GameStop - Great Seeing Short-Selling Hedge Funds Get Beaten Up

by Simon 28 Replies latest social current

• 

  shepherdless

  What the Redditors did to the hedge funds, is what the billionaires have been doing for years to the average citizens who invest and are hoping to save enough money for retirement

  Absolutely.

  Also, this is one of these unusual occasions where I fully agree with Tucker Carlson.

  B.t.w., I noticed that Fox News has not enabled comments on any of its GameStop stories. I wonder whether it is because this issue is one where the views of its audience are diametrically opposed to the powerful business interests it normally aligns with, and Fox is trying to avoid upsetting either side.
• 

  pistolpete

  B.t.w., I noticed that Fox News has not enabled comments on any of its GameStop stories. I wonder whether it is because this issue is one where the views of its audience are diametrically opposed to the powerful business interests it normally aligns with, and Fox is trying to avoid upsetting either side.

  What has happened in the past several hours is that it was revealed that Citidal the Hedge fund company that lost billions to the redditors, forced Robinhood and other to freeze trades and censure any messages on censure boards which is illegal. So some lawsuits have been filed against this illegal activity and the Hedge fund companies decided-------------------- to give Janet Yellen $800,000 dollars.

  Why is this significant?
  

  Because on November 30, 2020, President Joe Biden announced he would nominate Janet Yellen to serve as secretary of the Treasury in his Cabinet.

  Now all of a sudden the SEC decided not to investigate the Hedge fund companies illegal activity.

  Come to find out others in Political Positions of the current administration also have ties to the many Hedge fund companies who lost money.

  So instead they are going to investigate the redditors who are average citizens that banned together to take the hedge companies down.

  https://www.youtube.com/watch?v=K32XejdUmy0
• 

  Brock Talon

  I missed the last few days on this forum (I don't get on it much). But I just had to respond to the issue I raised regarding the 2008 market crash I mentioned earlier in this post and why I resent fast-buck "house flippers" so much.

  To be certain, the subprime mortgage problem and the subsequent 2008 crash was a complex issue. I will concede that there are many contributing factors as to why it happened. I won't go over them here, but suffice to say that most of the claimed contributing reasons for the cause are more likely just factors. They are not necessarily the cause.
  

  The recent and most thorough studies of this issue have shown that it was the more wealthy "investors" who ultimately defaulted en masse and triggered the 2008 crash. It was not just a bunch of poor sub-prime buyers. These "investors" are the ones who do the flipping. The more "poorer" buyers are just trying to get into a home to live in, one in a market they are competing against with the wealthier "flippers" who play the system rather than live in it. Once the market peaked and these investors could not make their fast buck, they defaulted on their loans en masse and triggered the crash.
  

  See the article below for a better explanation of this.
  
  https://finance.yahoo.com/news/house-flippers-triggered-us-housing-175705459.html
• 

  ShotWhileTryingToEscape

  The recent and most thorough studies of The more "poorer" buyers are just trying to get into a home to live in, one in a market they are competing against with the wealthier "flippers" who play the system rather than live in it.—-Brock Talon

  I heard an economist make an observation like yours.

  Markets played for no other reason than to make money will inevitably destroy struggling people and businesses. He indicated it will break the country unless there come a change to the ways money is gamed .
• 

  Anony Mous

  The flippers generally increase the housing market values temporarily. There is no way you can sell a flipped home for the purchase price you paid since any renovations are so crap and generally don't touch the mechanicals.

  It's basically the equivalent of putting a new paint job on a rusted out 1995 Chevy with 300,000 miles on the odometer and yes there are some idiots that will buy those houses and then get in over their head between debts they incur repairing their homes and the higher mortgage they got into and higher property taxes than their neighborhood is actually valued at. The problem is that housing market values and local wages are closely tied together, so these people will generally not make enough to make payments + maintenance on the 'nice house' that is falling apart inside.

  hat drove the housing bubble was primarily government forcing and backing sub-prime mortgagees. People that couldn't afford a house but through various incentives were promoted into buying a house they actually couldn't afford. Besides the government providing banks the difference between the "market interest rate" and the "woke interest rate", there were programs in NY and CA that effectively paid your mortgage if you were of certain race and income, but once those incentives disappeared, which is inevitably what happens, the banks had to adjust for the real market value of the loans leaving those people on the hook for insane mortgage payments on an adjustable mortgage which the banks used to recoup any losses they had made during the "woke years".

  Whenever the government gives money, the market value will adjust to absorb these incentives. It's why college/university tuition costs are so high, because the government basically gives sub-prime loans to the students who don't have to pay for about a decade or so which sounds good, until the first payment is due and you've accumulated 10 years worth of interest. So colleges adjust their prices to adjust their value for this free money.

  It's the same problem as the minimum wage, you can increase it but that compresses all other wages and the market has to adjust accordingly. So the entire market moves up $10 which is reflected in the cost of products at the store, so in the end, the value of the extra money is absorbed again in the market as everything becomes more expensive. You can give people $100/h in minimum wages, it will just make whatever is currently valued at $15 cost $100 in the future and more likely $115 to recoup the losses from the inevitable recession that follows a minimum wage increase.

  Everything seems to go through this cycle between "woke equity" and "real equality". Businesses can't operate at a loss indefinitely, there is no such thing as a business owner swimming in cash like Scrooge McDuck, money that doesn't move has no value. But the woke seem to think that we need to take these cash reserves from anyone that does any better and redistribute them, which inevitably leads to a backlash against higher taxes and regulation during which businesses have to recoup their losses.
• 

  GrreatTeacher

  It's hard not to get caught up in a housing bubble. If you've been planning on buying a home, saving hard for a downpayment and watching rising home prices pushing you out of the market, you're very tempted to buy before it's "too late." and you can't afford to. Without any experience, you might not recognize a bubble or know that what goes up must come down and wait to buy until then.

  We were actually looking to move up to a larger home when the housing bubble hit. The house we had bought 10 years earlier for $120,000 was now worth $325,000! Great time to sell, right? Except we'd have to pay a hugely inflated price for our next, larger house, too!

  Our solution was to add onto our house. We already owned the land and the house was situated on the lot so that even doubling the size of our house left plenty of yard left. It was a standard 1980s 1200 square foot rancher and we basically an addition the same size directly behind it. That way we were only paying for construction, not land.

  We weren't the only ones adding on at the same time and construction companies were charging the amount of the difference between current value and completed value. Except this was inflated along with the entire market and we knew the actual market value of wages hadn't gone up. We looked and looked and finally found a guy who lived in the neighborhood who did construction on the side and who told us his labor rates. So, we did the addition for Time and Materials. He charged us for any materials he bought and he charged us $45 an hour for himself and $19 for his assistants. He bid out electrical, roofing and basic plumbing and did the rest himself. My husband did phones and data and I painted. We got 1200 square feet for $100,000. This was less than it would've cost us to move up to a bigger house of the same size!

  So, the bubble burst and every house was suddenly worth less. Did we lose money? Counting our original house price plus the addition, we had $220,000 in a house that, after the "correction" was still worth about $320,000. So, yeah, we were up about $100,000! The market has gone up since then and it's worth more now, but we were doing really well even right after the crash.

  Some of the people who sold and bought during the bubble were upside down on their new house after the crash. Unfortunately that led to quite a few foreclosures in our neighborhood some of which were bought by investors as rentals including the houses on either side of us. They have kept the properties decent looking, however. They are in high demand and command rather high monthly rental rates. ($1600 - $2000).

  Anyhow, be able to recognize a bubble. Sometimes houses just appreciate but it's usually in response to something. Population increase putting pressure on supply or local investment in the area like schools, parks or conservation easements. But, if housing prices are greater than the equation of Land + Cost of Construction, it might just be a bubble, so wait to buy until the bubble pops. The only exception might be retirees who can sell high and move down to a smaller house or even a vacation home they've bought previously. Then "Sell high!" might be the rule to follow!

  I hope nobody here got caught in the bubble because we watched a lot of people crash and burn in our area. And they weren't speculators, this was their primary home.
• 

  redvip2000

  I've been staying away from GME stock, because of how volatile it is. No real value there, it's just speculation. It has mostly crashed already and it will go down all the way in next few days I believe.

  I go to that Reddit thread everyday, and I'm baffled at the stupidity there. Lot's of people lost money on this deal. It's basically a pyramid scheme. Get in early get out early and maybe you'll make money.

  At the moment I'm making more $ with trading than with my job. Hard work though. But lots of money to be made.

  Just think that if you had invested $5,000 in Zoom stock in 2015 when it was $0.01 it would be worth about 200 million today. Crazy stuff.
• 

  GrreatTeacher

  Honestly, I learned a lot about this from my teenage/young adult son.

  He had been playing with stocks on Robinhood being introduced to it by the guys at work.

  (Remember when coworkers would go together on lottery tickets? How things have changed!)

  He dumped $100 into some stocks to see what would happen. OK I'm with you. But then he told me that they check the damn app on their phones all day long!

  Also, they checked various Twitter accounts and other social media all day long and they watched the sometimes instantaneous changes in stock value. Someone could just mention something cryptic like, "TGIF, enjoying my Coca Cola!" and they would watch Coke stock twitch.

  He was not on WSB, but he says he understood how quickly something like that could take off. The thing is that the collective wisdom of social media is not really stock market wisdom. It's just a bunch of people, some probably educated, but others idiots, who have managed to, in effect, distill the speed of high school gossip down to nearly instantaneous.

  There is power there, and some GenZers get off on it. I asked my son about the pyramid scheme idea, and didn't they realize that only the ones in the beginning will make money, etc.

  You know what he said? For some of them, yes they do know, but THAT'S NOT THE POINT. He said they don't care if they destabilize the stock market because their generation has been screwed. GenX has their retirement money in the stock market, but GenZ won't have a retirement because wages haven't kept up with expenses, college tuition has exceeded the rate of inflation, the jobs they are going to get won't have pensions, and Social Security will probably crash and burn before they get any.

  I don't feel like my son is super angry like this, but I was surprised about the level of anger that GenZ has toward GenX and Boomers. And, by the way, there is not much distinction between the two, having heard an, "Okay, boomer!" directed my way once or twice and I am smack in the middle of GenX.

  So, it's just a big old game to them. They revel in beating Wall Street, but they also disdain the middle class who has their retirement money invested in the stock market, and don't mind if they screw them, too.
• 

  Simon

  I've been staying away from GME stock, because of how volatile it is. No real value there, it's just speculation. It has mostly crashed already and it will go down all the way in next few days I believe.

  Yeah, unless you just happened to already own the stock, it's playing with fire. Lots of people will have lost lots of money through this.

  The nature of the business is one in terminal decline, because games are increasingly bought online or streamed, so the future for any bricks-and-mortar store that lets people exchange discs is bleak. There isn't any long term value there.

  Whatever happens with a bubble, the market will always return to balance at some point.

  I go to that Reddit thread everyday, and I'm baffled at the stupidity there. Lot's of people lost money on this deal. It's basically a pyramid scheme. Get in early get out early and maybe you'll make money.

  What amazes me is how the idiots think the likes of Elon Musk and Mark Cuban are "on their side". They are using them like fools for quick pump-and-dump schemes to get even richer and the schmucks fall for it and worship them as they loose their money.

  At the moment I'm making more $ with trading than with my job. Hard work though. But lots of money to be made.

  Just think that if you had invested $5,000 in Zoom stock in 2015 when it was $0.01 it would be worth about 200 million today. Crazy stuff.

  Yeah, our investments have done very well since the market correction caused by Covid. Lots of bargains to be had and still some great companies that can be bought at deflated prices.

  While everyone dreams of the 1000% growth stocks, the reality is that most of the time buying solid companies paying decent dividends is going to provide a good retirement for quite a small risk and little effort. There are so many good low-cost ETFs now it's hard to go wrong.

  But after that, putting some extra into a "play fund" is fun!