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By the way this whole "shorts have to cover tomorrow" is based on some random reddit guy's guess about what might be true for a small portion of certain hedge funds positions in a post 9 months ago.  

GM explained this a little yesterday and that podcast somebody put up explained this in a little more detail.  I mean by all means get your popcorn ready for tomorrow, but don't expect anything different than today.

 
General Malaise said:
Okay, that makes a little more sense.  Thanks.  

So hedge funds use Robinhood's trading platform to execute trades since there is (I believe) no commission to transact.  God, I am old enough to remember trading through brokerage houses that would charge 5 or even 6 cents a share.  Man, they would fly into town every year, take us to the finest steak houses, scotch, cigars, limos, strip clubs.....and then competition rolled in and commissions were cut.  4 cents, then 3....then you had computer programs to trade shares with for a penny.  The fancy dinners stopped immediately and the Xmas gifts that flowed in went from Dom to a card where they donated to the Human Fund on  your behalf.  

Hedge Funds will use myriad houses to execute trades, but unless they want access to research reports, analysts or deal flow, they'll turn to the discount trading houses so commission costs are de minimus.   
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No hedge funds don't use Robinhood to execute trades, they pay Robinhood to buy data of the trades Robinhood's users are making milliseconds before they happen so they can front run the trade.

That's where Robinhood makes it's money.  That's how they offered commission free trading.  When you place an order of 10,000 shares of AMZN because you're a FBG, instead of charging you $6.95 for the trade, they sell that info to hedge funds.  The hedgies pay $xx to get a notice that "hey General Malaise is about to buy 10,000 shares of AMZN and since it's a market order we'll set that order a little higher at $3280.50" and then the algorithms at that hedge fund put in an order for xxxxx shares of Amazon at $3280.25 knowing that your big $3280.50 order is about to come through and drive the price up.

It's the same business model as Facebook and Google.  The free users are actually the product, not the users.  For FB/Google the advertisers are the users.  For Robinhood the institutions buying the data are the users.

So you can see the conflict of interest when Robinhood's very product (Retail investors) are making a ton of money at the expense of Robinhood's users (the hedge funds/institutions).  You can see where some might see some foul play in RH's decision making when that decision directly benefits the people that pay them.  And according to those numbers people are throwing around (no idea of their accuracy) Robinhood's single largest paying customer is the very same Citadel that is one of the hedge funds most exposed to GME shorts.

So the dots that people are connecting, which they will have to prove to actually have a case, is that Citadel told Robinhood they had to block their users from buying their stocks or they would stop being a customer.

 
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FreeBaGeL said:
Right, and of course what will likely come of all this?  Probably more regulation on retail investors, nothing on institutions.

No different than the point I believe someone here pointed out early.  The result of the institutionally caused dot com bubble was the PDT rule placed on retail traders.
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Doesn’t even matter. There will barely be such a thing as a retail investor if it’s like this. 

 
BassNBrew said:
I may take this to the political forum, but how is a company restricting stock sales on certain individuals any different than banning certain people from their platform?
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I'm kind of surprised that there's not a PSF thread on this, but I think the people in that forum are too busy arguing over the same stupid stuff to pay attention to actual current events.  I mean, it's kind of hard to get interested in the stock market when somebody in some other state is talking about maybe renaming some elementary school.

 
BassNBrew said:
I may take this to the political forum, but how is a company restricting stock sales on certain individuals any different than banning certain people from their platform?
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Is there a difference in banning certain people from their platform vs allowing users to only close their positions and not allowing them to buy?

Idk the answer here, just holding.

 
CFB Sicko said:
One more nugget of wisdom and then I have to get some work done. Yesterday, AMC sold their company stock at $4.81 a share. At that price, they thought their company was overvalued. That's a pretty clear benchmark of FMV, yeah?

Price will continue to recede. Less volume means it will recede faster. You should be happy if your AMC is worth $10.00 a share by close. But I don't see why I would want to pay twice as much for a company than the company thinks it's worth. For the price to go up, you're relying on more people to jump on the bandwagon longterm.

I don't have confidence that the public has those kind of balls. Short it.


https://www.reuters.com/article/us-amc-ent-holdg-stock-sale-idUSKBN29W2UP
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Why don't you make that trade and report back when you get squeezed

 
Sorry EV/renewable SPAC guys, we missed on PSAC which just announced today they are merging with EV manufacturer Faraday Future and popped 20%.  But can you blame me?  From their S1:

Our efforts to identify a prospective target business will not be limited to a particular industry or geographic region although we intend to initially focus on target businesses that service the real estate industry.
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(I also didn't start actively tracking these until late November, and they listed back in July).

 
ShamrockPride said:
Uhhhh wtf is this. Robinhood is selling people's GME stocks FOR THEM? Without permission. "To mitigate risk to their account."

Please tell me this has lawsuits all over it.

https://twitter.com/CopingMAGA/status/1354858634640023552?s=19

EDIT: and before y'all clowns disregard it cause you read "copingMAGA", read thru the comments. It's happening to many.
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I have to think this isn't real.  They would be held liable for any profit missed, while not being able to recoup any of the money they might have saved a customer.  

 
Sand said:
Agree completely and I stayed out of this mania.  Though it is complete, utter bull#### that these trades were throttled.  

Funny enough the link earlier to the Ofdollarsanddata twitter story on Piggly Wiggly in 1919 played out almost exactly here.  He fought the short sellers and the rules got changed on him, driving him bankrupt.  

-----

I am, however, taking a bunch of small shots with some SPACs.  A Taleb anti-fragile investment method.  Odds are well in my favor to come out with a good ROI if just one or two of them hit reasonably well.  And if the names you're betting on are Chamath, Thiel, etc. chances are pretty good that will happen.
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Like given

 
Todem said:
I am a huge long term bull on hydrogen power cells. BLDP is a potential 10 bagger. I suggested it when it was $15 a share. It will gyrate but this is a long term bet for me.
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In case you missed it, this news yesterday was pretty interesting.  Was really thinking Hydrogen fueled vehicles was much further away.

 
IvanKaramazov said:
I'm kind of surprised that there's not a PSF thread on this, but I think the people in that forum are too busy arguing over the same stupid stuff to pay attention to actual current events.  I mean, it's kind of hard to get interested in the stock market when somebody in some other state is talking about maybe renaming some elementary school.
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Gamestop Elementary Stonk Academy is a fine name though.

-QG

 
BassNBrew said:
You are plenty savy.  Not much different risk than an index fund if you go with 20-30 stocks minimum and no more than 5% in any one company.  Your index funds can be heavily tied to FANG.

Good, then we'll sell more at a higher price and buy it back on a future pull back.

I may take this to the political forum, but how is a company restricting stock sales on certain individuals any different than banning certain people from their platform?
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They aren't banning them from they platform, they're taking some of their products off the shelf, since they feel they have the power (as the shop owner) to decide what we can and cannot buy.

 
I know some here got into the LOAK>DNMR trade a while ago, but I completely missed the boat on that SPAC. I have been watching for a while and started a position in DNMR on the dip this morning @ 46. Probably still overpaid, but wanted an ESG play and I'm fascinated by the concept and need for biopolymer plastics.

Also, I always cringe watching It's A Wonderful Life when George Bailey didn't invest with Sam Wainwright...had to take a swing here.

 
When hedge funds and market makers were driving up random failing chinese stocks 5000%, 6000% every hour a few months ago as we all sat along and watched, it's funny how RH was silent and allowed them to be traded.  But when the roles were reversed, all of the sudden the RETAIL investors, not the hedge funds that have such crappy risk managment they managed to get tens of billions of dollars underwater, need protection.

 
Sideshow Bob said:
He just said he wanted to give as many people as possible access to the financial system. Not the WHOLE financial system at once. 
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He wanted to give people a free choice to do what they wanted to do with there money with no restrictions which was not the case of his parents in Bulgaria.

 
FreeBaGeL said:
No hedge funds don't use Robinhood to execute trades, they pay Robinhood to buy data of the trades Robinhood's users are making milliseconds before they happen so they can front run the trade.

That's where Robinhood makes it's money.  That's how they offered commission free trading.  When you place an order of 10,000 shares of AMZN because you're a FBG, instead of charging you $6.95 for the trade, they sell that info to hedge funds.  The hedgies pay $xx to get a notice that "hey General Malaise is about to buy 10,000 shares of AMZN and since it's a market order we'll set that order a little higher at $3280.50" and then the algorithms at that hedge fund put in an order for xxxxx shares of Amazon at $3280.25 knowing that your big $3280.50 order is about to come through and drive the price up.

It's the same business model as Facebook and Google.  The free users are actually the product, not the users.  For FB/Google the advertisers are the users.  For Robinhood the institutions buying the data are the users.

So you can see the conflict of interest when Robinhood's very product (Retail investors) are making a ton of money at the expense of Robinhood's users (the hedge funds/institutions).  You can see where some might see some foul play in RH's decision making when that decision directly benefits the people that pay them.  And according to those numbers people are throwing around (no idea of their accuracy) Robinhood's single largest paying customer is the very same Citadel that is one of the hedge funds most exposed to GME shorts.

So the dots that people are connecting, which they will have to prove to actually have a case, is that Citadel told Robinhood they had to block their users from buying their stocks or they would stop being a customer.
Click to expand...
Excellent summary.  Yeah, I started reading about this earlier and get it now.  

Deal flow was always a benefit for using certain shops when executing trades as in you'd get calls or IMs from your trader/sales rep at XYZ telling you about large orders in a name you trade with them.  But that was just a perk for using their shop to execute trades.  It wasn't a business model.....what Citadel is doing seems a bit.....sketchy.  Though I'm sure it's perfectly legal, especially when you have politicians in your pocket.

 
I have to think it would be a great time to start up a brokerage that promised it would never freeze its clients out.  But charges .25 cents per trade.  I would think that the retail investors would flock to this.

 
CFB Sicko said:
I really hope none of you knuckleheads are holding onto AMC still. It's upside is volume driven. RH has placed a restriction and consumer confidence is lower than ever after losing their asses off.
 

People are only going to be more desperate to sell closer to EOD and I don't think AH is going to be kind to you either.
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I’d rather lose the money. 

 
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