The Lemon Fool

dspp wrote:

RockRabbit wrote:So, GameStop (which is a loss making retailer of computer games) is up another 30% this morning in US pre-trading. The market now gives it a similar capitalisation to the National Grid!

It is worth whatever the shorts need to pay to cover their nakedness. Maybe they shouldn't have doubled down - again & again & again

regards, dspp

I think that might be its current price, which can be a lot different to what it is worth.

dealtn wrote:

dspp wrote:

RockRabbit wrote:So, GameStop (which is a loss making retailer of computer games) is up another 30% this morning in US pre-trading. The market now gives it a similar capitalisation to the National Grid!

It is worth whatever the shorts need to pay to cover their nakedness. Maybe they shouldn't have doubled down - again & again & again

regards, dspp

I think that might be its current price, which can be a lot different to what it is worth.

I think we are in full agreement that GME itself, as a business, is worth a trivial amount of its current mkt valuation.

What we are now seeing is a double-or-quits game where the side that blinks first sees the other side take all the stake off the table. And, just as with the 2008 short squeeze on VAG, and the 2021 short squeeze on TSLA, the shorts may be finding out that however big & nasty they are, something else is bigger and nastier and may (?will?) take all their stake.

I'm glad I'm watching from the sidelines.

regards, dspp

dspp wrote:

dealtn wrote:

dspp wrote:
It is worth whatever the shorts need to pay to cover their nakedness. Maybe they shouldn't have doubled down - again & again & again

regards, dspp

I think that might be its current price, which can be a lot different to what it is worth.

I think we are in full agreement that GME itself, as a business, is worth a trivial amount of its current mkt valuation.

What we are now seeing is a double-or-quits game where the side that blinks first sees the other side take all the stake off the table. And, just as with the 2008 short squeeze on VAG, and the 2021 short squeeze on TSLA, the shorts may be finding out that however big & nasty they are, something else is bigger and nastier and may (?will?) take all their stake.

I'm glad I'm watching from the sidelines.

regards, dspp

The longs don't often make the money either. Many of those riding the momentum in VAG during that squeeze were unable to get out at/near the top too. It's a risky ride for either side on such rollercoasters. Marginal buyers/sellers set the price, but only a few get to trade at that price.

Not a game I am set up to play, but fascinating to watch the irrationality and psychology play out.

Interesting that many of those playing the momentum longs, and taking on the shorts, don't appear to have played this kind of game before, which adds to the attraction (for the spectator).

Sorry if OT but Bitcoin was mentioned further up.
Found this about Bitcoin risk. Is it true or just more lies, do you think?

https://crypto-anonymous-2021.medium.co ... dcf78a64d3

dealtn wrote:

dspp wrote:

dealtn wrote:
I think that might be its current price, which can be a lot different to what it is worth.

I think we are in full agreement that GME itself, as a business, is worth a trivial amount of its current mkt valuation.

What we are now seeing is a double-or-quits game where the side that blinks first sees the other side take all the stake off the table. And, just as with the 2008 short squeeze on VAG, and the 2021 short squeeze on TSLA, the shorts may be finding out that however big & nasty they are, something else is bigger and nastier and may (?will?) take all their stake.

I'm glad I'm watching from the sidelines.

regards, dspp

The longs don't often make the money either. Many of those riding the momentum in VAG during that squeeze were unable to get out at/near the top too. It's a risky ride for either side on such rollercoasters. Marginal buyers/sellers set the price, but only a few get to trade at that price.

Not a game I am set up to play, but fascinating to watch the irrationality and psychology play out.

Interesting that many of those playing the momentum longs, and taking on the shorts, don't appear to have played this kind of game before, which adds to the attraction (for the spectator).

Again, I think we are in agreement.

I think what is becoming apparent is that there is a new risk that shorts have to take into account. Each time they case the joint, and try to decide whether to murder some sleeping kitten, they need to try and decide if the wsb crowd are lieing in wait, and that sleeping kitten is in fact a very dangerous tiger. That has got to have an effect on the behaviour patterns of the shorts. Until now they thought they were the biggest vampire squid in town and as a result appeared to have gone far beyond their useful function of 'mere' acceleration of price disclosure and liquidity provision !

regards, dspp

The hedge funds will just have to cut back on coffees and their phone contracts.

dspp wrote:

dealtn wrote:

dspp wrote:I think we are in full agreement that GME itself, as a business, is worth a trivial amount of its current mkt valuation.

What we are now seeing is a double-or-quits game where the side that blinks first sees the other side take all the stake off the table. And, just as with the 2008 short squeeze on VAG, and the 2021 short squeeze on TSLA, the shorts may be finding out that however big & nasty they are, something else is bigger and nastier and may (?will?) take all their stake.

I'm glad I'm watching from the sidelines.

The longs don't often make the money either. Many of those riding the momentum in VAG during that squeeze were unable to get out at/near the top too. It's a risky ride for either side on such rollercoasters. Marginal buyers/sellers set the price, but only a few get to trade at that price.

Not a game I am set up to play, but fascinating to watch the irrationality and psychology play out.

Interesting that many of those playing the momentum longs, and taking on the shorts, don't appear to have played this kind of game before, which adds to the attraction (for the spectator).

Again, I think we are in agreement.

I think what is becoming apparent is that there is a new risk that shorts have to take into account. Each time they case the joint, and try to decide whether to murder some sleeping kitten, they need to try and decide if the wsb crowd are lieing in wait, and that sleeping kitten is in fact a very dangerous tiger. That has got to have an effect on the behaviour patterns of the shorts. Until now they thought they were the biggest vampire squid in town and as a result appeared to have gone far beyond their useful function of 'mere' acceleration of price disclosure and liquidity provision !

Nicely phrased. I really do not understand why someone would short a security, with unlimited risk, when instead you can buy put options to take a bearish view and have unlimited upside whilst defining your risk. (Other than with shorting you get paid upfront whereas a long put option requires an outlay).

That said someone has to take the other side of that trade, and they are probably hedging with the underlying, so it has a ripple through effect.

Another ripple through effect is that the shorts will be getting margin calls and, if they want to keep their shorts, then they have to sell their longs, and that affects the general market, as we saw yesterday. They may even lack the funds to buy back the shorts, and their prime brokers will be getting nervous about extending more credit.

It's all highly entetaining.

I hope this results in a derivative unravelling and brings down the market.

Even if that doesnt happen, it has educated a large population on young people on market makers and corruption.

Various platforms (Ameritrade, Robinhood) have banned trading on Gamestop. The retails investors are not breaking the rules, yet these hedgies have been manipulating markets while *technically* staying within the rules.

More and more people dont care about the system. Trust in institutions continue to decline

What we're seeing with GameStop is a great example of Benjamin Graham's "voting machine" at work, turbocharged by the squeeze on short sellers. They are learning the hard way that the market can be irrational for longer than you can remain solvent.

Eventually the "weighing machine" will come into play and GameStop's shares will fall sharply to something close to its actual value. That will be painful for a lot of investors, many who will be newcomers.

Entertaining to watch, but dangerous to participate in any meaningful way. I'm firmly on the sidelines. The way in which this has been organised, a sort of people's "Army of Davids" (see Instapundit's book Wikipedia entry linked below), has introduced a new element of risk for short sellers.

https://en.m.wikipedia.org/wiki/An_Army_of_Davids

SalvorHardin wrote:Eventually the "weighing machine" will come into play and GameStop's shares will fall sharply to something close to its actual value.

Sounds like it would make a good short

Appears SEC stepped in, instructing a swathe of brokers "closing transactions only".

Timber!

dspp wrote:
Saagar Enjeti: Wall Street Elites DESTROYED, Beaten By Redditors At Their Own RIGGED Game

https://youtu.be/9ToOGrUQ7ME

Clearly, it has be foreign powers!

"The rich call foul when the poor learn the rules"

https://twitter.com/Fartintomyheart/status/1354661163078995970

Cheers,

Itsallaguess

Reminds me of the UK regulator restricting which bonds are available to 'retail' investors - in the name of protecting retail investors, but actually restricting competition.

bruncher wrote:Reminds me of the UK regulator restricting which bonds are available to 'retail' investors - in the name of protecting retail investors, but actually restricting competition.

I think that is slightly unfair. The argument of the regulator is that people don't understand the complexity of the instruments. My view is that it is unfair to do this because it prevents retail investors having access to the better interest rates. It is not, however, a question of restricting competition.

The fact is, however, that investing in equity is quite complex anyway as you cannot be certain what is going to happen. You can make assessments. However, although it is often best for people to buy funds actually the regulator should not prevent retail investors from buying the underlying equities.

Some bonds (eg Tullow) have minimum quantities of USD100K or more. I personally think that is unfair as few people can invest such sums and keep the level of concentration to a sensible amount.

The problems that need better action are thinks like Wirecard and CAKE. That, I think, however, is really about the process of appointment of auditors which really does need work on. Also things like LCF which are orientated at retail investors, but are much more risky investments than listed hybrid instruments.

Then again we have claims managers encouraging claims where people have lost money on Shares ISAs.

The really big problem is that the more certainty you want the less return you are likely to get. That is a much bigger issue for smaller scale investors.

dspp wrote:

dealtn wrote:

dspp wrote:
I think we are in full agreement that GME itself, as a business, is worth a trivial amount of its current mkt valuation.

What we are now seeing is a double-or-quits game where the side that blinks first sees the other side take all the stake off the table. And, just as with the 2008 short squeeze on VAG, and the 2021 short squeeze on TSLA, the shorts may be finding out that however big & nasty they are, something else is bigger and nastier and may (?will?) take all their stake.

I'm glad I'm watching from the sidelines.

regards, dspp

The longs don't often make the money either. Many of those riding the momentum in VAG during that squeeze were unable to get out at/near the top too. It's a risky ride for either side on such rollercoasters. Marginal buyers/sellers set the price, but only a few get to trade at that price.

Not a game I am set up to play, but fascinating to watch the irrationality and psychology play out.

Interesting that many of those playing the momentum longs, and taking on the shorts, don't appear to have played this kind of game before, which adds to the attraction (for the spectator).

Again, I think we are in agreement.

I think what is becoming apparent is that there is a new risk that shorts have to take into account. Each time they case the joint, and try to decide whether to murder some sleeping kitten, they need to try and decide if the wsb crowd are lieing in wait, and that sleeping kitten is in fact a very dangerous tiger. That has got to have an effect on the behaviour patterns of the shorts. Until now they thought they were the biggest vampire squid in town and as a result appeared to have gone far beyond their useful function of 'mere' acceleration of price disclosure and liquidity provision !

regards, dspp

I wonder who was buying on the momentum and is now offside following the 55% fall in price.

dealtn wrote:I wonder who was buying on the momentum and is now offside following the 55% fall in price.

Following a sort of dead cat bounce it is now only 30% down

I think it is the same players. Some people may have followed them up, but it cannot go that far. I don't know to what extent Robin Hood allow margin trading.

I am not a fan of shorting, margin trading and/or writing uncovered options. I still remember seeing brokers go bust in 1987 from clients who in their own names were writing options on the index. In any event that sort of thing really does not interest me.

johnhemming wrote:I am not a fan of shorting, margin trading and/or writing uncovered options. I still remember seeing brokers go bust in 1987 from clients who in their own names were writing options on the index. In any event that sort of thing really does not interest me.

In order to write uncovered options you need to given explicit permission by your broker, which will depend on your level of investment experience and the assets you have available. You also need a suitable level of margin.

Typically writing calls will have a higher barrier to entry than writing puts, since the former have a potentially infinite loss whereas with a short put you cannot lose more than the value of the underlying.

In practice you will start getting margin calls long before you lose too much, and the broker will close out your positions if you do not meet them very quickly.

It does seem rather unfair, hypocritical even, that the regulators seem to have forced RH etc to close down retail investors from going long.

https://www.theguardian.com/business/20 ... kia-reddit

I haven't observed a great deal of attention from regulators when hedge funds act in concert to go short.

Surely what is sauce for the goose is also sauce for the gander ?

regards, dspp

dspp wrote:It does seem rather unfair, hypocritical even, that the regulators seem to have forced RH etc to close down retail investors from going long.

https://www.theguardian.com/business/20 ... kia-reddit

I haven't observed a great deal of attention from regulators when hedge funds act in concert to go short.

Surely what is sauce for the goose is also sauce for the gander ?

I think you are probably right if what is reported by the guardian is accurate in that people are prevented from buying stock. However, the price did bounce a bit.

joey wrote:

dspp wrote:It does seem rather unfair, hypocritical even, that the regulators seem to have forced RH etc to close down retail investors from going long.

https://www.theguardian.com/business/20 ... kia-reddit

I haven't observed a great deal of attention from regulators when hedge funds act in concert to go short.

Surely what is sauce for the goose is also sauce for the gander ?

Absolutely spot on. I’ve been following the story closely as I have a couple of friends involved; one a professional trader who follows these sorts of things, and one who is part of the herd who moved the price due to being on Discord & WSB. There is a lot of anger in the herd about the nonsense from the SEC on this (and the trading platforms who have caved). It really does prove their point IMO. Corruption all the way through to the heart of the system. Like we didn’t know, of course, but never the less...

Given the number of former Goldman Sachs partners appointed to the US federal government, this kind of thing isn't that surprising. They look after their own.

And the media too. CNBC is supposed to be on the side of the private investor, but you would not know it listening to their line on this topic.