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GameStop: Difference between revisions
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'''Fourth''': Fully-paid long investors — in this case the internet denizens and redditor day-traders — do not have this natural constraint. They are borrowing to invest; as long as they don’t need the money to pay their rent — which they may well do — they can sit indefinitely. | '''Fourth''': Fully-paid long investors — in this case the internet denizens and redditor day-traders — do not have this natural constraint. They are borrowing to invest; as long as they don’t need the money to pay their rent — which they may well do — they can sit indefinitely. | ||
'''Fifth''': The internet is a ''beast''. It is one thing to hold out short interest against one guy — Bill Ackman’s short on Herbalife versus Carl Icahn is the signature dish of that fight — and there is it a case of who has the bigger pile of chips. But if you are shorting against a meme stock where ''everyone'' is blindly, stupidly, piling in because it’s cool to stick it to the man, or because some influencer on Insta told them to — you are fighting an unlimited hoard, ram-raiding the casino with a | '''Fifth''': The internet is a ''beast''. It is one thing to hold out short interest against one guy — Bill Ackman’s short on Herbalife versus Carl Icahn is the signature dish of that fight — and there is it a case of who has the bigger pile of chips. But if you are shorting against a meme stock where ''everyone'' is blindly, stupidly, piling in because it’s cool to stick it to the man, or because some influencer on Insta told them to — you are fighting an unlimited hoard, ram-raiding the casino with a pretty-much limitless supply of fresh cash. You have a hard limit. The world wide webs doesn’t. | ||
'''Sixth''': The regulators are going to want to do ''something'' to ''someone''. It’s hard to see how that could be some HODLer on Reddit. Nor the Hedgies: they were just doing the deep-state, Pizzagate stuff all hedge funds do. A few market infrastructure players look to be volunteering to take the rap by strangling long interest amongst the day-traders, while the lucky old deep-state-connected hedgies carried on with unfettered access (barring the short-tick requirement, which meant they couldn’t short on a down-tick). But the sense the market infrastructure guys were acting out of the same good intentions that path many a road to hell: some little people are, eventually, going to get hosed here, and they were intervening to stop that — took on a rather greenish cast when it turned out that the retail platform’s biggest [[market-maker]], and [[Payment for order flow|payer of an enormous amount for order flow]] was closely associated with one of the significant short positions. Now, there is no allegation of actual dastardly behaviour — these organizations have impermeable [[Chinese wall]]s, but still — it ''doesn’t look great''. | '''Sixth''': The Wikipedia effect: don’t write off the Redditors. Reddit has a sophisticated reputation management system, and the best stuff gets filtered to the top. There were 2 million subscribers to that forum before the whole GameStop thing kicked off (there are 6m as of Jan 29), then the odds are that a significant number of them — you know, ''thousands'' — are fully credentialised, regulated, experienced, market specialists. This isn’t just a throng of idiots blindly following gravity. To be sure, much of the following throng might be idiots, but it isn’t idiotic to follow someone who’s smart. Indeed: as Chamath Palihapitiya wryly notes,<ref>Palihapitiya makes the point on CNBC [https://www.cnbc.com/2021/01/27/chamath-palihapitiya-closes-gamestop-position-but-defends-individual-investors-right-to.html Here].</ref> plenty of folks in the hedge fund industry make a decent living copying other people’s trading strategies too. | ||
'''Seventh''': The regulators are going to want to do ''something'' to ''someone''. It’s hard to see how that could be some HODLer on Reddit. Nor the Hedgies: they were just doing the deep-state, Pizzagate stuff all hedge funds do. A few market infrastructure players look to be volunteering to take the rap by strangling long interest amongst the day-traders, while the lucky old deep-state-connected hedgies carried on with unfettered access (barring the short-tick requirement, which meant they couldn’t short on a down-tick). But the sense the market infrastructure guys were acting out of the same good intentions that path many a road to hell: some little people are, eventually, going to get hosed here, and they were intervening to stop that — took on a rather greenish cast when it turned out that the retail platform’s biggest [[market-maker]], and [[Payment for order flow|payer of an enormous amount for order flow]] was closely associated with one of the significant short positions. Now, there is no allegation of actual dastardly behaviour — these organizations have impermeable [[Chinese wall]]s, but still — it ''doesn’t look great''. | |||
{{sa}} | {{sa}} | ||
*[[Short selling]] | *[[Short selling]] | ||
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*[[Net asset value]] | *[[Net asset value]] | ||
*[[Homey don’t play that]] | *[[Homey don’t play that]] | ||
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