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Sorry, but I don't agree with you. I've been a regular lurker on WSB for quite awhile, and I can tell you no investment advice was being given out by DFV. It's all there in his post history. Nothing from Roaring Kitty comes to mind so I can't speak on him. What I can tell you is that when DFV posted his positions last year he was widely lambasted on the subreddit. The consensus was that it was a pretty stupid trade and he was mocked for it and then forgotten about. Only in the last month did interest in GME pick up on the sub and someone remembered he had put on a pretty large bet. He wasn't giving out investment advice or recommending people to buy or sell any securities. He laid out his thesis and posted his position, that's it. His cost basis is so low because he was so early in the trade. He's been holding his call options and stock for many many months. There was no coordinated pump. He got lucky. That sub is pure chaos and the mob picked up the torch of "fighting the hedge funds" once the stock started to pick up.
The fact of the matter is the smart guys on the street made huge bets that blew up in their faces. That's normal and fine. Happens all the time on Wall Street. The part that they can't wrap their heads around is who handed them the loss. Retail never wins, so instead of everyone admitting that these guys got lucky on a 1 in a million shot, everyone is looking around to see how the "system" must have screwed up.
Us old guys remember the days before the internet when you used to get junk mail touting various stocks (usually penny or low priced stocks) because your broker sold your address to junk mailer lists. Some people fell for it and those stocks went up because of it. And then of course, those stocks came crashing down when the original holders (those who sent the mailers out) cashed out and there was no one to buy because there was no reason to buy based on valuation.
Note now, how there are many memes on WallStreetBets of "buy, buy, buy", "to the moon" and "hold, hold, hold."
There are big players behind the short shake out. They need rubes to "buy! Buy! Buy!" and "hold, hold, hold." for them to sell the shares they bought weeks ago to. Because, really, what professional would buy GME above what it's really worth?
It is a well executed plan by expert players who are using the little guy. And what better way than to make the little guy feel like he has a part in sticking it to the man? Robinhooders, WSB redditors and CNBC - FOXnews watchers are all being taken for a ride. This is stocks, not cryptocurrencies. Valuation will matter eventually.
I'm old enough to remember when amazon.com was overvalued at about $130 . Just saying.
Valuation is in the eye of the beholder.
Or, perhaps the SEC could set up a division of Valuation Enforcement to ensure the market price does not go over, say, a P/E multiple of 25? We can discuss which metric would be most appropriate.
However, in a court of law and/or before regulators:
"He laid out his thesis and posted his position, that's it."
Can be seen as investment advice. Using a pseudonym at that. Remember, he's not a regular Joe. He's an investment advisor. He has rules to follow that you don't.
The fact of the matter is smart guys made huge short bets, even smarter guys with deep pockets bet against those short bets by going long and in effect have been driving the price up and posting memes to drive interest in the stock so they have someone to sell their stock to (little retail guys and dumb money larger players).
Smart guys, understanding how shorting works, what float means, where those borrowed shares used to short were held and more or less by whom, how to induce the owners of those borrowed shares to call them back from the borrower(short) so they can sell them, executed a targeted attack. There was no luck involved. They understand the power of social media, the madness of crowds and how to illicit popular delusion. This is just a high tech version of an age old game. That doesn't mean the little guy can't make money along with them. But when these smart guys are done and believe there's no more to be gained, who do you think they will be selling to to realize their gains? Institutions who know better than to buy an exceptionally and catastrophically overvalued stock? Or the deluded little guy who bought into the memes of "buy-buy-buy, to the moon, hold, hold, hold?"
Catching up this morning on the thread, so apologies if this has been discussed already (with more detail).
They got the same call, more or less, which is why they had to tap $600 billion of emergency credit lines, and are trying to raise more still.
The real difference is the amount of leeway on time. Your broker doesn't actually have to liquidate you on a margin call, it is at their discretion as to whether or not they wish to float you the amount you owe.
I am not sure of the exact timing but there is an excellent chance Robinhood was actually in violation for a short period, and may be subject to fines. I haven't been reading much on this aspect of it.
I wonder how Robinhood determined what positions to liquidate in order to cover their own liquidity requirements. The problem that this guy is going to have is that you sign away your life with broker agreements. I am sure they are well within their legal rights to close the position, even more so if it's on margin as you pointed out.
Indeed it was overvalued, especially in 2000-2001. But it was one of the last ones standing during the dotcom bust because they secured a massive amount of debt funding. So there's that. The fundamentals...