Is this responsible for some of the market’s decline yesterday (and perhaps today if the futures are predictive)?
While a few tickers will rise due to the short-squeeze are hedge funds being forced to liquidate some of their long positions as a result of closing their shorts?
More generally, I agree with Yuval’s recent post expressing the concern that we are in a bubble. What will be the catalyst if we are due for a correction?
No shorts are safe->less money in the market? Enough to precipitate a correction? Maybe there are enough RobinHood “stimmy-checks” to compensate even if there is a concern regarding the hedge fund’s possibly withdrawing money from the market.
Thanks. Just a question. I do not have enough of a grasp on shorting (and the amount of money that is created for long positions) to have an informed opinion on this.
Congrats all. I hope you guys don’t put all the short sellers out of business. Short Interest has been a pretty reliable factor prior to this year. Thinking what’s happening now might permanently change how short sellers behave going forward, and wonder how it might impact the factor itself.
I enjoy hearing your trade stories, but sortof hoping all the “bull raid” success (along with increased vol) doesn’t pull all of the money out of other strats. My only buy was added a small bit of cash to boring MSFT after xlnt quarter, but stock barely budged. All the oxygen is moving to where you all are.
Oh, I feel like I’m more risk averse than most, but I’m almost fully invested (98+%) now - just had a bit of spare cash in a couple accounts to act on the MSFT earnings report when I saw it was still flat the next morning. If I had guts I might try some of the high short interest stocks. QLYS is the highest ranking stock on my ranking system that has high short interest (17% of float). I owned it at one point but sold after reading a lot of pretty bad glass door reviews about work environment that seem out of step with what most tech aspires to. I considered it a couple days back, and it’s up 9.9% since then, but I decided that just wasn’t my bag. Sometimes that kind of stuff is fun though - even small positions like that can get me to thinking differently. Problem is - it can also distract me.
I’m wanting to add a bit to FB today after earnings, but I already have enough of that I think. Big tech is putting up nice numbers so far.
I like the approach of the wallstreetbets subreddit and want to support it. It feels like David vs. Goliath. Therefore I just bought small positions in EBIX, PETS and IRBT.
Robinhood and other brokers shut down trading in these stocks today. You are only allowed to close positions, not open new long positions. Note the hypocrisy by the Robinhood CEO:
“I’d argue that those who question the capability of retail investors do not have the interests of everyday Americans at heart. It’s wrong to view the arrival of increasing numbers of retail investors in the market with dismay. It’s short-sighted to proclaim that financial instruments integral to investment strategies of the wealthiest Americans should be left exclusively in the hands of the old guard.”
It turns out that Robinhood makes most of its money from (market maker) Citadel which bailed out one of the hedge funds that was driven to near bankruptcy. There is actually a class-action lawsuit in the works against Robinhood for not allowing trading in these heavily shorted stocks.
CNBC had a discussion as to whether you (or at least some Reddit users) were guilty of any crimes regarding stock manipulation: CNBC
I would skip the above link. Suffice it to say Cramer thought that maybe you should not go to jail and that maybe you were not part of a conspiracy started by a foreign government.
I like Cramer even more as he is not a hypocrite at least. In an old interview he had this to say: Cramer
[i]“You know a lot of times when I was short at my hedge fund and I was positioned short meaning I needed it to open up, I would create a level of activity beforehand that could drive the futures. It doesn’t take much money.
Similarly if I were long and I would want to make things a little bit rosy I would go in and take a bunch of stocks and make sure that they are higher, you know maybe commit five million in capital do it.
And I could affect it. What you’re seeing now is maybe it probably is bigger market now, maybe any ten million capital and knock the stuff down but it’s a fun game and it’s a lucrative game “[/i]
You can draw your own specific conclusion. But I am not sure it has to make sense any more—at least not on TV.
Just crazy CNBC?
Elizabeth Warren also calls it stock market manipulation and wants enforcment:
‘“We need an SEC that has clear rules about market manipulation and then has the backbone to get in and enforce those rules,” the Massachusetts Democrat said.’
The link I provided above is not the full interview. The full interview is 5x as long but I can’t find it now. Looks like there is some censorship going on.
Gamestop causing a market crash? Implied volatilty has gone crazy up .
Higher IV triggers selling which triggers even higher IV which triggers even more selling?
I think Gamestop is going to issue shares within 2 weeks. They have $600M cash ok, but they have a D/E of 3.5 when the industry is 1.5. With their plan to create a online platform to compete against Amazon, it will require alot of investment in infrastructure. They also need some budget to revamp their brick and mortar stores. However, they have to be very careful on how they will do it or they could kill their own business if they aren’t doing it right as millenials could boycott the company. What I was thinking is that if the short% to float is 125%, then issue for 25% worth of shares. So if the float is 44M of shares, then do 11M of shares at 500$ each. It is important that the amount must be higher than the current price, to avoid the retailers to have losses. It would bring the short % to float from 125% to 100% then I would let Reddit squeeze the remaining 100%. That way the company is set for its future and the redditors can still cause a sizeable squeeze, to perhaps $1000, if successful. But I think the company would be dumb to not take advantage of the current price, it is a once in a lifetime opportunity to get well funded.
GME is a fundamentally bad company though.
Gabe whatever was right when he shorted GME it had 800 EBITDA, now its like 0 to 200, and revenue declined largely.
He was right on fundamentals.
So you can be right predicating the company fundamentals and lose 3000%, mind blowing.
Only one share of General Motors or Starbucks? Looks like confirmation that Robinhood is in serious trouble. Maybe we should start taking bets on what day Robinhood goes either goes bust or gets a Fed bailout?
Any thoughts on the risk to the market if Robinhood should die an ungraceful death?
Why are people so sympathetic to gamestop? It’s a poorly runned company in which the CEO took the company from earning $800 million in ebitda to losses, and is getting a $1 billion payday. For what? For sucking?
I short stocks . Why do people hate short sellers? I short stocks in the last bucket and but I’m mostly long companies in the top bucket. The reason is im not too exposed ot the 40% market drawdowns.
Thinking what’s happening now might permanently change how short sellers behave going forward, and wonder how it might impact the factor itself.