[HN Gopher] Statement of SEC Regarding Recent Market Volatility
___________________________________________________________________
Statement of SEC Regarding Recent Market Volatility
Author : TeMPOraL
Score : 477 points
Date : 2021-01-29 14:47 UTC (8 hours ago)
(HTM) web link (www.sec.gov)
(TXT) w3m dump (www.sec.gov)
| afrcnc wrote:
| i can't understand any of this, can someone provide an ELI5 or
| tl;dr?
| [deleted]
| likesprivacy wrote:
| Zz 4 :. 1 Wt
| andreygrehov wrote:
| > Nevertheless, extreme stock price volatility has the potential
| to expose investors to rapid and severe losses and undermine
| market confidence.
|
| Well, it has also the potential to expose investors to rapid
| gains. -\\_(tsu)_/-
| dudeinjapan wrote:
| GME's market cap (~$25B) is more than the entire AUM of Robinhood
| (~$20B). It's a game of chicken between pros at this point.
| Animats wrote:
| There's nothing all that new about this. Read "Extraordinarily
| Popular Delusions and the Madness of Crowds", which is over a
| century old. It describes all the classics - a pump and dump, a
| Ponzi scheme, a pyramid scheme, a "bubble", "tulipomania", etc -
| from the first time they appeared on a large scale.
|
| These are mostly 19th century tricks. That's when finance and
| newspapers got big enough to make them work at scale. The SEC was
| established after the 1929 bubble got so big it took down the
| whole country.
|
| Meanwhile, the latest thing on Reddit is pumping Dogecoin.
|
| In all these things, the people who get in late and don't get out
| early are the losers. It's zero-sum, after all.
| dkrich wrote:
| There's a long history of similar occurrences that follow along a
| common line: whatever appears to support individual investors
| will be the path taken by politicians and regulatory bodies.
|
| Right now it appears that the public wants to be able to trade on
| their terms because there is this narrative that the little guy
| is finally sticking it to the big bad hedge funds. In reality
| there is probably very little truth to this. However, support for
| the individual investor plays extremely well which is why you see
| politicians from both sides joining forces on this issue. A rumor
| makes it halfway around the world while the truth is still
| putting its pants on. Nobody is interested in the subtleties
| around these issues where there almost certainly should be
| regulations in place or at least warnings from those who do
| actually know better. But late in bull markets when speculation
| is running wild those who try to be the voice of reason are run
| over by the masses until they shut up and go away.
|
| Galbraith wrote about this in the 1950's and if you read his
| account of the 1929 crash the parallels are eerily similar.
| Nobody wants to be told they aren't making money due to skill but
| because they're caught up in a dangerous bubble. In the aftermath
| of a crash when tremendous sums are lost, nobody blames the
| speculators, they always find another scapegoat- the regulators,
| the brokerages, the hedge funds- whomever. It doesn't matter so
| long as the speculator is held up as a victim. I expect this to
| end no differently.
| FartyMcFarter wrote:
| > there is this narrative that the little guy is finally
| sticking it to the big bad hedge funds. In reality there is
| probably very little truth to this.
|
| Which part has little truth to it?
|
| The big hedge funds are apparently losing money (billions!) on
| Gamestop, unless that's being mis-reported. Some of the "little
| guys" (reddit people) definitely were a part of the reason for
| that.
| kasey_junk wrote:
| Hedge funds are not homogeneous and the majority of them had
| no position whatsoever in any of the meme stocks. Some were
| long meme stocks.
|
| https://www.google.com/amp/s/www.marketwatch.com/amp/story/l.
| ..
|
| A Korean fund made a billion dollars on a 12 million dollar
| GmE investment and they were only the 7th largest holder of
| GME shares. The wsb narrative of this sticking it to Wall
| Street is just false.
|
| I personally think it's a narrative propped up intentionally
| by wsb insiders for their own gain. This is just a modern
| distributed boiler room. Retail traders always pay in those
| scenarios.
| FabHK wrote:
| > it's a narrative propped up intentionally by wsb insiders
| for their own gain.
|
| Yes, in particularly the passionate pleas to buy in more
| and HODL, stick it to the man, stick it to the evil shorts.
| While enabling the early longs to cash out profitably.
|
| Bit like Bitcoin, really.
| kristopolous wrote:
| It's the same hustle. I've been clicking through some of
| the usernames that are posting.
|
| I've been noticing some interesting patterns. Accounts
| that seem to have been abandoned for months or years are
| commenting all of a sudden.
|
| Makes me think some of these very similar looking frantic
| lunatic posts are part manufactured.
|
| It'll take a good effort to show it conclusively
| rdiddly wrote:
| Interesting - who knows, could even be professional
| foreign trolls, only interested in encouraging volatility
| a.k.a. instability.
| kristopolous wrote:
| It's this false dynamic, as if the people working at funds
| don't browse the internet.
| MattGaiser wrote:
| Certain hedge funds are losing money. I am sure some others
| are having a great time with this.
| zaphod4prez wrote:
| (Disclaimer I do NOT know what I'm talking about, just
| repeating what I saw on Twitter)
|
| It seems like they've all closed their shorts already, most
| of them did on like day 2 I believe.
|
| In addition, other hedge funds have been on the winning side
| of this trade. Some of the orders for GME last few days have
| been absolutely massive, not coming from retail.
| hatsunearu wrote:
| There was a CNBC post about Citron and Melvin closing
| shorts but it was retracted.
| whimsicalism wrote:
| No, it wasn't. Melvin has definitely closed, although
| Citron may still be in partially.
|
| Why are so many people repeating the same misleading
| talking points over and over?
| kchr wrote:
| > Melvin has definitely closed, although Citron may still
| be in partially.
|
| Source?
| whimsicalism wrote:
| The original CNBC article that was never retracted.
| joncrane wrote:
| I believe the statements were worded in such a way to try
| to make people believe that the short squeeze was no longer
| in play, but the short interest in fact never changed and
| maybe even went up. I believe they were also worded in a
| way to be technically correct (for example if they had
| multiple short positions, e.g. naked short calls, if they
| "closed their short position" that could mean they chose
| their smallest/cheapest short position to close and it
| would be technically correct).
|
| The data doesn't back up the broader (and presumably
| intended) interpretation of their statements.
|
| In my (inexpert) opinion THAT is the definition of market
| manipulation.
| [deleted]
| whimsicalism wrote:
| > I believe the statements were worded in such a way to
| try to make people believe that the short squeeze was no
| longer in play, but the short interest in fact never
| changed and maybe even went up.
|
| I've seen this "claim" all over the internet. It's not
| true. The statements released by Melvin Capital were
| unambiguous and of course short interest on Gamestop is
| going to go up when it surges to such high prices.
| sandworm101 wrote:
| >> The big hedge funds are apparently losing money
|
| _Some_ are losing money. But that is nothing new. Hedge
| funds die every day ... on paper. But which brokerage houses
| are going under? Other hedge funds are doing fine, likely
| profiting on this. The fact that a few are held out as
| victims sounds, to me, like the other funds just stoking the
| panic. I don 't see any non-paper houses closing over this.
| This is Gamestop, not the mortgage crisis.
| mcountryman wrote:
| Not a financial expert however, Citadel is a market maker
| rather than just a hedge fund like Melvin.
|
| Money is lost when a retail investor holds onto their shares
| not just when the stock price rises.
| iamacyborg wrote:
| > The big hedge funds are apparently losing money (billions!)
| on Gamestop, unless that's being mis-reported.
|
| There are thousands of hedge funds, just because a handful
| have been caught with their trousers round their ankles
| doesn't mean the others aren't profiting from current
| volatility.
| dkrich wrote:
| That retail is behind a massive short squeeze that is solely
| responsible for these moves. At this point shorts from
| significantly lower levels have almost certainly been
| covered, if for no other reason out of simple necessity. At
| this point what started as a short squeeze has ballooned into
| a false narrative that retail is sticking it to shorts when
| in reality it's almost certainly HFT traders pushing this
| stock up and down by now. Retail simply doesn't have enough
| cash to move a stock like this especially when by their own
| admission they aren't selling any shares!
| dagw wrote:
| _The big hedge funds are apparently losing money (billions!)_
|
| A few hedge funds (of different sizes) are indeed losing
| billions. A few other hedge funds have taken the opposite
| side of this bet and are making money. The vast majority of
| hedge funds have no position in this stock and are completely
| unaffected.
|
| In addition a bunch of HFT shops and similar making a lot
| money off the volatility and order flow all this has caused.
| enraged_camel wrote:
| I mean, some hedge funds are making money, sure. But the
| point is that, _collectively_ , billions of wealth have so
| far been transferred from institutional investors to
| regular investors.
| FabHK wrote:
| Also, how much of that has been realised vs just being
| paper gains/losses? I'm not convinced the original hedge
| fund shorters have really closed out all their positions
| at a loss. Or maybe they've closed out some of their
| shorts at a loss, then entered the short again at a
| higher point and are now poised to make even more money
| on the (inevitable) way down.
|
| Conversely, a few investors that bought cheap might have
| made huge returns - if they sold at inflated prices
| (passing the hot potato to the next greater fool). If
| they didn't sell, then the paper gains will vanish.
| dagw wrote:
| _But the point is that, collectively, billions of wealth
| have so far been transferred from institutional investors
| to regular investors._
|
| Perhaps, but for every dollar that gets transferred to a
| small handful of regular investor, I suspect at least 10,
| if not a 100, is probably being transferred to different
| institutional investors.
|
| I just don't buy the Wall Street vs The People narrative.
| This is Wall Street vs Wall Street with The People
| picking up scraps from the battle field and hoping they
| don't get stepped on.
| [deleted]
| [deleted]
| [deleted]
| adrr wrote:
| Not it hasn't. Retails hasn't yet sold and the market
| doesn't have the demand to hold sell off at the current
| price. The billions paid by hedgefunds went as pure
| profit to the big FIs like blackrock. When all this done
| and financial disclosures come out. The winners will be
| the big financial firms who have already made their money
| selling stocks at this inflated price.
| JW_00000 wrote:
| > The big hedge funds
|
| Which ones? Citadel/Melvin/Citron (is this all the same one?)
| and which others?
| unicornmama wrote:
| Who do you think is selling GME shares to retail investors
| for dollars on the penny?
|
| This whole thing is disgusting. Once the euphoria had
| subsided, people will realize that the hedge funds have come
| out as bandits, having traded nickles for dollar bills.
| astrange wrote:
| Two hedge funds isn't "the big hedge funds". A lot more
| people are going to make money not by taking the right
| position, but because they are the market, and they get paid
| whenever a ton of retail investors decide to come in and buy
| GME based on memes.
| dalbasal wrote:
| Re: Subtleties.
|
| I disagree. I think a big part of why this whole thing is
| fascinating is the depth. Yesterday morning, financial press
| were blathering generalities pinning WSB as market manipulators
| and calling for regulation to stop them. That is, stop retail
| investors trading at a scale that moves markets. IE, the stuff
| that insiders get away with regularly.
|
| Between yesterday afternoon and now, millions of people have
| been catching up on the detailed mechanics of stock trade
| execution. There's a mad dash from reporter to get interviews
| with brokers, clearing house operators & such.
|
| Note that the maneuver itself was analyzed in detail, and in
| public. That's what allowed big names like Cuban, Musk, various
| politicians and such to take a side and comment on it
| intelligibly.
|
| Ultimately, whoever is holding these meme stock shorts needs to
| buys stock to cover their positions. I acknowledge that brokers
| had legitimate/legal/normative reasons to stop retail buys.
| But, it's also true that they created a window where short
| sellers _could_ buy without competition from retail investors.
| Maybe brokers are covered legally against market manipulation
| charges because clearing houses were genuinely short on
| liquidity. But, (1) that doesn 't change what happened and (2)
| Isn't this the regulator's job?
|
| The reason people are cheerleading is because of these
| shenanigans. "Rigged" gets thrown around often, usually it's
| devoid of subtlety. This time, it's detailed. We can debate the
| details and construction of the rig. Truths fly around reddit
| for an afternoon, and are discarded the following day.
|
| Few people cheerleading because they want a no regulation, pre-
| depression stock market. They just aren't willing to accept a
| rigged system. In any case, who are the speculators here? Short
| sellers like Melvin or Redditors? Short sellers future-sold
| 140% of the stock... hoping for a crash and potentially
| creating one. Redditors recognized this by looking at publicly
| available information and discussing it in the open.
| itronitron wrote:
| >> (2) Isn't this the regulator's job?
|
| Is the regulator in this case the SEC, the exchange, or some
| other party?
| dkrich wrote:
| Yesterday premarket when Robinhood announced the cessation of
| trading in these ultra volatile stocks, was there a deep
| analysis of what led them to that decision? A measured
| consideration of why they might do that?
|
| Of course not. Immediately a false narrative was created that
| citadel forced them to do it under threat that they would
| stop their order flow. Had any politician or public figure
| merely suggested we let the CEO of Robinhood explain the
| decision, they would've been dragged by the Twitter mob. Just
| look at how Steve Cohen, Lee Cooperman and John Fortt were
| shamed for raising what I believed to be perfectly legitimate
| questions. But nobody is interested in legitimate questions
| when it's hive mind mob rule which is what _always_ takes
| hold in a bubble. In fact the vilification of naysayers is
| one of the tell tale signs of a speculative bubble.
|
| To answer the last question who are the speculators here,
| shorts or wsbers? Both. But what I'm talking about are the
| speculators who are simply buying this up with the
| expectation they will make huge gains like deep fucking
| value. They can say all they want about how they don't care
| about potential losses and this is something bigger. Total
| nonsense. Let's see who gets blamed and who plays the victim
| if we get a crash.
|
| It's an interesting world when Mark Cuban and chamath
| palyhapitia can be portrayed as champions of the little guy
| when they have made billions of dollars at their expense.
| Chamath takes a SPAC public every Tuesday. Who do we think
| are buying these up? Warren Buffett? Didn't Cuban make his
| fortune selling a worthless business to Yahoo? These guys are
| using this entire thing to build their own popularity.
| FireBeyond wrote:
| > Just look at how Steve Cohen, Lee Cooperman and John
| Fortt were shamed for raising what I believed to be
| perfectly legitimate questions.
|
| Leon got shamed not for his commentary on the speculation
| around the stock, but for the complete failure-to-read-the-
| room commentary on his taxes, commenting on marginal tax
| rates and "fair shares" as "bullshit":
|
| > "This fair share is a bullshit concept. It's just a way
| of attacking wealthy people, and I think it's
| inappropriate," Cooperman said Thursday. "We've all got to
| work together and pull together."
| content_sesh wrote:
| Maybe if Robinhood had done literally anything to _not_
| appear like they were colluding with their customer Citadel
| people wouldn 't have constructed "false narratives". Its
| some impressive mental gymnastics to see a broker lock out
| all of their retail investors (remember, you were
| completely free to liquidate your position) and offer
| almost no explanation, and blame the investors for being
| hasty and jumping to conclusions.
|
| And for that matter, calling these narratives false seems
| premature. As far as I know there hasn't been any actual
| investigation by regulators into the reason Robinhood took
| those steps (although multiple politicians from across the
| spectrum have called for one). It seems many public figures
| would love to give Robinhood the opportunity to explain
| themselves
| dkrich wrote:
| > Its some impressive mental gymnastics to see a broker
| lock out all of their retail investors (remember, you
| were completely free to liquidate your position) and
| offer almost no explanation, and blame the investors for
| being hasty and jumping to conclusions.
|
| People don't seem to realize that brokerages do this all
| the time to limit their risk. If you have less than $25k
| in a trading account for example, a brokerage is mandated
| by law to not allow day trading (that is entering and
| exiting the same position on the same day). Do you know
| what happens if you do? You are labeled a pattern day
| trader and you can only exit positions. Actually the fact
| that they were letting people exit trades was a big clue
| to me that this was risk mitigation while this collusion
| with citadel narrative was making the rounds.
| mancerayder wrote:
| The motivation is one thing, the end result is that it
| created a slanted playing field where one party was
| blocked from buying, but not selling, and the other party
| (the losing short side) could do either unrestricted. Not
| only that, but it was pre emptive. We can talk all day
| about GME, but the handful of other names like BB hadn't
| even reached that point. There was simply a risk of a
| short squeeze and we slanted the field here, too, enough
| time for the losing side to mitigate their risk.
|
| Conspiracy or no, the end result is so far from your day
| trading 25K minimum example. Your example is a rule that
| already existed going in, rather than a rule that changed
| temporarily to convenience one side for a day.
| tomp wrote:
| But why did RH lie about it then? _That 's_ the smoke
| that most people see.
| content_sesh wrote:
| > Actually the fact that they were letting people exit
| trades was a big clue to me that this was risk mitigation
| while this collusion with citadel narrative was making
| the rounds.
|
| Ok let's say I'm a retail investor using RH. Why should I
| need to divine what my brokerage is doing from Twitter
| posts and Reddit? My should I need to wait hours for
| their explanation that comes in the form of a handwavey
| blog post?
| dalbasal wrote:
| Of course mid-sprint reporting is all over the place. That
| said, so has the financial press and insiders. In fact,
| during an interview of NASDAQ's CEO, the suggestion was
| floated that this is the Russians or something. That rumour
| was dropped by professional journalists and insiders. In
| fact, the regular, non financial press had a far more
| curious response than the financial press... they even read
| reddit.
|
| Going back to "Citadel rumour.." It certainly was off the
| cuff and certainly doesn't encompasse everything. That
| said, RH _is_ financially dependant on Citadel and Citadel
| is in a position to benefit from RH 's decision.
|
| Whatever you think of Cuban, these people are being drawn
| in for the same reason you and I are talking about it. It's
| saucy.
|
| I think your "vilification of naysayers" point is off-mark.
| This is not about whether or not GME bets make money. The
| whole saga _is_ a naysaying of sorts. Naysaying to the
| rigging.
|
| I suspect I'm probably on the same side as you regarding
| the larger point. Speculation, HFT, etc are negatives to be
| curtailed not expanded. But, the _" me but not thee"_ way
| that financial markets have been structured is an outrage.
|
| The "revenge for 08'" stuff is symbolic. But, the symbolism
| is fairly subtle. The firms being protected from long tail
| risk (right, wrongly or even essentially are, again, being
| shielded from long term risk on bets only they have access
| to. This _includes_ clearing houses and market makers. The
| "systemic risk" is the risk that these guys lose money.
| Stability is premised on them not losing money.
| Dirlewanger wrote:
| >nobody blames the speculators
|
| The hedge funds _are_ the speculators in this case. They 're
| playing a dangerous game where you can short more stock than
| what actually exists. Why this is allowed? Who the fuck knows.
| richardwhiuk wrote:
| It's quite difficult to stop without blocking all shorts.
| electrondood wrote:
| Why? My broker doesn't let me trade unsettled funds, even
| though I've made a sale and they're "in my account." How
| hard would it be to create a restriction that says you're
| not allowed to double-loan the obligation to return a share
| borrowed in a short sale?
| kgwgk wrote:
| Because when you buy a share on the market there is no
| notion of it being "a true share that someone sold to
| you" or "a borrowed share that someone sold to you". The
| only way to prevent double-lending is to prevent all
| lending.
| bluGill wrote:
| How do you know that the stock was loaned in the first
| place? If there is a way to know is there a way I can buy
| the original non-borrowed one - this should be worth more
| money because I can borrow it to someone else.
|
| It sounds simple, but the details make it hard.
| gowld wrote:
| Your broker lends your share out.
|
| I borrow it.
|
| I sell it to Tom.
|
| I borrow the share from Tom's broker.
|
| _Tom 's broker and I both have no idea it's "the" "same"
| share I borrowed._
|
| Boom, 200% short interest on "that" share.
| TeMPOraL wrote:
| I think this "is allowed" for the same reason that I can
| borrow a book from you, sell it on Amazon, and when you ask
| for your book back, buy a copy of that same book on Amazon
| and give it to you - but in the meantime, the person who
| bought your book from me can lend it to yet another person,
| who does the same as me.
|
| In other words, this works simply because stocks can be sold
| and borrowed, and they don't carry provenance with them. To
| stop this, you'd have to do the equivalent of DRMing books
| and revoking the first sale doctrine. Which I imagine would
| turn shorting into a much more complex market mechanic than
| it is today.
|
| (Disclaimer: the extent of my expertise on stock markets is
| me knowing how to spell "stonks".)
| politician wrote:
| Security ownership is the killer app for blockchain.
| FabHK wrote:
| No. Way too little throughput (unless we slow down
| trading considerably, which is a good idea in itself,
| IMHO).
| politician wrote:
| Re: throughput, I think nanosecond resolution for trades
| is bad policy. 5 or 10 minute windows are better.
| kgwgk wrote:
| Shorting more stock than what actually exists is not really
| that different from shorting less stock than what actually
| exist.
|
| Imagine you short 50% of the outstanding shares.
|
| Now there are 50% more long positions than outstanding
| shares.
|
| It's not substantially different from having 100% or 150%
| more long positions than outstanding shares.
| [deleted]
| FabHK wrote:
| You could stipulate, though, that the outstanding short
| position mustn't exceed the net position, or equivalently
| that the total long positions can't exceed twice the net
| position. Why not? (This would require new regulation, but
| not be impossible, I think.)
|
| If the total long or short positions exceed the underlying
| economics by a lot, you create all sort of weird incentives
| for manipulation, as can be seen in the CDS market
| sometimes.
| kgwgk wrote:
| You could stipulate whatever you wanted, but there is
| nothing special about that threshold in particular.
|
| I fully agree that derivatives can create all sort of
| problems in many cases, including when the nominal amount
| of the positions is much higher than the actual amount of
| the underlying.
| FabHK wrote:
| Agreed fully. The 2x long, -1 short limit is just a neat,
| natural limit that one could discuss, and might be easier
| to enforce than other (similarly arbitrary) limits.
| kgwgk wrote:
| I'm not against that, but it's not trivial to implement
| either.
| FabHK wrote:
| Would require to set up a central registry or so, yeah.
| (Or finally a use case for blockchain!!!1!!! :-)
|
| Not sure it would be worth it, I think historically
| excessive shorting has rarely been a problem, except for
| a few colourful episodes like these.
| robntheh00d wrote:
| End all speculative finance.
|
| That's where we ended up after 1929, until the current
| billionaire class removed all the guard rails.
|
| Nobody deep on SV stocks and unicorn chasing wants to admit
| they're in the bubble too. Why does society owe floating a
| coder bros data science project?
|
| Anything not science is a meme. That billionaires should exist
| is a meme. This is social philosophy, not truth. And it's
| gamed.
|
| America is a bubble in time and it's having a real
| (environmental) impact on the future.
|
| Billionaires are not experts. They're rich and can pay the
| fines and schmooze. That is not expertise. It's selling "free
| market" and manipulating it based on a meme that speculative
| finance expertise is real. All it is is social engineering of
| the masses to accept deflation of their economic position.
| remolacha wrote:
| Bad take. We need capital markets to effectively value and
| fund different business efforts (unless you want to do things
| Soviet-style). And no matter how much fundamental analysis
| you do, some things remain unknown; all finance is in some
| way speculative. There are rough patches, but you need to
| take the bad to get the good.
| ants_a wrote:
| A serious outsider question - are shorts an essential part
| of capital markets? Or do they at least provide some
| valuable service to the markets?
| remolacha wrote:
| They aren't essential, but they are actually useful.
| There have been some experiments with banning shorts, but
| they lead to larger spreads on longs because market
| participants have to hedge by going risk-off on longs
| instead of shorting affirmatively. Shorts can create
| moments of volatility, but they improve overall trading
| liquidity and reduce frictional cost of capital.
| bluGill wrote:
| Yes. A short is a way to tell the market you are wrong
| about value, and by doing so push the value down to more
| reasonable levels.
| boring_twenties wrote:
| Of course they are. If you believe a stock is
| undervalued, you buy it. If I believe the same stock is
| overvalued, I sell it. That's how price discovery
| happens. If only people who already hold the stock are
| allowed to sell it, then price discovery is impeded.
| robntheh00d wrote:
| No, we don't.
|
| We need to let people build their communities without
| tethering agency to outsiders who control the flow of
| imaginary capital.
|
| Pretending a value in a database is real ownership of
| something is insane and continues to lead humanity towards
| fascism to protect the oligopoly at the top of the meme
| pyramid.
|
| You're selling an appeal to authority that is a complete
| mirage, only existing in your head because of years of
| reinforcement.
| remolacha wrote:
| People can seek capital from whomever they want. But it's
| also true that outside capital is useful. If my community
| has lots of resources and no ideas about how to use them,
| then the world is better off if I take my resources and
| find an under-resourced entrepreneur in a less wealthy
| part of the world to invest in. That's what capital
| represents.
| robntheh00d wrote:
| Please stop believing you are telling me something that I
| do not already know.
|
| I've been following finance for decades.
|
| American communities are under financed because of
| capital extraction to improve margins. It's a
| mathematical fact which carries far more weight than your
| hand wavy generalizations.
|
| The extraction has decimated US communities, empowered
| slave labor across the globe, and entrenched power in
| hedge funds.
|
| Do the actual research instead of parroting cable news
| sound bites.
|
| The same pattern happened when manufacturing was pulled
| from cities to rural areas 100 years ago. This time the
| capital was pulled from rural areas and sent overseas
| simply to improve profit. We can decimate the planet on
| any continent. We do it in Asia to externalize real costs
| and boost financial margins.
|
| You're talking in a pure emotional abstract.
| arrosenberg wrote:
| ...and then you have a bunch of money and resources, and
| your community has nothing because you took it all out.
| Then your community wants to redistribute the wealth
| (because they see how unfair the results were to them),
| you and your followers scream "COMMUNIST!" at them, and
| we wind up in a right-wing authoritarian situation
| instead.
|
| That's what happens when capital runs amok.
| eloff wrote:
| The very high and very speculative participation by retail
| investors is scaring me. I'm reminded of the story of the hedge
| fund manager who was getting a shoe shine, and the shoe shine
| boy was giving him stock tips. He closed out his positions and
| correctly called the top of the bubble[1]. I don't know if the
| story is true, and it is just an anecdote anyway. But
| historically this kind of activity does mark the end of bull
| markets.
|
| At the same time I keep hearing that the stock market is
| actually undervalued on average given current interest rates -
| and those aren't going to change anytime soon.
|
| Definitely things are frothy and there are bubbles in some
| stocks, but maybe this market still has legs - at least while
| the fed is buying 120 billion of debt each month.
|
| [1] I found it, it was Joe Kennedy in 1929:
| https://archive.fortune.com/magazines/fortune/fortune_archiv...
| cardiffspaceman wrote:
| In 1929 a series of events took place, and some of it took a
| while to happen (like Ford shutting down for a few months) that
| pretty much (not completely) eliminated retail accounts from
| both the stock market and actually from banking. Much of the
| public swore off checking and savings accounts, never mind
| owning stocks.
|
| It seems like the big money is changing its clothes to pose as
| children in order to get priority on the life boats ("Women and
| children first!").
|
| The social circle of firms closely connected to this ruin of
| Robinhood and which had been short GME are the speculators.
| Short for longer than intraday == speculative. Short as a
| market maker for an hour or two is good for efficient clearing.
|
| It's on the guys with the big money to gather their fortitude
| and ride this out in the most-trust-inducing ways they can. I
| think the big money is naive if they think it could be
| otherwise.
|
| One more thing, I am reminded that a lot of the time, a retail
| investor will buy something, a weak stock, and ride it down to
| zero out of misguided optimism. Conducting margin calls on zero
| notice is going to be toxic to such people and I don't think
| the finance world really wants that money to leave the market
| for good.
| kurthr wrote:
| I take much of what you say a reasonable wisdom, but the idea
| of retail investors buying weak stocks on margin and riding
| them to zero seems far fetched. They shouldn't be buying on
| margin anyway and if it goes to zero, they're going to get
| the margin call no matter what.
| cardiffspaceman wrote:
| So they get the margin call partway down, they pay in to
| keep the stock because they have told all their friends
| they are long that mess, and out of pride continue to ride
| it down.
| tootie wrote:
| As much as there's a backlash of "it's ok when hedge funds do
| it" the GME situation is still an absolutely massive
| distortion. The company is still worth the same $11/share it
| was a few months ago. Maybe $20 if you think the new leadership
| will improve sales. It's not better because it's little guys
| doing it. It's still abusive.
| unicornmama wrote:
| The narrative that retail investors have stuck it to hedge
| funds is laughable.
|
| Who do they think is selling counter party is?
|
| All they've managed to do transfer wealth from one hedge fund
| to another. And eventually when this pops they have transferred
| wealth from themselves to other winning hedge funds.
| itronitron wrote:
| _the enemy of my enemy is my friend, my friend._
| Miner49er wrote:
| > Right now it appears that the public wants to be able to
| trade on their terms because there is this narrative that the
| little guy is finally sticking it to the big bad hedge funds.
| In reality there is probably very little truth to this.
|
| The fact that buying was limited yesterday is evidence that the
| little guy is actually winning here.
|
| Trading was stopped to save the hedge funds, because if they go
| under or lose too much, the clearinghouse has to front that. If
| the clearinghouse goes under the whole market will crash.
| TameAntelope wrote:
| I cannot stress this strongly enough -- the fact that buying
| was limited yesterday is _not_ evidence that the little guy
| is actually winning.
|
| As has been explained in multiple other places, the
| limitations were as a result of Robinhood et. al. being
| _unable_ to cover the risks involved in providing instant
| trading capabilities for a stock as volatile as the ones that
| got restricted. That has _nothing_ to do with "the little
| guy is winning" whatsoever, and in fact may indicate that
| "the little guy" is about to lose his shirt, due to lack of
| predictability.
|
| Trading was _not_ stopped "to save the hedge funds". This is
| an outright lie that needs to be squashed. Stop saying this.
| I don't mean to be rude, but the narrative you're spreading
| is actively dangerous and not supported by any of the facts
| we have available to us.
| Miner49er wrote:
| > limitations were as a result of Robinhood et. al. being
| unable to cover the risks involved in providing instant
| trading capabilities for a stock as volatile as the ones
| that got restricted.
|
| Yes RH had to cover more, because the clearinghouse was
| also starting to be stretched by the risk from the
| violatility. If the hedge funds go down, the clearinghouse
| wouldn't have been able to front their cash, and they
| would've gone down as well.
|
| You're also missing the point that the clearinghouse firms
| didn't just ask for more money from brokers. In many cases
| they told brokers to step selling these securities.
|
| There's increased risk on both sides, but the long side is
| at least finite (and probably there's not much margin). The
| short side is not. The unknown risk the clearinghouse needs
| to worry about is the short (hedge fund) side.
| TameAntelope wrote:
| > short (hedge fund) side.
|
| The claim that "the hedge funds" operate in unison and/or
| are all short is probably the largest misconception about
| this whole situation. Very "us vs. them" and also very
| wrong.
| [deleted]
| wavefunction wrote:
| If you broaden your understanding of WSB's definition of
| winning beyond "making a profit" or "maintaining value" to
| "taking a loss but having an entertaining ride along the
| way" then they're winning and have no way to "lose." Now
| the SEC or Professional Capitalists making easy money may
| not want WSB to turn corners of the market into a volatile
| form of entertainment but it's completely legal AFAIK and
| illustrates the disparity between what is claimed about the
| stock market by the wealthy and powerful and what the stock
| market actually is. If a Wall Street clique-member replaced
| WSB and behaved the same way it would be fine, at least
| from a hyperventilating "we have to think of the
| children/retail investors" standpoint.
| ditonal wrote:
| Your "facts" are basically corporate PR statements from
| corporations that have a huge entrenched reason to distort
| the truth and have changed stories multiple times. I'd say
| your eagerness to accept RH's version of the truth as 100%
| credible is far more actively dangerous than what you
| responded to.
| ForHackernews wrote:
| Some variation of "If you owe a bank thousands, you have a
| problem, but if you owe a bank millions, the bank has a
| problem" probably applies here.
|
| If crazy retail investors can bankrupt Robinhood or other
| over-leveraged brokerage firms, that's _also_ a win for the
| little guys.
|
| I don't think many HN posters with their stable, extremely
| well-paid technology careers can truly empathize with the
| strain of aggressive nihilism on display at WSB.
|
| "I'm only gambling with my future, so nothing to lose."
| TeMPOraL wrote:
| Here's the thing, though - and please correct me if I'm
| wrong: it's not just Robin Hood. Many other trading apps
| blocked GME buys yesterday and today, and some of them are
| blaming this on banks and brokerages _upstream_ of the
| apps.
|
| That to me looks like the clearing houses themselves are
| worried, which means the whole thing poses a risk (even if
| easily mitigated) to the greater market.
| camgunz wrote:
| What you're saying may be true. But then I don't know why
| Robinhood wouldn't say that in their first statement
| addressing why they disabled buying [1].
|
| [1]: https://blog.robinhood.com/news/2021/1/28/keeping-
| customers-...
| astrange wrote:
| They're poor communicators, or thought saying nothing
| would be better than saying they'd run out of money to
| cover counterparty risk.
| alkonaut wrote:
| Then the clearinghouse should fail, rather than the private
| actors saved.
|
| Once one accepts that "socialized risk and private profits"
| isn't acceptable, then one must also accept that either we
| must allow even the too big to fail actors to fail, or we
| must not accept any actor to be too big to fail at all.
|
| If public money is used to rescue a bank or clearinghouse,
| then the public should own it. A government institution can
| buy any failing bank/clearing house/ if it's so vital, and
| then the public owns it. Buying a commercial bank or clearing
| house at cents for the dollar and then selling it again in
| better times isn't necessarily a bad idea. It's certainly a
| better idea in terms of moral hazard than simply "bailing
| out" banks without ownership.
| Anon1096 wrote:
| There was no bailout here of the clearinghouses, and in
| fact your line of argumentation supports them. If you want
| institutions to be able to avoid getting liquidated for
| cents on the dollar or bailed out by the government, you
| need to also allow them to defend themselves in times of
| trouble. The clearinghouses are doing just that by forcing
| brokerages to get higher reserves.
| fjabre wrote:
| This is not David vs Goliath. This is Goliath vs Goliath. A
| reddit mob armed with Macbook Pros and iPhone 11s does not
| equal 'the little guy.'
| wavefunction wrote:
| Interesting that you assign expensive Mac products to WSB
| members. The most that can be said is that they likely have
| a mobile phone of some time.
| [deleted]
| dleslie wrote:
| The FOMO is palpable.
|
| There's a hurried rush of small investors hoping to turn their
| meagre savings into a big win, backed by the anxiety that if
| they don't try then they'll forever regret missing their one
| and only chance at a comfortable life.
|
| This sort of event would be less likely if America's wealth
| disparity weren't so grotesquely skewed.
| sosuke wrote:
| When hindsight points out the opportunities that you
| overlooked which would have giving you that comfortable life
| it infects all future decision making.
| throwaway-571 wrote:
| Is there a spoiler tag on HN ? These ones still hurt:
|
| There is a lot of thing one could have done "for the LULz"
| but decided to browse HN, Imgur or Reddit instead.
|
| - Bitcoin. I heard about it when it was still possible to
| mint it on CPU, but chose to run SETI@Home instead.
|
| - Bitcoin when it was at merely $9000.
|
| - Ethereum when it was going under $1.
|
| - Dogecoin like anytime before yesterday (up 6x or
| something today).
|
| - #GME when options where pennies on the dollar, or even
| the stock at $20 in early January.
|
| - $Tesla in January, February, March of 2020 or anytime
| before the split.
|
| - $Tesla instead of putting down $1000 to reserve a slot to
| buy a model 3 at its announcement, put it in the stock, or
| even better, in long dated calls.
|
| - $Amazon or $Apple last march or anytime before that.
|
| - $SPCE after it crashed in March (a WSB hyped stock)
| anonymous28092 wrote:
| I feel $SPCE still has a lot of potential upside.
| Robotbeat wrote:
| At least Doge has a small transaction fee. 2C/ For Doge
| vs like $7 for Bitcoin. Might actually be useful as a
| currency like Satoshi intended in his paper (lower
| transaction cost than credit cards). But of course those
| low fees are because it's not popular.
| xapata wrote:
| Live long enough and there'll be plenty more. I'll have
| more regret over that girl I never spoke to.
| throwaway-571 wrote:
| Yeah, but (don't) think about where your life would be
| today if you had done those thing earlier. It's like you
| knew the winning numbers to the Powerball and just didn't
| tick the numbers at the shop. It just sometimes when life
| gets you down these thoughts just poke at you.
|
| Same thing with the girl one never talked to.
| dleslie wrote:
| Dogecoin is ... Just _why_?
|
| There's no limit on the number of coins. Mining is
| designed to be forever-easy. The coin is _designed_ for
| rapid deflation.
|
| Why are people treating it as anything other than the
| joke it was intended to be?
| Sohcahtoa82 wrote:
| > There's no limit on the number of coins. Mining is
| designed to be forever-easy. The coin is _designed_ for
| rapid deflation.
|
| Yes, but the increase in coins is constant. So as a
| percentage of available supply, the inflation rate
| approaches 0%.
|
| Right now, there are 128,000,000,000 DOGE in circulation.
| The block target for Doge is 1 minute, with a reward of
| 10,000 DOGE, which gives a yearly minting of
| 5,256,000,000 doge, which gives and inflation rate of
| 4.11%. Next year, another 5.256T gets added, which is an
| inflation of 3.94%.
|
| And of course, since it's a cryptocurrency, there are
| bound to be permanent losses in the supply because of
| people losing their wallet files. This is difficult to
| track because even with a public ledger, there's no way
| to be sure if unspent DOGE is simply not being spent, or
| if the private key to spend it was lost.
| throwaway-571 wrote:
| You can still make money of a joke if you are quick
| enough! Just @-mention Elon and here you go.
| whatshisface wrote:
| I really have no idea, but your question suggests its own
| answer: fiat currencies are also designed for eternal
| inflation (I think you swapped inflation with deflation)
| and many people consider that a boon.
| legolas2412 wrote:
| The problem is the word inflation vs deflation.
|
| When too much fiat is printed, it decreases its value and
| is called inflation.
|
| But when assets lose value, it is called deflation.
|
| So, do you call cryptocurrency a fiat currency or a
| speculative asset? Because falling value will happen, it
| will be just termed inflation or deflation.
| snowwrestler wrote:
| The key to managing this FOMO for me is really committing
| emotionally to the concept of hindsight bias.
|
| We remember the winners we missed way more than the
| losers, because the winners are still present in our
| lives today, whereas the losers never became noteworthy
| (because they lost).
|
| But it's extremely difficult to tell them apart ahead of
| time. So current me needs to give past me a pass... past
| me failed at something that is very difficult; no shame
| in that. Wistful regret, maybe, in a "what if..." kind of
| way, but I think everyone has those in their life, and
| not just about money.
| sosuke wrote:
| I have this unsupported idea that after I get a win I
| won't be as hard on myself for past errors. Like the 3
| BTC I had to sell when it was at $3k.
| skulk wrote:
| A mental exercise I do to manage FOMO is to try and
| remember duds that I pondered might be the next BTC.
| Admittedly, it's hard because the brain really tries to
| forget about those. Keeping a diary is probably the key
| here.
| Sohcahtoa82 wrote:
| And then you get the ones like Dogecoin that were
| _supposed_ to be a dud, and it 's still around more than
| 5 years later and just had a massive spike today until RH
| decided to restrict the use of instant deposits to buy
| it.
|
| Can't have the poors making money!
| triangleman wrote:
| You can rest easy knowing that most of these things
| provide practically no utility to anyone (or even
| negative utility), and they are simply speculative
| bubbles.
| Leader2light wrote:
| It is so sad. The collapse will come within the next decade.
| Total financial collapse.
| xbmcuser wrote:
| We are going to find out what will happen soon. As looking at
| the trade volumes people seem to have stopped selling or
| buying looking at the stock prices and the trades it looks
| like hf traders rather than retail
| f430 wrote:
| The rally will continue as long as there are buyers given
| the price and the neural pathways have been fully mapped
| out.
|
| What I'm worried about is that there were more than one
| Melvin Capital with several banks now involved who do not
| own enough shares to cover the shorts.
|
| Which means we are literally witnessing a money printer go
| brrr situation where as long as there are people buying in
| due to FOMO or some us-vs-them politics, the prices will
| rally.
|
| The most shocking part is how exposed not only the brokers
| are but now the banks are also exposed. We are literally
| seeing a repeat of 1929.
|
| https://www.history.com/news/1929-stock-market-crash-
| warning...
| [deleted]
| znpy wrote:
| "That's just, like, your opinion man"
| Unklejoe wrote:
| > This sort of event would be less likely if America's wealth
| disparity weren't so grotesquely skewed.
|
| Maybe, but I'm pretty well off (at least compared to the rest
| of the country) and I still feel the same way. It's primal if
| you ask me.
| oramit wrote:
| My Facebook feed is filled with people talking about this.
| These are friends I have know for years who have never
| mentioned stocks before but now are talking about "holding
| the line".
|
| It is FOMO for sure, but the real emotions I get from talking
| with people are outrage and revenge. Everyone feels like the
| system (economic and political) is rigged against the public.
| The dopamine hit from sticking it to the man is palpable.
| pjc50 wrote:
| It strikes me that the outrage is free-floating and waiting
| to be weaponised by whoever finds the words to trigger it
| and point it at a target. Until very recently this was the
| pro-Trump faction; having stormed the Capitol and got some
| of their leaders arrested that has gone quiet. So there
| must be a new disinformation magnet on the internet - and
| this is it.
|
| > These are friends I have know for years who have never
| mentioned stocks before but now are talking about "holding
| the line".
|
| That's what radicalization sounds like.
| dgb23 wrote:
| Radicals aim for the root of the problem.
|
| In these times it's revealing that there seems to be a
| severe lack of solidarity and trust. In a crisis it is
| paramount that everyone does their best and that the
| strong carry the weak. That's a very fundamental property
| of a community. But instead the inequality rises and many
| fear for their livelihoods. This erodes trust and can
| turn fear into anger.
|
| At some point in the future there will be the last straw.
| It might be the financial crisis, the environment, war or
| everything at the same time. The kinds of problems cannot
| be explained away; excuses and lies won't help. Only a
| sharp turn towards solidarity and sustainability can
| avert it.
| sanderjd wrote:
| That would be useful if they were actually sticking it to
| the man. But that isn't what's happening here. What's
| happening is a big bubble where most of these regular
| people are gonna lose lots of money while the hedge funds
| end up closing out their position for a manageable loss and
| come out just fine.
| oramit wrote:
| For sure. This is a terrible way to "stick it to the man"
| and i've encouraged everyone i've talked to about this to
| stay far away. Unfortunately emotions have really taken
| hold. Greed is a hard one to talk people down from but
| doable. Anger and outrage pretty much impossible.
| PaulDavisThe1st wrote:
| ... not to mention the few smarter hedge funds and mutual
| funds that quickly jumped in an out of this and made
| substantial gains, leaving everyone who thinks they are
| "holding the line" even more "on the line".
| ummonk wrote:
| Ehh, the short ratio is still over 100%, and I guarantee
| you those aren't retail investors. So plenty of
| institutional investments to stick it to left.
| sanderjd wrote:
| You don't know when those shorts got in. The price is
| clearly too high now, so it makes sense that
| sophisticated investors (probably other hedge funds)
| would be entering short positions at the recent prices.
| And those recent entrants will not be squeezed unless the
| price goes up by another ludicrous amount, which it is
| less likely to do now that the initial surge of
| enthusiasm is running its course. So lots of retail
| traders who got into the frenzy late with normal stock
| purchases at these absurd prices will get screwed during
| the inevitable crash, while the recent shorters will make
| a killing.
| ummonk wrote:
| I don't think the initial surge of enthusiasm has run its
| course. Most are stuck trying to find another place to
| buy in due to RobinHood closing off purchases.
| sanderjd wrote:
| We'll see won't we?
| snowwrestler wrote:
| I see it too and I think the idea of making money is mixed
| up in the concept of revenge, like "finally I'm going to
| trick Wall Street out of some money instead of the other
| way around." But it's not going to happen that way for most
| people.
|
| I see the idea parroted a lot that if everyone holds the
| line, the shorts will have to buy every outstanding share
| of GME stock at whatever inflated price it's at. They
| won't, though. The bubble will pop.
| triangleman wrote:
| Even if it was true, much of the anti-Wall Street
| sentiment is a scapegoat for their avarice.
| NoOneNew wrote:
| Everything on WSB states this is a bad investment plan and is
| more to bankrupt Melvin because they tried to bankrupt
| Gamestop. Short sellers have been using the down turned
| economy to collapse struggling companies that hire everyday
| people.
|
| What's funny is how the HN community tries to defend the
| firms they've whined about for years. Is what's going on
| irrational? Yup. But it pulls back the curtain of what the
| financial firms do to the economy and their own manipulation
| tactics.
| shakezula wrote:
| I think what really turned up the anger level on this
| specific instance is that they just turned the market off
| when it didn't go their way. That's just such a colossal
| breach of trust.
| sanderjd wrote:
| Here's what oh-so-many people are missing: the gigantic
| volume in these stocks is no longer coming from the WSB
| YOLO bros who know they'll lose money but think that's
| worth it to stick it to hedge funds. That may well be who
| was getting into the stock on Monday and Tuesday. But now
| it is people who saw the story on Good Morning America,
| having never previously heard of WSB or Robinhood, who
| don't care about hedge funds or any of that, but just got
| the impression from the news that hey this stock is going
| way up and that must mean it is a way to make a quick buck.
| And those are the people who are actually going to get
| screwed, not the hedge fund managers, who will be just
| fine.
| NoOneNew wrote:
| So it's WSB fault that the news outlets spun the
| narrative to confuse people?
|
| Sorry, but hasn't the news spinning and generally
| misconstruing news stories to the benefit of their
| advertisers and financiers agendas been the issue the
| past few years?
| chrisdhoover wrote:
| The news has a long history of prevaricating. "Remember
| the Maine." It is only recently that folks are waking up
| to what Chomsky spent a lifetime explaining. The
| awakening is accelerating. Assange and Snowden, the naked
| media lying in the 2020 election, and now Wall Street
| manipulation is being exposed. We never had a reckoning
| after 2008. If this becomes an infinite runaway squeeze.
| Who will get bailed out?
| sanderjd wrote:
| What about my comment seems to say that it is WSB's
| fault? I didn't comment on whose fault it is and I don't
| care, I just think pretty much everyone is acting like
| the only two parties involved are WSB memers and hedge
| funds. And maybe that was true for awhile. But it isn't
| now, there are lots of unsophisticated people who have
| bought into the frenzy and in a few months all the
| stories will be about how those people got screwed.
| Meanwhile, both the WSB folks and the hedge funds will be
| doing just fine.
| khawkins wrote:
| Nobody cares about the people who are "unsophistocated
| people who have bought into the frenzy", especially if
| they get screwed. Further, they shouldn't care about them
| because anyone who doesn't understand what's going on
| deserves to get whatever happens to them. Stock trading
| is high risk, high reward, and that should be clear to
| everyone.
|
| The problem is that hedge funds constantly benefit from a
| much lower risk due to market structures designed to
| stabilize the market. Many of the WSB people are willing
| to risk a big large loss in order to reveal this flaw of
| the system. Many of them will not be fine, and, if
| they're successful, some hedge funds will be bankrupt and
| all of them will be scared moving forward.
| allenu wrote:
| I know people at work joining Slack conversations about
| this and asking how to set up an account and how to buy
| the stock, while fully admitting they don't know anything
| about stock and have never bought any before. From their
| comments, it seems like they just want to throw their
| money at this since it seems like a good bet.
| whatshisface wrote:
| That's quite plausible, but where could we look to see if
| that was true?
| sanderjd wrote:
| The volume in the stock since this became the big news on
| Wednesday, and the performance of the Robinhood app in
| app stores.
| lyjackal wrote:
| One point of evidence is the massive influx of members to
| /r/wallstreetbets
| dzmien wrote:
| When you discover something like this on a nationally
| syndicated talk show, it is probably too late for you to
| get in on the action.
| sanderjd wrote:
| Yes exactly, but many people who discover things like
| this in mainstream media don't know that.
| snarf21 wrote:
| And what about all the people who watch MSNBC and CNBC
| and Cramer, do they need to stop pushing stops as good or
| bad too? They tell lots of people "who don't care about
| hedge funds or any of that, but just got the impression
| from the news that hey this stock is going way up and
| that must mean it is a way to make a quick buck" too.
|
| None of this could have happened if they weren't shorting
| GME at 143%+ of float. They were greedy, this is the
| consequence. In 2006-2008, they ALL were greedy and so
| the government had to bail them out. No lessons were
| learned. If the SEC wants to do something, remove these
| instruments that allow infinite leverage and collapses.
| Spooky23 wrote:
| I haven't watched Cramer regularly in a long time, but
| unless he changed, this isn't what he does.
|
| He has an entertainment component, but fundamentally
| encourages people to educate themselves and manage a
| portfolio of stocks who choose to do so.
|
| The mob bullshit we're seeing now is just the new normal
| - brigades of internet idiots, motivated by profit or
| ignorance to run around like a drunken monkey. It's no
| different than the political drama we've seen fomented by
| irresponsible social media like Twitter, Facebook,
| Reddit, etc.
| shakezula wrote:
| They were greedy, they over leveraged their positions,
| and when the market called them out on it exactly like
| it's supposed to, they just turned the market off. Im
| almost surprised someone hasn't been arrested for that
| move yet.
| sanderjd wrote:
| CNBC / Cramer type stuff is pretty bad too IMO, but way
| less mainstream than network news talking about how a
| single stock is a rocket ship and making all these
| regular joes (just like you!) oodles of cash.
| fairity wrote:
| Greed is really only a problem when your actions
| ultimately hurt someone else.
|
| In general, shorting stocks is a beneficial action
| because it helps prevent shares from becoming overvalued.
|
| So, yea, the fact that GME had 143% of its shares shorted
| is a function of greed. But, no, greed in this case was
| not a problem so long as GME's share price was fairly
| valued.
| InvertedRhodium wrote:
| Is "fair value" an objective metric in this context?
| fairity wrote:
| Yea, it's objective in the sense that it's the net
| present value of all future cash flow. Many unknowns in
| that formula, of course.
| pas wrote:
| You're mushing together two separate issues. Shorting GME
| at 100+ is not in itself a problem. (There's an argument
| that it dilutes the stock, makes it harder for the
| underlying company to turn around, because market
| sentiment is already against them, see investment
| reflexivity theory, etc.)
|
| There's a problem with bailing out big companies again
| and again. While not bailing out small investors
| (directly).
|
| The other problem is that there's no real defense against
| CNBC/Twitter amplified end-user stupidity:
| https://www.youtube.com/watch?v=lMUtU0tOmNE
|
| Every stock trading app/site/service requires submitting
| tons of "risk declaration" forms. (Sure, all of it is
| next next finish. It's the EULA/TOS all again, but with
| money.) And that's the problem.
| Aunche wrote:
| We let big players partake in risky things like shorting
| GME above 100% float because we don't care if they lose.
| It's the same reason we allow them to invest in companies
| like Theranos. They know the risks they were getting into
| and will still be fine without a extra 0 in their bank
| account. Regular followers of WSB are aware of the risks
| as well, so I'm fine with them attempting a short
| squeeze. The problem is that they're encouraging regular
| people to join their crusade against hedge funds who are
| most likely going to time the market incorrectly. What's
| worse is that most of the world, including politicians
| are cheering them on.
| mike00632 wrote:
| Except hedgefunds only trade money from accredited
| investors, i.e. people who can afford to lose a lot of
| money. They also typically aren't swayed by TikTok videos
| and short explainers of how shorts work designed to hype
| up GSE. The point is that Robinhood investors are being
| exploited.
| Aunche wrote:
| Can you explain how you're disagreeing with me?
| mike00632 wrote:
| I disagreed with the statement about WSB users knowing
| what they're doing. Upon closer reading I think our
| larger points are the same. All over the internet I'm
| seeing sleazy promotions for GameStop stock targeted at
| young people who are inexperienced with trading. Anyone
| left holding GameStop stock when this ends will lose a
| lot, i.e. most of WSB.
| PartiallyTyped wrote:
| Then you haven't been paying attention to WSB. WSB knows
| full well they will lose everything. We call it Loss Porn
| and it gets us going. When you see 5,6,7 figures in
| losses you get desensitised to it. It's a casino, yes we
| sometimes make money, we call that the first time, you
| know, the first one is free.
|
| Besides the jokes and the memes, Chamath went on CNBC and
| argued that WSB provided very good due diligence in some
| instances. Yes a lot of it is utter garbage, no doubt,
| but when there are specialists there able to call each
| other out, you get to see good analysis.
| einpoklum wrote:
| > But now it is people who saw the story on Good Morning
| America
|
| Most of those people don't own stock and don't know how
| to buy stock.
|
| And I would guess most of them tune out stories about
| stocks going up or down like they tune out commercial
| breaks or the business segment of news shows.
| vegesm wrote:
| Why would shorting Gamestop mean making it to go bankrupt?
| The falling stock price of a company doesn't cause a
| company to go bankrupt, the causality is in the other
| direction. Putting downward pressure on price is useful
| only if you want to do a hostile takeover.
| stonogo wrote:
| Because Gamestop is a business that is in the process of
| adapting to changing market conditions, which generally
| requires capital, and when market analysts go big on
| shorting in public it depresses stock price, and issuing
| stock is a major common method by which businesses raise
| capital.
|
| As another example, lots of people assume Elon Musk got
| mad at short sellers because he took it personally, when
| in fact they were fucking with his ability to raise money
| he needed to ramp up production and meet manufacturing
| goals.
|
| These things don't happen in a vacuum. Large funds making
| public bets against a company have a material impact on
| that company's liquidity.
| sangnoir wrote:
| Short-sellers _are part of the free market._ They are how
| the equation balances itself when trying to find the
| "true value" of a concern, or at least an approximation
| thereof.
|
| Obviously the person who owns stock, or is set to earn
| billions when the share price reaches a certain level is
| going to be adversarial to someone whose actions result
| in the share price being depressed - even if that is the
| fair value.
|
| > Large funds making public bets against a company have a
| material impact on that company's liquidity.
|
| There are always bigger fish - and if the public bet is
| wrong, someone can, and will earn money at the funds'
| cost.
|
| Edit: shareholders dislike shorts the same way employers
| dislike employees sharing salary information; it's a
| losing proposition for them, but a fair one.
| mike00632 wrote:
| This narrative that GameStop is actually a good company
| and it's turning around despite all the short interest is
| pure bologna. Worse, it's intentionally misleading and
| often espoused by people who have a financial interest in
| the company. It's crazy to see people in this forum, who
| are typically tech forward, hype up the business model of
| selling physical copies of video games.
| shakezula wrote:
| I think focusing on how it hurt GameStop isn't the right
| perspective here. I think it's more about how greedy and
| over-leveraged the short holders were. When average Joe
| goes crazy over-leveraged, the entire world says "well
| duhh, you took a risk and now you have to pay." But when
| a hedge fund does it, they get to just make a call to
| turn the market off for a few hours and try to bail out
| their shorts? The hypocrisy is stunning.
| mike00632 wrote:
| "Over leveraged" typically means you traded too much on
| credit in proportion to how much collateral you have, not
| that the trade is risky. A very large short position is
| reasonable for a company that is likely to go out of
| business.
| NoOneNew wrote:
| Hi, let me google "how short sellers hurt companies" for
| you.
|
| First link of one practice: short and distort
| https://www.investopedia.com/articles/analyst/030102.asp
|
| You can google more yourself.
| hinkley wrote:
| I believe I learned the term Short Squeeze while holding
| Maxwell (MXWL) shares. I sold that position years before
| Tesla bought them, but one thing I recall is that there
| were a few people on the message boards that were
| pointing out how silly-high the short interest was, and
| that was, IIRC, in the 30% of float range.
|
| As we all know, MXWL wasn't bankrupted, but neither did
| they thrive on their own. GME also has 4 times the short
| interest that those people were talking about. It also
| lacks a trove of patents that are worth something even in
| a fire sale. In fact the only thing they really have,
| IMO, is ThinkGeek, and the last time I looked they had
| fucked that up by merging its catalog into their own
| hamfisted storefront.
|
| Honestly, given the current generation of consoles, I
| think they may be better off rebranding as ThinkGeek and
| having a Gamestop section at each store. We'll see if the
| new guy has any ideas like that.
| vegesm wrote:
| which is all illegal and there is no indication that was
| happening with Gamestop
| mike00632 wrote:
| According to the best evidence, Melvin has no short
| position (they may even actually be long now). So the
| entire WSB narrative is a lie being used to pump up the
| stock. The subtleties matter here.
| einpoklum wrote:
| > What's funny is how the HN community tries to defend the
| firms they've whined about for years.
|
| Aren't you over-generalizing just slightly? Even in a post
| with many comments, only a small number of community
| members (if this is a community at all) post anything. And
| not a huge number vote, either.
| nuusr120121 wrote:
| I noticed this recent trend of stuff turning annoying
| political in that sub. There is so much trash being posted
| now drowning out useful DD. I think at the end of the day,
| the original WSB crowd cares way less about political
| statements and solely making money.
| throwaway-571 wrote:
| It's kind of depressing when you look at these crazy success
| stories of lottery winners. You realize even a small bet at
| the right time could be life-changing.
|
| Let's say instead of buying a Latte every working days at
| starbucks over the last five years you had invested it in
| tesla stocks. Or maybe for every starbucks latte you drank,
| you invested the same amount in ETF and in Tesla (pay 3
| latte, drink one). Where would your life be? Would you still
| be at your 9-to-5 or would you go work for that non-profit?
| Or would you just be lazing around on the sofa or at the
| beach sipping pina-coladas?
|
| Anyway, sometimes it takes a lot of energy to deal with the
| KIMO (Know I Missed Out).
| slfnflctd wrote:
| Totally know what you mean. What I do is just assume I'm
| going to have to work until I die, and keep angling toward
| work I tolerate better. I try to invest wisely, maintain a
| few months of cash savings, etcetera, but don't think about
| it otherwise. Money is imaginary and anything could happen
| to it at any moment.
|
| If once in a while I want to use some of my disposable
| income to spin a roulette wheel or buy GME, and can keep it
| under control, I see no problem. If I win, it's a nice
| surprise. But if I don't feel like playing, of course I
| won't win anything.
|
| Despite having watched it since Monday or before, I don't
| think about what I could've won on GME this week any more
| than what I could've won at some dog track. I decided not
| to play, and that's that. My life continues on as normal.
| itronitron wrote:
| It's funny, because I was visiting Gamestop's website last
| November trying to find a Pink 3DS and remember thinking,
| 'oof, Gamestop's website is in bad shape'.
|
| When I get the FOMO urge I think about how BBY just sucks
| as a store, how much better Netflix is than AMC, and how
| airlines regularly go bankrupt.
|
| I believe that GameStop has a future as they have a lot of
| mind share and goodwill. But they need to get rid of their
| brick and mortar stores.
| triangleman wrote:
| The best analysis is always against the company itself:
|
| - SBUX instead of buying Starbucks
|
| - MO instead of buying cigarettes (see _The Millionaire
| Next Door_ for this analysis)
|
| - LVMH instead of buying LV, M, or H
|
| - NVDA instead of buying video cards and AAA games
|
| - CVS instead of shopping at convenience stores
| fractionalhare wrote:
| This doesn't seem to be saying anything about those
| companies though. It's just that you will do better
| financially if you invest money instead of spending it.
|
| Well...yeah.
| throwaway-571 wrote:
| WSB is trying to create a short squeeze by buying call
| options to crush the shorters.
|
| RoaringKitty found the stock underpriced in 2019 and then
| managed to turn 50k into 13M in 1.5 years + and is still
| holding 22M in stock and calls.
| agumonkey wrote:
| I wonder what's the optimum sizing of FOMO. 1% ? 0.1 ? 2% ?
| qznc wrote:
| The Kelly criterion tells you how big your bet should be.
| thereddaikon wrote:
| That's not the sense I'm getting at all. Oh im sure there are
| those involved who fit the description. But for most, it
| isn't about making money at all. Its about financial warfare
| with "the man".
|
| The overwhelming majority of examples I have seen so far are
| only concerned with causing hedges funds to collapse and to
| put brokers out of business, personal losses be damned.
|
| And I see little reason to doubt this. Everyone knows
| Gamestop is a company with an obsolete business model, a bad
| reputation and little chance of turning things around.
| Everyone knows that there is little to no chance of making
| any money on holding. But $500 isn't a lot of money. 3
| million people each putting $500 in to GME is. Obviously
| there are some who are putting in far more. Current market
| cap is $24 billion. Its coming from somewhere. I suspect once
| this is all over we will find that some major players got
| involved as well and put a lot of money into GME to topple
| their rivals. But that isn't the main narrative and most of
| the people buying in are doing so to make a statement.
|
| This has started a discussion. A lot of people are getting a
| 101 education on how the stock market really works and they
| are learning just how little it actually has to do with real
| value and the economy. I predict there will be serious public
| pressure for regulatory reform. People are going to want to
| make shorting and high speed trading illegal.
| AmericanChopper wrote:
| > A lot of people are getting a 101 education on how the
| stock market really works and they are learning just how
| little it actually has to do with real value and the
| economy.
|
| I don't see how you can draw this conclusion from these
| events. If this level of price volatility was commonly
| caused by market participants, then it would be such big
| news when it happens. They're not common at all, they
| represent a small number of events where a small number of
| shares were traded overvalue for very short periods of
| time. Nobody is concerned that stocks are overvalued
| because short squeezes are just happening all the time.
| Squeezes are also short sellers getting punished for trying
| to profit off somebody else's losses, which as far as I can
| tell most people think is very morally righteous. The only
| time they're controversial is when intervention occurs to
| rescue the short seller.
| ycombigator wrote:
| Many just want to screw the hedge funds, finally it's their
| blood in the water.
| nullc wrote:
| The "their" in your sentence can be read as ambiguous as to
| which parties its referring to, aptly.
|
| With crud like rwsb posters asking if letting their deep
| in-the-money calls expire unassigned will screw the funds
| more-- it may well be the case that it isn't fund blood in
| the water that you see in this feeding frenzy, at least not
| anymore.
| teeray wrote:
| Absolutely. Many view this as a donation to a political
| cause that has tangible outcomes. The ROI is watching hedge
| funds implode.
| iso1631 wrote:
| I bunged in $50 into GME this morning because why the
| hell not. If pubs ever reopen I can spend another $50 on
| a round of drinks with mates and legitimately say "we
| took on the wall street parasites". The truth doesn't
| matter, the end doesn't matter, the tale is the reward.
| gowld wrote:
| I can do that for half the price by skipping the first
| $50 and starting with tall tales in the pub.
| misterS wrote:
| But I bet the beer would not taste as good.
| dleslie wrote:
| Of course! Many are living hand-to-mouth in dismal
| conditions and unable to afford basic necessary expenses,
| while they see robber barons making a killing by putting
| thousands of already-poor people out of work.
|
| Hating the hedge funds is rational, for many.
| xapata wrote:
| Irrational, but understandable.
| dleslie wrote:
| It can be rational to hate those who actively seek to
| harm you. Emotion isn't necessarily irrational, so long
| as the reasons for emotion are well-founded.
| markbnj wrote:
| I don't get this. I can't imagine the professional investor
| class is still blindly following their shorts. They're all
| out by now, aren't they? If the "little guys" are making
| money I tend to think it's coming from other little guys.
| reggieband wrote:
| Believe it or not there is strong evidence that more
| shorts are being added.
|
| Consider a potential attitude that Citadel is going to
| get away with this blocking. I mean, maybe ... just maybe
| ... they'll get an SEC fine of a few hundred million
| (while protecting many hedge funds from billions in
| losses). In a worst case scenario a sacrificial scapegoat
| or two goes to a minimum security country club or house
| arrest for 6 months/1 year. But that will take a few
| months/years to come to pass and public sentiment will be
| much less hot. So they're probably gonna force the price
| down to unwind existing shorts.
|
| So, since there is a potential that the price will be
| pushed down due to the above ... doesn't it make sense to
| open a new short position?
| NationalPark wrote:
| The "short" (haha) answer is that we just don't know what
| the funds have done during the last week. They're
| incentivized to mislead the public about closing their
| positions. But the technical reasons the gamma squeeze
| happened and possible short squeeze today could happen
| still make sense: the equity has oversubscribed short
| interest and a skyrocketing price.
| tayo42 wrote:
| I'm kind of amazed how little transparency there is in
| the stock market. Everyone seems to be guessing. The
| unequal amount of information for regular people is
| really unfair and seems like an easy situation for
| corruption to take place
| disgrunt wrote:
| No. Apparently other hedge funds got in line behind
| Melvin with even more aggressive shorts.
| Anon1096 wrote:
| The truth of the matter is that hedge funds and
| institutions are quietly the ones actually pumping these
| stocks. Reddit likes to paint a narrative that they are
| in control, but when their messiah has 50MM max of
| securities and options, meanwhile single trades are going
| through worth over 700MM, the narrative just doesn't make
| sense. This is a battle of Wall Street vs Wall Street
| with some retailers playing along as pawns. Most likely,
| starry eyed retailers are going to be the ones holding
| the bag when it all comes down because they're playing a
| game without even knowing who they're up against.
|
| As for the shorts, Melvin and Citron are out but new
| shorters get in every day. The higher the price goes the
| more incentive there is to short. Most will probably lose
| money as the bubble inflates. But a few will make out
| like kings when it pops.
| xapata wrote:
| Why would you short when you can buy a put option?
| [deleted]
| Gladdyu wrote:
| Your gain in delta (due to the stock moving) will be
| offset by your loss in vega (due to the volatility coming
| off after the impending crash). Option fair value is a
| function of both underlying price and volatility, which
| is currently at unprecedentedly high values.
| kortilla wrote:
| > This sort of event would be less likely if America's wealth
| disparity weren't so grotesquely skewed.
|
| Highly unlikely. It doesn't matter how rich the rich are if
| you're poor and want to gamble your way out. The problem is
| with poverty, which is completely unrelated to wealth
| disparity.
|
| One you can fix by making life worse for everyone, the other
| you can fix by making life better for the poor.
| BoorishBears wrote:
| It boggles the mind people think hedge funds can't profit off
| a mad rush like this...
| the_local_host wrote:
| > It boggles the mind people think hedge funds can't profit
| off a mad rush like this...
|
| How exactly would they do it? Shorting it again would
| involve calling the top for a stock whose price recently
| has been unpredictable, but very high.
|
| Writing options seems nuts for something this volatile. I
| guess they could "buy volatility" with a straddle but again
| what would the numbers have to be on this where they turn a
| profit? It's not like the rest of the market is
| _underestimating_ the volatility, it 's evident to
| everyone.
| BoorishBears wrote:
| I would be completely out of my depth implying I
| understand all the creative ways different hedge funds
| make money, but there's a lot more tricks in the bag than
| "short it" and "write options"
|
| Just look at Citadel... how much money do you think
| they've made off early access to majority of retail
| orders for GME as RH exploded?
|
| And how much more money will they make on an ongoing
| basis after this from all the new users?
|
| The volume has been insane, someone is making money
| besides retail investors, and they won't be the ones left
| holding the bag after the musical chairs stop...
| Bedon292 wrote:
| Volatility makes the HFT's money. Hundreds of millions of
| shares are flying around the past few days. Thats not
| from a bunch of people buying and holding. They make
| money on fractions of a percent swings. They can make a
| lot of money on 50% swings.
|
| The other thing is, the price WILL go down eventually.
| Even if not today. A fund with billions of dollars can
| afford to sit on a short of GME at $400 for a long time.
| Longer than the upward pressure will last. The narrative
| was that the short squeeze will happen today, and prices
| will skyrocket. You only had to be in it for a little
| while. Now the narrative is changing, and it will maybe
| be next week, or even farther out. Sure the meme is to
| hold forever, but anyone holding any amount that will
| maybe make a difference are going to see that life
| changing number and sell eventually.
| brootstrap wrote:
| One of my neighborhood friends is a HFT guy and he says
| he makes bank off fractions of a dollar. Not all trading
| is equal obviously. But he said sometimes it's like 3,4,5
| decimals places deep that he is watching the stock prices
| and trading
| Justsignedup wrote:
| hedge funds put in some money. They lost. Yeah. But
| automated trading solutions quickly flip things around. If
| they are smart. Losing money is literally part of what they
| do. Some they lose some they win. The success is winning a
| bit more than you lose, and very frequently.
| dkrich wrote:
| I mean do people really believe Robinhood traders are
| moving billions of dollars of stock a day? Most admit that
| they aren't selling and buying at higher and higher levels.
| That translates to very little cash to buy more. There is
| absolutely no way that these moves can be attributed to
| retail traders or short squeezes. The narrative that these
| are retailers causing every significant move higher and
| with every move the shorts are losing more and more is
| actually causing this bubble.
| rory wrote:
| Matt Levine's email today estimates retail investors to
| be about 30% of total volume (with actual data from
| Citadel), but retail was net selling on Tuesday,
| Wednesday, and Thursday. So theoretically retail is
| enough to move the price if they were truly united, but
| that isn't actually the case. It's just not sexy to say
| "I bought in for a couple days and am taking my gains" in
| a public forum.
| kenneth wrote:
| Let's say the average bet is 1-5k into this the average
| Robinhood user invests around 5k), it only takes 200k-1M
| buying in to move $1B into the stock. When you start with
| a $200M market cap on a heavily shorted stock, you easily
| end up where we are today
| BoorishBears wrote:
| Average bet being 1-5k feels optimistic by an order of
| magnitude...
|
| The _entire account value_ of _normal_ RH users in the
| range of 1-5k
|
| Most people just joining don't have 1k to just throw at a
| lottery ticket, and remember that until today RH allowed
| fractional shares of GME
|
| -
|
| But you know, that's not even it...
|
| The other day GME did _20 Billion_ in volume in a single
| trading day. More than the S &P 500.
|
| I don't understand how people think retail can account
| for that.
| dkrich wrote:
| And doing it every day? Even now that the stock is $350 a
| share? If they are able to do that I have to question the
| "little guy" tag.
| nrmitchi wrote:
| Why do you think "hedge funds" are not? The small ones that
| were caught in a bad position at the beginning? Sure, they
| probably didn't.
|
| But most other funds, or trading desks, or market makers,
| or brokerages (etc) are most likely printing money right
| now.
| BoorishBears wrote:
| ... what? My comment is literally saying hedge funds
| (like Citadel...) are profiting off this.
| nrmitchi wrote:
| You're right, I misread. My apologies.
| germinalphrase wrote:
| 'People' don't know what hedge funds do.
| ramraj07 wrote:
| Many might be FOMOing, but few want to be told that they're too
| dumb to be given this power. Clearly the experts themselves
| don't know when they bite too much (as seen in 2008) lets spare
| the common adult some decency and allow them to bankrupt
| themselves if they wish to do so. America was a great place
| precisely because of this freedom
| franklampard wrote:
| > In reality there is probably very little truth to this.
|
| The whole premise of your argument is based on 'probably'
| tal8d wrote:
| Nope, the narrative has been building for the last two days
| that this was all perpetrated by fascist white supremacist
| deplorables... so it is no mystery which side Democrats will
| pick. Republicans will do the same for more classically
| stereotypical reasons.
| aaroninsf wrote:
| Observation:
|
| When a startup seeking a C round does it, it's -disruption -
| moving fast and breaking things - seizing market advantage by
| nimbly circumventing slow-moving or antiquated regulation.
|
| When a nihilistic stan does it, it's - <various pejoratives> -
| <motivated by ignorance or abuse or amorality of various types>
|
| Argumentation over terminology, expertise, etc., is secondary,
|
| to the ways in which this is about _power_ , which informs every
| aspect of how, why, who, and what. Including the language used
| and appeals made by those who have it, traditionally have it, and
| defend it, against those who do not.
|
| Many of the details being argued over are interesting mostly
| because argument over such details is another tool of the
| powerful.
| twadfas wrote:
| The problem with experts is that they often accept things and
| normal that the general public finds unacceptable. The SEC
| experts probably see a lot of "Normal" level of manipulation and
| improper activity that folks outside the industry would find
| wholly unacceptable and would like reformed. This happens to a
| lot industries where bad behavior is normalized and ignored by
| both players and regulators.
| cwwc wrote:
| this is a warning to FINRA, too
| cwwc wrote:
| (FINRA is a like a mini, NGO-SEC for broker dealers)
| [deleted]
| dls2016 wrote:
| What are the odds of a flash crash in the next week as a result
| of this activity? The system of banks and market makers and
| clearing houses is a always way more coupled than the the owners
| let on... history shows they don't know how to risk manage these
| sorts of situations.
| rich_sasha wrote:
| From a distance, this is all a storm in a teacup. It's a small
| handful of stocks, and every single one in S&P500 is waaaay
| bigger, in terms of trading volumes and market cap.
|
| Anything can happen, but in finance terms, this is tiny so far.
| acover wrote:
| The issue isn't GME market cap vs the S&P 500. It's that the
| clearing houses, exchanges and other intermediaries that
| guarantee every trade may go bankrupt due to the $15+ billion
| loss on options that they may have to cover.
| jiofih wrote:
| Why do clearing houses have to cover losses, isn't it the
| options seller on the other side that takes it?
| rich_sasha wrote:
| Clearing houses cover any shortage of money due to one
| party not paying up. So if someone sells an option on an
| exchange, then doesn't pony up, the clearing house must.
| And if too many people don't pony up, the clearing house
| is in trouble.
|
| Except it is far more complicated. Does Robin Hood allow
| the selling options? That would seem ridiculously stupid
| if it does, but let's say yes. The clearing house has
| nothing to do with the seller, or in fact probably with
| Robin Hood. It will be dealing with Robin Hood's dealer,
| probably a big bank (think JP Morgan or the like), and
| there's a cascade of who-owes-who.
|
| Robin Hood clients ought to pay to Robin Hood if they owe
| money on short options, but if they fail, then Robin Hood
| must cover that to the broker. The broker wants to make
| sure it doesn't lose any money on trading with Robin
| Hood, because if it does, it still needs to make good to
| the exchange. And only if the broker fails, _then_ the
| clearing house gets involved.
|
| If you can only buy options on Robin Hood (or, in any
| case, cannot be short), then there isn't much of an issue
| there. The issue would arise if the broker cannot pay the
| option payouts, but that's very unlikely. Banks deal with
| option trading all the time, and spend lots of money on
| hedging their exposure to the underlying stock. This is
| essentially a solved problem, and the scale of what's
| going on is way too small to stress that.
| acover wrote:
| Let's say you are buying an option contract on an
| exchange. You don't know who is selling to you and
| whether they can actually pay you when the time comes. In
| order to solve this issue, intermediates act as a
| guarantor of all transactions allowing investors to treat
| each seller the same. This lets investors only care about
| price instead of "who".
|
| I am not an expert, I only have very surface knowledge
| and don't know the exact chain of intermediaries for each
| market but I know one such guarantor is the Chicago
| mercantile exchange.
|
| https://www.cmegroup.com/clearing/risk-management.html
| dls2016 wrote:
| Yeah everyone says short sales have "infinite loss
| potential", but at some point the lender will recognize
| that those shares aren't coming back.
| rich_sasha wrote:
| I'd be very worried about Robin Hood's solvency, since they
| let people trade on margins, and retail investors are
| presumably difficult to get debts out from. I seriously
| doubt they underwrite their own options, more likely they
| just sell some broker's options.
|
| Otherwise... sure some funds might lose a lot of money. But
| a lot of money for a fund (and it's investors). I wouldn't
| say we're seeing _anything_ like systemic risk. If nothing
| else, Redditors ' pockets are only so deep, and there's
| only so much meme stocks they can buy.
|
| So where does it leave us? Perhaps Robin Hood might go
| under (though it looks like they learnt their lesson and
| got some cash, so maybe not). Some funds went under, and
| maybe some other will too. But generally, funds are not
| major systemic risk. They are speculative money. It's been
| going on for long enough that clearing houses requested the
| higher margins already. I don't think banks have any real
| skin in this game.
|
| What was so terrible about 2008 financial crash, from the
| technocratic point of view, was that it was banks that were
| affected, and they are, among other things, the very
| plumbing of the financial system we all depend on.
|
| Of course life can prove me wrong :) but I'm not remotely
| worried atm.
| kart23 wrote:
| the inverse correlation between the S&P and GME style stocks
| looks strong over the last couple days.
| dkrich wrote:
| I'd be very careful about making this assumption. There is
| always bleed over in unexpected ways. When these stocks
| spiked on Wednesday the market as a whole came down hard.
| Perception is extremely important and if people start to fear
| that brokerages could be insolvent or just lose faith in the
| valuations of stocks as a whole it could definitely effect
| the entire market.
| llampx wrote:
| I follow the markets, and the market does a hard mini-crash
| about once every two weeks. You don't notice it as a buy-
| and-hold investor, but it raises the hackles of many short-
| term traders.
| dageshi wrote:
| If that's the case I'm kinda confused why trading platforms
| keep banning trades in these particular meme stocks?
| andreygrehov wrote:
| In the case of Robinhood:
|
| > On Thursday, Robinhood was forced to stop customers from
| buying a number of stocks like GameStop that were heavily
| traded this week. To continue operating, it drew on a line
| of credit from six banks amounting to between $500 million
| and $600 million to meet higher margin, or lending,
| requirements from its central clearing facility for stock
| trades, known as the Depository Trust & Clearing
| Corporation.
| ThrustVectoring wrote:
| It's down to minutiae in the collateral brokers have to
| post to ensure that the clearing house doesn't eat losses.
| Trades on Wednesday aren't settled until Friday, so if a
| brokerage firm dies in the interim they have an obligation
| to complete a bunch of trades that they might not have cash
| for, and unwinding that exposes counterparties to the price
| moves in the interim. RH users have been buying a lot of
| meme stocks that move a lot in price, so they have to put
| up _vast_ amounts of funds to ensure that nobody else
| suffers losses if they were to back out of the unsettled
| trades.
| klodolph wrote:
| Because they are forced to carry collateral to make the
| trades happen, and need more collateral for more volatile
| stocks.
| rich_sasha wrote:
| What's small for the whole market isn't necessarily small
| for Robin Hood.
|
| It's not out of the question that Robin Hood could go under
| as a result of these shenanigans. Just very unlikely that
| would trigger any serious fallout downwind.
| snet0 wrote:
| Because of the volatility of the stock, I believe.
| 100->300->200->300 in the space of no time at all. You
| could've watched the stock just jump all over the place in
| real-time, pretty much.
| marcosdumay wrote:
| It's not because of this stock. The question is quite
| reasonable because some funds were overexposed into it, and
| the funds are much larger.
| davio wrote:
| GME has the market cap of a S&P300 sized company right now.
| TeMPOraL wrote:
| Newest from the front lines, Freetrade (UK trading app) just
| blocked buy orders for US stocks... but they explicitly pin it
| on "a sudden and unexpected decision by our FX provider, and
| their bank"[0]. In another statement, they also express their
| deep unhappiness about it[1].
|
| Assuming they're being honest - and I see no reason to doubt it
| - it's refreshing, compared to Robin Hood's communications, and
| more importantly it highlights your point. The "backend" of the
| market seems way more coupled than I imagined it is.
|
| --
|
| [0] - https://twitter.com/freetrade/status/1355161107699273729
|
| [1] -
| https://old.reddit.com/r/wallstreetbets/comments/l7u3ag/free...
| zinekeller wrote:
| Corrobating on this, same thing happened on my side that all
| US financial products (apart from regular deposits, cheque
| (or check?) and loans including credit cards) were suspended
| "beyond our control", so there is some action taken by US-
| based fincacial companies due to this (either because of
| laziness or genuine worry that they might be punished).
|
| Nota bene: I do hold some Nokia stocks, but it is from
| (Nasdaq) Helsinki and not from NYSE and it was already in my
| possesion waay before these brouhaha. I don't hold any other
| stocks that were affected, including stocks for GameStop.
| dls2016 wrote:
| > The "backend" of the market seems way more coupled than I
| imagined it is.
|
| Exactly. Overlay this on the backdrop of a frothy, juiced up
| market and a bunch of angry people on their phones (I bought
| a few GME out of spite at $360 after considering it way back
| at $15)... one little push could cause the market to throw a
| rod, I feel. These people run the system at max RPM with
| minimal oil as it is.
| throwaway4good wrote:
| In the mentioned stocks? Very high.
|
| However for the broader market; GME and friends are tiny.
|
| Ristricting trading is a way of managing risk.
| jeffbee wrote:
| The last giant crash was triggered by a single party (Bear
| Stearns) running out of credit. Do not underestimate the
| events that could follow if this volatility destabilizes a
| large market participant.
| lm28469 wrote:
| > The last giant crash was triggered by a single party
| (Bear Stearns) running out of credit.
|
| It was waaaaaay more complex than that, the Bear Stearns
| thing was one of many worldwide symptoms (not cause) of a
| widespread problem.
|
| There is nothing to compare between this GME event and 2008
| crisis (even though there are plenty of other issues that
| could lead to one)
|
| https://en.wikipedia.org/wiki/Financial_crisis_of_2007-2008
| dls2016 wrote:
| That was the point of my original post. Not that current
| events are comparable to historical events as far as the
| mechanism of crisis is concerned... but that stresses
| like the ones today have a way of uncovering new and
| interesting failure modes which people collectively wrote
| off as unlikely.
| jeffbee wrote:
| That is why I said it was triggered by, not caused by.
| TeMPOraL wrote:
| There's definitely going to be _some_ impact on other
| stocks, as at the very least, retail trading apps
| overcompensate and block buys on other stocks (including
| Freetrade for _all the US stocks_ right now). Hard to
| quantify the magnitude of the impact, though.
| dls2016 wrote:
| > Ristricting trading is a way of managing risk.
|
| So when the low probability event actually happens, should I
| be happy to have had my trading privileges revoked and my
| risk managed for me?
| klodolph wrote:
| Robinhood managing its own risk, not yours.
| throwaway0a5e wrote:
| >What are the odds of a flash crash
|
| Barely more than zero because there are market circuit breakers
| now and broker dealers are supposed to be limiting order flow
| so that HFTs can't be submitting huge numbers of orders that
| are massively far away from what the security is trading at. Of
| course some broker dealers play much faster and looser than
| others but if shit really hits the fan the circuit breaker
| catches it.
| hehehaha wrote:
| Zero. They actually learned their lessons from the past decade
| and have guard rails in place.
| Miner49er wrote:
| The clearinghouses and brokers likely won't let it happen.
| They'll step in and stop buying again if that's what it takes.
|
| But if they are stopped from doing that, then it certainly
| could happen. I think the odds are greater then most might give
| it credit.
| adriancr wrote:
| A few rants that i tried answering to someone before him removing
| post.
|
| Free speech is allowed.
|
| Prosecuting people for free speech is impossible.
|
| A bunch of imbeciles posting on forums is similar to a bunch of
| imbeciles on CNBC arguing that price is too high.
|
| A hedge fund with 12 billion dollars shorting 140% of a stock and
| then using media to drive price to 0 is illegal. Also more then
| idiotic since they caused the whole problem to begin with.
| Without their greed there would be no short squeez, gamestop
| would have been at 50-60 or whatever fair market value instead of
| suppressed 5-6 dollars a long time ago.
|
| The only illegal thing initially was hedge funds.
|
| They then got punished and went to do other illegal things like
| wash sales, stopping people from buying, collusion with
| supposedly neutral market makers.
|
| Whatever happens I hope the people above go broke first,
| investors that got conned go after their personal belongings for
| breaking fiduciary and afterwards spend a long time in jail.
| robocat wrote:
| > A hedge fund with 12 billion dollars shorting 140% of a stock
|
| I am fairly sure that one fund shorting 140% would have the SEC
| on your back (that would count as market manipulation).
|
| A comment somewhere mentioned that Melvin had shorted 14%.
|
| Does anyone have some facts here?
| adriancr wrote:
| > A comment somewhere mentioned that Melvin had shorted 14%.
|
| How did they lose 3 billion at 65$ with just 14%?
|
| I call bullshit on that :)
| threedots wrote:
| I mean you can just do the maths, no? They probably had a
| few hundred million position (maybe larger) with an entry
| cost under <10$. There may be some puts in there too which
| will have been a total loss.
| adriancr wrote:
| Ok, let's assume they shorted at 10$, they lost 3 Billion
| at 65$ (and say they closed the position)
|
| So, the stock needed to be bought back was worth 3
| billion at 65$, reduce the 10$ per share it was shorted
| at and you get 3000M/55 = 54M shares.
|
| Total stock float of GME is ~64M, so the short % was ~80%
|
| You see how it's way off of the 14%? (and close to
| impossible to close out of?)
|
| If they did not get out then they would be very bankrupt
| right now.
| threedots wrote:
| If they bought in at 10 and sold between 50-100 if they
| owned 14% of the free float they would have lost 0.5-1bn.
| That assumes they didn't increase exposure as the price
| went up and it ignores the borrow cost.
|
| They then lost a bunch of money on options the exact
| amount of which we don't know. They also lost a whole
| bunch of money on other positions going against them
| which we don't know but can guess at.
|
| To get to a 3bn loss (which btw is just a guessed number
| based on how much new capital they took)you probably only
| need to assume they are down around 10% on the rest of
| the short book (ex GME) which under the circumstances is
| entirely plausible. That assumes they run something like
| 200% gross exposure with an evenly balanced book with
| 12.5bn aum.
|
| I'm not sure where the conspiracy is here. 3bn is a huge
| number to lose in a week but it looks roughly right given
| what happened and it's not exactly unprecedented either.
| gruez wrote:
| >Free speech is allowed.
|
| >Prosecuting people for free speech is impossible.
|
| Are you suggesting that pump and dumps legal because "free
| speech"?
|
| >A hedge fund with 12 billion dollars shorting 140% of a stock
| and then using media to drive price to 0 is illegal.
|
| What is the relevant legislation preventing someone from
| shorting "too much"? Furthermore, prior to this debacle I
| certainly haven't heard of GME in the media aside from some
| passing references. Therefore I'm skeptical of your narrative
| that the hedge funds were somehow using the media to crash GME
| prices.
| adriancr wrote:
| > Are you suggesting that pump and dumps legal because "free
| speech"?
|
| Where's the pump and dump?, This is a short squeeze due to
| Melvin Capitals 140% short and people buying due to initially
| Cohen joining. Same as for VW a long time ago. Now it's just
| because people want to buy... Hell I did so as well at recent
| prices as I think with a nice stock offering GME can get to a
| 500 fair market value easily. Que in some partnership with
| Tesla for 'TeslaStop' gaming while charging and they'll be
| good.
|
| > What is the relevant legislation preventing someone from
| shorting "too much"?
|
| Look it up under market manipulation. A oversized hedge fund
| overselling a stock will certainly be able to set the price
| where they want and then profit.
| gruez wrote:
| >Where's the pump and dump?
|
| Whether this specific instance counts as a pump and dump is
| irrelevant. The point is that it's illegal and "free
| speech" isn't a valid defense. Furthermore, comments
| elsewhere in this thread have mentioned that intentionally
| causing a short squeeze is also illegal.
|
| >Look it up under market manipulation. A oversized hedge
| fund overselling a stock will certainly be able to set the
| price where they want and then profit.
|
| And the same isn't true of the people in WSB gobbling up
| GME?
| adriancr wrote:
| > And the same isn't true of the people in WSB gobbling
| up GME?
|
| If people like the stock and buy it what can you do about
| it?, prevent them from buying same as robinhood?
|
| These individual investors are not putting in market
| moving ammounts.
|
| This is different from a hedge fund dumping a stock,
| driving price down then bankrupting a company.
| floor2 wrote:
| Essentially none of what is written in your "rants" is
| factually accurate, unless by calling it out you meant to make
| clear that these were emotional ramblings unrelated to reality.
|
| Neutral analysts on CNBC providing commentary is pretty
| different than someone with a financial stake trying to pump up
| a stock they own to maximize their profit.
|
| There is no evidence that any of the major funds involved in
| shorting have done anything illegal.
|
| There's nothing illegal about a wash sale, wash sales are just
| a minor technicality around how cost basis is calculated for
| tax purposes.
|
| People figured out they could exploit a fund that was
| overexposed in a trade and did so. We don't need all the
| conspiracies and class warfare. Greedy retail traders took some
| money from some greedy hedge funds, that's the whole story, it
| doesn't need to be more than that.
| adriancr wrote:
| > Neutral analysts on CNBC
|
| This is amusing, check out interview with Chamath then
| everything else covered. It's even more amusing when Cramer
| of all people was the voice of reason.
|
| > There is no evidence that any of the major funds involved
| in shorting have done anything illegal.
|
| We will see through class action lawsuit against robinhood
| and SEC investigations.
|
| > There's nothing illegal about a wash sale,
|
| Used the wrong term, I meant the massive sell order (while
| people were not allowed to buy) trading halt, sell order
| again, trading halt, a few times to trigger stop losses then
| price magically goes back up where it was and the sell orders
| evaporated...
|
| > it doesn't need to be more than that.
|
| Disagree, some investigations are warranted as to how this
| was allowed to happen. (I'm assuming investors in hedge fund
| arent happy either at 3 billion loss that we know of) As well
| as general practices and the dirty tactics employed recently
| vga805 wrote:
| "Neutral analysts on CNBC providing commentary"
|
| lol. okay.
| realmod wrote:
| I also believed that most of the shorts were naked, but the
| director of S3partner clearly explained how this was not the
| case. One stock can be shorted multiple times which is what
| causes the SI% to be over 100%. A lends to B, B sells to C, C
| lends to D and so forth. Two shorters (B,D) but only 1 original
| stock.
|
| And Robinhoods closure of the trade seems reasonable in
| retrospect as well. If the clearing house required a higher
| collateral to clear trades on those tickers due to their
| volatility and RH did not have the liquidity to provide it then
| blocking the purchase of those tickers seems fair.
|
| I can't really see anything illegal about the actions of the
| traders or the brokerages like Robinhood and Webull.
| adriancr wrote:
| You can get more the 100% without naked shorts, sure, but is
| that legal?, does SEC allow that?, nobody is concerned that
| if there is a short squeeze there is no chance in hell to
| close out? (like we are seeing here)
|
| The point I tried to make was - this short was done to drive
| price down to zero (it can do that with that large of a
| position) in collusion with negative media reports from
| friends... That is manipulation. And they got caught with
| their pants down.
|
| I'm also not convinced on no naked shorts, we'll see...
|
| As for robinhoods closure of trade, they only disabled buy,
| not sale... as for reason, are you speculating? I did not see
| any clearing house comment. This was brought up by Cuomo as
| well in interview.
|
| As for illegal on robinhoods part, we'll see, there will
| likely be an investigation. Especially since they are owned
| by the company that bailed Melvin Capital out.
| andylei wrote:
| > You can get more the 100% without naked shorts, sure, but
| is that legal?, does SEC allow that?
|
| Yes. As someone lending out a share (for someone else to
| short), you can't know whether the person you bought it
| from had borrowed it to sell it to you.
|
| Let's say you bought a share of stock. Can you lend it to
| someone for them to short sell? Of course. You own the
| share, regardless of how many people it passed through to
| get to you.
| realmod wrote:
| The same director noted that the SI%, according to their
| way of calculating*, is actually at 55% (still very high).
| And like the poster below stated, one cannot really know
| the difference between a borrowed and "ordinary" stock .
|
| Webull came out and clearly stated that their clearinghouse
| had issues with putting up collateral for the tickers and
| thus had to shut them down [0]. And while Robinhood has not
| come out directly and said it was due to liquidity, one can
| easily gather that from the statements they put out, the
| new funding they needed, and lastly the fact that DTCC
| required higher collateral for those tickers.
|
| [0] https://www.wsj.com/articles/gamestop-trading-
| restrictions-b...
|
| * It includes all tradeable share. So in the case of the
| example, normal SI% states 2:1, two shorters and one
| original share. Their way is 2:3 which is, 2 shorters (B,D)
| and 3 longs (A,C,E)
| adriancr wrote:
| > And while Robinhood has not come out directly
|
| So you were speculating on robinhood reason.
|
| > The same director noted that the SI%, according to
| their way of calculation, is actually at 55%
|
| Thanks, I'll check that out, weird since there are
| contradicting stories likely due to that short positions
| are not disclosed.
| UncleMeat wrote:
| Imagine an alternative universe. WSB decides that shorting
| some company they hate is a good idea. But wait, it has
| already been shorted up to 99% by hedge funds! No more
| shorting allowed. SEC rules.
|
| Same backlash about a "rigged" system.
| adriancr wrote:
| You are aware everyone else except retail was allowed to
| buy right?
|
| You are aware hedge funds did just that after doing wash
| sales to trigger stop losses.
|
| It was funny at one point bid ask spread was 120-5000
| UncleMeat wrote:
| Yes that's what I'm saying. The same narrative ("wtf,
| they are allowed to short but I'm not") arises in my
| scenario.
| adriancr wrote:
| your scenario means everyone is disallowed from shorting.
| Equal measure to market condition. You see it being
| different from disallowing just retail buying?
|
| Oh and that already exists when there are no shares to
| borrow. (in theory as they can naked short)
| seabird wrote:
| I'm not a domain expert, but it would seem that whether or
| not something was sold naked is ultimately determined in the
| instant that you are obligated to deliver -- not doing so is
| a Failure to Deliver, which is when your problem actually
| starts.
|
| The SEC has 170k recorded FTDs for GME in the second half of
| December 2020: https://www.sec.gov/data/foiadocsfailsdatahtm
|
| GME has been on the NYSE Threshold list for months:
| https://www.nyse.com/regulation/threshold-securities
|
| Multiple WSB users were aware of this public data and that
| GME had high FTD rates in significantly more favourable
| circumstances at least as early as October 2020: https://old.
| reddit.com/r/wallstreetbets/comments/j0ckgf/reg_... https://o
| ld.reddit.com/r/wallstreetbets/comments/jbvwek/fail...
|
| There was no reason to _not_ be ass-naked or close to it on
| the high end of GME call contract writing a few months ago.
| They 've probably covered (at least partially) by now, but
| that doesn't mean it hasn't happened.
| andylei wrote:
| > I'm not a domain expert, but it would seem that whether
| or not something was sold naked is ultimately determined in
| the instant that you are obligated to deliver
|
| No, this is not true. When you sell short (with some
| exceptions for market makers), you are obligated to "find"
| shares to borrow (called "locates"). Usually your broker
| arranges this; any shares that you borrow cannot be lent to
| someone else. If you do not have any borrowed shares (as
| recorded by the broker), that is considered a "naked short
| sell".
| seabird wrote:
| No idea why you're getting downvoted -- whether or not
| you're able to do it depends on if you are one of those
| exceptions and that is an important part I missed in my
| original post. I _was_ referring to market makers, as I
| think it goes without saying that a retail investor or
| small firm will not be allowed to do something like write
| a naked or near-naked call, but you know what they say
| about assumptions.
| adriancr wrote:
| > you are obligated to "find" shares to borrow
|
| Unless you know... you just dont. Or you are big enough
| to have an exception.
|
| Whats the punishment?, how will they find you? (you dont
| need to disclose shorts)
| realmod wrote:
| E.g. A lends a share to B, B sells to C, C lends to D.
| Now say another shorter, X, needs to cover their short
| and thus buys a share from C, now for this trade to
| settle C has to recall their share from D and then give
| it to X, who would then use it to cover their short. If D
| now fails to give back the share to C, then the trade
| between C-D is FTD which would then cause X trade with
| its borrower to be FTD since X needs C's share to settle
| it.
|
| So they could have locates but still fail to settle.
| Though, I'm not unequivocally excluding that _some_ naked
| shorts may have happened. I just find it more plausible
| than hedge funds and brokerages allowing huge amounts of
| naked shorts, which are already illegal.
| [deleted]
| [deleted]
| maxfurman wrote:
| This statement seems like a big ball of nothing. Basically the
| SEC is aware of what's happening (how could they not be?) and
| maybe they'll do something about it or maybe they'll decide that
| it's all within the law.
| kgwgk wrote:
| "Likewise, issuers must ensure compliance with the federal
| securities laws for any contemplated offers or sales of their own
| securities."
|
| If GameStop management was thinking of selling some shares to the
| public (or directly to those who really need shares to cover
| their shorts) at some crazy price they'll have to be careful.
|
| AMC was lucky to have a lot of convertible debt outstanding which
| has been converted without any action on their part.
| ComputerGuru wrote:
| American Airlines announced their intention to do just that
| yesterday. I wonder what the SEC will have to say about it.
| fartzzz wrote:
| "Our core market infrastructure has proven resilient under the
| weight of this week's extraordinary trading volumes"
|
| Most of the retail investors couldn't buy specific stocks on most
| exchanges for some time (tastytrade, ib, rh etc). I wouldn't call
| that "resilient".
| my_usernam3 wrote:
| We have 5 nines uptime on all our non crashed systems!
| bredren wrote:
| Not knowing how hard it is to provide the service fo their
| "core market infrastructure," I couldn't tell if it was just a
| self-complimentary way to boast or genuine technical feet.
|
| Regardless, the prominence of the note was strange and set an
| immediate defensive tone.
|
| What made it really odd was the arc of tone to "Market
| participants should be careful to avoid such activity." An
| elegant threat.
| rossdavidh wrote:
| Is it my imagination, or did this SEC statement not actually, you
| know, actually say anything, except "we're the SEC, and we're
| going to do the thing that it's our job to do"?
| underseacables wrote:
| I can't help but think about Bill Ackerman when I see stories
| about stock shorting and their dangers. Isn't this exactly what
| Bill Ackerman did? He shorted Herbalife and then went on TV
| (there's even a Netflix documentary) And he lost. How is that not
| market manipulation? What if Ackerman did not have a position in
| the company, would it not be market manipulation then? It seems
| like what Reddit did was stand on a soapbox in the public square
| and say buy the stock,
| hong_kong wrote:
| https://chiron-risk.com/when-is-shareholder-activism-actuall...
| sjg007 wrote:
| I look forward to Michael Lewis's next book on the subject.
| swader999 wrote:
| It is very difficult to not read this in the most cynical tone
| imaginable.
| OscarCunningham wrote:
| There's been some speculation that what WSB are doing could be
| market manipulation or otherwise illegal. The fact that this
| statement only mention retail investors in the context of
| protecting them makes me suspect that the SEC's not going for it.
| nostrademons wrote:
| Third paragraph:
|
| > In addition, we will act to protect retail investors when the
| facts demonstrate abusive or manipulative trading activity that
| is prohibited by the federal securities laws. Market
| participants should be careful to avoid such activity.
|
| "Market participants" here is referring to retail traders.
| Don't make the mistake of thinking that just because you're the
| little guy, you're exempt from the law. It's like how the
| capitol rioters were sure they were on the side of America but
| the FBI (and half of America) sees things very differently.
|
| A lot of government regulation is about protecting the little
| guy from other slightly more unscrupulous little guys. "The
| public" is not a monolithic entity - folks can and do screw
| each other over even when purporting to be part of the same
| mass movement.
| nend wrote:
| Doesn't "retail investors" refer to any individual, non-
| professional, investor? Sounds like to me the SEC is warning
| any party involved in this, RH and WSB included.
| pardonmesir wrote:
| what are you talking about? the real fraud and market
| manipulation was perpetrated by Robinhood and Shitadel when
| they shut peoples' ability to buy the stock while still
| allowing it to be sold. They know this is illegal but they were
| betting on the fines being less than the losses. They need to
| be taught a real lesson. Those responsible for this
| intentional, flagrant violation of the most basic free market
| principles should go.to.jail.
| kapp_in_life wrote:
| If anything Robinhood allowing people to continue buying
| volatile assets while not being able to meet their clearing
| house's requirements would be something to run them afoul of
| the SEC.
| [deleted]
| jeffbee wrote:
| Could be? It's an open, publicly-documented market manipulation
| event. How can there be any question about it? You might decide
| that this kind of manipulation is OK due to it's stated goals,
| but that doesn't make it not manipulation.
| qmmmur wrote:
| People are free to purchase stock how they want to. If those
| people collect together and discuss potentially profitable
| strategies for trading who is to stop them? Do you think its
| possible youve fallen ill to the rhetoric that this is bad
| purely because the rich people didn't get their way?
| kshacker wrote:
| But people are not being allowed to purchase stock as they
| want. Robinhood now allows you to buy a grand total of 5
| shares of GME.
| spydum wrote:
| that's a service delivery problem, just like when a
| restaurant runs out of a popular dish. Go to another
| broker.
| SpicyLemonZest wrote:
| I have a general, all-purpose opposition to financial
| trading that's about exploiting weird market structure
| tricks to screw people over rather than expressing beliefs
| about the value of the underlying things being traded.
| Institutional traders too often get away with doing that
| kind of thing, and I'm hardly losing sleep over the
| particular targets of this campaign, but we can't let the
| takeaway here be "it's fine as long as retail investors get
| to play too".
| jaywalk wrote:
| Imagine calling the simple act of buying a stock
| "exploiting weird market structure tricks to screw people
| over"
| blackearl wrote:
| The issue with that argument is that it's really not
| "it's fine as long as retail investors get to play too,"
| it's "it's fine _until_ retail investors get to play too"
| SpicyLemonZest wrote:
| The point is that it's _not_ fine. The institutional
| investors who have historically said it was fine were
| wrong. If the average retail investor comes away thinking
| scummy tactics are cool now that you and I can use them,
| it 'll be a disaster for the cause of real financial
| reform.
| avs733 wrote:
| The SEC has some case studies on this that are really
| itneresting...
|
| https://www.sec.gov/files/Market%20Manipulations%20and%20Cas.
| ..
|
| The idea that there has to be behind the scenes coordination
| (i.e., non-publically available communication/information)
| runs pretty clearly through all of them, but IANASEC
| willcipriano wrote:
| >Could be? It's an open, publicly-documented market
| manipulation event.
|
| Strange question, what's the bar for market manipulation? For
| example if a company took out debt to buy their own stock in
| order to drive up the price would that count?
| jeffbee wrote:
| If the company were to issue a statement that they believed
| their actions would raise the share price, then yes.
|
| https://www.law.cornell.edu/uscode/text/15/78i
| [deleted]
| pbourke wrote:
| So do everything up to specifically stating the effect
| that you want, and it's not market manipulation? This is
| the "emperor's new clothes" absurdity of this whole
| system.
|
| The whole fucking market has been manipulated by various
| parties this year, most notably by the Federal Reserve,
| yet there's only a moral panic when some firefighter from
| Long Island gets a little taste?
| foolmeonce wrote:
| Stock buy back is perfectly fine and its authorization is
| usually announced in a press release. Hiding that you are
| taking new debt to do just about anything would be illegal.
| asimpletune wrote:
| Persuading people that they should invest in X company for Y
| reason is not market manipulation. People who take a short
| position frequently announce their short publicly, with the
| express aim of achieving their goals.
| moolcool wrote:
| I can't find any documentation that a short squeeze is
| illegal. Can you?
| TeMPOraL wrote:
| It's in the SEC rules.
|
| "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."
|
| From https://www.sec.gov/investor/pubs/regsho.htm.
|
| It's an open question whether this case is more of a
| natural occurrence or "a scheme to manipulate", given that
| it's all randos who found a Schelling point and are now
| hyping each other up. I think it's fair to say it's
| unprecedented.
| blackearl wrote:
| If the SEC isn't going to litigate the naked short
| selling that preceded this, it's really hard to not cry
| hypocrisy.
| OscarCunningham wrote:
| Is there any actual evidence of naked short selling? The
| only evidence I've seen people raising is that the total
| value of the shorts was over 100%, but that can happen
| completely legitimately if the people who buy from short
| sellers allow the stock to be sold short a second (or
| third, fourth, ...) time.
| tolstoshev wrote:
| I don't get why loaning out an already loaned stock is
| legal. Short selling should be limited to first gen
| loans. Otherwise it's like Beavis and Butthead in the
| Candy Store episode where they keep loaning the same
| dollar back and forth.
| ComputerGuru wrote:
| You seem to be under the impression that a stock can't be
| shorted more than 100% without naked short selling. This
| is not true.
| Rapzid wrote:
| Interesting.. WSB was 100% orchestrating a short squeeze.
| They were telling anyone who would listen and in fact
| using it to rationalize what they were doing..
| jaywalk wrote:
| scheme (verb): make plans, especially in a devious way or
| with intent to do something illegal or wrong.
|
| Discussing buying stock on a public forum is certainly
| not devious, and although the goal is to cause short
| positions to lose a bunch of money I would argue that
| it's neither illegal nor wrong.
| jeffbee wrote:
| You could argue that but you'd be clearly wrong on
| American law and jurisprudence. If the goal is to cause
| other market participants to lose, that it specifically
| against the letter of the law.
| avereveard wrote:
| "scheme to manipulate" is the keyword here, patting each
| other on the back for riding market volatility on a forum
| about stocks isn't neither novel nor illegal.
|
| it would be quite different if they were to coordinate
| the sale moment or the sale prices; for the latter, I
| don't see much coordination beyond memes, for the first
| SEC might have a point and there's many posts walking a
| thin line suggesting friday will be the day.
|
| however this is a billion dollar operation which include
| many players and wide interference by multiple actors
| ranging from unclear to blatant business relationships; I
| wouldn't be surprised by anonymous plants joining wsb
| trying to stir up a movement and coordinate sales/prices
| to create a solid case where there is just a feeble
| suspicion; and as a matter of fact there has been quite
| many fresh accounts (either low karma, no posts in a long
| time, no posts at all etc) joining in just to propose to
| hold until a certain price or date is reached.
| OscarCunningham wrote:
| If I were the short-sellers I'd be a bit aggrieved at the
| SEC not going after WSB here.
|
| People keep saying that the hedge funds 'knew what they
| were getting into', and are therefore fair game. But they
| could well have thought that they were protected by this
| regulation. It's unlucky for them that they got squeezed
| by loveable retail investors rather than another hedge
| fund that the SEC would have no qualms about prosecuting.
|
| In the debate between the free market vs regulation, the
| worst possible outcome is to have people thinking they
| are protected by regulation when they in fact aren't.
| willcipriano wrote:
| The shorters should form a class action and sue wall
| street bets, I'm sure a 5 dollar check in 3 years and a
| year of free stonk advice will cover it right?
| jsmith45 wrote:
| Wall street bets is not an organization, and does not
| really even have a defined membership, and I've never
| heard of a court case with a class as a defendant. But I
| suppose that would be a really amusing circus show. Class
| of shorters vs class of buyers.
| [deleted]
| seigando wrote:
| Oh dear, those poor hedge funds.
| floor2 wrote:
| This worldview seems like one of the biggest problems
| facing America right now.
|
| We should strive for equal rules and justice for all,
| rather than first deciding how likeable or sympathetic
| the parties involved are and then changing the
| interpretation of rules to favor the group we perceive as
| being inherently more deserving of our favoritism.
| seigando wrote:
| The rules were written, and have been interpreted with
| certain perceptions of 'who is deserving'. To claim that
| they weren't is at best ignorant.
| jchook wrote:
| Everyone always told me, "don't invest what you can't
| afford to lose" and that risk mitigation is paramount.
|
| Potentially tanking your firm on a gamble seems reckless
| and totally ignores the fundamentals of trading.
| hansvm wrote:
| There's a bit of nuance. We're using the word "manipulation"
| to mean two different things -- one is the colloquial
| meaning, and yes it's very obvious that the price was
| manipulated in that sense. As far as the legal definition of
| manipulation is concerned though, we haven't necessarily met
| all the requirements.
| bwilliams18 wrote:
| Matt Levine did a pretty good job explaining why it probably
| doesn't fit the traditional definition of market manipulation
| in his newsletter on Tuesday[1], see the second section
| titled "But is it securities fraud?"
|
| [1]https://www.bloomberg.com/opinion/articles/2021-01-26/will
| -w...
| wslh wrote:
| > It's an open, publicly-documented market manipulation
| event.
|
| I understand that if someone publicly give you a financial
| strategy that is sound and it is not based on a ponzi then it
| is a recommendation.
| Dirlewanger wrote:
| Ever think that they just like the stock?
| amirhirsch wrote:
| It kinda feels like that to me. The nostalgia value of
| owning 1 share of GameStop is pretty important considering
| the joy that going to that store brought to me as a child.
| I can totally understand if 20 million people also want in,
| especially given the idea that we're fighting against a
| short position to cause a squeeze. It's like a dumb feel-
| good movie where we had a bake-sale and everyone buys a
| cookie for an unreasonable price to help our favorite local
| grocery store avoid bankruptcy by the evil liquidators who
| want to turn it into a Walmart.
| jeffbee wrote:
| That's the thing: there is NO QUESTION as to the motives of
| the r/wsb traders. They are overtly conspiring to raise the
| price of shares in order to force specific parties to buy
| it. That's manipulation!
| TheCapn wrote:
| >force specific parties to buy it
|
| I think they forced themselves to buy it by taking the
| short position they did.
| RHSeeger wrote:
| Is it illegal to corner the market on a product because
| you know someone else is going to need to buy it, so you
| can charge them a lot because they must buy from you? It
| seems like what is being done is pretty much this; just
| for a large definition of "you".
| jeffbee wrote:
| Yes, it is broadly illegal to corner or attempt to corner
| any market, and the law directs the CFTC to step in and
| and void commodities contracts or take whatever other
| actions it deems appropriate when it finds that a market
| has been destabilized. See 7 USC 12a(9).
| Dirlewanger wrote:
| May be for some of them. People invest for all sorts of
| reasons besides the "fundamentals", you know.
|
| Tell me: what do you think Melvin's intentions were for
| shorting a dying company's stock for several billion?
| jeffbee wrote:
| To raise cash? Shorting a company in terminal decline,
| but that will never die and will live on the pink sheets
| forever, is a great way to take a gain without ever
| having to pay the taxes.
| Dirlewanger wrote:
| And you just described a form of market manipulation.
| Except that we can't know Melvin's true motives because
| for some weird reason, hedge funds don't have to make
| their methodologies public.
|
| So why are you getting mad that retail investors are
| engaging in the same practices that hedge funds can do
| with impunity?
| jeffbee wrote:
| No? Your folk definition of "manipulation" isn't
| furthering this discussion.
| ceejayoz wrote:
| It's manipulation, but is it _illegal_ manipulation?
|
| Remember, it's perfectly legal for a hedge fund to open a
| short position, and then release a big expose of the
| company that tanks its stock price.
|
| For a prominent recent example:
| https://hindenburgresearch.com/nikola/
| [deleted]
| gnfargbl wrote:
| Whether or not it is market manipulation, who do you think
| the SEC could realistically go after here?
| jeffbee wrote:
| Maybe one or two specific individuals, but you're right in
| general. That's the part that frightens me the most here.
| The tactics that are being used are equivalent to the ones
| used by sideshow street racers and political riots: if we
| get thousands of individuals to break the law at the same
| time and place then law enforcement will be ineffective.
| gnfargbl wrote:
| It certainly _feels_ like an organized riot, but I'm not
| 100% sure that it is. In a riot, there are organizers and
| instigators, and then there is a mob who follows them.
| Here, I'm not really sure that the organizers exist: the
| closest thing I can see is the Reddit user
| DeepFuckingValue, and all they do is post screenshots of
| their position in GME without futher comment. And have
| been doing so for the best part of a year.
|
| The mob seems to have largely formed itself.
| hhhar42 wrote:
| You really need to stop accusing thousands of people of
| lawbreaking when several actual securities lawyers with
| backgrounds in actual manipulation litigation have said
| it isn't as cut and dry as you think. Tying the activity
| to the riots and suggesting similar organization is also
| beyond the pale. You have cited neither of those
| positions throughout your ranting here and they're
| harmful speculation.
|
| Your commentary in this thread is over the top. I'd use a
| term you already have (edit: and deleted, looks like)
| which definitely applies, but I'm not stooping there, and
| you're probably on your way to a flag for it anyway. I
| suggest you step back from HN for a few minutes, at
| least.
| nsonha wrote:
| Reddit or any future platform hosting WSB and the like,
| same logic that took Parlor out of biz.
| moosey wrote:
| Applying this logic, perhaps we can get "professional" stock
| ... manipulators off the TV. CNBC can go away entirely.
| Marketing speak would be replaced with value charts. Ban all
| forums that discuss specific stock values.
|
| Then prevent people from buying stocks in groups. Mutual
| funds, ETFs, etc... all of these abstractions on
| abstractions, we can throw them away. The more abstractions
| we throw away, the closer we get to what all this should
| actually be meant to serve; people.
| NoOneNew wrote:
| Absolutely. I mean, what's different now in comparison to
| Ackman shorting hotels then going on CNBC and saying hotels
| are going to burn financially? Except for the fact it's one
| rich guy compared to thousands (maybe millions?) of not so
| rich folks.
| mrlala wrote:
| Well.. I think the difference is that if there are
| literally millions of people immediately acting in a
| certain fashion (suddenly buying up a specific stock) in
| a coordinate fashion- that has a very different effect
| than a small number of large investors taking a bet.
|
| I'm not defending the bullshit that is CNBC and
| 'professional stock pickers' and crap, but it ends up to
| be a very different thing. Not saying better or worse,
| but certainly different.
| [deleted]
| ericmay wrote:
| Which is one take, certainly. But the problem is once you say
| that this is a market manipulation event you run into other
| issues.
|
| Is going on CNBC and talking about the strength of a company
| that you invested in market manipulation? Before this blew up
| you certainly had more reach.
|
| Is posting "research" or holding a conference call and
| telling people a company is garbage while you have the
| company shorted market manipulation? What about when you
| short a company and sell a ton of shares to induce panic?
| What about algorithms that are created to trade shares to
| reach a certain profitable price based on internal
| holdings/analysis?
|
| Here's another thing - if WallStreetBets was incorporated
| into a hedge fund and took a huge long position is that
| market manipulation? It seems to me the main difference is
| that they aren't behind closed doors talking privately in a
| legal fiction called a company that is really the problem
| here...
|
| You have to define what you mean by manipulating the market
| and apply that equally under the eyes of the law. The fact
| that this was done publicly makes it all the more
| interesting. Had it been done behind closed doors (like so
| many things are on Wall Street) it would have been an open
| and shut case, but it wasn't.
|
| So sure, let's say it's a market manipulation event. Ok. Can
| you tell me what isn't a market manipulation event?
| jeffbee wrote:
| You are not the first person to ponder these questions.
| There is a great deal of jurisprudence on these topics. Any
| market participant firm's compliance desk can readily
| answer all of them.
| acover wrote:
| If wallstreetbets was a hedge fund and they bought all of
| GME to cause a short squeeze then that is market
| manipulation - this has been settled [0].
|
| [0] - https://www.sec.gov/news/press-release/2013-159
|
| Edit: litigated to settled
| ordinaryradical wrote:
| If you actually read that link that case is so
| extraordinarily different than the reality of what's
| happening today I don't know how you can argue this in
| good faith.
| acover wrote:
| > I don't know how you can argue this in good faith
|
| I'm not an expert and am rather dumb.
|
| What do you think the differences are?
|
| Differences:
|
| * One hedge fund versus a multitude of investors
|
| * Owning all the securities vs only a portion
|
| The similarities are:
|
| * Intentionally buying all the stock to cause a short
| squeeze
|
| * Explicitly recalling borrowed shares to cause a short
| squeeze
|
| To be clear, I'm not arguing that what wallstreetbets is
| doing is illegal but something fairly similar is. I
| thought an actual example of market manipulation was
| relevant to the conversation.
| ordinaryradical wrote:
| A short squeeze in and of itself is not illegal. The
| squeezers were not prosecuted in 2008 when they held onto
| VW even though it briefly became the most valuable stock
| in the world. Seeing an opportunity to advantage oneself
| of a bad short position is just trading, nothing fancier
| than that.
|
| The Falcone case is much more complicated because it was
| a single person buying the entirety of the market. Much
| weirder mechanics at play. Squeezes are always carried
| out through the self-interest of uncoordinated parties,
| be they retail investors or firms.
| acover wrote:
| Note that the comment I replied to introduced the idea of
| treating wallstreetbets as a single hedge fund.
|
| > if WallStreetBets was incorporated into a hedge fund
| and took a huge long position is that market
| manipulation?
|
| So your main point of contention with me for bringing up
| unrelated information was already brought up.
| ericmay wrote:
| If WSB was a hedge fund they just have to buy some of GME
| - not all or even too much. Other hedge funds could buy
| some too.
|
| Just have a "dinner conversation" about it.
|
| Just like you and a few hedge funds can get together and
| collectively short GameStop and other companies... as
| they are doing now.
|
| There's no rule that I know of that says only one entity
| can make a specific investment.
|
| -edit-
|
| Don't forget that hedge funds ARE on the other side of
| this trade. WSB and retail do not have the ability to
| move this solely on their own. I wonder how long until
| they're on CNBC/Bloomberg "we saw a great opportunity in
| the market and executed our position well". If it's
| market manipulation - was it market manipulation to even
| have heard about WSB and entered the trade? WSB is a nice
| scapegoat for the real money that caught these hedge
| funds in a bad position. Didn't take long before WSB
| became alt-right, white supremacist, market
| manipulators... etc.
| FartyMcFarter wrote:
| > Just have a "dinner conversation" about it.
|
| This would be illegal I think.
| trsohmers wrote:
| It isn't. Hedge fund managers have "idea dinners" with
| dozens of their friends all the time to discuss what
| plays they are thinking... they frequently also bring in
| guests that represent companies, or even
| politicians/former politicians to discuss lobbying
| strategies to keep this exact type of collusion and
| market manipulation legal for them.
|
| But as soon as a bunch of the dreaded "retail investors"
| start doing it in the open, Wall Street calls on K Street
| to save them.
| lukeramsden wrote:
| This is well known the be common practice and very much
| not punished.
| Armisael16 wrote:
| It is not: https://www.reuters.com/article/us-hedgefunds-
| probe-exclusiv...
| CTDOCodebases wrote:
| It could be argued that r/wallstreetbets is a public
| forum. Anyone can join. Think of it like a virtual
| conference room.
|
| If I walk into this room and yell "Everybody buy GME to
| screw the hedge funds" am I engaging in market
| manipulation? There is no formal or informal agreement to
| do so if someone says "ok great idea" and go buys GME.
|
| Besides how are they going to enforce the laws? Match IPs
| to ISPs and extradite all the thousands if not millions
| of people across the world who bough stock? If a fine is
| issued do they just divide it up by the number of people
| who commented in wallstreetbets and held stock? Or is
| every person fined individually?
|
| How is this worse than the sell walls that hedge funds
| use to deflate a share price?
|
| The truth of the matter is the SEC dropped the ball. They
| were probably too busy having a wank while on pornhub
| [0].
|
| In December as soon as the share price started to rise
| GME was placed on the NYSE threshold securities list for
| large numbers of "failure to deliver". Keep in mind it
| had entered this same list earlier in the year. Followers
| of wallstreetbets were suspicious and believed that
| illegal naked short selling was occurring so they
| informed the SEC [1].
|
| Then a few weeks later the stock rose 10% then 50% the
| next day leaving the call options ITM on a Friday
| afternoon. What did the SEC do? They sat on their hands
| over the weekend instead of suspending trading of the
| stock and performing an investigation.
|
| [0] https://abcnews.go.com/amp/GMA/sec-pornography-
| employees-spe... [1] https://www.reddit.com/r/wallstreetb
| ets/comments/kr98ym/gme_...
| mmd45 wrote:
| well, the case reached a settlement so i would not say it
| was litigated in the sense of establishing case law or
| legal precedent.
|
| it's interesting- it reads as though harbinger bought
| bonds and demanded delivery. can you imagine it! asking
| to take possession of the thing you just bought is
| painted as manipulation!!!
| hogFeast wrote:
| You realise that all of this stuff has specific rules.
| There are specific rules about posting research, there are
| specific rules about media (newspapers and TV), there are
| specific rules about algorithms (I will answer your
| questions: no, no, no, no...the last question is...odd, if
| you know about sure-win algos then you must be very rich).
|
| And all of this stuff has happened before, it happened in
| 2000, lots of people went on bulletin boards, and some
| ended up going to jail for market manipulation. The
| difference between doing it publicly and privately is huge,
| that is a necessary component of market manipulation
| (generally speaking, market manipulation isn't very
| effective if you don't have anyone to baghold for you).
| ericmay wrote:
| I'm more of a "spirit of the thing" than "this is what
| the text says" kind of guy.
|
| I'd argue that those things aren't fundamentally
| different than anything going on via WSB (assuming no bot
| accounts saying buy buy buy or something similar).
|
| I think the difference is that for these other items
| there's nobody around to measure the impact.
| hogFeast wrote:
| No. If you do any of those things wrong then you will get
| charged.
|
| There aren't bot accounts. There are people telling other
| people to buy who are probably selling (there is a reason
| why DFV isn't posting anything but account updates). No
| conpsiracy theory around bots, the people manipulating
| the market are there, they are posting on a public forum.
| It doesn't get more cut and dry.
| ericmay wrote:
| I just don't see a difference in manipulating the markets
| through official channels versus unofficial channels. If
| CNBC wants to have me or reddit user r/deepfuckingvalue
| (Keith Gill) on their platform instead of WSB sure I'll
| give them some stock picks too.
| jaywalk wrote:
| I'm certainly no expert in the rules at play here, but I
| can't fathom how posting on a public forum and saying
| "let's all go buy $GME and screw these hedge fund guys!"
| would not be absolutely protected by the First Amendment.
| There's no fraud or anything like that, and you're not
| posting anything false or misleading about the company.
|
| If a bunch of people feel like it's a good idea and want
| to join in, then it is what it is.
| hogFeast wrote:
| Because there is the first amendment...and there is
| securities fraud. You are saying: anything that anyone
| says at any time has no legal consequence because of the
| first amendment...no.
|
| Misleading stuff is being posted on wsb. And some people
| are likely not being honest about what they are doing
| (i.e. telling people to buy when they are selling). This
| is how pump and dumps work. If you buy a stock worth $5
| for $300...your only option is to sell to someone who
| knows nothing. That is what it is happening now.
|
| The stuff about hedge funds only came later, it is funny
| that people are citing this now (as ever, financial
| markets and ex-post rationalisations...human reasoning is
| amazing). All this stuff about revolutions against
| bankers, and the wealthy, and politicans leaping onto
| it...lol. The funniest thing about this is that people
| who have the least knowledge believe they need protection
| the least...and when this blows up, they will still say
| it is rigged. Oh well. Plus ca change.
| Tenoke wrote:
| A SEC investigation will take time. I wouldn't judge much based
| on their general initial statement.
| balozi wrote:
| Well... they will start by redefining "market manipulation" to
| encompass all activity they now consider disruptive (also
| suitably redefined). This is America today.
| datavirtue wrote:
| This. Man walks into a hardware store and buys a Milwaukee
| drill. Bam, supply reduced, market manipulated.
| PeterisP wrote:
| There's no need for SEC to redefine market manipulation -
| IMHO the "pumping" activity of at least some WSB activists
| would perfectly match the existing legal definition of market
| manipulation as written to prevent historical "boiler room"
| type activities.
|
| On the other hand, in these discussions I have seen a bunch
| of assertions that what the shorting hedge funds or HFTs are
| doing is "market manipulation" - now _that_ is an attempt to
| redefine market manipulation to something entirely different
| than what it is /was.
| nsonha wrote:
| Your point? Can disruptive ever be good? Other than in SV
| jargons?
| bradstewart wrote:
| Good for who? Why does an event have to be good or bad?
| csomar wrote:
| It's harder to pursue this if there were hundreds of thousands
| involved. Maybe they'll go for the people who organized this,
| or the one who profited massively for it. But I don't see it
| possible to sue a million person.
| TheAdamist wrote:
| crowd sourcing / gig working a pump n dump instead of running a
| boiler room operation.
|
| Just add gig work to anything and rules no longer apply.
| nrmitchi wrote:
| I don't think it's fair here to assume that by "retail
| investors" the SEC means _all_ retail investors. Retail is not
| one giant group.
|
| It is possible for one group of retail (lets say the original
| WSBs crowd) to take illegal action that harms _other_ retail
| investors.
|
| Taking action to protect the mass of retail does not mean that
| all of retail is immediately in the clear.
| einpoklum wrote:
| > extreme stock price volatility has the potential to expose
| investors to rapid and severe losses
|
| Isn't that the definition of extreme stock volatility? Extreme
| height volatility has the potential to expose you to severe
| falls.
|
| > extreme stock price volatility has the potential to ...
| undermine market confidence.
|
| Confidence in what, exactly?
|
| > As always, the Commission will work to protect investors, to
| maintain fair ... markets,
|
| I don't see what's fair about the stock market.
| ummonk wrote:
| "Our core market infrastructure has proven resilient under the
| weight of this week's extraordinary trading volumes." - this is
| flat out false. The market infrastructure was supposedly unable
| to handle the desired buy volumes under high volatility on meme
| stocks, resulting in multiple retail brokerages disabling
| purchases of the meme stocks.
| williesleg wrote:
| Put on your face diaper.
| numair wrote:
| Okay kids, story time.
|
| After the crash of 2008, I spent some time working with Dick
| Fuld. Yes, the former head of Lehman Brothers. Yes, the one
| people describe as "disgraced," among other terms. Here's the
| irony, though -- Dick was one of the only people I encountered at
| that level of business/finance who _wasn't_ a scumbag. Unlike so
| many virtue-signaling Silicon Valley darlings, the guy behind the
| curtain was an honorable dude. And again, that's a direct account
| from someone who has no vested interest or a book to sell or
| anything of that sort.
|
| Dick and I worked closely together, one on one. After enough
| time, after he trusted me, I finally got to ask him about what
| the hell actually happened. The man had a ton of PTSD -- and
| probably still does -- but eventually it became clear that the
| real story was completely, utterly, unbelievably stupid.
|
| Yes, Lehman was doing a bunch of stupid stuff, and the management
| under Dick were behaving like cowboys. But at the end of the day,
| that was the entire market at that time. What sunk Lehman was, in
| the end, a decision by all of the other big banks and the
| regulators that they'd let Lehman die because of something that
| might be best summarized as "lol idk sorry Dick but we're just
| gonna let you go and let the Fed bail the rest of us out sorry
| bro lol." Like really. _That's_ how it went behind those closed
| doors in the lairs of the lizards that control the universe.
| Lehman had already suffered near-death in 1994 -- the world has
| now forgotten that Dick was the hero that saved the firm back
| then -- and now it was to be made a sacrificial lamb for everyone
| else's benefit.
|
| Why am I telling you this story? What is the point? Well, what I
| am trying to say is that these supposed "adults in the room" who
| are so much smarter and better than the the "retail investors"
| are pretty much the same sort of immature, self-centered children
| as the other side. The difference is, they've got the regulators
| and the politicians in their pockets. So when they say "lol oops"
| and _literally blow up the global economy to save face_ , nothing
| happens to them. But for some reason when it's the retail guys, a
| moral panic ensues.
|
| In my eyes, the Internet-connected retail investor is learning
| the power of what I call "massively multiplayer liquidity." Yes,
| there's some growing pains, but let's not kill this wild new
| phenomenon before we learn what it can do. Because, from what
| I've seen from the other side of things, I doubt these self-
| styled "retards" will ever end up as depraved and corrupt as the
| people they're disrupting.
|
| Play ball, kids. And as Dick always used to say, "don't get left
| with nothing other than a ham sandwich."
| kypro wrote:
| Can someone explain why my perspective is wrong on hedgefunds
| please?
|
| My understanding is that the GFC happened because the whole
| economy was levered to hell. At the risk of referencing the big
| short, there was a scene in that film where a stripper has
| levered herself up so much she owns five home. The reason the
| GFC happened was in reality because average people were levered
| up on real estate and couldn't afford their repayments.
|
| I fully understand that the financial system also took on too
| much risk and many understood those risks, but the narrative
| that hedgefunds are entirely to blame for the GFC, and that
| they were the only ones being irresponsible with leverage, is
| surely wrong?
|
| If the blame was with anyone it should be the regulators... Why
| were individuals and hedgefunds able to take so much risk? In
| the absent of regulation individuals and hedgefunds should be
| expected to take maximum risk for their own gain. Just like how
| WSBs did when they were all exploiting the infinite leverage
| glitch.
|
| Another thing that I don't think is true here is that the
| government is only there for the hedgefunds... If this last
| year has proven anything it's that the government is perfectly
| wiling to bail out individuals if they feel it's necessary to
| save the economy. And if the financial system is so rigged
| against individuals then isn't it odd how those individuals
| seem to be so able to destroy the hedgefunds with relative ease
| from a free smart phone app?
|
| I'm not trying to be edgy, I genuinely don't understand why
| people seem to blame hedgefunds for every inequality problem in
| society.
| caffeine wrote:
| This "wild new phenomenon" is just boring old market
| manipulation. The only thing new about it is that the
| perpetrator is a subreddit instead of a licensed broker/dealer
| or other regulated entity.
|
| The appropriate thing to do is for the SEC to subpoena Reddit
| and RobinHood, correlate trades with posts to prove intent to
| manipulate the price (which IS illegal), and charge every
| individual with market manipulation.
|
| Just like any other individuals guilty of market manipulation
| (Libor riggers, Navinder Sarao, etc).
|
| Robinhood should probably also be investigated for abetting
| this, although it's a gray area.
| fnimick wrote:
| 100% this. Price manipulation to trigger a short squeeze is
| explicitly illegal.
| https://www.sec.gov/investor/pubs/regsho.htm section 7.
|
| Anyone who told others to buy and hold with promises of short
| covering and higher prices is party to market manipulation,
| and it is absolutely, definitely illegal. Whether they'll be
| able to unmask and charge people behind the anonymity of WSB
| is another question though.
| Ghostt8117 wrote:
| Charge everyone with market manipulation the same way that
| everyone who caused the 2008 recession was charged? Sincere
| question, because if they decide to charge individual
| investors who commented on a Reddit thread with market
| manipulation after my generation witnessed the downfall of
| the economy due to sheer lies and blatant manipulation by
| banks, with no major charges against anyone of importance, I,
| at least, will be very angry.
| caffeine wrote:
| I am not against charging certain actors in the 2008 crisis
| with fraud and manipulation either.
|
| The 2008 recession is not really a comparable event to the
| current GME short squeeze. It was rather a broad series of
| events, most of which were unfortunately legal, some of
| which were probably not.
|
| In that case I would be in favour of charging the ratings
| agencies with fraud, and possibly the financial regulators
| with gross incompetence.
|
| Edit: I don't see it as "big guys vs small guys". I see it
| as "law abiding people vs not".
|
| So my reaction is not "its unfair to prosecute the little
| guy," but rather "we didnt get those criminals but at least
| we can get these criminals."
| throwaway2048 wrote:
| its funny how its always a certain class of people "we
| didn't get", the answer isn't to shrug your shoulders and
| say oh well.
| morlockabove wrote:
| What a very convenient point of view for the people above
| the law. I hope they're passing some of their gains on to
| you.
| IMTDb wrote:
| > the management under Dick were behaving like cowboys
|
| Exactly. and that's why they went under. Let's look at all
| possibilities :
|
| - Maybe Dick knew that the management under him was behaving
| like cowboys, and tried to stop it. Then that's sad, but so far
| no one seem to have given any tangible proof that this was the
| case.
|
| - Maybe Dick knew the that the management under him was
| behaving like cowboys, and did not tried to stop it. And he got
| what he deserved.
|
| - Maybe Dick just did not realize that the management under him
| was behaving like cowboys. Then the company he was a part of
| got what it deserved for putting that man - who was not
| competent enough to realize what was going on - in a position
| of power.
|
| - Maybe Dick did not realize that the management under him was
| behaving like cowboys. But the "company policy" prevented him
| from acting. Then he should have left. You don't reach such
| positions without playing the game.
|
| Maybe Lehman was not the only one doing all of that. But Lehman
| was definitely one. As such they maybe should not have been the
| only one to die, but they definitely deserved what they got. I
| don't buy the "I was a clueless nice guy that got caught in the
| middle of it" story. He's not sorry he did it, he's only sorry
| he got caught, otherwise he would just have left sooner.
| claw_howitzer wrote:
| > I doubt these self-styled "retards" will ever end up as
| depraved and corrupt as the people they're disrupting.
|
| But they sure would like to be. I've seen WSB. The entire
| system is selecting for sociopoaths.
| selectodude wrote:
| He conveniently left out the fact that Lehman was the only bank
| that wasn't helpful during the collapse of Long Term Capital
| Management, not that it changes anything. Basically the other
| banks and the NY Fed decided to send a fuck you for not
| cooperating ten years prior.
| briefcomment wrote:
| > "these supposed "adults in the room" who are so much smarter
| and better than the the "retail investors" are pretty much the
| same sort of immature, self-centered children as the other
| side. The difference is, they've got the regulators and the
| politicians in their pockets."
|
| Absolutely.
|
| Dick and Trump are examples of scapegoats. Throw someone under
| the bus publicly, so you can continue doing what you're doing
| while the public is busy staring at the spectacle.
| mindslight wrote:
| I don't know how it's possible to spin someone who made many
| public statements disrupting our society's pandemic response
| from a position of high authority as a mere "scapegoat", but
| at this point I'm no longer amazed.
| heimatau wrote:
| I find this refreshing actually.
|
| What reason? Because it demystifies the room. It pulls the veil
| off and we get to see behind the curtain.
|
| Strangely enough, I had a fleeting thought that this is why few
| firms went under and most got bailed out. I actually had this
| thought after watching the Big Short or another Wall Street
| movie about the 2008 crash. I thought that it was strange that
| Lehman was the odd one out and it struck me as a frat party.
| Only the cool kids survive.
|
| @numair, you sound very candid and forthright. I appreciate it.
| I find it's difficult for people to mask their tone and reading
| this honest tone is refreshing. I wish you success in your
| endeavors.
| kortilla wrote:
| Wall Street 2 effectively has an enactment of the scene where
| they all throw the one firm under the bus.
| fallingknife wrote:
| > "lol idk sorry Dick but we're just gonna let you go and let
| the Fed bail the rest of us out sorry bro lol." Like really.
| That's how it went behind those closed doors in the lairs of
| the lizards that control the universe.
|
| Says Dick Fuld. I doubt that's true, though, because at the
| time Lehman was going under, they didn't know that all the
| other banks were going with them. Remember, the bailouts didn't
| come until a few weeks later when the money market funds broke
| the buck triggering $trillions of withdrawals in what would
| essentially be a financial system wide run on the bank. The
| regulators didn't like the idea that a failing bank should be
| bailed out (as they shouldn't), and they couldn't find a merger
| partner like they did with Bear Stearns, so they let it fail.
| The bailouts didn't come until they realized that the fallout
| from Lehman's failure would bring down the whole system. Yeah,
| Dick Fuld wasn't really any different than any of the CEO's
| that got a bailout, but to cast him as the good guy among the
| group is ridiculous.
| numair wrote:
| The unforeseen side effects of what was meant to be a very
| orderly and master-planned wind-down of one bank for the
| benefit of all the others -- that speaks to the exact point I
| was making about the ridiculous notion that these are mature,
| all-knowing, all-wise adults.
|
| As far as good and bad people, well... The senior
| $LARGE_CONSUMER_BANK Vice-President who told me how much he
| loved the profit he was making off the overdraft fees he
| thought were "an honest service" to his poorest customers,
| with a huge smile on his face, was definitely a lot more evil
| than Dick.
|
| But look, if you've had direct experiences with a bunch of
| the CEOs and senior execs at these firms, feel free to
| provide a counter! If you're basing things on journalist
| accounts, however, you're going to be in for a surprise when
| you learn who pays their bills and takes them on trips...
| whimsicalism wrote:
| > mature, all-knowing, all-wise adults.
|
| The market is incredibly complex. If you thought that
| executives can _foresee_ the downstream effects of a given
| market event because they are "all-knowing, all-wise",
| then of course you are an idiot.
|
| But nobody you were arguing with even remotely thinks this.
| Of _course_ , there is uncertainty. There was never going
| to be a "very orderly" draw-down, but the issues from the
| moral hazard of propping up Lehman were (and remain) a big
| consideration when considering bailouts.
| roenxi wrote:
| > But nobody you were arguing with even remotely thinks
| this.
|
| The SEC thinks this, the linked statement suggests
| believe they can foresee rapid and severe losses that
| normal traders can't. Someone in this argument likely
| agrees with the SEC.
| hogFeast wrote:
| Dick Fuld has said that several times publicly, there are
| interviews with the FCIC where he said that there was a
| conspiracy against LEH, and almost every part of the meetings
| at the NY Fed are public knowledge...you have no behind the
| scenes knowledge (you sound like every person: I met X who did
| Y terrible thing, he isn't actually a bad guy, I am going to
| ignore all the public information about X and prioritise my
| super special "insider" knowledge).
|
| I will ask you a different question: if LEH was so strong, why
| didn't the Koreans invest? Why didn't BARC invest before BK?
| The issue, again and again and as explained at massive length
| in several books, they had very shaky funding, they had a lot
| of stuff that no-one knew how to value, they insisted to
| everyone that this stuff was very very valuable...it was not.
| If the real estate was so valuable, why couldn't they sell it?
| Every single person who I have ever met in the same position (I
| have met many) is in denial...that is why they are in that
| position. Fuld made numerous mistakes that can be summarised
| as: he thought he had pocket aces, he had 72o.
|
| Asking Dick Fuld for opinions on Dick Fuld is not smart.
| numair wrote:
| I am not going to go too far into this but, I was in meetings
| with Dick and senior executives from the other banks. The
| "lol sorry bro" attitude wasn't just Dick's way of telling
| the story.
| hogFeast wrote:
| ...I am not sure that I disputed that. What I said was: the
| reason why LEH didn't get bailed out was because the stock
| was worthless, and mgmt mismanaged that from day one (even
| towards the end, LEH was trying to sell its real estate at
| book...this isn't hard). And then Fuld went around telling
| everyone he should have got bailed out (btw, if you went
| into a meeting with other banks and started telling them
| they should give you money for nothing...do you think that
| wouuld have went down well?).
| whimsicalism wrote:
| > I met X who did Y terrible thing, he isn't actually a bad
| guy, I am going to ignore all the public information about X
| and prioritise my super special "insider" knowledge
|
| And it's such a trope. I swear, it feels like the quality of
| discussion on HN has gotten measurably more low-brow in the
| last few days.
| dannyphantom wrote:
| Thank you for your sentiment; I was unsure of the point
| initially but you really drove home to the concept of retail
| investors actualizing their significance in this new market.
|
| Of course, I'd like to both as you personally and additionally
| air out a sentiment of the ease of access being delivered to
| retail investors. What was once prohibitive has now been given
| to the individual. Do you have any sentiments that you're
| willing to share on that notion?
|
| As an additional thought; personally, I can't believe the
| behavior of some of the brokers that have come to light
| recently. RobinHood who, as they said in a tweet in 2016 "let
| the people invest" and now, in 2021 we see how true they
| maintain their values by restricting the very same people they
| sought to empower by disallowing trading on their platform. It
| is despicable.
| hinkley wrote:
| The problem with a conscience is that it gives you a tell, that
| others without one can use against you when they're in need of
| a scapegoat.
|
| As someone once told me when I lamented that I don't talk to a
| certain person more often, they stopped me and pointed out that
| the phone system works in both directions. There are two people
| not talking to each other, not just me.
|
| Dick participated, he could have blown the whistle, and he
| didn't, so he deserves a share of the guilt. He is not
| innocent. But if you didn't _build_ the house of cards, then it
| 's not _your_ fault, it 's the group's fault. If you colluded
| to remove people who would have said something, then you get
| more of a share of the blame. Anyone could have blown the
| whistle, not just you. Even if it's obvious that you are the
| most likely whistleblower, there could have been others. (And
| if you _were_ the most obvious, you can 't anonymously tip
| someone off because everyone will know it's you, so you're
| doubly screwed.)
|
| One of the things slimeballs have intuited for millenia is that
| if you really believe something crazy, nobody is going to pick
| up that you're lying because you believe it. You've lied to
| yourself, and then fastidiously avoided looking at the lie so
| that you can maintain your innocence, and your profit stream.
| You're guilty as sin, with extra sins piled on top.
| dnautics wrote:
| > The problem with a conscience is that it gives you a tell.
|
| We should encourage conscientious people to play more poker,
| I guess.
| archibaldJ wrote:
| As a programmer and an aspiring amateur quant myself I always
| ponder upon the possibilities of more people starting & managing
| mini hedge funds (e.g. with a starting captial of 200~500k?) with
| a mix of fundementals + algo-trading with multi-agent
| simulations, game-theoretic modelling, etc.
|
| As more platforms like ploygon.io, alpaca.markets emerge as well
| as more DeFi stuff gaining tractions, I really hope in the next
| 10 years regulations, etc, in the financial space would leave
| more rooms for smaller players to thrive.
| ineedasername wrote:
| _extreme stock price volatility has the potential to expose
| investors to rapid and severe losses and undermine market
| confidence_
|
| It's not the SEC's role to protect investors from risk or losses,
| rapid or otherwise, and saying that the recent activity
| "undermines confidence" is just another way of saying "increases
| risk", which is not their job. They should ensure confidence by
| guarding against fraud, but not to protect against losses by
| institutions that never thought that activist investors would
| work against their own interests.
|
| This isn't really manipulation that we're seeing: it's people
| betting against the institutions that themselves bet against
| companies combined with a fair bit of FOMO.
| threedots wrote:
| Protecting investors is literally the first part of the SEC's
| three part purpose statement.
|
| The SEC came into existence because retail investors lost huge
| amounts of money in the 20's in speculative bubbles. The same
| thing is going to happen here so the SEC is literally doing
| what it was set up to do.
| RurouniK wrote:
| Apparently when retail investors win it's "Manipulative trading
| activity"... I'm so glad Bitcoin and DeFi was invented in my
| lifetime and I can be protected by maths and computer science
| instead of a three letter agency.
| dialamac wrote:
| Yeah that's nice, so at least you can be involved in something
| where there is no doubt of large scale unfettered manipulation.
| I guess that certainty is a plus for some.
| RurouniK wrote:
| Do you have any proof of that large scale unfettered
| manipulation other than some random posts from salty boomers
| like yourself?
| jdefr89 wrote:
| Yea, unfortunately they isn't really the case right now as cash
| is still king and crypto is another gamble. Not to mention, who
| do you think could buy better hardware? Us or them?
|
| There isn't really such thing as decentralized. Its just the
| authority gets shifted around but the same issues can still
| show up.
| RurouniK wrote:
| Crypto is a technology not a gamble. It attracts gamblers but
| it's a technology and it's already 12 years old. I could say
| that an open decentralized permissionless network that has
| moved trillions of dollars for the last 12 years is resilient
| enough for me.
| Raidion wrote:
| You could say the exact same thing about the US stock
| market, except it's moved orders of magnitude more money.
|
| The risk may not be in the same spots as traditional
| markets, but it's there. Return doesn't come without risk,
| it comes because of the risk.
| RurouniK wrote:
| The US stock market is an institution run by suits not a
| technology. I mean boomers like you might think that the
| internet and usps are the same thing because they both
| move messages around but they are not.
| ycombigator wrote:
| "the Commission will work to protect investors"
|
| Ha, ha ha, ha ha ha...
| d33lio wrote:
| I generally find protests trite and idiotic, however if Yellen
| sides with hedge funds on this, and / or bails them out I'm going
| to find the nearest "peaceful" protest in NYC and bring as many
| people as I know.
| nscalf wrote:
| Protecting the individual investor usually looks like limiting
| our ability to participate in the market.
| peteyPete wrote:
| Whatever pressure is needed to stop the masses from understanding
| the power they have when working together. Although GameStop is
| small fries in comparison to other larger stocks, if that many
| people are willing to get together to vote with their dollars,
| that should scare wallstreet. And sure, this is "organized" but
| how is this any different than analysts with large audiences
| making calls and directing a large number of investors in the
| direction they want? Or hedge funds publishing their shorts and
| masses reacting based on that, affecting the stock. The
| hypocrisy. If they're going to regulate the people to this
| extent, they better regulate and actually enforce the regulations
| on wallstreet. Can't just protect one side.
| 1024core wrote:
| _to ensure that regulated entities uphold their obligations to
| protect investors_
|
| This is the "out" for RH. They'll claim (they already have) that
| they were protecting their investors
| dang wrote:
| For pointers to other vertices of this story graph, see
| https://news.ycombinator.com/item?id=25933543.
|
| (Sorry for the annoying repetition:) Large threads are paginated.
| To see all the comments, you'll need to click More at the bottom
| of each page, or do this sort of thing:
|
| https://news.ycombinator.com/item?id=25957748&p=2
|
| https://news.ycombinator.com/item?id=25957748&p=3
| sendtown_expwy wrote:
| It seems like Robinhood, when it stopped trading on GME, decided
| to literally transfer money from the WSB retail traders to the
| funds who were short on the stock. But if Robinhood needed to
| halt trading in order to just survive as a brokerage, (and could
| demonstrate so), would that justify its behavior? Does anyone
| know more about laws and regulations concerning brokerages here?
| gruez wrote:
| >It seems like Robinhood, when it stopped trading on GME,
| decided to literally transfer money from the WSB retail traders
| to the funds who were short on the stock.
|
| what?
| joncrane wrote:
| Preventing purchase orders would cause the stock price to go
| down.
|
| The funds short the stock gain wealth from the stock price
| declining.
|
| Holders of the stock lose wealth. Clients who want to buy
| "lose" the opportunity to gain wealth.
|
| The suspension of the ability to buy into the hype absolutely
| hurt the long folks (mostly retail WSB types) and helped the
| short folks (the big hedge funds which are short GME).
| JanSuly wrote:
| Could someone please explain briefly, where the problem is if
| someone small investers start investing in a trade? Yes, my
| question sounds as if it was from someone who doesn't get the
| whole story.
| gdubs wrote:
| A lot of cynical takes here, projecting the worst intentions of
| the government.
|
| To me this seems:
|
| A) remarkably hands-off, patient. "The market seems to be
| working."
|
| B) A reminder to newbies that there ARE laws, so don't be stupid
| as your investing journey continues.
|
| C) If anyone should be on the edge of their seats it's regulated
| entities who may have manipulated markets by putting their thumb
| on the scales.
| pgAdmin4 wrote:
| I am naive here, can someone explain what is the economic utility
| of a stock market ?
|
| For example, its easy to understand utility of food, cloths, car,
| house, money. But I am not able to find a reason about stock
| market existence for day-to-day trading, where secondary stocks
| are traded daily after IPO. It seems none of the day-to-day
| trading money/profit ever goes back to business to help them to
| improve that business.
| threedots wrote:
| Secondary markets provide liquidity for primary investors which
| makes making primary investments much more attractive. A stock
| market is just a highly organized kind of secondary market. How
| many VC investors there would be if they could never sell, or
| if they could only sell at prices which were random? Without a
| secondary market all investments would be permanent and that
| would make investing much less attractive.
|
| Secondary markets also provide important capital allocation
| benefits. They make it easier for good companies to raise
| additional capital (e.g. via a rights issue) or buy other
| businesses (using their shares). They also provide an important
| benchmarking role allowing non-listed companies to price
| transactions on the basis of listed company valuations.
| AcerbicZero wrote:
| The map isn't supposed to be the terrain; Generating wealth isn't
| the same as generating money, and the stock market seems to exist
| almost entirely for the latter, at the cost of the former.
|
| We're in a situation where playing in the market is a better
| strategy than using the market for its legacy purposes (you know,
| buying partial ownership in companies) and the number of
| financial tools created specifically to exploit the ability of
| wealth to generate additional wealth vastly out match everything
| else.
|
| Anyway I've got paperhands and bailed on my positions days ago by
| following some old WSB advice that's actually worth while - "take
| your profits when you want to"
| aritmo wrote:
| The response is pretty weak. The system was gamed for so long and
| small companies were driven out of existence. They are pretty
| saying, let's see how this plays out and we figure out after the
| fact what to do.
| dj_mc_merlin wrote:
| > The Commission will closely review actions taken by regulated
| entities that may disadvantage investors or otherwise unduly
| inhibit their ability to trade certain securities. In addition,
| we will act to protect retail investors when the facts
| demonstrate abusive or manipulative trading activity that is
| prohibited by the federal securities laws.
|
| Hopeful sentences for the ones who long GME. How often does the
| initial statement SEC makes actually matter?
| pferde wrote:
| In summary, just a vague "we are watching" statement.
| TeMPOraL wrote:
| My attention was caught by this paragraph:
|
| > _In addition, we will act to protect retail investors when
| the facts demonstrate abusive or manipulative trading activity
| that is prohibited by the federal securities laws. Market
| participants should be careful to avoid such activity.
| Likewise, issuers must ensure compliance with the federal
| securities laws for any contemplated offers or sales of their
| own securities._
|
| I'm no stock player, so I may not be reading the implied
| meaning correctly. But on the face of it, it seems at least as
| recognizing WSB-driven buyers as valid players in this match.
|
| (However, it's an open question whether they consider WSB's
| attempt at short squeeze as an organic thing, or a coordinated
| stock manipulation. The latter, as I understand it, is strictly
| illegal.)
| bo1024 wrote:
| I can read it the opposite way. "We will stop retail from
| trading for their own good because we think they are being
| manipulated."
| pferde wrote:
| Good point, I missed the explicit reference to "retail
| investors". That makes the statement somewhat interesting.
| pmx wrote:
| I think this part is pretty clear:
|
| "In addition, we will act to protect retail investors when the
| facts demonstrate abusive or manipulative trading activity that
| is prohibited by the federal securities laws. Market
| participants should be careful to avoid such activity."
| dubcanada wrote:
| What did you expect them to do? Go around arresting people?
| Stop trading on every market? Say that Robinhood is no longer
| allowed to trade?
|
| It's a giant government body that overseas a very large tender
| market of money, they can't just make rash decisions. They need
| to review, see how it plays out in the longer term, and see how
| the government is going to want to adjust.
|
| I don't think technically anything (minus the robinhood/other
| people restricting buying, and even that who knows) that's
| going on is really "wrong-doing" on the surface. Everything
| seems to be by the book.
|
| So they'll need to dig deep into the stock and find evidence
| and provide that evidence to the body that reviews stuff.
|
| You probably won't hear of any changes for months if not years
| if at all.
| LittlePeter wrote:
| It's something at least. You have to give SEC some time to
| investigate.
| cush wrote:
| What an absolutely nothing and unspecific statement. It could be
| the description on Wikipedia explaining the responsibility of the
| SEC.
| jancsika wrote:
| A Moment in the Life of an HN Genius:
|
| 1. Reads a technical document outside their domain.
|
| 2. Feels dumb because they don't have a grasp on any of the
| concepts.
|
| 3. Too busy to use the very internet _which some of them probably
| helped build_ to magically render learning materials to the
| screen in front of them at zero marginal cost.
|
| 4. Sees the word "manipulation"
|
| 5. Substitutes the laymen's definition of "manipulation"
|
| 6. Builds a fantasy World of Wall Street from first principles
| around that definition
|
| 7. Argues their fantasy first-principles Wall Street against
| other participants' fantasy first-principles Wall Street
|
| 8. Everyone leaves sync'd on the fantasy of feeling smarter than
| when they arrived.
| twblalock wrote:
| The flood of articles about this topic hitting the front page,
| and the flood of comments on those articles full of
| conspiratorial thinking, have been surprising.
|
| Even during the election, the controversy following the
| election, and the Capitol riot, the front page didn't get taken
| over by a flood of articles. Something is different this time.
| It was not good. I hope it won't happen again.
|
| The moderators on this site do great work, and I'm sure this
| caught them by surprise and they did their best. I hope a
| controversy like the one that happened with WSB and Robin Hood
| in the past few days will not be able to take over this site to
| such an extent again.
| mancerayder wrote:
| Your criteria for moderating/censorship is that the post
| suggests a conspiracy? Are you not worried the scope might be
| wider than intended and the net cast snag ideas tagged as
| conspiracies that aren't or are later discovered to not be?
|
| Or is the criteria that it's a negative and implicates
| mainstream institutions?
|
| I'm asking an honest question in good faith because I'm
| nervous at people conflating fringe ideas and extremist
| ideology with merely non mainstream ideas or suggestions.
| twblalock wrote:
| There were quite a few stories about this on the front page
| (many of which were duplicates), and a frenzy of posters
| positing conspiracy theories in the comments to those posts
| -- stuff like accusing Robin Hood of being paid off by
| hedge funds, general conspiracies about market manipulation
| and rigging, and trolls posting WSB-style content.
|
| If I want to see a flood of fake news and conspiracy
| theories there are plenty of other places to go. HN is not
| supposed to be the kind of site where that happens. Somehow
| the norms that prevented that from happening before on this
| site, even during times of extreme political controversy,
| have been broken.
| temp8964 wrote:
| Yeah. Common sense no longer makes sense. Let me write a
| technical document stating how killing half of population is
| justified, but it is not for laymen to understand.
| vntok wrote:
| Depends on whether your document's field is microbiology and
| "population" commonly refers to lethal viruses that we want
| eradicated, or it is sociology and population specifically
| refers to humans.
|
| Which is exactly the parent's point. Don't assume words mean
| the exact same thing from one field to another.
| germinalphrase wrote:
| Natural human behavior that smart people fall into just as
| easily as anyone else. Go read any HN thread on airplanes,
| education, or war...
| bcrosby95 wrote:
| So, the HN "Genius" is just like most other people on the
| internet? I think the problem isn't with the HN "Genius", it's
| you expecting people on HN to not behave like people.
|
| Stop putting STEM workers on a pedestal. We're still just
| people. Like everyone else.
| leothecool wrote:
| Do you have any metrics to back this up?
|
| Or is this your own fantasy you've built up...
| stjohnswarts wrote:
| "let's not discuss anything because we aren't experts or even
| amateurs in _____________. HN discussion is therefore useless
| and I declare the site be taken down immediately, post haste"
| Flott wrote:
| I get the point. They way it's delivered is just so passive
| agressive.
| SirSavary wrote:
| Seems like you struck a nerve. I'm impressed by how many people
| are replying to this, quoting your points, and then talking
| about those points as if they were addressed directly at them.
|
| When did HN become overrun by narcissists?
| notapenny wrote:
| Just because people are replying to your take, doesn't mean
| they are narcissists. Its possible to look at an argument and
| engage it without being triggered. People that disagree with
| you are not automatically x-ists. Though it sure is easier to
| believe they are, since that way you don't need to consider
| the alternative.
| e_tm_ wrote:
| day 1
| TeMPOraL wrote:
| You say "narcissists", I say I'm tired of seeing people
| shutting down anyone who uses their brain to try and
| comprehend the facts - and god forbid they know some math and
| are capable of formal reasoning.
|
| This approach is just teaching people to repeat memes after
| pundits and not use their brain - instead of teaching them to
| work on better reasoning skills, and applying these skills to
| the problems they face, while accounting for their lack of
| expertise.
|
| Discussions should be about arguments, not people's
| authority. If you see someone being wrong and you know better
| because you've studied the field for longer, point out the
| flaws in their arguments, offer corrections, but embrace that
| they're at least trying for understanding, instead of
| condemning them.
| beaconstudios wrote:
| I totally agree that merit of arguments should be earned by
| the argument, but on HN there's an awful lot of bad
| arguments posited in terms of "I think it probably works
| THIS way based on how I imagined up the entire industry in
| my head" that then go on to try to make a "hoho those
| stupid industry insiders, they didn't see solution X" point
| on said completely imaginary model. IE, not very rigorous
| models being used overconfidently.
|
| Closely related XKCD: https://xkcd.com/1831/
| bart_spoon wrote:
| > "I think it probably works THIS way based on how I
| imagined up the entire industry in my head"
|
| That's how every opinion anyone's ever had works.
| Everyone has a mental model, which they use to understand
| the world. If you have a problem with the specifics,
| address them. Otherwise, you are simply appealing to
| authority.
| beaconstudios wrote:
| Of course. But there's a difference between studying or
| being involved in an industry to formulate your model and
| being confident in that, and being confident in pure
| conjecture. Mental models are great and they're really
| all we have to understand the world, but they should be
| based in some kind of observation.
| TeMPOraL wrote:
| The arguments posited in terms of " _I think_ it
| _probably_ works THIS way ... " are arguably the best
| ones - they qualify someone's lack of expertise and save
| the reader from assigning undue confidence to claims :).
|
| That said, Internet discussions are run on Cunningham's
| Law - you say what you think you know, and others will
| call your errors out, or challenge your assumptions. As
| long as people don't read any single comment as gospel,
| but consider the whole discussion in context of their own
| knowledge, applying basic critical thinking, everyone
| gets to train their reasoning skills and learn something.
| I'd expect this to be a baseline on HN.
|
| I'm confident being the protagonist of that XKCD is a
| rite of passage in this industry :).
| egwor wrote:
| I think that there's a real problem with people using
| 'Cunningham's Law' as a way to learn. It might be fine
| for that person (because they know their limits), but
| then anyone reading it could incorrectly quote that
| person as being right (because it wasn't corrected).
| These ideas are then duplicated and we get into a real
| mess where we can't differentiate widely held views vs
| the experts/most agreed upon view by experts.
|
| In general, this can't be a way to move forward as a
| society if people just make stuff up.
| snowwrestler wrote:
| How dare you call me, specifically, a narcissist with this
| comment!
|
| (But to be serious, I think it's easy to accidentally take
| forum comments personally because the physical act of reading
| HN comments, social media DMs, and text messages are all
| basically the same. So maybe it's easy for our emotions to
| get mixed up.)
| SilasX wrote:
| I don't think it's narcissism, I think it's the dynamic
| described in the SSC post, Weak Men Are Superweapons:
|
| >>Alice said something along the lines of "I hate people who
| frivolously diagnose themselves with autism without knowing
| anything about the disorder. They should stop thinking
| they're 'so speshul' and go see a competent doctor."
|
| >>Beth answered something along the lines of "I diagnosed
| myself with autism, but only after a lot of careful research.
| I don't have the opportunity to go see a doctor. I think what
| you're saying is overly strict and hurtful to many people
| with autism."
|
| >>Alice then proceeded to tell Beth she disagreed, in that
| special way only Tumblr users can. I believe the word "cunt"
| was used.
|
| Alexander explains what's going on as:
|
| >>Beth chose to stand up for the people who self- diagnosed
| autism without careful research. This wasn't because she
| considered herself a member of that category. It was because
| she decided that self- diagnosed autistics were going to
| stand or fall as a group, and if Alice succeeded in pushing
| her "We should dislike careless self- diagnosees" angle, then
| the fact that she wasn't careless wouldn't save her.
|
| >>Alice, for her part, didn't bother bringing up that she
| never accused Beth of being careless, or that Beth had no
| stake in the matter. She saw no point in pretending that
| boxing in Beth and the other careful self- diagnosers in with
| the careless ones wasn't her strategy all along.
|
| https://www.slatestarcodexabridged.com/Weak-Men-Are-
| Superwea...
| dang wrote:
| Please don't do psychological mass-diagnosis of large
| internet communities, including HN, in HN comments. Those are
| always an invention because there isn't nearly enough data to
| assess anything like that.
|
| Meanwhile, when you do this (I don't mean you personally),
| it's always to bash the other side of some $issue, which is
| just the sort of flamebait and provocation we're asking
| people to avoid here--regardless of how wrong other people
| are or you feel they are.
|
| https://news.ycombinator.com/newsguidelines.html
| f430 wrote:
| https://news.ycombinator.com/item?id=25954606
|
| One really good example in that link is a user trying to
| claim that race & iq is the determining factor in economic
| outcome while dropping racial slurs as examples to justify
| racism against Asians and other groups that he thinks are ALL
| "wealthy" and "smart".
|
| It's a great illustration of parent's comment. Taking an
| outdated model and then using it to justify his/her own
| skewed views. Sort of like how we use colour labels created
| by a Swedish pseudoscientist to reduce ethnicities to is
| being heralded as a great achievement.
| Chris2048 wrote:
| > Builds a fantasy World of Wall Street from first principles
|
| or what experts call "a model"
| titzer wrote:
| Congrats, you hit the Smarty's Catch 22--thinking you found the
| error in the smart people's oversimplified reasoning with
| oversimplified reasoning and then throwing stones.
|
| /ducks
| dang wrote:
| Please don't respond to a bad comment by breaking the site
| guidelines yourself. That just makes this place even worse.
|
| https://news.ycombinator.com/newsguidelines.html
| tompccs wrote:
| I am so sick of this 'stay in your lane' attitude. Time and
| time again, experts have been shown to have consensus opinions
| which are wildly off from reality. You can almost set your
| watch to how often an outsider will analyse a situation from
| first principles and make money off the 'experts', especially
| in the stock market.
|
| You're welcome to your opinion but this appeal to authority is
| seriously wearing thin. Pretty much the only field which hasn't
| been embarrassed by an outsider of late is physics, and even
| that might not last forever (I remember the smugness with which
| Stephen Wolfram is routinely dismissed from having non-
| consensus views of physics).
|
| Progress almost always comes from non-consensus outsiders. This
| whole website is supposed to be a testament to that!
| jancsika wrote:
| > I am so sick of this 'stay in your lane' attitude.
|
| To my mind, I'm doing the equivalent of chiding front-end
| beginners for not spending a few minutes reading the part of
| the ecmascript spec that describes the language's primitive
| values. (Or at least a primer that covers the names of those
| types.) That spec is free, and I can probably find the
| relevant section faster than I can type this sentence.
|
| Actually, it took me a minute and a half-- it's in section
| 6.1.6: "ECMAScript Language Types" of the ECMAScript 2020
| spec.
|
| It doesn't take much longer to skim that section and start a
| mental model with at least the name for each primitive type.
|
| Armed even with that superficial knowledge, a beginner is
| less likely to make mistakes in communication with others.
| E.g., they are less likely to read a tutorial on symbols,
| confuse it with a tutorial on strings, and/or waste the
| author's time asking a question about strings.
|
| Someone who hasn't read the spec (or at least a primer) might
| assume that those words are synonyms, or perhaps that
| "symbol" refers to the content, or has something to do with
| unicode code points, or has the same relationship and single
| and double quotes in ecmascript.
|
| I have no doubt such a beginner can concoct all kinds of
| interesting definitions for "symbol" from first principles.
| Perhaps in some cases their own idiosyncratic
| misunderstanding describes some "alternate ecmascript"
| language that has superior features to the real ecmascript.
| That we can so easily construct these alternate realities is
| cool in and of itself and is an obvious part of the learning
| process.
|
| What _isn 't_ cool is when a critical mass of commenters who
| don't know and won't learn the basic terminology pretend to
| have a discussion about a topic which in reality each comment
| is in it's on parallel universe of idiosyncratic terminology.
| Especially on this topic, it's extremely likely that one's
| idiosyncratic, uneducated take is going to be immensely more
| boring and fruitless when compared to accurate and well-
| informed takes on what played out in the stock market over
| the past week.
|
| I look forward to posting something like this the next time
| the topics of macroeconomics or unions come up.
| JamesBarney wrote:
| The non experts who do this are almost always people who have
| spent significant amounts of time familiarizing themselves
| with the literature.
|
| It is fairly obvious that this is not the case for most
| people in threads about GME.
| [deleted]
| a-dub wrote:
| i think overall people are feeling a little burned by trump's
| anti-filter and rampant conspiracy theories that have taken
| hold recently and as such are retreating to respect for
| status and authority.
|
| there is some good to come of it, but i do wonder if the baby
| is being thrown out with the bathwater. true experts can
| handily defeat nonsensical arguments in their fields and
| unusual viewpoints can enrich their thinking.
| nabla9 wrote:
| This is not outsider vs. establishment expert.
|
| This is effort to learn vs. making hasty judgements issue.
|
| I have studied several subjects over 100 - 1000 hours as an
| outsider, but that does not mean that I can criticize
| experts. I can ask pointed questions maybe. Being
| intellectually humble is good.
|
| In this issue outsiders should at least read everything Matt
| Levine writes on the subject as a starting point.
| colechristensen wrote:
| It's not about staying in your lane, it's about being more
| aware of your ignorance. What you notice, over and over, is
| the people talking the loudest about most things have very
| little real idea about whatever they're talking about. The
| truth is almost always more boring than the most attention-
| grabbing theory, this bias found all over for the non-expert
| with the big opinion needs to stop.
|
| People with the stock industry conspiracy theories are doing
| the _exact same_ thing as voter fraud people. That is, people
| with almost no information are forming theories about a
| secret cabal of the powerful keeping them down.
|
| The reality which is becoming obvious is that trades were at
| several brokerages were halted because of capital
| requirements for brokerage firms. The capital requirements
| for some of these meme stocks changed, the stocks were very
| broadly held at these brokerages, and they simply didn't have
| the capital on hand where it needed to be to cover the
| requirements. That's (1) a lot more boring, and (2) a lot
| more complicated than a conspiracy about market fixing, so it
| doesn't get attention outside of people who actually know.
| elefanten wrote:
| That's not at all the attitude I read in gp.
|
| Being cognizant of our (humans') fantastic, ego-bolstering
| tendencies is a good thing.
| xapata wrote:
| I think bullets 3 and 5 were the main point of that comment.
| It wasn't well-said, but it is in fact valuable to spend a
| moment to get familiar with the jargon a person is using,
| even if that jargon happens to have homonyms with a different
| field's jargon. That effort is what allows us to "swim out of
| our lanes" as you might say.
| tompccs wrote:
| Fair enough, it's more the condescending attitude that rubs
| me up the wrong way. And if the words regulators use mean
| to them different things than they mean to everyone else
| (the people whom the regulations are ostensibly supposed to
| protect), that's probably interesting in itself! If you are
| charged with 'theft' under a law that defines 'theft' in a
| very different way to how you or your peers would define
| it, that's probably going to be a problem. So I'm all for a
| discussion on what the jargon actually means, if anyone has
| any insights beyond making general snipes at the HN
| community.
| oasisbob wrote:
| Theft is a pretty good example, actually.
|
| In many US states, the legal definition of "assault" is
| much different than the battery most people picture.
|
| Robbery is not larceny.
|
| Burglary is not larceny.
|
| Your peers probably don't know what robbery actually is.
| aaroninsf wrote:
| This is spot on accurate,
|
| Yet my next thought was in the "forest vs trees"
| direction which as far as I can tell as someone with
| homemade popcorn watching both this thread, and the "meme
| stock" story (saw that phrase last night),
|
| I will suggest that as in the case of the peers'
| ignorance of specific legal definitions,
|
| it's the thought or thrust that is usually being grappled
| with, and the dimension of argument is usually not e.g.
| about the _specific_ crimes some person might be guilty
| of or not, but rather the fact of their wrongdoing. Where
| "wrong" is not a legal concept full stop.
|
| So too in the case of the GME thing, if not this thread;
| I suspect that there is a lot of implicit meta-
| argumentation going on,
|
| and that some of what I see in this thread appears to be
| missing (or more likely, dis-missing) that, to engage in
| "tree" level quibbling.
|
| (All said, I do agree words and their meaning matter; and
| that when we want to use them informally, because
| specificity in some domain is not germane to our
| argument, we would do well to be explicit about that...)
| esoterica wrote:
| Haha, of course you're The Type of Guy who worships Wolfram.
|
| You know he's a total crank right.
| dang wrote:
| Personal attacks are not cool here regardless of how wrong
| another comment is or how much you disagree with someone.
|
| https://news.ycombinator.com/newsguidelines.html
| uh_uh wrote:
| One could argue that the whole situation came about because
| outsiders (Reddit users) caught the "experts" (hedge funds)
| with their pants down.
| mobjack wrote:
| Market experts have been caught with their pants down many
| times before because of the actions of uninformed
| investors.
|
| In 1999, the rational move would be to short tech stocks as
| they were over valued, but those who tried it lost lots of
| money because they didn't factor in how crazy investors
| were at driving up the price.
|
| You can technically be right but still end up losing
| everything.
| VectorLock wrote:
| This harkens back to the extremely worn threadbare quote
| "The market can stay irrational longer than you can stay
| solvent."
| Aunche wrote:
| Redditors made millions of dollars. A couple hedge funds
| lost billions. Where did the rest of the money go to? Other
| institutional investors. Nearly 10% of Gamestop is held by
| a mutual fund where experts try to pick undervalued stocks.
|
| https://money.cnn.com/quote/shareholders/shareholders.html?
| s...
| Voloskaya wrote:
| > Time and time again, experts have been shown to have
| consensus opinions which are wildly off from reality
|
| No, it's just that it's not interesting when an expert is
| right about their domain expertise so we don't talk about it.
|
| The issue is people getting skewed by this and then inferring
| that it must mean, on average, that their outsider opinion is
| as valid as experts, but really, it's not.
| ditonal wrote:
| If a physicists tells me something about how the solar
| system works, they don't have much reason to lie to me.
|
| If RobinHood tells me how clearing houses work, they have a
| huge reason to lie to me.
|
| Given what we say in cases like Enron, Bear Stearns, I am
| shocked and dismayed at the eagerness of Hacker News
| contributors to so readily accept whatever Robinhood tells
| them as 100% gospel.
|
| Where were all these experts on clearing houses a week ago,
| warning of this exact risk? Because plenty of people had
| opinions on Gamestop, that maybe the SEC would halt trading
| altogether etc, but not a single person mentioned this
| clearing house liquidity issues until it happened. And I
| still really can't get a good explanation for why if I had
| 10k in my non-margin account that cleared over a year ago I
| can't use that to buy a stock(or withdraw for that matter,
| though hopefully that's temporary). OR, if people were
| allowed to sell stock, who were they selling to?? Clearly
| SOMEONE was allowed to buy! A lot of misdirection around
| things like margin accounts.
|
| Robinhood didn't give any real explanation until many hours
| later. But they're apparently just "poor communicators."
| Amazing how a billion dollar company filled with conflicts
| of interest making a totally unprecedented restriction that
| actively helps their hedge fund investor simply can't
| possibly be committing any sort of fraud.
|
| Because nobody's ever committed fraud before, a Robinhood
| press release must be treated as the "facts". This is
| insanity . Robinhood are not the "experts" in this case,
| their version of truth is probably the least reliable of
| all parties.
| stcredzero wrote:
| _If RobinHood tells me how clearing houses work, they
| have a huge reason to lie to me._
|
| If there are enough mechanisms of "Crony Capitalism" at
| play, to cause most of the trading apps in existence to
| halt trading, this is definitely something that needs to
| be investigated.
|
| Likewise, if there are enough of these crony mechanisms
| involving collusion between Facebook, Twitter, Square,
| Stripe, and Visa targeting people, this also warrants
| investigation. It seems to be part and parcel the same
| sort of thing.
|
| People have been calling stuff like this out since the
| 80's!
|
| https://en.wikipedia.org/wiki/Manufacturing_Consent
| CabSauce wrote:
| I don't think anyone is saying "we don't need to
| investigate". They're saying "let's find evidence before
| we assume malintent".
| koheripbal wrote:
| The internet mob does not wait for pesky delays of
| "evidence"!
| dudeinjapan wrote:
| Maybe not apples-to-apples, but... I worked on Lehman's
| Tokyo electronic trading desk in 2008. When we went
| bankrupt, it wasn't our clients, or even the exchanges
| which stopped our trading. It was our clearing banks.
|
| Interestingly, we weren't cutoff uniformly in all
| markets. NY desk was trading about 75% of regular volume
| for 4 days into the bankruptcy before someone (SEC?) told
| them to knock it off.
|
| There's a lot going on in Robinhood's back office and
| legal teams of which we are not aware. While I'm as
| pissed as anyone that they shutoff trading, I'm open to
| the idea that the shutoff was for far more mundane
| reasons than collusion with Citadel and Point 72.
| [deleted]
| mgleason_3 wrote:
| "I'm as pissed as anyone that they shut off trading,"
|
| Robinhood did not halt trading or shut off trading.
|
| Robinhood prevented _buying_ Gamestop and only allowed
| selling.
|
| That's entirely different. It can only do one thing -
| drive the price down which is market manipulation. It's
| supposed to be illegal.
| mlthoughts2018 wrote:
| They did halt both buying and selling of _net new
| positions._ They did not halt adjustments of _existing
| positions_ (calls & shorts).
|
| This was actually a very fair, by-the-books standard
| trading halt. It just happened to benefit the short
| sellers who had been squeezed because they could easily
| find people willing to sell.
|
| You definitely could still buy GME if you found some
| extremely random call option holder who needed to _sell_
| to cover their position. This would not be changing a net
| new position, just like selling to someone looking to
| cover a previous short, and this was never blocked - it's
| just there was no volume for this, nobody owned calls and
| needed to sell.
| vkou wrote:
| Robinhood's collateral requirements increase when their
| users buy stock, and decrease when their users sell
| stock.
|
| If they hit their collateral limits, they have two
| options.
|
| 1. Stop all trading for a few days, as the trades settle,
| the funds clear, and the collateral requirements drop.
| Cue millions of pissed users who want to close their
| positions, but can't.
|
| 2. Only stop trades that increase their collateral
| requirements - buys.
|
| There's also option 3 which is 'immediately get kicked
| off the settlement networks and go into bankruptcy,
| because they are trading past their collateral
| requirements.'
|
| Which of these three options would manipulate the stock
| price less, and screw over fewer people, in your
| estimate?
| dudeinjapan wrote:
| Playing devil's advocate, it's possible that the
| lawyer/clearing bank/regulator gave the instruction to
| cutoff all trading in the name, and cutting off only buys
| was the lesser of bad options. (Had they also cutoff
| selling, it would have been even worse!)
|
| Reading the SEC's letter (in the OP), you can clearly see
| the SEC wants everyone to sell out of their position and
| make this whole thing go away. RH no doubt has an army of
| lawyers and compliance people whose entire jobs/careers
| is to predict what the regulator wants and proactively be
| their lapdog. (The regulators meanwhile are completely
| free to be Monday-morning quarterbacks and retroactively
| assess fines to anyone, despite providing no concrete
| guidance of what to do in an unprecedented situation like
| this one.)
| Aunche wrote:
| I don't take what Robinhood says at face-value because
| they have proven to be a sketchy-ass brokerage. That
| said, I still find their statements infinitely more
| valuable than baseless conspiracy theories floating
| around. Why would Citadel risk jeopardizing their
| lucrative relationship with Robinhood just so they
| _might_ be able to successfully manipulate the market?
| [deleted]
| tompccs wrote:
| Of course, an outsider can't simply declare something to be
| true by dint of being an outsider. You need to reason it.
| Or, in the market, bet on it, and you'll see who wins out.
| But experts should be held to the same standard.
| kd0amg wrote:
| > Or, in the market, bet on it, and you'll see who wins
| out.
|
| This is a fine way to settle debates about the
| health/viability of a publicly traded company, but it
| doesn't help much when the point of contention is a
| question of law.
| [deleted]
| AnthonyMouse wrote:
| The other issue is that it tends to be underspecified
| whether a discussion is about law or policy.
|
| Someone comes in and describes from first principles what
| a reasonable system would look like, and then someone
| else haughtily chastises them because that isn't how the
| existing system works. But if you read it as they
| intended it, i.e. as a policy proposal rather than a
| legal opinion, then the fact that it isn't the existing
| system is the point. The intention is to change the
| system to make it that way and the desired response is
| either support or a criticism of the mechanics of the
| proposal rather than its basis in existing law.
| mcguire wrote:
| On the other hand, many people who reason from first
| principles fall into two fallacies:
|
| First, they believe that their system is how the world
| should work, and therefore how it would work if only
| someone, somewhere, weren't interfering. The result is
| conspiracy theories.
|
| Second, they have not fully thought out the consequences,
| or don't care about them, and dismiss the historical
| consequences of similar systems in the past. Reasoning
| with people who ignore evidence in favor of their
| theorizing is difficult.
| andrewprock wrote:
| I can only applaud this succinct diagnosis of the
| difficulty in dealing with online debate.
| pas wrote:
| Offline debates tend to be even worse. You usually don't
| have time to read it at your pace, whoever talks to you
| will keep making sounds, etc.
| avs733 wrote:
| > an outsider can't simply declare something to be true
| by dint of being an outsider.
|
| you must be new to the internet.
| pas wrote:
| So ... an outsider who just declared something as true.
| It's tautologies all the way down! :)
| avs733 wrote:
| a tautologie is a form of turtle, I don't understand why
| the herpetologists haven't read my medium to understand
| that.
| wolf550e wrote:
| The non-consensus outsiders who make progress have done the
| reading. They know what the consensus is, they know all the
| concepts and the jargon, and they disagree about something.
| Your post can be interpreted to mean "my ignorance is just as
| good as your knowledge". That's anti-vax thinking and
| argument. That is not a way to make progress.
| maedla wrote:
| Yep exactly. For every one outsider that gets it right, how
| many are wrong? I'd wager, quite a bit
| TheOtherHobbes wrote:
| Expertise is not a Boolean. I'd trust a qualified
| physicist to make useful predictions about quantum
| devices, an EE to model an analog circuit, and a
| structural engineer to design a bridge that doesn't fall
| down.
|
| But financiers, bankers, and economists have a much less
| convincing record - and that's after you filter out the
| ones who have been caught breaking the law.
| 7d6dyeyee wrote:
| I always hear these sorts of criticisms of economists and
| financiers but I just don't think they hold water
| overall. Usually when I hear econ get flak the
| conversation rapidly devolves into criticisns of the
| abstract fairness of a solution rather then its
| priorities and effectiveness within the context. You see
| this constantly in the US when politicians from either
| side talk about the bank bailouts, the national debt,
| minimum wage, immigration, etc. Suddenly, rather than
| having anything resembling a sober and informed
| discussion about the topic and the current expert
| consensus, everyone just starts soapboxing about fatcats
| and entitlement while larping as intellectuals as they
| promote fringe 'theories' that happened to coincide with
| their political objectives. Meanwhile the actual
| economists and their suggestions get either drowned out
| or misrepresented.
| stcredzero wrote:
| _The non-consensus outsiders who make progress have done
| the reading. They know what the consensus is, they know all
| the concepts and the jargon, and they disagree about
| something._
|
| http://www.paulgraham.com/say.html
| cogman10 wrote:
| Pretty well captured by that old comedy sketch "The expert"
| [1]
|
| I dare say that most people here on HN have been hit by
| upper management telling them to do something stupid or
| impossible. I'd even wager that most have had them get
| defensive when you try to explain why doing X isn't a good
| idea.
|
| That's effectively what I see when someone criticizes
| "experts" broadly and generally. I've long accepted that
| there are many individuals that know a lot more about
| subjects I know little about. While I have a pretty good
| read on things related to computers, I'm more than willing
| to admit that I'm not an expert in science, medicine,
| climatology.
|
| So who should I trust? Should I trust the youtuber that's
| "Found" the secret that the "so called experts" are trying
| to hide from the public? Or should I look to the actual
| experts actually working in the field and take their word
| for it? Or do I take the harder route and try and build
| understanding on the subject on my own?
|
| I certainly have tried to expand my personal understanding
| in general. However, what I've found is that by and large
| the experts actually know what they are talking about. You
| should generally trust them. The place where I've found a
| LOT of misinformation is the "skeptics" that hurl doubt
| without evidence while denigrating "experts". That is the
| place where I've found outright lies.
|
| Evidence of such BS artists include Flat earthers, Anti-
| vaxxers, and climate change deniers. Those are all flat out
| wrong positions. There's mountains of evidence and experts
| against each of those positions and mostly lies or
| misrepresentation in favor.
|
| [1] https://www.youtube.com/watch?v=BKorP55Aqvg
| mcguire wrote:
| If an old, grey haired scientist tells you something is
| possible, he's probably right. If he tells you something
| is impossible, he's probably wrong.[1] But if a hundred
| scientists tell you something, they might be wrong but
| it's still the way you want to put your money.
|
| [1] As the saying goes.
| cvwright wrote:
| > [1] As the saying goes.
|
| It's from Arthur C. Clarke.
|
| https://www.goodreads.com/quotes/155962-when-a-
| distinguished...
| jodrellblank wrote:
| The Expert sketch is all dramatic and frustrating, I
| rather like the Mitchell and Webb spoon design sketch for
| a quieter view of the problems of designing and
| communicating https://www.youtube.com/watch?v=Hu9nhExp5KI
|
| (y'know, if you're faced with something which seems
| obvious, and the expert is struggling, why? And should
| you simply trust them and give up? Why is the extra
| "explanation" just the same thing repeated again and
| again? How difficult it is to say "I still don't
| understand" after several of these explanations. And then
| at the end it's less clear whether the request is
| reasonable, if you use spoons as a proxy for other
| things).
| stcredzero wrote:
| _I certainly have tried to expand my personal
| understanding in general. However, what I 've found is
| that by and large the experts actually know what they are
| talking about._
|
| Right. It's the expert's blind spots that contain the
| best nuggets of value.
| dudeinjapan wrote:
| Experts are almost always right, assuming their
| assumptions are infallible. The skeptic's criticism is
| often not directed at the expert's conclusions but their
| axioms.
|
| Red lines with green ink --> use a thermochromic ink,
| change the temperature.
|
| 7 lines all perpendicular to each other --> sure, in 7+
| dimensions.
|
| Solve the climate crisis --> geo-engineering.
| Paddywack wrote:
| I would frame this on two axis: 1) outsider vs
| establishment 2) expert vs layperson
|
| My opinion (see below for how I have defined these)
|
| Outsider expert > establishment expert for public ally
| challenging and overturning norms
|
| Any expert > layperson on the basic facts (ignoring
| statistical aberrations, of course)
|
| "Outsider" being unconstrained by norms, not afraid to be
| cast out of a long established peer group
|
| "Expert" has deep grasp of contemporary facts, second and
| third order consequences, puts in controls to remove
| cognitive biases, deep curiosity and healthy scepticism.
|
| "Layperson" being someone who is probably intelligent, but
| grasps quickly onto unfamiliar concepts and data and makes
| heuristic calls based on limited data.
| edmundsauto wrote:
| So Michael Mauboussin is kinda of my obsession in this
| area. Basically, if it's a field with a lot of luck
| involved in outcomes, don't trust the experts (finance
| and economics). If it's heavily skill based (chess),
| trust the experts.
| Paddywack wrote:
| Note the Dunning Kruger effect too!
| adkadskhj wrote:
| Very well said, thank you. That was my objection, too.
| Outsider is a meaningful distinction in that they're still
| a domain expert _(or something)_ , just not inline with the
| standard.
|
| What the OP comment was citing wasn't that. Rather, it was
| people like me - reading that document, not knowing the
| terms but assembling some form of self reinforced
| "knowledge".
|
| There's a difference between very well informed outsiders
| which rival experts and random people. Thinking I know more
| about vaccines and the dangers than researchers, doctors,
| etc is moronic. I have no foundation to be making that
| decision, and beyond the obvious "free will" arguments, i
| shouldn't.
| Chris2048 wrote:
| > I remember the smugness with which Stephen Wolfram is
| routinely dismissed from having non-consensus views of
| physics
|
| The guy is disliked for taking too much credit for things,
| not for "having non-consensus views" - which is sort of the
| opposite problem.
| btilly wrote:
| He is disliked for different things by different people.
|
| See https://www.scientificamerican.com/article/physicists-
| critic... for scientists dismissing his theories of
| physics.
| Chris2048 wrote:
| Maybe, but I was talking about ppl on HN
| btilly wrote:
| People on HN are merely a (rather biased) sample of
| people in the world. Just as people in general can
| dislike him for different reasons, people on HN do as
| well.
|
| I respect him for his work in programming. I dislike him
| for assuming that success makes him correct in whatever
| theories he comes up with in physics. Particularly when
| he has failed to produce any testable predictions.
| metalliqaz wrote:
| > Time and time again, experts have been shown to have
| consensus opinions which are wildly off from reality. You can
| almost set your watch to how often an outsider will analyse a
| situation from first principles and make money off the
| 'experts', especially in the stock market.
|
| When? Who? Are you talking about, say, Dr. Burry and the
| mortgage bubble? Because he was definitely an 'expert'
| already.
| slumdev wrote:
| Dr. Burry was trained as a medical doctor and started
| investing on the side.
|
| Definitely not one of the anointed "experts" who followed
| the too-common family connections, Ivy League, and
| i-banking VP path.
| MattGaiser wrote:
| His undergrad degree was in economics from UCLA. He never
| practiced medicine and started his own hedge fund soon
| after medical school.
|
| https://en.wikipedia.org/wiki/Michael_Burry
| MattGaiser wrote:
| Non-consensus outsiders who later succeed are usually still
| experts in the field, not people who are completely unaware
| that parts of a field exist or people who joined up in the
| past few hours.
| skeeter2020 wrote:
| >> Progress almost always comes from non-consensus outsiders.
|
| Don't confuse cause and effect. This doesn't mean all anti-
| consensus ideas are genius and progress. Most are still just
| junk. See the "all big thinks initially looked like toys"
| meme for another example.
| spamizbad wrote:
| OP isn't asking us to defer to experts - he's arguing there
| are laypersons not doing enough research before forming an
| entire theory of how an industry works.
| rodgerd wrote:
| > I am so sick of this 'stay in your lane' attitude.
|
| Is that you, Michael Gove.
|
| > You're welcome to your opinion but this appeal to authority
| is seriously wearing thin.
|
| It _is_ you, Michael Gove.
|
| > Progress almost always comes from non-consensus outsiders.
|
| Certainly the spread of COVID19 in the UK and US is evidence
| that _something_ can spread with the encouragement of "non-
| consensus outsiders".
| dang wrote:
| Please do not post in the flamewar style to HN, regardless
| of how wrong a comment is or you feel it is. We're trying
| for something different here.
|
| https://news.ycombinator.com/newsguidelines.html
| throwaway0a5e wrote:
| There's an important difference between "stay in your lane"
| and "keep your mouth shut until you know what you're talking
| about".
| tux1968 wrote:
| Sometimes opening your mouth and saying the wrong thing is
| the quickest way to improve your understanding. Starting
| with an incorrect premise and then talking/arguing things
| out until your understanding comes more in line with
| reality is a pretty healthy tact. Essentially Agile
| development, just applied more broadly.
| xster wrote:
| This seems like a strawman. The OP isn't arguing against
| outsider/non-expert discussion. He's just satirizing HN's
| specific tendencies to spin off of a headline/article first
| glance into a let-me-teach-you-something fan fiction vs fan
| fiction argument.
| JKCalhoun wrote:
| A agree that is what OP is doing. Disagree that we can
| dismiss all HN comments unless they are experts in said
| field.
| [deleted]
| throwawaylolx wrote:
| > The OP isn't arguing against outsider/non-expert
| discussion.
|
| Yeah, he's just strawmanning and shaming a hypothetical
| group for the applauses of a circlejerk.
| dang wrote:
| Please don't respond to bad comments by making the thread
| even worse. That's taking this place in exactly the wrong
| direction.
|
| https://news.ycombinator.com/newsguidelines.html
| fatsdomino001 wrote:
| That's a tendency for all headlines/articles, not just
| those on HN
| ramraj07 wrote:
| Oh boy let's not get started on physicists this week!
| iso1631 wrote:
| From what I can tell almost no professional investers beat
| the market, almost nobody wins the lottery. Why should I
| listen to lottery players or professional wall street gamers?
| watwut wrote:
| Because while what you wrote is true, it is not really
| relevant to how Wall Street earns money. They are not
| earning money from beating the market.
| iamacyborg wrote:
| The warnings on UK spread betting companies are amusing.
|
| The broker I used to work at has a big disclaimer on all
| their marketing stating that 77.9% of retail clients lose
| money when trading with them.
|
| Doesn't stop people signing up thinking they can beat the
| market...
| koheripbal wrote:
| Almost no doctors beat terminal cancer. Im going to try
| this crystal healing method...
| duckfang wrote:
| I'll take it you've never gotten a bad diagnosis from a
| doctor. Those too are disastrous, gets put in your
| medical record, and local doctors will agree for the sole
| sake of not refuting another local doctor.
|
| But jumping to crystals? Seriously?
| PaulDavisThe1st wrote:
| Which, if accompanied by an empathic and engaged healer
| who manages to fully invoke the power of whatever is that
| drives the placebo effect, just might stand a chance of
| being more effective (in certain cases).
| A12-B wrote:
| Reddit stock traders, some of whom are professional, have
| consistently beaten the market by using collective action.
| valuearb wrote:
| Nope.
| kortilla wrote:
| The comment above you is lamenting not even looking up what
| the stuff means before commenting. That has nothing to do
| with insider vs outsider.
| thesteamboat wrote:
| > Time and time again, experts have been shown to have
| consensus opinions which are wildly off from reality. You can
| almost set your watch to how often an outsider will analyse a
| situation from first principles and make money off the
| 'experts', especially in the stock market.
|
| > Progress almost always comes from non-consensus outsiders.
| This whole website is supposed to be a testament to that!
|
| Even granting that these statements are accurate (which
| plenty of sibling comments are willing to dispute) I don't
| think these statements suggest that "Stay in your lane" is
| bad advice.
|
| Why? It's a question of distributions. For any given
| task/field there are a lot more laypeople than experts.
| Consider the following simple model where we quantify some
| arbitrary ability score. If lay people's scores are normally
| distributed with a low mean and expert's scores are normally
| distributed with a high mean we can still see the best lay
| person beating all the experts simply because there are so
| many more of them.
|
| "You don't know more than the 'experts'" is good advice for
| almost everyone even if there are counterexamples.
|
| There's a separate problem I think you're trying to point at
| where in some fields credentials don't correlate as well with
| expertise as one would hope. But even if credentials are an
| imperfect proxy for expertise, they are probably better than
| just trusting your gut in the absence of any expertise of
| your own.
|
| > Pretty much the only field which hasn't been embarrassed by
| an outsider of late is physics, [...]
|
| This seems an idiosyncratic take on the current state of
| science to me. I've seen plenty of examples of a field being
| embarrassed by insiders (e.g. the replication crisis of
| psychology) or seen great results from experts who were not
| particularly recognized by the system as set up (see Yitang
| Zhang's work on the twin prime conjecture). What I don't
| think I've seen is a field's dogma being overthrown by a
| complete outsider. For the sake of my own calibration, I'd
| welcome any examples of this.
| kmeisthax wrote:
| The existence of outsiders disproving consensus opinion with
| a more-correct contrarian one does not mean every outsider
| with a contrarian opinion is right.
| na85 wrote:
| >I am so sick of this 'stay in your lane' attitude.
|
| And I am so sick of the HN-trademark "I'm smarter than the
| average bear" arrogance that you display here. Pick an
| article about nuanced subjects like COVID vaccines, the 737
| Max, the law in general. Guaranteed the comments section here
| has dozens of people incorrecting each other about semantics
| of these subjects in which they are not domain experts.
|
| Everyone's entitled to their opinion, but your opinion is
| worth less than that of a domain expert.
| whateveracct wrote:
| i think it's an appeal to not spouting answers when you
| should be asking questions
| jorblumesea wrote:
| But there's really an entire class of people who have no clue
| what they're talking about weighing in on things that they
| clearly do not understand.
|
| It's one thing to study this in your own time and make
| meaningful contributions. It's another to assume that simply
| because you have an opinion, it's somehow valid.
| dgb23 wrote:
| I think it is useful, as it can imply that the experts have
| some explaining to do.
|
| In this particular instance something seems to be
| _fundamentally_ broken.
| chosen1111 wrote:
| Does medical advice fall into this consensus trap?
|
| If so...relative to today?
| astrange wrote:
| It is a good example of it, eg anything American doctors
| would've told you about wearing face masks was wrong until
| it wasn't (and the CDC director is still telling people not
| to wear N95s), they still give terrible diet advice like
| telling diabetics to eat more carbs, and so on. Doctors are
| quite bad at making reasonable decisions when they don't
| have an RCT in front of them.
| chosen1111 wrote:
| thank you for your candid and informative reply
|
| i always find it fascinating to hear people's take on
| science and medicine
|
| especially when conclusions that have weight reach
| politically hazardous territory
| prepend wrote:
| > CDC director is still telling people not to wear N95s
|
| This is an interesting point. The statement I read from
| her is saying that N95s are hard to wear for long periods
| of time, so people will wear them improperly. So the
| overall adherence is higher with cloth coverings and have
| a net higher benefit.
|
| She's not saying "don't wear n95s" she's saying "we don't
| recommend it because..."
|
| This is an important distinction.
|
| Also N95s have to be fit tested to be effective. So
| randos buying N95s and wearing them will frequently not
| work.
| VectorLock wrote:
| >Also N95s have to be fit tested to be effective. So
| randos buying N95s and wearing them will frequently not
| work.
|
| I don't think this is true. No box of 3M N95 masks I've
| ever bought has said anywhere "failure to fit test this
| mask renders it ineffective." 3M Aura masks have an
| instruction video on how to maximize the fit, but thats
| just a bit on how best to adjust the little metal bit
| that clamps around the nose.
|
| An ill-fit N95 that might not be perfectly adjusted to
| conform is still way better than a cloth mask which isn't
| intended to seal at all.
| prepend wrote:
| Not completely ineffective, but ineffective at filtering
| the designed 95%. Here's NIOSH's page [0] defining fit
| testing and why it's important. You don't see this
| warning because it's on NIOSH's site, just like you don't
| see the definition of all the stuff and just have the
| certification is for your test.
|
| Some masks are just incompatible with some faces, it's
| greaT that Aura's have an instruction video, that doesn't
| mean it will work for all people.
|
| > An ill-fit N95 that might not be perfectly adjusted to
| conform is still way better than a cloth mask which isn't
| intended to seal at all.
|
| I think you're probably right. But I don't know of a
| study that tests this because N95s are measured as
| conforming to spec, not when they are worn improperly
| without a seal at the nose and chin. I hope we get some
| info on this.
|
| The Dirextors (and Fauci's) comments weren't about this
| though, they mentioned how N95s are uncomfortable and
| thus hard to wear consistently. Try wearing an N95 for 6
| hours of school. Especially without training. I think the
| recommendation for cloth masks is because of the ability
| for people to wear them.
|
| So the recommendation is not based around optimal
| standards of use, but around likely use.
|
| This doesn't mean that N95s don't protect people. I wear
| them in public. I'm just trying to correct GP's criticism
| that someone the CDC director's comments are incorrect or
| illogical.
|
| [0] https://www.cdc.gov/niosh/npptl/topics/respirators/di
| sp_part...
| astrange wrote:
| > Also N95s have to be fit tested to be effective. So
| randos buying N95s and wearing them will frequently not
| work.
|
| That was the excuse doctors were giving me in March that
| they all suddenly dropped. Are N95s without perfect fits
| worse than cloth masks, which don't have fit tests
| either? Are they better than no masks? Was Facebook wrong
| to stock up on N95s for employees during wildfire season?
|
| > So the overall adherence is higher with cloth coverings
| and have a net higher benefit.
|
| This is one of the worst things public health experts
| seemed to just be totally wrong about. They were obsessed
| with "risk compensation", where if you make things safer
| in the wrong way people will act riskier so it doesn't
| help. But this doesn't actually seem to happen.
| prepend wrote:
| > Are they better than no masks?
|
| This is the important question. Well are they? I've seen
| a lot of people wearing N95s and almost every one of them
| are wearing them incorrectly. Is this better than a cloth
| mask? I don't know. But having huge gaps on the bridge of
| one's nose where air flows is really bad to reduce risk.
| And my favorite is seeing them work with beards that
| prevent a seal.
|
| I can't find any tests of cloth mask vs bad n95. Saying
| "common sense" as the reason is not a compelling reason
| to try to get 300M people doing something.
| Dirlewanger wrote:
| Yup. Your average PCP/internist is good at one thing:
| analyzing your symptoms and directing you toward someone
| who _actually_ can help you.
|
| Not saying that a yearly check-up isn't beneficial (it
| is), just that they shouldn't be prescribing Type 2
| diabetes medications on the spot (and getting kickbacks)
| and instead should tell the patient to stop stuffing
| their faces so much.
| astrange wrote:
| Well, the advice specifically is more like "dear Type 2
| diabetics, don't forget that if you eat less than 200g of
| carbs every day, you'll die of heart attacks from that
| evil saturated fat".
| mumblemumble wrote:
| Point #3 doesn't seem consistent with the idea that this is
| just a "stay in your lane" attitude. "Lurk before you leap"
| might be a better phrase. You've got to do at least a little
| homework before you can understand a technical topic well
| enough to make sense of what you're reading.
|
| I am less familiar with finance, but I see this all the time
| when HN discusses legal matters. The conversation is almost
| pure noise, because it's dominated by people who have so
| little knowledge of the topic in question that they don't
| even recognize a term of art when they're seeing one. Which,
| in turn, engenders fundamental misunderstandings, and so the
| whole conversation ends up being a sort of large-scale
| trainer battle at the gym that specializes in strawman-type
| Pokemon.
|
| Imagine if a discussion of programming were dominated by non-
| programmers who are seemingly willfully ignorant that, in the
| context, the word "functional" does not mean "designed to be
| practical and useful, rather than attractive."
| novok wrote:
| Or to quote another software saying, RTFM
| abakker wrote:
| Truly a motto to live by.
| jrochkind1 wrote:
| When it comes to _how the authorities will act_ , is one of
| the few places that appeals to authority are absolutely
| reasonable.
|
| What do the regulations and laws actually mean and how are
| they actually in real life enforced historically? Oh yeah
| appeal to authority. We're literally talking about the
| authorities.
|
| Laws and regulations -- and business arrangements and customs
| -- aren't some kind of objective external thing to be
| observed scientifically from first principles. That's the
| whole error. Like if you can show a logical flaw you can
| prove they are't really so because they must be logical! They
| are socially constructed and the result of human action, by
| people with the power to do so, for particular ends. They are
| continually re-constructed by human action, they are
| constructed _by the powerful_.
| hazeii wrote:
| Planck's Principle: "Science advances one funeral at a time"
| [0]
|
| [0] https://en.wikipedia.org/wiki/Planck%27s_principle
| feralimal wrote:
| Great response! I agree.
| NoOneNew wrote:
| Hey, it's not market manipulation when you're an academic or
| part of the oligarchy of experts with invested positions.
| These people are to be cherished and flaunted on news media
| to state their "unbiased" opinion of market movements. It's
| manipulation when you're an average joe telling other average
| joes to stick it to a firm that's trying to bankrupt another
| company that's struggling through the pandemic.
| young_unixer wrote:
| > Builds a fantasy World of Wall Street from first principles
| around that definition
|
| Haven't politicians and regulators been doing the same thing
| for ever?
|
| Can't a normal person challenge that?
|
| Why should we blindly follow the narrative of the politicians
| and regulators?
| dalbasal wrote:
| True (and funny) but, there's a lot of actual learning
| happening too. Nothing like limit testing to understand a
| system.
| bigsteve90 wrote:
| You got a good point. SV types like HM tend to be textbook
| examples of Dunning-Kruger in action.
|
| 1. Read Wikipedia on another field 2. Decide, based on that
| knowledge, that the field is "ripe for disruption" 3. Usually
| fail miserably if parasitic ad tech isn't the core business
| model
|
| Even politicians show more humility than these people. It's as
| if typing into a computer makes them think they are omniscient
| high priests. Most of them even have the gall to call
| themselves engineers. We don't call machinists engineers, and
| most programmers are digital machinists.
| cambalache wrote:
| > Too busy to use the very internet which some of them probably
| helped build
|
| I didnt know Vincent Cerf, Tim Berners-Lee et al were HN users.
| bart_spoon wrote:
| You are both constructing a strawman and appealing to
| authority. Are you going for fallacy Bingo?
| kibwen wrote:
| In general it's good for people to be more aware of the fact
| that, outside of a few narrow technical domains, HN users are
| no less foolish, uninformed, and irrational as you those will
| find anywhere else on the internet.
|
| Source: HN expert, to my continual shame.
| literallyWTF wrote:
| This is absolutely perfect.
| sidlls wrote:
| That is pretty accurate even for many software and tech related
| discussions here (it's a big field with lots of specialties).
| nvarsj wrote:
| Yes, it's a reductionist argument that can apply to literally
| anything. Let's just delete all user discussions on the
| internet, and only allow PhD granted experts to discuss
| things on panels where they must provide primary sources for
| everything.
|
| Or you could simply point out when someone is wrong, and
| explain why, assuming you are an expert. Then we all learn.
| sidlls wrote:
| I didn't mean to imply anything about who should be
| permitted to post or the subject matter of posts. My
| apologies that it came across that way. I simply meant it
| as an observation.
|
| I could explain, as you suggest, and so could other
| experts. In my experience the likelihood of a response with
| denials, shifting goalposts or similar is much higher than
| an acknowledgement and gratitude for education. I'll pass,
| but others might enjoy the challenge.
| Armisael16 wrote:
| > Or you could simply point out when someone is wrong, and
| explain why, assuming you are an expert. Then we all learn.
|
| That's pretty rare in online discussion, especially the
| kind with voting. The most popular argument wins, not the
| most correct one.
| nvarsj wrote:
| Yeah you're not wrong. I think HN is pretty good here
| though - we do have genuine experts (on tech) that
| correct people. That's why I value HN so much - I learn a
| lot even when I make stupid, wrong comments.
| esoterica wrote:
| We shouldn't make fun of people for not knowing things, but
| it's perfectly okay to make fun of people for being
| narcissistic enough to think they are experts on a topic
| and arguing fervently based on their shallow and distorted
| understanding of the topic and hand when they are clearly
| not.
| philosopher1234 wrote:
| You could interpret it as an insightful observation rather
| than an argument to delete all comments.
| egwor wrote:
| I think it would be helpful if folk highlighted when they
| don't know an area and are not experts. I think this is a
| better way to do it because it is clear that the person is
| trying to learn rather than spouting nonsense. Also, it
| takes a lot of effort to correct people, and when emotions
| are high this is a painful process. The RH post was a great
| example of this.
|
| I've commented on some of the RH posts and got downvoted
| because people didn't like the facts (and I think maybe
| took it personally too). I've worked in Finance long enough
| professionally to know that I don't understand this fully
| and few people do. I do know enough to know when the
| comments are nonsense though.
|
| I think that some of these issues comes down to respect and
| also arrogance. Imagine going into a new field and after 30
| seconds deciding that you know everything (the Dunning-
| Kruger effect?)! Have a little bit of respect for those in
| the field and listen. Feel free to comment/ask, but don't
| spout 'facts' without checking and I think we'd all move
| forward faster.
| egwor wrote:
| Replying to myself to avoid edits.
|
| The other reason that listening and not spouting fiction
| is a good idea is that it is a lot of effort correcting
| people d that effort could otherwise be spent elsewhere.
| Folk have good will, but there's a finite amount that
| shouldn't be wasted! Once that's run out they look to use
| their time effectively. Correcting you /again/ won't be
| up high on the list.
| esoterica wrote:
| Number 2 is obviously false, a HN commenter would never have
| enough self-awareness to feel dumb.
| klodolph wrote:
| > 3. Too busy to use the very internet which some of them
| probably helped build to magically render learning materials to
| the screen in front of them at zero marginal cost.
|
| I will say that I'm not too busy for this at the moment, and
| getting to my _very basic_ level of understanding has required
| me to sort through, at the very least, a fairly decent chunk of
| reference material and reading interpretations and explanations
| online.
|
| Like, here's some things I've been grappling with understanding
| recently:
|
| How do settlement risk, clearing brokers, and clearinghouses
| work? Why does buying an ordinary stock carry so much
| settlement risk?
|
| Why do market makers buy stock for delta hedging? How do they
| figure out how much stock to buy?
|
| To make an analogy, it feels like I'm some kid in chemistry
| class who just learned how to draw bond diagrams, and then I
| watch a video of someone talking about how they figured out the
| structure of some chemical using Raman spectroscopy.
| alexpotato wrote:
| So maybe I can help a little with the above:
|
| - prior the 1980s, when you bought a stock a physical stock
| certificate was passed back and forth between your broker and
| the broker selling the stock
|
| - as you can imagine, as trading volumes increased this
| became unmanageable. In fact, at one point, the exchanges
| would close every Wednesday just to give people time to catch
| up on all of the exchange of certificates
|
| - everyone, rightly, agreed that there needed to be a better
| way and the idea of a clearing house emerged. In this model,
| all of the physical certificates lived in one place.
| Ownership was tracked via a central "database" (originally
| not electronic). This made it MUCH easier to transfer
| ownership aka "settle". This is very similar to how gold is
| traded e.g. the NY Fed holds it for other countries etc
|
| - An added benefit of a clearing house: it's easy to see how
| much everyone owns of everything. e.g. if one party is over
| leveraged or has gone extremely short, in theory, the
| clearing house can choose to not deal with that party or,
| more flexibly, request additional capital etc.
|
| Here is also a specific example about settlement risk:
|
| - let's say you report all of your trades to your clearing
| broker (think of them as a mini-clearinghouse)
|
| - a data file gets lost or corrupted and the clearing broker
| says "Wait! Something is wrong! We are not letting you trade
| until we get this figured out!"
|
| - EVEN IF YOU ARE CORRECT and they are wrong, you now have
| market risk because you may be holding a position that is
| losing you money. So much money in fact that it might drive
| you out of business.
|
| The above is an actual answer to a settlement expert when
| asked "What is your nightmare scenario?". This in turn, could
| have ripple effects to other clearing brokers and trading
| firms and is generally all part of "settlement" or "clearing'
| risk.
|
| Source: have worked in fintech trading for many years.
| tlholaday wrote:
| Thanks for the crystal-clear example.
| dlubarov wrote:
| Thanks for the background info. Why can't the database be
| updated ~instantly though? Is it just because of legacy
| systems that handle settlement in periodic (daily?)
| batches?
|
| Also, couldn't a broker eliminate this risk by just making
| assets "unavailable to trade" until they've been settled?
| Granted, I understand why brokers wouldn't want to do that
| under normal circumstances, but it seems like something
| they should be able to enable when liquidity becomes a
| problem.
|
| To me, "Your cash can't be spent yet because the TSLA sale
| you just made hasn't settled" would seem a lot more
| understandable than "We're halting GME purchases".
| alexpotato wrote:
| > Why can't the database be updated ~instantly though? Is
| it just because of legacy systems that handle settlement
| in periodic (daily?) batches?
|
| The legacy systems reason is a big one. There are banks
| with mainframes built in the 80's as part of the critical
| infrastructure. Another reason is that everyone doesn't
| communicate directly with the main clearing house. e.g.
| brokers clear with other brokers who then clear with the
| clearing house etc.
|
| > To me, "Your cash can't be spent yet because the TSLA
| sale you just made hasn't settled" would seem a lot more
| understandable than "We're halting GME purchases".
|
| There have been interesting solutions to disputes. e.g. I
| think it was NYMEX that had a rule for floor traders
| along the lines of "If Trader A and Trader B have a
| clearing issue, NEITHER of them gets to trade till it is
| taken care of." Given that these traders traded with each
| other multiple times a day coupled with they were making
| no money during this dispute, both parties were
| incentivized to come to an agreement.
| seabird wrote:
| Not an expert myself, but I've been interested in the field
| for a while.
|
| The clearinghouse ultimately moves the security and money to
| their right place, and allows brokerages to let each side
| move on faith that everything will be right once the dust
| settles. On settlement risk, a key point is that there
| usually _isn 't_ a huge amount of risk. This is why DTCC is
| nearly imperceptible for retail players. In this case, the
| volume and short situation is so extreme that clearinghouses
| are getting antsy that there may not be enough of the
| securities available to actually make good in the end, so
| they're twisting arms at brokerages and requiring they have
| 100% of it on-hand so that there's no surprises when they go
| to officially give the buyer their security and the seller
| their money. This is obviously very expensive, which is why
| brokerages started limiting buying of volatile securities,
| have had to take out money to get 100% hedge on these trades,
| and why RH is allowing trading of volatile securities but
| only in volumes of 5.
|
| Market makers buy stock for delta hedging because if they
| don't, they could get caught out and either deliver at a loss
| or not be able to deliver at all. Figuring out how much you
| need is a trick of the trade; if you or I knew what their
| strategy was, their position could be in danger.
| mcguire wrote:
| Speaking as a long term value investor who is mostly
| noshing po'corn and watching, I have a couple of questions:
|
| Don't the settlement worries provide evidence of naked
| shorts? (Naked shorts being selling a share without being
| sure the share would be available at settlement? And naked
| shorts illegal?)
|
| Wouldn't the normal procedure be to halt all trading until
| the issues had cleared up? As opposed to allowing positions
| to be closed, but not opened?
| seabird wrote:
| Naked shorts are not impossible, especially if you're
| talking about naked call options. They're comparatively
| rare (being illegal just means you get fined if you get
| caught, it's really "not that serious" for a big player),
| and small timers aren't allowed to participate, but
| they're not impossible. An even bigger point than that is
| that the short doesn't necessarily have to be naked in
| the _legal_ sense for you to fail to deliver, especially
| when a security has gone completely Texas like GME has.
|
| This situation is rare. Halting all trades is very scary
| for all parties involved. It's way worse for just about
| everybody than asking brokerages to have 100% collateral
| is.
| w23j wrote:
| > Why do market makers buy stock for delta hedging? How do
| they figure out how much stock to buy?
|
| From
| https://www.bloomberg.com/opinion/articles/2021-01-25/the-
| ga...:
|
| _The market maker has sold you an option that goes up in
| value as the stock goes up. The more the stock goes up, the
| more the market maker owes you. It hedges this by buying
| something else that goes up in value as the stock goes up--
| specifically, stock. Its option pricing model--the Black-
| Scholes formula or a related model--tellsit how much stock to
| buy; that output is a number called "delta" and ordinarily
| expressed as a percentage. Delta is the sensitivity of the
| option price to the stock price; the higher the delta, the
| more the option behaves like stock. The more in-the-money the
| option--for a call option, the higher the stock price is
| relative to the strike price--the higher the delta will be. A
| loose, nontechnical, incorrect but still sometimes helpful
| way to think about delta is as "the probability that an
| option will end up in the money." A 100-delta option is so
| far in the money that it is sure to convert into stock, so it
| 's just stock. A 0-delta option is so far out of the money
| that it can't possibly convert into stock, so it's just
| worthless. A 50-delta option is roughly at-the-money--a
| $50-strike call when the stock is trading at $50--and could
| go either way. The more stock-like an option is, the more
| stock the market maker will buy to hedge it. Here,Bloomberg's
| OV page computes a 37.57% delta for the Jan. 29 $50 call as
| of last Tuesday; I rounded up for ease of use._
|
| If you are remotely interested in these kinds of things I can
| heartily recommend reading Matt Levine (https://www.bloomberg
| .com/opinion/authors/ARbTQlRLRjE/matthe...). He's at the same
| time educating and entertaining and what is more leaves out
| all the bile and negativity that is connected to these topics
| in other places. Gamestop is covered in recent issues.
| ryandrake wrote:
| Whenever I read about a topic that I don't know much about,
| part of me is always wondering if the writer is throwing all
| these exotic words and greek letters in there because they
| are really an essential to understanding the topic, or
| because they just want to over-complicate it to sound smart
| and blow their own horn.
|
| On one hand we have Occam's Razor: "the simplest solution is
| almost always the best." On the other we have "For every
| complex problem there is an answer that is clear, simple, and
| wrong." How does one know which to apply?
| klodolph wrote:
| I don't know how you could possibly reason about options
| without understanding delta, and gamma makes sense to me
| too since it's just the derivative of delta as the
| underlying value changes.
| colejohnson66 wrote:
| As a math person, I've never heard "gamma" to mean the
| derivative of a change (a delta). For example, I was
| always taught that speed is v=delta-x/delta-t (distance
| over time). I've _never_ heard gamma to mean that.
| klodolph wrote:
| Speaking as a math major, gamma means, like, a million
| different things. It's just a letter. There are only 26
| latin letters, 24 greek letters, the capitals, and then a
| few oddities like blackboard bold, fraktur, cursive, etc.
| You run out pretty quickly and end up reusing letters.
|
| Just like pi means different things in different
| contexts. It might be a permutation, projection, a
| function which counts prime numbers, or it might be half
| the period of sin. I might write p(10) = 4, or p [?]
| 3.14..., or for p in P, etc. I might say that p is the
| right inverse of i, in other words p[?]i = id, and point
| to some digram with a bunch of arrows.
|
| Delta is not just "a change" in this context. It is
| specifically the rate of change of an option's value with
| respect to the value of the underlying security. Just
| like pi, delta and gamma mean different things in
| different contexts.
| csmiller wrote:
| Referring to https://en.wikipedia.org/wiki/Greeks_(financ
| e)?wprov=sfti1
| ZephyrBlu wrote:
| Financial markets and derivatives are just complicated.
|
| There seem to be a lot of moving parts, and a lot of
| possible outcomes.
| wj wrote:
| Two books that I might recommend for others that are
| interested are:
|
| Trading and Exchanges: Market Microstructure for
| Practitioners (cost of this on Amazon seems to have more than
| doubled since I bought it 11 years ago)
|
| Algorithmic Trading and DMA: An introduction to direct access
| trading strategies
| [deleted]
| sandworm101 wrote:
| >> 6. Builds a fantasy World of [X] from first principles
| around that definition
|
| That is most every online discussion these days. I would only
| add "first principals learned at highschool and/or undergrad".
| The real scientists/lawyers/doctors with deep backgrounds in
| fields, the ones who dare to talk online, stand out like sore
| thumbs.
| hatsunearu wrote:
| And then there's another guy writing smug 8-point steps! Truly
| the pinnacle of hacker news culture.
| notahacker wrote:
| tbh I thought I'd have to go to n-gate to get this take on
| recent discussions...
| TeMPOraL wrote:
| You're fined for violating the Prime Directive!
|
| That said, when I saw that top comment I thought for a
| second I've confused the domains, this sounded like
| something taken straight from there.
| listless wrote:
| Honestly disappointing that trolling is the top comment here.
| This is the kind of thing that we should hold each other
| above doing.
| hatsunearu wrote:
| The comment isn't without substance but yeah, could have
| had better delivery
| dang wrote:
| Please don't respond to a bad comment by making the thread
| even worse. This is also in the site guidelines, which
| include a very clear statement of what to do instead:
|
| " _Don 't feed egregious comments by replying; flag them
| instead._"
|
| https://news.ycombinator.com/newsguidelines.html
| christiansakai wrote:
| And then there's another guy who will comment on the comment
| of guy writing smug 8-points step! internet karma wohoow!
| iamacyborg wrote:
| Choo choo.
| wizzwizz4 wrote:
| Is it dang time?
| whateveracct wrote:
| my favorite topics this gets applied to are physics and rocket
| science.
|
| it's amazing how many HN physics comments start with "my
| theory"
| [deleted]
| cblconfederate wrote:
| It's because "ze nerds" have rebuilt multiple industries that
| were "too hard to understand", because they work bottom-up,
| from first principles and reject gatekeepers. They 've even
| created an entire substitute version of the 'conomy which
| currently most people are mocking, but soon will be using
| daily.
| DataWorker wrote:
| When someone tells you not to believe what you read on the
| internet, on the internet.
| kodah wrote:
| Personally, I think smart people just _do_ this. When I got
| sick with COVID I cannot begin to describe the number of people
| who became doctors _during this unprecedented time_ , only to
| send me outdated comments, articles, and speculation.
|
| All of these people thought they were smarter than the
| instruction I received from a _real_ doctor, nurse
| practitioner, and the CDC. These were smart people, though, and
| mostly (but not limited to) highly educated engineers.
| robntheh00d wrote:
| Sympathetic response is a thing.
|
| One has to balance that with awareness they're talking out
| their ass.
| tacitusarc wrote:
| I absolutely agree with the main thrust of your comment, but
| I want to point out that in unprecedented times specifically,
| the odds that a smart non-expert is more correct than an
| expert are substantially higher than in normal times.
| mcguire wrote:
| ... but still not particularly high.
| Tenoke wrote:
| I saw plenty of smart people ahead of institutions and real
| doctors on masks and to some extents other aspects of the
| pandemic.
|
| Yes, in general if you don't know much on a topic you'd on
| average do best if you listen to the experts but you can
| outperform that if you can identify the right kind of smart
| people with a good track record.
| mcguire wrote:
| I saw plenty of smart people ahead of institutions and
| experts on hydroxychloroquine here on HN. They were wrong.
|
| Smart people with a good track record are generally called
| "the experts".
| Izkata wrote:
| That is the single most frustrating part of the pandemic
| for me:
|
| * There was preliminary evidence from the experts it
| might work.
|
| * At some point Trump got wind of this and mentioned it.
|
| * The media, in an effort to portray Trump as wrong, went
| on a crazy cherry-picking campaign to show HCQ as
| completely ineffective. "HCQ does not work" was the
| prevailing sentiment for almost the entire past year
| because of this, even though evidence was still coming
| out it does work under certain circumstances.
|
| * Now that Trump is out of office, our understanding of
| HCQ is shifting back to exactly what that preliminary
| evidence said that Trump repeated.
| mcguire wrote:
| * https://www.thelancet.com/journals/lanrhe/article/PIIS2
| 665-9...
|
| " _They included 30 569 patients with systemic lupus
| erythematosus or rheumatoid arthritis who were already
| taking hydroxychloroquine in the 6 months before what was
| considered as the start of the pandemic in England and
| 164 068 patients with these rheumatic diseases who did
| not use hydroxychloroquine. The study found no
| significant difference in standardised cumulative
| COVID-19 mortality associated with hydroxychloroquine use
| (0*23% among hydroxychloroquine users and 0*22% among
| non-users) with an adjusted hazard ratio of 1*03 (95% CI
| 0*80-1*33)._ "
|
| * https://www.acc.org/latest-in-cardiology/clinical-
| trials/202...
|
| " _Among patients exposed to patients with SARS-CoV-2,
| hydroxychloroquine, administered within a median duration
| of 2 days as post-exposure prophylaxis, did not reduce
| the incidence of SARS-CoV-2 or COVID-19 infection within
| 14 days, compared with placebo (vitamin C)._ "
|
| * https://www.nih.gov/news-events/nih-research-
| matters/hydroxy...
|
| " _Researchers assessed each patient's condition 14 days
| after being assigned to a treatment group. They used a
| seven-category scale ranging from one (death) to seven
| (discharged from the hospital and able to perform normal
| activities). The results showed no significant difference
| between the hydroxychloroquine and placebo groups. The
| scientists also found no differences in any of 12
| additional outcomes, which included mortality 28 days
| after assignment to a treatment group or time to
| recovery. Based on the data, they concluded that
| hydroxychloroquine was not an effective treatment._ "
|
| *
| https://jamanetwork.com/journals/jama/fullarticle/2772921
|
| " _Several published rigorous studies have demonstrated
| similar findings. In the well-conducted clinical trials
| published to date, hydroxychloroquine has been evaluated
| in a wide variety of populations, ranging from patients
| with severe illness2-4 to individuals at risk of severe
| acute respiratory syndrome coronavirus 2 (SARS-CoV-2)
| infection, in whom the drug was used as primary
| prophylaxis5; these studies failed to show any beneficial
| effect of the drug. This raises the question: How did
| medicine get to the point where so many studies were
| conducted assessing the possible benefit of
| hydroxychloroquine, that led to nearly identical
| findings, and have been published in major journals?_ "
|
| * https://www.nejm.org/doi/full/10.1056/NEJMoa2022926
|
| " _Among patients hospitalized with Covid-19, those who
| received hydroxychloroquine did not have a lower
| incidence of death at 28 days than those who received
| usual care._ "
|
| * https://www.cdc.gov/mmwr/volumes/69/wr/mm6935a4.htm
|
| " _New prescriptions by specialists who did not typically
| prescribe these medications (defined as specialties
| accounting for <=2% of new prescriptions before 2020)
| increased from 1,143 prescriptions in February 2020 to
| 75,569 in March 2020, an 80-fold increase from March
| 2019._ "
|
| * https://www.aljazeera.com/economy/2021/1/27/oklahoma-
| attempt...
|
| " _Oklahoma tries to return $2m worth of
| hydroxychloroquine_ "
|
| Under what circumstances does it work?
| nemo44x wrote:
| "Right kind of people" have no accountability to their
| advice. A doctor can't really just hazard a guess without
| actual facts to base them in or risk losing their ability
| to practice and/or reputation. "Right kind of people" can
| be and are often plenty wrong about things but it fades
| into obscurity and they are never held accountable.
|
| Of course they are right sometimes but on many issues with
| a binary choice (should or shouldn't wear masks) that's a
| 50% chance.
|
| In the long run you want to be able to discern hearsay,
| opinion, and rumors from facts and accountability to them.
|
| You see it today when inquiring if a pregnant woman should
| get the vaccine. Doctors won't really advise you because
| although they maybe feel it's totally safe if you're far
| enough along, they would be held accountable if something
| happened. They can be "pretty sure" about things, but that
| isn't enough. Meanwhile, "very smart person" on Twitter can
| reference a bunch of content from unaccountable people that
| says it's safe and come off as an expert when they aren't.
| It's easy to be "right" when you don't have skin in the
| game and especially so when no one is going to hold you to
| account for all the times you were wrong or misinformed.
| DennisP wrote:
| Last spring I was briefly lectured by a maskless doctor
| who said I shouldn't bother with the mask I was wearing
| at an appointment. I shrugged and kept my mask on. A
| month or two later I saw him again. He was wearing a mask
| that time and didn't complain about mine.
|
| That doctor didn't just avoid guessing. He gave
| unsolicited advice, on limited information, that turned
| out to be exactly wrong and somewhat dangerous.
| Tenoke wrote:
| >A doctor can't really just hazard a guess without actual
| facts to base them in or risk losing their ability to
| practice and/or reputation.
|
| No, but one doctor might base advice on one study he saw
| another on a different one. Having skin in the game helps
| but it is also well documented that doctors might be
| overly cautious due to risk of litigation and thus
| sometimes chose suboptimal courses of action.
|
| >Of course they are right sometimes but on many issues
| with a binary choice (should or shouldn't wear masks)
| that's a 50% chance.
|
| No, this isn't a real coinflip. There's evidence for and
| against things like this, and some people have learned
| better than others how to evaluate such evidence and can
| definitely do better than 50%.
| xapata wrote:
| > a real doctor, nurse practitioner, and the CDC
|
| Sadly, many doctors and nurses are statistically illiterate.
| I know, because I (try to) teach them statistics. Remember,
| the Surgeon General of the CDC said that, "[masks] are NOT
| effective in preventing general public from catching
| #Coronavirus," perhaps in some misguided belief that avoiding
| panicked mask-buying was more important than a mask-wearing
| public.
|
| [Sorry for insulting our healthcare heroes, but ... evidently
| y'all haven't been responsible for teaching them evidence-
| based medicine. It ain't easy.]
| iso1631 wrote:
| > The CDC was parroting the anti-mask blather of the Trump
| administration
|
| And the WHO were too?
| xapata wrote:
| Sorry, edited after you wrote this. I took out the
| reference to the Trump administration because it wasn't
| helpful to the main point of many doctors not being
| experts on epidemics.
| DanBC wrote:
| Can you link to the papers that were available in March
| 2020 that showed that masks are effective?
|
| Use any definition of "mask" and "effective" you want, but
| preferably effective should include some concept of
| "prevents spread of respiratory disease".
|
| Covid is a serious illness. Far too many people have been
| told, and believe, that they can continue their normal day
| to day life so long as they put mask on. This is untrue,
| and this advice has driven mass infection and death.
| newt_slowly wrote:
| This comment from early March links to several.
|
| https://old.reddit.com/r/Coronavirus/comments/fdf5fq/we_a
| re_...
| TeMPOraL wrote:
| This is a pandora's box. My recollection of the events is
| this: around March 2020, there were some links to
| somewhat shoddy studies of effectiveness of masks in case
| of other diseases, but the official statement was that
| masks were not _proven to be effective_ - but that 's
| because there was no randomized control trial performed
| to check mask effectiveness against SARS variants, and
| _how could there be_?
|
| This spins off into a whole discussion of how evidence-
| based medicine can lead you off the cliff when you follow
| its letter, and not spirit, because despite something
| being bloody obvious, there is no RCT proving that.
| compiler-guy wrote:
| My favorite example:
|
| "Parachute use to prevent death and major trauma related
| to gravitational challenge: systematic review of
| randomised controlled trials"
|
| https://www.ncbi.nlm.nih.gov/pmc/articles/PMC300808/
| DanBC wrote:
| > but that's because there was no randomized control
| trial performed to check mask effectiveness against SARS
| variants, and how could there be?
|
| The argument was not "we can't do tests because this is
| new", the argument was "we've got dozens of studies
| across a range of settings and respiratory diseases
| (which we expect to act similarly to covid) and we
| struggle to see any benefit, until we drop the quality of
| the research down".
| TeMPOraL wrote:
| IIRC the argument was "we can't say it works because we
| have no relevant tests _at all_ ". That's what I remember
| from March, but I may be misremembering.
| kgwgk wrote:
| Like this?
|
| https://www.ncbi.nlm.nih.gov/pmc/articles/PMC2662657/
| DanBC wrote:
| Yes, exactly like that.
|
| > We concluded that household use of face masks is
| associated with low adherence and is ineffective for
| controlling seasonal respiratory disease.
|
| "Do masks work, if you use the right type of mask and
| wear it properly?" isn't particularly controversial (the
| answer is probably "yes") but it's a stupid question
| because we don't care about optimal use, we care about
| real world use. And in the real world people _might_
| improperly wear a mask and go outside when they 're
| symptomatic.
|
| We don't have much good quality evidence for that, but
| here's a study that showed people were prepared to do
| things like wear masks, but were less prepared to self-
| isolate or book a test if they had symptoms: https://www.
| medrxiv.org/content/10.1101/2020.09.15.20191957v...
| kgwgk wrote:
| The sentence following the one you quote says:
|
| "However, during a severe pandemic when use of face masks
| might be greater, pandemic transmission in households
| could be reduced."
|
| Later: "Although our study suggests that community use of
| face masks is unlikely to be an effective control policy
| for seasonal respiratory diseases, adherent mask users
| had a significant reduction in the risk for clinical
| infection. [...] Adherence with treatments and preventive
| measures is well known to vary depending on perception of
| risk and would be expected to increase during an
| influenza pandemic. [...] Therefore, although we found
| that distributing masks during seasonal winter influenza
| outbreaks is an ineffective control measure characterized
| by low adherence, results indicate the potential efficacy
| of masks in contexts where a larger adherence may be
| expected, such as during a severe influenza pandemic or
| other emerging infection."
| xapata wrote:
| > link to papers
|
| No, I can't. Can you link to papers that show flossing is
| effective? Probably not, but the mechanism is so obvious
| that essentially all dentists will tell you to floss.
| Further, mask-wearing was already a well-established
| practice in medical settings to prevent the spread of
| respiratory disease from practitioners to patients.
|
| > believe that they can continue their normal day to day
| life so long as they put [a] mask on. This is untrue
|
| Combined with some coordination on travel restrictions
| and quarantines, it seems Taiwan has been able to keep
| that normal day-to-day life for the majority of
| Taiwanese.
|
| https://www.wbur.org/hereandnow/2021/01/08/taiwan-
| covid-19-p...
| rcpt wrote:
| > flossing evidence
|
| That was a thing a few years back:
| https://www.health.harvard.edu/blog/tossing-
| flossing-2016081...
| legolas2412 wrote:
| And let's not forget WHO actively advising against travel
| restrictions.
|
| https://www.reuters.com/article/us-china-health-who/who-
| chie...
| DanBC wrote:
| > Further, mask-wearing was already a well-established
| practice in medical settings to prevent the spread of
| respiratory disease from practitioners to patients
|
| We don't see much benefit there, either. See the "clean
| surgery" papers.
| xapata wrote:
| The evidence would have to be overwhelming that it's not
| helpful, because the prior is so strong.
| at-fates-hands wrote:
| There's been ongoing debate about the effectiveness of
| masks to prevent the spread of the influenza virus for
| years now. There were a lot of studies after the H1N1
| pandemic since mask wearing was "recommended" but to my
| knowledge no state or federal mask mandate was put in
| place.
|
| Here's a paper from 2010 after the H1N1 pandemic.
|
| Face masks to prevent transmission of influenza virus: a
| systematic review
| https://www.cambridge.org/core/journals/epidemiology-and-
| inf...
|
| _Our review highlights the limited evidence base
| supporting the efficacy or effectiveness of face masks to
| reduce influenza virus transmission. An important concern
| when determining which public health interventions could
| be useful in mitigating local influenza virus epidemics,
| and which infection control procedures are necessary to
| prevent nosocomial transmission, is the mode of influenza
| virus transmission between people and in the
| environment._
|
| The interesting thing is everything they recommend, we've
| adopted during COVID, including physical barriers and
| front line workers additional PPE equipment:
|
| _Physical barriers would be most effective in limiting
| short-distance transmission by direct or indirect contact
| and large droplet spread, while more comprehensive
| precautions would be required to prevent infection at
| longer distances via airborne spread of small (nuclei)
| droplet particles [19]. In healthcare settings, stringent
| precautions are recommended to protect against pathogens
| that are transmitted by the airborne route, including the
| use of N95-type respirators (which require fit testing),
| other personal protective equipment including gowns,
| gloves, head covers and face shields, and isolation of
| patients in negative-pressure rooms_
|
| There's five additional studies referenced in the MedPub
| doc: https://pubmed.ncbi.nlm.nih.gov/20092668/
|
| A current Danish study concluded masks don't reduce the
| spread of the virus:
|
| Effectiveness of Adding a Mask Recommendation to Other
| Public Health Measures to Prevent SARS-CoV-2 Infection in
| Danish Mask Wearers
| https://www.acpjournals.org/doi/10.7326/M20-6817
|
| _In this community-based, randomized controlled trial
| conducted in a setting where mask wearing was uncommon
| and was not among other recommended public health
| measures related to COVID-19, a recommendation to wear a
| surgical mask when outside the home among others did not
| reduce, at conventional levels of statistical
| significance, incident SARS-CoV-2 infection compared with
| no mask recommendation._
|
| People are already debunking this Danish study but here's
| a CDC study showed even when people do wear masks, they
| were still getting sick:
|
| Community and Close Contact Exposures Associated with
| COVID-19 Among Symptomatic Adults >=18 Years in 11
| Outpatient Health Care Facilities -- United States, July
| 2020 https://www.cdc.gov/mmwr/volumes/69/wr/pdfs/mm6936a5
| -H.pdf
|
| _In the 14 days before illness onset, 71% of case-
| patients and 74% of control participants reported always
| using cloth face coverings or other mask types when in
| public," the report stated._
|
| _In addition, over 14 percent of the case-patients said
| they "often" wore a face covering and were still infected
| with the virus. The study also demonstrates that under 4
| percent of the case-patients became sick with the virus
| even though they "never" wore a mask or face covering._
|
| Personally I feel like masks aren't stopping the spread
| mainly because people either use one or two masks
| continually without cleaning them daily, or put them on
| dirty surfaces thinking its ok and then putting them back
| on, or simply not wearing them over their nose. Masks
| _would probably_ be effective if people wore them
| properly and only used them once. Hoping 300 million
| people all follow those simple rules is a bit hopeful to
| say the least.
| [deleted]
| xapata wrote:
| > Hoping 300 million people all follow those simple rules
| is a bit hopeful to say the least.
|
| There seems to be something different about the US
| population than, say, the Taiwanese population regarding
| mask usage. I don't have a good explanation for it,
| because I think blaming "culture" is lazy research.
| mcguire wrote:
| I've posted links before, and I'll try to find them when
| I'm not on my phone. But you're right.
|
| It was an open question, but the general opinion before
| 2020 was that masks would not be particularly useful.
| Sketchy results started appearing in March with better
| days in April and May. Several experts said, "we were
| wrong."
|
| Medical grade masks are very useful. Others are less so.
| But they primarily prevent you from giving the virus to
| others.
| mcguire wrote:
| Engineers, in particular, have a reputation for being experts
| on everything.
| glitchc wrote:
| _perceived_ :D
| lioeters wrote:
| I think "self-perceived expert" fits well.
|
| "When Knowledge Knows No Bounds: Self-Perceived Expertise
| Predicts Claims of Impossible Knowledge" - Stav Atir,
| Emily Rosenzweig, David Dunning
|
| https://journals.sagepub.com/doi/abs/10.1177/095679761558
| 819...
| dmurray wrote:
| To be fair, professional medical advice was especially low-
| quality in the early days of the pandemic. What was important
| was public health messaging, picking some lowest-common-
| denominator messages and having everyone repeat them. It
| wasn't hard to be better informed than that.
| phkahler wrote:
| >> To be fair, professional medical advice was especially
| low-quality in the early days of the pandemic.
|
| They primarily suffer from dogma IMHO. For example, now
| they know people with breathing difficulty should be kept
| in prone position. I dont know if that applies outside of
| Covid19, but I thought it was really interesting to see
| them learn it. Like "oh, what we'd normally do is bad but
| this variation is good".
|
| Medicine also suffers from a fear (justified) of
| litigation. If they dont follow accepted practices they may
| get sued if someone dies. The funny thing with Covid was
| watching that fear when there was no accepted treatment.
| Seeing them say "The FDA hasn't approved that for covid"
| when they hadn't approved _anything at all_ yet.
| PaulDavisThe1st wrote:
| > Medicine also suffers from a fear (justified) of
| litigation.
|
| very US-centric. Medical litigation in many others parts
| of the world doesn't work in the same way, and isn't a
| driving force in the way medicine is practiced.
| hrktb wrote:
| I agree in principle. Then in real life example you will have
| real doctors and nurses giving conflicting advices and having
| wildly different viewpoints on the details.
|
| The easy to point to example is how a lot of doctors viewed
| masks at the beginning of the pandemic. Or how trickle down
| economics is also endorsed by experts. Or experts opinions on
| mental health drugs. And so many other subjects where it
| won't be hard to find an expert on the dumb side of the
| argument.
|
| I think we should rely on experts, but we can't dismiss
| people's doubts or research just with a "I've seen a real
| doctor" slight of hand.
| scythe wrote:
| >Or how trickle down economics is also endorsed by experts.
|
| Trickle-down economics is not explicitly endorsed by
| _anyone_ , because it's a pejorative. That's like saying
| "totalitarianism is popular in some countries"; _you_ might
| think those countries are totalitarian, but _they_ don 't.
| PaulDavisThe1st wrote:
| > you might think those countries are totalitarian, but
| they don't.
|
| "You" in the above is a specific individual.
|
| "They" in the above is undefined and extremely imprecise.
|
| For various definitions of "they", your statement could
| be true, false or somewhere in between.
| mjburgess wrote:
| Indeed. Even then, as a term, it refers to a specific
| regan-era tax policy.
|
| What many on the left assume it means, is a sincere
| description of growth "raising the tide"; and how
| ridiculous an idea _that_ is.
|
| Of course the tide has risen to an unprecedented degree
| in human history both since the term "trickle down" was
| invented; and moreso, over the last 40 years.
| mikestew wrote:
| _Even then, as a term, it refers to a specific regan-era
| tax policy._
|
| The term was coined by Will Rogers about 90 years ago.
| opo wrote:
| The usage goes further back then that. The first use was
| in 1896 by William Jennings Bryan in his Cross of Gold
| speech:
|
| https://en.wikipedia.org/wiki/Trickle-down_economics
| stonogo wrote:
| Except the tide you're describing is _global_ , and the
| policy in question was _domestic_ , and wages and assets
| within the middle and lower economic classes have indeed
| stagnated in relation to almost every other economic
| indicator _within the country_ , which is why "many on
| the left" consider this argument to be invalid.
| mjburgess wrote:
| This just isn't the case. And it _dramatically_ isn 't
| the case.
|
| This is a side effect of using the same category terms,
| but not talking about the underlying distributions.
|
| Eg., in the UK, 80% of the country were industrial
| working class or poorer until 1980s; and middle class
| only _started_ at top 5%.
|
| Today, the "industrial working class" level of wealth, is
| the bottom 20% _at the very most_.
|
| So if you hold the class terms fixed, "middle class" it
| seems the 80s top 5% has "stagnated", only to fail to
| mention, it now 60% of the country.
|
| If you hold the distributions constant, the wealth level
| acheived in the top 5% in 1980s is now a _majority_ of
| the population.
| kodah wrote:
| The problem, to me, isn't peoples curiosity or attempting
| to broaden their horizons. I think the outcomes of this are
| largely good; it encourages discerning people to exercise
| caution and makes for good light conversation. Where things
| get off the rails is when people believe their tentative
| research or association with a domain makes them
| authoritative in some sense.
|
| I read the same waffling about masks you did, the
| information I read (since it was inconsistent) led me to
| believe that I should wear masks more than directed. I did
| this out of an abundance of caution because at the time
| early research eerily concluded that not much is known
| about the longer term effects of this virus, there was
| stark contrast in the symptoms various people had, and that
| there were layers to exercising prevention. I acted in a
| similar manner when I limited my social circle.
|
| The difference in the way, I think, these people used much
| of the same information that I did is that it became
| authoritative to them. After they'd read enough articles
| straight from the CDC it made them feel qualified to
| interpret them. I'm reminded of one guy who demanded I get
| another PCR test before he hung out with me, even after I
| hadn't experienced a fever for 10+ days. For some context,
| when I got sick I came back negative on both tests I was
| given. I was later told my viral load was not high enough
| on those days, ironically these also happened to be some of
| the worst days of the virus. It was only after I lost taste
| and smell that the doctors realized I had COVID. My friend
| cited all the reading he had done as evidence that I just
| wouldn't accept his "perspective". When I asked the doctor
| about getting both PCR and an antibody test she responded,
| "Do you have an actual reason? We already knew you were
| sick." In reality, the time which I would've been
| contagious had long passed, yet my friend couldn't get it
| out of his mind that transmission was a possibility.
|
| Another example is a friend whose brother had gotten COVID
| a few months back. His symptoms were certainly worse than
| mine. Where I didn't experience much trouble breathing, he
| did among other things. I went on a walk one day because it
| was one of the days in between being sick that I had some
| energy and wasn't overcome with brain fog. I shared that I
| was exhausted after this short walk and that I'd probably
| stave off a walk for a few days to see where I was at. She
| chastised me for going on a walk, explaining that her
| brother had been told not to exercise for three to six
| months, and that it seemed as if I was taking COVID as a
| joke. What I realized after googling this specific
| treatment plan is that it's usually given to people with
| some form of cardiomyopathy and other conditions (none of
| which I have.) I am now about 3 weeks removed from having
| COVID and I'm back to riding my bike, which is consistent
| with what my doctor told me. My doctor told me recovery has
| a lot of variables and I'll need to go at the pace that I'm
| comfortable with and listen to my body. Regular checkups
| should help to that end as well.
|
| The theme among these people is when I tried to explain
| what doctors had told me and why I was going to stick to
| what they were saying (more generalized as drawing
| boundaries) I was met with harsh rejection. The key here is
| that authoritative sources were no longer respected. The
| fact of the matter is that doctors _do_ take a bit to
| arrive at consensus and that can be frustrating to a public
| opinion that is waiting on them for their own sanity, but
| just because you landed on the correct conclusion a couple
| times (or even a more conservative solution that kept you
| equally safe) does not make you an authoritative source.
| So, I 'm not going to tell people to stay in their own lane
| but you can't just go lecture people based on your own
| understanding. That's when you forget that all of this
| information you gather outside of your own domain is good
| for _exercising caution and light conversation_.
| hef19898 wrote:
| Conflicting doesn't mean that one, or both, opinions are
| wrong. There is more than solution to every problem.
| ta1234567890 wrote:
| > Then in real life example you will have real doctors and
| nurses giving conflicting advices and having wildly
| different viewpoints on the details.
|
| Exactly. Real life example - someone I know asked her
| doctor about getting the Moderna covid vaccine while
| pregnant. The doctor not only said it was ok, but also
| verbally recommended it and gave her a written paper to
| help her get the vaccine. She was able to get it a couple
| days ago. Then yesterday the World Health Organization
| announced that pregnant women should not be getting the
| Moderna vaccine because they were not included in the
| trials.
|
| So who's right here? It's hard to trust a "real doctor"
| when something like this happens.
|
| It also happens that, doctors in particular, barely see you
| for 5-15min, that is not enough time for them to fully
| understand what is going on with you and your whole
| history. It's only enough time for them to make a quick
| judgement based on their pattern matching abilities from
| their own experience and then give, an educated,
| recommendation. But they are not really vested in you in
| particular, you are just one more, and if their
| recommendations don't work for you, they usually don't
| really care and won't go down the rabbit whole with you, at
| the most they'll just refer you to someone else.
| pas wrote:
| But that ... that's not exactly incompatible. The WHO
| makes very simple blanket statements that are safe in
| general.
|
| A doctor usually looks at an individual. (And we know a
| lot of pregnant women got infected with COVID. We know
| that hospitalization was higher for them, but also that
| mortality is the same - https://www.cdc.gov/mmwr/volumes/
| 69/wr/mm6925a1.htm?s_cid=mm... , so the immune reaction
| should be the same too)
|
| The real problem is that it's impossible for a non-expert
| to gauge the expertise of any of these entities (your
| full-sized real-life walking-talking doctor who you know
| for a deacade, the WHO and anyone in between). Even
| simply asking many questions is just the illusion of
| getting informed (not just because there's rarely any
| time for proper answers as you mentioned), but because
| the answers are biased, so this naturally biases the next
| question too. (Unless there's enough time and effort to
| go through years of science and try to falsify whatever
| theory is being communicated with very targeted
| questions, it's close to useless/futile effort.)
|
| > But they are not really vested in you in particular,
| you are just one more,
|
| Yep. Agreed. Also usually primary care physicians are
| better at "bedside manner" and pattern matching than at
| real medical science. (Because it's not really their job
| to have 20 doctorates in every subfield of biology.)
| mcguire wrote:
| " _how a lot of doctors viewed masks at the beginning of
| the pandemic_ "
|
| Ok, so I've looked into the history of this a little, and
| most of the mask mythology seems misunderstood.
|
| Prior to 2020, most medical professionals believed most
| viruses, and corona viruses particularly, could not be
| transported as aerosols. This was a subject of research
| where the data had not come in.
|
| About late March, it began to appear that the virus could
| be an aerosol. Hard results did not come in until April and
| May, and many in the field discovered they had egg on their
| faces.
|
| Conflicting advice is to be expected with new information.
| kevstev wrote:
| Yeah, I think what a lot of people going on TV failed to
| really express is that there was so much unknown about
| this new virus, that this is the best information we have
| to go on RIGHT NOW. And then when that changed, they
| didn't make it explicit enough that they were changing
| their advice based on NEW DATA. Partially this is just
| the soundbite driven media, where even if it was
| explained, that often doesn't make the 10 second clip
| replayed.
|
| My company had a zoom conference with a very well
| respected British doctor, he won something more or less
| equivalent to a nobel prize in mediciine, and he told my
| company, on May 4th, that masks are not necessary. This
| was already a bit head scratching, but what I feel he
| probably meant, but certainly did not explicitly say- is
| that its not a priority for an individual to wear a mask
| when there are shortages for front line workers.
|
| But mix a changing message with an inbred resistance to
| being told what to do and the inconvenience of a mask,
| and this comes out the end for many as "They don't know
| what they are talking about these "experts!", I don't
| need to listen to them, they can't get their story
| straight!" and here we are...
| edbob wrote:
| > My company had a zoom conference with a very well
| respected British doctor, he won something more or less
| equivalent to a nobel prize in mediciine, and he told my
| company, on May 4th, that masks are not necessary. This
| was already a bit head scratching, but what I feel he
| probably meant, but certainly did not explicitly say- is
| that its not a priority for an individual to wear a mask
| when there are shortages for front line workers.
|
| This comes off as blatantly lying to us for our harm, not
| "they don't know what they're talking about". If someone
| lies to you _and knowingly puts your life at risk through
| the lie_ , it's very rational not to believe anything
| they say in the future. This is not mere mixed messages.
|
| If government and/or experts want to have non-negative
| credibility, they are going to have to start consistently
| telling the whole truth.
| cactus2093 wrote:
| Do you have sources for your claims?
|
| I've also looked into it a little and come to the
| opposite conclusion. Here is one study from Singapore in
| 2014 that showed surgical and n95 have about a 68% and
| 95% efficacy respectively at preventing SARS transmission
| https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4293989/
| Masks have also been shown to provide protection against
| the common cold (many strains of which are also
| coronaviruses) and seasonal flus
| https://www.livescience.com/7661-masks-protect-colds-
| flu.htm...
|
| In the absence of more specific information about SARS-
| COV-2 early in the pandemic, surely it would have made
| sense to default to using the preventative measures that
| were known to be effective at controlling SARS and other
| known respiratory diseases? Especially when these
| measures come with no real risks.
|
| It's true that they didn't know with 100% certainty, and
| China's misinformation about human to human spread in the
| beginning and not allowing the CDC team in early to
| investigate certainly didn't help either. Maybe these
| experts, including Dr Fauci, the CDC, and WHO, just made
| what turned out to be very bad judgement calls and they
| honestly thought that masks wouldn't prevent the spread
| of the disease. But by far the likeliest explanation in
| my mind is that these institutions knowingly lied to the
| public in an attempt to manipulate people into not buying
| masks, and I still find that to be absolutely
| unconscionable.
| mcguire wrote:
| Here's my previous comment:
| https://news.ycombinator.com/item?id=25738200
|
| https://bmcinfectdis.biomedcentral.com/articles/10.1186/s
| 128... [2019]
|
| " _In summary, despite the various mechanistic arguments
| about which organisms can be potentially airborne and
| therefore aerosol-transmissible, ultimately, the main
| deciding factor appears to be how many studies using
| various differing approaches: empirical (clinical,
| epidemiological), and /or experimental (e.g. using animal
| models), and/or mechanistic (using airflow tracers and
| air-sampling) methods, reach the same consensus opinion.
| Over time, the scientific community will eventually form
| an impression of the predominant transmission route for
| that specific agent, even if the conclusion is one of
| mixed transmission routes, with different routes
| predominating depending on the specific situations. This
| is the case for influenza viruses, and is likely the most
| realistic._"
| thereare5lights wrote:
| How does this address the assertion that there's already
| been research out of Asia that says masks are effective
| against these kind of viruses?
| grahamburger wrote:
| > But by far the likeliest explanation in my mind is that
| these institutions knowingly lied to the public in an
| attempt to manipulate people into not buying masks,
|
| As I remember it, the advice wasn't "don't wear masks,"
| the advice was "stay home." If they said "go buy masks,"
| that would mean leaving your house to get a mask, which
| would directly contradict the more important advice of
| staying home. Also if they said wear a mask when you
| leave the house it would have been interpreted as "it's
| ok to go on with normal events as long as we have masks"
| which wasn't the message they were trying to send,
| either. The message was stay home, and at the time it was
| probably the right message, and not a lie.
| dragonwriter wrote:
| > As I remember it, the advice wasn't "don't wear masks,"
| the advice was "stay home."
|
| There was "stay home" but also "stop buying masks because
| you are stopping medical, first responder, etc. personnel
| from getting them and they aren't useful for the general
| public" during the initial PPE supply shortage and
| hoarding.
|
| This wasn't a lie, AFAICT, but Aa statement that was
| completely correct public health statement in the context
| it was given that was widely interpreted as an individual
| health statement.
| thereare5lights wrote:
| I definitely remember a lot of talk from experts saying
| non-surgical masks don't work and that surgical masks
| should be saved for medical professionals.
| cmrdporcupine wrote:
| My frustration is that, here in Canada at least, there is
| still an outdated way of talking about the virus as if
| it's a surface / hand sanitation issue, and much of the
| public policy (especially around school openings, etc.)
| still seems to be ignorant of the absolutely essential
| role that shared air has in transmission. Public
| authorities have failed to really drive home the reality
| of the virus, and instead we get sanitation theatre, a
| pantomime of virus control, and parents clambering to get
| schools reopened (while the numbers plummet since they've
| been closed after Christmas)
|
| Example, a local wine shop in my small town where you are
| not allowed to touch the bottles, but I see the staff
| inside with their masks off when there's no customers in
| the store.
|
| Frankly, I think people really just don't _want_ to
| believe it's aerosol transmitted. Because the
| consequences for public policy would be so drastic; no
| malls, no factories, no schools, etc. should really be
| open if you admit it.
| cthaeh wrote:
| If you go to ontario public health website and read their
| summaries on current covid papers, you'll note that the
| vast majority of papers come to the conclusion that
| schools have almost no impact on the spread of covid.
|
| But no, keep applying youre second grade logic: spreads
| through air-> indoor places unsafe-> CLOSE EVERYTHING.
|
| That's not to say some of it isn't security theater (ie
| my parents were washing cookie boxes with soap some a
| couple of months ago), but those measures aren't being
| driven by the public health, but rather the unrelenting
| fear mongering of the media.
| astrange wrote:
| It's possible that it's just been so long since we had a
| bad respiratory pandemic that medical advice assumes
| everything is food poisoning and norovirus, where
| cleaning surfaces actually does matter.
|
| But it's also possible they'd have to admit grandma-type
| adages about opening the windows actually work and office
| buildings don't let you do this anymore.
| astrange wrote:
| > Prior to 2020, most medical professionals believed most
| viruses, and corona viruses particularly, could not be
| transported as aerosols.
|
| That's most American medical professionals. And they
| mostly seemed to believe you would get yourself sick
| faster by touching your eyes after taking the mask off
| wrong, or that masks provided 0% protection unless you
| wore an N95 with a fit test, or that if they didn't lie
| about them being useless people would steal them from
| hospitals. They certainly didn't believe they were truly
| useless, since they were all wearing them for procedures.
|
| Actually, wasn't the excuse for suddenly being like "face
| masks are good actually" that they didn't know COVID had
| asymptomatic spread before then? That's even worse than
| not knowing it spread through aerosols.
|
| > This was a subject of research where the data had not
| come in.
|
| By using the technique of "not assuming all of Asia is
| primitive and superstitious", it was easy to figure out
| what to do without an RCT. Note there isn't evidence that
| surgical masks help during surgery either.
| dang wrote:
| " _Please don 't sneer, including at the rest of the
| community._"
|
| " _Be kind. Don 't be snarky._"
|
| https://news.ycombinator.com/newsguidelines.html
|
| If you know more than others, that's wonderful. Please share
| some of what you know so the rest of us can learn. None of what
| you wrote here helps anyone learn--it just puts others down,
| makes you sound supercilious, and makes the community worse. A
| comment like this stuck at the top of a thread, letting off
| fumes and polluting the environment with meta nastiness, is one
| of the worst things that can happen on HN. No one intends it to
| happen--I'm sure you had no such intention, nor did the
| upvoters, but it's the default that we co-create on the
| internet unless we consciously do otherwise.
|
| https://hn.algolia.com/?query=share%20know%20learn%20by:dang...
|
| If you just pour acid on stuff that you scorn, it may get
| heavily upvoted because everyone is feeling anger and scorning
| others is a way to relieve that feeling--but you can't pour
| acid without pouring it on the commons, which is extremely
| fragile. By getting upvoted, the damage you cause is amplified
| 1000x. People posting here need to take care of the commons,
| the same way none of us would pour toxins into a mountain lake,
| leave campfires burning in a dry forest, or litter in a city
| park.
|
| I totally get how frustrating, nay maddening it is when others
| are wrong and ignorant on the internet and self-satisfied about
| it. But being a good citizen on HN means learning to tolerate
| the pressure and metabolize the irritation this activates in
| you. Then you can come back to the commons with a response that
| builds it up--for example with interesting, relevant
| information--rather than tearing it further apart.
|
| Our brains are hard-wired to weight painful impressions--like
| internet comments that seem dumb or wrong--much more heavily
| than pleasurable ones, like comments we agree with. This makes
| it feel like HN is dominated by wrongness and dumbness and
| meanness to a greater extent than it actually is. We all need
| to become more aware of this mechanism (especially by observing
| our own reactions more closely) so we don't destroy this place
| by making the mistake of feeling like it's already been
| destroyed. The truth is that it's hovering precariously in
| between.
|
| https://hn.algolia.com/?query=notice%20dislike%20by:dang&dat...
|
| https://hn.algolia.com/?query=demons%20by:dang&dateRange=all...
|
| https://news.ycombinator.com/item?id=23308098
| robntheh00d wrote:
| Everyone's brain is a time series database of experience,
| with a variety of heuristic shorthand's built in. Presuming
| they should all consume and process information the same way
| is arrogant.
|
| Perhaps take some of your own advice; one comment in this
| thread has not damaged HN.
|
| Consider; for me OP did not leave as painful an impression as
| the helicopter parenting and scolding that followed. Trigger
| the Streisand Effect at your own risk.
| dang wrote:
| I don't think I disagree with any of that. But if you're
| implicitly arguing that more of the GP would be just fine
| for HN, then I do have to disagree.
|
| Moderation comments are an unfortunate evil. To some extent
| they do the very things we're scolding others for. I don't
| feel very good about that and I'd love to find a better way
| --especially because they're even more tedious to write
| than they are to read. https://hn.algolia.com/?query=tediou
| s%20write%20read%20by:da... Unfortunately, the system
| doesn't regulate itself with community and software
| mechanisms alone. There needs to be a moderation mechanism
| as well, i.e. humans who are giving the system their
| primary attention and giving feedback to it. I'd never
| claim that the way we do it is the only way or the best
| way, just that it's better than nothing.
|
| While I have you: could you please stop creating accounts
| for every few comments you post? We ban accounts that do
| that. This is in the site guidelines:
| https://news.ycombinator.com/newsguidelines.html.
|
| You needn't use your real name, of course, but for HN to be
| a community, users need some identity for other users to
| relate to. Otherwise we may as well have no usernames and
| no community, and that would be a different kind of forum.
| https://hn.algolia.com/?query=community%20identity%20by:dan
| g...
| DSingularity wrote:
| Dang, I like you dang.
| archibaldJ wrote:
| been loving HN for 8 years (n coming!) mostly due to the
| self-constraints commentators here generally have on the
| amount of meta-nastiness they (accidentally/intentionally)
| leak out
|
| and as the population grows am hugely thankful for the
| moderation too
| relaxing wrote:
| I feel like "resist the urge to post claims about concepts
| outside your domain/grasp" is clear, actionable advice that
| improves the community. What if you spent more time policing
| that, instead of policing of tone of people trying to make it
| better? Take care of the commons earlier, and then these type
| of posts wouldn't be necessary.
|
| I'm not sure why you would question the intentions of the
| upvoters - do you believe they don't understand how the
| upvote system works? It seems clear they had every intention
| of promoting OP's message and forcefulness with which it was
| delivered.
| dang wrote:
| There are other ways to make such points which don't break
| the site guidelines. You're ignoring the damage to the
| community that I'm writing about, which is much more
| important. Massive, low-information, vicious flamewars are
| the biggest existential threat to the community.
|
| I don't believe that either the commenter or the upvoters
| wanted an off-topic flamewar to be pinned at the top of the
| most popular thread on HN's front page. That would be
| malice! Outcomes like this happen on the internet, not by
| deliberate malice, but because a large number of small
| contributions--usually made without much attention, and
| without thinking of the overall health of the community--
| compound into a damaging outcome.
| caffeine wrote:
| It's a humorous injunction that could be gainfully posted at
| the top of most controversial threads. Nothing wrong with
| warning people against bias and groupthink. Especially when
| the matter is deeply technical and outside of most
| participants'expertise.
| dang wrote:
| From my perspective it's more important to protect the
| commons from going up in flames.
|
| Generic warnings about "bias and groupthink" have no
| helpful effect anyway, let alone snarky putdowns of others.
| Apart from adding off-topic noise, their main effect is to
| polarize the audience into a "like and agree" tribe and an
| opposing "dislike and disagree" tribe. Then the two go
| after each other in increasingly nasty and unthoughtful
| ways.
|
| If you actually want to reach people you have to do it
| differently. If you (I don't mean you personally, but all
| of us) don't actually want to reach people, but just to
| vent bile, that's not what this site is for, and there are
| other places to do it.
|
| https://news.ycombinator.com/newsguidelines.html
| TLightful wrote:
| TL/DR: You're a HN Genius.
|
| Appreciate your generosity.
| johnfn wrote:
| Can we not write posts like this? The air of superiority
| without actually offering any insight doesn't contribute to
| interesting discussion.
| loljeffbee wrote:
| That's Step 9: lament posts that shatter the shared fantasy
| as disruptive to the forum.
| at-fates-hands wrote:
| I have to admit, this wasn't me to a tee, but I did initially
| believe manipulation of any kind - whether you do so to push
| the price up or down is illegal. My basis for this was from
| several friends who have been financial planners for 10+ years
| and two have lived off day trading for more than 15 years.
|
| Then I had a few people tell me, "Nope, its called a "short
| squeeze" and totally legal. Then I had to go back and do some
| research on how short squeezes work. Then I found several
| instances where this had happened, just not nearly as public
| because of social media.
|
| The small amount of research opened my eyes to the fact even
| though something may seem illegal, in the finance world,
| there's a lot of gray areas and details most people will never
| know about until something like this happens.
| JKCalhoun wrote:
| Cynical?
|
| Thoughtful people who have been on this planet for decades
| build up a world view based on the countless examples of actors
| on the world stage behaving the way that they do. A single
| article or internet search is not how we are informed.
| glitchc wrote:
| I don't know where this perspective comes from. Reading the SEC
| note suggests that they are actively investigating or looking
| to actively investigate to see if there was market
| manipulation. No conclusions made as of yet.
|
| When the market wildly diverges from steady state operations,
| this is an entirely reasonable thing for the SEC to do. An
| unstable market hurts the average person far more than a stable
| one.
| Nasrudith wrote:
| Yeah it is essentially just a boilerplate post that just says
| "We heard and are looking into it" essentially. It will
| probably be months to years after the event for them to
| conclude who if anyone rose to the level of illicit market
| manipulation or other offenses and who would be responsible.
| Robinhood was at risk of being fined by the SEC for their
| infamous infamous leverage glitch as opposed to the users.
| (Not sure if it ended in a real fine as the media lost
| interest post patch.)
| gjsman-1000 wrote:
| "The Commission will closely review actions taken by regulated
| entities that may disadvantage investors or otherwise unduly
| inhibit their ability to trade certain securities. In addition,
| we will act to protect retail investors when the facts
| demonstrate abusive or manipulative trading activity that is
| prohibited by the federal securities laws. Market participants
| should be careful to avoid such activity."
|
| This should scare the crap out of Robinhood from what happened
| yesterday.
| youkoulele wrote:
| Why would the SEC punish Robinhood for not having enough
| collateral to trade very volatile stocks.
| adjkant wrote:
| IANAL but some possible reasons:
|
| 1. For lying about that reason to customers
|
| 2. for not shutting down all trading on their app (allowing
| sells of GME without manipulated the market, even if blocking
| sells would also have bad effects)
|
| 3. For allegedly tipping off Citadel before shutting off GME
| trading (unconfirmed but they will likely investigate this
| claim)
| youkoulele wrote:
| Yeah it's worth investigating if they are at fault
| somewhere.
|
| But many people seem to think that the SEC will punish them
| simply because they stopped allowing people to buy more
| GME.
| zamadatix wrote:
| I think everyone knows it wasn't simply that though,
| hence the outrage.
| sneak wrote:
| It specifies _trading activity_. I read this as a warning to
| WSB, not their brokerages.
| AznHisoka wrote:
| People who are anti-robinhood thinks it's a message to RH.
|
| Those who are anti-WSB thinks it a warning to WSB.
| TeMPOraL wrote:
| Might be both.
| elliekelly wrote:
| It definitely is. The next sentence specifies _market
| participants_ which would include both WSB and hedge
| funds.
| acegopher wrote:
| No. WSB is not "a regulated entit[y]" that "disadvantage[d]
| investors or otherwise unduly inhibit[ed] their ability to
| trade certain securities". Robinhood is and did.
| FabHK wrote:
| I'd say you might be wrong on both counts:
|
| 1. preventing people from buying GME at, whatever, $300
| might not have been disadvantaging them, and
|
| 2. it might not have been _unduly_ inhibiting their ability
| to trade, but _duly_ so.
| franklampard wrote:
| You are so biased because you think GME is overvalued at
| $300.
|
| Your bias even makes you defend Robinhood's action to
| disable cash accounts buying certain stocks as DULY.
|
| Wow
| jeffbee wrote:
| That's the first part but the second part is a separate
| statement against market manipulation generally. In the
| law, manipulation is forbidden to anyone, not just brokers
| and dealers.
| SaltyBackendGuy wrote:
| > we will act to protect retail investors when the facts
| demonstrate abusive or manipulative trading activity
|
| Specifically calls out retail investors (i.e. WSB). I read it
| the opposite way, but I can see how it could be interpreted
| as a warning to both.
| jasonjayr wrote:
| It boils down where and who did the manipulation?
|
| 140% shorts, including naked shorts from Melvin?
|
| RH stopping buys but allowing sells?
|
| Conclusive proof that Citidel put their finger on the
| scales to force RH's actions?
|
| WSB's members constantly chanting hold/diamond hands/ride
| to the moon?
|
| There's a lot at play, and further examination will make
| for a good post mortem...
| interestica wrote:
| There's a weird aspect of meme-as-protection. It's hard
| for a regulating entity to cite memes and seemingly
| offensive speech.
| nerdjon wrote:
| > actions taken by regulated entities
|
| WSB isn't regulated, that is companies like Robinhood
| rich_sasha wrote:
| WSB is not a regulated entity, but presumably Robinhood is.
| kgwgk wrote:
| The "trading activity" is in the "in addition" sentence, it
| doesn't have to refer exclusively to regulated entities.
| ysw0 wrote:
| Quant firms made more money then WSB did trading on the
| momentum I'm sure. Do you really think retail was the only
| one pumping?
| SaltyBackendGuy wrote:
| Hopefully it's more than posturing and that there will be
| action taken to back up this statement.
| avs733 wrote:
| And their investors...this could (not will, could) end up being
| a fairly easy case for piercing Robinhood's corporate veil.
|
| Good on the SEC for stating they stand with retail investors,
| even if it ends up being hollow it sure is nice to hear them
| say it.
| elliekelly wrote:
| Absolutely not. On what theory? And on what grounds? There's
| no such thing as "a fairly easy case for piercing the
| corporate veil".
| avs733 wrote:
| Lack of separation? If it turns out they did take any
| direction on this from anyone holding a short position in
| GME I would imagine RH is fully and completely screwed, as
| are their investors.
|
| this is all hypothetical, which is why I used the word
| _if_. If they did what WSB is accussing them of, which I
| think is probably doubtful, RH is in really really big
| trouble...
| throwaway4good wrote:
| "Abusive or manipulative trading activity that is prohibited by
| the federal securities laws."
|
| Is that aimed at "professional hedge funds" or self-proclaimed
| "autists" in an internet forum?
| ChrisRR wrote:
| The big traders probably have friends in high places, so I
| suspect they're going after WSB and not wall street who
| caused the issues in the first place.
| TeMPOraL wrote:
| With the amount of media attention WSB has been gaining,
| this is setting itself up for "Wall Street versus The
| People" situation. It may be politically tough to go
| against the retailers now, particularly mid-pandemic and
| with all the other political comorbidities US is suffering
| from.
| fnimick wrote:
| If after bubble pops it's shown that an elite group of
| WSB traders made huge profits while a large amount of
| retail traders lost their entire investment, I think
| there's going to be plenty of public appetite for nailing
| the market manipulators to the wall.
| mrkramer wrote:
| This is not about "Wall Street versus The People" or
| WallStreet vs Retail (small investors) it is about
| federal securities laws. And you know where the law is?
| In court. I think court needs to decide whether what is
| WSB doing illegal or legal.
| mrkramer wrote:
| I think court needs to decide whether what is WSB doing
| is* illegal or legal.
| Izkata wrote:
| It's been that for a while. Lots of people on social
| media have been framing it as another Occupy Wall Street,
| except this time they've figured out how to make the
| elites hurt. There's plenty of people who don't care how
| much they lose when it bursts, because Wall Street is set
| up to lose more.
| throwaway4good wrote:
| I know of cases from the Danish market where the financial
| service authorities went for people who had tried driving
| the price up in a pump and dump scheme for a small penny
| stock. Using internet forums and a couple of trading
| accounts.
|
| They made a few thousand dollars and got months in jail for
| it.
|
| The problem with wsb is that it has gotten so big and there
| are too many involved at this point.
| vinceguidry wrote:
| It's not really that the government can't go after WSB.
| Sure they're not going to prosecute 2 million
| degenerates, but it's not like they can't round up 50 of
| the big names to make a statement.
|
| It's that there's really no appetite in the federal
| government for going after retail traders. Retail trading
| as an industry took a very long time to build and ham-
| fisted enforcement could tank it harder than a few
| lawsuits ever could.
|
| Make no mistake, this was going to happen eventually.
| There's infinite ability to gather information, infinite
| ability to share it. Retail collusion was inevitable. The
| people who built the industry knew it was going to
| happen. They prepared for it. Everyone, including the
| SEC, knew it was only a matter of time before something
| like this happens.
|
| Denmark did that because there's much greater financial
| regulatory capture than there is here.
| throwaway4good wrote:
| Yes. This stuff (market manipulation using internet hype)
| is so easy to do that they need to make an example.
|
| I am very certain that most of retail traders who buy GME
| at 400 will end up losing money.
| mariodiana wrote:
| There is no "probably." It is well-known that people leave
| their civil servant jobs at regulatory industries, after
| putting in their time, and bring their know-how and
| connections to big banks and hedge funds in return for
| cushy salaries.
| nsonha wrote:
| Worked in a broker in Australia, our head of compliance
| is a former ASIC (the Australian regulator) employee.
| SpicyLemonZest wrote:
| It's aimed at both, presumably. It's not like hedge funds
| have never gotten in trouble for abusive trading practices.
| bilbo0s wrote:
| This.
|
| It's clear that everyone should be lawyering up depending
| on what positions they had when they started pumping this
| idea to the masses. That said, I'm a big believer in "a
| fool and his money". If there are hedge funds or retail
| investors out there who, perhaps, didn't understand all the
| risks of what they were doing, protecting them from their
| folly only causes more problems in the future.
|
| As horrible as this sounds, now is the time to let everyone
| fail. Hard. If we don't, no lessons will be learned.
| stonecraftwolf wrote:
| IANAL, but to me it seems like it would be very difficult
| to convict retail investors of investing in a stock they
| believe has value and then telling other people they
| invested in a stock they believe has value. Unless there
| are chat records of a few redditors coordinating an
| astroturf campaign while twirling their mustaches or
| whatever, I don't see how this could be aimed at retail.
|
| Regulated entities who have access to tools or
| information not available to retail investors, or who
| applied financial pressure to manipulate access to the
| markets, or did not disclose conflicts of interest...that
| seems like a much easier case to make.
| vorpalhex wrote:
| It's also not as if hedge funds are employing thousands
| of welders or craftsmen. These are high risk financial
| strategies by people who qualify as professional traders
| - "I didn't know" isn't an excuse anymore. If they lose
| the game, they get to eat their losses.
|
| We will probably see a few retail traders get burned, and
| I suspect anyone wanting to do trading in the future is
| going to have to fill out more disclaimers.
| jeffbee wrote:
| Maybe not hedge funds but I estimate that the majority of
| what laypeople call "hedge funds" are not hedge funds.
| There are tons of firms that just run money for ordinary
| people. At my old firm they have shorted blackberry in
| thousands of individual margin accounts, and those
| accounts are losing money on paper and might have to
| realize losses in order to rebalance their risk.
| vorpalhex wrote:
| I'd have some questions if my low risk or medium risk
| investment firm was making large shorts. Shorts are very
| risky for a whole bunch of reasons - which is also why
| they can be high value. Don't get me wrong, I'm sure
| every high risk fund can find at least one pensioner
| invested in them, but if your firm is well known for
| shorting then you can't pretend to be anything but high
| risk/high reward.
| jeffbee wrote:
| These aren't large positions and that is the point. If a
| short position that was 2% of your account suddenly
| becomes 10% of it, now you have a problem, and the
| problem wasn't caused by a wrong investment thesis, it
| was caused by a mob of kids online.
| newsclues wrote:
| The problem is that when hedge funds get in trouble they do
| not go to jail, are not prohibited from doing business and
| the penalties (fines) are ineffectively weak.
|
| Given the track record of holding the powerful accountable
| is terrible, I don't think this is directed at hedge funds
| but is a warning to the little people.
| SpicyLemonZest wrote:
| It's common for hedge funds (and more importantly, the
| people who run them) to be prohibited from doing
| business. "Barred from the securities industry" is the
| term typically used if you're looking for examples.
| newsclues wrote:
| True.
|
| But why does this sort of thing seem to be the norm?
| https://en.m.wikipedia.org/wiki/S.A.C._Capital_Advisors
| dcolkitt wrote:
| > The problem is that when hedge funds get in trouble
| they do not go to jail
|
| Criminal prosecution is held to a much higher evidentiary
| standard than civil fines. Almost all market related
| crimes, including manipulation and insider trading,
| require mens rea. Proving state of mind beyond a shadow
| of a doubt is _really_ difficult to do. Especially when
| the defendant is sophisticated enough to know the law and
| have access to high-quality legal advice.
|
| Any US Attorney would absolutely love to have the feather
| in his cap of sending a billionaire hedge fund manager or
| investment banker to prison. Hell, the reason Rudy
| Giuliani is a household name is because he managed to do
| that. But no prosecutor is going to bring a case that he
| has no chance of winning.
|
| Given that it makes much more sense to target enforcement
| with civil fines rather than criminal prosecution. You
| can tie up your resources to fight expensive, hard to
| prosecute criminal cases. Or you can quickly settle for
| reasonable fines, and cover many more cases with the same
| set of limited resources.
| marcosdumay wrote:
| > actions taken by regulated entities
|
| That's clearly not about random people commenting on an
| internet forum.
|
| It may still be about specific people commenting on an
| internet forum, but those people would know it's about them.
| [deleted]
| boublepop wrote:
| It is aimed at the people who shut down buying GME, then
| tried to create a downward trend at unusual low volumes to
| try to scare the wallstreet bets crowed into abandoning their
| positions in GME to allow short positions to recoup their
| gigantic losses.
|
| It failed mind you. The shorts are still bleeding and the GME
| hold is continuing though just at a slightly reduced price.
|
| Retail investors who have bought GME can afford to wait out
| the antics of hedge funds, but those funds are on borrowed
| time to try to turn the loss of a century into some kind of
| win, or they are done for good. Ask yourself, who do you
| think is trailing the borders of legality? A teen who goes
| "hmm GME at 100$? Sure why not, I'll take 10" or the
| hedgefond manager calling all his friends to stop trading
| because his fund is going bankrupt on a stupid bet he made
| that he would have gotten away with if it wasn't for those
| meddling kids.
| esoterica wrote:
| This is QAnon/Kraken/Dominion level crankery. The MAGA
| types are happy to believe in voter fraud conspiracy
| theories with no evidence because they hate the Democratic
| party, and here you are doing literally the exact same
| thing here except replacing "Deep State" with "hedgefond
| managers".
|
| People like you make fun of the QAnon-types but you're just
| as willing to indulge in deranged evidence-free conspiracy
| theorizing as long as it accommodates your ideological
| priors.
| zamalek wrote:
| Shorting more than 100% of the stock is excessive and
| irresponsible. That figure is not a conspiracy theory: it
| is public information that the SEC releases monthly.
|
| Whether hedge fund managers did make a call to their
| buddies is not the only thing in question here (although
| the SEC will surely determine the truth). Shorting a
| stock drives the price down and, while this is no less
| legal than buying a stock, the question is whether
| shorting 136% of the stock counts as outright
| manipulation. Reddit kids have done nothing but pop an
| artificial bubble, they did not participate in
| manipulation; as the hedge fund managers and their
| buddies claim.
|
| > QAnon
|
| I have yet to see the baby cookbook or other evidence of
| their ridiculous claims.
| esoterica wrote:
| The parent commenter claimed that brokerages were
| colluding to drive the price of GME down to benefits the
| shorts. That is QAnon-level evidence-free conspiracy
| theorizing. The clearing houses were demanding more
| collateral and brokerages couldn't afford or didn't want
| to put it up.
|
| > whether shorting 136% of the stock counts as outright
| manipulation
|
| I refer you to the snarky top comment about how all the
| Dunning-Kruger victims who claim manipulation do not
| actually know what manipulation is. Shorting a stock is
| not manipulation and neither is lots of people deciding
| to short a stock. 136% of the stock is shorted because a
| lot of people were shorting it, not because Some Guy
| decided to single-handedly short 136% of the float.
|
| > Reddit kids have done nothing but pop an artificial
| bubble
|
| So GameStop was an artificial bubble at $10 but not at
| $500? Really?
| zamalek wrote:
| > So GameStop was an artificial bubble at $10 but not at
| $500? Really?
|
| Did I claim that? I wouldn't touch GME with a barge pole.
| beagle3 wrote:
| IB claimed to have hiked margin to 100% which is a
| reasonable response. However, I have heard from many
| sources that they in fact rejected buy orders even with
| cash - which, if true, and I have every reason to believe
| so, makes any explanation about margins and technical
| reasons seem ridiculous.
|
| There is surely some deeper non public reason that every
| single retail broker - but no single institutional broker
| - stopped accepting GME buys but kept honoring sells. It
| might or might not be a call from hedge fund buddies, but
| it is still likely illegal.
|
| When I was working at a hedge fund, I once executed a few
| hundred mil notional on a supposedly anonymous exchange,
| taking advantage of an obvious counterparty mistake.
|
| Within 10 minutes, I got a call from said counterparty,
| telling me that next time I do that, they'll make sure
| I'm kicked off the exchange.
|
| Anonymous my ass. Legal my ass. And yet, it happened -
| I'm sure I wasn't the first or the last - the other side
| kept making those mistakes. I stopped taking advantage of
| them. This kind of behavior is rampant in Wall Street.
| Only difference is it has been done now in the open, very
| visibly, and with thousands - perhaps tens of thousands -
| identifiable victims.
| swader999 wrote:
| In other news there are reports of men in $4,000 suits with
| shovels and pick axes working above New York's many fiber optic
| lines.
| malwarebytess wrote:
| Robinhood says that they basically couldn't fulfil the buy
| orders because they ran out of money, or couldn't fulfil the
| orders without breaking the rest of the platform. I imagine
| whatever the reason there's going to be lawsuits.
| josephorjoe wrote:
| Whatever else happens, Robinhood should not survive this.
|
| They clearly violated their customers' trust, so their
| customers should leave them.
|
| And I will be completely unsurprised if when the dust settles
| it turns out they acted illegally.
|
| Also, they suck at lying.
| stjohnswarts wrote:
| I don't agree. I think they provide a valuable service they
| should stay whole IF they can fix their capital issue and
| make their customers whole. You didn't forsee what was
| happening and neither did I because it was unprecedented.
| If not let them sink, someone will provide a similar
| service and learn from it. The SEC shouldn't be in the
| market of shutting down companies because a new phenomenon
| happened, let the market do that, unless something illegal
| has occurred.
| josephorjoe wrote:
| I don't think the SEC should shut them down.
|
| I think they should go bankrupt because their customers
| leave them for one of their many more reliable and
| trustworthy competitors.
| gruez wrote:
| >They clearly violated their customers' trust, so their
| customers should leave them.
|
| They did? That might be the case according to the Popular
| Narrative (that the Hedge Funds phoned them and said "shut
| it down"), but reality is that they couldn't front the
| deposits for the customer's trades, due to the insane
| volatility. In that case it's less violating their
| customers' trust and more having a product that couldn't
| handle extreme circumstances well. They are a _discount_
| brokerage after all, some compromises had to be made.
| TeMPOraL wrote:
| The narrative doesn't matter. It's a PR problem. Lots of
| people wanted to buy GME, then RH suddenly cut them off,
| offered no reasonable explanation, and then their CEO
| went on the news to just spew some content-free noise.
| Sure, there were reasons behind this ban, perhaps good
| reasons - but they weren't explained by RH, and RH to
| this moment didn't even admit to the cause of the
| problem.
|
| Sounds like solid ground for loss of user trust to me.
|
| See also: https://news.ycombinator.com/item?id=25957097.
| deelowe wrote:
| The CEO said they couldn't cover deposits. He only
| started spewing nonsense when the obvious question about
| RH having liquidity issues came up. He didn't lie to
| retail RH clients, but he may have lied to RH investors.
| Then again, it's funded by private equity, so it's likely
| they know all this.
|
| All of this makes sense given the emergency cash infusion
| of 1B RH got this week.
| tootie wrote:
| As has been stated elsewhere, it is easier to recover from
| alienating customers than it is from running afoul of the
| SEC. They ran a very real risk of being forcibly shut down
| by regulators if they didn't slow trading.
| Robotbeat wrote:
| I don't agree. See Tesla. Elon frakked up with the SEC
| but not his customers (or his fans) and so Tesla a couple
| years later is on top of the world. I doubt Robinhood
| will survive this. They built their whole brand around
| rallying for the little guy at the expense of the fat
| cats. It's literally their name.
| scythe wrote:
| Tesla isn't an investing firm. They don't even really
| have much in the way of acquisitions yet. Tesla would
| have to do something pretty blatant to really piss off
| the SEC. Elon's $420 tweet was greeted with a slap on the
| wrist precisely because "you're new here, aren't you?".
|
| The better analogy would be if SpaceX pissed off the FAA.
| kchr wrote:
| Tesla actually made an official statement on their
| website about going private within 24 hours of the tweet.
| That's what reduced it to a slap on the wrist.
| whimsicalism wrote:
| That's an absolutely awful argument. Elon Musk rich so
| don't have to bother with the SEC?
| Robotbeat wrote:
| Nope. The question was whether it's worse (in terms of
| recovery time) to crap on the SEC or your customers, and
| in which case you'll recover faster. Elon frakked with
| the SEC and rightfully had to pay a price for it. But
| they recovered quickly. I don't think Robinhood will.
|
| The best thing is to not frak with either the SEC or your
| customers. And that's probably always an option, even if
| it might mean sacrifice.
| monadic3 wrote:
| > As has been stated elsewhere, it is easier to recover
| from alienating customers than it is from running afoul
| of the SEC.
|
| Oh did the SEC decide to grow a spine?
| iamacyborg wrote:
| You may want to check what happened to certain brokers on
| Jan 15th 2015 before you start chucking accusations out.
| It's clear you don't understand how these brokers work and
| how they interface with the broader market.
| cannabis_sam wrote:
| Is this the Swiss Franc thing?
| iamacyborg wrote:
| Yep.
| josephorjoe wrote:
| It is completely clear that they betrayed their
| customers' trust.
|
| I know some people think "but that's not illegal so they
| did nothing wrong". Those people are bad and should feel
| bad. And I think in this case enough customers are angry
| that robinhood will not escape the consequences of its
| actions.
|
| I only said I would be unsurprised to learn they acted
| illegally.
|
| I admit the "suck at lying" thing is more my opinion than
| fact at this point.
| maxfurman wrote:
| Do Robinhood's terms guarantee that their users can buy
| any stock at any time? Does Robinhood in any way ask or
| imply that their users cannot use another service? I'm
| just not sure what trust they betrayed here.
| lixtra wrote:
| Trust is not covered by terms.
| adaml_623 wrote:
| Why would you post that without including information
| about the event and brokers you are referencing. You're
| not really adding to the information content on this
| site.
|
| I assume you were talking about this event:
| https://www.leaprate.com/forex/liquidity/algo-traders-
| worsen...
| iamacyborg wrote:
| Because if people are going to start playing these games
| they need to do the bare minimum of research. Their money
| is literally on the line.
| renewiltord wrote:
| And you should read about how that was dealt with in July
| 2017.
| franklampard wrote:
| Source?
| xd1936 wrote:
| They over a day to say that. Instead, they decided it was
| clearer to say "we're temporarily restricting trading due to
| volatility". If what you said really was the issue... Why not
| just say that? They're a startup. They'd be forgiven. Why
| hide behind vagueness?
| partiallypro wrote:
| I do agree that they bungled the whole thing badly, but I
| also think they were probably trying to prevent a run on
| their accounts when they were already cash strapped.
| linuxftw wrote:
| It's a highly regulated industry. Brokers can't just take
| actions. Perhaps they hit some regulatory corner case and
| nobody knows how the SEC is going to react.
| [deleted]
| temp667 wrote:
| There is really only one simple concept needed to understand what
| the SEC cares about.
|
| When a big hedge fund is selling a stock short, they can do so
| without even borrowing it. As a result, the buyer ends up not
| owning it and the stock fails to deliver - called a fail.
|
| There are a lot of easy penalities that could be applied here.
| Reprice based on lowest price in intervening period prior to
| deliver. Provide a 10% rebate per day if not delivered T+3, up to
| perhaps a 200% rebate. Etc.
|
| But instead, nothing happens, the fail to deliver just continues.
| I took a look at Gamestop on the fail to deliver list. It's been
| there forever.
|
| I don't trade, but the whole fail to deliver game seems rotten.
|
| https://en.wikipedia.org/wiki/Failure_to_deliver
| hikerclimber wrote:
| this has to do greed of wall street and I have no remorse for
| hedge funds failing. karma is a bitch ain't it. but it should be
| illegal to disable chatrooms for reasons when before they were
| allowed so wall street could profit from it. we no longer live in
| a free market most of it is controlled.
| fairity wrote:
| I don't understand the current lessons being drawn by the public
| from this situation.
|
| I don't think shorting stocks (even to 140% of its float) is a
| bad thing. And, the hedge fund managers that shorted GME don't
| deserve to be bankrupt.
|
| Shorting stocks, in general, is a beneficial action for the
| market because it helps prevent shares from becoming overvalued.
|
| The problem that GME highlighted is that it's too easy to
| purposefully trigger a short squeeze.
|
| One possible solution seems to be that the SEC should make it
| easier to borrow shares to short a stock. And, in so doing, they
| should make it harder to purposefully trigger a short squeeze.
|
| There's nothing wrong with greed if it doesn't hurt others...The
| SEC's ultimate goal should be to have a fair and efficiently
| priced market at all times. In this case, it seems like the party
| that needs to be protected is the hedge funds....What am I
| missing?
| nairboon wrote:
| is this satire?
___________________________________________________________________
(page generated 2021-01-29 23:00 UTC)