I disagree with your assessment, these brokers are preventing purchases of these stock, there is no risk for the broker in this regard.
I don't even have a Robinhood account and it is now guaranteed that I will never use Robinhood in my entire life because they are total scumbags.
I don't have a Robinhood account either. They are plenty of reasons why I would avoid doing business with that company. I still don't think this is as bad a business move as some people here are claiming.
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Something insane is happening, claims of market manipulation are flying, Congress is saying they're going to investigate, what started as a meme is suddenly picking up more daily volume than SPY...
There's going to be a bloodbath, and their options are:
- do absolutely nothing, watch people get slaughtered. This is what they normally do!
- start removing yourself from the blast radius and pop the bubble, watch people get slaughtered.
The second case still hurts people, it's not some benevolent thing they're doing! They're doing it because it covers their asses a bit.
Because this time with all the tricky stuff happening with claims of manipulation, the insane volatility, the insane publicity, and most importantly the insane volume, they're afraid they might be opening themselves up to some sort of liability.
sec.gov/rules/other/2013/34-69013.pdf
Broker-dealers aren't supposed to hold your hand, but there is guidance that they should provide some meaningful sort of hand rails for retail investors.
Usually they make money either way and sit back, but this time the same way the masses have been concentrated at a stock ticker, the masses (and Congress) could end up concentrated at their door step asking why they let this happen...
They'd rather have AOC threatening to ask why a stock that's been spiked %1,400 in a month was deemed too high volatility for clients than the SEC asking why they let so many people take a bath on a meme gone wild...
Yes, lets do them a favor by destroying the value of their life savings they just invested.
>The problem for these brokers is when this musical chairs dance stops, retail investors will be holding the bag. Full stop.
Are you new? That's the entire reason wallstreetbets exists in the first place. It was always about losing money on purpose.
Comment pointed out that this hurts retail investors badly. I literally attributed an almost 50% drop to their actions.
But it covers their asses, and it reduces the number of people who can lose their life savings with them. Note the "with them" part
> Are you new? That's the entire reason wallstreetbets exists in the first place. It was always about losing money on purpose.
Are you new? WSB has always had clueless people trying to ride it's coattails, there's the "As and the Rs" for a reason. That's why it used to go private even more often than this.
My comment explains like 3 different ways that the people who did this made a YOLO with "fuck melvin" in mind don't care.
But there's suddenly an entire clueless public trying to clutch onto it, and they don't really know or care what Melvin and yolo and WSB are, they just see a ticker keeps going up because of those reddit guys
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You should read comments before you reply. It's a lot of words but if you're willing to take the effort to reply, take some effort to read.
I didn't talk about any actions of any brokers yesterday or hedge funds yesterday, and besides, do you think a hedge fund has a HN account?
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Also, hate rationale discussion much? You couldn't refute a single thing I said, the brokers can do something that: I don't like, was self-serving, and good for shorts... but was also the least damaging call for retail... all at the same time.
It sounds like you're taking a bath because you didn't respond to the most blatant sell signal I've ever seen in my life and looking at someone to lash out at...
Pro tip for next time: If your plan works because people are buying and holding... if they can't buy it's probably going to go south.
It was a lose lose situation, the point of halting buys is to stop the pump... if it didn't stop the pump they would have halted the stock.
In fact if GME breaks out and doubles again count how long until it gets halted period for an "investigation".
Everyone was playing musical chairs and the music stopped. Don't get mad at me because you didn't try and find a seat.
https://www.sec.gov/rules/other/2013/34-69013.pdf
SEC has already started providing guidance on that loophole. They're not a fiduciary, but there's a want from the SEC to have their operation start to be more in line with if they were one ("harmonization")
After all RH does advertise popular stocks, they put out news branded digests of the market, it does show users gamified views of things like options, they have an entire "learning platform" meant to guide you through the market.
It's not an investment advisor, it doesn't have a fiduciary duty but the SEC wants broker-dealer behavior to better reflect the fact that retail investors assume that the platforms they use to trade are aligned with their financial goals
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So disclaimer: I was holding large amounts of GME and AMC and sold this morning as a direct result of this news.
But I really don't get why people are so shocked.
People who started this wanted to buy and hold until shorts are kill.
Then people who heard about this plan after it started working joined, they still wanted to hold but their reasoning was starting to get a little removed from the original goal. This group is slightly bigger than the first
Fast forward a few days and suddenly this stock that just keeps going up by hundreds of dollars a day is in the news, people don't quite get what's happening, but it looks like a magical money fountain. And as a bonus this magic fountain is a big FU to the man? Sign me up! This group is exponentially bigger than the first, and exponentially less understanding of why this is happening.
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At this point retail money is flooding into this stock left and right, and people are starting invest money they cannot afford to lose.
The problem for these brokers is when this musical chairs dance stops, retail investors will be holding the bag. Full stop.
But more importantly, those clueless people just buying GME because they have some vague idea of "it goes up" and "we're rebelling" are going to lose their shirts. The people in the first group who were doing this for the principle of it and as a YOLO don't really care, it's "fuck Melvin" all the way...
But the people in the last group are going to feel blindsided.
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This feels like damned if you do, damned if you don't. The action of trying to insulate these people from losing their money will actively make people lose money. The dip to the low $130 was directly caused by the actions they're taking.
But on the flipside, imagine what would have happened during the rally to $400 this morning. We likely would have seen another breakout that puts all options ITM...
The fact is, the dance will end. The idea is buy and hold... but for the newest cohort there's an implied "until the money fountain stops".
And the higher the share price is when that happens, the more it will hurt. (and make no mistake, some hedge fund might be hurting, but the big guy can navigate this. If it takes making Congress halt these stocks they'll do it)
This has been a fun ride, and thrust the insane inequality of our financial systems for normal individuals and cash flushed "institutions" into the spotlight... but I can't pretend I don't understand why it's happening.