Some people are calling this the short squeeze of the lifetime. Basically people shorting the stock got screwed by amateur retail investors. A hedge fund making money off companies going under lost billions of dollars. I can't believe what I'm seeing.

Backalleybuttlove wrote:
Some people are calling this the short squeeze of the lifetime. Basically people shorting the stock got screwed by amateur retail investors. A hedge fund making money off companies going under lost billions of dollars. I can't believe what I'm seeing.

Prelude to Agony wrote:
Apparently they're telling each other to hold the line.

moose poop wrote:
not necessarily "buy" but they may have to cover, or pay something; but on the company books of the hedge fund this is a huge paper debt

hope this explains a little bit:

Let's use an example to demonstrate it. Say you've been reading up on Company X, and you're certain the value is going to go down, and soon. A lot of investors who believe that simply won't touch the stock. A short-seller, though, will act.

Company X shares are currently worth $100 each. The short-seller may borrow 20 shares from their lender or broker, and then sell them. 100 x 20 = $2,000.

Perhaps X's shares fall down to $80. The short-seller buys back the shares and has made a profit. How much? Well, there were 20 shares, and each share declined $20. $20 x 20 shares = a net profit of $400.

That, of course, is the profit made if the short-sale goes how you assumed it would go. It doesn't always. This short-seller might have been wrong, and instead a big week for Company X leads the shares to increase to $110. Now afraid that the shares will continue to rise, the short-seller decides to purchase the shares back before he incurs any more losses. Now, instead of multiplying a profit of $20 by 20 shares, they're multiplying a loss of $10 increase in price by 20 shares they must repay. Their loss is $200.

angry_salad wrote:
The simpler answer here is that large funds with more cash and credit at their disposal than your or I means that a single transaction from them can result in a significant price change.

Now, shift that power to the smaller investor with one huge BUT => millions of smaller investors are buying GME en masse, one share at a time. All of these smaller investors - you and I - have formed our own distributed fund, rowdy and incoherent as it is.

Read my link above regarding the short squeeze, it's informative on a quite simple level.

straightcashhomie wrote:
Remove your limit for real though.

straightcashhomie wrote:
Diamond fucking hands you guys, if you're in it, fucking stay in it.

Don't put limits on.

I'm up quite a bit, these hands aren't paper. But, you bitches knew that, didn't ya.

EnginGhent wrote:

It's not as one-sided as it's being portrayed.

Obligatory - I believe Robin Hood, nor any institution, should prevent access to any equity.

That said - the really subtle point, is that Robin Hood let people trade on margin. In that scenario, RH loans you the money, but you're on the hook to pay it back.

Even in a short squeeze, eventually the knife falls. That's fact. So if you're the guy that went on margin for 2k, to purchase 5-6 shares of GME, and it doesn't catch a sale on the way back down to realistic prices, YOU are responsible for that money lost.

Considering most Americans are 1-2 paychecks away from poverty - there is a legitimate reason for RH to prevent some people from making these trades.

The problem is that
1. They shouldn't have let common people go on margin
2. Despite user volume in all of 2020 leading up to this, they didn't appropriately take out the necessary credit lines of risk to mitigate the in-the-middle-position that they're in.

They're at fault, for sure - though the measures they've taken to protect their users are the same, and equally important measures they're taking to protect themselves.

My personal viewpoint - we've been through a traumatizing political cycle for many. We're in the middle of a traumatizing pandemic ravaging the nation. An economic crisis is not something the country needs.

Edit - AND this is massively effecting the market. People are taking out money from all the other equities to purchase GME. ETFs that are designed to handle extreme volatility are getting swung around.

What's more problematic is that once GME is gone, the pressure / Eye-of-Sauron is going to fragment into a race of pump-and-dumps. It's already happening between AMC/BB/Dogecoin/BBBY/NAKD.

The market has never been rational, though this has addeed a whole cauldron of irrationality to it.

angry_salad wrote:
I read all that but still not sure what point you're trying to make.

Robinhood isn't a babysitter. If someone decides to start playing around in equity markets then the onus is on the participant, not the service provider. Robinhood is limiting GME share purchases because of its connection to Citadel, not for any altruistic reasons. Any real broker is still accepting buy orders.