GME, Hedge Funds, Citadel and Reddit

[Ann]

Just now, GG1 said:

 

That's the point.  If there was even a fraction of stock bought on margin, the broker has the right to liquidate anything in the account to bring the margin in line.

 

My quotes from above were from an October story, where Robinhood was already getting concerned about its customers maxing out their margin accounts.   

 

Unsophisticated investors and margin accounts are a toxic mix, as Robinhood found out.    Serves them right for being stupid by defaulting rubes into dangerous accounts. 

 

But that doesn't mean they did anything illegal in liquidating margined positions yesterday.

So you are saying that if I buy stock XYZ with cash and I have no margins on my account the brokerage can simply take any of those stocks in my account and sell them at anytime they please without my ok? 

 

[GG1]

Just now, Ann said:

So you are saying that if I buy stock XYZ with cash and I have no margins on my account the brokerage can simply take any of those stocks in my account and sell them at anytime they please without my ok? 

 

 

That's not what I'm saying, and that's not what happened in the Robinhood cases.

 

@DC Tom described the default account setup, which no reputable broker does.   If people don't understand how margin accounts work, and placed an order that has margin in it, they had shares liquidated when the stock tanked yesterday

[Ann]

1 minute ago, GG1 said:

 

That's not what I'm saying, and that's not what happened in the Robinhood cases.

 

@DC Tom described the default account setup, which no reputable broker does.   If people don't understand how margin accounts work, and placed an order that has margin in it, they had shares liquidated when the stock tanked yesterday

But that is precisely what I am saying I read people complaining happened to them, and not with Robinhood. And why I said I was not certain if it was true or not, and  why I said it needs to be further investigated. 

 

[GG1]

1 minute ago, Ann said:

But that is precisely what I am saying I read people complaining happened to them, and not with Robinhood. And why I said I was not certain if it was true or not, and  why I said it needs to be further investigated. 

 

 

Reading through the commentary around this I place about 10% confidence that people understand what they're talking about.  For all you know people can be referring to a forced "sale" of GME stock that they never owned because the broker couldn't execute the trade.  Just because you put the order in, doesn't mean it closed.

[The_Dude]

I love watching the world burn!

[B-Man]

59 minutes ago, Foxx said:

https://twitter.com/Timcast/status/1355191875368591360

 

 

 

[Billsandhorns]

15 minutes ago, The_Dude said:

I love watching the world burn!

Reality check, it's going to consume you too

[Dubs]

1 minute ago, DC Tom said:

People in Robinhood are now getting around Robinhood's buy limits on GameStop by buying calls and exercising them immediately to accumulate shares.

 

They are going to get slaughtered doing this.  

 

Not sure what the motivation of this latest buying surge is, other than spite, which isn't a good investment approach.  Stock is at $315 right now.

 

Maybe they think the hedge funds put more shorts on and continue to be exposed.  I doubt that's the case.  Feels a lot like a game of chicken at this point.

 

 

[GG1]

1 minute ago, DC Tom said:

People in Robinhood are now getting around Robinhood's buy limits on GameStop by buying calls and exercising them immediately to accumulate shares.

 

They are going to get slaughtered doing this.  

 

They're buying in the money calls?

[GG1]

3 minutes ago, DC Tom said:

They're buying "GME call options with the cheapest +x.xx%."  

 

I don't really know what that means.  No matter what it means, they're paying a massive premium to buy shares - on the order of a 20% markup.  So whatever they're doing, they really don't know what they're doing.

 

20% markup on a stock that's 10x overvalued on a good day.

[The_Dude]

1 hour ago, Billsandhorns said:

Reality check, it's going to consume you too

In my best Bain voice: “Yes, Brother.”

[KD in CA]

2 hours ago, Foxx said:

https://twitter.com/Timcast/status/1355191875368591360

 

 

Casino like swings in the stock price of GameStop doesn't hurt their workers or customers either Liz, so......why lead with that bullsh--?   Oh right, it's show how much you 'care'.

[LB3]

🤣🤣

 

[Nouseforaname]

1 hour ago, DC Tom said:

 

And I just saw an explanation on reddit of how to do this.  Idiots are assuming their options trades are getting filled at the last quoted trade.  Don't even understand "bid" and "ask." 

 

They are going to learn a hard, brutal lesson, and blame others for it. 

 

Not only are the options very in the money (understatement of the year) but the stock is extremely volatile.  

[Foxx]

 

https://www.youtube.com/watch?v=lS3zKR3t3Qs

 

[Nouseforaname]

3 hours ago, Dubs part Dub said:

 

At this point, we don't know who made/lost how much money and how much of that was an impact on their lives.  We don't know each individual investors motivation.  Trying to group the entire retail investor group as a monolith would be a very inaccurate approach.  Just as using the people who get crushed as an example of why retail as a group needs to stay in the play pen.  And since when do we need to protect people against bad investments?  If someone wants to put their life savings into GME at $300 because someone on Reddit said so, so be it.  Welcome to the world, hope you enjoy the learning experience.

 

I'm willing to bet that a shit load of people that are home, just received a bit of stimulus and blew it on this thinking they will get rich.  Does that mean that they deserve sympathy? No. 

 

But I do see tons of people in my entourage egging these people on for shits and giggles and the Dave Portnoy's of the world who are not helping.

 

Do I feel bad for these people? Yes because for many, they won't be able to recover and I don't think they know any better.

 

 

3 hours ago, Dubs part Dub said:

It does seem like you are missing the broader discussion.  There is a widespread, and growing, anger with the institutions in this country and the world.  Media, Academia, Tech, Government, and Wall Street.  Each time we see one of these instances, the institutions seek to dismiss, divide and conquer.  This is another example of it.  Dismissing everyone who hopped on the train as stupid shows a shocking misunderstanding of the environment we are in now and a massive amount of hubris, considering we have no idea what the average investment by a "retail" investor was, who is losing money, etc...

 

I get the broader issue but I don't think the anger is directed at the right people.  Robin hood and hedge fund guys are just regular folks working for institutions that go by a set of rules and the "influencers" such as Pizza Dave, Elon Musk or AOC are just stoking a fire that they should be trying to put out.

 

3 hours ago, Dubs part Dub said:

And trust me, I am not advocating that this is a good idea.  I don't talk about my personal life on here, but I've been in the industry for 20 years, it doesn't take that level of experience to know that this is not going to end well for many people.

 

+1

[The_Dude]

https://www.yahoo.com/finance/news/will-the-sec-sue-gamestop-traders-183845241.html
 

If they do — cartridge box. Go straight &#%$ing for it. If they prosecute these traders, look, bad time to be a judge IMO.

[Foxx]

 

We did it boys - we saved the movie theater industry from COVID so we can enjoy premieres together when it ends! 🚀 Has anyone else also missed the theater experience?

[devnull]

[Foxx]

38 minutes ago, DC Tom said:

 

Between this and the Capitol "Insurrection," Jan 2021 is the month of the LARP.

Just a precursor for what is coming in February.