[gruez]

While the title might be true for the "amateur investors" that got in early, I strongly believe that most of them are not outwitting anyone and will be bagholders. As of this post basically everyone who bought yesterday are underwater by 50%.

[Out_of_Characte]

Does it matter that your're underwater by 50%? The goal was to beat Wallstreet, They did.

The hedgefunds should definitely take note not to play a dangerous game because losing is always on the table.

[gruez]

> Does it matter that your're underwater by 50%? The goal was to beat Wallstreet, They did.

1. If you end up losing money in the end, I'd hardly call that "beating".

2. "wall st" isn't a single entity. The hedge funds shorting GME might have lost money, but there's plenty of companies that made money on the side, eg. the asset management firm that unloaded their GME shares.

[betterunix2]

They didn't beat wall street, they just dinged a handful of speculators. Who do you think is on the other side of that 50% loss? I am going to assume that a whole bunch of speculators swooped in yesterday to take advantage of the situation and they just walked away with some easy money, courtesy of the WSB crowd.

[KMag]

> The hedgefunds should definitely take note not to play a dangerous game because losing is always on the table.

Taken at face value, this advice boils down to never doing anything that involves a large risk. No civil rights movement, no D-Day invasions, etc.

There's certainly a reminder here about tail risk, and the ability of the market to stay irrational longer than you can stay solvent. However, the takeaway isn't "only take on big risks if failure is impossible." Taking calculated risks is an important life skill, and so is realizing that humans have pretty bad intuitions about risk.

In hindsight, we may find some funds that had 30 different short positions similar to this one. This one position blew up badly, but if the others come out moderately ahead, and they came out ahead net-net, then maybe this just validates their strategy.

[Out_of_Characte]

That's quite the hyperbole you've got going. I was just suggesting that ONE bad round of investments going bad shouldn't make a hedgefund apply for bankruptcy. and my take isn't to "only take big risks if failure is impossible" (Which is a paradox, you risk failure or failure is impossible)

"then maybe this just validates their strategy."

Well, no, the GME stock rally made them insolvent for such a long time that only the SEC intervening might save them. (Again, not suggesting that's the SEC's motivation)

30 day non-volatile shortstocks should require significantly higher margins than they already do because debt increases nonlinear when the market goes up. but no, higher margins would mean you can invest less so the SEC better protect everyone on wall street from market gambling. The SEC operates on a complete grey area and many people who have 'beaten' wall street ended up being caught and nerfed by the SEC.

'our mission is to protect investors and maintain fair, orderly, and efficient markets'

The SEC is not your friend. It does not help YOU when the market is unfair, volatile, inefficient. only when big waves form they feel the need to help big players. The SEC is just going to blame amateurs, help the hedgefunds and make no attempt to help the day-traders who many people argue ITT got caught up in the GME stocks.

[SpicyLemonZest]

The problem is that people were starting to get in for pure speculation. Two friends of mine who don't care at all about Wall Street told me yesterday that they bought in, because they read an explanation of why they're sure to see big gains on Friday. If the goal was just to beat Wall Street, hurt some hedge funds and get egg on a lot of people's faces... like you said, they've already succeeded, so putting a stop to it before speculative investors get hurt seems appropriate.

[calvinmorrison]

Well exactly, if you're holding a single share and you lose $200 dollars in the end, obviously it's not the end of the world.

[throw03172019]

I think the later investors were coming in because they saw the craze on the news, Facebook, Twitter, etc and wanted to get rich quick. I have a few friends who invested yesterday.

[WrtCdEvrydy]

depends on when the positions are liquidated.

everyone who bought yesterday is fighting exchanges whose only option for GME is "sell" because buying is restricted.

I don't know how some of these shorts will find 20 million shares by tomorrow.

[pen2l]

Sorry for ignorant question here not acquainted to stock market mechanisms, but: why the time imposition of tomorrow? Who dictates that storters have to return shares and when?

Frankly I thought with puts you state time limits, and with shorts you decide for yourself when you’ll have to give shares back. If that is not so, then I guess I finally understand why everyone says shorts are super risky.

[EpicEng]

They don't have to cover shorts tomorrow, but there are ITM calls that will be expiring. The idea behind the shorts is to keep the price high until these funds have no choice but to cover.

[SV_BubbleTime]

> everyone who bought yesterday is fighting exchanges whose only option for GME is "sell" because buying is restricted

I can’t really understand how the exchange is saying “no, you’re not allowed to buy, but you can sell all you want” is legal.

[betterunix2]

First of all, the exchanges could never impose that rule, because in order to sell you need to have someone buying. It is discount brokerages imposing the rule, and they are doing so because they saw what looked like market manipulation and are not interested in helping with that sort of thing. They could have stopped trading entirely, but that would have been worse for their customers, who would have watched their positions lose value and been helpless to do anything about it.

[WrtCdEvrydy]

Robinhood is currently operating under Restricting the GME stock. The only option is to sell, there are no 'buy options'

[betterunix2]

Who do you think those shares are being sold to? Robinhood's brokerage side is restricting trades, but their exchange (the "shadow" exchange they use to make money without charging commissions) is still allowing buy orders, or else they have effectively suspended GME on their exchange and have to route the sell orders elsewhere. Again, it is not possible for an exchange to only allow selling of a stock, because every share sold is a share someone else is buying.

[SV_BubbleTime]

Yea... you know other exchanges that “I” can’t use, like Canadian ones are still allowing buying right?

[gruez]

>I don't know how some of these shorts will find 20 million shares by tomorrow.

you're confusing shorts with options. shorts don't expire. They can be held indefinitely as long as you have the margin to keep up with the losses.

[benmanns]

If you short more stock than exists, eventually you need to find it. Prime brokers will allow you to naked short but you have to locate shares or buy back in pretty quickly.

[Haunted_Cabbage]

Shorts don't expire, but the short sellers can call in on that short and there's also interest at exceptionally high rates.

[jacksnipe]

Shorts have delivery dates.

[gruez]

They do?

>There are no set rules regarding how long a short sale can last before being closed out.

>The lender of the shorted shares can request that the shares be returned by the investor at any time, with minimal notice, but this rarely happens in practice so long as the short seller keeps paying its margin interest.

https://www.investopedia.com/ask/answers/05/shortsaleclosed....

[fock]

they could always deal with the lenders, which don't gain anything if their borrowers go bankrupt and they won't even get back their pennystock. And I think these lenders already deal with them quite a bit. And obviously there's still a lot of shares with WSB and I don't see how the current situation prevents offering shares for the rocket-like USD1k.

[rasz]

How are you going to become a bag holder of a stock shorted over 100%? Hedge funds will have to buy you out.