Here's what oh-so-many people are missing: the gigantic volume in these stocks is no longer coming from the WSB YOLO bros who know they'll lose money but think that's worth it to stick it to hedge funds. That may well be who was getting into the stock on Monday and Tuesday. But now it is people who saw the story on Good Morning America, having never previously heard of WSB or Robinhood, who don't care about hedge funds or any of that, but just got the impression from the news that hey this stock is going way up and that must mean it is a way to make a quick buck. And those are the people who are actually going to get screwed, not the hedge fund managers, who will be just fine.

And what about all the people who watch MSNBC and CNBC and Cramer, do they need to stop pushing stops as good or bad too? They tell lots of people "who don't care about hedge funds or any of that, but just got the impression from the news that hey this stock is going way up and that must mean it is a way to make a quick buck" too.

None of this could have happened if they weren't shorting GME at 143%+ of float. They were greedy, this is the consequence. In 2006-2008, they ALL were greedy and so the government had to bail them out. No lessons were learned. If the SEC wants to do something, remove these instruments that allow infinite leverage and collapses.

They were greedy, they over leveraged their positions, and when the market called them out on it exactly like it’s supposed to, they just turned the market off. Im almost surprised someone hasn’t been arrested for that move yet.

We let big players partake in risky things like shorting GME above 100% float because we don't care if they lose. It's the same reason we allow them to invest in companies like Theranos. They know the risks they were getting into and will still be fine without a extra 0 in their bank account. Regular followers of WSB are aware of the risks as well, so I'm fine with them attempting a short squeeze. The problem is that they're encouraging regular people to join their crusade against hedge funds who are most likely going to time the market incorrectly. What's worse is that most of the world, including politicians are cheering them on.

Except hedgefunds only trade money from accredited investors, i.e. people who can afford to lose a lot of money. They also typically aren't swayed by TikTok videos and short explainers of how shorts work designed to hype up GSE. The point is that Robinhood investors are being exploited.

Can you explain how you're disagreeing with me?

I disagreed with the statement about WSB users knowing what they're doing. Upon closer reading I think our larger points are the same. All over the internet I'm seeing sleazy promotions for GameStop stock targeted at young people who are inexperienced with trading. Anyone left holding GameStop stock when this ends will lose a lot, i.e. most of WSB.

Then you haven't been paying attention to WSB. WSB knows full well they will lose everything. We call it Loss Porn and it gets us going. When you see 5,6,7 figures in losses you get desensitised to it. It's a casino, yes we sometimes make money, we call that the first time, you know, the first one is free.

Besides the jokes and the memes, Chamath went on CNBC and argued that WSB provided very good due diligence in some instances. Yes a lot of it is utter garbage, no doubt, but when there are specialists there able to call each other out, you get to see good analysis.

What a lot of you are missing is that this isn't happening within your little WSB playground anymore. It's just a regular stock frenzy now, it's not even really all that relevant anymore how it started.

I agree, unequivocally, my comment was meant to point the parent comment is filled with ignorance.

Haven't been paying attention... It must not be in the news, right? This is more of a niche interest, not getting any attention. Hard to pay attention to. You really have to be focused on WSB subreddit to know what's going on, right? It's really a few key people understand it. Anyways, yeah, GameStop is a great company with a great stock and some evil hedgefund is going to lose billions for trying to manipulate the price!

And that is a straw-man, I never claimed any of what you are accusing. You have nothing to say, so you twist the words. Quite sad actually to see this in Hackernews of all places.

I claimed that if you have your information about WSB from anyone but yourself, you have most likely been duped in some way or another and that is evident by how you talked about WSB, full of ignorance.

> Anyways, yeah, GameStop is a great company with a great stock and some evil hedgefund is going to lose billions for trying to manipulate the price!

Nobody said GME is a great company. What are the odds the proletariat on reddit throwing money into the fire pit in an attempt to hurt the rich is attempting to con you, and what are the odds somebody who stands to lose billions and already lost is?

gmedd.com, or you know, do your own DD.

No one who has been in WSB for a while wants the publicity, believe me. No one who has been around views this as some noble moral crusade. But WSB went from <1M subs in 2019 to 2M by end of 2020, to 6M now. We didn’t magically orchestrate it, they flocked to WSB after every media outlet in the world mentioned it for a week+ straight since Gamestop happened. Its an open forum and we don’t decide who joins, or when, or what they post. When 4M new people show up in a sub of 2M in a week, its Theseus’ ship twice over at warp speed.

Yep, this is my point, not that it's necessarily WSB's fault that a bunch of regular people are jumping on a bandwagon and going to get screwed, just that it is happening and is bad. I think it is more the fault of mainstream news editors and Elon Musk than of WSB regulars.

You're mushing together two separate issues. Shorting GME at 100+ is not in itself a problem. (There's an argument that it dilutes the stock, makes it harder for the underlying company to turn around, because market sentiment is already against them, see investment reflexivity theory, etc.)

There's a problem with bailing out big companies again and again. While not bailing out small investors (directly).

The other problem is that there's no real defense against CNBC/Twitter amplified end-user stupidity: https://www.youtube.com/watch?v=lMUtU0tOmNE

Every stock trading app/site/service requires submitting tons of "risk declaration" forms. (Sure, all of it is next next finish. It's the EULA/TOS all again, but with money.) And that's the problem.

I haven’t watched Cramer regularly in a long time, but unless he changed, this isn’t what he does.

He has an entertainment component, but fundamentally encourages people to educate themselves and manage a portfolio of stocks who choose to do so.

The mob bullshit we’re seeing now is just the new normal - brigades of internet idiots, motivated by profit or ignorance to run around like a drunken monkey. It’s no different than the political drama we’ve seen fomented by irresponsible social media like Twitter, Facebook, Reddit, etc.

CNBC / Cramer type stuff is pretty bad too IMO, but way less mainstream than network news talking about how a single stock is a rocket ship and making all these regular joes (just like you!) oodles of cash.

Greed is really only a problem when your actions ultimately hurt someone else.

In general, shorting stocks is a beneficial action because it helps prevent shares from becoming overvalued.

So, yea, the fact that GME had 143% of its shares shorted is a function of greed. But, no, greed in this case was not a problem so long as GME's share price was fairly valued.

Is "fair value" an objective metric in this context?

Yea, it's objective in the sense that it's the net present value of all future cash flow. Many unknowns in that formula, of course.

So it's WSB fault that the news outlets spun the narrative to confuse people?

Sorry, but hasn't the news spinning and generally misconstruing news stories to the benefit of their advertisers and financiers agendas been the issue the past few years?

What narrative? I've seen every possible article on the topic in the last two days. Every single narrative exists. Brilliant retail investors. David and Goliath. Idiotic YOLOing. Claims that Robinhood, etc are in cahoots to sabotage people. Claims that this isn't about the money and actually it is about screwing the rich. The squeeze is illegal/legal. The trading halts are illegal/legal.

There is clearly no coordinated agenda among news agencies here. It is a compelling story and a bunch of people wrote their hot takes on the topic.

What about my comment seems to say that it is WSB's fault? I didn't comment on whose fault it is and I don't care, I just think pretty much everyone is acting like the only two parties involved are WSB memers and hedge funds. And maybe that was true for awhile. But it isn't now, there are lots of unsophisticated people who have bought into the frenzy and in a few months all the stories will be about how those people got screwed. Meanwhile, both the WSB folks and the hedge funds will be doing just fine.

Nobody cares about the people who are "unsophistocated people who have bought into the frenzy", especially if they get screwed. Further, they shouldn't care about them because anyone who doesn't understand what's going on deserves to get whatever happens to them. Stock trading is high risk, high reward, and that should be clear to everyone.

The problem is that hedge funds constantly benefit from a much lower risk due to market structures designed to stabilize the market. Many of the WSB people are willing to risk a big large loss in order to reveal this flaw of the system. Many of them will not be fine, and, if they're successful, some hedge funds will be bankrupt and all of them will be scared moving forward.

> Nobody cares about the people who are "unsophistocated people who have bought into the frenzy", especially if they get screwed.

This is in fact exactly who most people care about, in this situation. It may not be who the extremely-online people that this board is mostly comprised of care about, but they are not most people.

> Further, they shouldn't care about them because anyone who doesn't understand what's going on deserves to get whatever happens to them.

This is directly at odds with how markets are regulated, because there is a long history of this thinking leading to widespread scams and cons.

The news has a long history of prevaricating. “Remember the Maine.” It is only recently that folks are waking up to what Chomsky spent a lifetime explaining. The awakening is accelerating. Assange and Snowden, the naked media lying in the 2020 election, and now Wall Street manipulation is being exposed. We never had a reckoning after 2008. If this becomes an infinite runaway squeeze. Who will get bailed out?

When you discover something like this on a nationally syndicated talk show, it is probably too late for you to get in on the action.

Yes exactly, but many people who discover things like this in mainstream media don't know that.

That's quite plausible, but where could we look to see if that was true?

One point of evidence is the massive influx of members to /r/wallstreetbets

The volume in the stock since this became the big news on Wednesday, and the performance of the Robinhood app in app stores.

I know people at work joining Slack conversations about this and asking how to set up an account and how to buy the stock, while fully admitting they don't know anything about stock and have never bought any before. From their comments, it seems like they just want to throw their money at this since it seems like a good bet.

Yep, of course that's what is happening. There is a story all over the news that reads to most people as exactly this: "this stock is going up and making everyone rich, you are missing out".

> But now it is people who saw the story on Good Morning America

Most of those people don't own stock and don't know how to buy stock.

And I would guess most of them tune out stories about stocks going up or down like they tune out commercial breaks or the business segment of news shows.

They don't know how to buy stock until they see the mainstream news say "download this app called Robinhood in order to buy this stock that will make you rich", which is why Robinhood rocketed to the top of the app store charts this week.

Most people do not tune out stories of the form "do this simple thing to get rich". It's the same reason endless coverage of the lottery gets good ratings.

Your mental model of how stock bubbles work is not accurate.

Why would shorting Gamestop mean making it to go bankrupt? The falling stock price of a company doesn't cause a company to go bankrupt, the causality is in the other direction. Putting downward pressure on price is useful only if you want to do a hostile takeover.

Because Gamestop is a business that is in the process of adapting to changing market conditions, which generally requires capital, and when market analysts go big on shorting in public it depresses stock price, and issuing stock is a major common method by which businesses raise capital.

As another example, lots of people assume Elon Musk got mad at short sellers because he took it personally, when in fact they were fucking with his ability to raise money he needed to ramp up production and meet manufacturing goals.

These things don't happen in a vacuum. Large funds making public bets against a company have a material impact on that company's liquidity.

Short-sellers are part of the free market. They are how the equation balances itself when trying to find the "true value" of a concern, or at least an approximation thereof.

Obviously the person who owns stock, or is set to earn billions when the share price reaches a certain level is going to be adversarial to someone whose actions result in the share price being depressed - even if that is the fair value.

> Large funds making public bets against a company have a material impact on that company's liquidity.

There are always bigger fish - and if the public bet is wrong, someone can, and will earn money at the funds' cost.

Edit: shareholders dislike shorts the same way employers dislike employees sharing salary information; it's a losing proposition for them, but a fair one.

I would like you to show me where this free market is, because it certainly isn't NYSE. The minute anything unexpected happens we're hit with trading halts, brokers riding the line of insolvency, SEC investigations, and congressional freakouts.

> Short-sellers are part of the free market

Not when they get to simply turn off the half of the market moving against them they aren't.

This narrative that GameStop is actually a good company and it's turning around despite all the short interest is pure bologna. Worse, it's intentionally misleading and often espoused by people who have a financial interest in the company. It's crazy to see people in this forum, who are typically tech forward, hype up the business model of selling physical copies of video games.

This is a common reaction to people who haven't followed Gamestop for a while. Cohen and RC Ventures bought in a while ago and have been pushing for the company to pivot out of the brick-and-mortar focus. This is why 'people who have a financial interest' are talking this way. Everyone involved recognized this would be an expensive proposition. Then the short sellers showed up.

I think focusing on how it hurt GameStop isn’t the right perspective here. I think it’s more about how greedy and over-leveraged the short holders were. When average Joe goes crazy over-leveraged, the entire world says “well duhh, you took a risk and now you have to pay.” But when a hedge fund does it, they get to just make a call to turn the market off for a few hours and try to bail out their shorts? The hypocrisy is stunning.

"Over leveraged" typically means you traded too much on credit in proportion to how much collateral you have, not that the trade is risky. A very large short position is reasonable for a company that is likely to go out of business.

I understand what over leveraged means. This was /also/ an incredibly risky short to start. I’m not convinced that GameStop was ready to go out of business. Struggling, sure, pandemic and all that, and that would justify a put position, but the market also reacted exactly how it’s allowed to and called out a short positions bluff.

I believe I learned the term Short Squeeze while holding Maxwell (MXWL) shares. I sold that position years before Tesla bought them, but one thing I recall is that there were a few people on the message boards that were pointing out how silly-high the short interest was, and that was, IIRC, in the 30% of float range.

As we all know, MXWL wasn't bankrupted, but neither did they thrive on their own. GME also has 4 times the short interest that those people were talking about. It also lacks a trove of patents that are worth something even in a fire sale. In fact the only thing they really have, IMO, is ThinkGeek, and the last time I looked they had fucked that up by merging its catalog into their own hamfisted storefront.

Honestly, given the current generation of consoles, I think they may be better off rebranding as ThinkGeek and having a Gamestop section at each store. We'll see if the new guy has any ideas like that.

which is all illegal and there is no indication that was happening with Gamestop

Well your average Joe buying stocks with his hard earned money and then doing whatever he wants with them is not illegal too, but that's being debated by the parties with the appropriate interests.

I think what really turned up the anger level on this specific instance is that they just turned the market off when it didn’t go their way. That’s just such a colossal breach of trust.

> What's funny is how the HN community tries to defend the firms they've whined about for years.

Aren't you over-generalizing just slightly? Even in a post with many comments, only a small number of community members (if this is a community at all) post anything. And not a huge number vote, either.

I noticed this recent trend of stuff turning annoying political in that sub. There is so much trash being posted now drowning out useful DD. I think at the end of the day, the original WSB crowd cares way less about political statements and solely making money.

Correct me if my understanding is wrong, but more than a political statement, this seems to be indeed a way to make the most money possible. Political tones are a satisfying sprinkle for many, but what everyone understands there is the more they hold, the higher the value gets. We will be able to judge by the result shortly.

According to the best evidence, Melvin has no short position (they may even actually be long now). So the entire WSB narrative is a lie being used to pump up the stock. The subtleties matter here.