagery of, say, a collusion of hedge funds that forces a third world nation into a credit default.
These people are getting a taste of their own medicine, on their terms, and using their own rules. But, since they're loosing, then surely there must be some "funny business" involved. What's funny is that so-called players and high rollers hate other players instead of hating the game.
It's all so tiresome yadda yadda blah blah
Anytime anybody organizes effectively it gets shut down
Somehow I find the "it's not about the stocks" excuse to be bullshit.
Sometimes that's a good thing. QAnon ring a bell? They haven't shut down anti-vaxxers yet but that'll probably happen soon. Humanity's flying blind trying to navigate free-speech, free-trade, group think, and the dichotomy of individuality vs. collective good all at once due to smart-phones, the internet and social media. It's interesting from a 'detached observer' perspective, but scary as Hell from a 'wtf is going to happen next?' perspective...
Ok, so, interesting point of discussion. Anyone advocating for Google, Twitter, YouTube, Facebook etc not being able to ban people for what they do or say on their platform would have to rely on some sort of anti-trust action or declaring them a public utility. You can probably argue at least 3 of those 4 above are monopolies.
But can that really also apply to sites like Reddit and Discord?? One is basically a message board, the other is community-based voice communication. There are a myriad of alternatives to both. They can't be considered monopolies, and while I can certainly argue the one main internet search engine qualifies as a public utility (in other words, necessary to everyday living), I doubt I can make a persuasive case about Discord in the same way.
Google knows more about us than we know about ourselves. It's not like anyone really did anything to stop it, and no one is going to give up their smartphones or high speed internet. But, as an example, I got an email from Google Maps the other day that literally had every single location I have visited in the last 7 or 8 years. Since I never went anywhere without my phone in that time, it basically traced every step I took for that time period. My only surprise was how few places I've gone in that time outside the city I live in.
As a side point: The idea that rich investors are going to lose in the end is a mistake, imo. I'm not an expert on finance. But it seems what we're seeing isn't that far off from the 2007-2008 crash, albeit at smaller scale. Investors are inflating certain stocks. Other investors are making bets on the future movement of those stocks. It's the same jenga tower as CDO's and credit default swaps. It's not even just average joes here, Fidelity is holding millions in Gamestop stocks, for example.
This isn't to defend the original shorting of Gamestop. But adding further artificial movement to the market isn't going to leave regular folks in the economy better off. Some hedge funds will lose but some hedge funds will gain because of this. I'm not even sure there's evidence that there will an overall net loss to the hedge fund industry here.
Game of chicken. Short now, they have no way of maintaining this. Um... should say, short now if you can. Don’t think it will be that easy, I have stopped trying. If people keep buying, just keep selling because it cannot last.
They signed a deal with Microsoft to get a portion of the profits from any digital sales that take place from Xbox consoles they sell, but it's a band-aid on a gushing head wound. The only companies that can become the Netflix of gaming are Microsoft and Sony. Gamestop (since they sell so many used games) could, I suppose, have aimed to be the Redbox of gaming, but even that service is going to go the way of Netflix's DVD envelopes sooner rather than later. Physical media is dying, and it's dying fast.
It's really down to the same type of people who buy vinyl records and like to organize things on shelves as their customer base (in other words, people like me). I'm most resistant to this trend on books (I simply cannot abide staring at a flat-screen to read an entire novel). But I've pretty much given up in every other area. Why am I going to waste $15.00 on a CD or even digital album when 99% of all popular music ever released is available for unlimited streaming for $9.99 a month??
If you're buying short using margins then you're toast if the stock keeps going up. You're one margin call away from disaster!
Like the horse track though!
Many to the eighth power? It happens all of the time. Take pharmaceuticals, they work together to manipulate the market.
Give someone a skosh of a chance to manipulate things so that it will work out in their favor and they will. Id est, Trump inciting insurrection. Kind of went sideways on him but hey, he left it all on the field. Eww! Felt slime on my soul just typing that. Y’all know what I mean right? The ability to manipulate is the hierarchy of the the human species.
Folks appear to be trying to just keep going indefinitely, increasing the price further rather than cashing out early. I don't know when the Gamestop stocks will stop going up, but I'm hoping that this happens again even after this is over.
Long-term, we really should just have a capital gains tax to limit how rich you can get by gambling on stocks to begin with. That would kill bloated finance companies much more efficiently than ordinary folks on social media.