[HN Gopher] Robinhood is limiting purchases of stocks: AMC, Blac...
___________________________________________________________________
Robinhood is limiting purchases of stocks: AMC, Blackberry, Nokia,
and GameStop
Author : Miner49er
Score : 2470 points
Date : 2021-01-28 13:25 UTC (9 hours ago)
(HTM) web link (twitter.com)
(TXT) w3m dump (twitter.com)
| pdevr wrote:
| 99.99% (or more) of people who buy lotteries, lose ALL their
| money. However, government allows anyone to buy them. There is no
| meaningful restriction for an assured destruction of wealth for
| most of those who buy them.
|
| While this GME/AMC run will not end well for many people,
| restricting people from buying those stocks - whether it is
| through actions of trading platforms or governing agencies -
| smacks not just of paternalism, but downright favoritism. Only
| certain parties benefit from this.
| batmenace wrote:
| Im guessing their argument would be that while a majority of
| people know what they're doing / the risk they are exposed to,
| a lot of people are seeing the gains online right now and are
| jumping into it blindly. Big difference between WSBers buying
| in at 10-30$, and people from all around the internet now
| buying in at 300$
| VikingCoder wrote:
| ...and yet cigarettes are still legal.
| stonesweep wrote:
| Back in 1999 when Red Hat went IPO (dsiclaimer: I had FoC
| options), eTrade denied a very large swath of first-time
| investors with their platform trying to take advantage of Red
| Hat's FoC share options; I was one of them.
|
| There was a followup round of reach-out "hey, you might want
| to take this quiz again and maybe we'll let you play"
| (meaning go answer the questions and lie that you're an
| experienced investor) to try and get the disenfranchised back
| into the game.
| 0x008 wrote:
| It's basically corruption and shows why we need free markets
| and why it is a problem that exchanges are private companies.
| imtringued wrote:
| If anything, this proves that free markets cannot exist. If
| rich people showed even a tiny shred of humility this
| wouldn't have happened.
| MrMan wrote:
| what
| treis wrote:
| Stock market regulation stems largely from the experience of
| the Great Depression. So even if 99.99% of people lose all
| their money in lotteries we haven't seen an economic crisis
| caused by lotteries.
|
| We're not likely to see an economic crisis due to a Gamestop
| short squeeze, but it is a bit of a worrying sign.
| chrisco255 wrote:
| And how much did that regulation help prevent the Great
| Recession and Global Financial Crisis of 2008?
| treis wrote:
| There's a pretty direct line of causation from the rollback
| of some regulations and lack of enforcement of others to
| that. That crisis was a reminder of why we have these sorts
| of regulations and an example of why we should enforce
| them.
| chrisco255 wrote:
| I disagree on that point. The '08 financial crisis was
| not so clear-cut as to trace back to one single
| regulation being "rolled back". And it's not clear to me,
| that whatever vulnerabilities existed in the system then,
| have somehow been patched up today. We could and still
| very well might have another large meltdown in the
| markets in the near future.
| llampx wrote:
| Yes. The way the short squeeze has been working so far is the
| hedge funds do a ladder short to drive the price down, and
| retail buys up shares, sending price back up. Without retail to
| buy shares, price can keep falling until people get freaked out
| and sell their shares, which is what the hedge funds want.
| buildbuildbuild wrote:
| I agree with you. But it is also much higher friction to invest
| large sums in lotteries. Casinos feel the more apt analogy.
| notahacker wrote:
| 99.99% of people who buy lotteries know it's a gamble rather
| than a moneymaking strategy. Nobody is advising people buying
| lottery tickets that they should borrow money to buy as many of
| them as possible because they will make a nice easy profit at
| the expense of the rich. It's often said lotteries are a tax on
| people that don't understand probability, but at least people
| playing don't think they're doing arbitrage.
|
| And governments often do restrict other forms of gambling
| associated with more problematic losses. There are those who
| would like them more restrictions on it, and those who would
| like fewer, but at least the latter group don't argue that
| without loosening gambling laws, the little guy doesn't stand a
| chance of wealth improvement.
| bufferoverflow wrote:
| > _Nobody is advising people buying lottery tickets_
|
| That's demonstrably false. There are literal ads on TV that
| show how wealthy you can become if you just buy a lottery
| ticket.
|
| > _that they should borrow money to buy as many of them as
| possible because they will make a nice easy profit_
|
| You clearly haven't read any of the GME threads on WSB.
| Pretty much everyone is saying to only invest what you can
| afford to lose. Most people are buying small amounts just to
| f##k with the hedge funds, and they are outspoken about it.
|
| > _but at least people playing don 't think they're doing
| arbitrage._
|
| Buying a lottery ticket for a dollar, hoping they make much
| more? Isn't that the whole point of a lottery?
|
| > _And governments often do restrict other forms of gambling
| associated with more problematic losses._
|
| That's the whole point of the criticism that you're missing.
| These restrictions are completely arbitrary and don't follow
| any rules.
|
| You can go to a casino and lose your life savings.
|
| You can buy 1 million lottery tickets and lose your life
| savings.
|
| You can buy one of thousands of penny stocks and lose your
| life savings.
|
| The government won't stop you. The brokers won't stop you.
|
| But suddenly, when a big hedge fund is caught with their
| pants down, people like you come out and pretend like what's
| happening is a big problem, and we have to stop the trading
| "because some people can lose money".
|
| Sorry, I'm not buying your narrative at all.
| henrikschroder wrote:
| > Most people are buying small amounts just to f##k with
| the hedge funds, and they are outspoken about it.
|
| I think the funniest part about this is that it is
| rationally irrational.
|
| It's irrational from a market perspective, Gamestop really
| isn't fundamentally worth this much, everyone who invests
| ought to lose the money. Short sellers ought to make bank
| on it.
|
| And then comes WSB and offers a different reason: Buy a
| couple of shares and hold just to punish the short sellers.
| It's irrational in the market sense, but it's _completely
| rational_ from an internet mob sense. They 're not out to
| make money, which is the normal rational decision-making
| process that all the big players are accustomed to. This
| mob is out for _blood_ , and they're doing it for shits and
| giggles. Of course the big market players are upset,
| because the mob has money and are wielding it "wrong"!
| imtringued wrote:
| Yes, GME is the laughing stock. In a very literal sense.
| biztos wrote:
| Somewhat off topic but I was in Spain before Christmas, and
| there the Christmas Lottery is a big deal: it has a huge
| jackpot but costs 20EUR for a ticket. The drawing of the
| numbers is a massive televised affair, with children
| singing out the numbers, I kid you not. Lots of interviews
| with winners big and small.
|
| There were lines outside the ticket shops (semi social
| distanced and with masks). Street vendors of tickets were
| walking around asking people "don't you want 200 million
| Euros?" Or whatever the number was, I didn't win so I
| forget.
|
| Point being, with the Christmas lottery all but personally
| endorsed by the Pope and the King, and with millions of
| poor and poorly educated people watching this spectacle,
| I'd be shocked if some people didn't cause themselves real
| trouble as a result. Just one more ticket...
|
| (My friends there treat it mostly as a joke but still do
| buy one ticket each, every year, on principle.)
| notahacker wrote:
| > That's demonstrably false.
|
| That's because you truncated my sentence to pretend I made
| a claim I didn't make. What I _did_ say is that nobody is
| marketing lottery tickets as an investment or (or posting
| screenshots of how much they 've spent on lottery tickets
| to encourage others not to cash out). They're literally not
| allowed to in those ads you mention.
|
| > You clearly haven't read any of the GME threads on WSB.
| Pretty much everyone is saying to only invest what you can
| afford to lose. Most people are buying small amounts just
| to f##k with the hedge funds, and they are outspoken about
| it.
|
| _All_ the top threads are people encouraging others not to
| take their money out because it 'll hold its value, honest,
| and the specific stakes people are sharing range from
| thousands to [options on] millions. You don't see people
| make those kind of bets on lotteries, and people with
| financial upside from lottery ticket sales certainly aren't
| allowed to encourage them to.
|
| I mean, the whole reason we're having this discussion about
| Wall St versus the common man is because people here are
| treating entering the market at this stage as an
| opportunity rather than a negative EV gamble for people
| looking to join the action. If a vendor stops selling
| tickets for a particular lottery, nobody acts like wannabe
| customers or ticket holders dreaming of bigger jackpots are
| victims.
|
| > Buying a lottery ticket for a dollar, hoping they make
| much more? Isn't that the whole point of a lottery?
|
| The point of buying a lottery ticket for a dollar for what
| even the dumbest lottery player knows is an tiny chance of
| winning isn't very similar to the point of buying what used
| to be $20 stocks starting at $200 after reading an "AT THIS
| RATE $5,000 IS GOING TO BE NOTHING FOR GME" post.
|
| > But suddenly, when a big hedge fund is caught with their
| pants down, people like you come out and pretend like
| what's happening is a big problem, and we have to stop the
| trading "because some people can lose money".
|
| Casinos block people from some gambles all the time
| (especially if something funny's going on or they think
| they might get sued). Nobody cares. Some brokers stop
| people from some gambles on their platform and people gnash
| their teeth with rage at how unfair it is, before flipping
| to arguing that it's just a game people are playing with
| what they can afford to lose. The double standard here
| isn't mine.
|
| And yes, most people buying today would lose money (with or
| without broker intervention). That's not a reason to for
| Robinhood to stop the trading, it's a simple observation
| which is hard to square with arguments that stopping the
| trades is some monstrous imposition on the common man.
|
| As for the hedge funds and investment pros, some of the
| longs would have loved to see more retail investor action
| today, and some of the shorts are already out.
| imtringued wrote:
| People buy GME for entertainment purposes. Instead of buying
| games at gamestop they want to have fun in a different way.
| By stopping the fun Robinhood basically gave everyone a big
| fuck you.
| majortennis wrote:
| Criminal
| carrabre wrote:
| That's why the world needs more decentralized technologies. Pro
| DeFi & other decentralized tech.
| irrational wrote:
| I understand that the hedge funds stand to lose a lot of money,
| and potentially go bankrupt, but isn't that just one of the risks
| when you play the stock market? There is no guarantee that all
| your bets will end up making you money. If you want a sure thing,
| put your money in bonds or some other investment that has low
| risk. The hedge funds are acting like they deserve to make money
| off their shorts and them not making that money is theft in some
| way.
| Denvercoder9 wrote:
| It's interesting to see the outrage about this. Everyone who has
| done a bit of research into this kind of broker knew this. It's
| the only way to get the commissionless trading they advertise
| with.
|
| Just another case of "If you are not paying for it, you're not
| the customer; you're the product being sold".
| spelunker wrote:
| If you're one of the big and established brokerages you can
| provide commission-less trading through other means - portfolio
| management fees, doing bank things.
|
| For the smaller guys like RH though your point still stands.
| belltaco wrote:
| Not really, the outrage is over a _short_ of GME being a
| customer. If the headline was about Firm XYZ without a short in
| GME paying $100M it wouldn 't be as newsworthy.
| Denvercoder9 wrote:
| You don't get to pick to which advertiser your data is sold
| either. You're just along for the ride with no hands on the
| wheel.
|
| I'm not defending business models built upon selling their
| users' data. I'm just saying that this is no surprise, and it
| was pretty inevitable to happen sooner or later.
| JumpCrisscross wrote:
| > _the outrage is over a short of GME being a customer_
|
| Do we have any evidence Citadel is materially net short GME?
|
| They bailed out Melvin Capital. But Melvin Capital announced
| that they closed out their short position. And bailing out
| Melvin Capital isn't the same thing as assuming their
| positions.
| cmmeur01 wrote:
| Please provide evidence they have closed their short other
| than them talking their portfolio.
| SpicyLemonZest wrote:
| Is there any concrete reason to suspect they're lying?
| Obviously none of us have directly seen Melvin's books,
| but there's a point where the contrary hypothesis just
| becomes unfalsifiable.
| cmmeur01 wrote:
| Until they release their statements we have no way of
| knowing.
|
| If you want to take what they say at face value, go for
| it, but I don't believe them.
| anonymouse008 wrote:
| You can believe everything they put in writing. You just
| have to read it correctly.
| [deleted]
| anonymouse008 wrote:
| > But Melvin Capital announced that they closed out their
| short position. And bailing out Melvin Capital isn't the
| same thing as assuming their positions.
|
| Yeah, arm's length transactions are a means of providing
| truth to falsity, and perfectly crafted statements are in
| the same category.
|
| The only thing missing from these press releases is "to the
| best of my knowledge"
| JumpCrisscross wrote:
| > _arm 's length transactions are a means of providing
| truth to falsity, and perfectly crafted statements are in
| the same category_
|
| Bailouts aren't arms-length transactions. They're highly
| involved.
|
| Melvin Capital isn't just a GameStop short. It has
| billions of other assets. But not all of those are
| liquid. Margin calls require liquidity, and Melvin didn't
| have many options other than fire selling the rest of
| their portfolio and taking a private bailout at
| exorbitant terms (but less egregious than the losses they
| would have incurred in a fire sale).
|
| From Citadel's perspective, why on earth would they
| assume the short positions? They're in the red. That is
| Melvin's investors' problem. The second-order problem,
| that of avoiding a fire sale of remaining assets, is what
| the bailout prevented.
|
| With respect to Melvin, I'm blown away that these trades
| were executed as unhedged shorts.
| anonymouse008 wrote:
| > From Citadel's perspective, why on earth would they
| assume the short positions? They're in the red. That is
| Melvin's investors' problem. The second-order problem,
| that of avoiding a fire sale of remaining assets, is what
| the bailout prevented.
|
| Because:
|
| > With respect to Melvin, I'm blown away that these
| trades were executed as unhedged shorts.
|
| Because that ^ will take down a prime, and if it's your
| prime because you're buddies with your mentee... no sir.
| And to cap it off, dominos fall everywhere because of the
| Index Fund phenomenon if there's no longer 'liquidity'
| from these guys.
|
| Side note: You're smart as hell, I can tell from the few
| times we've interacted on this forum, and I appreciate
| the thoughtful responses. We need to figure out a way to
| trade info and get a beer.
|
| Edit: this could become a run on the banks, but instead
| it would be a run on equities... which is equity cost of
| capital worse than just withdrawing your dollars.
| runawaybottle wrote:
| It's like if non-tech people suddenly find out Salesforce uses
| AWS and Microsoft Office suite.
| dang wrote:
| (This comment was originally a reply to "Robinhood makes most
| of its money selling customer orders (2020)"
| https://news.ycombinator.com/item?id=25946626, but we've merged
| it into the main thread.)
| ryanSrich wrote:
| I see little outrage about this. The outrage is about illegally
| manipulating the market in broad daylight by preventing retail
| investors from purchasing a stock.
|
| Is a user expected to tolerate illegal activity because the
| businesses customer demands it of them? If you have any doubt
| what Robinhood is doing is illegal (setting aside that it's
| clearly morally reprehensible), then I encourage you to read
| the suit that was just filed
| https://www.courtlistener.com/recap/gov.uscourts.nysd.553175...
| dawnerd wrote:
| And forcefully selling peoples' shares now as well.
| JumpCrisscross wrote:
| > _forcefully selling peoples ' shares_
|
| Is this a reference to margin calls?
| dawnerd wrote:
| https://twitter.com/555Sunny/status/1354854993946406917/p
| hot...
|
| Still not sure if this is across the board or just the
| larger shareholders. I'd imagine robinhood is trying to
| limit their risk vs. the risk of the investor.
| imtringued wrote:
| I'm not sure I trust this tweet but if it is true this is
| literal fraud. That would mean the end of Robinhood as a
| company.
| qaq wrote:
| There is a difference between a normal margin call and
| manipulating rules on your platform to force margin calls
| for the benefit of Citadel. I hope Kenneth C. Griffin
| joins Mike Milken in a list of crooks who actually got
| convicted.
| TeaDrunk wrote:
| if RobinHood can just pay whatever fine and continue
| operating as normal, then it's effectively legal for any
| entity of RobinHood's wealth.
| Denvercoder9 wrote:
| > I see little outrage about this. The outrage is about
| illegally manipulating the market in broad daylight by
| preventing retail investors from purchasing a stock.
|
| There's outrage about both. This story wouldn't be submitted
| and upvoted if this was common knowledge and accepted
| practice.
| missedthecue wrote:
| _" The outrage is about illegally manipulating the market in
| broad daylight by preventing retail investors from purchasing
| a stock._"
|
| There's a difference between preventing someone from buying a
| stock and telling them you're not going to assume the risk of
| making a market for them, which is what's going on here. You
| cannot force Citadel to make a market for your orders.
|
| They happen to result in the same situation, but the
| implications are completely different.
| toast0 wrote:
| > You cannot force Citadel to make a market for your
| orders.
|
| That depends on the market maker contract Citadel has with
| the brokerage(s) and the exchange(s). Although, I don't
| think the contracts with exchanges are very tight; I don't
| know about the contracts with brokerages. IIRC, Nasdaq had
| (has?) a special order type for market makers who didn't
| want to actually make a market that would put in bid and
| ask at exactly the maximum contractually allowed spread
| away from last trade, and withdraw and replace them when
| any trades did occur; making it much harder to actually
| trade with the market maker.
| missedthecue wrote:
| Citadel would never ever put themselves in a situation
| where they contractually have to assume an unpredictable
| level of risk
| toast0 wrote:
| There's plenty of outrage about payment for order flow; see
| every thread about payment for order flow. The SEC argument
| that RobinHood was misleading about it rings a bit true to
| me; but payment for order flow isn't the problem there and
| isn't what the SEC was upset about; it's the split between
| the brokerage and price improvement.
|
| As a retail investor, I'm a little squeemish that firms want
| to pay me to trade with me, but given the National Best Bid
| and Offer requirements, I don't see what the downside is for
| me. It's like accepting a deal at the electronics store
| that's listed as 'no resellers.'
| mcintyre1994 wrote:
| Is this legal? Or is it a case of the eventual SEC fine will be a
| much smaller problem for them than upsetting whoever asked them
| to do this?
| lettergram wrote:
| People can stay irrational longer than you can stay solvent.
|
| Onto the next one.
| coliveira wrote:
| This is typical market manipulation from WallStreet. They
| colluded to guarantee the outcome of their price manipulation and
| make millions on the back of thousands of small investors.
| justaguy420 wrote:
| CTRM (Castor Maritime), BB, NOK, GME, AmC, and others! Important
| no stock delisted goes unmentioned. Don't let them win, not a
| single hand!
| kgwgk wrote:
| https://twitter.com/AOC/status/1354833285386543105
|
| "Committee investigators should examine any retail services
| freezing stock purchases [...] especially those allowing sales,
| but freezing purchases."
|
| Apparently she would prefer that people were blocked from selling
| their holdings.
| moscovium wrote:
| Did you not read the tweet or are you just trying to
| misrepresent her argument? She is asking why different sets of
| trading rules are apply to retail and institutional investors.
| If retail can sell, but can't buy, who are they selling to?
|
| "We now need to know more about @RobinhoodApp's decision to
| block retail investors from purchasing stock while hedge funds
| are freely able to trade the stock as they see fit."
| kgwgk wrote:
| Does she or doesn't she say that the retail services allowing
| sales but freezing purchases are especially worth of
| investigation, compared to the general category of retail
| services freezing stock purchases?
|
| Of course, in reality, the only services freezing stock
| purchases are those allowing sales but freezing purchases.
| Because freezing sales in addtion to purchases would be much
| more problematic, not less.
| darkwizard42 wrote:
| No, I think she would prefer that exchanges didn't restrict
| purely in an effort to "protect" retail investors and nakedly
| do the bidding to protect larger institutional investors who
| are getting squeezed.
|
| A brokerage NOT allowing buys, sells, margins, options on a
| security is well within their right to do so. It's only when
| they start to take positions that limit an investor's ability
| to manage their own risk that it gets a little fishy...
| kgwgk wrote:
| So if you have shares in a brokerage account you think the
| broker is within his right to prevent you from selling them?
| Ivoirians wrote:
| Your comment is not a gotcha. She'd clearly prefer that stock
| trading not be frozen at all. Freezing purchases but not sales
| is a gift to short sellers because retail investors can only
| lower the price, which will induce more people to panic sell.
| kgwgk wrote:
| So the hypothetical broker that had frozen both would be less
| worth of investigation?
| lovehashbrowns wrote:
| That is not what that tweet is saying. She is saying that
| particular pattern, sales allowed but purchases are restricted,
| is especially deserving of an investigation.
| kgwgk wrote:
| I don't know. If they had restricted sales I think that would
| be much worse. That particular pattern is the only pattern
| that could exist in practice.
| pelasaco wrote:
| Looks like the Robinhood became corrupt and ratted his outlaws
| out to the Sheriff of Nottingham
| cblconfederate wrote:
| I find the actions of billionaires petty. This is a world of
| absurd valuations, stocks skyrocketing despite experiencing the
| equivalent of a world war. And they can't let go of a few billion
| to some random redditors?
|
| The billionaire class is made to look bad with this, and
| billionaires must stop this reaction in order to restore the
| faith and trust in the Ancien regime of the markets.
| abrowne2 wrote:
| Robinhood bugged out as I attempted to sell some of my AMC this
| morning. The Market Sell order barely went through and was
| visually glitched for 10 minutes.
| mudlus wrote:
| Buy Bitcoin
| drewcon wrote:
| Trading stocks is not the 1st amendment where we basically say we
| don't really care about the outcome of your speech (as an
| individual). Say what you want even if its dumb and hurts you.
|
| With capital markets...there absolutely is a goal, and it's not
| speculation/gambling. The goal is to have a place where
| corporations can raise capital and investors can hold them
| accountable for how they return value to them...and then a
| billion rules to make that as fair and functional (not equitable)
| as possible.
|
| I don't get the argument that what these guys are doing is
| somehow noble, or to be encouraged. Completely unregulated non-
| purposeful markets are not helpful....we did that 100 years
| ago...thats why we have all the rules we do to make markets
| function to the end.
| dixego wrote:
| Perhaps this is proof regulations on the market should be
| stricter, then. After all, if a bunch of barely coordinated
| randos on the internet can do this through the power of 'meme
| magic', imagine what people with real resources and power and
| influence could do.
| Dirlewanger wrote:
| >imagine what people with real resources and power and
| influence could do.
|
| You mean what they already have been doing for decades? Are
| you seriously in favor of clamping down on retail investors??
| drewcon wrote:
| Who has been doing this for decades? When has "Wall st."
| coordinated a random attack to squeeze cash out of an
| entity just for the hell of it?
|
| You may disagree with the outcomes of short pressure, or
| private equity actions etc., thats fine, but I think there
| is an important distinction between actors in the market
| doing something profitable because they actually believe
| it, and the hysteria of a mob just randomly committing
| financial mayham because they can.
|
| I don't think we want to live in a world where markets are
| increasingly led by irrational forces simply amplified by
| media and misinformation...its not good in media right now,
| I shudder to think what happens if that behavior gets a
| foothold in markets.
| layoutIfNeeded wrote:
| >it's not speculation/gambling
|
| What is short selling if not speculation? It's speculating that
| an asset will be worth less than it is now.
| drewcon wrote:
| There is a world of difference between playing a game of
| chance, and playing a game where you happen to believe you
| have real better/different information about how the future
| unfolds. Speculators tend to act mostly on emotion and
| inertia from the game, not any real understanding of any
| underlying fundamentals.
|
| Short sales can be good. Downward pressure can be healthy. If
| you think a company is overvalued because its fundamentals
| are misjudged, the short is a corrective force in an overly
| optimistic market
| MrMan wrote:
| to the extent that the market needs speculators, I think it is
| part of the "goal" of capital markets. a market of only long-
| term risk-averse allocators wont have the liquidity necessary
| to create fair prices nor is it likely to attract as much
| capital when companies issue shares, as a market that has a
| "healthy" amount of speculation.
| drewcon wrote:
| I have no problem with individuals or fiduciaries investing
| on short time horizons because they believe they understand
| something fundamental the next guy doesn't. But mass
| coordinated speculation isn't that; it's using a mob to
| affect the underlying system for profit -underlying equity be
| damned.
|
| And for all those that say "well Wall St has been doing that
| for years"...fine, let's address that too. Financial
| regulations are essentially a history lesson of past failure
| we've tried to correct. Let's be consistent.
| EGreg wrote:
| So organized capital was all about free markets and small
| government, until organized people took it on.
|
| Chamath Palihapitiya of Social Capital is becoming one of my
| heroes, LOL. Last year he criticized the trillion dollar bailouts
| of Wall Street, now he comes on to defend the right of retail
| investors to share information publicly and coordinate a short
| squeeze against overleveraged short positions by shadowy hedge
| funds.
|
| When organized people take on organized capital, we get this kind
| of situation where the organized capital tries to call for
| government to add additional rules to protect their existing ways
| of making money. What happened to wanting a free market and less
| regulation? What happened to welcoming innovation?
|
| Technology empowers people and unites communities. Sometimes
| those communities can start to organize in new ways. That's why
| we started Qbix.com and Intercoin.org - to build the tools for
| them to do so, without relying on the Big Tech oligopoly.
|
| The future is decentralized. You can't keep shutting down
| people's speech on platforms. And here we are shutting down
| people's transactions. Even if you don't like what they are doing
| or saying.
| zby wrote:
| Eighteen years ago flashmobs were disrupting some retail stores -
| but I knew they have a potential for more. Now we see flashmobs
| in the US Senate and then disrupting capital markets. It is funny
| - but also ... disruptive.
|
| Actually politics has been a part of entertainment for some time
| already - but I don't like it like that and I am afraid capital
| markets will also be worse.
| avarsheny wrote:
| Is this even legal?
| ApolloFortyNine wrote:
| Surprised no one is commenting how they stopped AAL (American
| Airlines) as well, it's not even close to being back at precovid
| levels, which would not be an unreasonable level for the stock I
| believe.
| [deleted]
| l31g wrote:
| When AOC and Ted Cruz are agreeing that something smells fishy...
| it's probably fishy
|
| https://twitter.com/tedcruz/status/1354833603943931905
| alex_c wrote:
| Big if true (have to take everything with a grain of salt
| nowadays).
|
| Can anyone with more knowledge than me comment on what
| Robinhood's exposure is in all this? My understanding is they do
| not have any direct financial exposure, only reputational risk
| (and of course downsides from their users potentially losing a
| lot of money, but that should be part of the game). Is that
| correct?
|
| And does blocking specific trades today open them up to future
| liability?
| zepearl wrote:
| Maybe they have indirect exposure derived from loans granted to
| users that are holding those stocks? Just trying to guess.
|
| Edit - related comment (about "margin requirements"):
| https://news.ycombinator.com/item?id=25942150
| nickjj wrote:
| I don't think the title of this post does the story justice.
|
| The buy UI widget under GameStop's stock symbol has been replaced
| with: "This stock is not supported on Robinhood."
|
| It seems the ability to buy the stock has been completely
| removed, however they left in the ability to sell.
|
| That is much different than "limited" because other platforms
| only prevented options trading but still allowed purchasing it
| with funds you already have.
| GVIrish wrote:
| You can't even look at the stock on RH, it's like it doesn't
| exist. Same with Nokia, AMC, etc.
|
| And all this with no explanation whatsoever. It would be one
| thing if they put out a press release or something to explain
| themselves but the fact that they did it on the sly stinks to
| high heaven.
| justaguy420 wrote:
| CTRM (Castor Maritime) to that list! important to track all
| delisted apps. Can't leave any of em behind. Don't let them win a
| single hand!
| zarkov99 wrote:
| Sure. Robinhood got a call from someone very powerful in their
| circle, politely asking them to stop the amateur plebes from
| interfering with their professional market manipulation. We are
| taking about people commanding titanic amounts of capital and
| (indirect) regulatory power. Robinhood then had the choice, do we
| make enemies out of these people or do we just screw, er, I mean
| protect, our customers? Unburdened by a moral compass or fear of
| retribution, the RH leadership made the obvious choice.
| MuffinFlavored wrote:
| Everybody screaming "class action lawsuit" is lying to
| themselves. I'm pretty confident this is totally within
| Robinhood's rights according to their terms and conditions
| (that everybody with an account agreed to).
| jandrese wrote:
| EULAs can't override federal law.
|
| That said, even if the SEC does rule against Citadel I
| wouldn't expect the fine to be anything that bothers Citadel.
| The message time and time again is that the fees are way less
| painful than not cheating in the first place.
| zucker42 wrote:
| Robinhood isn't only limited by its terms and conditions;
| there are also laws it has to comply with.
| ypeterholmes wrote:
| So is closing the account and moving to a better app.. Robin
| Hood is going to take this on the chin.
| simias wrote:
| While what you say is plausible, can't it also simply be that
| they saw a gigantic portion of their userbase making these
| incredibly risky bets and they were worried that it'd end up
| blowing in their face?
| isoprophlex wrote:
| WSB have been yoloing their trades since forever.
|
| This is some anticompetitive bullshit, plain and simple.
| newfeatureok wrote:
| That doesn't make any sense because they still allowed them
| to sell, realizing a loss. Why not stop buying and selling?
| castlecrasher2 wrote:
| This right here. Only allowing sells appears to be
| blatantly anti-retail investor, intended to help drive down
| prices for those with short positions needing to be closed.
| imtringued wrote:
| Exactly. How are retail investors supposed to benefit if
| they are forced to wait until the stock they just bought
| tanks? If anything that's a direct attack at the value of
| your portfolio.
| beagle3 wrote:
| A broker is nit your friend who refuses to buy junk food for
| you because he suspects you'll be sick.
|
| A broker is yiur fiduciary/agent; their discretion at
| refusing your order should be limited to well defined
| circumstances, and I would be surprised if this is one of
| them.
|
| (I would not be surprised if the EULA lets them do what they
| want, but I would be surprised if it would actually be found
| legal in court --- though it will likely take ages to test
| because it likely contains a binding arbitration clause)
| simias wrote:
| It's not what I was trying to say, of course they're not
| your friend, I'm not that naive. But on the other hand if
| many of their users go bankrupt because of poor trades that
| could backfire against Robinhood themselves, directly or
| indirectly (for instance by motivating new regulations).
| EEMac wrote:
| Sorry, but no. Concern for the little people isn't even
| _slightly_ indicated by Robinhood 's actions.
| [deleted]
| jacobsenscott wrote:
| Only a small fraction of RH's customers bought into the fantasy
| they are fighting some kind of revolution against hedge funds
| (or that 'the smoking man' paid them a visit in the night...).
| The vast majority don't care about any of these stocks. Also,
| by making trading so easy RH has a responsibility to protect
| amateur investors from making terrible financial decisions. If
| you really want to buy game stop stock or whatever there are
| plenty of ways to do so. So they are by no means "screwing"
| their customers.
| imtringued wrote:
| >The vast majority don't care about any of these stocks.
|
| Are you crazy? Robinhood just sent a message to retail
| investors (it's entire customerbase) that they are going to
| crush you at any given time. By using Robinhood your are
| exposing yourself to extreme risk of losing your investments
| no matter what stock you trade.
|
| >Also, by making trading so easy RH has a responsibility to
| protect amateur investors from making terrible financial
| decisions.
|
| WSB is about making terrible financial decisions as a sport.
| That's the entire point.
| colonwqbang wrote:
| > Also, by making trading so easy RH has a responsibility to
| protect amateur investors from making terrible financial
| decisions.
|
| I strongly disagree with this. Nobody can know beforehand
| what is a good investment or not. The omnipresent disclaimer
| applies: "All investments involve risks, including the
| possible loss of capital."
|
| The idea that the professionals know something that the rest
| of us don't, is quite controversial and there are many
| articles giving evidence to the contrary.
|
| https://www.researchgate.net/publication/234025489_The_Activ.
| ..
|
| This idea is also quite condescending (my own opinion, no
| references given).
| always_left wrote:
| Protecting them is one thing, but ceasing all buys before the
| market opens and without warning is irresponsible.
| rayhendricks wrote:
| Yeah there's something going on here. But they don't realize
| that the Streisand effect will be or in full force in this.
| People are going to freak.
| cft wrote:
| All robinhood orders go to Citadel for execution because that
| is how they make money. Citatel just bailed out Melvin who
| shorted GME https://www.cnbc.com/2021/01/27/hedge-fund-
| targeted-by-reddi... So the call to Robinhood was probably from
| Citadel. It's disgusting that instead of saying just this, they
| hypocritically "protected" their users.
| cft wrote:
| To the two downvoters , this is 1h after I wrote the comment:
| https://twitter.com/justinkan/status/1354853920762253315
| xiphias2 wrote:
| It's Citadel, they are holding the shorts, and they are the
| main customer of Robinhood.
|
| I think Citadel is winning this war, but people are moving in
| masses to Fidelity now that they learned why Robinhood is
| ,,free''
| slim wrote:
| is robinhood a publicly traded company? are there any
| alternatives?
| jaywalk wrote:
| They're very close to doing an IPO. Or at least they were,
| before today. This could very well end up destroying the
| company.
| Aunche wrote:
| This narrative doesn't make any sense. Hedge funds aren't a
| monolithic entity. Some hedge funds lost billions of dollars on
| shorts. Redditors made millions of dollars. Where do you think
| the rest of the money went to? That's right, other, more
| powerful, hedge funds. BlackRock held 9.2 million shares as of
| a few weeks ago.
| dan-robertson wrote:
| BlackRock hold everything. It doesn't really mean anything to
| say that they hold a lot of shares in some particular
| company. You might as well have just written "GameStop is a
| publicly traded US company" and one would deduce that
| BlackRock owns a lot of shares in it.
| the_local_host wrote:
| BlackRock had 13% of GameStop. That's more consistent with
| taking a real stake than just happening to own it along
| with a piece of everything else.
|
| https://www.reuters.com/article/us-blackrock-investment-
| game...
| MichaelDickens wrote:
| BlackRock owns a similar % of the entire market, so this
| isn't too surprising. BlackRock has about $9 trillion
| AUM, and the global stock market is worth around $100
| trillion. (Not all of that $9 trillion is stocks, but
| BlackRock still owns a notable percentage of the total
| stock market.)
| [deleted]
| m4eta wrote:
| Linkedin is your friend. A lot of top people came from
| Blackrock. lol.
| Kranar wrote:
| There is a saying that if you're not paying for a product,
| you are the product.
|
| Robinhood's real customer, the paying customer isn't the
| users of its app, which they offer out for free. It's actual
| paying customers are HFT firms, and specifically Citadel, the
| same Citadel that on Monday bailed out Melvin Capital with a
| 3 billion dollar loan.
|
| Wouldn't surprise me one bit to find out Citadel called up
| Robinhood and said either shut this GME trading down or
| they're pulling the plug.
| Aunche wrote:
| Melvin Capital closed out their short positions, so what
| exactly does Citadel stand to gain here?
| Kranar wrote:
| I do admit to speculating here, but I am speculating that
| Melvin Capital did not close out their short position.
| Their claim to CNBC leaves a lot of room for
| interpretation, misunderstanding, and it's an informal
| statement.
|
| We won't know what Melvin Capital did until they submit
| their next 13F filing.
| avs733 wrote:
| not having a RH account, can you trade there on leverage? I
| imagine if a huge number of retail traders are ending up
| leveraged to high hell, RH may have ended up in an uncanny
| financial position because of this.
| tfehring wrote:
| You can (and people frequently do) trade options on RH,
| which are inherently leveraged. But RH is just a broker -
| it's not on the other side of the trades itself.
| avs733 wrote:
| ah okay. I wasn't sure what services RH offered and
| didn't. The amount of meme-ery around them had me
| wondering if they had decided to go beyond being a broker
| to try and extract more money from users like they do by
| selling access to their order flow.
| wfhpw wrote:
| Then they can enact a moritorium on leverage buys to
| protect themselves. They have no liability for clients who
| are buying without leverage.
| dv_dt wrote:
| I think the biggest thing RH offered that they may have
| been justified in curtailing is fractional stock buys and
| buys on margin. But to stop trading on buys outright is
| very strange.
| tfehring wrote:
| BlackRock isn't a hedge fund, it's (primarily) an index
| provider and just holds stocks including GME on behalf of
| clients who invest in wide swaths of the market at once. Most
| of the profit has probably gone to passive investors who own
| a little bit of GME as part of a diversified portfolio. (I'm
| pretty sure that group includes me but I'm not even 100%
| certain of that.)
| alexfromapex wrote:
| So the exact opposite of what the real Robinhood would do?
| psswrd12345 wrote:
| 100% this, very eloquently said
| joering2 wrote:
| Now they made enemies of most of their clients. I bet not more
| than few weeks before you will see advertising from big shot
| lawyers on national TV welcoming you into class action
| lawsuits. Frankly, I am terribly disgusted by this news from
| Robinhood and I hope they will be sued into eternity... and
| then hopefully DOJ step in an see what they did was illegal. If
| you have Robinhood account, write you state AG. Show your
| outrage in writing so they can also get involved.
| techsupporter wrote:
| > you will see advertising from big shot lawyers on national
| TV welcoming you into class action lawsuits
|
| Like all darling start-ups, Robinhood has a section of its
| terms of use whereby users give up their right to sue.
|
| Because courts are only for the rich and those with the power
| to negotiate. The rest of us clicking on take-it-or-leave-it
| contracts can pound sand.
|
| Section 38: https://cdn.robinhood.com/assets/robinhood/legal/
| Robinhood%2...
| f-word wrote:
| Hi! Sorry, not an american.
|
| Exactly how is it legal to forego your right to a fair
| trial on an "agreement" between two parties who for any
| intents and purposes do not know each other?
| jaywalk wrote:
| Clauses like this are put in there to try and protect
| from nuisance lawsuits. But in a case like this, it will
| certainly not protect them.
| WrtCdEvrydy wrote:
| What if you're not a user and these trade restrictions
| affected your trades outside of the RH platform?
|
| It's illegal to dump products on a market (physical
| products) below price... yet some a-hole can force their
| plaform into "sell-only" mode and it's all cool.
| headsupftw wrote:
| Speaking of which,
| https://twitter.com/ljmoynihan/status/1354836830169006081
| MrMan wrote:
| there are lots of other ways to trade stocks and they will
| all limit your ability to trade any old thing depending on
| the state of the market, the state of your balance sheet, the
| state of their balance sheet. why do you care about one
| particular crappy retail broker?
| victor106 wrote:
| It didn't make much sense to me yesterday when Chamath and
| others were saying the system was rigged against the small
| investors. It totally does today. These actions are nothing but
| The powerful signaling to the small investors whose turf they
| encroached on.
|
| I just shutdown my Robinhood (they have the audacity to use
| that name while stealing from the poor) account
| raducu wrote:
| Citadel runs robinhood transactions and Citadel bailed out the
| hedgefunds.
|
| The house(Citadel) always wins.
| dang wrote:
| We detached this subthread from
| https://news.ycombinator.com/item?id=25941689.
| vergessenmir wrote:
| This is so true. It's all connected. It's probable that Reddit,
| Discord, RobinHood have all received calls to disrupt retail
| traders from political players or financial backers. There's no
| evidence of this, the truth is we'll never know, but how its
| most obvious reason. If only RobinHood would live up to its
| namesake. It is alarming that "soft" circuit breakers are being
| used to target retail traders on exchanges.
|
| <rant>
|
| I rarely emote but this stinks to high heaven, corporates and
| politicians doing anything to keep necks under boots.As
| upsetting as it is to see folk fighting back capped at their
| knees, the broader issue is that of censorship, of the soft or
| hard variety, and coordination across firms to limit movements.
|
| </rant>
| josho wrote:
| I look forward to the investigations on market manipulation
| that RH, Schwann, and TD did by not allowing their customers
| to trade on that stock.
|
| Or is it normal for brokers to independently halt trades on
| stocks they deem too risky?
| potta_coffee wrote:
| "Investigations for thee and not for me." Or, I think no
| investigation will occur.
| ianai wrote:
| Pretty sure what the WSB traders were doing could qualify
| for market manipulation and various securities frauds in
| broad daylight.
|
| I honestly hope not, and that RHb etc are in the wrong. But
| it's sure to be informative anyway.
| doggosphere wrote:
| There's something different about "organizing" raids in
| the public eye though.
|
| There's no actual group consensus, no agreements, no
| negotiation, none of the processes that are required to
| actually "cooperate".
|
| What happens is a a leader throws a bet at the wall and
| says "FOLLOW ME!". But no one is compelled or committed
| to any kind of action. This is the same thing as any
| analyst or short seller publishing their thesis and
| disclosing that they have a position. Its protected as
| freedom of speech.
|
| Now, if the discord group or elsewhere have private
| circles about which stocks to raid and when, that is
| obviously a different matter. But I don't think that is
| the phenomenon that is occurring. This is a broader
| social movement.
| realusername wrote:
| That's the same as any market analysis you can read on
| any blog or mainstream media though. Somebody will just
| say "buy that stock" and people might agree with the
| analysis or not. If you think what they have done is
| market manipulation, so is every other financial
| newspaper out there.
| dbancajas wrote:
| > g to insulate these people from losing their money will
| actively make people lose money. The dip to the low $130
| was directly caused by the actions they're taking.
|
| > But on the flipside, imagine w
|
| Due diligence and disclosing your position is not "market
| manipulation". Mainstream media wants it to look like
| that. Even the DFV, who spearheaded the GME position got
| a lot of flack early on.
| xapata wrote:
| Usually it's the exchange that halts or throttles trading.
| josephjrobison wrote:
| Right I'm seeing Vanguard not allowing it which I don't
| believe is connected to Citadel.
| conductr wrote:
| Exactly. The entire market should be impacted equally. A
| brokerage making this decision is problematic. I'd fear
| now the WSB gang turns to class action lawsuit on RH et
| al for preventing them from exiting their positions,
| after ... well, allowing them to enter those positions.
| You know, the job of a brokerage.
| jaywalk wrote:
| Robinhood has not prevented anyone from closing their
| position. They've only prevented people from buying these
| stocks.
| fennecfoxen wrote:
| > Or is it normal for brokers to independently halt trades
| on stocks they deem too risky?
|
| Yes. It is exactly normal.
|
| One. Brokers are required to act in the best interests of
| their clients. What is that? Well...
|
| "A broker who becomes a fiduciary of his client must act
| with utmost good faith, reasonable care, and loyalty
| concerning the customer's account, and owes a duty to keep
| informed regarding changes in the market which affect his
| customer's interests, to act responsibly to protect those
| interests, to keep the customer informed as to each
| completed transaction, and to explain forthrightly the
| practical impact and potential risks of the course of
| dealing in which the broker is engaged."
|
| -- Rupert v. Clayton
|
| Two. Robinhood is already under scrutiny already for trying
| to gamify trading, on the premise that it encourages people
| to treat things like a casino and lets them get hurt in the
| name of their own profit. They are on thin ice as it
| stands.
|
| Three. This whole thing is going down like the Pequod,
| complete with the impassioned revenge monologue. "To the
| last I grapple with thee! From hell's heart I stab at thee!
| For hate's sake I spit my final breath at thee!"
|
| If Robinhood _didn 't_ do something, they would soon learn
| what the true wrath of the regulators really looks like.
| Much, much better to drop Gamestop like a hot potato.
|
| Some recent examples of similar actions:
| https://www.reuters.com/article/us-tvix-brokerages/schwab-
| co...
| moistrobot wrote:
| Brokers are not fiduciaries. https://www.forbes.com/sites
| /forbesfinancecouncil/2020/06/17...
| manigandham wrote:
| Best interests means facilitating trades as best as
| possible, not trying to protect clients from their own
| trades. No broker is attempting to preserve your capital.
|
| What they will do is protect _their_ capital over yours
| by raising margin requirements and initiating special
| rules to limit their risk. They don 't care if you blow
| up your account, as long as you don't owe them at the
| end.
| cbozeman wrote:
| > Or is it normal for brokers to independently halt trades
| on stocks they deem too risky?
|
| Absolutely not, and I almost typed "LOL" in front of that
| because your question - while genuine and sincere - is so
| ridiculous in the context of the stock market that it
| actually made me laugh out loud.
|
| Brokers _are more than happy_ to allow unsophisticated
| investors to buy or sell any stock. They won 't let you use
| sophisticated products like options, etc., but simple
| _buying and selling_? Absolutely. What 's happening here is
| simple. The wrong people are getting rich. The wrong people
| are losing money. That cannot be allowed.
|
| There _is_ something called the "pattern day trading rule"
| wherein someone buys and sells the same security several
| times and their ability to buy and sell gets restricted,
| but that's not what's happening here. People wanting to buy
| $GME are wanting to buy and _hold_. Not sell.
| NathanKP wrote:
| On the pattern day trading rule its also worth noting
| that you are exempt from that above $25k on Robinhood. As
| I watched the subreddit over the past few weeks I saw a
| lot of folks happy that their account was now no longer
| subject to the pattern day trading rule. They started out
| below $25k but growth in GME value pushed them over $25k
| BoorishBears wrote:
| Edit: A lot of people fixating on the fact broker-dealers
| aren't investment advisors...
|
| https://www.sec.gov/rules/other/2013/34-69013.pdf
|
| SEC has already started providing guidance on that
| loophole. They're not a fiduciary, but there's a want
| from the SEC to have their operation start to be more in
| line with if they were one ("harmonization")
|
| After all RH does advertise popular stocks, they put out
| news branded digests of the market, it does show users
| gamified views of things like options, they have an
| entire "learning platform" meant to guide you through the
| market.
|
| It's not an investment advisor, it doesn't have a
| fiduciary duty but the SEC wants broker-dealer behavior
| to better reflect the fact that retail investors assume
| that the platforms they use to trade are aligned with
| their financial goals
|
| ----
|
| So disclaimer: I was holding large amounts of GME and AMC
| and sold this morning as a direct result of this news.
|
| But I really don't get why people are so shocked.
|
| People who started this wanted to buy and hold until
| shorts are kill.
|
| Then people who heard about this plan after it started
| working joined, they still wanted to hold _but_ their
| reasoning was starting to get a little removed from the
| original goal. This group is slightly bigger than the
| first
|
| Fast forward a few days and suddenly this stock that just
| keeps going up by hundreds of dollars a day is in the
| news, people don't quite get what's happening, but it
| looks like a magical money fountain. And as a bonus this
| magic fountain is a big FU to the man? Sign me up! This
| group is exponentially bigger than the first, and
| exponentially less understanding of why this is
| happening.
|
| -
|
| At this point retail money is flooding into this stock
| left and right, and people are starting invest money
| _they cannot afford to lose_.
|
| The problem for these brokers is when this musical chairs
| dance stops, retail investors will be holding the bag.
| Full stop.
|
| But more importantly, those clueless people just buying
| GME because they have some vague idea of "it goes up" and
| "we're rebelling" are going to lose their shirts. The
| people in the first group who were doing this for the
| principle of it and as a YOLO don't really care, it's
| "fuck Melvin" all the way...
|
| But the people in the last group are going to feel
| blindsided.
|
| -
|
| This feels like damned if you do, damned if you don't.
| The action of trying to insulate these people from losing
| their money will actively make people lose money. The dip
| to the low $130 was directly caused by the actions
| they're taking.
|
| But on the flipside, imagine what would have happened
| during the rally to $400 this morning. We likely would
| have seen another breakout that puts all options ITM...
|
| The fact is, the dance will end. The idea is buy and
| hold... but for the newest cohort there's an implied
| "until the money fountain stops".
|
| And the higher the share price is when that happens, the
| more it will hurt. (and make no mistake, some hedge fund
| might be hurting, but the big guy can navigate this. If
| it takes making Congress halt these stocks they'll do it)
|
| This has been a fun ride, and thrust the insane
| inequality of our financial systems for normal
| individuals and cash flushed "institutions" into the
| spotlight... but I can't pretend I don't understand _why_
| it 's happening.
| ves wrote:
| Brokers aren't fiduciaries.
| imtringued wrote:
| >At this point retail money is flooding into this stock
| left and right, and people are starting invest money they
| cannot afford to lose.
|
| Yes, lets do them a favor by destroying the value of
| their life savings they just invested.
|
| >The problem for these brokers is when this musical
| chairs dance stops, retail investors will be holding the
| bag. Full stop.
|
| Are you new? That's the entire reason wallstreetbets
| exists in the first place. It was always about losing
| money on purpose.
| BoorishBears wrote:
| > Yes, lets do them a favor by destroying the value of
| their life savings they just invested.
|
| Comment pointed out that this hurts retail investors
| badly. I literally attributed an almost 50% drop to their
| actions.
|
| But it covers their asses, and it reduces the number of
| people who can lose their life savings with them. Note
| the "with them" part
|
| > Are you new? That's the entire reason wallstreetbets
| exists in the first place. It was always about losing
| money on purpose.
|
| Are _you_ new? WSB has always had clueless people trying
| to ride it 's coattails, there's the "As and the Rs" for
| a reason. That's why it used to go private even more
| often than this.
|
| My comment explains like 3 different ways that the people
| who did this made a YOLO with "fuck melvin" in mind don't
| care.
|
| But there's suddenly an entire clueless public trying to
| clutch onto it, and they don't really know or care what
| Melvin and yolo and WSB are, they just see a ticker keeps
| going up because of those reddit guys
|
| -
|
| You should read comments before you reply. It's a lot of
| words but if you're willing to take the effort to reply,
| take some effort to read.
| llampx wrote:
| You've been defending the actions of the brokers and
| defending the hedge funds since yesterday. What's up?
| Hate the little guy much?
| BoorishBears wrote:
| What kind lazy non-comment is this?
|
| I didn't talk about any actions of any brokers yesterday
| or hedge funds yesterday, and besides, do you think a
| hedge fund has a HN account?
|
| -
|
| Also, hate rationale discussion much? You couldn't refute
| a single thing I said, the brokers can do something that:
| I don't like, was self-serving, and good for shorts...
| but was also the least damaging call for retail... all at
| the same time.
|
| It sounds like you're taking a bath because you didn't
| respond to the most blatant sell signal I've ever seen in
| my life and looking at someone to lash out at...
|
| Pro tip for next time: If your plan works because people
| are buying and holding... if they can't buy it's probably
| going to go south.
|
| It was a lose lose situation, the point of halting buys
| is to stop the pump... if it didn't stop the pump they
| would have halted the stock.
|
| In fact if GME breaks out and doubles again count how
| long until it gets halted _period_ for an
| "investigation".
|
| Everyone was playing musical chairs and the music
| stopped. Don't get mad at me because you didn't try and
| find a seat.
| slivanes wrote:
| From what you describe, brokers are protecting the retail
| investor? Awesome, I can feel free to make any
| speculative decision and they will protect me from myself
| if it goes south. Where can I sign up to one of these
| brokers that guarantee I am safe?
|
| I disagree with your assessment, these brokers are
| preventing purchases of these stock, there is no risk for
| the broker in this regard.
| slg wrote:
| These companies are still businesses. They won't care if
| you, a single retail investor, screw up and lose a lot of
| money. However it is dangerous for the future health of
| their business if a sizable portion of their retail
| investors take a bath on this, get turned off by that
| experience, and end up stop using the service.
| imtringued wrote:
| You aren't thinking straight. Millions of people bought
| GME for a single reason and Robinhood denied them that
| reason. If anything this is going to piss them off even
| more.
|
| I don't even have a Robinhood account and it is now
| guaranteed that I will never use Robinhood in my entire
| life because they are total scumbags.
| slg wrote:
| Those people might be angrier at this specific moment,
| but I don't think that will last long. Losing real money
| currently in your possession is always going to be more
| painful than losing out on future earnings that were
| always theoretical. Once GME drops back down to some
| normal levels, which is only a matter of time, the anger
| of restricting trades will fade. The anger from people
| who lost a lot won't fade as easily.
|
| I don't have a Robinhood account either. They are plenty
| of reasons why I would avoid doing business with that
| company. I still don't think this is as bad a business
| move as some people here are claiming.
| HappySweeney wrote:
| How will those investors feel when they are
| paternalistically told the trade they want to make is too
| risky, and then end up losing out on 3x gains as a
| result?
| llampx wrote:
| Let's not beat around the bush, RH doesn't care about
| it's users, it cares about it's clients. Including
| Citadel, who has a LOT to lose if all the options are ITM
| tomorrow.
| BoorishBears wrote:
| Brokers are covering their asses. You're projecting a
| positive spin on this when I literally said "this is
| actively hurting investors"
|
| -
|
| Something insane is happening, claims of market
| manipulation are flying, Congress is saying they're going
| to investigate, what started as a meme is suddenly
| picking up more daily volume than SPY...
|
| There's going to be a bloodbath, and their options are:
|
| - do absolutely nothing, watch people get slaughtered.
| This is what they normally do!
|
| - start removing yourself from the blast radius and pop
| the bubble, watch people get slaughtered.
|
| The second case still hurts people, it's not some
| benevolent thing they're doing! They're doing it because
| it covers their asses a bit.
|
| Because this time with all the tricky stuff happening
| with claims of manipulation, the insane volatility, the
| insane publicity, and most importantly _the insane
| volume_ , they're afraid they might be opening themselves
| up to some sort of liability.
|
| sec.gov/rules/other/2013/34-69013.pdf
|
| Broker-dealers aren't supposed to hold your hand, but
| there is guidance that they should provide some
| meaningful sort of hand rails for retail investors.
|
| Usually they make money either way and sit back, but this
| time the same way the masses have been concentrated at a
| stock ticker, the masses (and Congress) could end up
| concentrated at their door step asking why they let this
| happen...
|
| They'd rather have AOC threatening to ask why a stock
| that's been spiked %1,400 in a month was deemed too high
| volatility for clients than the SEC asking why they let
| so many people take a bath on a meme gone wild...
| beezle wrote:
| Brokers can and do change margin requirements in times of
| high volatility. For instance, IB raised margin reqs
| going into the election on many products.
|
| Also, I am fairly certain that no broker is under
| obligation to provide you trading access to any specific
| stock or futures contract. There are many futures I would
| like to have access to trade but are unavailable at
| retail.
|
| If you have an existing position, they are likely
| obligated to allow you to close out.
| bingojess wrote:
| https://www.finra.org/rules-guidance/rulebooks/finra-
| rules/5...
|
| Without such regulation what would stop any bad actor
| from colluding with brokers to halt trading a moments
| that benefit themselves? Pretty hard to enforce or prove
| in practise but the idea that brokerages can prevent
| groups of users from accessing markets willy nilly is
| absurd. This is for cash products no any futures/options,
| even for those once they grant access it should not be
| taken away
| beezle wrote:
| Nothing in that regulation stipulates that a broker must
| provide access to a market in any (and therefore every)
| security. Specifically, it refers to _any transaction_
| Clearly, a transaction can 't occur unless the broker
| agrees they will provide that security for trade.
|
| As to your second point, it would not be in a broker's
| best interest to change access to certain securities
| 'willy nilly' as they will lose business and clients.
| Whap happened today was not an arbitrary decision.
|
| Would you be arguing if these brokers raised the margin
| requirement on Gamestop, etc to 99%? That is within their
| rights to do so, the SEC only sets a regulatory minimum
| margin req, not (to the best of my knowledge) a maximum.
|
| People seem to forget that many people "trading" Gamestop
| and the like are doing so on margin. As such, the broker
| dealer has financial risk that you will not be able to
| pay your loan back, ie by a close out of positions. Is it
| reasonable or unreasonable to expect that the eventual
| decline in these stocks will be rapid with sizable gaps?
| How many of the Robinhood traders are going to cry bloody
| murder when they are automatically closed out 10s,
| perhaps a hundred points lower from when the call was
| triggered?
| sharkweek wrote:
| "This is Wall Street, Dr. Burry, if you offer us free
| money, we are going to take it."
|
| https://www.youtube.com/watch?v=Cxjdj5_5yNM
| amrrs wrote:
| Everything that's happening is just reminding of the Big
| Short, Flash Boys and generally what Michael Lewis has
| been saying
| dwater wrote:
| It reminds me of Reminisces of a Stock Operator (1923) ht
| tps://en.wikipedia.org/wiki/Reminiscences_of_a_Stock_Oper
| a... Wall Street does not exist so that an individual can
| invest $100 and make a profit. It exists so that
| financial institutions can invest $100M and make a
| profit. It benefits from the illusion of the former
| though so the public is encouraged to believe that.
| StavrosK wrote:
| "I'm sorry, are you for real? You want to pay against the
| housing market and you're worried _we_ won 't pay _you_?
| "
| chipotle_coyote wrote:
| This may be another genuine but ridiculous question,
| but...
|
| I think "the wrong people are losing money" is right on
| point, and to be clear, I don't think Robinhood has any
| business stopping people from buying stocks if they want
| to. But I am really wondering about how many people are
| getting _rich_ from this stock pop. When the dust from
| all this settles, aren 't a lot of the folks buying the
| stock over the last week or so going to end up
| underwater? My assumption has been that they saw that as
| an acceptable price for a jolly time Sticking It To The
| Man. And, back in the long ago (e.g., last week) when the
| stock price was $20 or $30 a share, that makes sense if
| you have the money to burn. But at $200+ a share, what's
| the rationale for holding on?
| JumpCrisscross wrote:
| > _how many people are getting rich from this stock pop_
|
| The people getting rich are the market makers. This is
| the hole in the Wall Street vs. the Rebels argument the
| media seems to be trying to pigeonhole this into.
|
| The first-order losers are the hedge funds who, for some
| stupid reason, expressed their short view through actual
| shorting versus through puts and the retail investors who
| bought at inflated prices. The second-order losers will
| be the brokers, who will likely face margin losses,
| options-settlement losses, investor lawsuits, regulatory
| fines and Congressional attention for enabling the pump
| and dump and then ham-fistedly trying to stop it.
| TuringNYC wrote:
| The other first-order losers are RH retail investors who
| just made a huge unrealized gain and are not allowed to
| realize the profits by selling in time. I'm on TD and
| they arent allowing in-the-money call option sell-to-
| closes to execute.
| chipotle_coyote wrote:
| That's what I'm mostly concerned about, yes. If my
| understanding about the initial involvement of the Reddit
| crowd is correct -- that it was really about "let's pump
| this stock up to screw hedge funds that are shorting it"
| -- that group is presumably okay with losing their
| investment. But I can't help suspect that over the last
| few days, that group has become outnumbered by investors
| who figured they could take advantage of this weird pop
| by buying and selling within a very short time frame,
| which it sounds like you're in, and possibly even by
| investors who want to _hold_ the stock, not understanding
| that -- even without Robinhood 's interference -- it's
| likely set up for a fall just as quick as its rise.
| TuringNYC wrote:
| Part of the thing is -- I dont have a margin account. I'm
| not leveraged. The whole bit about "protecting the retail
| investor" is absurd. There is nothing to protect and they
| face no harm from me since its not margined. I can lose
| all my equity and that is it. I am the one who faces harm
| -- because I cant actually get out of the trade of a
| lifetime.
|
| Second thing -- I think there were many things going on
| and many cohorts on WSB.
|
| - Cohort 1: possibly pump and dump (though, this happens
| all the time with hedge fund managers also trying to move
| their position...)...or perhaps 22yos excited by
| GameStop, not that hard to imagine. GME has been a huge
| discussion on WSB for months.
|
| - Cohort 2: 22yos YOLO'ing their weekly stipend and
| stimulus check. No real though about pump and dump and
| more so just silly gambling.
|
| - Cohort 3: Intelligent investors seeing an opportunity,
| not manipulating any more than a hedge fund manager does
| (see: Infinite Gamma Squeeze notice: https://www.reddit.c
| om/r/stocks/comments/l3e54f/gme_infinite...)
|
| - Cohort 4: Downtrodden retail "investors" looking to
| stick it to the man: https://twitter.com/inactivist_/stat
| us/1354537152445521923/p...
|
| - Cohort 5: Onlookers on WSB (im a frequent reader, never
| post) looking to hitch a wagon to the runaway train.
| throwaway09223 wrote:
| I think you're touching on why brokerages have tried to
| come down hard on GME. The brokerages themselves have
| exposure as you explain -- they have a direct financial
| stake.
|
| Maybe someone at RH ran the numbers on how much they
| stand to lose if things go sideways and decided it poses
| an existential threat.
|
| It's the only reason I can think of because halting GME
| when more than half of their customers hold GME seems
| like a company ending event.
| jonas21 wrote:
| > more than half of their customers hold GME
|
| This is incorrect. See the correction at the bottom of
| the article that originally reported that figure [1]:
|
| _Correction: An earlier version of this article stated
| that 56 percent of Robinhood users hold GME stock. This
| is incorrect, based on a misreading of a statistic on
| Robinhood. Motherboard regrets the error._
|
| [1] https://www.vice.com/en/article/m7ak7y/r
| vergessenmir wrote:
| This is unlikely. The regulators are on the side of the
| financial institutions since the unusual activity is coming
| from retail traders.
|
| The NASDAQ CEO, Anna Friedman has already said they will
| stop trading on a stock if they match chatter from social
| media with a stock's movement. Her justification is to
| allow them "time to investigate" the situation.
|
| SEC lawyers have stated also that justification for
| investigation come when "volatile trading fuelled by
| opinions where there appears to be little corporate
| activity to justify [price movements]".
|
| It's a ridiculous assertion since several banks and funds
| use alternate data sources to inform their buy and sell
| decisions. These alternate, or non-traditional, sources of
| data are usually many steps removed from corporate company
| announcements and news headlines.
|
| Saying all that to say that legal positions are shoring up
| on the side of the exchanges and professionals.
| arminiusreturns wrote:
| > The regulators are on the side of the financial
| institutions since the unusual activity is coming from
| retail traders.
|
| I call BS. I mean you might be right that they are on the
| side of the institutions, but it's not because retail is
| unusual, it's because it's a big old boys club and they
| don't want the plebs getting uppity. MM's exposed
| themselves by massively naked short selling into very
| risky territory, which is illegal and what the regulators
| should be more interested in, as it is what enabled all
| this to happen in the first place!(1)
|
| It's well known that the SEC is a toothless wonder that
| doesn't go after the malfeasance right under it's nose
| but loves to go after middle and low end people, with
| maybe a smattering of high profiles just for the optics
| (come to think of it, very much like the IRS). The legal
| system is part of that corruption. So you may be right
| that the legal positions are shoring up on their side
| (though I think its very possible you are wrong), but
| that doesn't make it the right, or just, state of things!
|
| I think we are living in a moment of history that will
| lay bare just how abusive and illegally manipulative the
| whole system is against retail and there is going to be a
| backlash that isn't inconsequential.
|
| [1] https://www.sec.gov/answers/nakedshortsale.htm
| EVdotIO wrote:
| Are they going to start monitoring Bloomberg chat now as
| well?
| jaywalk wrote:
| No, of course not. It's perfectly fine when _they_ do it.
| vergessenmir wrote:
| Of course not. They're probably just going to wait until
| this blows over and get back to business as usual.
|
| The way it's panning out now they probably won't go down
| the regulatory route. They already have levers that they
| can pull if the behaviour happens again, through the
| platform (Robinhood and the like) limiting trading or
| having Reddit or Discord ban or suspend groups on
| spurious grounds such as hate speech.
|
| Why go down the legal route when you can give a soft
| nudge to board members and still get the desired outcome?
| moistrobot wrote:
| Brokers don't have a fiduciary interest, unlike Asset
| Managers. So, no. They have no obligation to halt trades,
| usually they make money on volume of trades and would
| encourage people to trade more. https://www.forbes.com/site
| s/forbesfinancecouncil/2020/06/17...
| beagle3 wrote:
| Do they have the legal privilege to do it? I suspect not,
| because if they did, they would be able to kill a company
| by not let anyone buy its share.
| AndrewBissell wrote:
| There won't be any serious investigation leading to a
| bombshell revelation like "Citadel told Robinhood to stop
| buying in $GME." The same people pressuring RH, Discord,
| etc are also quite adept at pressuring politicians and
| regulators.
|
| There will probably be some hearings for show, but nothing
| more.
| shakezula wrote:
| Idk if it is or not but it feels like crazy levels of
| illegal to be able to just halt buy orders like that.
| Imagine the inverse, if they just halted sell orders on a
| stock they were deeply invested?
| inlined wrote:
| If not criminal it sounds like a class action lawsuit.
| sleepybrett wrote:
| https://www.reddit.com/r/wallstreetbets/comments/l6yrs3/w
| e_a...
| shakezula wrote:
| Others in this thread are pointing out issues with
| arbitration, which really muddies the water on how this
| can be handled. Definitely complaining to the SEC though.
| Imagine if they did the inverse of this, and stopped
| anyone from being able to sell a stock they were heavily
| invested in. That would be absolute madness. It's the
| exact same ass-covering.
| twadfas wrote:
| Arbitration is usually bad for consumers but in volume it
| can be terrible for the offending company. Ususally folks
| dont go through it with but if you get WSB to ally and do
| mass arbitration to stick it to the man robinhood is an a
| world of hurt on legal costs.
| munk-a wrote:
| I think RH can probably hide behind the excuse of "We
| thought it was a pump and dump scheme and tried to cool
| down the market". I'm not certain this isn't, somewhere
| in its core, a pump and dump scheme, even if the majority
| of people buying seem to be honest in their intentions.
| beagle3 wrote:
| This is purely fundamental. As of this morning, short
| interest was still 139% of float - which means that there
| are still exist buyers who will pay any price, no matter
| how high - or default on their shorting obligation.
|
| Is it anything but rational to buy something you know
| someone is willing to pay any price (at this point in
| time) with the intention of selling it later?
| mtgx wrote:
| Looking forward to the "record-breaking" $5 million
| settlement.
| [deleted]
| supernovae wrote:
| I've noticed that EFTs that typically happened in 24 hours
| all the sudden require nearly a week. Even from places that
| have auto-drips enabled.
| jay754 wrote:
| Are they really going to be investigated? Like honestly.
| mgolawala wrote:
| When Wall Street is making billions off of selling balloon
| interest mortgages with no income verification the position
| is "The consumer is an adult and can make decisions for
| themselves and read the fine print.... blah blah blah ..
| personal responsibility."
|
| When the people are causing Wall Street to lose billions on
| their absurdly large short position, suddenly they are
| concerned for the "amateur" investors. The "unsophisticated"
| investors. "We need to save them from themselves, we have to
| do something, they don't know what they are doing! How could
| they possibly be responsible adults taking this position that
| is hurting us financially? I know! Let's strap on these
| training wheels for their own good so they cannot hurt
| themselves _cough_ or us _cough_. "
| omgwtfbyobbq wrote:
| That's pretty much it.
|
| I remember seeing something similar during Tesla's run up,
| where firms would force individual investors to sell their
| call options because the investor would have tax liability
| once their call options were profitable.
|
| Course, it also had the effect of reducing the amount they
| would have made by forcing them to sell early.
|
| Tails we win, heads you lose.
| munk-a wrote:
| Just as a note - Elizabeth Warren is pretty much on the
| same page:
|
| > "For years, the same hedge funds, private equity firms,
| and wealthy investors dismayed by the GameStop trades have
| treated the stock market like their own personal casino
| while everyone else pays the price."
|
| I find it interesting that folks feel empowered to call out
| the BS even when they've got a pretty big spotlight on them
| - instead of being shushed to quiet by monied interests.
| munificent wrote:
| Socialism for the rich, capitalism for the poor.
| [deleted]
| deelowe wrote:
| The reddit narrative is wrong. WSB marked their sub private
| for a little while to address a huge influx of bots and spam.
| They were only down for maybe an hour or so.
| tootie wrote:
| We already know that this is not what happened with reddit.
| And there's absolutely no reason to think RH has done this
| either. It is also grossly naive to think that any investor
| who wasn't short on GME isn't already on the bandwagon.
| herewegoagain2 wrote:
| What would "they" do if they were enemies of Robin Hood? Short
| Robin Hood stock? Or send contract killers?
| TeMPOraL wrote:
| If by "they" you mean Wall Street - pull the data sharing
| contracts that underpin Robin Hood's business model in the
| first place.
|
| If by "they" you mean WSB - for now, they just nuked RH's app
| in Play Store, but they're already calling for a class action
| lawsuit.
| Scoundreller wrote:
| Don't just pull RH's, pull all brokers'. Paying a
| commission doesn't protect you from anyone maximizing
| profits.
|
| All the discount brokers sell order flow.
|
| > Schwab earned 1.4% of revenue from payment for order
| flow, TD Ameritrade about 8.4%, and E _TRADE about 6.1%.
|
| They all make half or a lot less of their revenue from
| commissions.
|
| > The contribution to revenue across the discount
| brokerages is minimal: 6.8% at Schwab, 28% at TD
| Ameritrade, and 17% at E_TRADE.
|
| > Interactive Brokers is the one standout, largely because
| it caters to high-volume professional and semi-professional
| traders; it makes 49% of revenues on commissions.
|
| All RH did was run a tight ship on costs and cut
| commissions to zero. In theory, commissions could go less
| than zero.
|
| https://www.kalzumeus.com/2019/6/26/how-brokerages-make-
| mone...
| vlkr wrote:
| Source?
| pfortuny wrote:
| "You know: we can buy market information elsewhere".
|
| This is not a source but.
|
| The problem with huge power is that one loses control of the
| size of one's decisions.
| honest_guy wrote:
| Lol
| dang wrote:
| Please don't post unsubstantive comments here. We're trying
| for something a bit different than internet default.
|
| https://news.ycombinator.com/newsguidelines.html
|
| https://hn.algolia.com/?query=stave%20by:dang&dateRange=all
| &...
| itsyaboi wrote:
| Hackernews, everyone!
| dang wrote:
| Please also don't post unsubstantive comments here. We're
| trying for something a bit different than internet
| default.
|
| https://news.ycombinator.com/newsguidelines.html
|
| https://hn.algolia.com/?query=stave%20by:dang&dateRange=a
| ll&...
| benmanns wrote:
| https://cdn.robinhood.com/assets/robinhood/legal/RHS%20SEC%2.
| ..
| zarkov99 wrote:
| If I had a source I would be reporting it to the SEC, the FBI
| and any newspaper that would print it, though of course that
| would likely be none. This is all speculation, obviously.
| ummonk wrote:
| D1 capital is a Robinhood investor and was reported to have
| lost 20% in the markets due to this revolt.
| mmmeff wrote:
| Yep, how is this not market manipulation?!
|
| https://www.crunchbase.com/organization/robinhood/company_fi.
| ..
|
| https://www.bloomberg.com/news/articles/2021-01-28/dan-
| sundh...
|
| I'm sure there are other investors on that list losing money
| from this whole thing too.
| llampx wrote:
| https://i.redd.it/qwo8tf71f4e61.png
| almost_usual wrote:
| As someone without any skin in the game this has been really
| entertaining.
| kasey_junk wrote:
| I don't have a data feed available to verify but it's at least
| possible there is no one on the other side of the order book for
| these symbols so Robinhood can't execute any more buy orders.
|
| Judging this as a policy decision from a 1 sentence tweet and
| some screen shots seems premature.
| coredog64 wrote:
| Why do you have to get all rational when we can stoke
| conspiracy theories?
| guerrilla wrote:
| The conspiracy is real, here's your source:
| https://blog.robinhood.com/news/2021/1/28/keeping-
| customers-...
| GVIrish wrote:
| If that were the case then why didn't RH put out a statement
| saying exactly that? They haven't even put out a tweet.
| kasey_junk wrote:
| Why didn't they tweet a policy decision?
|
| One explanation is that this is a systematic behavior, part
| of their software is seeing market conditions it can't
| execute into and hitting this case. If it's not sustained or
| is happening only during particular microbook states the best
| thing to do is let the software behave as designed and let it
| stabilize.
| GVIrish wrote:
| If it were a case of their software functioning as
| intended, it would be malpractice to not come out and say
| that. Right now it looks like they're deliberately
| manipulating the market to the detriment of their
| customers. That makes for a humongous blow to trust in
| their platform and can lose them many, many customers.
| ineedasername wrote:
| Apparantly they're letting people close out their position, but
| how are you supposed to do that when no one can buy it from you?
| AI_WAIFU wrote:
| Simple, the hedge funds can buy it from you at a steep
| discount, that way the can close their short positions for
| massive profit.
| simonsarris wrote:
| Not you too, Interactive Brokers :'(
|
| https://twitter.com/IBKR/status/1354792600004386818
| greatpatton wrote:
| If the prevent buy and let people only sell stock it is going to
| create a great market imbalance that will just crash the stocks
| blocked.
|
| For once this done by multiple broker is pure market manipulation
| because it is going to have a huge effect on the blocked
| stocks... and will leave big fish with direct access dictate the
| direction.
| thonos wrote:
| I too bought those shares with the anticipation that the price
| will go up due to the hype generated. I made a careful decision
| to do so by estimating that the traffic on /r/wsb will increase
| because of the news coverage, which causes people to buy those
| shares. I don't live in the states and don't use Robinhood, but a
| local broker that charged me a good bit for US stock trading.
|
| Robinhood halting trading tanked the price in afterhours
| immediately, and it will likely crash further on opening because
| of this. As a result, I too will lose money.
|
| Sure that's what you get with market gambling and speculation but
| I find it ridiculous that this company now singlehandled crashed
| the stock and results in losses for global independent investors
| like myself.
|
| Being able to only sell shares and not buy is directly playing
| towards the hedge funds. It will drive the price down and
| positions might get closed. If what reddit did was market
| gambling and manipulation, what robinhood is now doing is the
| same, just in the opposite direction.
| bjeds wrote:
| I think you should file a complaint to your local financial
| authorities.
| fireeyed wrote:
| https://twitter.com/justinkan/status/1354853920762253315 >Just
| got a tip that Citadel reloaded their shorts before they told
| Robinhood to stop trading $GME.
|
| If this is true, Ken Griffin and the Robinhood founders should be
| in jail.
|
| This is class warfare.
| floatingatoll wrote:
| 'Reloaded' isn't a term I understand yet amidst the WSB stuff
| going on. Do you have a brief refresher on what it's slang for?
| NVHacker wrote:
| 1. RobinHood get their money from Citadel. 2. The price was not
| driven by the little people but by Citadel following the trend.
| 3. Now Citadel want to realize some gains an instructed RobinHood
| that th silliness needs to stop. 4. Citadel go on the other side
| of the trade and sell short, as there are no more buyers.
| lordnacho wrote:
| This will just incense the WSB crowd more, surely? The cat is out
| of the bag, people can organize a group purchase of stock if they
| feel like it. On one platform or another.
| blhack wrote:
| Here's the part of this that is actually worse than it seems at
| first:
|
| RH is making it so you can ONLY sell the stocks. You can't buy
| them.
|
| So who is on the other side of the trade? Definitely not anybody
| on RH. But the thing is: a lot of the retail buy side of this is
| coming from RH. Like RH just gutted the buyers and handed them to
| the sellers. It's _unbelievable_ how corrupt this looks.
| devops000 wrote:
| It was obvious, the real customer of Robihood are hedge found for
| their front-running business. They protect interest of hedge
| founds.
| rswail wrote:
| As I understand it, the hedge funds had naked shorts. That's
| illegal. If they did, what is happening to them serves them
| right.
|
| Even if they didn't, a "short squeeze" is perfectly legal. If the
| short sellers think the stock is overpriced, and there's others
| that think its underpriced, then both sides are placing their
| bets and will deal with the result, either by making or losing a
| lot of money.
|
| This is not a "pump and dump", this is an unco-ordinated short
| squeeze. A bunch of people decided to take the short sellers on.
|
| Whether everyone involved understands the risk of a short squeeze
| to them by going long is a prime case of "caveat emptor". They're
| not even buying calls, they're actually buying the stock.
|
| The short sellers are being squeezed mercilessly and will
| eventually have to bail out. At that point the stock will tank
| back to a more realistic position and the people that went long
| too late and didn't exit will also lose lots of money.
|
| Of course, they won't crystalize those losses until they sell.
| argonaut wrote:
| There is no evidence to indicate they had naked shorts. They
| were most likely short, but not naked short.
| hntrader wrote:
| The short interest was above 100%, so there was naked
| shorting going on, although no direct evidence linking it to
| hedge funds (but they would've been most of the short float,
| so probably yes).
| wocram wrote:
| Short interest being above 100% does not require naked
| shorting.
|
| Edit: A better example @
| https://www.bloomberg.com/opinion/articles/2021-01-25/the-
| ga...
| hntrader wrote:
| Good point. Learned something there.
| sltkr wrote:
| > If the short sellers think the stock is overpriced, and
| there's others that think its underpriced, then both sides are
| placing their bets and will deal with the result, either by
| making or losing a lot of money.
|
| I don't think it's really a case of people disagreeing on the
| real value of GameStop stock. Framing it like this ignores
| important facts.
|
| This stock was trading around $4 in August, around $20 in the
| beginning of January, and is almost at $400 right now. People
| can have legitimate disagreements about what the true value is:
| $5 per share? $10? $20? $40?
|
| But no way anyone sincerely believes GameStop is worth
| $400/share. People who are buying right now at (or near) that
| price point are either doing so because they believe the short
| squeeze will drive the price up even further (Redditors), or
| because they have to deliver stock they sold short (investment
| funds). So all parties agree that the stock is overpriced, and
| people have been buying knowing this fully well.
| lukeramsden wrote:
| Part of the reason it was trading so low was supposedly
| because the short sellers were suppressing the price, simply
| by way of being very publicly short the stock. It was clearly
| undervalued because of this, which is why people like /u/DFV
| (the guy who turned $53k in to 10's of millions) bought in
| about 18 months ago.
| CryptoBanker wrote:
| A stock is worth what people are willing to pay for it...
| iso1631 wrote:
| A stock is worth what people are willing to sell it for
| Ar-Curunir wrote:
| So? Is Tesla worth 10x what it was worth last year? I don't
| think so. Same for almost any tech stock.
| vincentmarle wrote:
| Yeah, so... what? Which laws dictate that stock needs to be
| traded at "fair price"?
| sltkr wrote:
| I didn't say there is such a law. I'm just saying it's not
| a case of "two sides disagreed on the true value of the
| company". It's not so symmetric.
|
| One side was selling short because they believed (not
| unreasonably) that GameStop's core business is in trouble
| and is likely to go bankrupt (or at least more likely to
| lose value than gain it).
|
| The other side was buying long not because they believed
| GameStop was likely to reinvent itself, but only because
| they noticed a lot of funds had sold it short and saw a
| short squeeze coming. They wouldn't have bought at the
| current stock price if the other guys hadn't sold short.
| devoutsalsa wrote:
| A stock is worth what people will pay for it. That's it.
| Sure, there are models you can use to come up with a
| seemingly reasonable valuation, but that's just a tool you
| use to make a wild ass guess.
| hntrader wrote:
| Exactly. I think gold is worthless because it's just a lump
| of metal that doesn't do anything useful. But apparently
| there's enough people that like shiny metal and therefore
| it's worth a lot. GME might just be an aesthetic purchase
| more than anything.
| devoutsalsa wrote:
| A trivia snippet I like is that aluminum used to be more
| valuable than gold for a period of time in the 1800s.
|
| https://www.npr.org/2019/12/05/785099705/aluminums-
| strange-j...
| defen wrote:
| > But no way anyone sincerely believes GameStop is worth
| $400/share.
|
| In February 1997 AAPL was worth 15 cents per share. You could
| have overpaid by 100x at the time and you'd still be up 9.4x
| after 24 years (not counting dividends), which is an
| annualized gain of almost 10%.
|
| Maybe Ryan Cohen taking a big stake in Gamestop is their
| Steve Jobs moment, who knows?
|
| Disclosure: long GME
| sltkr wrote:
| That's my point. Nobody believed AAPL was worth $15/share
| in 1997. Nobody believes GameStop is worth $400/share
| today.
|
| The motivations for buying are different.
| defen wrote:
| _My_ point is that if AAPL had shot up to $15 /share when
| Jobs came back, and people bought in then at $15 and
| held, they'd currently have a YoY gain of 10%
| thepasswordis wrote:
| I really don't get why everybody is so upset. The stock market is
| a private company. If you don't like it just make your own
| financial system.
|
| /s
| djvu9 wrote:
| I have to say whoever voted for Biden voted for this.
|
| A Trump admin would have done the same but at least we could get
| some angry journalists yelling at them. See what we get now? A
| bunch of a* lickers.
| krapp wrote:
| >A Trump admin would have done the same but at least we could
| get some angry journalists yelling at them. See what we get
| now? A bunch of a* lickers.
|
| But Trump supporters have been telling everyone for years that
| journalists are all a*lickers for corporations and the left.
| Why would they suddenly have integrity today if Trump were in
| office now? Surely they would just toe the line of their
| corporate masters of find some way to blame Trump for
| everything, as we're told their extremist left-wing pro
| Democrat agenda required them to.
| djvu9 wrote:
| I never mentioned integrity. Integrity is nonexistent in the
| previous admin, the current admin, the big tech, and the
| mainstream media. And they working together is much more
| scarier than they fighting each other. I wish you could have
| seen this after what happened to Parler and now the GME stock
| saga.
| JackTally wrote:
| During today's short ladder immediately after Robinhood removed
| the ability to buy shares...
|
| * There was 443k shares sold in a single batch at $120 at
| 11:24:36 AM EST. * There was 347k shares sold in a single batch
| at $140 at 11:19:09 AM EST.
|
| Someone took a total loss of $300M from the price an hour prior
| OR that is a $100M short sale.
| hntrader wrote:
| Most likely it's a large long position who is capitulating or
| being margin called (stopped out) by their broker. I don't
| think a short seller with that kind of capital would ever chase
| a steep drop like that.
| JackTally wrote:
| You are probably right!
|
| Justin Kan (YC) just posted this: https://twitter.com/justink
| an/status/1354861575916515330?s=2...
| Tenoke wrote:
| RH are scummy but reloading just beforehand seems way too
| risky by citadel and more like a made-up for attention
| story.
| hntrader wrote:
| It could've been one of the many trading desks inside
| Citadel who saw the news early, through publicly
| available sources (e.g. the RH website), and put on a
| short position within a few seconds. So the story about
| Citadel shorting the top could be be simultaneously true
| and legal/normal. Definitely needs an investigation
| though.
| Tenoke wrote:
| Hm, actually Citadel has access to all RH trades before
| they go in effect as part of their partnership so I guess
| their traders would know when buys stop coming at the
| earliest possible time without any breaking of the
| firewall.
|
| Still, if that's what happened the tweet is still
| inaccurate and likely made-up for attention
| JackTally wrote:
| RH goes down. Minutes later there is a ladder driving the
| price down $100s. Minutes later someone longs $100M
| position. Take it how you see it. And agree about the
| risk.
| dang wrote:
| (This comment was originally a reply to "Robinhood makes most
| of its money selling customer orders (2020)"
| https://news.ycombinator.com/item?id=25946626, but we've merged
| it into the main thread.)
| cratermoon wrote:
| So what do the apologists for wealth concentration that cite the
| supposed "Free Market" as a reason to fight market regulation
| think of this? Is this not real free market behavior? If not, are
| the activities of hedge funds not real free market behavior?
| mrkramer wrote:
| What SEC thinks of this GameStop madness? Is this normal market
| activity or pump and dump scheme? They only said they are
| monitoring ongoing market volatility. [1]
|
| I didn't research this whole situation a lot but I know brick and
| mortar game selling is almost dead and everything moved online
| especially to Steam which basically has monopoly on digital
| online video games selling.
|
| I don't agree with Chamath when he said paraphrasing this is the
| move against financial establishment, this is the result of
| transparent and open stock market research. For me this is public
| and collective pump and dump scheme.
|
| The narrative of going against current financial establishment is
| the same one that motivated criminals and drug sellers to embrace
| Bitcoin because they thought it was meant to be anonymous and
| anarchist but in reality it was meant to be everything opposite;
| to establish decentralized trust, transparency, enable micro
| transactions and to eradicate fraud and financial mischief.
|
| [1] https://www.sec.gov/news/public-statement/joint-statement-
| on...
| aynyc wrote:
| This isn't a fundamental based investment on both sides. Even
| if you believe GME is about to go out of business, shorting it
| at 140% is ridiculous. This is momentum trade on both sides.
| The difference is all establishment (news media, hedge fund
| bros, brokers and government) is against one side (retail).
| skinpop wrote:
| so much for the free market
| pdevr wrote:
| FWIW, Robinhood posted a statement on their blog[1].
|
| Two snippets:
|
| >In light of recent volatility, we are restricting transactions
| for certain securities to position closing only, including $AMC,
| $BB, $BBBY, $EXPR, $GME, $KOSS, $NAKD and $NOK.
|
| Also:
|
| >We fundamentally believe that everyone should have access to
| financial markets.
|
| Cognitive dissonance to the hilt :)
|
| [1]https://blog.robinhood.com/news/2021/1/28/keeping-
| customers-...
| krelian wrote:
| At least for GME the stock is still rising uncontrollably. If
| the WSB crowd who mainly uses Robinhood can't buy then who is
| pushing the price up?
| Quarrelsome wrote:
| I feel like we're bordering on religion here (which means it
| doesn't have to be grounded in logic) and its possible that
| people who were rewarded for holding bitcoin have happily
| added an extra punt to this campaign. If you can click all
| the buttons to deal with crypto then I don't imagine its too
| hard to trade without Robin Hood.
| bytematic wrote:
| People are flooding robinhood competitors
| briankelly wrote:
| Most or many of RH's competitors have similar restrictions,
| however. Hints that the ratio of 'big money' going long was
| on the rise, and/or short sellers closing their positions.
| Also, foreign money potentially.
| vorpalhex wrote:
| WeBull and a few others had a temporary halt on buys due
| to their clearing house, but have since resolved and
| rescinded their limitations. Other brokerages have never
| stopped allowing buys and longs (but restricted shorts
| and some margin activity).
| jberryman wrote:
| I'm really out of my depth here but my understanding is at a
| certain point short sellers start getting forced to buy at
| whatever price, pushing the stock up further?
| greenshackle2 wrote:
| If you are short you have to put up more and more
| collateral as the price goes up. So yes, eventually you may
| be forced to buy to cover your short, if don't have enough
| cash you are able or willing to tie up as collateral. This
| can create a feedback loop as short-sellers buy and drive
| the price further up, forcing other short-sellers to buy,
| etc., the so-called short squeeze. I have no idea if this
| is happening now.
| mitch3x3 wrote:
| That is exactly what is happening right now.
| traeregan wrote:
| Doge cryptocurrency can also be added to the list of Robinhood's
| halted buys for today.
| boh wrote:
| I could see how a regulator can peg Wall Street Bets as some
| vague case of market manipulation, but this is a whole new level.
| They're closing the public out of the public markets. There's
| really no formal argument to support this. What, the stock price
| is overvalued because of concentrated investments propping it up?
| That's pretty much most of the market.
| byerobh wrote:
| What kind of joke brokerage would do this? Closing my account
| ASAP
| IceWreck wrote:
| How is this not market manipulation ?
| mandeepj wrote:
| > people asserted their power financially
|
| This is just wrong. Where was this power before? Stock trading
| platforms have been around forever. And, why to assert this power
| only on some of the stocks? It's just sheep chasing sheep
| dilippkumar wrote:
| Question: Why shouldn't everyone pull their money out of
| Robinhood asap?
|
| Thesis: Suppose a sufficiently large number of people believe
| that the market is going to crash one day. Robinhood has just
| shown us that it will consider locking up everyone's accounts and
| prevent a sell off while the rest of the market cleanly exits
| after cutting their losses.
|
| Robinhood investors will be left holding the bag once Robinhood
| reopens trading for the plebians.
| piva00 wrote:
| I think because we are dealing with sentiments. There would be
| a price point that will trigger a run-off but it still seems to
| be sustained by the "fuck you" message and playing chicken.
|
| The problem here is that game theory completely mess the
| incentives, everyone needs to play chicken (or buy out the ones
| selling) or everyone loses on potential profit. But if just a
| few people trigger a sell out, everyone loses.
|
| It's a very strange Mexican stand-off and my take is that is
| held, for now, by anger and excitement to see what happens when
| the shorts have to cover. When the shorts start buying and
| driving the price up we will see how many are able to hold (and
| up to what point).
|
| This is quite fascinating to me, game theory would predict this
| shouldn't have happened with so many different players with
| conflicting interests.
| boringg wrote:
| What about robinhood's platform not being to handle the activity
| level and are concerned about their ability to execute all the
| trades while managing the book probably given their history on
| execution. Thus they had to limit purchases as they expected more
| surges and then a lot of risk on Friday settlement.
| codecamper wrote:
| This is exactly what they should have done immediately when these
| stocks started to make no sense.
|
| 150% moves would be maybe a rough estimate.
|
| Markets need to be protected from manipulation.
|
| Not allowing purchases from robinhood does not punish retail
| traders more than institutions.
|
| There was NO legitimate reason for the price on these stocks. By
| limiting purchases they are preventing their clients from getting
| into a trade that will almost certainly result in losses.
|
| "the short sellers" could very well be other retail investors. I
| personally shorted GME & AMC when they hit ridiculous prices (I
| lost money on these trades when they became 2x ridiculous)
| naebother wrote:
| > There was NO legitimate reason for the price on these stocks
|
| Agreed, $TSLA next.
| finikytou wrote:
| im moving to JPMorgan after today events.
| Closi wrote:
| Ah yes they would never mislead investors to their own benefit
| and manipulate the market for profit something something
| subprime crisis.
| adventured wrote:
| That's most likely the joke. Of all the choices they pick
| JPM, which is notoriously corrupt to the bone.
| buttholesurfer wrote:
| Funny how everyone has no problem with blocking users and
| stopping ideas from spreading until it impacts them.
|
| When facebook, twitter, youtube and reddit block the things we
| don't like, we cheer... but when they do it to things we like,
| there's outrage.
|
| Almost like censorship in any form is bad.
|
| I know they are two different problems, but its awfully funny to
| see the crowd yelling "just make your own platform" (in regards
| to censorship) get outraged at this.
| MattBearman wrote:
| It's the same with Trading212 in the UK
| fireeyed wrote:
| Goodluck with DOJ and SEC investigating and bringing charges
| against RobbingHood and Citadel. I am not holding my breath.
| aaron695 wrote:
| Relevant XKCD -
|
| https://xkcd.com/1357/
|
| They are a private company and you aren't allowed to complain,
| something something American law.
| swayson wrote:
| Alienating your userbase before an IPO. Damn, how much leverage
| do this 'hidden' hand have.
| simlevesque wrote:
| Yeah but the thing is that the free market does not exists and
| companies can screw customers up and customers hating a company
| does not affect it that much.
|
| The lists of companies that are absolutely shitty to their
| customers and are making billions is never ending. They don't
| need our approval.
| MrMan wrote:
| RH are victims of their successful business model!
| zaltekk wrote:
| All of this is making me wonder if I'm making the right choices
| for the retail brokerage that I use personally. While I'm not
| trading these stocks, what if this happens with a stock I _do_
| have money in?
|
| Initially I had thought, "hey, there's this Interactive Brokers
| place that seems a bit further removed from places like Robinhood
| or Fidelity/Schwab/TD/ETrade." But apparently they're now
| blocking trades too.
|
| What is the right way to ensure you're able to trade? I know
| there's the StockBrokers.com review site, but it doesn't seem
| they're going to have this kind of information.
| throwaway5752 wrote:
| https://seekingalpha.com/news/3655841-why-brokers-shut-down-...
| is likely an honest explanation and isn't nefarious. The system
| may have issues, but Robinhood just wants to stay in business.
| teekert wrote:
| What? I get the reason for GameStop, but why the other 3?
| kyuudou wrote:
| They were next on the list recommended by WSB, IIRC.
| [deleted]
| kryogen1c wrote:
| im just so worried this is textbook bolshevism.
|
| the narrative that the evil corporate oligarchs are ruining
| peoples lives is certainly rooted in truth, but it is not true
| enough that people need to die about it.
|
| these people with their FREE stock trading platforms browsing
| reddit all day with their $500-$2000 smart phones AND computers,
| feel like life is unfair. they feel repressed (because there is
| certainly >0 repression occurring), but have no idea how deep
| this rabbit hole is. the single mothers with 4 kids arent on WSB.
| the mentally ill, the 75 year olds that lost pensions, the drug
| addicted, the slumlords, the victims of being poor in ghettos -
| none of the people with real problems are WSB players.
|
| once people with actual problems get involved, all these kulaks
| are gonna realize how much they have to lose.
| bradleyjg wrote:
| If they were just blocking margin trading or trades with
| unlimited risk that would be one thing. But this smacks of either
| paternalism or trying to manipulate the market. I hope they lose
| a lot of customers (or product depending on your POV).
| gmm1990 wrote:
| I'm pretty happy they are doing it. This is really in the best
| interest of the average Robinhood user trying to buy GME right
| now. Maybe they shouldn't completely ban it, but there should
| be at least very extreme warnings about why its a terrible idea
| to buy.
| imtringued wrote:
| It isn't. People buy it to laugh, not to make money.
| nickysielicki wrote:
| Dude it's _my fuckin ' money._ I don't need or want
| protection. Maybe I want to buy a couple hundred dollars of
| meme stonks solely because it's funny. Is that not allowed?
| gmm1990 wrote:
| It's their fucking trading platform if they want to defend
| people from investing in a Ponzi scheme is that not
| allowed.
| nickysielicki wrote:
| I just wish they'd say that they have a vested interest
| in the ponzi scheme failing rather than telling me I'm
| not smart enough to make the decision to throw my money
| away.
|
| And that's really what this is all about.
| gmm1990 wrote:
| It's probably a liability concern on their part, but they
| also want people to have money to trade in the future
| too. If Robinhood users had any chance of actually making
| a bunch of money on this it would only be in Robhinhoods
| interest to allow people to continue buying. (if their
| users have more money in the future they will trade more)
| wocram wrote:
| I imagine the paternalism argument would be something like
| "currently GME is part of a ponzi scheme, and you would be
| defrauded by making this purchase".
| imtringued wrote:
| It's a ponzi scheme where early stage investors are
| forced to buy the products of late stage investors.
| PartiallyTyped wrote:
| It's not about making money, it's about sending a message,
| and we can send a message with our money. Not their business
| how we burn it.
| matthewbauer wrote:
| But there are tons of overpriced stocks out there. Where do
| you draw the line? TSLA? AAPL? S&P 500?
| bytematic wrote:
| Informing your customers is one thing. Blocking them in
| "their" own interest is a ridiculous overstep. We make
| platforms and tools to empower users, not to force them down
| whatever path we deem best for them.
| rantwasp wrote:
| really? really?
|
| this is stock investing 101. don't invest what you cannot
| afford to lose. i find it condescending and insulting that
| they are claiming to protect the users.
| sokoloff wrote:
| It's absolutely paternalism, IMO. I'm less sure whether I think
| it's a good thing or not (because I think people _buying new
| positions_ in GME at this point are unlikely to end up happy
| about that in mid-Feb.)
|
| I'm all for "let 'em play" in general but this is not going to
| end well for a lot of folks...
| noncoml wrote:
| Why are you so quick to assume that people don't know what
| they are doing?
|
| Is it so hard to believe that at this point buying GME is
| more about activism than making profit?
|
| "When you ain't got nothing, you got nothing to lose"
| sokoloff wrote:
| People who believe that they can only buy GME via
| specifically Robinhood, I'm not sure I see them as
| sophisticated investors or even "understand what they're
| doing".
|
| I think that people should be able to spend their money
| however they want. I also don't mind when regulators say
| "liquor stores are blocked from having one-day specials the
| day that welfare benefits are paid."
|
| If Robinhood believes that their customers are better
| served by blocking certain transactions, I trust Robinhood
| to make that call (and suffer the goodwill or ill-will that
| results).
| tracyhenry wrote:
| Of course the motivation of Robinhood is to "better serve
| their customers". However, their customers are not retail
| investors.
| nrmitchi wrote:
| > Why are you so quick to assume that people don't know
| what they are doing?
|
| Screenshot lists floating around the internet yesterday
| pointing out exactly what buttons in your app to hit in
| order to buy GME options is the first piece of evidence
| that makes me that thing, perhaps, a large number of people
| don't know (or understand) what they're actually doing.
| snakeboy wrote:
| OP means even among those who have never invested before,
| there are a lot of people who want to buy GME to support
| the cause, not caring if they lose a bit of money in the
| end.
| spookthesunset wrote:
| > Is it so hard to believe that at this point buying GME is
| more about activism than making profit?
|
| Go read the top comments in the top WSB threads and tell me
| which it is.
|
| This is all about getting rich quick with a thin veneer of
| activism slapped on top.
|
| That might not have been the case a few days ago, I don't
| know because I only got into the loop yesterday... but if
| it was 90% activism on Monday... is probably 10% activism
| today.
|
| I wouldn't touch that stock using "for real" money with a
| 50 foot pole.
| ssully wrote:
| This hit mainstream this week. There are people out there
| now buying stock based on a Reddit thread because they
| think it will get them some quick cash.
|
| I am pretty much in like with the OP in that this is
| definitely paternalism, and I have no idea if it's good or
| bad. People were going to get screwed because of this, but
| I don't think Robinhood or other online trading apps
| stopped buy's to protect these people.
| bradleyjg wrote:
| It's pretty hypocritical for a casino to say that you are
| welcome to keep playing our table games and lose your money
| to us slowly but you aren't allowed to sit down at that table
| full of poker sharks because we are worried you'll lose your
| shirt.
| tim333 wrote:
| The stockmarkets aspire to be more than a casino and
| actually a way for people to invest money and productive
| enterprises to raise it. If you want a casino try crypto.
| bradleyjg wrote:
| I don't think that's the case, but even if it is for the
| stock markets broadly it isn't for Robinhood. It's not
| vanguard.
| mrguyorama wrote:
| Casinos LITERALLY do this though, with segregated/exclusive
| higher stakes games. You only get to play the ultra high
| stakes poker if you set it up yourself or get invited
| 42_ wrote:
| That is fine, if it is done before the play begins.
| What's happening here is being kicked out of the game
| when you're winning.
| sokoloff wrote:
| Who's getting kicked out while they're winning?
|
| No one holding GME is having their holdings seized.
|
| No one holding GME is prevented from selling (by
| Robinhood; periodic circuit breakers do inject halts for
| everyone during periods of high volatility/price
| movement, which are rules set in place before [this] play
| began)
|
| No one is prevented from opening an account at the many
| dozen other brokerages who are happy to transact in GME.
| unethical_ban wrote:
| Your take is so wrong. There is friction in opening
| accounts, funding it, etc. If all your investment money
| is in RH, it takes a week to move money out.
|
| And the simple fact that millions of people on RH are
| locked out of buying totally fucks the people holding the
| stock. "You can sell but not buy"?
|
| Who is buying? The institutions.
|
| Do not attempt to justify this.
| warkdarrior wrote:
| RH is a business and can make their own decisions. If you
| are not happy with how they service you as a client, you
| can take them to court. They do not owe you anything more
| than what's in the contract you have with them.
| piva00 wrote:
| What about people that already lost money because of this
| movement? On the other side, on the sell side there might
| be lots of people who were holding waiting for a higher
| price that was driven down by the blocking of new
| purchases, cratering their gains. Is that right by the
| rules of the game?
| llampx wrote:
| Well in this case I think the gamblers are going to take
| all their business elsewhere if the casino doesn't change
| its ways.
| UseStrict wrote:
| I ended up buying a couple stocks late in the game, fully
| expecting to lose the money. First, it's not my retirement or
| long-term cash, more of a hobby. And that hobby quickly
| turned into sending a message after watching those rich SOBs
| literally cry about being hurt by the free market, and then
| try and end/manipulate it to their advantage.
| spookthesunset wrote:
| You are probably an outlier. Look at the average newbie on
| WSB. Look at the upvoted posts and comments. It is pure
| mania at this point.
|
| I promise a ton of people are convinced this is their
| ticket and throwing in far more than play money.
| imtringued wrote:
| I have seen a lot of people throw in fractions of a share
| or less than 10 shares. What you might have observed is
| the law of large numbers. When you have 4 million people
| putting in fuckyou money some of them actually have a few
| hundred thousand to spare and those get voted up.
| theturtletalks wrote:
| I keep hearing this argument, but Robinhood's actions
| will directly cause those people to lose money. By only
| allowing to sell the stock, most people will hop out or
| hedge which will tank the price. If they let it play out,
| then they can blame the market for the outcome.
| holtalanm wrote:
| I missed the boat, but I'm cheering all of this on from the
| sidelines.
| 015a wrote:
| When Melvin Capital sold a metric ton of naked shorts on
| GameStop, no one was there to tell them it wouldn't end up
| well. It was certainly a risk, but not really a bad one going
| on fundamentals. They just failed to predict the mob
| mentality of retail investors.
|
| Of course, those retail investors who got in on Thursday,
| Friday, or Monday; that seemed like a bad purchase. So bad
| that Melvin double-downed on their naked short position.
| There's no way the stock could go up. The fundamentals aren't
| there. But it did. A lot. And those retail investors made a
| ton of money.
|
| So, we're at today, where you're saying that it would be a
| bad time to invest because it won't end well. You, and to
| some degree Robinhood, are making a prediction on the stock
| market. You may be right; you may be wrong; but you're
| _definitely_ not certainly right or certainly wrong. You 're
| making the same mistake anyone who tries to pick stocks does;
| you're just doing it in reverse.
| sokoloff wrote:
| If I were running Robinhood, I'd be inclined to continue to
| allow trading*, but perhaps with a popup message with
| language that legal approved to suggest that people should
| be certain of what they were doing when creating new
| positions in high-vol securities and would have 100% margin
| requirements on high-vol securities now. So, I agree with
| you that I'd, on balance, prefer to see trading open in
| these names. I think people should do what they want with
| their money, even if I think it's stupid and likely to end
| badly.
|
| At the same time, parabolic moves like this have never once
| in the history of markets been sustained over a long period
| of time. It's possible that this will be the first one
| ever, but I am indeed making a prediction that it will not
| be. You are correct that I might be wrong about that.
|
| * - All this assumes that my clearing firm would continue
| clearing the orders, which is uncertain at the moment. If
| my clearing firm won't book the orders, I literally can't
| do anything except cajol, plead, or sue them.
| FabHK wrote:
| > And those retail investors made a ton of money.
|
| A few that got in early and have liquidated their position
| made a ton of money.
|
| Those HODLers? They might have paper profits now, but long
| term not so sure.
| edaemon wrote:
| I'm not sure an app that allows you to put your entire
| account balance into options trades is engaging in good-faith
| paternalism by preventing people from buying a particular
| stock.
| ookblah wrote:
| how about for paying gold customers who specifically want to
| engage int PM/AH trading? i know robinhood isn't a pro level
| platform but come on, this feels exactly like blatant
| manipulation.
| buildbot wrote:
| Lost this customer! They canceled my literal 4$ but in gme,
| which was more of a statement than an investment on my part.
| PartiallyTyped wrote:
| They have blocked 7/10 most mentioned stocks in
| r/wallstreetbets from being purchased. It isn't just Robinhood,
| also Revolut and others. Then they launched a short attack,
| with nobody willing to buy besides themselves, they tanked the
| stock.
|
| It doesn't get more obvious than this.
| cwkoss wrote:
| It's absolutely market manipulation. RH gets sells order flow
| to Citadel, who bailed out Melvin Capital.
|
| Someone high up at RH got their arm twisted to help their
| buddies close their shorts.
| piva00 wrote:
| Maybe someone higher up could be losing lots, much more than
| what Robinhood could be valued during the IPO but that would
| be USD 12 bi...
| kweinber wrote:
| The fact is that a few things that are already prohibited are
| happening here. You have 1) pump-and-dump manipulation on the day
| trader side and 2) Robinhood grew an entire business based on
| selling blocks of order-volume so that people can front-run and
| piggy-back off of trades (which is also prohibited).
|
| If the SEC wasn't neutered by the last administration and was
| doing their job, people would be hauled in for market
| manipulation on both sides.
|
| Real marketplaces need to be free from gross manipulation or else
| people lose faith in them for legitimate commerce.
| firebaze wrote:
| Even a congresswoman has a quite strong opinion on this:
| https://web.archive.org/web/20210128155006/https://twitter.c...
|
| Unfortunately the tweet has already been deleted. There seems to
| be quite a lot of pressure.
| Miner49er wrote:
| Ted Cruz and AOC have also tweeted similar.
| guidovranken wrote:
| It's not deleted.
| firebaze wrote:
| It _was_ deleted. Maybe she undid it in the meantime.
| [deleted]
| kecupochren wrote:
| It's still up -
| https://twitter.com/RashidaTlaib/status/1354807292667981828?...
| subsubzero wrote:
| I called out Robinhood months ago in this old thread:
| https://news.ycombinator.com/item?id=24188407
|
| basically its a shitty company that sells your orders so
| hedgefunds (citadel etc.) can then buy the same stocks at a lower
| price[1] and you always end up paying more, they were fined 65M
| for doing this see here[1]. A total scam and hopefully congress
| and the SEC come down hard on this company.
|
| [1] - https://modernconsensus.com/technology/robinhood-high-
| freque... [2] - https://www.cbsnews.com/news/robinhood-sec-
| fine-65-million/
| jacquesm wrote:
| Robinhood -> best picked name ever.
|
| Steal from the poor, give to the rich :)
|
| And all the while the poor where believing it was the other way
| around.
| wocram wrote:
| All retail brokerages sell order flow to the wholesale
| brokerages, it is part of the market structure.
|
| Rule 606 disclosures enumerate each brokerage's arrangement:
| eg.
| https://cdn.robinhood.com/assets/robinhood/legal/RHS%20SEC%2...
| from https://robinhood.com/us/en/about/legal/
|
| Fidelity:
| https://clearingcustody.fidelity.com/app/literature/item/990...
| from
| https://clearingcustody.fidelity.com/app/item/RD_13569_21696...
| seahawks78 wrote:
| And they call themselves "Robinhood"! Nauseating.
| f430 wrote:
| So the HF strategy is now to:
|
| 1. stop hemmorage
|
| 2. lose their edge in market (buying order flow from RH)
|
| 3. go to court & hopefully settle for less than their AUM.
|
| All in all, this seems like a desperate move. Every securities
| lawyer is celebrating right now because they have a home run
| case.
|
| Either way, Citadel is screwed but the HF managers probably
| decided its better to call it a day at -30% than over -100%.
| WarOnPrivacy wrote:
| The ONE TIME that shareholders don't ruin things for everyone . .
| .
| gadders wrote:
| Project Veritas is on the case:
|
| Robinhood whistleblowers can hit us up at
| veritastips@protonmail.com or on Signal 914-653-3110
| secondcoming wrote:
| How is this not market manipulation?
| xyzzy4 wrote:
| I agree. This seems like illegal market manipulation on the
| part of Robinhood.
| [deleted]
| slumdev wrote:
| It's most likely that (because of dark pools and other legalized
| front running) that Robinhood is the losing counterparty at the
| other end of these trades.
| hinkley wrote:
| In retrospect this seems quite obvious.
|
| This Citadel-Melvin-RH triangle looks super sketchy. The sort of
| thing that might show up in anti-corruption training at a company
| that does government or especially defense contracting. In fact
| if I still worked at a particular employer, this would have been
| the breakroom _and_ lunch topic for today.
| gbolcer wrote:
| They don't even show up in search. Why would Robinhood do that?
| mizzack wrote:
| Yep, as of last night RH had also delisted 1/29 options for GME.
| 2/6 options are still available, which maybe points to RH
| hoping/thinking this all unwinds in the next few days.
|
| Sign me up for the class action...
| frongpik wrote:
| Don't the ToS include a waiver of taking any legal action
| against RH, class action suits in particular, and a binding
| arbitration clause in case you really want to make some noise?
| mizzack wrote:
| Almost certainly. Don't expect the SEC to step in here,
| either.
| muskox2 wrote:
| Is having a clause like that in your ToS legal?
| ascagnel_ wrote:
| In the US, yes, a terms of service can force binding
| arbitration.
| dd36 wrote:
| And the CFPB had made a rule outlawing it for financial
| firms and then the Republican senate killed it with the
| Congressional Review Act.
| wrkronmiller wrote:
| IANAL but I believe that some clever lawyers have used
| this to the advantage of the victims by essentially
| creating a DOS attack on the company, flooding it with
| binding arbitration claims.
|
| https://www.nytimes.com/2020/04/06/business/arbitration-
| over...
| logicchains wrote:
| Just because something's in a TOS doesn't make it legally
| enforceable, especially if you've got enough money
| collectively for expensive lawyers.
| frongpik wrote:
| Well, in this case the ToS will be a contract one needs to
| "digitally sign" in order to open an RH account. RH would
| simply claim that its customers didn't have to accept the
| terms, regardless of how bs those were. I'm not a lawyer,
| though.
| dd36 wrote:
| False. There's no way out of a forced arbitration agreement
| that bans class actions. The courts always defer to
| arbitration, even when arbitrability is in question. It's a
| ridiculous judicially made trap.
| koolba wrote:
| If they're able to coordinate a short squeeze, they can
| easily coordinate demand for thousands of arbitration
| requests.
|
| And we know what happened to DoorDash when they tried to
| play that game: https://www.reuters.com/article/us-otc-
| doordash/this-hypocri...
| dd36 wrote:
| Yes, but that's not a class action.
| koolba wrote:
| Yes the idea is to use their insistence of arbitration
| against them by forcing them to pay for thousands of
| arbitration cases.
| dd36 wrote:
| Everyone should utilize this strategy. We've been
| advocating for it for 6 years. AAA keeps upping its fees.
| Want to attack the system? Attack forced individual
| arbitration.
| koolba wrote:
| Agreed. A few more high profile en masse individual
| arbitration is the way to end the practice entirely.
| dd36 wrote:
| I think it will cause them to think twice but the only
| real way to end it is legislation. The FAA was never
| intended to apply to consumer disputes or eliminate the
| ability of people to group together to make a claim. It's
| all a construct of the courts and corporate-friendly
| judges and needs adjustment.
| dccoolgai wrote:
| According to the Supreme Court, forced arbitration is fine
| to have in a TOS. The past couple years there's been more
| awareness of it, it's one of the nastiest sneak moves in
| history to take people's rights away en masse. You don't
| find out until you get in a position where you've been
| harmed and you go to hold them accountable using the legal
| system: Surprise! You have to settle in this thing where
| the defendant pays all the participants. Here's your $200
| check for your $200,000 claim, see you next time.
| ciabattabread wrote:
| Which is why I find the story about Postmates and its
| efforts to avoid _mass arbitration_ very funny.
| adjkant wrote:
| Worth pointing out that nearly every major trading firm has
| blocked buying of Gamestop and AMC stock today. I really am
| hoping to see legal action against the entire industry for
| literal stock manipulation. This isn't limiting purchasing, it's
| full-on stopping and only allowing selling. That's insane.
| goodluckchuck wrote:
| I don't know how stocks work.
|
| Could you explain how it's possible to stop buying and allow
| selling? In order to execute a sell order, there would have to
| be a corresponding buy order? Do they do this by allowing new
| buy / sell orders, but only if they're at a lower price?
| maxerickson wrote:
| There are different sorts of access to the markets. Some
| companies literally operate the market, others have direct
| access to trade on that market, others sell indirect access
| to other people.
|
| The companies blocking buy orders are all in the indirect
| access business.
| cwkoss wrote:
| It is unprecedented for buying to be stopped for retail
| investors while still allowing buying from institutional
| investors.
| throwaway5752 wrote:
| We as a technology community should know this better than anyone.
| If you are getting a service for free, then you are not the
| customer.
| sharker8 wrote:
| Switch to WeBull, works great.
| dayaz36 wrote:
| This is ridiculous
| ucha wrote:
| Robinhood sells their order flow to Citadel.
|
| Citadel is financing Melvin Capital's GME short. The financing
| terms are private but whether they just lent them funds to cover
| the margin calls or actually hold their short positions until the
| storm passes for a fee, it is absolutely in their interest to
| prevent GME from continuing to skyrocket. Drawing a collusion
| between Citadel and RH isn't that far-fetched but I obviously
| have no insider knowledge of this.
|
| Most brokerages sell their order flow and Citadel trades 25% of
| the equities market in the US, from memory. Schwab, which also
| sells order flow to Citadel, requires 200% margin to go long GME
| which makes no sense since at most, you can lose 100% of your
| bet.
|
| This is not what free markets are supposed to be like.
| shakezula wrote:
| Because it's not a free market. It's a controlled market where
| market makers have all the power and they plainly flex it. I'm
| pretty disgusted with this as a whole. As others have pointed
| out in this thread, these funds have no problem margin calling
| the little guy but when they get in danger of losing their ass
| they can just bail out and hit the "off" button on the whole
| stock? Complete bullshit honestly.
| [deleted]
| randyrand wrote:
| hedge funds are a group of people all giving their money to act
| together.
|
| how is this any different?
| perfunctory wrote:
| On the one hand this is outrageous. On the other, if you don't
| pay for the product (Robinhood) then _you_ are the product. How
| many times do we have to be reminded of this.
| Zealotux wrote:
| I'm using Trading212 and they did the same today with GME and
| AMC.
| muagleeb wrote:
| Should probably change their name to Nottingham.
| 0x008 wrote:
| This is not robinhood only, this is on a lot of brokers world
| wide. Gamestop and AMC are close-only.
| wnevets wrote:
| "oh no our customers are making too money" seems like a very
| weird stance for this company to take.
| codecamper wrote:
| The only problem I see here is that market makers can still buy
| the stock to prop it up so they don't have to pay out on the
| options they sold.
|
| Restricting retail from buying the stock is a good idea. There is
| no legitimate reason to buy these stocks. They are doing naive
| investors a favor.
|
| People who own the stock can either hold or sell. You sell if you
| think the current price exceeds the value.
|
| I can guarantee that also no institutional investors are buying
| the stock. They just don't really need someone to tell them that.
|
| Brokers are attempting to limit complaints by limiting their
| user's losses. They have done this in self interest.
| owenversteeg wrote:
| Wow. First the Discord ban and then this - clearly the
| billionaire hedge fund managers have been busy pulling strings
| overnight.
|
| Limiting it so you can't buy, you can only sell... Very clearly
| helping the hedge funds here.
| engineeringwoke wrote:
| Citadel is one of the "cheater" funds along with Melvin,
| Point72 (previously SAC Capital Advisers) and Maplelane (ex-
| Galleon Group). They all have connections to insider trading of
| some sort since it was legal to know stuff like earnings
| beforehand, etc. before reg FD in 2001, and the seeds from that
| age are still there in these funds. They certainly aren't the
| type to be below doing something like this.
|
| Citadel could also be absolutely fucking themselves if they end
| up in discovery over this. It could mean the end of this era of
| funds. Many would be glad to see them go.
| geerlingguy wrote:
| The head of NASDAQ even suggested a Tradimg Halt so
| institutions can adjust to combat retail investors better!
| wocram wrote:
| A long halt would be bad for shorts, since they would be
| stuck paying the 125% annualized borrow for the duration of
| the halt.
|
| And practically a halt doesn't _really_ affect the prices.
| shut_it_down wrote:
| We're close to reaching a "let them have cake" point of elite
| arrogance.
| swiley wrote:
| Every day of 2021 I'm thinking those people with the
| guillotine were less crazy.
| NortySpock wrote:
| Those elites making the rules and the power plays need to
| remember: "Those who make peaceful revolution impossible
| will make violent revolution inevitable." John F Kennedy
|
| Elites: better leave some safety valves in the system.
| People have been getting angry in the last year.
| piva00 wrote:
| People have been getting angrier since 2008. Lots of
| those that were young and suffered through are adults
| now, the ones that were adults are getting older and
| everyone is still pissed off about what happened.
|
| I definitely feel I'm getting squeezed, even though I've
| increased my salary quite a lot since 2005, including
| moving continents to pretty good jobs in Europe. I can
| feel the squeeze in society, with friends that even in a
| rich nation with a good salary still don't look very
| brightly into the future. Climate disasters incoming,
| also propelled up by the elites (or at least delaying
| action against, inaction is an attack in this case).
|
| People were tired, now a lot are tired, bored, unemployed
| and angry.
| joshstrange wrote:
| More like "Let them have shortcake". This is absolutely
| ridiculous.
| h_anna_h wrote:
| We were already on that point at least since the bank
| bailouts.
| [deleted]
| [deleted]
| eli_gottlieb wrote:
| Luckily, I used my Vanguard account instead of making a
| Robinhood.
| thinkingemote wrote:
| Now people are moving away from Robinhood is it only a matter
| of time before the other platforms do the same?
| 0x008 wrote:
| Even european brokers now forbid buying gamestop/AMC.
| Animats wrote:
| Fully paid purchases, or just options?
| [deleted]
| rvnx wrote:
| Interactive Brokers now blocking purchase call and put options
| (even to institutional investors!) on $GME, you can only close a
| position.
|
| On the other side, Robinhood is asking for account to be funded
| with cash to execute the calls at expiration, or else they will
| liquidate your position :|
| Schweigi wrote:
| I just tested it with IBKR and was able to create a call buy
| order (exp 1/29, $500 strike) for a single contract.
|
| Info: Market was closed so the order wasn't executed but it was
| accepted by the order system before i cancelled it.
| aynyc wrote:
| I don't know IBKR's system, but most OMSs will accept an
| order unless it's blatantly wrong such as invalid stock. It's
| the execution engine that really enforce the rules.
| rvnx wrote:
| I have a message: "Transactions in this instrument are
| limited to closing-only trades" @ Jan29'21 300 CALL GME.
| Schweigi wrote:
| You're right. I get the same message for Jan 29'31 300 CALL
| but do not get the message for the $330 or $500 strike.
| Looks like its only for ITM strikes.
| rvnx wrote:
| This is sad indeed :(
| leonroy wrote:
| Tested IBKR today - I was able to place a simple Limit order
| for GME stock which was good till close but when I refreshed
| to view my list of orders it shows as Cancelled.
|
| Tried it twice, did the same thing each time.
| MrMan wrote:
| this is a risk management move for RH, nothing else
| gmethowaway wrote:
| If it's just risk management, why IB doesn't allow to buy 1
| GME stock on non margin account?
| firebird84 wrote:
| That last sentence is extremely scary. Do you have a source?
| rvnx wrote:
| https://www.reddit.com/r/wallstreetbets/comments/l6plv0/robi.
| .. (unless I misunderstood something)
| akvadrako wrote:
| This is much more signifiant than Robinhood because IBKR is one
| of the most professional trading platforms available for retail
| investors.
|
| Some more info:
|
| https://twitter.com/IBKR/status/1354792600004386818
| gmethowaway wrote:
| It's not only about options. You can't buy even 1 stock of GME
| on non margin account. I don't understand how it has anything
| to do with IB risk management.
| typon wrote:
| I can confirm interactive brokers is doing the same thing. Looks
| like collusion from the top.
| darepublic wrote:
| Not a fan of the Reddit wsb movement but not sure this is a
| justified move by Robinhood. You gotta let things play out by the
| rules of the game
| CryptoBanker wrote:
| This move by RH is changing the rules of the game
| shakezula wrote:
| Not just a rules change, I'm pretty sure an illegal rules
| change. Volume manipulation is stock manipulation according
| to the SEC.
| zxcvbn4038 wrote:
| This is interesting, can individual brokerages refuse to trade
| individual securities or to only allow them to be sold. Unless
| the SEC authorized these actions I think it arguably makes the
| brokerages liable for losses and is arguably market manipulation.
| Transferring securities positions between brokers is relatively
| costly and time consuming - takes at least a day and there is
| usually a $40-70 fee - so is a temporary but significant road
| block.
|
| Robinhood may be wanting to keep their name out if the papers but
| unless every brokerage does this it will just move elsewhere.
| Just like the US was going to limit oil futures because they
| thought institutions were driving up gas costs - then Dubai
| announced they would continue to trade without restrictions, US
| dropped that idea like a hot potato because they would rather
| have high gas prices then have Dubai become the world hub for oil
| trading.
| carstenhag wrote:
| What, really? In Germany transferring securities is free, but
| it takes weeks or months for all securities and the correct
| prices to be transferred.
| ghaff wrote:
| In my experience, in the US it's free but it is often a
| pretty cumbersome and manual process that takes at least
| days, if not weeks. It's certainly not a click a few buttons
| on a website sort of thing. The last time I did this I had to
| physically mail a form and have a couple of different phone
| conversations.
| bagacrap wrote:
| what losses can you prove? It's not like you were blocked from
| selling at the high, the high was blocked from being reached.
| And this applies whether you have a rh account or not.
| zxcvbn4038 wrote:
| Opportunity loss. When I worked IT in brokerages we always
| had to reimburse traders for missed opportunity from
| technology issues -- which was abused, whenever trades went
| against them they would claim their UI was unresponsive and
| we'd have a programmer scour the logs with millisecond
| timestamps to prove the UI did respond and how quickly, then
| cross reference with the tradebook to see if its a trade that
| would likely be executed immediately or not etc. Often times
| the resolution is that the trader clicked trade at this
| timestamp, the order was sent at this timestamp, the exchange
| acknowledged at this timestamp, but you tried to buy 10000
| shares at X price and only Y were available, so the trade did
| not execute immediately or not at all.
|
| Edit: Class action lawsuit was just filed for loss of
| opportunity - https://news.ycombinator.com/item?id=25945052
| Simulacra wrote:
| I predict that we will see a law or regulation which will require
| that a person hold a license from the government in order to
| trade stocks, or certain securities. In every state there are
| laws that you must hold a license to perform certain tasks, so
| it's not inconceivable that the government will say: "This is too
| dangerous to let just anyone do, look what unlicensed, and
| untrained people did with GameStop. The government must require
| that only a professional licensed financial trader buy or sell
| stocks and securities."
| speeder wrote:
| This sort of stuff will put people more and more on edge, there
| is the deplatforming going on, people asserted their power
| financially, and now getting that removed too, the powers that
| rule USA don't realize that soon the only tool left to common
| people is violence?
|
| Even more with some irresponsible newspapers blaming the whole
| thing on GamerGate and Alt-Right, effectively pushing away people
| that previously could be on their side.
| WhompingWindows wrote:
| Violence against whom and how? Do the powers that rule the USA
| truly fear any commoners? I doubt it, the rich are ensconced in
| private jets, mansions, posh offices, and do not interact with
| commoners, nor are they easily targeted due to lack of
| proximity and knowledge. It's not like the French Revolution,
| where the mobs knew precisely where the king, queen, and
| legislature were, and could assail them personally.
| ryanmarsh wrote:
| You had me, up until "legislature". Recent events seem to
| indicate the people know precisely where the legislature
| meets.
| dd36 wrote:
| Pump and dump isn't legal.
| xutopia wrote:
| Except it isn't a pump and dump. It is a short squeeze. Hedge
| fund managers are betting more stocks than the company issued
| and people are taking advantage of that opportunity.
|
| The closest thing to criminal activity we see here is people
| betting more than a company's stock. When hedge fund managers
| see this and buy all the stock to squeeze the shorters it's
| normal. When it's people like you and me they say it is
| illegal.
| dd36 wrote:
| Pump and hold may not be illegal but it means those people
| that pumped can't sell for huge gains.
| batmenace wrote:
| It is a pump in the sense that none of the fundamentals of
| the company have changed between December and now, the main
| event has been people buying stock with the express purpose
| of enabling a short squeeze. Legally, there could be an
| argument for it being market manipulation.
| llampx wrote:
| So nobody should ever buy a stock unless something
| material, as defined by you, has changed? Not because
| they think it'll go up in the future?
| koheripbal wrote:
| Sure they can. But coordinating multiple people to do
| that is a classic pump and dump, and is explicitly
| illegal.
| factsaresacred wrote:
| Where's the coordination? People in subreddits are
| talking about what they are doing and others are choosing
| to do the same thing.
|
| No different from somebody on CNBC providing stock picks.
| llampx wrote:
| Exactly. CNBC is the biggest market manipulator with a
| huge mouthpiece. Anytime Cramer mentions a stock in
| favorable terms it goes up, at least short term.
| Meanwhile we _know_ that he is friends with hedge funds
| and at least part of time is probably taking positions
| before going on TV.
|
| We give that a free pass but suddenly a loosely-organized
| internet forum is a problem.
| koheripbal wrote:
| There are two major differences...
|
| 1. If Cramer said "Hey, let's all buy this stock because
| there is a potential short squeeze.", then that would be
| illegal because it's attempting to create an _artificial_
| market pump through short squeezing.
|
| 2. Cramer is LICENSED to give investment advice. A
| licensed doctor can go on TV and make medical
| recommendations. Reddit specifically bans subs that try
| to do that.
| disgrunt wrote:
| It is the hedge funds that are inflating the stock price
| because they have to cover their short positions. This is
| a short squeeze.
| Nimitz14 wrote:
| It is clear from your comments you have no clue what
| you're talking about. Stop spreading misinformation.
|
| Read matt levine's twitter: https://twitter.com/matt_levi
| ne/status/1354129838806872073
|
| and newsletter if you want to inform yourself.
| coldcode wrote:
| It's not a short squeeze any more the shorts sold out at a
| huge loss. Now it's just hot air holding it up.
| heyoni wrote:
| You're getting that from news stories and people aren't
| buying it. I just looked at TD Ameritrade and it was at
| 121% of float. Are there newer numbers?
| chollida1 wrote:
| short numbers almost always lag atleast a week from what
| the average person can see.
| duckfang wrote:
| Again, it's a "Rules for thee but not for me" situation.
|
| And as it turns out, people are very angry about that.
| And since violence gets you thrown in jail, the next is
| financial violence in bankrupting these country-
| destroying fintech scabs.
|
| And look who comes to _their_ rescue, but not for the
| masses.
| [deleted]
| disgrunt wrote:
| Incorrect. GME is still heavily shorted by hedge funds.
| nip180 wrote:
| Squeezing a short is different then a pump and dump.
| jermaustin1 wrote:
| When it succeeds, and the originators of the squeeze don't
| sell beforehand.
| vetinari wrote:
| As it was said in previous days: they (the originators of
| the squeeze) can remain irrational longer, than the other
| side (hedge fund managers) can remain solvent.
| jermaustin1 wrote:
| True, but if they sell a massive position and the stock
| tanks, and a bunch of little guys are left to hold the
| bag, I could see the SEC definitely investigating it as a
| pump and dump.
| monadic3 wrote:
| Might as well try to hold water in a sieve. What are they
| gonna do, charge tens of thousands of people?
| vetinari wrote:
| If the bunch of the little guys invested each just few
| hundred, it is not that a big loss. So if they end up
| holding the bag, it will be distributed among big crowd,
| where each member would be missing just a little.
|
| Of course, if someone went above that and invested an
| amount, where losing it would hurt, that's different.
| evv555 wrote:
| >This is why I put academic fields adjacent to "identity
| politics" in the same category as climate change
|
| This is why academic fields involved with "identity politics"
| are in the same class as "scientists" involved in climate
| change denial and questionable nutrition/smoking studies. Once
| there were academics involved in "critic theory" which more or
| less used Marxist level of analysis. A thorn in the side of the
| establishment. A branch within this field took the language of
| Marxism but replaced capitalist/working class with
| identities(e.g white men/minority women). Ofcourse those in
| power have supported this branch of critic theory and have
| gotten to the point where they even use it as a wedge issue. At
| this point this is the orthodox branch of "critic theory" and
| it's not because of intellectual merit.
| notjes wrote:
| HN admins will ban this thread in 3...2...
| rorykoehler wrote:
| Exactly my thoughts. It's only a matter of time now. I'm most
| surprised it hasn't started in earnest yet.
| Fjolsvith wrote:
| Its called "RedPilling".
| fvbdbdhbdb wrote:
| Serious question. Is the whole David vs Goliath narrative
| unfounded?
|
| Over the last 8-10 years online activism/mobs have increasingly
| been co-opted by those in power as a means of astroturfing. I
| think it is totally fair to be skeptical and ask whether that
| is going on here.
|
| One thing is for sure. Even if this is organic, it won't be
| next time. After seeing this why wouldn't some hedge fund
| orchestrate something like this to manipulate the market?
| [deleted]
| llampx wrote:
| If you are coming with such a narrative it would behoove you
| to come with proof.
| fvbdbdhbdb wrote:
| What narrative am I coming with? My comment is
| _questioning_ the prevailing David vs Goliath narrative.
| Based on past events, I think there is enough of a prior
| probability of astroturfing to be skeptical. We will find
| out whether this was organic or not as things evolve.
|
| But it would be a mistake to not think that some hedge fund
| manager, oligarch, etc. somewhere is paying attention and
| thinking about how they might be able to co-opt.
| mandeepj wrote:
| I hope you get well soon. Maybe see a psychiatrist.
|
| You are taking Stocks linking them to alt-right then to
| violence. What? You look like a close devotee of an incompetent
| president whom we just fired. He was also super-spreader of
| conspiracy theories. No one had any problem with any other
| conservative president or progressive for that matter until he
| showed up.
| jl2718 wrote:
| > GamerGate Actually it seems related to me. Leveraged short-
| selling is a tactic of activist investors to take control of a
| company, and there was an article about what they wanted to do
| with it. No doubt the past actions of activist investors in the
| gaming industry was fuel for this fire. I'm not a gamer and I
| don't know what is going on, but I think it has something to do
| with getting rid of the ownership model of games to make way
| for cloud gaming and advertising, served with a political
| agenda. GameStop made the ownership model work. Every major
| cloud service provider, social media company, and their
| investors all want it gone. Gamers know that ownership is the
| only way to keep politics out of gaming.
| Bart073T wrote:
| There's cryptocurrency.
| baybal2 wrote:
| I've heard the talk that Robinhood website is an op by a
| financial fund called Citadel LLC. It may be considered market
| manipulation on their side well more solidly than some
| speculation on the internet, not to say a breach of brokerage
| contractual obligations.
| christophilus wrote:
| Is that the same Citadel who lent money to Melvin Capital? If
| so, that's a huge red flag.
| mrep wrote:
| Citadel securities is the market maker that pays for order
| flow, Citadel is the hedge fund that lent 2 billion to
| melvin capital. Definitely smells like some backroom don't
| bite the hand that feeds you.
| chaostheory wrote:
| It is.
| [deleted]
| batmenace wrote:
| Not quite. Citadel is a very well known quant hedge fund. The
| main way Robinhood makes money (and can let people trade
| without commission) is by selling their customers order flow
| (legally) to Citadel. Citadel (legally) uses this customer
| information to, in the milliseconds before the customer,
| front-run the trade, buy the shares and sell them to the
| Robinhood users at a marginal profit.
| axlee wrote:
| That doesn't sound correct:
| https://robinhood.com/us/en/support/articles/how-
| robinhood-m...
|
| - Rebates from market makers and trading venues
|
| - Robinhood Gold
|
| - Stock loan
|
| - Income generated from cash
|
| - Cash Management
| tylerhou wrote:
| Payment for order flow falls under "rebates from market
| makers and trading venues."
|
| https://robinhood.com/us/en/support/articles/stock-order-
| rou...
| jrochkind1 wrote:
| How much do you think Citadel has made off of GME in the
| last week?
| jcfrei wrote:
| They have certainly profited from the increased options &
| equity trading. I'm also pretty certain it's less than
| the loss Melvin Capital suffered.
| tomp wrote:
| You got things a bit mixed up.
|
| There's _Citadel Asset Management_ , the quant hedge fund
| (which is probably the one that lent money to Melvin,
| though I'm not sure about that), and _Citadel Securities_
| the HFT / market-making show (they have the same owner).
|
| HFT market-making using retail order flow isn't front-
| running - the price the customers get is the same
| regardless ("Best Bid Offer" as brokers are legally
| required to provide in the US). The difference is, once
| that the HFT market maker _holds_ the stock, they can get
| rid of it more easily (i.e. they can _close_ the trade)
| because (the assumption is that) the retail flow is
| "noise" (uncorrelated with future price movements) as
| opposed to professional/institutional traders (e.g. other
| hedge funds executing their strategies), where a big
| problem is negative selection (i.e. you're more likely to
| execute a trade with someone that has better information
| than you).
| swader999 wrote:
| This and they have terrible spreads. So commission is
| included in the price.
| im3w1l wrote:
| This is incorrect. To understand the business model you
| first have to understand the order book and how trades
| _normally_ work. The order book consists of two sides. The
| bids (people who want to buy, how much and at what price),
| and the asks(people who want to sell, how much and at what
| price).
|
| For instance the bid side may say
|
| Alice wants to buy 50 shares at $20 (order added at 10:37)
|
| Bob wants to buy 30 shares at $20.1 (order added at 11:18)
|
| Citadel wants to buy 35 shares at $20.1 (order added at
| 11:17)
|
| David buy 10 shares at $20.1 (order added at 11:01)
|
| The bids are ordered by price, and ties are broken by who
| placed the order first.
|
| If Evelyn (Robinhood customer) shows up and wants to sell 5
| shares at $20, then the exchange will say, oh nice 20 is
| less than $20.1, lets get some trades going! $20.1 is the
| highest prices, and of those orders David's were entered
| first. So Evelyn's sell order is matched with Davids buy
| order. The price is determined by the order which was in
| the book. So Evelyn will get a better price than she hoped
| for!
|
| If Evelyn had requested to sell 100 shares, then she will
| first sell to David for $20.1, then Citadel's for $20.1,
| then Bob's for $20.1 and finally some of Alice's shares for
| $20.
|
| Ok but what happens if Citadel is paying for order flow??
| Now the order book (from Evelyn's perspective) looks like
|
| Alice wants to buy 50 shares at $20 (order added at 10:37)
|
| Bob wants to buy 30 shares at $20.1 (order added at 11:18)
|
| David buy 10 shares at $20.1 (order added at 11:01)
|
| Citadel wants to buy 35 shares at $20.1 (order added at
| 11:17)
|
| So if Evelyn (Robinhood customer) shows up, and again wants
| to sell 5 shares at $20, then she will sell to Citadel,
| even though their order is later than David's.
|
| So to sum it up
|
| Evelyn (Robinhood customer) is unaffected
|
| Citadel wins
|
| David loses.
| tylerhou wrote:
| This is missing the context that Robinhood is required to
| seek the "best" execution of trades [1]. So Citadel is
| making a profit yes, but the customer is not necessarily
| harmed in that profit as Citadel may still be delivering a
| better execution than other market makers or the actual
| exchange itself.
|
| [1] https://www.sec.gov/fast-answers/answersbestexhtm.html
|
| Robinhood publishes their execution numbers (as required by
| the SEC), along with other brokers. At a quick glance,
| there is nothing out of the ordinary. It's also worth
| noting that you cannot directly compare numbers as
| different platforms have different trading behavior.
|
| https://robinhood.com/us/en/about-us/our-execution-quality/
|
| https://www.schwab.com/execution-quality
|
| https://www.fidelity.com/trading/execution-quality/overview
| fomojola wrote:
| Of note here: Robinhood recently (last month) settled
| charges that they actually weren't seeking best
| execution.
|
| https://www.sec.gov/news/press-release/2020-321
| tylerhou wrote:
| (In 2018, and the actual charges they settled were not
| that they weren't seeking best execution. The charges
| that landed were that they falsely advertised that their
| execution matched or beat other brokers.
|
| In fact, they were still seeking "best" execution; they
| just didn't beat other brokerages because of high
| payments for order flow and misled customers about that.)
| gashad wrote:
| I just learned about the Citadel/Robinhood connection from
| this https://marketsweekly.ghost.io/what-happened-with-
| gamestop/, which the author https://twitter.com/alexisgolds
| tein/status/13546053632874864... explained as "Why it's not
| Robinhood/Reddit vs. Hedge Funds. It's Hedge Funds vs.
| Hedge Funds vs. Wall Street, with Robinhood as a fig leaf".
| The sidebars in the article explain a lot of the lingo.
| cpascal wrote:
| Can Citadel exercise any sort of discretion on what order-
| flow they'll fill? Can they legally tell Robinhood that
| they will no longer fill orders for GME?
| baybal2 wrote:
| > Can Citadel exercise any sort of discretion on what
| order-flow they'll fill? Can they legally tell Robinhood
| that they will no longer fill orders for GME?
|
| Legally not, illegally... yes, and try to prove that.
| omosubi wrote:
| citadel is their market maker but as far as I know is not
| owned or operated by them.
| rvz wrote:
| Yes. You can now see the true extent of their tricks and
| possible ways of shaking the WSB traders. Obviously these large
| guys are using their influence and connections to drive FUD,
| lies and fake news to frame their enemy / target (/r/WSB) to
| give in and sell. Even the stock brokers are in on it. All of
| this to protect the losses of the irresponsible and the
| greediest of hedge-funds and short-sellers.
|
| Best part? They are not even hiding it. Everyone can see the
| message.
| tiahura wrote:
| Am I the only one who see's parallels between the above
| paranoia and "the election was stolen and they're not even
| hiding it?"
| jaywalk wrote:
| In order for it to be paranoia, it has to be irrational. So
| I'd say you're the only one who even sees it as paranoia in
| the first place. Because the evidence that it's happening
| is literally right in front of your face.
| henriquez wrote:
| Yes
| tima101 wrote:
| People who engineered this fake outrage made a lot of money by
| buying early and selling early, everyone who believed this scam
| lost money.
|
| Let's punish hedge funds - fake outrage
|
| Stocks are climbing up - fear of missing out
|
| Restrictions on platforms to prevent people from falling into
| this scam - fake outrage
|
| Scammers' freedom of speech is in danger - fake outrage
|
| Looks like we entered new era where fake outrage on social
| media (Reddit, HN and Twitter) can make scammers a lot of
| money.
|
| I am surprised that HN community is falling for this scam.
| kyuudou wrote:
| > the powers that rule USA don't realize that soon the only
| tool left to common people is violence?
|
| A clever way to create a situation to pass mass gun control and
| limit those pesky civil liberties, no?
| kmeisthax wrote:
| If I were running a financial brokerage I'd totally do this,
| too. It's not a matter of "helping my hedge fund broker
| friends", it's a matter of "how do we keep the SEC off our
| backs". Remember: Robinhood is already being charged with
| securities law violation for giving their customers a raw deal
| on order execution.
|
| We usually don't see distributed market manipulation like this,
| but I wouldn't be surprised if a shitton of people buying
| GameStop to squeeze a short-seller breaks securities law. Does
| it feel good to get one up on a hedge fund idiot that was
| trying to manipulate GameStop the other way? Yes - but this is,
| at best, financial vigilantism.
| ordinaryradical wrote:
| > Does it feel good to get one up on a hedge fund idiot that
| was trying to manipulate GameStop the other way? Yes - but
| this is, at best, financial vigilantism.
|
| Hedge funds do this to each other every day. Why is it
| suddenly wrong when it's retail investors on the other side
| of the trade?
|
| I truly do not understand the naivete of arguments like
| these. Only the wealthy should be allowed to game the price
| of assets and rip each other off?
| Tinyyy wrote:
| > Hedge funds do this to each other every day.
|
| Do you have a source for this?
| Person5478 wrote:
| If it were not so shorting wouldn't be considered high
| risk...
| sigstoat wrote:
| short positions are inherently higher risk than long
| positions because your upside is finite, and the downside
| is unbounded.
|
| (this is why you might want to... hedge your shorts.)
| adrr wrote:
| If you remove the short squeeze part. It is still a pump
| and dump. Someone is going to be holding the bag when the
| stock comes back down. That is going to be retail
| investors.
| ordinaryradical wrote:
| Start with Matt Levine or Michael Lewis if you want to
| see how games are played.
|
| For eg, here's an insane one from last fall on negative
| oil futures:
|
| https://www.bloomberg.com/opinion/articles/2020-08-04/som
| e-p...
| folkrav wrote:
| I'm still shit at these things, but so far, I seriously
| cannot understand how hedge funds get away with "shorting",
| but people doing the same thing in reverse is market
| manipulation. From this (admittedly naive) POV, this sounds
| like double standards.
| kmeisthax wrote:
| Holding a short position (selling before you buy) or a long
| position (buying before you sell) are both valid and legal
| trading decisions on their own. Market manipulation arises
| out of context. When you start tweeting about how you
| should totally sell a stock that you have a short position
| on, then you start stepping into illegal behavior.
|
| In other words, the capital firm that got short-squeezed by
| the idiots at /r/WSB were also doing something illegal.
| It's not the case that the short is legal but the longs
| aren't. Alternatively, if the argument is that /r/WSB isn't
| market-manipulating, they just think the stock is
| undervalued, then the hedge fund can use the same argument.
| "We think this stock is overvalued so we shorted it" is how
| they'll explain it to the SEC.
|
| And that's not an invalid position: GME has been
| suspiciously overvalued way before any of the parties
| involved started holding positions. It's a retail-heavy
| business in pandemic season with multiple year-over-year
| same-store sales cuts. What that means is that, for each
| one of their stores, on average, they sold 30% less product
| in Q3 2020 than they did in Q3 2019. And even if you think,
| "oh, that's just the COVID economy, they'll be back"; Q3
| 2019 sales were already 20% down from the year before. This
| is a company nobody wanted to buy games from even before a
| novel coronavirus decided to close a good chunk of their
| stores.
|
| The fun fact about that above explanation is that it
| provides plausible deniability for someone trying to juice
| the market in a particular direction. Hell, if /r/WSB
| hadn't caught the hedge fund with their pants down, they
| probably would have gotten off scot-free. However, the
| financial vigilantes dumping fat stacks into GME don't have
| the same kind of excuse - they explicitly coordinated in
| public fora to manipulate stock price, so it's an easy
| target for an SEC that really doesn't get the budget
| necessary to prosecute the complex kinds of financial
| crimes they're tasked with.
|
| So, from a legal perspective, both parties are in the
| wrong. From an enforcement perspective, /r/WSB is a soft
| target.
| folkrav wrote:
| So definitely double standards.
| aikinai wrote:
| I think you missed most of the story. The stock was
| massively undervalued before attracting the attention of
| WSB. The first posts were when it was valued less than
| the cash it was holding.
|
| On top of that, you have the beginnings of a takeover by
| a successful e-commerce CEO and potential for real
| turnaround.
|
| That would have been enough on its own for WSB longs to
| jump in, but then the hedge funds shorted over 100% of
| the stock making it the perfect powder keg for this
| explosion.
| notahacker wrote:
| The same thing in reverse isn't market manipulation. Buying
| call options or the stock itself is legal.
|
| What can be market manipulation is to collude with others
| to move a stock price not because you believe it is worth a
| different amount, but because you predict others will react
| to the movement you create. That applies to collusion
| involving shorts (bear raids) too. Proving the collusion
| and the artificial price bit is the difficult bit
| koheripbal wrote:
| It's not only that - the current price of AMC, GME, etc...
| are being manipulated artificially.
|
| This is text-book illegal activity.
|
| There is no logical derivation of GameStop's financial books
| that would warrant the kind of stock price it has.
|
| It is very very clearly market manipulation, and these exact
| sorts of manipulations are commonly prosecuted.
| Seanambers wrote:
| No this is EMH at work. Main street has realized that they
| can attack short positions which are unnatural in size. And
| they intend to get paid for doing it.
|
| Hedge funds are so used to being the only tool on the
| block, they overextended, and for the first(?) time the
| retail side is fighting back.
|
| The professional investing world have so many advantages
| over main street that it's not even funny. They've got
| everything from frontrunning, colocation, free money, and
| leverage(10x), 'unsophisticated' investors only can dream
| of this. And when they do go belly up, tax payers bail them
| out, meanwhile the bonus machine keeps churning.
|
| But it is funny and good when main street actually catches
| them with their hand in the cookie jar.
|
| How is this different from Bill Ackmans attack on Herbal
| life? https://www.youtube.com/watch?v=bQc6L4ieMwo
|
| How is this different from all the FUD Tesla has gotten
| over the years? Which CNBC has happily broadcast for years.
| https://www.youtube.com/watch?v=a-YgFDAroeI
| koheripbal wrote:
| > How is this different from Bill Ackmans attack on
| Herbal life?
|
| That was shorting. That is LEGAL.
|
| > How is this different from all the FUD Tesla has gotten
| over the years?
|
| Tesla was specifically investigated by the SEC when it
| tried to push short sellers out - and they paid an
| undisclosed fine for that ILLEGAL activity.
| themaninthedark wrote:
| Coordinating a short position and shorting over 150% of the
| available stock is not market and price manipulation?
| hyko wrote:
| There's nothing illegal about buying a stock, or even
| voicing your opinion about a stock.
|
| If only value investing was legal, the stock market look
| and operate very differently to today.
|
| Edited to add: ultimately the law should be there to
| prevent fraud, not to restrict capital ownership and
| financial autonomy to a handful of cronies. You know, what
| they call a _free market_.
|
| Incidentally, if this had been a properly regulated market
| to begin with, the price inflation would not have been
| possible.
| unityByFreedom wrote:
| If you're able to rally people on social media is that
| manipulation? I'm not so sure.
|
| I think it's very risky for the investors but I don't know
| whether the SEC has stuff that would cover this.
|
| And even if there were a law, if you somehow have your
| thumb on the social media hype button then how would you
| enforce that law? Makes me think nothing unruly is going
| on, just a bubble that will inevitably collapse and make
| Musk etc. rich once more just like during the dot com era.
| Some people only know how to make money through theft and
| I'm not surprised we've found ourselves here after the last
| 4 years.
| adkadskhj wrote:
| Yea - i'm confused on what the definition of manipulation
| is here.
|
| If i tell you GME has a new product line that will
| increase their wealth 10x - that seems like manipulation.
| If i say to you i'm buying GME and you should too, with
| clear disclaimers that this isn't financial advice but
| rather a meme - i don't think i manipulated you.
|
| By "normal" definition manipulation requires some about
| of deception/etc. I don't think "anyone" _(within obvious
| reason)_ is being manipulated here. It 's very clear what
| the community is buying into.
|
| So i come back to what "manipulation" is defined as in
| the stock sense. Is it meaningfully different?
| roel_v wrote:
| "This is text-book illegal activity."
|
| Is it? If I have the money to put a short squeeze on
| someone by myself, with my own money, is that illegal?
| Isn't that what some people do all the time with smaller
| numbers?
|
| (honestly asking)
| koheripbal wrote:
| Coordinating millions of people to pump a stock so that a
| short squeeze will occur is very different from you doing
| it on your own.
|
| Pump and Dump schemes have been illegal forever. This is
| no different.
| Macha wrote:
| > There is no logical derivation of GameStop's financial
| books that would warrant the kind of stock price it has.
|
| Is there a requirement for stock prices to be logical?
| Wouldn't that would ban all sorts of hft trades?
| BunsanSpace wrote:
| What about Tesla? It's incredibly overvalued and in the
| same boat essentially.
|
| Why is one okay but not the other? Right because rich
| people with connections are the ones being burnt right now.
| virmundi wrote:
| The price of GME is due to a squeeze. The shorts have to
| get out. People know this. They are refusing to sell.
| Manipulation but legal.
| loceng wrote:
| It's also ironic that one of the supposed ethos of Bitcoin is
| to circumvent these powers that be - meanwhile every time
| there's an upward surge in pricing Coinbase conveniently isn't
| accessible which temporarily blocks impulse sellers and stops a
| rush of the "army of HODLers" from selling. If this behaviour
| isn't illegal it certainly should be, it's manipulation.
| cableshaft wrote:
| When that happens it's usually at the same time as a huge
| influx of new users and/or user activity.
|
| I agree it's somewhat suspicious if it happens all the time,
| like this has happened enough times why haven't you designed
| your infrastructure to handle surges more gracefully, but for
| the most part I think it's legit.
|
| If we assume intentional malice every time a website goes
| down, that's a dangerous precedent for the tech industry.
|
| The corporations I've worked for had nothing to do with
| finances but managed to have several major outages I've sat
| in on that have lasted as little as 2 hours and as much as 48
| hours. They were pretty much always network or server
| related, sometimes unrelated to the business entirely (a T1
| line got cut accidentally by the city in one case).
|
| Those corporations didn't want to go down, and often lost
| some serious money as a result. I imagine Coinbase loses out
| on a good amount of money every time they go down as well.
|
| I also expect it's at least somewhat overreported or only a
| partial outage as well. One person has an issue and announces
| it and everyone just repeats it without checking themselves.
| There was at least two instances when I saw people say
| Coinbase was down and I tried logging in myself and had no
| issues.
| llampx wrote:
| By crashing, or giving the appearance of crashing, Coinbase,
| Kraken etc maintain plausible deniability. RH is going whole
| hog "look at us, we are denying you the ability to buy this
| security so that hedge funds can drive the price down, and
| all you can do is sell your existing position - can't even
| short it if you like"
| xiphias2 wrote:
| Bitcoin is a monetary escape valve from the current financial
| system according to Janet Yellen. It's a 20 year long trend
| that can work peer to peer even without any exchange. Of
| course Coinbase makes things simpler, but it's not needed.
| TheRealDunkirk wrote:
| > the powers that rule USA don't realize that soon the only
| tool left to common people is violence?
|
| What's even more concerning to me is that, to platforms looking
| for an excuse, your comment could be painted as trying to
| "incite" violence, and used as a justification to ban you.
| paganel wrote:
| > be painted as trying to "incite" violence,
|
| They're using the "terrorist" word already in many cases.
| hagibborim wrote:
| Along these lines, bad-faith actors can plan racist messages
| as a pretext for banning arbitrary communities
| BitwiseFool wrote:
| There is a precedent for this, look at all the shenanigans
| r/AgainstHateSubreddits is known for.
| esyir wrote:
| Private platforms, can't do shit about them, yada yada yada.
|
| That's bullshit.
|
| The principle, and thus the the right to free speech is the
| fundamental value of a free country. Hiding behind the
| "they're a private company, they can do what they want" is
| nonsense when the vast majority of communication flows
| through them.
|
| I'm wondering though what happens if section 230 was modified
| to only allow for filtering and removal of spam (I'm
| expecting wiggle here in how it's abused) and illegal
| content.
| MrMan wrote:
| Pump and dump schemes being regulated being framed as a
| free speech issue? I don't know if it is productive to make
| this about free speech. The purpose of life isn't just to
| emit speech, and indeed the purpose of WSB is for people to
| exhort other people to action and that action is to buy and
| sell certain stocks, so that a subset of participants can
| profit and other people lose their capital. "Speech" is not
| the central issue or the most interesting one to me about
| this case, it is rather more interesting to see how mobs
| can be formed and influenced to take action.
| HotVector wrote:
| I just think it's really hypocritical of the government
| to advocate for freedom when they're literally making the
| market less free. The only markets to be regulated should
| be the ones that would otherwise be in market failure,
| like medicine.
| mountainb wrote:
| The law isn't set up to regulate 'distributed' peer to
| peer pump and dumps. The precedent is all focused on
| clearly identifiable orchestrators.
|
| E.g: I run a stock newsletter. I hire a boxer, Evander
| Tyson, to hype a biotech penny stock, Scampill Co.. Tyson
| says to his followers and to my newsletter subscribers
| that Scampill is about to get a drug approved by the FDA
| that will cure cancer. I and my friends at Scampill make
| sure that the patsies have enough stock to buy when I put
| out my first email blast. When the stock goes up 900% we
| sell our shares. At that point there are no more large
| lots on the market, the spreads widen, and the price
| collapse occurs.
|
| The SEC then sends their feds after me, the boxer I
| hired, and my friends, the insiders at Scampill. If they
| can catch me, I do some time in club Fed and have to pay
| some fines.
|
| In this instance, there is no insider collusion, there is
| no single promoter with an interest, and there is no
| commonality to build a class among the redditors etc. who
| participated in the manipulation. You have a mixture of
| people who may have said illegal things and people who
| had totally licit (in the eyes of the law) motivations
| and actions. You have a big mixture there of mens rae and
| its absence and a big mixture of types of actus reus and
| the lack thereof. It is a big mess as compared to making
| a case against the typical P&D mob scheme.
|
| Yet, you have an outcome that is somewhat similar to a
| classic P&D, and on a regulated marketplace, whereas most
| P&Ds happen on less regulated over the counter markets.
| littlecranky67 wrote:
| IANAL, but common misconception is that a constitution
| regulates the rights between individuals/citizens of that
| state. But this is wrong, the constitution regulates the
| rights of an individual against the state/government. That
| is, you have the freedom of speech against any government
| entities and cannot be prosecuted for exercising it. But if
| you come to my bar/house whatever and I don't like your
| opinion, I can show you the door and you can't quote the
| constitution and refuse to leave because you are exercising
| your rights.
| seneca wrote:
| This isn't the case. The rights we have are naturally
| ours, by nature of our very existence, and the
| constitution enumerates them as a mechanism to keep the
| government from infringing on them. It is very clearly
| written this way, and to say that our foundational
| natural rights don't matter in any context is dystopian
| and authoritarian. That is to say, rights exist outside
| and beyond the constitution. The question is really one
| of e.g. my rights vs Facebook's rights.
| echelon wrote:
| This sucks when there are only three or four bars and
| they all have the same corporate interest.
|
| Look at Visa going after porn and private sex work.
|
| This entire culture of trying to control what others can
| say via deplatformization is neoliberal fascism.
|
| Bad things get said. But free speech protects all of us
| from tyranny, and we have to defend it. Because they'll
| come after you and your ideas next.
|
| Americans have thick skin, or at least most of us do.
| It's a consequence of our liberty, and it's a defining
| trait of our system.
| BitwiseFool wrote:
| Civil Liberties don't exist if you leave them to the
| public sector. The US Government hosts and produces
| virtually nothing on it's own and just about everything
| you interact with is run or produced by a corporation.
|
| If you leave the responsibility of Free Speech to the
| Free Market then you end up having freedom of press only
| for the people who own one.
| nostrademons wrote:
| You can own a corporation with about $400 and an hour of
| filling out a form online, plus a month or so waiting for
| various government agencies to process it.
|
| The hard part is getting that corp to own anything of
| value, since it starts with just the money you put in.
| But this is still a viable path to wealth for people with
| time horizons measured in years rather than days. (And
| all the people who want immediate gratification provides
| a fairly large market to trade with.)
| CrazyStat wrote:
| > you end up having freedom of press only for the people
| who own one.
|
| That's how things have traditionally been in the US, is
| it not? As far as I know there was never any law that
| would force me to allow someone else to use my (literal)
| printing press.
|
| The exception is the FCC fairness doctrine, but the basis
| for that was that the "printing press" (RF allocations)
| is actually a common good, and was only granted to
| private interests in exchange for certain concessions.
| dfxm12 wrote:
| It's how it is today and also how it was when the framers
| wrote the constitution. Benjamin Rush suggested a
| particular printer for Thomas Paine to work with to print
| Common Sense, because Rush knew not every printer would
| want to print it based on its content.
| jaywalk wrote:
| Comparing your bar/house to a massive social platform
| like Reddit is absurd beyond belief.
| SkyBelow wrote:
| The moment the government started giving our licenses as
| to who can run a bar, meaning that not just anyone can
| open one and bars have to be pleasing enough to the state
| to be allowed is the moment when the separation between
| private business and state ceases to be a clear well
| agreed upon line.
| crudgen wrote:
| "There's class warfare, all right, but it's my class, the
| rich class, that's making war, and we're winning."
|
| -- Warren Buffett
| koheripbal wrote:
| The WSB sub is almost certainly going to get banned by
| Reddit.
|
| Given the track record Reddit has of keeling over to public
| pressure, there is no way they are going to stand up to the
| SEC.
| Sebb767 wrote:
| I'm not so sure. This subreddit is immensely popular right
| now, when they get banned the receiving backslash might be
| Reddits Digg-moment. And they are probably aware of this.
| carrabre wrote:
| If they ban it will be the beginning of the end for
| reddit. As i think is the case for Discord.
| MrMan wrote:
| Nah
| mlinhares wrote:
| There's no public pressure to do that, the only pressure is
| from Wall Street itself. The public is cheering the whole
| thing.
| whoknew1122 wrote:
| How do we know what 'the public' is cheering? Has there
| been any reputable sources of this?
|
| On one hand, the rise of meme stocks is shining light
| that one of the central conceits of capitalism is wrong
| (i.e. that the stock market isn't a good arbiter of the
| value of companies).
|
| But as a member of the public, I'm concerned about what
| happens when the meme stocks come crashing back to earth.
| When that happens institutional investors will overreact,
| doom and gloom will reign, and CEOs of public companies
| will use that to lay off people and cut worker benefits.
|
| The common person always loses when bubbles burst.
| ballenf wrote:
| > one of the central conceits of capitalism is wrong
| (i.e. that the stock market isn't a good arbiter of the
| value of companies)
|
| The "central conceit" is not that the market is a "good
| arbiter" of the value of a company. Just that it's the
| least bad one.
|
| The central conceit of every alternative to capitalism is
| that there's such a thing as a singular, coherent
| definition of "the value of a company" and that it's
| consistently, accurately measurable by some central
| authority.
| realce wrote:
| If there was no meme-stockery happening, Gamestop would
| have gone bust and everyone that works there would have
| been laid off. That's what the whole short strategy was
| intended to do, bleed them dry just like Toys R Us.
|
| In a crazy way this is probably saving a lot more jobs
| than it's jeopardizing.
| jfim wrote:
| Why would GameStop have gone bust? Even if GameStop stock
| would trade at zero, the company still exists until it
| runs out of money and declares bankruptcy, which is
| independent of its stock price.
|
| In this case, it's not really saving any jobs, since
| GameStop employees (excluding higher ranked employees)
| probably don't have any part of their compensation that's
| stock based.
|
| Toys R Us was a leveraged buyout, which is definitely a
| much more ethically dubious strategy, and that can cause
| jobs to be lost. This won't cause any jobs at GameStop to
| be lost, although there probably will be some unhappy
| traders and people left holding bags of GameStop stock.
| jsdwarf wrote:
| Bankruptcy is not independent from the stock price. If
| your company goes bankrupt, its shares are voided.
| jfim wrote:
| You're right, what I meant is that the share price
| doesn't affect the finances of the company (eg. a company
| that sells widgets makes the same amount of money whether
| their stock is worth $1 or $100000). As you point out,
| the share price should in theory reflect the value of the
| company (bankrupt company -> share price of $0), but a
| fluctuating stock price doesn't really change the value
| of the company itself (excluding shares that it owns,
| obviously).
| andruby wrote:
| If GameStop trades below book value, then someone could
| do a takeover, sell all the assets and make a profit.
| jfim wrote:
| Good point.
|
| Out of curiosity, has that actually happened to a public
| stock? I'd assume the minority shareholders would have
| standing for a lawsuit if someone were to do a hostile
| takeover of a stock and liquidate the assets of the
| company.
| herewegoagain2 wrote:
| "The common person always loses when bubbles burst."
|
| That is a tautology, because you define the "common
| person" as the person who loses.
|
| I'm sure there were people who made good money in the
| 2008 housing bubble. Didn't they all live like kings for
| a while, because they could borrow arbitrary sums against
| their houses?
|
| Similarly, some people may make good money on that
| GameStop thing now.
|
| The "common people" who didn't participate in this will
| probably never even notice. At most they'll notice that
| their favorite shopping mall is closing, but that is part
| of a larger trend. And they can now shop on Amazon
| instead, so their quality of life probably remains the
| same or gets improved.
| whoknew1122 wrote:
| Actually, I never defined the common person. Because I
| felt it's pretty obvious.
|
| The common person is the majority of Americans who live
| paycheck-to-paycheck and don't invest in the market.
|
| Those who don't participate will be negatively impacted
| if this causes another recession, which is likely as
| investors get spooked by another bubble burst. Which
| means standard of living, job benefits, and salaries will
| continue to stagnate.
|
| This also ignores the fact that we've moved from
| guaranteed pensions to 401ks, which are heavily dependent
| on hedge funds. If hedge funds lose their shirts, they'll
| get a bailout from the government because we didn't learn
| our lesson about too big to fail last time. Which will
| mean government austerity in other areas, typically
| starting in social welfare programs.
| thatfrenchguy wrote:
| 401ks, given their rules, are not reliant on hedge funds,
| unless you expert hedge funds to be any good at
| influencing pricing in the long term
| WSB_Mod wrote:
| With 175MM+ pageviews yesterday alone, I'm sure they're
| ecstatic about WSB's growth.
|
| This chapter in WSB has brought forth substantially better
| communication with the admins than we'd ever had in the
| past, including a direct line to Alexis.
|
| Edit:
|
| Thank you all for the outpour of support!
|
| Our main challenges thus far have been technical (hitting
| API limits, automoderator backlog, etc.) however, those
| issues have now been resolved and our bots are running
| better than ever before.
|
| We largely owe our success in handling this to the Reddit
| engineering team who has routinely stepped up and fixed
| things. As chaotic as the scene has been for us moderators,
| I'm sure they have been under much more pressure. If you
| know a reddit engineer, please give them your thanks as
| they have done a phenomenal job.
|
| For those curious, the surge in activity broke a number of
| things. Here are just a few:
|
| > modmail surpassing 80,000+ messages resulting in modmail
| going down
|
| > constant threads hitting 100,000 comments resulting in
| slow loading site-wide
|
| > automoderator getting backlogged and taking 30+ minutes
| to parse comments leading to terrible comments getting
| through.
|
| All these issues are now resolved, so once again, big
| thanks to the Reddit engineering team!
| guardiangod wrote:
| Don't stop. I am 100% behind you guys.
| [deleted]
| realce wrote:
| Thanks for your work - As a former super-mod I know how
| crazy and thankless it can be. You guys have a real scene
| going on, it's pretty beautiful.
| Communitivity wrote:
| Dogecoin subreddit may get banned too. Saw elsewhere that
| they're trying to push it to $1 (it's at $0.01 and the push
| has raised it 72%). Half tempted to drop $1k in it, in a
| Just-In-Case thing. Supposedly the total volume of Dogecoin
| is only 128k coins, though that sounds low. If it is that
| low it explains why the coin is so volatile. My main
| cryptocurrency positions are Bitcoin and Cardano.
| Matticus_Rex wrote:
| Total volume of dogecoin is ~128 billion coins, not 128k.
| Communitivity wrote:
| That is a heck of a decimal point error on my part.
| Thanks for the correction.
| throwaway12757 wrote:
| There is no way that's true because I mined and then lost
| 81k dogecoins because I reformatted my computer.
| cableshaft wrote:
| It's definitely not 128k coins. When it was first created
| it was notable for having such a huge supply of coins
| that people could have silly fun with it and not care
| about the 'value' of it. That hasn't remained true, but
| it was the initial idea behind it, a joke coin people
| could give tons of coins to other people to for pennies.
| swader999 wrote:
| Too many whales in dogecoin that want to keep a lid on
| it. It's meant to be used for charity and community
| building. Sometimes you can play the run and use
| derivatives to short it on the way down. Easier plays
| than this though.
| elliekelly wrote:
| I can't imagine a scenario where the SEC goes after
| _reddit_ of all places.
| Pulcinella wrote:
| There are other ways of applying pressure. AWS hosting
| Wikileaks was not illegal but they were still pressured
| to stop hosting if they wanted lucrative hosting
| contracts with the federal government.
|
| Now I doubt Reddit has huge contracts with the
| government, but I'm sure the government could find
| something to harass them with if it wanted to. Drive long
| enough and a cop will eventually find a reason to pull
| you over.
|
| https://www.theguardian.com/media/2010/dec/01/wikileaks-
| webs...
|
| http://scripting.com/stories/2010/12/28/usGovtABigUserOfA
| maz...
| elliekelly wrote:
| Definitely. It wouldn't at all surprise me to find out
| reddit was being pressured in some way but I think that
| pressure is _far_ more likely to come from investment
| folks than regulators. And I think elite investor class
| pressure would be far more threatening & potentially
| costly to reddit than anything the SEC might be able to
| dig up.
| mkhpalm wrote:
| > Given the track record Reddit has of keeling over to
| public pressure
|
| I'm not sure I'd call it keeling over to "public" pressure.
| ta302349 wrote:
| What SEC rule is WSB violating? I've seen no evidence yet
| that there is any sort of pump and dump collusion, the
| speculative bubble / stick-it-to-the-market-manipulators
| deal on WallStreetBets seems to be fairly organically
| driven as many memes are. There's no rules that I can think
| of against "tulip mania" type speculative bubbles. If there
| were, a huge amount of people would have been in serious
| trouble for the 2008 real estate bubble / crash.
|
| To be honest, I think the recent restrictions on trading
| specific stocks (on Robinhood etc.) is absolutely dumb.
| Apparently, the sort of crappy market manipulation that led
| to the 2008 Volkswagen "short squeeze" or the 2010 "flash
| crash" is absolutely fine because it was driven by traders.
| But an _amateur mob_ performing the short squeeze must be
| stopped at all cost? What bullshit. Either the "casino"
| should be open to all, or rules that apply to the "amateur
| mob" should apply to the HFT and derivatives market as
| well.
| luxuryballs wrote:
| Facts won't matter, they can ban just out of lawyer fear
| that they are at risk if they don't ban.
| Simulacra wrote:
| IMO the same is true with mask mandates. Businesses
| probably fear lawsuits from employees and customers who
| might get sick, and blame them for not doing enough.
| Sometimes a business does something that it claims is in
| the public interest but in reality is to protect them;
| i.e. Green Washing.
|
| https://en.wikipedia.org/wiki/Greenwashing
| luxuryballs wrote:
| Yep. In Virginia a church sued and forced the mandate to
| put the misdemeanor on the individual rather than the
| church. I wish they would do this for businesses as well.
| WorldMaker wrote:
| Wall Street asked for exactly these sorts of
| deregulations. It's absolutely hypocritical for them to
| ask for exceptions to be made now and those half-assed
| versions of older regulations brought back but for only
| _some_ traders.
| zappo2938 wrote:
| The hedge funds went to CNBC and told them they settled
| their short positions at $90. This news rippled through
| the entire trading community, exactly the same as WSB
| information ripples through the entire trading community.
| There is zero difference.
|
| Most likely this will be like accessibility to poker
| online and in casinos which don't profit off the game
| directly interestingly in the 2000s. A lot of people got
| involved. A few made a lot of money and the rest went to
| do other things after a while.
| BitwiseFool wrote:
| None, but Reddit doesn't need a valid reason to ban a
| subreddit. Where there's a will, there's a way.
| tylerhou wrote:
| > What SEC rule is WSB violating?
|
| Market manipulation. Loosely, market manipulation happens
| when you artificially influence the price of a stock,
| resulting in a personal gain. Buying stock with the
| intention of causing a short squeeze can be interpreted
| to fit that definition. I believe that WSB is creating
| artificial demand to try to "screw over" certain
| institutional investors. I am not a lawyer; this is not a
| legal interpretation.
|
| > Apparently, the sort of crappy market manipulation that
| led to the 2008 Volkswagen "short squeeze" or the 2010
| "flash crash" is absolutely fine because it was driven by
| traders.
|
| How were they "absolutely fine?" You do know that
| regulators attempted to prosecute the traders/executives
| responsible for the 2008 VW short squeeze [1], and
| successfully prosecuted a trader for the 2010 flash crash
| [2]? For the VW short squeeze, regulators were not able
| to find evidence that the traders involved _intended_ to
| cause a short squeeze or engaged in any artificial
| demand; they actually demanded the stock because they
| sought to take over VW. This is also evidenced by the
| fact the Porsche sold stock on the open market once they
| released that a squeeze was happening [3].
|
| [1] https://www.ft.com/content/ad782326-ed02-11e5-888e-2e
| add5fbc...
|
| [2] https://en.wikipedia.org/wiki/2010_flash_crash
|
| [3] https://www.ft.com/content/0a58b63a-4294-3e07-8390-c3
| aabef39...
| baybal2 wrote:
| > Loosely, market manipulation happens when you
| artificially influence the price of a stock, resulting in
| a personal gain.
|
| Every purchase influences the market, and results in
| gain, otherwise people would not be buying, and selling
| things.
|
| Every purchase, is a market manipulation by the
| definition.
| tylerhou wrote:
| > Every purchase, is a market manipulation by the
| definition.
|
| Well, I don't think this would hold up in court. Both the
| SEC and courts have made a distinction in the past
| between "real demand" (i.e. demand motivated because you
| think the stock is undervalued) and "artificial demand"
| (i.e. demand that is not based on any underlying
| analysis, but instead motivated because you intend to
| trigger other market mechanisms, including coverings of
| short positions). Like most legal definitions, the actual
| definition is hazy, and courts may have established legal
| tests. Read Matt Levine for a nuanced analysis [1].
|
| Again, not a lawyer, this isn't legal advice.
|
| [1] https://www.bloomberg.com/opinion/articles/2021-01-26
| /will-w...
| baybal2 wrote:
| And every time, an effort to judge whose demand is more
| real that other ends up with absurd, scandalous legal
| rulings.
|
| They should not be.
|
| These guys have full understanding how laughable it the
| attempt to judge somebody by pretending the
| judge/bureaucrat can peer into somebody's mind, and yet
| they do it.
| tylerhou wrote:
| > pretending the judge/bureaucrat can peer into
| somebody's mind
|
| But historical cases don't peer into people's minds. They
| look at evidence, such as texts in chat rooms that show
| clear intent to manipulate. See the Libor scandal chats
| [1], where one trader wrote "its just amazing how libor
| fixing can make you that much money" and "its a cartel
| now in london."
|
| I think it's unlikely that the SEC will be able to
| successfully prosecute WSB traders, though, due to lack
| of evidence. It's also probably not even worth their
| time.
|
| [1]
| https://www.buzzfeednews.com/article/matthewzeitlin/why-
| bank...
| emteycz wrote:
| It's not market manipulation if it's true.
| [deleted]
| [deleted]
| partiallypro wrote:
| > Market manipulation. Loosely, market manipulation
| happens when you artificially influence the price of a
| stock, resulting in a personal gain. Buying stock with
| the intention of causing a short squeeze can be
| interpreted to fit that definition. I believe that WSB is
| creating artificial demand to try to "screw over" certain
| institutional investors. I am not a lawyer; this is not a
| legal interpretation.
|
| Bill Ackman went on CNBC last year in near tears saying
| the end was coming, helping stocks continue their nose
| dive...all the while he was buying tons and tons of
| stocks which he turned into billions. How is that allowed
| but people on a message board sharing positions and high
| number of short floats isn't? There is literally, and has
| been for a long time, a website that tells you the short
| interest in a stock. It's sole purpose is to help people
| find short squeezes. That's why you have stats like "days
| to cover."
| tylerhou wrote:
| > Bill Ackman went on CNBC last year in near tears saying
| the end was coming, helping stocks continue their nose
| dive.... How is that allowed?
|
| It shouldn't be allowed without proper disclosure on
| their actual positions. The SEC has prosecuted people in
| the past for making public statements while taking the
| other direction without proper disclosure.
|
| I believe that this _should_ be investigated by the SEC,
| but it likely may not since, at the direction of the
| Trump administration, the SEC has instead focused their
| efforts on other financial crimes.
| ethbr0 wrote:
| > _The SEC has prosecuted people in the past for making
| public statements while taking the other direction
| without proper disclosure._
|
| There a difference between "This stock is going down. (I
| buy long because I know something I'm not saying)" and
| "This stock is going down. (I buy short because I believe
| what I say)"
|
| This is essentially Reddit saying "This stock is going
| up, so buy options to exacerbate that and to profit." No
| misrepresentation.
|
| If the SEC doesn't like this, they should fix the
| underlying market structure that makes this action
| possible. Effectively: what allows the traders to create
| leverage by abusing / forcing brokers to take specific
| actions.
|
| Or just give up and accept that by digitizing markets
| we're past the rubicon to smart trading and predatory
| pack algorithms being successful.
| tylerhou wrote:
| First, I am not arguing that WSB is engaging in fraud or
| misrepresentation, as is alleged with Ackman. That is
| entirely different from the activity I am alleging is
| being done on WSB (by a subset of posters).
|
| > This is essentially Reddit saying "This stock is going
| up, so buy options to exacerbate that and to profit." No
| misrepresentation.
|
| I see threads where WSB is saying "This stock is going
| up, and if we make it go up more, hedge funds & market
| makers will have to buy more stock to cover their short
| positions, and therefore it will go up even further [and
| we will make more money]." That's the manipulative part
| -- creating artificial prices to induce even more demand.
| ethbr0 wrote:
| I think it's the "manipulative" that's debatable here,
| because the manipulation is effectively being done by a
| second party.
|
| Is it manipulation if _you 're_ so predictable that an
| action by me causes you to _always_ act a certain way?
| And I profit when you take that action?
|
| If hedge funds refused to cover their shorts (I'm
| probably using the wrong terminology) and left them open,
| this wouldn't be an issue, no? Or, conversely, if market
| makers refused to sell options on overly volatile stocks
| / stocks being manipulated?
| tylerhou wrote:
| > Is it manipulation if you're so predictable that an
| action by me causes you to always act a certain way? And
| I profit when you take that action?
|
| It depends, but approximately, yes _if there was any
| intent to exploit that fact_. See spoofing, other
| prosecutions for creating short squeezes, etc.
|
| https://dealbreaker.com/2012/06/phil-falcones-alleged-
| piggis...
|
| The rationale is that markets are better for participants
| when their prices are accurate and reflect true supply
| and demand. Price manipulation subverts that, so the SEC
| disallows it (except in some cases where manipulation is
| explicitly allowed for historical reasons).
|
| > refused to cover their shorts (I'm probably using the
| wrong terminology) and left them open, this wouldn't be
| an issue, no?
|
| This is imprecise; hedge funds might cover short
| positions to hedge further losses, or because their prime
| broker might require them to maintain a certain margin
| (to reduce counterparty risk). I have no experience in
| institutional investing, so that's a guess.
|
| > Or, conversely, if market makers refused to sell
| options on overly volatile stocks / stocks being
| manipulated?
|
| Market makers will increase a premium for options on
| "overly volatile stocks." If the risk is too high, then
| they may stop selling the options altogether. But the
| problem is -- it's difficult to predict which next stock
| WSB might start manipulating. That's another issue. If
| regulatory agencies don't step in and prevent this type
| of manipulation, the premiums on all retail-adjacent
| options will be higher because of the increased risk and
| fear that a capricious WSB crowd might turn on a MM.
| That's bad for people who use options "correctly" -- not
| for gambling, but as a way to hedge and reduce risk.
| jdavis703 wrote:
| I personally believed that stocks would continue at
| depressed valuations for the duration of the pandemic,
| yet bought during the crash because I knew there would be
| a recovery. I don't think those actions are
| contradictory. (And of course I wound up being surprised
| how quickly prices recovered.)
| partiallypro wrote:
| You weren't a huge fund manager on TV talking down the
| market in real time while having your firm buy. A lot of
| people vested around last March, that's completely
| different than trying to scare people out of positions on
| national TV so that you can get into the position at a
| lower price.
| ghastmaster wrote:
| > ...all the while he was buying tons and tons of stocks
| which he turned into billions
|
| It's called activist investing. His fund did not buy
| stocks, but bought Credit Default Swaps to the tune of
| $27 million USD. In the event that the markets dropped,
| they were awarded massive gains if they exit position.
| They gained $1.3 billion.
|
| Prior to exiting the position which was publicly
| released, he went on media outlets and promoted the idea
| of shutting down the economy. This is what activist
| investors do. They actively spread rumors that will help
| their positions.
|
| https://assets.pershingsquareholdings.com/2020/03/2612284
| 2/P...
| TheRealDunkirk wrote:
| I remember, a few years back, that Musk made news because
| he shut down someone asking questions in a public
| earnings report. The press was giving him a lot of flack
| about it. Then I kept reading, and found out the person
| who was trying to ask those questions represented a
| firm(s) that had large short positions on the stock, and
| was trying to cause the stock to dip. Musk knew what was
| going on, and headed it off. Seemed like he made a good
| call, but then the press made THAT the story instead.
| ericmay wrote:
| > It's called activist investing.
|
| I'd be really interested in learning more about the
| Olympic level mental gymnastics one has to go through to
| write this off as O.K. but then turn around and say that
| a bunch of random people on an open public forum saying
| to buy an over-shorted stock is market manipulation. They
| don't even have the purchasing power to make a difference
| here.
| partiallypro wrote:
| That is -not- what an activist investor is. An activist
| investor is someone that buys a large enough portion of a
| company in order to have a say in board operations, etc
| (even liquidation.) You can go on air and talk up your
| company, ever CEO, etc does that. That is expected. What
| he did was talk down positions he was going into. That is
| not activism.
| rorykoehler wrote:
| How is this not market manipulation?
| zajd wrote:
| It's called smart when you do these sorts of things with
| a 9 figure net wealth.
| staticautomatic wrote:
| What is artificial about buying a stock and encouraging
| others to buy it?
| kchr wrote:
| Because the encouragement affects the outcome of your own
| investment instead of "happening on its own".
| staticautomatic wrote:
| So no one should be allowed to speak for or against
| buying or selling stocks they own?
| tylerhou wrote:
| > There is literally, and has been for a long time, a
| website that tells you the short interest in a stock.
| It's sole purpose is to help people find short squeezes.
| That's why you have stats like "days to cover."
|
| Again, I am not a lawyer, I am not your lawyer, and this
| is not a legal interpretation or legal advice; just my
| personal opinion.
|
| Motivation and intent are the main factors in determining
| manipulation. So there are two cases:
|
| 1. A trader buys stock, seeking to profit, because they
| believe that a short squeeze may be incoming soon.
|
| 2. A trader buys stock, seeking to profit, because they
| _intend to drive the stock price up, thereby causing a
| short squeeze._
|
| (1) is legal (in my understanding; see the disclaimers
| above). (2) is not. They differ in their intents. The
| first one is "legitimate" demand, the second is
| "artificial."
|
| Now, it's difficult to prove intent in court. And
| clearly, many people in WSB legitimately are buying the
| stock because of (1). But there are some who are doing
| (2). They have plausible deniability, though, and that's
| why it's unlikely that anyone in WSB will be successfully
| prosecuted without more concrete evidence.
| d1sxeyes wrote:
| This is not artificially influencing the stock price.
| Buying a stock believing it will increase in value is
| basically the point of the stock market. Believing it
| will increase in value because it's been over-shorted is
| a legitimate reason to ascribe value to it.
|
| > The US Securities Exchange Act defines market
| manipulation as "transactions which create an artificial
| price or maintain an artificial price for a tradable
| security".
|
| It is my opinion that this demand is not artificial, it
| is genuine, although caused by factors other than the
| inherent value of the stock itself.
|
| If this is considered to be 'creating an artificial
| price', I don't see how a position where 140% of the
| shares of a company are shorted could not be, meaning
| significantly wider implications than just a single
| subreddit.
| paulie_a wrote:
| You never need the disclaimer about not being a lawyer.
| Ever
| tylerhou wrote:
| Since I am not a lawyer and therefore unfamiliar with the
| potential liabilities I might incur by not including that
| disclaimer, I would rather cover my ass.
|
| https://law.stackexchange.com/questions/683/usa-is-i-am-
| not-...
|
| Also, are you a lawyer, and is that legal advice? :)
| melomal wrote:
| It would be interesting to know what the difference is
| between CNBC talking heads VS a community of "traders"?
|
| Jimmy Cramer pumping stocks every evening to his boomer
| audience which ultimately has some effects (not sure how
| much though) on stock prices seems fine but a group of
| people discussing stocks seems like a threat...
| realce wrote:
| Really - is a TV network much different from a subreddit
| where only the mods can post?
| swader999 wrote:
| It's a small club and you ain't in it is what this all
| comes down to. USA a banana republic more and more sadly.
| NDizzle wrote:
| Are you a Zappa fan? If not, check out Frank Zappa. The
| Meek Shall Inherit Nothing.
| whobar wrote:
| Just looking at this from a technical perspective, it'll be
| pretty exciting if all this ends up leading to an explosion
| in the take up of self-hosted social media platforms.
|
| The question is, will the creators of these communities
| trust cloud providers where the platforms are hosted to not
| de-platform them, or will we end up with P2P, distributed
| networks instead?
| davidw wrote:
| > explosion in the take up of self-hosted social media
| platforms.
|
| Network effects drive a lot of adoption of these things,
| which is a huge headwind against an "explosion" of them
| lasting that long.
| gonzo41 wrote:
| When you take you're tech to it's limit you get mailing
| lists, again.
| cousin_it wrote:
| Then email providers will kick out unapproved users, DNS
| will kick out unapproved email providers, and so on.
|
| I want an anti-authoritarian internet. The past year has
| been surreal.
| laurent92 wrote:
| Until China, Japan and Russia unite to provide
| disenfranchised Americans with a free internet that is
| off-limits from the grabbing hands of the US elites.
|
| And it will thrive and will be a better place to make
| more money that SV for 5-10 years, until it gets censored
| like any public space.
| sidlls wrote:
| Including "China" and "free internet" in the same
| sentence is hilarious. Unless something like "will never
| tolerate" is in between them.
| pbourke wrote:
| Are you seriously calling for China, of all countries, to
| create a network free of censorship?
| sjg007 wrote:
| It'll have to be p2p maybe with super nodes to replicate.
|
| You will want a data mesh layer that multiple apps run on
| top of probably.
| bitstan wrote:
| Would be interesting if WSB was allowed to invest in
| private startups as easily as they can invest in meme
| stocks.
|
| Robinhood doesn't like us? We'll start out own.
|
| Reddit doesn't like us? Let's just kickstart and crowd-
| source another.
|
| This idea that the common man needs to be protected from
| himself is paternalistic and condescending. Private equity
| is the means of collective action and the rich people don't
| want us to organize without their blessings.
| ibraheemdev wrote:
| > Reddit doesn't like us? Let's just kickstart and crowd-
| source another.
|
| By the way, the Reddit WSB "shutdown" was done by mod
| admins to clean up the page a bit. It was private for an
| hour or two and back up.
| silicon2401 wrote:
| > This idea that the common man needs to be protected
| from himself is paternalistic
|
| Interesting word choice. Conservative wording of "common
| man", but liberal wording of "paternalistic". I don't
| mind the former but I do wonder how a father would be
| more inclined to protect a child from itself than a
| mother; if anything, I would find maternalistic a more
| fitting descriptor.
| tachyonbeam wrote:
| > Reddit doesn't like us? Let's just kickstart and crowd-
| source another.
|
| There's Ruqqus which is already a working alternative to
| reddit. However, what I found going there is that there
| are a lot of anti-left memes being shared. Some amount of
| toxicity. I'm all for freedom of speech, but I wish the
| platform was a bit less political, a more neutral
| alternative to reddit... but hey, if enough people leave
| reddit, maybe it will become just that.
|
| https://ruqqus.com/+Commentary/post/74iv/lol-you-thought-
| tha...
| bitcharmer wrote:
| > what I found going there is that there are a lot of
| anti-left memes being shared
|
| This is probably because reddit is quite clearly a left-
| leaning platform. Due to the lack of healthy balance, the
| refugees from reddit are mostly people who feel their
| views and voices are being silenced by aggressive
| moderation. In my opinion this state of affairs is only
| reddit's fault.
| aphextron wrote:
| >Would be interesting if WSB was allowed to invest in
| private startups as easily as they can invest in meme
| stocks.
|
| Not enough liquidity. WSB has very little to do with long
| term investing. It's just about using the stock market as
| a casino.
| sidlls wrote:
| Which is more or less how most big investment (hedge) and
| prop trading firms use it anyway. The key difference here
| as the same is it always is: which group has the ear of
| those with power.
| snowwrestler wrote:
| There is absolutely nothing stopping the members of WSB
| from pooling their money to start an angel fund, VC fund,
| or any other form of private equity. You don't need
| special Wall Street credentials to do that, just some
| money and a lawyer.
|
| That's a pretty long-term bet, though, and I don't think
| WSB is usually into those.
| xhrpost wrote:
| > Would be interesting if WSB was allowed to invest in
| private startups as easily as they can invest in meme
| stocks.
|
| Technically the JOBS act is supposed to allow this
| (crowdfunding). May not be as easy as buying stock but at
| least it's legal now.
| perryizgr8 wrote:
| > Robinhood doesn't like us? We'll start out own.
|
| Then payment processors ban you. Then you start your own
| visa. Let's start our own visa. Banks ban you. Let's
| start our own bank. Your hosting service bans you. Host
| your own. Your ISP bans you. Start your own ISP. Other
| ISPs don't peer with you. Start your own internet. Then
| the feds shut down your bank.
|
| The answer to censorship is not "start your own".
| bitstan wrote:
| As a bitcoiner none of those things sound too crazy.
| Community banks, community ISPs, and market-based money?
| Sweet. Kick Comcast and BoA to the curb.
| MrMan wrote:
| I think its fine that the SEC attempts to clean up stock
| manipulation schemes. The reason anyone cares is that you
| can lose all your money playing around in the market, and
| the SEC is responsible for trying to keep people from being
| taken advantage of, and in cases like this swept up in
| manias.
| freeone3000 wrote:
| You can lose all your money in the _market_ playing
| around in the market. If I could sign some sort of
| statement saying I know what I 'm doing, I won't invest
| more than I'm willing to lose, and while I may make
| extremely risky bets, I'm willing to forego your
| "protection" in favor of being able to lose all of my
| money, I would.
|
| And I did, because I'm a registered investor. But this
| isn't available to most people, only the top 10%.
| SpicyLemonZest wrote:
| I agree with your skepticism of registered investor
| requirements, but that's not really a related issue.
| Regulators and platforms intervene in this way against
| even the most sophisticated investors; the possibility of
| a trading freeze when the market exhibits crazy
| volatility is well-known.
| freeone3000 wrote:
| I can buy GameStop. My friend can't. Trading freeze for
| everyone, sure. Trading freeze for _some_ people, but not
| for other people? That 's fucking bullshit.
| sandworm101 wrote:
| >> only tool left to common people is violence?
|
| I am genuinely interested in the physicality of how that
| would play out. A mob with pitchforks makes a run at a
| Facebook HQ. Do they kidnap employees until they find one
| with the access to re-initialize the account? I guess they
| would have to keep the hostages forever, else the accounts be
| disabled again the next day. Do they setup a camp outside
| with the declared intent to launch an attack should certain
| accounts not get enough likes? How long could that last? Or
| do they break into a datacenter and attempt to do it
| themselves? I'm reminded of that iMac scene in Zoolander.
| bnjms wrote:
| I don't want to be banned but... You are, I think, blessed
| to not be able to imagine violence. When someone says
| violence is an outcome the violence becomes the goal -- not
| reinstating accounts... You don't physically attack a DC
| you sever as many links in and out as possible.
| DamnYuppie wrote:
| You are thinking to gentle and precise. Think more along
| the lines of setting data centers and office buildings on
| fire. Find anyone who has FB on a linked in profile, go
| their house, and burn it down. Let it all be known that it
| was an act of war and watch the insurance companies cover
| nothing.
| Bud wrote:
| There's not any real reason to be concerned about this. Not
| yet, at least.
|
| Furthermore, this comment is offensive. Let's please not
| pretend that Facebook and Twitter were "looking for an
| excuse" before deplatforming Trump. They were entirely
| justified and would have been justified in doing so many
| years before they eventually did so.
|
| Let's also not put the word "incite" in dick quotes barely
| three weeks after an insurrection and attempted coup. There
| was _actual_ incitement of violence in that case.
| listless wrote:
| I think there's plenty of reason to be concerned, but
| certainly not enough to be terrified or overreact with
| comments like "this comment is offensive".
| Bud wrote:
| I don't think that expressing my opinion is an
| overreaction. It's offensive to minimize what happened on
| January 6th. That's what you do when you mock the notion
| that the president incited violence.
| juanani wrote:
| And I am offended when a few loud voices maximize it. It
| is called making a mountain out of a mole hill and the
| media did well here to convince so many to not give too
| much thought about giving up their rights again.
|
| Very similar to 9/11 except less casualties thankfully.
| Just an interesting observation of how much control
| screens can exert then vs now. More are connected with
| constant access. We need better screen diets.
| jcadam wrote:
| > It's offensive to minimize what happened on January
| 6th. That's what you do when you mock the notion that the
| president incited violence.
|
| No, that doesn't follow.
| herewegoagain2 wrote:
| "It's offensive" is not actually an argument. There never
| was a societal consensus that nobody should be allowed to
| say things that somebody could consider offensive. That's
| just what some people want, as a means to control other
| people.
| ehnto wrote:
| It was concerning because it was a demonstration of
| significant soft-power, and I think many people are
| surprised or hadn't yet considered the implications of that
| kind of power.
| um_ya wrote:
| I'm curious why people are so tender to the capital riots
| and not to the Chaz "autonomous zone" and the riots,
| continued even to this day, by BLM and Antifa. Is there a
| distinction I'm not getting here?
| gadders wrote:
| Because Antifa is the armed wing of the Democrat party,
| and people on HN and SV typically trend left.
| a_new_start1 wrote:
| lmfao - even by your low standards that's pathetic.
| wizzwizz4 wrote:
| So who's the CEO of this "antifa"?
| swader999 wrote:
| Where does antifa.com take you too?
| kaibee wrote:
| Anyone can buy a domain and redirect it anywhere. This is
| an extremely embarrassing comment for the level of
| discussion I expected from HN.
| ardy42 wrote:
| > Anyone can buy a domain and redirect it anywhere. This
| is an extremely embarrassing comment for the level of
| discussion I expected from HN.
|
| Exactly. Has everyone forgotten whitehouse.com? In the
| 90s it was a porn site.
| Magnetanomali wrote:
| >So who's the CEO of this "antifa"?
|
| Follow the money stream.
|
| https://www.nytimes.com/2020/07/13/us/politics/george-
| soros-...
|
| https://www.theguardian.com/news/2018/jul/06/the-george-
| soro...
| HoodrichShinobi wrote:
| Oh yeah cuz Antifa and BLM are just ideas. Come on man!
| wetmore wrote:
| I think you may be surprised by how much those who would
| consider themselves antifa hate the Democrats
| DaedPsyker wrote:
| Honestly as a non-American I look on at comments like
| this with amusement. If you believe the global antifa is
| an armed wing of the democrats then your an absolute
| tool.
| subjectsigma wrote:
| European antifa != American antifa. Learned this when I
| went to Germany and people were just walking around in
| Antifa shirts. I told them Antifa is basically a
| terrorist group in America and they thought this was
| super weird, because over there it is more of a
| legitimate political movement.
| vidarh wrote:
| If you believe "American antifa" is _a_ group in any kind
| of sense, you haven 't the faintest idea what you're
| talking about.
| gadders wrote:
| Who says I'm an American, and who says I was talking
| about global Antifa?
| whoknew1122 wrote:
| No one said or implied you were American. In fact, the
| comment that 'SV trends left' kind of belies that fact.
| The power brokers and people in actual control of SV are
| libertarian, not left.
|
| And antifa is an idea, not a singular, cohesive group. So
| if you weren't talking about antifa as an idea (which
| isn't uniquely American), what are you talking about? The
| made-up-by-right-wing-news organized leftist group that
| doesn't exist?
|
| Further, if you were an informed American, I'd hope that
| you would understand that those who tend to identify with
| antifa weren't (and by and large aren't) happy with the
| selection of Biden and Harris. Both are seen as defenders
| of the prison industrial complex.
| gadders wrote:
| >> The power brokers and people in actual control of SV
| are libertarian, not left.
|
| Name one that is politically active, other than Peter
| Thiel.
|
| >> And antifa is an idea, not a singular, cohesive group.
|
| Citation needed.
|
| >>The made-up-by-right-wing-news organized leftist group
| that..
|
| ..rioted non-stop for about nine months all across
| America and killed 25 people.
|
| Fixed it for you.
|
| >> Further, if you were an informed American, I'd hope
| that you would understand that those who tend to identify
| with antifa weren't (and by and large aren't) happy with
| the selection of Biden and Harris. Both are seen as
| defenders of the prison industrial complex.
|
| Well, they might not like them too much, but Biden is an
| empty suit and there is always the prospect of The Squad
| getting more power in the DNC. And they absolutely hated
| Trump.
| sofal wrote:
| You're asking for citations for the non-existence of a
| secret group that you claim, with no evidence, is "the
| armed wing of the Democrat party". You have the burden of
| proof here, and you cannot be taken seriously until
| you've met that.
| Bud wrote:
| There are quite a few distinctions that should be
| obvious, yes, but let's stick to the most obvious one:
| BLM hasn't attempted to overturn a US election or
| overthrow the government.
|
| Or this one: BLM hasn't caused any deaths, to date; the
| Capitol (capitalized, btw, and with an "o") insurrection
| caused 5 and could easily have resulted in the
| assassination of various senior government officials.
|
| Or this one: BLM protests involved tens of millions of
| citizens across all walks of life and were prompted by
| very real social problems with police murdering black
| people; the Capitol riot was prompted by fascism and
| white supremacy.
|
| Do I need to go on?
| goatinaboat wrote:
| _BLM hasn 't attempted to overturn a US election or
| overthrow the government._
|
| Isn't declaring part of the sovereign territory of the
| United States to be an autonomous zone sort of similar?
| katbyte wrote:
| Not really lol, that's more like trying to seceded or
| fight for independence while the capital insurrection
| attempted to kidnap and kill actual leaders of America.
| herewegoagain2 wrote:
| Any proof for that?
| rob74 wrote:
| Well, the Capitol riots were in the capital (Washington
| DC), so let's give him the orthographic benefit of the
| doubt...
| [deleted]
| treis wrote:
| >Or this one: BLM hasn't caused any deaths, to date; the
| Capitol (capitalized, btw, and with an "o") insurrection
| caused 5 and could easily have resulted in the
| assassination of various senior government officials
|
| In Atlanta BLM protestors set up an armed road block.
| Several people were shot there culminating in the
| shooting death of a 9 year old girl.
| mopsi wrote:
| > _BLM hasn 't attempted to overturn a US election or
| overthrow the government._
|
| CHAZ was even one step further.
| kcolford wrote:
| I feel that your argument started out very strong but
| fell off a cliff at the end by making similarly
| alienating comments to what your parent made.
| Bud wrote:
| I appreciate the feedback. Could you tell me exactly
| which comments you found to be alienating? Perhaps that
| would help me refine arguments in the future. Thanks.
| HoodrichShinobi wrote:
| Are you serious? BLM murdered an 8 year old black girl in
| atlanta and terrorized people by taking over seattle, and
| restaurants. They most definitely tried to use political
| attacks as leverage. The capital riots were patriots who
| have been upset that the corrupt courts refused to allow
| anybody to present evidence of fraud when there is more
| than enough out there to show
| ardy42 wrote:
| > Are you serious? BLM murdered an 8 year old black girl
| in atlanta
|
| You're claiming BLM is about murdering black kids? Are
| you serious?
|
| https://www.nytimes.com/2020/07/06/us/atlanta-
| mayor-8-year-o...
|
| As someone who considered himself to be on the right
| until relatively recently, I'm pretty disturbed by how it
| seems to have rejected reason in favor of sloppy free
| association.
|
| > The capital riots were patriots who have been upset
| that the corrupt courts refused to allow anybody to
| present evidence of fraud when there is more than enough
| out there to show
|
| The allegations of fraud were laughed out of court, even
| by Republican judges, because they had no merit
| whatsoever. They were little more than expressions of an
| incompetent demagogue's psychological insecurity.
| jtms wrote:
| What evidence? There was and is no evidence of systemic
| fraud
| yonaguska wrote:
| > BLM hasn't caused any deaths, to date
|
| Lee Keltner
|
| Aaron "Jay" Danielson
|
| Garret Foster
|
| Tyler Gerth
|
| David Dorn
|
| Victor Cazares Jr
|
| Secoriea Turner
|
| ....
|
| And that's just a small sampling.
|
| Do I need to go on?
| kombucha111 wrote:
| Yes please go on with your disingenuous list.
|
| Lee Keltner - Killed in Denver by the hired security
| guard for a journalist.
|
| Aaron Danielson - Killed at dueling protests by self
| identifying anti-facist (antifa)
|
| Garret Foster - He was a BLM protestor killed by an
| active Army sergeant.
|
| Tyler Gerth- he was a protest photographer killed by a
| guy with a grudge over an argument.
|
| David Dorn - Not killed by BLM The protests were several
| miles away and had disbanded a few hours earlier near the
| Metropolitan Police Headquarters downtown after clashes
| between police and a few remaining agitators turned
| violent
|
| Do I really have to go on?
|
| You make it sound like those on your list were killed BLM
| mobs and a modicum of investigation makes it obvious you
| lack perspective. Those that marched on the Capitol were
| indeed a mob.
| cthaeh wrote:
| Just like how the MSM constantly emphasizes the fact that
| 5 people died as a result of the capital riots.
|
| When: 2 people died as a result of strokes. No
| participation in the riot.
|
| 1 person trampled by the rioters. 1 unarmed person shot
| by the police. 1 police officer dead due to being struck
| in the head.
|
| So clearly, only 2 people died as a consequence of the
| riots, per your logic.
| tmn wrote:
| White supremacy is the new Jewish cabal
| dang wrote:
| Please keep this sort of hellpost away from HN.
|
| https://news.ycombinator.com/newsguidelines.html
| nxm wrote:
| 12-19 people have died due to BLM "protests", and over
| 700 officers injured. So BLM riots have had a worse
| impact.
| ardy42 wrote:
| > 12-19 people have died due to BLM "protests", and over
| 700 officers injured. So BLM riots have had a worse
| impact.
|
| Your statement is dense with issues:
|
| 1. You're comparing a single "protest" to a protest
| _movement_. Also, where did you get a figure like
| "12-19"?
|
| 2. There are documented and confirmed cases of capitol-
| riot-type people using the BLM protests as _cover_ for
| violence (e.g.
| https://www.nbcchicago.com/news/local/illinois-man-
| accused-o... and
| https://www.theguardian.com/world/2020/oct/23/texas-
| boogaloo...). The attempts to blame the capital riots on
| "antifa" are groundless.
|
| 3. The capitol rioters deliberately struck at the
| democratic process itself (e.g. process of conducting a
| fair election) because they rejected the results of that
| process, which is a far more serious thing than any
| traditional protest, no matter how violent.
| herewegoagain2 wrote:
| 1) Because there was just a single "capitol incident",
| and several BLM riots.
|
| 2) So you seriously believe all violence at BLM riots was
| solely because of false flag white supremacists? Really?
|
| 3) Bullshit. Riots are not "democratic process" either -
| it's people rejecting the established laws (like property
| rights) and proceeding to do their own thing. I mean they
| installed an "autonomous zone", how is that not an attack
| on democracy?
| ardy42 wrote:
| > 1) Because there was just a single "capitol incident",
| and several BLM riots.
|
| No, there wasn't just a single incident. Just to give
| some examples off the top of my head: large groups of
| III%ers participated in both the Capitol Attack and Unite
| the Right rally in Charlottesville, and the BLM counter-
| protests were arguably part of the same phenomenon (and
| one of them shot three people in Kenosha).
|
| > 2) So you seriously believe all violence at BLM riots
| was solely because of false flag white supremacists?
| Really?
|
| That's a sloppy reading of what I said. I merely pointed
| out a fact that makes attribution of violence that
| occurred at the protests difficult.
|
| > 3) Bullshit. Riots are not "democratic process" either
| - it's people rejecting the established laws (like
| property rights) and proceeding to do their own thing. I
| mean they installed an "autonomous zone", how is that not
| an attack on democracy?
|
| It's pretty obvious that it wasn't an "attack on
| democracy" because they made reform demands to elected
| officials and were cooperating with the government:
|
| https://www.nytimes.com/2020/06/11/us/seattle-autonomous-
| zon...
|
| > The protest zone has increasingly functioned with the
| tacit blessing of the city. Harold Scoggins, the fire
| chief, was there on Wednesday, chatting with protesters,
| helping set up a call with the Police Department and
| making sure the area had portable toilets and sanitation
| services....
|
| > The demonstrators have also been trying to figure it
| out, with various factions voicing different priorities.
| A list of three demands was posted prominently on a wall:
| one, defund the Police Department; two, fund community
| health; and three, drop all criminal charges against
| protesters.
|
| In comparison, the capitol attackers setup a gallows and
| were chanting things like "Hang Mike Pence," because he
| wouldn't unconstitutionally override the election
| (https://www.snopes.com/fact-check/hang-mike-pence-chant-
| capi...,
| https://www.cnn.com/videos/politics/2021/01/15/mike-
| pence-cl...). The sloppy false equivalences to deflect
| away from that are getting old.
| herewegoagain2 wrote:
| 1) The Kenosha shooting was self defense. And if you
| arbitrarily lump things together, you can probably find
| an arbitrary number of victims. BLM is connected to
| socialism, so I guess you could count the 100 million
| dead in the Chinese Culture revolution and so on.
|
| 2) In the same vein, there seems to be only one actual
| victim of protester violence at the capitol, and that one
| also looks more like an accident (got hit in the head
| with a thrown item, which is of course a stupidly
| dangerous attack, but also common at BLM riots)
|
| 3) That's not CHAZ cooperating with authorities, but
| authorities cooperating with CHAZ. Just because "your
| people" welcomed the secession, doesn't make it any more
| democratic.
|
| Also, there are videos from the capitol of security staff
| chatting with the protesters. So I guess they were also
| cooperating, and hence, by your logic, democratic.
|
| Anyway, let's end here. There really is no point. It is
| just always interesting how warped people's perceptions
| can be.
| ardy42 wrote:
| > 1) The Kenosha shooting was self defense.
|
| We'll see about that when he goes to trial.
|
| > And if you arbitrarily lump things together, you can
| probably find an arbitrary number of victims.
|
| Which is what you're doing. Why arbitrarily lump together
| BLM and looters, when it could make more sense to
| consider them different groups that happen to be in the
| same area reacting in their own ways to the same
| circumstances?
|
| > 3) That's not CHAZ cooperating with authorities, but
| authorities cooperating with CHAZ. Just because "your
| people" welcomed the secession, doesn't make it any more
| democratic.
|
| The point is it's not a succession if you continue to
| recognize the government by calling on it to reform.
|
| > Anyway, let's end here. There really is no point. It is
| just always interesting how warped people's perceptions
| can be.
|
| Yep.
| [deleted]
| organsnyder wrote:
| The Capitol "riot" involved people with known plots to
| capture and kill lawmakers, and occurred while Congress
| was in session doing one of the most important (if
| intended to be mundane) tasks it does every four years.
| gostsamo wrote:
| Yes, the anarchist are not trying to dictate to the rest
| of the country how to be ruled. This is major difference
| and though I'm not an anarchist, I can make a difference.
| TheRealDunkirk wrote:
| I put incite in "dick quotes" to emphasize that it has
| become the specific word with which to paint a comment
| _about_ violence when you don't like the message or the
| messenger, not to minimize or parody what happened on the
| 6th.
|
| Calm down, Bud.
| Bud wrote:
| I don't think that "calm down" is an appropriate
| response; you don't know anything about my state of
| calmness, or lack thereof. Even if you did, it's frankly
| not your business whether I am calm or not, nor does it
| affect the quality of my argument.
|
| I appreciate your clarification, however. I withdraw my
| assertion that you were trying to minimize what happened
| on January 6th. And I apologize.
| TheRealDunkirk wrote:
| To be fair, you didn't seem to be bothered with inferring
| my state of mind in your original comment. Nor did your
| inference, even if true, change the meaning of what I
| said, either.
|
| I was going to say "Calm down, Francis," as per the old
| movie Stripes, and then changed it, but neither would
| have been helpful. I apologize too.
| [deleted]
| clankyclanker wrote:
| I believe SMBC says it well: "I'm offended" is a much more
| useful concept than "it's offensive."
|
| https://www.smbc-comics.com/comic/2011-02-23
| Bantros wrote:
| Oh no, it's offensive. Get a grip
| shockeychap wrote:
| Where was all of this offense concerning violence when we
| watched countless businesses being burned and looted
| throughout the summer? I'm not justifying what happened at
| the Capitol, but the shouts of righteous indignation ring
| more than a little hollow.
| MrMan wrote:
| When things ring hollow, that is like nails on a
| chalkboard.
| herewegoagain2 wrote:
| Let's all pretend to have the same opinion and believe in
| the narrative.
|
| Why exactly, again?
| [deleted]
| 974373493200 wrote:
| > the powers that rule USA don't realize that soon the only
| tool left to common people is violence?
|
| I think creating and using decentralized alternatives beyond
| the control of the state and affiliated corporations is a much
| better tool for creating lasting change. Violent revolutions
| tend to just replace (or restyle) the ruling class without
| significant changes to their behavior.
| boredumb wrote:
| "Pick the target, freeze it, personalize it, and polarize it."
| [deleted]
| 77pt77 wrote:
| > the powers that rule USA don't realize that soon the only
| tool left to common people is violence?
|
| They do realize that and are confident that they will win. In
| the end it boils down to that.
|
| In here we have a case of the wrong people succeeding at a game
| that de jure is supposed to be open to everyone but de facto is
| only open to the _right people_.
| ryanmarsh wrote:
| Remember how quaint Occupy Wall St. seemed back in 2011? They
| were maligned as a bunch of privileged wannabe hippie kids. The
| economy was "hopelessly complex" and "how were we to know" etc.
| Seems we're way past that, to blatant protection of the wealthy
| over a fluctuation in .025% of the stock market.
| jariel wrote:
| No, this is the market defending itself from unwanted
| shenanigans.
|
| Listed companies want nothing to do with this.
|
| Restaurants like customers, but imagine a stampede of 1000
| people rushing through the doors, it's not what they want.
|
| The populism here is getting ridiculous, I don't think most
| people have any understanding of what's going on.
| swader999 wrote:
| It seems more like big fish stuck in a losing set of trades
| are pulling whatever strings they can to save themselves.
| jariel wrote:
| They will take a haircut and move on. Some of the plebes
| rushing the doors are going to get crushed.
|
| Given that a lot of people egging the plebes absolutely
| 'know better' you have to wonder what their motivations
| are.
| dna_polymerase wrote:
| You know, you could always just pay for your trades and get
| them executed as you wish. Or you use a service that is free,
| but please stop complaining.
| cashewchoo wrote:
| I worked in proprietary trading for about half a decade.
|
| I think the biggest thing that the lay-person doesn't
| understand is that thinking of hedge funds (and other
| proprietary firms), banks, exchanges and ATS's, retail
| brokerages, the SEC, and lawmakers as all being either one
| entity or all being on the same side is just absolutely
| incorrect. They all need each other, but by and large they are
| not friends.
|
| Some claims I've seen that are just comical to me:
|
| "The SEC is going to step in to save hedge funds"
|
| The relationship between regulators and proprietary firms is
| particularly cagey. The SEC constantly audits them and asks, in
| my ex-professional opinions, extremely annoying questions about
| even the most innocuous trading activity. (Annoying because
| they take so much time because frequently, not knowing what the
| firm is doing, they ask questions that internal tooling is just
| not prepared to answer, thus requiring custom development; and
| annoying because some of them feel like they're just the SEC
| trying to use their authority to conduct audits to learn more
| about the industry). But I digress. The SEC is absolutely not
| going to step in and do a prop shop a favor. Their concern is
| with the efficient and accurate functioning of the equities
| market. The fact the GME, a company with no news releases and
| no change in their (honestly dismal) fundamentals, has
| experienced such absolutely insane volatility (there are large
| numbers of _options contracts_ with less volatility, for crying
| out loud!) is absolutely a concern for them. The fact that
| "what is the price of GME right now", asked to a person who
| looked at Apple Stocks app yesterday but not yet today, is
| "somewhere between 10 dollars and 1000 dollars", is absolutely
| a major cause for concern to them. Equity markets exist to
| discover pricing and transfer risk. It's hard to transfer risk
| if you don't have any idea of the pricing!
|
| "retail brokerages are cancel culturing the GME rocketship!"
| and similar rhetoric, especially with aphorisms suggesting that
| the SEC or shadowy "the rich and powerful" are pressing them to
| do so.
|
| I really, really doubt it. Retail brokerages toe a very fine
| line, because on one hand they obviously really want people to
| store their money with them (e.g. Schwab makes like 80% of its
| operating revenue from interest on uninvested cash balances)
| and also to use their trading services. But at the same time,
| they are taking as clients some of the most dangerous creatures
| known to man: retail investors. They're dangerous because they
| have so little clue what they're doing (which is like, fine,
| you know? this is no judgement on them) that there is a very
| real responsibility places on the retail brokerage to protect
| them from themselves. There's a reason you have to apply and be
| approved to trade options, and there's various levels of
| approval for various risk categories too. You need at least 25k
| in balances to be a pattern day trader. There's precedent for
| brokerages limiting access to some ETFs that expose equities
| investors to the kinds of leveraged risk that is more typical
| of options. Brokerages have been sued - successfully - for not
| doing their fiduciary duty to educate investors about risk.
|
| I am absolutely unsurprised that retail brokerages are limiting
| trading of GME, AMC, etc. I can already see the lawsuits coming
| when this thing folds - "Why did you let me trade GME given the
| volatility, especially after the SEC even made a statement
| about it? I am a retail investor and your client, and cannot be
| expected to know better, and you failed in your fiduciary duty
| to me." This is absolutely something a retail brokerage would
| do to protect themselves from regulatory scrutiny.
|
| (I had more to vent, but this post is already huge so I'll stop
| here. You get my gist, though.)
| liuliu wrote:
| Why allow sales in that case?
| mFixman wrote:
| > some irresponsible newspapers blaming the whole thing on
| GamerGate and Alt-Right [...]
|
| What?
| greatpatton wrote:
| yes Financial Times! this is a real low for a journalist...
| sudosysgen wrote:
| To be entirely fair to the FT, WSB did originally have some
| connection to 4chan's /biz/.
|
| It doesn't really anymore, but it's an understandable mistake
| imo
| albedoa wrote:
| OP might have a few hangups: https://hn.algolia.com/?dateRang
| e=all&page=0&prefix=false&qu...
| pfortuny wrote:
| The ft dropped the "Alt-Right" bomb in an article and then
| they had to change it.
| paganel wrote:
| And strangely enough there's no mention right now of what
| Robin Hood is doing on their front page.
| x86_64Ubuntu wrote:
| No one is going to become violent over not being able to buy
| GameStop or Nokia stock.
| fullshark wrote:
| Messing with people's finances is more anger inducing imo
| than banning people from an internet message board.
| serf wrote:
| It's not that those stocks hold specific value, it's that the
| denial of trade demonstrates to people a lack of personal
| power and freedom with regards to their own finances and
| where they may be directed.
|
| it signifies a small loss of financial liberty and
| flexibility on behalf of the citizenry, which is enough to
| spark upset.
|
| meanwhile large groups are allowed to systematically abuse
| in-place systems in a semi-visible public fashion without
| backlash or repercussion from regulators in most cases,
| exacerbating the perceived difference between 'Us and Them',
| fueling outrage and divide even further.
|
| It's easy to consider why this might upset people.
| x86_64Ubuntu wrote:
| Once again, no one is going to become violent over this.
| People aren't losing jobs, they aren't losing housing, they
| aren't losing food, they aren't being disappeared by
| balaclava'ed men in the middle of the night.
| paganel wrote:
| If further decreases the legitimacy of the regime
| currently in place, I'm not talking Democrats vs.
| Republicans or anything like that, I'm talking about the
| military-industrial complex which has got a strong
| financial wing added to it starting with the mid '80s.
| Once that legitimacy is gone then all bets are off.
| cik wrote:
| Ah, but what about being able to sell?
| gspr wrote:
| > This sort of stuff will put people more and more on edge,
| there is the deplatforming going on, people asserted their
| power financially, and now getting that removed too
|
| Don't compare deplatforming and this.
|
| Deplatforming is akin to throwing a customer out of the grocery
| store for doing nazi salutes in the vegetable aisle.
|
| What Robinhood is doing is akin to throwing a customer out of
| the grocery store because you don't agree with his choice of
| vegetables.
| cambalache wrote:
| > Deplatforming is
|
| > throwing a customer out of the grocery store because you
| don't agree with his choice of vegetables.
|
| There, fixed for you.
| carrabre wrote:
| facts
| dwpdwpdwpdwpdwp wrote:
| This is a twitter post of a screenshot. There's almost no
| substance here. We don't know why or even if this happened. So
| the immediate leap to talk of violence as a reaction is
| incendiary.
| djrogers wrote:
| It's happening. You can't find GME on Robinhood unless it's
| in one of your lists, and when you do it says "This stock is
| not supported in Robinhood".
|
| There are millions of users of this app, and it's easy enough
| to verify - why the skepticism?
| dwpdwpdwpdwpdwp wrote:
| Only because I think it's prudent to wait until more
| information is available (than was provided in the original
| link) before talking about violent repercussions.
|
| I have little doubt that it's happening, but the twitter
| link was not substantive in comparison to:
|
| https://blog.robinhood.com/news/2021/1/28/keeping-
| customers-...
| dang wrote:
| Some people are complaining to me that this comment is an
| implicit call to violence. It's not so hard to see why they
| might be reading it that way.
|
| Please don't post like that to HN. Instead, either post
| comments that are unambiguously within the site guidelines to
| begin with, or be careful to disambiguate your intent.
| Otherwise we end up in flamewar hell or something even worse
| than flamewar hell.
|
| https://news.ycombinator.com/newsguidelines.html
|
| https://hn.algolia.com/?query=disambiguate%20burden%20by:dan...
| areyousure wrote:
| This reaction was predicted in this sibling comment:
| https://news.ycombinator.com/item?id=25941883
|
| (dang: Thank you for all your moderation. This is a meta-
| comment, not a complaint.)
| Damorian wrote:
| "They're a private company! They can restrict their product for
| corrupt political and financial purposes and this is good...
| for... reasons... at least that's what the tv/social media told
| me."
| timkam wrote:
| > Even more with some irresponsible newspapers blaming the
| whole thing on GamerGate and Alt-Right, effectively pushing
| away people that previously could be on their side.
|
| I didn't read any such claim in my German and Scandinavian news
| diet, is this a US-only thing? Here, the consensus seems to be
| that what happens is a somewhat well-deserved embarrassment.
| ryanmarsh wrote:
| Perhaps but Americans won't result to violence en mass. Despite
| what you may have seen, Americans are rather docile. A small
| minority of folks who just so happened to be of military age
| during the country's longest war but never signed up to fight
| are the same people who buy the most guns and saber rattle
| about civil war, etc...
| metalliqaz wrote:
| Oh please. Robinhood's business model is not designed for this
| kind of thing. They are not required to tank their own business
| to allow malcontents to feel better about themselves.
| TheHypnotist wrote:
| How does allowing trades tank their business? That is their
| business.
| metalliqaz wrote:
| Thousands of new accounts buying one stock for free (while
| it's at the top) and then disappearing after it tanks is
| not going to help them. Is this not obvious?
| koolba wrote:
| That shouldn't change anything if they require the stocks
| to be purchased with cash and not margin.
|
| Brokerages can, and do all the time, set specific margin
| requirements for volatile securities. There's no reason
| they can't do that here as well. ( _unless they literally
| can't because their tech stack doesn't support it which
| would be pretty funny_ )
| TheHypnotist wrote:
| Yeah i'm sure they hate the traffic and the increased
| user base. Get real.
| [deleted]
| alex_c wrote:
| Then block new accounts for a day or two until this blows
| over, not specific stocks.
|
| Why would anyone use a trading platform that now has a
| history of picking and choosing what trades you are
| allowed to make?
| zwily wrote:
| Robinhood doesn't let you choose your free stock, they
| give you one randomly.
| [deleted]
| ericmay wrote:
| I always thought the app was good - but my view of the role
| of the broker is to place my trades. If the SEC wants to shut
| down trading of a security they should do so.
|
| This will be very disruptive to Robinhood. I think today they
| made a poor business decision that will affect their
| valuation and potentially the company itself.
|
| I don't do much trading on Robinhood, mostly for learning or
| experimenting with small amounts of money but this move has
| left a sour taste. I'll be closing my account, while
| recognizing that other brokerages are doing the same (though
| not all).
|
| _edit_
|
| Retail investors are locked out, $GME is still going up.
| What's the fucking excuse now?
| [deleted]
| vincentmarle wrote:
| > Oh please. Robinhood's business model is not designed for
| this kind of thing. They are not required to tank their own
| business to allow malcontents to feel better about
| themselves.
|
| Well, they're gonna lose millions of customers over this I
| predict. How is that not killing their business?
| [deleted]
| ceilingcorner wrote:
| It's a pretty classic tactic in the history of conflict. By
| pushing your opponent into a tight position, you force him to
| strike first, thus giving you complete justification in your
| disproportionate response.
| the_drunkard wrote:
| That tactic worked out well during the French Revolution...
| malwarebytess wrote:
| Obligatory we are at higher inequality than immediately
| before the French Revolution. Wonder what that means?
|
| Some interesting reading:
|
| Professor Walter Scheidel examines the history of peace and
| economic inequality over the past 10,000 years -
| https://news.stanford.edu/2017/01/24/stanford-historian-
| unco...
|
| Revolution and the Rebirth of Inequality -
| https://www.jstor.org/stable/2777764?seq=1
| rjtavares wrote:
| "Those who make peaceful revolution impossible will make
| violent revolution inevitable."
| vetinari wrote:
| "There are four boxes to be used in the defense of
| liberty: soap, ballot, jury, and ammo. Please use in that
| order."
| psychlops wrote:
| Stalin empirically disproved that statement.
| cableshaft wrote:
| Fair point, so I guess if the leader gets really
| blatantly violent, along with enough government
| propaganda, it can stop a revolution.
| psychlops wrote:
| I'd also make the argument that it's easier to do with
| today's technology than when Stalin did it.
| rjtavares wrote:
| The propaganda is easier, the violence is harder. Don't
| know how that balances out...
| imtringued wrote:
| Luddites is also a good example. Oh, you are poor and
| starving and protesting on the streets? They start
| destroying machines? Time to arrest everyone, even those
| who did nothing.
| foobarian wrote:
| Give the Revolutions podcast by Mike Duncan a listen. The
| French revolution was not what it seems... it was elites
| vs. elites, not peasants vs. monarchy.
| tarboreus wrote:
| It's always elites vs. elites. The problem now is that
| there's plenty of elites on the outs. Elite
| overproduction and all that.
| orwin wrote:
| It's not as simple as that. I don't think any of Jean-
| Clement Martin books are translated to english, but its
| really not as simple as that.
| cambalache wrote:
| Yeah, what a weird take. As if La Bastille was attacked
| by French aristocracy. This argument only holds if you
| hold 2 very loose claims. 1) To confuse the leaders with
| the whole movement. 2) To compare the rag-tag group of
| young lawyers, acerbic journalists, disgruntled
| politicians with the whole ancien regime.
|
| Mike Duncan is an entertainer, not a professional
| historian.
| monadic3 wrote:
| Duncan makes it extremely clear the pressure came from
| the bread riots which were certainly _not_ elite.
| vetinari wrote:
| That tactic backfired multiple times in history, for
| example
| https://en.wikipedia.org/wiki/Defenestrations_of_Prague
| agumonkey wrote:
| It seems preprogrammed in the brain. I can witness that in
| people that will gradually boil you until you snap and then
| benefit from the chaos as revenge almost sub-conscientiously
| agilob wrote:
| It's a police tactic called Kettling
| https://en.wikipedia.org/wiki/Kettling
| [deleted]
| sircastor wrote:
| I'm kind of embarrassed to say it never occurred to me that
| the goal of kettling was to encourage a non-violent protest
| to violence. Thinking on it, it makes a sort of sick sense.
| If the people are actually violent the rules go out the
| window and you can use whatever force you deem necessary.
| And the police always consider themselves the superior
| group.
| maxerickson wrote:
| Lots of people call it a riot if a crowd does not
| immediately disperse when ordered to do so. Like super
| immediately.
| pjc50 wrote:
| Kettling is one of the less provocative tactics, but it's
| intended as a collective punishment of the kettled:
| extra-legal detention for a period of hours with no food,
| water or toilet facilities.
|
| Police can and will provoke non-violent protests to
| violence. In a few cases (see the UK's "spycops" scandal)
| police infiltrators will _organise_ protests so they can
| arrest dissidents.
| WJW wrote:
| The link to the Wikipedia article explicitly mentions
| that is was originally designed to just coop up a crowd
| for several hours so that they get bored and the
| situation de-escalates. This was seen as a more effective
| and humane tactic than dispersing rioting crowds using
| fear by doing police charges. That said, 1990s era
| European protests (when the theory behind kettling was
| developed) were rather less violent than current day
| American protests, helped in no small part of course by
| the relative prevalence of firearms in American society
| and their higher distrust of police forces (again,
| compared to Europeans. Atm distrust between police and
| protesters in the USA seems to be in a vicious downward
| spiral where the actions of both group confirm the
| prejudices of the other group)
| ihsw wrote:
| Inter arma enim silent leges
| Voloskaya wrote:
| > It's a pretty classic tactic in the history of conflict
|
| Yes when executed by a single coherent entity.
|
| This is not it, unless you believe there is a powerful cabal
| controlling twitter, facebook, robinhood, discord etc.
|
| They are all doing it independtly to limit the legal and/or
| financial risks for themselves. Getting people to "strike
| first" is not the intent, saving $ is the intent here.
| Footkerchief wrote:
| Money is the greatest coordinating force in the history of
| civilization.
| read_if_gay_ wrote:
| Apple, Amazon and Google killing Parler in lockstep isn't
| coherent enough for you?
| Voloskaya wrote:
| No it's not, the moment Parler became a liability to them
| they dumped it. It for some reason it was to become good
| business again tomorrow, they would jump to host it
| again.
|
| There is no intent on the part of the GAFAs to force the
| lower class into a revolution to get a pretext to squash
| them or any bigger "art of the war" plan behind those
| decisions than money.
| read_if_gay_ wrote:
| Their motivation does not matter. The point is that
| effectively they are a single coherent entity.
|
| Assuming no bad intentions doesn't change the outcome of
| their actions.
| ceilingcorner wrote:
| Doesn't need to be a grand conspiracy, merely the same
| reaction by multiple independent entities.
| Voloskaya wrote:
| You are talking about result, I am talking about intent.
| Yes the result might be the same, but there is no intent
| to "force him to strike first, thus giving you complete
| justification in your disproportionate response".
|
| Only intent here is ass covering.
| Macha wrote:
| Honestly, I don't see where the attempt to equate the WSB
| people out to make a quick buck by gambling and hope they win
| out over the hedge funds as being that connected to the
| deplatforming of right wing people - I'm sure given "the right"
| and "wall street bets" are large groups that there is some
| overlap, but in Europe I know plenty of people following along
| the stock market with no connection to current US issues.
|
| People have found an unpopular target (large funds, still a lot
| of dislike built up over the 2008 recession, current inflated
| housing markets in many cities) and there's a swing in popular
| emotion and yes, public figures have egged it on at this stage,
| but it's not really a protest against donald trump's
| deplatforming or liberal elites that some people are trying to
| make it out to be.
|
| Plenty more people willing to take risks on that among the
| middle class when the stock market is the only way to even keep
| the value of their savings anyway. My savings account has an
| actual interest rate that was cut from 0.50% to 0.01% this
| year, whereas 2020 excluded, inflation has been around 1% in my
| country. Many of my friends in similar situations have gotten
| involved in stocks under a similar background and a not
| insignificant number of them are operating under logic like
| "90% in long term stocks, 10% for whatever crazy long bets"
| (like which airlines are going to come out of this, whatever
| stock reddit is pumping at the moment, bitcoin or companies
| like AMD a few months ago which they're like "I use this stuff
| and so many insitutional investors are completely clueless on
| the market dynamics").
|
| So you get people with "stupid bets" funds, and an idea that
| gets momentum (The shorts cannot not buy, let's outwait them),
| and this is the result.
| cableshaft wrote:
| Yeah, there isn't necessarily a ton of overlap. I'm pretty
| liberal but I follow this stuff, not so much WSB (and no skin
| in the game for this GME craziness) but crypto, and put money
| I'm willing to lose into these things periodically. I've lost
| some money, sure, but I'm significantly up overall.
| bko wrote:
| > the powers that rule USA don't realize that soon the only
| tool left to common people is violence?
|
| Do you honestly believe this? Somehow we'll go from not being
| able to buy certain stocks to violence?
|
| Banning collecting rain water on your own property didn't do
| it. Abject failure of politicians keeping drinking water clean
| didn't do it? Not being able to buy cheese from unpasteurized
| milk didn't do it. Can't grow a plant in your own backyard for
| personal consumption. But this is it, this is the impetuous.
| Not being able to buy GME stock.
|
| Let's be real. This is small potatoes.
| johnsimer wrote:
| Yes.
|
| We are near levels of inequality that caused the French
| Revolution to go violent.
| dv_dt wrote:
| Didn't it already happen in the capitol insurrection? Will it
| happen again with some other collection of people?
| Historically high inequality societies see high instability
| and even revolution.
| stretchcat wrote:
| It is no exaggeration to say wars have been fought for worse
| reasons than this.
| jb1991 wrote:
| > Banning collecting rain water on your own property
|
| What does that refer to?
| NoOneNew wrote:
| It's literal. There are a number of states that make it
| outright illegal to collect rain water even if you're doing
| it to water your own garden during droughts.
| baybal2 wrote:
| Exactly that, a number of US states used to ban it so water
| utilities, and water rights buyers can make more money.
|
| As of now, I believe the last explicit ban on that was
| repealed decades ago.
| tzs wrote:
| I believe they were usually enacted to protect the nearby
| properties that the runoff went to, not to help water
| utilities and water rights buyers make more money, and to
| protect sources for streams and creeks and rivers.
|
| Also, I don't think most of them were bans. I think they
| usually just limited the extent of it. Some barrels
| collecting from the downspouts from your roof--fine.
| Building a huge reservoir filled by rain--not fine.
|
| And they haven't been all repealed. A few states still
| have restrictions, such as freely allowing collecting
| anything that falls on the roofs of your buildings as
| long as the building weren't specifically to collect
| rainwater but requiring approval for anything else.
| macksd wrote:
| There are still some restrictions, and a good summary
| here: https://worldwaterreserve.com/rainwater-
| harvesting/is-it-ill....
|
| When buying property, you may have agreed that you were
| not acquiring mineral rights, water rights, etc. and you
| still might have problems even in the absence of a
| government rule against it. I don't know how legitimate
| such claims are or how often they're successful, but I
| know someone who got legal nasty-grams from a land
| developer for doing it, and the property owner backed off
| when they saw the papers they had signed again.
| NoOneNew wrote:
| I do agree with you when it comes to the surface level idea
| of buying a particular stock. However, the fight here isnt
| about that. This is a fight between the public mixed with low
| level capitalist (sub 8 digit yearly earnings) and the
| billionaire well... oligarchy of hedge funds. The hedge funds
| are putting pressure on gov and media to stop allowing the
| general public from doing something. This was originally a
| fight to screw over a hedge fund that was picking on Gamestop
| to bankrupt them through predatory short selling. Its blown
| up to now the hedge funds trying to manipulate public
| discourse, media discourse and the public's ability to
| participate in the market. Originally, capitalism is about
| anyone has the ability to participate in business and the
| market equally, regardless of their family lineage or social
| class. Obviously reality is messier than theory, but you no
| longer need to have a royal family name to own land or start
| a business. Hedge funds, banks and others are trying to
| accomplish the same old, "kiss my ring", just with slightly
| different tactics.
|
| It's a fun show regardless.
| the8472 wrote:
| straw, when the camel broke.
| psychlops wrote:
| It's true that today's population is complacent. Many should
| take another look at how flimsy the reasons were why
| Americans fought a war of independence.
| ceilingcorner wrote:
| I've always thought that if the Revolution happened today,
| you'd have big media corporations like The NY Times writing
| hit pieces on George Washington everyday.
| Macha wrote:
| You say this like it wasn't the case that media outlets
| wrote anti-revolution articles then:
| https://allthingsliberty.com/2014/03/james-rivington-
| kings-p...
| dogma1138 wrote:
| The American Revolution used the social media of the
| time, what do you think the federalist papers were all
| about?
|
| A lot of the established press was against it and they
| did constantly published "hit pieces".
|
| History is written by the victors if the American
| Revolution didn't succeed the US would likely eventually
| gained independence but it would've been a commonwealth
| nation. The Revolution isn't the reason why you have
| freedom today, Canada is free so is the UK. The world
| would look quite different than it is today but not as
| different as you might think.
| ceilingcorner wrote:
| Canada and the UK developed in the same post-American
| Revolution world as America itself did. The idea that the
| Commonwealth would have automatically become free is
| historical revisionism.
| dogma1138 wrote:
| I didn't said it automatically would be, but I would put
| my money on the west developing in a similar fashion as
| far as form of governments goes than not.
| ceilingcorner wrote:
| Considering that the West almost ended up being ruled by
| the Nazis, I'm not sure how this is remotely likely
| without the US existing as an independent powerhouse.
| bko wrote:
| Sadly it's more than today's population. Take for instance
| Wickard v. Filburn (1942), a law was upheld that prevented
| farmers from growing food in order to prop up food prices.
| An Ohio farmer was forbidden to grow wheat to feed his own
| livestock, not even sell it.
|
| > An Ohio farmer, Roscoe Filburn, was growing wheat to feed
| animals on his own farm. The US government had established
| limits on wheat production, based on the acreage owned by a
| farmer, to stabilize wheat prices and supplies. Filburn
| grew more than was permitted and so was ordered to pay a
| penalty. In response, he said that because his wheat was
| not sold, it could not be regulated as commerce, let alone
| "interstate" commerce (described in the Constitution as
| "Commerce... among the several states"). The Supreme Court
| disagreed: "Whether the subject of the regulation in
| question was 'production', 'consumption', or 'marketing'
| is, therefore, not material for purposes of deciding the
| question of federal power before us.... But even if
| appellee's activity be local and though it may not be
| regarded as commerce, it may still, whatever its nature, be
| reached by Congress if it exerts a substantial economic
| effect on interstate commerce and this irrespective of
| whether such effect is what might at some earlier time have
| been defined as 'direct' or 'indirect.'
|
| [0] https://en.wikipedia.org/wiki/Wickard_v._Filburn
| pas wrote:
| If a new Constitution would be written would people want
| this in it or not? Is this consistent with self-
| determination or not?
| MockObject wrote:
| The commerce clause was intended to create a free trade
| zone between the states, which at that time were engaging
| in trade wars with each other.
|
| Then it was misinterpreted in Wickard to permit nearly
| limitless power to Congress.
|
| So yes, in a new Constitution we would want a commerce
| clause, and we would want it never to be interpreted in
| such a manner.
| MockObject wrote:
| And as awful as that logic was, the absurdity was
| surpassed in Gonzales v. Raich [1], when the SC leveraged
| Wickard to conclude that the commerce clause also allows
| the federal government to ban activities that could
| affect prices in _illegal_ markets, too.
|
| [1] https://en.wikipedia.org/wiki/Gonzales_v._Raich
| unityByFreedom wrote:
| Lol you're reaching. This is not the issue that divides us.
| Rather, we enjoy seeing winners and losers in the market.
| psychlops wrote:
| No, I don't like seeing winners and losers in the market.
| I like to see winners, it's not a zero sum game.
|
| There are no divisions on this board, everyone is against
| the Power that is being exhibited right now. TD,
| Interactive Brokers and Robinhood have bent the knee to
| enrich the rich at the expense of many.
| goatinaboat wrote:
| _I like to see winners, it 's not a zero sum game_
|
| Short selling absolutely is a zero sum game.
| unityByFreedom wrote:
| Eh, there's an argument to be made that maintaining a
| healthy market with longs and shorts produces more value
| in the long term. Generally I disagree with gp tho b/c
| people love drama even if it isn't 100 to zero.
| MrMan wrote:
| Day trading will likely lose a lot of people a lot of
| money. It's absolutely a zero sum game and for the vast
| majority, a negative-sum game.
| scruple wrote:
| And all of it under the guise of "protecting the little
| guy."
| unityByFreedom wrote:
| Why do you think it's a guise to stop buys on a
| ridiculous valuation? You can still sell.
| wizzwizz4 wrote:
| By that logic, nobody should be allowed to buy and sell
| Bitcoin, because there's no way a currency with such a
| low GDP can be worth that much.
| scruple wrote:
| I can walk into any gas station in the country and blow
| as much money as I care to on lottery tickets. I can
| drive to Las Vegas and walk into a casino and do
| practically anything I want with my money. This is
| America and retail investors are (hopefully) all legal
| age and are participating of their own free will.
|
| Hedge funds have treated the stock market like their own
| personal casino for decades. When the house starts to
| lose at their own game, due to their own greed, it's
| suddenly a problem?
| unityByFreedom wrote:
| Casino is right but you can't easily get to one. They're
| highly regulated and not everywhere for a reason, which
| is they make masses poor and are generally bad for the
| economy. Great you get tax money but you've destroyed
| people's lives to do it and people are a country's most
| valuable asset.
|
| Don't know what you're on about the house losing here.
| Brokers make a killing on any trade action. Heavy retail
| day trading inevitably falters and ends up creating tons
| of poor while money flows into the pockets of a few. See:
| the year 2000.
| cbozeman wrote:
| I can't remember the movie. Can't even remember the
| actor, but...
|
| "What. the fuck. are you talking about?!"
|
| Tesla's price-to-earnings ratio is 1660.
|
| Why didn't TSLA buying get shut down? OH yeah, because a
| shitload of institutional investors have shares.
| unityByFreedom wrote:
| B/c TSLA shenanigans all occurred under a completely
| corrupted admin whose agencies will need time to rebuild.
| Can't believe I need to write that. It's no secret a con
| man was at the helm.
| unityByFreedom wrote:
| People do like other people's drama. It reminds them
| they're not the only ones with troubles. As for zero sum,
| of course it's not, the market grows over time, but there
| def are winners and losers when you look at events up
| close.
|
| Bending the knee is not right, there must be some sanity
| in the market. They're trying to protect mom and dad from
| losing their shirts.
| psychlops wrote:
| Sanity is a relative term depending on which side of the
| trade one is on. Moms and Dads (if any were in GME) will
| lose money and make money, they are directing _who_ will
| be losing.
|
| I'm happy to change my phrase, what would you call it
| when brokerages unilaterally help their market makers by
| changing trading terms to ones that favor one side.
| Halting trading is usually done by an exchange.
| op00to wrote:
| The government letting 400,000+ people die didn't piss people
| off.
| csomar wrote:
| I mean it could be not "it" but the "it" that triggers this
| build-up of tension. People are fed up (and rightly so) of
| the elite gaming the system.
|
| KYC is fine if you are a multi-millionaire. You just delegate
| your lawyers and army of accountants to do it. But if you are
| a small man/company, it's a headache that can drive you out
| of business.
|
| This financial restrictions has to be stopped. Financial
| freedom is more important than Freedom of expression.
| Super_Jambo wrote:
| I would guess most count oppression and exploitation
| cumulatively not by maximum event size.
| notahacker wrote:
| And lets be honest, the overlap between retail investors
| trying to buy meme stocks and people who regarded Parler as
| their true voice isn't going to be that huge (and the
| relationship between AWS and Robinhood's compliance teams
| negligible). Anyone sufficiently motivated to see strong
| connections between the actions of AWS booting Parler and
| Robinhood restricting trades is going to be so accustomed to
| seeing everything through a fact-lite 'us vs the man' lens
| that it barely matters what corporations _actually_ do. And
| those tempted by actual violence have had other causes to
| attach themselves to over the last 12 months anyway.
|
| Also this isn't people 'asserting themselves financially',
| this is people mug punting on a stock that wealthier and more
| financially savvy people who got in early are happy to unload
| their stock to. There will end up being people quite relieved
| they didn't get to execute their plan to put their life
| savings into peak-price Gamestop.
| georgeecollins wrote:
| >> Let's be real. This is small potatoes.
|
| Agree. It is not like there aren't half a dozen apps that let
| you trade stocks commission free on your phone. Some may
| require you to have $500-$1k to invest, but seriously if you
| don't have that you should invest in a different way then
| treading individual stocks.
|
| That said, I have no idea why Robin Hood should ban the
| trading of GME and I wish they wouldn't.
| sampo wrote:
| > This is small potatoes.
|
| Do you know how the Arab Spring started? A municipal official
| bullied a street vendor who was selling produce from a cart
| roadside.
|
| https://en.wikipedia.org/wiki/Arab_Spring#Events_leading_up_.
| ..
|
| https://en.wikipedia.org/wiki/Mohamed_Bouazizi
| dhritzkiv wrote:
| Was any of his produce small potatoes? (I only joke)
| bart_spoon wrote:
| > Do you honestly believe this? Somehow we'll go from not
| being able to buy certain stocks to violence?
|
| It isn't simply that people can't buy certain stocks. Its an
| accumulation of events that increasingly lead people to
| believe that the system is rigged against them. This extends
| back decades. You have to have been living under a rock to
| have missed the rising tide of populist sentiment over the
| last decade, as seen in the pro-Trump anti-establishment
| contingent on the right, and the explosion of pro-socialist
| sentiment on the far left.
|
| This Gamestop business probably amounts to a large bucketful
| of water, but at a certain point, a single drop causes the
| dam to burst. Kicking the can down the road by saying "surely
| people won't resort to violence over _this_ " all but ensures
| that eventually, people will.
| chaostheory wrote:
| We live in interesting times. This is surreal coming from Ray
| Dalio
|
| _" I believe we are on the brink of a terrible civil war (as
| I described in The Changing World Order series), where we are
| at an inflection point between entering a type of hell of
| fighting or pulling back to work together for peace and
| prosperity..."_
|
| https://twitter.com/RayDalio/status/1353408208082112512
| spamizbad wrote:
| What nightmare of a HOA do you have that bans rain barrels?
| kingnothing wrote:
| The entire states of Colorado and Utah ban rainwater
| collection.
| throwaway0a5e wrote:
| It's not a HOA. Several states in the southwest have laws
| prohibiting/restricting rainwater collection.
| spamizbad wrote:
| Oh that's crazy! Here in Chicago you can actually get a
| rebate from the government for using one![1]
|
| [1]https://mwrd.org/rain-barrels
| imtringued wrote:
| That sounds like a good idea. Just regulate the rain
| barrels so that they lose a certain amount of water if
| you don't use it yourself.
| 974373493200 wrote:
| I'm not aware of any HOA that bans rain water collection
| but many state and local governments do to protect their
| monopoly.
| ppod wrote:
| The Federal Government does not have any restrictions on
| rainwater harvesting. Some states have minor regulations in
| terms of the amount of rainwater collecting and the means by
| which it is collected, but most states allow their citizens
| to collect rainwater while others even encourage it.
|
| https://worldwaterreserve.com/rainwater-harvesting/is-it-
| ill...
| yonaguska wrote:
| They don't anymore bc Trump scrapped that. Obama instituted
| it by expanding the clean water act to cover "isolated
| wetlands, ponds, and ditches".
| wavefunction wrote:
| Taking water out of ditches or the other types of places
| mentioned is not "rain-water harvesting."
| stretchcat wrote:
| If you dig a ditch specifically to be filled with rain
| water, then in what sense is taking rainwater from that
| ditch _not_ harvesting rainwater?
|
| Is it no longer rainwater if it touches a ditch? Maybe
| it's no longer rainwater if it touches a barrel. _" Haha
| no States have laws against harvesting rainwater, only
| barrel water, you fools!"_
| nudpiedo wrote:
| I think the point is the general cut on freedoms more than
| any of the individual steps. For some people the increasing
| power given to corporations and governments to cut people
| freedom and putting their rights in front of individual
| rights (the pilar of all mordern western democracies).
|
| The fenomenon is global by the way, but it still has been
| dominated by classic political tags on the media, like alt-
| right vs commie etc. A very few polititians broke that
| pattern the last 5 years or so, won'tt give any names,
| because all that labels I mentioned,
| snakeboy wrote:
| I think it's important to put this in the context of many
| other related issues/pressures:
|
| * Increasing wealth inequality for several decades now
|
| * older generations holding onto more wealth and power in
| society than ever before - with a large share of their wealth
| in the stock market
|
| * Wall Street is seen as entirely unaccountable due to 2008
| bailout
|
| * Pandemic this year has basically been a huge wealth
| transfer from normal people and small businesses towards
| large conglomerates and the wall street hedge funds who back
| them
|
| * Institutional trust is at historic lows, while online
| spaces become more and more regulated by those same
| institutions
|
| So maybe GME stock is small potatoes in the grand scheme of
| things, but it seems like all of this has to reach a boiling
| point eventually. I'm not sure what that will look like, but
| violence wouldn't be surprising.
| omgwtfbyobbq wrote:
| To be fair, Wall Street's been unaccountable for a while.
| The 2008 was just a large example of this.
|
| Do you have a reference for older people having more
| wealth? There's definitely a smaller number of people
| holding more wealth, but I haven't read about older people
| holding more wealth.
| snakeboy wrote:
| Google image search "generational wealth USA" You'll find
| several similar charts. I dislike the Washington Post,
| but it's just the first result: https://www.washingtonpos
| t.com/business/2019/12/03/precariou...
| omgwtfbyobbq wrote:
| Are there any charts that aren't piecemeal?
|
| Saying that there's wealth deficit for millennials/genx
| because boomers have accumulated more wealth later in
| life is a little handy-wavy.
|
| What did the boomer chart look like when they were 20-35?
| What will the genx chart look like when they're 50-70?
| And what will the millennial chart look like when they're
| 30-70?
|
| Edit - 70+ for everyone would be good too.
| luxuryballs wrote:
| Game, stop.
| bko wrote:
| To play devil's advocate....
|
| > Increasing wealth inequality for several decades now
|
| TV talking heads bemoan about this, but billionaires still
| remain the most admired people in this country (Trump,
| Musk, Gates, etc).
|
| > older generations holding onto more wealth and power in
| society than ever before - with a large share of their
| wealth in the stock market
|
| If there was anger at the older generation, we wouldn't
| have so many sacred cows regarding older people (social
| security and medicare). Average age of senator and house
| member has been growing over time. Hell, we just elected a
| 78 year old as president. How about before the revolution
| we just start with voting for younger people
|
| > Wall Street is seen as entirely unaccountable due to 2008
| bailout
|
| Most people don't remember this. I'm surprised how rarely
| its actually discussed
|
| > Pandemic this year has basically been a huge wealth
| transfer from normal people and small businesses towards
| large conglomerates and the wall street hedge funds who
| back them
|
| This is mostly true but people don't see it that way.
| They're too busy yelling at people that refuse to wear
| masks or people that are forcing others to wear masks.
|
| > Institutional trust is at historic lows, while online
| spaces become more and more regulated by those same
| institutions
|
| Again, we elected a 40+ year veteran politician. House and
| Senate re-election rates are still 85%+ and we're ceding
| ever more of our authority to the [health] experts.
|
| [0]https://www.washingtonpost.com/news/wonk/wp/2014/04/01/y
| es-c...
| luxuryballs wrote:
| You don't really get much of a choice on who you vote
| for, you just get to pick which of the two parties
| occupies your seat. We should eliminate parties entirely
| and just go back to a vanilla republic where you pick
| someone from your community to represent you. Repeal the
| 17th amendment, return the Presidential electors back to
| being chosen by the legislators, who are voted in only by
| the will of their local constituents rather than the
| blessing of the party.
| bko wrote:
| There were 29 major candidates for Democratic party this
| year. The Democratic primaries were very competitive, and
| turnout was high (all things considering). Why do you
| think you'd have different results nationally?
| snakeboy wrote:
| > TV talking heads bemoan about this, but billionaires
| still remain the most admired people in this country
| (Trump, Musk, Gates, etc).
|
| Okay, now include Jeff Bezos, George Soros, and the Koch
| Brothers :)
|
| But in all serious, I'm not talking about anecdotal
| "admiration" of billionaires. I'm talking about literal
| wealth gaps[1]. The Bottom 50% of the US held 21% of the
| wealth in 1970, and the Top 1% held 11% of the wealth.
| 21% to 11%. By 2014 this had changed to 13% to 20%.
| Meaning the top 1% _doubled_ its share of the wealth
| while the bottom 50% _lost_ 38% of its share of the
| national wealth.
|
| > If there was anger at the older generation, we wouldn't
| have so many sacred cows regarding older people (social
| security and medicare). Average age of senator and house
| member has been growing over time. Hell, we just elected
| a 78 year old as president. How about before the
| revolution we just start with voting for younger people
|
| There is massive systemic momentum keeping these programs
| in place untouched as they are because of gridlock in the
| national government, I'm not really sure how their
| existence supports or rejects my point. I agree younger
| people need to be more active in the voting process and
| to elect younger people. I'm optimistic about several
| state-level voting reforms gaining momentum in the coming
| years to help this.
|
| But at least at the presidential level, our arcane
| primary/caucus and electoral college systems give a huge
| advantage to older people living in rural areas. There
| has been increasing consolidation of young voters in
| urban areas which are severely under-represented in
| choosing the president.
|
| And of course campaigns are financed by large wealthy
| interests that are mostly controlled by older generation
| who have an incentive to maintain the status quo. As long
| as we don't have congressional term limits, poor campaign
| finance regulation, and a massively gridlocked Congress,
| it's difficult for the state of things to change from
| what we have, which is domination by those lobbyists and
| a federal government which doesn't accurately reflect its
| populace.
|
| > Most people don't remember this. I'm surprised how
| rarely its actually discussed
|
| What is your definition of Most People? This comes up
| every time I've ever seen wealth inequality,
| accountability and government bailouts discussed (A lot
| in 2020, naturally).
|
| > This is mostly true but people don't see it that way.
| They're too busy yelling at people that refuse to wear
| masks or people that are forcing others to wear masks.
|
| It's concretely felt among those who have lost money,
| jobs and opportunities. Twitter arguments about masks can
| be present at the same time as the literal felt effect.
| Anyone who has followed economic news this year has seen
| the repercussions even if they weren't directly impacted.
| In my opinion you're underestimating the mood on this,
| but I'd like to see some data on it.
|
| > Again, we elected a 40+ year veteran politician. House
| and Senate re-election rates are still 85%+ and we're
| ceding ever more of our authority to the [health]
| experts.
|
| I already talked about federal government above^ But I
| think this has actually been an incredibly interesting
| year in that divergence from health experts became
| "mainstream". Tons of people getting Covid news from
| people on Twitter who called out studies being used by
| mainstream press and national governments to justify
| their policy decisions. I can point out a dozen random
| people on twitter who I trust more than NYT or Dr. Fauci
| to give me relevant, contextualized analysis of different
| COVID-19 strategies around the world. And most
| importantly, there's little social risk to this. I can
| tell that to people and they don't think I'm a quack.
| Half of them do are doing the same thing. Additionally,
| you're seeing protests break out across the world as
| governments try to lock-down and re-lock-down without
| legitimately strong evidence to back up their proposals.
|
| [1] Figure 2.4.1a,
| https://wir2018.wid.world/part-2.html#article-39
| HotVector wrote:
| If there is a big economic downfall and the government
| tries to play trickle down bs again I'm sure the populace
| would be enraged.
| Aunche wrote:
| Robinhood is in a heads I win, tails you lose scenario with
| the press here. Wealth inequality will get even worse if
| regular people lose a ton of money on GME. They already
| fucked up by causing one guy to commit suicide, so you
| can't blame them for playing it safe this time.
| ordinaryradical wrote:
| Nailed it. There is a context for all of what's happening.
| GME may seem like a funny oddity but there is real
| resentment boiling underneath the surface of this event. I
| know it because I feel that way myself.
|
| Everything I've seen from how the media covers it to how
| our financial institutions are forming ranks to condemn
| retail investors sickens me. It's making obvious the
| informal lines of control the investor class use to
| maintain their wealth and their anger to have the average
| person attempting to play their game.
|
| It's like a giant metaphor for how screwed up our society
| has become.
| ryandrake wrote:
| Pretty much all media coverage of the GME thing boils
| down to "oh no! The wrong _type of people_ are
| manipulating the stock market this time!" It's pretty
| sickening and transparent. CNBC is like the propaganda
| arm of Wall Street.
| godtoldmetodoit wrote:
| Watching some CNBC clips yesterday is what convinced to
| put a couple hundred bucks into GME for the hell of it.
|
| I'm pretty lucky, I happened to like computers and got
| into a field that pays decently well for now. I have no
| illusions that that I'm not working class though. I
| watched my parents nearly get crushed in 07/08. I
| graduated into a economic war zone. Watching the banks
| get bailed out as I went to parties hosted by kids whose
| parents were losing the house. Seeing the kids who used
| to live in the house encourage everyone to punch holes in
| the drywall because fuck the bank.
|
| I haven't forgotten what Wall Street did to us. The
| wealth inequality in this country is insane. The elites
| have been treating the working class like dirt for
| decades now.
|
| With that context... those CNBC clips made me livid. Fuck
| the Wall Street propaganda. I'll chip in my little piece
| if there's a remote chance of taking down one or two of
| the vultures who are destroying this country with their
| greed. Much of the finance class that runs this country
| builds nothing, provides nothing, and tears down
| communities so they can shake a few coins out of the
| wreckage.
|
| In talking with my friends who voted for Trump, this is
| the first time I've been able to feel on the page as them
| in a long time. There is class rage at play here. People
| are sick of this system.
| afavour wrote:
| CNBC is like that, sure. But I've found articles in
| places like Bloomberg and NYT to be quite even handed
| about it all. If I recall the NYT article even ends with
| a quote from a pastor's wife(!): "eat the rich".
| imtringued wrote:
| I saw some mild Bloomberg articles. Not sure how they
| source their stories. Haven't seen anything that defends
| retail investors though.
| cableshaft wrote:
| Here's an exception in the media: Saagar Enjeti at The
| Hill Rising. It's a great take on the situation and he's
| happy to see Wall Street get kicked in the face:
| https://youtu.be/9ToOGrUQ7ME
| dv_dt wrote:
| Both hosts at The Hill Rising have great commentary. Not
| always perfect, but generally much more piercing through
| the usual inane mass media coverage. (other coverage on
| the Hill is ok but more hit or miss IMO)
| cableshaft wrote:
| Agreed. I watch at least one segment of theirs pretty
| much every single day. I don't always care about some of
| the things they cover (especially the when they're
| criticizing something someone said in Congress), and
| sometimes I don't fully agree with their takes on things,
| but overall they're great.
| cableshaft wrote:
| I have former Gamestop employees that hate the company
| and want to see its demise on my feed going 'Good. Fuck
| these hedge funds,' knowing full well that people are
| injecting money into a company they hate.
|
| When it gets to that, it seems to me that there's some
| serious anger built up.
| duckfang wrote:
| Indeed. This kind of "fuck you i got mine" attitude is
| how countries are lost in extreme corruption or "third
| world" - third world countries are that because the
| people are impoverished, and the elite have everything.
|
| We're pretty much there. Just try driving through the
| Midwest, or West in areas not subsumed by the mega-
| cities. It's sad.
| swalsh wrote:
| > Somehow we'll go from not being able to buy certain stocks
| to violence?
|
| Please read this whole thread (https://old.reddit.com/r/walls
| treetbets/comments/l6omry/an_o...)
|
| This isn't about buying stock any more. This has become a
| battleground. The people in this thread are normal people
| fighting back for the first time in their lives.
| thaumaturgy wrote:
| > _...the powers that rule USA don 't realize that soon the
| only tool left to common people is violence?_
|
| I wonder how big the intersection is between people saying this
| now and people who said that the Black Lives Matter protests
| were violent (when they largely weren't).
|
| > _there is the deplatforming going on, people asserted their
| power financially, and now getting that removed too_
|
| It's not the same people. I keep seeing efforts to compare the
| deplatforming of violent and radical white supremacists that
| were using platforms to coordinate a coup to whatever other
| unpopular thing is happening today. I suspect that's an attempt
| to cultivate a little sympathy for people who have none for
| others.
|
| Yes, large investment firms appear to be circling their wagons
| now and making moves through media partners and others to try
| to stop the bleeding. That's an entertaining enough event all
| on its own, it doesn't need specious comparisons to other
| recent events.
| jberryman wrote:
| Vague predictions of inevitable violence (never "when we
| start a civil war", always "when the civil war happens" or
| "when the shit hits the fan") does seem like a hallmark of
| the far right, or white grievance.
| umvi wrote:
| > the powers that rule USA don't realize that soon the only
| tool left to common people is violence?
|
| This is a dangerous thing to say in 2021. Merely suggesting
| violence is an option or eventuality could be considered
| incitement and get you banned from every major internet
| platform.
| acdw wrote:
| I'm personally really pissed off because I made a Robinhood
| account _last night_ to buy $10 each f AMC and GME, the first
| stock trading I 've ever done. I just want to make some extra
| money so I can start a family, you know?
|
| I feel like the history of my personal financial life has been
| the increasing awareness that nobody with any power cares one
| whit about me or anyone like me.
| MrMan wrote:
| I think one of the original messages of HN was "start a
| business" partly because investing in those new businesses was
| what Pg wanted to do for a living. why don't you embrace that
| message? it seems healthier than complaining about the stock
| market being rigged
| RyanShook wrote:
| Isn't r/wallstreetbets the logical outcome of Robinhood's
| business strategy? When you combine free, frictionless trading
| with online communities I don't really see any other outcome and
| it will keep happening.
| MrMan wrote:
| WSB certainly seems to have been pumped up by RH business and
| vice versa.
| wavefunction wrote:
| "Free marketeers declare markets a little too free for their
| tastes" I've been really enjoying watching this whole thing pan
| out but you had to know that the 'professional capitalists' who
| brought us the economic crisis in 2009 would close ranks and
| appeal to the SEC to save them from the vicious retail investors.
| Robin Hood doesn't want to be banished to the proverbial
| wastelands because their customers are more clever than some
| hedge fund operators.
| ForHackernews wrote:
| I'd argue Robinhood customers are not more clever, but they
| _are_ more irrational /motivated by non-market goals.
|
| Getting absolutely wrecked by irrational market behaviour is a
| rite of passage for small traders, and it's only fair that some
| bigger hedge funds should learn that lesson too.
| wavefunction wrote:
| Some of them were sophisticated enough to see the short
| squeeze opportunity and realized it was possible to exploit
| it. Melvin Capital kept pouring more good money after bad in
| a classic and literal sunk-cost fallacy. This is all
| completely rational behavior by WSB investors, taking
| advantage of the short squeeze. At a fundamental level GME
| just got a new activist investor/board member with a history
| of revitalizing retail operations and turning them around.
| This would be a rational reason to invest in GameStop at a
| basic level. This is just the status quo realizing their
| position can be threatened and the easy money the wealthy
| have rolling in can be taken by average people acting in
| concert.
| gmethowaway wrote:
| Interactive Brokers (IB) is blocking GME stock buy even on non
| margin account.
| gricardo99 wrote:
| Namely, should a brokerage--especially one like Robinhood that
| brands itself with an anti-Wall Street Everyman gloss--be selling
| its customers' trades?
|
| What exactly is the point of this article, other than trying to
| stir up anti-Robinhood sentiment? Relying on PFOF/external
| execution is now a bad thing? Is the author advocating to do away
| with PFOF/external execution?
|
| What's the proposed alternative, because it seems like that would
| take us to a full circle. In previous years, the brokerage
| dealing directly to the clients was fraught with problems:
| conflict of interest between the brokerage and their clients
| because the brokerage holds offsetting client positions, and the
| market risk held by the brokerage.
|
| Auditing "best execution" is pretty straight-forward for a
| brokerage and regulators (really anyone with the data). If
| Brokerages are "cheating" and dealing against their clients best
| interests, then that's exactly the role of regulators.
| dang wrote:
| (This comment was originally a reply to "Robinhood makes most
| of its money selling customer orders (2020)"
| https://news.ycombinator.com/item?id=25946626, but we've merged
| it into the main thread.)
| [deleted]
| chaostheory wrote:
| Same with TD Ameritrade. Fidelity seems to still allow trading
| for now.
|
| I guess the simultaneous outage wasn't coincidental. Fidelity did
| not suffer and outage. I could be wrong but Vanguard was fine too
|
| EDIT
|
| Robinhood's customer(s) are hedge funds like Citadel. I believe
| it was Citadel who offered Melvin Capital a lifeline. I wonder
| what the rationale is for TD Ameritrade, and the others?
| Leader2light wrote:
| Disgusting. The entire system is so fucking corrupt. The only fix
| in my mind is total collapse.
|
| Bring everyone down to the same level.
| bilekas wrote:
| Excuse my ignorance but can this not be considered manipulating
| the market ?
| Triv888 wrote:
| How is that not illegal?
| dang wrote:
| For pointers to other vertices of this story graph, see
| https://news.ycombinator.com/item?id=25933543.
|
| As for this thread, it's got 1500+ comments. If you want to see
| them all you'll need to click through the More links at the
| bottom, or like this:
|
| https://news.ycombinator.com/item?id=25941431&p=2
|
| https://news.ycombinator.com/item?id=25941431&p=3
|
| https://news.ycombinator.com/item?id=25941431&p=4
|
| (Use your imagination after that.)
| gruez wrote:
| >thread for an unsourced tweet reaching the front page, with
| everybody assuming it's true
|
| where have I seen this before?
|
| https://news.ycombinator.com/item?id=23987584
| bytematic wrote:
| What a complete spit in the face of their users. If you work at
| robinhood, take a look at your company values and know that they
| are willing to wipe out any of those during investor pressure.
| pulse7 wrote:
| This article has a good summary of what exactly happened:
| https://www.nbcnews.com/think/opinion/redditors-took-hedge-f...
| vincentmarle wrote:
| It's real. They just announced it on their blog:
| https://blog.robinhood.com/news/2021/1/28/keeping-customers-...
|
| > Our mission at Robinhood is to democratize finance for all.
| We're proud to have created a platform that has helped everyday
| people, from all backgrounds, shape their financial futures and
| invest for the long term.
|
| > We continuously monitor the markets and make changes where
| necessary. In light of recent volatility, we are restricting
| transactions for certain securities to position closing only,
| including $AMC, $BB, $BBBY, $EXPR, $GME, $KOSS, $NAKD and $NOK.
| We also raised margin requirements for certain securities.
|
| > Amid significant market volatility, it's important as ever that
| we help customers stay informed.
|
| > We fundamentally believe that everyone should have access to
| financial markets. We're humbled to have helped many people
| invest in the markets for the first time.
| gintoki927 wrote:
| What upsets me is the fact that selling isn't halted. If only
| buying is halted, it's obviously going to cause the stock to
| plummet. Retail investors who bought AMC, GameStop, Nokia, or
| Blackberry are going to fear losing a lot of money and sell. If
| everyone does that, the stock price decreases. It's obvious
| manipulation in favor of hedge funds shorting the stocks. I
| really hope Robin Hood gets hit with a class action lawsuit. I
| don't want to sound greedy because I'm losing money, but the way
| this is being dealt with is beyond unfair. Losing money for a
| stupid decision is fine by me, but joining a movement like this
| and having it shut down by force is absolute bullshit. How can
| hedge funds be allowed to manipulate the market but we can't come
| together to fight them?
| rubatuga wrote:
| This is manipulating the market, imagine if you set up a
| brokerage where you can only sell a certain stock but not buy.
| thinkingemote wrote:
| Robinhood will have its work cut out to recover the trust lost
| today. I wonder how they will respond?
| corobo wrote:
| I don't think they can respond to this adequately.
|
| Imagine being the first one to bend to big money with that name
| hahaha
| gkfasdfasdf wrote:
| Not that I condone this type of market manipulation, but I do
| wonder what is the end game for all these wsb buyers - the price
| will come down eventually right? What will happen when they try
| to cash out?
| simlevesque wrote:
| I don't want to sound too dramatic, but that is the beginning of
| the end for robinhood. Why would you use it after this ?
| MrMan wrote:
| why would you ever use it? to experience random outages and
| poor execution?
| kevinventullo wrote:
| Schwab, Fidelity, and others now offer free trades on equities
| and ETF's, so if that's all you're doing, there's no reason to
| stay. That said, RH still has the best fee for options trading
| ($0.00 vs $.65 for Schwab/Fidelity).
| Tenoke wrote:
| This is messed up but WSB has pissed off RH so much before
| ("infinite money cheatcode")[0] so it probably took less
| convincing for them to do this than one might think.
|
| 0. https://markets.businessinsider.com/news/stocks/robinhood-
| fi...
| rootusrootus wrote:
| Not only them. I just got an e-mail from Tasty Works saying
| they're doing the same. And that it's out of their direct
| control.
| graiz wrote:
| This is messed up. The only the stock exchange (NASDAQ/NYSE)
| should be able to halt a stock. We need a "stock neutrality" for
| trading platforms.
|
| Robinhood claim that they are protecting investors assumes that
| they don't understand the risks of stock investing. Did the
| shorts understand the risks of shorting a stock over 100%?
| shut_it_down wrote:
| This is not going to end nicely.
| simlevesque wrote:
| For real. This will cause deaths, you can be sure of that.
| throwaway2245 wrote:
| This is identical to my experience of casino gambling.
|
| If you have a system that is beating the house (or appears to
| be), the house will immediately shut you down.
|
| You can't win. Not only because the bets are stacked against you
| (here in favour of the wealthy), but also because the system only
| exists in the first place to benefit the powerful.
| powvans wrote:
| I wonder if this is just for after hours trading. You would think
| the user could at least place an order for execution when the
| market opens.
|
| GME was up over $100 pre-market when I got up this morning, so
| someone somewhere is buying.
| rvnx wrote:
| In the night, GME went from 350 to 250 USD as well; this was
| when Discord had been banned and the Reddit suspended (both for
| moderation / hate speech issue).
|
| The variations are extreme, in the morning it was hitting 500
| USD in the morning, and now 400 USD.
| rvnx wrote:
| Now 309 USD, only 20 minutes, this comment didn't age well.
| IceHegel wrote:
| Robinhood is being deceptive.
|
| They say this move is to protect their customers, in fact it's to
| protect themselves. As others have pointed out, Robinhood lends
| margin to some accounts and if those accounts cannot pay for
| losses purchased on margin, Robinhood is responsible. This is a
| real risk, and they should have made the margin requirement 100%
| for GME or cash only as other brokers did. They did not have to
| limit buys to de-risk their own portfolio.
| chuckysbk wrote:
| institutions are controlling robin hood? why else would they not
| let you buy/sell certian stocks.
| [deleted]
| throaway1990 wrote:
| Naked short selling through unlimited "Puts" is totally LEGAL for
| these hedge-funds, but when people caught them pants down they
| are using every ILLEGAL move to cover their asses and losses.
|
| These are the corrupt and insane people who should be punished
| not the people who sussed out their bullshit!
|
| What Robinhood and other platforms are doing is market
| manipulation which is illegal.
|
| The legal and reasonable thing would be to allow trading these
| stocks with additional "e-signs" letting the individual know that
| there are additional risks here.
|
| That would actually help the retail investor.
|
| But these brokers and buddies are happy to help their hedge fund
| buddies!!
| sebmellen wrote:
| Justin Kan (Twitch founder) is calling for Ken Griffin and
| Robinhood's co-founders to jailed. > Just got a tip that Citadel
| reloaded their shorts before they told Robinhood to stop trading
| $GME.
|
| > If this is true, Ken Griffin and the Robinhood founders should
| be in jail.
|
| > This is class warfare.
|
| See https://twitter.com/justinkan/status/1354856228661334017.
| Tiktaalik wrote:
| Incredible shenanigans. Government needs to lower the boom.
|
| Very much an example of how only "certain people" are allowed to
| win in our society and the system will intervene to ensure that
| established wealth retains its preferred status.
| TheHypnotist wrote:
| This is the perfect opportunity for another platform to step up
| and welcome traders. Robinhood will be on damage control.
| squeaky-clean wrote:
| It's not just Robinhood, IB and WeBull have also suspended GME.
| Schwab lets me get all the way to confirming an order, but I'm
| not spending $370 on a share of GME to confirm if it will go
| through haha. IB/WeBull/Schwab seem to still allow AMC/NOK/BB.
|
| Those are the brokerages I use, can't check in the others.
| weitzj wrote:
| Traderepublic is doing the same
| Miner49er wrote:
| Robinhood's rating on the android app store has fallen to 1.1
| stars.
| zaltekk wrote:
| Unfortunately the account deactivation story is quite poor.
|
| Under Settings > Account Information > Deactivate Account you're
| just sent to a customer service email form. They say it takes 1-3
| business days to process.
|
| As a side note, you have to close out all of your positions and
| transfer out all of your money before you're allowed to close the
| account. This seems unusual to me from experiences with other
| brokers.
|
| From my understanding the average retail broker will allow you to
| transfer you assets out to another brokerage. You can do this as
| part of closing your account.
|
| While just transferring money out separately and keeping the
| account open longer isn't a big deal, there's tax and other
| financial implications to having to close your positions instead
| of transfer them. You'll have to realize capital gains. You'll
| also have multiple banking days in which the price could move up
| while your money is transferred to another brokerage to re-buy
| the shares.
| benji_is_me wrote:
| Robinhood _does_ allow you to transfer holdings directly to
| another brokerage (for a $75 fee).
|
| https://robinhood.com/us/en/support/articles/transfer-stocks...
| zaltekk wrote:
| Ah, good find. There's no mention of this as a closing option
| in the app itself. That fee is a bit ridiculous, but it might
| be the best option if you have a real portfolio.
|
| I can't find a history that shows when they added this, but
| it appears they at least added transfers _in_ a few years
| ago:
|
| https://www.reddit.com/r/RobinHood/comments/6tre6o/transfer_.
| ..
| DyslexicAtheist wrote:
| _Step 0: Citadel pays Robinhood for order flow. Citadel gets to
| see RH 's orders a few milliseconds before they're filled.
| Citadel may choose to front-run some of those trades.
|
| Step 1: RH's customers and WallStreetBets start manipulating
| $GME. This is happening in the open._
|
| -- https://twitter.com/toxic/status/1353890766800621569
| coredog64 wrote:
| Dueling Twitter posts:
|
| https://twitter.com/matt_levine/status/1354129838806872073?s...
|
| I'm gonna go with Matt Levine over a Twitter rando, especially
| since the step 0 notes something that is explicitly illegal
| (front running)
| clevernapkins wrote:
| Front running is illegal indeed. But it would be possible to
| use Robinhood's order flow data to detect momentum and decide
| to hold a position from that. Small difference but the effect
| is the same
| amai wrote:
| "Robinhood got about 40% of their revenues from one of the hedge
| funds that just took a dive on Gamestop. Highly recommend an
| investigation. This smells like collusion to protect the rich
| insiders."
|
| https://twitter.com/mindmeld_me/status/1354807424998281217
| fairity wrote:
| Is there a source for the 40% figure? It seems to allude that
| the fund in question is Citadel.
| alexggordon wrote:
| First, I believe that number comes from this article[0],
| which doesn't tell the whole story. Did some research and
| found some more info with the help of this article[1]. In Q1,
| Citadel paid $12,583,220.60 to fulfill orders from Robin
| Hood[2]. I can't put together the total percentage of their
| order fulfillment revenue, but this website seems to suggest
| 91 million[3], but if you add up the totals from[2] they
| don't sum to 91 million--so I can't quite determine the
| percentage of revenue it works out to, but it appears Citadel
| is their biggest order fulfillment client.
|
| [0] https://www.bloomberg.com/news/articles/2018-10-15/robinh
| ood...
|
| [1] https://fortune.com/2020/07/08/robinhood-makes-millions-
| sell...
|
| [2] https://cdn.robinhood.com/assets/robinhood/legal/RHS%20SE
| C%2...
|
| [3] https://www.businessofapps.com/data/robinhood-statistics/
| briankelly wrote:
| Not revenue, but RH publishes their order flow percentages,
| which shows Citadel is at the top. Here's one from last year:
| https://cdn.robinhood.com/assets/robinhood/legal/RHS%20SEC%2.
| ..
| hntrader wrote:
| Yeah it must be, they gave funds to Melvin Capital which took
| a beating on GME, and make money off Robinhood's customer
| flow.
| tomjakubowski wrote:
| Citadel the hedge fund and Citadel the market maker are
| separate companies.
| tylerhou wrote:
| They do share ownership though. But the alleged
| conspiracy above is unlikely for other reasons.
| whimsicalism wrote:
| Giving funds to Melvin so they can close their short !=
| having a short position in GME
|
| There are like 30 comments getting this confused in this
| thread.
| briankelly wrote:
| This sounds a little pedantic to me. Citadel has exposure
| to a short position in GME due to their deal.
| whimsicalism wrote:
| > Citadel has exposure to a short position in GME due to
| their deal
|
| No, they don't. It's not pedantic - Citadel _literally_
| does not have a short position or exposure to a short
| position in GME.
| briankelly wrote:
| If you lend money to someone, especially someone on the
| brink of insolvency, then you are buying whatever they
| are. Of course, Citadel can be on both or any number
| sides but they still take on exposure in that direction.
| whimsicalism wrote:
| You're missing that they lent the money specifically so
| they were no longer exposed to the short position.
| briankelly wrote:
| Yeah this is the central argument and I don't think we
| have a clear answer yet.
| ForHackernews wrote:
| Pretty staggering hubris from the company whose shoddy software
| used to offer "infinite leverage"[0] to make themselves the self-
| appointed guardians of responsible investing.
|
| Maybe one of these newly-minted millionaires can cash out and use
| their gains to sue.
|
| [0]
| https://www.bloomberg.com/news/articles/2019-11-05/robinhood...
| arbitrage wrote:
| oh no, but what happened to the free market? this is censorship
| /s
| iloveyouocean wrote:
| Robinhood is looking for a near term IPO. Who will take their
| stock public? Daddy told them to delist and they complied.
| imgabe wrote:
| Please remember that Robinhood is a private company, so if they
| want to collude with hedge fund managers to deny small investors
| access to the stock market, then that's just something we all
| have to accept. We must never, ever question the actions of a
| private company.
| thefounder wrote:
| Imagine buying some of these stocks. Next day people can only
| sell. What could go wrong..who will make money put of this? I
| think it's time to do something! People will get fed up of this
| fake freedom and "equal opportunity" bs
| thepasswordis wrote:
| Ah cool so does this mean that all the other stocks are safe and
| will only make me money? Very cool of Robin Hood to protect me
| from ever being exposed to any risk like this. It's just really
| cool to know that they remove the ones that can lose me money.
| karlmcguire wrote:
| Nice, Robinhood is a publisher now!
| kchr wrote:
| Release the sock puppets!
| imtringued wrote:
| Tomorrow they are going to prevent you from selling stocks that
| are in the money.
| lovehashbrowns wrote:
| Robinhood determined that you're too poor to mess with the
| market. Sorry about that!
|
| This whole thing is such bullshit.
| shakezula wrote:
| Very cool of robinhood to protect me by tanking my stock
| position simply because it's as odds with their wallet. What a
| fucking sham of a company and if there isn't some serious legal
| repercussions of it, then I don't know what even would qualify
| as "market manipulation".
| Lasher wrote:
| Mods on WSB are catching a lot of flack for closing a thread
| asking for alternative brokers (no idea why) and for commenting
| in another sticky not to go and write bad reviews for the brokers
| limiting trades.
|
| I fear they are about to get a harsh lesson in what happens when
| the mob you are leading turns against you.
| rcxdude wrote:
| I get the impression the mods on WSB aren't really leading the
| whole thing, just trying to moderate a particularly hard to
| moderate community.
| kchr wrote:
| Same here. They are probably just trying to stay neutral and
| not steer a mob towards specific brokers.
| [deleted]
| lastofthemojito wrote:
| I know some language nerds who like to debate about whether
| certain aspects of language should be descriptive (dictionaries
| document how real people use language) or prescriptive (very
| smart people know the correct way to spell/use words, and that
| should be imparted to the less knowledgeable).
|
| In that light, I'd always seen the stock market as purely
| descriptive - the price of a stock can be completely detached
| from the valuation or profits of a company, it's purely the price
| that someone in the market is willing to pay.
|
| This feels like an attempt to make the stock market prescriptive
| - "we know that these retail traders are wrong for trading at
| such lofty prices, we need to fix this".
|
| Spoiler alert: Descriptivism always wins.
| alea_iacta_est wrote:
| The elites of this world should meditate on it, because on the
| same logic: populism always wins.
| jacobsenscott wrote:
| There are a handful on people on wsb manipulating a lot of people
| into buying worthless stock from each other, often on margin. It
| is such a classic con. I can't believe people are mad at RH for
| helping them not get conned.
| wyldfire wrote:
| Can someone help me understand Robinhood's POV? This just seems
| so outrageous that there must be some sane rationale that I'm not
| seeing.
|
| Why do Robinhood, Reddit, Discord, etc feel like they have to
| respond to this? Whether the investments being made are
| responsible or not, it doesn't seem like it should be their place
| to intervene.
|
| If the hedge funds over-shorted GME and WSB recognized that and
| traded against that bad analysis, then that's great! If the
| pendulum swung the other direction and WSB is trading into some
| momentum, how is that any different than the hedge funds doing
| the same with shorts? Why should Robinhood pick a winner (siding
| _against_ their own customers)?
| janmo wrote:
| It is likely that they have lend out the $GME shares to a hedge
| fund that went short, if this hedge fund goes bankrupt and the
| stock price continues to rise they will be in serious trouble.
| metalliqaz wrote:
| Robinhood allows free trades. With all the new customers loging
| in and just buying a few stocks, they have to acquire lots of
| new shares. When this is all over, a lot of retail investors
| are going to be left holding the bag, and will likely not be
| continuing customers.
| iso1631 wrote:
| Lots of people saying "you can lose a ton of money"
|
| If you buy 10 shares at $200, that's $2k out of your bank
| acount, and it's gone, just like if you bought a car.
|
| How do you lose more than that? I'm not talking about
| shorting and stuff, just buying shares, hoping it goes up,
| and selling it later.
| ghastmaster wrote:
| The opposite is true:
|
| The idea behind these trades is that they will not in fact
| suffer any losses because they bought in after the naked
| shorts brought the stock down to a low valuation. If they
| keep the stock high enough, long enough, the naked shorts
| will have to buy back the stock at much higher prices than
| the price was when this short squeeze was started. That's why
| short squeezes are a thing in the first place. This is no
| different than what Carl Icahn did to herbalife and Bill
| Ackman.
|
| When companies keep these people from implementing their
| strategy, they expose these individuals(their own customers)
| to potential huge losses.
| MrMan wrote:
| look at GME today, a lot of late arrivals have just lost a
| lot of money. they are probably not professional traders
| seabird wrote:
| That's not how this works. Of course the play is bad if
| you completely ignore that the key part of the play is
| that short sellers and call contract writers are
| contractually obligated to buy pretty much regardless of
| the price. Whether or not it pans out this way for most
| retailers is yet to be seen, but the mechanism is sound
| and the risk is in not having data available to you on
| what the outstanding short interest is.
|
| It's not a loss until you sell, and a key date to sell
| (tomorrow, when tens of thousands of 1/29 calls expire)
| hasn't happened yet.
| unanswered wrote:
| Once the short positions are covered, shouldn't we expect
| the price instantly fall to its original level, modulo
| retail bagholders still buying due to fog of war?
|
| And... The price is in freefall in the last minutes of
| trading today.
| pmorici wrote:
| Better to educate instead of ban then. So long as people have
| the facts, let them make their own decisions. At this point a
| number of people are probably just in on this because they
| love the idea of sticking it to a hedge fund or two.
| rory wrote:
| Are buyers of these stocks really exposed to more downside
| risk than the buyers of the way OTM options they sell to
| retail investors freely?
| IG_Semmelweiss wrote:
| Only those that got in late and then chose to sell at a
| lower price than cost.
|
| However, and here is the problem - when the price does come
| down (likely after the shorts capitulate) , it will
| literally be a stampede to finally get out. It is unknown
| how sell orders will be processed... if at all at that
| point. So the later you get in the more likely you are to
| be burned, in the disordely unwinding scenario.
|
| Early adopters will be ok. Holders and latecomers will not.
| rory wrote:
| My point is, why is Robinhood still selling options that
| have a 95% chance to expire worthless, if their actual
| motivation is to protect their investors from high-risk
| trades?
| [deleted]
| retube wrote:
| I know there's a lot of conspiracy around wall st screwing over
| the little guy here, I suspect the truth is more mundane. When
| the music stops a LOT of people will be left holding the bag
| and will lose a great deal of money. There are people putting
| their parents life savings into GME at $300/share. It's insane,
| and nothing but pure gambling at this point. I suspect
| regulators are extremely concerned at the risk people are
| exposing themselves to.
| atwebb wrote:
| While you're right that eventually the music will stop, this
| thread is about direct intervention. There isn't a way I see
| that the intervention protects retail at all. By its nature
| it ensured a full crash and retail didn't see it coming.
| jgwil2 wrote:
| A full crash is ensured by the fact that the stock is
| massively, massively overvalued. If they are taking steps
| to prevent it from becoming even more overvalued, the
| upshot should be _less_ money getting lost overall.
| atwebb wrote:
| Possibly, you are only part of the crash if you have to
| buy at the top which, from my understanding, would be the
| short sellers as it is driven to a 1 time spike. There
| would be bag holders from not having limits set correctly
| and all but that's the risky play.
|
| Doing this way ensures that retail loses, 100%. Only a
| retail app was blocked.
|
| It is the asymmetry, I can't see a valid reason for
| unilateral action from RH here.
| greenshackle2 wrote:
| I don't see this ending well for (some of) the Robinhood
| crowd. Wall Street has deeper pockets. Robinhood manages
| $20B in total. A small-ish hedge fund has like, a few
| billion dollars AUM. There are many such hedge funds, and
| a couple dozens much larger ones.
|
| A couple funds with large short positions have popped,
| but short interest hasn't budged; they were just quietly
| replaced by other funds. At this point probably every
| hedge fund who trade equities is short GME. If your
| position is not too large and you have enough cash you
| can just keep meeting the margin calls and collect your
| free money when the bubble bursts.
|
| (And stop loss orders don't save you if the crash happens
| fast enough.)
| JumpCrisscross wrote:
| > _Can someone help me understand Robinhood 's POV?_
|
| Robinhood is a margin-lending options-trading broker. If a
| customer falls down on a trade, it is ultimately liable. If a
| retail customer loses money and makes a FINRA complaint that
| Robinhood induced them to buy through its gameified interface,
| it is liable. Risk and compliance likely made this call.
|
| Also, Robinhood makes its revenue from market makers. They are
| the customers. Clients are not. So when trading these equities
| gets unprofitable, they will pull the plug. (Though
| anecdotally, everyone I know on the sell side in equities and
| equity derivatives is making a killing on this.)
|
| What I can guarantee is nobody shorting GameStop got Robinhood
| to pull the plug.
| marricks wrote:
| > _What I can guarantee is nobody shorting GameStop got
| Robinhood to pull the plug._
|
| Not sure how you could possibly gaurantee that. Also given
| that Robinhood _edit_ got a huge chunk of cash from a shorter
| makes that pretty weird to "guarantee"[1]
|
| [1] https://cdn.robinhood.com/assets/robinhood/legal/RHS%20SE
| C%2..., https://news.ycombinator.com/item?id=25945258
| tylerhou wrote:
| The same shorter is making money hand over fist on market
| making due to increased volatility, volume, and
| unsophisticated investors.
| cfontes wrote:
| Exatcly volatility is the name of the game. They do not
| care about the direction as long as it moves and if it
| moves a lot twice as good.
|
| Market makers always win.
| JumpCrisscross wrote:
| > _given that Robinhood got 40% of their revenue from a
| shorter_
|
| I'm seeing one tweet from Adam Hackney claiming this [1].
| Do we have a real source?
|
| [1]
| https://twitter.com/mindmeld_me/status/1354807424998281217
| [deleted]
| tylerhou wrote:
| Yes, Robinhood disclosed that Citadel's MM desk accounted
| for the largest portion of their payment for order flow
| income in their rule 606 disclosures. But still a bad
| take because Citadel stands to make much more money on
| further trading, and Citadel's hedge fund likely has the
| capital to outlast retail.
|
| https://cdn.robinhood.com/assets/robinhood/legal/RHS%20SE
| C%2...
| JumpCrisscross wrote:
| Let me be clear: if I were sales at Robinhood, Citadel MM
| is a _huge_ client.
|
| But Citadel MM is more likely to pull the plug on making
| markets in a name for risk reasons than to benefit a
| hedge fund position. To say nothing of the fact that
| Citadel got to bail out Melvin Capital, which is
| traditionally a profitable trade.
| tylerhou wrote:
| I am agreeing with you that there is not much merit to a
| conspiracy that Citadel asked Robinhood to pull out.
|
| In particular, I believe Citadel would gain more from
| continued trading on Robinhood than they would lose from
| their hedge fund positions.
| sparrc wrote:
| > If a customer falls down on a trade, it is ultimately
| liable.... Robinhood induced them to buy through its
| gameified interface
|
| Why would robinhood be any more liable than other online
| traders like Fidelity or etrade?
|
| > What I can guarantee is nobody shorting GameStop got
| Robinhood to pull the plug.
|
| How can you guarantee that? Robinhood likely routes most of
| it's trades through citadel, which has informed partners it
| will not be fulfilling GME or AMC or BB trades.
|
| And it turns out Citadel is also a hedge fund that has
| massive short positions on GME.
| cjlars wrote:
| They would have different risk profiles depending on what
| their clients are actually doing. RH probably has much
| greater net exposure than Fidelity since they have a
| greater share of meme investors in their customer base.
| Fidelity definitely has a less gameified interface as well.
|
| Corporate risk controls are also not a hard science,
| different risk teams can and do come to different
| conclusions on the same issue.
| JumpCrisscross wrote:
| > _Why would robinhood be any more liable than other online
| traders like Fidelity or etrade?_
|
| Every brokerage house ultimately vouches for their clients.
|
| Robinhood has extra exposure because clients could claim
| its interface induced them to overtrade.
|
| > _Robinhood likely routes most of it 's trades through
| citadel_
|
| Do we have a source for this?
|
| Also, Citadel just _made_ money bailing out Melvin Capital.
| The short squeeze let them buy assets at dimes on the
| dollar. Assets which do not include GameStop shorts.
|
| > _which has informed partners it will not be fulfilling
| GME or AMC or BB trades_
|
| Former market maker. When trading got crazy we'd take
| profits. When it got inexplicable, we'd pull the plug. If
| we didn't, risk would. In this case, there is the
| additional factor of political risk--you don't want to be
| making millions of dollars off GameStop at its peak when
| that's going to cost you tens of millions of legal fees in
| front of Congress.
|
| A simple explanation for Robinhood's behavior might be that
| their customers, the market makers, backed away from paying
| for this order flow.
|
| All this said, I'd be highly pissed if my broker did this
| to me. But Robinhood customers have known since the
| beginning they weren't the customer.
| mthoms wrote:
| >> Robinhood likely routes most of it's trades through
| citadel
|
| >Do we have a source for this?
|
| Yes.
|
| https://cdn.robinhood.com/assets/robinhood/legal/RHS%20SE
| C%2...
| pacetherace wrote:
| Every brokerage house has this problem. If their client
| goes bankrupt, then the brokerage house has to eat the
| loss.
| whimsicalism wrote:
| Citadel Securities is a market maker. Do you have any
| evidence that Citadel has un-hedged "massive short
| positions on GME"?
|
| I find it nuts how this has transformed into a populist
| thing.
| jmalicki wrote:
| If you buy a share of GME from Citadel Securities, that
| may typically result in an immediate unhedged short
| position at Citadel, if they weren't already holding it.
|
| Normally, a market maker might then close it by buying a
| share from someone trying to sell. But in a massively
| one-way market like GME, it's quite likely that they
| build up a large enough unhedged massive short position
| that they say "no, we're not taking on any more risk" and
| communicate that to Robin Hood.
| whimsicalism wrote:
| They immediately hedge it. If the market for GME is "one-
| way" (it's not, people are shorting), they might also
| hedge the sale by buying more exotic financial
| instruments and correlates of the GME price.
|
| > they say "no, we're not taking on any more risk" and
| communicate that to Robin Hood.
|
| Maybe, although they would probably do that when their
| ability to hedge started breaking down, not when they'd
| already acquired massive short positions.
|
| More likely, to me, is that they would just increase the
| bid-ask price spread continuously as their ability to
| hedge degrades.
| JumpCrisscross wrote:
| > _They immediately hedge it_
|
| This assumes continuous liquidity. Dangerous assumption
| to make in choppy markets.
|
| It is not uncommon for markets to gap up or down
| discontinuously. You look at the market and see bid 899
| at 901, buy some shares for 898, offer them at 890 and
| find the market is now 125 at 901.
| Spinnaker_ wrote:
| This is most likely the answer. They are taking on a lot of
| risk allowing this type of trading behavior. They likely
| don't have suitable risk infrastructure developed to feel
| like they have a handle on it, so they shut it down.
| snikeris wrote:
| Robinhood takes on a lot of risk when their customers buy
| GME?
| baking wrote:
| The risk to Robinhood is GME crashing by more than the
| amount of the margin. A large brokerage that has been
| through crashes before has systems in place, and can
| spread the remaining risk around. If a large portion of
| your customers are invested in a handful of stocks, their
| risk becomes your risk. Also, other customers of
| Robinhood who have cash that is in an uninsured account
| are also at risk even if they are not invested in GME.
| DennisP wrote:
| Then why not shut down margin purchases of GME, but not
| cash purchases?
| baking wrote:
| There was some speculation that they didn't have that
| capability. Brokerage firms should have the ability to
| restrict margin trading in particular stocks, but what if
| Robinhood couldn't, at least not on short notice?
|
| There could is also the concern about new accounts
| trading in GME with funds that might be suspect. It's a
| risk you don't want to take if you don't know your
| customers and the bubble is ready to burst at any moment.
| sweettea wrote:
| They _did_ shut down margin trading in GME and others
| several days ago, this is a further step atop it.
| baking wrote:
| Did they issue margin calls?
| MrMan wrote:
| aggregate customer exposure means that massive
| simultaneous losses by retail traders following the herd
| can mean losses for RH, which they want to prevent.
| [deleted]
| tommoor wrote:
| Even when they're not buying on margin GME is in a short
| term bubble that will soon pop and leave millions of
| their users worse off than before. There probably was
| some internal logic of "protecting" folks from themselves
| whether we agree with that or not.
| imtringued wrote:
| Buy high, sell never. Everyone who bought the stock has
| already written it off as a complete loss. Everyone is
| banking on being worse off than before. They still buy it
| for the entertainment value and Robinhood denied them
| that.
| ApolloFortyNine wrote:
| Did they stop people from selling in March when the World
| was panicing about Covid, despite most people assuming
| the stock market would rebound?
|
| The answer is no.
| hindsightbias wrote:
| Quite a bit of difference from markets being influenced
| by outside events and the market being influenced by your
| gamified platform.
| argonaut wrote:
| > most people assuming the stock market would rebound
|
| No, people / pundits / the media were widely proclaiming
| that the healthcare system would be overrun and the next
| great economic depression was upon us. Most people
| assumed the stock market would continue to fall.
| beagle3 wrote:
| It does because they let them buy on margin.
|
| Interactive Brokers hiked the long margin to 100% (and
| short to 300%) which is a reasonable way for a broker to
| behave.
|
| Killing the ability to buy is not.
| gmethowaway wrote:
| IB doesn't allow you buy GME even w/o margin account.
| seniorThrowaway wrote:
| I don't think that is correct. They stopped options
| trading in it not 100% cash backed stock buying or 300%
| cash backed shorting. I think their position is fairly
| reasonable and as an account holder there I don't want
| people going crazy on leverage on this amount of
| volatility.
| seniorThrowaway wrote:
| ok that is unfortunate I didn't go all the way through
| with trying to actually buy. I'm a long time customer and
| they were definitely better before they went public
| simplerman wrote:
| Got email from IB that you cannot open new positions on
| GME this morning.
| gmethowaway wrote:
| That's what they advertise via Twit. But if you try to
| buy even 1 stock of GME on non margin account (our own
| money only) it doesn't allow you to do that. I have a
| screenshot for that if you want. And customer support
| line is overloaded as expected.
| kart23 wrote:
| Why can't they just stop the people on margin from buying
| gme? That would be reasonable. But if it's your money, I
| don't see how it's risky for RH.
| madenine wrote:
| RH makes money by selling data to investment firms, not
| off individual trades/fees.
|
| If their customers - the firms that pay them, not app
| users - see the RH platform as a threat to their business
| they could pull the plug[0]. Or if this prompts
| regulators to examine RH and similar products.
|
| The risk isn't in the outcomes of options/trades; its
| risk to their business model.
|
| [0] RH's customer are actually market makers, who by and
| large will be profiting heavily off of this.
| JumpCrisscross wrote:
| > _If their customers - the firms that pay them, not app
| users - see the RH platform as a threat to their
| business_
|
| This point has been made repeatedly elsewhere but it
| bears repeating. Market makers are getting rich off this
| trading. Robinhood's customers are not hurting from this.
| madenine wrote:
| Point taken.
|
| Still, as far as risk to RH is concerned - if this kicks
| off a change via their customers, regulators, or legal
| action the change is probably not in their favor.
| JumpCrisscross wrote:
| > _if it 's your money, I don't see how it's risky for
| RH._
|
| FINRA arbitration, and the FINRA complaint process, is
| _highly_ sympathetic to retail clients. When these
| clients lose money on GME _et al_ , there will almost
| certainly be a class-action lawsuit for some fraction of
| their collective losses. And Robinhood's lawyers will
| almost certainly recommend they settle. That is the risk,
| beyond margin lending and options settlement, they are
| seeking to mitigate.
|
| (Also, when that money is lost, there is a decent chance
| Robinhood will be fined by half the regulators on this
| planet for inducing people to overtrade through its
| gameified interface or something like that.)
| pvarangot wrote:
| That's whay Schwabb did and what any serious broker would
| do if there's volatility. If you have cash you should
| always be allowed to play if you are not doing anything
| illegal. If it's dangerous, it's your cash not theirs.
| jartelt wrote:
| One issue is a lot of retail people bought GME options.
| If those expire in the money, these people will be on the
| hook to buy 100s of shares of GME and likely don't have
| the cash on hand to purchase the shares (which leave RH
| holding the bag).
|
| On one hand, you could say RH shouldn't let people buy
| options if RH doesn't believe those people can pay up
| when the option expires. On the other hand, you have
| people buying options who maybe don't understand that you
| need cash to buy the shares if the option expires in the
| money.
| simplerman wrote:
| If you bought options, you don't have to exercise them.
| They could expire worthless.
| grive wrote:
| If it was the answer, then RH could have instead only
| forbidden margin trades and restricted to cash.
|
| Additionally, other retail brokers selling to Citadel
| Capital have done the exact same (Schwab comes to mind, but
| not only).
|
| Other brokers however (fidelity), have not. If the short
| squeeze is to happen tomorrow, this seems an unlikely
| coincidence that those retail brokers affiliated with
| Citadel Capital tool positions that would ultimately
| deflate the stock.
|
| I don't see how GP can assure that no short sellers is
| behind those moves.
| hintymad wrote:
| So as a platform Robinhood wants to make money from trading
| options, but it will shut down the platform when it sees too
| much risk for itself? If so, would this damage the trust to
| Robinhood?
| BoorishBears wrote:
| Yes but
|
| a) most of the platforms are doing the same
|
| b) it's hard to imagine that with half of RH currently
| holding GME they're not going to come out of this having
| gained more in users than they lose over trust issues
| qaq wrote:
| Hedgefunds are real Robinhood customers buying their order
| flow. They go belly up Robinhood looses their actual source
| of income plus Robinhood lent them a ton of stock to short so
| they are on the hook too.
| JumpCrisscross wrote:
| > _Hedgefunds are real Robinhood customers buying their
| order flow_
|
| Market makers buy order flow. Hedge funds don't. The only
| major hedge fund affiliated with a market maker is Citadel.
|
| Melvin and Citron placing shorting GME is an anomaly in the
| hedge fund world. Most institutional short views are
| expressed through options and structured products. (Market
| makers convert those options into shorts, the same way they
| convert calls into stock purchases.)
|
| Market makers are making _tonnes_ of money on this. It 's
| the low-information non-directional trading their models
| are built for. (Source: former options market maker. My
| former colleagues are making annual targets in a week.)
|
| _Some_ hedge funds are getting screwed. But that is mostly
| over. Few funds ' risk tolerances let them extend a 10x
| loss on an outright short. With respect to their puts,
| their maximum loss is the premium. That's generally baked
| into the risk model _ex ante_.
|
| The only sophisticated parties holding the bag are brokers.
| Margin loans at risk. Uncovered options sales at risk. Most
| significantly, when the scheme inevitably crashes, almost-
| inevitable class-action lawsuits from clients claiming to
| have been misled by their interfaces.
| treis wrote:
| >Market makers are making tonnes of money on this. It's
| the low-information non-directional trading their models
| are built for. (Source: former options market maker. My
| former colleagues are making annual targets in a week.)
|
| Aren't these market makers sitting on a ton of stock to
| cover call positions?
|
| They may have picked up a lot of pennies these last two
| weeks, but the bulldozer is getting bigger and faster.
| This is a truly unprecedented situation and I doubt they
| have confidence that their models can handle it.
| KMag wrote:
| Market makers aggregate their risk exposure across all of
| their holdings and put limits on how large those
| exposures get.
|
| > Aren't these market makers sitting on a ton of stock to
| cover call positions?
|
| The whole purpose of delta hedging is to make them immune
| to the first-order effects of market moves. The first-
| order derivative of the value of everything they hold
| with respect to price moves in any one stock is
| constantly kept near zero.
|
| In the old days, many options traders would put off
| hedging their books until near the closing bell. Smart
| equities traders would watch the options market to see
| which way the traders would be rushing to hedge in the
| cash equities market. These days, there are systems that
| automatically hedge out the positions throughout the day.
| grive wrote:
| > The only major hedge fund affiliated with a market
| maker is Citadel.
|
| How many shares of Melvin Capital were bought by Citadel
| when they injected $2.75B? Is there a way to know how
| exposed they are?
|
| Isn't there a conflict of interest in them floating a
| hedge fund losing money due to flow orders they are
| buying (or, potentially, not buying anymore)?
| qaq wrote:
| And Citadel is responsible for 40% of Robinhood revenue
| and oh surprise Citadel is in the hole on the money sunk
| into Melvin.
| wrsh07 wrote:
| You could also imagine that they have concern about the
| volume causing issues on their servers. A literal thundering
| herd might mean owners of GME can't sell during the collapse
| which would put robinhood in a bad situation
| KMag wrote:
| > A literal thundering herd might mean owners of GME can't
| sell
|
| I can assure you there are very few cattle, bison, or
| caribou near the exchange.
| totalZero wrote:
| > Robinhood is a margin-lending options-trading broker. If a
| customer falls down on a trade, it is ultimately liable. If a
| retail customer loses money and makes a FINRA complaint that
| Robinhood induced them to buy through its gameified
| interface, it is liable. Risk and compliance likely made this
| call.
|
| This is a very tenuous argument. By law, options customers in
| the US have to receive an information packet and accept an
| Options Agreement, wherein it's clear that they could lose
| 100% of their premium outlay (or more). Options trading is
| approved based on levels; not every account can buy options,
| and not every options account can sell naked options.
|
| If we are assuming good faith from RH, maybe they are trying
| to prevent margin-call suicides. But I don't assume good
| faith from RH.
|
| Not to mention that they turned off all opening trades -- not
| just large trades, margin trades, or options trades.
| kosh2 wrote:
| Robinhood didn't pull the plug. Tastyworks did the same and
| they said they were more or less forced by Apex Clearing.
| Here is CEO of interactive brokers also admitting to the
| reasons: https://www.youtube.com/watch?v=7RH4XKP55fM
| jariel wrote:
| "Can someone help me understand Robinhood's POV? This just
| seems so outrageous"
|
| You are a mall owner and 25 000 people are stampeding through
| your mall causing a ruckus which will in the end create no
| value for anyone.
|
| This is speculative mania with no basis in any kind of market
| reality, people are actively acting against the best interests
| of the participants, especially the companies themselves.
|
| The lack of understanding here is what is 'shocking'.
|
| BlackBerry, Robin Hood, Citadel, NASDAQ - nobody wants to be
| part of this.
|
| It's ridiculous that people think they are somehow 'doing good'
| or even have some kind of inalienable right to own shares in a
| company on whatever terms.
|
| This is a 'market riot' nobody wants to be involved but the
| rioters.
|
| CFOs are all very nervous right now and I wouldn't doubt if
| some of the target companies have asked for protection.
| nrmitchi wrote:
| I'm just guessing here, but another thought is that since
| Robinhood _apparently_ want to IPO in the near-mid term future,
| they would rather take the "bad press" now, than take it in a
| month when it's "Gambling allowed on Robinhood ruins lives as
| Robinhood makes record profit"
| totalZero wrote:
| To some degree, they have a legal responsibility due to the
| "suitability standard" (link below) to do this. While they
| aren't recommending GME and the others per se, they certainly
| profit from the order flow as well as new account sign-ups.
| People may be making money now, but those who lose their shirts
| -- especially if the RH platform crashes when they try to exit
| a position -- are going to be angry. Preventing purchases in
| the first place is a way to keep those people from litigating,
| and to demonstrate to regulators that RH didn't attempt to
| profit from a mad dash toward unsuitable investments.
|
| https://www.finra.org/rules-guidance/rulebooks/finra-rules/2...
|
| Their platform is probably inundated with open orders on these
| few names, as the price is all over the place. They had outages
| back in March 2020 and presumably there's a risk of the same if
| everyone tries to close their positions at the same time (eg,
| if u/deepf**ingvalue announces that he has exited).
| optimiz3 wrote:
| Disgusting level of manipulation. If you can only close
| positions the only people who can buy are short sellers closing
| their positions.
| cryptonym wrote:
| "The Robin Hood effect is an economic occurrence where income
| is redistributed so that economic inequality is reduced. The
| effect is named after Robin Hood, said to have stolen from the
| rich to give to the poor."
|
| So I think in Robinhood's POV, hedge funds are the poor.
| tim333 wrote:
| From Schawb
|
| "It is not uncommon for us to place restrictions on some
| transactions in certain securities in the interest of helping
| mitigate risk for our clients,"
|
| from Massachusetts secretary of the commonwealth
|
| "It is very clear to anyone looking at the numbers that the
| whole marketplace is being manipulated here," he said.
|
| I imagine Robinhood's thinking is similar
| risyachka wrote:
| >> helping mitigate risk for our clients
|
| It's cute when they phrase it like that, though everyone
| understands that it should be "chosen clients that make us
| most money"
| sschueller wrote:
| But trading Tesla is OK? Oh wait that's a darling of WS, so
| it's OK. /s
| castlecrasher2 wrote:
| In this case, the "restrictions" seem clearly aimed at retail
| investors, and intended to help those with short positions.
| CivBase wrote:
| > "It is very clear to anyone looking at the numbers that the
| whole marketplace is being manipulated here"
|
| I don't get this.
|
| I didn't know anything about short selling a few days ago and
| maybe now is a bad time to learn... but my understanding is
| that short selling is only legal because it disincentivizes
| bubbles caused by artificial overestimation of a company.
| Investors took it too far and short sold over 100% of the
| stocks in a company, ironically creating ideal conditions for
| a bubble. As soon as GameStop's stock turned upward, the
| rampant short selling resulted in a demand for more than 100%
| the supply of GameStop's stock, resulting in a meteoric rise
| in price.
|
| But how is this market manipulation? The rise in stock price
| has nothing to do with an artificial overestimation of
| GameStop's value. It's just fundamental supply and demand. If
| anything, the short sellers are the ones who manipulated the
| market when they started shorting over 100% of the stock
| supply.
|
| Like I said, I'm a complete noob when it comes to the stock
| market. Maybe I'm misunderstanding something?
| cbozeman wrote:
| No. You aren't misunderstanding anything. That's exactly
| what happened.
|
| The "problem" here, is that the little guys noticed.
| Michael Burry and some unknown YouTuber saw this over a
| year ago and started buying GameStop, and making a case for
| people to buy GameStop.
|
| This is very easy to understand. The wrong people are
| losing money. And that can't be allowed. That's all you
| need to know for this to make sense.
| Traster wrote:
| I'm not an expert but it seems to me that this whole 100%
| thing is a total red herring. If I (A) have 50 shares in
| GME, I let you (B) borrow them and short sell them to
| person (C), person (C) now owns them, you (B) can borrow
| them from person (C) and short sell them to person (D).
| Suddenly you've short sold the same stock twice.The only
| issue for you is that you now need to buy back 100 stock to
| pay off what you've borrowed, which you could do buying the
| stock from person (D), giving it back to person (C), buying
| them frmo person (C) and giving it back to person (A).
|
| The only issue comes if someone notices that you've done
| this, pushes the price up to the point where you have to
| exit your position because your broker won't let you hold
| this short position that you can't afford to pay for. At
| that point you _must_ exit, which drives the price up even
| further because you 're creating demand for the stock.
|
| What's important to notice about this is that the second
| you're no longer short the stock, _no one_ has any
| incentive to hold the stock. So it 'll return to $20 and
| all those super smart boys on WSB who were holding out for
| $2000 have thousands of shares of a worthless retail stock
| that they probably bought on margin and are going to lose
| everything.
| spiznnx wrote:
| Yes. When the dust settles there are still 70M almost
| worthless original shares that will be held by someone.
|
| But in the meantime, there are 70M short shares that need
| to be rebought from the 140M original+loaned shares. The
| idea is that forcing closing out the short position will
| allow you to sell some at sky high prices, hopefully
| enough to cover the loss from the rest of the shares that
| must be inevitably bagheld.
|
| 100% of float or 100% of outstanding are not super
| significant inflection points, just very large ratios.
| bluGill wrote:
| Not necessarily. Those shorts exist for a reason: someone
| thought that gamestop was a bad company. If they are
| right then the short position won't need to be bought
| back because at some point the bankruptcy court will
| decide that the share holders get nothing. At this point
| all trades on the stock are legally halted and so the
| IOUs are legally meaningless - anyone who owned stock
| gets nothing.
|
| Of course the above depends on the short holders to: be
| right; have the capital to not have to cover their
| shorts; and be willing to hold on for the ride. I'm not
| making bets on any of the above.
| Macha wrote:
| Hi everyone, thank you for joining our Gamestop company
| all hands, I'd like to introduce our new CEO and majority
| shareholder, soon-to-be bankrupt guy from reddit.
| cm2187 wrote:
| People conspiring to push prices in one direction is a
| clear cut market manipulation and I believe a criminal
| offence in most jurisdictions.
|
| It's fine to have lots of people buying something, but if
| they discuss how they can coordinate to hurt short sellers
| or something like that, particularly on a public forum,
| despite not being a lawyer I am fairly confident this is
| prosecutable.
|
| Market trading regulations are full of fine lines where the
| wrong side can land you in jail. For instance the
| difference between front-running and pre-hedging /
| anticipating market liquidity is basically the intent and
| the information the trader has. The actions are
| indistinguishable.
| dahdum wrote:
| I think you're entirely right, but Citadel is the customer
| Robinhood is protecting. The retail investors are the
| product.
| MrMan wrote:
| Yes its why Robin hood is "free" but people are ignoring
| that maybe
| cromka wrote:
| Apparently Citadel is in bed with Schwab/Ameritrade, too, who
| also halted trading:
|
| "The Verge meanwhile noted one hedge fund suffering amid the
| GameStop surge was Melvin Capital Management, which another
| hedge fund, Citadel, has since bailed out. Citadel's founder
| is Ken Griffin, who also founded Citadel Securities, a big
| investor in Robinhood that also works with TD Ameritrade and
| Charles Schwab."
|
| I suspect they sell them the trading data just like Robinhood
| does, to help them front-running the retail traders.
|
| https://theweek.com/speedreads/963627/robinhood-halts-
| tradin...
| fallingknife wrote:
| And they were probably informed in advance that Robinhood
| was about to limit trading so they could short the stock at
| the exact right time.
| secondcoming wrote:
| They can halt trading of the stock all they want. All
| exchanges do [0]
|
| But the crazy part is that they only halted one side of the
| trade... the buy orders. _That_ is manipulation.
|
| Personally, this cost me PS1k on Nokia. I went from +PS700 to
| -PS1000 over the course of about 30 mins, because the market
| was pulled from under me.
|
| [0] https://www.nyse.com/trade-halt-current
| themaninthedark wrote:
| Exchanges halt trading, is Robinhood an exchange?
|
| >But the crazy part is that they only halted one side of
| the trade... the buy orders. That is manipulation.
|
| Exactly, I mean you could make the argument to stop
| selling: "The current price is being manipulated and is too
| high so we stopped our customers from selling if they
| mistime the market. We will resume selling when prices
| return to normal."
|
| Edit to add from /wsb:"If you try to sell you will get
| fucked because who are you going to sell it to if nobody
| can buy it?"
|
| I hope there is some meaningful action by the SEC. It would
| be interesting to have all the trades reversed to the point
| when buying was stopped.
| Symmetry wrote:
| >Why should Robinhood pick a winner (siding against their own
| customers)?
|
| If you consume a free product you aren't the customer, the
| person who pays the provider money is.
| Beefin wrote:
| It's one of the things:
|
| 1. SEC is protecting the little guy and being paternalistic
|
| 2. Institutional collusion
|
| However, 1. could be likely because this GME frenzy is reducing
| confidence in the overall market. S&P500 lost 100 pts this
| week. By stifling buys, they
| esoterica wrote:
| > Why should Robinhood pick a winner (siding against their own
| customers)?
|
| They're not siding against their customers. The median
| Robinhood trader that buys in at $350 is going to be left
| holding the bag when the price drops back down to $10. You can
| argue whether or not the paternalism is good or bad, but this
| is obviously going to on net stop more people from losing money
| than making money.
| LatteLazy wrote:
| I think it's BS to stop people trading but...
|
| You can make a good argument that WSB are engaged in market
| manipulation. RobinHood don't want to be the broker for that
| for a whole myriad of reasons.
| jaxwerk wrote:
| I would love to see a good argument there, because while that
| argument is easy to accept at face value, when I dig deeper
| at the concept of what market manipulation is, I fail to find
| behavior that the majority of WSB is engaging in that fits
| that criteria.
|
| Where are the fraudulent statements causing price pumps? None
| of the prominent due diligence the community has provided
| that started this run has been found to be untrue. Their
| thesis still stands: GME was undervalued and shorts were
| vulnerable to a squeeze.
| LatteLazy wrote:
| I've no idea if it meets the legal definition of price
| manipulation (we'd have to review the finra records which
| aren't public). And even then, it might not be the SEC etcs
| opinion that they want this fight.
|
| That said, WSB have been really clear that they're
| cornering the market to drive up the price. The fact
| they've done it by coordinating 1001 little retail accounts
| makes no difference. Short squeezes are always pretty
| dodgy. This one is openly a conspiracy to move a market.
|
| Shorters got themselves in a dumb position. It seems to me
| someone is rigging the market to get them out of it. But
| that doesn't change the core action here: let's conspire to
| corner the market and force an artificially high price.
| svcrunch wrote:
| > But that doesn't change the core action here: let's
| conspire to corner the market and force an artificially
| high price.
|
| First, I recommend you look up the meaning of conspiracy
| in the dictionary: "a secret plan by a group to do
| something unlawful or harmful."
|
| Tell me, where was the secret plan? Everything on WSB
| happened in the open, in plain view of millions of
| people.
|
| Second, the market is not even what's cornered here. It's
| the hedge fund owners who shorted gamestop (fully
| understanding the risks this entailed), who are cornered.
| They are the ones who are driving the price up as they
| try to cover their short positions.
| LatteLazy wrote:
| >Conspiracy has been defined in the United States as an
| agreement of two or more people to commit a crime, or to
| accomplish a legal end through illegal actions. A
| conspiracy does not need to have been planned in secret
| to meet the definition of the crime.
|
| https://en.wikipedia.org/wiki/Conspiracy_(criminal)#Unite
| d_S...
|
| One of the dodgiest things in English Common law is the
| low low bar for conspiracy (see also Joint Venture).
|
| I think we actually agree about the cornering part don't
| we? I say the shares are cornered, you say the hedge
| funds but it amounts to the same thing. I definitely
| agree the hedge funds are looking fucked and deservedly
| so.
| node01 wrote:
| Could either be govt/NASDAQ forced something or a major
| investor/VC in Robinhood is putting the pressure because they
| have other investments or vested interests in the hedge funds
| getting hurt.
| blablabla123 wrote:
| To be honest I ignored the whole topic until today.
|
| But in my opinion the rationale is obvious: you buy a stock,
| that means you provide that company with liquidity that they
| can use to operate and grow their business. I guess especially
| in the startup scene VCs and investors are in high regard since
| they believe in the future value and perhaps also the product
| of a company.
|
| Example: imagine I'm a hedge fund and put so much money into
| company x that the stock moves up. The company probably thinks
| I gonna fund their business for a few years (remember, stocks
| are long-term investments). Stock rises, they do a few risky
| choices. Suddenly I pull back my money. That would suck.
|
| I think options and futures have reasonable functions,
| especially to stabilize investments and raw material purchase.
| But speculation can easily get unreasonable, you basically
| speculate with the liquidity/credit of other companies that
| actually care what they do. The irony is that futures have been
| invented to stabilize food production, I think since almost
| 1000 years. But probably you don't want a large hedge fund play
| with this stuff.
|
| Also to put on another perspective. People are crazy about
| fairness on markets, even the super free US market has strict
| cartel laws. On the other hand large funds like Blackrock are
| so large, they have government-like powers. They even have the
| power to decide whether companies should stay or steer away
| from coal energy. That's even worse than a monopoly.
|
| https://www.spglobal.com/marketintelligence/en/news-insights...
| anonu wrote:
| What's played out over the last week has been an epic battle
| between David and Goliath. Goliath is winning... per usual.
|
| Translation: big business interests and wall street hedge funds
| win out. Of course, lots of retail guys and gals and r/wsb
| folks are losing their shirts today. It would have been next
| week if it didnt happen today.
| aphextron wrote:
| >Why should Robinhood pick a winner (siding against their own
| customers)?
|
| Robinhood operates a lot like Facebook. The "Gold"
| subscriptions and margin interest are tiny portions of their
| actual revenue. We are not their customers, we are the product.
| They offer free trades in exchange for selling order flow data
| to hedge funds, which in turns allows them to manipulate the
| markets. Of course they would protect their actual customers.
| variaga wrote:
| This is the correct take.
|
| If you thought free brokerage accounts with no-fee
| transactions was too good to be true... you were right! There
| was a catch, and this is it.
| hehehaha wrote:
| When markets move rapidly, and in GME's case we are T-1 from
| opex, brokerages cannot manage risks effectively. They could
| actually be exposed quite a bit. With something like GME
| (probably an 8 sigma event) it could actually put Robinhood out
| of business.
| socialist_coder wrote:
| It seems to me it's because "market makers" are a thing.
| Market making activities create billions in profits. But we
| are seeing the flaw in the market making algorithms.
|
| Do we _need_ market makers to let us always take a position
| in every single option when no real market for that option
| exists? I would argue no. It 's completely artificial and
| they profit from it. If companies want to be market makers
| and profit from every single transaction, they need to be
| prepared to take a loss when the math doesn't swing their
| way.
| hehehaha wrote:
| MM is different from RH. RH would actually need to get
| collateral (or raise money) to allow its customers to trade
| GME at this volatility. I really think the anger should be
| directed at Wall Street and the Fed for creating a frothy
| investment environment and not doing anything about it. RH
| OTOH is trying to be a disruptive player.
| cactus2093 wrote:
| One possible legitimate reason is the risk to Robinhood
| themselves. They allow margin trading and I think anybody would
| agree that buying GME at these crazy prices on margin is
| incredibly risky. If the traders can't pay, Robinhood or their
| bank/insurers are on the hook. Also even though the narrative
| here is Robinhood traders vs hedge funds, surely there are also
| a lot of shorts on Robinhood too, so there's more margin risk
| from those too.
|
| However why not just disable margin trading on these stocks
| instead of shutting them off altogether? I don't really know
| enough to say. Maybe there are additional risks somewhere
| unrelated to margins? Or maybe the upstream market makers are
| forcing their hand. Or maybe it's some combination of reasons,
| including pressure from people who are on the losing sides of
| these bets.
|
| > Why should Robinhood pick a winner (siding against their own
| customers)
|
| As others have often pointed out, Robinhood is in some ways
| analagous to social media companies. Their end users are not
| their customers, because it's a free service. The customers are
| the businesses on the other end, in Robinhood's case the market
| makers who are paying for the right to front-run trades. If
| this is no longer profitable for them due to crazy volatility,
| they can apparently stop allowing trades at any time.
| lottin wrote:
| > However why not just disable margin trading on these stocks
| instead of shutting them off altogether?
|
| Yes... or simply increase the margin.
| cactus2093 wrote:
| Well I think we're in such uncharted territory here that it
| would be difficult to trust any risk model, so just
| increasing the margin may be hard to get right.
| andrewmunsell wrote:
| > Or maybe the upstream market makers are forcing their hand.
|
| I'm not a lawyer, but to me, that seems like it would be very
| very illegal.
| cactus2093 wrote:
| I agree, with how much regulation is there is in every
| other aspect of the markets, I am surprised there is not
| more explicit process around just shutting off trades they
| don't like.
| backzerman wrote:
| > The customers are the businesses on the other end, in
| Robinhood's case the market makers who are paying for the
| right to front-run trades.
|
| Front-running is super illegal. You're referring to payment
| for order flow (PFOF), in which a sell-side party like
| Citadel pays Robinhood for the right to route your order to
| the exchange. But there's a catch: Citadel is allowed to take
| the other side of your trade without routing it to an
| exchange, but it legally has to match the exchange price or
| cut you a discount. If Citadel can't do either, your order
| MUST be routed to an exchange.
|
| PFOF makes up a somewhat negligible source of revenue for no-
| fee/discount brokerages. The bulk of revenue comes from a
| much more mundane source: interest rate spreads. Earn X%
| interest on customer cash deposits while providing customers
| less than X% interest on their deposits.
|
| If your order isn't making its way to an exchange, PFOF isn't
| your problem, and you shouldn't be day trading. Your real
| problem is that the professionals think you over-bid/under-
| asked to such an extent that they're willing to cut you a
| deal just to take the other side of your trade. Unless you're
| a professional options trader, betting against professional
| market makers will cost you a lot more money than the
| imaginary transaction costs would have.
|
| (This is just a summary of an old HN favorite:
| https://www.kalzumeus.com/2019/6/26/how-brokerages-make-
| mone...)
| jb775 wrote:
| Serious question: Since RobinHood is a private company, does
| the "if you don't like it, you can build your own platform"
| argument apply here? Or does that only apply selectively when
| it benefits partisan politics?
|
| This is the natural evolution when censorship as we've recently
| seen is given a pass.
| southeastern wrote:
| Censoring speech and regulating stock trading are
| categorically different. This doesn't cut across political
| lines as much as it does lines of class
| diveanon wrote:
| Because RH's real customers are the hedge funds that buy their
| trading data.
|
| It's users are the product.
|
| I'm sure this started with a call from a "concerned" board
| member.
| snowwrestler wrote:
| The way to make money in a bubble like this is to sell right
| before the pop.
|
| At some point the word will go out that it's over--"we won"--
| and everyone will rush to sell their GME and take profits.
|
| It's not possible for all those people to succeed. Broker apps
| like Robinhood will be absolutely overwhelmed with sell orders,
| many of which will run into technical problems and/or no
| counter parties. A lot of people are going to be pissed off and
| blame the brokers.
|
| People buying in late will have the most to lose and maybe the
| least understanding of what is going on. I mean, this story was
| a "breaking news" red banner on WashingtonPost.com yesterday.
| Not everyone buying GME today understands the social movement
| /r/wsb angle.
|
| Ultimately brokers are worried about getting sued by people or
| companies who lose a lot of money in ways that will look
| preventable in hindsight.
|
| Edit to add: the 2008 financial crisis was caused by financial
| firms selling a lot of crazy mortgages to people who could not
| afford them unless housing prices went up forever. When the
| crisis hit, the firms got the blame, not their customers.
| Companies learned that helping their customers shoot themselves
| in the foot can come back to bite them, even if it was all
| legal and what customers wanted at the time.
| mthoms wrote:
| >When the crisis hit, the firms got the blame, not their
| customers. Companies learned that helping their customers
| shoot themselves in the foot can come back to bite them, even
| if it was all legal and what customers wanted at the time.
|
| Maybe it wasn't intended, but this comes across as
| particularly harsh victim-blaming.
|
| Yes, the firms got some blame (and a bailout), the customers
| _lost their homes_.
|
| Edit: I now see the retraction/clarification you just posted
| to another commenter. Cheers.
| lordnacho wrote:
| > Broker apps like Robinhood will be absolutely overwhelmed
| with sell orders
|
| Shouldn't be possible. Most of the messages to the orderbook,
| by orders of magnitude, would be market makers doing
| add/cancel, which isn't something that comes from RH anyways.
|
| How often is one particular user going to send in an order?
| 10 times a day if they're particularly busy? Doesn't touch
| the sides. The internet facing gateways can be scaled up
| easily if that's even needed, they aren't latency sensitive.
| The inside towards the exchange can be made extremely fast.
|
| I've built systems that do this.
| JW_00000 wrote:
| Robinhood experienced several outages in March 2020 because
| of large volumes of trading.
|
| [1] https://www.cnbc.com/2020/03/09/robinhood-app-down-
| again-dur...
| dillondoyle wrote:
| I'm on schwab. I had a hard time executing my sell. Luckily
| got it around $450 haha. But only 1 share for fun. I think
| I had to try like 8 times for it to go through. I also had
| a hard ish time canceling pre-market limit orders.
| treis wrote:
| A system could be built to handle this. Robinhood's likely
| hasn't been considering the notable outages they've had.
| Loughla wrote:
| >Companies learned that helping their customers shoot
| themselves in the foot can come back to bite them, even if it
| was all legal and what customers wanted at the time.
|
| What a dismissive, awful, terrible way to phrase this.
|
| Having parents that were nearly the victims of one of those
| upside down mortgages, it's not that simple. They didn't ask
| for a 400k mortgage. They asked for a home they could afford.
| When the bank, that they have trusted their entire life,
| says, 'you can afford this much per month', they had no
| reason to question that.
|
| They're unsophisticated people, who trusted the system not to
| fuck them. And that's precisely what it tried to do.
|
| While I get that people need to take control of their own
| money, when the people _responsible for looking after your
| money, the actual, literal bank_ tells you you 're good, why
| wouldn't you believe them?
| snowwrestler wrote:
| I understand you. Many of the people seeing news stories or
| social media posts today about buying GameStop are also
| unsophisticated. Brokers may be thinking it is in their
| self-interest to not just execute every buy order in an
| obviously inflated stock.
| prepend wrote:
| > when the people responsible for looking after your money,
| the actual, literal bank
|
| The bank doesn't have a fiduciary duty to mortgage
| customers.
|
| If someone wants someone responsible for looking after
| money and large purchases, they need a fiduciary financial
| advisor, not their bank.
|
| The fact that people think the bank is supposed to look
| after money is part of the problem. The bank is just a
| vault. Not only are they not responsible for helping
| someone pick a mortgage and house, they aren't even
| competent to do so.
|
| I can't imagine some retail bank even employing people who
| could competently assess individual debt/income ratios.
|
| The training is that individuals should have financial
| literacy enough to know what banks do and don't do well.
| And to recognize cross-marketing.
|
| I knew tons of people who made dumb decisions in the 00s
| and bought way too much house. The bank letting them was
| part of the problem. But people being stupid was a big part
| too. I knew families making $50k/year buying $400k houses
| and refinancing every six months for cash out to pay the
| mortgage. The bank shouldn't have done that. But people
| were really stupid to do this once much less multiple
| times.
| snowwrestler wrote:
| Loughla is right, it was reasonable for customers to
| trust their banks on scoping a mortgage. Not because of
| some technical fiduciary status, but because banks had a
| history of being conservative with mortgage underwriting,
| and because it would seem to be in the banks' best
| interest to be conservative with mortgage underwriting.
|
| But some banks thought they could lower their
| underwriting standards and get away with it because they
| could shift the risk to larger financial entities by
| selling the mortgages. And a lot of non-banks got in on
| the mortgage underwriting game for the same reason.
|
| And bank customers liked it. Who doesn't like to be told
| that you're in better financial shape than you thought?
| That should be good news.
|
| My point above was not to defend what banks did, but to
| point out that, even though banks were in the legal right
| to lower their underwriting standards, it did not work
| out well for them or their customers (or anyone else,
| really). And a lot of the downside came later, in the
| form of bad reputations, burdensome regulations, etc.
| prepend wrote:
| Most buyers didn't get mortgages from their retail bank,
| they got them through mortgage brokers.
|
| Maybe there were lots of hapless old people who were
| misled by some bank they mistakenly trusted for years.
|
| I don't think so, the many examples I personally knew
| from that period were getting loans from specialized
| banks that set up mortgage shops, like Washington Mutual.
|
| The book (and movie) The Big Short digs into this how
| regular people were overextending.
|
| To clarify, the banks were bad actors by offering and
| participating. But reasonable people were avoiding the
| situation until the whole system tipped over. Someone
| borrowing at 40% debt to income or higher should never
| have done that, even if they trusted their local banker
| who was saying it was fine. Finance requires personal
| responsibility and people need education to help make
| these decisions (and they shouldn't get this help from
| someone with a vested adversarial financial interest).
| esoterica wrote:
| If you agree that a bank should engage in paternalism and
| tell people what they can and cannot afford then why
| shouldn't Robinhood also engage in paternalism and tell
| people what stock they can or cannot buy?
| imtringued wrote:
| >People buying in late will have the most to lose and maybe
| the least understanding of what is going on. I mean, this
| story was a "breaking news" red banner on WashingtonPost.com
| yesterday. Not everyone buying GME today understands the
| social movement /r/wsb angle.
|
| Actually that is impossible. This is a short squeeze. If you
| forget to sell your share then the short sellers are fucked
| because they still have to buy yours.
| balls187 wrote:
| > When the crisis hit, the firms got the blame, not their
| customers. Companies learned that helping their customers
| shoot themselves in the foot can come back to bite them, even
| if it was all legal and what customers wanted at the time.
|
| That is a pretty gross oversimplification and completely
| dismisses the variety of "companies" that had a hand.
|
| Subprime lending was just the foundation, but it took
| investors to investors to buy those securities, and ratings
| agencies to assign favorable risk ratings to those
| securities.
| sparrc wrote:
| > caused by financial firms selling a lot of crazy mortgages
| to people who could not afford them unless housing prices
| went up forever. When the crisis hit, the firms got the
| blame, not their customers.
|
| This is not totally correct.
|
| 2008 was caused by banks giving out extremely risky mortgages
| (the banks knew they were risky mortgages) and then packaging
| them up into giant bundles and magically calling them AAA
| stable real estate investments and selling them forward to
| other banks/pensions/401ks.
|
| Banks are responsible for assessing the risk on a mortgage,
| not the customer.
| spookthesunset wrote:
| > Not everyone buying GME today understands the social
| movement /r/wsb angle.
|
| I mean read the top comments in the top WSB posts today. It
| ain't about sticking it to the man. It's about making money,
| fast.
| programmertote wrote:
| Agree. My cynical mind like to think that there are a lot
| more people there who just want to make a quick buck and
| maybe get rich quick. Those people, who most likely bought
| GME early on, are hyping up the "hold strong on GME" motto
| and they will silently leave the fools to hold the burden.
| Whether it's sticking it to the Wall Street or not
| (actually, it's only affecting maybe a handful of hedge
| funds on Wall Streets; the big guys on Wall Streets are
| probably making a lot of money from this "movement"), A LOT
| of average Joe's will lose money here as well.
| jen20 wrote:
| > many of which will run into technical problems
|
| If a broker has a technical problem processing a trade, they
| deserve to be blamed.
| snowwrestler wrote:
| Seeing a comment like this on HN shows the risk here. If
| people here don't understand the difficulty in scaling to
| meet huge spikes in demand, how are ordinary retail
| investors supposed to understand it?
|
| It's one thing to handle "a trade." It's another thing to
| handle everyone trying to trade at exactly the same second.
| We already saw broker apps have issues this week just on
| handling the buy volume. The sell volume will be far
| higher.
|
| And I mentioned counterparties too. Even if the technology
| works, you can't sell if everyone else is selling too.
| jen20 wrote:
| I spent many years building exactly this technology. It's
| hard, but it is (or should be) table stakes for the
| industry.
|
| The risk of not finding a counterparty to which to sell
| is different - and real - which is why I did not disagree
| with that aspect of your post.
| snowwrestler wrote:
| Multiple online brokers had outages this week and blamed
| volume. Whether or not it should be possible, it seems
| possible.
| themaninthedark wrote:
| Didn't Parlor just get shutdown because they did not
| moderate their user base comments fast enough?
|
| If we hold a social media company liable for not being
| able to scale fast enough shouldn't a company offering
| financial services be held to at least that level of
| standard?
| sgregnt wrote:
| It's not just Robinhood, I'm on Schwab and they blocked trading
| GME this morning (didn't try it but SELL might still be open)
| yumraj wrote:
| > (siding against their own customers)?
|
| You misunderstand who their customers are. Who you're calling
| customers are _users_. Their customers, the ones who pay them,
| are the dark pools and other trade routers, or whatever they
| are called, who pay RH for routing trades thorough them.
| [deleted]
| m3kw9 wrote:
| This prevents over leveraged YOLOs to go bankrupt, which
| prevents RH to hold their bags
| okprod wrote:
| Rh wants to go public and relies on Citadel. Both major reasons
| why Rh does the larger funds' bidding. Rh's trading for the
| people angle is a bunch of BS
| vmception wrote:
| Robinhood's actual customer is Citadel. Citadel was funding the
| short sells, investing directly into Melvin Capital, for
| example.
|
| Robinhood did not act against its customers. Its users are
| their product, which it sells to Citadel. As you see now, this
| is way more than an edgy quip: when its free you are the
| product.
| tomjakubowski wrote:
| Which is invested in Melvin, Citadel (the hedge fund) or
| Citadel Securities (the market maker, and Robinhood's
| customer)?
| GizmoSwan wrote:
| I just want to know how do you know for sure what those guys
| have been doing. Have they exposed all their trades? Are you
| saying that they were so stupid to not have hedged it?!
|
| This is a hedge fund's game as it is for WSB.
|
| It is the regular traders that have shorted via option that
| are losing money just the same. They are the most likely bag
| holders because they they don't hedge.
|
| Don't assume all parties are truthful.
| mgolawala wrote:
| I am not an expert on this.. but here is a theory. Broker's are
| incentivized to have the short squeeze stop.
|
| Someone please correct me if I am (or how I am) wrong with the
| following:
|
| Bob is a broker.
|
| Jack comes along buys 100 shares of X.
|
| Bob lends those 100 shares of X to Amy to sell short.
|
| Amy sells it short. Price shoots up.. Amy says "oh crap.. Sorry
| bill. Simply cannot buy back those shares. I am bankrupt. I
| physically do not have the money to do so.
|
| Jack will still expect Bob the broker to make sure his 100
| shares of X are there one way or the other.
|
| Bob the broker has to buy back those shares it lent out to Amy
| so that Jack the account holder is still able to sell/trade
| their shares.
| ummonk wrote:
| Their customers aren't their users - it's the institutions
| paying them for order flow.
| neximo64 wrote:
| Well probably to stop people buying at $500. If at any point it
| crashes to $100 it's going to make people more upset.
| beachwood23 wrote:
| I don't think this was Robinhood's choice.
|
| Robinhood doesn't actually execute any trades. They sell user's
| trade orders to Citadel, a trade executor. Citadel then buys
| the shares on the market, and sells them to Robinhood for a
| slight markup. It's how Robinhood offers trades for $0 fees.
| You pay pennies more per share, but don't have to spend $5 per
| trade.
|
| Citadel, and other trade executors, are refusing to buy shares
| for retail traders. Coincidentally, Citadel also bailed out
| Melvin fund for their short position in GME. So, Citadel has an
| interest in not letting the price go up any further. And
| citadel controls trade execution for dozens of firms.
|
| This is definitely illegal. But Citadel is betting that the
| resulting SEC fines from this illegal manipulation will be less
| than the loss they would get if they didn't suppress the price.
| throwawaylolx wrote:
| >Citadel, and other trade executors, are refusing to buy
| shares for retail traders.
|
| Any evidence on this? RH said the opposite:
|
| >To be clear, this was a risk-management decision, and was
| not made on the direction of the market makers we route to.
| We're beginning to open up trading for some of these
| securities in a responsible manner.
| centimeter wrote:
| > You pay pennies more per share
|
| To clarify: you will never pay more than market price (i.e.
| you will never have to pay more than the best order sitting
| on the book). Citadel or whoever will only internalize your
| order if they're willing to offer you a _better_ price than
| market price. Otherwise RH is obligated to match your order
| with the best price currently available.
|
| They are willing to do this because they would prefer not to
| leave orders sitting on the books, and there's a fee for
| taking orders off the books which they would prefer not to
| pay.
| cameldrv wrote:
| This is theoretically true, but there have been numerous
| SEC enforcement actions based on this not happening.
| onlyrealcuzzo wrote:
| > This is definitely illegal. But Citadel is betting that the
| resulting SEC fines from this illegal manipulation will be
| less than the loss they would get if they didn't suppress the
| price.
|
| It's not really a bet when they're 50% certain they can get
| away with no fine, 99% certain the SEC fine will be < 10% of
| the profit, and 100% certain the fine won't be > 100% of the
| profit.
| sitzkrieg wrote:
| in futures, your refusing to execute an order for risk
| management is not illegal. as well as slamming you out of
| stupid positions. i can only hope equities execution houses
| are as coherent
| heimatau wrote:
| Rumor mill says that the White House and Sequoia called RH to
| force their hand. Honestly, I wouldn't expect anything less.
| I say this because 2% drawdown of the stock market didn't
| happen for zero reason. It happened because these fools are
| leveraged up to their ass (metaphor) and the bet cost them
| severely. And it's cheaper to take the bad PR while salvaging
| your fuck up. These people act in a different set of rules
| and that's not okay.
|
| IMHO, I'm concerned about this because this is a 1st
| amendment problem. Let grown adults gamble. Let them be
| responsible for their dumb actions (hedge and retail alike).
| If someone is 'too big to fail' then they are 'too big to
| exist'.
| redisman wrote:
| The White House? This"rumor" doesn't make any sense
| aneemzic wrote:
| > I'm concerned about this because this is a 1st amendment
| problem. Let grown adults gamble.
|
| Gambling isn't even legal in most states. Good luck arguing
| that.
| heimatau wrote:
| > Gambling isn't even legal in most states. Good luck
| arguing that.
|
| What States are you not allowed to short or long? Using
| your logic, this is cognitive dissonance. How free people
| spend their money is an act of speech, PACs and SuperPACs
| are emboldened by this current legal fact.
| aneemzic wrote:
| No, you specifically said it's a first amendment problem
| and to let adults gamble. If it was a first amendment
| problem, gambling wouldn't be illegal in most states.
| heimatau wrote:
| > No, you specifically said it's a first amendment
| problem and to let adults gamble. If it was a first
| amendment problem, gambling wouldn't be illegal in most
| states.
|
| Maybe you need explicit help to understand my position.
| If hedge funds can short/long stocks, there should be
| nothing preventing a retail investor from doing the same.
|
| As for it being speech, well, corporations are people and
| PAC/SuperPAC political donations (read: blackbox
| donations) are speech. These are current USA facts.
|
| From there, I extrapolate that it would be unfair to
| regulate Main Street instead of Wall Street. This
| wouldn't be such a massive problem if Wall Street wasn't
| allowed so much leverage (and short 140% of the company
| shares...how is that even legal. That's literally fraud).
| I can't sell you 100% of my property and then sell 40% to
| someone else.
|
| It's that simple, stop obstructing discourse.
| michaelmior wrote:
| If that is the case, then it leads one to wonder why Robin
| Hood wouldn't come out and say so to avoid all the blowback
| they're getting. I suppose the obvious answer is that they
| don't want to burn bridges with Citadel.
| ivalm wrote:
| > Citadel then buys the shares on the market, and sells them
| to Robinhood for a slight markup
|
| This would be front running and is fundamentally not how
| citadel or other MM function.
| huhnmonster wrote:
| I guess I understand where you are coming from, but they
| way I understand it is that RH submits a bulk order for a
| stock and gets a quote from the MM, which the MM thinks is
| appropriate. The MM then adjusts its own portfolio
| accordingly, buying/selling the underlying stock at its own
| pace.
|
| So, more or less as described, but the order is a little
| different, right?
| ivalm wrote:
| Market makers fulfill a bunch of orders, they then have
| until end of day to get into a delta neutral position.
| They prefer to trade against retail traders because
| retail traders are typically uncorrelated, which means
| that vast majority of trades cancel out (but MM still
| collects the bid-ask spread on the trades!). When you
| make markets for counter-parties that include big
| institution there is always a risk that the "small"
| trades you're fulfilling will be very correlated (because
| a big institution is actually breaking-up and feeding you
| a big trade). This is called adverse selection and will
| force MM to start buying to get to a neutral position
| (which means that the bid-ask spread they are collecting
| will have to be paid to some other seller).
|
| What Citadel and others are doing is they are saying to
| RH "your order flow is uncorrelated and we'd like to make
| markets for it, we will charge your users slightly lower
| bid-ask spread (price improvement for user) and we will
| also give you a slice of the bid-ask spread we do
| collect, in return the uncorrelated nature of the orders
| will ensure that we won't have to do much trades in order
| to maintain a neutral position."
|
| This proposition is actually good for
|
| 1. RH users (they get price improvement relative to NBBO)
|
| 2. RH (they get to make money and get a user base)
|
| 3. Participating market makers (they get much steadier
| cash flow from MM activity).
|
| It is bad for
|
| 1. Big institutions, they get to pay larger spread than
| they would if the market was more diluted by retails
|
| 2. Non-participating MM (they increase the bid-ask spread
| to make sure it's still worth their time but there is
| more volatility and it's a competitive market so mis-
| pricing the spread is a real problem).
|
| Also, current GME shenanigans are net good for MM since
| MM is a business that makes money on volume, not
| direction.
| foobarbazetc wrote:
| Citadel != Citadel Securities.
|
| Most clearing firms aren't clearing GME or AMC anymore. It's
| not just RH.
| Karunamon wrote:
| Same owners at the end of the day.
| timack wrote:
| "Coincidentally"
| matttb wrote:
| > I don't think this was Robinhood's choice.
|
| They sure made it sound like it was their choice.
| https://blog.robinhood.com/news/2021/1/28/keeping-
| customers-...
| jansan wrote:
| Not sure if this is fake, but it would be huge if true.
| This personclaims to be an employee at RobinHood and says
| they got an order directly from the while house.
|
| https://www.reddit.com/r/ClassActionRobinHood/comments/l723
| k...
| tornato7 wrote:
| Exactly, while WeBull firmly pointed the finger at their
| market makers, Robinhood is treating it's customers like
| children and telling us they're banning trades for our own
| good while secretly collaborating with Wall Street in the
| background. They are a disgrace to the name "Robinhood."
| kosh2 wrote:
| Tastytrade wrote very clearly that it was Apex Clearing
| that forced their hand.
| dehrmann wrote:
| Can most brokers route trades directly through the market or
| use another market maker if something like this happens?
|
| I assumed Citadel would actually be cleaning up market making
| GME with all the trading and volatility, but maybe the trades
| are too coordinated. What they're paying for is order flow
| from unsophisticated investors; they don't want to deal with
| hedge funds and the games they play. Maybe these trades are
| close enough to something a hedge fund would do, so the
| orders aren't worth it?
| whimsicalism wrote:
| > directly through the market
|
| There is nothing but the market makers.
|
| > I assumed Citadel would actually be cleaning up market
| making GME with all the trading and volatility, but maybe
| the trades are too coordinated
|
| I suspect they are still making bank. The demand for
| liquidity has increased, so there is a higher premium on
| liquidity provision.
| thanksgiving wrote:
| > This is definitely illegal.
|
| I think there must be laws that say the CEO and the board
| must get prison terms (preferably life, with no possibility
| of parole) for these crimes.
|
| No, I will not listen to hogwash like "you shouldn't be
| responsible for the actions of people you hire". BS. They
| report to you. Even if they did it on their own, why didn't
| you reverse it? If you are not responsible for the actions of
| your employees or contractors, don't hire them. Close down.
| See if I care.
| whimsicalism wrote:
| Why are Americans so crazy for absurdly long penal
| punishments?
| pxtail wrote:
| Apparently in America there are huge prisons owned by
| private companies, traded on stock market of course. With
| this scenario one can quite easily imagine that
| incarcerating more and more inmates for maximally long
| periods of time could be something that is wanted and
| desired.
| munk-a wrote:
| I think it's generally because most Americans would be
| looking at ridiculously long prison sentences for common
| actions if they got caught (like possession) and because
| the US's general view is that there isn't anything in the
| world that can't be cured by throwing more prison time at
| it.
| whimsicalism wrote:
| Really? Where in America are you looking at a
| "ridiculous" long prison sentence in 2020 for possession?
|
| The war on drugs sucked, but it was still mostly a war
| against dealers.
| lamontcg wrote:
| Not if you were black and used crack. And pretty much any
| prison for posession and use is rediculous, if its a
| problem for the user it is a mental health issue and
| prison is the wrong treatment. And of course the limits
| on what determines if you're a dealer is set low enough,
| and carrier laws meant that many users were getting
| prosecuted like dealers. And what defines a "dealer"
| since someone doing a group buy for three friends is
| significantly less socially problematic than someone
| trafficking drugs across the border.
| whimsicalism wrote:
| I of course agree. It is ridiculous. I also grew up in
| one of the cities that was the center of the so-called
| "crime epidemic." We've definitely improved on sentencing
| since 30 years ago.
|
| I just don't think it is accurate to say that people are
| getting super long sentences for possession anymore and I
| don't think it is right to use that as justification for
| longer sentences for other people.
| lamontcg wrote:
| Well #1: yes the are. #2: drug addiction is a mental
| health problem (and not all drug use is addiction) and
| any sentence for possession is too much.
| whimsicalism wrote:
| yes the are what?
|
| #2: I completely agree.
| lamontcg wrote:
| yes theY are [still getting super long sentences]
|
| three strikes laws still exist, it is still possible to
| push possession into felony territory. if there's a gun
| anywhere near the arrest you can probably tack on
| firearms charges, etc.
|
| if you're reasonably white and middle class those extras
| will be ignored for a lighter sentence. if you're black
| or for whatever other reason they just don't like you
| then they'll tack those extras on and three strikes you.
|
| there is a lot of "prosecutorial discretion" still, and
| if you dig into it hard enough that's a code word for
| racially biased prosecution. the fact that they we
| reasonable with you or your college buddies who got
| busted with some MDMA or something is not the same
| experience that lower income black people get.
| asveikau wrote:
| Afaik there is a recording of Nixon saying that they want
| to use drug penalties to go after black people and
| hippies. A lot of times those racially biased outcomes
| are the product of many unrelated parts of a big and
| complicated system, but in this case the top of executive
| government seemed pretty deliberate about this.
| whimsicalism wrote:
| There is no such recording. A reporter who interviewed an
| aide of Nixon for his autobiography claimed that that
| aide said that (but he only claimed so after the aide had
| died).
| asveikau wrote:
| I must have misremembered then. There are so many
| recordings of Nixon saying offensive things that I can't
| keep them all straight.
| munk-a wrote:
| There is indeed no such recording - but calling the
| official an "aide" is a bit inaccurate, the official in
| question was the domestic policy chief[1] - rather than a
| random secretary that claims to have overheard something.
|
| That all said, for all of the negative PR Nixon has
| received over the years he was a rather progressive and
| surprisingly egalitarian executive who has been praised
| by Indian Country Today[2] and appears to have stuck
| pretty close to his quaker upbringings. I think a lot of
| people conflate Nixon and Regan - which is pretty
| ridiculous when you look at the policies those two
| presidents actually pursued during their terms... And
| even more folks are getting second hand vibes from
| Nixon's infamous presidential debate[3] which pitted a
| rather uncharismatic man against JFK and led to a pretty
| obvious outcome.
|
| 1. https://www.vox.com/2016/3/22/11278760/war-on-drugs-
| racism-n...
|
| 2. https://indiancountrytoday.com/archive/barack-obama-
| and-rich...
|
| 3. https://www.youtube.com/watch?v=-9cdRpE4KKc Just FYI -
| if you've never seen this I'd suggest giving it a go
| sometime. Given recent politics it's almost fantastical
| to listen to two folks come into a debate focused on the
| issues and minimizing the ways they attacked each other.
| harry8 wrote:
| Boomers hated Nixon because he undermined the Vietnam
| peace process for personal political gain elongating the
| war that they then had to go to the trouble of dodging
| the draft (as long as they were rich enough).
|
| We can be as cynical as we like about boomers and then
| going on to be Reagan voters, it doesn't change Nixon and
| Kissenger's status as unprosecuted war criminals.
|
| I'm not overly familiar with Quaker orthodoxy, I'd be
| surprised if dropping bombs killing 500k Cambodians is
| consistent with it. Nixon wasn't _all_ bad because no
| human is, even he who must not be named was kind to
| (some) children, we 're told.
|
| Not all bad can still be utterly horrific.
| MisterBastahrd wrote:
| For financial crimes?
|
| Because nothing ever happens to the rich when all you do
| is take a bit of their money away. They have so much that
| they will get it back merely for being wealthy, and as we
| just saw with the recent pardons, they won't even serve
| their entire sentence even when they're stealing the life
| savings of hundreds.
| thatguy0900 wrote:
| What else can you do to a ceo? Fines mean nothing.
| teddyh wrote:
| > _Fines mean nothing._
|
| Fines can mean something, if scaled correctly:
|
| https://en.wikipedia.org/wiki/Day-fine
| whimsicalism wrote:
| A shorter jail sentence? Somehow I feel like there is
| perhaps a less harsh punishment than life in prison but
| perhaps worse than a fine.
| tartoran wrote:
| A jail sentence for such a well positioned white collar
| criminal is probably comparable to a retreat lodge. Such
| an institution certainly doesn't have prison bars and a
| fenced perimeter because it is low security and has a
| special privilege.
| whimsicalism wrote:
| So what - somehow somewhere someone will have the power
| to jail these white collar criminals for their entire
| life, but they don't have the power to make a 5 year jail
| sentence more uncomfortable?
|
| Your objection doesn't even make sense.
| thatguy0900 wrote:
| These people are leveraging everything in their power to
| fuck over millions to save themselves money. We put them
| away for 5 years and they still come out billionaires in
| the end, why wouldn't they do it?
| whimsicalism wrote:
| These people are already billionaires or large multi
| millionaires.
|
| If I had a billion dollars and could get 2 billion
| dollars but I'd go to jail for 5 years, I would
| absolutely NOT do that thing.
| Red_Leaves_Flyy wrote:
| Recommended listening while you read my rant: white trash
| anthem - blood for blood lyrics[0]
|
| https://youtu.be/ghybm4Y6C7w
|
| Here's my perspective.
|
| I spent my childhood around kids from broken families,
| most of whom had parents in prison on long sentences for
| nonviolent drug charges. I saw lots of my friends lose
| their houses in the 00s. I entered a job market that
| treats just about everyone as disposable; unworthy of
| training, investment, benefits, time off, bathroom
| breaks, ppe, or a livable wage.
|
| Wall sts focus on the short term has been like napalm on
| these issues and made fixing them political suicide. I
| don't say this lightly; wall st has enslaved America for
| profit.
|
| >The Top 1% of Americans Have Taken $50 Trillion From the
| Bottom 90% [1]
|
| The proletariat is showing their heads and nipping at the
| ankles of everyone. Some are misguided, but beating a
| hedge fund at their own game, trying to convince boomers
| that black lives matter enough to not be executed by
| police, or Medicare for All or forgiving student loan
| debt are all extremely well studied solutions to systemic
| issues in America that will not be meaningfully addressed
| until the root problems are addressed: money in politics,
| racism, trickle down economics, class inequality, asset
| inflation, health care, employee rights, war on drugs,
| etc, etc, etc.
|
| This specific incident was a fluke of luck that required
| ridiculously overpaid bros in cushy hedge fund jobs to
| count past 100% while shorting gme/nok/AMC which is
| playing with the lives and livelihood of the people that
| work in each of those companies. Needless to say, but
| watching billionaires repeat '08 with gamestop, amc, and
| Nokia ruffled a lot of feathers. Gme especially brought
| out some whales with money to burn in the chase of
| infinite gains.
|
| Maybe this was an elaborate psyop to manipulate people
| into doing things they wouldn't. If so, great job, if
| not, well maybe the fat cats on wall st and in Congress
| should come around my hood and experience the
| hopelessness for themselves, that's an open invitation
| for as long as this account is active for any
| billionaires or US politicians not already arguing
| against the same issues I am to come and walk in my
| shoes.
|
| Hopefully this incident spurs some change in wall st and
| the culture there. Congress certainly doesn't have the
| courage to.
|
| [0] http://www.darklyrics.com/lyrics/bloodforblood/outlaw
| anthems... [1] https://time.com/5888024/50-trillion-
| income-inequality-ameri...
| matthewrobertso wrote:
| Because nothing happened when wall street bankrupted the
| country by gambling and needed to be bailed out in 2008,
| and then paid themselves huge bonuses.
| Aunche wrote:
| Very few people actually got punished, but a lot changed
| since 2008. Executives were forced to step down. Several
| major players went bankrupt and many more lost 95%+ of
| their valuations. Anecdotally, I hear that companies are
| taking compliance much more seriously. HN would call the
| surveillance at banks today Orwellian if they were more
| knowledgable about it.
| llampx wrote:
| Where are you from that you don't have bloodlust for
| those that wronged you?
| srswtf123 wrote:
| I think, at this point, we'd be happy to see _any_ actual
| punishment doled out to the "upper classes". We know it
| will never happen, so we wish for absurd things.
| whimsicalism wrote:
| I'm just not really sure I understand the narratives being
| thrown around right now, and I'd like to think I understand
| the economy somewhat
|
| Melvin Capital closed out their short position yesterday with
| a large loss - and Citadel helped cover that loss.
|
| As far as I know, Citadel and Melvin Capital no longer are
| holding any short positions in Gamestop. So what do they have
| to gain, by your narrative, from suppressing the price?
|
| Citadel is probably making bank off of this actually, like a
| lot of other sell-side firms.
| qwerty12345678 wrote:
| BS they closed their shorts....they shifted them to shell
| companies or to complicit 3rd parties so they could claim
| they unloaded the shorts publicly.
| beachwood23 wrote:
| Yesterday, there was a 140% short position on Gamestop.
|
| Today, there is still a 122% short position on Gamestop.
| There are still many funds hedged against GME. Melvin might
| have had one of the larger positions, but there are many
| more funds with this position. Source:
| https://finviz.com/quote.ashx?t=GME
|
| As you say, they would make money by running the orders,
| regardless if GME goes up or down. So - why would they
| stop? It is most likely that Citadel is still exposed to
| other funds holding short positions in GME.
| whimsicalism wrote:
| > So - why would they stop?
|
| There is literally _no evidence_ that Citadel has stopped
| serving GME orders. That is entirely the conjecture of
| this thread and ignores the much more likelier option
| that it was Robinhood that limited the stocks.
|
| Why _wouldn 't_ you short GME after the price has risen
| so high? I'm sure there are plenty of hedge funds
| shorting _now_ at a much higher price.
|
| Hell, I shorted AMC yesterday and have made quite a bit
| off of that already.
| matthewrobertso wrote:
| >Why wouldn't you short GME after the price has risen so
| high?
|
| Because the stock is already over 100% short and an army
| of retail investors is purchasing it
| whimsicalism wrote:
| So? If you had shorted GME yesterday, you would make a
| bunch now that the price has collapsed.
| matthewrobertso wrote:
| What if the price goes up further? It's already rebounded
| 50% from the short ladder/blatant robinhood manipulation.
| Why put yourself on the hook for something during a black
| swan event?
| whimsicalism wrote:
| > Why put yourself on the hook for something during a
| black swan event?
|
| Because that is also often when it is a good time to make
| money.
|
| It's entirely unsurprising to me that short pressure on
| the stock would increase after this.
| silexia wrote:
| Lots of individual retail investors, including myself,
| take short positions on a regular basis. People keep
| saying that all the short positions are held by hedge
| funds, but in reality there's a lot of individual
| investors that have short positions too.
|
| The risk to a company that processes trades is that many
| of these retail investors accounts would turn negative
| and the company that processes the trades would take
| giant losses they did not plan for. To prevent that, they
| stop processing trades.
| tsdlts wrote:
| They didn't tell you how much of the position they closed
| out on. They can say "they closed their position" even if
| they only closed out on 1% of it.
| whimsicalism wrote:
| > They didn't tell you how much of the position they
| closed out on. They can say "they closed their position"
| even if they only closed out on 1% of it.
|
| There is no ambiguity in what "closing the position"
| means. Stating on CNBC that you have closed the position
| when in fact you only bought shares to cover 1% of your
| short would put you in jail.
|
| Your mental model for how the world works is wrong.
| stdgy wrote:
| Serious question: Has anyone ever been jailed for
| publicly saying they've closed a short position but not
| actually closing it all?
|
| Is it equally illegal to say on CNBC that you closed it
| out, but to email your investors and tell them you
| didn't?
|
| Is the legal issue that you're misleading your investors
| or that you're manipulating the market? Both?
| ziml77 wrote:
| The thing the SEC is going to take issue with is lying to
| investors. Investors have a right to know what's going on
| with their money.
|
| And despite how it seems from outside Wall Street, hedge
| funds are definitely scared of the SEC. Banks worry less
| because their money is sourced differently. Hedge funds
| have to worry about legal action not just for the fines
| but also for scaring their investors. When individual
| investors are so large it only takes a few redemptions to
| significantly impact AUM.
| totalZero wrote:
| Wait a second, I thought Plotkin said that he was "out of
| the stock" to CNBC's Sorkin on the phone, who then
| reported that hearsay on the air.
|
| I have no idea what Plotkin actually said, and I don't
| know if that means he replaced into options or some other
| non-stock structure.
|
| Rule One of Wall Street: Everybody lies.
|
| If there's any lawful means to make people think you have
| no more shares to buy, a guy in Plotkin's (perhaps
| erstwhile) position would certainly pursue it.
| deeeeplearning wrote:
| >Your mental model for how the world works is wrong.
|
| Is this a joke? Were you conscious in 2007-2008? Lol
| Avalaxy wrote:
| The same way that tweeting "funding secured" puts you in
| jail?
| whimsicalism wrote:
| Musk didn't even make any profit from that (he didn't
| sell) and he still was fined $20 million and had to give
| up his Tesla board chair.
| TuringNYC wrote:
| Recall that when that was said, it was being said by an
| executive and director of a _public_ company.
| tartoran wrote:
| How likely is it for them to close their position when
| the price hit so high? That would be a huge loss. Why not
| wait a bit, make a few desperate phone calls and leverage
| their power before that?
| whimsicalism wrote:
| Because of the expiration date of the short they sold and
| uncertainty over whether the price would continue to
| increase.
|
| If you have to buy by EOD Friday and the price starts
| skyrocketing Thursday, you might want to buy a little
| earlier even if it means eating a huge loss, because you
| don't know if that skyrocket will continue into the next
| day.
|
| e: Why is that downvoted?
| desertrider12 wrote:
| Shorts aren't options, they don't have expiration dates.
| You can hold a short indefinitely just by paying interest
| on the borrowed share value when you entered the
| position. You can even keep the short from being forcibly
| closed during a squeeze by providing more collateral.
|
| Put options do expire, but the worst case for puts is
| that they expire worthless. Regular shorts can have
| unbounded losses.
|
| https://www.investopedia.com/ask/answers/05/shortmarginre
| qui...
| whimsicalism wrote:
| Sorry I misspoke.
|
| Melvin Capital's short position was in the form of puts,
| I think.
|
| Since they would expire worthless, better to sell them
| when it is skyrocketing than to wait and see it skyrocket
| further and lose all of your money.
| harambae wrote:
| >Melvin Capital's short position was in the form of puts,
| I think.
|
| This is incorrect.
| whimsicalism wrote:
| Source? Here's mine [0]
|
| [1]: https://www.institutionalinvestor.com/article/b1q8sw
| wwtgr7nt...
| ROARosen wrote:
| The other commenter is right that shorts have unlimited
| risk, and put option are defined, but they can
| technically be short by selling calls which would make
| them expire-able.
|
| But honestly I doubt it was even possible to be short so
| much with options alone on such a low cap company (as it
| was before this blew up)
| whimsicalism wrote:
| Is it wrong to call selling calls short selling?
| Regardless, I think it was puts that they were buying (so
| sorta the contrapositive).
| tartoran wrote:
| I don't buy it. They'd try some tricks before
| capitulating. And look, it worked. Since RH stop allowing
| buys the price went down
| tartoran wrote:
| > As far as I know, Citadel and Melvin Capital no longer
| are holding any short positions in Gamestop. So what do
| they have to gain, by your narrative, from suppressing the
| price?
|
| If this is accurate then your question makes sense. Why?
| But how do we know this is real though? They could play
| games as well and I'm sure they do. Stock trading is
| gambling.
| whimsicalism wrote:
| Citadel securities does not "play games", they aren't
| YOLO-ing on a GME short. They are happy to model the
| market so they can hedge better than their competitors
| and make money off of the bid-ask spread.
|
| Melvin Capital has already stated they have closed out
| their position, think it would probably be fraud if they
| hadn't.
| baq wrote:
| remember they don't have to report if they opened another
| one.
| whimsicalism wrote:
| If they opened another one, it would be at the much
| higher price and thus fine.
| baq wrote:
| couple hours after sister company of their major
| stakeholder (as of monday) disables purchases of the same
| stock for retail.
|
| this stinks.
| Red_Leaves_Flyy wrote:
| Iirc they only stated that they closed "a" position.
| Others have run with that in a horrid game of telephone.
| whimsicalism wrote:
| "Melvin Capital has repositioned our portfolio over the
| past few days. We have closed out our position in GME
| (GameStop)"
|
| You recall incorrectly. I encourage you to Google before
| commenting your recollections, it's quite easy to find.
| llampx wrote:
| They have every incentive to lie
| Red_Leaves_Flyy wrote:
| Where's your source?
| whimsicalism wrote:
| Literally just google the sentence I posted, it's been
| reproduced on a number of reputable outlets.
| TuringNYC wrote:
| >> Melvin Capital has already stated they have closed out
| their position, think it would probably be fraud if they
| hadn't.
|
| IANAL but I doubt this would be fraud -- they arent a
| public corporation making statements about themselves.
| They did have LPs, but i'm not sure what restrictions
| there are around speaking -- would anyone know?
| cmdli wrote:
| IANAL also, but I would imagine that they would need to
| represent themselves accurately to their investors at the
| very least. Perhaps they could be telling their investors
| something different privately?
| TuringNYC wrote:
| Yes, hedge funds send their LPs private "Investor
| Letters" with a lot more detail. Not sure who the public
| statement was meant for, but it might have been meant to
| discourage the public from taking opposing positions.
|
| You wouldnt communicate to your LPs via CNBC or Twitter.
| shrimpx wrote:
| Have they closed out their position? They said via CNBC
| that they have "closed a position", that's basically the
| quote that's making the rounds.
| npsimons wrote:
| > Melvin Capital has already stated they have closed out
| their position, think it would probably be fraud if they
| hadn't.
|
| Two points: 1. As I understood it, they
| closed *A* position, not their whole position, and
| announced that in the hopes it would deflate the stock
| price so Melvin doesn't crater. 2. And what,
| exactly, would be the punishment for this fraud, assuming
| they even get prosecuted and convicted? Can you put a
| dollar figure on it? Now put a dollar figure on how much
| they would lose if they didn't make that announcement,
| and compare the two numbers.
| cryptonym wrote:
| You may work on some fancy model but at the end of the
| day you are taking a risk and there is a possibility to
| lose in the worst possible way. Call it games, YOLO or
| hedge better than competitors.
|
| Maybe, the problem was just transferred to someone else
| so they can remove it from their statements. And now that
| someone is trying to deal with this. Unless we have
| trustable source with all the details on how that
| position has been closed, I don't think it's safe to
| assume anything.
| whimsicalism wrote:
| > you are taking a risk and there is a possibility to
| lose in the worst possible way. Call it games, YOLO or
| hedge better than competitors.
|
| Sure, there is some risk in liquidity provisioning, but I
| think you are really not understanding what market makers
| do and conflating it with hedge funds.
| alasdair_ wrote:
| >Melvin Capital closed out their short position yesterday
| with a large loss
|
| This is something many people are claiming is false. As far
| as I can find, Melvin have not issues any formal statement
| on the matter - this claim is purely based on a CNBC
| "source".
| warkdarrior wrote:
| If SEC decides at some point that this was pump-and-dump
| scheme (even crowdsourced), the Citadel may become liable
| for enabling that scheme, even if they do not run it
| themselves.
| whimsicalism wrote:
| I think it is much more likely that Robinhood is liable
| than the liquidity provider for Robinhood.
| cameldrv wrote:
| It seems unlikely to me that Citadel would be liable.
| They're just processing bulk transactions -- they have no
| direct contact with customers. You could just as well
| blame the NYSE.
| ethbr0 wrote:
| They were just processing bulk transactions.
|
| If it's true they refused to process for certain
| securities for their downstream clients, then I believe
| "When?" and "Why?", specifically in relation to other
| actions, become legally relevant questions.
| djeiasbsbo wrote:
| If Melvin Capital got out, then why was the stock still
| 140% shorted after that announcement? I thought that 11% of
| the shorted stock was from Melvin Capital, it doesn't make
| sense that there was no significant change in that figure.
|
| I am not trying to conspire, genuinely curious.
| __al__ wrote:
| with the stock price through the roof other funds (and
| retail investors) see it as a good opportunity to short.
| whimsicalism wrote:
| > If Melvin Capital got out, then why was the stock still
| 140% shorted after that announcement? I thought that 11%
| of the shorted stock was from Melvin Capital, it doesn't
| make sense that there was no significant change in that
| figure.
|
| Source?
|
| Also potentially new shorters getting in? I shorted AMC
| yesterday and have made quite a bit today.
| alexilliamson wrote:
| That's interesting because Ken Griffin started Citadel and
| has made huge investments in Melvin. Feels sketchy.
| game_the0ry wrote:
| Wow. Just wow. As RH user myself, I did not have a clue I was
| actually doing business (indirectly) with Citadel.
|
| I'll be closing my RH account soon. For now, I'll be holding
| the line on GME.
| game_the0ry wrote:
| Additionally, I speculate that Citadel/RH/IBKR and any
| other brokers that stopped buys on GME/AMC had sign-off
| from regulators (SEC etc.) where the fines they will surely
| incur would be limited to non-existent.
|
| Not only hedge funds and brokers colluding against the
| retail investors, but the government as well. Yeah...sounds
| about right.
| adrr wrote:
| I am curious about holding GME. Is your plan to keep it
| long term? If not what are you plans to unwind your
| positions? Certain price point? Certain time frame?
| jiofih wrote:
| I think a majority of people riding this don't care where
| the money goes - they just want to stick it to the man.
| 542458 wrote:
| Which IMO is silly. Institutional investors hold 160% of
| GME's float. For every institutional investor wanting it
| to tank there are others who want to see it rise. It's
| not like the institutions all agree or anything - "The
| man" is on both sides of this.
| adrr wrote:
| They are collecting interest from hedgefunds for the
| short positions and collecting interest from brokerages
| for capital they provide for margin accounts. They win no
| matter what.
| colinmhayes wrote:
| Everyone who buys options is doing business with citadel.
| They're the originator of most options. HFT firms are
| inescapable because their very reason for existing is to
| provide the market with the best prices.
| whimsicalism wrote:
| If you plan on continuing trading, it is going to be
| difficult to avoid doing business indirectly with Citadel,
| they are a major market maker.
| riffraff wrote:
| Who wins from a more limited market? It seems to me
| suspending trades locks people from selling as much as it
| locks them from buying, and short sellers should be happy to
| have a more liquid market,not less.
| yaur wrote:
| According to the RH blog post they are allowing people to
| close their position, just not open or expand one.
| JumpCrisscross wrote:
| > _Citadel also bailed out Melvin fund for their short
| position in GME. So, Citadel has an interest in not letting
| the price go up any further._
|
| Citadel bailed out Melvin Capital. _Not_ its position. Melvin
| doesn 't have a short position anymore.
|
| Melvin made a stupid bet. Citadel bailed them out. Private
| sector bailouts aren't free: Citadel got its pound of flesh.
| Even _if_ they bought the entire portfolio, that portfolio no
| longer includes GameStop shorts.
|
| If Citadel's asset management and market making arms are
| colluding, that is illegal. But it's the most complicated and
| stupid explanation of the bunch. Market makers stop quoting
| for all kinds of reasons. If I were still on my options
| market making desk, I'd be pulling the plug on this. My
| traders would yell at me. This is what you make money on in
| market making! But the risks of loss go up with volatility,
| and the costs of gamma getting away can be nasty.
|
| The chances that a fund the size of Citadel has any strong
| opinion on the direction of GameStop stock is vanishingly
| low. The chances that they stopped quoting in the name, as
| did almost every other market maker, and thereby broke
| Robinhood's system, which doesn't--to my knowledge--directly
| interface with exchanges to any significant degree, is high.
| macromaniac wrote:
| >Melvin doesn't have a short position anymore.
|
| This makes no sense, if gme isn't shorted then why then
| break the law and restrict buying it?
|
| And it does feel like they are restricting buys. Seems
| unlikely that all the trading platforms that rely on
| citadel coincidentally decided they wanted to hedge against
| volatility by restricting user buys.
| 6nf wrote:
| > Melvin doesn't have a short position anymore.
|
| Untrue, the number of shares short is still 70 million.
| Nothing changed.
| girvo wrote:
| They aren't the only people with short positions. They
| could've exited and others picked it up.
|
| I've no dog in this race; just thought I should point
| that out
| jamilbk wrote:
| > _Melvin doesn 't have a short position anymore._
|
| Source? If I was caught in a short squeeze, this is exactly
| the kind of announcement I would circulate to prevent the
| price from going any higher.
| JumpCrisscross wrote:
| > _If I was caught in a short squeeze, this is exactly
| the kind of announcement I would circulate to prevent the
| price from going any higher_
|
| That would be securities fraud.
| alasdair_ wrote:
| >That would be securities fraud.
|
| Naked shorting to drive down the price is also securities
| fraud. And yet...
| FabHK wrote:
| I don't believe Melvin has public investors that could
| claim to have traded Melvin's shares on the basis of
| Melvin's misleading statements.
|
| And I am quite certain that there is no obligation that
| you have to truthfully tell the world your position in
| any one security.
|
| So, I'd like someone with legal training to make a case
| for security fraud.
|
| (It might still be market manipulation or some such).
| pc86 wrote:
| Well surely that never happens. No large organization has
| ever committed securities fraud in order to make or save
| billions.
|
| I hope you have a better reason why that's not likely
| than "but that's illegal." Them actively committing
| securities fraud seems to be the most likely occurrence
| from where I'm sitting.
| [deleted]
| JumpCrisscross wrote:
| > _No large organization has ever committed securities
| fraud in order to make or save billions._
|
| Who would save billions? For how long?
|
| Let's assume the statement is fraudulent. Before the
| statement was made, Melvin's LPs were set to get hosed.
| Melvin's general partners, the ones making the
| statements, have a lot of egg on their faces. But they
| didn't do anything _wrong_. They keep their money and
| houses and yachts. And in all likelihood, after a few
| months, craft a lessons-learned pitch and raise more
| money.
|
| After the statement, they have engaged in fraud. Not only
| is criminal prosecution a risk. All those deep-pocketed
| LPs can now sue the general partners, _personally_ , for
| breach of fiduciary duty.
|
| Add to that the Citadel bailout, which removed the risk
| of the fund going under, and there is no reasonable
| explanation for lying about closing out the short. If you
| wanted to show resilience, you'd say something like
| "we've fully hedged our shorts with long-dated puts,
| reducing our expected profit but capping our losses."
| silexia wrote:
| This will probably be my least popular post ever, but the
| explanation needs to get out there for why Robinhood
| stopped trading on GME.
|
| Selling a stock short is NOT illegal. It is a perfectly
| valid type of investment according to the SEC:
|
| "D. Are short sales legal? Although the vast majority of
| short sales are legal, abusive short sale practices are
| illegal. For example, it is prohibited for any person to
| engage in a series of transactions in order to create
| actual or apparent active trading in a security or to
| depress the price of a security for the purpose of
| inducing the purchase or sale of the security by others.
| Thus, short sales effected to manipulate the price of a
| stock are prohibited."
|
| Basically - you can't short sell a stock to manipulate
| the price down so you can buy a lot more of it later. If
| you believe a stock is overpriced and short sell it, that
| is legal. That is exactly what tons of retail traders and
| hedge funds do every day, including on Gamestop.
|
| On the other hand, manipulating a stock price upwards to
| cause a short squeeze IS illegal according to the same
| SEC article:
|
| "Although some short squeezes may occur naturally in the
| market, a scheme to manipulate the price or availability
| of stock in order to cause a short squeeze is illegal."
|
| Unprecedented numbers of people on Reddit, Twitter, and
| elsewhere collaborated to intentionally create a short
| squeeze on GME in the last week. No one talked about a
| fundamental case why Gamestop the company was worth a lot
| of money and would be successful in the future; instead
| everyone made the argument that due to a very high short
| interest of 100%+, that a short squeeze would send the
| price "to the moon". That is illegal according to the
| SEC.
|
| Multiple brokerages, especially Robinhood, probably had
| their attorneys tell them that "Hey, you are aiding and
| abetting illegal activity by enabling a short squeeze and
| could be liable criminally or civilly if you continue to
| allow this blatant illegal activity on your platform". So
| they decided to stop it by only allowing people to close
| their positions rather than open new ones in support of
| the short squeeze.
|
| Another strong reason is that if the short squeeze caused
| the GME stock to go to 5000 in a sudden leap, tons of
| traders (both retail and professional) could instantly go
| broke, and then the brokerage (Robinhood) would be left
| holding the bag. For example, picture a retail investor
| with a Robinhood account had sold call options in the
| amount of $100,000 and their account was worth $200,000.
| If the price gapped from 300 to 5000 and those options
| were exercised, that trader could have a loss of
| $10,000,000. He would lose the value of his account,
| $200,000... but the brokerage would have to make up the
| rest of the settlement and take a loss of $9,800,000. Now
| multiply that by thousands of accounts.... no brokerage
| wants to take the risk of being bankrupted, so they shut
| it down.
|
| The two strong reasons Robinhood and other brokers
| stopped trading was to prevent legal liability from
| enabling illegal activity on their platform, and for
| wanting to avoid potentially massive banktuptcy from
| traders unable to cover their losses.
| DenverCode wrote:
| > No one talked about a fundamental case why Gamestop the
| company was worth a lot of money and would be successful
| in the future; instead everyone made the argument that
| due to a very high short interest of 100%+, that a short
| squeeze would send the price "to the moon".
|
| All of this started on Reddit because someone made a case
| for their fundamentals.
|
| Here is their Reddit account:
| https://www.reddit.com/user/DeepFuckingValue/
|
| Here is their YouTube account:
| https://www.youtube.com/c/RoaringKitty/videos
|
| He is considered a legend by all of the people on WSB (of
| which I am not one) for it and kicked the whole thing
| off.
|
| My question is.. how does a guy on Reddit and YouTube
| giving a fundamental analysis of why he valued a stock,
| and millions of people seeing value and buying it, differ
| from something akin to Mad Money?
| silexia wrote:
| DFW made his fundamentals case months ago and had a real
| (if possibly mistaken) case at that point.
|
| In the last week though, after the massive increase in
| GME's stock price, the arguments on WSB have all been
| about the planned short squeeze and gamma squeeze to
| convince people to hold on or buy more.
| DenverCode wrote:
| Interesting, all I see is comments about them liking the
| stock. The negative comments I've seen relate to the
| assumed market manipulation tactics.
| nawgz wrote:
| Shill.
|
| Still waiting for you to answer for a quote you have made
| up[0]:
|
| > most short positions are actually held by retail
| investors
|
| [0]: https://news.ycombinator.com/item?id=25947119
| silexia wrote:
| Once again, I am not a shill as you keep posting on my
| comments. I am a real person and my blog is here -
| joelx.com. I have an opinion that is different than
| yours. I have no dog in this game.
|
| Do you hold any positions related the question at hand?
| Are you trying to pump & dump the stock?
| nawgz wrote:
| I hold no positions related to the questions at hand. You
| however have gone from a random blogger who speaks
| largely about tech & politics and now is quite invested
| in defending a very crooked appearing move, all while
| making claims you can't support.
| Phlarp wrote:
| I don't have a position related to the question at hand,
| but I've certainly been observing closely over the last
| few days and for me personally it's pretty hard to shake
| the perception that a subreddit mostly specializing in
| financial market memes beat "the man" at his own game and
| now "the man" is changing the rules.
|
| Meanwhile you're jumping on internet message boards to
| try and explain how "the man" is actually totally right
| in this situation and everyone should really go back to
| dutifully enriching him without questions.
| nawgz wrote:
| In response to this accusation [0], this user has linked
| a document [1] which shows the exact opposite of his
| claims [2].
|
| Please do not downvote me for calling out strange
| activity by an account which is also spreading
| misinformation.
|
| [0]: https://news.ycombinator.com/item?id=25947119
|
| [1]: https://www0.gsb.columbia.edu/faculty/ptetlock/paper
| s/Kelley...
|
| [2]: https://news.ycombinator.com/item?id=25950657
| yowlingcat wrote:
| > Unprecedented numbers of people on Reddit, Twitter, and
| elsewhere collaborated to intentionally create a short
| squeeze on GME in the last week.
|
| You're missing a party in that analysis. For this party,
| maybe it was a stupid idea for them to try and short sell
| in a market where the fed had pumped trillions into the
| economy and market activity, retail and otherwise, is at
| an unprecedented level of froth. But with that said, they
| are supposed to be professionals. It seems to be within
| reason to expect them to be able to hedge against the
| risk of a bunch of amateurs deciding to protest buy a
| piece of their childhood against being raided by Wall
| Street, no?
|
| After all, "irrationally" holding assets that have
| sentimental value and allocating a large portion of
| whatever surplus earnings you have to it is a well known
| American tradition. Whatever the socioeconomic bracket,
| people have traditionally found ways to support causes
| and brands that they hold dear. Shouldn't large
| institutional clients be asking these fund managers why
| they're poking a beehive right now, and whether it might
| just be a little unnecessarily risky?
| tomjakubowski wrote:
| It's one thing to commit securities fraud. It's another
| to do it, blatantly and openly, as part of the biggest
| news story of the week.
| [deleted]
| metiscus wrote:
| If the penalty is less than the potential fine as has
| sometimes been the case, is that really that big of a
| deterrent?
| scsilver wrote:
| Seems like the most financially responsible move. And
| these guys are fiduciaries.
| franklampard wrote:
| > That would be securities fraud. Are you saying that
| they wouldn't commit securities fraud?
| Fredej wrote:
| Aren't we already discussing SEC violations here?
| monkpit wrote:
| Yeah, I don't see how it being fraud leads to the
| conclusion that it's not happening.
| ordinaryradical wrote:
| If the alternative is bankruptcy and the destruction of
| your legacy, would you risk it?
| unreal37 wrote:
| To be clear, they didn't "announce" they closed their
| positions. They whispered it to a CNBC news anchor on the
| phone.
|
| There's no announcement, just a sourced rumor, and no
| proof they closed their trades when they said they did.
| ZephyrBlu wrote:
| How have they exited their short position when the short
| interest is still ~130% though?
| JumpCrisscross wrote:
| > _How have they exited their short position when the
| short interest is still ~130% though?_
|
| Lots of people are short? I know at least half a dozen
| people who bought puts over the last few days. Those puts
| hedge into shorting the same way calls turn into buying.
| ZephyrBlu wrote:
| Hmm. There seems to be a lot of unknowns right now. Do
| you think the information about how this all went down
| will come out once it's over?
|
| I'd say most of the wallstreetbets traders still believe
| Melvin has their position, but you're saying otherwise.
| Though the still extremely high short interested doesn't
| seem to make sense if the big losers already exited...
| JumpCrisscross wrote:
| > _Do you think the information about how this all went
| down will come out once it 's over?_
|
| I do. This will make partners out of a solid suite of
| securities lawyers around the country. But we won't have
| clear answers for at least another 6 months.
| majormajor wrote:
| The higher the price goes, the more incentive for _new_
| people to buy short, who aren 't subject to the same
| pressure to get out fast that the ones who've been there
| longer were.
|
| Doing this all in such a publicly-coordinated way on
| Reddit means you're wide open to people trying to
| directly play _against_ your goals.
|
| So much of the "proof" of things around this seems to be
| making big assumptions about _who_ is on the other side
| that the aggregate numbers don 't seem to indicate one
| way or another.
| ryanSrich wrote:
| Yeah I don't buy this at all. There isn't enough stock
| for them to close their position.
| JumpCrisscross wrote:
| > _There isn 't enough stock for them to close their
| position_
|
| Tens of billions of dollars of GameStop have been bought
| and sold over the past few days. If you can buy GameStop
| to go long, you can buy it to cover a short.
|
| Note that there isn't a limit on rehypothecation. A share
| sold short by Bob can be used by Anna to cover her pre-
| existing short.
| d1sxeyes wrote:
| I am not highly knowledgeable on this, but... even if
| it's the same share that Anna sold to Bob short in the
| first place?
| nostrademons wrote:
| Yes, even if it's the same share that Anna sold to Bob
| short in the first place. That's how you get short
| interest > 100%. The market doesn't care, it only cares
| that a share was sold from Anna to Bob and then from Bob
| to Anna. The individual shares are completely fungible.
| (They don't actually exist, they're just numbers in a
| contract.)
| TechBro8615 wrote:
| Do we have real time access to the short interest
| numbers? My impression is those came from a report that
| comes out every two weeks?
| ZephyrBlu wrote:
| Not real time, but theres this wallstreetbets post from
| yesterday.
|
| https://www.reddit.com/r/wallstreetbets/comments/l642ms/u
| pda...
| TechBro8615 wrote:
| Posted before Melvin capital claimed they had closed
| their position?
| ZephyrBlu wrote:
| If you look at the comments it seems like the Reddit post
| was after the announcement from Melvin, because people
| are accusing them (Melvin) of lying.
| TechBro8615 wrote:
| But also possible the underlying data was collected by
| EOD the day prior. Point is it's not a very clear data
| source IMO. Would be nice if real time short interest
| _was_ public info.
| paxys wrote:
| Not if you ask one of your buddies at CNBC to announce
| it, and when caught they just say oops my bad, it was
| based on incorrect info.
| [deleted]
| [deleted]
| raducu wrote:
| Citadel din't bail them out and they didn't close the
| positions, if they did, the "bailout" would be a complete
| writeoff -- why would Citadel do that?
|
| Citadel probably gave them the cash to avoid a margin
| call, knowing they can later manipulate the market and
| the shorts would payoff in the end, and Citadel would get
| their share of the spoils.
|
| Otherwise a bailout makes no economical sense, Citadel is
| not the FED, they can't print money just to cover someone
| elses losses.
| JumpCrisscross wrote:
| > _if they did, the "bailout" would be a complete
| writeoff_
|
| What? No it wouldn't.
|
| Melvin faced cash calls. To raise cash fast they could
| (a) get it from their LPs (fat chance), (b) raise it from
| someone else or (c) sell other assets. The last option is
| a fire sale. You figure out what the fire sale discount
| would be, say it's 50%, and then use that to get (b).
|
| I don't know what the terms of the bailout were. If I
| were structuring, I'd make it a loan with a super-high
| interest rate triply collateralized by their remaining
| assets. If they pay it back, I get the super high
| interest rate. If they default, I get the rest of their
| assets for 33C/ on the dollar. Between those two, the
| latter is frankly the higher-payoff scenario. (I would
| also require all short positions be closed out within N
| days, with the borrower's investors bearing the losses.)
| raducu wrote:
| Are you saying that Citadel just lent someone money to
| close short positions worth a very significant percentage
| of their total assets? (Melvin having 11 bilion in total
| assets and Citadel giving them 3 billion).
|
| That's what I was pointing out! Melvin did not close
| their shorts(as they said they did), they just got more
| rope from Citadel, and Citadel was willing to do just
| that knowing they can manipulate the market.
|
| The narative of Melvin was "Citadel gave us 3 billion
| dollars, we closed our shorts at a loss, you won wsb,
| aren't you happy, you won, now leave us alone and stop
| buying".
| JumpCrisscross wrote:
| > _Citadel just lent someone money to close short
| positions worth a very significant percentage of their
| total assets?_
|
| Yes. Those other assets are presumably uncorrelated to
| this short position. If they were fire sold, depending on
| the assets, they could have gotten 20C/ or 30C/ on the
| dollar.
|
| That discount gives Melvin the incentive to borrow, even
| at exorbitant rates. It protects the rest of the
| portfolio. With the bailout, the GameStop loss is capped
| and eaten by LPs. That sucks. But it sucks less than
| eating that loss _and_ selling off the rest of the
| portfolio for peanuts.
|
| > _Melvin did not close their shorts(as they said they
| did)_
|
| You're alleging securities fraud. This may be the case!
| But we have zero evidence of it. And if Citadel and
| Point72 invested $3bn to aid and abet securities fraud,
| that would be quite stupid.
| PicassoCTs wrote:
| They got away with worse in 2008?
| fractionalhare wrote:
| No "they" didn't. Wall Street is not a homogenous thing.
| You're thinking of banks in particular, which are about
| as different from hedge funds categorically as Facebook
| and Salesforce. Sure they're both tech companies with
| software products, but they have entirely different
| business models.
| jachee wrote:
| I believe GP was specifically referring to Citadel, nee
| SAC: https://popular.info/p/the-merry-adventures-of-
| robinhood
| kgwgk wrote:
| You may be confusing SAC / Point72 with Citadel.
| raducu wrote:
| Genuinely curios, what type of assets can only be
| liquidated 33 cents on the dollar?
|
| And what is the likelyhood Melvin had such a significant
| proportion of their portfolio in such assets?
| ethbr0 wrote:
| The type of assets that you need to sell in the next
| hour, of such a magnitude that there are only a few
| buyers.
| sandworm101 wrote:
| Junk bonds. Packages containing failed/failing mortgages.
| Unsecured medical debt.
| georgeecollins wrote:
| Good grief, can you imagine trying to sleep at night with
| a portfolio of unsecured medical debt? "Pay me for your
| cancer treatment!"
| anonymouse008 wrote:
| Here's the source --
|
| Citadel, Point72 to Invest $2.75 Billion Into Melvin
| Capital Management - WSJ [0]
|
| Read As: _Melvin no longer has a short position. Citadel
| (edit: or like someone else said, a 3rd party) does.
| Citadel will handle this. Melvin is in time out._
|
| We'll figure out who holds the chips in a few weeks time
| when filing deadlines are due. Thus it's dark.
|
| Thus explains the perfectly executed short ladder today -
| could only be pulled off by someone with more dry powder
| than Melvin - but if you look at the Level II data, this
| is going to take a long, long time.
|
| [0]https://www.wsj.com/articles/citadel-point72-to-
| invest-2-75-...
| JumpCrisscross wrote:
| > _the perfectly executed short ladder today_
|
| I missed this. What's this referencing?
| dspig wrote:
| Selling back and forth at a lower and lower price while
| WSB couldn't buy to keep the price up
| jb775 wrote:
| Yeah I don't believe it. Or they transferred it to a
| complicit 3rd party who will eventually benefit.
| deeeeplearning wrote:
| >Melvin doesn't have a short position anymore.
|
| That's not at all verified. Short interest is still well
| over 100% of float. The only thing you are going off is a
| poorly sourced CNBC report with wishy washy language from
| Plotkin.
| AndrewBissell wrote:
| I certainly get pulling the plug on options, but I don't
| understand how the volatility in $GME would lead a market
| maker to simply stop quoting the underlying stock
| altogether. If the price starts flying around you just
| widen your spread. If there's too much pressure on the buy
| side and you can't keep your position neutral, you just
| raise your offering price until you're not selling shares
| at too fast a rate anymore.
| whimsicalism wrote:
| You're making assumptions that it was the liquidity
| provider who pulled the plug and not the _much more
| likely option_ that it was Robinhood pulling the plug for
| liability reasons.
| kosh2 wrote:
| Tastytrade also restricted trade in the same manner. They
| send a mail to all customers and made it very clear that
| it was Apex Clearing who forced their hand. It is very
| unlikely that something different happened at Robinhood.
| ROARosen wrote:
| > for liability reasons
|
| For trying to get some positive media coverage, after
| being constantly bashed and blamed by them for the
| uneducated retail trader boom.
| AndrewBissell wrote:
| No, I'm granting that as the parent's premise. And what
| liability reasons would Robinhood have to disallow buying
| an NYSE listed stock with 100% cash?
| whimsicalism wrote:
| They've already been sued by retail investors who have
| lost their cash in the past and courts have already shown
| themselves to be somewhat partial to "the gamified
| interface just made me spend $1k I could barely afford
| because it was so fun!" arguments that RH is liable.
|
| This is a much bigger deal, some (not hedge fund!) people
| are going to lose a crapton of money on it, and people
| are probably going to sue them once that happens.
|
| You can see this discussed elsewhere in the thread.
| JumpCrisscross wrote:
| > _I don 't understand how the volatility in $GME would
| lead a market maker to simply stop quoting the underlying
| stock altogether. If the price starts flying around you
| just widen your spread._
|
| People after the financial crisis liked to talk about fat
| tails. Risk models assuming narrow tails, reality having
| a taste for extreme events. _This_ is a fat-tail event.
| We don 't have great models for stocks as volatile and as
| correlated as GME is right now. Which means for even cash
| equities trading, we don't have a great sense around what
| the appropriate spread should be.
|
| Market making has sometimes been described as vacuuming
| up nickels in front of bulldozers. These are bulldozin'
| times. You don't want to fill a bunch of sell orders in
| GME right before it gaps down 80%.
| AndrewBissell wrote:
| I mean, we can see that this idea that the stock is too
| risky to quote is not true because _there is a two-sided
| market in it right now_ , which can be traded on multiple
| platforms. The only actually existing peculiarity here is
| that Robinhood is not allowing customers in possession of
| 100% margin to open a new long position.
| JumpCrisscross wrote:
| > _we can see that this idea that the stock is too risky
| to quote is not true because there is a two-sided market
| in it right now_
|
| On exchanges. Those are buyers and sellers _as well as_
| market makers. Robinhood connects to a subset of the
| latter.
| whimsicalism wrote:
| > Those are buyers and sellers as well as market makers.
|
| Nope, pretty much just market makers.
| whimsicalism wrote:
| Hopefully others realize that downvotes on HN do not
| change the reality of how market makers function.
| cameldrv wrote:
| I don't think it's an issue of Citadel not quoting GME.
| In my understanding, Robin Hood is allowing purchases to
| close a short position, so there exist quoted prices,
| they just don't want people expanding a long position.
|
| If this is coming from Robin Hood, they could make the
| (very weak) argument that they are protecting their
| retail customers from themselves, but if it's coming from
| Citadel, it just looks like market manipulation to me.
| jodrellblank wrote:
| I don't think it's coming from RobinHood; eToro is also
| blocking buys and they have the message " _We have made
| this change following a notification from our liquidity
| provider that they have set $GME to close only status_ ".
| andoriyu wrote:
| I got similar email from tasty. They said Apex clearing
| won't allow any new positions on meme stocks.
|
| Given that it's not just RH, but nearly all, if not all,
| brokers that outsource order flow like RH...I think it's
| safe to assume it wasn't RH decision.
| treis wrote:
| Today it opened at $265, hit a high of $483 and dropped
| to a low of $112. At 2:00 pm it was $226, 2:05pm it was
| $431, and then came back down to $237 at 2:15pm. That
| sort of volatility is, I think, unprecedented which means
| the market makers don't have good risk models. So you're
| right that they could be cleaning up here with a large
| spread. But that profit comes at unknown levels of risk.
| dcolkitt wrote:
| An internalizer must match displayed NBBO at the
| exchanges. If it can't, it has to route to the exchange,
| pay exchange fees, and on top of that _still_ pay for the
| order flow.
|
| Normally internalizers have no problem competing with
| spreads on the exchanges, because retail flow is much
| less toxic than the sophisticated traders in the public
| venues. But with GME, the retail investors are running
| the show.
|
| Therefore it no longer makes sense for internalizers to
| pay for this order flow.
| totalZero wrote:
| Market makers on exchanges generally have a contractual
| uptime obligation if I am not mistaken, but I'm not sure
| that applies when talking about payment for order flow.
| Red_Leaves_Flyy wrote:
| Gme has been freezing up for a few seconds to fifteen
| minutes at a time for days now. Sounds like a breach to
| me, unless someone else ordered a halt. Robinhood itself
| was responsive, as were other stocks.
| dehrmann wrote:
| > The chances that a fund the size of Citadel has any
| strong opinion on the direction of GameStop stock is
| vanishingly low
|
| I didn't touch this in the first place, but once it was
| clear it was a short squeeze, nope, not gonna play that
| game. Just sit back and enjoy the show.
| jansan wrote:
| A short squeeze is nice if you get caught in in by
| accident as a stock owner. During the Volkswagen short
| squeeze a lot of lower level employees at Volkswagen were
| suddenly able to fully pay back their mortgage. Isn't
| that cute?
| einrealist wrote:
| I wonder whether Citadel was the / a major lender for the
| shares in the first place. That would explain a lot. But
| even then, I doubt that there was foul play.
| bigtunacan wrote:
| Citadel is blocking trades on these stocks where Melvin
| Capital holds shorts for any platform that uses them;
| Robinhood is just the most prominant among small retail
| traders.
|
| Citadel "bailed out Melvin Capital" because Citadel
| essentially owns Melvin and so their loss is our loss sort
| of situation. Melvin Capital stated they had closed out
| their short position on GameStop, but those are huge losses
| to cover no one knows how true that is. There is a lot of
| rumor that Citadel/Melvin Capital re-bought short positions
| yesterday before Citadel restricted trades to manipulate
| the market. If this is true it is highly illegal, but this
| effectively allow Citadel/Melvin to make back their losses
| if they can force market prices down.
|
| TL/DR, Citadel/Melvin are breaking the law, all the retail
| traders are getting fucked, but when this is done
| Citadel/Melvin ends up having more cash than ever.
| znpy wrote:
| I wonder... couldn't people do this over and over again?
|
| how long can citadel and/or other entities hold?
| KMag wrote:
| Citadel is probably having a very busy, but very good day
| today.
| arminiusreturns wrote:
| No, or rather, only if MM's like Citadel over-short like
| they did here. It's a rare catch by retail that they were
| overextended, and retail pounced on the opportunity, just
| like the MM's do against retail _all the fucking time_ ,
| but now that the little guys are doing the fucking, it's
| all _fetch me my smelling salts and call the sheriff_!
| whimsicalism wrote:
| Retail didn't do jack to the market makers and Melvin
| capital isn't a market maker.
|
| So many people here who have no idea what the hell is
| going on, and yet are so confident.
| whateveracct wrote:
| This entire GME WSB thing is a bunch of people wanting to
| feel important. That's why there's so much high-and-
| mighty talk even though the facts of the matter
| are..pretty boring.
| arminiusreturns wrote:
| Melvin capital is a market maker, it's in the list at
| least... You might check yourself before acting so high
| and mighty. 1 is the reference for wikipedia. 2 is just
| another source in case you doubt. By the way, Citadel is
| also on that list. Retail did do something to Citadel and
| Melvin... so wrong on both counts.
|
| 1. https://web.archive.org/web/20070228050751/http://www.
| alphat...
|
| 2. https://www.level2stockquotes.com/market-makers-m-
| list.html
| whimsicalism wrote:
| Melvin _securities_ is a completely different company
| than Melvin _capital_.
|
| Retail did nothing to Citadel securities.
| arminiusreturns wrote:
| Welp I guess I can eat crow on this one then. You are
| right it seems.
| [deleted]
| cc_stoic wrote:
| wow, this is a very apt explanation.
|
| the best financial advice I ever got was to never ignore
| conflicts of interest.
| mgolawala wrote:
| Exactly this. They know there will be lawsuits and they know
| there might be SEC fines, but they are betting that those two
| will total up to be less than the billions it would cost them
| to cover a short position at $500-$600 per share.
|
| The question I have is, can this be prosecuted criminally and
| can those in charge be threatened with actual jail time from
| this?
| tornato7 wrote:
| But I don't think they are expecting the backlash that this
| had received. As a Robinhood user I am making it clear that
| this is not okay by withdrawing all of my funds and
| cancelling my Gold account, and I hope others will do the
| same.
| infogulch wrote:
| Fix: fines should be 2x more than just taking the loss on the
| chin.
| corty wrote:
| Problem is, the losses will never really be known. Shorts
| have an arbitrarily high loss potential, but nobody knows
| how high GME would have climbed without Robinhood
| manipulating it down.
| sidlls wrote:
| Then set the loss at the price where the manipulation
| started and add a multiplier.
| Red_Leaves_Flyy wrote:
| The loss is provably infinite, the fine should be too.
| moralestapia wrote:
| _"... the resulting SEC fines from this illegal manipulation
| ... "_
|
| Plus time in prison.
| [deleted]
| skyde wrote:
| thanks for explaining your a hero
| sgpl wrote:
| Obviously I'm speculating but one of the largest investors in
| Robinhood's last round was a hedge fund.
|
| As others have pointed out, Citadel's market making arm is
| their largest source of revenue + Citadel's hedge fund recently
| invested a large amount in Melvin Capital to help shore up
| Melvin's capital base after their loss.
|
| Unfortunately unless Robinhood insiders leak or post their
| rationale behind this decision, we'll never really know what
| happened behind closed doors.
| luxuryballs wrote:
| Well with a name like Robinhood I can at least see why they
| might be a tad hot under the collar on the legal department
| today.
| twinkletwinkle_ wrote:
| You know the adage usually applied to Facebook, "If you're not
| paying for anything, you aren't the customer, you're the
| product" ? . Daytraders and WSBers and other small fish like
| you and me aren't Robinhood's customers. Robinhood's customers
| are Citadel and companies like them who pay Robinhood for order
| flow from the uninformed masses. Keeping that in mind, here is
| the simple answer to your question:
|
| https://twitter.com/justinkan/status/1354853920762253315?s=2...
| TheRealDunkirk wrote:
| > Why do Robinhood, Reddit, Discord, etc feel like they have to
| respond to this?
|
| Indeed. There's a lot of talk about Section 230 lately, and how
| "precious" it is to freedom of speech. That law protects them
| from culpability against hosting legally-dubious things like
| this market move -- and any malfeasant commenting about it --
| but none of the big platforms are acting like it exists.
| They're just censoring anyway, because they are either
| embarrassed, or are getting their strings pulled. Either stand
| behind Section 230, or admit you're just censoring things for
| duplicitous reasons of politics, money, or the rabble.
| mdavidn wrote:
| Section 230(c)(2) explicitly protects service providers who
| remove content that they deem to be "otherwise
| objectionable."
| alistproducer2 wrote:
| Reddit and discord are afraid they'll be implicated in what is
| a classic pump and dump. Robinhood only exists because the SEC
| has chosen to look the other way concerning the pattern day
| trading rule which clearly is in jeopardy if big money starts
| complaining.
| Sohcahtoa82 wrote:
| > Robinhood only exists because the SEC has chosen to look
| the other way concerning the pattern day trading rule
|
| This is simply not true at all.
|
| I've had my trading on RH restricted specifically because of
| the PDT rule. As in, I was about to make a trade, and the
| site told me that the trade would cause a restriction because
| of pattern day trading.
| volta83 wrote:
| How is this a classic pump and dump ?
|
| This is a short squeeze: the stock is shorted to the limit,
| and from the stock price, the shorters entered their
| positions "uncovered", so their risk is extremely high, and
| their losses are potentially infinite.
|
| The WSB crowd and probably others noticed this, and bought
| the stock, knowing that it was going to become more valuable
| over time once the shorters had to close their positions.
|
| They were right, and the shorters are loosing so much money
| that they are willing to buy back the stock at astronomical
| prices to limit their losses, which drives the price up even
| more.
|
| The WSB crowd just need to hold until the stock is at the
| maximum price that the short sellers can pay, right before
| the short sellers default. That's the actual value of the
| stock right now.
|
| If the stock climbs too much, and the short sellers default,
| the stock is worthless.
|
| TBH, this is the short sellers own fault. They made the
| assumption that the market was "fair", and that they were
| going to buy back the shares for cheap when they needed them
| as a consequence.
|
| That assumption was wrong.
| SpicyLemonZest wrote:
| It's a classic pump and dump because there's just no reason
| to believe that this is what's happening. There was a short
| squeeze at one point, but all of the funds known to hold
| large short positions had closed their positions by
| Wednesday morning; the value since then was most likely
| driven entirely by speculation.
|
| In particular, I've seen a lot of speculators spreading the
| idea that margin calls will force everyone shorting
| Gamestop to buy stock at market price on Friday. This is
| wrong, and pretty unequivocally so, but I've had multiple
| friends come to me and explain that this is why they bought
| some.
| imtringued wrote:
| By this logic the stock should be shorted even more than
| it currently is. Why did short sellers close their
| position if that is the case? Your story is not
| consistent at all.
| robot1 wrote:
| This makes no sense - if they had closed their short
| positions of millions of shares and had the squeeze
| happen, the share price would have spiked far higher than
| it is now.
| SpicyLemonZest wrote:
| Why is that so? Trading volume was over 175 million each
| of Friday, Monday, and Tuesday. Do we have some way of
| knowing exactly what the price should be when they exit?
| robot1 wrote:
| Robinhood would not put themselves in such a precarious
| position if they had already exited - also as for the
| price target of when they actually do start covering
| their shorts, they are still currently short more than
| the available amount of shares on the market - the
| current trading range of around 200-300 cannot be the
| squeeze.
| SpicyLemonZest wrote:
| You're misunderstanding what a short squeeze means.
| There's no singular "the squeeze" - no specific point
| where everyone who holds a short position has to
| simultaneously obtain the underlying stock.
| llampx wrote:
| What? RH enforces the PDT rule, as does every other US
| broker. SEC is not looking the other way there at all.
| nfriedly wrote:
| A charitable guess is that Robinhood is trying to protect their
| users from buying at the height of this mania.
|
| There are people literally investing their rent money into GME,
| and it's almost inevitable that the price will come down at
| some point, the only question is when and how far.
| rchaud wrote:
| The trade screen could just display a warning that the stocks
| are in question are experiencing high volatility, and require
| the user to click something to indicate that they understand
| the risks.
| esoterica wrote:
| > Whether the investments being made are responsible or not, it
| doesn't seem like it should be their place to intervene.
|
| The entire history of the retail investing is unsophisticated
| investors shooting themselves in the foot and then turning
| around and suing everyone who allowed them to shoot themselves
| in the foot. It's obvious to everyone watching that for every
| retail investor who buys in at $10 and cashes out at the top
| there are going to be 20 other traders who FOMO in at $300 or
| $500 and then hodls all the way down to $10. People have a
| stated preference for Freedom to take risks but a revealed
| preference for paternalism (they start suing everyone around
| them for not "protecting" them from themselves when risks go
| bad). You can't blame companies for rationally responding to
| the legal liability they think they will incur if they let more
| retail traders pile onto meme stocks.
| shut_it_down wrote:
| One of Robinhood's main business partner is Citadel (RH sells
| their order flow to Citadel). Citadel is also the firm that has
| bailed out Melvin Capital, one of the hedge funds that took a
| huge short position in GME.
|
| Probably just a coincidence.
| agumonkey wrote:
| I follow the bitcoin crowd a bit. Everyday they issue claims
| like 'bitcoin was made to free us from wealthy people games'
| it felt echo chamber / tinfoil at times. This isn't hurting
| their theories.
| cableshaft wrote:
| Wealthy people games exist in bitcoin as well. Especially
| now with all the institutional investment and futures
| markets. I say this as a long-time bitcoin fanboy as well.
| agumonkey wrote:
| yeah can be to
| AzzieElbab wrote:
| It is not the same. Wall Street is playing with other
| people money mostly pensions and funds borrowed from the
| state.
| mudlus wrote:
| This is the only relevant thread in this ongoing class
| war.
| loceng wrote:
| This is just shifting who's getting the unreasonable,
| unnecessary transfer of wealth weighted towards the earlier
| adopters.
| ceejayoz wrote:
| They're right that wealthy people game the financial
| system.
|
| They're insane (or self-interested) to pretend the same
| doesn't happen in cryptocurrencies.
| agumonkey wrote:
| maybe, were crypto exchanges forced to stop trades before
| ?
| cactus2093 wrote:
| Don't forget that crypto exchanges have none of the
| properties of cryptocurrencies themselves, in terms of
| censorship resistance and cryptographic guarantees. Since
| fiat currencies are involved and these are businesses
| operating in countries with laws, they have to enforce
| whatever the government wants to require of them. They
| can absolutely halt trading, or freeze funds or assets on
| their platform at any time.
| nostrademons wrote:
| DEXes, however, can be designed so that no person can
| halt trading or freeze your funds (usually you trade out
| of your own wallet anyway). A DEX is just a computer
| program running on the Ethereum blockchain. Once
| deployed, the blockchain is immutable, and it just sits
| there accepting orders.
| ceejayoz wrote:
| Crypto exchanges going down during times of high volume
| is definitely a thing, yes. For example:
|
| https://www.coindesk.com/coinbase-redoing-infrastructure-
| to-...
|
| > During the recent bitcoin bull run, Coinbase has
| struggled to keep itself up during stretches of heavy
| volume, leading to snarky comments on Twitter and Reddit
| that it's only news when the exchange doesn't go down
| during peak periods. Given the exchange has filed
| preliminary documents for a public listing of the
| company's shares, fixing its infrastructure has
| undoubtedly taken on an even greater urgency.
| agumonkey wrote:
| Going down is one degree lower than officially displaying
| a 'you cannot buy <security>' on your app. I know DDoS
| smell bad but it's not the same. And mind you I lost
| profits on the latest DDoS.
| ceejayoz wrote:
| Coinbase suspended XRP. Not a perfect comparison, but
| perhaps closer to what you're referring to.
| agumonkey wrote:
| It was due to the SEC, not unofficial influences.. I
| think it's a different topic
| voteflipper wrote:
| I keep seeing this pop up everywhere; Citadel != Citadel
| Securities
| pfortuny wrote:
| Mitsubishi Electric != Mitsubishi.
| ForHackernews wrote:
| And Alphabet != Google! /s
| shut_it_down wrote:
| Same group of companies, the distinction is completely
| irrelevant.
| voteflipper wrote:
| One's a market maker + bank, one's a fund. I understand
| it's against the grain to hold this opinion, probably
| because it's inherently not conspiratorial, but they do
| different things and regulated/managed entirely
| differently.
| piva00 wrote:
| They are still owned by the same group of people, with
| conflicting interests: one side supports a trading
| platform, the other side just bailed out a moribund fund
| and needs to make that money back.
|
| What side do you think wins given the huge hole left in
| Citadel after propping up Melvin?
| purerandomness wrote:
| Companies do not make decisions. People owning these
| companies make decisions.
| kasey_junk wrote:
| You keep saying that but they are literally sub companies
| of the same larger conglomerate. Their CEO and founder is
| the same person, he is also both of their primary
| shareholders.
| Tenoke wrote:
| >Can someone help me understand Robinhood's POV?
|
| This is a small part of the picture but RH lost _a lot_ of
| money due to WSB advertising and exploiting the 'infinite
| money glitch' so it likely didn't take much convincing to act
| against WSB.
|
| Though ironically it took them months to close the glitch which
| was their fault and a day to stop the action on WSB's picks.
|
| https://markets.businessinsider.com/news/stocks/robinhood-fi...
| alasdair_ wrote:
| >Why should Robinhood pick a winner (siding against their own
| customers)?
|
| Because Robinhood's _actual_ customer is Citadel, not the
| retail people making the trades.
|
| Citadel gave $2.7BN to Melvin Capital a couple of days ago. It
| stands to lose that money if Melvin (and Citron etc.) can't
| fully cover their short positions.
|
| A good way to make the stock price go down and allow Citadel to
| make money, is for RH to only allow selling and not buying of
| GME.
|
| It's utterly appalling market manipulation.
| mox1 wrote:
| So FYI, the Reddit WSB "shutdown" was temporary and on purpose
| (by the mod admins) to clean up the page a bit. It was private
| for an hour or two and back up.
|
| Discord, not so. Looking at the financial backers of Discord,
| you can pretty quickly draw a link to the short sellers.
| Presumably some phone calls or dinners were had last night and
| strings were pulled to shut the discord down.
| somedude895 wrote:
| > Looking at the financial backers of Discord, you can pretty
| quickly draw a link to the short sellers.
|
| Mind elaborating on this?
| mox1 wrote:
| https://www.reddit.com/r/wallstreetbets/comments/l6n4ay/the
| _...
|
| Quote: Discord has had significant
| investment from private equity funds including FirstMark
| Capital, Greenoaks Capital Partners, Index Ventures, IVP,
| Greylock Partners, Benchmark, Accel, General Catalyst,
| Ridge Ventures, Spark Capital, and Tencent Holdings. At
| least one of these firms has invested with Point72
| Ventures, which recently helped Melvin Capital.
| hooande wrote:
| those are all silicon valley investment firms. they don't
| have any kind of direct relationship with hedge funds
| that specialize in short selling.
|
| this is essentially saying "discord has investors, and
| the stock market also has investors, so they're
| colluding". there isn't a real connection here
| mox1 wrote:
| So your telling me that 0 of the partners in those SV
| firms above have the phone numbers of 0 these short
| selling hedge funds partners in their phones right now?
|
| I'm on the fence whether someone influential actually
| called the CEO of Discord and asked to have it shut down.
| I'm 99% certain these people know each other. It's not a
| could the call be made its more of a was it made.
| hooande wrote:
| I never said this wasn't possible. though it's just as
| likely as anyone calling anyone.
|
| practically, short selling hedge funds and silicon valley
| investors don't run in the same circles. yeah, they're
| socially connected but they have separate networks and
| cultures. conflating the two because they both involve
| investing isn't accurate
| southeastern wrote:
| >though it's just as likely as anyone calling anyone.
|
| That's a stretch. I think the point here is that some
| parties can save billions of dollars in losses, and makes
| them a little more likely hypothetically. Im all for
| dealing with the facts, but the facts are just looking at
| the '08 crisis a lot of Wall st funds have a track record
| of bending rules for profit. It's not out of this world
| to imagine 12 years later that the same culture exists
| xapata wrote:
| Don't they all have the same LPs?
|
| Behind all of these nefarious entities is CALPERS, etc.
| just trying to keep your pension fund solvent.
| boringg wrote:
| The connection is pretty conspiratorial. By that logic
| every company in the valley could be heavily influenced
| to shutdown products for different people if it as any
| connection to a VC (which is pretty much every company).
|
| I think discord probably made some calculations on its
| own as opposed to pressure from Melvin/Point72. Though in
| this day and age it seems that the truth ends up being
| stranger than fiction.
| pepperonipizza wrote:
| Surprise also how much conspiracy is being upvoted here.
| SpicyLemonZest wrote:
| I think you've gotta take selection effects into account.
| The deep comments section of the Nth Robinhood/Gamestop
| post is going to be disproportionately full of people who
| are unhappy with Robinhood and willing to believe lots of
| nasty things about them.
| boringg wrote:
| Which then has a spiraling effect in that other
| disaffected people will read those comments and believe
| what they want to believe. Similar to the conspiracy
| theories in the election. However I do think there has
| been some super shady stuff done with robinhood that
| doesn't take that much to believe that there is a
| conspiracy/collusion is at play. It's hard to believe
| that they are altruistically de-risking their clients
| when they sell doge coin.
| loveistheanswer wrote:
| Well, we are discussing market manipulation. Which can be
| considered a conspiracy crime, right?
| thomasz wrote:
| > By that logic every company in the valley could be
| heavily influenced to shutdown products for different
| people if it as any connection to a VC (which is pretty
| much every company).
|
| Well, yes...?
| AndrewBissell wrote:
| Love how often these comments just boil down to straight
| denial. "This couldn't _possibly_ be happening! "
| thatguy0900 wrote:
| Exactly. These companies are losing literal billions.
| Actual wars in real life have been fought over less. Yet
| they couldn't possibly be exerting any influence over the
| companies they own. That would be illegal.
| AndrewBissell wrote:
| And they would surely be caught and word would get out if
| they did do it.
| devoutsalsa wrote:
| The theory is that Discord's investors are putting pressure
| on them to shutdown the wild & crazy investment decisions
| they don't like. It's hard to say what is actually
| happening.
| wongarsu wrote:
| What you are describing would be Discord engaging in
| (potentially illegal) market manipulation.
| batmenace wrote:
| How?
| ev1 wrote:
| This will be somewhat difficult to prove because the WSB
| discord (for the hour I was in it) was more or less a
| walking terms of service violation, near totally consisted
| of "ironic" racial slurs and "ironic" racist memes,
| n/f-word everywhere.
| jedimastert wrote:
| For the several years I've been following, I've never
| once seen the n word or anything close to racist memes.
|
| They _do_ make a lot of autism jokes (mostly pointed at
| themselves) and plenty of f bombs, but neither of which
| is generally seen as ban-hammer-levels of problematic
| (whether or not it is is up to you)
| rgrs wrote:
| If that's the only criteria lot of social media sites
| would get hit
| trianglem wrote:
| Are you certain? I haven't seen a single racial slur on
| r/wsb. I'm sure there are plenty of r/f-s but I have seen
| any n bombs.
| interestica wrote:
| I legitimately don't know _which_ f-word you 're
| referring to. This is where we are.
| LaserPineapple wrote:
| f-string
| KaoruAoiShiho wrote:
| The bundle of sticks
| [deleted]
| prepend wrote:
| Fnord
| ordinaryradical wrote:
| It was clearly taken over by folks intending to have it
| shut down because it did not look like that prior to this
| GME bet gaining media attention. There is a lot of
| extremely questionable things happening around this event
| leading me to think that some very wealthy people are
| trying to prevent their shorts getting blown up at all
| costs. Even on HN I've been seeing weird posts on these
| threads.
| ryneandal wrote:
| Eh, that blatant offensive nature is a 4chan holdover,
| which WSB proudly embraces. Plenty of millennials are
| former /b/ browsers, now in their 30s and some with
| plenty of disposable income.
|
| I've struggled with this in some friend groups,
| particularly after having a child diagnosed with an
| autism spectrum disorder.
| whimsicalism wrote:
| > I've struggled with this in some friend groups,
| particularly after having a child diagnosed with an
| autism spectrum disorder.
|
| Can you elaborate this some more? Are you saying that
| you've struggled with this because people take that 4chan
| attitude they grew up with into their IRL lives and are
| assholes to your son with ASD?
| ryneandal wrote:
| Essentially, yes. Whether it's playful or not, a lot of
| the memes on a place like WSB are incredibly demeaning.
| whimsicalism wrote:
| Cheers. And yes, I'm totally aware of how awful and toxic
| those parts of the internet are, but usually those toxic
| and awful people hide it more when you talk to them in
| real life.
| optimiz3 wrote:
| What needs to be elaborated? Question feels voyeuristic.
| mlyle wrote:
| Figuring out just how they're assholes in real life helps
| understand and contextualize the problem better. Are they
| oblivious, or dropping offensive memes at his kid, etc?
| brewdad wrote:
| Does it really matter? If you reach your mid-30s and
| haven't figured out that mocking someone with ASD is
| wrong, I'm not going to waste my time educating you _. I
| 'll simply cut you out of my life, gradually or all at
| once.
|
| _The royal "you", not you specifically.
| whimsicalism wrote:
| ?? I asked the question more because I was just curious
| if there are legitimately like mid-30 year old groups of
| friends that haven't grown out of this "4chan attitude"
| of using the n-word, calling people "autists", etc.
|
| I didn't ask out of a sense of voyeurism. More like a,
| "dang, is this something I need to watch out for when I
| get older?"
| ryneandal wrote:
| This is precisely it. A willful ignorance when referring
| to awkward people as "autists" along with tasteless WSB
| quotes.
| fastball wrote:
| So "it was funny until it was relevant to me personally,
| then it wasn't"?
|
| Strong moral backbone ya got there.
| ryneandal wrote:
| You've just described the premise of growing into an
| adult. Congratulations.
| nend wrote:
| >It was clearly taken over by folks intending to have it
| shut down because it did not look like that prior to this
| GME bet gaining media attention.
|
| That's one theory. Another would be that the gaining
| media attention caused an influx of users to join a group
| that equates itself to 4chan, causing moderation issues.
| dijit wrote:
| WSB is about the memes, I don't think it's at all similar
| to 4chan (especially not /b/) and I think it is dangerous
| for you to assassinate the character of the community in
| such a dismissive way.
|
| I'm not personally associated (not a member on the
| boards) but I've seen a lot of discussions float my way
| over the years and if it became that way now it's
| unlikely to be from 4chan itself (or a community like
| it).
|
| But your insinuation here gives credence to many that the
| internet is eating itself, when it's much more likely to
| be manipulation from those who stand to lose.
| BobbyJo wrote:
| Their tagline is (or was at least) 'if 4chan found a
| bloomberg terminal'.
|
| I say this as someone who frequented both communities at
| one time or another: they are very very very alike. I
| wouldn't be surprised if this who thing is a charade to
| take money from 'normies' as much a wall street.
| simias wrote:
| I think it's similar to old school 4chan, mostly chaotic
| neutral in alignment. Today's 4chan is little more than a
| far-right forum.
| realmod wrote:
| Ive been watching the community for atleast 4 years now,
| and for the most part it's is just random people that use
| options to gamble (i.e. wild shots at trying to make
| money but they do have some knowledge). Either way, while
| terms like retard, autist, and gay are used frequently
| I've yet to see any racism or any xenophobia whatsoever
| in the community. And any insinuation of it is usually
| shut down fast. And While they use that mantra I think
| WSB is very unlike 4chan (although my exposure to 4chan
| is extremely limited) and its racism/hate speech.
| morelisp wrote:
| This is how 4chan started as well - there's then a steady
| progression from the ironic mode, to ironic "racism", to
| ironic racism, to "ironic" racism, to racism.
| xapata wrote:
| WSB on Reddit had moderators. WSB on Discord, I'm not
| sure they could keep up.
| balls187 wrote:
| WSB Discord had an auto-mod, but their claim was that it
| was circumvented with people alternative characters to
| post slurs.
| ssully wrote:
| I don't think "While mocking people with disabilities and
| homophobia is frequent, I have yet to see any racism or
| xenophobia" is the defense you think it is.
| meowkit wrote:
| The defense is "while there is mocking of disabilities
| and gay sexuality, there is not racism and xenophobia".
| Regardless, its in good fun. There is no intention of
| actually disparaging those groups. There are plenty of
| posts about donations to Autism research and other
| charities.
|
| Stop moving goal posts its a bad look.
| realmod wrote:
| Yeah, I read my comment and thought about it, and I fully
| understand that those words are not acceptable but I feel
| like its not as severe and most of the time they are
| calling themselves gay and such, but I fully understand
| that it still is unacceptable.
| yowlingcat wrote:
| > I don't think "While mocking people with disabilities
| and homophobia is frequent, I have yet to see any racism
| or xenophobia" is the defense you think it is.
|
| I think that it's a bit of a stretch to say that the
| language they use means they're mocking people with
| disabilities or homophobia. Using words ironically just
| to be edgy is completely different from believing others
| to be inferior or an invasive entity to be defended
| against. That's very apparent when you talk to, say, an
| angsty teenager versus an actual ethnonationalist or even
| just your garden variety civic nationalist.
|
| They might use the same words, but mean them in
| completely different ways, and actually be expressing
| very different things. I think that as it pertains to the
| internet, certain dialects of edgy, slang filled english
| are as close to a global lingua franca as can be
| considered possible. You can't paint all of these people
| with the same brush. Aside from speaking the same dialect
| of english, they use it to express very different
| thoughts, no less diverse or varied as those who speak
| other ones. This nuance will get missed if you
| overliteralize what they say and take it at face value.
| ev1 wrote:
| This one is probably closer to my guess, it would be
| difficult to moderate half a million new users in a day
| with an existing mod base, and you can't really just hand
| out permissions to random memers saying "I'll help
| moderate" without risking that some nonzero amount of
| them will just cause havoc anyway.
| ansible wrote:
| Yes. The only thing I'd suggest is to call for volunteers
| from "sane" subreddits that seem to have a good
| moderation policy and reasonable moderators.
|
| The problem there is that the above people are already
| likely quite busy, and don't want to take on an
| additional (unpaid) burden by trying to clean up a sub
| they don't really care about.
| loceng wrote:
| However Discord would have known about this "bad"
| behaviour for a long time and it wasn't a coincidence
| that they finally decided to apply a ban hammer, so it's
| a very weak cover story. Also, racial slurs? You're the
| first I've heard of racist slurs - I had only heard of
| people calling themselves/the group retards and autists -
| meant in an endearing, self-deprecating humour kind of
| way. I've seen no instances of racism on
| /r/wallstreetbets - I really doubt on their Discord
| they'd be allowing racism though.
| read_if_gay_ wrote:
| As usual, the ToS are applied selectively, serving merely
| as a justification for arbitrary behavior.
| loceng wrote:
| It's just so blatantly obvious. It reminds me that the
| final layer of competition is governance, and these
| "unicorns" funded by the VC-finance industrial complex
| are going to lose out in the end when eventually good
| actors come into play.
| hintymad wrote:
| How is this not making people cynical, even for a person like
| me who does not own any share of GME? And isn't cynicism one of
| the greatest dangers to a system, for people stop trusting the
| system no matter what?
| fire7000 wrote:
| No because the price will normalize in the long run which is
| the only solid investment strategy. This valuation was
| created by out of thin air and will disappear into just that.
| If anything it shows that the market is rife with opportunity
| where people are overvaluing/undervaluing something
| TheHypnotist wrote:
| This is just a guess, but I imagine the hedge funds that own
| shares of these platforms are pulling some strings. That's a
| bit conspiratorial, but is it really that unbelievable?
| AnHonestComment wrote:
| It's not unbelievable, but it does sound like a breach of
| fiduciary duties to side with investors against your clients.
|
| Is what RH doing legal for a brokerage?
| throwaway-8c93 wrote:
| > Is what RH doing legal for a brokerage?
|
| At this point, nobody cares - Reddit found a repeatable
| distributed exploit that cannot be patched, and the
| financial system's self-preservation instinct kicked in.
| imtringued wrote:
| The big short was the same thing. The VW short squeeze
| too. This is nothing new. The fix is to just close your
| short position.
| AnHonestComment wrote:
| It seems more like WSB found an exploit in financial
| malware and crooks are panicking that their swindle got
| disrupted.
|
| What WSB is doing only works against a certain kind of
| predatory short position.
|
| The "patch" is to disallow those predatory short
| positions, which are themselves vulnerable to well-funded
| activist investors.
|
| Obviously the crooks directly involved don't want to do
| that, though.
| riazrizvi wrote:
| Execution risk that they can't handle. When you buy/sell stock
| on Robinhood, they hold execution risk until they net out your
| position by transacting a large enough order on the market. In
| this situation they don't know how to manage the execution risk
| on these trades, so they are losing money, so they don't want
| to do them.
| cm2187 wrote:
| Are they banning people from trading the stock or trading the
| stock on margin? On margin would be reasonable, if the
| volatility of the stock becomes very high, the broker is taking
| a credit risk on its client it may not want (plus suitability
| consideration). It may also make sense to restrict access to
| certain stocks if they are deemed too complicated/dangerous to
| retail investors. But I doubt the suitability would be a
| function of a market movement.
|
| Or is the platform assuming that its clients are doing market
| manipulation by coordinating on reddit to push the price up,
| and wants no part to a crime being committed.
|
| Just speculating, but can think of some reasonable reasons.
| socialist_coder wrote:
| They're not letting you open new positions in the stock or
| options on the stock. You can only close your existing
| position. Guaranteed way to make the price go down.
| KMag wrote:
| There are a couple of charitable explanations for Robinhood
| acting this way.
|
| One is that most Robinhood users probably under-estimate how
| quickly they can sell if the price turns around quickly. There
| might not be enough willing buyers for all of the Robhinhood
| users who might be looking to get out at the same time.
|
| Another thing is that I'm not a lawyer, but they could be
| worried that if the SCC finds the discussions on Reddit
| constitute a conspiracy to manipulate the market, and it's
| primarily being executed through their platform, and they're
| aware of the conspiracy and take no action...
| imtringued wrote:
| Every short seller is a buyer. That's why people keep buying
| the stock. There are more buyers than sellers.
| KMag wrote:
| But what happens when all that liquidity provided by
| squeezed shorts dries up when either they all capitulate or
| the price starts to come back down?
| bondarchuk wrote:
| As far as I understand it robinhood makes (most of their?)
| money from selling their order flow to hedge funds.
| dd36 wrote:
| Yes. Hedge funds profit from every trade on RH.
| kortilla wrote:
| Nah, it's likely net interest that is the largest portion.
| coldcode wrote:
| Which is not remotely illegal, and most brokers do the same
| thing, except they used to charge people to buy and sell as
| well but now just make money from order flow. In fact market
| makers have always been involved in stock sales to ensure a
| fluid market; none of this is new. What is new is that buying
| and selling stocks costs you nothing, so there is no barrier
| to anyone to put money in or take it out. While everyone
| thinks it's a great thing, it's no different that allowing
| free communication in exchange for your personal data (ie
| Facebook) instead of requiring you to pay to communicate via
| mail or phone or plan things in person. Free always has a
| cost; in this case free involve scads of money changing hands
| with the folks at the end holding the bag, and anyone can
| pump the market to ensure they make a profit, and someone
| else takes a loss.
| ceejayoz wrote:
| The theory isn't "it's illegal", the theory is "someone at
| their main source of revenue might call them up and
| pressure".
| ForHackernews wrote:
| It's not a question of legality, it's one of incentives.
|
| Similar to Google or Facebook, if I get the service for
| free, the service-providers' incentives may be aligned
| against me in favour of their paying customers.
| [deleted]
| ForHackernews wrote:
| Robinhood makes most of its money by selling "dumb money" order
| flows to bigger Wall Street firms:
| https://fortune.com/2020/07/08/robinhood-makes-millions-sell...
|
| It seems plausible to me that some of Robinhood's real paying
| customers have asked them to tame their unruly product.
| FirstLvR wrote:
| how come is this even legal
|
| basically the system is telling us to do what they want of fuk
| off
| [deleted]
| h0nd wrote:
| I am just going to leave this here:
|
| https://www.sec.gov/oiea/Complaint.html
| worldmerge wrote:
| Anyone have any recommendations on brokers? I would like to move
| off Robinhood as soon as possible.
| christophilus wrote:
| Fidelity has been rock solid for me. Great customer service.
| Relatively terrible UI, but you get used to it.
|
| Edit: Also, their rewards card dumps 2% of your usage into your
| brokerage. It's a nice combo.
| anaboyd101 wrote:
| This is really messed up. Does anyone here think that Robinhood
| will allow me to buy any shares soon or will it just be limited?
| osrec wrote:
| So only big shot hedge funds are allowed to manipulate the market
| and get away with it? How dare the common man shift the balance
| of power, that too by playing totally within the rules!?
|
| Seriously, if a fund did this, they'd be patting themselves on
| the back, and would have had little to no backlash from their
| brokers.
| janmo wrote:
| Many brokers have lent the shares to hedge funds that went short
| on the stock. Now these hedge funds are on the verge of
| bankruptcy. If they default the brokers are in a lot of trouble.
| MrMan wrote:
| yeah counter-party risk can verge into systemic risk, none of
| these moves by brokers are surprising
| swiley wrote:
| When was Nokia being pumped? I bought calls on it for something I
| saw on _HN_ a week ago which is what you 're supposed to do and
| have been watching WSB and _no one_ was talking about it.
|
| Also: thinkorswim just let me submit an order to buy more NOK
| anyway. Heh, this is what you get for using robinhood.
| mam2 wrote:
| ok fine but there are other brokers..
| Alex3917 wrote:
| Meanwhile WSB is adding over 1,000 subscribers per minute.
| 908087 wrote:
| In the context of WSB, "marks" would be a more accurate term to
| use than "subscribers".
| ClumsyPilot wrote:
| I am in Uk, and Trading 212 has not allowed any purchases since
| yesterday.
|
| Freetrade is the only platform that was still allowing trades. I
| thibk i will stick by them, despite them taking saubscribtuon
| payments
| whywhywhywhy wrote:
| Had an AMC buy go through today on Freetrade too.
| JulesRosser wrote:
| At least with the subscription they pay 3% on up to 4k cash,
| essentially covering the cost (assuming you have an emergency
| fund/cash available).
| bashwizard wrote:
| Class action lawsuit, incoming. WE LIKE THE STOCK.
| hntrader wrote:
| Hedge funds made millions off this move by Robinhood. As soon as
| this information became known - and they would be the first to
| know about since they would've game planned this out - they
| would've loaded up on put options and front-run retail investors
| who were getting stopped out of their position due to cascading
| liquidations. What a tremendous transfer of wealth from retail to
| institutions that we witnessed today.
|
| It's fairly interesting to see the cultural response to this, and
| it doesn't seem to divide down the usual left/right political
| lines which is a relief after years of constant fighting. I
| wonder if this might be a driver of more political harmony in the
| coming months.
|
| I also wonder how much of all this is due to a social media
| vacuum created by the end of Trump's tenure and his removal from
| social media. The timing of this GME episode lines up pretty well
| with that hypothesis.
| ummonk wrote:
| Take from the rich and... oh wait you're not allowed to do that.
| [deleted]
| fasteddie31003 wrote:
| To be clear I bought puts on GME yesterday, so this will work
| well for me, but it is totally unfair by Robinhood. I will be
| cancelling my Robinhood account after this show of force.
| MrMan wrote:
| use a better broker! dont be a mark
| axiom92 wrote:
| And dogecoins!
| gorgoiler wrote:
| WSB reminds me of the heyday of LulzSec. As questionable as
| LulzSec / anon's hacking was, it was also exciting to watch in
| real-time (10 years ago!)
|
| _Of course_ they were caught and _of course_ they turned out to
| be regular nobodies. Everything is normal and banal in the end.
|
| If WSB doesn't turn out to be a regular ole pump and dump then
| I'd be very surprised. The only thing that's weird about it is
| that not even the current cohort of pumpers realise that's what
| they are doing.
|
| Could it be that the original pumpers have closed out already
| leaving behind a crowd of meme spewing parrots that collective
| display malicious sentience while individually being regular
| joes?
| randmeerkat wrote:
| Now that's a name I haven't heard in a long time.
| danmg wrote:
| It's not a pump and dump. It's a short squeeze. It's nothing
| new. It's the plot of the 80s movie "Trading Places."
|
| A hedge fund bought short position futures contracts for 120%
| of the available stock on the market. That's the underlying
| reason the price is going up: because they're forced to somehow
| buy more than 100% of the available Game Stop stock because
| they agreed to sell it to the people on the other end of those
| contracts for a set strike price.
| MrMan wrote:
| no the pump and dump part means that WSB arguably exists as a
| kind of ion cannon like Anon used to be, where if you can
| convince a sizable number of community members to commit to a
| proposed course of action, you can create a reflexive effect
| that you can harness to your advantage. creating a stock
| price event, on purpose, using a community like WSB, and
| profiting, by exiting the trade is a "pump" and "dump."
|
| it is ancillary that a short squeeze might be an attendant
| and inciting event. you could do this with any stock as long
| as the supply is limited compared to the demand created by
| the manipulation of trader sentiment. the short squeeze just
| amplifies the effect
| danmg wrote:
| It's disingenuous and factually incorrect to compare WSB
| with a DDOS takedown crew running a tool against
| scientology.org.
|
| WSB is legally sharing trading information and making
| informed investing decisions based on public information.
| What happened with Game Stop is completely predicated on
| large investors, who should have known better, buying
| positions that exposed them to an infinite amount of risk.
|
| The short squeeze is the reason this is happening and not
| "ancillary." The hedge fund took these positions because
| they thought they were a form a free money. A better
| analogy would be "The Producers." The audience just walked
| out of "Spring Time for Hitler" for intermission and
| they're humming the songs and laughing.
| [deleted]
| ignorantguy wrote:
| is there a good alternative to robinhood? I really like
| robinhood, but what they have done today is super dumb.
| [deleted]
| wonderwonder wrote:
| If Robin Hood was allowing people to sell but not to buy, and
| most other Citadel involved brokerages were doing the same, who
| was able to purchase the massive volume of shares being sold? If
| it turns out that it was only allowing large hedge funds with
| massive short exposure then it means that they were artificially
| reducing price to bail them out and the very real expense of the
| retail investors that were suddenly and inexplicably bag holders
| on a stock that could not be longed.
|
| If this is true, then this is a Bernie Madoff level crime and I
| hope that those responsible get similar sentences. Tens /
| Hundreds of thousands of retail investors were involved in the
| WSB long, all of these people potentially suffered damages, some
| of them significant. Its fine to say only invest what you can
| lose but in your risk analysis I am sure that the market maker
| intentionally committing fraud to force you to dump your shares
| probably did not factor in.
| lefrenchy wrote:
| This whole situation was supposed to be bad because "retail
| traders would be left holding the bag". Now Robinhood has
| intervened, essentially crashing the stock by taking away retail
| buy pressure, so retail is inevitably left holding the bag.
|
| Meanwhile, Kelly Loeffler and other senators insider traded
| before the pandemic market crash. Nancy Pelosi holds deep ITM
| Apple and TSLA calls.
| tareqak wrote:
| Robinhood has announced this restriction on their blog here:
| https://blog.robinhood.com/news/2021/1/28/keeping-customers-... .
|
| > We continuously monitor the markets and make changes where
| necessary. In light of recent volatility, we are restricting
| transactions for certain securities to position closing only,
| including $AAL, $AMC, $BB, $BBY, $CTRM, $EXPR, $GME, $KOSS,
| $NAKD, $NOK, $SNDL, $TR, and $TRVG. We also raised margin
| requirements for certain securities.
| c3534l wrote:
| How is banning people from buying stock with the express purpose
| of prevent the price of that stock from going up in any way,
| shape, or form legal?
| 127 wrote:
| The sacrificial lamb enters the fray. Killing off Robinhood is a
| much cheaper option than allowing your Wall Street buddies to
| take a loss.
| ineedasername wrote:
| This significantly constrains demand while at the same time it
| pressures people to put their supply in the market (sell it off).
| So they're lowering demand and increasing supply, which is sure
| to drive the price down and make people lose money.
|
| Likely to the benefit of institutional investors-- the same ones
| that lost money on the squeeze-- to make money on shorts they
| places at the top.
|
| Doesn't smell right. It might even just (relatively innocently)
| be from soft pressure from the SEC to limit a perceived market
| manipulation, but it will still induce losses in positions that
| users might have sold at higher prices.
| thick wrote:
| How long before r/WSB turns into r/LateStageCapitalism?
| chuckysbk wrote:
| how can robin hood stop me from buying certian stocks? is this
| legal?find another platform.
| moocowtruck wrote:
| why would people use this site? it seems very unreliable, i tried
| with many attempts last night to signup and all I get are strange
| errors..why would i want to conduct serious business through them
| if they can't simply handle signups
| sct202 wrote:
| Robinhood frequently goes down several times a year whenever
| there's a big event like this that attracts a lot of attention.
| Tenoke wrote:
| Because it's the easiest way by far for someone with just a bit
| of extra cash to quickly start trading without paying much in
| fees.
| stevespang wrote:
| Censorship, Cancel Culture - - and now, throttling smaller retail
| traders again giving the big institutions and hedges more power.
| throwaway4good wrote:
| I am the only one who finds this understandable?
|
| Sure short selling sounds weird and dodgy. But how is this
| different from shilling penny stocks in year 2000?
|
| People on Internet forums find stocks that are easy to move for
| whatever reason; generate hype and price hike and then watch
| gullable speculators pile in while the core group of manipulators
| exit their positions.
| gmm1990 wrote:
| Yeah I don't understand why so many people are defending a
| ponzi scheme. Its in at least 90% of Robinhood users interest
| to not be able to buy GME right now.
| recursive wrote:
| When are all the noble protectors going to turn their
| attention to convenience stores and gas stations? They
| shamelessly sell lottery tickets every single day to
| unsuspecting bag holders. It's in at least 99% of their
| interest not to be able to buy those tickets.
| gmm1990 wrote:
| That's a good point
| Miner49er wrote:
| It's a short squeeze, not a pump and dump, as you describe.
|
| In a short squeeze, the hedge funds that hold the shorts will
| be the ones who lose money. Although, to be fair, some gullable
| speculators probably will too, but the point is to make money
| off the hedge funds' poor trade.
|
| The SEC can step in for pump and dump schemes, no reason for
| Robinhood to have taken the initiative (AFAIK).
| DC1350 wrote:
| For a lot of young people, the only paths to a regular life are
| either work hard for 5-10 years, live like a poor student, save
| the majority of their money and gamble that life will be
| affordable at the end, or just gamble away their money today.
| It's so much harder to reach regular milestones that it's
| sometimes not even worth the effort. I don't think taking this
| away from a bunch of nihilistic young men is going to end well...
|
| On an unrelated note, start preparing yourself for a neo-feudal
| society now and you will still live well. You will own nothing,
| and you will be happy.
| kchr wrote:
| <3
| naebother wrote:
| But what if I want to own something?
| vvpan wrote:
| Hacker news often gets very skeptical about blockchain-related
| projects. But I think Uniswap and similar "automatic market
| makers" are showing us a glimpse of how things will work. It's an
| unstoppable exchange with no middlemen. Anybody can access,
| anybody can trade, anybody can pool their money to facilitate
| these trades and nobody can say "no, you cannot".
| at_a_remove wrote:
| A now-old song has the lyrics "everybody knows that the dice are
| loaded" and, outside of "doing it for the lulz," part of this
| exercise is to expose the collusion as a kind of carnival. Watch
| Big Tech scramble to the aid of Big Money! Witness the flimsiest
| of excuses being generated in the hopes that one will stick! See
| with your own eyes the scramble to protect the usual suspects!
|
| And what is pretty amazing is that some folks think that if they
| just stamp out _this_ one, they can go back to (big) business as
| usual: money made by a select few, and the small fry can hope
| that some crumbs might trickle down to them, if only by accident.
| My bet is that this is going to happen again -- perhaps not
| exactly the same way, but it will be another nasty demonstration
| of the self-protection that has managed to be the sign of the
| entrenched.
| [deleted]
| snowwrestler wrote:
| Brokers are worried about their legal exposure at this point.
|
| They could face lawsuits from investors in Melvin and other hedge
| funds, who will allege that the brokers knew they were
| facilitating intentional financial harm. It doesn't matter if
| these are likely to fail; they are expensive lawsuits to defend
| against and therefore may result in settlements.
|
| And they could face class action litigation from trial lawyers
| representing retail investors who lose money when the bubble
| finally bursts. Again, maybe the brokers will win these suits but
| they are expensive and bad for the brand. "I used Robinhood and
| lost my life's savings" is not the news story they want to see 2
| months from now. (Edit to clarify: class action litigators have
| PR strategies to feed these stories to reporters, hoping bad
| press will convince their target to settle.)
| ceejayoz wrote:
| > They could face lawsuits from investors in Melvin and other
| hedge funds, who will allege that the brokers knew they were
| facilitating intentional financial harm.
|
| That'd be a gutsy move from a firm that takes a big short
| position and then publicly bashes a stock.
| alexggordon wrote:
| "Intentional financial harm" is not illegal, otherwise shorting
| stocks would be illegal. There is also no court precedence for
| normal market maneuvers that happen to have a significantly
| negative outlook on a company. Imagine if Gamestop sued TD
| Ameritrade for facilitating short market orders for Goldman
| Sachs? It would be a joke. Same thing for if Melvin sues--they
| over exposed themselves and paid for it.
|
| There's nothing here that's illegal. Insider Trading, Pump and
| dump schemes, etc all require coordinated distribution or
| communication of false and/or non-public information. What's
| happening with GME is happening in the public, in full view of
| everyone, with a goal of exploiting a hedge fund that
| overexposed itself through a short squeeze. Short squeezes are
| legal, and have a large storied history over the last couple
| decades.
| FireBeyond wrote:
| Good point. Hedge funds pay for things that are ostensibly
| public, but with very high entry points, to understand the
| market - witness satellite surveilling of Chinese factory
| activity, Walmart parking lots, laying private fiber.
|
| WSB was the very definition of public information, open
| social media.
| vincentmarle wrote:
| > They could face lawsuits from investors in Melvin and other
| hedge funds
|
| Wait until Robinhood sees the class action lawsuit
| snarf21 wrote:
| Class action lawsuits never tend to work out that well for
| the little guy. Lawyers get rich and the Goliath pays
| essentially a fine.
| azemetre wrote:
| Class action lawsuits are about people punishing companies
| because the government won't levy a harsh enough penalty. I
| never took part in a class action because I wanted "a
| payday," I take part in them because I want the company
| punished.
| nico_h wrote:
| Shouldn't they have an arbitration clause in there somewhere?
| Maybe that would open them to a Thousand Papercut bleeding
| when everyone activate the arbitration clause at once.
| derwiki wrote:
| Wouldn't forced arbitration in the TOS prevent that?
| randomopining wrote:
| Wonder if I should cash in my BTC on Robinhood. If they go
| under then I lose everything right?
| jMyles wrote:
| > who will allege that the brokers knew they were facilitating
| intentional financial harm
|
| Is it possible to make such an allegation in a way that doesn't
| also plausibly describe parts of the everyday behavior of a
| hedge fund?
| FabHK wrote:
| Can someone clarify whether RH blocks margin purchases (in other
| words, just refuses to lend people money to purchase those
| stocks), or blocks outright cash purchases?
|
| The former would be entirely understandable and justifiable, the
| latter not so much.
| FabHK wrote:
| Lol, seems to be a general restriction on buying. Wow.
|
| https://blog.robinhood.com/news/2021/1/28/keeping-customers-...
| [deleted]
| gdubs wrote:
| Zooming out above the vitriol, a few thoughts:
|
| 1) There's a deep irony in calling yourself Robinhood - literally
| a guy who stole from the rich to pay the poor - and taking a move
| like this.
|
| 2) The 2008 financial crisis continues to have deep
| reverberations and has played a role in a lot of the upheaval
| over the past decade.
|
| 3) The Medium is the Message. This one probably deserves an
| essay, but if McCluhan were alive today he'd probably say that
| what's really happening is society is getting buffeted against
| the waves of new mediums.
| zarkov99 wrote:
| This is unbelievable. If there ever was a time to be outraged.
| This is naked corruption as usual hiding under the shabbiest veil
| of virtue. RobinHood traders can bankrupt and kill themselves,
| and that is fine, we will continue prodding them to trade more
| often, but once we get a call from one our hedge fund buddies,
| moaning about the rubes stopping him from raping another company,
| we will shut the rabble down.
| frongpik wrote:
| What matters is the lower 50% (aka the poor) get to see, for a
| brief moment, how the machine really works. WallSt will get
| their way this time, but I doubt those people will just live as
| usual with the gained knowledge.
| ChicagoBoy11 wrote:
| We all collectively saw Wall St. dip into our pockets in 2008
| yet here we are, aren't we?
| miloignis wrote:
| I believe the government and taxpayers made money on the
| bailout, see sources like:
| https://projects.propublica.org/bailout/ The financial
| institutions got themselves in a bad spot, and instead of
| failing they were helped out, but they paid it back with
| interest.
| notacoward wrote:
| Please don't use rape as a metaphor.
| mooseburger wrote:
| > p-p-p-p-lease don't use rape as a metaphor > notacoward
|
| Fucking white people can't go extinct soon enough
| rozab wrote:
| It may be a literal use of the archaic meaning, as in 'rape
| and pillage'. Obviously insensitive though.
|
| https://www.etymonline.com/word/rape
| cambalache wrote:
| Yeah, also add to the list:
|
| Kill, maim, torture, force, destroy ...
| neals wrote:
| Yes, I agree. Also add to the list: laugh at, look at,
| downvote, whisper, cough and point to. All of this triggers
| my poor snowflake millenial mind.
| paulddraper wrote:
| Why?
| rirarobo wrote:
| Because sexual abuse is a visceral trauma real to many
| people, by some estimates 1 in 3 women and 1 in 6 men have
| experienced sexual abuse. Those who have experienced sexual
| abuse also face higher risks of PTSD, drug abuse, suicide,
| and many other challenges. They also often never report
| their abuse, never discuss it with others, and suffer
| lifelong emotional distress at higher rates than for any
| other violent crime.
|
| Consequently, sexual violence is not treated lightly in
| most public discourse. In that sense, it is simply a common
| courtesy.
| paulddraper wrote:
| > sexual abuse is a visceral trauma
|
| No argument.
|
| It's _because_ of negative attributes it 's being used in
| that analogy.
| EGreg wrote:
| Hey, crowd, you are not allowed to buy up the stock like that!
| Someone is gonna get hurt on the way down!
|
| "Here let us help you" -- closes down exchanges, panic sell --
| "isn't that all better?"
|
| People with their money stuck and unable to cash out... so much
| better eh?
|
| I smell a huge class action lawsuit
| djrogers wrote:
| Well, to be fair - they are at least allowing sales, just not
| purchases.
| isatty wrote:
| Which doesn't matter - averaging down is a valid strategy.
| joncrane wrote:
| How convenient that people are now "allowed" to close their
| positions, now that the number of counterparties to that
| trade is dramatically reduced...
| ngngngng wrote:
| Who do you sell to if purchases aren't allowed?
| Brystephor wrote:
| other brokers still allow buying of gamestop stock. This
| is purely robinhoods decision to block trading using
| their app. There is no official market wide block.
| ineedasername wrote:
| The problem is that much of the buy demand seems to be on
| the retail side. But the retailers have shut that down,
| so you're left selling to a portion of the market that
| has the lease demand for what you're selling.
| joncrane wrote:
| Most other major retail brokers are also locking out GME,
| AMC, and co.
|
| For example Interactive Brokers and Revolut have followed
| suit. I believe Ameritrade is also restricting trading.
| UK-Al05 wrote:
| That's worse. Institutional investors want people to sell.
| It's in their advantage. It quite clearly a one way benefit
| for banning purchase but not selling.
| EGreg wrote:
| To be fair - this would be called illegal market
| manipulation (pushing stocks in a downward direction)
| kilroy123 wrote:
| Yeah, so incredibly messed up. How can we sell when there are
| no or very few buyers?
| corndoge wrote:
| Simple, you sell to the shorts.
|
| You see?
| tim333 wrote:
| It could also be RobinHood trying to avoid their traders
| bankrupting and killing themselves by restricting them from
| buying gamestop etc. shares at 10x what they are worth.
| zarkov99 wrote:
| How could that possibly work, ever? If RH can stop me from
| making a trade they deem bad, why don't they just trade on my
| behalf? This is nonsense. Any pretense of caring for their
| users could be faked by simply putting a banner up on the
| forbidden securities. They do not care one iota beyond being
| able to generate fodder for the hedge funds who pay their
| bills.
| [deleted]
| ddevault wrote:
| Robinhood explicitly disavows itself of that responsibility.
| Quoting from their literature:
|
| > If you are interested in opening an account where you do
| not receive recommendations or advice about whether to buy or
| sell investments or investment strategies or account
| monitoring, and you make all of your own investment
| decisions, then a self-directed brokerage like ours could be
| the right fit for you. Robinhood Financial does not have
| account minimums for any brokerage accounts. Robinhood
| Financial does not provide recommendations. We are not
| subject to a fiduciary duty to you and do not monitor or
| manage your account, including the monitoring of brokerage
| account investments, unless we state otherwise in writing.
| Since we do not provide recommendations and you must make all
| of your own investment decisions, the licenses, education and
| other qualifications of our financial professionals will not
| be relevant to your investment decisions. Robinhood Financial
| professionals are available only to provide account support
| through an online email system. If you choose our services,
| you must be comfortable with investing your assets on your
| own.
| Tenoke wrote:
| That's indeed what they are claiming but it's pretty clearly
| just the easiest excuse they can give no matter the reason.
| Similar to how it's the easiest reason for discord to say
| they are banning wsb because of bad language.
|
| https://blog.robinhood.com/news/2021/1/28/keeping-
| customers-...
| alexggordon wrote:
| A stock market trading app, for consumers, trying to protect
| consumers by... not letting them buy stocks? If Robin Hood
| cared about consumers, they probably wouldn't have given them
| credit that they could then go buy options with.
| [deleted]
| slingnow wrote:
| You realize Robinhood allows you to buy Dogecoin as well,
| right? Do you not see the hypocrisy?
| boringg wrote:
| It does? Amazing.
| llampx wrote:
| Suuuuuuuuure
| KyleJune wrote:
| They are artificially reducing the buying volume. Anyone that
| bought GameStop recently on their platform is now stuck
| holding the bag or selling for less than it currently would
| be worth if they were not artificially reducing the buying
| demand. How do you think people that bought in over $300 feel
| now that Robinhood has done this? They made a decision
| knowing about the volatility and that it is likely to go up
| further due to short squeeze. Now RobinHood has changed the
| game in after-hours with no warning.
| netsharc wrote:
| Ah yes, speculate, and then be outraged from your own
| unfounded, evidence-less, conclusions... should we storm the
| Capitol next, because we are dead certain the election was
| stolen?
| zarkov99 wrote:
| You know, one day this sort of thing will happen to you or
| someone or something you care about, and you will instantly
| be enlightened on the dangers of unchecked power.
| netsharc wrote:
| Oh my god, is Deep State Biden going to make legislation
| that my children will have to be taken to Epstein's island
| where he's alive and well? Maybe take the money for their
| tickets out of my bank account as well.
|
| God damn, everyone's lost their minds...
| listless wrote:
| You can be outraged without donning a pair of horns and
| running through the capitol with a stolen lectern. This kind
| of overcharged rhetoric gets us nowhere when rhetoric is all
| we have to solve the problem.
| netsharc wrote:
| My rhetoric? Meanwhile guy I was replying to has made up a
| story in his mind and is dead fucking sure that's what
| happened...
| avereveard wrote:
| where's the 'just build your stock exchange' crowd now?
| Dem_Boys wrote:
| This whole Game Stop situation has made the power of the rich so
| obvious and disgusting.
|
| They temporarily shut down the market, banned the discord server,
| and are now preventing people from buying stocks on the most
| popular app used by small time investors.
|
| All of these moves hurt the small time investor trying to cash in
| on the next bitcoin-like bubble. This just creates more division,
| more disgust, and more of a class war than already exists. So sad
| to see.
| jahaja wrote:
| What if the Socialists were right all along? ;-)
| ehsankia wrote:
| Were the market shutdowns manual or automatic handbrakes? I
| know there are breaks when specific thresholds are hit that are
| pre-determined.
| dahfizz wrote:
| There are different layers here.
|
| Baked into the exchanges (NYSE, Nasdaq) are circuit breakers
| which halt all trading on certain volatility conditions. The
| intent is to stabilize prices. This is not what happened
| here.
|
| What happened here is a broker (Robinhood) decided to not
| accept certain kinds of orders. It wasn't a market shutdown,
| it was a specific manipulation to stop the purchase but _not_
| the sale of an instrument, causing the price to drop.
| ehsankia wrote:
| I was referring to what happened yesterday by NYSE, not
| what Robinhood did today.
| verganileonardo wrote:
| As far as I know, they were automatic handbrakes based on
| excessive volatility. A feature designed to prevent chaos and
| people from over buying/selling due to panic.
| cwkoss wrote:
| Brokerages preventing users from buying certain stocks is
| clearly manual, and fairly unprecedented afaik
| verganileonardo wrote:
| Yes. Both things happened. I was specifically talking
| about halting trade multiple times during the day.
| JohnJamesRambo wrote:
| Just invest in Bitcoin now, it is going to do the same thing in
| a few months. And it can't be censored like this. I admire the
| gme crowd's efforts but they are so misguided. Investing in
| zombie companies we actually hate is pointless. Yes you might
| bankrupt a hedge fund or two but the system will continue.
| Bitcoin was created for the disruption to the corrupt financial
| system that they are seeking.
| wdobbels wrote:
| I mean, GME has value because it is shorted so much. The goal
| of WSB is to go for a short squeeze (when the short positions
| have to be closed to avoid going bankrupt, the stock price
| goes up). In that regard I'd consider bitcoin to have less
| "value", as its price is mostly based on hype, and it doesn't
| really have any practical uses.
| ARandumGuy wrote:
| It may displace the billionaires who run banks, hedge funds,
| etc... and replace them with billionaires who own huge mining
| farms.
|
| Bitcoin doesn't solve any of our problems. It just shuffles
| around who's in power.
| byerobh wrote:
| That keeps the people in power wary from abusing it. What
| do you propose instead? Lulz
| ezekg wrote:
| I personally really like alt coins like Nano, which don't
| require mining in the same way BTC does. But those
| usually have their own set of problems.
| krupan wrote:
| This is a gross oversimplification of how power to
| influence fiat and power to influence Bitcoin differ. Do
| better.
| hajile wrote:
| Bitcoin solves a lot of the biggest problems.
|
| Fractional lending isn't possible because you can't make
| bitcoin out of nothing then charge interest on the nothing
| you lended.
|
| Inflation is out of government control and no longer works
| as an unofficial tax. Related, money can't be printed at-
| will.
|
| Large banks and corporations can't outright prevent
| transactions from happening.
|
| The money can have value as a universal reserve currency
| without any specific political ties.
|
| Removing big banks from the equation takes their hands at
| least partway off the politicians.
|
| Seems like at least a decent upgrade to me.
| imtringued wrote:
| You need inflation to at least match productivity
| improvements. Otherwise your economy will slow down over
| time.
| hajile wrote:
| I agree on the importance of inflation, but with a
| difference in how it happens.
|
| Bitcoin currently inflates slightly. I think it should
| target a 1-2% steady inflation forever both to encourage
| spending and to replace lost coinage.
|
| At the same time, inflation should not be a spending
| power advantage. By distributing inflation among miners,
| you don't give disproportionate advantage to any one
| group like governments currently enjoy. I view this as
| more fair and it removes the incentive to attempt to
| change inflation rates in the future.
| josefx wrote:
| > and replace them with billionaires who own huge mining
| farms.
|
| Aren't most crypto coins set up so that mining is only
| getting harder with time? The ones ending up rich are the
| old money, the guys that invested into it in its early
| days.
| krupan wrote:
| And merely being rich gives you little to no power over
| Bitcoin
| justaman wrote:
| I'm hesitant to invest in an alternative currency that the
| CCP is one of the largest holders of as a means to stave off
| corruption.
| Hendrikto wrote:
| > Of all the countries in the world, China had, by far, the
| largest international reserves in August 2020, with 3.46
| trillion U.S. dollars in reserves.
|
| Maybe you shouldn't use USD either.
| xur17 wrote:
| This does make the advantages of stuff like Ethereum dexes
| (uniswap, etc) a lot more obvious.
| thecupisblue wrote:
| And then the rich noted that, bought mining farms and turned
| bitcoin into their own playtoy.
| krupan wrote:
| How? Do you even understand how Bitcoin works?
| thecupisblue wrote:
| By killing the revolution.
|
| More money = more mining power, more trading power, ICO
| pumps and dumps that rose the overall crypto market
| volume, raising the hype and earned millions in the
| process for the early buyers/minters. The game was never
| equal.
|
| Want to buy BTC? Get your ID ready, or do a local
| exchange which is quite inconvenient.
|
| The revolution died as soon as you could a profit out of
| it.
| krupan wrote:
| Yes, some of what you describe could be done with
| Bitcoin, but Please do not confuse Bitcoin with "the
| overall crypto market" where all of what you described
| actually took place.
|
| KYC and government regulations are a pain, but the core
| decentralized, limited supply, secure nature of Bitcoin
| will remain fully intact.
|
| Rich and powerful people have already tried to take it
| over, they ended up with their own forks and you can
| judge how those have done.
| imtringued wrote:
| Bitcoin is a bubble in progress. If you want to make money it
| certainly is a much better asset to speculate with. However,
| it's a bit late. Most of the easy gains are not available
| anymore. If you buy now you there is a decent risk that you
| will have to wait a year.
| coredog64 wrote:
| Read up on the story of the Piggly Wiggly short/corner.
| chronolitus wrote:
| a link for the lazy (twitter thread): https://twitter.com/dol
| larsanddata/status/135456107992655053...
| tenacious_tuna wrote:
| unroll:
| https://threadreaderapp.com/thread/1354561079926550530.html
|
| interestingly, the page I got was cached from Cloudflare. I
| wonder if the twitter chatter / thread unrolling is up
| enough during all this nuttiness that it's brought the site
| down.
| kaszanka wrote:
| And that time, the rules were also changed to protect the
| big guys. How convenient. The stock market is a _farce_.
| RyanShook wrote:
| Love that story. It's told in more detail along with other
| stories like it in Business Adventures by John Brooks -
| https://amzn.to/3cq4Fs5
| iso1631 wrote:
| So the moral of the story is you can't win against the
| machine
| cwwc wrote:
| This is not limited to these stocks - I've been stopped from
| buying some REITS, closed end funds, ETFs, ect (even DNP).
| dataminer wrote:
| One of the things people don't realize is that all these short
| squeezed companies get put into a very hard position. CEOs at
| these companies don't want a situation like this, as it damages
| the company's reputation, CEO of Tilray has talked about it when
| Tilray got squeezed for two months.
|
| He said something interesting "My advice to those CEOs would be
| that, at times like this, your company is not your stock and your
| stock is not your company".
|
| Another things we need to realize is that there are people who
| will be losing their life savings or getting into debt. It
| doesn't matter if someone with high networth loses 1% of their
| wealth, but it does matter if someone in middle class loses 100%
| of their savings or worse bought these stocks with debt and now
| need to pay high interest on the losses. There have been painful
| situations where losses like these have caused people to have
| heart attacks, mental health issues and suicide.
|
| Brokers, apps, platforms don't want their names associated with
| such painful situations.
| cirgue wrote:
| So am I crazy, or is WSB a fairly transparent ploy for larger
| investors to get more stupid money into the market? Like the
| people making out here are the ones that sold the short positions
| before everyone hopped on the bandwagon. Am I missing something
| here?
| Triv888 wrote:
| They are not the only one, TD Ameritrade and Alpaca are doing it
| too... they are on one team, we are on the other.
| WhompingWindows wrote:
| Isn't this a bad business move? Doesn't RH want its users to
| engage with them? Or are they calculating that this sort of mass-
| coordination on their app will lead to regulations and censures
| against them?
| pettersolberg wrote:
| Well, so this is the free market in action - wow!
| [deleted]
| minkeymaniac wrote:
| What they should do if it is indeed to protect the user is have
| you sign a document. Just like Fidelity does if you want to buy
| UVXY or the oil short securities
|
| FWIW Fidelity lets you buy GME....
| ulfw wrote:
| Someone remind me again how this is even legal? You can SELL but
| not BUY, thus automatically suppressing all stock values?!
| kart23 wrote:
| Its a private company providing a service for FREE. YOU ARE THE
| PRODUCT. Just like twitter, they are allowed to control what
| happens on their platform, and they make no guarantee about
| reliability or free trade.
| darkwizard42 wrote:
| This is not even accurate in the smallest sense. This is a
| brokerage firm. It is heavily regulated by financial law.
|
| They are not "allowed to control what happens on their
| platform." in the sense of Twitter. They have a fiduciary
| responsibility to their clients and the reliability of their
| platform is actually part of their ability to operate as a
| brokerage.
|
| The service being free or not has NO impact on the rules they
| operate under as a brokerage.
| hchz wrote:
| Sure, it's regulated, but which regulation states they have
| a fiduciary duty to you?
|
| Given they are currently arguing in court they have no such
| duty, but only to act in their customers best interest,
| perhaps this isn't sufficiently clear to them.
| kart23 wrote:
| https://cdn.robinhood.com/assets/robinhood/legal/Robinhood%
| 2...
|
| Read section 16.
| read_if_gay_ wrote:
| It is surprising how few people are arguing the "private
| company can do what they want" angle here. I wonder how
| the balance will look next time big tech bans a bunch of
| conservatives.
| SirensOfTitan wrote:
| I'm fuming, and about as angry as I've been in years because of
| this. Robinhood opened up a bunch of levered trading to amateurs,
| that was fine! Allowing folks to buy stocks that are making their
| business partners lose cash: we're protecting the little guy.
|
| If you work at Robinhood and you continue working at Robinhood I
| don't know how you'll continue to sleep at night.
| diveanon wrote:
| Their paychecks can buy some very nice mattresses.
|
| RH has been a scam since day one, the very principle of it is
| virtue signaling to the common man to sell his data to front
| run his trades.
|
| I'm sure none of these people will lose a wink of sleep.
| MrMan wrote:
| yeah Robin Hood was a creepy cynical marketing play from the
| start. good on them for convincing young people that they
| were a good choice despite being objectively worse than all
| other brokers. it's the free market at work! go use another
| broker if you dont like RH, trading fees have plummeted
| everywhere it's a years-long trend due to market regulation
| changes and HFT and low interest rates
| neom wrote:
| I always thought BTC and blockchain stuff had no utilitized
| value, so I never really took it seriously.
|
| Today I started to take it seriously.
| timdaub wrote:
| Lol, what else to say but: Buy Bitcoin?
| whywhywhywhy wrote:
| Watching this unfold makes so many of the early criticism of
| Bitcoin look ridiculous.
| dhdhhdd wrote:
| Clickbait. They're reducing the (risky) leverage. "A Schwab
| spokeswoman said that the platform changed its margin
| requirements, limiting how much an investor can borrow, on Jan.
| 13 and said it has placed "restrictions in place on certain
| transactions in GME and other securities"
| nickik wrote:
| I don't understand what these investors do, I don't think it
| makes sense for most of them and I would advice against it.
|
| However, the whole point of Robinhood is to allow people to buy
| the stocks they want.
|
| Would they also have stopped people buying Tesla a few years ago?
| This has proven to be right bet. However given
| r/teslainvestorsclub strongly pushing for the stock, could be
| interpreted as the same thing.
|
| Robinhood seems to just decide who can be a winner.
| hyko wrote:
| In America, the law is king...until one of the actual kings gets
| punched in the face and re-writes the law the next day.
| Triv888 wrote:
| Do they limit only on margin buys or even cash buys? Because with
| TD Ameritrade, they only limit with margin buys.
| TheGrim-999 wrote:
| Wait, so now private entities censoring/deplatforming/shutting
| down anyone they want for any reason they want is a bad thing?
| Just pretend they were all evil Trump voters that got what they
| deserved.
| joez wrote:
| I don't get how Robinhood can make this move. I see this move as
| a lose/lose. Anyone care to emphasize with them? Maybe they see
| themselves as saving the lay investor?
|
| But then from a price action perspective, - If GME goes up,
| people are going to have the sentiment that Robinhood stopped
| them from making money to protect the fat cats - If GME goes
| down, people are going to blame RH.
| tester34 wrote:
| Relying on USA based IT seems to be very poor choice
| paganel wrote:
| Deplatforming in action, first they came for Trump and his
| supporters, now for people trying to make a quick buck the same
| way as the fat foxes on Wall Street, what will be next?
| ultimoo wrote:
| So is schwab.
| benji_is_me wrote:
| Robinhood's rating has dropped to 1 star in the Google play
| store.
|
| https://play.google.com/store/apps/details?id=com.robinhood....
| jonthepirate wrote:
| RH is blatantly rigging the system in favor of the hedge funds.
| Not good.
| andi999 wrote:
| Does anybody know: who is getting rich on this? What I mean, the
| short seller have to pay up a lot of money because of the
| squeeze, so who gets this money. Of course the entities who lend
| the stocks to them. Who is it specifically Goldman? (the guys
| from reddit just 'create' the squeeze, they are not getting a big
| chunk from the cake).
| djrogers wrote:
| This is so over the line that reps Cortez and Cruz both agree
| it's 'unacceptable', and would push for hearings on the matter...
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