[swixi]

> Yep, it's really great that markets can create speculation that are not tied at all to the fundamentals of a security. That doesn't create bubbles, volatility, or open the door for endless shenanigans at all.

Speculation is a huge part of the market, and "sophisticated investors" take part in it all the time. Tell me why certain popular tech stocks are trading at P/E ratios of more than 1000, or pulling in negative income year after year. Be sure to justify your answer using "fundamentals".

[titzer]

Do you think that I think that that is a good thing? Speculation is good for a lucky few and very bad for lots of people when it goes off the rails. Which is the whole point of having governing bodies regulate the market.

Are you proposing that we rein in speculation in a wider sense? Then please, sign me up! But let's not do this with mobs and all the screaming, please.

[swixi]

I don't think it's that simple. Of course the Gamestop situation is a unique one, but speculation is the entire point of the stock market. You can justify (and lower) the risk you take by examining fundamentals, or by investing in "safe" funds, but you are always speculating that the price will eventually go up and not down.

An example: One could argue that TSLA's current price is almost entirely speculation divorced from current fundamentals. Are you sure it will be "good for a lucky few and very bad for lots of people when it goes off the rails"? It's possible, but what should we do about that? Restrict people's ability to trade TSLA?

In the case of Gamestop, I agree with you, it will be bad for lots of people who get in late. I think more people should be informed about risk before entering the stock market, but I don't know if I agree with you that we need more government regulation in the market to do this. What would that look like?

[fortran77]

But that’s fine and why I don’t buy GME or Tesla! It’s just not the type of investing for me.

It would be hard to see how anyone was hurts by GME speculation or organized buying. (Assuming nobody gets government bailouts.)

[rhino369]

>It would be hard to see how anyone was hurts by GME speculation or organized buying.

That's because the they still in the pump part of the pump and dump scheme.

People buy Tesla because they think its worth even more. Everyone who has thought about it for more than a second understands GME is not worth 22 Billion dollars.

So the people who are buying now are going to collectively lose a ton of money when it inevitably crashes back down to 8 bucks a share.

The people knowing engaging in the short squeeze are taking that risk, so that is on them. But I feel sorry for people who foolishly chase the gains or the wifes/husbands of fools who are buying in now.

The whole ideas is that the hedge funds are these "bag holders." And to a huge degree they were, which is hilarious. But a huge amount of the bag holding is going to be done by retail investors.

[sidibe]

> The whole ideas is that the hedge funds are these "bag holders." And to a huge degree they were. But a huge amount of the bag holding is going to be done by retail investors.

Yup, people are buying into a misconception here that because of high short interest there must be more to squeeze and the shorts will be the bag holders, while completely ignoring that the further this goes from the actual value of GME the more attractive it is to short, so who is short may change, but short interest won't go down much. The mob for some reason sees the short interest not going down as "they'll have to buy it at a higher price!" Once the smart longs start taking their profits the whole idea will fall apart, some shorts are going to make much more than people who bought early in the run and held thinking it would keep running up.

[iso1631]

> Assuming nobody gets government bailouts

This is a lot of the problem. Certain people are too big to fail, they can keep the profits, but they don't suffer. How many people who had barely heard of the stock market lost their homes after 2008? How many speculators lost their homes?

How many people who have barely heard of the stock market have made massive gains over the last 10 years? How many speculators?

The government borrowed trillions, that all ended up in the pocket of people with shares, not in the hands of people who struggle to make rent.