Author Topic: GameStop Pump and Dump  (Read 132 times)

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Offline Boges

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GameStop Pump and Dump
« on: January 29, 2021, 12:54:25 pm »
This is a fascinating story.

Short Sellers are beyond destroyed because a large cohort of people on Reddit decided to buy GameSpot (and other moribund businesses like Blackberry, AMC and Nokia) This increased the price of the stock exponentially.

The Shorters had to buy the stock as quick as they could to stem losses, only driving these stocks higher.

The free trading app Robinhood (only available in the US) which allowed normos online to trade the stock easily, stopped trading on Gamespot. Showing that this game is rigged, now that the big guys were losing it was forced to press the reset button.

But the damage has been done. Billions of dollars invested in shorting companies like Gamestop have been lost.

This story shows the inherent BS in the Stockmarket.
1) A Stockmarket price is not always a direct reflection of the health of that company
2) It's rigged, when the big boys lose, the system can function.

Allowing day trading like this is an amazing loophole in the system and allows normos without a big investment portfolio to shake up the system.

I love this story.

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Offline eyeball

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Re: GameStop Pump and Dump
« Reply #1 on: January 29, 2021, 06:34:13 pm »
This seems to be a phenomenon that is dominated by younger people but its also partially fuelled by all the stimulus money in the economy.  It reminds me of the way younger people used their internet/app savvy to disrupt one of Trump's rallies.

How long can they keep this sort of app trading activity contained to the US? As I posted in the COVID thread some $12 billion has been given to Canadian teens.

Offline cybercoma

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Re: GameStop Pump and Dump
« Reply #2 on: January 31, 2021, 07:16:00 pm »
Today’s conspiracy theory is that the brokerages have OVERSOLD $GME stock. This is akin to printing counterfeit money. If true, that would certainly explain the shitstorm.

Not to be confused with the shorts being over borrowed.

Offline eyeball

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Re: GameStop Pump and Dump
« Reply #3 on: January 31, 2021, 08:33:10 pm »
Silver surges as Reddit army targets precious metals

Are they vandals, anarchists - a horde or a hive?

Offline kimmy

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Re: GameStop Pump and Dump
« Reply #4 on: February 15, 2021, 11:00:40 pm »
I thought this was a very interesting story for a few reasons.

First off, there is the appearance that Robinhood (and others) put their thumb on the scale to help out the hedge funds. Robinhood insisted that there were technical reasons for why they had to halt buys of $GME.  Failsafes kicked in, the trade clearing house required the brokers to put up collateral due to the price and volume of buys, something of that nature. Is that true? I don't know, and I'm not sure that anybody is completely satisfied with that explanation.

There's also the question of what actually happened.  The story has the appeal of modern folklore: some yahoos on a message board came up with a harebrained idea to take on the hedge-funds, and won.  But is that all there is to it?  Some people think there may have been more to it than that. I think I have read that since the Gamestop squeeze, they have detected "bot" activity on Reddit attempting to manipulate the Reddit mob. Somebody could get rich if the mob at WallStreetBets takes an idea and runs with it like they did with Gamestop.  It goes without saying that people will be trying to create "the next Gamestop" with some stock that they already own.  Which raises the question: what if last month's Gamestop was itself invented by somebody who already had skin in the game?  Could some institutional investor have conned the kids at Reddit into creating this fiasco?

This guy on Reddit bought $53,000 of Gamestop stocks in 2019 when it cost 60 cents a share:

He posted this video in July 2020 when it was worth $4 a share to explain why he was holding his stocks.

He sold something like $13 million worth and was still holding a bunch more.  One of the first things he talks about is Scion Capital and Michael Burry (if you've seen "The Big Short", those names will ring a bell) being bullish on Gamestop. So, "Roaring Kitty" or "u/DeepFuckingValue" might have been the Reddit champion of the stock, but Scion Capital was already on board, and probably they weren't the only ones. Is it out of the question that some big money player helped stoke the fires over at Reddit?   And if they did, is there anything wrong with that?   People were shocked that a bunch of Redditors exchanging publicly available information could have such an impact, people were asking "is this market manipulation? Is this illegal? Does the government have to do something?"  But really, how is that different from Jim Cramer going on TV and telling his audience "buy this, sell that" etc?  It seems like the powers that be are comfortable with people buying stocks that a guy on CNBC says they should buy, but not comfortable with people buying stocks that people on a message board are buying. I'm curious what the difference is.

I think the main reason I found the Gamestop story so interesting is that it agreed with my existing biases against the stock market. People keep pointing to the stock market as if it was a barometer of economic health, but clearly it's not.   That has become more clear than ever in the age of covid, where the economy as a whole is sicker than it has been in decades, while the stock market is at heights never seen before.

Here's Jim Cramer talking about manipulating the market:

"The great thing about the market is that it's nothing to do with the actual stocks."

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