GameStop and the hedge funds, continued
Glenn Greenwald with some thoughts, including a caveat about who’s doing the buying. Among other points he makes, he points out that although much of the recent buying of GameStop stock has been driven by the redditers, the price of the stock went up so very fast and so much that it’s possible that rival hedge funds may have gotten into the game in order to drive some of their fellow hedge fund competitors into the cellar:
I also call your attention to this comment by “TommyJay”:
Well regulated short selling is a good thing for a market. Decades ago, Saudi Arabia thought they would create a cleaner more ethical stock market by not allowing any short selling. Their whole market blew up sky high and then imploded…
…[S]hort selling and over-leveraging need not go together, although they did [in the GameSpot caper]. As huxley said, these [hedge funds] were playing with shares that don’t exist. Sure it’s injudicious for the hedge fund that demanded the borrowed shares, but somebody is committing a type of fraud.
That somebody is the giant investment bank/brokerage who tells the hedge fund “We don’t actually have shares to lend you, but we will pretend otherwise (because it’s all just 1’s and 0’s in a file somewhere) and we will worry about cleaning it all up later when the 3 day settlement period ends.” IMHO this is the origin of the real crime, which maybe isn’t even a crime if the SEC says it isn’t.
We keep hearing the “vulture” comparison. Nevertheless, vultures have an important function in the food chain. As I’ve said many times before, I’m no financial expert. So I imagine that the comments to this post should be interesting and edifying.
The short selling is not really the problem. They are correct that short selling allows better liquidity for troubled stocks. The problem is that hedge funds got cocky. They never loose. Therefore they put themselves into a massively leveraged position and got caught.
This is how the market learns what is ok and what is not. I would guess if they don’t get saved this will make other hedge funds more circumspect when putting themselves in to large positions with almost no restriction to the downside.
ZeroHedge says the hedge funds have shorted Bitcoin hard. ZH speculates Bitcoin could be the next GameStop, which could shoot Bitcoin above 100,000.
In another ZH story Tyler Durden (nom de web) explains how he was short on the market during the 2010 “Flash Crash”, cashed out, then two days later discovered his broker had cancelled the trade!
________________________________________________
The lesson is obvious: when we screw up, we pay the price for our mistakes. But when the banks screw up, the whole financial system comes to their rescue.
https://www.zerohedge.com/markets/financial-revolution
Matt Taibbi explains a lot of nuts-and-bolts, with raspberries for the dolts.
https://taibbi.substack.com/p/suck-it-wall-street
If there are any readers here not familiar with Matt, he was recently kicked off of Rolling Stone magazine for being an honest liberal.
The battle between Dave Portnoy and Steve Cohen, the unsavory hedge-fund billionaire, is quite fascinating, as is the position of Elon Musk, perhaps the world’s richest man, whose new slogan is “Get Shorty”. It may thus be overly simplistic to analyze this situation purely in terms of David vs Goliath, but it is undeniable that the short-selling strategy of Citron and Melvin is far more unethical, while technically legal, than the short-squeezing strategy of the Reddit-investors, who may not be saintly but are, without question, striking a much-needed blow against the arrogance of those titans of finance (largely donors to the Democrats) who consider themselves fully entitled to manipulate a rigged system.
I may have posted these on another thread. But here is an evocative trio of comments that I found on the JustOneMinute blog.
“Robinhood lifts trading bans.
GameStop up 30% after hours.”
“To escape, they have to buy the security they are short. When collectively they have shorted more shares than exist… the price goes to infinity as they fight each other to escape. The trap gets tighter the harder they pull. Their backers get sucked in, and are trapped as well. Meanwhile the price is pushed ever higher. When Robinhood sold shares (against owner instructions), the price came down (by half— screwing the little guys) and made it less painful for the hedge funds. But as earlier pointed out, they must buy the stock they are short by end of day Friday. And more shares are short than exist. There will be carnage.”
“Options expiration is tomorrow. That’s when the real fun begins, around 6 PM, margin deadline on delivered shares. The blood stains will appear on Sunday night, the names on Monday.”
Meanwhile, as we concentrate on the gaming of the stock market, Powerline highlights the most important thing about the economy that Biden destroyed with his Executive Pen.
In the context of the huxley-Rufus debate on the similarity or lack thereof between the Tea Party and Occupy Wall Street, the one undebatable position is that Big Government is in cahoots with Big Business, and both are supported by (and support) Big Bureaucracy.
Simply put, they hate ALL of us, Left or Right.
“The enemy of my enemy may be my temporary ally, but not necessarily my friend.” – huxley
Churchill said the same, obliquely, about Stalin, while explaining his priorities in World War II: “If Hitler invaded hell I would make at least a favourable reference to the devil in the House of Commons.”
Just remember that the Right and the Left do not, in general, share any common goals.
https://issuesinsights.com/2021/01/29/bidens-worst-executive-order-went-almost-entirely-unnoticed/
#AlwaysMyPresident
#MissHimYet?
So that’s Glenn Greenwald. He looks like he could be Hoagy Carmichael’s less-handsome little brother.
–“Top 10 Hoagy Carmichael Songs”
https://www.youtube.com/watch?v=OC_qg7P2xfc
Hoagy was before my time, but he was great in those old Bogart/Bacall films, so I looked him up. Love his fluid play and singing.
Once again today Robinhood has put trading restrictions and sold positions in some accounts. The firm was given an infusion of emergency funds last night and may need some more today to meet the capital requirements. Compliance dept will be busy tonight.
huxley: In another ZH story Tyler Durden (nom de web) explains how he was short on the market during the 2010 “Flash Crash”, cashed out, then two days later discovered his broker had cancelled the trade!
That sounds like BS. I had trades cancelled in Oct 1998 and knew the same day after close. This was the first time that electronic trades had been cancelled and this was unknown territory for everybody. In 2010 flash crash a lot of trades in stocks were cancelled and everybody knew the same day. Some stocks had dropped to pennies. It is just common sense that trade was likely to be cancelled. In ’98 I spoke to a guy who eneded up going short at 9,999, the max price on system, which he knew would be canned. He called up the exchange because he was an exchange member and sure enough he was told it wasn’t a good trade. Also, the broker doesn’t cancel trades, the exchange does.
In the context of the huxley-Rufus debate on the similarity or lack thereof between the Tea Party and Occupy Wall Street, the one undebatable position is that Big Government is in cahoots with Big Business, and both are supported by (and support) Big Bureaucracy.
AesopFan:
It was fun to hear Greenwald hit some of the same notes. Nonetheless, I would take issue with Greenwald’s frame that Occupy was basically the Tea Party from the Left.
I see Occupy as just the 2011 version of the usual leftist street theater. In 1999 we had the Seattle WTO protests. In 80s we had the anti-nuclear and anti-apartheid protests. In the sixties/seventies it was anti-war and civil rights protests. And today we have BLM/Antifa.
If you’ve been to enough leftist demos, it’s all the same demo.
The left’s MO is to seize the current hot issue, co-opt it into the leftist agenda, then demonstrate, demonstrate, demonstrate.
That sounds like BS. I had trades cancelled in Oct 1998 and knew the same day after close.
Andy:
Could be. I’m willing to learn. I don’t regard ZH as the final word on anything.
Since it was way down in the comments, and not everyone reads that far, in the previous piece on this:
Warren Meyer, a private businessman and Harvard B-school grad, discusses this, over on Coyoteblog:
https://coyoteblog.com/coyote_blog/2021/01/the-public-really-hates-and-misunderstands-short-sellers.html#disqus_thread
Let us put this pretentious piffle about the ethics of Redditers aside. Central banks actively intervene in the forex market to hurt traders who are holding a position that is in variance with the wishes of the central banks.
This is no longer a super short squeeze. That was a few days ago. This is a gamma call squeeze. https://www.fool.com/investing/2021/01/28/what-is-a-gamma-squeeze/
Calls and put options, aka options trading, trades contracts binding the selling and buying of 100 shares per contract.
Hedge funds rarely buy up stock from the market directly as it will spike prices. So they use contracts to make it work at strike prices. Giving people plenty of time to settle and work it out.
This week s up and down m9vement of many many stocks was indeed hedge funds market orders. Only explanation for me. They were selling stocks to get money for this short squeeze. Their other stocks.
But puts and calls execute today 8 pm and it will be really over by sat 12 noon.
Puts are used to hedge a position. Hedge funds use that to hedge. It prevents 100% loss.
What they did was write sell short put contracts. They would take a short at gme 13, write a contract for 1 or 5 usd, drive the prices down to 5 usd, use the puts to buy up all the stock, then sell the stock at higher price plus shorting more.
This is how it is done in this system. It is pretty much eve online simulated cartels.
Wall Street is one big gambling addict.
Investing, we all know, is gambling. One buys stocks betting that they will go up in value and at some point in the future, their investment will do better than inflation.
Once upon a time, investing was based on careful analyses of companies, looking at profits, earnings, company outlook, etc. Stock analysts actually had a background in the stock they analyzed: certain people would specialize is a specific sector. One friend of mine had a degree in chemical engineering and specialized in analyzing chemical and oil company stocks. Another acquaintance had a degree in automotive engineering and specialized in analyzing auto industry companies.
It was gambling, but it was gambling based on knowledge.
But at some point, it all just came a mad scramble.
Two things happened: One was the addict’s need to bet on ANYTHING! The other was the dumbing down of analysis.
I remember the dot com boom. I was an admin assistant on Wall Street. And I couldn’t believe how NUTS these people were going over things with no obvious value. I’d say that it seemed to me that the value of stock is based primarily on the perceived value of that stock. I’d be “tut-tut-ed” and given some crap about P/E ratios, blah, blah, blah… But the only thing that made sense was…
The value of stock is based primarily on the perceived value of that stock…
So, back to gambling addicts….
The Wall Street crowd keeps looking for crap to gamble on. When stocks were analyzed by knowledgeable people and stock prices had more to do with reality, it wasn’t as EXCITING as gambling on something with crazier odds. They came up with weird s*** to gamble on. It’s like the gambling addict who gets tired of horse and dog racing to bet on the color hair of the eighth person to walk in the door.
I recall the derivatives scandals and the money lost. It was all gambling… Remember Michael Milken and the Junk Bonds? (BTW, his current net worth is about $3.7 billion.) Lehman Brothers? Gambling on the color of the hair if the right person through the door….
Hedge Funds…
And they (the gambling addicts) set the rules. Yeah, we “can” bet on the hair color of the eighth person to walk through the door. But meanwhile, the Insiders will collude to make sure that a convention of red heads is going on, and that we, the Outsiders, are not allowed to bet on red.
Tucker Carlson is right. One rich gambling addict Insider gets on tv, has histrionic hysterics over Hilton Hotel, driving the stock price down. And makes a fortune in the aftermath on his “gamble” on the stock price. He manipulated the market and NOTHING HAPPENED TO HIM.
It’s all just a game to them. They win some, they lose some, but they still make boat loads of moolah in the end.
And they never stop feeding their addiction…
Now, back to dumbing down analysis: I am willing to bet that there are virtually no stock analysts left who actually understand the companies whose performance they pretend to analyze. I am willing to bet that they grind some s*** out “analysis” that is as based on reality as much as today’s “news” is. That is to say: Not much.
The lefty nut jobs in academia seem to think you can base an economy on “social justice.” (Really. I was told this in a class I took fifteen years ago!) If economics based on social justice float, then I’m sure stock analysis is in just as much fairy tale land.
Those Wall Street firms go nuts recruiting from the same few schools: Harvard, NYU, Wharton, Yale, UVa… All the left has to do to really screw up Wall Street is focus on getting on faculty at those schools. Voila!
The dumbing down…
huxley – totally agree with you.
This is kind of rambling, but I don’t have time to polish it.
Just things to think about.
Greenwald and Taibbi, and other Democrats such as Tulsi Gabbard, are certainly not conservatives, but they recognize the flaws in the policies of their colleagues.
They support progressive policies I cannot get on board with.
But they are not goons or Democrat / Communist operatives in masks.
I believe they are the kind of leftists that Rufus is thinking about when he cites the detest for the Bigs that makes one common cause thread of connection with the right.
The Left is street theater with the same plot but different dialogue and details, new sets and costumes, sometimes different casts (sometimes the same) — Commedia dell’arte aka commedia alla maschera, commedia improvviso, and commedia dell’arte all’improvviso.
In other words, improvised masquerade, organized to address the hot topics.
The Tea Party was (is) a genuine “grass roots” movement that is more like a traditional play, to continue the analogy. Their issue IS the agenda, whereas the Establishment Left’s “issues” are just tools to use in service to their real agenda: power.
I added that adjective because I think the Left and Right share the Top/Bottom class structure you mentioned before saying this on the second GameStop thread Thursday:
“OWS was not about reform, but outright revolution.
Back then I couldn’t believe the naivete of the nice liberal folks who assumed the OWS was the Summer of Love Redux — never mind all the red/black colors, upraised fists, hard-core communist activists, and the slogan of the Occupy Wall Street website” – huxley
The Establishment Left and the Establishment Right are similar in their techniques of using the populist Left (OWS) and populist Right (Tea Party) when they can get any advantage out of them, and ignoring or destroying them when they can’t. BLM & Antifa have discovered that they aren’t nearly so vital to the cause of the Democrat Party now that Biden is in office and can do the work for them.
Wikipedia says Anonymous or some faux off-shoot is still active, but they certainly are not the new drivers they were at their peak.
I didn’t know that Facebook had “adult supervision”.
https://www.reuters.com/article/us-retail-trading-facebook-idUSKBN29X34P
Facebook temporarily shuts stock trading group after GameStop frenzy
(Reuters) – Facebook Inc took down a popular Wall Street discussion group, Robinhood Stock Traders, in a move its founder said was an unjustified response to conversations that have buoyed shares in GameStop Corp and other companies.
The MA Sec of State was on CNBC this AM with Kevin O’Leary a/k/a Mr. Wonderful.
The government guy was talking about the risks of the mah-ket. On and on. Mr. Wonderful said, “I disagree with everything you just said.”
O’Leary noted that short selling serves a good purpose in keeping valuations somewhat inbounds. He also noted that there is NO finance education in high schools and his kids went to school in MA.
I also saw another post today that even at $350/share, the market cap of GME is not crazy considering that it can pivot to a virtual business. It will be interesting to see if GME issues equity on Monday at this price.
I’ve been astounded over the years about how MA is so, so liberal. I guess I blame the schools and the Kennedys. The federal delegation makes me puke. Interesting to me that their forefathers were the leaders in a shooting war against the greatest power in the world at that time and their descendants want total protection and a risk-free society. Must prevent people from losing money in the mah-ket. Fighting the Redcoats was way riskier.
I bought one share of GME at $325. I will be rich next week!
Investing, we all know, is gambling.
It can be. For most, it’s what you do with your savings in the hope that the savings will grow in real value. Lots of different vehicles for savings with different advantages and disadvantages. Because you’re making rough actuarial calculations in allocating your savings, you are ‘gambling’ on an outcome. There are people trying to benefit from price arbitrage and sinking their money into exotica, of course. Beware.
“I’ve been astounded over the years about how MA is so, so liberal.”
Did you know that Massachusetts is 78% white, slightly above the U.S. average, and just 7.6% black, far below the U.S. average? And Massachusetts’ Latino population is also far below the national average. It’s a lot easier to be liberal if you look around and can still convince yourself you’re living in 1950s America.
Mike
I find Greenwald’s explanation very edifying. I only disagree with him when he asserts that the poor have not benefitted from the left’s machinations. As the entitlement state fully disproves it.
O’Leary noted that short selling serves a good purpose in keeping valuations somewhat inbounds. He also noted that there is NO finance education in high schools and his kids went to school in MA. — Cornhead
I’ve found the lack of financial education amazing for a long time. I’m pals with my my accountant who’s fairly smart. On this topic, I once made an off-hand comment to him that high schools really should require a little basic education in finance. He surprised me by saying “High school!? You mean third grade don’t you?”
He explained that he’s seen all types of financial horror stories with the parents of little kids and that the kids pick it up at an early age. Better to nip it in bud if schools are going to attempt this.
I’m sure we were talking about somewhat different aspects of financial education, but I suppose it is true that if you don’t understand the super-basic basics, then the rest is irrelevant.
_______
I like AesopFan’s Matt Taibbi article near the top.
AesopFan,
It just occured to me that Biden’s E.O. is how the global elite plan to facilitate the first world’s transition in the Great Reset. Not through new laws but through new regulations.
“Biden wants the review process instead to be “a tool to affirmatively promote regulations” and “to ensure swift and effective federal action” on everything from the pandemic, to the economy, to racial inequality, to the “undeniable reality and accelerating threat of climate change.” In other words … everything.”
Regulations concerning the ‘pandemic’; “papers please”…
The economy; the intentional extinction of small businesses and the gutting of the energy sector…
Regulations mandating racial “equality” to combat “systemic racism”…
And most of all regulations to address the“undeniable reality and accelerating threat of climate change”…
Of course, a Congress controlled by the democrat party will do nothing to rein in regulatory agencies bent upon fullfilling a holy mission.
Those who voted for this abomination of an adminstration are going to “get it good and hard”. As are we but it is we that’s going to make them pay the bill for what they have wrought.
Im on the battleline we hold boys! i dont mind loosing 4k if the big guys loose 40mil
–“Gamestop to $1000? | GET OUT of Robinhood! | GME stock”
https://www.youtube.com/watch?v=QM-0z5BDIQE
______________________________
The above is a comment to a crazy YouTube guy, “Chicken Genius Singapore,” tubing on GameStop.
I make no claims for the commenter nor “Chicken Genius” (with 200K subscribers).
My point is that this is war. This is the Alamo. This is Bastogne during the Battle of the Bulge. The GameStop army is fully prepared to take losses to send their message. They keep saying, “We hold.”
It’s not a bad strategy to make a short squeeze when a stock is 138% shorted. But it’s about much more than that.
“Did you know that Massachusetts is 78% white, slightly above the U.S. average, and just 7.6% black, far below the U.S. average?”
Portland, OR is also an HQ for persons of pallor. WA state has plenty.
Seems like there are people moved by racial animosities in the ghetto. And plenty of pie in the sky prog madness in some prosperous white areas.
Plus most every area of concentrated gov’t employment, DC and state capitols, some university towns.
It’s not just one thing but there are a few patterns to discern
Probably photoshopped? Still funny as heck.
https://twitter.com/The_Analyst/status/1355182749032841219
huxley,
That is just so bizarre. “Let’s get into the market so we can lose money and teach those hedgie SOBs a lesson!” Yes, the country is extremely divided politically, but this has got to be some kind of new benchmark or indicator.
I do believe that Ymarsakar is correct that the markets are down sharply over the last three days because some hedge funds caught in a downward spiral are raising cash by tapping into their most valuable positions: their long blue chip stock positions. So everyone is feeling the pain. (Except for those who scored a massive win in Gamestop and took the cash.)
TANSTAAFL: Who are RobinHood’s customers.
“That is just so bizarre. “Let’s get into the market so we can lose money and teach those hedgie SOBs a lesson!” Yes, the country is extremely divided politically, but this has got to be some kind of new benchmark or indicator.” – TommyJay
This story in the NYP unpacks a lot of the motivations fueling the Redditors. It’s a little more complicated than TommyJay suggested.
However, it may indeed be a new benchmark – Black Swan, tipping point, or what you will.
https://nypost.com/2021/01/28/inside-the-reddit-group-that-left-traditional-investors-5b-in-the-red/
Nerds (or close affiliates; not all gamers are geeks) having fun don’t like getting dissed by people for whom they already have a marked antipathy. And GameStop is probably a nostalgia-point for many of them; it is for my kids. The Hedgies take down lots of companies, and that didn’t inspire a “Reddit Spring” moment, but GameStop is theirs.
There’s a misconception that the personality types represented more heavily among nerds & geeks don’t have emotions, but that is very false. They just don’t display them the way other people do.
And they not only get mad, they get even.
So they launched the online version of Occupy Wall Street.
I mentioned the resemblance to GamerGate on an earlier thread (wonder if some of the Redditors are veterans of that war?) and Brandon Morse made the same connection (of course, he gets paid for his opinion, but it’s nice to know someone is on the same wave length).
https://redstate.com/brandon_morse/2021/01/28/318179-n318179
TommyJay, I wondered that. Second- and possibly third-order effects have been noted by moi in my own portfolio.
The good news – here are a couple more stories in the Small Guy cheering section.
https://redstate.com/nick-arama/2021/01/29/318941-n318941
https://redstate.com/bonchie/2021/01/29/behold-the-absolute-worst-take-on-the-reddit-revolt-agains-the-hedge-funds-n318910
https://townhall.com/tipsheet/mattvespa/2021/01/29/barstools-portnoy-shreds-wall-street-elite-someone-needs-to-go-to-jail-n2583901
The bad news — it’s unlikely any of the Wall Street manipulators will go to jail for anything; we can’t even seem to bust people who manipulate official government documents and lie to the courts.
https://www.politico.com/news/2021/01/29/fbi-lawyer-trump-russia-probe-email-463750
Interesting observations at Chuck’s link – Robinhood runs the same model as Facebook, Twitter, Google, etc.
If you aren’t paying for a service, then you are the product.
https://www.vice.com/en/article/qjpnz5/robinhoods-customers-are-hedge-funds-like-citadel-its-users-are-the-product
I now know enough about Wall Street to qualify as a couch-potato expert:
if you’ve read 2 articles about a subject, then you’re an expert.
It used to be “cocktail party expert” but we have to stay locked down.
I’m not an expert, of course, and I don’t play one on TV or the internet, but this article in the Vice sidebar piqued my interest, and I discovered a little nugget that supports the contention that the Small Guys are getting hammered by the government and media tech for things that the Big Guys do all the time.
And Big means yuge.
https://www.vice.com/en/article/z3e7ye/apple-lost-the-most-money-in-history-in-one-day-still-worth-dollar2-trillion
Bryan Preston picked up the OWS analogy also, and raised several questions.
https://pjmedia.com/news-and-politics/bryan-preston/2021/01/28/has-the-robinhood-app-been-unmasked-as-the-sheriff-of-a-rotten-system-n1415925
It would really put the icing on the cake if the answer to Preston’s “whodunnit?” questions turns out to be China.
Turns out there may actually be some kind of connection, even if it’s just the now-normal fact that China owns most of our government leaders on the Left, and probably not a few on the Right.
https://redstate.com/nick-arama/2021/01/29/318823-n318823
If Psaki won’t give the real answer, that means even DeMedia can’t spin it to look good.
Thanks for link to Motley Fool for “gamma squeeze”. Going up – faster!
And, maybe, coming down faster, too.
Taibbi’s good note linked to even better Forbes articles:
https://www.forbes.com/sites/antoinegara/2021/01/26/the-hedge-fund-genius-who-started-gamestops-4800-rally-now-calls-it-unnatural-insane-and-dangerous/?sh=5a4741ca303b
First I hear that Dr. Michael Burry bought 3.8 million shares last April, around $3-$4. He’s sold a lot, now owning 1.7 million.
Ryan Cohen bought 9 million shares
https://www.forbes.com/sites/jonathanponciano/2021/01/26/gamestops-massive-surge-creates-a-new-billionaire-as-wall-street-bets-against-reddit-traders/?sh=470fa8a635ae
Cohen & 2 allies recently got 3 seats on GameStop’s Board of Directors.
So in one sense this is a kind of Takeover battle. At least partly. Sometime in the next few months, (weeks? days? probably not hours), we’ll be hearing about who are the real owners of GameStop, the company. And maybe they’ll be issuing more shares to increase the 69 million or so they now have, so as to have cash for making Cohen-desired changes.
Another part is normal anger at the Too Big To Fail arrogance of the bailout receiving super rich. Taibbi notes a bit how those “shorting” are so often right, and were right in 2008:
The shorts were right about all the other banks, too. The Inspector General of the TARP, Neil Barofsky, eventually told the Financial Crisis Inquiry Commission that 12 of the 13 biggest banks were on the brink of failure when they got saved — by the short ban, by emergency overnight grants of commercial bank licenses to companies that weren’t commercial banks, by the bailouts, by the subsequent avalanche of underwriting fees, and most of all, by the lies about all of the above.
One of the other articles talks about how new funds are all looking to short GME – so maybe a “short ban” would be good for now.
Or, maybe almost 689,000 redditers can own an avg of 100 shares at a stable $300 (including Cohen, and Bury – but not the Korean Fund manager who just sold it’s full stake, nor the youngster whose mother bought him 10 shares 2 years ago and now he’s got $3,250 to buy games with). So that’s $30,000 “value” for each non-selling owner…
How much is “moral superiority” worth? WEIRD people are ready to punish the “too unfair” in offering to split money – see the Ultimatum game write ups.
https://www.sciencedirect.com/topics/neuroscience/ultimatum-game
It seems people in other cultures have different norms than those from Western Educated Industrialized Rich Developed places, like I’m from.
I suspect in 6 months the shorts will have been proven “right” and the price will be down to … $50?
Down yes.
How much, who knows? not me.
With a new business plan. Hopefully successfully creative.
I do hope more shorters
take it in the shorts.
Waiting for the DOJ to arrest some of these memers any day now…
https://www.powerlineblog.com/archives/2021/01/the-week-in-pictures-extra-special-gamestop-edition.php
Being a conservative means listening to both sides of a controversy.
https://www.powerlineblog.com/archives/2021/01/gamestop-contrarianism.php
OK, I listened.
However, I stand with the commenters, who ratioed Paul thoroughly on this one.
Some of the best:
There were several variations on the above.
As for Paul’s inane comment, you can write your own responses, but mine is this Corollary to Mark Steyn’s Maxim:
If the financial culture forbids respectable investors from making certain trades, then the markets will turn to unrespectable ones.
#ThisIsHowYouGetMoreTrump
And this excellent point:
Correction: the author at PowerLine was John, not Paul.
The commenting system at PowerLine makes linking individual comments impossible (well, you can do it, but going to the links won’t “land” on the comment) , and I thought these were very pertinent to the discussion:
Looks like I was right about the nostalgia component; it was kind of obvious, though.
And about the Steyn Corollary.
Charlie Six Actual said — It’s almost become an existential struggle between the two camps at this point, and at least on the Redditard side it’s looking increasingly like it’s about more than “just money.”
Sure sounds a lot like the consensus here at Neo’s place.
There were many other insightful and informative comments — too many to read them all!
Several PLB commenters mentioned this post by Sean Davis. He gives a succinct description of what short selling is, and why it became a problem for the Hedgies, and then explains why this is about more than just money.
https://thefederalist.com/2021/01/29/the-gamestop-saga-isnt-about-finance-its-part-of-the-ongoing-war-between-elites-and-populists/
One of the PLB commenters noted that the stock of Bed Bath & Beyond is way down, after (former) customers made known their displeasure at BBB’s foray into partisan politics against the MyPillow guy Mike Lindell.
There was a discussion on that boy-cott starting here:
https://www.thenewneo.com/2021/01/26/led-by-rand-paul-republicans-say-the-senate-trial-of-citizen-trump-is-unconstitutional-also-leahy-in-hospital-for-observation/#comment-2537242
This was the news before the wokesters dropped the popular bedding.
https://www.forbes.com/sites/warrenshoulberg/2021/01/24/why-has-bed-bath–beyond-hit-3-12-year-stock-high/?sh=6c6149f9f0cf
This was the news afterward.
https://noqreport.com/2021/01/29/bed-bath-beyond-stock-collapses-by-36-after-mike-lindell-canceled/
One of the very interesting points in the Forbes post was that BBB’s rise was, in part, due to events that were almost an exact copy of GameStop’s.
I don’t know if the Redditors turned against BBB, but a lot of other people did.
The activists (very peaceful, I assure you!) have a letter you can take to your local BBB, and an online petition.
https://www.basketboycott.com/wp-content/uploads/2021/01/Bed-Bath-Beyond-letter.pdf
https://mediaactionnetwork.com/sign-the-petition-to-demand-bed-bath-beyond-reinstate-mypillow-products-in-their-stores/
Action may extend to other retail giants that are determined to get woke and go broke:
https://www.usatoday.com/story/money/shopping/2021/01/20/mypillow-backlash-jcpenney-kohls-drop-brand-mike-lindell/4206669001/
Who thinks it’s such a good idea to diss half the country (and probably more than half of their own customers) just to virtue signal their social justice bona fides?
There is some good news in all of this!
https://notthebee.com/article/this-kid-just-cashed-out-big-on-gamestop-stock-his-mom-bought-two-years-ago
The avg cost for gme stock was 120 to 140 last i saw. The lowest gme went down trade werk was 190 to 220. That means majority of holders have an average gme stock bought at price. The next group is 300 ish.
Still profitable.
It was not the pull back on appke or others this week that tipped me off. I was day trading several stocks monday to thursday. I noticed an unusual pattern. Volume was too high. Volatility was too high. Very unusual. Not a pull back where people sell.
This was not a burn your money thing. Those that bought gme at 15 and .56 are holding. They lost 15 million in one day but their current is 13 million. 50k gme stock boufht at 15 usd.
These big players do not trade small.amounts so they tend to hold and hold. The gme was not hold and pray. This is not a gambler at casino. This is the house always winning. Market manipulation using the rules.
It works.
My personal pov. I can afford to lose 2 gme shares entirely. They stopped put and call option buying. Way bigger than the stock halt.
Every day trader can easily afford 2 or 1 gme stock. It is about a day or 14 day s worth of options or stock gains. But also, we make money day trading the gme stock. So technically, the skilled can make more than enough to cover losses.
We know how the big caps manipulate the charts. We see it every day. We just dont have the capital or desire to fight them. The strong survive.
Just not getting screwed by. Corona 2020 or big cap swing pump dump, is good enough.
This is why theh are in trouble now that gme and reddit have gotten inti main sewer news.
There are wizards elon musk and plenty of small traders who will pool iur resources. Hokding a few shares. Not crazy like 1or 15k worth. Not crazy. But worth it. Because some of us know. We know what can happen with the short put and call situation. Your account can blow up ilwith naked outs calls with no cover and margined.
The valuation of our major tech companies, on paper, is incredible. I hope Masayoshi Son’s trades haven’t over inflated those valuations.
While Microsoft has done many ill advised acquisitions over the years, Apple for the most part has built a cash horde. It is currently at $195B. That’s so huge it would fund the US gov. for about 2.3 weeks. (Just trying to put it into perspective.)
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Here is my pet peeve about the Gamestop thing and our markets. The financial aspect of Wall St. began with people standing around a buttonwood tree at the foot of Wall St. exchanging paper shares and bonds. I like computers and software, but when electronic trades are made it should be an exact analog to moving paper shares, at every moment.
Below is more than you want to know about short selling and naked short selling from Investopedia:
I think this establishes that the SEC only cares about what happens at the end of the 3 day settlement period. Three days is a long time. I have heard stories prior to 2008 that brokerages would “locate” a block of borrowable shares and then repeatedly over utilize that single locate for many funds wanting to short. I love the part in the above quote about requiring that a brokerage “believes” that they can actually deliver shares. Plus we now have added close-out standards, whatever that means. I’m doubtful that there are many teeth in those standards.
The so far modest market calamity that we have now is a combination of leverage and almost certainly naked short selling. It’s my belief that much of it is driven by shares that people paid for and just don’t exist.
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That Patrick Byrne, former CEO of Overstock, video mentions 3 categories of problems with the short selling that he experienced. #1 and least important in his opinion was that when it comes time for shareholders to vote, the corp. can’t even come up with a share count (and who owns them) that is remotely correct. So in Byrne’s experience, the vote count ends up being too high by as much as a factor of two. Wow. That’s the least important?
Ymarsakar mentions naked options which I heard on the news also. I know precious little about options. This means the trader doesn’t have enough collateral to back up the option contract properly? I had heard that many of the Redditors were too cash poor to actually exercise their options and purchase shares. Is that the same thing Ymarsakar, or two different things?
TommyJay:
I too have found it difficult to get a good nuts-and-bolts understanding of the GME phenom. Here’s a good YouTube I found. The creator is a young, energetic guy with mad video skillz.
He does a good job on shorts but leaves out the puts and calls which are surely an important part of the story and which I would like to better understand.
–Stephan Graham, “The GameStop Infinite Money Glitch Explained”
https://www.youtube.com/watch?v=8YrnTbzuOWM
Graham makes the case, mostly ignored in current reporting, that there is a rational value argument for GME not to go gentle into that good night like BlockBuster. GME has deals with Sony and Microsoft, and the game consoles still have disc drives.
In fact even Michael Burry, one of the 2008 hedge fund guys who foresaw the subprime mortgage bubble blowing, has gone long on GME. (See “The Big Short” film for the Burry character.) Though Burry is unhappy with the reddit cowboys entering the game.
Graham says that no one knows how the GME story ends, beyond that it will end. It does give GME a second chance instead of being ground down into the dust by the hedgie shorts.
To the non traders here , we are not betting. This is risky yes but the enemy has risked way more and is weaker.
This is how markets are manipulated. They need 138 percent of all shares to settle the trades calls and shorts. Demand meet zero suppky. What price on food in a famine?
Options trading is rather arcane, even for pros. I understand it because i trade it.
https://youtu.be/7PM4rNDr4oI
Why is it 2.5 hrs? Because nobody wants to lose 1k to 150k of capital because of a misunderstanding. Worth more than 1 hour. Or 1 day of work.
Puts are where you offset the risk by having the contract writers take on said risk.
Call options are options. You can exercise or not. If you sell a call option, which is what hedgies sometimes do, you need the actual 100 stock or else you are short or naked. So the option writer is holding way more risk than nust tge option trader. The trader can just trade the premium on the contract without ever buying or selling a stock.
This is why it is arcane.
To cover 1 contract of gme stock at 100 usd, you need 10 000 usdin cash.
Level 3 options may use margin but then your account can go into negative usd. Debt.
But the premium or insurance risk on the contract is usually just .2 to 2 or 3. Meaning 20 usd to 200 usd.
This contract is traded on the premium, which goes up if it is in the money.
The orthodox criticisms of the reddit WallStreetBets (WSB) cowboys driving the story — like the one appearing in Powerline by a friend of John Hinderaker, which AesopFan has commented upon — mostly misunderstand what the WSB boys are up to.
The critics assume the redditors are dotcom newbs piling in to GME for some easy money and will be killed in the market as newbs usually are.
But I have read these guys and they are not wide-eyed, gonna-make-me-a-million, day-trader fools. Most of them don’t care about the money, though they wouldn’t mind making some, but that’s not the point. This time it’s personal. As they see it, they are fighting for the little guys everywhere against the Wall St goliaths.
It’s more like that scene in the “300” film about the 300 Spartans fighting the Persians at Thermopylae. The Persian general threatens them with extinction in battle:
___________________________________________
Persian: By noon this day you will be dead men. A thousand nations of the Persian Empire descend upon you. Our arrows will blot out the Sun.
Spartan: Then we will fight in the shade.
–“300 Scene: We will fight in the shade…”
https://www.youtube.com/watch?app=desktop&v=qvx7oXqiaMM
___________________________________________
Of course, it’s not life or death. The reddit boys aren’t betting the farm. Just a few hundred, maybe a few thousand, dollars. But there are enough of them that it makes a difference when a stock is over-shorted by 38%.
I can see the point of buying a share, getting the paper certificate, framing it and hanging on the wall as a memento, a trophy, a goddamn work of art.
I’ve also learned some new jargon out of the GME story. I kept running into the term, “diamond hands.” Here we go:
_______________________________________
‘Diamond Hands’ and ‘Paper Hands’
While we’re on the topic of holding, these two phrase refer to people’s hands — but it’s really about what they can stomach. If you’ve got “diamond hands,” you’re ready to hold a position for the end goal, despite the potential risk, headwinds and losses. If you’ve got paper hands, you exit a position, or fold, early on because the heat of the situation might be too much.
https://www.marketwatch.com/story/tendies-diamond-hands-your-guide-to-the-lingo-on-wallstreetbets-the-reddit-forum-fueling-gamestops-rise-11611780829
_______________________________________
There’s a definition of YOLO, which I already knew, but has particular resonance in this case:
_______________________________________
‘YOLO’
Standing for “you only live once,” this acronym is already out there. But it’s got special meaning in WallStreetBets, where it’s sometimes used as a verb, to describe the act of gambling big, wagering like there’s no tomorrow.
One Redditor said, “For those making large bank on this I congratulate you. For those who may lose a little, F it YOLO and this is epic history in the making. Go get em!!!!”
huxley,
I’ve been baffled by my intellectual superiors’ inability to wrap their minds around the fact that profit isn’t the motive of the Redditors.
I have paper and diamond hands then lol. I held through march 2020 and would have bought more but i mistimed it. Astrology told me there would be a quick recovery but i had never seen the hedgies short stock pre market for 2 weeks or 4 weeks before. I was off my pattern. I did not even know what a short or put was back then.
Amazing i did n9t get slaughtered. Astrology and diamond hands saved me.
The reason your stuff crashed was because 1. Insider traders sold in jan 2020 and 2. Hedgies wanted to make profit off the panick.
Had to stop that one hard.
I was using a 2x marginleverage throughout march and april. Robinhood s 5 % fee was very good. But potential losses were high. Those stocks are now appian and novitae, jumped 2x. I got out too soon due to paper hands. God just rebalanced my account though. Gained back what the red was.
Puts woukd have been better for me. Plus shorting in march 2020
Tommy, option holders can exercise or not. The option writer or guy short an option, is exercised upon. How that contract works. If you exercise, the system assigns it to a guy short that option. If he is covered, his stock is sold or stock is bought using bis collateral or margin.
A contract is written out of thin air. Whomever buys that to hold, pays the premium for the hedge or option.
You dont need to know the arcane rules of options to know how to trade them. But if you write them and still dont know… big problem.
The max you can lose holding a long call or long put is the premium you paid. But the contract is worth almost as much as if you had 100 gme stock but you need to exercise it to make bank.
Redditors could write or buy contracts at price levels that were worth 1 usd a contract. Not 100 but 1. Then when the short squeeze happened, they sell the contracts to us traders that can exercise the calls. The holders then exercise the option to buy gme at 100. Their 10k goes up to 40k once gme is at 400. They sell the stock, getting 30k profit minus the high premium they paid. The gamma squeeze happens when the contracts are exercised. But the hedgies dont have the stock to sell to the call owners. They have to go short to fulfill the call assignment.
This is why they halted options trading for gme. Because they understand the play. And unfortunately forthem… so doi now.
I’ve taken a couple trading classes and know how options work, though I’ve never used them. I’m curious how GME is being traded — the proportions of shorts, longs, calls and puts, and how that affects the current story.
I bought an S&P index fund early last April at 2200. It started going up so fast, I didn’t buy more. It’s now 3700, which I can’t believe.
We’re in dotcom territory now.
This is NOT really Little Guys vs TBTF Big Bad Guy. Not really.
GameStop, today, remains mostly owned by Big Guys.
Like the biggest, Black Rock.
https://www.businessinsider.in/stock-market/news/blackrock-has-likely-made-1-2-billion-on-gamestop-as-day-traders-buy-the-stock-to-stick-it-to-wall-street/articleshow/80482402.cms
Here’s the list of Institutional owners as of last Sep (way out of date), including Michael Burry’s Scion Asset (sold 1.7 mil shares)
https://www.nasdaq.com/market-activity/stocks/gme/institutional-holdings
240 Institutional Holders
77,120,414 Total Shares Held
There are 68.9 million shares (rounded to 70) – but 77 million held?
10% fraud right there.
TommyJay’s Patrick Byrne vid from 2012.
Maybe fraud – maybe they are “counting” some of the shares which were borrowed for the short selling? Maybe that’s even legal? (It shouldn’t be)
Most of these institutions include huge numbers of 401K retirement funds – and most are mostly long buyers, looking to buy and hold. Any could sell at any time.
I think Ryan Cohen bought his large stake from FMR (Fidelity).
Nice quick chart of GameStop activity (great title):
https://www.nasdaq.com/articles/gamestop-short-squeeze%3A-when-elephants-fight-2021-01-28
When elephants fight, ants get trampled — is the Cambodian proverb.
Any of the many big institutional investors can fix a price, $300 or $400 or $200 or $100, and agree to sell at the price and probably find plenty of short sellers willing to buy at that price. Maybe $500. Maybe $1000.
But if any do that, some other will sell at $990, or $490, or $390 — this is how cartels break up, but small cheating.
How many shares has WSB (WallstreetBets) buyers bought? I don’t see that in the news – it’s certain to be far far less than the number short sellers have ALREADY sold.
Unlikely jail time, possibly not even illegal due to lousy regulations – but very possibly some bankruptcies and breaches of contract by the short sellers, Melvin going under?, Robinhood? (where? at the Robbin’ ‘hood) plus maybe even Citadel.
What is a call option? An option, but not the obligation, to buy some number of shares of GME at a specified price within a specified time.”
Like 10,000 shares of GME* at $115 on Feb 1.
What is today’s price of such a call option? (Black-Scholes options pricing theory).
If today’s price is $10, such call options are usually very very low, like maybe $0.10, because the share prices looks very unlikely to rise that high.
If today’s price is close, like $110, the price is much higher and closer to the price of the shares (but there’s a bid-ask market for them, too), maybe $1.00.
If you had bought 10k Feb call options in Dec for $0.10, which are now maybe worth $1.00, you can decide to cash out early, and your $1,000 goes up to $10,000 (minus commissions). (10,000 * $0.10 is what you paid at start)
If today’s price is $315, those 10k options would be worth 2,000,000.
Huge upside potential with very risky options – such big swings very seldom happen.
If you don’t like reading charts like this, options are not what you should invest in – but the ability to invest in call options is a big part of the upswing of GameStop.
https://www.stockoptionschannel.com/symbol/gme/?symbol=GME&month=20210205&type=call
MORE info, in detail, than most of you want – but this is what analysts look at (and I used to do that, a few decades ago)
*I’d like to know more details of a famous Dec tweet where billionaire Palihapitiya said GO for this; didn’t say how many he bought, nor the strike price he paid.
Tom Grey:
Sounds like you know more than I do.
I’m sure the WSB holders are small change next to the Big Guys. Clearly the Big Guys aren’t eager to help the short sellers fully unwind just yet either. So they’re holding too in the face of a massive cash-out at $325.
I’m trying to picture the endgame.
I don’t believe Melvin has covered all its shorts, though it’s in their interest to say they have — to encourage holders to sell.
“We’re in dotcom territory now.” — maybe.
Christian Capitalist civilization has never seen a “hyper asset inflation” — where the gov’t prints money, but with “no inflation”. No big increase of bread & milk, clothes & gas & cars going up in price; no big wage increases.
Yet house prices in good areas boom. Stocks boom. Gold & Bitcoin boom. “Assets” boom, especially rich people’s assets.
The poor get richer, slowly, but the rich get richer more quickly.
There’s no legal limit to how high GameSpot will go.
There’s no legal limit to how high Apple, or Tesla, Google (/Alphabet), Facebook, or especially Amazon can go. 2 years ago, Apple broke the $1 Trillion level of market cap (capitalization = number of shares * price); rose to over $2 Trillion, now ~1.3 Trillion; almost 10 billion shares.
Nobody knows when some GameStop institutions start selling – my guess is before $400, and the fine short-haters will buy some, but I doubt they’ll be able to keep the price up. Yet, squeezing short sellers is quite different then pump and dump, tho not mutually exclusive. Esp. for the Big Guys.
“Modern Monetary Theory” sort of says that as long as interest rates are near zero, it’s OK to print money. That’s what the Fed & US budget deficits have been doing for over a decade.
I used to believe, strongly, this would be terrible. It won’t surprise me if it turns terrible, but now I’m not so sure “it WILL”.
It should be clear to all that we need a better metric than the Gini co-efficient to measure income inequality, and we need a political program whose goal is to have the median income of American taxpayers increase faster than the increase for the top 10% (90 percentile) or top 1% (99 percentile). [But that’s a different rant…]
The GameSpot endgame has some bankruptcies, and lots of early short sellers losing a lot, but maybe lots of late (over $100? over $200, $300??) short sellers making huge amounts – depending on where the price “stabilizes”.
Unless the SEC or other gov’t / NY Stock Exchange quasi-gov’t / Fed take other actions. Like restricting short selling.
Or, restricting information about short selling, so retail folk won’t know – I saw one column suggesting that.
It’s rigged for the super rich, and I don’t see that changing fast – but it might be a little more clear to a lot of folk.
Ymarsakar helped me with his first response. A trader who sells a call without owning the shares in question, which he/she may have to deliver later, is writing a naked call option. It’s very analogous to naked short selling, or at least the “naked” usage is similar.
Tom G., I saw the CNBC interview with Mr. Palihapitiya this week. He claimed he netted $500K from following the WSB redditors trades. I forget his phrasing, but he implied this was chump change. He’s donating it to BarStoolSports’ small business charity.
I think I’m repeating myself now; apologies. The WSB strategy was to buy GME call options, thereby leveraging their very limited cash. Because of said cash scarcity the vast majority did not exercise their right to buy shares.
And as Ymar said, they can just sell the options instead of exercising which is what they did, except … So many WSBers were selling options that they drove the options price way down relative to where it should have been. (According to Jon Najarian who watches this stuff.)
Ymarsakar turned me onto the Patrick Byrne video. Yes, I wondered if some of what he said were very extreme cases.
I added to a number of my long positions, before or near the bottom in 2020. I’m always early. (I marvel at the psychological aspect of trading. Better know yourself well, and track the history of your mistakes.) My fun and profitable position was in Roku. Nothing exotic. Buying as low as $71 and selling as high as $400.
I missed some of Tom Grey’s comments on my first scan.
… where the gov’t prints money, but with “no inflation”. No big increase of bread & milk, clothes & gas & cars going up in price; no big wage increases.
I’ve met a friend of a friend on a few occasions over recent years, who is one of the smaller (I think) hedge fund players. He seeks out very smart people and hires them to do research. He commented on how low inflation is, in spite of all the money printing and stimulus. And he knows the proximate reason for this, the velocity of money is very low and going lower (about 1.5 years ago). But he has no idea why the velocity is so low.
He commented on how low inflation is, in spite of all the money printing and stimulus.
TommyJay:
I’ve been reading this guy, Kartik Gada, off and on for over ten years. He’s an investment banker specializing in hi-tech and teaches part-time at Stanford. He has a blog called “The Futurist.” (I’ve linked this before.)
His thesis, in a nutshell, is that technology causes deflation which offsets government debt and inflation, and as tech penetrates more deeply into the economy, the greater that offset. But let him tell it:
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Executive Summary
The accelerating pace and diffusion of technological change has taken control of an ever-growing fraction of the world economy. This fraction is being assimilated into a different set of economic fundamentals, such as the rapid and exponential price deflation inherent to technology. The effect of this was insignificant until recently, but is now beginning to create conspicuous distortions in many economic metrics, and is just years from being the dominant force across the entire economy.
In response to technological deflation, the central banks of the world will have to create new money in perpetuity, increasing the stream at an exponentially rising rate much higher than is currently assumed. This now-permanent need for monetary expansion, if embraced, can fund government spending more directly. This in turn creates a very robust, dynamic, and efficient safety net for citizens, while simultaneously reducing and even eliminating most forms of taxation by 2025-30. Alternatively, this monetary expansion can be a means to create Sovereign Venture Funds that can hedge a country’s risk far more effectively than existing sovereign wealth funds.
Failure to recognize that technological deflation mandates permanent and ever-rising central bank monetary expansion that can and should gradually become the primary source of government spending could result in countries falling behind more enlightened countries in a very short time.
The nature of current worldwide technology is to link various disruptions with each other, consume monetary liquidity to generate deflation, and lower the effective prices of most goods and services over time. Therefore, the entirety of worldwide technology has to be seen as a holistic economic entity, and can be defined as the ‘Accelerating TechnOnomic Medium’, or ‘ATOM’.
https://atom.singularity2050.com
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I’m not sure I go as far as Gada goes into singularity thinking, but I’m convinced the acceleration of tech is part of the answer to the low inflation. A good thing too.
Here’s a web page in which Gada presents his specific reasoning for the above:
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…In the United States, the Federal Reserve controls the Fed Funds Rate, which it raises when it expects inflation to be higher in the future, and lowers when the economy is weakening and/or inflation is trending too low. Until the end of the 20th century, this process was relatively straightforward, with the Fed Funds Rate very rarely ever going below 3% or so. Inflation was discussed as though it could fall in only two categories; ‘high’ and ‘very high’. It was further assumed that whenever employment reaches a threshold of ‘full employment’ that inflation was certain to accompany this. Many practices that require inflation to succeed, such as taking on mortgage debt, were assumed to be indisputable wisdom that had no such dependency.
However, after the technology boom and bust at the turn of the century, inflation was conspicuously missing. The Federal Reserve had the freedom to lower the Fed Funds rate all the way down to 1% in 2004, and while observers expected this would finally cause inflation, it still did not. Relatively few economists were particularly curious about why that might be, since the rate was still above zero, and the possibility of rates at zero did not seem realistic…
–“The Overlooked Economics of Technology”
https://atom.singularity2050.com/4-the-overlooked-economics-of-technology.html
Better tech really IS much better – but it’s being used by gov’t policy to make the rich richer faster.
The improving tech should be causing deflation, meaning bread & milk & products are cheaper. Lots of studies show how, for many products, the number of hours worked by the avg (or median, which is better) worker to pay for the product is going down. The flood of money printing by the Fed should make it go up.
This guy’s 15 min rant agrees with me on how the Fed is making the rich richer faster, but talks a bit too much about inflation that seems overboard.
https://www.zerohedge.com/news/2021-01-30/feds-role-exacerbating-gamestop-chaos
He claims that a lot of support for the BLM riots is against the system which gives 900 billion gov’t support to normal folk, and 2 trillion support to the rich. I suspect that is true insofar as so many whites feel the system is rigged.
Why is the Fed using QE to buy Apple bonds, or Buffet’s Berkshire Hathaway bonds? (To make the rich richer faster)
Check prices:
https://www.in2013dollars.com/Milk/price-inflation
Here are milk prices rising only 1.7% per year since 1997 (for a 48% change so $5 of milk then costs $7.43 today). This is really low, even below the Fed target rate of 2%. The target rate being too low is why the Fed can justify 0% interest rates. (Miles Kimball, among others like in Germany & Switzerland, supports negative interest rates.)
The tech deflationary angle is too little discussed among economists. The gov’t helping the rich more than helping the worker at least is more discussed.
Asset hyperinflation is only now starting to be discussed. See
https://seekingalpha.com/article/4352767-buy-when-you-see-asset-hyperinflation
The inflation is not in the cost of goods, it is in the cost of stocks. Because why not. If you put interest to zero, then people know the dollar is going to inflate, especially when federal reserve keeps printing trillions on top of trillions to provide “liquidity” to markets and the economy.
This is why the stock market was higher in Dec 2020 than in January 2020, with the big March V crash hitting -40% or higher.
So partially the inflation is actually offset by gold, silver, crypto currency, and stocks. Because people have their digital “bank numbers” in those stuff, they trade in that, instead of trying to trade on toilet paper and sky rocketing the price.
I am not any different. I have been told by spirit and the godhead to diversify. Some into gold (Glint card via Rubin), stocks, cash (actual case not the digital stuff), and crypto currencies.
Cause why not?
There’s not enough space to buy too much food or whatever people are buying, like ammo.
This means I am taking money out of the economy, so to speak, in terms of the price of actual goods. Because I am not bidding or competing with other people for these material resources, which I alraedy have enough of. We are pre setting for the “Reset” so to speak.
Of course the dark state wanted to send us into hyper inflation but I counter voted that. They wanted 500% increase in price of imlk and gas. The markets tank, everyone panicks, pandemic kills everyone, than the WAX REALLY KILLS EVERYONE, and you get what you get.
Easy. Massive wealth transfer. You “short” the American republic into zero cents mode, then BUY IT ALL UP. Now you own everything and all the slaves have nothing, cause they sold everything in a panick, their rights, their masks, and their pants.
I’m curious how GME is being traded — the proportions of shorts, longs, calls and puts, and how that affects the current story.
GME options and AMC options, have been disabled since Thursday if not before.
It took them a few days since monday to figure it out, but they are mostly high IQ, so they figured it out. This was to stop the “gamma squeeze”.
The short squeeze was from 15 USD to 50-100 USD. The super short squeeze put the price to 200, then 380, then 465 something. A gamma squeeze would have sent it to Tesla 1k or above territory.
And a financial “reset” collapse, would put the price of the stock at 2000,5000, 10,000 territory.
How much is food and real estate worth in a great depression or famine?
Essentially, because banks, margin loaners, hedgies, and clearing firms are have gotten liable to GME stock contracts, they need to pay out. So the price of GME is logical, because it is based on cutting open the hedge funds and banks, where the money is. It is not based on GME’s value, entirely.
Of course they don’t have enough money to buy the stock, because they need Gamestop to issue more stock. WHich is probably why they bought time over the week end to do. SOme kind of private equity deal or even public deal.
But Melvin already had to be bailed out. So they are already in “trouble” territory. They aren’t safe.
The astrology is also really not in their favor. It never has been for the entirety of 2020.
Stop The Game is quite a good incantation for this manifestation. Cause wall street cheats.
So ideally, to them perhaps, the ycan just declare bankruptcy and declare that all of us that should get our shares, will be handing over our shares or they won’t fulfill the contracts they are short.
Never mind, ignore us, slaves. Wizard of Oz territory.
But no matter what they choose… they are in check mate, under the Heavens. No matter what they choose, they cannot save the system because too many people are aware of the deception now. The main sewer fake news didn’t do their job right. Nobody told them to suppress this story in time.
Inflation is a can of worms as a topic. huxley’s prof. makes me want to bury some physical gold somewhere. Did I ever mention that I carry 50 trillion dollars in my wallet? That is, a single bank note representing what used to be 50 trillion Zimbabwe dollars.
For those with too much time, I can recommend reading “Fiat Money Inflation in France,” by Prof. Andrew White of Cornell, written in 1912.
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Amazing factoid: Last Monday’s trading volume in GME was bigger than any single S&P500 stock.
Inflation is a can of worms as a topic. huxley’s prof. makes me want to bury some physical gold somewhere.
TommyJay:
Say more. I’m not wedded to my “prof.” I started as a Benjamin “The Intelligent Investor” (1949) Graham guy.
Speaking of “cans of worms” to refer to gold, silver, and cryptocurrency (bitcoin) as
similar assets is somewhat fantastic: one of those “things” is not like the others. Best consult my astrology. 🙂
om:
A cautionary story I read recently about a guy who got early into Bitcoin. Except …
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A San Francisco man who lost the password to a thumb drive with $220 million worth of bitcoin inside says he has “made peace” with the loss.
Stefan Thomas has used 8 of the 10 attempts allowed by a secure thumb drive to reach his 7,002 digital tokens — which are now worth nearly $40,000 apiece and have been minting millionaires left and right — and is no closer to reaching his funds.
https://nypost.com/2021/01/15/man-who-lost-password-to-220m-worth-of-bitcoin-says-hes-made-peace/
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However, he has substantial Bitcoin stored elsewhere — i.e. not on that thumb drive — so he’s still wealthy.
Apparently, it’s a common problem. It’s estimated that 20% of the world’s Bitcoins are lost to their owners:
https://www.nytimes.com/2021/01/12/technology/bitcoin-passwords-wallets-fortunes.html
huxley:
I was thinking of a similar outcome that befell a big time drug dealer whose bitcoin thumb drive got sent away in the wheelie bin while he was in the slammer. That unfortunate sod was in the UK IIRC. Great minds think alike?
Bitcoin is the sci equivalent of credits.
Ds 9 s latinum gold pressed
Good luck with that, buying beans and rice, Buckwheat.
I didn’t say anything about silver or bitcoin, though silver is fine substitute for gold ignoring the fact that the physical item is much heavier per dollar than gold.
Here is a true story about a guy who started hording gold in 1960 or shortly thereafter and died in 2012 with $200 in his bank account and $7M in gold tucked away in his house. He’s my hero, aside from the minor detail that he was moderately off his rocker, and apparently enjoyed little or none of his wealth. I wonder what the net appreciation of his gold holdings were in dollar terms.
Tommy Jay, it wasn’t you, didn’t mean to implicate you in fantasies.
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