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WallStreetBets vs WallStreet: It's not about the money anymore (thinkingthrough.substack.com)
344 points by maddynator 9 months ago | hide | past | favorite | 458 comments

Once again, this insistence on viewing 'Wall Street' as a monolothic entity. The largest asset management firm on Earth holds over 9 million Gamestop stock, none of the big banks that received bailouts in 08 are affected by this, 99.9% of hedge funds are not affected by this, high frequency traders are probably making a bundle. Institutional money was long Gamestop before this story entered the public consciousness. The idea of governments stepping in to bolster hedge funds is ludicrous, the whole point is that the government and SEC is hands off with them.

Ultimately, a few medium-sized hedge funds were caught doing something stupid and the market has rightfully taught them a lesson. It's great that retail investors got in on a high-level play like this and made money.

> high frequency traders are probably making a bundle.

I've heard from a former colleague at a major HFT firm, that they hit their entire revenue target for the year, just in the past week.

That is very interesting to hear! I imagined that this was the perfect storm for HFT. Lots of retail investors using default exchange routing settings via brokers like Robinhood and ETrade that sell their order flow. Meanwhile these retail investors are buying small amounts of very volatile equities! Lots of opportunity to rack up lots of pennies.

So RobinHood is stealing information from the poor to give to the rich? To make them richer? Surely I am not the first to notice this irony.

To stretch the analogy, the equivalent of an HFT firm in English folklore would probably be a toll-road operator; or a city-state customs officer accepting lesser private bribes in place of levying greater official tariffs on imported goods.

Robin Hood, by stealing from the rich and giving to the poor (in a period with commodity currency with no monetary policy), would be encouraging deal-flow (as the rich traders stolen from need to send the same goods again to fulfill their contracts; and the poor now have money to spend to purchase exotic goods, requiring more be imported by traders), in turn increasing travel on the toll-road/through the customs office, in turn making the toll-road operator/customs officer money. It would make perfect sense for the mythical Robin Hood to, in fact, be a toll-road operator/customs officer — or at least to be in cahoots with them.

(In fact, come to think of it, he wouldn't even need to steal from the rich, per se. He could just destroy trade caravans, and collect a cut of the revenue from the toll-booth operators; or destroy goods already imported but not yet sold, and collect a cut from the customs office; and then distribute said cut to the poor. The same virtuous(?) cycle would occur.)

Yeah, RobinHood and Citadel Securities (that has been backing most of the options trades here) aren't at all the good guys either. Almost all of Wall Street is a money shuffle, and the "free" trades at retail had plenty of hands skimming the pot and making their own profits.

Then one of two thing is true.

1) they are lying to you. Look at how much the stock has traded, Its alot but its nothing compared to how much SPY trades in a year. There just wasn't' anywhere near enough trading volume to make an entire year in one week even if they participated in every trade that Gamestop had this past week.

2) they lost money last year so any profit beats last year's pnl?

GME has been trading at $2 spreads. SPY trades at $0.01 spreads.

Fully aware

I’m in the industry. I stand by what I said:)

You said something that was flagrantly wrong, I’m just trying to help correct you.

I’m in the industry too.

Average PnL per share traded for a firm doing okay is about $0.001. A decent size firm might do 4% of ADV. Tape A trades about 1.5 billion shares per day. That’s 21 million annual trading revenue.

GME traded 1 billion shares in the past week. PnL per share has been averaging close to $0.40. At 6% ADV (HFT market share spikes during volatile periods), that’s 24 million in revenue.

Or (3) they got hit on some GME paper at the outset out of pure luck, and printed the gamma much higher. SPY volume is higher but SPY doesn't realize like GME has.

I can tell you're in the industry because you say pnl instead of p&l haha.

Or the spreads/volatility of GME is big/frothy enough that they can make much more per trade

What kind of self-respecting HFT firm has revenue targets? Surely you're talking about P&L.

Trading revenue. As in “Goldman reported trading revenue of $X”

They're nearly the same thing in the hedge fund's case. Most of them take some variant of 2&20 still, so 20% of fund profits is their revenue.

HFT shops are not hedge funds.

They don't need much capital, and I'd say that many have no outside investors. So, their trading PnL minus cost of running the operation is the net profit.

On the other hand, the trading PnL will typically be a tiny part of their total trading volume (maybe a few bp).

HFTs are not hedgefunds and generally are marketmakers.

Sure, but Gabe Plotkin is the uber-wallstreeter. All the rich-but-average Chosen Ones who get internships because of mommy and daddy look at what guys like him accomplish and think, "someday that too can be mine."

This is like that scene in 300 where Leonidas makes Xerxes bleed. The point isn't that Wall Street has fallen. It's that, for once, Wall Street is fallible.

I can't see how that's the case. They aren't going to suffer for this, let alone personally.

Even if the fund tanks, they can set up a new one, probably with sympathetic money or just cruise off into the sunset with their millions.

They're so disconnected that losing billions doesn't matter?

The problem is bigger than originally conceived then.

Its nice that more people are coming to this realization, though I'll admit that it's a bit funny that this, of all events, is what's making people realize that extreme wealth disparity is a problem.

The existence of billionaires isn't even good for the free market, let alone free society. In order for a market to be rational, the threat of losing money has to actually mean something, which it doesn't for the ultra-rich.

Eh. The problem isn't that billions or billionaires exist at all. I see no issue with that.

The problem is systems that resist merit. You make terrible investment decisions with the portfolio but it doesn't matter? (I think it will matter FWIW.)

In what way do you think it will matter? Can you be more specific?

He'll be regarded as the moron that shorted a stock 140%(!!!) and then got caught

There doesn't seem to be any singular person in this case to assign such fault to; best I can tell the over-shorting was caused by multiple firms acting independently, and I'd guess that the orders were signed off on by multiple people at each firm (and I'm not inclined to suspect any collusion here; in a thunderstorm people sell umbrellas, and in a pandemic people short retail).

In the meantime, the billionaire owner of Citadel (the company that just made tons of money by front-running all these retail investor trades via their data harvesting contract with Robinhood) just used some of that freshly-acquired cash to buy a stake in Melvin (the company that those retail investors just tanked) for pennies on the dollar. The feel-good rage of WSB serves as a convenient smokescreen for the rich getting richer.

> The problem is bigger than originally conceived then.

You're starting to get it.

It matters to the investors in the hedge fund. It matters a lot less to the people running it.

Wall Street is driven by money, relationships, and reputation. Obviously, Plotkin lost money here in terms of his this-year payout. But I believe he also takes a hit in other ways.

On Money: Plotkin's fund lost money for his investors, all of whom are rich people who will be upset with him. There will probably be some redemptions, and AUM will go down -- not just because he lost some of it, but because investors will pull out some of what remains.

On Reputation: Plotkin ends up with egg on his face because he held the bag for a bunch of mom-and-pop investors on Robin Hood. You know how Soros is known for famously breaking the Pound Sterling? Plotkin is now known for infamously being broken by GME.

On Relationships: Plotkin lost even after getting an injection of liquidity from Cohen and Griffin. That can't be good for his standing with those two power players.

"Hedge fund managers typically have a substantial amount of their own capital invested in the funds they manage, and a significant portion of their compensation is based upon the absolute, or positive, performance they achieve for their investors. As New York Attorney General Eliot Spitzer observed recently, the interests of hedge fund managers and their investors tend to be "aligned", largely due to this combination of the managers' commitment of capital to their funds and the performance-based compensation structure."


Loosing billions still hurts a lot I would guess.

The fund and it's investors may lose a lot. The people running the fund will not. But it's important to remember that it's a matter of scale here. Billions is a lot to a midwestern retail worker who put half his rent check into a volatile stock. It's not a lot to large groups of already-wealthy investors who have a portion of their portfolio invested with this one fund.

It's not their money, it's the money from LPs who invested in the fund.

If you know the term LPs you should know the typically senior management at hedge funds have a significant portion of their net worth invested in their own funds.

You don't think losing his fund would have any personal or reputational effect on him, just because he has plenty of money to live, or do something else?

I don't buy it.

While I enjoy the esprit de corp of this particular discussion, the recurring allusions to "David vs Goliath"-esque tales are rather cringe-inducing and really speak to the maturity level of those involved (if that wasn't already clear by their "tendies").

The image I have in my head is less LOTR defenders or David(s) vs Goliath, and more of a horde of zombies that broke through a barrier and jumped some guards, but are about to be mowed down by a well-armed group behind a barricade. This isn't going to end well for the retailers - but hell if isn't sending a message.

Also the collateral damage is going to be more interesting to follow than the financials themselves. Already Discord and RobinHood painted themselves as enemies of the people - whether this was their least bad option legally, or they were influenced by Wall Street is immaterial - it's already viewed as the latter. Couple that with other high-profile bans by social media platforms this year (and it's not even February!), and I can see a lot of regular people all across the political spectrum who feel abused by big, rich companies. I think the last time we saw this kind of energy on the Internet, it led to Scientology protests, Occupy WallStreet and the Arab Spring...

I would have imagined you could read the business category of any major news outlet on any given day and see the fallibility, but I think you're right that that may be a common interpretation of this event.

How is disabling purchases and broker-wide outages not bolstering hedge funds?

It's government intervention no matter how you look at it. Just because it's not a direct capital infusion does not make it any less bad

Not sure if I missed something but did the government intervene here? I thought it was all private entities that stopped the trading?

The line is blurry.

There was an immediate and emphatic appeal to the regulators, and the way the SEC works is often by encouraging self regulation. The CEO of the NASDAQ even went on air to ask for more SEC regulation.

This isn't unusual, it's pretty much how "government intervention" via the SEC, and a lot of other regulatory bodies, actually works.

So, the SEC is hands off and encourages self regulation, so any instance of self regulation is considered government intervention?

Probably not any, but my understanding is that the answer to that is mostly yes because much of the incentive for these entities to self-regulate comes from the threat of worse-for-them regulations from SEC if they fail to do so in a way that SEC feels good about, and they spend a fair bit of energy communicating back and forth what those ways are, even if it's not made explicit on paper.

Look at the language of SEC (and other regulators outside of technical fields like pharma).

There are very occasional "landmark" regulations, often legislated, that are explicit. EG Sarbanes-Oxley.

Day-2-day, the SEC works mostly by signalling. They might make a policy declaration, or send letters to CEOs. They'll note things in periodic firm reviews. Publicly raise an eyebrow. Take action against or investigate one firm and publish findings. Rarely are specifically worded edicts issued.

Regulating bodies are designed to work largely through pressure instead of (ironically) through regulations. This is by design. Regulators are usually created in response to firms having won the loophole cat and mouse games, and the prohibitive complexity of actual regulations. If government wanted rules, they can just legislate directly instead of delegating to a regulator.

"Compliance" is often about staying away from trouble by playing a sort of guessing game. It doesn't mean that it's "hands off."

Agreed, but one point:

> Regulators are usually created in response to firms having won the loophole cat and mouse games, and the prohibitive complexity of actual regulations. If government wanted rules, they can just legislate directly instead of delegating to a regulator.

Large motivation to create regulatory bodies is expertise and focus on one (or more related) subject, and these regulatory bodies often simply recommend to the government/legislators and do the management the law mandates.

IMHO this 'suggestive' mode of operation is not usual outside of finance. (I might be wrong though, I have never seen a full list of regulatory bodies.)

Yes, when SEC asks for something it's considered governmental intervention even though they technically don't force it.

...Exactly. This is by design. It's what regulators are designed to do. Medical/pharma is an exception. Usually regulators are designed to wield pressure. For long term goals, they usually steer towards more explicit "industry standards" that they can back... but they rarely author them.

For shorter term and more operational issues, pressure is the main toolkit.

How is disabling purchases and broker-wide outages not bolstering hedge funds?

There are hedge funds on both sides of this bet. So this intervention is both helping and harming "hedge funds" in equal measure depending on what side they have taken.

Buying vs. Selling Short do not carry equal amounts of risk. They are not balanced sides of the equation.

Trading through Royal Bank of Canada's platform has been down all morning.


>It's government intervention no matter how you look at it.

Is it? Do we have some information on that yet?

Why does disabling purchases help?

It prevents more people from piling onto the short squeeze?

(It also prevents J. Naive Trader from buying into this train wreck and losing a bucket of money when the bottom falls out, which it will.)

in the current situation, I don't think that private buyers trying the short squeeze (for which you have to hold) are really the driving force anymore. I think someone at robinhood had the (good) idea that at the current price, most people can realize a nice buck (by selling), while allowing them to buy a stock, which will probably go down a factor of 200 over the next year and currently fluctuates -50%/100% on a 20minute schedule required a casino license.

The whole idea of the short squeeze is that the hedgefunds can't buy anything anymore and the lenders want their stuff back. And if they are still overshorted and the lenders don't like to bleed them first, before initiating the squeeze I don't think that this somehow hurts retail investors. Maybe it benefits the lenders who can nicely bleed both shortsellers and the WSB+muskalike-crowd, but at the current price, where the stock has actually gone up quite a bit but stabilized, it seems quite clear that this thing is decided by the lenders now. Do they want to play the crazy game for a near bankrupt company and demand their loans from Melvin or Co. (which would probably result in fast default and them not seeing a substantial amount of their shares again with the others reduced to a pennystock) or do they just sail along, taxing the narcissistic sociopaths on one side, while slowly selling off their actual stock to then be bought by those and returned to them. I guess they decided for option 2 and I think they are not as dumb and chaddy as they look to you ;).


Just take a look at the shareholders and count how many shares those institutional have: https://money.cnn.com/quote/shareholders/shareholders.html?s...

It's Wall Street vs Wall Street - redditors were just the catalyst, and will be left holding the bag.

What's surprising is all the concern for redditors here and elsewhere; whilst the overwhelming vibe from r/wsb is this meme resulting in squeeze is strictly personal and not at all business for most that are holding on.

The rest (presumably greedy) are either making money or losing money because they're either riding up with the market or down. That's a feature of the zero-sum game that the financial system has been reduced to both the benefit and the detriment of the greed that's on all sides of the table.

Because the vibe you would want to make for a pump and dump scheme is an emotional hold it forever mindset.

There's no distinction between the two, if you have that mindset you will be left holding the bag even if you think you won.

Right now it looks like retail investors stuck it to Wall Street and made some money because GME is still over $400/share this morning. Everyone holding GME can look at their app and feel great.

But not everyone is going to be able to sell it at $400... or even $100 in some cases. It will be interesting to see how everyone feels after the sell off.

GME is still over $400/share this morning

Guess what's changed in the 56 minutes since you posted this?

GME: $265.00

Though I think it had dipped into around $380 by the time of parent post, and heading down. But someone bought at $430 this morning.

Is this a surprise? Tons of people wanted to buy GME this morning and were mad that Robinhood was preventing them.

We won’t know for days who makes money and who doesn’t. It certainly won’t be everyone.

For a lot of people buying GME, it's not about making money. It's about sticking it to hedgers that they feel didn't just expect GameStop to file bankruptcy but hoped for it.

Sure, once the squeeze is over they'll be holding expensive stock in a fundamentally near-worthless company. But then, they're probably Bitcoin believers too.

I think the argument remains that GME is not fundamentally a near-worthless company and some of these investors are probably right that it was hugely undervalued by all the funds shorting it (maybe not to the tune of $400 a share, but many of those investors have seemed to have been whales, not average joes). Retail is down in the pandemic, but it is not out. My opinions that GME is the biggest pawn shop operation in the US makes me look down on the shops from a high horse that I don't currently feel a need in my personal life for pawn shops, but America as whole will always need pawn shops.


> Short interest as a percentage of float above 20% is extremely high

> A high NYSE short interest ratio means that the stock market as a whole is vulnerable to a “short-squeeze.” It could rise quickly if new economic data, political news, or other types of information are released that make investors more optimistic.

GME was shorted 140%.

No idea if 20% being risky is sage advice but it seems like you're totally right: some hedge funds took on a massive risk, the market saw the opportunity and played the other side.

I'm pretty stupid on this, but how does one short for +100% is that not naked shoring ?

From https://www.bloomberg.com/opinion/articles/2021-01-25/the-ga...:

There are 100 shares. A owns 90 of them, B owns 10. A lends her 90 shares to C, who shorts them all to D. Now A owns 90 shares, B owns 10 and D owns 90—there are 100 shares outstanding, but190 shares show up on ownership lists. (The accounts balance because C owes 90 shares to A, giving C, in a sense, negative 90 shares.) Short interest is 90 shares out of 100 outstanding. Now D lends her 90 shares to E, who shorts them all to F. Now A owns 90, B 10, D 90 and F 90, for a total of 280 shares. Short interest is 180 shares out of 100 outstanding. No problem! No big deal! You can just keep re-borrowing the shares. F can lend them to G! It's fine.

Entity A holds 100 shares and lends 80 to B, who shorts it by selling it to C, who lends 60 to D, who shorts it by selling it to E.

Now there are 240 long positions (100 A, 80 C, 60 E), and 140 short positions (80 B, 60 D), for a net 100 long, as before.

Short interest is 140/100 = 140% of the shares outstanding.

Oh, and by the way: Now A has 20 shares left (out of a 100 long position), C has 20 shares left (out of a 80 long position), and E has 60 shares (out of 60 long position).

Now assume that entity E is redditors/RobinHood/financial justice warriors that pledge to hold, and not let anyone borrow their shares, to squeeze the bad bad shorts B and D. So, FJW/HODLers control 60% of the shares now, and will never ever lend or sell!

A: 100 long (=20 shares, 80 lent), B: 80 short (=0 shares, 80 borrowed), A+B together net 20 long (the rest is held by C, D, E)

Well, so no A can sell, say 10 shares to B:

A: 90 long (=10 shares, 80 lent), B: 70 short (=10 shares, 80 borrowed), A+B together net 20 long (the rest is held by C, D, E)

And now, B returns those same 10 shares to A:

A: 90 long (=20 shares, 70 lent), B: 70 short (=0 shares, 70 borrowed), A+B together net 20 long (the rest is held by C, D, E)

Well, so no A can sell, again, say 10 shares to B:

A: 80 long (=10 shares, 70 lent), B: 60 short (=10 shares, 70 borrowed), A+B together net 20 long (the rest is held by C, D, E)

And now, B returns those same 10 shares to A:

A: 80 long (=20 shares, 60 lent), B: 60 short (=0 shares, 60 borrowed), A+B together net 20 long (the rest is held by C, D, E)

As you see, with only 10 shares circulating, and 60 shares in the hands of HODLers, B can happily reduce their short exposure. Let those shares circulate in this manner a bit more, and you end up with:

A: 20 long (=20 shares, 0 lent), B: 0 short (=0 shares, 0 borrowed), A+B together net 20 long (the rest is held by C, D, E)

Now, B is out of their short and flat, A has the same 20 shares it had at the beginning, and only a 20 long position now, and C, D, E keep holding their 80 shares net together.

Now, C,D can also drive down their position, we end up with A holding 20 shares, C holding 20 shares, and E holding 60 shares.

TL;DR: as long as 1 share is circulating, the shorts can reduce their position to zero, even if the majority of shares is held by never-lenders, never-sellers.

And now the market can collapse, and E is left holding the bag.

This is fascinating. Is Melvin Capital the "B" in this situation, and that's how they "closed their short positions" earlier today? It just shuffled hands between the other funds?

When you short a share, you borrow a share from someone who owns it and sell that share to someone else.

If the person who bought the shorted share lends it to someone else to short, one share has been shorted twice.

They are naked shorting. This is why wsb is so eager to destroy them.

When you buy a share and return it to the lender, you can buy it again from the lender. 200%, not naked.

This story is far less dramatic than the media is making it out to be. Short-sellers are a fringe group within the industry who often totally fail on trades (short selling is a pretty risky bet with an unlimited downside). This situation is definitely not monumental or new. Retail investors have been pumping stocks for the last 100 years. They contributed to the crash of 1929 and the dot com bubble, for instance. No they didn't have a subreddit to express themselves, they instead were driven by newspapers and pundits to direct their trades, but a similar premise nonetheless.

A lens to look at this through is - "why is short selling allowed?" Advocates cite increased "liquidity." But, does society really benefit? Short-selling really just lets trading firms extract value from the failure of others. In that sense - professional trading firms that participate in short-selling could be grouped into a monolithic "Wall Street" in the sense that they are extracting value without a benefit for society.

Most advocates argue that short-sellers help find the accurate price of a security, in service of the broader market goal of capital allocation. People who argue that markets should be long-only wind up advocating for frauds and failures to be mispriced in the market.

Liquidity is not usually the primary benefit. That’s usually the argument for high frequency trading firms.

It's a little on the nose when wsb is happy that Michael Burry bought into GME about a year ago?

It's almost like they forgot who Christian Bale portrayed in that movie.

Being on the short side isn't a problem per se. Having 140% short float is.

A company existing is not just automatically a good thing. If there weren't any Gamestop stores anymore that opens up the retail space for, say, Micro Center or Fry's Electronics to step in and fill that role and do a better job, create more jobs, etc. That's true also for all the other resources Gamestop consumes, their exclusive contracts with businesses, pre-order bonuses, underpaid labor, whatever.

There's a term, 'Zombie Corporations' for businesses that are both stagnant and also generally aren't very beloved by their customers, but are still able to stay in business due to some localized monopolistic factors. Those kinds of companies exist in every sector and still 'make money' but they're usually the kind of companies short sellers target.

Getting rid of them is not some fundamental ill of society - yes it could in theory make some people lose their jobs, but it also keeps the economy going. If this kind of things didn't happen it would be impossible for new businesses to come up and with those new businesses new job creation, new ideas, etc.

The act of shorting a stock puts downward pressure on the stock price, similar to the way buying a stock puts upward pressure on it.

Suppose you see an ongoing pump-n-dump---sketchy pseudoinformation being passed around to raise the price of a stock someone has already bought, so they can sell later. If you short the stock, you act to reduce the price excursion and potentially help the eventual victims.

Suppose it's not a pump-n-dump, but rather "irrational exuberance"---people buying a stock and raising the share price for non-economic reasons. Short selling applies alternate pressure on the stock price, reducing the effects of a subsequent correction.

No, advocates cite improved "price discovery". You know, the only rational reason why stock markets exist in the first place.

Markets also exist for capital allocation.

Yes, and in order to have efficient capital allocation, you need price discovery.

Personally, I am not a fan of shorting but in addition to "liquidity" there is also "price discovery". Using excess leverage to short and floating 150% of the shares short is potentially a problem but the same would be true if it was the reverse (ie. buy or long positions). Price manipulation is the real problem here.

Given more capital and a reasonable amount of time, the short sellers in this instance will be correct. The value of the GameStop stock using commonly accepted valuation methods of our day is much lower than $300 or even $100 per share. Unfortunately brick-and-mortar companies with declining revenue and no visible growth prospects are valued differently than high flying tech stocks. Keep in mind that I understand the rules of the game dictate that shorts can be squeezed and the share does not have to trade at the commonly accepted valuation.

If stocks prices being close to their true value is beneficial to society, then traditional short selling is also beneficial.

Another reason is hedging, a form of insurance.

because it’s a free country. why would we restrict people from taking loans and who is the government to say the loan has to be denominated in dollars instead of shares?

short sellers have also discovered a lot of fraud companies because they have a monetary incentive

and for society as a whole, we should want the markets to price things accurately. things that are overpriced just means capital that isn’t being used somewhere else efficiently

it may seem ugly but capitalism is creative destruction. it’s an evolutionary system, the weak need to die so the strong can thrive

I was wondering if this was really a pump and dump made to look like a short squeeze. Now I'm 100% convinced that this is what it is. All those people buying a couple hundred shares via Robinhood are going to lose their shirts.

> a few medium-sized hedge funds were caught doing something stupid and the market has rightfully taught them a lesson.

Individually, what they were doing (shorting that stock) might have been perfectly sensible. That they collectively overshorted made them vulnerable. I'm not convinced yet that it was stupid.

All those institutions are interconnected. A large hit to one player can cascade to the wider market as they're forced to sell off other positions to put up additional capital. That could cause additional sell-offs for more leveraged players. And so on... The phrase "too big to fail" exists for a reason and it's smaller than you think.

Forcing big leveraged players to sell is fantastic for everyone else. There will be a lot of cheap stocks to pick up for everyone else.

Assuming that you are in cash or another asset class that isn't being sold off.

No need for that assumption. Equities going down is not a problem for reasonable investors. You just buy more for cheaper prices according to your schedule and wait. You still own the % of your companies. It's not worth less just because you can't temporarily sell it. It would be like saying that price of your house is fluctuating from 0 to 500k depending if there is a potential buyer today or not.

Stock market crash is only a big problem for leveraged over commited entities, very small inconvenience for people beyond accumulation phase (as they may need to sell very small % of assets in coming months) and huge opportunity for everyone else.

Stocks crashing is fantastic for a little guy. It's the same with real estate prices and it's the reason entrenched players do everything to prevent it.

Or just that you have some kind of disposable income.

Sell, what exactly? They won't buy after that?

It's hard to know exactly what the repercussions were, but in my experience a lot of stocks were down yesterday, including some FAANG's and the like down 5-10%. Those numbers aren't likely to be permanent, so anyone who wanted to buy anyways got a 5-10% discount.

> Ultimately, a few medium-sized hedge funds were caught doing something stupid

Shorting a company that sells a physical product in malls during a pandemic is stupid? It seems their intuition is correct but there was a black swan event.

Shorting a company to the extent that you have enough leverage to go bankrupt? Not the brightest move. Shorting it so that you may not be physically able to satisfy the sales? That's window-licking territory.

Like everything, it’s a matter of degree.

Would I start a company to sell physical video games, in malls, in a pandemic? Hell no.

Would I short it to the extent that it the shares become ‘rare’ enough to induce a lot of demand? Also, hell no.

Both extremes are....not clever.

Some retail investors made money. The rest that are still jumping in will lose a lot as the stock returns to it’s correct price over time.

As repeated Reddit, the shorts are still oversubscribed and the short squeeze has yet to start. Retail investors are around 15% -- there are many index funds that are invested, perhaps they might be the last ones holding? Even so, I'll be damned if I understand anything about this.

I think it's interesting that "accredited investors" (e.g. 1MM in assets) can unionize to play in the stock market (e.g. hedge funds) but that the majority of Americans aren't permitted to unionize due to SEC rules. They are stuck with index funds. It's like we only allow top earners to be wolves and force everyone else to be sheep.

Looking at this, I guess it's safe to say that the WSB-crowd won't pull of the short squeeze: https://money.cnn.com/quote/shareholders/shareholders.html?s...... it's institutional investors lending their stock out and buying it back...

It can't go tits up!

So the smart money is to short it?


Yep, and this is a particularly silly article. One group of investors caught another group making a spectacularly poor decision. It just happens that the first group are retail traders (I'm not sure I would call them "investors").

>> this insistence on viewing 'Wall Street' as a monolithic entity.

That's not a fair statement. "Wall Street" isn't viewed as a monolithic entity. It's viewed as an entity, or industry. In fairness, Wall Street is even more insular than other industries that we happily refer to as a group: Petrogas, real estate developers, silicon valley, etc.

Thank you, I appreciate this level headed response. The populist outrage fueled by anonymous Reddit users who are often either lying outright or wildly speculating is completely out of control.

We really need to get those vaccines out, people are going insane...

I agree with this mostly, but you can't deny that the swift action Wall Street firms/brokers have made to protect the interests of those effected hedge funds.

What is worrying, is that a lot of people are going to be left holding the bag.. And I dont see this retail trading squeeze not hurting some regular retail investors..

I'm wondering about this. I was a little skeptical of the whole David-vs-Goliath bring-down-wall-st thing. But if it's really true that this is just one small and low-relevance hedge fund getting their ass handed to them for doing something dumb, then why does it feel like there's a whole machine trying so hard to tear down /r/wallstreetbets and distort the entire retail investing market to stop it?

Why did Discord ban their server on a flimsy pretext right at the height of the attention? Why is there a sudden flood of articles about how this is all so very concerning in the mainstream financial press? Why are they mobilizing the universal weapon of calling everything they don't like Nazis?

Nobody cares about these two hedge funds in particular, but they are concerned in general about retail investors having some way to band together to move a (very small) market. If it can happen to one fund it can happen to any random fund on Wall Street and that kind of risk and uncertainty can’t be allowed.

Same mentality when companies that try to fight unions forming, even those forming at their competitors. A few Amazon employees want to form a union? The entire retail industry will suddenly show their support for Amazon. Can’t set the president of allowing the little guy anywhere to get used to being able to band together and take collective action.

Because like anything that gets suddenly popular, r/wsb and discord wsb got flooded with spammers.

don’t forget the pensioners whose money is in the hedge fund

Unconvincing. We're all playing in the same pool. It only takes one upset stomach to set off a chain reaction.

>the market has rightfully taught them a lesson

Has it? What leads you to believe that THIS is the time investment firms will stop being reckless?

Where did I say that? They've been taught a lesson via losing a lot of money, and now they know will be a lot of eyeballs on any future trades of a similar nature.

How is that a lesson? What consequences have they endured that will affect their future behavior? "Eyeballs" is not a lesson.

Losing billions of dollars in one of the biggest trading stories ever seems fairly consequential and will likely affect their future behaviour. That combined with the newfound knowledge that the type of trade they made can be picked up on and exploited is also likely to affect their future behaviour (i.e. don't do that again).

These are shame-based punishments, what happens if these people have no shame?

$3B is not shame.

Sure it is, and most of us have enough capacity for shame that it works on us. Do you think Bernie Madoff feels ashamed about the money he lost? People who have no shame are very powerful, which is exactly why we need actual, meaningful punishment for people like this.

Ah the good old "it's just some bad apples", the system is great, trust it.

I'm not talking about good vs. bad, but winner vs. loser. This is Wall St vs Wall St with retail investors taking some off the top on one side. This is not retail investors vs Wall St.

Retail is getting fleeced also.

They are blocking buying, and only allowing selling GME, BB and others.

How is this not evidence of a corrupted free market system? A CEO of one company can call up his connections in retail trading platform firms, CNBC, and Nasdaq and protect his profits? Why is Reddit the scandal and not that?

Reddit is full of rocket emojis and YOLO jokes. But what we see here, especially with the moralizing about gambling, is an elitism on full display.

The people are sick of it.

Robinhood is a free service. The customers don’t pay anything. If the order internalizers decide to stop paying them for their order flow, then they have to route to the exchanges. which charge fees.

Trading is still ongoing at the exchanges. It’s just the free platforms, where it’s shut down. If someone wanted guaranteed access to the exchange, then they shouldn’t have used a free broker. Are you saying that Robinhood should be forced to continue providing a free service at a loss?

Yes. They should be forced to provide the service they promised. It’s not my fault their business model is failing for a particular ticker on a particular day.

If they can’t, then some advance notice is needed. Making this decision instantly without giving customers time to move their holdings elsewhere is not okay.

That being said, I’m surprised people are still using them for day trading. They don’t have a great track record.

> They should be forced to provide the service they promised

Read the TOS. This was never promised.

Yeah, TOS's are famous for being one-sided and permitting all sorts of bad behavior. And for not matching the marketing promises of the product they're attached to.

They may be legally entitled to do what they've done. That doesn't make it right.

My comment is an "ought" comment, more than an "is" comment. Regulation should moot TOS's that allow this kind of rug-pulling.

This is exactly why people don't like Wall Street. It's smart to pay attention to the TOS pragmatically to protect yourself, but the TOS has absolutely no ethical relevance. To people with a well-adjusted ethical compass, a trading platform blocking trades is a violation of their social contract.

You should be aware that if you're citing the TOS in any context other than a court case, most people are going to like you less as a result.

You can't expect a reasonable person to read the TOS. They have a reasonable expectation to get the same service as any other day, even if this conflicts with Robinhood's business model, unless Robinhood made their expected behavior abundantly clear in advance.

>It’s not my fault their business model is failing for a particular ticker on a particular day.

As I see it, regardless of how it should be, one needs to accept that trading with RH has limitations/trade-offs compared to a "proper" brokerage. I get your statement, but like you said, their track record already speaks for itself.

It's not just RH. I am paying for Interactive Brokers, they also stopped buy transactions.

Oh wow. I've always thought IB to be the most "bare metal" trading platform available to regular people. If they're denying buy orders, then where does a plebe go to get direct access to the market?

> where does a plebe go to get direct access to the market?

If you have direct access to the market, you go directly to the market (i.e., have a seat on the exchange.) Also, you very much aren't a plebe in that case.

Fidelity is free and has been giving me full reign over my own assets.

> It’s not my fault their business model is failing

"You" (well not you but you get what i'm saying) picked the service...

If folks are capable of investing directly in stocks they should be expected to understand the ramifications of picking a free service like Robinhood.

They ESPECIALLY should with all this populist banter going around...

Yeah, I agree picking RH to do this isn't very smart. But I can hold both ideas in my head ("RH, don't do that", "You, don't pick RH")

But apparently Interactive Brokers is now doing the same. Much stronger argument to be made there. They're a pay service, with supposedly big-boy ideas about their clients, right?

EDIT: Also, note that Robinhood's decision isn't just affecting their own clients. They're screwing the wider market by restricting the pool of buyers. People who have no relationship with RH are now seeing their holdings lose value because fewer bids are making it to the books. I'm a TDA client. I didn't agree to Robinhood's TOS.

> a free service like Robinhood

And pretty much every other broker on the planet who made trading stocks free?

How is a user, no matter how "capable", supposed to predict this?

The majority of all e-brokers have made the same choice. This isn’t about Robinhood being for dummies or selling your data or any of that.

If you put the wrong oil in your car because you got it for free, and your engine failed then whose fault is it? If it's the wrong grade then it's the wrong oil, even if it says it's "high performance*".

I'm a casual investor at best. I have some investments as savings through the bank, and use WealthSimple Trade here in Canada. It charges fees. It hasn't gone down. I still wouldn't trust it for any volatile action as they alert me well in advance that they have a delay of about 15 minutes. I don't expect anything more from that. I also wouldn't buy anything with the intention of time-critical sells there. If I cared more, I'd seek using a higher-performing platform. (Also worth noting, they never pinched any buys or sells during this fiasco. What's the old adage: "you get what you pay for". I don't see how this situation is any different)

>If you put the wrong oil in your car because you got it for free, and your engine failed then whose fault is it? If it's the wrong grade then it's the wrong oil, even if it says it's "high performance*".

If someone gave you that oil under fraudulent pretenses then it would absolutely be their fault..

Now to say that Robinhood is engaging in outright fraud, but having your service expectations subverted like this is going to rightfully piss people off whether or not the underlying service is free. There's all sorts of malfeasance that Robinhood could engage in with its free service that would clearly be unethical/illegal.

But they didn't. The oil just sat on the shelf, and they picked it out because it was free.

I’m not following your analogy here. If a bottle of “10-40W” oil is offered to me for free, but it really contains olive oil, it’s my fault for trusting the label?

I mean, pragmatically speaking a buyer should be more wary of a situation like this. But motor oil is not the same thing as brokerages. It is very common for trades to be executed with no fee these days. It’s a market norm.

It is not a market norm at AutoZone to have $5 quarts of oil sitting next to free quarts of oil.

Add in any case, ethically speaking, it is still the fault of whoever mislabeled that olive oil.

I'm saying the oil is not labelled 10-40W, but is actually 2-cycle motor oil and they put it in their car anyway.

I'm an outsider, but that's how this appears to me. They weren't lied to, they misjudged—and mainly because of a lack of understanding.

Traditionally, acting without understanding but still a high degree of confidence was called hubris.

And it appears the institutional traders expressed hubris when they over-leveraged, and this subset of retail investors expressed hubris when they didn't properly understand the capabilities and limitations of the app they decided to use to engage with the stock market.

I haven't seen people on other platforms complain in the same ways. I mean, for instance I haven't been restricted on my platform. I haven't heard anything about Questrade or E-Trade or anything.

To go back to my contrived motor analogies, it looks like a lot of people also expected a lawnmower to compete with a Tercel, never mind a Ferrari.

That's more reasonable. However, the lawnmower or the Tercel are machines that have inherent limitations.

RH's decision here isn't an inherent limitation of their platform. It's an active decision they made. One they did not have to.

Also, what RH has done isn't harming just their own customers, but the entire market. People using Questrade or E-trade are finding that they have fewer buyers for their shares. If RH is going to act like a Tercel on the racetrack, they have no business entering the race in the first place. They're a danger to the other participants.

(BTW, analogies are fun. Thanks for the opportunity to torture them like this :)

I think you've got a point there, if I'm reading you correctly:

If Robinhood (et al—sorry RH you're the de facto stand-in now) can't meet the standard of keeping up with the ... other cars in the race... then they shouldn't be allowed to enter. In that case, the analogy helps since most races have minimum qualifier rounds before you're allowed to enter.

I've got no arguments there. But that's the kind of thing RH [et al] were founded to confront or change, wasn't it? Or were they just circumventing previous regulation about market interfaces? This is where we get into the weeds and me out of my depth.

If the oil was mislabeled it's still the store's responsibility.

In the case of Robinhood, I can't just liquidate my money out of Robinhood and move it into a new platform and buy GME today if I wanted. I had a reasonable expectation that I'd be able to do this yesterday, and now that expectation was subverted in a way that's costly/inconvenient to me even if the service is free I have every right to complain.

Should, as in ethically? Surely not legally.

I say legally. A broker-dealer should be required to either give advanced notice of a suspension like this, or have a clearly upfront volatility metric that triggers it. (No, a TOS statement like, "We reserve the right to suspend trading at our discretion" is not a clear rule. It's a weasel clause)

Users would then know, in advance, if a particular ticker will be restricted. Either through specific advanced notice, or because they were told that all securities that exceed a volatility of X over Y time period will be restricted.

Whatever the rule, it can't be a snap decision that leaves users with no recourse.

If you're not an appropriate day-trading app, then don't act like one until you suddenly don't want to be one anymore. Make the rules in advance, communicate them, and let the market decide if you're appropriate for their needs.

Again, is this based on any real legal foundations, or on what you think the law should be?

What I think the law should be. I'm not qualified to say if there is a legal violation here (whether criminal, regulatory, or civil).

I said in another comment that my thoughts on this are in the "ought" category, not the "is" one.

It's not just robinhood, platforms that charge commission such as IBRK [1] have halted the trade of options (which is different from not allowing buying) but it definitely suggests some behind the scenes coordination for all these online brokers to all decide this today.

[1] https://www.axios.com/robinhood-gamestop-restrictions-370adf...

Options are different than equities. The possibility of losses far exceeding the initial position is easily possible. If the customer loses all their money, the broker is in the hook.

IB clearly is concerned about the credit risk, when the stock could literally rise or fall by a factor of ten in a day. They’re still allowing trading in the underlying stock.

Correct me if I'm wrong but if I'm buying a call, my downside is limited to the price that I pay for the option no?

Obviously if people are selling options / etc. downside can be uncapped.

I tried through IB and could not buy GME stock either.

I'm saying they should be sued. So, yes, I am saying that. If you buy securities you can't sell, you're pinned and that's not right, is it. I'm not sure if Robinhood traders signed up to that. Free doesn't matter.

They still allow selling, just not buying.

Allowing only buying OR selling seems like a good lever to manipulate a stock price.

But who's buying if you can't buy? Limiting the audience that can buy reduces demand, and thus the price will be negatively impacted.

To me that suggests they're kowtowing to short sellers and manipulating the market.

Nah. "You can only sell up to 0 shares of GME."

Robinhood has a free version and a paid version. Both account types are blocked from trading GME, NOK and other securities.

This doesn't really answer the main question above. How is this not evidence of a corrupted market system?

Free market assumes that buyers can make their own decisions. This is a fundamental requirement. If you are "free" to decide something, but then your decision gets overridden when it doesn't suit a particular third party, you aren't really free. The mechanism of enforcement and excuses given afterwards don't change the fundamentals.

I don't known if the kind of publicity they're getting right now is good for them. They could end up losing way more.

Allowing trading in only one direction is clearly market manipulation and should be slammed by the SEC.

This is the second day in a row I've been unable to log in to Ally Invest, a service I absolutely pay for.

Robinhood is not free. You are paying through PfOF. Just because you're not aware that you're paying more for your trades doesn't mean it's actually free. And, as others have pointed out, they have a version of their service which is paid and is exhibiting the same behavior.

interactive brokers is a paid service and they actually pretend they are different by not sharing their flow with Citadel etc... even they blocked trades on options on these symbols.

Robinhood is not entirely free. Just sayin..

Absolutely yes. If you can't provide a free service, then do not advertise it as a free service.

I just checked my TD Ameritrade account. I couldn't call up any information on GME.

Same policy applies to paid Robinhood and other paid brokers.

Yes, this is the bed they made for themselves.

> Are you saying that Robinhood should be forced to continue providing a free service at a loss?

This seems like an honest framing of the situation!

> They are blocking buying, and only allowing selling GME, BB and others. How is this not evidence of a corrupted free market system?

I can almost guarantee you that this decision was made to protect retail clients -- not as part of some conspiracy against them. It's very clear that retail is going to lose their shirts in the end of all of this, and by blocking new buy orders, the brokerage is effectively protecting its naive clientele.

Come back to your comment in a month, and I think your perspective will have shifted.

I sincerely doubt that many retail investors expect to make money on this. I have a couple buddies who made robinhood after seeing this on the news just for the opportunity to make a hedgefund bleed. I was in the same boat, but I already had an account.

No matter how paternalistic the intent may have been on Robinhood's end, the message is all the same to us on the outside: the game only has rules when we get to win it

Guarantee as soon as the hedge fund guys are all safely out of their positions and stopped their losses, Robinhood and the other retail brokerages will suddenly be like "Well, we did a great job and protected retail clients! All done with that trade limiting business. Back to normal, everyone."

You don't think the shorts are getting a chance out of their positions here?

Slight miscommunication -- what's happening is they're preventing any new positions from being opened. You can close positions, whether short or long.

YOU can't buy, only sell. That means buying power of the Reddit mob was taken away.

The retail brokers bailed out the hedge funds!

You are right that a big part of retail will be left with enormous losses. But that doesn't in any way excuses brokers who manipulate price letting only SELL orders in

If they only allow sell orders, who is buying what is sold?

The hedge funds who are in trouble and need to exit their short positions?

It's not Robinhood's responsibility to protect retail clients. They are not financial advisers. By doing this they have violated their mandate. Why? Maybe it's for their clients, but when you consider their incentives, that seems at best suspiciously convenient, and at worst deliberate market manipulation to save their ass.

How is Robinhood in danger through all of this? My understanding is they make money by selling order flow. If anything, they're losing money by halting trades?

The story is that they're subservient to interests which are losing money from the GME shorts.

What I don't understand, is why the only candidate that would really do something about this, from either party (Bernie), doesn't get a look in by "the people". The same people who are sick of it also shout "socialist" at the people who want to change things. Slugs voting for salt.

People have had enough, it's not just WSB anymore. The community of retail investors in GME is far beyond WSB. It's people that are frustrated with the 1% getting bailed out time and time again and them not seeing a dime at their tax dollar expense.

So they're going to show Wall Street who's boss by gambling away their grocery money? (Some will make out but I suspect the vast majority will lose big--money at least some can't really afford to lose.) I have trouble conjuring up a lot of sympathy but that's almost certainly uncharitable as I'm sure there will be stories of serious individual loss.

I have seen very little evidence of people investing money in the stock market that is not budgeted as “gambling” (ie disposable income). WSB embraces the idea that memetrading is gambling. This is not a surprise to anyone but a few outsiders.

Then you have not been paying attention to WSB for very long. It's full of degenerate gamblers, so many loss porn posts come from people saying, "How will I pay my rent this month?"

Most of the time, WSB is a community to commiserate about losses and lie about gains.

"How will I pay my rent this month?"

That's something I'd say to be funny, especially on reddit.

I am with you historically, but people seem to be taking this way more seriously than previous similar shenanigans, so I'm re-evaluating my prior dismissals.

I feel like a lot of that sort of rhetoric on there is highly highly sarcastic. Half the time “how will I pay the rent?” Is followed by something along the lines of “my wifes boyfriend will never forgive me” the very next sentence.

But it kind of goes against the story that this is “the people” against Wall Street. “The people”, by and large, do not have a ton of spare gambling money sitting around. “Upper middle class folks with spare disposable income vs Wall Street” isn’t quite as persuasive a hook, though.

But one could argue the upper middle class's interests are aligned with the lower class. So it's “upper middle class folks with spare disposable income on behalf of everyone else vs Wall Street”, which is such a mouthful that "the people vs Wall St" is probably close enough.

Certainly. It takes money to make money. That rule hasn’t changed yet.

Many of societies big issues are intertwined so hopefully addressing one partially addresses many. The golden rule is particularly nasty: those with the gold make the rules.

You must be missing a rash of people outside of the wsb sphere trying to create accounts with brokerages, have no idea what investment is, and trying to buy GME or others.

Those are the ones who would be left holding the bag when the music stops.

One of the most popular posts on WSB right now is somebody bragging they're putting their entire life savings in GameStop. I personally know people buying Gamestop that shouldn't be. It's pretty scary.

This is not just a WSB thing anymore, it was front-page news on every news service yesterday.

Nobody is gambling money away. The sentiment is that they are knowingly _throwing_ it away to send a message.

Are we talking about cutting your own nose off to spite someone else's face?

My partner and I were so entertained by reading WSB last night we bought a share at $350.

I don’t particularly care if it goes to $10 tomorrow. I don’t expect to make money here. It’ll be fun to watch for a few days, maybe weeks.

We just felt a lot of solidarity with the sentiment over there, and are happy to make a small contribution to the squeeze.

It feels kind of like contributing to a Kickstarter with low chance of success.

But you know, there’s a nonzero chance it goes to $1000 before the shorts can wiggle out. That’s what makes it exciting.

In general, since watching what they did to Tesla I have no sympathy for shorts.

Is that any different to taking a day off work to go to a protest? Both situations have you losing money in order to bring issues to light. Same with union workers going on strike.

Except if I were to protest it is focused on that one employer / hits them.

Meanwhile this financial system is hardly just a monolithic monster and plenty of big institutions will make money too.

I think the populist ideas / results around this are all weirdly misguided.

Citron mainly is one focus for sure. I'm sure someone knows why Melvin Capital is targeted.

Yes, because here they not only lose money, but also all the money they lose is gained by the exact thing they protest against. It’s as if they went to protest Amazon by working at their warehouse for free.

Yes, it's different insofar as the money you're losing in this protest is going directly into the pockets of the group of people you're protesting against. Very illogical way to protest.

Not sure I understand the metaphor, but I think so. Here's a good intro to the mythology.


So you're saying they're even dumber than they appear at first glance? Sorry, but pissing money away (or actually likely giving it to some Wall Street institution) to send some ill-defined "message" really can't be called anything but dumb.

Even as an econometrician, I would never call it dumb. It's a virtual incarnation of Occupy Wall Street. These guys are probably spending less than those who protested several years ago did. Heck, you can buy a stock and still go to work. No need to forego weeks of labor.

I guess I find it really weird and unfocused and so mixed in with people who are greedy/stupid that the whole thing just seems absurd.

I think the absurdity is why it's grown as big as it has: a bizarre combination of conditions achieved critical mass and has exploded into this unplanned, unprecedented paroxysm of pure absurdity that nobody would have predicted because it's so irrational, so stupid, yet it's happening.

You just said anyone who has ever contributed to a presidential campaign in their life is a moron. I don't see how this can be interpreted any other way, no one pisses away $100 to the Libertarian candidate expecting he's really going to save over $100 in income tax or reduced regulations the next year...

I would say that giving money to a libertarian (or other) candidate is a very clear message that you favor their policies compared to the alternatives. Yes, $100 isn't going to move the needle but neither is your individual vote in the vast majority of cases.

I can see all the pressure being applied to me to sell. Clearly some very rich and influential people want me to sell. This alone is enough to convince me not to. I don't care if it's dumb or it will go down to $0. I'm not budging.

Yeah, before today I'd have likely dismissed such comments as "conspiracy theory" but, RobinHood literally disabled the ability to buy, or even search for these stocks on their platform.

Do you know how this whole thing started? It seems you're just coming in and dismissing the whole thing, when the person who started it with $50k is now sitting on gains of $50m and even people who bought in yesterday are up almost 2x.

And some people who can't really afford to buy Powerball tickets every week. And a few of them hit it big. Doesn't make it a rational choice from a purely economic perspective.

The biggest flaw of conventional economic theory is that "people are rational".

Do you see all trading on the stock market as speculative and basically gambling?

Seeing it that way makes budgeting for it a lot easier (for me): I fully expect the loss of any and all money I'd bring into a casino, treating it as an admittance fee paid in exchange for the thrill of the tiny possibility of winning big, whose occurrence would probably influence me to double down and inevitably lose everything.

I hope thinking this way about retail investing reduces the risk of YOLOing one's life savings on individual stocks.

even people who bought in yesterday are up almost 2x.

Not anymore, they're not. Such are equities when the price becomes detached from reality. Any moorings one wishes to try and tie the price to, those are gone now.

As they say, past performance is not an indicator of future gains.

Very paternalistic to assume that people are gambling away their grocery money and should be stopped now that the short squeeze has become much, much more likely. Meanwhile ANY other security also has the chance to go to 0, but RH doesn't stop you from buying.

I don't care if Robinhood bans trading or not. Don't have an account with them and likely never will. Aside from some fairly obvious things (states generally shouldn't advertise their lotteries for example), people should be able to do whatever they want with their money. And it's probably pretty fruitless to try to stop them from doing so in general.

I don't think he's arguing FOR stopping the trades. I think he's worried about the folks participating financial well being.

We worry about that (people's retirement savings and so on) anytime we see market corrections, a given company go under, and etc... it's not an unusual concern.

That's elitism. Which is fine, it's a legitimate position, to believe that you have knowledge that others don't, and others should be protected from themselves. And the Law can step in to enforce this protection. You can apply that to stocks, "gambling", drugs, sex, porn, hate speech, misinformation, and everything else.

And there are a number of countries that have that philosophy in legal form. I'm glad to have a choice NOT to live in those countries and I suspect most on HN are similar.

We have laws about scams and etc, is that elitism, or just that the population doesn't want scams?

It seems like concern trolling tbh.

I'm not entirely sure what you mean but I guess that would men that regulations are 'concern trolling'?

When I see 'concern trolling' I usually think of it as just a term slapped on something to hand wave and ignore it.

Occupy Wall Street was just 10 years ago. It was the longest demonstration in a lifetime. Nothing changed. How did nothing change? What message does this send?

> How did nothing change? What message does this send?

nothing changed because camping out in a park for a few months without making any actionable, specific demands as a group is not a good tactic for effecting change. BLM was a bit more specific with their demands and have already received a few (if token) concessions.

The reason nothing changed with OWS is because they couldn't voice a clear message. Everyone knows they're being defrauded but the fraud is complex and difficult to communicate so instead you have this disorganized protest that amounts to very little change.

Tax the rich. Distribute the wealth that was stolen from the backs of the workers. It wasn’t said clearly because we were living in a post 9/11 era where uttering words like “socialism” was still unpopular.

Enough is enough. The only thing keeping the guillotines from coming out is a thriving middle class. Oh wait, that’s been stolen. It badly needs fixing and fast.

That sitting around playing drums and smoking doesn’t accomplish anything productive.

That’s called being civil. Would you prefer they instead break the law to have their voices heard? Do you want wall street suits to fear for their life?

>Do you want wall street suits to fear for their life?

Ideally yes, the rest of us are a missed paycheck or major health problem away from becoming homeless and there's no mathematical reason it has to be this way, it's just how we've structured our society.

There was a murderous insurrection bent on overthrowing democracy about 3 weeks ago. I rather think tempers are high enough that you'd get a lot of affirmative answers right now.

1. It failed.

2. It was stupid.

3. It violated the principles of our society.

That is the point I’m trying to demonstrate. Solutions come from within, not without.

You have it backwards, change cannot come from within. The master’s tools will never dismantle the master’s house.

(This is in no way an endorsement of the capitol insurrectionists. They don't want change. In fact, they're upset at change.)

>Do you want wall street suits to fear for their life?

Well... yes? For less than what this guys did Louis XVI lost his head.

They can do what they want and suffer no consequences, of any sort. Neither economic (they get bailed out by us) nor personal (virtually nobody gets personally prosecuted and sent to jail). Why should they stop what they're doing? In their position, I wouldn't.

And now you see the necessity of violence to advance political goals.

I’ll see it only after a liberal party controls the executive and legislative branch in the absence of a filibuster failing to implement meaningful change.

The same liberal party that bailed out Wall Street last time?

The very same. At least they have a branch of progressives and there is a pretense of moving towards a more fair ruleset.

Investing in stocks/crypto for average people with little to zero experience was not nearly as simple as today compared to 10 years ago.

The only way things will change, I'm convinced, is for everybody to vote out the incumbent every time. Occupy Wall Street didn't work, riots and looting wealthy areas didn't work, raiding the capitol building didn't work. The corruption is dug in.

Voting out the incumbent breaks all these decades long (multi-generational?) relationships with the elites. They will probably reform the relationships to a degree the first time, but if congressional membership dramatically changes every 2 years, those relationships will weaken over time.

To whomever disagrees, please help me understand your reasoning.

The lesson from Trump is that blindly going against the incumbent may simply replace them with somebody less competent and more corrupt.

So then we just have to live with a police state and a corrupt government that redistributes wealth up? I mean I don't see an alternative. We're in a really bad place.

I too hold money at a stock brokerage just in case a revolution starts.

Feel like the platforms are helping out hedge funds by making it challenging to put more pressure on the short squeeze before Friday. Sounds a bit like a cartel in co-ordinating activity under the guise of "reducing risk exposure" - shepherded on by the Financial media.

Trade itself is no longer on technical merits (except those in early) but have you looked at valuations across the stock market these days -- everything is off given pandemic. So that line of reasoning by all the financial talking heads just proves they don't understand the moment.

It's pretty reckless behavior for sure but its more about rage and control then anything imho.

That everything is off is just your assessment which a lot of people disagree with. When it's difficult to do business and make better use of the money then equites are more attractive place to keep your money. This is especially true with a lot of additional money supply and low interest rates. It makes perfect sense to me why we had the run we had during the pandemic. Anything else would be a big surprise.

Right ... that works until you have decide to move your money out of equities. At which point it is a race to the exit. Once the next rotation happens don't get caught being flat footed.

And I disagree - I do think everything is off (not just the markets being highly volatile). With many people making record money this year and human suffering being at the highest levels and considerable outrage everywhere, it feels like something is breaking down in society (at least North America). There is something very amiss right now, which I am sure we will be able to determine with the benefit of hindsight. Hopefully we can pick up and move on quickly post pandemic.

I am not attaching a judgement to my assessment. It's just an observation that equites are worth more when money supply increase and new business opportunities are difficult to come by.

If you have a box producing 4k usd per year people may want to pay around 100k for it on normal times but when you can't find any other investments and the government is pumping money into the economy then suddenly the box becomes way more valuable. It's after all better to buy it for 150k even if it produces 3k instead of 4k than to just your money in the bedroom mattress. This same mechanism that causes stocks to rally every time a big player (EU or US) announces another QE round

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