How GameStop found itself at the center of a groundbreaking battle...

Hedge Funds Face More Than $70 BILLION in Losses After Reddit Prank
BY MEGAN FOX JAN 29, 2021 2:39 PM ET

https://pjmedia.com/news-and-politi...OE3RmIjragyDqUffljd1T5OmnvE6xyX8oHk5PdS7DJ4-o

 

LOL! Your premise is phony.

 

For those who might know, I'm still confused about the entity Robinhood in this situation. What role do they play?

 

They literally banned the buying of certain stocks, in order to allow the shorts to get out.

 

So they are not robbing the rich and giving it to the poor as their name suggests, they are helping the rich at the expense of the poor?

 

Yes

 

This may explain it:

https://www.bloomberg.com/news/arti...revent-cascading-failures-q-a-with-larry-tabb

Robinhood just didn't have enough cash reserves for GME settlements, considering the wild price swings and high frequency of trading. But, never let a good conspiracy go to waste.

Second, many other brokerages still allowed GME trading. That means the people who complain about GME rigging the game in favor of the hedge funds could have just gone to another broker to buy GME. However, it is always easier to complain a lot than to do a little more work, i.e. open an account with another broker.

 

No, you can't. Lol



If only Rosa Parks had just created her own bus line, right? Lol

Instead of being bitter, buy in and ride the wave.

 

Robinhood is just a broker.
Many are pissed about limitations, but I’m on Ameritrade and I bought 1 stock of AMC just to check on Saturday and it looks like the purchase will settle just fine on Monday.
I might try again on Tuesday, as my deposit should clear by then and I’ll be able to make a real purchase, but this, of course, depends on what will be going on with the market on that day. Not selling my real long term investment in order to play this unexpected casino.

 

You don't have to transfer your whole account to another broker. You just sign up and start buying. What's so hard?

I have accounts with Vanguard, Tiaa-Cref and Fidelity, I have accounts with multiple banks. None of them care whatever I do/have with the other financial agencies.

The Rosa Parks analogy is ridiculous. Back then, people of color were not allowed to sit in the front in ANY bus. That's discrimination. Nobody discriminated against the reddit guys, they just feel like victims because their favorite brokerage ran out of cash, due to their own herd behavior.

 

Thanks for posting this. The trades with places like Robinhood, as you say, usually settle within two days of the trade. What happens if one of the parties of the trade, for example the buyer, goes broke in those two days? The brokerage will still have to pay the seller, which is why they have clearing houses with cash reserves that handle these issues. In the GME case, they just didn't have enough reserves. This could also be caused by too many buyers who didn't have enough cash to actually buy -- after the order was already placed.

I am not any friend of day trading platforms like Robinhood or Ameritrade, I stick with actual investment (not gambling) brokerages like Vanguard. In this case, however, there is no conspiracy. The only thing that happened was that Robinhood had to protect their own bottom line.

 

Protect their own bottom line? If they have to change the rules to protect their own bottom line then they do not need to be in business to begin with.

Have they ever changed the rules and caused hedge funds to lose money?

 

Will HISTORY repeat ? Is there a hope for a SILVER lining ? ​

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You know what? Things like that happen. In mid Dec. I bought an Xbox series X for my son, or so I thought. 2 hours later, the sale was cancelled, due to lack of stock. I lost to all the bots buying up the inventory and selling it for $100s more on ebay. Some of those may be the same as the redditors that bid up GME. That's the free market. Live with it. If you don't want to, join the Democrats, who are the ones who advocate for consumer protections in the financial world. Trump, on the other hand, dismantled the fiduciary rule. You gotta rethink who is on your side.

 

Seeing some posts on that subreddit is just surreal - people using their life savings to buy GME stock and daydreaming about paying off their loans and buying new homes. And that’s after they purchased stock that was priced at $3 just 3 weeks ago for $300 a pop.
I predict lubricant makers will have a good rally after this short squeeze is over. And it ain’t gonna be hedge fund managers who will need it.

 

They didn't lose it, it got redistributed. That's what the left wants, right?

 

I don't have a robinhood account, but I would bet several hundred dollars that their lawyers were smart enough to write a terms of service agreement that allows robinhood to do what they did. Anyone who uses the RH application would have had to agree to those terms. Surely something in those terms states that RH cannot guarantee buying or selling of any given stock. Those things would be out of their control on occasion, so it would be good business practice to protect themselves - and surely they did.

Now, we can argue the morality of what happened all we want. In the end, the negative PR will have a major negative impact on RH moving forward as investors leave to better platforms. Other platforms will see this, and in the future, will be reluctant to manipulate buys and sells like RH did.

 

The whole stock market is pretty much an ecosystem where money changes hands, and when especially large amount of assets got redistributed we have a crash or a rally. Most of the money never really leaves.

 

To those who are reading this thread secretly hoping to see some investment ideas that are safer than betting on stock that grew 100 times in the last several weeks - buy Boeing.
I’ve been purchasing their stock since November of last year. It’s below $200 now, but I believe it will be closer to $1,000 in the next 2 years -> their space capsule test is scheduled for March, they might shoot humans in space in that capsule this year too. 737 Max is cleared for flights in the EU, and they are moving some production from expensive Washington to cheaper Carolinas. WuFlu restrictions will probably be lifted in the next couple of years.
Look at the reports - almost nobody is shorting (betting on stock value decrease) Boeing. It’s at the rock bottom and the only way it can go now is up!

 

Remember the scene from The Big Short where the dude says that a $20m security could potentially be worth $1b after it was diluted, repackaged, and resold?

It's all a farce.

 

You didn't answer his question. He asked if they ever changed rules to hurt hedge funds. I know you want to paint this as something Warren could fix, but it's not. Do you really think she couldn't be bought?

The truth is that the game is rigged, just like most other aspects of the system, but your partisan mindset is incapable of seeing the big picture.

 

Robinhood isn't the main culprit in this. The DTCC is.

https://www.washingtonpost.com/busi...3744bc-6257-11eb-a177-7765f29a9524_story.html

https://en.wikipedia.org/wiki/Depository_Trust_&_Clearing_Corporation

What they did was rig the system. And there's not much that could stop Wall Street in general from buying off any politician who tries to resolve this problem.

EDIT: I see that your link covers this topic as well, but the problem goes a lot further than just consumer protection. The system itself is the problem.

 

I mentioned the clearinghouse as the cause for the Robinhood liquidity crunch in one of my previous posts.

Now, you are claiming that the system is the problem. Can you explain this further? I do not disagree that big funds with lots of capital have much more power to affect stock prices than the individual investor. That is not new. What do you want to do about it? Whenever Democrats bring up issues of unfairness resulting in economic inequality, conservatives usually point to the superiority of the invisible hand. So, tell us your thoughts.

 

Sorry but this is not the same as losing out on an XBox.

 

Nah, the folks running RH were pressured by hedge fund billionaires to stop the folks screwing them over....at least that is how the hedge fund folks see it. They have screwed the little guy over so much they see it as just normal business.