Wallstreet vs. The People
Too Big To Lose a Trade!
Yesterday I told you about a developing story, a Reddit group started buying up stocks that Melvin Capital and other hedge funds were shorting. If the price goes up the hedge funds lose their trade and in one case they had shorted not only more than they could cover, but they also shorted for more than what their fund was worth putting them in an insolvent position.
The story spread across the Internet and more people started buying the stocks the hedge funds were shorting. Causing liquidity and solvency problems for these large hedge funds it briefly appeared that average every day people were going to be able to win a trade and "Long" out some hedge funds.
Today's update is Robinhood and other exchanges that were hosting these trades just stopped allowing average people to trade these stocks. Meanwhile, the hedge funds are free to make trades.
Robinhood confirmed that it has placed restrictions on several stocks due to volatility. “We continuously monitor the markets and make changes where necessary. In light of recent volatility, we are restricting transactions for certain securities to position closing only, including $AMC, $BB, $BBBY, $EXPR, $GME, $KOSS, $NAKD and $NOK. We also raised margin requirements for certain securities,” the blog post read.
The fight isn't over yet, there has been a lawsuit filed on Robinhood.
While the movement to Long the trades has been apolitical, mending anger between political groups.
The edge for the Hedge funds comes with it's political power.
Source:
Keep an eye on this situation it is a revolution of sorts!
Since my exposure on Wall St. is very small, I am late getting to the heart of the Game Stop story, but honestly... I'm finding a smile in it all. Especially since my old 401k plan took a beating twice years ago, due to the criminality of big players in the market.
Hardly living up to the name of Robin Hood. I'm glad there is finally a bit of a reality check to this con game of unlimited naked shorts bullying retail traders and targeted companies.
As I noted elsewhere, it's ironic that mega corporations like WalMart can cause the demise of thousands of mom-and-pop businesses, but when "the little guy" finds the leverage to strike back with similar tactics... suddenly the mega corps cry foul and call for legislation.
I notice you used the tage #doge, so there's another story in the making... the cryptosphere's long standing "joke" coin suddenly has a market cap in excess of $7 billion!
=^..^=
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Interesting choice of topic @whatsup
Issue around Gamestop definetly brought so much attention to stock markets and exposed some real issues.
I've been wondering: would it be possible and profitable to open short positions on gamestop right now, while price is so high and assuming that very unlikely it will still grow much?
Could hedge funds make billions by shorting it right now?
What do you think?
Cheers, Piotr
It's a highly manipulated stock in a company that has had a lot of issues, anythings possible, but I wouldn't touch it as an investment.
I could see people choosing to hold it for a statement.