The GameStop phenomenon

[Longsidebovril]

Anyone following this story? It’s a stretch for my tiny brain but I think I understand it

Is this the end of hedge funds? How much could it cost them?

I know some of you dabble in stocks would be interested in opinions.

[GodIsADeeJay81]

It's hilarious watching Wall Street crying because they're losing money in the billions when they're normally forcing others to lose money.

I hope it puts some of the traders out of business.

I see that one of the apps that allows the general public to dabble has now stopped people trading on specific stocks and its also come out that they let someone else see all the trades juse before they happened so it allowed them a chance to get in there first, both of which breaks the rules I'm sure.

Other companies are also seeing a massive increase in their share prices as a result.

Hasn't Bidens new treasury secretary gotten involved too?


So long as the common people sell at the right time this could be a massive lesson for Wall Street.

[Longsidebovril]

It’s fascinating. Sounds like it could really change things. Unless the rich folk find a way to stop it which they probably will.

[Spiral]

It's absolutely glorious, it really is, but there appears to be no fraud or market manipulation happening. Just the power of a subreddit that is half way toward being meme subreddit creating buzz around a stock and nailing the short sellers who tried to make money from Gamestop's collapse. Some bloke turned 50k into about 10m or something in a few days. Glorious.

[BFC123]

What the brokers did today, stopping people from buying a number of stocks, just can’t be legal and there will be some serious backlash over the next few months. A class action complaint has already been filed against Robinhood, a broker in the US.

[BFC123]

It’s fascinating. Sounds like it could really change things. Unless the rich folk find a way to stop it which they probably will.

They did today by getting brokers to stop allowing people to buy certain stocks.

[tim_noone]

Didnt The "Essex" Boys scoop tens of Millions late last year buying cheap fuel and selling for a fortune?

[Spiral]

Nothing significant will come of those class actions. It's all been very educational, if nothing else, and has elucidated to a lot of folks to the utter nonsense of the rules by which these brokers and fund managers play compared to the average bloke in the street, but there will be plenty of distractions available whenever folk start asking questions about the morality of running economies like a game of roulette.

[4:20]

We like the stock

[Devils_Advocate]

Best explanation of what going on

https://twitter.com/avalonpenrose/statu ... 3938201600

[Steddyman]

It's a great story. I've always thought short selling should be illegal. It was a big part of the last financial crash in 2009 and was banned in the UK for a few years because of it.

[Dante.El.Chunk]

They're now censoring the social media's they are organising themselves on

[Hipper]

It's a great story. I've always thought short selling should be illegal. It was a big part of the last financial crash in 2009 and was banned in the UK for a few years because of it.

Just seen what seemed to me a pretty good film on that:

https://www.imdb.com/title/tt1596363/?ref_=nv_sr_srsg_0

[Darthlaw]

Excellent film.

[Spiral]

The Big Short is a very good film. Definitely would recommend it. There's also a documentary series on Netflix called Dirty Money, and one episode in particular, season 1, episode 3, called 'Drug Short' which follows a woman who uncovers a price gouging scheme from a pharmaceuticals company which was ripping off people in need of life saving drugs. She realises the rip-off will be exposed and that their stocks will plunge, so she shorts them. She was so convinced that the scam would be exposed she put her own money into the company's demise. And she won. This is all a true story. If you've got an hour to spare, I'd highly recommend it. Both that episode and the film The Big Short are interesting because they present the short-sellers as the good guys, as being ethically motivated, whereas usually short-sellers are seen as pariah within the financial world, and not without justification, the bloody vampires.

[Burnley Ace]

Not all hedge funds have lost some have made fortunes, Blackrock have made over a billion, someone bought 12m and it’s now 450 million. Do you not think that some city firms have bee piling in as well?

[duncandisorderly]

I haven't a clue what's going on, but I'm interested.
I've watched the Big Short at least three times and not understood it, but enjoyed it each time and I will watch it again and maybe understand a little more each time.
Same (or different, I dunno) with Wolf of Wall Street. Hugely enjoyable, probably a little truthful, not understood a bit of it really.

[duncandisorderly]

Explain to me a hedge fund in three sentences or less. Please.

[MiltonKeynesClaret93]

Explain to me a hedge fund in three sentences or less. Please.

A hedge fund is an alternative investment that is designed to protect investment portfolios from market uncertainty, while generating positive returns in both up and down markets.

[Spiral]

Not all hedge funds have lost some have made fortunes, Blackrock have made over a billion, someone bought 12m and it’s now 450 million. Do you not think that some city firms have bee piling in as well?

The stock is up something like 140% since the beginning of the year which is just insane for any business, let alone a bricks-and-mortar video game store, but when it comes to large firms making money off other large firms losing theirs, that's just a normal day on the market. Without being trite, there are always winners and losers in that game, but the big difference between this and any other stock price movement is that it's normal people sat at home with an app who are pumping up the price, not the typical 'players' on Wall Street. It's millennials and gen-z'ers sat on a sofa who are making a killing, and this is threatening to the status quo because a lot of big-money players are being absolutely decimated by bloody kids on the internet. It has shown how people coming together online and creating a buzz around a stock (all perfectly legal) can actually challenge the vampires who had designs on killing off Gamestop.

[RVclaret]

Explain to me a hedge fund in three sentences or less. Please.

Manage outside money. Trade a long/short portfolio of products (could be anything from equities to bonds to commodities). Charge a per annum management fee plus a percentage of profits if they are made (usually 2%/20% is typical).

Btw I work in the financial markets and share an office with a hedge fund so to answer the OP’s question, no it’s not the end, far from it. A lot will have made a killing from this move higher on GME then the crash today.

[duncandisorderly]

Why does gamestop need killing off? (in their eyes)

[Garnerssoap]

I’ve seen trading places like a gazillion times and still don’t understand the end bit

[Burnley Ace]

Why does gamestop need killing off? (in their eyes)

I don’t think it’s killing off rather some analysts predict that (like blockbuster) the days of going into a second hand video shop is over and downloading is the future.

GameStop are like Game, they are struggling and have plans to shut 450 stores.

[GodIsADeeJay81]

Why does gamestop need killing off? (in their eyes)

It doesn't, they're just trying to make the shares dirt cheap without killing it, so they can buy cheap and then sell high.
If it was to die then they wouldn't care and move onto their next target.

That's how they've always done it, but people are getting hacked off with their behaviour, especially as the bankers in the US basically got away with that financial crash back in 2008, like they did in the UK...

[Spiral]

I haven't a clue what's going on, but I'm interested.
I've watched the Big Short at least three times and not understood it, but enjoyed it each time and I will watch it again and maybe understand a little more each time.
Same (or different, I dunno) with Wolf of Wall Street. Hugely enjoyable, probably a little truthful, not understood a bit of it really.

I don't mean for any of this to sound patronising, apologies if it comes across that way, but I'll keep it as simple as possible.(Though it's a bit of a long explanation). Gamestop is a video game store in the US. Struggling in an increasingly-digitised world where physical copies of games are (it is reasoned) being bought less and less often. Think, HMV struggling to sell CD's. Wall Street (i.e. the people working in finance who somehow earn a living shuffling numbers around on a screen) collectively decided Gamestop is practically dead, and they wanted to make money off this. Arbitrary figures and time-frames used here-on-in for the sake of keeping it simple.

So, people own Gamestop stocks. Have done for a long time. Some people on Wall Street propose to those stock owners, "I'll borrow your stock from you for, say, a fortnight, and you'll get a bit of interest on it. You'll get in back in a fortnight". That's not a promise, it's a legally binding trade. Stock owners goes "cool, deal, nice bit of interest for me". Wall Street broker now in possession of Gamestop stock takes newly borrowed stock and flogs it so some other mug for, say $10 (it's market price), in a trade structured in a way that means they are LEGALLY bound to buy it back in, say, a week, whatever the price. Wall Street begins to make a song and dance about how Gamespot stock are being sold off left, right and centre, the price drops, the bloke who borrowed-then-sold the stock now buys it back a week later as per the deal at its new low price of, say, $2. Poor ignorant sucker who bought it for $10 loses money. Wall Street short-seller flogged it for $10, $10 goes in his pocket, he buys it back for $2, pockets the $8 difference and buys champagne with it, and as per the deal, gives the stock back to the person he originally borrowed it from (plus a little interest for them) when the time on the loan is up. This is short-selling. It's basically a bet placed that a stock price will drop. If the stock drops, you win. If it rises above what you originally sold it for, you're completely f.ucked.

ENTER: REDDIT

The WallStreetBets subreddit caught wind of thi...

wait...

So there's a website called reddit, which is like a forum made up of individual forums, each dedicated to one thing or another. These are called subreddits. There's a Burnley FC subreddit. (Though it's very quiet and hardly anyone uses it). There's a subreddit called WallStreetBets which, to be honest, isn't the most reputable source of financial advice, to say the least. Put plainly, it's mostly discussion among people investing small amounts of money into struggling companies (hence the 'bet' part of the name) with a lot of memes flying around, jokes, irony, etc. It's all very light hearted, but some folks do play with real money. Now then, a good few months ago someone made a post on the WallStreetBets subreddit highlighting how they thought Gamestop was actually undervalued by Wall Street. They thought there was genuine potential there in a company which those people using that subreddit probably would have shopped at as kids (and probably still do today). Then, earlier this month, Gamestop introduced new board members, including a bloke with experience in digital distribution (I think). Basically, Gamestop was under new management. This bumped the stock price a bit, but not in the way it's happening today.

Now then, this piqued reddit's interest and a bunch of people on reddit got together and were like, "guys, there's life still left in this company", and they start thinking about investing in Gamestop. Then they noticed that a bunch of short-sellers (Wall Street traders gambling on Gamestop's demise) were shorting Gamestop, and making a big song and dance about it with the intention of tanking the stock price (because shouting 'this company is dying' loud enough can sometimes become a self-fulfilling prophecy on the stock market), and making money on their bet, killing the company in the process. Lost jobs etc, all the usual real-life consequences of a company going bust. But then a bunch of millennials on reddit went, "guys, f.uck those short sellers, let's do something about this". So people using bloody mobile phone apps got together on reddit and decided they're going to buy a load of Gamestop stock to try and bump the price. This was all legal. The buzz grew, more and more people jumped on the bandwagon, and now the stock is at just absurd levels. We're at tulip fever levels of price bubble. Those short-sellers on Wall Street, who were banking on the stock price dropping, and whose profit completely depended on it, are now faced with having the LEGAL OBLIGATION to buy back stock at more than $100 per stock higher than they sold it for. In short, they're completely f.ucked. But their businesses are legally required to have something to back up their trades, so they're having to buy a bunch of Gamestop stocks themselves in order to hedge (protect) their failed gamble, which is itself pumping up the price, making those millennials on reddit even richer! The bubble is going to burst eventually, and those who got out early enough will thank God they did, and those who don't will regret seeing the stock price correct back to normal, but for now it's stupid high, the Wall Street short-sellers have been completely f.ucked over, some reddit users have made an absolute killing, and Gamestop is not yet dead!

[HunterST_BFC]

A hedge fund that shorts is a shrubbery

[GodIsADeeJay81]

Those on reddit are also looking at other companies that are being shorted, they've smelt blood, seen the money and fancy having another crack at it.

[Bosscat]

Explain to me a hedge fund in three sentences or less. Please.

Its the fund the Council use to by privet plants and other hedging materials

[Spiral]

Those on reddit are also looking at other companies that are being shorted, they've smelt blood, seen the money and fancy having another crack at it.

Yep. AMC theatres, BlackBerry, Nokia. Reddit-rallied stock purchases have been blocked by retail brokers, because God forbid the ****ing plebs actually make money on the market.

[Bordeauxclaret]

I don't mean for any of this to sound patronising, apologies if it comes across that way, but I'll keep it as simple as possible.(Though it's a bit of a long explanation). Gamestop is a video game store in the US. Struggling in an increasingly-digitised world where physical copies of games are (it is reasoned) being bought less and less often. Think, HMV struggling to sell CD's. Wall Street (i.e. the people working in finance who somehow earn a living shuffling numbers around on a screen) collectively decided Gamestop is practically dead, and they wanted to make money off this. Arbitrary figures and time-frames used here-on-in for the sake of keeping it simple.

So, people own Gamestop stocks. Have done for a long time. Some people on Wall Street propose to those stock owners, "I'll borrow your stock from you for, say, a fortnight, and you'll get a bit of interest on it. You'll get in back in a fortnight". That's not a promise, it's a legally binding trade. Stock owners goes "cool, deal, nice bit of interest for me". Wall Street broker now in possession of Gamestop stock takes newly borrowed stock and flogs it so some other mug for, say $10 (it's market price), in a trade structured in a way that means they are LEGALLY bound to buy it back in, say, a week, whatever the price. Wall Street begins to make a song and dance about how Gamespot stock are being sold off left, right and centre, the price drops, the bloke who borrowed-then-sold the stock now buys it back a week later as per the deal at its new low price of, say, $2. Poor ignorant sucker who bought it for $10 loses money. Wall Street short-seller flogged it for $10, $10 goes in his pocket, he buys it back for $2, pockets the $8 difference and buys champagne with it, and as per the deal, gives the stock back to the person he originally borrowed it from (plus a little interest for them) when the time on the loan is up. This is short-selling. It's basically a bet placed that a stock price will drop. If the stock drops, you win. If it rises above what you originally sold it for, you're completely f.ucked.

ENTER: REDDIT

The WallStreetBets subreddit caught wind of thi...

wait...

So there's a website called reddit, which is like a forum made up of individual forums, each dedicated to one thing or another. These are called subreddits. There's a Burnley FC subreddit. (Though it's very quiet and hardly anyone uses it). There's a subreddit called WallStreetBets which, to be honest, isn't the most reputable source of financial advice, to say the least. Put plainly, it's mostly discussion among people investing small amounts of money into struggling companies (hence the 'bet' part of the name) with a lot of memes flying around, jokes, irony, etc. It's all very light hearted, but some folks do play with real money. Now then, a good few months ago someone made a post on the WallStreetBets subreddit highlighting how they thought Gamestop was actually undervalued by Wall Street. They thought there was genuine potential there in a company which those people using that subreddit probably would have shopped at as kids (and probably still do today). Then, earlier this month, Gamestop introduced new board members, including a bloke with experience in digital distribution (I think). Basically, Gamestop was under new management. This bumped the stock price a bit, but not in the way it's happening today.

Now then, this piqued reddit's interest and a bunch of people on reddit got together and were like, "guys, there's life still left in this company", and they start thinking about investing in Gamestop. Then they noticed that a bunch of short-sellers (Wall Street traders gambling on Gamestop's demise) were shorting Gamestop, and making a big song and dance about it with the intention of tanking the stock price (because shouting 'this company is dying' loud enough can sometimes become a self-fulfilling prophecy on the stock market), and making money on their bet, killing the company in the process. Lost jobs etc, all the usual real-life consequences of a company going bust. But then a bunch of millennials on reddit went, "guys, f.uck those short sellers, let's do something about this". So people using bloody mobile phone apps got together on reddit and decided they're going to buy a load of Gamestop stock to try and bump the price. This was all legal. The buzz grew, more and more people jumped on the bandwagon, and now the stock is at just absurd levels. We're at tulip fever levels of price bubble. Those short-sellers on Wall Street, who were banking on the stock price dropping, and whose profit completely depended on it, are now faced with having the LEGAL OBLIGATION to buy back stock at more than $100 per stock higher than they sold it for. In short, they're completely f.ucked. But their businesses are legally required to have something to back up their trades, so they're having to buy a bunch of Gamestop stocks themselves in order to hedge (protect) their failed gamble, which is itself pumping up the price, making those millennials on reddit even richer! The bubble is going to burst eventually, and those who got out early enough will thank God they did, and those who don't will regret seeing the stock price correct back to normal, but for now it's stupid high, the Wall Street short-sellers have been completely f.ucked over, some reddit users have made an absolute killing, and Gamestop is not yet dead!

Thanks for that. Makes more sense now.

Out of interest, how many individual Reddit users are we talking about here and how much money would you estimate between them?

[Spiral]

Thanks for that. Makes more sense now.

Out of interest, how many individual Reddit users are we talking about here and how much money would you estimate between them?

As of right now, 5.1 million subscribers, though that's only because this is a genuine moment in reddit history. The front page is basically all WSB posts, which has never happened before. About 2 million subscribers a few days/weeks ago, and I'd imagine most of those are just lurkers or people there just for the memes. As for the money involved, couldn't possibly even begin to guess. But the retail broker a lot of those people were using appears to have broken the law or violated some code or codes or something in numerous ways to try and put a leash on it all. You don't do that lightly, so for them to break the law because they're so frightened of the volatility these rallies are creating, it's significant.

[GodIsADeeJay81]

Just reading an article about one of the first subreddit people to invest $50k into Gamestop last year when he giddy caught a whiff of what was going on.

His shares are now worth over $5 million...

[GodIsADeeJay81]

As of right now, 5.1 million subscribers, though that's only because this is a genuine moment in reddit history. The front page is basically all WSB posts, which has never happened before. About 2 million subscribers a few days/weeks ago, and I'd imagine most of those are just lurkers or people there just for the memes. As for the money involved, couldn't possibly even begin to guess. But the retail broker a lot of those people were using appears to have broken the law or violated some code or codes or something in numerous ways to try and put a leash on it all. You don't do that lightly, so for them to break the law because they're so frightened of the volatility these rallies are creating, it's significant.

I'm seeing stuff saying the White House has sent the order out to halt the reddit users doing this.

[Spiral]

I read a post yesterday also mentioning $50k. It might be the same guy you read about, it might be someone different, but the guy was at $14m, then $10m. It was all over the place.

[Duffer_]

A hedge fund that shorts is a shrubbery

Daylight shrubbery!

[GodIsADeeJay81]

I read a post yesterday also mentioning $50k. It might be the same guy you read about, it might be someone different, but the guy was at $14m, then $10m. It was all over the place.

DVK or something like that is the abbreviation for his username on there.

[scouseclaret]

There is glorious irony about hedgies that make money out of short-selling suddenly bleating about “market manipulation”. I believe a couple have gone bust on the back of this, or at least forced to liquidate.

The other side of this is that another bunch of hedgies will be absolutely cleaning up by shorting it at current levels.

[Spiral]

Found it. DFV, an abbreviation for DeepF***ingValue. So same guy I was reading about. That $5m value was mid-Jan. At the time according to the latest article I could find (one day old article), his position which he later upped to $700k is worth $47 million. (Forty seven million)!!!!

[Spiral]

For anyone unfamiliar with reddit and WallStreetBets subreddit, it's difficult to understate just how ridiculously un-serious that subreddit can be, which makes what they're doing even crazier. I've just gone on the front page of reddit, and I'll copy/paste some of the post titles so you get an idea of the tone of the way people talk there, and how this has been organised.



-YOU RETARDS ARE ACTUALLY HOLDING THE LINE!!!! DON'T STOP HANDS!!!!

-You get what you f**king deserve! UPVOTE!

-Like this post if you are holding!! The real squeeze is yet to happenYOLO

IMPORTANT!! THERE ARE NO SELLERS!!! DO NOT PANIC IF YOU SEE PRICE DROP HOLD THE LINE! UPVOTE SO PEOPLE DON’T PANIC.

-AMERICANS CAN'T BUY GME, BB?!?! HELP IS ON THE WAY!! CANADIANS!! WE HAVE NO SUCH RESTRICTIONS!! BUY ALL THE GME AND BB YOU CAN!!!

-Give them nothing, but take from them everything



They're basically parodying the hyper aggressive, hyper masculine language used by traders on the floor and in brokerage offices. It's completely dripping with irony, but their market moves are genuinely frightening the life out of short traders and the market as a whole. It's like barbarians at the gates, only what the barbarians (redditors) are doing is completely legal, and the moves Wall Street is taking to thwart WBS is possibly illegal, definitely unethical, and so blatantly being done to protect bigger traders that it's all at once disturbing, outrageous and absolutely hilarious.

[GodIsADeeJay81]

I'd be taking the £47million and running off into the distance laughing

[Spiral]

I'd be taking the £47million and running off into the distance laughing

I wouldn't have the balls even for that because I'd have cashed in my chips at a couple of grand profit, but there again there's no way I'd gamble 50k on Gamestop in the first place! Balls of steel, that guy. (And insanely lucky, too!)

[Spiral]

Leon Cooperman, a billionaire hedge fund manager, went live on CNBC to attack the people taking part in the GME rally, having a pop at them for deigning to use their government stimulus cheques to invest in GME (which they didn't do, because they haven't received those cheques yet), calling it, "bull$hit, a way of attacking wealthy people".

https://old.reddit.com/r/PublicFreakout ... perman_is/

[NewClaret]

Best explanation of what going on

https://twitter.com/avalonpenrose/statu ... 3938201600

[GodIsADeeJay81]

Leon Cooperman, a billionaire hedge fund manager, went live on CNBC to attack the people taking part in the GME rally, having a pop at them for deigning to use their government stimulus cheques to invest in GME (which they didn't do, because they haven't received those cheques yet), calling it, "bull$hit, a way of attacking wealthy people".

https://old.reddit.com/r/PublicFreakout ... perman_is/

Some of the replies on there are pretty Savage.

With a bit of luck this could go on for a while longer yet.

[Spiral]

Last I'll post on this for tonight, but if I could frame what has happened today as a football analogy, it'd be like this:

Imagine it's the FA Cup 3rd round. You play in the 10th tier of English football, you're in the hat, and you draw Man City. By reasons known to absolutely ****ing nobody, City get to decide not only where the game is to be played and when, but have used their wealth to butter up football's rule makers to allow themselves to set the rules of the game itself, and they do so in a way that massively benefits City (as they would, naturally). Not only how they can spend money, but the size of the pitch, number of players on the field, length of the halves, number of subs etc. So City welcomes this 10th tier side, and City find themselves 8-0 down with 10 minutes to go. At 81 minutes, City decide the game is to be called off. Why? Because this result damaging to City. Because this 10th tier team are scoring for "the wrong reasons".

This is not far off what happened today. Folks at home investing their money on an app had the game stopped when they were winning, and were accused by the people who decided to abandon the game of buying stocks for, to quote billionaire chairman of the firm 'Interactive Brokers', Thomas Peterffy, the "wrong reasons", whatever that means. And of course, one or two heads will roll, and a few people may go to jail, but these small-time folks had the rug pulled out from under them when the big players realised they were losing, and now the big money firms are making up the rules of the game on the fly so they don't lose any more money. So much for the free market, eh?

[KateR]

watching TV here on stocks such as Bloomberg and NBC, you see them trashing stock to a vast audience and you can watch the said stock falling real time.

The problem now is, when did you get in the game for Game Stop and when do you get out, it's like any stock, right now it is way over priced per share so it'll drop like the proverbial stone once someone says, ok I'm taking some or all out now before someone else does.

I think I need to go and check my hedge funds

[RVclaret]

A hedge fund that shorts is a shrubbery

Erm, you should learn about what 'hedging' is.

[Paul Waine]

I'm seeing stuff saying the White House has sent the order out to halt the reddit users doing this.

I've seen it reported that a lot of the reddit people are "investing" the $600 covid incentives the US has been giving them. As it will all end in tears - Gamestop is not worth the amount people are buying these shares at - and the $600 was intended to encourage everyone to help get the US economy going again it's no wonder that the White House would like to put a stop to this re-run of "tulip fever."

[Spiral]

I've seen it reported that a lot of the reddit people are "investing" the $600 covid incentives the US has been giving them. As it will all end in tears - Gamestop is not worth the amount people are buying these shares at - and the $600 was intended to encourage everyone to help get the US economy going again it's no wonder that the White House would like to put a stop to this re-run of "tulip fever."

Yes, and when the financial sector was bailed out to the tune of hundreds of billions with the aim of encouraging them to help get the economy going again they totally put in into communities, and didn't at all pump it into the stock market and watch as wealth inequality exploded to levels not seen in centuries, as people so downtrodden, so desperate at the state of their lives turned to fascism as a last ditch grasp at hope, but now a few folks investing their own money (which may of may not be from their stimulus cheques) to make a few hundred dollars, now that is most definitely cause for concern, and regulation is needed, and wouldn't it be wonderful if folks worked together and blah blah blah. Come off it, mate.