What a world where people are more concerned about a single company going under than the fact that the working class is finally doing something against the rigged capitalist system.
a certain percentage of people in WSB only want to light a pile of their money on fire for the sole purpose of bankrupting some hedge funds. they expect no returns and only want to cause pain to people with more money than them that they dont like.
another percentage of people (i think this group is much, much larger than the first) think bankrupting the short positions is gonna make them huge returns. they think theyre all david collectively fighting a goliath as the proletariat rises up. most of these people are sorely mistaken and will lose everything, but some will make money.
the RH trade halt (EDIT: only buying was halted, a "trade halt" technically means both) is allowing the shorts to unwind more gracefully, making the first group of people angry. theyre not getting their witchburning, or public execution, or lynching - however you want to frame it.
the problem is the second group of people think theyre being defrauded out of huge returns by an artificial exit from the short squeeze. these people are wrong to begin with. most of them were never going to make huge returns. even if they successfully bankrupted the shorts, most of them are left holding stock they bought for $100, $200, $300, or $400 a share (WSB was memeing share price was gonna go into the thousands) that is worth <$90. those people were always going to lose, they just didnt know it. but now they have a scape goat, even though they were on the wrong side of the trade to begin with.
People argue that this is criminal market manipulation.
you are correct, I used the term "trade halt" incorrectly. i clumsily meant the portion of trading that was has halted, which is neither clear nor an appropriate usage of the term.
> People argue that this is criminal market manipulation.
shrug. some people wouldve said that if it WAS a full trade halt - if people can't sell to get their gains before a crash, thats illegal market manipulation right?
regardless, it seems clear that RH couldnt cover more volatile stock buys so they halted volatile stock buying. maybe they shouldve taken different actions, but they have well-known legal and contractual requirements about liquidity and cash-holdings for the volatile stock trades they broker.
Many people said the same thing about TSLA before it stabilized at higher levels. I bought at under $40 and sold around $80 because I thought fundamentals mattered. Turns out they don't right now.
Everyone talking about what GME is 'actually worth' is spouting bullshit. The fact is, no one knows. Because it's up to the market.
youre right in that no one, least of all me, can predict future stock prices, but i think youre missing the point. even if GME stabilizes at $150 - which is an unlikely tripling of value - most of the people involved are going to lose most of their investment.
the fundamental principal is that a short-squeeze HAS to end in a pricing crash. its the whole mechanism by which the squeeze occurs in the first place. the final price isnt really relevant, the point is that most people have to absorb large losses by definition. I think a lot of the players dont understand this; they think its free money, and are gonna scream bloody murder because they think they only lost because RH did something illegal. RH actions are irrelevant, legal or not, because the trade was bad in the first place.
the only way this doesnt happen is if the original market was wrong about GME to the tune of 1000%. maybe the short squeeze happens and GME never crashes, it peaks and stays at $350 and then beats the S&P 500 by 10% YoY for the next decade and everyone that bought long just makes money. if you believe that then well, good luck.
The reason I used TSLA as an example is because this is pretty close to what happened there! The future scenarios 'priced in' to that company now are several degrees beyond ludicrous. I don't think I'm missing the point at all, which to me is: massive swaths of the entire market are super irrational right now, and have been for a while, with no end in sight.
> no one, least of all me, can predict future stock prices
This seems more true to me today than it ever has been. After all the shit I've seen happen with stocks in the past few years (2020 especially), things I used to consider impossible I no longer do. None of this makes any sense any more. I don't really have the stomach for it, honestly, the whole thing makes me nauseous. But if I want my meager savings to do anything other than lose value, I still have to try to evaluate what's going on to weigh my choices.
good point. youre making me second guess myself, but i think in the end GME's case is just too extreme. it mightve been undervalued at $20, but i just dont see the volume of positions >$200 as defendable or profitable. even if the gamma drives the price bananas high today, the end result will just be an even larger crash at the end.
Fundamentals never matter "right now". Fundamentals are about long-term investing and growing money over time.
Day trading is about speculation, not investing. WallstreetBETS has nothing to do with market fundamentals or investing money. This is the point of the Keynes quote "The Markets Can Remain Irrational Longer Than You Can Remain Solvent" - Markets don't rely on the the "fundamentals" in the short term, only in the long term.
>Everyone talking about what GME is 'actually worth' is spouting bullshit.
That's because in the long term, GME's value hasn't changed. GameStop the company is just as valuable as it was a month, meaning it's basically worthless. Which means before too long the stock is going to crash and the majority of people who bought it are going to lose a lot of money, while the few who bought earlier will make out.
Whether it's the legal definition of "pump and dump" is pretty irrelevant, because in practice it's a pump and dump scheme, and is going to leave the majority of people involved with a lot of regrets.
What you call 'day trading' has turned into week trading, has turned into multiple-month trading, and I would argue even beyond a year now in a lot of cases. Plenty of stocks have been pumped far beyond what their 'fundamentals' would justify. In some cases, that has changed the trajectory of companies and even entire sectors.
> in the long term, GME's value hasn't changed
This is entirely debatable. The investors just changed it, and new people are on the board who could potentially turn it into an eSports empire, or the next Valve, or who knows what else. Not at all likely, I know, but money changes things and there is some amount of 'true believer' investment happening, like we saw with Tesla.
Honestly, I don't like all this volatility one bit. I am increasingly concerned about not ending up homeless when I'm elderly. But the fact is, the market appears to be changing, and so-called 'retail investors' may be gaining new prominence in the greater order of things. Valuations based on hopes for what could happen 30 years out instead of how much paper profits got jacked up over a 3-month period. It's scary and I don't like it. But who knows, in the long run it could be a good thing? I don't think you, or I, or anyone else can say from here.