Yep, it's really great that markets can create speculation that are not tied at all to the fundamentals of a security. That doesn't create bubbles, volatility, or open the door for endless shenanigans at all.
Sorry to be a bit snarky, but fad-based bubbles are not what markets need. They don't need social justice either. If you want to trade stocks, do some research and invest wisely for the long term. I am personally weary of 24/7 outrage.
Who are you to arbiter who gets to trade stock and on what terms? Isn't this play literally about fundamentals? The stock was undervalued and overshorted so Redditors saw an opportunity to crowd source a short squeeze. WallStreetBets is full of jokes and memes, sure, but there's also consistently top voted posts explaining the logic and due diligence behind GME. There's nothing untoward happening here except the insane outrage and hypocrisy of Wall St CNBC types.
I'm not American so I don't know what CNBC's coverage is like, but I'm not seeing any outrage or hypocrisy from the Financial Times, the Economist or the various Business sections of Irish media outlets. Maybe I'm missing something.
The worst I've seen is maybe a paternalistic attitude of "some inexperienced day traders are now at risk of being taken for greater fools," which I find hard to disagree with, to be honest. Or else they're slightly sniffily pointing out that short selling is not inherently immoral, and that many Wall Street firms are actually delighted with the windfall in fees from all this extra market activity.
Now, not only is the stock market all f'd up, we gotta listen to one inane story after another about a market riot.
Not only that, you gotta now worrying if your investments will suddenly and inexplicably become the target of some online mob's ire and get spiked for absolutely no reason. And don't be fooled. These things will absolutely be gamed by botnets, astroturfing, and smear campaigns until kingdom come.
It's just another landmine that makes the whole background of life suck even more.
But yeah, let's get them CNBC types! Burn it down!
You're all over the place. GME is a black swan aberration borne out of current market conditions BECAUSE of hedge funds and institutional players. Retail investors involved in short squeezes like GME are not going to cause a crash.
In fact, I would argue the GME episode has made life suck a lot less for plenty of people - some made money but a lot of people have just had fun laughing, making memes, and putting some money in because, well, what else are you gonna do? The stock market is not F'd up because of retail investors. What should we do - just sit on our hands and hope the free Ford stock Robin Hood gave us goes up? Why not have fun and dream a little and learn about the market in the process?
Lol it’s not the people on Reddit’s fault for exploiting an opportunity. Maybe your anger should be directed at the hedge funds who were shorted 140% OF AVAILABLE FLOAT. Wanna know where the instability is coming from? The hedge funds don’t want to pay up and lose money. Redirect your anger towards the proper people.
> Yep, it's really great that markets can create speculation that are not tied at all to the fundamentals of a security. That doesn't create bubbles, volatility, or open the door for endless shenanigans at all.
Speculation is a huge part of the market, and "sophisticated investors" take part in it all the time. Tell me why certain popular tech stocks are trading at P/E ratios of more than 1000, or pulling in negative income year after year. Be sure to justify your answer using "fundamentals".
Do you think that I think that that is a good thing? Speculation is good for a lucky few and very bad for lots of people when it goes off the rails. Which is the whole point of having governing bodies regulate the market.
Are you proposing that we rein in speculation in a wider sense? Then please, sign me up! But let's not do this with mobs and all the screaming, please.
I don't think it's that simple. Of course the Gamestop situation is a unique one, but speculation is the entire point of the stock market. You can justify (and lower) the risk you take by examining fundamentals, or by investing in "safe" funds, but you are always speculating that the price will eventually go up and not down.
An example: One could argue that TSLA's current price is almost entirely speculation divorced from current fundamentals. Are you sure it will be "good for a lucky few and very bad for lots of people when it goes off the rails"? It's possible, but what should we do about that? Restrict people's ability to trade TSLA?
In the case of Gamestop, I agree with you, it will be bad for lots of people who get in late. I think more people should be informed about risk before entering the stock market, but I don't know if I agree with you that we need more government regulation in the market to do this. What would that look like?
>It would be hard to see how anyone was hurts by GME speculation or organized buying.
That's because the they still in the pump part of the pump and dump scheme.
People buy Tesla because they think its worth even more. Everyone who has thought about it for more than a second understands GME is not worth 22 Billion dollars.
So the people who are buying now are going to collectively lose a ton of money when it inevitably crashes back down to 8 bucks a share.
The people knowing engaging in the short squeeze are taking that risk, so that is on them. But I feel sorry for people who foolishly chase the gains or the wifes/husbands of fools who are buying in now.
The whole ideas is that the hedge funds are these "bag holders." And to a huge degree they were, which is hilarious. But a huge amount of the bag holding is going to be done by retail investors.
> The whole ideas is that the hedge funds are these "bag holders." And to a huge degree they were. But a huge amount of the bag holding is going to be done by retail investors.
Yup, people are buying into a misconception here that because of high short interest there must be more to squeeze and the shorts will be the bag holders, while completely ignoring that the further this goes from the actual value of GME the more attractive it is to short, so who is short may change, but short interest won't go down much. The mob for some reason sees the short interest not going down as "they'll have to buy it at a higher price!" Once the smart longs start taking their profits the whole idea will fall apart, some shorts are going to make much more than people who bought early in the run and held thinking it would keep running up.
This is a lot of the problem. Certain people are too big to fail, they can keep the profits, but they don't suffer. How many people who had barely heard of the stock market lost their homes after 2008? How many speculators lost their homes?
How many people who have barely heard of the stock market have made massive gains over the last 10 years? How many speculators?
The government borrowed trillions, that all ended up in the pocket of people with shares, not in the hands of people who struggle to make rent.
> Yep, it's really great that markets can create speculation that are not tied at all to the fundamentals of a security.
To take the other side of the argument, the linked post is not about a value "not tied to the fundamentals of a security." In particular, it claims:
>> For reference: if $GME was trading at the same P/S multiple as $CHWY, the share price would be $420.
Now, this argument is wildly speculative to me, but it is in fact an argument about the long-term proper value of the company based on a fundamental.
The most recent hype train of "hold diamond hands to the moon rocket" is indeed disconnected from the value, but note that the current stock price is still within a small multiple of the above-quoted long-term level.
> If you want to trade stocks, do some research and invest wisely for the long term.
That's undoubtedly the safest advice, but this does not make short-term investment illegitimate. Stocks reach long-term value as a series of short-term movements, after all.
Taxpayers have been pumping cash to share owners for the last decade. If a frickin pandemic can't cause shareowners to stop increasing their net worth, what will?
Because while non-shareholders are working on treadmill living and majorly suffering, there's something seriously wrong. Either fix the market and the wealth disparity, or some people will just say "ah fuck it" and watch the world burn.
Sorry to be a bit snarky, but fad-based bubbles are not what markets need. They don't need social justice either. If you want to trade stocks, do some research and invest wisely for the long term. I am personally weary of 24/7 outrage.