GameStop Shows Rising Power of Retail Traders, Says Reddit Co-Founder (bloomberg.com) 67
Reddit Chief Executive Officer Steve Huffman said on Thursday that the WallStreetBets forum is "by no means perfect but they've been well in the bounds of our content policy." From a report: "With all of our communities that do their best to be good citizens of Reddit, we try to do our best by them as well," Huffman said on the Clubhouse app. He called the forum's outsize influence on GameStop stock a "culture war of Wall Street versus everybody else." He said anyone who thinks the users of the forum are "idiots" should spend more time reading the discussions. "It's this idiot swagger that masks what I think is this charming intelligence," Huffman said. The forum's unprecedented influence on GameStop's stock shows that markets must adapt to a world where retail investors are gaining some of the power big financial firms have long held, according to Alexis Ohanian, co-founder of the online forum. "This is something, I think, for a lot of people, that was a statement as much as an investment," Ohanian, who left Reddit's board last year, said on Bloomberg Television on Thursday. "I'd equate it to, like, folks voting with their dollars in order to get back at or make a statement towards big finance."
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Joe Biden's son and brothers work or dabble in finance and hedge funds. Nancy Pelosi's husband is a real estate, venture capital, and consulting mogul. Chuck Schumer's wife has been a New York City executive for 20-plus years. In late 2016, WikiLeaks posted transcripts of Hillary Clinton's speeches to Wall Street firms, but even the BBC [bbc.com] asked whether she was too cozy with them earlier in the year.
Leading Democrats are still welded at the hip to Wall Street. They have been for decades, and they show no s
Re:Lines are drawn and approved opinions assigned (Score:5, Insightful)
Leading Democrats are still welded at the hip to Wall Street. They have been for decades, and they show no sign of stopping now.
I think a lot of people get confused and think of Republicans as the party of the rich and Democrats are the party of the poor, which in reality the vast majority of politicians are rich, regardless of party. Nobody else can afford to spend the time and money on an election campaign that they may or may not win.
Local elections (eg town/city/county council members) are a little more attainable to the average Joe but even then it often costs a few thousand just to file for candidacy. While the middle class can afford that anyone poor typically can't.
It's just one brand of rich people vs a different brand of rich people.
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The thing is there are some important differences. Republics are traditionally rich industrialists and Democrats are traditionally rich money changers and holly weird. The line is blurring a little with big tech and there have always been exceptions.
Vote in your primary election (Score:4, Informative)
Your general election vote is really just for harm reduction. Change comes from your primary vote.
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Your general election vote is really just for harm reduction. Change comes from your primary vote.
And donations. Particularly donations prior to the primary have the most influence. Getting name recognition before the primary is HUGE.
The main way major politicians exert influence is by providing financial backing prior to the primary. If a member of congress doesn't want to go along with the party's agenda, they get "primaried". Which means the party backs their opponent financially.
By making a financial contribution prior to the primary, you can help make sure your representatives actually repr
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Further proof that there is no such thing as a poor politician.
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Chuck Schumer's wife: Iris Weinshall is the Chief Operating Officer of The New York Public Library, former vice chancellor at the City University of New York and a former commissioner of the New York City Department of Transportation.
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All three of those positions are executive roles. The NYC DOT has a single commissioner at any point in time -- Weinshall led one of the city's large agencies.
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You framed it as if she is "welded at the hip to Wall Street" by being a NY executive. I wouldn't call being head of the library system, a university, or DOT as positions that are particularly influential to Wall Street.
OP was trolling (Score:3, Informative)
That said, try to find an equivalent to AOC, Bernie Sanders or the squad members in the GOP (No, Rand Paul is not one of those, plenty of corruption to find with Paul).
This "both sides" stuff isn't helping. One side really is objectively worse because they'
You confuse Trolling with Disagreement (Score:1)
OP was trolling
No, it just your partisan feelings got hurt when I pointed at the very obvious fact that AOC twitting in support of WallStreetBets was exact moment when a lot of people fell in line and started supporting it. You can claim this to be a coincidence, but you can't deny easily observable situation - White is not Black and pointing so doesn't make it Trolling even if your feelings are hurt in the process.
It's not partisanship to point out (Score:2)
You're leaning on the "Facts don't care about your feelings" trope rather than addressing the central thesis of my post, which is that while the Democratic party has a (albeit small) wing of reformists there is no such animal in the GOP. The closest we got was Ted Cruz trying to borrow some of AOC's internet cred, which he was rightfully smacked down for [yahoo.com]
Seriously, try to find a principled member of the GOP who holds
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You have rhetoric. We have facts.
https://www.cnbc.com/2020/10/2... [cnbc.com]
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You completely missed my point (Score:2)
There's something in the Democratic Party that *might* be salvageable. I can't find anything of the sort in the GOP. Can you? I mean that. Show me the right wing equivalent to AOC. Someone who reliable champions the goals, rights and needs of the working class. I couldn't name one.
Re: It's not partisanship to point out (Score:1)
Re: OP was trolling (Score:1)
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Career politicians will align to whoever they need to align to in order to get elected/re-elected, because staying in office is how they make themselves rich. The politicians who really believe in what they say and try to accomplish what they promise are few. Anyone voting for a career politician based on what they promise (instead of what they have done in the past) is a fool.
Re:Lines are drawn and approved opinions assigned (Score:5, Insightful)
The more I've read about the whole thing, the more I'm surprised that some other organization didn't pull the same stunt. I am aware that most snakes won't bite each other, and perhaps the same applies here, but the idiots that were making the shorts put themselves in a position where they're completely fucked because of their obligations to buy back shares later regardless of price. Honestly, the exchange should have prevented more shorts once they exceeded some percentage of the stock since it creates exactly this kind of situation that's just as exploitive as what the people trying to short the shares were doing.
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Saagar Enjeti: Wall Street Elites REGULATE, DEPLATFORM Redditors Who BEAT THEM On GameStop [youtube.com]
Saagar Enjeti: Wall Street Elites DESTROYED, Beaten By Redditors At Their Own RIGGED Game [youtube.com]
Mob investments and flawed rules (Score:5, Interesting)
An angry mob of people hitting each other with American flags and a mob of "intelligent" armchair investors beating up a stock and each other are both still mobs. I'm not certain they shouldn't be treated much the same way.
The whole idea of investments were to pick a company you felt had good ideas and potential for growth and to collectively put money into a venture that a single person couldn't afford. The entire system is flawed with trading companies vying to have the lowest sub-microsecond communication latency. This isn't what was intended.
Capitalism is a very responsive system as social and economic policy systems go. But so are today's modern fighter jets. What they both have in common is that to achieve responsiveness, they trade flight stability. A modern fighter jet can't fly a straight line without a computer making minute control-surface adjustments. The system is inherently unstable because it is based on greed. This isn't a moral accusation, it's simply a fact. When greed and gain are involved, there is nothing some people won't do to game the rules. The problem is, the intention of the system is being subverted, often times within the current rules, and adjustments are required. Antitrust laws and SEC regulations are capitalism's equivalent of a flight computer, but they aren't sufficient today. They are generations old and they simply can't react quickly enough or finely enough to today's instabilities. I'm not sure there is a good regulation fix for this that lets us keep the way things are now. The problem is, the intended goal of the system has been being subverted for so long and it has come so gradually that it is now wide spread. There is no rule fix that will bring the game field back to being about what it was originally intended that won't have some, or even most, of the current system howling about lost profits.
I suspect Musk is right and the whole system of short-selling is dangerous and flawed. I don't think there will be a fix for this kind of instability until borrowing and lending of stocks are outright forbidden. We might also have to slow down stock trades. Introducing latency into the system, say a 24 hour waiting period between ordering a stock and the actual sale finalization, might also help with the instabilities. You might also need to put in a 30-day sell delay. You buy a stick, you are forced to hold it for 30 days before selling. We need to force the system back into a strategic investment platform, rather than a tactical one.
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The joke is that if this tells us anything it's not that buying ads on Reddit is a good idea, it's that buying bots and shills and influencers on Reddit allows you to manipulate the stock market.
I bet Putin is kicking himself that he didn't think of this. He could have told the Internet Research Agency is do this long ago.
No, it shows a gap the upper class left (Score:3, Insightful)
You'd think we here on the bottom would learn. If you want to act like a rich person use your Government like one: Demand regulations that benefit you and your class.
Then again, we're all just temporarily inconvenienced millionaires. It's like Fry from Futurama said, "True, but someday I might be rich. And then People like me better watch their step!".
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Socialism for the rich, dog eat dog capitalism for the working class.
What you are thinking of is mercantilism. Basically, the government protects established players. It used to specifically refer to tariffs, but I think an expanded view is warranted, with licensing boards, financial and other types of regulations being structured to protect incumbent companies from upstarts.
I don't think there's much of a distinction (Score:2)
The NFL, for example, has all sorts of rules to prevent the best players from ending up on one or two teams because if they didn't football would be boring AF to watch. You'd know the outcome 90% of the time. Just like we do with the stock market.
The problem isn't gover
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But, then the new ref will be called a racist, mysoginist, homophobe against all evidence and asked over and to denounce white supremacy.
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At this point, it is boiling straight down to fascism.
The government can't control people through laws, so they have their big business buddies do it for them. The authoritarians insure that the businesses get paid well for their trouble.
The thing about revolutions is that they don't happen in truly oppressed states. It is only when the underclass gains enough wealth to be able to pull their nose off the grindstone long enough to see what is going on. I think we've reached that point in this country.m
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that they will close with regulations soon enough.
Well, Yellen works for Robinhood's owner so...
https://www.youtube.com/watch?... [youtube.com]
If someone gave me $810,000 I think I would regard myself as a very well paid employee. And I think they would too.
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It's kind of fun watching so many people who were absolutely sure that capitalism was working great and they were about to get rich suddenly realize what people have been telling them was true: The system is rigged and the free market is a false idol made for you to worship, not a real thing that exists.
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Psst! Capitalism is where people take advantage of other people. In your socialism, it is the other way around.
Too Big to Fail - Part 2 (Score:5, Insightful)
If you listen to some of the interviews from yesterday, the intentions of the Wall Street firms is quite clear. They aren't even speaking in coded messages. They're being pretty up front about it. They're manipulating the market to drive down the price, because if they don't the market will fall apart. They let the short sellers get so in over their heads that they can't possibly let them go under on this, because if they do, whatever amount they can't pay up will fall back to the clearing houses to cover, and when they can't cover it and go bankrupt it the falls to the next layer and then the next, like dominos.
So basically, the shorts have gotten so big, they're too big to fail. If they fail, they take down the whole system. Except this time around instead of the government handing out the 2B2F cash, the stock market is just skipping that step entirely and helping themselves by manipulating market prices.
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No.
In 2008 the banks were being threatened. That meant a loss of liquidity and the stopping of the economy.
This time it hits a few hedge funds, and the banks are out of it. If this was one trading firm catching another trading firm, we would never have heard of it.IT's jsut that it is the small guys that got one over on them.
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This is the problem with centrally planned economies. It turns out that when you put a few people in charge their mistakes have a massive effect.
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Shorts were always a terrible idea because the liability is essentially unlimited. Whatever that stock goes up to is what they have to pay. It was all just reliant on no stock shooting up too fast, and as soon as a bunch of Reddit bros figured out how to make that happen they were screwed.
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Re:Too Big to Fail - Part 2 (Score:5, Informative)
The issue here is that there were more shares being shorted then were actually in circulation, which immediately creates the possibility for this kind of situation. Due to the way the rules work, it creates an unlimited profit potential, which is why there's a corresponding unlimited liability. Neither exist in reality, only on paper and the ultimate limit to liability is all actual assets because anything beyond that is just a fiction of numbers. Driving the stock prices to hundreds of thousands of dollars per share wouldn't create trillions (or whatever it would shake out to) of dollars of wealth because the system has entered a state where pointless idiocies like this can occur.
The reality is that the value limit of the stock is now how much liability the people with shorts can actually afford. If they can fork over the ~$20 billion representing the market cap of GME then the price could go higher only to the point they could actually pay their debts. At some point you exceed the actual amount of money in circulation and it's obviously pointless because even if they could pay, there just isn't enough money for them to actually settle the debt. The other problem is that once the stock price exceeds that cutoff point, there are a new group of idiots thinking they're going to be able to get rich on a whole new set of imaginary valuation.
Anyone paying attention and with enough money should have realized that this is a free money situation. Eventually someone at an investment firm would have figured it out, but here it just happened to be some average schlep who knew about a group of people crazy enough to go in on the idea with him. So rather than some established player at the high-roller table with enough chips to play, it's a crowd-funded effort to call the obvious bluff and walk away with a fat stack of their own.
Re: Too Big to Fail - Part 2 (Score:2)
You've got the impression that the stock market is supposed to go up, always and forever? That's exactly what's wrong with market today, everyone and their mother with a Robinhood account believes that.
I'm not even sure what you think the enemy is, HFT, shorting, or large firms or personalities that influence the market merely by saying "We're doing this now." You don't even know, it's just "Wall Street", you know, the bad guy.
You know who actually drives prices up and down when some analyst, or tweeter,
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Did you even intend to reply to my post? I'm not sure where most of that came from? What in my post gave the impression I think the market is supposed to go up forever? I didn't say any even remotely to that effect.
And you seem to be the one mistaken about what these WSB people (who I am not a part of, only following the story for the entertainment and educational value). For the most part, they do not appear to be rational actors, at least if their words are to be believed. The vast majority don't expect t
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whatever amount they can't pay up will fall back to the clearing houses to cover, and when they can't cover it and go bankrupt it the falls to the next layer and then the next, like dominos.
The sums we're talking about here run into the millions, but I would think that George Soros could cover it with the change he's lost in his couch.
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Try billions. Just on GME alone the shorts are already down about $5 billion (with a couple billion of that already realized). I believe it was approaching a billion for AMC. I haven't paid much attention to the other ones.
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I should've looked first. My numbers were outdated. The GME shorts are down around $20 billion so far YTD.
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Which doesn't matter as long as you can cover your position, and there is a high probability that the so will go down. Do you think people will leave their money in GME forever, try a month. And the many of the shorts are selling at 350$ or above which is a pretty good position to be in
The Crimson Permanent Assurance (Score:4, Funny)
Didn't they ban it yesterday (Score:1)
Just the opposite of the headline (Score:4, Insightful)
The Game Stop Fiasco shows the power of hedge-funds.
I still believe shorting and short instruments have an important role in the market place. However what we are seeing here is that a small number institutions with access to a lot of credit leverage were able to create a situations where nearly the entire float was short. There are two reasons to keep shorting a small float company to the point anything close to 100% short interest like that:
1) You sincerely believe the company is heading to a near term bankruptcy.
In which case fine. However a quick look at GME balance sheet should make it abundantly clear they aint bankrupt and they aint going to be near term either.
2) You are directly trying control the asset price.
Which is while possible not illegal isnt really helpful in the market place. You are no longer driving investment away from a bad company that might otherwise raise capital only to waste it you are just scalping other traders with less capability to move the market than you have. Its a zero some activity. Again it might be within the rules all players agreed to but its the sort of thing that when i backfires like this well - nobody feels bad for you!
The fact remains though retail never could have done things without large financials stupidly opening a window to make it happen entirely through their own reckless actions. Retail is just exercising a small opportunity that presented itself with a few tickers, they don't have any more power than they had last month.
Its the WSB infulencers that are profiting (Score:2)
Step 1) Buy the stock
Step 2) Tell everyone else to buy the stock
Step 3) Profit
Which isn't blatant market manipulation, but the money is going from those who get in late, to those that get in early. If you had a following and you could post, you could make millions, and that money won't necessarily come from hedge funds, it will also come from retail investors.
Most of these people haven't lost money (yet) some of them have, some of their accounts have been buried, they won't be back. When enough of these peo
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but the money is going from those who get in late, to those that get in early.
No necessarily. If the shorts are really forced to cover (which requires the price be high enough they can't get sufficient credit to extend their shot positions they have to buy to cover) A big part of the money in that case really is transferred from the hands of the institutional guys to the retail investors who are almost all long.
After the shorts capitulate (assuming they do) its whoever sells first among the longs that reaps the most profit. But yes the selling will continue until the stock settles at
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The shorts already capitulated, new shorts are taking their place with bigger pockets. They are also getting in at a higher price, somewhere around 370$. All they have to do is wait for the hype to settle down. The WSB traders won't keep their money in one place for long.
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Which isn't blatant market manipulation
Market manipulation isn't illegal. The SEC only cares if you do that using privileged insider information.
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I never said it was illegal, I just don't know why you'd want to help a snake oil salesman sell their wares. In the process people will get burned.
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In a way they do have privileged insider information, its not any different that a CEO that sells their stock before their company tanks from an information perspective. If you knew that your posts would cause many other people to buy stock, that is information and that equals power and money.
Spez works for the Establishment (Score:1)
This is why Reddit bans only Right-wing activists, and celebrates whatever extremes that Antifa and BLM can throw around. Like most of our elites, he wants to transition to socialism because he thinks that he will be a leader then, not realizing that revolutions are unpredictable and the rich end up first against the wall. Very sad.