[javagram]

> Institutional investors did do what people suspect wsb of doing.

Buying based on observing market conditions or seeing the posts in reddit wouldn’t have been questionably legal afaik. Only actively coordinating e.g. through posts on Reddit or phone calls or a Smoky back room could be argued to be market manipulation I think? If they were posting in Reddit to feed the squeeze that’s when stuff may get problematic.

[IgorPartola]

The sentiment on WSB from what I can tell is that they can’t coordinate which thread to sticky, let alone which stock to buy. My impression of observing it for a couple of weeks is that this is true. They aren’t capable of truly coordinating anything.

Best I can tell, Roaring Kitty/Deepfuckingvalue basically had been buying more and more GME stock for like a year and every month showed screenshots to prove this saying a short squeeze was coming. Eventually in January something happened and everyone else was like “he might actually be right, I’m buying”. Then the news picked it up and it hit a positive feedback loop. Robinhood stopping buy orders put a wet blanket on things and after they lifted the restrictions enough time had passed that the frenzy slowed down. The short squeeze might still happen but lots of WSB participants bought at $300+ and I suspect will never recover that loss. But also because of this specific crowd it seems a good chunk of them are not selling on the idea that if you buy at $300 and sell at $50, you definitely lose. And if you hold the stock it might some day rise back to above $300-400. Mark Cuban did an AMA there where he basically reaffirmed this point of view which they took and ran with.

Part of this behavior is that WSB wasn’t really focused on going long on stocks until now. They mostly traded options which have specific deadlines. They simply aren’t used to the idea of an open ended investment. I saw people talking about how GME is a solid company and how they believe it’ll transition to digital successfully. How it might grow from fundamentals, etc. Nevermind their EPS, or the fact that their valuation currently sits at 10x what it was with no justification as to how their fundamentals might have changed to account for this. The difference with this crowd is that they for the most part acknowledge that this is gambling and that you are likely to lose all the money you invest so don’t worry about losing it. They also acknowledge that they don’t know what they are doing vs pretending like this is all based on research, experience, or education. Makes them a sort of dangerous crowd, especially as some there do accumulate a good amount of wealth, IMO.

[sillysaurusx]

But also because of this specific crowd it seems a good chunk of them are not selling on the idea that if you buy at $300 and sell at $50, you definitely lose.

So close! You're almost completely correct, but remember that a loss is considered a win on wsb, because you get to post loss porn. Can't spell trader without retard.

https://www.reddit.com/r/wallstreetbets/comments/ljde34/rip/

Your comment is excellent. But I just wanted to chime in with a "yes, but remember that they don't take themselves very seriously" type reply. It's necessary for preservation of their culture. People who act like they know a thing or two tend to get immediately jumped on, which I found quite refreshing. "But will a gamma squeeze happen?' is usually met with "stfu and go read a book rather than drop terms you don't understand."

Which ... seems unhelpful and awful, until you realize that it preserves the important property of letting everyone feel like they can participate. You, me, anyone. And I don't really see how that's a dangerous group; it's more like a virtualized casino meme factory.

[fractionalhare]

> People who act like they know a thing or two tend to get immediately jumped on, which I found quite refreshing. "But will a gamma squeeze happen?' is usually met with "stfu and go read a book rather than drop terms you don't understand."

Maybe this is how it was 6 million subscribers ago. Based on my (extensive) reading of WSB the past few weeks, this is no longer true.

I've read just about every WSB post (and its comments) about GME with over ~1000 upvotes. People asking when the gamma squeeze is going to happen were definitely not being told to read a book, they were being told things like "this Friday!" And people acting like they had intimate knowledge of this fact weren't exactly downvoted either...

[sillysaurusx]

Valid. :( An influx of millions of people tends to do that.

But! You can preserve the culture yourself. Try to make things a little better when you see problems. It's all we can do.

[IgorPartola]

That’s a really interesting take. The way they seek the lowest common denominator of communication does seem to create a strong sense of community.

What I mean by dangerous is this: as more people flock there more capital will enter the market through that gate. And that’s a lot of money to be directed by whims of a fickle and undereducated community that tends to ride whatever is popular at the time. This time they pump and dumped GME, AMC, and BB. What happens when they do this to a different company like say Amazon? Anything good/bad?

[sillysaurusx]

Their counterargument would be "How can we have insider knowledge when we have no knowledge?"

I get what you're saying, and it's a valid perspective. But, this gets back to the root of the issue: the older I get, the more it seems like there is a class division in society, and the upper class will do whatever it takes to ensure the lower class stay low.

I hate phrasing it like that, because you can't even say it without sounding like a loon. But think carefully about what you're saying. You're essentially saying that it's dangerous for uneducated, unsophisticated people to band together.

I'm not saying you're wrong. I'm saying, rich people aren't so different, and they are equally dangerous. Moreso, since they have the resources. So I personally find it hard to worry about some people collectively throwing around a few hundreds of millions.

My effort here is to try to convince you -- only you, not whoever's reading this -- to aim your worry "up the chain," so to speak, and to take a hard look at how the rest of the industry acts, and why the structures are in place. It seems false to say that these protection mechanisms are to prevent another 2008 from happening; after all, the 2008 crash wasn't caused by unsophisticated investors.

[IgorPartola]

I think I wasn't clear in what I was saying. I made it sound like them being dangerous was a bad thing. I am placing no value judgement on WSB, just acknowledging that they are on the way to becoming a serious player in this game, with the ability to cause serious damage to other players (hedge funds, public companies, etc.). This is a quality that I already attribute to the hedge funds, the SEC, the big corps, etc. as inherent. Whether WSB becoming a serious player is a good thing or not is really not clear to me. I would expect that it results in a lot of collateral damage, first and foremost to some percentage of retail investors. At the same time, the fact that you can short stocks in the manner that GME got shorted is a much clearer and much more immediate problem, IMO. And I share your view that the haves seem to want to keep the havenots out of their clubhouse and will do all manner of things to keep the separation.

But overall, no I don't think that we should do anything about WSB. The GME situation is at best a symptom of a broken system, it's just that this time hedge funds got (theoretically) hurt not by other hedge funds but by retail investors so everyone noticed. If anything, let's fix the rules of the game so it's closer to fair for the little guy, and fix the SEC to keep those rules properly enforced.

[quickthrowman]

> What happens when they do this to a different company like say Amazon? Anything good/bad?

What do you mean? AMZN has 3 million of 500 million shares sold short, less than 1% short interest. It would take one day for shorts to cover at average volume. Shares are also $3,277 as of Friday’s close, a lot of WSB people can barely afford one or two shares.

They cannot do this to a company like Amazon because the short interest isn’t there and the share price is too high. A weekly at the money call is $3,250 right now. WSB doesn't have enough capital to buy the shares or options.

[IgorPartola]

They can’t do this particular thing to Amazon. But that doesn’t mean they can’t do something else. What if Amazon’s supply chain is found to be dependence to heavily on some other publicly traded company that can be manipulated more easily? What if they find some pattern in how hedge funds trade Amazon that is exploitable? It’s like saying that we found and fixed a bug so the attacker who exploited that particular bug can never find another one.

[bsanr2]

A market so susceptible to mania is maybe in the need of brakes that are used judiciously and without bias. We clearly do not have that, and in fact have been stripping them away since the 80s.

You can't blame this on "unsophisticated" investors breaking norms but ultimately playing by the rules.

[IgorPartola]

I’m not blaming anyone. I think it’s an interesting situation in the same way that oxygen rich atmosphere becoming a thing on earth led to interesting results. The market system is clearly broken. You need not look further than GME for evidence of that. Either GameStop has been undervalued by everyone for years at $5/share and is really worth $50/share (where it is today), which would mean the market is broken. Or GameStop is currently worth 10x what is its true value which means the market is broken. Its sole purpose is to help us efficiently determine how much each company is worth and allow us to trade them. And here we have a situation where nobody can argue (I don’t think) that the market is doing a good job at efficiently determining how much GME is worth, and trading it has a decidedly one-sided advantage towards hedge funds vs retail investors.

My only observation is that while I don’t know what long term effect WSB will have on the market, I think in the short term a lot of retail investors will lose their shirts as collateral damage.

[baq]

that wsb is gone. maybe it'll come back after the dust settles.

it isn't all bad though - old timers migrated to a myriad of other subreddits where quality content is more popular. it may take a while to get back to late 2020 level of memes, though.