Business, Economics, and Taxes: Capitalism. Yay? >=(

[Handyman]

https://twitter.com/CNBC/status/1354217344277630981

More than 150 world leaders, including Amazon boss Jeff Bezos, Salesforce CEO Marc Benioff and Ford Motor Company executive chairman Bill Ford, signed an open letter to President Joe Biden to pledge their support to the new administration’s goals to combat climate change.

In particular, the open letter, released Sunday, underscored the potential job growth new climate change mitigation technology will provide.

“You’ve famously said: ‘When I hear the words climate change, I hear jobs.’ We agree,” the open letter says. “While the climate crisis presents incredible challenges, it is also the greatest economic opportunity for innovation, job creation, new businesses, and investment in our communities.”

Biden made combating climate change one of the pillars of his campaign and outlined a $2 trillion plan that would create jobs by rebuilding infrastructure in the United States in a sustainable manner, upgrading buildings and weatherizing homes, investing in the development and commercialization of clean energy technology, to name a few initiatives.

“Your commitment to build back better with clean energy jobs and tackling the legacy of environmental injustice is the consequential action that science and our future demands,” the open letter says. “We will work alongside you to realize this ambitious pursuit.”

Man why do these guys hate business so much?!

 

[Jimjamesak]

And yet the State of Alaska, and plenty of people here, continue to insist that "drill baby, drill!" is the future...

 

[Kepler]

OK, somebody please explain this.

Do not:

Use finance slang
Be flippant
Be speculative

Do:

Use as much math as you want
Use mainstream finance terms I can look up
Be factual


Thank you. I feel like I'm missing a very interesting, important story and I don't want to wait for Michael Lewis to write a book about it.

Also I'm starting to get scared SAC will go broke.

 

[Kepler]

So, I logged onto the GME (Gamestop) Thread for January 27, 2020 on r/wallstreetbets.

It had 49 thousand posts. Since midnight.

I refreshed. Once. It had 50 thousand.

Um.

GME doubled again overnight in futures trading and is now +700% since January 12.

Edit: that was not a fluke, the thread is literally getting hit for hundreds of posts per minute. I wondered why it didn't update in real time, now I know.

Also, the tenor of those posts make me look like Adam F-cking Smith. These guys think they can bankrupt the entire hedge fund industry by Friday. I mean, superficially that sounds... very attractive... but I have a feeling it might not be great for the world economy.

CNBC is unhappy.

 

[rufus]

My layman's interpretation.

Most of these hedge funds have Gamestop shorted.

Someone at Reddit has been either buying up, or leading a group of people buying up shares of Gamestop, driving the price upward.

All these hedge funds now need to buy up shares as well to cover their short positions that are coming due, driving the price up even further.

Rinse and repeat.

Its tulips in Holland time.

 

[Kepler]

Its tulips in Holland time.

Except there were no hedge funds shorting the tulips and no reddit to short squeeze them.

That reddit thread is hilarious. These guys really think they can bankrupt the entire hedge fund industry by Friday.

And the talking heads on CNBC are basically:

My utterly uninformed take is that a lot of the right people are going to lose a ton of money, which is great, but that these people are also wired directly into politics so they will always be bailed out at our expense.

We probably can't actually ever touch them unless/until we 1789 them.

 

[dxmnkd316]

This was the chance all of the people who actually owned GME to get out. Yeah, you won’t hit the top but GME @ 8x what it was is pretty good. The people who now own it are going to get hurt pretty bad. They will learn an important lesson. Don’t swim with sharks.

 

[SJHovey]

So, I logged onto the GME (Gamestop) Thread for January 27, 2020 on r/wallstreetbets.

It had 49 thousand posts. Since midnight.

I refreshed. Once. It had 50 thousand.

Um.

GME doubled again overnight in futures trading and is now +700% since January 12.

Edit: that was not a fluke, the thread is literally getting hit for hundreds of posts per minute. I wondered why it didn't update in real time, now I know.

Also, the tenor of those posts make me look like Adam F-cking Smith. These guys think they can bankrupt the entire hedge fund industry by Friday. I mean, superficially that sounds... very attractive... but I have a feeling it might not be great for the world economy.

CNBC is unhappy.

When I saw a story online about that reddit thread and GME, a couple of things came to mind.

1. Is there anyone in the world happier right now than those GME corporate types who have been saddled with a stock in a dead company in a deadend industry, as they call their broker each morning and sell a little more?

2. Might be a great time to short GME stock.

3. All those people buying shares in this company where it's share price is up 700% or something are going to learn an interesting lesson when the drive to buy on that forum ends. Now, they're not going to take a bath like some of the hedge funds they're trying to bankrupt, because it's more of a crowd sourcing deal, but I wouldn't even want to buy 10 shares of a stock at $150/share, knowing that within the last year it traded at $3/share or something, and knowing it will probably end up back there very quickly.

4. Hedge fund guys are smart. The gamers may have gotten the hedgies this time, but next time, look out. They will figure out a way to manipulate this and we haven't seen the last of these crowd sourced share price explosions, and the hedgies will figure out a way to be on the winning end.

 

[Deutsche Gopher Fan]

Reddit cried says amc is next.

How are they picking these?

 

[ScoobyDoo]

Reddit cried says amc is next.

How are they picking these?

They're ferreting out shorted stocks so they can screw over hedge funds.

 

[St. Clown]

OK, somebody please explain this.

Do not:

Use finance slang
Be flippant
Be speculative

Do:

Use as much math as you want
Use mainstream finance terms I can look up
Be factual


Thank you. I feel like I'm missing a very interesting, important story and I don't want to wait for Michael Lewis to write a book about it.

Also I'm starting to get scared SAC will go broke.

The GME (Gamestop) company is on shaky grounds, based upon how the gaming world is changing. Because of that, the hedge fund investors expect the stock to continue losing value. The way they make money on this is to make a "short sale" on GME - they're selling shares a stock that they do not actually own. That means they're borrowing the shares from somebody else, and selling those shares with the intent of later purchasing those shares to give back to the person/entity lending them the shares. They hope to start the short-sale process when a stock is high (say $100), and then buy back in when the stock has slumped (say $40). They just made $60/share in the reverse order of a traditional "long position" sale (selling share you already own).

What Reddit users are doing is known as a short-sale squeeze. It creates the potential of infinite risk exposure because if you sold at $10, and you're trying to buy-in as the stock goes up to cut your losses, it's possible that you won't be able to fill your purchase order as there may not be enough sellers dumping their shares. Because brokerage houses require margin accounts for customers with short sales, it puts further financial pressure on those customers (hedge funds, in this case) to closeout their short positions.

The real problem with short sales by major hedge funds is that they control A LOT of capital, and can depress the value of a stock further than it may already be depressed.

I won't pretend to know why people chose GME other than they like to play videogames and had a bout of nostalgia, but that's what we're seeing here when you get thousands of people (millions?) deciding to stick it to the rich...for a blink of an eye, really, as these games who got into it late are going to be left holding the bag when the bottom drops out on this rush and GME goes back down to the levels commensurate with its revenue and profits.

 

[St. Clown]

The more I think of this...

If the Reddit users who organized this GME rally had already owned shares of GME, they could be facing issues regarding illegally influencing the market just to turn a buck. That could theoretically land these people in jail should they sell out their positions that they hypothetically owned, or purchased after the start of this run as part of this ploy before the price really soared.

 

[Handyman]

Reddit cried says amc is next.

How are they picking these?

If it is AMC the theater chain that makes a ton of sense. AMC has been in trouble for a while. They have been run like crap and have/had a ton of debt. That was before the Pandemic which damned near bankrupted them. In fact if theaters hadn't been open in the summer to 25% capacity they were likely to fold. (and they weren't the only one) I post on a movie board and there was a lot of talk about it. As someone who is an AMC Stubs A List member (their version of MoviePass) I started watching it closely.

The Hedges will end up just co-opting this crowdsourcing but it is an interesting experiment and shows the ridiculous Ponzi Scheme that is the stock market. If they do this on the wrong stock though it could be a massive disaster. Crashes have been caused by stuff like this before.

 

[Deutsche Gopher Fan]

I’m quite sure they meant amc theater

 

[Handyman]

I won't pretend to know why people chose GME other than they like to play videogames and had a bout of nostalgia, but that's what we're seeing here when you get thousands of people (millions?) deciding to stick it to the rich...for a blink of an eye, really, as these games who got into it late are going to be left holding the bag when the bottom drops out on this rush and GME goes back down to the levels commensurate with its revenue and profits.

I would guess that is part of it...but also it was pretty well known that Gamestop was cutting their deal with Microsoft (I could care less about Gamestop and I knew about it like 2 months ago) so it probably started as a means to just make a little cash on the inside. (like when I heard Fitbit was likely selling to Google and bought despite the dropping price...went up another $10 after the original $40 a share so I am doing a happy dance right now!) Without following it myself I would assume the money types were not high on it because their friends in the industry were shorting it so they kept talking it down. Since the gamers knew the stock was likely to rise they smelled a rat. They probably openly talked about it amongst themselves on Reddit and Twitter and sooner or later someone with a financial background figured out a way to make money and screw the shorters and they crowdsourced a plan. Thousands of people acting in unison, with information that the Hedges didn't have yet. (or were ignoring)

Most of the time this would have been avoided, but in this case gamers have the means, the knowledge and the numbers to pull this off. But as you said at this point getting in will cost you dearly. There is no way to make your money back. The only way to keep this going is for the Hedges to buy in to cover their shorts which is not likely to continue much longer. (unless casuals get involved which has been happening) Sooner or later the price crash will happen. The question then becomes do the hedge fund's shorts cover what they will lose on the stock price crashing after they bought it? If it does then overall they will likely be fine. If the loss is heavy though...oh boy.

 

[Handyman]

I’m quite sure they meant amc theater

Yeah it looks like it is already starting. AMC was trading in the $2-4 range since at least October. It hasn't cracked $8 in the past year. Right now it is at almost $17. Damnit this is about as high as I would probably dare buy it because who knows if they will be able to make it work with this stock.

 

[Handyman]

The more I think of this...

If the Reddit users who organized this GME rally had already owned shares of GME, they could be facing issues regarding illegally influencing the market just to turn a buck. That could theoretically land these people in jail should they sell out their positions that they hypothetically owned, or purchased after the start of this run as part of this ploy before the price really soared.

I would guess maybe a couple did but the majority didn't.

 

[BassAle]

I'm on the WSB BB (BlackBerry) rocket. I got in at $10.57. Right now it's at $21.90. Trying to decide if I want to take profits or see if the rocket takes me to the moon.

 

[SJHovey]

The GME (Gamestop) company is on shaky grounds, based upon how the gaming world is changing. Because of that, the hedge fund investors expect the stock to continue losing value. The way they make money on this is to make a "short sale" on GME - they're selling shares a stock that they do not actually own. That means they're borrowing the shares from somebody else, and selling those shares with the intent of later purchasing those shares to give back to the person/entity lending them the shares. They hope to start the short-sale process when a stock is high (say $100), and then buy back in when the stock has slumped (say $40). They just made $60/share in the reverse order of a traditional "long position" sale (selling share you already own).

What Reddit users are doing is known as a short-sale squeeze. It creates the potential of infinite risk exposure because if you sold at $10, and you're trying to buy-in as the stock goes up to cut your losses, it's possible that you won't be able to fill your purchase order as there may not be enough sellers dumping their shares. Because brokerage houses require margin accounts for customers with short sales, it puts further financial pressure on those customers (hedge funds, in this case) to closeout their short positions.

The real problem with short sales by major hedge funds is that they control A LOT of capital, and can depress the value of a stock further than it may already be depressed.

I won't pretend to know why people chose GME other than they like to play videogames and had a bout of nostalgia, but that's what we're seeing here when you get thousands of people (millions?) deciding to stick it to the rich...for a blink of an eye, really, as these games who got into it late are going to be left holding the bag when the bottom drops out on this rush and GME goes back down to the levels commensurate with its revenue and profits.

I think the story that I saw suggested that it actually started as sort of an internal argument within the gaming world over online gaming versus the old GME method, and was a way for the GME supporters to sort of put their money where their mouth is. They then discovered the side benefit of screwing some hedge funds, and everyone in the gaming world got on board.

 

[LynahFan]

I would guess maybe a couple did but the majority didn't.

It seems like it should still be illegal to "pump" a stock that you don't own with the intention of buying it on its way up and "dumping" before it hits the peak.