This is true. But if you read Reddit and Twitter this week, everyone is making the case to buy and hold to put pressure on short positions. This is an illegal short squeeze.

I can't find any evidence that a short squeeze is illegal. (https://duckduckgo.com/?q=illegal+short+squeeze&t=ffab&ia=we...)

Also: If a big hedge fund shorts a stock, expecting to drive its price down, that's cool. (Search "big short drives down stock price")

But if regular people buy a stock expecting to drive its price up, that's terrible.

Sorry, this position just isn't credible.

Shorting in and of itself has a builtin risk/reward scenario. You're betting on the company's future performance. What's happening here is that people saw that some investors went overboard with shorting, so they started pumping the stock in order to extract money from said investors. Nobody actually cares about Gamestop's actual worth as a company, it's just a metagame effectively. Once the play is over the stock will collapse back.

I don't know if it is or should be illegal but I can see why it raises some questions.

> Shorting in and of itself has a builtin risk/reward scenario. You're betting on the company's future performance.

No, you're betting on the stock's future performance, not the company's future performance. There's an ocean of difference between the two.

If the company does poorly, but the stock price rises, or stays the same (Say, because we're in the middle of a COVID recession, and the printing presses are working overtime), you're going to lose a lot of money.

> Nobody actually cares about Gamestop's actual worth as a company, it's just a metagame effectively.

How do you know that everyone who bought it actually doesn't care about Gamestop's worth? There isn't really any way to prove that every single person (or even a majority of people, or really even a good portion of the people) don't care about GameStop's success and are solely doing it as a metagame.

Well there's the rub, we do need proof and that takes investigation. It's obvious what's going on but we will need to wait for whoever is conning this to leave a trail. It's just a matter of time.

What proof? I'm serious here.

Sure, there's threads on WSB about this, but there's no real way to tie that to actual transactions, and not everyone who has bought stock even contributes to that subreddit, let alone the specific threads about this.

Furthermore, all it really takes is someone saying "I bought stock because I believe in the company". We don't have thought police; unless someone explicitly posts "I, RH account XXX, bought the stock in a concerted effort to short it" there's no real way to prove intent.

I've no idea if any proof can be found in this case. I just know that if someone has won big off this they're likely to continue doing it until caught.

What's wrong with buying a stock you like and never selling it because you like the stock itself? Etherum's NFTs are entirely built around this idea.

What statutes establish the criteria for manipulation?

I heard (from a non-authoritative source) that the coordination on reddit, etc. is not manipulation.