Do you care if a hedge fund ate the big one?

[Porsche-O-Phile]

The entire so-called “free market” system is rigged to protect the people that are in the “club”, not unlike what former President Trump referred to as “The Swamp” in the federal government - a self-serving bunch of system manipulators primarily concerned about their own self-preservation at the expense of everyone else. This lays bare the reality that the finance world has its own “Swamp” - one every bit as sleazy, dirty and self-serving as the one In Washington, D.C...

This sort of reminds me of what happened in the air travel world a few years ago or what’s gradually been happening more and more with regards to car sales or real estate - the people that were part of that “club” (trying vainly to protect themselves from the advent of REAL free market capitalism and customer choice brought about by new enabling technologies like the Internet) are running scared and doing their best to stuff the genie back into the bottle in order to protect “we’ve always done it this way (in order to fleece everyone else and line our pockets)”. Now it’s just the professional investor’s turn.

The system has been - and is - clearly rigged for decades against those who aren’t willing to pay the cover charge / entry fee to the established brokerages, fund managers, etc. who believe they’re entitled to your money for... well... not much of value at all. This is not unlike what’s happened / happening with traditional “old school” travel agents, car dealerships / salespeople, insurance and real estate agents - many of whom have gone the way of the dodo because they simply don’t add much or any value to the end user and the end users (who aren’t all that stupid after all) have been pissed about it for years and now FINALLY have a way to fight back via new technologies to return the power of choice to THEM.

The investing world can’t stand the notion of “hacks” or “outsiders” getting into their sandbox and REALLY making money the way they have for decades (by manipulating the rules and rigging the game). They’ve begrudgingly allowed token day trading and small-scale dabbling to creep in, but they’ve been arrogantly blind to just how pervasive this has become and just how unnecessary they’re deemed to be by most. It’s refreshing to see their arrogant, “too-big-to-fail” attitudes getting a quick recalibration at the hands of more-or-less ordinary people.

While I’m not a fan of schaenfraude, it is rather delicious to see these same types of “professional” financiers who smugly ride off into the sunset in 2008-09 proclaiming “I got mine!” while millions of other people (like me) lost their jobs, livelihoods, homes and were set back years - some never recovering at all - finally getting a little comeuppance. Call it karma or whatever but I have absolutely NO sympathy here. None. Either you’re for the free market or you’re not. If you are, stop rigging the game and make the playing field level for EVERYONE and let’s see how good y’all really are and compete on the basis of that. What (or whether) people pay you should be a function of the value (if any) you create, not an entitlement or consequence of a rigged system.

[rsrguy]

I still haven't recovered and I went to Afghanistan to earn, worked away from home the better part of three years..... still renting.

I was seriously considering opening an account to day trade... I'm guessing the big dogs will be pumping the brakes on that.. And making it harder as well..

I'm hoping FB gets some special market treatment before the biden clowns lock it all down.

Feudalism, it's here.

[Tervuren]

I prefer to cheer and celebrate positives.
Not gonna cheer.

Cheering might even be pre-mature.
Where does the money to pay for loss come from?
Sell off assets. Major sell off of a stock assets does what to market?

Bust.

What happens when margin calls start cascading?
People not even players in the original situation can go down.

Bigga Badda Boom


Maybe those smarter can outline how this is contained.

[jyl]

Some reasons why RH (and other brokers) restricted buying of GME and/or new open positions on GME options:
1. Solvency. Brokers must deposit cash with DTCC (securities clearinghouse) in amount based on amount, volatility and concentration of stock held in customer accounts. As amount of GME held ballooned, RH was forced to draw down several hundred $MM of credit lines. Don’t know how close they got to limits but they were likely at risk of insolvency. Interactive Brokers, WeBull and others also restricted buying of GME. Schwab did not, being far larger with much less r/wsb type customers.
2. Margin. RH encourages margin accounts. All brokers raised margin requirements on GME to 100%. If customer doesn’t have enough cash for margin call, broker will liquidate stock.
3. Options liquidity. When customer buys a call option, dealer must secure stock (since option is a contract to deliver stock). When dealer cannot secure enough stock, or isn’t willing to take risk of not being able, dealer will stop writing new options. Then RH (and other brokers) have to place that option on “closing transactions only” meaning can only buy an option to cancel out an existing option i.e. close out the position.

r/wsb’ers are treating their RH app like a massively multiplayer video game with juicy in game rewards. In reality it is the front end to a complex system with real world constraints, and the rules allow the system to shut down if the pipes are overflowing.

The “free market” rhetoric is mostly bull***** spouted by ppl who yesterday had no idea what an option or Gamestop was. Like I was telling a millenial friend, no matter hours much you want to buy a unicorn, you can’t. Being able to buy a call option on a given stock at a given time is not a human right.

The “eat the rich” rhetoric is also stupid. The market makers (Citadel etc), dealers, brokers, and some hedge funds, and big investors are making far more on this than the redditors. Some hedge funds are losing money, which is fine - the other funds are laughing and feasting on the corpses.

The “we’re gonna break the system” cry is laughable. Game bros won’t break the financial system, if they trouble it they’ll just get locked out.

[speeder]

Rich people: why don’t the poor invest their money?
Poor people: ok
Rich people: wait...stop

[island911]

Originally Posted by speeder

Rich people: why don’t the poor invest their money?
Poor people: ok
Rich people: wait...stop

Close.

Rich people: anyone with the means can manipulate markets like we do. What we do is perfectly legal. Even poor people can do this
Poor people: ok
Rich people: wait...stop! Only we get to do that.

[javadog]

I object to all of the illegal bull**** that has been perpetrated in the last couple of days to protect the hedge fund guys that ****ed up.

It shows how corrupt the markets, the government and the rest really are. Trump tried to point this out but not enough people listened.

**** Wall street.

[Otter74]

This is hedge funds having others do to them what they do to companies. Crying myself a river right now .

[island911]

Originally Posted by javadog

I object to all of the illegal bull**** that has been perpetrated in the last couple of days to protect the hedge fund guys that ****ed up.

It shows how corrupt the markets, the government and the rest really are. Trump tried to point this out but not enough people listened.

**** Wall street.

THIS!

and this...

[jyl]

Originally Posted by javadog

I object to all of the illegal bull**** that has been perpetrated in the last couple of days to protect the hedge fund guys that ****ed up.

It shows how corrupt the markets, the government and the rest really are. Trump tried to point this out but not enough people listened.

**** Wall street.

As I pointed out above, it is not illegal - or unheard of - to restrict trading in extremely unusual trading conditions.

If you set out to overwhelm a system, don't be surprised when the system's safety mechanisms kick in.

There's as many hedge funds, big investors, billionaire types who make money when GME rises as there are who make money when it falls.

(By the way, the report about global $ lost in short positions is almost certainly wrong, since it doesn't count hedging of short positions. No question its been a tough year for short trades and some long/short HFs have lost a bunch, but note that those same HFs were up big in 2020.

[sammyg2]

Intentional market manipulation is wrong. With a great big W. That's kinda why it against the law.
And don't try that "we'll Johnny down the street did it too ...". That childish crap didn't work when you were 5, why would you try it now?


Anyone who thinks this is just going to hurt a few hedge fund managers is ignorant, uninformed of the subject at hand, or just not very smart.
Millions of regular people are getting screwed over by this illegal market manipulation, people who worked hard to one day enjoy their pension and retirement.
Not to mention the people who have nothing to do with investing but will have to pay additional taxes to cover the state pension fund losses. Dummazzes.

Market manipulation is wrong, and so is stealing. Robbing people under threat of bodily harm, aka armed robbery is just as wrong.
But somehow, there is a portion of our population that doesn't realize that. A portion with profound character flaws and very low morals and values. IOW, POS.

Which brings us to robin hood.
A fictitious character who was made famous for being a thief, an armed robber.
And for that he is idolized? Bah. Poor upbringing. Someone's parents should be ashamed.
The end does not justify the means, and two lefts don't make a right.

Anyone out there who thinks what these A-hats are doing is somehow OK needs to reevaluate their personal values and make some adjustments in order to be less of a POS.

Justice would be best served if they loose every single penny they have and then some, and loose their jobs, wives, families, houses, everything.
Then live the rest of their lives in homeless squalor, until ultimately they succumb to the elements and die surrounded by other filth before burning in hell for eternity.

I wouldn't wish that on anyone even though I'm a mean old man who doesn't like people in general. But I don't lie or cheat or steal and don't tolerate it in others.
Let alone encourage it.

[javadog]

Originally Posted by jyl

As I pointed out above, it is not illegal - or unheard of - to restrict trading in extremely unusual trading conditions.

If you set out to overwhelm a system, don't be surprised when the system's safety mechanisms kick in.

Pretty sure that they went a lot further than that this time.

**** Wall street.

[creaturecat]

**** 'em.
manipulation became a two way street - and it was quelled via more manipulation.
a foxes guarding the henhouse scenario.

[island911]

Originally Posted by sammyg2

...
The end does not justify the means, and two lefts don't make a right.

Anyone out there who thinks what these A-hats are doing is somehow OK needs to reevaluate their personal values....

I'm happy about this because it outs the practice. Big League

[craigster59]

This Tweet made me laugh....

"Never in my 3 days of trading have I ever seen anything like this."

[3rd_gear_Ted]

300% of stock value to play a short just became not enough. Circuit Breakers kicking in as they should. Glad the big dogs got poop on their pretty shoes. NO algorithm can account for virality in social media. Back to the drawing board for Hedge Funds

[KFC911]

So where the hell is Trader220 when ya need some advice ?

[Sooner or later]

It is not just the hedge funds themselves or managers getting hurt. A lot of pension funds invest in them as a means to limit risk. It isn't a high percentage of assets being invented in them.

[Bill Douglas]

Will still on the topic of social media and finances...

I'd like to see the same game, but BIGGER, played on China. Not their stock market, but their whole economy. Something like "Don't buy anything Chinese made for the next six months."

[jyl]

Originally Posted by javadog

Pretty sure that they went a lot further than that this time.

**** Wall street.

Evidence?

Not saying they wouldn’t if they “needed” to, but not seeing that they needed to.