Investments Trade Log

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anesde
Posts: 197
Joined: Wed Jan 09, 2019 8:32 am

Re: Investments Trade Log

Post by anesde »

Matt Levine from Bloomberg has had a few good articles on GameStop this week. He has a daily free email you can sign up for (“Money Stuff”) which is well written and offers a humorous take from a former investment banker and lawyer.

You can sign up for them here if you’re interested
https://link.mail.bloombergbusiness.com ... 4B6e7c24fe

What’s really interesting is the latest activist board member (Ryan Cohen) who bought a large minority share at $8.43 with a plan to turn them around from a mall-based retailer to an online giant. He’s now a billionaire on paper. Except he can’t really sell and just resign! Strange times.

IlliniDave
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Re: Investments Trade Log

Post by IlliniDave »

The Gamestop situation is pretty fascinating. From what I've been reading, sounds like hedge funds are getting somewhat skewered. Since it is hedge funds getting hurt by little people, what's the over/under on when the federal gov't intervenes on behalf of their financial benefactors? I'm surprised it's gone on this long.

white belt
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Joined: Sat May 21, 2011 12:15 am

Re: Investments Trade Log

Post by white belt »

@IlliniDave

My guess is any day now regulators will intervene, just based on the amount of hype on Wall Street that GME has generated. However, I think the decentralized nature of social media means it may be trickier to crackdown because it’s not clear who to go after. I mean you can ban WallStreetBets, but that will just turn into a game of whack-a-mole as they pop up on different platforms.

You could introduce trade restrictions, but that would affect the markets in other ways that are not favorable to the ruling class. So who knows how it will play out, but I suspect hedge funds won’t continue with their previous short strategies given what we’ve seen. Maybe Jacob or someone with more high finance perspective can give a more informed opinion about how things might look from inside.

Hristo Botev
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Re: Investments Trade Log

Post by Hristo Botev »

@IlliniDave: The conspiracy theorist in me wonders whether that's part of why some retail brokerages have halted trading on GME (and AMC).

Hristo Botev
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Re: Investments Trade Log

Post by Hristo Botev »

white belt wrote:
Wed Jan 27, 2021 1:57 pm
I mean you can ban WallStreetBets, but that will just turn into a game of whack-a-mole as they pop up on different platforms.
Based on what though? This is about as protected of free speech as you're going to get. I don't see how you can stop a bunch of industry outsiders from using social media to hype up stocks; it's no different than what investment professionals do every day.

white belt
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Joined: Sat May 21, 2011 12:15 am

Re: Investments Trade Log

Post by white belt »

Well you can go after individuals (posters, admins, moderators) for market manipulation in its various forms. Lots of SEC rules and restrictions for publicly discussing a stock that you have a stake in. However, there’s likely a strength in numbers as the SEC will only pursue the biggest fish.

Edit: It looks like the exchanges themselves might start blocking trades: https://www.reuters.com/article/idUSKBN29W131

white belt
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Re: Investments Trade Log

Post by white belt »

I’m no expert on options trading, but I think what we are seeing is the Black Scholes model breaking down because the options market can’t handle retail inflows of this size. I suspect structural change may be afoot in the future, but there are probably lots of profits to be made in the meantime.

jacob
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Re: Investments Trade Log

Post by jacob »

"Pump and dump"-schemes are illegal... but I suppose when you have a social [media] herd doing the pumping the legality becomes ill-defined. As with anything regarding these matters, the law is lagging reality. Social media inspired pump and dump is a new thing just like social media inspired riots are a new thing. There's a lot of social media behavior we don't really have laws for yet.

At the risk of Dunning-Krugering myself, I suggest the following to be a good conspiracy-free reason why retail broker-dealers might wanna CYA and stay out of this frenzy. When usern00b32 submits a market order to buy 2 shares of GME or however much their pizza delivery job affords on their WonderTrader app, this order likely does not land directly on the Nasdaq. Instead the order might initially be matched with a similar seller on an internal crossing network (in the app's system) with the broker taking part of the spread or liquidity fees as vig. The brokerdealer might also have an internal dealer/trading operation that seeks to scrape from this trading operation. (This is why funds offer "free" single stock trades to their users). All they have to do to remain legal under Reg NMS is to offer the best national price. (This means they have to check the consolidated ticker feed for the best price but they do not necessarily have to transact with the counterpart offering it. They can simply lower their own... or pay a fine if the timing is off and they accidentally sell too high. (Miliseconds matter here.) Going outsider the internal crossing, the brokerdealer can try to make the trade externally on any number of dark pools or small exchanges---this numbers in the dozens.

Now such an operation usually proceed in an orderly fashion. E.g. retailers wanna buy 13 shares ... the brokerdealer sells them 13 shares out of their own account. Once the [marketmaking] brokerdealer is 100 or 1000 shares short, they cover their -1000 position by buying 1000 shares on an exchange from a bigger counterpart. Ideally they try to make money from this, but just not losing money is fine too.

However, when shits crazy and stocks move 20-50-100% in hours, they hit the circuit breakers because it becomes really difficult to avoid exposure from not unloading in time. All the verbiage about protecting retailers from themselves ... it's more likely that they're trying to protect themselves and their operation from crashing. Also ... if this was fully opened, you might see situations where trades go through way off the price in something akin to flash crash prices except it isn't a flash crash as much as it is a completely broken market.

It helps to keep in mind that size (volume) matters, when it comes to trading fees. At the retail level, we're now used to free (of course nothing is really free) whereas it used to be a fixed cost (e.g. $7.95/trade). For large volume (1,000,000 sh) you don't pay a fixed cost but a percentage to place market orders. OTOH, you might (will) get paid (yes, you will) to put passive (resting) limit (maker) orders. These various fees vary a lot depending on where, how, and how much is sold ... not much differently than the cost of selling milk depends on whether it's packaged up in 1 gal containers or is sold by the truckload. All kinds of fancy "wiring" exists to reduce/make money from these fees. This "wiring" is not built to handle the current cra-cra situation.

jacob
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Re: Investments Trade Log

Post by jacob »

Also add the howling/bad PR a couple of days or weeks from now when usern00b32 wants to sell his 2 shares that at that point was worth maybe $2300 ... only to run into circuitbreaker after circuitbreaker (because everybody else got the same idea at the same time) leaving zero liquidity ... only to finally transact at the previous price of ~$4/sh when things settle. Such experiences can scar neophytes for years and years.

There's a reason why "orderly markets" are generally a good idea.

white belt
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Re: Investments Trade Log

Post by white belt »

@Jacob

Good points. For now I'm just interested to watch how the narrative unfolds over the coming days. Will we see the retail investors vilified and hedge funds praised to justify another Wall Street bailout? With front page news coverage and all the retail involvement, this situation will be much harder to unwind behind the scenes like they did for the junk bond bailout.

Toska2
Posts: 358
Joined: Fri Nov 20, 2015 8:51 pm

Re: Investments Trade Log

Post by Toska2 »

I put 10% NW into cash today. The federal unemployment bonus and the moratorium on foreclosures* (imo) puts a large enough part of the economy on a hair trigger. I will wait till the dust settles on both of these issues.

Overall, I am still stock heavy.


*I wonder who this is for, the people & businesses or the banks who have to write down bad loans. I have the same thoughts about student loans, students or banks?

Seppia
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Re: Investments Trade Log

Post by Seppia »

What I am most surprised is that RenTech and the likes still haven’t found a way to profit from this at the expense of retail investors.
I would imagine these “raids” organized via Reddit to work once or twice, then the third time the small fishes get slaughtered by someone with more knowledge and infinitely bigger means.
I mean what we are seeing is simply a social media organized pump and dump, not like it’s the resul of some incredible analysis à la Big Short.

More likely, the RenTechs of the world are already profiting from this by adding fuel to the fire and exiting at the correct time.

Mister Imperceptible
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Re: Investments Trade Log

Post by Mister Imperceptible »

Within the last few minutes this ZH article with rolling updates was retitled from “Most Shorted Names Tumble After WallStreetBets Reddit Page Goes Private” to “Most Shorted Names Soar After WallStreetBets Reopens”:
https://www.zerohedge.com/markets/sec-j ... volatility

Reuters: BlackRock may have raked in $2.4 bln on GameStop's retail-driven stock frenzy

Radigan Carter: The Wall Street Insurgency

Der Leiermann
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Joined: Mon May 11, 2020 5:32 am

Re: Investments Trade Log

Post by Der Leiermann »

Dave Portnoy's little speech embedded in this article will one day be in wikipedia as an example of Irrational Exuberance/Stock Market Euphoria. And he probably believes what he's saying!

ajcoleman22
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Joined: Mon Apr 16, 2018 8:45 am

Re: Investments Trade Log

Post by ajcoleman22 »

$GME to the Moon!

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Lemur
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Re: Investments Trade Log

Post by Lemur »

Lots of organic buying power...and unusual options activity on Nokia. Earnings is February 4. One of the weekly options expire February 5. The stock spiked and briefly touched around $8 a few days ago.

I can take the last price of that $10 call ($2.00)....and see an immediate 20% return on that alone. I can reduce my cost basis greatly on this stock this year if this one also ends up turning into a longer term hold like what may happen with my holding in MAC.

I guess I'm in on this one! I intend to fully take advantages of whatever we're calling this.

Nokia is trading around $5 right now before market open.

white belt
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Re: Investments Trade Log

Post by white belt »

The frenzy continues today. Some platforms suspended trading on GME and others for periods of time due to high volumes but it appears that trades are still possible as the commonly shorted stocks continue to rise. The same trend has spread to Europe and Australia. WSB membership rises to 4 million.

I heard an interview on RealVision’s Daily Briefing that this trend is a manifestation of the frustration at wealth inequality of the younger Millenial/Gen Z compared to older Boomers. The young generation is saddled with debt while the older generation continues to get wealthy by owning assets that the Fed has propped up. I don’t expect this to go away anytime soon. Fourth turning anyone?

The optics are not going to be good if regulators try to stop the retail investor from making profits after standing by and letting Wall Street manipulate markets in all kinds of ways without intervening.

Once the short sellers are done being squeezed, the question becomes who will WSB target next? Maybe the dollar or VIX. No trade is safe. Here’s an article with more insight: https://www.forbes.com/sites/mikeosulli ... e125534c3e

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C40
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Re: Investments Trade Log

Post by C40 »

- Sold half my BB shares at 60% profit after one week
- Bought a little bit of AMD
- Bought a little bit of NOK and AMC just for the hell of it.

I put a bunch of limit orders for selling GME at various prices, most very high. Oddly, the higher ones disappeared after sitting seemingly ok for about 20 hours. I sent them a complaint and entered new orders

edit - member numbers for /r/wallstreetbets, from my memory:
1/22 - 1.9 million
1/27 - 2.8 million
1/28 - 4.9 million

there are something something like 40,000 posts per day of people saying they are buying or holding GME
Last edited by C40 on Thu Jan 28, 2021 10:20 am, edited 4 times in total.

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Lemur
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Re: Investments Trade Log

Post by Lemur »

Done. Bought 8000 shares of NOK for $5.44 share. Sold 80 covered calls expiring Feb 5 for $0.70 a contract at the $10 strike. Reduced cost-basis to $4.75. NOK reports earnings February 4.

I stand to make a lot of money if either MAC (In my tIRA) or NOK (In my Roth IRA) wins the retail frenzy....or both.

white belt
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Re: Investments Trade Log

Post by white belt »

I got in on NOK and AMC with $500 I had laying around in my settlements account. Should be interesting to see how this plays out and I know I’m in full speculation mode, but if I’ve learned one thing it’s to not underestimate the power of such trends. The stocks could plummet, but on the other hand as we go into the 2nd day of front page news coverage, I suspect more people will keep piling in. There’s also the possibility that institutional money is already getting in on the trend.

The top 4 stories on the front page of Wall Street Journal are all about WSB.

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