Stocks - The Best Buys 2

[TherapyforGlencross]

Originally Posted by wpgflamesfan

To add to the above, there seems to be this idea that hedge funds are earning crazy returns that are out of reach for the average investor. While there are definitely individual examples of this being true, on average hedge funds tend to underperform the market (Warren Buffet even famously won a million dollar bet saying that a S&P500 would outperform these funds over 10 years).

If anyone should be mad at these funds, it's the wealthy individuals who have somehow been convinced it's worth paying a 2/20 fee structure to underperform the market.

Even the book "The Millionaire Teacher" (written by Andrew Hallam, a very good and interesting beginning investing book) preaches this.

[Cecil Terwilliger]

Originally Posted by Monahammer

Dying over here holding on to my NOK and BB. I should have just grabbed popcorn and watched!

I think we saw the peak this morning and it's gonna be all downhill from here.

Should I have sold? Am I delaying the inevitable? I don't know but my exposure is so small I'm willing to let it ride and see where this goes. If we see another big rally next week then maybe I'll sell. Otherwise this fun little game this week may turn into a long term position.

[Hemi-Cuda]

Originally Posted by Enoch Root

Can you back that up?

Hedge funds are investors. Custodial services and brokerages run the transaction systems (they don't control them). The SEC regulates them.

https://cointelegraph.com/news/finan...under-scrutiny

Melvin Capital was one of the largest short sellers for GameStop. They got bailed out by Citadel for almost 3 billion dollars. Citadel is Robin Hood's largest client, accounting for 35% of their revenue, and shortly after the bailout Robin Hood restricts buying of GME (but not selling). And then right after that Citadel reportedly reloads all of their short positions on GME

You can put your head in the sand and say that's all coincidental, but it seems pretty obvious the big players are pulling some real shady #### to get out of this mess

[TherapyforGlencross]

Originally Posted by Hemi-Cuda

https://cointelegraph.com/news/finan...under-scrutiny

Melvin Capital was one of the largest short sellers for GameStop. They got bailed out by Citadel for almost 3 billion dollars. Citadel is Robin Hood's largest client, accounting for 35% of their revenue, and shortly after the bailout Robin Hood restricts buying of GME (but not selling). And then right after that Citadel reportedly reloads all of their short positions on GME

You can put your head in the sand and say that's all coincidental, but it seems pretty obvious the big players are pulling some real shady #### to get out of this mess

According to the article you provided, the source of the bolded was Twitch's Co-Founder, who said he heard it from another source. I realize you said "reportedly" but it's not exactly a reliable source. The article then uses Dave Portnoy as another example of public outrage. Dave Portnoy of all people.

[Monahammer]

Originally Posted by Cecil Terwilliger

I think we saw the peak this morning and it's gonna be all downhill from here.

Should I have sold? Am I delaying the inevitable? I don't know but my exposure is so small I'm willing to let it ride and see where this goes. If we see another big rally next week then maybe I'll sell. Otherwise this fun little game this week may turn into a long term position.

Maybe on BB, but the longterm average for NOK is pretty close to where it is right now... I am definitely holding it until Im break even, and my average is only $5 on it.

BB I got swept up in the FOMO and am in the same boat as you. Worse, my wife was begging me for some direction (I am always reticent to do so) and now is mad that I made her lose some of her playing money on BB.

[Hemi-Cuda]

Originally Posted by TherapyforGlencross

According to the article you provided, the source of the bolded was Twitch's Co-Founder, who said he heard it from another source. I realize you said "reportedly" but it's not exactly a reliable source. The article then uses Dave Portnoy as another example of public outrage. Dave Portnoy of all people.

Even without that, Robinhood did prevent buying of GME shortly after Citadel took a high stake into GME. And if you believe their reasoning of reacting to market volatility, then why didn't they also lock selling like you would expect? Only doing one or the other is them clearly trying to manipulate a particular stock to move in a direction they want

[TherapyforGlencross]

Originally Posted by Hemi-Cuda

Even without that, Robinhood did prevent buying of GME shortly after Citadel took a high stake into GME. And if you believe their reasoning of reacting to market volatility, then why didn't they also lock selling like you would expect? Only doing one or the other is them clearly trying to manipulate a particular stock to move in a direction they want

From the best of my knowledge, selling a stock wouldn't negatively impact a company's financial holding. After all, like it or not, the number one priority of a business is their financial positioning.

[Enoch Root]

Originally Posted by Hemi-Cuda

Even without that, Robinhood did prevent buying of GME shortly after Citadel took a high stake into GME. And if you believe their reasoning of reacting to market volatility, then why didn't they also lock selling like you would expect? Only doing one or the other is them clearly trying to manipulate a particular stock to move in a direction they want

Ignoring the dubiously supported claims of the article you posted, your theory does not explain why other firms also halted purchases. Citadel bought them too? The answer is liquidity and risk management. And the reason they didn't shut down sell trades, is because those would reduce their exposure, and therefore their risk.

One thing that needs to be understood here: risk exposures aren't just something that brokerages 'deal with', they are regulated. And they are limited. And if you are offside, or beyond your limits, you have to square up that day. It isn't like your personal finances where you say 'honey, we're a little stretched this month, we need to cut back on the entertainment budget'. It is immediate reconciliation.

And when their limits are tested, they have to limit activities.

It isn't the boogeyman, it's regulation.

[sa226]

Its interesting that today the volume on AMC is 10x what it is on GME

[edslunch]

Originally Posted by Enoch Root

And what problem is that?

I am no fan of hedge funds, but they serve a purpose. They are piranhas, circling the financial waters, feasting on the weak, the stupid, and any scraps they can find.

They provide liquidity, and they challenge other positions.

Please explain how they are the problem.

(and don't say 'because they over-shorted this stock'. So what? All that has done is provide an opportunity for people like you to rally together and save the world!)

Shorts are an important tool for managing risk but in isolation are a risk themselves. Hedge funds who are in this deep without some counter-balancing upside are just stupid and greedy and don’t deserve any sympathy. I’m always understood the right formula was a combination of options and shorts to mitigate risk in either direction while still carving out some profits, but I’ve never been a trader....

[Enoch Root]

Originally Posted by sa226

Its interesting that today the volume on AMC is 10x what it is on GME

That is interesting. However, GME's price is 20x that of AMC, so it still had twice the volume in dollars.

[Senator Clay Davis]

People seem to think if AMC closes above 9 today (it did) it will spike over 30 on Monday because of calls that are in the money will expire.

[Enoch Root]

Originally Posted by edslunch

Shorts are an important tool for managing risk but in isolation are a risk themselves. Hedge funds who are in this deep without some counter-balancing upside are just stupid and greedy and don’t deserve any sympathy. I’m always understood the right formula was a combination of options and shorts to mitigate risk in either direction while still carving out some profits, but I’ve never been a trader....

There are lots of ways to manage the risk. And the hedge funds in question probably did - who knows, without looking at their books. Even if they didn't, they would have started doing so as soon as this started generating interest and publicity. They are professionals after all.

Regardless, hedge funds never deserve any sympathy.

[Enoch Root]

Originally Posted by Senator Clay Davis

People seem to think if AMC closes above 9 today (it did) it will spike over 30 on Monday because of calls that are in the money will expire.

like the calls that expired on GME today, pushing it to $1,000?

[Senator Clay Davis]

Originally Posted by Enoch Root

like the calls that expired on GME today, pushing it to $1,000?

I'm not saying it's right, but that's why AMC's volume was so much higher than GME today.

[FurnaceFace]

I would think the answer is, or would have been, to limit margin/credit purchases. You want $1000 worth of stock? Put up the cash before you buy or GTFO. Maybe a small amount of credit but if I read this right they are or were allowing full purchase of stock with “no money down”. I have noticed a couple of times TD allows that but I’ve also had them deny an order due to funds when I’ve accidentally tried to buy Stoke with one of my accounts that has a small amount of holdings. I would think that’s something any good brokerage would put in place. Having free range seems like a bad business model.

[FlameOn]

SEC investigation has begun with the goal of protection retail investors.

https://www.cnbc.com/2021/01/29/sec-...investors.html

[Enoch Root]

Originally Posted by FurnaceFace

I would think the answer is, or would have been, to limit margin/credit purchases. You want $1000 worth of stock? Put up the cash before you buy or GTFO. Maybe a small amount of credit but if I read this right they are or were allowing full purchase of stock with “no money down”. I have noticed a couple of times TD allows that but I’ve also had them deny an order due to funds when I’ve accidentally tried to buy Stoke with one of my accounts that has a small amount of holdings. I would think that’s something any good brokerage would put in place. Having free range seems like a bad business model.

Especially with this kind of volatility.

Customer buys stock with no money in the account. Stock goes down. Client walks away from account. Broker left holding the bag.

It's a goddamn conspiracy!

[agulati]

My understanding was they stopped the buying completely , not just the purchases made on margins

[Monahammer]

Today, Robinhood didn't stop trading of the shares, or restrict only to margin, rather all accounts were first limited to ownership of 2 GME shares and then 1 GME Share. It's not about margin or risk, it's about holding down the speculation and hype, which is ####ing wrong.