Gamestop?

[Hristo Botev]

@IlliniDave: Not SDNY (at least not the US Attorney there--aka Paul Giamatti from Billions); but these class action plaintiffs' attorneys are QUICK! I certainly can't put together a complaint that fast.

[Loner]

A restriction on buying GME on retail trading apps does not imply a restriction on institutional traders because they transact through other channels, correct?

One guy I know, who uses IB (i.e institutional), cannot trade GME at the moment.

[C40]

I quite confused now about what did or didn't happen today relating to shorts being closed.

[white belt]

Vanguard still allows trading on GME.

I bought the dip with 26 shares of GME using my 2021 Roth IRA contribution (1.6% of my current NW), so we'll see where things go from here. AOC is live-streaming tonight on Twitch about the whole GME debacle, so it appears this is a #woke cause. If/when trading re-opens on other major platforms I'm expecting parabolic behavior due to all the coverage and political story. Or I'll be out $6k and this will all be a good learning experience.

Edit: In terms of exit strategy, the vibe I get from the WSB community is that people are holding on to this no matter what. I get that at some point we will crash, put the sentiment now is religious commitment to hold the line, so I think there is a rebound afloat. Not to mention that there is a 2 day lag for people switching platforms because of ACH transfers, so we might see a bump coming in a couple days regardless if Robinhood re-instates buying. Fidelity, Vanguard, and others are all still allowing GME buys and the hardcore WSB people will flow there.

[Lemur]

@White Belt

My concern with this is that 99% of the GameStop traders are not experienced investors or even traders for that matter. What they did as a collective was unheard of - but at this point I'm betting the sociopaths are out, and some losers are out, but mostly just the clueless are holding (to borrow from Gervais Principle).

Like the poker analogy used in another thread, I think they will mostly just fold once they have some profit or even say "what am I doing this for..." and some will sell that way. I doubt they will hold the line like an experienced trader....The only ones that will hold are ones that barely have a sizable investment. Plus as the stock price goes up and up, the amount of willing participants will decrease due to the stock price being too high for most to even buy 1 share.

I could be wrong and maybe they all will hold the line but we will see how this plays out.
Actually, MI has a real good compelling counterargument to what I post above here. viewtopic.php?p=236215#p236215

[white belt]

@Lemur

That's entirely possible. You are correct that the GameStop traders are not sophisticated and I may be too late on the trend.

Another possibility is that with AOC and Ted Cruz on the side of WSB, the situation today has opened the angry floodgates of the populists on both sides of the aisle (Trumpists and BLM). Just give the flames some time to be fanned on social media tonight and we will see in the coming days. The common person is going to see this as an us vs. them dynamic, which (hopefully for me) translates into buy GME for the tribe and win the war against Wall St.

Edit: Yes, I agree with MI's sentiment. This is going beyond the logic of making a profit from a stock and has morphed into a way for the masses to make Wall St atone for all of its sins. Regardless if you think that's an accurate narrative, that's what is currently being spun by populist politicians and media alike. A protest is geographically limited, but this is a protest of a different form that anyone can take part in with their meager savings and an internet connection. I'm sure there are quite a few Wall St funds following along and thinking the same thing.

Edit2: Not to mention the millenial Yuppies who make $100k+ and just want to get in on the action for financial profit (maybe I fall in this category?). I have at least 2 friends from such demographic that were unable to transact today because of the Robinhood restrictions.

[IlliniDave]

@IlliniDave: Not SDNY (at least not the US Attorney there--aka Paul Giamatti from Billions); but these class action plaintiffs' attorneys are QUICK! I certainly can't put together a complaint that fast.

Yes, I meant filed in, not brought by the gov't. Sorry for my sloppy diction. I'm guessing there's an interesting subtext to all of this we'll probably never find out.

[Hristo Botev]

I have at least 2 friends from such demographic that were unable to transact today because of the Robinhood restrictions.

Ditto (older millennials); and they're pretty damn fired up about it. Seems like this thing could have legs as something more than a humorous anecdote.

But I wouldn't be surprised if a state AG or a USA filed something; but they don't move as fast as plaintiff's lawyers.

[nomadscientist]

USA platforms are reportedly seizing clients' securities and forcibly selling them (to hedge funds?) at a loss to the client.

I suggest finding a non-USA brokerage.


edit: Specifying that only USA platforms are reported (to me) as engaging in this behavior.

[jacob]

Platforms are reportedly seizing clients' securities and forcibly selling them (to hedge funds?) at a loss to the client.

Ehh.. that would be very weird. Perhaps you misunderstood the process or perchance some headline got sensationalized?!

In order to short a security, a broker has to ID and borrow a specific stock (each security has unique numbers like the VIN number of a car) from someone else. This right is granted in the small print that nobody reads. It's thus not "seizing" nor "forcibly" nor "at a loss to the client". Rather if you buy retail stocks, you agree to letting the broker lend your stock (certificate) for someone else to short. Meanwhile, you retain the claim. Insofar losses are incurred it's between you and your broker.

Analogy. You hire your broker to buy a cow which they put in their pen while tagging it as yours. They can lend out the cow and someone can sell the cow they borrowed (you very likely agreed to this in the TOC). Meanwhile, you still have a claim on a cow in their pen. If the particular cow dies, your broker still has a contractual obligation to present you with a fungible cow to you on request. (Getting back the original cow or some other cow. Cows are fungible.) You only have a problem if they can't. They're not gonna take your cow and sell it for a loss to you.

[nomadscientist]

I'm receiving screenshots from people who claim they are being subjected to involuntary sales.

[white belt]

Speculation that institutional money is already getting in the WSB retail trends and may have been a factor in the moves today: https://www.marketwatch.com/articles/it ... arketwatch

Edit: So far we are on the 2nd straight day of the GME story as the top story on the main page of Reuters. Let's see if the story continues to dominate the news cycle tomorrow.

Edit2: Robinhood is re-opening GME to non-margin buys tomorrow.

[SavingWithBabies]

I'm reading though that this is Robinhood forcing sales for shares purchased on margin and apparently their ToS allow it. Reading threads on WSB about this.

Earlier today, I requested Robinhood close my account over all of this (not the margin aspect, that part basically makes sense to me but more the other shenanigans). It's no real loss to them as I've been dormant on their platform for a couple of years but...

[giskard]

Platforms are reportedly seizing clients' securities and forcibly selling them (to hedge funds?) at a loss to the client.

I suggest finding a non-USA brokerage.

No they are liquidating people who bought on margin because they changed the margin requirements to be 100%. That's a very different thing, because these folks were borrowing the money to begin with and brokers are on the hook for that. Brokers are allowed to liquidate a margin position that they don't want to underwrite.

IB was liquidating naked options too because they don't want the exposure when this mania unwinds, which it will. They have been known to do this in the past when there is a ton of volatility, I think even did it earlier this year, when oil crashed.

[jacob]

Edit: Someone help me understand the structures at play here. A restriction on buying GME on retail trading apps does not imply a restriction on institutional traders because they transact through other channels, correct?

Correct. To translate this ...

You (anyone) hiring your broker to trade your securities with other brokers and your broker telling you they no longer wish to be in the middle of that does not limit what or who other brokers can trade with. Basically comes down to the fine print. Freedom of association, I believe?

[white belt]

@Jacob

Gotcha. My understanding is the SEC/exchange would have to step in to block transactions on the security itself (ie block everyone from buying it). Well going with the "boomer" index investing company Vanguard seemed to payoff in this scenario since they didn't block transactions.

[nomadscientist]

I am told that Singapore accepts non-resident clients at SG$350,000 and up.

[jacob]

@white belt - I don't think so. There are dozens of exchanges/pools/brokers. Even if one restricts it, it doesn't mean you can't trade on/with another. The real (not idealized) market is really more like "craigslist" than "magic market app" although I don't know if you can actually hand over your 100sh to your neighbor w/o involving a third party. I don't know if SEC can "stop all trades". Trading is usually shut down "further out" whether it's the broker or the exchange itself triggering a circuit breaker. It's basically capitalism in action with private parties protecting their own interests against counterparties in a reality-based universe.

[jacob]

In practice, those who want to exit now have a harder time finding a buyer.

Such buyers would be
1) Lesser fools/momentum players hoping to sell to a greater fool tomorrow or next week.
2) Short sellers getting margin calls. (Even evil ones get those.)

The (1) source was cut off at the app level. So the price dropped.

Winners: Short sellers and future greater fools.
Losers: Lesser fools turned into present greater fools.

Not sure how this is best handled "pedagogically"?

It's really the same problem as the political snafu as described above.

[Seppia]

I am told that Singapore accepts non-resident clients at SG$350,000 and up.

It’s less than that actually.
You can open with HSBC as a non-resident if you have a premier account.