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The Game Stop Phenomenon - aka The Revenge of the Common Man

sharon sanders

sharon sanders

Editor-in-Chief & President
The GameStop Phenomenon? Some of Europe’s Most Heavily Shorted Stocks Are Rising

Last Updated: Jan. 27, 2021 at 11:40 a.m. ETFirst Published: Jan. 27, 2021 at 11:26 a.m. ET
By
Barbara Kollmeyer


Cineworld stock rose on Wednesday along with other heavily shorted European stocks.


As another dramatic day shaped up for the battle between retail investors and hedge funds in the U.S., shares of some of Europe’s most shorted stocks were climbing.

snip

The moves come as videogames retailer GameStop surged another 150% early on Wednesday. Shares have gained 1,864% in January as retail investors, organizing via forums such as Reddit’s WallStreetBets, sought to boost a group of heavily shorted stocks.

more..

https://www.marketwatch.com/article...ocks-are-rising-51611764801?mod=mw_latestnews

------------------------------------------------

Reddit Traders Bludgeon Melvin Capital in Warning to Wall Street

3 hours ago

------------------------------------------------


snip

A popular rebellion, organized by the powerless against the powerful. It might have failed in Washington, but it certainly seems to be working on Wall Street.

Driving the news: The market value of GameStop closed at more than $10 billion on Tuesday, on record volume of more than $26 billion.
  • The winners: A ragtag group of traders from Reddit and TikTok, led by a man calling himself “Roaring Kitty.”
  • The losers: Hedge-fund short-sellers wh0 are learning John Maynard Keynes's lesson the hard way — "The market can remain irrational longer than you can remain solvent."
How it works: Thanks to Robinhood and other stock-trading apps, trading options in GameStop (or BlackBerry, Bed Bath & Beyond or any other smallish company Wall Street traders have bet against) is easy, fun, and carries an irresistible commission of exactly $0.
  • Giant hedge funds like Melvin Capital now find themselves at the mercy of thousands of small investors using the internet to coordinate their buying attacks.
The bottom line: Short-selling — betting that a company's stock is going to fall — is a crucial element of efficient markets. But, thanks to Reddit, it has also never been more dangerous.


https://www.axios.com/gamestop-stock-market-0689e407-d1a3-4947-b4b5-5aef23c72acf.html
 
The instability, the regulatory cloudfront taking shape...a very bad day could be coming soon.

https://www.msn.com/en-xl/money/topstories/bad-words-lead-to-gamestop-shares-plunging/ar-BB1da1Tc
'Bad words' lead to GameStop shares plunging
22 mins ago
After some frenetic trading activity, Reddit moderators closed the WallStreetBets forum to make adjustments after it was blocked on chat app Discord due to obscene content.

https://www.bloomberg.com/news/arti...onitoring-gamestop-market-activity-psaki-says
SEC ‘Monitoring’ GameStop Frenzy as Warren Pressures Regulators
By Jordan Fabian and Jennifer Epstein
January 27, 2021, 12:34 PM CST Updated on January 27, 2021, 4:36 PM CST
  • SEC says it’s ‘assessing the situation’ with other regulators
  • Retail investors have driven surge in shares, squeezing shorts
...
“For years, the same hedge funds, private equity firms, and wealthy investors dismayed by the GameStop trades have treated the stock market like their own personal casino while everyone else pays the price,” Warren said. “It’s long past time for the SEC and other financial regulators to wake up and do their jobs -- and with a new administration and Democrats running Congress, I intend to make sure they do.”
Warren’s comments came after White House Press Secretary Jen Psaki said that Treasury Secretary Janet Yellen and Biden’s economic team were watching stock market activity around GameStop and other heavily shorted companies.

https://www.msn.com/en-xl/money/oth...after-being-mistaken-for-gamestop/ar-BB1d9Ynd
Australian stock surges after being mistaken for GameStop
AFP
1 hour ago

A little-known Australian mining company saw its share price soar as much as 50 percent on Thursday, after investors appeared to mistake it for the similarly named cult US stock GameStop.

GME Resources Limited -- listed as "GME" on the Australian Securities Exchange -- surged in early trading, with the market taking an unexpected interest in the tiny Western Australia-based nickel miner.
 
Hope we don't have a Jay Cooke/Panic of 1873 situation brewing. Bad times usually only hurt the vulnerable.

https://www.wsj.com/articles/several-hedge-funds-stung-by-market-turmoil-11611842693

Wall Street Hedge Funds Stung by Market Turmoil
The pain that has afflicted Melvin Capital Management and Maplelane in recent days is spreading
By Juliet Chung Updated Jan. 28, 2021 5:48 pm ET

More hedge funds are being hit by losses on the recent market turmoil.

Traders say the pain that has afflicted top hedge funds Melvin Capital Management and Maplelane Capital in recent days is spreading, as an increasing number of stocks with significant short interest surge and as funds dealing with losses pull back their exposure to the stock market on both the long and short sides of their portfolios.

That means funds are getting hurt even on previously profitable bets on companies as other funds exit their investments in the same firms. The pain is largely being caused by the broad market turmoil and not one specific stock...
 
This is a good article that explains why trading had to stop at some brokerages. See "Why did Robinhood stop them?" about the T+2 settlement system. What it can't explain is who was buying GameStop when the Reddit traders were shut down. There's some sort of dark money involved. Whether it is something like this or just legal "intra-fast money warfare", I would not want to have money I needed at stake in this.

(My highlights in purple.)

https://www.bloomberg.com/opinion/a...d-are-on-both-sides-of-gamestop?sref=qStSw5ze

GameStop Stock Game Got Stomped

Retail flows, clearinghouse margin, short sellers, lawsuits, Roaring Kitty and Nottingham.

By Matt Levine
January 29, 2021, 11:06 AM CST

Matt Levine is a Bloomberg Opinion columnist covering finance. He was an editor of Dealbreaker, an investment banker at Goldman Sachs, a mergers and acquisitions lawyer at Wachtell, Lipton, Rosen & Katz, and a clerk for the U.S. Court of Appeals for the 3rd Circuit.
Read more opinion Follow @matt_levine on Twitter

Who’s buying GameStop?

....

The … near total prohibition on retail buying? … didn’t hurt it as much as you might expect. (After the close, Robinhood “said clients would be able to make limited purchases of some of the companies that it blocked, but did not provide further details,” and the stock rallied; it opened at $379.71 today.)

So that’s a little weird. One natural conclusion to draw from it might be, well, maybe a lot of the move in GameStop’s price was not caused by retail traders on Robinhood and Reddit, but by professionals, hedge funds and proprietary trading firms and professional day-trading shops. When retail buying was shut down, other buying continued.

Here is some suggestive data on that. Many of the big retail brokerages, including Robinhood, route a lot of their customer orders to Citadel Securities, so it ends up seeing a large percentage of retail trades in U.S. stocks. It can see if retail traders are mostly buying or mostly selling or mostly pretty balanced. You might expect—I certainly expected—to see that retail traders were buying more than they were selling this week. The stock seemed to be rocketing up on frenzied retail sentiment, and the posters on WallStreetBets were all claiming that they would never sell and keep buying until it hit $1,000.

But here’s what Citadel Securities’ retail flow looked like in GameStop this week:...
 
APMEX, who is one of the largest online metals dealers, posted this notice today:

Click image for larger version Name: apmexnotice.PNG Views: 1 Size: 62.5 KB ID: 905718
 
Sharon, the short squeeze move on silver, if successful, will have dire ripple consequences across the entire globe. Silver is a commodity (meaning there is lots of it and it is used widely). It is also very useful, in many areas, beyond just jewelry and as a financial instrument. Almost all IT uses silver, medicine uses silver, industry uses silver, space, avionics, heck even pool sanitization can be a user of silver.

If a silver short squeeze pushes silver beyond an affordable threshold for industry use, we will see everything affected in a cascade which will extend well beyond just silver.

Remember though, if this happens, it is the big players who have been pushing silver as a short, well below what is actually realistic (due to being greedy), that creates the situation where a squeeze can happen that results in the opposite, value goes well beyond realistic levels. When this happens to a companies stock, only the direct players are affected. When it happens to a physical and useful commodity like silver, the entire world will feel the impacts.
 
When you have the wealth gap at these levels, protected speech only for mantra speech, and laws that, apparently, only apply to the masses
- anything can happen.

The power elite have pushed things too far and now...well...I don't know what is going to happen.



 
Last edited:
https://www.reuters.com/article/us-retail-investing-robinhood-debt-exclu-idUSKBN2A13HG

Retail February 1, 20211:46 PMUpdated 12 hours ago

Exclusive: Robinhood explores raising more debt to fulfill Reddit-fueled order frenzy - sources
By Sumeet Chatterjee, Anirban Sen, David French
(Reuters) - Robinhood, the U.S. online broker that has emerged as a gateway for amateur traders challenging Wall Street hedge funds, has held talks with banks about raising $1 billion in debt so it can continue to fulfill orders for heavily shorted stocks, according to people familiar with the matter.

The capital raised would be separate from the $3.4 billion in financing that Robinhood announced on Monday it had secured from its investors since Jan. 29. It reflects the financial pressure that last week’s Reddit-fueled frenzy in shares such as GameStop Corp placed on the company, prompting it to restrict some trades....

https://finance.yahoo.com/news/alphaomega-advisors-peter-cecchini-on-gamestop-191110147.html
Wall St. strategist warns on GameStop: 'There's not an infinite pool of greater fools'
Julia La Roche?Correspondent
Updated Mon, February 1, 2021, 2:13 PM
AlphaOmega Advisors founder Peter Cecchini, the former chief market strategist at Cantor Fitzgerald, expects “the fantasy narrative” surrounding GameStop's (GME) surge “reverts to reality” at some point.
...
Cecchini has long felt that the markets have been “somewhat dysfunctional for a while.” He highlighted monetary policy accommodation and fiscal policy coordination that's helped companies extend and amend their obligations, making folks unconcerned about default risk and thereby boosting equity valuations. What's more, fiscal policy in the form of direct deposits into personal checking accounts has found its way into the stock market, primarily via no-fee trading apps and the ability to buy fractional shares.
...
“You can't expect to trade your options for no fee if there's not a trade-off, that trade-off is that the market-makers see the flow, period. So, look, I think it's all about to unwind, I really do. I think it's just such a mess at this point that, that game is over,” he added.


http://www.fiendbear.com/Curmudgeon372.htm
Mania in GameStop and AMC the Most Irrational of Irrational Exuberance Seen So Far
By the Curmudgeon with Victor Sperandeo
 
Greed is good sometimes - if you aren't the one left holding the bag.

https://www.buzzfeednews.com/article/laurenstrapagiel/wall-street-bets-gamestop-hype-saved-dogs-life

The WallStreetBets GameStop Hype Saved This Dog's Life

By getting in and out at just the right time, a Texas man got enough money to pay for his dog's surgery.

Lauren Strapagiel BuzzFeed News Reporter

Posted on February 2, 2021, at 5:25 p.m. ET

The people who have bought up GameStop stock thanks to the r/WallStreetBets subreddit have been portrayed as many things — mainly greedy, anarchistic, and chaotic.

But that doesn't paint the full picture. Take, for example, the guy who just wanted to save his dog's life.

Patrick Delgado, 33, works in construction in the Dallas–Fort Worth area. His best friend is his 2-year-old American bulldog named Satoshi Nakamoto, after the founder of bitcoin. He goes by Toshi, for short...
 
https://www.medscape.com/viewarticle/945388

Med Student Uses GameStop Stock Profits to Help Community

Laura Arenschield
February 05, 2021

A second-year medical student who quadrupled his investment during the frenzy involving GameStop stock in January used some of the profits to help a children's hospital in his city.

Aaron Schmid, a student at Marion University in Indianapolis, had been playing the stock market for a few years, hoping to boost his retirement savings. This despite the fact that he's already paying thousands of dollars a month on his student debt. Schmid, 30, was a pharmacist before going back to medical school and already had about $200,000 in loans from that education. He estimates his total student debt will reach nearly $500,000 by the time he's finished.

Although he certainly could have used all the stock profits himself, Schmid says giving back is important to him. "If I'm blessed with that money, then I need to pay it forward," he said.
...
Schmid had been a member of WallStreetBets for a few months. He had made a little money on another stock and figured, "why not give GameStop a try?" He invested $3000. The last week of January, that $3000 turned into $15,000. The Reddit group collectively advocated for everyone to hold their stocks, but Schmid said he couldn't justify it. "I get their logic, but I'm in med school and I've got a ton of debt and I'm not making any money," he said. "I have to be smart with my money — we have bills to pay."

Schmid is a religious person. His educational institution, Marian University, is a private, Roman Catholic school. He said his beliefs prompted him to give part of the profits away. He had seen a post on the Reddit community from another user who donated a portion of their GameStop profits, and that helped inspire him, too...
 
https://www.youtube.com/watch?v=FDFVD-wsHbI
CNET
2.98M subscribers
Watch the best clips from the congressional hearing on the GameStop short squeeze. Members of the House Financial Committee question Robinhood CEO Vlad Tenev, Citadel CEO Kenneth Griffin, Melvin Capital CEO Gabriel Plotkin, Reddit CEO Steve Huffman, Jennifer Schulp, Director of Financial Regulation Studies at the Cato Institute, and 'Roaring Kitty' himself, Keith Gill.
 
I watched the testimony of "Roaring Kitty". It was fascinating. He had been out of work for two years. I think the 2008/2009 recession caused a lot of suffering - especially in people who were coming into adulthood. I believe that recession is responsible for the wave of socialism that is so popular now among young adults. Millions of them saw their families lose their jobs and houses. Capitalism has not worked for that age group. In addition to their families losing their homes, their parents were not financially able to assist with technical/college education so many millions took out student loans. In an economy where the middle class is being squeezed, these young adults are looking more and more for government to address these inequities. My generation has a serious distrust of all governments, but this younger generation trusts government to provide a more fair environment than natural market forces provide.
 
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