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Redditors gave Wall Street traders an absolute pasting


monkeytassle said:
The sec presides over markets and aims for "fair, orderly and efficient" markets. If they think a person or group of people are acting against this they will take action. I don't give 2 figs about the hedge funds that have lost money and nor will the regulators. What they will care about is influencing stock prices.

I'm not even getting near this. Absolute accident waiting to happen.

Fwiw this is good for banks and financing so the conspiracy theorists are already wrong.
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Shorting is risk. They know it’s unlimited risk.

Im still not sure how some organised buying of stock isn’t “fair, orderly and efficient”. They’re not unfairly influencing the stock price. They’re not even directly influencing it.

The SEC need to be careful here, IMO.
MattyM 09/109 said:
The funds have already agreed to buy them when they shorted (and are still shorting in the hope they can outlast the community)
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If they’re still shorting then surely the SEC (and the hedge funds) don’t have a leg to stand on? They can’t continue playing the game and only afterwards shout “but the rules were unfair”.
 
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Market Where? said:
That’s the point of organized buying and then selling. The risk of shorting is that they end up “ owing” more stock than is actually available. If the millions of people in the community own that stock then the big shorting hedge funds have to buy. If the community restricts how much is on the market each day - so you agree to only sell 5% of your own holding - then the hedge funds have to buy. At some point they will have covered their position and the stock will dramatically reduce in value but by effective coordination the community will all have made a sizable profit.
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Aye, except effective coordination on a sub Reddit when factoring the behavioural patterns of inexperienced individuals is most likely to look great on the way up and tragic on the way down.
MattyM 09/109 said:
The funds have already agreed to buy them when they shorted (and are still shorting in the hope they can outlast the community)
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If/when the short positions are blown out, where is all the liquidity going to come from to make sure all the redditors can sell?
 
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Titus said:
Aye, except effective coordination on a sub Reddit when factoring the behavioural patterns of inexperienced individuals is most likely to look great on the way up and tragic on the way down.


If/when the short positions are blown out, where is all the liquidity going to come from to make sure all the redditors can sell?
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Hence my big if.
 
Market Where? said:
That’s the point of organized buying and then selling. The risk of shorting is that they end up “ owing” more stock than is actually available. If the millions of people in the community own that stock then the big shorting hedge funds have to buy. If the community restricts how much is on the market each day - so you agree to only sell 5% of your own holding - then the hedge funds have to buy. At some point they will have covered their position and the stock will dramatically reduce in value but by effective coordination the community will all have made a sizable profit.
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Which is illegal
 
HellsBells said:
Shorting is risk. They know it’s unlimited risk.

Im still not sure how some organised buying of stock isn’t “fair, orderly and efficient”. They’re not unfairly influencing the stock price. They’re not even directly influencing it.

The SEC need to be careful here, IMO.

If they’re still shorting then surely the SEC (and the hedge funds) don’t have a leg to stand on? They can’t continue playing the game and only afterwards shout “but the rules were unfair”.
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This. The ones shorting the stock created the situation.
 
Market Where? said:
Hence my big if.
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My question initially was relating to liquidity issues if the short positions close or are blown out. I know the funds are buying, I know what a short position is, but surely a fuck load of Reddit posters are going to get burnt here? Clicking sell on something inflated 300% for zero reason when liquidity pours out of the market will be a killer waiting and watching.
 
monkeytassle said:
Which is illegal
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How is it anymore illegal than forecasting a share as buy/sell/hold?
If someone wants to say I think this share still has value but my advice is to sell 5% of your holding today in order to take some profit - how is that illegal?
It’s exactly the same as some arrogant hedge fund wanker posting in YouTube that he has shorted a company which is currently at $40 but will drop to $20
 
Titus said:
If/when the short positions are blown out, where is all the liquidity going to come from to make sure all the redditors can sell?
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They either cover them or they're done, both are actually wins for the original redittors given this all started as a way to attack the very practise of large scale shorting. At the start of this the various funds had shorted some 160% of the stocks so have to buy them. I'm not saying by any means that some, potentially a lot, of little folk who got in to try to turn a buck arent gonna get trampled, they absolutely are. If they could get a blanket agreement to only sell of fixed % and prevent a massive drop they could theoretically manage this back down but i think most people recognise at some point its gonna drop like a brick when everyone loses their bottle.
 
Market Where? said:
How is it anymore illegal than forecasting a share as buy/sell/hold?
If someone wants to say I think this share still has value but my advice is to sell 5% of your holding today in order to take some profit - how is that illegal?
It’s exactly the same as some arrogant hedge fund wanker posting in YouTube that he has shorted a company which is currently at $40 but will drop to $20
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Are you familiar with a small group of people influencing something called libor?
 
Titus said:
My question initially was relating to liquidity issues if the short positions close or are blown out. I know the funds are buying, I know what a short position is, but surely a fuck load of Reddit posters are going to get burnt here? Clicking sell on something inflated 300% for zero reason when liquidity pours out of the market will be a killer waiting and watching.
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Almost certainly a lot will lose money - and a lot will make loads. On GameShop overall Reddit will be up and considerably so. My theorizing is how you could equalize that so all Reddit posters are up.
 
MattyM 09/109 said:
They either cover them or they're done, both are actually wins for the original redittors given this all started as a way to attack the very practise of large scale shorting. At the start of this the various funds had shorted some 160% of the stocks so have to buy them. I'm not saying by any means that some, potentially a lot, of little folk who got in to try to turn a buck arent gonna get trampled, they absolutely are. If they could get a blanket agreement to only sell of fixed % and prevent a massive drop they could theoretically manage this back down but i think most people recognise at some point its gonna drop like a brick when everyone loses their bottle.
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I know what a short position is for the person who holds it. My concern is for the people buying in to something artificially pumped by several hundred percent who might see massive issues with getting somebody to buy that on the exit. If the positions can no longer be covered then so many redditors will be fucked. If they manage to coordinate it properly and what not, excellent - however too many emotions involved and expecting to eventually see some people wanting to sell and having to wait ages.
Market Where? said:
Almost certainly a lot will lose money - and a lot will make loads. On GameShop overall Reddit will be up and considerably so. My theorizing is how you could equalize that so all Reddit posters are up.
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If people want to legally take high profile short sellers to town then they're more than welcome from me, in most cases I'm baffled as to why they go so public with them. I just don't want to see the flip side of now where a shit load of average Joe's have ended up losing money trying to 'stick it to' a bunch of people they don't know/understand.
 
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monkeytassle said:
Are you familiar with a small group of people influencing something called libor?
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Yes - but I don’t see the relevance to this situation.
A company is shorted. Someone posts on Reddit that this company has been overly shorted and I think it’s a good buy. At some point later they post this stock has peaked but still has value my advice is to sell 5% of your holding today. What’s illegal?
 
Dont really understand this too much but ive been following the sub for a few days they seem to be saying one user put 50k in a year ago and is now upto 47million
 
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Market Where? said:
Yes - but I don’t see the relevance to this situation.
A company is shorted. Someone posts on Reddit that this company has been overly shorted and I think it’s a good buy. At some point later they post this stock has peaked but still has value my advice is to sell 5% of your holding today. What’s illegal?
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I'm sorry you don't see the relevance? It's the same thing. Group of people artificially influence the price of a security. Fine when it's a rag tag bunch on reddit. Not fine when it's a group of 16 banks.

But some amc stock of you think it's a good buy.
 
Correct me if I’m wrong but given that hedgies have to disclose their short positions when passing a certain % threshold, it’d be perfectly legit for another established, massive fund to spot that opportunity, come in and buy the same amount of stock up that these redditors have done collectively and cause a similar pump in the share price / short squeeze?

Isn’t it just because it’s the proles buying up stock that’s causing a stir with burnt hedge funds rather than the process (which has never been ethical but is legal) itself?
 
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