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Can someone explain this GameStop/Reddit ordeal to me like I'm a 12 year old?
 
This is fantastic. Fuck the hedge funds. Let them take a nice, big L on their shorts.
 
There is so much hate for hedge funds like they're this omnipotent being puppeteering the market.

Hedge funds consistently underperform the market and have had 10 straight quarters of net outflows from their funds.

Everyone hates hedge funds because they are the booger man, but they really get beaten on pretty much at every turn and active management in general has lost a ton of steam in the ETF environment.

But watch what happens because this is the most predictable ending

GME finishes its insane squeeze (I actually wouldn't be surprised to see it get to 600-800). People realize there isn't going to be a bid for 70M simultaneous asks at 1000 and start trying to undercut each other. The stock craters, some people make fortunes they could have never imagined, some lose everything after being paper rich.

Somehow hedge funds get blamed when they are the target of a bull raid because it's trendy to hate hedge funds and eat the wealthy. The already extreme hatred for hedge funds and wall street grows and retail feels like they got cheated and the game is rigged against them. The us vs them grows and it helps no one. Hedge funds continue to underperform like they have for a decade.
 
FiveThous said:
Can someone explain this GameStop/Reddit ordeal to me like I'm a 12 year old?
Click to expand...
My favorite financial writer, Matt Levine covered it yesterday

Bloomberg - Are you a robot?

www.bloomberg.com

edit: actually he did cover short selling I just skipped over it when I read it. I'll leave my inferior explanation anyway

One thing not covered is what a short sale is, so in case you weren't sure, here is shorting at a high level:
In the stock market you can sell short a stock. What that means is you borrow the stock from someone else to immediately sell it and convert it to cash. You do not owe the person that you borrowed from money back because you didn't borrow money. You borrowed shares. So you have to repay the shares at some point. You also can't just borrow the shares for free. There is a cost to borrow the securities for a short sale you incur. For heavily shorted stocks like Gamestop, that is quite high (high 20's last I checked)

The reason you would do this is if you think the stock is going down. If I short sell a stock at 20 dollars then I have 20 dollars in my pocket. If the stock the next day goes down to 10 then I can buy it on the open market for 10, return it to who I borrowed it from, and keep the cool 10 dollars that I didn't have to spend buying it back.
 
The Wizard of Moz said:
There is so much hate for hedge funds like they're this omnipotent being puppeteering the market.

Hedge funds consistently underperform the market and have had 10 straight quarters of net outflows from their funds.

Everyone hates hedge funds because they are the booger man, but they really get beaten on pretty much at every turn and active management in general has lost a ton of steam in the ETF environment.

But watch what happens because this is the most predictable ending

GME finishes its insane squeeze (I actually wouldn't be surprised to see it get to 600-800). People realize there isn't going to be a bid for 70M simultaneous asks at 1000 and start trying to undercut each other. The stock craters, some people make fortunes they could have never imagined, some lose everything after being paper rich.

Somehow hedge funds get blamed when they are the target of a bull raid because it's trendy to hate hedge funds and eat the wealthy. The already extreme hatred for hedge funds and wall street grows and retail feels like they got cheated and the game is rigged against them. The us vs them grows and it helps no one. Hedge funds continue to underperform like they have for a decade.
Click to expand...
Why 600-800. I've seen numbers around 1k and it doesn't make sense.
 
bigfoot5415 said:
Why 600-800. I've seen numbers around 1k and it doesn't make sense.
Click to expand...
Kind of a behavioral guess. A lot of people on WSB (who are a big force here, but I’d bet dollars to doughnuts other hedge funds have jumped in to punish offside shorts as well) have said “none of us sell until 1,000 and then we’ll all be rich”

I think human nature takes over before then and people start undercutting each other

Anything over a very risky 30 dollar flyer on the back of Cohen doing something magical is probably a big stretch fundamentally anyway. We are in full on animal spirits land. Maybe it gets to 6000 who the hell knows. Volkswagen in 2008 briefly became the most valuable company in the world on a short squeeze

Elon and Chamath have also thrown gasoline directly on the fire which has helped immensely

Gun to my head if you forced me to pick short or long on it today I pick long. But I’m also not long because at some point the music stops

moxreports.com

Hedge funds lose $30 billion on VW infinity squeeze - MOX Reports

Related article. How Martin Shkreli caused a 10,000% squeeze on KBIO Volkswagen Infinity Squeeze. The October 2008 short squeeze on shares of
moxreports.com moxreports.com
 
I almost went in when it was $30 too. Kicking myself a little.
 
Idk man. I wouldn’t. It’s a complicated enough process that it caught hedge funds offsides. It took a lot of things to happen and again, I’ll be stunned if it’s >30 in a year.

This whole saga seems so so similar to June 2020

Swap Hertz with GameStop and swap bankruptcy stocks with high short interest stocks and it’s a pretty good parallel. This is obviously more aggressive but it’s not like hertz didn’t run 900% in 2 weeks

So ask yourself, when Hertz did all that jazz did you feel like you missed out then? I did. But these are pump and dumps not pump and pumps. Obviously all just my opinion
 
Im gonna jump in tomorrow and see if I can sell at 500$. Not much, but might as well jump on this train while it's rolling.
 
Rich said:
Im gonna jump in tomorrow and see if I can sell at 500$. Not much, but might as well jump on this train while it's rolling.
Click to expand...

if you think it'll hit 500, buy a call instead of the stock. Thing could fall back to $20 at any time.
 
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about shorting. the group picked game stop because the short interest was 139.7% of the float. Sent the price up, at some point shorts have to buy to cover their short, which sends the price up. EA big hedge fund shorted more, they could go bankrupt tomorrow.

After Elon tweeted after the close, the stock shot up another $80, it ended after hours trading at $209.


 
got in at $89 this morning...made a bunch, now I'm wondering what to do
 
I saw this tweet and almost copied him (but not as many calls), but thought the run was over.

He made around $500k today. :doh:

 
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