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Posted on 1/27/21 at 5:17 pm to Texas Weazel
Posted on 1/27/21 at 5:19 pm to Rex Feral
Posted on 1/27/21 at 5:21 pm to Chazreinhold
quote:
Well I watched it till he was in the Tub then I ended it.
It’s a play on the big short
This post was edited on 1/27/21 at 5:21 pm
Posted on 1/27/21 at 5:29 pm to JOHNNY HUNGEE
quote:
So the European market will crash too
If there is so much shorting that it'll take down hedge funds and the stock market, it needs to crash.
If the system is built on gaming the system, is it really a system?
Posted on 1/27/21 at 5:32 pm to MontyFranklyn
quote:
Just watch the end of Trading Places
... looking good Billy Ray
... feeling good Lewis ...
Trading Places (movie)
Posted on 1/27/21 at 6:03 pm to Rex Feral
Not long ago stocks were listed for most people in newspapers and you had to call a broker to buy or sell something.
Now the whole stock market world is on the Internet with access on your computer.
Now the whole stock market world is on the Internet with access on your computer.
Posted on 1/28/21 at 12:43 am to Rex Feral
Gamestonks!
Posted on 1/28/21 at 1:13 am to kingbob
Talk about some unity! Hell yeah
Posted on 1/28/21 at 8:53 am to bbrownso
quote:
Plotkin founded New York-based Melvin Capital in 2014 with $925 million in seed money, according to a source. The fund now manages $13 billion. Its holdings include more than 405,000 shares of Amazon (worth nearly $1.3 billion on Monday),
Pardon if this is an ignorant question, but could this be a possible reason. Could this cause the Hedge Fund to start selling off Amazon to cover it's losses, and cause Amazon stock to go down some?
Posted on 1/28/21 at 9:55 am to Rex Feral
To "short" a stock, you first borrow that stock from a lender. Party A lends a share of Game Stop stock to party B. In return, B pays some small amount interest based on the value of that share to party A until they return the share.
The next step is that B takes that share they borrowed from A and they sell it to someone else. So B now owes A a share of stock that B no longer has in its possession. If the price of that stock falls, B can buy a new share at a lower price than what they sold the original share for, give that share to A, and then pocket the difference. So if B borrows a $100 share and sells it, then the company tanks so that B can now buy a new share for $10 and return that share to A, then B has made $90.
This is very risky. The way normal investing works is that if you buy a $100 share, the most money you can possibly lose is $100 should that share become worthless. However, if you short a $100 share, and then that share skyrockets to become worth $1000, now you've lost $900.
The "short interest" of the stock is the ratio of shares that have been shorted to the number of publicly available shares. So if there 100 publicly available shares of a stock, and 10 of them have been shorted, that's 10%. If all of them have been shorted, that's 100%. Short interest of 20% is considered extremely high. But, lets say B borrows a share from A and sells it to C. The D borrows that share from C and sells it to E. And then F borrows that share from E and sells it to G. Now that one share has been shorted 3 times. In this way, it's possible for short interest to go above 100% (gamestop's short interest was 140%).
So if people notice that a stock is way over shorted, they might start buying that stock like crazy, which increases demand for it, and drives the price up. Well, all those firms that shorted the stock betting that the price would fall are gonna get scared and start scrambling to buy enough shares to repay to their lenders before the stock price climbs any higher. But then those firms clamoring for that stock drives the price up even more! That's called a short squeeze.
So basically a bunch of redditors noticed gamestop stock was over shorted, and so they started buying it in order to trigger a short squeeze. This caused the value of the stock to sky rocket, giving them a huge return on investment and costing hedge funds a fortune as they scrambled to buy shares to cover their short positions. Meanwhile, gamestop is still the same struggling company today that they were months ago.
The next step is that B takes that share they borrowed from A and they sell it to someone else. So B now owes A a share of stock that B no longer has in its possession. If the price of that stock falls, B can buy a new share at a lower price than what they sold the original share for, give that share to A, and then pocket the difference. So if B borrows a $100 share and sells it, then the company tanks so that B can now buy a new share for $10 and return that share to A, then B has made $90.
This is very risky. The way normal investing works is that if you buy a $100 share, the most money you can possibly lose is $100 should that share become worthless. However, if you short a $100 share, and then that share skyrockets to become worth $1000, now you've lost $900.
The "short interest" of the stock is the ratio of shares that have been shorted to the number of publicly available shares. So if there 100 publicly available shares of a stock, and 10 of them have been shorted, that's 10%. If all of them have been shorted, that's 100%. Short interest of 20% is considered extremely high. But, lets say B borrows a share from A and sells it to C. The D borrows that share from C and sells it to E. And then F borrows that share from E and sells it to G. Now that one share has been shorted 3 times. In this way, it's possible for short interest to go above 100% (gamestop's short interest was 140%).
So if people notice that a stock is way over shorted, they might start buying that stock like crazy, which increases demand for it, and drives the price up. Well, all those firms that shorted the stock betting that the price would fall are gonna get scared and start scrambling to buy enough shares to repay to their lenders before the stock price climbs any higher. But then those firms clamoring for that stock drives the price up even more! That's called a short squeeze.
So basically a bunch of redditors noticed gamestop stock was over shorted, and so they started buying it in order to trigger a short squeeze. This caused the value of the stock to sky rocket, giving them a huge return on investment and costing hedge funds a fortune as they scrambled to buy shares to cover their short positions. Meanwhile, gamestop is still the same struggling company today that they were months ago.
Posted on 1/28/21 at 9:57 am to crash1211
Yes, it is very possible Amazon takes a hit if they try to sell shares so fast that there aren’t enough buyers to snap them up.
Posted on 1/28/21 at 10:09 am to Ailsa
That archive link don't work.
Posted on 1/28/21 at 10:14 am to JOHNNY HUNGEE
quote:
Will this cause the stock market to crash.
Nah, this deal is to too targeted to crash the market. The big picture issue is if firms like Melvin Capital is called on their losses, and they don't have the ability to cash out...the firm and its assets are seized, bankruptcy courts get involved, and it takes years for the winners to get possibly pennies on the dollar paid out. And Melvin's investors will likely take a bath as well...it's not just some hedge fund that's being taken down. A lot of investors lose possibly everything just for having their horse hitched to the wrong wagon. Admittedly not the best investment strategy, but it happens. It's the way the system works, though. The internet has given a bunch of people with $600 stimulus checks in their fist a way to organize and react quickly. A few guys with disposable income aren't a threat, but a few thousand can be. We'll see some rules changes come out of this, that's for sure.
Posted on 1/28/21 at 10:21 am to Konkey Dong
quote:Why did they target GME?
Hedge fund shorts gme, at like 150%
Posted on 1/28/21 at 10:26 am to Rex Feral
Watch the end of Trading Places.
Posted on 1/28/21 at 10:33 am to tigerpawl
GameStop’s retail model is in trouble long term without adjustments because game consoles are moving primarily to online sales and GameStop’s bread and butter has always been used sales of physical copies.
That being said, they also reorganized heavily during Covid, closing unprofitable locations, and sales went up because of the next generation system launches and people being stuck at home for months at a time with little to do but play games.
Is it healthy long term? No. But it’s prospects are better than the short suggested.
That being said, they also reorganized heavily during Covid, closing unprofitable locations, and sales went up because of the next generation system launches and people being stuck at home for months at a time with little to do but play games.
Is it healthy long term? No. But it’s prospects are better than the short suggested.
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