[HN Gopher] GME: Or, why we shouldn't underestimate "4chan with ...
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GME: Or, why we shouldn't underestimate "4chan with a Bloomberg
terminal"
Author : ed25519FUUU
Score : 50 points
Date : 2021-01-26 18:44 UTC (4 hours ago)
(HTM) web link (twitter.com)
(TXT) w3m dump (twitter.com)
| exabrial wrote:
| I don't understand _how on earth_ Robinhood's relationship with
| HFT firms is even legal.
| llampx wrote:
| What this whole saga has brought to light is how much the market
| is manipulated, mostly to accelerate the wealth transfer from the
| retail investor (boomer, millenial, zoomer, it doesn't matter) to
| the insitutional investors and hedge funds - the smart money.
|
| We have to give up the thought that the markets move as they do
| on pure investor sentiment, and face the reality that a large
| part of price movement is manufactured to suit the big money.
| jakupovic wrote:
| This was always the case. Nothing has changed.
| toomuchtodo wrote:
| https://threadreaderapp.com/thread/1353890766800621569.html
| hntrader wrote:
| Step 0 and step 2 are false, but in typical Twitter fashion
| uttered with such confidence. Citadel can fill those trades
| internally for better-than-market price, but it's illegal to
| front-run them. It's not a practice I agree with, but it's not
| front-running.
|
| HFT surely made money market making GME, as they probably did
| with many other instruments today. There's nothing unique in the
| HFT space about GME.
| Miner49er wrote:
| Can someone explain how this is manipulation? Users on WSB saw
| the potential for a short squeeze and bought on it (it's a common
| trading strategy to play highly shorted stocks) and they told
| other users about the idea. Large investors like Ryan Cohen and
| Michael Burry were on this trade, too, for a long time.
| hehehaha wrote:
| It's not if you're retail but there are signs to indicate that
| professional traders drummed up retail over on r/wsb without
| any disclosures.
| Miner49er wrote:
| What signs?
| s1artibartfast wrote:
| Even if that were true, would it constitute manipulation?
| What disclosures are required for stating opinion and
| publicly available information. I can find 1000 articles on
| google finance.
| Miner49er wrote:
| Another thing, GME is just one of many stocks that appear to be
| squeezing right now. These other stocks that might be squeezing
| (like DDS, TR?, FIZZ, BBBY) are barely mentioned on WSB.
|
| What's causing all these stocks to be squeezing at the same
| time?
|
| I'm not even sure we should be saying GME was WSB's doing,
| although it is a fun story.
| jdhn wrote:
| BBBY has been brought up in a few DD (due diligence) posts.
| If you go to WSB and search for BBBY you'll come acorss them.
| GME is obviously the focus of attention, and therefore the
| lions share of posts are about them.
| salawat wrote:
| I have issues with where the line is actually drawn for market
| manipulation. It sure looks like the way it's applied is "if
| you inconvenience institutional investors, you're a market
| manipulator". As I've not seen much in the way of mitigating
| institutional investment firms capacity to do the same in the
| other direction vs retail.
| LatteLazy wrote:
| You're not meant to coordinate your trades with other entities.
| That alone is manipulation I believe.
|
| You're meant to buy(sell) because you like the idea of (not)
| owning something. That means you don't want to move the price.
| If you move the price you can't buy more at the same great
| price later. Wanting to move the price is sort of the smoking
| gun of manipulation.
|
| Being able to change the price in the short term means the
| price is "wrong". A wrong price cheats all sorts of market
| participants even ones who don't trade.
|
| Securities fraud is defined as any action that "induces
| investors to make purchase or sale decisions on the basis of
| false information"[0]. A false price is a great false piece of
| info to manufacture.
|
| I'm watching with interest for when WSB attracts the interest
| of the regulators. Being retail means they're generally
| ignored, until they're not.
|
| [0]: https://en.wikipedia.org/wiki/Securities_fraud
| uxp100 wrote:
| Has the SEC ever considered the market value of a stock false
| information in this way before?
|
| Edit: and as to your first point, it has always been legal to
| say, hey, I am buying this stock, I like it, I recommend you
| buy it too. That alone is definitely not manipulation.
| LatteLazy wrote:
| Here's a case from 2019:
|
| https://www.sec.gov/news/press-release/2019-216
|
| Drove prices down, bought, drove prices up, sold.
|
| The reported actions of WSB is basically the second half of
| this with the twist that they think they can use large
| short positions as leverage to push prices up more.
|
| It's actually a very common, old form of fraud. The
| question is whether regulators care to enforce the rules.
| It's what Leonardo Decaprio is guilty of in Wolf of
| Wallstreet.
| waheoo wrote:
| Id say selling naked calls is the real fraud here.
|
| Why is it the fault of wsb for exploiting a market
| failure?
| Miner49er wrote:
| That's not what WSB is doing. The traders charged by the
| SEC were acting in coordinattion to drive stock prices up
| and down with manufactured orders.
|
| On the other hand, WSB is just a bunch of different
| people and a lot of them have bought GME because they
| thought would go up.
|
| By your logic, anytime a stock goes up, how's it not just
| manipulation? It's typically caused by a bunch of people
| buying it cause they hope it will continue to go up. This
| is all that's happened at WSB.
| Imnimo wrote:
| As someone who knows basically nothing about stocks, I still
| don't totally understand whether this is a situation where the
| WSB guys are going to be left holding the bag, but at least they
| will have screwed over the short sellers and so it'll be worth it
| to them, or if they're actually going to come out way ahead? Like
| surely GME stock can't be worth 150 or whatever once this short
| squeeze business is done with. So what's the offramp look like?
| Miner49er wrote:
| Short squeeze like this have happened before. The most famous
| probably being Volkswagen in 2008, when they briefly became the
| most valuable company in the world. In that case hedge fund
| managers lost $30 billion, and Porsche (who orchestrated it)
| came out with $10 billion.
|
| https://moxreports.com/vw-infinity-squeeze/
|
| It's looking like GME is going to be similar, but at some point
| it'll basically come crashing down once all the shorts cover
| and such.
| [deleted]
| hehehaha wrote:
| This is right on the money. Retail traders are getting used
| either way and both ways.
| nicholastsmith wrote:
| I really like this take. The whole time (pandemic onward) I've
| been thinking: "how can a bunch of small potatoes on WSB actually
| make such an impact." This neatly explains it... It's the HFT
| amplifying these actions.
| seabird wrote:
| This has very little to do with HFT. I would argue that the
| person who wrote this Twitter thread really quickly veers off
| into the territory of just-plain-wrong. What's more likely,
|
| - Citadel is paying multiple billions to get in on a firm
| that's so talented that they managed to take on this GME
| position, or
|
| - Citadel is a market maker that has written a shitload of
| near-naked call options and now needs to deliver on them?
|
| HFT is not the root of all evil. Citadel isn't making a killing
| off of frontrunning retail investors that have a Robinhood
| account containing $137. Odds are pretty damn good that they're
| in hot water with an options position and need to ensure that
| Melvin stays afloat to try and keep as many contract OTM as
| they can.
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(page generated 2021-01-26 23:01 UTC)