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Thread: Wall Street & Social Media

  1. #21

    Default Re: Wall Street & Social Media

    Shorting seems like a predatory concept anyways. This was simply a brilliant response.
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  2. #22
    Basileos Leandros I's Avatar Writing is an art
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    Default Re: Wall Street & Social Media

    Shorting is predatory in some cases - you're basically piling cash on the downfall of a company instead of wanting them to succeed. This is why Musk has been struggling for so long with Tesla, they have a massive issue with short sellers.
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  3. #23
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    Default Re: Wall Street & Social Media

    Princeton University report about predatory short selling - https://www.princeton.edu/~markus/re...rt_selling.pdf
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  4. #24
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    Default Re: Wall Street & Social Media

    I mean if the hedge funds really are losing billions aren't they going to get many times that shovelled straight in by the US Government?
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  5. #25

    Default Re: Wall Street & Social Media

    Back to GameStop, the alleged revenge that small investors are enjoying over hedge funds is rooted in a misunderstanding about short sellers. In this case, it’s said that a few hedge funds were short GameStop’s shares, the shares have surged as everyone knows, which means a few hedge funds are said to be collapsed.

    The populists are cheering! Those awful traders will learn to never short again! Let’s wipe out a few more of these producers of misery!

    Actually, if it’s true that a few hedge funds were wiped out by GameStop’s surge, it’s a reminder of how heroic hedge funds are in the first place. It’s a reminder that if they didn’t exist, we would have to invent them. Think about it.

    After which it’s time for everyone to get real. Prices are the way that market economies organize themselves. It’s through prices arrived at freely that retailers know which items to stock and which ones to not, plus it’s through share prices that those with precious capital to allocate know where investment is needed, where it isn’t, where it will be wasted (think mortgages back in 2008), and where it will be rewarded. Without honest prices in the marketplace, the economy and stock market would plummet.

    Please keep this in mind as pundits make their silly arguments about GameStop’s price action signaling a shift of power away from hedge funds, and back to the little guy. Such a view isn’t true, plus it ignores the heroics of short sellers. They’re in truth price givers, and the economy couldn’t function without them.

    https://www.forbes.com/sites/johntam...rs-are-heroes/
    I can’t help but wonder what the narrative would be if the shoe was on the other foot; Wall St speculators inflating the stock price of a wildly overvalued company, “exposing the stock market casino,” only to be screwed over by a gang of patient and determined retail short sellers who were vindicated when the bubble finally burst, and thus portrayed as the kind of “heroes” this article talks about. We’d be having a very different conversation, with politicians on Twitter demanding a crackdown on “irresponsible and amoral Wall Street speculators who distort market forces for the benefit of a few firms running a Ponzi scheme, putting the entire economy at risk on Main Street.” The vast majority of the hype surrounding WSB and GME is just that; an understandable impulse to celebrate the underdog, without an understanding of how short sellers contribute to the market ecosystem, or what would happen if these “predators” went the way of the dinosaurs.
    Quote Originally Posted by Love Mountain
    Brokerages have pretty broad leeway in limiting trades. Whether this is unusual or not, is not really relevant, in my opinion (though it is extremely unusual to prevent an entire userbase from trading on a single stock to the benefit of Robinhood's partners). However, this broad leeway is not limitless and it is certainly not above reproach. Even something as mundane as filing practices can be scrutinized, fined, and settled on. While Robinhood may certainly claim that they are "protecting" their userbase, their actions are benefiting their partners, who stand to lose billions if the current trend goes on. Circumstantial evidence is suggesting foul play rather than any genuine concern for their userbase. That said, the plaintiffs certainly face a high legal bar, as Robinhood can halt trades for any reason.
    That’s not necessarily circumstantial evidence of anything illegal. Short sellers would continue to lose money so long as enough retail buyers hold their positions and the price point remains above whatever borrowed shares were sold for, even if the upward trajectory of retail buying spree is capped as per Robinhood. Equity shorts lost nearly a quarter trillion dollars last year, representing over half of all shorted securities. In the case of GME, the bubble was bound to burst at some point, regardless of whatever retail trading platforms do. At 193 USD, whoever borrowed shares to sell at even Monday or Tuesday’s price is still stuck and will be until the price halves again, if not longer.
    One thing to keep in mind however, is that even if the lawsuit fails, there is absolutely nothing to stop the SEC from investigating and determining that Robinhood did something shady and illegal, and order them to pay damages. The SEC has extremely broad powers, and the current Attorney for SDNY is no friend to the finance industry.
    The SEC can dig into Robinhood and the hedge funds all they want; the odds they will find anything salacious are pretty low. If anything, though, regulators are more likely to be suspicious of WSB activity.
    U.S. law bars the dissemination of false or misleading information with the aim of manipulating investors into buying or selling securities, as seen during a rash of "pump and dump" schemes during the early 2000s dot.com boom.

    Regulators are likely to explore whether Reddit was used in a similar way, after thousands of messages hyped up the stock and urged other investors to hold on to their shares or buy more.

    On Wednesday, the Massachusetts state regulator, William Galvin, called on NYSE to suspend GameStop for 30 days to allow a cooling-off period. "This isn’t investing, this is gambling," he told Reuters in an interview. "This is obviously contrived."

    Lawyers said the incident could prompt a broader review of share suspension rules.
    "I could see the SEC encouraging the NYSE to put in place rules that might smooth such swings as a result of retail investment activity," said Marc Adesso, partner at Saul Ewing Arnstein & Lehr. NYSE declined to comment.

    https://www.reuters.com/article/game...-idUSL4N2K246P
    In other words, the kind of action Robinhood took vis a vis GME was not only unlikely to be illegal, a similar dynamic could become a regulatory imperative as a result of WSB’s trolling.
    Last edited by Lord Thesaurian; January 29, 2021 at 07:59 AM.
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  6. #26

    Default Re: Wall Street & Social Media

    Quote Originally Posted by Legio_Italica View Post
    I can’t help but wonder what the narrative would be if the shoe was on the other foot; Wall St speculators inflating the stock price of a wildly overvalued company, “exposing the stock market casino,” only to be screwed over by a gang of patient and determined retail short sellers who were vindicated when the bubble finally burst, and thus portrayed as the kind of “heroes” this article talks about. We’d be having a very different conversation, with politicians on Twitter demanding a crackdown on “irresponsible and amoral Wall Street speculators who distort market forces for the benefit of a few firms running a Ponzi scheme, putting the entire economy at risk on Main Street.” The vast majority of the hype surrounding WSB and GME is just that; an understandable impulse to celebrate the underdog, without an understanding of how short sellers contribute to the market ecosystem, or what would happen if these “predators” went the way of the dinosaurs.
    Not quite sure what you mean. Stories of the "greatest shorts" happen all the time, from the people who shorted the housing market during the 2008 crisis, to Bill Ackman's famous bet that the pandemic would crash the market, netting him a 2.6$ billion profit.

    That’s not necessarily circumstantial evidence of anything illegal. Short sellers would continue to lose money so long as enough retail buyers hold their positions and the price point remains above whatever borrowed shares were sold for, even if the upward trajectory of retail buying spree is capped as per Robinhood. Equity shorts lost nearly a quarter trillion dollars last year, representing over half of all shorted securities. In the case of GME, the bubble was bound to burst at some point, regardless of whatever retail trading platforms do. At 193 USD, whoever borrowed shares to sell at even Monday or Tuesday’s price is still stuck and will be until the price halves again, if not longer.
    By halting buying, and not selling, they are slowing down the rise in prices and lowering losses for the firms who made the short. I.E., they are artificially reducing the competition for bid hedge funds. If there is a real threat of a calamitous bubble, the NYSE themselves will halt trading, as they have in the past.

    The SEC can dig into Robinhood and the hedge funds all they want; the odds they will find anything salacious are pretty low. If anything, though, regulators are more likely to be suspicious of WSB activity.
    Maybe, maybe not. The New York Attorney General is also taking a look.

    In other words, the kind of action Robinhood took vis a vis GME was not only unlikely to be illegal, a similar dynamic could become a regulatory imperative as a result of WSB’s trolling.
    The "regulatory imperative" is already there, but it's not administered by brokerages. Stock exchanges and the SEC all constantly monitor the market and shut it down if they deem it necessary. What Robin Hood and other brokerages did is rightfully suspicious, but not necessarily illegal. Though the most likely scenario, is that the SEC ignores this or issues a minor fine. Of course, when an issue becomes politicized, anything is possible.

  7. #27

    Default Re: Wall Street & Social Media

    Quote Originally Posted by Love Mountain View Post
    Not quite sure what you mean. Stories of the "greatest shorts" happen all the time, from the people who shorted the housing market during the 2008 crisis, to Bill Ackman's famous bet that the pandemic would crash the market, netting him a 2.6$ billion profit.
    Not sure what you mean either. No one is praising GME shorts, apart from a handful of irritated columnists defending short selling.
    By halting buying, and not selling, they are slowing down the rise in prices and lowering losses for the firms who made the short. I.E., they are artificially reducing the competition for bid hedge funds. If there is a real threat of a calamitous bubble, the NYSE themselves will halt trading, as they have in the past.
    By halting buying and not selling, the platform is also de facto protecting WSB trolls from themselves, and without evidence of having done so illegally, the “suspicion” is speculative, whereas these platforms can point to the very real and proven risk from which they “protected” their users in a way that is similar to perfectly legal firm policies already in place, and to the kind of preventative measures regulators are likely to consider.
    The "regulatory imperative" is already there, but it's not administered by brokerages. Stock exchanges and the SEC all constantly monitor the market and shut it down if they deem it necessary. What Robin Hood and other brokerages did is rightfully suspicious, but not necessarily illegal. Though the most likely scenario, is that the SEC ignores this or issues a minor fine. Of course, when an issue becomes politicized, anything is possible.
    The SEC issues fines for violations of federal securities laws, and there’s no actual evidence thus far trading platforms or hedge funds have done so in relation to the GME issue. The regulatory scrutiny that has been deemed likely so far is aimed in the other direction, if anything, at the virtually unimpeded accessibility of the retail trading environment combined with the nature of social media conducive to exactly the kind of market manipulation WSB has found itself a party to.
    Of these facts there cannot be any shadow of doubt: for instance, that civil society was renovated in every part by Christian institutions; that in the strength of that renewal the human race was lifted up to better things-nay, that it was brought back from death to life, and to so excellent a life that nothing more perfect had been known before, or will come to be known in the ages that have yet to be. - Pope Leo XIII

  8. #28
    the_mango55's Avatar Comes Rei Militaris
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    Default Re: Wall Street & Social Media

    I didn’t know Forbes had columnists from The Onion working for them.
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  9. #29

    Default Re: Wall Street & Social Media

    Quote Originally Posted by Legio_Italica View Post
    Not sure what you mean either. No one is praising GME shorts, apart from a handful of irritated columnists defending short selling.
    In your previous post you said,

    "I can’t help but wonder what the narrative would be if the shoe was on the other foot; Wall St speculators inflating the stock price of a wildly overvalued company, “exposing the stock market casino,” only to be screwed over by a gang of patient and determined retail short sellers who were vindicated when the bubble finally burst, and thus portrayed as the kind of “heroes” this article talks about."

    And that's why I replied, those kinds of stories do happen and they are quite publicized. In fact, there is a pretty famous film made about the very thing you are talking about.

    By halting buying and not selling, the platform is also de facto protecting WSB trolls from themselves, and without evidence of having done so illegally, the “suspicion” is speculative, whereas these platforms can point to the very real and proven risk from which they “protected” their users in a way that is similar to perfectly legal firm policies already in place, and to the kind of preventative measures regulators are likely to consider.
    That is one angle to consider. Another, is that they are de facto defending big hedge funds from competition. By preventing users from buying stock, they are reducing the demand for the stock, this obviously helps to lower or slow down the price of the stock. For the funds holding the shorts, this reduces their potential losses.

    The SEC issues fines for violations of federal securities laws, and there’s no actual evidence thus far trading platforms or hedge funds have done so in relation to the GME issue.
    You have no access to the "evidence" in question. We don't know what went behind closed doors and this is exactly what SEC investigations do. They look at what's behind the doors without disclosing it to the public. Which is why I repeatedly stated that what you assert is certainly one possibility and one way to look at things, but it is certainly possible that there is foulplay involved.

    The regulatory scrutiny that has been deemed likely so far is aimed in the other direction, if anything, at the virtually unimpeded accessibility of the retail trading environment combined with the nature of social media conducive to exactly the kind of market manipulation WSB has found itself a party to.
    I doubt it. Rumors and other nonsense is a daily reality for traders. On the other hand, I can certainly see a review of whether platforms like Robinhood, are actually in the interest of consumers. There is an obvious conflict of interest within Robinhood, as they may not necessarily upset their partners who make their business possible, at the expense of their userbase who have a much harder time organizing and carrying out actions on the behalf of the collective.

  10. #30

    Default Re: Wall Street & Social Media

    Quote Originally Posted by Love Mountain View Post
    In your previous post you said,

    "I can’t help but wonder what the narrative would be if the shoe was on the other foot; Wall St speculators inflating the stock price of a wildly overvalued company, “exposing the stock market casino,” only to be screwed over by a gang of patient and determined retail short sellers who were vindicated when the bubble finally burst, and thus portrayed as the kind of “heroes” this article talks about."

    And that's why I replied, those kinds of stories do happen and they are quite publicized. In fact, there is a pretty famous film made about the very thing you are talking about.
    Bill Ackman is a hedge fund manager who bet against the market, not just retail investors. I don’t get the point of bringing it up since it has nothing to do with the comparison I made.
    That is one angle to consider. Another, is that they are de facto defending big hedge funds from competition. By preventing users from buying stock, they are reducing the demand for the stock, this obviously helps to lower or slow down the price of the stock. For the funds holding the shorts, this reduces their potential losses.
    The difference is these are not equal possibilities. We know for a fact online speculation deliberately overvalued a stock for the explicit purpose of causing harm, and that the netizens in question who engaged in a de facto group effort to do so would have ultimately harmed themselves and most GME investors even more had their efforts continued unchecked to their only logical conclusion. The idea that hedge funds and trading platforms colluded to stop them, on the other hand, is based on speculation.
    You have no access to the "evidence" in question. We don't know what went behind closed doors and this is exactly what SEC investigations do. They look at what's behind the doors without disclosing it to the public. Which is why I repeatedly stated that what you assert is certainly one possibility and one way to look at things, but it is certainly possible that there is foulplay involved.
    You have no access to the evidence in question either. The difference is, I’m basing an opinion off of public information, whereas the idea hedge funds and trading platforms colluded to screw over retail investors is based on what could possibly be revealed by non-public information, and would require a fairly intensive investigative effort to prove, if it were even possible to do so.
    I doubt it. Rumors and other nonsense is a daily reality for traders. On the other hand, I can certainly see a review of whether platforms like Robinhood, are actually in the interest of consumers. There is an obvious conflict of interest within Robinhood, as they may not necessarily upset their partners who make their business possible, at the expense of their userbase who have a much harder time organizing and carrying out actions on the behalf of the collective.
    If you want to frame it in terms of conflict of interest, we just witnessed how the interest of retail investors in deliberately overvaluing a stock directly conflicted with their interest in avoiding risk and loss resulting from that. On the other hand, the interest trading platforms and hedge funds have in avoiding immediate and long term reputational and therefore financial damage would be equal to or greater than their interest in minimizing the near term cost of covering short positions in a manner that would cause that reputational damage, and there’s no evidence as of yet they have colluded to do so.

    If the authorities do come in and crack down on the wild west show that is free trading apps, it’s retail investors, not Wall Street firms, who will be the most upset about it, and the internet trolls who thought they were sticking it to the man would have only themselves to blame. Play stupid games, win stupid prizes.
    Of these facts there cannot be any shadow of doubt: for instance, that civil society was renovated in every part by Christian institutions; that in the strength of that renewal the human race was lifted up to better things-nay, that it was brought back from death to life, and to so excellent a life that nothing more perfect had been known before, or will come to be known in the ages that have yet to be. - Pope Leo XIII

  11. #31
    irontaino's Avatar Protector Domesticus
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    Default Re: Wall Street & Social Media

    Remember how long it took big tech companies to move on violent white supremacists? Look how quick they were when it came to regular people retaliating against the wealthy.
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  12. #32

    Default Re: Wall Street & Social Media

    Quote Originally Posted by Legio_Italica View Post
    Bill Ackman is a hedge fund manager who bet against the market, not just retail investors. I don’t get the point of bringing it up since it has nothing to do with the comparison I made.
    The comparison you made, alluded that a group of patient short sellers screw over Wall Street speculators who continue to pump stocks. That's pretty much exactly what happened in both, the 2008 short of the housing market (which consequently exposed the insane amount of fraud and lack of regulation), as well as in the 2020 Bill Ackman short. Both bets hedged against wild Wall Street Speculation. While the 2008 crash was particularly egregious, the 2020 Covid crash started in February and momentarily stopped and rebounded, until reality set in.

    So I don't see how it has "nothing to do with it" when it is a perfect example of your hypothetical scenario.

    The difference is these are not equal possibilities. We know for a fact online speculation deliberately overvalued a stock for the explicit purpose of causing harm, and that the netizens in question who engaged in a de facto group effort to do so would have ultimately harmed themselves and most GME investors even more had their efforts continued unchecked to their only logical conclusion. The idea that hedge funds and trading platforms colluded to stop them, on the other hand, is based on speculation.
    You will have a much harder case proving that "market manipulation" occurred by the Reddit crowd. On the other hand, the possibility of brokerages stopping activity in favor of their partners (hedge funds with short positions in GME, AMC, etc) is a much lower (though still very high) bar to clear.

    You have no access to the evidence in question either. The difference is, I’m basing an opinion off of public information, whereas the idea hedge funds and trading platforms colluded to screw over retail investors is based on what could possibly be revealed by non-public information, and would require a fairly intensive investigative effort to prove, if it were even possible to do so.
    Market manipulation that you're suggesting, is a high legal bar to clear. Especially when the supposed defendants would be thousands of different, mostly uninformed traders, who are looking for an easy payday. Even if there is a supposed circle of masterminds who used social media to engineer this squeeze, good luck finding them.

    If you want to frame it in terms of conflict of interest, we just witnessed how the interest of retail investors in deliberately overvaluing a stock directly conflicted with their interest in avoiding risk and loss resulting from that. On the other hand, the interest trading platforms and hedge funds have in avoiding immediate and long term reputational and therefore financial damage would be equal to or greater than their interest in minimizing the near term cost of covering short positions in a manner that would cause that reputational damage, and there’s no evidence as of yet they have colluded to do so.
    The former is not an actual "conflict of interest". A conflict of interest requires two or more parties. The latter is an actual conflict of interest. As in, the brokerages have an interest in keeping the relationship between themselves and their hedge fund partners (who make their business possible in the first place), as well as the relationship between themselves and their userbase. The problem is that the two relationships can have opposing interests, as was the case in the short squeeze of Game Stop, AMC, etc. However, unlike the userbase, which is fractured and composed of millions of users who have little power on their own, hedge funds can exert enormous pressure on Robinhood since there are far fewer of them. A loss of even one partner can be much more damaging.

    If the authorities do come in and crack down on the wild west show that is free trading apps, it’s retail investors, not Wall Street firms, who will be the most upset about it, and the internet trolls who thought they were sticking it to the man would have only themselves to blame. Play stupid games, win stupid prizes.
    That depends on when people bought in, whether they borrowed money to buy the stock, and where the final price finally settles. Meanwhile, Wall Street giants already lost billions so "internet trolls" already stuck it to the man, and they stuck it big.

  13. #33

    Default Re: Wall Street & Social Media

    Quote Originally Posted by Love Mountain View Post
    The comparison you made, alluded that a group of patient short sellers screw over Wall Street speculators who continue to pump stocks. That's pretty much exactly what happened in both, the 2008 short of the housing market (which consequently exposed the insane amount of fraud and lack of regulation), as well as in the 2020 Bill Ackman short. Both bets hedged against wild Wall Street Speculation. While the 2008 crash was particularly egregious, the 2020 Covid crash started in February and momentarily stopped and rebounded, until reality set in.

    So I don't see how it has "nothing to do with it" when it is a perfect example of your hypothetical scenario.
    My comparison wasn’t an allusion, it was pretty straightforward. If you’re referring to the article, the reference to Paulsen was as an example of a huge short bet being vindicated, not of my comparison. Paulsen obviously wasn’t a retail investor, and neither is Ackerman. They’re hedge fund managers, betting against the market, not just against retail investors.
    You will have a much harder case proving that "market manipulation" occurred by the Reddit crowd. On the other hand, the possibility of brokerages stopping activity in favor of their partners (hedge funds with short positions in GME, AMC, etc) is a much lower (though still very high) bar to clear.

    Market manipulation that you're suggesting, is a high legal bar to clear. Especially when the supposed defendants would be thousands of different, mostly uninformed traders, who are looking for an easy payday. Even if there is a supposed circle of masterminds who used social media to engineer this squeeze, good luck finding them.
    No one suggested the SEC is going to go after Redditors for market manipulation. Reddit was and is the epicenter of people explicitly admitting to and encouraging transactions which create an artificial price or maintain an artificial price for a tradable security, the definition of market manipulation.
    Spoiler for bad words



    That’s just a fact. So no bar. Whether that in fact broke laws is for the SEC to find out, but they’re unlikely to find anything concrete. Prosecution doesn’t have any bearing on what I said, however, so I don’t know why you would try to put the allegation of collusion on the same footing as the fact of market manipulation. The latter is known, the former, speculation.
    The former is not an actual "conflict of interest". A conflict of interest requires two or more parties. The latter is an actual conflict of interest. As in, the brokerages have an interest in keeping the relationship between themselves and their hedge fund partners (who make their business possible in the first place), as well as the relationship between themselves and their userbase. The problem is that the two relationships can have opposing interests, as was the case in the short squeeze of Game Stop, AMC, etc. However, unlike the userbase, which is fractured and composed of millions of users who have little power on their own, hedge funds can exert enormous pressure on Robinhood since there are far fewer of them. A loss of even one partner can be much more damaging.
    A conflict of interest requires two conflicting interests whereby serving one may harm the other, not parties; two parties is a common example/situation. That’s not dependent on the likelihood that immediate and long term reputational and therefore financial damage would be equal to or greater than platforms’/hedge funds’ interest in minimizing the near term cost of covering short positions in a manner that would cause that reputational damage, and there’s no evidence of the alleged collusion or pressure exerted for your inferred conflict to be a comparable factor. WSB knows they’re “retards,” as they say, acting in bad faith. The latter is known, the former, speculation.
    Last edited by Lord Thesaurian; January 29, 2021 at 09:41 PM.
    Of these facts there cannot be any shadow of doubt: for instance, that civil society was renovated in every part by Christian institutions; that in the strength of that renewal the human race was lifted up to better things-nay, that it was brought back from death to life, and to so excellent a life that nothing more perfect had been known before, or will come to be known in the ages that have yet to be. - Pope Leo XIII

  14. #34

    Default Re: Wall Street & Social Media

    Quote Originally Posted by Legio_Italica View Post
    My comparison wasn’t an allusion, it was pretty straightforward. If you’re referring to the article, the reference to Paulsen was as an example of a huge short bet being vindicated, not of my comparison. Paulsen obviously wasn’t a retail investor, and neither is Ackerman. They’re hedge fund managers, betting against the market, not just against retail investors.
    I didn't say your comparison was an allusion, I said your comparison alluded. There's a pretty big difference. I also wasn't referring to Paulsen, but I think the distinction between "retail investor" and a "hedge fund manager" is only in size. Imo, I really don't think that distinction as super important as you seemed to put an emphasis on Wall Street Speculators being screwed by short sellers. "Wall Street Speculators" are generally large, institutional investors who tend to inflate prices regardless of market conditions. Betting against the "market" as was the case for Scion Capital against the housing market in 2008, Ackman against the overall market in 2020, is as much a bet against "Wall Street Speculators" (who continue to inflate stock prices despite adverse market conditions), as it was against markets.

    But if you want to really underline the point of retail investors doing so, then sure. I cannot recall any precise example like that.

    No one suggested the SEC is going to go after Redditors for market manipulation. Reddit was and is the epicenter of people explicitly admitting to and encouraging transactions which create an artificial price or maintain an artificial price for a tradable security, the definition of market manipulation.
    Spoiler for bad words


    The "definition" of market manipulation can be stretched to include almost all manner of trading. This is why market manipulation is rarely pursued unless it is particularly egregious or obvious. A bunch of retail traders deciding to buy a security they see as undervalued and unfairly shorted wouldn't constitute market manipulation. Otherwise you may as well call this market manipulation.

    That’s just a fact. So no bar. Whether that in fact broke laws is for the SEC to find out, but they’re unlikely to find anything concrete. Prosecution doesn’t have any bearing on what I said, however, so I don’t know why you would try to put the allegation of collusion on the same footing as the fact of market manipulation. The latter is known, the former, speculation.
    Because collusion would probably be easier to prove than market manipulation. Though anything is possible, I'd be quite a bit more surprised to Redditors investigated than brokerages or hedge funds. Oh wait, they're already looking into both. Now whether this results to anything tangible is of course anyone's guess, but the fact that people are looking doesn't really surprise me.

    A conflict of interest requires two conflicting interests whereby serving one may harm the other, not parties; two parties is a common example/situation.
    Uh huh. So how would a plaintiff would sue himself due to an internal conflict of interest? Because you are right, you can certainly have an internal conflict of interest, but we aren't talking about metaphysics, we are talking about finance.

    That’s not dependent on the likelihood that immediate and long term reputational and therefore financial damage would be equal to or greater than platforms’/hedge funds’ interest in minimizing the near term cost of covering short positions in a manner that would cause that reputational damage, and there’s no evidence of the alleged collusion or pressure exerted for your inferred conflict to be a comparable factor. WSB knows they’re “retards,” as they say, acting in bad faith. The latter is known, the former, speculation.
    I don't see how r/WSB's "bad faith" is at all relevant to the subject matter at hand. People are allowed to make bad investments based on personal beliefs. If I invest into gold because I want to see the USD eventually die and try to convince others to do so, that's not illegal.

    Moreover, you still haven't addressed the obvious clash in interest at brokerages like Robin Hood, who have an incentive to do an unethical favor for their hedge fund partners in order to maintain a good relationship with parties that make their business possible, at the expense of a userbase that will have a hard time mobilizing against them. That conflict of interest is very relevant, and makes unethical conduct not only possible, but likely. Hence, why, as referenced several times before and in this post, people are taking a look and want to see an investigation. These are not difficult dots to connect.

  15. #35

    Default Re: Wall Street & Social Media

    Quote Originally Posted by Love Mountain View Post
    I didn't say your comparison was an allusion, I said your comparison alluded. There's a pretty big difference. I also wasn't referring to Paulsen, but I think the distinction between "retail investor" and a "hedge fund manager" is only in size. Imo, I really don't think that distinction as super important as you seemed to put an emphasis on Wall Street Speculators being screwed by short sellers. "Wall Street Speculators" are generally large, institutional investors who tend to inflate prices regardless of market conditions. Betting against the "market" as was the case for Scion Capital against the housing market in 2008, Ackman against the overall market in 2020, is as much a bet against "Wall Street Speculators" (who continue to inflate stock prices despite adverse market conditions), as it was against markets.

    But if you want to really underline the point of retail investors doing so, then sure. I cannot recall any precise example like that.
    Ok, then yeah, I guess you missed the point.
    The "definition" of market manipulation can be stretched to include almost all manner of trading. This is why market manipulation is rarely pursued unless it is particularly egregious or obvious. A bunch of retail traders deciding to buy a security they see as undervalued and unfairly shorted wouldn't constitute market manipulation. Otherwise you may as well call this market manipulation.
    Not really, since the legal definition you linked to doesn’t corroborate your comparison to “all manner of trading” to any extent, and “5 stocks that could make you rich” is not “transactions which create an artificial price or maintain an artificial price for a tradable security.”
    Because collusion would probably be easier to prove than market manipulation. Though anything is possible, I'd be quite a bit more surprised to Redditors investigated than brokerages or hedge funds. Oh wait, they're already looking into both. Now whether this results to anything tangible is of course anyone's guess, but the fact that people are looking doesn't really surprise me.
    I don’t see any mention in your links of prosecuting Redditors nor any evidence of collusion between trading platforms and hedge funds. Like I said, citing an allegation of collusion doesn’t equate to the fact people are explicitly admitting to and encouraging transactions which create an artificial price or maintain an artificial price for a tradable security. I already cited the Reuters article myself in post 25, because it confirms what I’m talking about. The potential for criminal prosecution of market manipulation doesn’t have bearing on the manipulation known to take place, or the likelihood of regulation being put in place as a result.
    Uh huh. So how would a plaintiff would sue himself due to an internal conflict of interest? Because you are right, you can certainly have an internal conflict of interest, but we aren't talking about metaphysics, we are talking about finance.
    It’s not my fault you attempted to make a point about what a conflict of interest is, only to highlight your own misunderstanding.
    I don't see how r/WSB's "bad faith" is at all relevant to the subject matter at hand. People are allowed to make bad investments based on personal beliefs. If I invest into gold because I want to see the USD eventually die and try to convince others to do so, that's not illegal.
    It’s the above comparison that’s irrelevant here, since it would entirely depend on whether your desire translates to transactions which create an artificial price or maintain an artificial price for a tradable security, not whether any subsequent investigation would result in prosecution. I don’t see how you could have misunderstood what I said, since it was pretty clear:
    No one suggested the SEC is going to go after Redditors for market manipulation. Reddit was and is the epicenter of people explicitly admitting to and encouraging transactions which create an artificial price or maintain an artificial price for a tradable security, the definition of market manipulation.
    Spoiler for bad words



    That’s just a fact. So no bar. Whether that in fact broke laws is for the SEC to find out, but they’re unlikely to find anything concrete. Prosecution doesn’t have any bearing on what I said, however, so I don’t know why you would try to put the allegation of collusion on the same footing as the fact of market manipulation. The latter is known, the former, speculation.
    The explicit goal of the entire WSB campaign was/is to engage in and facilitate transactions which create an artificial price or maintain an artificial price for a tradable security. The explicit bad faith motive confirms the manipulation is not merely incidental, it is indeed the goal, leaving no room for doubt about what is happening.
    Moreover, you still haven't addressed the obvious clash in interest at brokerages like Robin Hood, who have an incentive to do an unethical favor for their hedge fund partners in order to maintain a good relationship with parties that make their business possible, at the expense of a userbase that will have a hard time mobilizing against them. That conflict of interest is very relevant, and makes unethical conduct not only possible, but likely. Hence, why, as referenced several times before and in this post, people are taking a look and want to see an investigation. These are not difficult dots to connect.
    I don’t need to address Robin Hood’s relationships with hedge funds because those aren’t up for debate. Those relationships are not evidence of collusion or pressure exerted to restrict trading, and there is no evidence the company’s denial of such is a lie. The known facts thus far corroborate the collateral requirements, as well as the company’s justification that they wanted to “protect the firm and protect our customers,” as I discussed. The latter is known, the former, speculation.
    Of these facts there cannot be any shadow of doubt: for instance, that civil society was renovated in every part by Christian institutions; that in the strength of that renewal the human race was lifted up to better things-nay, that it was brought back from death to life, and to so excellent a life that nothing more perfect had been known before, or will come to be known in the ages that have yet to be. - Pope Leo XIII

  16. #36

    Default Re: Wall Street & Social Media

    Quote Originally Posted by Legio_Italica View Post
    Ok, then yeah, I guess you missed the point.
    I don't see how, since the crux of your comparison relied on short sellers turning the table on Wall Street. As I asked in the previous post, why focus on the distinction between retail sellers and individual fund managers? The only real difference between a guy on r/WSB and Bill Ackman is the size of their bank account (plus a few dozen staff).

    Not really, since the legal definition you linked to doesn’t corroborate your comparison to “all manner of trading” to any extent, and “5 stocks that could make you rich” is not “transactions which create an artificial price or maintain an artificial price for a tradable security.”
    Then you haven't read the legal definition. Section 2 alone, for instance, could potentially make any attempt to even buy or sell securities in conjunction of others, suspicious and possibly illegal. Articles such as "5 stocks that could make your rich" can be investigated under section 6 for

    "effecting either alone or with one or more other persons any series of transactions for the purchase and/or sale of any security other than a government security for the purpose of pegging, fixing, or stabilizing the price of such security in contravention of such rules and regulations as the Commission may prescribe as necessary or appropriate in the public interest or for the protection of investors."

    The key words of the code of course being the very first which clarify that,

    "It shall be unlawful for any person, directly or indirectly, by the use of the mails or any means or instrumentality of interstate commerce, or of any facility of any national securities exchange, or for any member of a national securities exchange—"

    In fact, this broad definition has been under criticism and discussion for ages, from its very inception in 1934, to the de-regulation era of 1970s and 80s,, to the modern post-2008 era. And every single author will tell you that the broad definition of "market manipulation" can include virtually everything, but common sense and faith in the SEC is what prevents innocuous article writers from being investigated by the SEC. So while the r/WSB fiasco may raise some eyebrows at the SEC, it will be fairly surprising if they are actually labeled as "market manipulators" by the SEC in any capacity.

    I don’t see any mention in your links of prosecuting Redditors nor any evidence of collusion between trading platforms and hedge funds. Like I said, citing an allegation of collusion doesn’t equate to the fact people are explicitly admitting to and encouraging transactions which create an artificial price or maintain an artificial price for a tradable security. I already cited the Reuters article myself in post 25, because it confirms what I’m talking about. The potential for criminal prosecution of market manipulation doesn’t have bearing on the manipulation known to take place, or the likelihood of regulation being put in place as a result.
    I didn't say they're "prosecuting" anyone. My links and my previous post indicate that both the SEC and Congress are investigating the situation.

    It’s not my fault you attempted to make a point about what a conflict of interest is, only to highlight your own misunderstanding.
    This sentence makes no sense in the given context, and you didn't answer the question. To rephrase the question in the manner that you applied it, what does an internal conflict within an individual investor have to do with legal liability? And how is that at all relevant to an actual conflict of interest with real legal ramifications that are taking place at the Robinhood brokerage? To give even more context, Robinhood was already fined for not disclosing the potential conflict of interest in the first place, who knows what might happen now that they potentially acted on it.

    It’s the above comparison that’s irrelevant here, since it would entirely depend on whether your desire translates to transactions which create an artificial price or maintain an artificial price for a tradable security, not whether any subsequent investigation would result in prosecution. I don’t see how you could have misunderstood what I said, since it was pretty clear:
    This sentence again, makes no sense in the given context. The above comparison was made to demonstrate that there is no legal liability for making and advertising bad investment strategies regardless of how "bad faith" they are. Which is why I question, why is r/WSB's supposed "bad faith" is even brought up and how is it relevant to the point you're making? Try to answer the question this time.

    The explicit goal of the entire WSB campaign was/is to engage in and facilitate transactions which create an artificial price or maintain an artificial price for a tradable security. The explicit bad faith motive confirms the manipulation is not merely incidental, it is indeed the goal, leaving no room for doubt about what is happening.
    This is false. The motivations of the r/WSB campaign vary based on individual preferences. For example, the supposed "origin" of the GME bet, Keith Gill, genuinely believed that Game Stop was undervalued. And of course, as any cursory browsing of r/WSB reveals, some people wanted to be along for the ride, others genuinely wanted to make a statement, and others wanted to hurt the hedge funds. So no, this assertion is false.

    I don’t need to address Robin Hood’s relationships with hedge funds because those aren’t up for debate. Those relationships are not evidence of collusion or pressure exerted to restrict trading, and there is no evidence the company’s denial of such is a lie. The known facts thus far corroborate the collateral requirements, as well as the company’s justification that they wanted to “protect the firm and protect our customers,” as I discussed. The latter is known, the former, speculation.
    Well first of all it would be "evidence" or at least part of basic discovery in any court case. Robinhood's business model is well understood now, and the potential conflict of interests that arise from this business model are also well publicized and easily understood. As demonstrated by articles here, here, and here, and even a reddit thread here. So this isn't a fringe view, and the situation that occurred on Thursday is pretty much exactly what people were worried about. That the relationship between Robinhood and its partners may lead it to making decisions that are in their favor at the expense of their userbase.
    Last edited by Love Mountain; January 31, 2021 at 01:48 AM.

  17. #37

    Default Re: Wall Street & Social Media

    Quote Originally Posted by Love Mountain View Post
    I don't see how, since the crux of your comparison relied on short sellers turning the table on Wall Street. As I asked in the previous post, why focus on the distinction between retail sellers and individual fund managers?
    Because the thread is about a situation involving retail investors vs hedge funds, and that’s the comparison I made.
    The only real difference between a guy on r/WSB and Bill Ackman is the size of their bank account (plus a few dozen staff).
    Neat opinion, but not relevant to the current discussion.
    Then you haven't read the legal definition. Section 2 alone, for instance, could potentially make any attempt to even buy or sell securities in conjunction of others, suspicious and possibly illegal. Articles such as "5 stocks that could make your rich" can be investigated under section 6 for

    "effecting either alone or with one or more other persons any series of transactions for the purchase and/or sale of any security other than a government security for the purpose of pegging, fixing, or stabilizing the price of such security in contravention of such rules and regulations as the Commission may prescribe as necessary or appropriate in the public interest or for the protection of investors."

    The key words of the code of course being the very first which clarify that,

    "It shall be unlawful for any person, directly or indirectly, by the use of the mails or any means or instrumentality of interstate commerce, or of any facility of any national securities exchange, or for any member of a national securities exchange—"

    In fact, this broad definition has been under criticism and discussion for ages, from its very inception in 1934, to the de-regulation era of 1970s and 80s,, to the modern post-2008 era. And every single author will tell you that the broad definition of "market manipulation" can include virtually everything, but common sense and faith in the SEC is what prevents innocuous article writers from being investigated by the SEC. So while the r/WSB fiasco may raise some eyebrows at the SEC, it will be fairly surprising if they are actually labeled as "market manipulators" by the SEC in any capacity.
    If you want to argue almost all manner of trading can be considered illegal, go ahead and die on that hill. It has nothing to do with what I said.
    I didn't say they're "prosecuting" anyone. My links and my previous post indicate that both the SEC and Congress are investigating the situation.
    The possibility of investigation was never debated. You tried to make a point about the probability of investigations legally proving in court that Redditors violated laws pertaining to market manipulation so you can draw an equivalence to allegations of collusion between hedge funds and trading platforms, but that’s a comparison you chose to pursue on your own, not an argument I made. Citing an allegation of collusion doesn’t equate to the fact people are explicitly admitting to and encouraging transactions which create an artificial price or maintain an artificial price for a tradable security.
    This sentence makes no sense in the given context, and you didn't answer the question. To rephrase the question in the manner that you applied it, what does an internal conflict within an individual investor have to do with legal liability? And how is that at all relevant to an actual conflict of interest with real legal ramifications that are taking place at the Robinhood brokerage? To give even more context, Robinhood was already fined for not disclosing the potential conflict of interest in the first place, who knows what might happen now that they potentially acted on it.

    This sentence again, makes no sense in the given context. The above comparison was made to demonstrate that there is no legal liability for making and advertising bad investment strategies regardless of how "bad faith" they are. Which is why I question, why is r/WSB's supposed "bad faith" is even brought up and how is it relevant to the point you're making? Try to answer the question this time.
    Your red herring claim about conflicts of interest backfired and now you’re apparently sea lioning in an effort to substantiate allegations that trading platforms colluded with hedge funds to suppress stock prices, sans evidence. My point is very clear, and so far you haven’t indicated any basis for disputing it.
    This is false. The motivations of the r/WSB campaign vary based on individual preferences. For example, the supposed "origin" of the GME bet, Keith Gill, genuinely believed that Game Stop was undervalued. And of course, as any cursory browsing of r/WSB reveals, some people wanted to be along for the ride, others genuinely wanted to make a statement, and others wanted to hurt the hedge funds. So no, this assertion is false.
    Sigh.... no it isn’t. If you want to deny that the goal of the WSB campaign was/is to engage in and facilitate transactions which create an artificial price or maintain an artificial price for a tradable security, or that GME is deliberately overvalued, you can go argue about it on Reddit. I never claimed every single person who participated/is participating has identical motives.
    Well first of all it would be "evidence" or at least part of basic discovery in any court case. Robinhood's business model is well understood now, and the potential conflict of interests that arise from this business model are also well publicized and easily understood. As demonstrated by articles here, [https://qz.com/1772017/robinhood-fined-1-25-million-by-finra-for-trading-violation/]here[/URL], and here, and even a reddit thread here. So this isn't a fringe view, and the situation that occurred on Thursday is pretty much exactly what people were worried about. That the relationship between Robinhood and its partners may lead it to making decisions that are in their favor at the expense of their userbase.
    None of the links you’ve presented evidence allegations that trading platforms colluded with hedge funds to suppress stock prices (nor do they claim to), and again, the company’s relationships with hedge funds are not evidence of collusion or pressure exerted to restrict trading, and there is no evidence the company’s denial of such is false. The conflict you identify could theoretically be used to establish motive corroborating evidence of collusion or pressure exerted to restrict trading, but the latter has not been provided.

    According to former SEC chief economist and Tepper School of Business (Carnegie Mellon) professor Chester Spatt, these actions were simply the companies and the trading infrastructure doing what they were supposed to do. This, he said, was an example of regulations working.

    “[The mainstream] is coming down on Robinhood saying ‘they changed the rules.’ No, they didn’t change the rules,” Spatt said. “First of all, their contracts allow them a lot of flexibility to intervene in terms of protecting their firm.”

    The contracts with their users in terms of service and in their back-end apparatus that clears and settles trading allow for changes depending on the situation, Spatt explained.

    Robinhood and Webull CEOs both told Yahoo Finance that the halting of buy orders and leveraged trading had nothing to do with any backroom conspiracy or restrictions on freedom.

    The day before, Webull’s Denier said, “There is an outcry because a lot of the retail [investors], they don't actually understand the dynamics that happen after a trade.”

    “It has nothing to do with the decision or some sort of closed room smoke-filled cigar room of Wall Street firms getting together to the dismay of the retail trader. This has to do with settlement mechanics of the market,” he added.

    https://finance.yahoo.com/news/robin...204321652.html
    Last edited by Lord Thesaurian; January 30, 2021 at 11:06 PM.
    Of these facts there cannot be any shadow of doubt: for instance, that civil society was renovated in every part by Christian institutions; that in the strength of that renewal the human race was lifted up to better things-nay, that it was brought back from death to life, and to so excellent a life that nothing more perfect had been known before, or will come to be known in the ages that have yet to be. - Pope Leo XIII

  18. #38

    Default Re: Wall Street & Social Media

    Quote Originally Posted by Legio_Italica View Post
    Because the thread is about a situation involving retail investors vs hedge funds, and that’s the comparison I made.
    The thread sure, but not the comparison you made. In fact, in the original statement you made no mention of "hedge funds", this was the original post.

    "I can’t help but wonder what the narrative would be if the shoe was on the other foot; Wall St speculators inflating the stock price of a wildly overvalued company, “exposing the stock market casino,” only to be screwed over by a gang of patient and determined retail short sellers who were vindicated when the bubble finally burst, and thus portrayed as the kind of “heroes” this article talks about. We’d be having a very different conversation, with politicians on Twitter demanding a crackdown on “irresponsible and amoral Wall Street speculators who distort market forces for the benefit of a few firms running a Ponzi scheme, putting the entire economy at risk on Main Street.” The vast majority of the hype surrounding WSB and GME is just that; an understandable impulse to celebrate the underdog, without an understanding of how short sellers contribute to the market ecosystem, or what would happen if these “predators” went the way of the dinosaurs."

    Now, as I understood it before, the crux of the comparison was a question for how the media would react to a potential screwing over of "Wall Street Speculators" (terminology that can refer to any number of market participants, from large corporate banks, to hedge funds, to investment firms, to "mom and pop" home offices run by billionaires, or combination thereof) by retail short sellers. There is no direct mention of the word "hedge fund" anywhere in there. Now I'm not trying to play some kind of game of "gotcha" as others are prone to do, but you did draw a distinction between firms like Pershing, and retail investors, as well as between "Wall Street Speculators", as well as "the market". So I'm assuming that you are a stickler for details.

    So to clarify, you did not mention the word "hedge fund" in the original comparison and made no attempt to clarify it until now. Why?

    Neat opinion, but not relevant to the current discussion.
    Well it is relevant, as it is the primary reason you give, for why my examples, housing shorts of 2008 and the 2020 short of credit markets, are inapplicable to your hypothetical scenario. We know how people react to short sellers teaching Wall Street a lesson. it's generally celebrated, given a 7 figure book deal, and a motion picture.

    If you want to argue almost all manner of trading can be considered illegal, go ahead and die on that hill. It has nothing to do with what I said.
    The point is that the SEC, or any entity that wants to accuse anybody of market manipulation will have a hard time doing so. And your complaints about market manipulation by r/WSB are a little tone deaf, considering that people like Bill Ackman buy the same securities they fearmonger about. I.e., accusing a mass of uninformed investors from r/WSB and the frenzy that occurred of "market manipulation" is hilarious when we consider the kinds of things that "Wall Street Speculators" do every day without the SEC batting an eye.

    The possibility of investigation was never debated. You tried to make a point about the probability of investigations legally proving in court that Redditors violated laws pertaining to market manipulation so you can draw an equivalence to allegations of collusion between hedge funds and trading platforms, but that’s a comparison you chose to pursue on your own, not an argument I made. Citing an allegation of collusion doesn’t equate to the fact people are explicitly admitting to and encouraging transactions which create an artificial price or maintain an artificial price for a tradable security.
    This summary of the debate so far is simply false. Originally, I pointed out that the circumstances at Robinhood and other brokerages were suspicious, and deserve a closer look from regulators, that was post #8, and #10. You've routinely tried to counter this narrative since #14, and in post #25 you're the one who contrasted my suspicions of Robinhood and other brokerages, against the activities of retail investors on r/WSB.

    Or, to be brief. The claim that this was a "comparison I choose to pursue on my own" is wrong, and the first person to bring it up was you, when you said, "If anything, though, regulators are more likely to be suspicious of WSB activity." in post#25.

    As to your final point, again, what r/WSB is doing is ultimately no different from what is legal, and what is done on a daily basis without being lambasted by accusations of "market manipulation", a term so legally broad it encompasses nearly everything (as was thoroughly cited). To come back to the Bill Ackman comparison, a guy who literally decried an incoming downturn in the markets, while buying more shares as a manager of a multi billion dollar firm. As far as I can tell, from basic observation and mild digging, the GME spree was started when a bunch of traders began arguing that certain stocks were undervalued and that those stocks were actually being manipulated by "Wall Street Speculators" in order to short them. Since these stocks were undervalued, a general argument to buy and hold these stocks were born, which eventually cascaded into a frenzy of retail traders buying in to ride the wave. If this constitutes "market manipulation", then so does the article previously mentioned article titled "5 Stocks That Could Make You Rich in 2021". The only difference being, is that Keith Gill publishes on Youtube and Reddit and is a lot more popular than Motley's Fool.

    Your red herring claim about conflicts of interest backfired and now you’re apparently sea lioning in an effort to substantiate allegations that trading platforms colluded with hedge funds to suppress stock prices, sans evidence. My point is very clear, and so far you haven’t indicated any basis for disputing it.
    Your point is most unclear and it's not a red herring. In fact, the so-called "red-herring" and the inherent conflict of interest was brought up by me as far back as post #10 where I disclosed that the relationship between Citadel, Melvin, and Robinhood was made the accusations that Robinhood intervened on behalf of those firms, a lot more "interesting". The only reason I brought out the phrase "conflict of interest" was because you kept arguing the point ad naseum and it appeared that I had to chew down why Robinhoods activities were suspicious.

    And again, in finance or in any business or relationship, the term "conflict of interest" requires at least two parties to have legal ramifications. While you are correct that internal "conflicts of interest" are present, they are completely irrelevant in this case as we are not discussing metaphysics, but real, physical ramifications between several parties, Robinhood, their hedge fund partners, and retail traders who use Robinhood as a platform.

    Sigh.... no it isn’t. If you want to deny that the goal of the WSB campaign was/is to engage in and facilitate transactions which create an artificial price or maintain an artificial price for a tradable security, or that GME is deliberately overvalued, you can go argue about it on Reddit. I never claimed every single person who participated/is participating has identical motives.
    Nobody accused you of doing so, but it is obvious that if the people engaged in the "WSB campaign" all have various reasons for buying the stock, then the "campaign" is neither artificial, nor manipulative in nature. You can't have it both ways.

    None of the links you’ve presented evidence allegations that trading platforms colluded with hedge funds to suppress stock prices (nor do they claim to), and again, the company’s relationships with hedge funds are not evidence of collusion or pressure exerted to restrict trading, and there is no evidence the company’s denial of such is false. The conflict you identify could theoretically be used to establish motive corroborating evidence of collusion or pressure exerted to restrict trading, but the latter has not been provided.
    That was always the entire point I was making, and I'm not sure why you are arguing for the sake of arguing, when that very point was repeatedly stressed. As was the fact, that the circumstances do not paint a charitable picture. So it seems that you are capable of connecting the dots, which leaves me puzzled as to why you bothered to reply to me, and argue in the first place.

  19. #39

    Default Re: Wall Street & Social Media

    Quote Originally Posted by Love Mountain View Post
    The thread sure, but not the comparison you made.
    This is false, and your strawman (since it’s highly unlikely you still don’t understand) about hedge funds underscores a bizarre commitment on your part to make an argument about something undermined by your own bolded selection and my exhaustive explanations:
    "I can’t help but wonder what the narrative would be if the shoe was on the other foot; Wall St speculators inflating the stock price of a wildly overvalued company, “exposing the stock market casino,” only to be screwed over by a gang of patient and determined retail short sellers who were vindicated when the bubble finally burst, and thus portrayed as the kind of “heroes” this article talks about. We’d be having a very different conversation, with politicians on Twitter demanding a crackdown on “irresponsible and amoral Wall Street speculators who distort market forces for the benefit of a few firms running a Ponzi scheme, putting the entire economy at risk on Main Street.” The vast majority of the hype surrounding WSB and GME is just that; an understandable impulse to celebrate the underdog, without an understanding of how short sellers contribute to the market ecosystem, or what would happen if these “predators” went the way of the dinosaurs."

    Now, as I understood it before, the crux of the comparison was a question for how the media would react to a potential screwing over of "Wall Street Speculators" (terminology that can refer to any number of market participants, from large corporate banks, to hedge funds, to investment firms, to "mom and pop" home offices run by billionaires, or combination thereof) by retail short sellers. There is no direct mention of the word "hedge fund" anywhere in there. Now I'm not trying to play some kind of game of "gotcha" as others are prone to do, but you did draw a distinction between firms like Pershing, and retail investors, as well as between "Wall Street Speculators", as well as "the market". So I'm assuming that you are a stickler for details.

    So to clarify, you did not mention the word "hedge fund" in the original comparison and made no attempt to clarify it until now. Why?
    More pointless sea lioning on your part. Hedge funds vs wall street speculators in general is not the point of the comparison, and your own recounting of it demonstrates your awareness of that.
    Quote Originally Posted by Legio_Italica
    Paulsen obviously wasn’t a retail investor, and neither is Ackerman. They’re hedge fund managers, betting against the market, not just against retail investors.

    Because the thread is about a situation involving retail investors vs hedge funds, and that’s the comparison I made.
    Well it is relevant, as it is the primary reason you give, for why my examples, housing shorts of 2008 and the 2020 short of credit markets, are inapplicable to your hypothetical scenario. We know how people react to short sellers teaching Wall Street a lesson. it's generally celebrated, given a 7 figure book deal, and a motion picture.
    When did retail short sellers teach Wall Street a lesson? And if these retail short sellers were celebrated as opposed to the Wall Street investors whose stocks they shorted, that would be an example of my comparison, not a counterpoint. “The chaos and mismanagement that ensued in the departments of Energy, Agriculture and Commerce in the handoff from President Barack Obama to President Donald Trump” is totally irrelevant, and Paulsen is not a retail investor.
    The point is that the SEC, or any entity that wants to accuse anybody of market manipulation will have a hard time doing so. And your complaints about market manipulation by r/WSB are a little tone deaf, considering that people like Bill Ackman buy the same securities they fearmonger about. I.e., accusing a mass of uninformed investors from r/WSB and the frenzy that occurred of "market manipulation" is hilarious when we consider the kinds of things that "Wall Street Speculators" do every day without the SEC batting an eye.
    Again, it’s a self evident fact Reddit was and is the epicenter of people explicitly admitting to and encouraging transactions which create an artificial price or maintain an artificial price for a tradable security, the definition of market manipulation. An irrelevant link to Bill Ackman defending the manner in which he bet against the market doesn’t make that fact a “tone deaf” observation. Your attempts to equate that fact to allegations of collusion between hedge funds and trading platforms by deflecting to the odds of successfully proving Redditors broke laws, or to irrelevant things Bill Ackman did, merely underscores the dishonest tactics you’ve employed to try and discredit known facts in place of substantiating the allegations.

    This summary of the debate so far is simply false. Originally, I pointed out that the circumstances at Robinhood and other brokerages were suspicious, and deserve a closer look from regulators, that was post #8, and #10. You've routinely tried to counter this narrative since #14, and in post #25 you're the one who contrasted my suspicions of Robinhood and other brokerages, against the activities of retail investors on r/WSB.

    Or, to be brief. The claim that this was a "comparison I choose to pursue on my own" is wrong, and the first person to bring it up was you, when you said, "If anything, though, regulators are more likely to be suspicious of WSB activity." in post#25.
    This is false, as your own bolded selection indicates, and why I assume is your reason for quoting it selectively:
    The SEC can dig into Robinhood and the hedge funds all they want; the odds they will find anything salacious are pretty low. If anything, though, regulators are more likely to be suspicious of WSB activity.
    The assertion regulators are more likely to be suspicious of WSB activity is confirmed by the Reuters article I cited and which you would later link to yourself. It’s a fact that the SEC is unlikely to find evidence of collusion or pressure between hedge funds and trading platforms, as cited, including from a former SEC chief economist.
    As to your final point, again, what r/WSB is doing is ultimately no different from what is legal, and what is done on a daily basis without being lambasted by accusations of "market manipulation", a term so legally broad it encompasses nearly everything (as was thoroughly cited). To come back to the Bill Ackman comparison, a guy who literally decried an incoming downturn in the markets, while buying more shares as a manager of a multi billion dollar firm. As far as I can tell, from basic observation and mild digging, the GME spree was started when a bunch of traders began arguing that certain stocks were undervalued and that those stocks were actually being manipulated by "Wall Street Speculators" in order to short them. Since these stocks were undervalued, a general argument to buy and hold these stocks were born, which eventually cascaded into a frenzy of retail traders buying in to ride the wave. If this constitutes "market manipulation", then so does the article previously mentioned article titled "5 Stocks That Could Make You Rich in 2021". The only difference being, is that Keith Gill publishes on Youtube and Reddit and is a lot more popular than Motley's Fool.
    Your determination to appeal to false comparisons in order to draw an equivalence between allegations of collusion between hedge funds and trading platforms, and the known fact Reddit was and is the epicenter of people explicitly admitting to and encouraging transactions which create an artificial price or maintain an artificial price for a tradable security, just highlights the dishonesty of your argument. Like I said, if you want to argue almost all manner of trading can be considered illegal, go ahead and die on that hill. It has nothing to do with what I said.
    Your point is most unclear and it's not a red herring. In fact, the so-called "red-herring" and the inherent conflict of interest was brought up by me as far back as post #10 where I disclosed that the relationship between Citadel, Melvin, and Robinhood was made the accusations that Robinhood intervened on behalf of those firms, a lot more "interesting". The only reason I brought out the phrase "conflict of interest" was because you kept arguing the point ad naseum and it appeared that I had to chew down why Robinhoods activities were suspicious.

    That was always the entire point I was making, and I'm not sure why you are arguing for the sake of arguing, when that very point was repeatedly stressed. As was the fact, that the circumstances do not paint a charitable picture. So it seems that you are capable of connecting the dots, which leaves me puzzled as to why you bothered to reply to me, and argue in the first place.
    That is not the entire point you were making:
    Quote Originally Posted by Love Mountain, post 10
    This is a serious issue and I hope that FTC leads a very detailed inquiry into this. Other traders also shut down or paused trading for GME. This stinks of insider trading and if it is, I hope they put them all in jail and make an example of them. Nobody should be above the law, especially the people playing with economic levers.
    My initial reply merely pointed out a fact you haven’t countered:
    Quote Originally Posted by me, post 14
    I haven’t seen any evidence of that so far.
    Quote Originally Posted by Love Mountain, post 29
    You have no access to the "evidence" in question. We don't know what went behind closed doors and this is exactly what SEC investigations do. They look at what's behind the doors without disclosing it to the public. Which is why I repeatedly stated that what you assert is certainly one possibility and one way to look at things, but it is certainly possible that there is foulplay involved.
    Quote Originally Posted by me, post 30
    The difference is these are not equal possibilities. We know for a fact online speculation deliberately overvalued a stock for the explicit purpose of causing harm, and that the netizens in question who engaged in a de facto group effort to do so would have ultimately harmed themselves and most GME investors even more had their efforts continued unchecked to their only logical conclusion. The idea that hedge funds and trading platforms colluded to stop them, on the other hand, is based on speculation.
    According to former SEC chief economist and Tepper School of Business (Carnegie Mellon) professor Chester Spatt, these actions were simply the companies and the trading infrastructure doing what they were supposed to do. This, he said, was an example of regulations working.

    “[The mainstream] is coming down on Robinhood saying ‘they changed the rules.’ No, they didn’t change the rules,” Spatt said. “First of all, their contracts allow them a lot of flexibility to intervene in terms of protecting their firm.”

    The contracts with their users in terms of service and in their back-end apparatus that clears and settles trading allow for changes depending on the situation, Spatt explained.

    Robinhood and Webull CEOs both told Yahoo Finance that the halting of buy orders and leveraged trading had nothing to do with any backroom conspiracy or restrictions on freedom.
    For whatever reason, you’ve been trying to dispute that point with a handful of false comparisons ever since.
    Nobody accused you of doing so, but it is obvious that if the people engaged in the "WSB campaign" all have various reasons for buying the stock, then the "campaign" is neither artificial, nor manipulative in nature. You can't have it both ways.
    This is a false dichotomy. The explicit goal of the entire WSB campaign was/is to engage in and facilitate transactions which create an artificial price or maintain an artificial price for a tradable security, regardless of the motivations individuals may have for participating in that goal. The latter fact establishes the bad faith motive underpinning the campaign, ie the explicit intent to injure, since the campaign succeeded in causing the desired injury, by deliberately overvaluing certain stocks for the explicit purpose of causing harm . As I said repeatedly, that fact is not dependent on proving individual Redditors broke laws in court, and is not remotely equivalent to the allegations of collusion between trading platforms and hedge funds, since there’s no evidence the latter has even taken place, much less proof of guilt in court.
    Last edited by Lord Thesaurian; January 31, 2021 at 08:55 AM.
    Of these facts there cannot be any shadow of doubt: for instance, that civil society was renovated in every part by Christian institutions; that in the strength of that renewal the human race was lifted up to better things-nay, that it was brought back from death to life, and to so excellent a life that nothing more perfect had been known before, or will come to be known in the ages that have yet to be. - Pope Leo XIII

  20. #40
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    Default Re: Wall Street & Social Media

    The Hedge Fund boys were stupid because they boasted about their next shorting target and they got punished. It wasn't by the government so maybe this is vigilante justice? Certainly tastes like justice anyway.

    In many countries (eg that didn't create the GFC) anything like shorting is regulated and is shut down altogether when the market is fragile. Typically the coked up prostitute addicts on Walls Street that Trump and Biden are so keen to keep happy are dancing on the edge of the precipice while ideologues bang on about how good they are for freedom and democracy or something.
    Jatte lambastes Calico Rat

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