We should probably pay attention to this and start exploiting it instead of fighting each other. Start saving cash or blowing it on gamestop stocks
We should probably pay attention to this and start exploiting it instead of fighting each other. Start saving cash or blowing it on gamestop stocks
I wrote this earlier to try and explain this whole thing to some friends, full disclosure I have money in it already. Obviously I’m not a financial expert by any means (and this is not investing advice™ ), and I definitely missed some stuff, but I figure it might be useful as an explanation for everybody here since I haven’t actually seen anything go into it too much.
With stocks you can do something called shorting, which is where where you think that a stock is going to go down, and what you do then is borrow shares from a broker for their current price, sell them, and at a specified date you buy the same amount of shares up and give them back to the broker, and you keep the difference. If the stock goes down, you make money, if it goes up however you can eat it big, because there’s technically no limit to how high a stock can rise. This is where the magic comes in.
Right now $GME, our beautiful GameStop, has a short interest of over 100%, which means its being shorted for more shares than are available for sale. This is because GameStop is yknow GameStop and it went down to $5 over the summer, and a couple Wall Street firms shorted them a bunch back then. Since the stock is going up so much, they’re gonna get absolutely screwed when the shorts come in, which should be happening sometime on Monday and Tuesday of next week.
The last piece of the puzzle is a bunch of nerds on WSB refusing to sell their stock to the firms so that they can cover their shorts (give the stock broker the shares that were shorted), which creates a positive feedback loop of spiking the stock price. Remember, those firms have to cover those shorts, their assets can literally be seized otherwise, and if nobody wants to sell, then they have to offer more money. It’s like offering to pay somebody on the street more and more money for the shirt on their back until you finally offer them $1000 and they give it to you. This situation is called an “infinite short squeeze,” and as long as people keep holding it should keep going up, and lord knows they’re going to keep holding.
What you might need to on your end, if you’re still interested in our modern day robin-hood tale, is buy some $GME for as low as you can, preferably on opening on money or a dip otherwise, and hold on to it for as long as possible while the price rises. WSB seems to think it could go as high as $1000, take it with a grain of salt, but also keep that in mind when you’re deciding the price you want to sell at. I’d recommend holding for as long as possible as it goes up, since it’s usually better to sell too late after the peak than too early and completely miss it, but you know your situation better than I do.
There are a few possible pitfalls in all of this. GameStop could issue more stock and ruin the short squeeze, people might sell too early before it can reach a number that’s truly crazy, and probably some pmore that I don’t remember, but even so it’s still looking pretty good for it.
In conclusion, money is fake anyway, Marx day traded so don’t feel bad, don’t gamble more than you can afford (because it is gambling lol), and don’t say I didn’t warn you. It’s probably too late in the game to make millions of dollars like some people on WSB, but definitely still time to put a good dent in some debt you might have and maybe have a bit left over for some mutual aid, who knows. 💎🤲🚀🚀🚀
e *GME
No, don't advise people to trade. It is gambling and gambling addiction is real. Seen too many "experts" get fucking wrecked because of this shit. It's not worth it.
shits too stressful and I want to just see everyone lose all their money not make money. 📉
Yeah you’re probably right, I tried to be as informative as I could about it, but I’d be lying if there wasn’t some bull bias in there. Maybe I’m naive, but I’d like to believe that the average chacha user has a good enough head on their shoulders to be smart about it.
Isn't it $GME?
Edit: you're also forgetting the whole Ryan Cohen thing and that a contingent on WSB are also holding long (sell the squeeze and buy back when it normalizes) because apperantly the fundementals are good. Also I saw a WSB post about how $GME is also on an artificial float, that is that all the shares everyone is playing with are actually fake shares that are still true shares but still fake non issued shares? I don't know I'm kinda dumb.
It's all fake mumbo jumbo if you ask me but if anyone here can make money then I'm happy for you comrades.
Yeah it totally is $GME. I mostly just wanted to explain the “mechanics” of it, but you’re right about the long play, at least in WSB’s opinion (I told you I was missing some stuff). Honestly I’m a little more skeptical about the long term, Cohen isn’t guaranteed to strike gold just because he’s been successful in the past, I mean it’s GameStop. Then again who knows, I can’t read the bones that well.
Thanks for the write-up, had been OOTL a bit on this one.
So any predictions on how the government will step in to ensure these big firms don’t suffer any consequences once WSB pulls off their prank? We should all know better than to think that the capitalists will ever be allowed to suffer while the state is there to protect them
Honestly I have no idea, I’m the wrong person to ask. I’ve heard some murmurs that maybe the SEC will put in more restrictions for retail traders? Like not being able to use options, don’t really know otherwise.
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I’ve just been using the Robinhood app and that’s worked fine for me. It’s legit and everything, there is an approval process for setting up an account that can supposedly take some time, mine was almost instant so I’m not really sure. Not gonna post my referral code either because that just seems scummy and really I just want to keep people informed anyway.
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nah seriously that sounds like self promotion and makes me feel kinda dirty thinking about it, also I don’t wanna get banned
There's an app called Robinhood apperantly
Robinhood has some predatory practices, I'd go with another brokerage like WeBull.
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Doesn't etoro only do crypto? I only got in a while ago so don't look at me too much for advice but I'd go with a much more reliable and old brokerage; maybe Schwabb. I'd reccomend this guide .
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Download the Robinhood app and make an account. It’s super easy i even got approved for options despite not knowing how to do them. I bought a bunch around 40 and am planning on selling enough to cover my initial expense at opening because it’s at 90 now. The rest I’m holding with iron hands.
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I'm with you until this part. What do you mean by "being shorted for more shares than are available for sale"? I don't understand how this is possible.
Let's say GameStop only has 100 shares. In this example how would it all work?
I’ll try and explain as best I can to my understanding, but as always I’m no financial professional.
So, going with your example, let’s say at around June of last year, GameStop had its astronomically low share price of about $5, and some Wall Steet Firms (Melvin Capital) shorted it for let’s say, 75 shares. To do this, Melvin borrows those 75 shares at their current price of $5 dollars from a broker and sells them on the market. If the stock goes down, they get to buy those 75 shares back for less than they paid for them, and after selling them back to the broker they would earn a profit. If the stock goes up though, they still need to give those 75 shares they borrowed back to the broker, losing money in the process.
Back around the same time in June, WSB caught wind of this whole short scheme and started buying up GameStop stock and holding it, to the point where there were, let’s say, only 25 shares available in total. Remember, Melvin never owned those shares to begin with, and sold them on the market, allowing WSB to buy them up to the point where they collectively hold enough shares so that the number of shorts Melvin needs to cover is greater than the amount freely for sale, the difference having been bought up by a bunch of people who don’t want to sell.
Let’s imagine now it’s this Friday, which is the day that Melvin’s shorts have to be called in. They owe the broker 75 shares, but they can only buy 25 since the other 50 shares got bought up by WSB in the meantime. But, Melvin still owes the broker the 50 remaining shares that they shorted earlier, which is where the squeeze comes in.
Because they owe more shares than it’s possible for them to acquire, they making them have to offer more and more money until WSB finally relents and sells them the 50 shares they need, and that can be as long as WSB can collectively hold out for. If they aren’t able to cover the shares they shorted, they’re majorly on the hook from the broker they owe those shares to, and their assets and stuff like that can be seized to cover the difference, to the point of bankruptcy at least. The obligation to buy the shares from WSB is whats driving the price essentially.
Also, part of it is that the firms did something called “naked shorting”, which is selling shares to short that a broker doesn’t actually have and is super illegal, but that’s Wall Street for you.
I hope that was a good enough explanation.