For those following......and pissed
Robinhood
- Thread starter LonghornCatholic
- Start date
Seattle Husker
10,000+ Posts
What I find most interesting is that the populists (left and right) are all on the same side on this. Ted Cruz agreed with AOC. 
I do agree that Robinhood seems to be at fault. There's no explainable reason for them to stop buys (only sells) other than to help those hedge funds that are trying to limit the impact of their margin calls.
WallStreetBets isn't just impacting Gamestop. My sons roommates all signed up on Robinhood today and have nabbed some easy money as WSB is pushing a few penny stocks. I had the investment discussion with them to "lock in your gains" and not try to "time the top".
I do agree that Robinhood seems to be at fault. There's no explainable reason for them to stop buys (only sells) other than to help those hedge funds that are trying to limit the impact of their margin calls.
WallStreetBets isn't just impacting Gamestop. My sons roommates all signed up on Robinhood today and have nabbed some easy money as WSB is pushing a few penny stocks. I had the investment discussion with them to "lock in your gains" and not try to "time the top".
What I find most interesting is that the populists (left and right) are all on the same side on this. Ted Cruz agreed with AOC.
I do agree that Robinhood seems to be at fault. There's no explainable reason for them to stop buys (only sells) other than to help those hedge funds that are trying to limit the impact of their margin calls.
WallStreetBets isn't just impacting Gamestop. My sons roommates all signed up on Robinhood today and have nabbed some easy money as WSB is pushing a few penny stocks. I had the investment discussion with them to "lock in your gains" and not try to "time the top".
One of my best friends made $26K on AMC. He said it was pure luck.
I'm trying to figure out if Citadel did anything wrong. They are being accused of having some involvement in Robinhood's decision to shut down trading in those stocks.
Seattle Husker
10,000+ Posts
I've heard the claims but have yet to see any evidence of Citadel owning Robinhood nor having any undue influence if they are an investor. If there is evidence of a relationship then an SEC investigation will have to follow.
Hopefully your friend got out. These stocks that the WSB's guys are investing in are moving wildly. Gamestop spiked to $492 at 2pm today and closed at $192 just 2hrs later. Then in afterhours trading was back up over $300. That has to be institutional investors driving the after hours movement. There has to be institutional money taking advantage of the Reddit mob investors.
Seattle Husker
10,000+ Posts
Just listened to a podcast with the author of "The Wolf of Wall Street". He thinks the platforms shut down the trades out of fear of their own liability for collusion and market manipulation. It was his belief that lawsuits will be filed on behalf of investors (Hedgefunds?) and applications like Robinhood and TD Ameritrade will be named defendants. I don't know the trade rules well enough to confirm or counter that claim.
I'll admit that I'm I'm pretty much a dunce when it comes to the stock market. Probably everybody on this board knows more than I do. I don't personally buy and sell stock, because I wouldn't know what I was doing. I let others do that for me.
Having said that, I'm a little conflicted on this. I think it's funny that a bunch of dorks on Reddit dicked around with hedge fund managers trying to short sell GameStop. However, I think the practice is bad, because it undermines distorts the information stock prices communicate about a company to the public and to investors. Companies in the shitter shouldn't be priced ridiculously high, just because some dorks on Reddit want to mess with hedge fund managers. You can't run a functioning stock market if this sort of thing happens a lot.
However, I also think it's BS that Robinhood shutdown the buying. If people want to buy, you let them buy even if it's for a stupid reason. It's obvious that they were trying to manipulate what was happening.
Having said that, I'm a little conflicted on this. I think it's funny that a bunch of dorks on Reddit dicked around with hedge fund managers trying to short sell GameStop. However, I think the practice is bad, because it undermines distorts the information stock prices communicate about a company to the public and to investors. Companies in the shitter shouldn't be priced ridiculously high, just because some dorks on Reddit want to mess with hedge fund managers. You can't run a functioning stock market if this sort of thing happens a lot.
However, I also think it's BS that Robinhood shutdown the buying. If people want to buy, you let them buy even if it's for a stupid reason. It's obvious that they were trying to manipulate what was happening.
Caveat Emptor.
As long as the "Reddit Dorks" did not have inside information, they did nothing wrong other than make a bad investment. In the end, both (the last buyers of Game Stop and the hedge fund) will get their asses kicked. To me, this is no different than Bitcoin. People are buying irrationally, with respect to actual value, and the price is run up to ridiculous levels, but that music will stop. Just make sure you grab a chair first.
I'm pretty sure he got out. He had his hand on the mouse all day apparently. The thing is, I bought AMC on Tuesday ($1,000) and got out at the end of the day and made a paltry $34. I was joking with my family about my day trading skills. I was dabbling and had told myself to get out no matter what. I had NO IDEA that AMC was a target of the Reddit Dorks (another awesome phrase coined by @Mr. Deez). Later when I saw what happened, I was sick to my stomach. I just didn't have the nerve to hang in there. The thing is, it's not like I needed that $1,000. I'm good. But I'm a very risk adverse type and I stayed disciplined. My bad. Oh well. At least I can buy the familia a few rib eyes to grill.
Musburger1
2,500+ Posts
Found this interesting.
Debt Rattle January 29 2021 - The Automatic Earth
(Not mentioned int the piece is that Ben Bernanke is an advisor to Citadel). This shows how compromised and corrupt the relationship is between Wall Street, the Federal Reserve, and perhaps the SEC.
...
Debt Rattle January 29 2021 - The Automatic Earth
(Not mentioned int the piece is that Ben Bernanke is an advisor to Citadel). This shows how compromised and corrupt the relationship is between Wall Street, the Federal Reserve, and perhaps the SEC.
...
The craziest thing about the ongoing Robinhood and WallStreetBets saga must be that the former was selling their clients’ positions in GameStop without permission. That’s even worse than halting trading. It’s like your bank selling your home because that pleases them for some reason. Bet a lot of people never knew that Robinhood was just a division of Citadel. Well, they know now.
Also pretty crazy is Janet Yellen receiving $800,000 in “speaking fees” from Citadel but refusing to recuse herself from the case. That could mean Biden needs to find a replacement, fast. Because her ethics agreement appears quite clear on the matter. Then again, she’s gobbled up so many of these fees from so many financial companies that she would be a lame duck Treasury Secretary if the ethics were actually applied and enforced. To be continued.
Also pretty crazy is Janet Yellen receiving $800,000 in “speaking fees” from Citadel but refusing to recuse herself from the case. That could mean Biden needs to find a replacement, fast. Because her ethics agreement appears quite clear on the matter. Then again, she’s gobbled up so many of these fees from so many financial companies that she would be a lame duck Treasury Secretary if the ethics were actually applied and enforced. To be continued.
Not as long as the big guy gets his 10%.Found this interesting.
Debt Rattle January 29 2021 - The Automatic Earth
(Not mentioned int the piece is that Ben Bernanke is an advisor to Citadel). This shows how compromised and corrupt the relationship is between Wall Street, the Federal Reserve, and perhaps the SEC.
...
The craziest thing about the ongoing Robinhood and WallStreetBets saga must be that the former was selling their clients’ positions in GameStop without permission. That’s even worse than halting trading. It’s like your bank selling your home because that pleases them for some reason. Bet a lot of people never knew that Robinhood was just a division of Citadel. Well, they know now.
Also pretty crazy is Janet Yellen receiving $800,000 in “speaking fees” from Citadel but refusing to recuse herself from the case. That could mean Biden needs to find a replacement, fast. Because her ethics agreement appears quite clear on the matter. Then again, she’s gobbled up so many of these fees from so many financial companies that she would be a lame duck Treasury Secretary if the ethics were actually applied and enforced. To be continued.
Joe Fan
10,000+ Posts
The WSJ story - should be the full article
How one man sitting in a gamer chair took down Wall Street (for a day)
WSJ News Exclusive | Keith Gill Drove the GameStop Reddit Mania. He Talked to the Journal.
How one man sitting in a gamer chair took down Wall Street (for a day)
WSJ News Exclusive | Keith Gill Drove the GameStop Reddit Mania. He Talked to the Journal.
On principle, you're absolutely right. I guess my worry is that this can undermine market confidence when the price of a stock isn't based on economics but since other agenda. Having said that, the investors can also account for that risk. The far bigger problem is the app (especially if at the urging of government actors) shutdown trading to force down the price. That kind of crap shouldn't happen.
Yes, indeed. In the future perhaps hedge fund managers will think twice before over-leveraging themselves in short positions on companies in an attempt to drive them into bankruptcy (thus fulfilling their own prediction and profiting off the destruction of the companies they targeted).
As a conservative, that is the no BS answer. Just like it is for anyone running up credit card debt or taking out a student loan.
A stock trading platform THEORETICALLY facilitates trades. They should have as much interest in the trade outcomes as a toll booth would have in the average speed each car is going on the tollway. They get paid either way.
Remember, if a transaction neutral exchange survives by commission on sales, then wouldn't they be thrilled at all the increased activity by the man on the street? The same man they claimed to be representing in their ads?
So why then would the exchange halt purchases of certain stocks and allow only selling which would drive down the price of those stocks, thereby propping up the short sale market?
Remember, if a transaction neutral exchange survives by commission on sales, then wouldn't they be thrilled at all the increased activity by the man on the street? The same man they claimed to be representing in their ads?
So why then would the exchange halt purchases of certain stocks and allow only selling which would drive down the price of those stocks, thereby propping up the short sale market?
Joe Fan
10,000+ Posts
Why do only conservatives think loans should be repaid?
I don't believe a suit against TD Ameritrade goes very far...that is who I use (albeit not on a phone app) and the only thing impacted with some of the WSB stocks was that margin requirements were changed. There was never a cessation of an ability to buy or sell except when the actual market (NYSE and NASDAQ) triggers forced a halt.
And now, Robinhood is limiting a number of stocks, including some blue chips, to ONE share. ONE share. Those aren't investors. Investors, even at the small level, aren't looking for one-share odd lots to purchase. Odd lots serve a purpose, but not when a platform is limiting you to no more than one share.
And for Vlad to have come out with his "there are thousands of other stocks out there" crap was just insane. He was complicit in market manipulation and dodged the question about whether the shutdown had been sought by the actual markets or the SEC. It was one of the very few times I could stomach Chris Cuomo interviewing someone and, like a broken watch, he happened to have been correct once...
In the interim, Robinhood has torpedoed their pending IPO. Nobody will trust them and I suspect this will lead back to people wanting more traditional companies. Especially now that people realize that the Webull that was being touted as an alternative is Chinese-backed...
Like with all meteoric rises, there are going to be people left holding the bag. This holds true in a pump-and-dump just as with a short squeeze or even just in a market crash. People who buy on fundamentals or who are only playing with money they can afford to lose will be ok...those who were literally betting the house are going to be SOL, with the hastening due to market manipulations.
Am curious whether you had the cash reserves with them at the time...I didn't try to short GME but have had no problems shorting some of the others as long as I had the free cash for margin reserve.
That said, most of my shorting activities the past month have been quick hits on TWTR after I picked up the spike/fall tendencies. And while I did purchase one of the lesser-mentioned WSB stocks (MAC), I promptly turned around and sold covered call contracts for February. Was willing to play with that some since it offers up a dividend and I got it not far above where it was normally trading.
This exactly. There is ZERO reason why a company should be in a position to be 140% sold short. ZERO!
Further, the masses who claim that the rockets and falls don't impact a company overlook that share price and "market value" can directly impact who loans money and at what terms, if any terms are offered to begin with.
Rhetorical question is rhetorical.
All one need do is look around at the end of the spectrum most noted for the clamoring for hand-outs. With the liberal bent that many fund managers have taken in the past decade, they just drive a better class of vehicle than the other beggars.
The usual way brokers deal with an extremely volatile stock is by limiting their traders’ ability to buy/sell short that stock on margin. For most stocks, some brokers will normally allow you to buy or sell short up to 4 times the amount of $ you have in your account—provided that you exit the position before the end of the day or after-hours session. For some stocks (as selected by the broker) its only 2 times the amount of $ you have. For swing trading (holding it for several days or weeks), a given broker may only allow you to buy/sell short up to twice the $ you have in your account. For stocks that are going nuts, the brokers often flag that stock as one where you cannot buy/sell short on margin at all. You are limited to only the $ you have with that broker. Nothing unusual about that. The broker doesn’t have to give you margin in the first place, so they can take it away. Also, sometimes you can’t sell a stock short because your broker can’t find the shares to borrow. Not uncommon for volatile small caps.
This is much different.
Robinhood telling its traders that they can’t even BUY up to the amount of $ they hold in a Robinhood account is far outside the norm.
Another, more “normal” approach to a run away crazy trading stock is a market circuit breaker that stops trading for a while to calm things down. After such a stop, look for a big move in either direction, so it’s questionable whether the circuit breakers are even effective.
Also, the usual situation where it’s harder to sell short (because the broker must borrow the shares), than to buy, has been flipped on its head. I don’t remember anything like this.
This is much different.
Robinhood telling its traders that they can’t even BUY up to the amount of $ they hold in a Robinhood account is far outside the norm.
Another, more “normal” approach to a run away crazy trading stock is a market circuit breaker that stops trading for a while to calm things down. After such a stop, look for a big move in either direction, so it’s questionable whether the circuit breakers are even effective.
Also, the usual situation where it’s harder to sell short (because the broker must borrow the shares), than to buy, has been flipped on its head. I don’t remember anything like this.
Few tears will be shed for the hedge fund guys losing their shirts on this trade. They’ve manipulated this market, and many other markets, by buying puts, selling short, going on tv and proclaiming what a crappy company it is, then selling short more with their buddies, causing a downward avalanche. They’ve made billions $$$$$$$$$ doing this sort of thing. I hope those who made fortunes within the bounds of the law enjoy it.
I don’t oppose selling short or profiting when a stock goes down. The shorts have just got to bear the losses when they are finally on the losing end of a big trade. Otherwise it’s the old: privatize the gains, and socialize the losses. Regulators should use a light hand approach and not take steps to eliminate short selling, squelch the expression of amateurs’ opinions on Reddit, etc, or mess with the marginability of stocks.
Say you read a message board where some anonymous guy posting as “Sargon the Stock Guru”, “Shorts Killer”, or whatever, tells you to buy a stock, it’s going to the moon. You go out and buy that stock, it goes down, and you lose money. You shouldn’t go crying to the regulators to shut down that message board or posters. When you take your advice from those sorts of guys, you should only be trading $ you can afford to lose, and not hang out in those positions for long.
I don’t oppose selling short or profiting when a stock goes down. The shorts have just got to bear the losses when they are finally on the losing end of a big trade. Otherwise it’s the old: privatize the gains, and socialize the losses. Regulators should use a light hand approach and not take steps to eliminate short selling, squelch the expression of amateurs’ opinions on Reddit, etc, or mess with the marginability of stocks.
Say you read a message board where some anonymous guy posting as “Sargon the Stock Guru”, “Shorts Killer”, or whatever, tells you to buy a stock, it’s going to the moon. You go out and buy that stock, it goes down, and you lose money. You shouldn’t go crying to the regulators to shut down that message board or posters. When you take your advice from those sorts of guys, you should only be trading $ you can afford to lose, and not hang out in those positions for long.
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