Semantic validity in 2021

[DonaldD]

"Robinhood nerfed memestonks" could win a prize. 

Poetic. Grammatical. Semantically valid.  Utterly meaningless in 2010.

[NobleHunter]

Eh, "nerfed" would be comprehensible, likewise meme and a guess could be made at "stonks." What a flour company or historical figure has to do with memes would be a mystery though.

[oldbrian]

Is it supposed to make sense today? I obviously am not keeping up with current trends.

[LetterRip]

Robinhood is a no fee stock trading platform/app

nerfed is to make weak or ineffective or kill or remove

memestonks referers to a stock related meme where stock was misspelled and is the name of a reddit stock related forum.  It is used to refer to stocks that hit social media or otherwise capture public imagination and their price starts mooning (shooting up drastically).

In this case it is referring to robinhood disallowing purchases of these stocks (only allowing selling) with the apparent (illegal?) motivation of a partner with an enormous short position in these stocks.

[rightleft22]

Robinhood is a no fee stock trading platform/app

nerfed is to make weak or ineffective or kill or remove

memestonks referers to a stock related meme where stock was misspelled and is the name of a reddit stock related forum.  It is used to refer to stocks that hit social media or otherwise capture public imagination and their price starts mooning (shooting up drastically).

In this case it is referring to robinhood disallowing purchases of these stocks (only allowing selling) with the apparent (illegal?) motivation of a partner with an enormous short position in these stocks.

I feel so old...

[TheDeamon]

Robinhood is a no fee stock trading platform/app

nerfed is to make weak or ineffective or kill or remove

memestonks referers to a stock related meme where stock was misspelled and is the name of a reddit stock related forum.  It is used to refer to stocks that hit social media or otherwise capture public imagination and their price starts mooning (shooting up drastically).

In this case it is referring to robinhood disallowing purchases of these stocks (only allowing selling) with the apparent (illegal?) motivation of a partner with an enormous short position in these stocks.

I feel so old...

Just wait until Chad enters the conversation.

[DJQuag]

Who knew that Biden's unity would come about from a bunch of Redditors deciding to screw over some hedge funds. Politicians on both sides coming together to target the blatant and illegal means the people in charge are using to try and curtail this.

And I've been trying to educate myself on what exactly is going on. This could easily get much crazier before it's over. It's called a short squeeze because the people who bet on stocks lowering in price aren't exactly forced to buy the stock back, but they do have to pay interest on what they borrowed originally and said interest is based on the current price of the stock. So they'll at some point be forced to buy at whatever price. Except the Redditors are declaring they're not going to sell. Which will force prices higher and higher...

Honestly, this *censored*show couldn't have happened to better people. The sociopaths behind Wall Street tactics are being bent over a barrel and I couldn't be happier.

[rightleft22]

Its been a while that I took a interest in trying to understand the various economic theories.  A take away was a realization how much the system is dependent on belief. A belief that a piece of paper has value, that a signature means something.... That much of Economics is a soft science influenced by belief, how we think/imagine things should be, should work.

I don't understand very much about this GameStop Redditors thing but wonder how playing with beliefs in how the system works might not have a bigger impact then we can currently imagine?

Perhaps its the shadow showing itself in the Freidan like slip that the stock being played contains the word Game. When it comes to money how much is real? Stop believing its real and everything changes. Do not pass go, do not collect $200... pass go and collect... what and who defines Go?

[DJQuag]

I'm sorry my friend, but you're wrong.

This was not about a belief or even a meme.  Hedge funds have been using these tactics to crush companies into the ground whilst they made bIllions for decades.

They made a bet on GME to fold. They put their normal enterprises behind it to guarantee it. What they didn't expect was Reddit to come up and punch them in the face. I'm not sure how much you all are understanding this right now, but the big billionaire boys are absolutely *censored*ting their pants at what is going on. They've been caught out.

Google fee-free apps, which were advertised as being on the side of the "little people," they were curtailed yesterday so people could only sell the stock, not buy. In other words, the only move people using that platform could make would be to help the hedgefunders.

[NobleHunter]

*evil laugh* Gamespot is back up over $300. Yesterday's attempt to crater the stock price doesn't seem to have worked so far. I wonder when the shorts expire. Is this still a short squeeze or has Reddit and **** disturbers fully taken over?

The big question is how much of a threat this poses to the usual practice of the stock market. Was the exposure of hedge funds on Gamestop shorts unusual or typical for businesses circling the drain? If it's something that usually happens when a company's market has disappeared, then I think we can expect Reddit to keep doing this as they find new opportunities to short squeeze. Unless brokerages and regulators take action to stop it, though I'm not sure what. Robin Hood could very easily kill itself if Reddit turns away from them (I find it interesting that the Canadian free trading app, WealthSimple Trade, just posted warnings on the stock instead of suspending purchases).

My other question is how would regulators and industry have reacted if this wasn't crowdsourced and social media driven but an institutional buyer finding an exploit. What if Blackrock or Vanguard or a pension fund had noticed that hedges were over-exposed on GameStop and driven the price up to trigger a short squeeze? Would people still be clutching their pearls and moaning about market manipulation? Or would they congratulate the savvy traders on their amazing returns?

I think the best part of this is billionaires wailing about their misfortunes to the public and expecting people to care.

[rightleft22]

It is tension between seeming opposites that creates consciousness.

The 'game' currently being played by the 'Hedge funders' and 'Redditors'  is creating tension and as such awareness,  (But of what?)
challenging what I view as a belief in how the system should be?

[NobleHunter]

I had a longer post about perceptions and rational evaluation but what I think Reddit is doing highlights that the ultimate point of the stock market is to make money and everything else is just fancy justifications for why one method of investing "works" or why it's okay to be amoral and heartless in the pursuit of profit.

[DJQuag]

Eh.

It's wallstreetbets. Google it. It's reddit so it'll be unfamiliar to some of you but it's not that bad.

What you'll find over the past few days is some people selling their shares in order to pay for medical treat mentioned for their family member or dog. They were high fived and encouraged.

The rest of it? They're encouraging not to sell til the bitter end. It's a meme at this point. The idea of pissing off billionaires is so attractive to these people that they'll throw out...you're reading this now. Think about it.

[yossarian22c]

Eh.

It's wallstreetbets. Google it. It's reddit so it'll be unfamiliar to some of you but it's not that bad.

What you'll find over the past few days is some people selling their shares in order to pay for medical treat mentioned for their family member or dog. They were high fived and encouraged.

The rest of it? They're encouraging not to sell til the bitter end. It's a meme at this point. The idea of pissing off billionaires is so attractive to these people that they'll throw out...you're reading this now. Think about it.

And some other billionaire is quietly shorting the stock today and is going to make a killing. The stock price can only remain artificially high for so long. Insiders are probably looking to sell the crap out of stock options and vested stocks to get a payday while the getting is good. But it does serve as a caution to investors to be quiet about short positions in publicly known companies.

[rightleft22]

Market version of hot potato and chicken. When the fat lady sings you don't want to be the one holding it.

It has very little to do with the value of the company involved. Begging the question how do we define 'value'

[NobleHunter]

And some other billionaire is quietly shorting the stock today and is going to make a killing. The stock price can only remain artificially high for so long. Insiders are probably looking to sell the crap out of stock options and vested stocks to get a payday while the getting is good. But it does serve as a caution to investors to be quiet about short positions in publicly known companies.

If I had capital, I'd be trying to short the heck out of it. Which may be for the best since I don't really know what's going to happen.

Shorts seem to be publicly available information, so it may turn out we're going to see soft caps on short interest in companies. No more shorting over 100% of a company's shares for instance. Unless the Powers That Be find a way to kill Reddit's ability to short squeeze stocks.

[msquared]

yossarian

That was sort of my take away from it. All of these hedge funds were bragging about their shorting GME and what to me would almost seem a dare. And they got their asses handed to them.  I have no sympathy for the hedge funds.

[NobleHunter]

GME's short interest is still over 100%. I think the perversity of the market might be kicking in. That is, it's obviously overvalued so you should short it but because people are still shorting it, the short squeeze isn't over so it makes sense to hold or even buy more shares which is stabilizing the price even if people cash out for gains or risk aversion. Then on top of that, I'm not seeing any news about collapsing hedge funds that might slake Reddit's bloodlust, so they're not selling.

[TheDeamon]

My other question is how would regulators and industry have reacted if this wasn't crowdsourced and social media driven but an institutional buyer finding an exploit. What if Blackrock or Vanguard or a pension fund had noticed that hedges were over-exposed on GameStop and driven the price up to trigger a short squeeze? Would people still be clutching their pearls and moaning about market manipulation? Or would they congratulate the savvy traders on their amazing returns?

From somewhere else(someone else I know quoting Reddit):

The SEC might think so, actually. In 2012, it brought charges against Phil Falcone and Harbinger Capital Partners LLC for, among other things, having “conducted an illegal ‘short squeeze’ to manipulate bond prices.”

[TheDeamon]

It is tension between seeming opposites that creates consciousness.

The 'game' currently being played by the 'Hedge funders' and 'Redditors'  is creating tension and as such awareness,  (But of what?)
challenging what I view as a belief in how the system should be?

In this case, I'd say it's bringing awareness of options trading to a level that very rarely happens.

Sure there was the hedge fund guy in Florida who decided to run for office and was attacked for making millions off of short sales back in 2008. But most people remained oblivious to what a short sale was, or how those can blow up in the face of the person making the short.

I don't feel bad for the option traders. At least to my understanding of what they do, they're nothing more than financial parasitic organisms. I think their best case is maybe being compared to e coli. Beneficial so long as the population is kept in balance, but if it becomes unbalanced, watch out.

[TheDrake]

It is tension between seeming opposites that creates consciousness.

The 'game' currently being played by the 'Hedge funders' and 'Redditors'  is creating tension and as such awareness,  (But of what?)
challenging what I view as a belief in how the system should be?

In this case, I'd say it's bringing awareness of options trading to a level that very rarely happens.

Sure there was the hedge fund guy in Florida who decided to run for office and was attacked for making millions off of short sales back in 2008. But most people remained oblivious to what a short sale was, or how those can blow up in the face of the person making the short.

I don't feel bad for the option traders. At least to my understanding of what they do, they're nothing more than financial parasitic organisms. I think their best case is maybe being compared to e coli. Beneficial so long as the population is kept in balance, but if it becomes unbalanced, watch out.

Option trading is not the same as short sale. Those with put options have losses capped at 100%. Having a short position by borrowing shares and selling them has much more massive downside. Thus the loss of billions as they have to cover those short sales to stop the bleeding.

[TheDeamon]

And some other billionaire is quietly shorting the stock today and is going to make a killing. The stock price can only remain artificially high for so long. Insiders are probably looking to sell the crap out of stock options and vested stocks to get a payday while the getting is good. But it does serve as a caution to investors to be quiet about short positions in publicly known companies.

My understanding is that even the short "option" sells have to be reported to the SEC and made public. Which is where this mayhem was started in the first place. Late last week WSB noticed that the short sell (option) trades had already leveraged over 100% of issued GameStop stock, among some others for this week. Which is where WSB started to advise people to buy/hold because of what that would do to the short sellers when the option trade became do.

And any new investor putting out a new short sell option is going to have that also reported, and so long as GameStop remains at over 100% on shorts, people are going to be inclined to hold.

[TheDrake]

Shorting a stock is not in any way shape or form an option trade. Put options are a right to sell a stock at a particular price, betting that the price will go down. It has an expiration date, and if the stock hasn't reached that price and you are holding when it expires, you lose the entire amount invested. This is some fraction of the stock price, depending on how far away the stock is. You buy 1 contract for the right to sell 100 shares. If you short the stock, you borrow and as described earlier you have to pay interest until you close it out. Further, lets say the stock was at $10 per share, then balloons to $100. You will have to pay the difference ($90 per share) to get out of it. On top of the interest. Short positions don't expire, it is the interest that presses you to close out at a loss, even if you think the price eventually has to come down. There are a few more nuances, but that's the gist of it.

[yossarian22c]

Shorting a stock is not in any way shape or form an option trade. Put options are a right to sell a stock at a particular price, betting that the price will go down. It has an expiration date, and if the stock hasn't reached that price and you are holding when it expires, you lose the entire amount invested.

Yes this would be the amateur (and safer) way to bet on a stock going down. For instance, if the stock price is $100, you could buy an option to sell the stock at $90 in a month. If the price of the stock drops below $90 your option to sell at $90 is profitable and can be sold. If the stock never dips below $90 then your option is worthless and you are out whatever you paid for the option. Risk of loss on the trade is 100%, but the downside risk of a true short position is how much the stock goes up. Which in a short squeeze can go very high very quickly as we're seeing with GME.

[Fenring]

Short positions don't expire, it is the interest that presses you to close out at a loss, even if you think the price eventually has to come down. There are a few more nuances, but that's the gist of it.

As I understand it a short position does have an expiration date built into it at which point you have to return the borrowed stock no matter what.

[TheDrake]

Short positions don't expire, it is the interest that presses you to close out at a loss, even if you think the price eventually has to come down. There are a few more nuances, but that's the gist of it.

As I understand it a short position does have an expiration date built into it at which point you have to return the borrowed stock no matter what.

I've only shorted once or twice in my life, didn't care for it. A quick search showed this on investopedia:

There is no mandated limit to how long a short position may be held. Short selling involves having a broker who is willing to loan stock with the understanding that they are going to be sold on the open market and replaced at a later date. A short position may be maintained as long as the investor is able to honor the margin requirements and pay the required interest and the broker lending the shares allows them to be borrowed.

Now, that last line could imply a de facto limit even if it is not a market rule.

[Fenring]

Now, that last line could imply a de facto limit even if it is not a market rule.

I think it just means (but I'm not 100% sure) that the law doesn't mandate how long the term has to be. But I do think there is a term agreed on when the arrangement is made.

[LetterRip]

Here is how Schwab does it,

What happens if the lender wants to sell the shares that have been borrowed?
Next, let’s assume Mr. Armstrong wants to sell all 300 shares of XYZ.
Mr. Armstrong simply places the sell order for 300 XYZ as usual. He is free to do this as he is the rightful owner of the shares.
If there are additional shares available for shorting, Ms. Bourne may continue holding her short position using those additional shares. If these shares are ETB, Ms. Bourne would continue to short without any additional fees. However, if the shares are HTB, she would pay a fee to continue to borrow the shares.
If the sale results in unavailable shares, Ms. Bourne's short position will be closed out via a purchase at the current market price by Schwab, at Ms. Bourne's expense, and potentially without notice. This enables proper delivery of the shares to Mr. Armstrong.

https://www.schwab.com/resource-center/insights/content/9-frequently-asked-questions-about-short-selling



So easy to borrow - no interest
hard to borrow - interest payment required
shares unavailable to borrow - forced to buy shares at current market rate.

So  the short seller is not directly borrowing the shares from the share holder.  Instead they are borrowing them through a pool of shares held by the brokerage that share holders have made available to borrow and the share holders can withdraw them from the pool at any time.

Also

7. When do you have to buy the shares back?
There are no regulations that limit the amount of time a short position can stay open; however, the following conditions may cause a short position to be closed out (bought back):
Shares are no longer available to borrow: When a client borrows shares to short sell, the margin lender retains the right to recall the securities at any time and without notice. If the shares are recalled by the margin lender, Schwab will try to re-borrow the securities on the client's behalf. However, if shares cannot be obtained, Schwab is then forced to close out (buy back) the short position at the current market price, at the borrowing client's expense, and potentially without notice.
There is an existing margin call on the account: Just as ‘long positions’ in accounts with margin calls are subject to liquidation at the discretion of the Margin Department (the department in a brokerage firm that monitors customers' margin accounts), a short position is also subject to possible closure when a margin call exists.

[Fenring]

So  the short seller is not directly borrowing the shares from the share holder.  Instead they are borrowing them through a pool of shares held by the brokerage that share holders have made available to borrow and the share holders can withdraw them from the pool at any time.

That sounds to my inexpert ears like three scenarios of what is going on with the shorted stock while the borrower has it. The issue right now with GME (and the risk sometimes faced) of a short squeeze necessarily implies a borrow term whose end date becomes constricting as the price is going up at the wrong time and the borrower is scrambling to buy back the stock without overpaying as their time is running out.

In the case you're citing it sounds like in scenario 3 just means that in regards to certain very hard to lend stocks, the lender reserves the right to terminate the contract at any time if they want to sell, making it a higher risk for the borrower since they may not be able to choose a time opportune for them. Regarding cases 1 and 2, ETB and HTB, all the article seems to say is that the borrower doesn't need to immediately give back the shares if the lender wants to make a sale. It doesn't say that they never need to pay it back if they want to keep it indefinitely. I assume that unless scenario 3 happens (which automatically withdraws the lent shares) scenarios 1 and 2 would still have an expiration date. It's just that until that date arrives, the borrower is free to either keep them for free (ETB) or keep them for a fee (HTB).

[DJQuag]

If nothing else this whole thing will result in people being more aware of just how the Wall Street parasites continue to leech us.

Honestly how many of you had heard the term short squeeze before but didn't actually know what it meant?