Robinhood
- Thread starter LonghornCatholic
- Start date
towersniper
100+ Posts
I know very little about SEC regs and trading laws, but but I went and read the Market Manipulation statute [15 USC sec 78i (a)(2) and (3) if anyone cares] ,and it sure looks like buying for the purpose of driving a stock value is illegal, as is disseminating information that prices will go up or down as a result of market operations, if intent to influence stock value were shown. This is exactly what the Reddit guys did. Many on Reddit bragged about and encouraged driving up the price. Maybe there are too many and too small potatoes to prosecute, but it looks illegal from my limited perspective, based only upon googling and clicking (always dangerous.) Reading this made me wonder about stock buy-backs. Shouldn't they be illegal under that statute? Companies artificially drive up their stock values all the time these days with stock buy-backs (without increasing productive capacity.) The answer seems to be that those buy-backs WERE illegal until 1982, when the "deregulation" tsunami gave corporations the special treatment they asked for. SEC Rule 10b-18 made an exception for buy-backs, when certain conditions were met. So the populists are right in that respect - the big boys are allowed to intentionally manipulate stock values, the Reddit buyers are not. It also looks like the firms that got popped in the Game Stop situation may have been engaging in illegal naked shorting (shorting stock that doesn't actually exist, with the requisite bad intent, as someone above discussed) and Melvin Capital was trying to manipulate prices by shorting so much and so fast. I tried to find out whether what they did was actually illegal, but the issue got too complex too fast - too complicated for me. My guess is that the usual Wall Street malefactors know enough to have a figleaf covering "intent." For most of the usual, big boy players the requisite intent to manipulate prices would be hard to prove, Some Reddit buyers, who didn't know that they needed a fig leaf, however, expressly stated that intent through their posts on the board. They confessed. Moreover, a lot of these amateur Reddit buyers are also going to get caught at the end of this game of musical chairs with no chair when the music stops, and they will lose money. They are buying the price up to where the company has ridiculously high market capitalization, and very little business capitalization. The stock prices will collapse, and they will be left holding trash stock they paid too much for, not understanding what was going on. I'm wondering if Reddit buyers who encouraged a mass buy for the express, stated purpose of manipulating the price won’t be targeted for prosecution to send a message - "don't do this again amateurs!" At this point the Reddit actors' best protection is public outrage since the story went viral. It is probable that the prosecutors won't have the stomach for the shitstorm if they prosecute the Reddit guys, while the big players do similar, if technically legal things all the time. Again, my opinion is worthless on this, and based upon 20 minutes of reading statutes and regulations that I barely understand, but hell, this is hornfans!
As the price drops (as it is doing now), those who would normally short it will probably consider Gamestop to now be poison and will avoid shorting it. So the bull (squeeze) opportunity won't be there anymore.
Maybe wrong message at wrong time but most folks on social media are mentally unwell.
AC
2,500+ Posts
true about social media. But to me this is about centralized control. Will the Fed bailout some hedge funds over this? Will WSB on Reddit move money from stock trading into Bitcoin which actually IS decentralized? And finally, will WSB be able to pull off a short squeeze of Silver?
Im too old to use WSB. I don’t know what those kids will do.
Seattle Husker
10,000+ Posts
AC
2,500+ Posts
I'm a CryptoCurrency investor not a stock investor. So keep us updated on what WSB is doing. I heard the Silver short squeeze is more of a MSM narrative and they are not promoting that. Is that true. I am wondering also if they are coming over to CryptoCurrency specifically Bitcoin since it is decentralized. They could front run central banks over here!
I believe Dogecoin is on their radar.
Seattle Husker
10,000+ Posts
Yep! They love the meme. WSB jumped into it last week pushing it to a high of $.07.
Last edited:
New York Mets owner Steve Cohen made in the news today. Yep, he bailed out Melvin Capital in the aftermath of their Gamestop losses. He also opened up his hedge fund today to broker-investors (this is new for him), which will raise lots more $$$$$$ to do trades and deals. So it appears that he's playing Darryl Strawberry and swinging for the fences with this one. Sometimes these guys are wrong, but I don't see Cohen going on food stamps anytime soon, or ever.
As an interesting side note to the furor over RobinHood's actions against their retail traders, don't count on the regulators to (intentionally) do anything to help Steve Cohen--they absolutely, positively hate this guy. He has lawyered up real tight, and beat them time and time again (although his old fund SAC did settle some insider trading disputes by paying fines; he just sat on the sideline a few years, operating a family office, then he founded a new fund.)
The buzz I heard on Stuart Varney's show is that the many of the big boys have been, and are still, long on silver, so some people think all this silver buzz over the past few days was a "fake news" plant by the big boys... Who knows.
I'd just say be careful out there and consult your financial advisor lest you do anything stupid. It's nutzo in these markets.
As an interesting side note to the furor over RobinHood's actions against their retail traders, don't count on the regulators to (intentionally) do anything to help Steve Cohen--they absolutely, positively hate this guy. He has lawyered up real tight, and beat them time and time again (although his old fund SAC did settle some insider trading disputes by paying fines; he just sat on the sideline a few years, operating a family office, then he founded a new fund.)
The buzz I heard on Stuart Varney's show is that the many of the big boys have been, and are still, long on silver, so some people think all this silver buzz over the past few days was a "fake news" plant by the big boys... Who knows.
I'd just say be careful out there and consult your financial advisor lest you do anything stupid. It's nutzo in these markets.
Gotta love the name.
Paragraphs please - your readers will appreciate it
Just understand that Dogecoin is memecraft about crypto shits and giggles and always have been if you choose to participate in that trade
Seattle Husker
10,000+ Posts
It's a real crypto currency but not a real viable or commonly used from what I was told. The internet loves it as a meme.
SEC Attorney: "Towersniper, you bought Game Stop to drive the price up, didn't you"
Towersniper: "Da fug outtahere"
Sec Attorney: "So your not denying it?"
Towersniper: "Hey it looked like a good investment so I bought it. By the way, who cuts your hair. That is hideous.""
Gamestop's down another 40%+ in the pre-market this morning (to around $128), so I wouldn't count Steve Cohen and the other big hedgers out here in round 2 or 3 (or 4 or 5...). I heard RH limited purchases of Gamestop to 1 share a day or two ago. Who buys 1 share, unless it's a teaser or a sort of "alarm" you set for when it crosses a certain level? Better talk with your investment advisor before you flush any $ down the toilet on this sort of stuff.
Joe Fan
10,000+ Posts
Robinhood users
Down under $100 now.
Seattle Husker
10,000+ Posts
There are certainly a lot of those WBS stalwarts that will lose their shirt. Outwardly, they claim they are OK with this. Like gamblers who lose lots of money you'll rarely hear their stories of lost investments.
Like @Chop , I'm fairly certain the institutional investors the felt the pinch will make their money back riding GME/AMC and others all the way down.
Like @Chop , I'm fairly certain the institutional investors the felt the pinch will make their money back riding GME/AMC and others all the way down.
AustinHorn24
250+ Posts
I bought a put option on GME for strike of $300 when the GME stock was at $312.00
The stock price briefly dipped below $100 when I closed today.
Option price = $4750 per 100 shares
# Contracts = 1
Total investment = # contracts x option price = $4750
Strike price value = $300 x 100 shares/contract = $30,000
Stock value at closing = 100 x $98 = $9800
Profit = strike price value - stock value at closing - total investment - commissions - fees = $30,000 - $9800 - 4750 - $0.65 x 2 - $1.00 = $15,447.70
Damn I should have bought 10 contracts instead of 1. Could have paid off my house early.
How do you like that math?
Nice on the timing--Entry and Exit.
Yeah, maybe it will go down further to $50 or $30, but that's a pretty big bird in the hand to take off the table while you're well ahead. Kudos.
A little bit of greed (and fear) is what drives markets. A lot of greed will often get people killed on a whipsaw move against them (when they should have taken the bird in the hand and closed their position for a profit...). Well played.
Last edited:
Recent Threads
-
The Media Industry
- Started by texas_ex2000
- Replies: 8K
- West Mall
-
President Biden Accountability Thread
- Started by 2003TexasGrad
- Replies: 4K
- West Mall
Prediction Results Threads
