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Stock Thread (8 Viewers)

Desert_Power said:
Worth remembering that pension funds have been swindled into investing way too much in hedge funds.
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I would hope they are diversified investors.

I would also add that it is not a swindle if they invested in a hedge fund. A hedge fund for a pension fund should be part of the mix. 

 
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Desert_Power said:
Worth remembering that pension funds have been swindled into investing way too much in hedge funds.
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See, that's what gets me fired up.  "We need hedge funds for liquidity and to manage risk."  Oops, you just effed over a bunch of pension funds for people that actually work for a living making, doing, teaching and not leeching.

Go away hedge fund brats.  Get a real job.

 
BassNBrew said:
Lime networks up 15%

I think I'm the only one left, but Luckin up 9% and now a 3x for me.  Glad I followed @stbugs suggestion and sat on this.
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My suggestion? I bailed on both a while ago. The reinvested money did well but I had so little LK ($400) and I didn’t care about LLNW so I consolidated to other stuff.

 
Thinking out loud.  This is such new territory I'm working it out in my head.

  • u/####meintheass on reddit is holding 100 shares and sells at market
  • Bernie Madoff has sold 100 shares short at 16 and is backing that up with now 350 bucks.
  • Madoff now has to decide if he's willing to buy reddit guy's shares for his short-price
  • This money is now marked against him, as margin or taken out of pocket
Let's say there are more Madoffs than /u/WSBguys. 

  • In the above example all the Madoffs are bidding  against eachother to buy out WSB at the lowest price
  • In this situation the price has near infinite downward price momentum because the closers overweight the sellers.
  • Plus, now you have short sellers that have new positions (at 350 for example)
If the short sellers think they can collude, they can in theory start a near infinite drop, and really just need to get what? half of themselves on board?

 
culdeus said:
Thinking out loud.  This is such new territory I'm working it out in my head.

  • u/####meintheass on reddit is holding 100 shares and sells at market
  • Bernie Madoff has sold 100 shares short at 16 and is backing that up with now 350 bucks.
  • Madoff now has to decide if he's willing to buy reddit guy's shares for his short-price
  • This money is now marked against him, as margin or taken out of pocket
Let's say there are more Madoffs than /u/WSBguys. 

  • In the above example all the Madoffs are bidding  against eachother to buy out WSB at the lowest price
  • In this situation the price has near infinite downward price momentum because the closers overweight the sellers.
  • Plus, now you have short sellers that have new positions (at 350 for example)
If the short sellers think they can collude, they can in theory start a near infinite drop, and really just need to get what? half of themselves on board?
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I think we need to have a discussion of what happens if WSB decides to short amazon, Google, Facebook etc due to whatever reason. What would the play be?

 
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beef said:
Is Scott Wapner (cnbc host) the judges son?  End the show and bring Morgan Brennan on already.  :wub:
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Yeah she could get it.  Melissa Lee, who is on the last show, is always making filthy double entendres.  She's a dirty, and a super smart, lady.  Luv so much. :wub:

 
Some short trader sees a company he thinks will go down, so he borrows a share from a long with the promise to pay it back later. So he borrows from Investor A, sells to Investor B, and hopes to buy it back later at a lower market price and pocket the difference. Then he gets a call from Investor C, who also wants to be long in the company, and thinks "Great! Another idiot to make money off of!" and now needs to borrow a share to sell to the new guy. Who has one? Investor B, of course. So he borrows the share again from Investor B and sells it to Investor C. His hope is to buy it back later at a lower price, give it to B, then buy it from B and give it to A. He'll make money on every one of these transactions. 

The same share has been shorted twice, which is how you end up over 100% shorted.

Now, when the squeeze comes, he needs to buy a share at market price and give it back to B. Then, he needs to buy it again at market price from B to give it to A. The same share is going to change hands a bunch of times and he'll lose money on each trade. There's no reason to assume some retail long is going to get burned in this exchange. 

 
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shades said:
Some short trader sees a company he thinks will go down, so he borrows a share from a long with the promise to pay it back later. So he borrows from Investor A, sells to Investor B, and hopes to buy it back later at a lower market price and pocket the difference. Then he gets a call from Investor C, who also wants to be long in the company, and thinks "Great! Another idiot to make money off of!" and now needs to borrow a share to sell to the new guy. Who has one? Investor B, of course. So he borrows the share again from Investor B and sells it to Investor C. His hope is to buy it back later at a lower price, give it to C, then buy it from C and give it to B, then buy it again at a lower price and give it to A. He'll make money on every one of these transactions. 

The same share has been shorted twice, which is how you end up over 100% shorted.

Now, when the squeeze comes, he needs to buy a share at market price and give it back to C. Then, he needs to buy it again at market price from C to give it to B, then buy it again from B to give it to A. The same share is going to change hands a bunch of times and he'll lose money on each trade. There's no reason to assume some retail long is going to get burned in this exchange. 
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Look if you are long on this trade I would say get out. Keep your huge win as sometime the shorts will be unwound and stock will go closer to its real value. 

 
culdeus said:
Thinking out loud.  This is such new territory I'm working it out in my head.

  • u/####meintheass on reddit is holding 100 shares and sells at market
  • Bernie Madoff has sold 100 shares short at 16 and is backing that up with now 350 bucks.
  • Madoff now has to decide if he's willing to buy reddit guy's shares for his short-price
  • This money is now marked against him, as margin or taken out of pocket
Let's say there are more Madoffs than /u/WSBguys. 

  • In the above example all the Madoffs are bidding  against eachother to buy out WSB at the lowest price
  • In this situation the price has near infinite downward price momentum because the closers overweight the sellers.
  • Plus, now you have short sellers that have new positions (at 350 for example)
If the short sellers think they can collude, they can in theory start a near infinite drop, and really just need to get what? half of themselves on board?
Click to expand...
If the short sellers had infinite capital then they could wait it out.  But when you short something at $20 on margin and it is now worth $200, the bank comes calling (margin call) and says pay up now.  You now owe 10 times your investment and are being forced to cover (eventhough you know the price will eventually fall).  

In your bolded scenario above, there are more buyers then sellers, so the stock price goes up.  They are all trying to get it at the cheapest price, but the people selling aren't exactly tripping over themselves to sell it low.  The price goes up when you have more buyers.

 
So when the GME shorts finally are done getting killed (i.e. short position is well under 100% finally - and that is gonna take a while still) what do we think the GME price settles at (ie for lack of better term the 'honest' price)?  Just curious.

-QG

 
stbugs said:
My suggestion? I bailed on both a while ago. The reinvested money did well but I had so little LK ($400) and I didn’t care about LLNW so I consolidated to other stuff.
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When everyone was selling Luckin before the delist you suggested hanging onto some shares so I did. My $400 investment is now $1600+. 

 
Chaz McNulty said:
If the short sellers had infinite capital then they could wait it out.  But when you short something at $20 on margin and it is now worth $200, the bank comes calling (margin call) and says pay up now.  You now owe 10 times your investment and are being forced to cover (eventhough you know the price will eventually fall).  

In your bolded scenario above, there are more buyers then sellers, so the stock price goes up.  They are all trying to get it at the cheapest price, but the people selling aren't exactly tripping over themselves to sell it low.  The price goes up when you have more buyers.
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I'm trying to walk through a world where the sell volume is so large as everyone is jumping off that the short closers are looking for a way to get out, or not because they are colluding.  The voices in my head are confused.  I think I get where you are, but this requires WSB to keep coming back in with buy orders.  In my mind I'm seeing them all move off in unison more or less, or at worst hodl

 
To stop this scenario from happening in the future, wouldn't they just need to stop publishing the percentage of short shares in relation to the total.  If no one knows that a stock is shorted at over 100%, then this would be difficult to make work.

 
Chaz McNulty said:
To stop this scenario from happening in the future, wouldn't they just need to stop publishing the percentage of short shares in relation to the total.  If no one knows that a stock is shorted at over 100%, then this would be difficult to make work.
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I'm not sure I can get behind reducing the amount of information available to the public and thereby increasing the advantage of institutional investors over the general public. 

 
culdeus said:
I'm trying to walk through a world where the sell volume is so large as everyone is jumping off that the short closers are looking for a way to get out, or not because they are colluding.  The voices in my head are confused.  I think I get where you are, but this requires WSB to keep coming back in with buy orders.  In my mind I'm seeing them all move off in unison more or less, or at worst hodl
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I think where you might be getting confused is that the Shorts have to buy back the stock that they borrowed in the first place.  All the shorts are buying stock at $300 plus to cover their position.  

 
Sideshow Bob said:
If you were considering shorting it at $20, how much more money does it look like you can make shorting it at $319? Assume you're an arrogant ##### with a ton of access to $$, and you're certain the snowflakes will run out of stimulus money before you can possibly break.
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I confess that I don't know the ins and outs of shorting, but if they need to cover by the end of the day on Friday, then I don't see why anyone would jump to short it now. These reddit folks can clearly last out until Friday. However, given the chance to short it out a month, say, that seems like easy money. No way that the house of cards stands that long. Once folks start bailing to take profits, this thing is going to pop like an overinflated balloon.

 
pecorino said:
I confess that I don't know the ins and outs of shorting, but if they need to cover by the end of the day on Friday, then I don't see why anyone would jump to short it now. These reddit folks can clearly last out until Friday. However, given the chance to short it out a month, say, that seems like easy money. No way that the house of cards stands that long. Once folks start bailing to take profits, this thing is going to pop like an overinflated balloon.
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The Reddit folks definitely have the advantage in that they can see the percentage of shorted shares still out there.  If this doesn't move below 100% shorted, they can still hold knowing that eventually the shorts have to rebuy.

It does take balls of steel to short it at this point.  There are still 130% of shares shorted.  Why sell now if you are a long.

 
Chaz McNulty said:
The Reddit folks definitely have the advantage in that they can see the percentage of shorted shares still out there.  If this doesn't move below 100% shorted, they can still hold knowing that eventually the shorts have to rebuy.

It does take balls of steel to short it at this point.  There are still 130% of shares shorted.  Why sell now if you are a long.
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I teach game theory in the summer, granted with teenagers. But I know an unstable equilibrium when I see one. The "social contract" to hold and make the shorts twist in the wind cannot last. I'm impressed it's held this long.

 
pecorino said:
I teach game theory in the summer, granted with teenagers. But I know an unstable equilibrium when I see one. The "social contract" to hold and make the shorts twist in the wind cannot last. I'm impressed it's held this long.
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I agree.  I am surprised they are holding on this long.  It is probably working because most only bought a small amount.  The less at risk, the more you can afford to hold out.

 
Chaz McNulty said:
To stop this scenario from happening in the future, wouldn't they just need to stop publishing the percentage of short shares in relation to the total.  If no one knows that a stock is shorted at over 100%, then this would be difficult to make work.
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Nope.  100% disagree.  The availability of information is important for things to function right.  Before stepping out for a moment I saw that Wells Fargo is now publishing a list of heavily shorted stocks.  As this info is more widely paid attention to (it was after all already available) and people know about this play short sellers won't be so inclined to get themselves into this kind of position.  And as a result this marker inefficiency will disappear.

-QG

 
pecorino said:
I teach game theory in the summer, granted with teenagers. But I know an unstable equilibrium when I see one. The "social contract" to hold and make the shorts twist in the wind cannot last. I'm impressed it's held this long.
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I am too but some of these folks really want to change the world/burn down the system. Gonna be a fascinating week or whatever. 

 
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