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John Galt

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I like the hedge funds. They are making tons of money by being smarter than others. Good for them. That is what America is about. All I see here is a bunch of jealous wanna be’s rooting against those that have more because they have more. Funny thing is I’m sure they all saw what was happening and hedged long as it went up.
Are the hedge funds smarter though? They’re smart because they fleece their investors by taking a 2% management fee and 20% of profits. Their investors don’t do nearly as well.
 

chri1673

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A message from Robinhood around 415 this afternoon.


"This past year, we’ve seen the financial markets become a voice for the voiceless. We’ve seen a new generation of people come into the markets, sparking conversations about what it means to be an investor. Our customers have shown the world that investing is for everyone—not just institutional investors and hedge funds.

Amid this week’s extraordinary circumstances in the market, we made a tough decision today to temporarily limit buying for certain securities. As a brokerage firm, we have many financial requirements, including SEC net capital obligations and clearinghouse deposits. Some of these requirements fluctuate based on volatility in the markets and can be substantial in the current environment. These requirements exist to protect investors and the markets and we take our responsibilities to comply with them seriously, including through the measures we have taken today.

Starting tomorrow, we plan to allow limited buys of these securities. We’ll continue to monitor the situation and may make adjustments as needed.

To be clear, this was a risk-management decision, and was not made on the direction of the market makers we route to.

We stand in support of our customers and the freedom of retail investors to shape their own financial future. Democratizing finance has been our guiding star since our earliest days. We will continue to build products that give more people—not fewer—access to our financial system. We’ll keep monitoring market conditions as we look to restore full trading for these securities. We will update this Help Center article with the latest changes.

We are deeply grateful to our customers."
 

FormerFatOL

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So if let's say the Chicago firefighters pension had a couple million investment with that hedge fund ... are the firefighters just F'ed then?
I don't know that situation. Hypothetically, if a pension fund or anyone else invested a couple million in a hedge fund that went belly up, the pension fund's losses would be limited to their invested amount.
 

MplsGopher

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Hypothetically, if a pension fund or anyone else invested a couple million in a hedge fund that went belly up, the pension fund's losses would be limited to their invested amount.
So in the end:
- the hedge fund "owes" more than their company was worth
- so they say "go F yourself, we won't pay, see ya in bankruptcy court"
- so the people who are "owed" get F'ed anyway, they won't get their money
- and the pension fund doesn't get its money back
 

FormerFatOL

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So in the end:
- the hedge fund "owes" more than their company was worth
- so they say "go F yourself, we won't pay, see ya in bankruptcy court"

- so the people who are "owed" get F'ed anyway, they won't get their money
- and the pension fund doesn't get its money back
Or... the funds get bailed out. You and I pay for it. Crony capitalism at its best.
 

GophersInIowa

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There is not a timeframe for a typical short sale (the excellent banana analogy by Taji34 in #127 above). However, brokerages can force the investor to liquidate positions when leveraged losses in an account get too high (margin call as described below). There is a specific time frame in the options market, but that's a different subject.

To steal from Taji34's excellent analogy, let's say you borrowed the banana at $10. Instead of going down in price, bananas increased to $400. You now owe $400 on a $10 investment. That's the danger with shorting stocks and the relative situation now with GameStop (that stock was under $10 weeks ago and surpassed $400 recently).

When the losses get large enough in a single investment that it puts your account at risk, the brokerage forces you to infuse new money or liquidate the short position and buy back the borrowed stock no matter what the price is (a margin call). The higher the price gets, the more short sellers are forced to buy back their stock at any price. This pushes the price even higher and is called a short squeeze.

To make matters worse, let's say that you were totally convinced the price of bananas was going to drop from $10 to $1. Your were so convinced that you borrowed $100 to short sell a total of 10 bananas. However, the price goes up to $400 per banana and you now owe $4,000 on a $10 investment. This is how leveraged hedge funds and investors get wiped out overnight.
Great explanation, thank you
 

FormerFatOL

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A message from Robinhood around 415 this afternoon.


"This past year, we’ve seen the financial markets become a voice for the voiceless. We’ve seen a new generation of people come into the markets, sparking conversations about what it means to be an investor. Our customers have shown the world that investing is for everyone—not just institutional investors and hedge funds.

Amid this week’s extraordinary circumstances in the market, we made a tough decision today to temporarily limit buying for certain securities. As a brokerage firm, we have many financial requirements, including SEC net capital obligations and clearinghouse deposits. Some of these requirements fluctuate based on volatility in the markets and can be substantial in the current environment. These requirements exist to protect investors and the markets and we take our responsibilities to comply with them seriously, including through the measures we have taken today.

Starting tomorrow, we plan to allow limited buys of these securities. We’ll continue to monitor the situation and may make adjustments as needed.

To be clear, this was a risk-management decision, and was not made on the direction of the market makers we route to.

We stand in support of our customers and the freedom of retail investors to shape their own financial future. Democratizing finance has been our guiding star since our earliest days. We will continue to build products that give more people—not fewer—access to our financial system. We’ll keep monitoring market conditions as we look to restore full trading for these securities. We will update this Help Center article with the latest changes.

We are deeply grateful to our customers."
Your bolded points out the massive hypocrisy. When they say "as a brokerage firm, we have many financial requirements, including SEC net capital obligations and clearinghouse deposits.", how much of those requirements are related to satisfying their hedge fund masters by screwing their customers? Interesting story.
 

chri1673

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Google play store and Apple deleting negative reviews For Robinhoods app. Seems like this may be a case where the spamming of negative reviews is warranted. I can support this as a friend and i each had reviews deleted.


"It’s not outside Google’s purview to delete these posts. Google’s policies explicitly prohibit reviews intended to manipulate an app’s rating, and the company says it has a system that “combines human intelligence with machine learning to detect and enforce policy violations in ratings and reviews.” Google says it specifically took action on reviews that it felt confident violated those policies, the company tells The Verge. Google says companies do not have the ability to delete reviews themselves. "
 

Wally

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Spoof loves when the little guy gets bent over.
No surprise there...
 

fan of Ray Williams

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My extremely limited experience with selling any type of share, via retirement accounts, is you go to Vangard (or whatever) and say "I want to sell 100 shares of this fund and put it into these two funds over here". They say "Ok, give me some time". Then later you get a message that it's done. If you want to see the details, you can see what price the shares sold for and then what prices the others bought for.

But what you're describing makes it seem like a share owner of any listed stock can put it up for sale at any price they want? Like Facebook marketplace. Like, you can log onto Robinhood and put a share of Tesla on sale for $5k? And just "just keep it up for sale, let me know if someone buys it, thanks!"
Pretty much, but if the stock is selling at 10 and you want to sell it at 20, you are going to have a long wait. Dude, c'mon......you are a young guy. You have to learn this stuff. Here is good one for you. HEC is merging with Talkspace. This pandemic is going to take it's toll on mental health. Here is a nice little penny stock, BIOL Here is the chart for it. It banged on 1.00 twice (the two circled x's) before finally getting through. It's called a triple top breakout. Good success with it. You are a smart kid, you could do well at this. .....Shit, sorry, the x's didn't get circled like I wanted. You will figure it out.
 

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MplsGopher

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Google play store and Apple deleting negative reviews For Robinhoods app. Seems like this may be a case where the spamming of negative reviews is warranted. I can support this as a friend and i each had reviews deleted.


"It’s not outside Google’s purview to delete these posts. Google’s policies explicitly prohibit reviews intended to manipulate an app’s rating, and the company says it has a system that “combines human intelligence with machine learning to detect and enforce policy violations in ratings and reviews.” Google says it specifically took action on reviews that it felt confident violated those policies, the company tells The Verge. Google says companies do not have the ability to delete reviews themselves. "
So they they manipulated the bad reviews that were trying to manipulate the rating.

Who isn't manipulating something in this story??
 

fan of Ray Williams

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A message from Robinhood around 415 this afternoon.


"This past year, we’ve seen the financial markets become a voice for the voiceless. We’ve seen a new generation of people come into the markets, sparking conversations about what it means to be an investor. Our customers have shown the world that investing is for everyone—not just institutional investors and hedge funds.

Amid this week’s extraordinary circumstances in the market, we made a tough decision today to temporarily limit buying for certain securities. As a brokerage firm, we have many financial requirements, including SEC net capital obligations and clearinghouse deposits. Some of these requirements fluctuate based on volatility in the markets and can be substantial in the current environment. These requirements exist to protect investors and the markets and we take our responsibilities to comply with them seriously, including through the measures we have taken today.

Starting tomorrow, we plan to allow limited buys of these securities. We’ll continue to monitor the situation and may make adjustments as needed.

To be clear, this was a risk-management decision, and was not made on the direction of the market makers we route to.

We stand in support of our customers and the freedom of retail investors to shape their own financial future. Democratizing finance has been our guiding star since our earliest days. We will continue to build products that give more people—not fewer—access to our financial system. We’ll keep monitoring market conditions as we look to restore full trading for these securities. We will update this Help Center article with the latest changes.

We are deeply grateful to our customers."
TD Ameritrade also sent one out. Covering their asses, I assume.
 

stocker08

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But what you're describing makes it seem like a share owner of any listed stock can put it up for sale at any price they want? Like Facebook marketplace. Like, you can log onto Robinhood and put a share of Tesla on sale for $5k? And just "just keep it up for sale, let me know if someone buys it, thanks!"
Technically, yes. If I had a share of Tesla....I could set a sell limit at $5,000. It wouldn't get filled, but I could do it.
 

TruthSeeker

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Are the hedge funds smarter though? They’re smart because they fleece their investors by taking a 2% management fee and 20% of profits. Their investors don’t do nearly as well.
A worthy post.
 

MplsGopher

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Technically, yes. If I had a share of Tesla....I could set a sell limit at $5,000. It wouldn't get filled, but I could do it.
So there is some automated mechanism or master list of what every active seller's price is? Someone who wants to buy 10k shares can just look at the list and say "OK, give me everyone on 'the list' who has a price <= $X" ?
 

MplsGopher

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So again my question.

Why can't LesBolstad and myself get together with the following scheme:

Les will list his Tesla stock at 1 share for $5k, and I'll buy that share. Boom -- the price for Tesla stock is now $5k per share.

Right? Where did we go wrong?
 

Wally

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So there is some automated mechanism or master list of what every active seller's price is? Someone who wants to buy 10k shares can just look at the list and say "OK, give me everyone on 'the list' who has a price <= $X" ?
Yea, lol. How do you think the markets work?
 

stocker08

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So again my question.

Why can't LesBolstad and myself get together with the following scheme:

Les will list his Tesla stock at 1 share for $5k, and I'll buy that share. Boom -- the price for Tesla stock is now $5k per share.

Right? Where did we go wrong?
Nope. You don't buy from or sell to specific people. If you want to buy...you buy from next offer in line.
 

Wally

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So again my question.

Why can't LesBolstad and myself get together with the following scheme:

Les will list his Tesla stock at 1 share for $5k, and I'll buy that share. Boom -- the price for Tesla stock is now $5k per share.

Right? Where did we go wrong?
That crap gets pulled in microcap otc stocks.

In heavily traded stocks, if you say you will pay double the price they just instantly fill it at the market price. You can't say I demand to pay double what everyone else is paying at that moment.
 

MplsGopher

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Nope. You don't buy from or sell to specific people. If you want to buy...you buy from next offer in line.
Why not??? Who gets to control things and make those rules, to such an oppressive extent??

#RIGGED
 

Wally

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I don't know that situation. Hypothetically, if a pension fund or anyone else invested a couple million in a hedge fund that went belly up, the pension fund's losses would be limited to their invested amount.
But the possible losses on the hedge funds leveraged short are theoretically infinite.
 

chri1673

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I’m guessing then that the timeframe it has to be returned is decided when it’s borrowed?
Think this answers your question. (worth 2 minutes of everyone's time, or 10 if you had to re-read it 5 times like I did)


Short selling How Long does a Short Seller have before covering:
.

Margin calls:
.


Will be interesting to see what happens tomorrow, not sure how many shorts are left out there. Robinhood and the others that shut down trading may have given the shorts enough time to cover their shorts and avoid even larger losses. Melvin capital and Citron both claimed they were out of their positions yesterday, published all over Bloomberg and the like. (Not sure what to believe)
 

MplsGopher

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It's like it's completely controlled ... and yet completely uncontrolled at the same time.

The following is theoretically possible, and would not be illegal (I think?):

- publicly traded company X, ended trading on Friday at say $50 per share
- on Saturday they announce they've suffered massive losses and are on the edge of bankruptcy
- I post a Reddit message that goes viral on Sunday -- in which I suggest that every owner of every stock simply refuse to sell for anything less than $50 per share or otherwise just refuse to sell.


Voila. The price can't go lower than $50 per share.
 

Wally

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Will be interesting to see what happens tomorrow, not sure how many shorts are left out there. Robinhood and the others that shut down trading may have given the shorts enough time to cover their shorts and avoid even larger losses. Melvin capital and Citron both claimed they were out of their positions yesterday, published all over Bloomberg and the like. (Not sure what to believe)
The really smart hedge funds shorted the shit out of the runup.

This whole thing was likely organized and supported by some big money out there. Just imagine how much you could make playing both sides of this pump. Its rediculous.
 
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