r/WallStreetBets and $GME

[Cap]

And I will say this--hedge funds are not bad things. They are places where people are hedging their bets. The fundamental idea is that you invest in competing markets so that if the bottom drops out of one, the other usually spikes, so you aren't losing money. But the borrowing of shares is awful and shouldn't be allowed.

You want to bet against a stock, you can do that by buying puts. At least that way your exposure is limited. I don't get why selling borrowed shares, which has limited upside but infinite potential downside, is a thing.

[Indy]

And I will say this--hedge funds are not bad things. They are places where people are hedging their bets. The fundamental idea is that you invest in competing markets so that if the bottom drops out of one, the other usually spikes, so you aren't losing money. But the borrowing of shares is awful and shouldn't be allowed.

You want to bet against a stock, you can do that by buying puts. At least that way your exposure is limited. I don't get why selling borrowed shares, which has limited upside but infinite potential downside, is a thing.

agreed. it reminds of all the stuff you learn in high school history about why the stock market blew up during the depression. I know it isn't exactly the same, because they don't allow buying on margin anymore, but really how different is it?

[Superbone]

A note from Robinhood
Hi Superbone,

We wanted to reach out to you after a transformative week in the markets to answer a question we know many of you are asking: “Why did Robinhood limit certain stocks?”

We understand that the temporary limits we placed on certain stocks this past week were frustrating for many, especially since we built Robinhood to expand access to investing. We have always sought to put our customers first and we want you to be able to invest on your own terms.

To help explain what happened and why we had to take action, we wrote a letter to our customers and captured the key understandings for you below:
For Robinhood to operate, we must meet clearinghouse deposit requirements to support customer trades.
Deposit requirements are determined in part by how much stock a firm’s customers hold. If a firm’s customers’ holdings are volatile, a broker (in this instance Robinhood) is obligated to meet higher deposit requirements.
Last week, in part due to volatility in some popular stocks, Robinhood’s deposit requirements rose tenfold. The combination of the deposit increase and the extraordinary increase in volume on these particular symbols led us to put temporary buying restrictions in place on a small number of those stocks.
We had to take steps to limit buying in those volatile stocks to ensure we could comfortably meet our deposit obligations. We didn’t want to stop people from buying stocks and we certainly weren’t trying to help hedge funds.
We hope you take away this: at Robinhood, we stand with everyday investors participating in the markets. Standing by our Robinhood community means being there for our customers through any trading environment. We’ll continue to improve as we break down barriers in the financial system to open it for all.

Thank you for being a part of the Robinhood community.
Sincerely,
The Robinhood Team

[In2ition]

Are you guys hearing that Silver might be a target soon?

[Superbone]

Are you guys hearing that Silver might be a target soon?

I heard it already was a target.

[In2ition]

Are you guys hearing that Silver might be a target soon?

I heard it already was a target.

Ok, yeah I heard that if Silver is a real target, it might actually bring down the entire market system and US dollar as they don't have enough physical silver to back it. I don't know enough to know if that's hyperbole or something real.

[Indy]

Came out today that robinhood makes money by selling the buying patterns of their users to high speed traders. I think it would be a great idea to add a per trade tax/fee (even 0.1% for all transactions) to limit that behavior.

[Nodack]

I find the whole thing interesting. The poor people have pooled their resources and are sticking having a great effect on the stock market. I am not really sure how I feel about that yet. It is definitely interesting to see where this goes.

Edit: Poor is a bad choice of words. Maybe average Joe would have been better.

[ShelC]

I don't know how sustainable it can be overall, but the more people become aware of how the market works and how they can make money, the better. Whether it's supplemental income on the side while working a FT job, understanding and taking more control of their retirement savings or getting good enough to do it full time, it gives "the little guy" more power and more opportunity to improve their lives/lifestyle. I feel like there's a serious lack of education and understanding of the market and finance/economics in general within this country, maybe almost by design, so that most people are kept in the dark and/or think it's too complicated for them to understand.

[Indy]

I feel like the more I know about the stock market, the more I realize how fake money is.

[ShelC]

Just FYI, GME hit $513 on Thursday and is washing out to the $70s today. $AMC hit $25 last week, trading in the $6s now. These were nothing more than squeeze plays, good for a momentum run and quick money.

You can't bankrupt the casino on 1 hand of blackjack.

[In2ition]

Just FYI, GME hit $513 on Thursday and is washing out to the $70s today. $AMC hit $25 last week, trading in the $6s now. These were nothing more than squeeze plays, good for a momentum run and quick money.

You can't bankrupt the casino on 1 hand of blackjack.

I agree, but then it begs the questions. Why did Robinhood and other entities come flying in and caping for the Hedge Funds? Shouldn't they have just let it all play out?

[ShelC]

They still got their asses handed to them and needed to stop the momentum. They're all bouncing now actually, so we'll see if traders jump back on or these are just quick scalp plays off those dips.

[Indy]

Just FYI, GME hit $513 on Thursday and is washing out to the $70s today. $AMC hit $25 last week, trading in the $6s now. These were nothing more than squeeze plays, good for a momentum run and quick money.

You can't bankrupt the casino on 1 hand of blackjack.

I agree, but then it begs the questions. Why did Robinhood and other entities come flying in and caping for the Hedge Funds? Shouldn't they have just let it all play out?

They weren't doing it for hedge funds. They were doing it for their primary customer (who they sell their customers' info to). They literally didn't have the cash to cover the stock trades.

[In2ition]

Just FYI, GME hit $513 on Thursday and is washing out to the $70s today. $AMC hit $25 last week, trading in the $6s now. These were nothing more than squeeze plays, good for a momentum run and quick money.

You can't bankrupt the casino on 1 hand of blackjack.

I agree, but then it begs the questions. Why did Robinhood and other entities come flying in and caping for the Hedge Funds? Shouldn't they have just let it all play out?

They weren't doing it for hedge funds. They were doing it for their primary customer (who they sell their customers' info to). They literally didn't have the cash to cover the stock trades.

Isn't that Robinhood specifically, or does that apply to all the other entities that were involved in shutting down buying? Interesting either way. How can you change the rules in the middle of the game?

[Indy]

All of the no-fee trading companies are *relatively* small. They couldn't cover all of the trading being done. They just didn't have the capital.

[In2ition]

All of the no-fee trading companies are *relatively* small. They couldn't cover all of the trading being done. They just didn't have the capital.

Vlad said that it wasn't a liquidity problem at the time, so he's completely lying and you're right, or there was another issue. Why lie about it?

[Indy]

CEOs don't typically admit when they are basically operating on margin, and selling their customers' data to cover their "free" service... especially when they are (were???) hoping for an IPO really soon.

[In2ition]

CEOs don't typically admit when they are basically operating on margin, and selling their customers' data to cover their "free" service... especially when they are (were???) hoping for an IPO really soon.

Ok, that makes sense. Do you think this kind of reiterates that?
https://www.blacklistednews.com/article ... ng-in.html

[Nodack]

I am not sure how all this works. I get that Robinhood is a site where little guys can buy and sell stocks. Reddit is just a chat place sort of like this isn’t it? What is interesting to me is that an investing group on Reddit figured out that they could pool their resources and become a major player and were able to screw over people betting on Gamestop to fail by propping up the price of Gamestop by buying a bunch of shares in a group effort. This is pretty significant and probably sends chills down some investment companies.