What is happening these days exceeds anything I've seen before. I knew the stock exchange is mostly decoupled from the real economy, being mostly a speculation playground, but what is happening these days is insane.
Melvin Capital went under the water after being caught in the GameStop crossfire. A $1-5 (according to BofA) stock of a retail company, affected by the malls crisis and the games downloading business, traded up to $380, 600% up since January 12th, whoever was short is FUBAR.
https://www.washingtonpost.com/business/2021/01/27/gamestop-amc-reddit-short-sellers-wallstreetbets/
How Reddit and WallStreetBets blew up GameStop’s stock - Vox
KOSS, EXPR, AMC, FOSL, NOK, CVM, NAKD, maybe others, all stopped from trading, after unbelievable trade volume numbers.
I myself didn't see such a mess since the 2008 disaster. WTF is this going, only God knows, but certainly it doesn't smell kosher.
Melvin Capital went under the water after being caught in the GameStop crossfire. A $1-5 (according to BofA) stock of a retail company, affected by the malls crisis and the games downloading business, traded up to $380, 600% up since January 12th, whoever was short is FUBAR.
https://www.washingtonpost.com/business/2021/01/27/gamestop-amc-reddit-short-sellers-wallstreetbets/
How Reddit and WallStreetBets blew up GameStop’s stock - Vox
KOSS, EXPR, AMC, FOSL, NOK, CVM, NAKD, maybe others, all stopped from trading, after unbelievable trade volume numbers.
I myself didn't see such a mess since the 2008 disaster. WTF is this going, only God knows, but certainly it doesn't smell kosher.
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Let's see on this a bit deeper.
US are holder of global exchange currency.
Providing such a currency to a global market also demands to have a feedback, naturally say returning path.
Previously such a path was provided by state bonds and was regulated by it's profitability.
Now FED drop rates so bonds aren't attractive and huge wave of provided liquidity gushed to stock exchange raised rates. There was an attemt to cool down, but FED was forced to support rates.
Yes, this mechanism allows to distribute huge provided liquidity to end households and support market demands(asks) which must result in inflation rise and allow to rise FED rates. They hoped to spend money to all around.
But they didn't.
End households are enough saturated by goods and new yilded profit returns to a stock forcing stock rates to rise again.
The cure are simple but extremely unpopulated - return from stock heaven to a damn ground.
Remember tulip bulbs market disease in Dutch/Hollandia in 197x and be ready, you're warned.
US are holder of global exchange currency.
Providing such a currency to a global market also demands to have a feedback, naturally say returning path.
Previously such a path was provided by state bonds and was regulated by it's profitability.
Now FED drop rates so bonds aren't attractive and huge wave of provided liquidity gushed to stock exchange raised rates. There was an attemt to cool down, but FED was forced to support rates.
Yes, this mechanism allows to distribute huge provided liquidity to end households and support market demands(asks) which must result in inflation rise and allow to rise FED rates. They hoped to spend money to all around.
But they didn't.
End households are enough saturated by goods and new yilded profit returns to a stock forcing stock rates to rise again.
The cure are simple but extremely unpopulated - return from stock heaven to a damn ground.
Remember tulip bulbs market disease in Dutch/Hollandia in 197x and be ready, you're warned.
Glad I moved a lot of my 401k money out of the stock market at the beginning of the year.
Diversify. You shouldn't be investing in the stock market if you want to retire soon. You have to be in the stock market for the long run. Don't buy high and sell low.
I already spent a lot of money at GameStop when my son was young.
Diversify. You shouldn't be investing in the stock market if you want to retire soon. You have to be in the stock market for the long run. Don't buy high and sell low.
I already spent a lot of money at GameStop when my son was young.
The Netherlands / Holland in 1637.
also:
Elizabeth Warren Smacks Wall Street 'Casino'-Goers Amid GameStop Kerfuffle | HuffPost
and
The Redditors Have Revealed A Myth About The Stock Market | HuffPost
"Melvin Capital has lost $3.75 billion and counting."
Oh, this was so long ago... I remember it so clearly as it was yesterday!
But really i'm talking about 197x when Groningen formation was founded and mining income crashed local production and industry.
Now we see something similar, why invest in production while there are easy peasy stock growth. So real industry are drained and stock market is cut off reality.
My take - such crap is going to happen as long as there's practically free money on the market. Gone are the times when the stock exchange was a good way to finance a business, now there's money everywhere, and the stock market became a casino.
The effect of "quantitative easing", bailouts, non targeted financial help. Another text book economic death spiral is coming soon, unless somebody brings some sense to this game fed by the FED printing machines.
Some free online trading software platforms banned today AMC, GameStop, etc... from trading, how dare they take such an action? Are some tech companies allowed to take over the SEC role? Are we advancing toward a lawless, no rules, who-shoots-first society?
The effect of "quantitative easing", bailouts, non targeted financial help. Another text book economic death spiral is coming soon, unless somebody brings some sense to this game fed by the FED printing machines.
Some free online trading software platforms banned today AMC, GameStop, etc... from trading, how dare they take such an action? Are some tech companies allowed to take over the SEC role? Are we advancing toward a lawless, no rules, who-shoots-first society?
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When Gordon Gecko is making money its good. When Joe 6 pack makes money and GG loses suddenly there is a problem. Funny that.
Personally I think if a hedge fund does a put option on >100% of the stock in a company they deserve everything they get including investors who lose out helping themselves to the hedge fund managers posessions. It's lucky I never got to a position of power 😀 (note paragraph above has tongue wedged into cheek)
Personally I think if a hedge fund does a put option on >100% of the stock in a company they deserve everything they get including investors who lose out helping themselves to the hedge fund managers posessions. It's lucky I never got to a position of power 😀 (note paragraph above has tongue wedged into cheek)
The funny part in this particular case is that Joe Six Pack doesn't make a lot of money, and will end up with losses, anyway. The scope of this speculation was only to make Gordon Gecko mark big losses.
To me, this is a childish approach of reality, the real solution is to implement changes in the current trading policies, and taxing transactions would be a big step forward. Yes, I know, it will not happen, so be prepared for the big storm.
To me, this is a childish approach of reality, the real solution is to implement changes in the current trading policies, and taxing transactions would be a big step forward. Yes, I know, it will not happen, so be prepared for the big storm.
Don't Panic! 🙂 Remember when exercising stock options was not taxable until you filed? I had one classmate who committed suicide when he cashed in his options and and reinvested it all hoping to double down before the end of the year.
I've been through my share of this stuff, as I said, "Don't Panic!" During the last big storm I was on a boat in the middle of the Mediterranean and had no internet or phone, some friends panicked, I did nothing and everything recovered in a year or so.
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Stocks and shares is basically gambling.
Unless you seriously understand the markets.
Even then you can still get caught out with the likes of pandemics, wars etc.
Unless you seriously understand the markets.
Even then you can still get caught out with the likes of pandemics, wars etc.
"The Market" is both the largest Casino on Earth and a Ponzi Plan.
BOTH characterized by huge $$$$ movements (and we are talking medium Country GDP values) and NO real wealth creation.
Real wealth being the stuff or services which you can buy with money, which by itself is just printed paper.
Going back to the old but true "island" example, suppose you are in an isolated island and only "goods" available for sale are 10 loaves of bread.
And 10 people there have $10 each, so total "financial market" amounts to $100
Now by clever speculation, financial tools, futures markets, share appreciations, low cost loans, money printing, WHATEVER they end up having $100 each.
Are they now 10 times richer?
According to accounting and number printed papers, YES
According to ACTUAL GOODS ... **NOOOOO!!!!**
Even worse, they are actually POORER.
The guys who handled all those transactions got their fees, win or lose, so maybe 2 or 3 of those bread loaves are THEIRS now.
It does not get more complicated or deeper than that.
PS: maybe one out of the general public also ended up with, say, 2 loaves instead of the original one assigned to him, and you will see HIS story displayed on News all over the place.
So what?
You will not see the stories about the 9 others who now have only 5 or 6 loaves TOTAL to share among them.
I´m a dyed in the wool Capitalist, but this Marxist slogan becomes true under this very limited scenario (no new goods/services creation): "when somebody wins, it is only because others lose"
Of course, the ORIGINAL purpose of "the Market" was to get and consolidate Capital to allow for creation of *lucrative/productive* Enterprises, be it a car factory, colonizing India, build railroads, ports, newspapers, whatever, that is GOOD and in principle, self sustaining.
LONG ago that purpose was lost, you do not earn money any more because "the Company is doing good", but because "you bought for $60 and now it sells for $80"
Why does it sell for $80? .... because some guy "thinks" next week it will sell for $100.
Which often happens, at least for some time, and will keep happening while fresh investors arrive (did I mention Mr Ponzi?) until the bubble explodes.
At least Charles Ponzi could buy a beautiful house for his wife Rose:
Then, was he a successful investor?
Was he a good example?
Quite the contrary, he bough it with Investor´s money!!!!
BOTH characterized by huge $$$$ movements (and we are talking medium Country GDP values) and NO real wealth creation.
Real wealth being the stuff or services which you can buy with money, which by itself is just printed paper.
Going back to the old but true "island" example, suppose you are in an isolated island and only "goods" available for sale are 10 loaves of bread.
And 10 people there have $10 each, so total "financial market" amounts to $100
Now by clever speculation, financial tools, futures markets, share appreciations, low cost loans, money printing, WHATEVER they end up having $100 each.
Are they now 10 times richer?
According to accounting and number printed papers, YES
According to ACTUAL GOODS ... **NOOOOO!!!!**
Even worse, they are actually POORER.
The guys who handled all those transactions got their fees, win or lose, so maybe 2 or 3 of those bread loaves are THEIRS now.
It does not get more complicated or deeper than that.
PS: maybe one out of the general public also ended up with, say, 2 loaves instead of the original one assigned to him, and you will see HIS story displayed on News all over the place.
So what?
You will not see the stories about the 9 others who now have only 5 or 6 loaves TOTAL to share among them.
I´m a dyed in the wool Capitalist, but this Marxist slogan becomes true under this very limited scenario (no new goods/services creation): "when somebody wins, it is only because others lose"
Of course, the ORIGINAL purpose of "the Market" was to get and consolidate Capital to allow for creation of *lucrative/productive* Enterprises, be it a car factory, colonizing India, build railroads, ports, newspapers, whatever, that is GOOD and in principle, self sustaining.
LONG ago that purpose was lost, you do not earn money any more because "the Company is doing good", but because "you bought for $60 and now it sells for $80"
Why does it sell for $80? .... because some guy "thinks" next week it will sell for $100.
Which often happens, at least for some time, and will keep happening while fresh investors arrive (did I mention Mr Ponzi?) until the bubble explodes.
At least Charles Ponzi could buy a beautiful house for his wife Rose:
Then, was he a successful investor?
Was he a good example?
Quite the contrary, he bough it with Investor´s money!!!!
I don't! I am not planning to do any impulsive change in my investments. I am only wondering where is this crap going and feel bad for my kids future. I guess this is part of the process of getting old. I recall my father doing the same in the 60's while watching the cold war and the nuclear threats unwinding.
I use to think that in the 60's some serious planning was required for a kid to **** up his life. Nowaday, a ****** up life for the kids is the normality, the fight is to ****** it.
You do not build wealth by putting your hard earned money under your mattress. You build wealth by putting your money to work. I prefer the stock market while others invest in real estate (not for me) or other investments.
The system is rigged a bit toward the big fund managers - their rules and regulations are not quite fair
The stuff they gotta fix: - Gamestop was 140% shorted - ie - the shorted shares able to be re-shorted, thus able to send a company stock to ZERO - something really wrong here. I am surprised Gamestop had a stock price at all... did we not learn this lesson during the Housing debacle?
The beauty in all this is a small group of Joe Blow investors decide to stick it to these fund managers by convincing a few other Joe Blow investors to buy the stock (because it was so heavily shorted) causing all the managers to cover their 140% shorted positions, and covering the short positions at a extremely elevated price making for HUGE losses for them. Ha ha ha I say!!
The only problem I see is when those fund managers have to reconcile their client accounts, they likely have to sell good stocks that have nothing to do with any of this, causing the rest of the market to have an inordinate amount of selling driving stock prices lower...
We should be happy the little guy stuck it to these managers (unless of course you have one of these managers managing your investment portfolio)
Lets be honest - there is inherent risk in the market. I just want it to be fair for the Joe Blows to.
The system is rigged a bit toward the big fund managers - their rules and regulations are not quite fair
The stuff they gotta fix: - Gamestop was 140% shorted - ie - the shorted shares able to be re-shorted, thus able to send a company stock to ZERO - something really wrong here. I am surprised Gamestop had a stock price at all... did we not learn this lesson during the Housing debacle?
The beauty in all this is a small group of Joe Blow investors decide to stick it to these fund managers by convincing a few other Joe Blow investors to buy the stock (because it was so heavily shorted) causing all the managers to cover their 140% shorted positions, and covering the short positions at a extremely elevated price making for HUGE losses for them. Ha ha ha I say!!
The only problem I see is when those fund managers have to reconcile their client accounts, they likely have to sell good stocks that have nothing to do with any of this, causing the rest of the market to have an inordinate amount of selling driving stock prices lower...
We should be happy the little guy stuck it to these managers (unless of course you have one of these managers managing your investment portfolio)
Lets be honest - there is inherent risk in the market. I just want it to be fair for the Joe Blows to.
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Our world is such an island. It's closed.
But we can take a credit. Naturally say - spent future money.
So now world debt is a debt of future peoples (or for future work) and more or less limited by one generation active life, say 35-45 years. This money can be printed for easy.
Been chatting to my sons about this today.
What happens when you short sell stock as a hedge fund manager is you extract value out of a company’s stock market valuation. In the process, the stock price is driven into the ground. A sort of feeding frenzy that can and does drive companies into liquidation.
The fact that a bunch of guys on Reddit have been able to reverse this process and drive the hedge fund into bankruptcy is to be applauded.
The stock market stinks. It’s full of stuff like this.
Imagine sending dozens of billionaire hedge funds into bankruptcy by doing to them what they’ve done to struggling company’s?
Hopefully some smart guy will work out how to do this to the Private Equity industry.
Interesting that these same hedge fund managers are now squealing about ‘unfair practices’.
What happens when you short sell stock as a hedge fund manager is you extract value out of a company’s stock market valuation. In the process, the stock price is driven into the ground. A sort of feeding frenzy that can and does drive companies into liquidation.
The fact that a bunch of guys on Reddit have been able to reverse this process and drive the hedge fund into bankruptcy is to be applauded.
The stock market stinks. It’s full of stuff like this.
Imagine sending dozens of billionaire hedge funds into bankruptcy by doing to them what they’ve done to struggling company’s?
Hopefully some smart guy will work out how to do this to the Private Equity industry.
Interesting that these same hedge fund managers are now squealing about ‘unfair practices’.
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The flip side: can you imagine what would such an outcome do to the average Joe Six Pack pension funds? Where do you think (for example) the Teachers Pension Plan in Canada, the largest private investor in this country, money is going into?
I still believe the only way to fix this mess is to use the taxes as a tool to regulate the casino. Want to play wild, it will cost you upfront (before the cost of the risk), so you'd better play nicely, or else...
Gentlemen,
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