Hey guys! What’s your view in the madness of GME stock this week?
Completely agree on the broker points you made. Points I overlooked to be honest!
But in regards to what you said about hedge funds wanting price back down, from what I've read (and by no means 100% understand) is that the reason they want price back down is due to the fact these hedgefunds shorted at <$10 roughly, and now price is through the roof, they will stand to lose billions when their contracts expire, apparently this Friday. So when they expire, they need to buy back the shares they have shorted, thus sending price even higher. I read the short float or open interest is still 120%, and shorts don't cover the amount of shares available to buy?
Now as I said before I don't fully understand half of this at all, and I'm going off what I've seen on reddit, but some people have sounded like they have logic behind the madness of what's going on?
It's in no way fundamentals driving this but I think it's the figures people post on reddit in regards to amount of shorts @ X amount vs amount of total shares, and obviously the momentum they've gained, I think some people believe they simply can't lose if price maintains a certain level come tomorrow.
All I know for 100% certain is people are gonna get burned baaaaaaadly on this lol.
If you know more detail on this I'd love to hear because I've never heard of anything like this before and I find it quite interesting to be honest! Not something I'd be part of but fantastic to watch haha!
There's no real logic tbh Kieran.
1) The market cap of these companies is relatively small, so it's easier to manipulate (can't be replicated for any companies who have larger caps)
2) If those funds options/ futures contracts expire by Friday, It's likely that yes the price may spike, but what has stopped them from increasing exposure short as it went up, and made huge money from the 63% drop past few days? The news sites seem to miss that one out. - 1 Trade isn't going to make a fund bust, if it is, it's a terrible fund!
Also - what if the shorts are on derivative markets? So many variables that are not answered, so no point trying to speculate on it.
3) Trying to rationalise, irrational market behaviour will drive you insane! IMO, it's noise that cannot be predicted. But, as you know, when people make money from poor judgement, the euphoria is similar to hitting the jackpot at the slot machine. They feel like it was because of something they did... when really it was pot luck, and high unlikely to be replicated regularly.
Your final point - yes, people are going to get burned really bad, and the FCA, SEC, ESMA will step in to further tighten restrictions on retail traders - typical lol.
~ Some may even go as far to say, that the regulators were just waiting for a catalyst like this, so that can tighten up the access for 'retail traders' to these instruments. Bad news for guys like us tbh.
Haha I love the drama too Kieran, although somewhat dangerous for many!
Your point number 2 is a very good point Marcus as I don't think anyone involved in this has really thought about that, they only think about their own gains and nothing else.
and number 3, pretty much sums up the whole thing.. except everyone wants to try hit the jackpot. There's a guy posting $48 million gains who bought in at less than $5 a share, I assume these guys dropping their life savings in at $300+ think they can also be that guy lol. In a way its sad because this will absolutely annihilate some peoples lives forever. Just hope any new regulations don't come back to bite us!
And Matty, yeah its certainly entertaining! Ive never used reddit before but now I keep finding myself looking on WSB to see what else they've come up with to back their theories on price *GOING TO THE MOON* haha. Some redditors have apparently started a lawsuit against Robin Hood 🤣 one thing I do know is this **** has been distracting me today so I'm deleting reddit and getting back to business as usual haha.
Thanks for the insights fellas as always!
In my opinion there's a lot of risk involved in what's going on for brokers.
One these traders are leveraging insane amounts "wallstbets", they're reducing potential risk of insolvency of their business if something mad happens like a flash crash where their clients are all long but then the markets crash on them (i think high potential going to happen considering the financials of the companies involved) if the clients all lose money they could also owe the broker due to slippage which in turn comes out the brokers pocket (They may not be liquid enough to deal with this).
2 if the clients all lose out and all these regulatory bodies like SEC etc look into it the brokers will likely get a hefty fine for not protecting their clients money.
TLDR: Brokers protecting their business, but also their clients at the same time. Reddit traders claiming responsibility on the price going up when in fact there's a big player propping it up silently. (Michael Berry made 1380% on this position - question is when does he sell it).
Media will have just raised concerns to regulatory bodies.
No reason to believe hedge funds want the price back down as there are both long and short participants. E.g. Michael Berry just made huge gains on a long he had on GME and he is very likely the person behind this short squeeze which caused the other investor to close out their shorts and lose a lot.
Now the person who owns a big stake in GME whoever bought it up needs to sell his 1380% gain. how does he do this? He needs the liquidity, he needs buyers at high prices, that's all the retail traders buying it now since it's in the news. Come 1-4 weeks and we'll see a crash or at least a big dip in value.
Brokers in the end are protecting their own ass which makes sense from a business stand point and indirectly protecting clients from making big losses here in a weird market manipulation that's going on.
The worrying thing about your final point is that a lot of the general population are now all of a sudden interested in buying GME or other stocks that have shot up but they're already too late to the party and once that price drops they're all going to be crying. They're not educated enough to know the risk (a lot of younger people investing in a company that's got a -100% growth rate YoY and -90% profit margin). You've got to ask yourself, does it seem smart to burn money because that's what you're investing in!
Just my 2 cents.
What's your thoughts on the recent buy blocks on GME, BB etc from stock brokers? Do you think they are blocking people for they're own good or have they been pressured from hedgefunds / media to drive price back down?
Me personally, I don't think brokers have ever had people's safety in mind as such, so why now? I understand it is very unique situation but the brokers doing this favours price to move one way, which is ideal for the hedgefunds that have massive shorts on this stock.
Would a strong stern warning explaining current market volatility be more suited? As all traders (or most) know the risk that comes with trades like this
Short Squeeze from one investor to another.
Retail investors buying into hype.
About to get wiped when the buyer sells his shares.
GME and AMC negative growth companies, negative profit margins and negative earnings per share.
Pump and dump boys🤯
I have to agree with matty here😂 short and sweet