GME

[glennds]

With all the increased interest in GME, I figured it was time to write up something bigger than a message board post. Here are a few thoughts, including a large dash of Harry Browne that you guys and gals might appreciate.

How to Play the Game and Live to Tell the Tale

Very nice write up. Thanks!

[Smith1776]

With all the increased interest in GME, I figured it was time to write up something bigger than a message board post. Here are a few thoughts, including a large dash of Harry Browne that you guys and gals might appreciate.

How to Play the Game and Live to Tell the Tale

Amazing work.

[CT-Scott]

GME price currently at $213.07. Down significantly since open (and Friday's close). "Funny business" behind-the-scenes or retail buyers selling? When is it supposed to start heading to the moon?

[Kriegsspiel]

[flyingpylon]

This article says GME shorts are down to 39%:

https://finance.yahoo.com/news/gamestop ... 26052.html

[dualstow]

This article says GME shorts are down to 39%:

https://finance.yahoo.com/news/gamestop ... 26052.html

Maybe this would be a good time to short it.

[dualstow]

A better time to short it was right before the close on Friday....

Yes, but since I don't own a time machine..

My post is really for Ct-Scott. Just stating the obvious here- Scott, GME has already gone to the moon. It has negative earnings, and it should never have gone this high. It might soar again, but it might never do so again.

[dualstow]

This article says GME shorts are down to 39%:

https://finance.yahoo.com/news/gamestop ... 26052.html

Maybe this would be a good time to short it.

Ahem. GME is now below 100. Near 80.

[Maddy]

As one veteran trader noted, "it's a bloodbath" and another mocked "in all my 6 days of trading, I have never seen anything like this..."

Who could have known?

[dualstow]

As one veteran trader noted, "it's a bloodbath" and another mocked "in all my 6 days of trading, I have never seen anything like this..."

Who could have known?

In all my 6 days

[Smith1776]

Under $100 now.

[Kriegsspiel]

As one veteran trader noted, "it's a bloodbath" and another mocked "in all my 6 days of trading, I have never seen anything like this..."

Who could have known?

In all my 6 days

I also lold.

[Smith1776]

Putting the jokes aside for a moment.

I feel for the people (and there must be lots of them) who are currently feeling a ton of anguish from seeing losses on GME. A lot of people bought it because they really thought this was a social movement that could stick it to the man.

It's not over yet. It might bounce back; who knows. But yeah, I really hope a lot of these speculators will be okay.

[Maddy]

The most notable thing coming out of all this is that the light bulb has finally come on for a whole new swath of deplorables. Even the true believers could not possibly have missed the fact that the democrats, who immediately jumped in to change the rules when the hedge funds were pummeled, are firmly and unequivocally aligned with Big Business monopolists and Financial Elites.

[dualstow]

Putting the jokes aside for a moment.

I feel for the people (and there must be lots of them) who are currently feeling a ton of anguish from seeing losses on GME.
...
...I really hope a lot of these speculators will be okay.

I feel bad for anyone who hasn't had access to financial education and just didn't know any better...but there's a little bit of the feeling I have for people who inhale cinnamon because they saw someone challenging people to do it on youtube.

Education, education, education.

[Kbg]

Ah GME what a story. Pretty entertaining for sure. Big losses can, long term, be a good thing when one is younger. For me a particularly nasty experience/loss was what turned the corner to being successful. Sometimes a good 2x4 right to the forehead is the best of life gifts.

The real lesson here for the serious student of markets is how brokerages work. They couldn’t care less if you lose every last penny in your account. They care greatly if you lose every penny so quickly that they end up losing money as well. If the brokers risk management systems are any good you will have been involuntarily closed out before you got to zero.

I’ll be blunt, if you are with a broker that didn’t put restrictions on GME my strong advice is to move your money somewhere else as quickly as you can.

[Tyler]

I’ll be blunt, if you are with a broker that didn’t put restrictions on GME my strong advice is to move your money somewhere else as quickly as you can.

I disagree. Even if one assumes there were no ulterior motives involved, brokerages like Robinhood put restrictions on GME because they lacked the financial liquidity to back the trades on their platform. That's a big red flag.

Mark Cuban had an interesting AMA on WallStreetBets today, and he summed this up pretty clearly:

Q: Hey Mark! Thanks for doing this. What are your thoughts on which services to use? I’m planning on getting g out of RH for obvious reasons, any retail trading companies you’d recommend? I want to support free trade and hit Robinhood in the wallet for what they’ve done here. Also, any legitimacy to a class action suit against them?

A: Pick the brokerage with the strongest balance sheet. What ruined it on RH is that they didnt have enough cash to deal with the growth in accounts, margin loans and volatility. The EXACT SAME THING will happen at the next broker if you dont make sure they have a MULTI-TRILLION dollar balance sheet to be able to handle these kind of circumstances

And there will be class action suits. And they will be combined and they will win and you will get a check for less than $10

[glennds]

I wonder if the two biggest winners in the GME story might be Robinhood and Reddit itself.

The incident has clearly driven home the influence of the retail investor. Robinhood's model is selling the order flow and data it accumulates from it's customers to market makers. The result of this story can only be an enhancement in importance and value of this data.
Similar with Reddit, two of whose major investors are Sequoia Capital and China's Tencent Holdings.

[Mark Leavy]

...

brokerages like Robinhood put restrictions on GME because they lacked the financial liquidity to back the trades on their platform. That's a big red flag.

This is exactly what happened.

[vnatale]

...

brokerages like Robinhood put restrictions on GME because they lacked the financial liquidity to back the trades on their platform. That's a big red flag.

This is exactly what happened.

Could either Vanguard or Fidelity be questioned as to whether they might lack the requisite financial liquidity?

[glennds]

...

brokerages like Robinhood put restrictions on GME because they lacked the financial liquidity to back the trades on their platform. That's a big red flag.

This is exactly what happened.

I'm not sure it's that simple. The plumbing broke in numerous places. Not just within the brokerage, but also at the clearinghouse level and in the broad market.
Think about it, if overall short interest is 126%, you can see why there will be significant logistical issues settling transactions when a large percentage of the positions are basically synthetic naked shorts. Yes, the clearinghouse required more collateral than Robinhood could put up at that moment, but the underlying problem is a disrupted market for this particular stock, not that the brokerage was undercapitized per se.

[Mark Leavy]

if overall short interest is 126%, you can see why there will be significant logistical issues settling transactions when a large percentage of the positions are basically synthetic naked shorts. Yes, the clearinghouse required more collateral than Robinhood could put up at that moment, but the underlying problem is a disrupted market for this particular stock, not that the brokerage was undercapitized per se.

The volatility was too high to float the stock for two days. That effectively devalued the collateral. The backers had to pull the credit line.

[InsuranceGuy]

[deleted]

[Tyler]

Could either Vanguard or Fidelity be questioned as to whether they might lack the requisite financial liquidity?

IMO, those are your two best bets. BTW, two interesting things I learned this week are 1) what payment for order flow is, and 2) that neither Vanguard nor Fidelity accept it. I like how that eliminates a shadier section of the financial plumbing that tripped up several competitors.

[Mark Leavy]

Could either Vanguard or Fidelity be questioned as to whether they might lack the requisite financial liquidity?

IMO, those are your two best bets. BTW, two interesting things I learned this week are 1) what payment for order flow is, and 2) that neither Vanguard nor Fidelity accept it. I like how that eliminates a shadier section of the financial plumbing that tripped up several competitors.

Interactive Brokers allows you the option of a free account or a paid account if they don't sell your order flow.
I pay.