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I really enjoyed Matt Levine’s thoughts on the legality of the GME pump and the overall situation. Pretty good and informative read.
I used to read WallStreetBets on Reddit a few years ago before it took off. It used to be a great resource where people did decent stock research with the occasional meme play. Unfortunately it exploded in popularity about a year or so ago and then turned into a classic large subreddit - lots of edgy early 20 year old know-it-all’s. Can’t say I follow it much anymore. I do miss the old WSB though.
When the earlier buyers, the one's who've done the research and noticed that the %short relative to float was over 100%... start selling to take massive profits, there will be a bloodbath amongst the latter buyers.
What comes next is more regulation to protect the "stupids" from themselves.
Although different exchange... looks like they are getting prepared.
It would be crazy if we have a new paradigm developing? Wonder how they'll respond to stop average joes from banding together to accomplish this against the money'ed funds?
I wonder how much of this you could tie into stimulus money? You could imagine someone getting a stimulus check for $600-1400, and having the attitude of... "Well, I'll throw $500 at something on wsb." They could do this for instruments that should have no reason to be mooning, like AMC or GME.
Worst case, they loose $500, of money they didn't really need. Best case... a whole lot of other people with the same mentality about that $500 force big money to exit at a loss?
Unfortunately this event has only worsened that effect. Lots of astroturfing, spam posts, people that should obviously not be throwing their money into the market asking what a short is.... WSB needs to host another paper trading competition, that weeds out a TON of weenies who aren't really there to learn or do anything.
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Sort of but in reverse. Bunch of people on reddit found some stocks that everybody was short and is squeezing them/sending them to the moon. And yes certain hedge funds are literally losing Billions! It's big news.
Gamestop is up 800% in a week, and 1700% this year. AMC (movie chains) is up 570% in a week.
Blackberry is up 100% in a week.
Nokia was up 133% in a week at its high today but has retraced a lot.
The amount of short interest in GME was astonishingly high. With short interest already exceeding 100% of the float, you'd have to be an absolute moron to be short this thing.
Where the heck was Melvin's risk management on this one? Seriously those clowns deserve to be out of a job.
And whether it was Redditors, momentum players, or other hedge funds that put this squeeze on (probably, a combination of all three) doesn't really matter. Wall Street has played this game over and over again since long before any of us were even born.
People did their research, ID'd a huge positioning imbalance in GME, recognized a hugely asymmetrical r/r setup, and positioned accordingly. Good for them. Well played.
As for Melvin and his point 72 buddies, let's hope they learned a lesson in risk management (knowing these guys, I wouldn't hold my breath)