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Acerbatus posted:It's possible that they're just doing it because they're in with rich people or whatever; But they stand to actually lose a lot of money themselves if they don't save people from their own stupidity. They are financially tied to a company that has shorted GME to a dangerous extent. They're using the convenient excuse in the hopes that they avoid their just deserts. Same thing with selling the margin shares - they stop people from buying, knowing that buying on their platform is one of the biggest things holding the price up, and then margin call people when the price drops as a direct result of that action. In a sane world they'd all go to jail and never get out, they're essentially stealing an insane amount of money. If they wanted to claim fiduciary responsibility, they would have had to force the sales they eventually margin called at the same time they stopped buying, because they knew they were single-handedly, inevitably causing the price to hit the trigger. Waltzing Along posted:Ok...so people are buying as much as they can no matter the price because when the hedge funds shorts come due, the holders will get to sell at whatever the new price is, guaranteed? This is mostly correct, except plenty of people are going to lose money. Some people will have bought high and not sell before the hedge funds have bought enough and the market crashes, and it's almost certain GME will never hit this kind of territory every again. It'll go back to its natural progression of a slow inevitable decline as the market they're in disappears over the next decade or two. People who bought the stock a few months ago are almost completely risk-free - if it craters, it's still going to wind up going to $20 or whatever it should be without the pressure from the shorting. They might not actualize their gains, but they aren't actually going to lose their initial investment. Someone buying at $300/share can potentially see it drop to $20 and never go up again, and there will inevitably be people that happens to. Right now it seems like other financial companies are happily loaning the people trapped in the death spiral money because the government has always bailed out this idiocy before, but this has grown big enough in the public eye before the government has an opportunity to act that they probably can't act without starting a loving civil war. IMO this is the story of the decade, it's a crazy once in a lifetime event. K8.0 fucked around with this message at 04:27 on Jan 29, 2021 |
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Jan 29, 2021 04:19
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| # ¿ May 15, 2024 08:07 |
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The bit you're missing is that short sellers pay daily interest based on the price of the stock. In a case like Gamestop, the people lending to short sellers may agree that the stock will go down, but their assessment is that it won't happen as fast as the short seller hopes. Even if the stock goes down, if the short seller winds up paying them interest that is greater than the difference between what the stock was lent out and and what it was returned at, they win. Also, it's not that the entire industry was certain that Gamestop was in a death spiral. It's more that it was a fairly safe assumption that Gamestop would continue to decline, so one or more hedge funds made a sizable bet on it. Hedge fund managers are still human, they still engage in herd behavior, so lots of others did the same thing, and they collectively wound up shorting more stock than they could easily buy back, through a combination of laziness and greed. As they approached and passed the limit, the bet went from very safe to very greedy to an outright guaranteed loss if enough money noticed and was willing to take the opposing position.
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Jan 29, 2021 16:09
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