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re: Explain the stock situation+the corruption like I’m five
Posted on 1/28/21 at 9:53 pm to JOHNNY HUNGEE
Posted on 1/28/21 at 9:53 pm to JOHNNY HUNGEE
quote:
If I borrowed your car for 10 dollars and the next week it goes down in value and you only pay 5 to get it back you shortchanged me but got an increased in your pay of 5 dollars plus car back.
If you paid me $10 to borrow my car, why would I pay you to get it back?
0
Posted on 1/28/21 at 10:00 pm to xGeauxLSUx
quote:
The problem is that these hedge funds had more short sales than there were actual real shares available.
That is key. It was both brazen and foolish and a great investment opportunity to rightfully exploit by WSB. 130% I think?
Posted on 1/28/21 at 10:07 pm to Havoc
140% not 130%
Posted on 1/28/21 at 10:27 pm to FlexDawg
Posted on 1/28/21 at 10:33 pm to FlexDawg
In simple terms, big hedge fund managers short a stock; ie betting it will go down. Some people at Redditt formed an alliance and bought enough stock to force it to go up. This caused the big hedge fund managers to lose a huge amount of money. The hedge fund managers are use to making millions hurting companies and don't like it when they lose, so they whine to the government to help them.
Is that about right?
Is that about right?
Posted on 1/28/21 at 10:44 pm to FlexDawg
1. Covid and new distribution technology (online sales and downloads) is killing retail businesses like Game Stop
2. Hedgefunds decide to finish off these ailing businesses, completing Covid’s annihilation of big box retailers (other than Home Depot, Wal-Mart, Target, Costco, and Lowes, of course) by shorting their stock. Basically, they borrow based on the prediction that they can buy the stock later at a lower price.
3. A subreddit poster on r/wallstreetbets noticed that Hedgefunds, like Melvin, were taking massive shorts on Game Stop specifically, like 150%.
4. A bunch of trolls on reddit realized that “we could make more money with a flop than with a hit” and started buying Game Stop like crazy causing the price to explode from like $8/share to over $350/share.
5. The hedgefunds, who over leveraged on the short, immediately lose like $80 billion and Melvin becomes insolvent. Another hedgefund bails them out, but they have to do so by selling off stocks in a lot of other companies to cover the losses.
6. The redditers sense blood in the water and start repeating this strategy on a whole host of other shorted stocks under the mantra of “we can behave retarded longer than they can remain solvent” and the hedgefund losses skyrocket into the hundreds of billions.
7. To stop the bleeding, most investment firms and trading apps stop permitting their clients to buy gamestop and a few other companies. Some Apps that continue to allow their users to buy gamestop get de-platformed, removed from the apple store, etc. Some apps, like Robinhood, even liquidate or lock out entire profiles of users to stop them from buying, and even auto-sell a bunch of stock to force the stock price of game stop to stop rising and go down.
8. The subreddit gets nuked, the entire media labels them economic terrorists, but some commentators on both left and right are absolutely pissed at how the brokerage firms intervened to prevent their small time customers from buying stock to protect their large hedgefund pals. AOC and Ted Cruz are even both calling them out. People start flooding congressmans offices and the FBI with calls.
9. Caving to pressure, Congress announces that they will begin hearings regarding Robinhood’s antics, and the FBI officially opened a criminal investigation as a massive class action suit was filed against Robin Hood by their customers in the Southern District of New York.
10. Whistle blower who allegedly works for Robinhood reveals that they were ordered to do what they did by the White House.
2. Hedgefunds decide to finish off these ailing businesses, completing Covid’s annihilation of big box retailers (other than Home Depot, Wal-Mart, Target, Costco, and Lowes, of course) by shorting their stock. Basically, they borrow based on the prediction that they can buy the stock later at a lower price.
3. A subreddit poster on r/wallstreetbets noticed that Hedgefunds, like Melvin, were taking massive shorts on Game Stop specifically, like 150%.
4. A bunch of trolls on reddit realized that “we could make more money with a flop than with a hit” and started buying Game Stop like crazy causing the price to explode from like $8/share to over $350/share.
5. The hedgefunds, who over leveraged on the short, immediately lose like $80 billion and Melvin becomes insolvent. Another hedgefund bails them out, but they have to do so by selling off stocks in a lot of other companies to cover the losses.
6. The redditers sense blood in the water and start repeating this strategy on a whole host of other shorted stocks under the mantra of “we can behave retarded longer than they can remain solvent” and the hedgefund losses skyrocket into the hundreds of billions.
7. To stop the bleeding, most investment firms and trading apps stop permitting their clients to buy gamestop and a few other companies. Some Apps that continue to allow their users to buy gamestop get de-platformed, removed from the apple store, etc. Some apps, like Robinhood, even liquidate or lock out entire profiles of users to stop them from buying, and even auto-sell a bunch of stock to force the stock price of game stop to stop rising and go down.
8. The subreddit gets nuked, the entire media labels them economic terrorists, but some commentators on both left and right are absolutely pissed at how the brokerage firms intervened to prevent their small time customers from buying stock to protect their large hedgefund pals. AOC and Ted Cruz are even both calling them out. People start flooding congressmans offices and the FBI with calls.
9. Caving to pressure, Congress announces that they will begin hearings regarding Robinhood’s antics, and the FBI officially opened a criminal investigation as a massive class action suit was filed against Robin Hood by their customers in the Southern District of New York.
10. Whistle blower who allegedly works for Robinhood reveals that they were ordered to do what they did by the White House.
This post was edited on 1/28/21 at 10:49 pm
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