CNN Declares that the Gamestop stock surge is Trump's fault

Now,now - espousing capitalist ideas is dangerous to the site - Ask 'r' for teh expert opinion.

They treat their employees poorly, try to get you to buy into a subscription club that the majority of people don't see a fair return on, and they buy low and sell high on games with such margins that I often hear anti-Semitic stereotypes used.

Pre-release/pre-order bonuses and deluxe editions in games actually came about so software publishers could incentivize players to buy it new, because they would not get these bonuses if they bought the game used.

That being said, as much as I hate them as a business, that doesn't mean I want the government to shut them down. I just wish customers would wise up and not give them any business.

Like I told Lucas, Consoles moving away from physical media and moving to digital distribution will be the death knell of them. They don't make enough money selling hardware, peripherals, or toys to stay open. Originally Posted by GastonGlock

Well, that sounds like any old company to me.

I love this, what AOC said today:

“This is unacceptable,” tweeted Representative Alexandria Ocasio-Cortez, a Democrat. “We now need to know more about @RobinhoodApp’s decision to block retail investors from purchasing stock while hedge funds are freely able to trade the stock as they see fit.”

Interesting Alexandria. This is like telling the owner of some cannabis cafe who had some crack slip into his product selection that he must continue selling the crack or else.

Some people who get out early will fare well with Game Stop, just like some people who cash out of a Ponzi scheme early. And others will have their lives ruined. Originally Posted by Tiny

The buying or selling of 5 or 10 shares on Robinhood is meaningless to the market. Gamestop shares trade in the tens of millions everyday.

Personally I have no issue with what the redditers did. It is a gamble (which alot of them will lose) but they are forcing the market to do what they want it to do. Usually they are not operating on margins like the short sellers they are screwing.

I dont believe the clearinghouses should have stepped in, they should have allowed this to play out like it eventually will. Those properly margined short sellers will be just fine when the price hits $5 or Whatever price they were aiming for, those funds that were gambling the short will lose out big.

The fact that a bunch of small investors ran up the cost of a shitty stock should not be something that either the govt intervenes in or the clearing houses which are booking the sales. Robinhood, TD Ametrade and others only shut down the small investors because short sellers had a fit that they were getting creamed on their buy orders for what they thought would be at a great profit. Originally Posted by 1blackman1

GameStop traded shares in the tens of millions per day over the last week. Someone is buying and selling. Those shitty little Robinhood accounts being required to up their margin percentages and limit purchases to ten shares are a sideshow. Wall Street is undoubtably on both sides of this trade, as are thousands of other regular investors. I could buy hundreds of shares on my account if I wanted to do it, and so could most other legitimate investors.
If this goes to court any half assed storefront attorney could defend RobinHood against these stupid whiners.
If it goes to hearings AOC will get her media circus but show her ignorance of the market.

That’s because the brokers aren’t properly margined. Robinhood for instance (one of the brokers that intervened) requires that buyers provide money for their trades. They have some good plan members operating on margins but most of their buyers/members/whatevers are not buying and selling using only 10% cash, they are usually running at 80-90% cash (to the extent that cash is the best description since it’s money on deposit).

With that being the case I don’t really see why Robinhood should have been intervening. The people/institutions that were actually operating cash free were the short sellers who also got crushed and they are well able to cover their margins. They are just angry because they thought they were gonna make money short selling these stocks when in fact they got hit with a huge increase in price of the borrowed stock they sold at the lower price. Originally Posted by 1blackman1

I'm not sure that you're right, that the brokers aren't properly margined. If you are, it's an argument in favor of placing restrictions on trading right now, to maintain the brokers' solvency. I know that Interactive Brokers raised the margin on GameStop, I think from 30% to 100% for longs and 300% for shorts respectively. So they did react to the situation.

I don't think RobinHood had a choice, as their clearing firm was demanding more money on deposit. Now, was their clearing firm demanding more than it should have? I have no idea. RobinHood is kind of a special case, in that they don't allow customers to write naked calls or naked puts or sell short, all of which require margin. And assuming you're right, that their customers aren't carrying much margin for their longs, that's another big point in their favor.

Finally, I bet RobinHood has more of the money in customer accounts to pay for shares at settlement date than some other brokers. A broker I used to use would let me wire the money to my account after I bought the shares but before the settlement date. I think this is the way institutional investors operate. If the money doesn't arrive on time the broker has to dip into his pocket and pay the clearing firm, so that's probably part of the reason margin deposits from the broker are required. RobinHood probably doesn't allow this though. It probably demands all the money required on the settlement date is in the customer's account when he places the trade.

Still, we don't know. Maybe the clearing firm took all this into account. Maybe the huge increase in RobinHood's business in the last couple of weeks justified the clearing firms demand to fork over more cash. Neither of us are experts on this. What's worrisome is that the Congressmen and Senators who will be conducting hearings on this aren't either, and many won't know any more than you or I do when they vote on whatever they're going to vote on.

.


@I Love Freedom:


(BTW -- being a rather libertarian-leaning individual, I do like that handle!)


Yes, the vast majority of Robinhooders are young individuals with very little net worth -- but I read earlier today that a fairly large trader, whose opinion I respect, believes that Redditors and various other small retail players have about $20 billion at the ready for the GME game. That's a lot of ammunition, considering that even at the current wildly pumped-up price, GME is still only about a $24 billion market-cap company. He noted additionally that the vast majority of them land well short of even 7-figure net worth category, but that there are a hell of a lot of them!


And now for a little Friday afternoon humor ...


A small public mining company in Australia saw its previously rather sleepy stock go on a tear, rising about 73% over the last two days,



When queried about this by local media, he had to ask around the office to find out what was going on. He said he was hoping it had something to do with new investor excitement about the company's new nickel-mining projects.


Leave it to his nephew to clue him in. The name of the company is GME Resources and it trades on the Aussie market under symbol "GME."


Yep -- mistaken identity!


.

They're probably just speculative day traders mostly moving the price. I didn't read the article but they can jack up or jack down a stock price quickly. Or it could be a hedge fund or a private equity firm. I don't know... my apologies if someone has already said that because I did not read all of the posts in this thread.

That won't happen, Dem reps and senators are in big oil's pockets. Originally Posted by GastonGlock

Not after the courts are through with Big Oil. Court cases will now be won and assets drained. These aren't your father's Democrats.

.


@I Love Freedom:


(BTW -- being a rather libertarian-leaning individual, I do like that handle!)


Yes, the vast majority of Robinhooders are young individuals with very little net worth -- but I read earlier today that a fairly large trader, whose opinion I respect, believes that Redditors and various other small retail players have about $20 billion at the ready for the GME game. That's a lot of ammunition, considering that even at the current wildly pumped-up price, GME is still only about a $24 billion market-cap company. He noted additionally that the vast majority of them land well short of even 7-figure net worth category, but that there are a hell of a lot of them!


And now for a little Friday afternoon humor ...


A small public mining company in Australia saw its previously rather sleepy stock go on a tear, rising about 73% over the last two days,



When queried about this by local media, he had to ask around the office to find out what was going on. He said he was hoping it had something to do with new investor excitement about the company's new nickel-mining projects.


Leave it to his nephew to clue him in. The name of the company is GME Resources and it trades on the Aussie market under symbol "GME."


Yep -- mistaken identity!


. Originally Posted by CaptainMidnight

GME Resources was trading around 50,000 to 100,000 shares a day on average until Wednesday. Now it's 12 million to 24 million shares per day. While it must have been the symbol, GME, that attracted people's attention, I bet a lot of them bought knowing they weren't buying GameStop. Electric (battery powered) vehicle companies are the rage and GME is focusing on a nickel/cobalt (raw materials for batteries) deposit it wants to mine. The market cap is only $30 million, so why not take a punt. Hey, you're only paying about 1/800th of what you'd pay for GameStop!

This is what happens when people start thinking about stocks as pieces of paper (or whatever the 21st century equivalent is) instead of pieces of ownership in a company.

Robinhood”s CEO in his CNN interview last night essentially admitted that he stopped trading because they didn’t have reserves (mainly because they were having a problem with the shorts on margin rather than the buys which were mainly cash). I presume this was likely the case for most of the brokers which was why they allowed sells (which didn’t hurt their reserves) but didn’t allow buys (which hurt the shorts and in turn pushed them into less cash position).

lizzie and harris and AOC will not be happy at all with those who abandon the Socialshit ideology reservation for capitalism .

.


@I Love Freedom:


(BTW -- being a rather libertarian-leaning individual, I do like that handle!)


Yes, the vast majority of Robinhooders are young individuals with very little net worth -- but I read earlier today that a fairly large trader, whose opinion I respect, believes that Redditors and various other small retail players have about $20 billion at the ready for the GME game. That's a lot of ammunition, considering that even at the current wildly pumped-up price, GME is still only about a $24 billion market-cap company. He noted additionally that the vast majority of them land well short of even 7-figure net worth category, but that there are a hell of a lot of them!


And now for a little Friday afternoon humor ...


A small public mining company in Australia saw its previously rather sleepy stock go on a tear, rising about 73% over the last two days,



When queried about this by local media, he had to ask around the office to find out what was going on. He said he was hoping it had something to do with new investor excitement about the company's new nickel-mining projects.


Leave it to his nephew to clue him in. The name of the company is GME Resources and it trades on the Aussie market under symbol "GME."


Yep -- mistaken identity!


. Originally Posted by CaptainMidnight

Thanks Cap'n and that sounds about right!

Robinhood”s CEO in his CNN interview last night essentially admitted that he stopped trading because they didn’t have reserves (mainly because they were having a problem with the shorts on margin rather than the buys which were mainly cash). I presume this was likely the case for most of the brokers which was why they allowed sells (which didn’t hurt their reserves) but didn’t allow buys (which hurt the shorts and in turn pushed them into less cash position). Originally Posted by 1blackman1

That's not right. See post #35 above. RobinHood doesn't allow shorting. Thus they could not have a problem with shorts on margin.

What I got out of one of his interviews was that they had to increase their "reserves" because their business grew rapidly in a short period of time. Trading increased a lot. The value of shares held by their customers increased and the number of customers increased. They have to keep reserves or deposits with their clearing firms. It's just like a bank, when a bank grows it has to increase its capital.

Your theory about the other brokers is wrong too, although, strangely, your conclusion is correct. Other brokers shut off short selling and writing naked calls in GameStop before they shut off buying. In other words, they shut down the shorts first.

Customers who were short or long were allowed to liquidate positions. If you were short you were allowed to buy shares to cover. If you were long you were allowed to sell your shares. What you did get right is that this had the effect of reducing the brokers' risk, liability, and deposits they needed to keep on hand with clearing firms.

Btw, shutting off buying helped the shorts, it didn't hurt it. When rumors leaked that RobinHood had shut off buying there was a huge decline in the share price.

.

GME Resources was trading around 50,000 to 100,000 shares a day on average until Wednesday. Now it's 12 million to 24 million shares per day. While it must have been the symbol, GME, that attracted people's attention, I bet a lot of them bought knowing they weren't buying GameStop. Electric (battery powered) vehicle companies are the rage and GME is focusing on a nickel/cobalt (raw materials for batteries) deposit it wants to mine. The market cap is only $30 million, so why not take a punt. Hey, you're only paying about 1/800th of what you'd pay for GameStop!

This is what happens when people start thinking about stocks as pieces of paper (or whatever the 21st century equivalent is) instead of pieces of ownership in a company. Originally Posted by Tiny

Well, I'd damn sure rather own the (Aussie) GME than the American edition!

Hey, anyone interested in trying to resuscitate Blockbuster? Somebody could talk up the nostalgic appeal of renting VHS movies and tout the idea of refurbishing all those VCRs people still have sitting around in the basement. Then when the idea goes viral in the WSB chatrooms, some of the big boys are bound to want to short the surging stock.

What could possibly go wrong?

.

I understand that shorts inject liquidity into the markets and that can be a good thing.

What I don't understand is why the hedge funds or anyone else can short MORE shares than actually exist. I think I read that the number of shorted shares is 140% of $GME's total shares. Can that be true?

The situation makes it practically impossible for the short seller to find shares to buy back, which drives the price even higher.

Why aren't shorts capped at 25% or 50% of all of a company's shares? You would get at least some of the benefits of liquidity without having these insane short squeezes.