Ye I know, especially the uncertainty of GME lasting until the start of next gen.
-
Ever wanted an RSS feed of all your favorite gaming news sites? Go check out our new Gaming Headlines feed! Read more about it here.
-
We have made minor adjustments to how the search bar works on ResetEra. You can read about the changes here.
Reddit memes GameStop into having record day at stock market; Shares at an all time high
- Thread starter Squid Bunny
- Start date
Are these two posts a joke or did you really put $2500 into something without any idea how it works, hoping it will turn into $25,000, thinking you won't lose money someone else will?
I hope it pays off for you but has anybody ever warned you about get rich quick schemes?
If I understand correctly, it's the investors who shorted the stock that are raising the prices. Reddit realized that there were 9 million borrowed shares that short investors owed back, in a pool of roughly 30 million actively traded shares. So reddit investors realized this relatively small pool of shares meant that just elevating the stock value by buying shares would cause the short investors to panic buy shares they owed to the lender before values increased further, in the same way that a normal day-trading stock holder would sell a plummeting stock, causing it to plummet as well. This is called a short squeeze, and is a pretty interesting market correction against too much shorting of a company's stock. If the ratio of borrowed stocks reaches so high that it leaves shares in short supply to purchase back, then shorters are borrowing shares already borrowed from another shorter.
Last edited:
someone on WSB explained it perfectly so that even simple people like me can understand
- Let's say 5 banana's currently cost 10 dollar
- One ape on the market has 5 banana's
- Snake asks to borrow 5 banana's for a bit and instead sells the 5 banana's thinking price will go down soon (shorting). he thinks he can buy them later for less and give them back to ape, so he make's profit on the difference.
- Group of apes notice what stupid snakes are doing and decide to buy all banana's on the market until snakes have no other choice than to buy from the group of apes in order to return what they borrowed
- If group of apes stay strong then banana price will go up.
If it continues the investors hope that the GME stock price will skyrocket and they will be able to sell for lots of profit.
I love it! So how many shorted shares are still outstanding?
I'm assuming the snake has to pay the ape some amount of interest to borrow the bananas in the first place, right? Otherwise I'm not sure what the ape gains from lending his bananas.
I uh, don't know much about the stock market. Or banana trading.
Download Robinhood app, sign up, deposit funds, buy shares low - sell high.
Don't do this unless you are willing to lose the money. And don't invest money you don't have.
That's the punchline: it appears that there's more shares being borrowed than are available to buy. Considering that it looks like Big Money has entered into the battle on WSB's side, the show might be about to begin.
I'm just enjoying this from the sidelines.
To anyone experiencing FOMO: don't. This isn't like getting in on Bitcoin early when it just took a few steps and running a program. Do you really think you would have invested in Gamestop back in the day? And any significant amount? Really? I mean, throwing some money on it now (a small amount you don't care if you lose) could be a fun time, but treat it like going to the casino or betting on a sports game.
The best part of this is that this might just be the beginning, which is absolutely hilarious.
To anyone experiencing FOMO: don't. This isn't like getting in on Bitcoin early when it just took a few steps and running a program. Do you really think you would have invested in Gamestop back in the day? And any significant amount? Really? I mean, throwing some money on it now (a small amount you don't care if you lose) could be a fun time, but treat it like going to the casino or betting on a sports game.
The best part of this is that this might just be the beginning, which is absolutely hilarious.
Yes, you a pay a premium for shorting. The problem is that the price can technically go to infinity, so when you cover the short you're exposed to total fund wipeout.
It's $137 now which is very high.. (I sold too early oops) - if it drops back down to around $60 whilst the euphoria is here I will buy back in. I wouldn't advise to buy in now, too risky.
Yeah, it looks like there are even more shorted shares than a week ago, which makes sense since the value is most likely absurdly overvalued at this point.
Yeah. I don't know what the interest is, but it's the brokerage firms that lend the shares to short sellers, and they charge interest and a fee. Especially since a short seller who borrows a share can easily go bankrupt when crazy shit like this happens, making them unable to afford to buy and give back the shares they borrowed and previously sold.
I can definitely see that.
I haven´t said it´s all rich kids. I´m saying the "edgelord" atmosphere that´s being cultivated there by the aforementioned isn´t indicative of a professional approach, and that it´s probably not financially healthy to blindly trust anonymous people on the internet just because they say that they´re your online buddy.
That´s not to say what people can or can not spend/invest their money on, but people are touting WSB as a "saviour of the common man" that will help you get rich quick and that´s frankly messed up.
The discourse on the subreddit is incredibly weird. It feels dreamlike.
Anonymous person wins 1mil.: "Look at what I got. Come in and join retards".
Anonymous person loses entire savings: "lol, no problem. Was so much fun. Thanks for the ride WSB. I salute you my fellow retards"
It feels like people cosplaying online.
That´s not to say that there isn´t normal people investing and hanging out.
edit: The word retard is an incredibly overused word on the sub.
That´s kind of what I´m implying. If you´re a millionaire (in my country at least) with $250k+ to invest carefree - you´re in the absolute top percents wealth wise.
The edgelordiness I mentioned was mainly because of the general smirkiness and teenage chat room language that´s predominant.
The amount of news this has generated has got a lot of people in traditional stocks shook. If people pooling their money can pull off a short squeeze and push the price from $4 to $140 in a small amount of time with apps like Robinhood then they are in trouble.
Billions have been lost by traditional Wallstreet people vs "normal" people. The loss isn't even over.
Billions have been lost by traditional Wallstreet people vs "normal" people. The loss isn't even over.
Been reading some of this may just be due to algorithms that are in place, I have to imagine if that is truly the case, they will be updated accordingly to handle this type of situation in the future.
I'm serious. I put $2500 not knowing anything (I only have some little experience with cryptocurrency).
GME was the first stock I have purchased in my life. I was able to purchase 28 shares.
At this point, it's 100% gambling. Don't put in money you aren't willing to lose. With that said, it looks like the proper short squeeze is imminent, possibly ongoing as we speak. I personally wouldn't risk buying in now. With that said, if you have $GME shares, absolutely hang onto them, since I don't think we're close to the peak.
At this point you take what you can get. Only honest advice I can give you is wait for another drop in price, cause so far, it looks like it might end at 50% + EOD; tomorrow it could end up even higher ¯\_(ツ)_/¯
So what you're saying is, return to monkeh? Stock market Reddit is nonsense and I love it. This whole thing has taught me more about stocks than I would've thought at the start though, so that's pretty cool lol.
Unless $2500 is like pocket change for you I'd recommend getting out if you can make any profit out of it at all. Stock purchases like this, crypto purchases from the last few years, are more similar to putting $2500 on the roulette wheel in vegas than they are safe or reliable investments.
I'm no expert though, but just caution that if $2500 is a sizeable chunk of change for you, that there's a good risk that you lose that money. That said, I hope it hits, just like I'd hope you hit if you put down $2500 and we were next to each other at the roulette wheel.
Looking at what it's doing this week the other poster would probably not want to get in now. It's over $140. There would need to be a huge dip to make it worth the risk.
I recommend getting Robinhood and pretending you got stock at whatever price and then seeing the thing go up and down. You can imagine how much you would have made or how much you would have lost.
Unfortunately no pocket change for me. $2500 is a year or savings for me. But what the heck.
Right now I'm $1500 up... But I would like minimum $15,000 to get a new car 🤣
I'm still not really grasping how this worked on a technical level. How did they generate so much interest around Game Stop when everyone was already telling that they were overvalued?
They have not been over valued until this squeeze. All the people that bet the wrong way (Think about the villain in Casio Royale who bet millions on the stock going down) a bunch of people bet HEAVY on that and loss , so they had to raise the stock price to cover the loss.
The short answer is wallstreetbets. The long answer is more complicated and I wouldn't be able to repeat what I've read and seen as explanations.
The specific trigger would have been several financial groups poking the sleeping giant that was apparently wallstreetbets and the reddit communities desire to crush wall street. The knowledge that buying more makes the price go up, which in turn kills all the shorts was the rallying cry. The proof was in Melvin Capital losses.
Citadel, Point72 to Invest $2.75 Billion Into Melvin Capital Management
This is happening to me too right now with Bank of America and a credit union I use.
Make sure you quit while you're sufficiently ahead because when this thing goes down you don't want to be riding it.
Ah, I see - so the only way for certain people that were in deep to recover was to actually raise the stock? But I thought a short option doesn't actually mean you own any real stocks?
Yeah, I've read the part about WSB - but I don't understand how they were able to do this. In December they had a community around 1.5m and I don't think there's loads of rich people that are able to throw around money there. Was it mostly a "grassroots" thing for the lack of a better term?
You could consider cashing out to the tune of your original investment and speculate on the remainder.
I feel the same - but at the same time we profited. That's great. (And I didn't make nearly as much as you.)
Be prepared to pay 22% short term capital gains tax on that ( I assume tax bracket $40,126 to $85,525)
You could sell half... nearly recoup your initial investment, and then buy back in for cheaper if it dips, or just shoot for the moon with "only" 10 weeks of your annual savings invested instead of the whole year... I mean, good luck to you but I don't think any rational investor would tell you to invest a years savings on the first stock you ever purchased... again. Good luck! Yolo I guess?
I have been following this for a couple of weeks, I didn`t invest in GME. But this event has caused me to learn a great deal about the market. I have always used a financial adviser and just wrote him a check every year. But because some idiot made a sea chanty meme in WSB, I have learned a great deal of the vocabulary and definitions about investing and feel like I can have a more intelligent conversation about my finances.
And this is why this event will bring a sea change.
And a nice profit!
Shorting a stock involves borrowing shares. This hedge fund is basically stuck between a rock and a hard place because they need to return those shares they borrowed but the price/share has skyrocketed. There's only so many shares to go around so if enough shareholders refuse to sell, supply/demand says price goes to the moon.
Silly question, but what stops the snakes from seeing the markup on banana prices and going nope?