The whole system can’t work if everyone’s on an even playing field. That’s what’s screwed.
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Most investors are genuinely stupid. Ask them about the ongoing of company or big projects or why people would want them and they fumble through the answer worse than a kid who has to improv on a speech/oral report cause they procrastinated too much.
Only there because of incumbency, early bird gets the worm, initial starting position, and resources to allow for unusual rebound after issues.
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QRD taken from another anon:
Gamestop, the videogame retailer, is on the rocks due to Covid and day one digital releases of new videogames. Seeing their stock idle at $20, investors representing hedge funds borrowed stock from other investors in a security. Per the terms of the security, they will give back the stock on a predetermined date (for all intents and purposes, next Friday). In the intervening time they then sell the borrowed stock at $20, wait for it to go down to $15 and buy it keeping the extra $5 for themselves. Last week, they did this in several successive waves pushing the price down to $10 and then $4. The goal was $2 when reddit’s wallstreetbets and (4chan)/biz/ smelled it, and decided to jump in.
Basically, WSB and /biz/ did two things: buy a lot of cheap GME stock and then traded smaller bits of it amongst themselves, iterating by $1 up every time. This pumped the stock up to the break-even level of $4, then past it to $8 and $12. At this point, had the price held there the hedge funds would not only lose all their money, but double and triple the money they invested. Further pumping took the price up to $20, $50, $80, $100, and then $180 before markets closed today. It is worth noting that the hedge funds mentioned here only have enough assets to cover up to a $170/share price. So WSB and /biz/ basically killed them, assuming the price holds through Friday at 4pm when markets close. The current price is $232/share in after hours trading.
Also Elon Musk is on the moon mission since he has his own petty issues with the same hedge funds shorting Tesla stock a year ago. So he encouraged others to buy in on Twitter late yesterday.
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You’re not going to catch a wave like this. You’re not going to hit the lottery. I would stay as far away from stuff like this as possible.
Hedge fund investors bet the stock will fall, because GameStop is going the way of the dinosaur. People got together on Reddit and pumped the price which forced the hedge fund short sellers to buy the stock to avoid further losses. The buying compounds as people flee to avoid losing everything.
Honestly, for every 1 story you hear of someone making 1000s or millions there are going to be 1000 people that get burned chasing. It will inevitably fall, hard. I wouldn’t even subscribe to WSB like another poster did. You might as well name every stock forum “emotional investors dot com”. They’re generally full of posts that will influence you to make bad investment decisions.
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Stores are something of the past, just like human interactions.
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It’s a lot of fun to watch if you’re not invested in this part of the market though.
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A few hundred thousand poor people flipped the tables on a few hundred very very rich people.
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It’s a glorious example about how the casino that is Wall street can be temporarily and drastically manipulated by a large enough effort based on absolutely nothing.
When you start seeing more of this (and this behavior also causing stock price downswings), it will be funny to see what provisions get put in place.
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I’m gonna put $200 for the meme, doubt it will be anything but I’ll try it
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First off, a “short sale” is when someone, or a company or a hedge fund, sells shares of stock that they don’t actually own with the gamble that the price is going to fall, which will allow them to buy shares to cover the sale later. Since you sold the stock for more than you bought it later, you earn a net profit from the transaction.
Selling something you don’t actually own is legal in the stock market, so long as you buy what you sold before the close of business to cover the transaction.
What happened with Gamestop is this: the r/wallstreetbets subreddit took notice of a hedge fund making a massive, MASSIVE short sale against Gamestop. And I mean it was the kind of short sale that could have collapsed the company had it succeeded. The guys on the reddit started buying the stock, which drove the price UP instead of DOWN. Remember, when someone “shorts” a stock (selling stock they don’t have), they MUST buy that stock by close of market in order to cover the sale. You can sell what you don’t have, but you have to have what you sold by the time the margins are called. Since the price went up instead of down, it caused the hedge funds that attempted the short sale to be forced to buy the stock at a much higher price than they sold when they attempted the short, making them lose TONS of money in the bargain.
A “short squeeze” is when someone shorts a stock with the intent to make money, but instead sees the price go up. The longer they wait to buy the stock to cover the short sale, the more the chance the price goes up even further, making them lose more and more money…thus a “squeeze.”
If you’ve seen the movie Trading Places, what Louis and Billy Ray do to the Dukes with the orange juice market was a short sale. They sold OJ futures that they didn’t actually own at $142, and then later bought futures to cover their sales at $29. That made them rich. And since the Dukes were the ones on the receiving end of the short sale, it ruined them.
This is what the hedge funds tried to do. They tried to short sale Gamestop, but they were thwarted by the r/wallstreetbets crew. The r/wallstreetbets caused the price of the stock to spike when they bought in, and this absolutely DESTROYED the hedge fund that made the short sale. Last I read, the attempt to short Gamestop cost Citron, a hedge fund, over a billion dollars.
With a B.
They effectively pulled a Duke Brothers maneuver, committing hundreds of millions of dollars to the attempt to short Gamestop. And they got their clock cleaned.
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Penny stocks do pump and dump schemes, and this seems pretty similar. They are pretty good at getting you all hyped up for a stock only to leave you with worthless paper when it crashes and no trade volume to even sell it.
The market is highly complex and no one knows what’s going to happen in the future. There are people that apparently manipulate the market like this though and manage to make some money in the process. But all in all, investing is risky and you can lose a lot of your investment. At least have an idea of the company’s history, financial situation, and look up some technicals before you invest. Basically try to do some homework at least.
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Lookup Peter Schiff on YouTube
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I’ve broken even on stocks for like 2 years for the most part. up maybe like $1500 overall. Bought GME and BB on Friday
Today was a good day.
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capitalism is a circus and it always benefits the rich, except this one time
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The short answer is: A bunch of people on the internet basically gave Wall Street a collective Aneurysm all at once.
More in depth layman’s explanation cause I don’t know how all this works, but I pieced it together from twitter threads that may or may not be 100% accurate: Reddit bought a bunch stock that was predicted to fall, so was borrowed out, and the hedge fund that “rented” them out panicked because instead of falling it went up by like 500 dollars or whatever.
Big Hedge fund gets bailout.
Amateur internet day traders get a few extra bucks.
Professional investors get mad.
Everyone else makes popcorn.
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Crap like this is why my deferred comp portfolio is minimal on stocks.
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yep. the lesson of today is that wall street billionaires arent the smartest guys in the room. theyre the greediest and they own the gov’t
if we actually had a ‘free market’ that hedge fund would not get a bail out(corporate welfare). wall st banksters and our politicians have been doing this stuff for decades but now they are pissed because they werent part of the action so they want new regulations
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The “kinda-sorta” qualifier there is good because in the example you gave, the Soul Dust would be worth exactly what it was listed for if that is the only place it was available.
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There is a ton of money to be made shorting this now…
It is really interesting to watch though.
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short sellers have been degrading stock price for years, what happened was those people did the same thing but thats bad somehow
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