tech

Facebook shuts popular stock trading group amid GameStop frenzy

32 Comments
By Paresh Dave

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© Thomson Reuters 2021.

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The hedge funds, businesses who have spent years pooling capital in order to drive companies bankrupt so that they can profit from their demise, are upset because some Redditors have pooled their capital to drive a hedge fund out of business to profit from their demise.

Now, after years of saying that the market should be free and that there should be no restrictions or regulations against how they trade, the wealthy are crying to the government for restrictions and regulations on retail trading and pressuring Robinhood to ban their users from buying stocks they've shorted because the game that they rigged in their favor is, for the first time, being used against them.

Under capitalism, the rich losing and ordinary people winning is against the rules.

27 ( +28 / -1 )

All hail DeepFValue. Hope they make a movie about him someday.

9 ( +9 / -0 )

[Rocket]^10

1 ( +1 / -0 )

The problem is, that you only discuss your half of the truth. Yes, those hedge funds are sometimes bad and show no mercy with companies that are already under pressure. That also should be a bit more checked and regulated. But, with that profits they invest in big and healthy companies, new technologies, start-ups who deserve more money they don’t have themselves. And that’s the point, although those little gamers and gamblers now found a way to make some pocket money and bring the big funds in difficulties, they ruin the circle of dying and new births in the economy. Nothing to celebrate, really.

-15 ( +1 / -16 )

Lazarus Knows - spot on!

5 ( +6 / -1 )

Oh no we can't have the reverse of the 2008 financial bailouts! It's not supposed to work like that!

Telling the workers they should invest, but don't game the system like the fat cats do!

Now hedge funds who lost billions are already getting bailed out, apps and sites are colluding to block trades and regulators are moving swiftly to change the rules.

The "free markets" are only free when they work out in THEIR favor.

8 ( +9 / -1 )

Melvin Capital and the other hedge funds losing billions should embrace the glorious unregulated opportunities in of the free market.

If their poor choices led them to be impoverished, they should pull themselves up by their bootstraps.

Maybe save money, spend more wisely, get a second job like delivering for Uber Eats.

7 ( +8 / -1 )

It appears free market is not sustainable...

0 ( +2 / -2 )

Can't stop. Won't stop. Gamestop.

6 ( +6 / -0 )

@Sven Asai

Let's all take a moment to think about those poor poor hedge fund managers. Those poor, altruistic hedge fund managers, who were only trying to make the world a better place with their little gambles. Jeeeezus, give me a break!

10 ( +11 / -1 )

@Sven Asai

Not anymore.

The stock market was once a way to get investment in a company to grow and expand.

It hasn't been that I'm decades it is now just the world's biggest ponzi scheme.

Fast trading using super computers, short selling, over priced hyped IPOs, etc long term investment in companies are now far and few between.

9 ( +10 / -1 )

Under capitalism, the rich losing and ordinary people winning is against the rules.

You are not supposed to beat the house in OUR casino!

7 ( +9 / -2 )

This is BULLY.

-2 ( +1 / -3 )

Nailed it, Lazarus.

6 ( +7 / -1 )

Oh, GameStop stock is traffic related, or is it?

On Wednesday trading drove GameStop’s market value jumped by $10 billion plus, yet Thursday tumbled by some 40%, more a helter-skelter investment.

Can a robin hood account just through wishful thinking deem or dream a windfall into reality?

Insanity writ large?

-1 ( +0 / -1 )

If this isn't a short position, I am the second female pope

-1 ( +0 / -1 )

Short squeezes: Everything you need to know about the recent investing movement

https://www.usatoday.com/story/money/investing/2021/01/27/short-squeezes-what-to-know/43360347/

0 ( +1 / -1 )

Oh, GameStop stock is traffic related, or is it?

On Wednesday trading drove GameStop’s market value jumped by $10 billion plus, yet Thursday tumbled by some 40%, more a helter-skelter investment.

Can a robin hood account just through wishful thinking deem or dream a windfall into reality?

Insanity writ large?

No-one thinks that GameStop is a good long term investment. Everyone investing in GameStop knows that it's overvalued, and if you didn't get in on the ground floor a month or so ago, you're not going to make money. A few people will get away with a big chunk of cash, for sure, but not everyone will. Not even close to everyone.

But that isn't the point.

The point is that the hedge funds bet that the stock would drop in value, the Redditors teamed up and called their bluff, and many of them aren't doing it to make money, they're doing it specifically to stick it to the hedge funds. If you visit their sub-reddit, they even admit to this. Many of them know they won't make, and will probably lose money, but they don't care. Wall Street screwed them twelve years ago, and it screwed them more when it profited from a pandemic while millions faced poverty and death. They don't want money. They want vengeance.

And the hedge funds, who for decades have shorted stocks and manipulated the market to make sure their bets against companies paid off are crying foul because someone else, playing by the same set of rules, have given them a bloody nose.

And they're not just crying foul because someone else did it: the wrong type of people did it. You can see this in the way they suddenly want regulations for retail traders, but not institutional traders. The way that some have suggested that it should be illegal for retail traders (but not institutional traders) to even talk about what stocks to buy and sell. The way they're mocked as "Cheeto-eating basement dwellers buying their stupid stocks on heir dumb apps".

The wealthy don't care that the market is being screwed with to make a very small number of people money at the expense of others. They are upset that the little guy is screwing with the market to make some little guys money at Wall Street's expense.

12 ( +12 / -0 )

Lazarus Knows,

Pretty please be careful, robin hood, if you are spreading option trading on GameStop.

Be advised the very hedge fund investment firms, you think are venerable specialize in short selling.

Quants, notice risk strategies in options trading with python advanced level short points on volatility.

A complex comprehensive dispersion trading strategy.

More importantly predict option pricing using advanced machine learning.

Facebook and Reddit have been taken for fools.

What Is Gamma Scalping & Why It Matters

https://globalprimeforex.medium.com/what-is-gamma-scalping-why-it-matters-1449b8f5bfff

GameStop's Gargantuan Gamma Squeeze

https://www.fool.com/investing/2021/01/26/gamestops-gargantuan-gamma-squeeze/

Lazarus if you are about to bet your life's saving think carefully please

-5 ( +0 / -5 )

Crazy times. The people are rising up and the establishment is fighting back.

4 ( +4 / -0 )

Lazarus if you are about to bet your life's saving think carefully please

I have no intention of gambling on this. I am merely explaining the situation to you.

5 ( +5 / -0 )

Lazarus Knows

Sorry, point taken.

-1 ( +1 / -2 )

Billionaires got fooled by the little people. Cry me a river.

7 ( +7 / -0 )

Much of this group was delighted a few weeks ago when Facebook started shutting down conservative voices.

Think about that.

2 ( +4 / -2 )

Much of this group was delighted a few weeks ago when Facebook started shutting down conservative voices.

I don’t recall conservative voices being shut down on Facebook.

Fascists were, sure.

1 ( +4 / -3 )

Burning Wall Street!

Thanks to the GameStop defense, hedge fund short sellers have lost nearly 27x more in the last month alone than all short sellers combined did in the average month last year:

Wall Street investors are sitting on estimated year-to-date losses of $70.87 billion on their bets against U.S. companies following massive surges in some of the heavily shorted shares, data from analytics firm Ortex showed on Thursday.

Some shares such as in video game retailer GameStop have jumped more than 1,000% in the past week, driven primarily by retail investors trading on online apps and sharing tips on social media messaging boards

Such gains have forced short-sellers to buy back stock to cover potential losses in what is dubbed a short-squeeze. Moves were exacerbated by more retail investors piling into the stock.

Ortex data showed that as of Wednesday, there were loss-making short positions on more than 5,000 U.S. firms.

Shorting GameStop may have cost $1.03 billion year-to-date, Ortex estimates, while those shorting Bed, Bath & Beyond were looking at a $600 million loss.

Its short interest data, sourced from submissions by agent lenders, prime brokers, and broker-dealers, showed that around 62 million GameStop shares with a value of $2.2 billion were out on loan as of Wednesday.

To put this in perspective, the average monthly profit/loss for short sellers in 2020 was $2.7 billion. Now you know why Wall Street is shrieking like a spoiled little kid throwing a tantrum for the Biden admin to stop the public from being able to do what they do.

One thing is clear from all of this. The America public is not going to support another bank bailout once the next financial crisis begins. They'd rather see Wall Street burn, and rightly so.

3 ( +5 / -2 )

The US Dept of Justice will come after these little people for their uprising. There are securities trading rules against coordinated efforts to manipulate prices, and all the communications in the Reddit group and the Facebook group will be turned over as evidence.

I am not agreeing with that and will be jeering when it happens, but it is predictable. The hedge funds, on the other hand, did not violate any securities laws (at the start) by shorting Gamestop. They were simply stupid to leave themselves exposed with absolutely no shares left in the market they could purchase to cover their shorts. The reason they didn't think anything bad could happen is that coordinated manipulation of the stock price is illegal, so the hedgies had no expectation it would occur.

Now, if on Thursday the hedgies coerced the Robin Hood and e-Trade entities to stop accepting buy orders, THAT is also an illegal manipulation - but evidence of such communication will be not be as easy to find as the amateurs' communication records.

-5 ( +0 / -5 )

Robbin Hood is done, toast. I wonder how much more of this people will take before Facebook, Twitter and Youtube also fail.

5 ( +6 / -1 )

Wall Street businesses are unhappy that their little apple cart has been overturned. But hedge funds have been violating US securities laws for decades by not actually owning the securities they use to make money. About 100K small investors decided to spend a little of their own money in hopes of breaking those who bet against companies to make a point and make a little money, if it worked as they thought it would.

I bet the reason this was shut down was because a few, if not all, of the top 10 leaders at Facebook have some of their personal investments in these hedge funds which are about to fail. The idea that someone can make money by betting on a company to have a lower price in the future is morally wrong. Betting that some other human will fail is a terrible business.

Who are these upstarts to think they're entitled to make money in the markets, too? That privilege is reserved for the richest 10% of Americans, who own 80% of the stocks - and the wealth - in the country.

The richest 1% have double the wealth of the other 99% worldwide. In America, the middle-class is shrinking as the upper income families grow. Low income families have been around 9% since 1970 and that trend continues. Basically, more of the middle-class is doing better and moving up. 48% of Americans are in the upper-income group now. https://www.pewsocialtrends.org/2020/01/09/trends-in-income-and-wealth-inequality/ That is all pre-COVID information.

Americans in the "well-to-do" category (say over $100K/annual income) are better off then 95% of the world based on global stats, but the lower parts of that category aren't exactly rich by local American standards.

Over 55% of Americans have stock investments in one way or another. Teachers, factory workers, state employees all have professionally managed funds, which invest in the US stock market.

In 2020, the percentages owning stock range from highs of 85% of adults with postgraduate education and 84% of those in households earning $100,000 or more to lows of 22% of those in households earning less than $40,000 and 28% of Hispanics.

My parents taught me about the stock market beginning around age 14. They bought all their grandkids a few shares of stock every year for b-day presents based on what the child thought was a winning company. That was usually $20-$50. The selected stocks were clothing or fast food companies. None had great returns when they were kids.

-1 ( +0 / -1 )

I confess I have no patience for normie investors whining and fretting over this. The hedgefunds exist to suck siphon money out of the market purely for themselves. They thrive by destroying good companies. The more healthy a company is before they destroy it... the more they make.

Ever wander what happened to Blackberry in the first place? "Oh... Apple came along and made better phones and poor dumb blackberry just couldn't adapt." Except tons of other companies are making phones just fine. Blackberry was picked out by hedgefunds and deliberately destroyed. Thousands of really good manufacturing jobs were lost so the fat billionaires could buy a few more yachts and date a few more models. They short the stock... then they go on TV and run down the stock... which drives the price down. Then they get with their buddies in the media who contribute by running down the products the company makes. They cannot lose. They never lose.

Until now.

So will normie investors get hurt? Does surgery hurt the patient? America has a bunch of leeches sucking billions out of its economy and destroying jobs. WSB is setting those leaches on fire.

Mr. Normie doesn't have to help. He can just stand on the sidelines where he belongs... fretting over his garbage 401k full of apple and facebook and microsoft.

0 ( +3 / -3 )

It's refreshing to read such open disdain for the common person, or "normie" as Ego Sum Lux Mundi describes them. I am glad that the right wing are finally honest with themselves and others about how they hate anyone who isn't wealthy.

2 ( +2 / -0 )

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