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The GameStop market fiasco

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enslaved1:
I have marginal knowledge of how the stock market works, but my understanding is that people primarily on reddit, particularly the sub reddit wallstreetbets observed a common hedge fund trick in process going on, and coordinated purchasing stock when it was down before the hedge funds bought it back to fulfill legal requirements, making themselves good chunks of change while costing the big boys lots of cash.  https://www.msn.com/en-us/money/topstocks/gamestop-and-amc-stocks-soar-on-another-day-of-wild-trading-in-heavily-shorted-companies/ar-BB1d9hlX?OCID=ansmsnnews11

In response to getting their own trick used against them, there has been maneuvers by some companies to limit or prevent purchase of GameStop stock.  https://www.cnet.com/personal-finance/robinhood-app-td-ameritrade-restrict-trading-of-gamestop-amc-stock/ Much wailing and gnashing of teeth online about the bourgeoisie not liking their own loopholes being used against them.

First question would be does anyone more knowledgeable about markets agree that this is a case of loopholes being exploited by different people, second, are services allegedly hiding or limiting specific stocks breaking laws and/or protocols to try and cover their own butts?

Texacon:
They're not loopholes so much as different strategies of buying stock (or making money off of stock).

I read a pretty good dumbed down piece on how the shorts work.  It was written so this guy could explain it to the 'apes'.  You have to remember those who are selling short are using borrowed stock and have a date they have to give those back to the owner.

Here's the story for the apes;

So 5 bananas are worth $10

An ape has 5 bananas and a snake comes along and asks the ape if he can borrow his 5 bananas.

The ape gives him the 5 bananas and the snake immediately sells the 5 bananas for $10, hoping the price of bananas will drop.

When the 5 bananas drop to $5 the snake buys them back and takes them to the ape and says "here are your bananas back, thanks" and keeps the $5 he made for the bananas.

Those hedge fund managers were doing the same thing.  They are betting on companies to LOSE and they put out videos telling people just how bad a stock something is hoping to cause the price to drop.

The Reddit people figured out just how many shorts were out on GameStop and started buying the stock making it go up in price.  The only thing the hedge fund managers could do was keep buying stock to stop some of their losses causing the stock to go higher!

NOW what's happened is a lot of the trading platforms won't let you purchase those stocks, but they'll let you sell them.  They are manipulating the market and it is WRONG!  They're trying to bail out the big boys who have lost an estimated $8 Billion at this point.

So frustrating to watch.  On the flip side of this, they could take down a corporation who had nothing to do with this.

KC

DLR Pyro:

--- Quote from: enslaved1 on January 28, 2021, 02:06:35 PM ---I have marginal knowledge of how the stock market works, but my understanding is that people primarily on reddit, particularly the sub reddit wallstreetbets observed a common hedge fund trick in process going on, and coordinated purchasing stock when it was down before the hedge funds bought it back to fulfill legal requirements, making themselves good chunks of change while costing the big boys lots of cash.  https://www.msn.com/en-us/money/topstocks/gamestop-and-amc-stocks-soar-on-another-day-of-wild-trading-in-heavily-shorted-companies/ar-BB1d9hlX?OCID=ansmsnnews11

In response to getting their own trick used against them, there has been maneuvers by some companies to limit or prevent purchase of GameStop stock.  https://www.cnet.com/personal-finance/robinhood-app-td-ameritrade-restrict-trading-of-gamestop-amc-stock/ Much wailing and gnashing of teeth online about the bourgeoisie not liking their own loopholes being used against them.

First question would be does anyone more knowledgeable about markets agree that this is a case of loopholes being exploited by different people, second, are services allegedly hiding or limiting specific stocks breaking laws and/or protocols to try and cover their own butts?

--- End quote ---

an example of social media inciting people to maneuver the stock market.

Workover:
Apparently none of them knew what a hedge fund was. Too many of the “investors” climbed on the same train at the same time and put the seesaw into overdrive. Logically, too many of the funds made the same bet.

ABC-2:
Oh Mercy!  Only thing I can say about all this  is glad that I am married to a savvy business man, now retired ...

And that, thanks to Edward Jones, managing our investments, and knowing that our portfolio is diversified, I will not worry about the effects of all this.

Hell's bells, I don't even try to delve too deeply into the details of all the changes that occur on a daily basis in the Dow Jones, the S&P, And The Nasdaq ... 

But, I do have access to what we are involved in, in case needed thank goodness.   :)

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