As the squeeze tightens over the next week or so, it will important to monitor how much investors, especially institutional investors, will have to pay to buy back the shares. If the price keeps going or even holds steady, big funds may have to draw down on long positions in other stocks to cover their shorts if they don't have available cash. This could potentially provoke a sell-off on the market.
For me personally, I'm going to look at trimming some of my bigger positions on other stocks in advance of this to reduce this. This will also create a larger cash position to buy stocks at a discount if they drop.
Be the ultimate irony if a failing chain of video game stores prompts a market collapse and wipes out most of the small investors in the process
As the squeeze tightens over the next week or so, it will important to monitor how much investors, especially institutional investors, will have to pay to buy back the shares. If the price keeps going or even holds steady, big funds may have to draw down on long positions in other stocks to cover their shorts if they don't have available cash. This could potentially provoke a sell-off on the market.
For me personally, I'm going to look at trimming some of my bigger positions on other stocks in advance of this to reduce this. This will also create a larger cash position to buy stocks at a discount if they drop.
I don't see the exposure being that pervasive (ie. not every hedge fund was shorting GameStop). Worse case scenario the hedge funds that do have to cover their positions become insolvent and the fund collapses resulting in the fund liquidating all of their holdings - I believe Melvin was at $12B so thats $12B erased out of a $50 trillion dollar US stock market which isn't even a blip really.
I don't see the exposure being that pervasive (ie. not every hedge fund was shorting GameStop). Worse case scenario the hedge funds that do have to cover their positions become insolvent and the fund collapses resulting in the fund liquidating all of their holdings - I believe Melvin was at $12B so thats $12B erased out of a $50 trillion dollar US stock market which isn't even a blip really.
Well yeah, but the contagion here is funds and institutions needing cash so they start selling high quality assets to get that cash. It's not the pure GME exposure, it's the contagion from that.
I don't see the exposure being that pervasive (ie. not every hedge fund was shorting GameStop). Worse case scenario the hedge funds that do have to cover their positions become insolvent and the fund collapses resulting in the fund liquidating all of their holdings - I believe Melvin was at $12B so thats $12B erased out of a $50 trillion dollar US stock market which isn't even a blip really.
We'll see. Wallstreet has shown us a calm demeanor downplay of worry and losses while s#####g their pants simultaneously many times before. This could be way worse. There could be more hedge funds heavily exposed (140% short @$20 for big dollars). I believe hedge funds don't necessarily have to disclose positions on the spot, they can wait up to a full yearly quarter if I'm not mistaken.
Has there ever been a short squeeze before where they shut off buying only? (Serious question, I have no idea how common this type of action is taken, but just seems without precidence)
We'll see. Wallstreet has shown us a calm demeanor downplay of worry and losses while s#####g their pants simultaneously many times before. This could be way worse. There could be more hedge funds heavily exposed (140% short @$20 for big dollars). I believe hedge funds don't necessarily have to disclose positions on the spot, they can wait up to a full yearly quarter if I'm not mistaken.
Has there ever been a short squeeze before where they shut off buying only? (Serious question, I have no idea how common this type of action is taken, but just seems without precidence)
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Short squeezes often end by some sort of government or regulatory action.
In the Piggly Wiggly squeeze, the exchange gave the shorts more time to dig up shares from individual investors to cover.
In the silver squeeze, the exchanges changed the margin requirements so the Hunt brothers would have needed to put up tons of extra cash, forcing them to sell and end the squeeze.
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That is possibly the best name of a financial maneuver in history.
Lol, well it wasn't a manoeuvre. It was the owner of the Piggly Wiggly chain in the 20's who cornered the market because he was upset with Wall Street. So he borrowed about $10m and created a short squeeze where to get out of it, they'd have to pay his asking price. The problem was the exchange pushed back the deadline, and as you'll see with certain other stocks currently rocketing up, he had to find a way out without cratering the price on the way down.
Even with the buying freeze on Thursday the funds were doubling down on shorts. I think it's their arrogance that's fueling the retail investors at this point.
OTOH the funds are probably right, the government will come in to save them and do whatever it takes to regulate back to the status quo. I don't see any way the American government let's a bunch of regular Joes walk away with a load of money from this.
Even with the buying freeze on Thursday the funds were doubling down on shorts. I think it's their arrogance that's fueling the retail investors at this point.
OTOH the funds are probably right, the government will come in to save them and do whatever it takes to regulate back to the status quo. I don't see any way the American government let's a bunch of regular Joes walk away with a load of money from this.
What a way for the new administration to lose the faith of the everyday person so early into their 4 years that would be. Mind you the average Joe doesn't fully understand all of the workings of this (myself included) but right now I'm happy to be sticking it to the man and already up 80%.
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Originally Posted by oilboimcdavid
Eakins wasn't a bad coach, the team just had 2 bad years, they should've been more patient.
What a way for the new administration to lose the faith of the everyday person so early into their 4 years that would be. Mind you the average Joe doesn't fully understand all of the workings of this (myself included) but right now I'm happy to be sticking it to the man and already up 80%.
I hope I'm wrong! I bought a few shares @350 on Friday because I'd rather lose some money than be on the sidelines with what's happening here.
I hope there ends up being some positive changes to the regulations around shorting and reporting.
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oh yes, kids not stupid, made good money selling crack right up until his 18th birthday then told me 'I aint going to adult' and finished school headed to UBC and is now taking a programming course
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That video is all candy and no substance, it doesn't discuss anything but the potential positives and what it does show seems u focused and scattered.
Here's the original analysis done by him. Obviously, on our part, hindsight is 2020. But he's clearly got some experience and skill, and spent some time on GME which drove his 50K investment. I don't think he had any idea it would go like it has, but I think he had a good thesis on why there was still some value in GameStop for the next couple years. People called him bonkers for months but he kept on it and also kept posting his updates in WSB.
The question is; Did he do the deep dive analysis and share it to try and get people on board for a squeeze, or did he truly believe there was some short term value there. I think because he did such an in-depth analysis along with the frequent updates on his position, that he was hoping to drive people on board. Who knows.
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I hope I'm wrong! I bought a few shares @350 on Friday because I'd rather lose some money than be on the sidelines with what's happening here.
I hope there ends up being some positive changes to the regulations around shorting and reporting.
I hope you're wrong too, you may have seen my post earlier but I'm in for 32 shares from last week. I could have almost doubled my cash at this point but I'm still holding.
Melvin is gonna pay for my great grandkids to go to some ####tier version of mount royal when this is all said and done.
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Originally Posted by oilboimcdavid
Eakins wasn't a bad coach, the team just had 2 bad years, they should've been more patient.
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Here's an interesting article about a short squeeze that happened this century. Be warned it is kinda long but at the very least check out the Volkswagen stock graph around 2008...that is what some people are speculating could happen to Game Stop in the near future given the current excessive short positions https://moxreports.com/vw-infinity-squeeze/
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Prior to 2008, Porsche had already been a significant shareholder in VW. Then in October 2008 Porsche took its stake to 30%, even getting board approval to ultimately take that stake to over 50%. However, statements from Porsche at the time had led most investors to believe that Porsche would not be attempting a full-blown takeover.
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Next, the government fund of Lower Saxony (the home province of VW in Germany) owned an additional 20% of VW as a strategic stake.
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In addition, various index funds owned around 5% of VW due to VWs large weighting in the DAX index. These index funds were required to hold VW in proportion to its weight in the DAX, such that they would not be able to sell simply due to changes in the price of VW. Volkswagen alone made up 17% of the DAX index at the time.
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Looking at the above, it is clear that heading into October of 2008, around 55% of VW shares were already unavailable in the market for any realistic purposes. As a result, when Porsche increased its stake by an additional 44%, it meant that the true available float went down from 45% of outstanding shares to around just 1% of outstanding shares. Suddenly the seemingly “low” short interest of 12.8% turned in to a massive supply and demand imbalance. Millions of shares needed to be bought immediately even though there were simply no shares available to be sold.
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Just to ensure that short sellers fully understood the urgency of their calamity, Porsche made sure to include in its announcement a few words to address the short position.
Porsche stated that they had: “decided to make this announcement after it became clear that there are by far more short positions in the market than expected.”
Porsche added that:
“the disclosure should give so-called short sellers – meaning financial institutions which have betted or are still betting on a falling share price in Volkswagen – the opportunity to settle their relevant positions without rush and without facing major risks.”
Despite the disarming choice of wording, the statement from Porsche had precisely the effect that anyone would have expected. The announcement triggered a mass panic for the exits by anyone who was short shares of VW. Porsche had also made this announcement on a Sunday, when the market was closed. As a result, the message would be widely disseminated at a time when short sellers would have zero ability to cover their positions until the market reopened.
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As a result of its skillful financial engineering, Porsche netted itself more than $10 billion in profits in a matter of just a few short weeks. It was money that was badly needed by Porsche. Luxury car sales were plunging due to the crisis and Porsche was already saddled with significant debt.
On the other side of the trade, the hedge funds who had sold VW short quickly saw their collective losses exceed $30 billion. Hedge fund managers were “literally in tears on the phone” as they described “a nuclear bomb going off in our faces.”
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