I came into this thread to get some clarity on the subject because I'd seen it mentioned on CNN.com and I still have no idea what's going on. The stock market just confuses me so much.
Post by sunshineluv on Jan 27, 2021 19:16:45 GMT -5
I am clueless and don’t understand.... but we benefited from this craziness today. A month or two ago DH bought some AMC stock and it went up over 200% today so he sold. I am thrilled, we had no clue about the redddit stuff just though AMC would go back up once people start going to the movies again.
Post by omgzombies on Jan 27, 2021 19:18:59 GMT -5
Looks like the Wallstreetbets reddit was taken down or possibly made private depending on what twitter account you are reading. The wallstreetbets discord channel was closed for hate speech. Everything took a dive in afterhours trading when it happened, I'll be curious to see how it all moves forward without all the push from the reddit community.
I came into this thread to get some clarity on the subject because I'd seen it mentioned on CNN.com and I still have no idea what's going on. The stock market just confuses me so much.
Looks like the Wallstreetbets reddit was taken down or possibly made private depending on what twitter account you are reading. The wallstreetbets discord channel was closed for hate speech. Everything took a dive in afterhours trading when it happened, I'll be curious to see how it all moves forward without all the push from the reddit community.
I'm not saying at all that the language in there was good, but how is this is channel hate speech while all the discussions leading up to Jan. 6th were not?
I have seen the movie Trading Places a dozen times, it was a Christmas tradition in my family. I still don't understand how they win in that movie, but this whole thing seems vaguely reminiscent of the ending of that movie.
Ok, so the reddit is back up. The mods made it private to clean it up a bit b/c there are a lot of bots trying to shut them down, diver attention to other stocks (which is probably how the Discord account got shut down).
I will give credit to the guy that initiated it. I guess he's been posting screenshots of his account each day and it shows he hasn't sold anything. Now, I think he's a dumbass, but whatever, I do like the "fight the man" vibe they've got going.
He posted about four hours ago and his account showed he had $49M in it. Now, he invested $750k, but that's still one hell of a return. And he only owns 50k shares. Volume traded today was nearly 100M, so he could sell it all in a minute I'm sure. https://www.reddit.com/r/wallstreetbets/comments/l6ekdz/gme_yolo_update_jan_27_2021_guess_i_need_102/
Ok, so he's not as dumb as I thought. I went back and looked at all of his screenshots. Looks like OOP total was about $50k. He had some calls he sold and bought more shares, which is why it shows the $750k spent. But he also has a cash balance of $13m from some sales (but never sold any of the actual shares). Damn, still a massive amount of money!
I came into this thread to get some clarity on the subject because I'd seen it mentioned on CNN.com and I still have no idea what's going on. The stock market just confuses me so much.
The hedge fund planned to make a lot of money by assuming game stop will go out of business soon. There have been examples of hedge funds doing this with businesses in the past by literally putting out fake press releases and such to mess with stock prices. By essentially pushing others to support their prediction with investments, they can get what they want.
In this case, they planned to make money by shorting the GME stock. They borrowed a ton of shares from owners, and then they sell them. They wait for the expected price drop of the shares, and then buy the shares back at the lower price. They then give the repurchased shares back to the original owner, having made their money off buying them back at less than they sold.
They have to put up collateral to borrow the shares to begin with. So obviously if the lender sees the share price going up for their stock, they want more collateral to support the value. If the lender asks for more and more collateral or you run out, you’d have to take a loss to return the shares to the lender.
The Reddit users simply saw this happening and did the opposite to the hedge fund people. They started buying a ton of shares collectively to drive the GME stock price up, therefore making the hedge fund bet on the price drop a huge mistake. In many cases, the hedge fund’s contracts for borrowing are now coming due (thurs/fri), meaning they have to return all those borrowed shares at $300/share instead of $5 (or whatever the numbers are, i didn’t pull the specifics). So they made a bet expecting to profit off bankrupting game stop and instead possibly got bankrupted.
Post by jordancatalano4ever on Jan 27, 2021 23:59:36 GMT -5
So I know nothing of this except what I’ve read here but my husband and I decided to watch The Big Short again after watching all this go down. Somewhat similar and leaves me just as frustrated as when I watched it in the theatre. Highly recommend if you’ve never seen it. Tangentially made me wonder whether the regulations that Elizabeth Warrens new department created were dissolved under Trump...
We are waiting on stocks to vest in 2 weeks. It's my Hs current company which is a mid-size and diverse product manufacturing company.
They company issued these stocks last yr rather than pay out a bonus and before this week had made huge gains. It would totally suck if it tanks and we end up with a lot less than expected.
The stock price was down sharply yesterday, out of nowhere. Anyone know if that's due to the current gamestop drama?
This is impacting funds that have nothing to do with game stop. When major hedge funds have to suddenly dump (sell off) their entire portfolios because of something like this, it can cause stocks to tank in completely unrelated sectors.
My husband primarily invests in pharmaceutical companies, and he’s on the verge of shutting his entire portfolio down as a result of unprecedented losses this week.
This is impacting funds that have nothing to do with game stop. When major hedge funds have to suddenly dump (sell off) their entire portfolios because of something like this, it can cause stocks to tank in completely unrelated sectors.
My husband primarily invests in pharmaceutical companies, and he’s on the verge of shutting his entire portfolio down as a result of unprecedented losses this week.
I don’t think Melvin Capital declared bankruptcy. Did they?
To the point about other stocks being affected, I’d like to know who’s money was lost by Melvin capital. Was it 401K money? That would definitely be an unintended consequence.
The stock price was down sharply yesterday, out of nowhere. Anyone know if that's due to the current gamestop drama?
I think it’s more than that. Our broker told us several weeks ago to expect a late Jan. Drop (and that may not be all of it, unfortunately.) Retailers’ Q4 reports were coming out and much worse than they hoped + rising unemployment reports. He did say he expected it to come back up relatively quickly and then be slow and steadily rising (because the markets like stability-AKA, Biden) if that helps.
Brokers let people borrow a stock hoping they get more money than it was worth when its given back/bought out from them?
Is that the essence of the stock market? I know its essentially one big legal gambling game, but that's about it.
I never realized you could borrow a stock. I thought it was all buying or selling.
No, some stock owners let these people borrow their stocks to do this manipulation. The average person isn’t going to borrow stock because you don’t have millions or billions for both market manipulation and collateral to borrow.
The stock market is buying and selling shares of companies on the market directly. A bunch of people buying a specific stock makes the price go up, a sell off (will happen with GME soon) will lower the price. But all this (waves hands) is why judging the economy’s performance on the stock market is insane. It’s all imaginary money until you sell (if you happen to sell at exactly the right time), and companies are constantly manipulating the market anyway.
I don’t think Melvin Capital declared bankruptcy. Did they?
To the point about other stocks being affected, I’d like to know who’s money was lost by Melvin capital. Was it 401K money? That would definitely be an unintended consequence.
It’s not about declaring bankruptcy.
The liquidation of long positions in hedge funds causes a broader sell-off, as hedge funds sell their positions to cover their shorts.
This has caused a disruption in the market that’s happening for several funds at the same time, some of them that have nothing to do with Game Stop. So when several funds are selling off their long positions, including their biopharma positions, that stock is suddenly trading for less. All of these funds can only lose so much invested capitol before they trigger their own sell-offs, so there can be a ripple effect.
The money they invest is usually big bucks - pensions, endowments, foundations.
The shampoo explanation is helpful, but also obnoxious to assume women can only understand things if they're about shampoo or makeup. I don't know how to feel about it.
I think the stock market is pretty stupid anyway, so whatever. I just worry about people like my friend who are barely scraping by who got all excited because someone who did this invested $52k and ended up "beating the hedge fund and making $2.1M". And now she's going to throw her $100 in. Someone who had $52k to gamble probably still isn't in my friend's tax bracket.
The shampoo explanation is helpful, but also obnoxious to assume women can only understand things if they're about shampoo or makeup. I don't know how to feel about it.
I am feeling something about this, too.
But, this whole thing makes me feel so dumb. I get anxiety about investing and portfolios and medium growth funds or whatever because I have a hard time understanding. I know we can't all be experts at everything, but this is one of those areas in life I struggle with. I remember when we bought our first home, and it took me an embarrassingly long time to understand escrow.
This is impacting funds that have nothing to do with game stop. When major hedge funds have to suddenly dump (sell off) their entire portfolios because of something like this, it can cause stocks to tank in completely unrelated sectors.
My husband primarily invests in pharmaceutical companies, and he’s on the verge of shutting his entire portfolio down as a result of unprecedented losses this week.
UGH I was afraid of that.
Although anything is possible, in general people who invest for the long term do better than those who try to time the market based on short term fluctuations. Of course there will always be exceptions.
As a regular investor, if you diversify and don't panic when something loses money, historically you'll still be OK. (I realize if you're stuck in your own company's shares you may not be able to diversify immediately.)
ETA I want to be clear I'm talking about regular stock trading, not short selling. I think short selling is a bit crazy. It's like going to a casino and saying "I'm not going to give you this $20 that I'm holding, but I'm going to borrow some chips from you and maybe give it to you later, but if I lose you can have my house."
The shampoo explanation is helpful, but also obnoxious to assume women can only understand things if they're about shampoo or makeup. I don't know how to feel about it.
I am feeling something about this, too.
But, this whole thing makes me feel so dumb. I get anxiety about investing and portfolios and medium growth funds or whatever because I have a hard time understanding. I know we can't all be experts at everything, but this is one of those areas in life I struggle with. I remember when we bought our first home, and it took me an embarrassingly long time to understand escrow.
I think the reason so many people are struggling to understand this specific situation is because it doesn't make a whole lot of sense. It goes against the logic most of us use. Most of the stock market does.
And most of us haven't been well prepared for things like mortgages, etc. @@@@ It should absolutely be covered in more depth in high school.