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Fancy some GameStop stock?


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12 hours ago, Harsin said:

I've tried my best to follow the shares discussion in the Off Topic thread and 

 

 

 

Someone or a group of people in reddit found an exploit in the market.

It does not seem they were organised in any way other than through a reddit board. They were all small investors using investing apps. 

 

They found a way to take advantage of a flaw in a strategy being used by a few big hadge funds. They bought shares of GameStop and held them at a time when they knew they will be needed by these hedge funds in large volumes to close deals they had set up.

 

The funds then ate each other up buying the remaining shares so they could close the deals they had planned. This forced the price way up and loss the hedge funds billions (with a b). They were beaten at their own game.  Some reddit users would have made a shit ton. 

 

It is the same concept of PS5 scalping.   Just taking advantage of knowing when something is going to be short supply.

Here it affects hedge fund managers mainly and not innocent folks trying to play miles morales. :) 

 

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16 minutes ago, Marlew said:

Can we all get rich quick now if we buy some

 

As I understand it, it's sort of a legal pyramid scheme, which generally means that by the time you hear about it, it's already too late to jump in without being in severe danger of getting your fingers burnt. 

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25 minutes ago, Waggo said:

They have something that billionaire hedge funds need, but are refusing to sell it so the price is absolutely skyrocketing.

Why do they need that specific stock? 

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Probably too late for that as the price is insanely high, and so is bound to crash at some point.  It is basically a pyramid scheme now those who piled on early will make a killing at the expense of those who follow.  
 

The beauty of it is those who follow are by necessity the hedge fund managers who must buy the stock, but if ordinary Joes get sucked into it they are going to get badly burned.

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13 minutes ago, Wahwah* said:

Why do they need that specific stock? 


The Hedge Fund investors short sold the stock, which is a legal but nasty tactic where they pay a fee to borrow shares from long term holders like pension funds etc who have no interest in selling at the present time.  They then are gambling they can sell those borrowed shares and buy them back again at a cheaper price thus locking in a profit.  In other words they are actively working to undermine the value of the business they are targeting.
 

They have to buy that specific stock back in order to give it back to the funds they borrowed it from.

 

In this case the Reddit group identified their interest in undermining Gamstop and bought up the shares the short traders had offloaded and refused to sell them back, meaning prices went through the roof instead of falling as the short traders need them to do.

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32 minutes ago, Marlew said:

Can we all get rich quick now if we buy some

defo not at this point for gamestop. but there might be other similar opportunities out there. you may loose a bit of money though. it's a bet. 

 

 

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24 minutes ago, Waggo said:


The Hedge Fund investors short sold the stock, which is a legal but nasty tactic where they pay a fee to borrow shares from long term holders like pension funds etc who have no interest in selling at the present time.  They then are gambling they can sell those borrowed shares and buy them back again at a cheaper price thus locking in a profit.  In other words they are actively working to undermine the value of the business they are targeting.
 

They have to buy that specific stock back in order to give it back to the funds they borrowed it from.

 

In this case the Reddit group identified their interest in undermining Gamstop and bought up the shares the short traders had offloaded and refused to sell them back, meaning prices went through the roof instead of falling as the short traders need them to do.

Thank-you very much! I understand a few comments I've seen on this story now.

 

The amount of ads I see for hobbyist trading apps, headlines like this story and influencers saying they make money on the stock market easily just makes me think that the danger of getting screwed if you don't at least have a good grasp on things must be getting higher and higher at the moment. 

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3 minutes ago, Wahwah* said:

Do you know how they identified which stock was being shorted? I'm not interested in attempting to emulate it, just interested. 

 

You can openly see such info all around the net. https://financhill.com/most-heavily-shorted-stocks-today

 

Here you can see that GME has 7 days left (6.9) to cover, with a huge percentage of shares shorted. They have to buy them back...

 

51 minutes ago, Marlew said:

Can we all get rich quick now if we buy some

 

There might be a little to be made, but the ship has possibly sailed a bit. They still need to buy back some shares though, so it's likely the price will still increase. They have like a week to do so on their loan. It's going to be an interesting week.

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The other stock seeing attention is AMC - it went from $5 to $20 yesterday.

Blackberry and Nokia were also seeing activity but not to the same level.

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1 hour ago, sbrandon111 said:

My Brother in Law does shares and investing, makes a decent amount doing it as a hobby. About a year ago he asked me about games companies as it was an area he was interested in investing in, particularly eastern European companies. I told him about CD Project Red and this massive game that was about to come out...

 

give yourself a bit of credit. if he sold in September or December your tip was actually quite good. if he still has them maybe that class action lawsuit is the ticket. give him some legal advice. :) Stevie > Michael Pachter

 

image.png.1bd70bf05b9548988eefe00200bd233a.png

 

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3 minutes ago, Oz said:

 

give yourself a bit of credit. if he sold in September or December your tip was actually quite good. if he still has them maybe that class action lawsuit is the ticket. give him some legal advice. :) Stevie > Michael Pachter

 

image.png.1bd70bf05b9548988eefe00200bd233a.png

 

To be honest he was pretty happy, he sold some when they went up and retained some. He's pretty confident they will go back up after i explained that thier last game (Witcher) has a similar launch, although not as high profile. I know nothing about finance :)

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Thanks for all the explanations, it helped me get my head around it too. Question: when the short sellers borrow shares, how long are the borrowing contracts typically? And I take it that short sellers to borrow shares will suddenly appear when a company looks like its on a downturn so the contracts aren't usually that long?

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This is really going to be a big deal. Rich, important people banding together to influencing the market for their own gain is fine. We'll even bail them out if it goes wrong. But poor people doing it? Shit's going to get real.

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