> The same emotion that caused us to root for the thieves in Ocean’s 11 is what makes Wall Street Bets so enticing. Put frankly, Millennials are tired of getting fucked by the man. When you’re underemployed with $100,000 in student loan debt, your financial situation feels overwhelming. You really don’t want to take the advice of your parents or CNBC talking heads [5] to invest 10% of your salary for a 4% annual return. At that point, what’s another $5,000? Might as well buy some short-dated GME calls.
Well put. I was explaining to a friend of mine a few weeks ago why cynicism is so prevalent in our generation: we graduated in 2008 where banks, not our parents, got the bailouts; we got stuck with thousands in student debt; the dream of marrying a pretty wife and having a few kids, working for a company for 40 years, and retiring in Cabo is a relic of the 1950s; we lived with our parents until our 30s, and in spite of being so "connected," we are more lonely, have less friends, and are having less sex than previous generations; unless, I guess, you count the COVID shutdowns screwing young people yet again.
It's a never-ending shit-show. At least some of us are getting rich in /r/wallstreetbets.
>It's a never-ending shit-show. At least some of us are getting rich in /r/wallstreetbets.
This is sad because most of what you've said can be applied to lotteries as well, which historically has been criticized as being a "tax" on the poor. The end result is the same: people putting themselves in a worse place financially (on average), just so they can cope with their bleak existence.
/r/wsb is kind of insanity, but I’ve come to think that maybe young person can YOLO a bit against the odds somewhere in life. If something returns poorly on average, but has high payouts at the top it might just work out. Your life won’t be the average case but single sample.
Lottery is too improbable but some other things ”no rational person would do” can be ok. Main thing is to get over with it soon and protect the downside.
Of course if you get lucky you need to be contempt with the nice head start and switch strategy to doing the boring rational things. Not sure if these qualities are often found in one person.
> I’ve come to think that maybe young person can YOLO a bit against the odds somewhere in life. If something returns poorly on average, but has high payouts at the top it might just work out. Your life won’t be the average case but single sample.
This is indeed, after all, a website about founding startups.
The only difference between being a founder and gambling is the social signaling. In both cases, luck is a larger component than grit (lots of amazing folks have failed through no fault of their own).
No shame in gambling your way to wealth if you don't care about the social signaling.
Social signaling must come from the person doing the signaling. In my experience people who've made life changing money off crypto this last couple months say they are 'investors' or have a couple of 'business'. Never would they say it was all luck or I gambled my way to the top. They saw a trend, they bet one it and they were payed for voting with their wallet. Although you call it 'gambling' someone else might call it 'insight' or 'Voting with your wallet' in the case of crypto.
I am going to push back on this. Creating something of value is better than gambling, which is why founders have more prestige than lotto winners. Even if luck is a significant component to success, it isn’t the only component.
I think I understood your use of the word `contempt` because it is similar to `contente` in my mother-langauge (portuguese). However, I don't believe `contempt` assumes the meaning of `satisfied`, instead it is defined as `having a strong feeling of disliking and having no respect for someone or something`.
In any case, I have mixed feelings about in which direction society is heading.
On the one hand, I think this game of social ascension is the same as before, only the dream changed: we have no illusions of having a well paid job that affords us house, cars and a big family, at least not without acquiring a huge debt.
On the other hand, on average, we have much more access to information. The average joe is much more educated and have higher buying power than 100 years ago.
I think we can't really look at the present comparing with what once was, because we live in a time of its own. We have to reassess the current configuration, fight to keep what we acquired in terms of freedom and equality, but try to fix the perceived feeling of separation, loneliness and helplessness together.
>If something returns poorly on average, but has high payouts at the top it might just work out. Your life won’t be the average case but single sample.
This almost certainly results in a worse average outcome, because of diminishing returns on income. Winning a 10M jackpot won't bring you 10,000 times the happiness compared to finding $1000 on the ground.
I think this is a truism which doesn't always apply.
Suppose that there are 1,000 basement-dwelling redditors (okay, it's a caricature). Each has their basic needs taken care of, but not much money, and not much scope to improve their lot in life. What little money they have doesn't get invested, but spent frivolously.
Suppose 1,000 such people could all put in $500 and give it to a randomly selected one of them. That person wins a life-changing amount of money. They suddenly have their prospects upgraded - they can travel, buy a house, live in some comfort, pursue a dream career. Couldn't it arguably be rational for all 1,000 to participate in that game? Doesn't it make sense that the utility curve is convex, not concave - that $500,000 is more than 1,000 times better than $500, when compared to $0?
After all, suppose that $500 was a year's spare income. Even saving for most of a lifetime would only yield $20-30,000, nothing like enough for many of the opportunities that half a million would make possible. And a lump sum at age 65 could be much less useful than one at age 25. Losing the $500 might barely make a difference to one's quality of life.
Now suppose that to participate in this lottery, they have to pay 10% of the money to Wall Street, or high frequency market makers, or whoever. Couldn't it still be a rational choice for each of the 1,000 to participate?
This is just the flip side of why people support progressive taxes. If you believe that a flat tax is unfair because the people at the lower end of the spectrum have much less free money that isn't taken up by base needs, then it follows that different amounts of money affect people in different circumstances differently.
To the person with 10 million dollars, doubling their wealth is nice for them but likely won't result in a major change in lifestyle and what they could or couldn't do before. Maybe they go from a large house to a larger house. For the person that makes 30 thousand a year, doubling it makes a huge difference in how they live. The disposable income amount doesn't double, it's likely many many times higher, because it was such a relatively small portion before.
The same thing applies to one-time payments. It would make sense in your example even if the payout was much less (like $10k) but still affected the group similarly (i.e. if they had less disposable income). That amount of money is a huge to people that have little disposable income.
All good points, but I think most real flat tax proposals have zero tax on your “base need” income. Imagine no taxes on first $40k of income... Then a flat tax above that.
I completely agree, with the precision that there can be huge difference between two people with a similar amount of money, if one has most of their needs take care of (ie 'broke' but not 'poor') and the other will suffer severe consequences of they run out of money.
>What little money they have doesn't get invested, but spent frivolously.
The implication you're making here is that these people wouldn't mind losing $500/year, because it's otherwise being spent "frivolously". I don't think this is true because if you're spending it on something, you're getting joy out of it, otherwise you wouldn't be spending money on it in the first place. For reference, $500 can buy you a game console or several games, which can provide you with tens or hundreds of hours of entertainment.
If it's really the case that the $500/year is being spent frivolously (ie. being spent on things that don't bring joy), then the correct course of action would be some sort of intervention that forces them to save, so they receive a large enough lump sum that can be used productively. We sort of see this happen with tax refunds, where people are basically forced to save throughout most of the year, the IRS gives it back at the end of the year, and they spurge the refund on a big purchase.
>Doesn't it make sense that the utility curve is convex, not concave - that $500,000 is more than 1,000 times better than $500, when compared to $0?
What makes you think that? I think it's generally accepted that money has a diminishing returns on happiness. I guess if you go to the extremes there's some ranges where it doesn't apply (eg. it's hard to do anything fun with a $5 bill), but there's also nothing preventing you from saving up the money.
>After all, suppose that $500 was a year's spare income. Even saving for most of a lifetime would only yield $20-30,000, nothing like enough for many of the opportunities that half a million would make possible.
You're off by a factor of 2. Factoring in a 6% inflation adjusted return, you end up with a return of $77,380 if you do this for 40 years.
You seem to believe that saving is a virtue, that you get what you pay for, that interest rates have a natural level much higher than zero, and in 'diminishing returns'. I accept that you and many other people believe in those things, but I don't think they are universally believed in, not particularly supported by evidence.
Saving isn't a virtue. You need a healthy balance between savings and spending. The economy is like a power grid. You cannot save labor. Any work that is currently done has to be consumed within a short time frame. Food rots. Technology gets obsolete.
Maybe if you are thinking in terms of being able to purchase things and financial security.
Things that bring me joy are being able to donate enormously to solve social problems in my quality. I can say for certainty that it will bring me 10,000 times happiness.
i don't know about that, if you're going from barely making rent or just straight up homeless, to never worrying about money again, the multiplier might be even more
Exactly. I first heard the bull thesis from Michael Burry. Hardly a gambler. GME was comically over shorted in a console release year. Burry predicted a short squeeze way before WSB picked it up.
We can find plenty of experts rationalizing some stocks or history, all with convincing narratives. But can you find a expert explaining the numbers which came up in lottery last night with such a believable narrative (wrong or right)?
> But can you find a expert explaining the numbers which came up in lottery last night with such a believable narrative (wrong or right)?
Isn't that what fortune tellers are? The only difference is that most people know that trying to predict the lottery is bullshit, but most don't think that's the case for stocks despite evidence to the contrary (eg. that actively managed funds underperform passive funds on average).
It's still a lottery. They didn't know if there would be enough real following or if most people were just trolling. Even if they estimated that well, they still had no idea where the peak was.
Exactly this. Many of us have been WSB for a while and it is really hard to know whether all this GME buzz would amount to anything material until it actually happened
A typical lottery in the USA has odds of like 1 in 300 million. The fact alone that more than 100% of float was shorted put the odds of this happening way above any chance you have of winning the lottery. Suggesting that just because there was an aspect of chance involved that it is on par with a lottery is ridiculous.
With 1/300M you're likely thinking of a jackpot. Winning anything is much lower. Powerball is 1/38 for the lowest payout. And in the same way, there will be a lot of people around breakeven point in the GameStop lottery, some small winners and some people who are now set for life.
Then you are not paying attention. The floating shares are fewer than the shorted shares. Even if all the floating shares were bought, there are not enough shares to cover the short's position.
So what? The same share can be bought more than once in just the same way it can be sold more than once; in fact, the one necessarily entails the other.
What happens if nobody sells? Say 40% of total shares are floating. You the hedge fund owe 60% of the shares because you shorted them. Even if your position is closed immediately (hint, it won't), you would still need to find the remaining 20% of the shares that you owe. Who will give you that 20%? Well I of course, but the difference is, I get to dictate what the market price is.
We saw this happen in 2008 with Volkswagen. 1% of the total shares were floating because Porché had purchased the remaining, the rest of the shares were owned by institutions and they were not selling them.
They owe more shares than there are available and they pay interest on said shares. Even if nobody sells, the interest gets accumulated and they are bleeding.
yeah, but how much can they bleed? Can they just give up, default and declare bankruptcy? And then all the people hoping for a short squeeze end up holding stock that is not worth much anymore?
I thought that takes a lot of time though, because of SEC filings, after which the bubble could be over. Or are they allowed to hold on to a bunch of ready-to-go shares?
(Honestly asking and don't know, everyone please only answer if you have knowledge of how these kinds of things work and are able to identify and explain away the relevant confusions.)
However, it looks very clear that GameStop is allowed to hold on to a bunch of shares it can sell directly in the stock market, since it did exactly that:
> Happily, GameStop does have an ATM offering going. It put it in place on Dec. 8, 2020, when the stock was at about $16.35. The way these things work is that GameStop disclosed that its bank could sell stock—up to $100 million worth—“from time to time” at GameStop’s request “consistent with its normal trading and sales practices”; it did not disclose any particular schedule, and has not yet reported if any shares have been sold, or how many, or when. So I don’t know if GameStop had sold the whole $100 million before Friday’s wild run, or if it had any stock left over to sell; if it had any left over, I don’t know if it sold it all on Friday. I hope it did!
> The floating shares are fewer than the shorted shares. Even if all the floating shares were bought, there are not enough shares to cover the short's position.
that's not necessarily true.
Quoting Matt Levine[0]
> There are 100 shares. A owns 90 of them, B owns 10. A lends her 90 shares to C, who shorts them all to D. Now A owns 90 shares, B owns 10 and D owns 90—there are 100 shares outstanding, but 190 shares show up on ownership lists. (The accounts balance because C owes 90 shares to A, giving C, in a sense, negative 90 shares.) Short interest is 90 shares out of 100 outstanding. Now D lends her 90 shares to E, who shorts them all to F. Now A owns 90, B 10, D 90 and F 90, for a total of 280 shares. Short interest is 180 shares out of 100 outstanding. No problem! No big deal! You can just keep re-borrowing the shares. F can lend them to G! It's fine.
Sure. What if they can't borrow them though? What if they are owned by retail/institutions/board? Some conservative estimates put WSB holding 7-8% with some people owning .2-0.4% and that is without the lurkers.
Same thing happened to Volkswagen, only 1% of the shares was available for purchase and they had to close their positions.
Eh, owning debt is always a possibility with options. But I agree, especially the people who YOLO large amounts of money on dailies. But honestly, that’s what makes WSB fun. There’s a mix of everything, serious traders, reckless gamblers. It’s insanely entertaining, even just from the sidelines.
Does anyone really believe that? The Fed'Gov couldn't get it together enough to vote for $600 assistance checks. We might see something before too long... maybe.
And this is for a global pandemic. You think they're gonna do anything if people choose to make risky-ass bets that don't pan out?
Isn't that exactly what happened with home ownership? Everyone levers up to buy a home, real estate goes into a bubble, and when it would normally crash, the government comes out in force with grants and easy credit programs ("Making Home Affordable" etc) because those malinvestors dominate the voting pool.
That's basically the reason why interest rates should be above 0% right now. Inflation is mild but it is still higher than 0%. I consider it extremely foolish of the Fed that the interest rates aren't at least at 0.5% just to send a signal that the easy money is slowly disappearing.
That easy money is driving malinvestment and it will just fuel any future bubble that inevitably ends up popping.
The argument is that we’re working to keep a roof over our heads now because we YOLOed through college. And while that doesn’t describe me, I had a lot of peers who partied through college, skipped classes, hardly worked, majored in women’s studies / art history / literature / etc and still managed to live in the dorms, buy daily lattes, have the latest iPhones, etc.
> I had a lot of peers who partied through college, skipped classes, hardly worked, majored in women’s studies / art history / literature / etc and still managed to live in the dorms, buy daily lattes, have the latest iPhones, etc.
That's what you get when your system is designed to give money easily to young people who don't understand the consequences of major financial debt.
Blaming this on the individuals is leaving aside that there are huge incentives to behave like that in the US: lack of financial education during formative years, a society based on consumerism and status, a society which provides easy access to a huge amount of capital through student loans.
From the outside it looks extremely predatory, even more when this easy money flows into universities increasing tuition prices, the same pressures on housing prices get in play here, with the difference that a mortgage is potentially dismissable if you go into bankruptcy.
I agree. I typed this hurriedly and didn’t mean to imply that it was individuals faults in particular. It’s certainly society’s fault at large as you observe. Perhaps a bygone generation would have been more fiscally conservative. It’s absolutely predatory with respect to universities jacking up tuition costs with nothing to show for it with respect to educational outcomes.
The mortgage is also often able to be discharged by selling or giving back the house as it's a secured loan. No one is lining up to give a quarter-million dollars to an 18-year old who has no track record of paying back significant loans, no current income to backstop such a loan, and where there would be no repossessable collateral in the event of a default.
> system is designed to give money easily to young people
Who exactly designed the system that way? Banks (aka capitalists) were not very keen on doing this exact thing for the risk reasons, and now the government ended up backing most of the educational debt for some reason (aka socialism).
"Who?" is a very loaded question for a process that for happenstance ended up designed this way through the decades. It's not about a single designer, it's about a power structure that has been perpetuated by the elites on this power structure.
And I'm sorry, the moment you use "socialism" to describe the government backing private loans from institutions that are privately held you lost me. This is not even close to a semblance of socialism, this is your government trying to live by the ideology of "free market everything" and patching the holes created by this ideology with a more expensive (and dumber) solution.
If higher education was free for every citizen, subsidised by taxes, you could call it a socialist-ish policy. Having to pay "market price" for your education through government-backed loans to private banks is far, very far from socialism.
> This is not even close to a semblance of socialism, this is your government trying to live by the ideology of "free market everything" and patching the holes created by this ideology with a more expensive (and dumber) solution.
I'm not an ardent capitalist, but I think education is an area that would have been better off without government tampering, or perhaps with less-clever tampering. The good bit about our student loan program is that it normalized higher education (perhaps too much to the extent that many would have been happier and more successful in the trades). The bad bit is that government put all risk on the students, allowing for students to elect into programs that wouldn't have a good return on investment--something that virtually no bankers would have signed off on. As a result, two things happened: 1. millions of students annually opt into careers with poor job prospects on the other side and 2. the price of higher education inflated (something like tenfold) to meet the availability of student loan money (and without any corresponding increase in value) because the system isn't steering students (and their loan money) toward programs that deliver. I think if we allowed students to default on their loans, we would see loan prices fall 80% or more ($8K instead of $40K).
> And I'm sorry, the moment you use "socialism" to describe the government backing private loans from institutions that are privately held you lost me
No, I am sorry. When government forces financial institutions to give loans to everyone applying without risk analysis it IS socialism, aka “democratic control over the enterprise”. No capitalist in their right mind would give hundreds of thousands of dollars to pay for underwater basket weaving degrees and expect to see the money back.
We used to have socialized college education, taxpayer paid. Now we have capitalist loans paying for it, and borrowers pay high rates of interest for decades.
>I had a lot of peers who partied through college, skipped classes, hardly worked, majored in women’s studies / art history / literature / etc and still managed to live in the dorms, buy daily lattes, have the latest iPhones, etc.
Did you go to a 4 year private school (possibly a non-Ivy)? I feel like you are describing a class of Americans who are oblivious to their privilege, but are mistakenly labeled as the working class who’s problems would simply be solved if they stopped buying avocado toast and switched their Starbucks for water.
I assure you your classmates who went to private 4 year school on dad’s dime do not reflect the majority of working class millennials. For many millennials they are more worried about being wiped out by a trip to the hospital that would cost the price of 3 lifetimes of lattes
Quite the opposite. I'm from a lower middle class family and that because my parents worked overtime in their blue collar jobs. I went to a public 4 year university. I was successful in college precisely because I didn't have a privileged background. While I also had no idea how to manage that much money, I erred on the side of caution. While my contemporaries lived in dorms, I spent half and rented a house with several other people some miles from campus. I didn't have daily Starbucks. I didn't party or skip classes. I worked 20+ hours while I was in school.
> I assure you your classmates who went to private 4 year school on dad’s dime do not reflect the majority of working class millennials.
I wasn't talking about working class millennials, but millennials in general.
> For many millennials they are more worried about being wiped out by a trip to the hospital that would cost the price of 3 lifetimes of lattes
Yeah, we have private health insurance and that really sucks for those who don't have access to decent insurance. But that doesn't justify living it up in school. Note also that I'm not even blaming millennials per se; our society failed to teach us personal responsibility, and it went even farther by creating a loan program and dumping us into a predatory university system with the vague guidance that we should follow our dreams, have a good time, and everything will just work itself out. Of course the majority of us took the bait and lived it up. Worse still, we graduated into an economy that was worse than what our parents dealt with. Excuses abound, but nevertheless, our generation YOLOed pretty hard even though the YOLOing wasn't evenly distributed.
I went to a four year state school in a state mostly free from major metropolitan areas full of stupid money that tend to mint a lot of those types of people. Yet there were still a lot of those people on campus. I wouldn't say a majority but they were there.
FWIW, I also went to a smaller university in a blue collar city where that kind of rich people money was largely absent.
I still saw this behaviour a ton, and it wasn't people living large off of daddy's money, it was people living large off of way too much student loan money.
People would take the maximum loan they could get even if they were living at home with no expenses, just so they could afford a party lifestyle
>The argument is that we’re working to keep a roof over our heads now because we YOLOed through college. And while that doesn’t describe me
Nor me. I worked throughout all of undergrad. My work paid for my grad degree. I have an MSEE and am looking at $50k of student debt. My income is such that I expect the only way my debt will go away in the next ten years is through PSLF. Owning a house before I’m 40? I’m not so sure. Where exactly is the YOLO? The generation didn’t piss anything away. We’re getting shafted.
You have an advanced degree in EE, paid for by work who valued that enough to pay for it, and don't expect to be able to clear $50K in student loans in 10 years.
Are you still working in a job requiring that degree, because if so, that does seem like you're getting shafted (especially compared to the equivalent on the CS side of EE/CS).
So to confirm, you took the job because there are no higher paying jobs available? I think GP was assuming that you had higher paying job options (given that EE jobs are high paying and generally in demand), but you chose to forgo that in favor of a research/academic position.
In my area of expertise and location, there are slim pickings. I moved to stay with my SO while they pursue a PhD. "There's always a choice" is a weak argument. I could move to a tech hub and get an easy cushy job in an ethically bankrupt field. I won't. I am not making life choices that maximize profit. I am also not acting irresponsibly, "living beyond my means", or making bad financial decisions.
You don't see a problem with a motivated, hardworking, educated individual meeting the market at a price that keeps them below what previous generations consider middle class? That is not indicative of an issue to you?
Why do you posit that your only options are "tech hub" and "research job"?
> You don't see a problem with a motivated, hardworking, educated individual meeting the market at a price that keeps them below what previous generations consider middle class? That is not indicative of an issue to you?
I think people are trying to understand if you are working at or below your regional market value. That said, it sounds like a problem local to your region. I think if you look at Glassdoor you'll find that you're well below the national average, and I don't think it's just Silicon Valley inflating the national average. (I have an EE degree as well and on graduation it seemed like $75K was a pretty reasonable starting salary most places with lots of room for growth).
I mean, with respect I don’t know how you are working with an MSEE and aren’t able to pay down $50 over 10 years without a lofty lifestyle. Perhaps if you live in NYC or SV where the cost of living is absurd, but I don’t think your experience is typical.
Sorry, I was using YOLO in the narrow WSB sense of betting on low-likelihood, outsized gains. If you have the chance to risk 5k to get out of 100k student debt, why not do it, if you’re disillusioned by the system.
> partied through college, skipped classes, hardly worked, majored in women’s studies / art history / literature /
Some of those things are not like the other. I studied computer science, plenty of people partied and as far as I can tell, people who studied humanities like literature had to work more. It was not easier major in terms of how much you have to work. I liked computer science, so I am always surprised about how many people seem to hold resentment toward those who studied less fun majors.
In any case, miniscule amount of population majored in women’s studies and they tend to cluster in top universities and from richer families. Meaning, it is not major drag on their future.
Majority of students go for practically sounding degrees - like various business related degrees. They tend to learn to like them somewhat, but generally are not intrinsically motivated to be accountants or what not at first. They are not making childhood passion based decisions, but the "what gets me job" decisions.
The reality is that, 50 years ago, when only the smartest people attented colleges, a college degree used to be a proxy for aptitude (a combination of intelligence and willingness to work hard). It didn't matter that much what you studied, just having that college diploma meant that you're smart enough to be able to contribute in a non-trivial manner in any company, and will likely be heading for a managerial position a couple years in. Whereas now, with a huge percentage of population going into higher ed, the diploma means that you're within 60th percentile or somewhere around that, which is not what companies need.
Unfortunately, many young people and their parents didn't understand this dynamic of watering down and still believe that the degree opens a path to a better life, while the truth is, most people are just not talented enough to be employed into demanding and well-paying office positions that most of us here work in. The Universities are silently running a scam, taking advantage of the obliviousness of young people and their parents by selling them a way to waste 4 years of their lives in exchange for a lifetime of debt... It sounds really horrible. At least here in Europe education is free so you "only" spend 4 years doing things that won't help you in life later.
Luckily, the stories of people who graduated only to sell shoes or coffee are now prevalent enough to make the next generation more aware of the real value (or lack of thereof) of a degree in something non-commercial from an average university. In my family, I now see younger people more often deciding that higher ed is not for them and going straight into trades.
>the diploma means that you're within 60th percentile or somewhere around that, which is not what companies need.
Need or want?
We've spent 30yr trying very hard to remove individual judgement and responsibility from the corporate world. Most employers larger than say ~75 people likely have enough process built up that they can skate by on people who mindlessly follow process with a few talented people sprinkled about to spice things up.
>while the truth is, most people are just not talented enough to be employed into demanding and well-paying office positions that most of us here work in.
The hardest part about working as a programmer is getting your first job as a programmer which usually means suffering through Calc 3 you'll never think very hard about again. Getting a pay stub is on FAANG letterhead doesn't automatically equate with intelligence though many here may keep telling themselves that. The bulk of the SWEs and SREs in those companies are just going through the motions and reacting to situations as any other person operating under the same constraints would. Besides basic problem solving ability that all humans have and a background with experiences that qualify you for the job there's nothing special about it.
I think it's need. There's plenty of chairwarmers hired as senior managers in my place of employment. The company would be doing radically better if these people were genuinely talented and dedicated, but apparently it was too hard to hire such folks, so we got those impostors instead. The whole department is a mess as a result. And it's mostly the same across the whole org. The world just doesn't have that many talented and dedicated people, and also a lot of them decide to just launch their own businesses instead of being a part of some corporate charade.
> Besides basic problem solving ability that all humans have and a background with experiences that qualify you for the job there's nothing special about it.
Are you aware of basic problem solving abilities of average human? They're... not that great. Intelligence plays a key role in constructing good ad-hoc working theories as to the hidden/internal state of the mess you're currently working with. Smart people are just better/faster at it and the more complex the problem is (and we're working with problems of huge complexity - often with codebases that are to large to understand within a lifetime), the more important that becomes. Not to mention that there's plenty of people who just don't tolerate (emotionally) uncertainty too well, and they feel terrible at jobs like ours, preferring to be a supermarket clerk or doing something else with minimum uncertainty, exploration and decision-making. For example, my mother once worked with a woman who has severely stressed over having to learn to operate a new kind of cash register (and she was a clerk at a store). Imagine how well would she do in the world of front-end development...
> The reality is that, 50 years ago, when only the smartest people attented colleges, a college degree used to be a proxy for aptitude (a combination of intelligence and willingness to work hard).
I don't believe that's true at all. Historically, in the US anyway, a university education was a wealth signal more than an intelligence or work ethic signal.
Perhaps that's true in the US. Here in Eastern Europe, University education was pretty elite (in terms of intellectual requirements) before the "democratization" of higher ed. Heck, high school before the war was most likely mentally harder than many higher degrees are today.
I neither agree nor disagree, I'm just not familiar with the US situation. I'm certainly aware that, especially historically (pre-XX century), US universities were finishing school for the well-off, but I don't know how/if the dynamics changed after the WWII, with introduction of GI bill etc.
I majored in Computer Science and minored in English, with a focus in literature. I can only speak for myself, but most of my Computer Science classes were nowhere near a cake walk, while I aced every single literature class, even the 300 level classes.
The only hard part about the literature classes was how much reading was assigned (often 300+ pages before the next class, per class, which might be 2 days later). But for the most part you could skim them just enough to take the pop quiz for the day and then get the parts the professor wanted you to know from the lectures, although I did my best to actually keep up with the reading. Tests and essays for lit classes were super easy for me, mostly just required parroting back what was covered in the lectures.
For Computer Science classes (in particular the programming assignments), if I couldn't figure out how to get something working, I ended up sitting in the computer labs for an extra 10-20+ hours until I could, because otherwise the best I could hope for on the assignment was a C. Professor's office hours were usually a joke for me, I even got told once "If you didn't get it in class I can't help you now," which I thought was the whole point of office hours. Didn't have Stack Overflow or Youtube or even very many tutorials online back then either to help out.
Also I had several friends who pursued various humanities majors, and it never seemed like they were ever as busy as I was. I even thought maybe I picked the wrong major at one point because I was spending so much of it stressed out about classes (that's actually the main reason I minored in English, I spent a semester only taking English classes, considering changing my major, but didn't end up doing it).
I got a degree in literature (from a top 100 university) and I'd say it was possible to pass without applying yourself too much, but getting top marks for essays was very difficult.
Now that I've ended up working in software engineering, I wish I'd had the foresight to have done joint degree in computer science and literature. Applying NLP techniques to literature would have been a blast.
I agree with this statement.
I had two majors: Religion (history/study of, not theology) and Computer Science.
My Religion degree, esp. when we got to things like post-modern criticism and Hegel, were leap-years more difficult than anything we had to study in computer science. So, yeah, I take umbrage to people saying that the humanities are easy.
(The Religion degree was incredibly interesting, too, though ultimately not terribly practical for anything but law, and I wasn't really interested in doing that.)
To be clear the argument wasn’t that the degrees weren’t difficult but that they aren’t valuable to employers and one shouldn’t expect to easily pay down their debts without a more valuable degree. Majoring in Religion alone would be imprudent for most people.
That's fair. Tbh, at the school that I went to (top 5 liberal arts school), studying any sort of humanity more or less set you up to pursue either a professional humanities degree (e.g. JD/MBA) or an academic degree (e.g. PhD).
To your point, though, studying just for interest is probably not prudent, and it's also probably not prudent to study humanities if you're not prepared to attain a subsequent degree/go on the academic track.
My point about degrees wasn’t that some are more or less rigorous (although I haven’t heard of many rigorous women’s studies or art history programs), but rather that they aren’t going to pay well on the other side. I’m very skeptical of the claim that these programs are comprised mostly of the independently wealthy.
> Majority of students go for practically sounding degrees - like various business related degrees. They tend to learn to like them somewhat, but generally are not intrinsically motivated to be accountants or what not at first. They are not making childhood passion based decisions, but the "what gets me job" decisions.
For bachelors degrees:
432,077 STEM
386,201 business
244,909 healthcare
44,262 liberal arts
82,621 education
So business is approx 9 times more popular than all of liberal arts combined with the vast majority of the rest being made up of degrees that would seem to be things that make money.
How does it compare to the demand for these degree holders? On the pie chart, engineering is 6% and social sciences is 8%. Engineering is barely bigger than communications, or than performing arts... and frankly I wonder what %%ge of business degrees are actually useful. The other stat merges all degrees together, but the entire STEM and healthcare is less than a third of all degrees. Add up all the useless degrees together (I, personally, would make it a value judgment too, but for this discussion useless can just mean "not cost effective"), and you can easily explain why so many people have trouble with student loans.
First of all, this is a super cool website; I had no idea this existed. That said, it doesn't seem to suggest what timeframe these statistics are for (I've only had time to skim so far). As best I can tell, those are today's statistics, not the stats for the millennial generation, and I would fully expect the nouveau generation to have learned from our mistakes.
> This is sad because most of what you've said can be applied to lotteries as well, which historically has been criticized as being a "tax" on the poor. The end result is the same: people putting themselves in a worse place financially (on average), just so they can cope with their bleak existence.
Damn. I've never considered the psychological effects of the lottery system, but in a way I think you hit the nail on the head.
Anyways, in the GME scenario it appears that most retail investors are actually in a better place financially because of it.
Isn’t this an explore/exploit problem? If you have time to recover then do it, if not then better to cash in on a sure thing even if the upside is lower.
Not really. The explore/exploit analogy only works if the higher risk investments have higher returns, as we see with stocks (higher risk, higher returns) vs bonds (lower risk, lower returns). I'm skeptical that speculating on options have higher returns commensurate with their risks.
Getting rich through a greater fool theory and creating a bubble in a small stock is not something I’d be proud of. You’re sticking it to the least knowledge Johnny-come-latelies who will be left holding the bag. Thinking that you’re screwing Goldman Sachs is delusional.
When Icahn does it he's a genius. When the street is challenged by a new distributed and crowd sourced hedge fund coordinated on an online forum they're fools.
I personally don't care if more people maintain this belief - but more and more funds are definitely starting to pay attention.
You could do this once a month - pick a heavily shorted low/mid-cap company and squeeze the crap out of it and reap what PE firms and institutions have sown
I fully expect the establishment to pressure the SEC to crack down because it's a new challenge and they're losing.
Hedge funds earned their name by their ability to hedge. Professional risk takers can balance their portfolio by placing multiple bets where they can afford a few of them coming up empty because they only need one to hit big. A keyboard commando betting their 401k on one stock is running a much bigger risk.
Given how hard Melvin Capital is going down right now, it doesn’t seem like they are all that good at the hedging bit. But sure, let’s pretend the big guys are insanely wise and all knowing and never play dirty.
Melvin Capital lost Billions last week alone. They needed to get bailed. You have been sold the narrative by the same people who screwed you in 2008. The bubble is the consequence of Hedge Funds getting greedy and repeatedly screwing a "dead company", by overshorting the shares.
Don't take my word for it, take Louis Rossmann's, somebody known to stand for the little guy.
Surely if it's obviously a bubble they can bet on that bubble bursting and come through the other side on top? Is it just a matter of rules around capitalisation? Surely it would be good business for them to go get that capitalisation?
Didn't hedgefunds "overlong" the housing market? They were borrowing on margin using housing debt as collateral, but the collateral turned out to be junk, so they got margin called when that collateral tanked (the CDOs), and banks with insufficient liquidity to cover the losses either collapsed or got bailed out.
Essentially the housing market bubble was people going long using worthless collateral.
This is why I absolutely hate Wall Street bets and push back every time it’s brought up. The people usually winning there are people who work in finance and are pushing their stocks onto the unsuspecting folks who visit just for the memes. There is something suspicious about a sub where high ranking users often post there 100k robinhood accounts, and the SEC investing them every few months is proof I’m not the only one who thinks so.
well past 100k now, u/WSBgod, u/DeepFuckingValue, and others are showing plays worth millions of $
some of these accounts "Rose up from nothing" by investing an entire portfolio of 50+ thousand dollars into extremely risky options. Either this is suspect or I'm out of touch with the average joe's risk tolerance.
u/DeepFuckingValue gave his DD, did his analysis and figured out the play. The fact that the shorts shorted 140% of the shares is their fault and nothing to do with insider information, it is all public, except of course for the blatant market manipulation by the same hedge funds, the naked short selling, the ladder naked shortselling, controlling the narrative, all the things people with billions in capital can and will do.
It’s worth noting that u/WSBGod was a scam ran by a corrupt mod to sell investment courses, but so far DFV is legit (given the size of his initial play and the fact he’s gotten his money out I think he’s legit, anyway).
DFV is up what, to $11MM right now, on his $50k investment? That's fantastic returns, but it's also only possible by the generated hype, and result of the short sellers getting screwed.
with that said, if someone spent $225 on lottery, and won $50k, no-one would bat an eye.
you’re out of touch with the entire wsb scene. wsbgod/jarteks alt (the mod that used the sub to farm idiots into a scam/trading group) was a ruse used to hype the sub.
I don't thing anyone is suggesting that this will fix the systemic issues which plague the younger generations today. While this probably isn't going to cause much harm to Goldman Sachs you can be sure the people who'd been shorting gamestop weren't too happy about it and enough random and unorthodox trading will certainly keep day traders on their toes. I'm not about to go gambling with what little spare cash I've got, but I'm not going to discourage others from trolling wallstreet by doing it. It's their money to lose.
It's the greed of the fund managers that kept shorting this company that will be driving the price way up. They will eventually need to cover their shorts causing the spike. the money will be payed mostly by these greedy fat cats
This isn't getting rich through a greater fool theory. This isn't a pump-and-dump; it's a short squeeze. The only fool here is Melvin Capital which entered into some pretty foolish short positions and are suffering the price.
The only story here is that it is retail investors who are profiting off it rather than some other insider hedge fund.
Somebody wrote a reply to the above comment saying that people should simply not have student loan debt and then promptly deleted it before I could post the following reply:
Big ask to expect teenagers to be able to project the marginal benefit of college education (inherently uncertain and speculative) and to also estimate the real, not nominal, burden of the loans to the future (again, inherently uncertain and speculative). And it's tough to make that judgement when many US high schools treat college education like a necessity. Also important to remember that education debt is unique, it's not dischargeable. Unlike any other type of investment debt, borrowers don't have access to bankruptcy, meaning that an investment in education that doesn't work out follows you around for life like an underwater mortgage you can't be rid of.
There is certainly a problem with how teenagers are misinformed about college, and that education debit is difficult to discharge.
However, I do agree that one should have little to no student loan debt. I am a millennial and was able to graduate without student loan debt. I went to community college then transferred to a state school. I earned a scholarship to do a masters in computer science. Then I found a six figure income job at a medium sized company not FAANG or some startup. All I did was found a degree that had a high ROI by googling which was at the time CS.
When I went to college, I could earn enough in one summer to pay for my tuition and books. Not my housing or anything else though. In the intervening 40 years, tuition costs have gone through the roof. There's no way that someone can work their way through school. Even community college in my town is expensive. Unless you can get an academic scholarship, or are very low income and get a needs based grant, you're stuck with loans.
Which young people don't have enough assets to take advantage of because most of their money goes to rent/loans. Then the eventual crash comes and they lose almost everything again.
That doesn’t make sense. If it just went to rich corporations, it wouldn’t have gone into Tesla, which is considered massively overvalued by all of these traditional companies.
Some of it did. But that's missing what he's saying. The Fed injected a shit-ton of money into the economy last year, mostly through PPP forgivable loans. This money was supposed to go to the most vulnerable small businesses, but we now know it largely went to the big guys. They used the money to pay for salaries, as per the requirements of the "loan," but that offset money which they would have used for salaries, which instead got funneled into savings and largely put onto the market. What stocks did people buy last year with this money? TSLA, AAPL, etc.
There was also a large amount of stimulus checks and unemployment bonuses that went to the same destination. Hence RobinHood having a record year. That's unrelated and somewhat contrary to the feds-bailing-out-big-business narrative though.
I was explaining to a friend of mine a few weeks ago why cynicism is so prevalent in our generation
Where have I heard this before?
” As adolescents and young adults in the 1980s and 1990s, Xers were dubbed the "MTV Generation" (a reference to the music video channel), sometimes being characterized as slackers, cynical, and disaffected.”
Arguably all started in the mid-to-late 70s when leadership in the US essentially threw in the towel on trying to improve the nation and started dismantling the country for profit. Adam Curtis's Hypernormalization does a very good job of illustrating this overall trend as it was reflected in the zeitgeist.
“The children now love luxury; they have bad manners, contempt for authority; they show disrespect for elders and love chatter in place of exercise. Children are now tyrants, not the servants of their households. They no longer rise when elders enter the room."
I do, however, agree with the spirit of quote; it's just that it started to become really applicable a few generations ago (or, depending on how you think of it, such a mentality was always a major current of colonized America, but it really gained cultural ascendency in the 70s as we ran out of easy ways to extract wealth while plausibly "improving" things).
Back in the 70s, Carter at least seemed to care about the American family’s wallet.
Now, America votes for a clown ex-president like Trump, thinking he’ll actually do something for them. Instead, he just surrounds himself with a bunch of other crooks.
And I highly doubt that Biden will do anything different to send America on a different trajectory.
My mom was an Xer and lamented that she was part of the first generation to be worse off than their parents. Our saving grace was the fact that welfare programs had not yet been completely gutted and that the 90s ushered in an era of prosperity that lasted long enough to get us kids through school (just in time for the GFC, yay!).
Exactly. Interests rates at 0%, wages stagnating and the system has been setup so that I'm essentially forced to participate in the market (otherwise I miss out on salary). AND these hedge fund idiots are feted as geniuses for their stupid plays.
I am basically at 110% cynicism regarding my 401k and would lose but an hour of sleep if it disappeared tomorrow. Fuck it, I'm all in!
You know, one would expect inflation to go up because of the aging population. Lots of people leave the work force and they start spending their retirement funds. That should be good for all those few youngsters. Somehow it is not. It will get really ugly once those youngsters enter their mid 30s and still have no job experience.
I think this is a just-so-story meant to explain something that doesn’t require an explanation. It’s just gambling. Gambling is fun and human beings have always done it. You don’t need to posit anything special about Millennials. New forms of gambling come around every once in a while and this is one such event.
Exactly this. It is people rationalizing their gambling, sprinkling in an anecdote here and there about someone paying off their student loans thanks to /r/wsb.
The narrative that you expect to live better than your parents (controlling for the benefits of technological progress like better medicines or cars), is historically aberrant, especially in the USA given the relative state of the US and world economy in say, 1950 (when everyone else was either woefully underdeveloped or recently bombed out of existence).
I think that is the problem... As the US economy shrinks as a percentage of the world economy, you would expect an average life experience in the USA to slowwwly move closer to an average life experience around the world. The latter is moving "up", sure, but there's still a huge gap to move down into.
But, they still teach kids in the USA to expect great life for average effort (or frankly as far as I can tell lately, regardless of effort). I don't think any other country in the world has this mindset; I like what appears to me to be the mindset in some Asian countries (I could be wrong but it seems to me like you are expected to try hard to do better but not in any way led to expect you will) is much healthier.
This is exactly why I become more liberal the older I get. If it’s no longer possible for millennials to have the same economic prosperity as baby boomers did, might as well vote for UBI, universal health care, and free education. One way or another, millennials are going to pull something out of this shit show.
Lots of these points hit home - but why blame older people for your generation having less sex? Baby boomers didn't make casual sex illegal, nor have they bought up all the sex. Until covid, if young people wanted to have sex with each other they were perfectly free to.
Isn't it simply that masturbation and pornography have become relatively more attractive propositions than they were in the past?
Baby boomers didn't have to spend hours in extra curricular activities in HS plus getting 5.0 QPAs to maybe get accepted into a good college so they can have a semi decent chance at a good living.
My dad was able to go to a steel mill and make huge amounts of money plus overtime and insanely good benefits. Housing was extremely affordable. Very low debt from trade school. Women wanted to have kids and settle earlier. Women today care about their careers. People don't want to get into relationships with people saddled with debt and making no money.
While materially there are a lot of benefits to our modern world, no one is really free. To get sex nowadays, you better be attractive. Because on Tinder there are thousands competing with you instead of 20 in that one bar. Most people get very little likes, get depressed, and give up. I don't blame them. It's soul crushing.
Actually, the right college degree can be an entry ticket to a good high skilled career. It's the low skill jobs that are disappearing. Most dating apps are garbage because they are basically a competitive esports game except with the pretense that they are there to help you. They are not the real world. Don't fall for that garbage.
Women can't vet men over the internet so it basically boils down to how good you look in a picture.
>My dad was able to go to a steel mill and make huge amounts of money plus overtime and insanely good benefits. Housing was extremely affordable.
It's because inflation was still doing okay back then. Inflation eats away at capital unless it is invested productively and by productively I mean primarily by gainfully employing people and providing value.
For the average worker that is very good because they do not have much savings and even if they did their savings grow much slower than the savings of the rich. Once everyone is employed the cat and mouse game begins. Workers can go for the best paying employer and that drives their salaries upwards. Higher salaries reduce the relative value of assets because you have to pay people more for the same work but the value of your assets does not increase fast enough to catch up.
With deflation you don't have to do anything to increase the value of your assets. You just wait and watch wealth inequality grow.
A quick solution is to simply increase capital gains taxes and reduce dividends taxes. Deflation gains will be taxed more. Productive income will be taxed less.
A degree from a state school in something reasonably marketable will still provide a decently comfy lifestyle in most of the US, and there are still plenty of single women who aren't spending all their time looking for someone a little bit snazzier on Tinder. Sure, it might not be quite as easy now, but I think the benefits of baby-boomerdom are a little exaggerated.
This attitude is what continues to kill us as a nation. "Everything is fine! remember this!" but if you look deeper most of it is not true. Things are not well for this nation. The capitol was just stormed.
Those statistics are easily gamed. For one, salaries aren't that high in the cheap COL areas and there aren't any jobs or room for advancement in Tusla. Sorry, that's just the facts. There are plenty of shitty places to live for cheap. But there is no hope of ever advancing or growing yourself - which is extremely important for a nation - advancement.
> and there are still plenty of single women who aren't spending all their time looking for someone a little bit snazzier on Tinder.
This is irrelevant- less people are partnering up and less people are having sex. Single women exist - they're working and focusing on their careers, not settling down.
> The dollar's buying power is less than what it was 20 years ago, meaning what you earn doesn't stretch as far as it once did. Government statistics show that while household income has been steadily increasing, it has failed to keep up with the pace of inflation. In addition, the cost of buying items like houses and automobiles has increased at a rate that outpaces the rise in inflation.
- From the BLS
So let's be clear - it costs way more now to buy a house and a car. You need to spend 4 years not working (and not saving) and going to school to make an OK salary while taking on tens of thousands of debt (avg debt is 30k). Healthcare is extremely expensive. Computers are replacing more and more tasks. And what about people who aren't smart enough for engineering school? Which is most?
Costs are rapidly outpacing gains for the common man. And we're surprised people are anxious and don't want to marry and have wanton sex all the time? They can barely pay the bills.
There are some real problems (such as healthcare and education costs), sure, but so many of the things that cause anxiety are self-inflicted. 1950s-level tech and medicine would be cheap, but you can't buy that today at any price. Relationships are harder because of changing social norms, not because we're too poor. The Capitol storming was a dumb stunt that's being milked for all the political capital it's worth.
The movie "Network" has all the same anxieties, (our country has been bought by the highest bidder, the air isn't fit to breathe, etc.)--if things are broken, they've been broken for 50 years, so I'm not convinced that the kids aren't all right.
People not having sex is because they are too busy playing on computers and TV and internet instead of socializing in meatspace, not because women are to busy working to be fembots.
None of these really make much sense. Sex is free and not that time-consuming. You can work hard at college and still find time for sex. You can be in debt and have sex with other people in debt without incurring further debt.
Women getting married and having children later should mean more opportunities for casual sex, not fewer.
Boomers have not forced younger people to find hookups on tinder. The argument about competition makes no sense. Everyone can't be outcompeted.
If a generation has chosen only to have sex with its most attractive members, how did that happen? Why does it leads to less total sex? Why is this the fault of older people?
Either way, your first comment is false. Sex is not free. I can't go outside and instantly have sex. I need a partner who is willing - which is, again, not free.
> Women getting married and having children later should mean more opportunities for casual sex, not fewer.
You're conflating "should" with "What is." You think it "should" mean more opportunities - but you haven't given any evidence that it actually should, and society shows that there is less sex. So this is false.
> Boomers have not forced younger people to find hookups on tinder. The argument about competition makes no sense. Everyone can't be outcompeted.
The argument makes perfect sense if you would get over your need to protect boomers, which is an odd strawman.
People don't want to settle. Now that they see they have potential access to more attractive mates, they are less likely to settle for someone less attractive and in turn others are less likely to settle for them. The benefits of having a partner just aren't there anymore, and the younger generations are far more risk averse (not just with sex: “It’s part of an overall trend toward less risky behavior since 1990, including not only sex but alcohol use, risky driving, and criminal activity,” Dr. Arnett told Healthline.") than the lead fueled baby boomers.
Young people can't consent until 18. While boomers aren't forcing anyone to use tinder, society has impressed these things upon youth. It's unfair to say that children and adolescents have free agency. They don't.
> why blame older people for your generation having less sex?
If you think it is the responsibility of older people that younger people aren't having as much sex, then why?
If not, then what are you challenging? I didn't say that there was more sex going on, not that student debt was great, not that Tinder was awesome.
Your whole argument seems to be 'there is less sex available because fewer people want to have sex'. This is, of course, a somewhat one-sided view of the situation. It does not contradict my suggestion that younger people are choosing to have less sex. Nor does it disprove the theory that the availability of alternatives to in-person sex has made it less attractive.
It’s even worse than this. The government feigns that they can’t do anything. And that everything is the result of the market. Meanwhile, they easily pass bills to increase their own pay, or find magic money to pay for their military wars.
And then, after screwing up the 2008 crisis, they stopped building homes. And the homes that were foreclosed on, they allowed the rich corporations to buy them up for pennies on the dollar.
You call this a real estate market? It’s a god damned scam!
So what does that leave us with? Millennials that have a lot of student loans, low pay for decades, and now, they can’t even buy a home.
How wonderful it is that a dilapidated entry level home is now $700,000. Good luck paying for that, when you couldn’t even afford to pay for a $500,000 home.
Families are delayed. Marriages are delayed. Kids? Good luck even affording to pay for a family, with your $800,000+ mortgage.
Thanks America. You f*cked us. But sure, your rich buddies are even richer.
Like, it was worth that when you bought it several years ago? I mean, I live in the midwest too, where it used to be possible to get a modest home in the burbs for about that price. But those homes are now gone, they disappeared over the past few years as they were purchased in all-cash transactions by flippers who threw some paint and flooring in them before selling them for twice the price.
Housing in the cheap areas is being hit really hard. Lots of areas are seeing coastal-levels of YoY price inflation. Mine is ~18% YoY according to Zillow.
This. I got an unexpected windfall last year that meant I could finally afford the downpayment on a house and in the Minneapolis suburbs (not exactly a "trendy" area) basic post-war (50s-70s, 2-4 bedroom) homes start at $250k unless they're exceptionally tiny or in poor condition. Just a few years ago these places were going for under $200k. If I wanted to live in a more rural area of the state I'm sure I could find homes going for $110k but for a lot of reasons I don't want to do that.
It's really simple economics: the low interest rates means they're dumping new money into corporations. If you're not getting loans and buying stocks you're missing out and just coping with your savings being devalued.
Except everyone knows about that sub and it does little but get the hopes of the working poor up, who then lose what little savings they have on some yolo being pushed by a more well off individual whose just having fun.
If you put forward a theory like this about Wall Street, markets in general, capitalism in general, or the political system we have, you're an 'extremist'. When it comes to a bunch of people goofing around with meme stocks on a subreddit, suddenly lots of people turn into champions of the 'working poor'.
I cant agree with this more, I think though once the mindset takes over than a nomad lifestyle is also something that can be extremely fulfilling and changing peoples ideals of that 50's relic is key. We will probably be hampered by the extreme inequality of wealth for generations to come but I think our generation is losing patience and finding new ways to live happy. VERY Slowly but surely.
So now the new proposal is for people to live in RVs, and wander from town to town? No security. No firm ground to call home. This is a life worse than the medieval ages.
I don't see the attraction but when you consider all the overhead costs that come with living traditionally I can see why it makes sense.
FWIW a non-trivial minority of people in the residential building trades have been doing this for years. They move north and south with the construction seasons.
No nesccesarily, the options are more broad than just an RV for sure, if you can earn an income remotely you have far better options. For example in germany a huge percentage of the population rent rather than buy : http://www.rentalcal.eu/the-german-rental-market There are good regulations around it there, but there is not the drive to own. Again though it's different folks different strokes.
I've wrote this elsewhere. The thing that's clicked for me after reading the comments on wsb is that populism, amplified by the modern internet, is going to radically change the finance world in a similar way to how it radically changed our political landscape. These people aren't just investing in GME to enrich themselves. They are doing it to spite the people who they percieve as rigging the game. They are doing it to poke in the eye of "mainstream media talking heads" whom they view as part of the controlled narrative of oligarchs. Does any of this sound familiar?
This is a once in a life time black swan. No one is factoring in populism in their investment thesis yet. Whoever can figure out populism well enough to predict it first stands to gain a lot of money.
Common folks who get in late in the bubble will be the ones who will suffer. This populist mindset that you’re somehow sticking it to big banks or something by paying for trading is funny.
In this case they have actually a pretty interesting goal and motivation. They chose GME because it had a short ratio of 138%. Basically, big hedge funds were betting on the downfall and demise of this stock excessively.
What WSB daytraders are trying to do is to bleed out these hedge funds by buying in and holding. The stock doesn't even have to increase and the damage to the big hedge funds is already happening, see the situation that Melvin Capital is in. To those who participate it is a david vs. goliath situation.
The thing is, what they are trying to do is not that dumb and actually quite interesting, but they won't get anywhere by remaining "civil". They need this to spread and be on the frontpage of Reddit constantly. Negative or positive press helps, because more regular people want to participate if they hear about it.
I think that this will go down in history. Constant timeouts, organised selling at certain intervals, unnatural spikes, we've yet to hear about the shady stuff that keeps this stock from surging even faster considering the current "virality".
I can assure you that most folks on wall street (speaking about most of the multi-manager hedge funds specifically) have significantly tighter risk limits than anyone on WSB. Frequently drawdowns of even 5-10% can get your sized reduce or get you fired. The YOLO attitude that WSB has is closer to the film "the wolf of wall street" than what actually happens.
While Billions is one of the more realistic shows about finance, it is far from accurate enough to be compared to real life.
So if everyone in Wall Street have significantly tighter risk can you explain the risk linked to the short position taken by Melvin Capital on GME?
How many "Wall Street" were burned by taking high bet that went wrong going around their internal audit?
There's a significant difference in the willingness to enact change between the Legislative branch and the Executive branch.
Where Congress (legislative branch) has been unwilling to pass any new regulations upon social media, the SEC (executive branch) is going to shut down these sorts of forums when they become disruptive.
Having worked in this field, while the SEC can sometimes be slow to act, the fact that it made the front page of the WSJ, it is only a matter of time before that hammer comes down.
...and Reddit isn't going to fight for this form (or any form) of Free Speech.
I mean it's just a small forum, can they really have the same amount of influence on the market than a hedge fund or a market maker? What does the SEC care about a bunch of trolls on the internet?
Coordinating with the goal of market manipulation (basically buy/sell/short/pump-and-dump/etc cartels or other) is illegal as far as I know. Hence why the guys who made a lot of money on the negative oil trades are staying very quiet.
That's not really true. So long as stock indexes generally move up, everyone can make money. The battle is over who makes more and more quickly. I'm a passive investor just plowing savings in index funds and making like 12% a year. All the mechanics of day trading vs working for a bank are pretty similar, but the difference is scale. And the ability to hedge bets.
Indices are going up because people are putting money into the market(s), and governments (legislatures and central banks) are printing money in order to prevent market collapse, because that'd mean liquidation events, meaning every mark-to-market asset will suddenly worth nothing, every company will become toxic overnight, banks will (have to) stop funding companies, companies will cut costs (fire everybody, stop every kind of project/investment/capex), and everyone will try to sell things to make cash to pay back debt, which can start a deflation spiral.
The asset bubble is an unintended consequence, it's the "lesser evil". But it's again the rich get richer.
Psychology has always been part of the market, and this event can be explained by Soros' theory of reflexivity - that the stock market leads the fundementals, not the other way around. Once you forgo the efficient market hypothesis (and it's never been more obvious how incorrect this is), this event makes more sense. Same as Tesla, momentum is a psychological event lead by a positive feedback loop.
why do you need to forgo the efficient market hypothesis? The market as a whole takes into account the psychology of people as well, because peole participating in the market do so.
I think this is more like beanie babies all over again. Except now that its easier to trade its happening in stocks.
Populism of a companies stock doesnt really change the performance of that company. GME will implode eventually and the newest suckers or WSB will be left holding the bag.
You're not quite getting what I'm saying. A bubble like beanie babies and dutch tulips is still a logical consequence of seeking financial gain. A bubble is a game of chicken. It is about knowing when to jump off. This is a new phenomena. It is no longer about just making the bull thesis or the bear thesis. It is now persuasive to make the "this will fuck over a hedge fund manager" thesis. We need to add an entirely new animal to the metaphor.
I dont understand why you consider this to be a different phenomena than a bubble.
Its still a bubble, people are still doing it for financial gain. Its just marketed as "doing this will screw hedge fund managers" to generate more hype.
Its not a new phenomena, its just a new marketing strategy.
Do you honestly believe these people aren't motivated by profit, when they are clearly entering long positions with the intention of driving up GME's price? It's straight up doublespeak.
You fell for the marketing. Billionaires were on both sides. The bulk of the damage is done to uneducated vulnerable retail investors.
So now you're out $1000. You contributed to a scheme which ironically was a net loss for retail. If this were really not about making a profit, you'd see people donating their gains or buying shares for other people, and nobody would be cashing out. Are you still in the trade? What are you going to do with your gain/loss?
If you look at WSB's posts though, it's nothing like beanie babies. People don't think this is going to go on forever. Posts where people lost a ton routinely make it to the top.
If anything, WSB celebrates the crazy volatility that can occur with the stocks of interest, and with it the chance to either win big or lose big.
Except that valuations alone can be decisive in shaping the fate of companies
// What does this mean for GameStop? Because of traders’ bullish sentiment, a previously failing company is now in the position where it can leverage the overnight increase in value to make real, substantive changes to its business. GameStop can pay off debt through the issuance of new shares or make strategic acquisitions using its newly-valuable shares. [9] A struggling company could become solid simply not because of a change in the underlying business, but because investors decided it should be more valuable. //
The difference is that our economy wasn't held together by beanie babies. A stock market crash has very wide ranging effects, not only to bankers but also retirees, blue collar workers, homeowners, new graduates and basically everyone else.
> A stock market crash has very wide ranging effects, not only to bankers but also retirees, blue collar workers, homeowners, new graduates and basically everyone else.
only has such an effect if those people who invested in the stock market has more than their risk tolerance invested.
Then what do you invest in? P/E ratios are astronimical across the board. It's been 85 years since Keynes wrote about his beauty contest. I think he might be right.
WSB are the old stock forums / discussion boards on steroids. Back in the day, people used to pump stocks on these smaller discussion boards. Difference is, WSB has 10^6 more members. And everyone can trade via Robinhood these days.
Is Citadel really making a lot of money from the GME squeeze?
I know they rebate Robinhood for order flow (I've even commented about it [1]), but I thought events like this were hard for MM firms to capitalize on because of the unpredictable nature of the price action and the high cost of hedging (there are no shorts available, how do you even delta hedge in that situation?).
I'm up 180% over the year. Peanuts compared to the WSB people, but I got there with my own intuition. I'm looking into food and entertainment for my next picks. I think the populace will need them over the next year before a general return to the before times mid 2022. We'll see.
Every action has an equal and opposite reaction. While the Covid deaths have been incredibly tragic, the 330 of 333 million Americans that survive, and that's assuming the virus and it's variants take 2.5 million more lives before its done with us, will be eager for a return to normalcy, if not outright partying like it's 1999. The play I tried to make last night and wasn't able to get filled today, Bloomin Brands, owner of Outback Steakhouse and other mainstream restaurants that can survive this down turn no matter how long it lasts, is up 1400% since I under bid on that strike and expiry date at 2am this morning. I'm not saying your prediction is guaranteed wrong, but I'm willing to bet against it, and 86% of my call picks are green at the moment, whatever the probability of that might be. The only one that isn't, China Unicom (CHU), essentially got delisted by executive order because the last administration didn't want Americans being able to invest in firms with ties to China's military, such as the largest provider of cell phone service for 1.4 billion people. The pandemic has been an incredible tragedy for so many human beings. I'm trying to position myself to be able to do something about it when the next one comes, which it inevitably will, as the universe trends towards entropy. But I won't be able to do it without capital, so it's worth the risk. Worst case scenario, I'm still a one man consulting shop serving the firms that keep the water running. Barring that, I guess we're hunting and gathering again, and I'm pretty good with a bow. Hopefully it doesn't come to that, and we can all look back at these present days like one of many possible filters we managed to survive on our way to colonizing the stars. That's the future I'd rather plan for, anyway. Albeit while hedging my bets.
LEAPS(Long Term Equity Anticipation Securities) calls, 1-2 years out in something too important to fail at a current all time low that the big shorters are ganged-up against is the value bet to look for. My 1/20/23 $3 AMC LEAPS calls that I've been accumulating since the pandemic struck long before wall street bets took notice are up 227% today as of 10 seconds ago for the day, and 822% overall. Granted, I'm benefiting from the commotion going on, but I'm holding until the end, because I believe in the long term fundamentals of AMC and hope to be positioned to exercise rather than sell by the time expiry arrives. (Edit: wording.)
If this helps anyone: I bought options for Palantir because whats his face is a vampire. I will continue my vampire based trading ~~strategy~~ gambling, so all CEO better start stealing blood from teenagers if they want my money.
I bet on housing because betting against housing is betting that politicians will stop catering to homeowners for the benefit of wider productivity and social mobility. I'm willing to incorporate your vampire take into my greater bastard theory.
I’ve made millions on WSB options plays. I can finally quit my job and stop being a cubicle slave. The visceral reaction from the media on this is disgusting. Major hedge funds got caught on the wrong side of this, and have been making a huge stink about it. CNBC to the rescue, demonizing young middle class Reddit investors. This whole thing has opened my eyes to how even my FAANG compensation is peasant money, it’s too little even as someone in the top few percent of incomes. Capital > labor
Since this comment is one of the top threads, I'm just going to re-post my earlier comment from one of the sub-threads:
This comment about having made millions leveraging on SPY and QQQ over the course of 100+ trades doesn't check out, given that a few days back, this commenter created this throwaway account to complain about finding it hard to quit their job at Amazon because the pay is so good.
As the article points out, it's about reality being controlled. In this case the user wrote something to change reality for their benefit.
The change they want is for more people to play the wsb game. And for more people to believe that the game has many winners. The mistake is that their message was untruthful, it was an exaggerated attempt to create hype.
Or. It was a user lying to make them get attention on the internet and feel better for a short amount of time, but I like my first idea as it's directly called out in the subject we are discussing. Thanks for unveiling it!
edits - I think its also like if you say something is important enough, it becomes important. So if wall street are still debating if wsb is or isnt actually relevant it means they already are. So the message is twofold. Firstly it's a "play the game, we need the hype" but more like "these comments have importance in itself because we say so". It's similar to meme magic - to say that 4chan memed Trump into office is utterly ridiculous, in reality they didn't. But enough people believed they might have and looked into it and thought maybe they did, that the effect of 4chan became important. A magic trick is about what you think you saw after you leave the theatre.
edit2 - and even my comment reinforces the effectiveness of the strategy just by commenting on it!
Perhaps this guy isn't real, but there's plenty of guys on WSB who have been able to do it. They're the dream to achieve. I admit I'm jealous myself because I missed out on great buys like NIO, PLTR, GME.
I'm paying attention now, but I'm worried I missed the boat already.
In my experience there will likely be another boat (or yatch). Back in 2016/2017 the meme was AMD, then there was TSLA and then GME, and lots of smaller ones in between. There will be more.
Not if the boomers activate the SEC. All it takes is one reddit ban of WSB. People won't just reorganize somewhere else, it never happens. Sure, a bunch of them will be somewhere else for 4 months but then the movement is dies because most WSB users will stick to reddit long term.
You played a game, you played it well, and you won. Well done.
But don't pretend that that means everyone can do it, because patently they can't: you won your bets, a bunch of other people lost theirs. No value that wouldn't otherwise have been created got made, you just shifted the balance of how the rewards are distributed in your favor, and away from someone else.
As a system for distributing the benefits of economic production, allocating it to the winners of a complex iterated social game seems suboptimal. Like if we used 'Among Us' tournaments to distribute food.
same can be said about just about anything, no? running marathons, startups, cooking a great dish... No one on WSB is saying its for everyone, thats why they talk trash about themselves.
you can learn to run a marathon, cook, etc. with a much higher chance of success then something like trading stocks or to a less degree starting a business. the latter pursuits have a much more volatile environment that rewards luck > skill
Investing is not luck. It's luck if you make just one or two trades.
In the long run, statistical iterations (that you have modeled/researched correctly) will give you positive returns with a very high confidence.
Situations like in this post are obviously not that. I have a trading strategy that I execute over hundreds of trades per year based upon financial modeling and financial statement analysis. There's a little luck involved, but over many trades, the luck aspect cancels itself out.
It's like rolling the dice. If you bet on getting a certain number, and roll once, it's luck. If you bet on averaging a certain number and roll 1000 times, there's virtually no luck at all.
If you believe that op played the game well, then he successfully took capital from less efficient companies and allocated it to new more efficient companies. This creates value.
Market theory only says that the aggregate effect of market activity is to allocate capital efficiently. The claim is that it does so by broadly rewarding investors whose decisions maximize value creation, encouraging more such decisions in general over the long term.
It does NOT say that any individual investment decision that produces a reward for the investor must necessarily have improved the allocation of capital to maximize value.
Options trading in particular has only indirect market-making effects on how the primary capital allocation market works. The existence of the options market helps the primary market discover efficient allocations (the theory goes). Participating in the options market has a side effect of increasing efficiency, but the way the options market allocates rewards is less connected to the information value that your trades contributed to the market.
There’s an investment product some governments sell called a ‘lottery bond’. People buy the bond, then periodically, rather than every bond being redeemed for a small premium over its value, one randomly selected bond is redeemed for a much higher value.
As a thanks for participating in that bond market and letting the government use your capital, instead of a predictable investment return the government offers a chance of a life changing lottery win.
This isn’t better or worse than a traditional bond offering, it just offers a different strategy for allocating the rewards for investing some capital in that government.
The person who wins a lottery bond didn’t do anything better or different than a lottery bond loser - both of them contributed the same value to the market in terms of increasing capital allocation efficiency. But the rewards were distributed unevenly - which is by design and both of them knew that going in.
Options traders take the same deal. Playing the game has the chance of winning big; participating in the game has a side effect of producing value. And the way the rewards are allocated for playing... don’t matter too much.
> the way the rewards are allocated for playing... don’t matter too much.
Of course they matter. If they didn't matter, then participants wouldn't participate. ...and if they didn't participate then the market would have less liquidity. ...and higher liquidity is ALWAYS a good thing.
The health of a market can be characterized by the persistence of liquidity.
If there are only two traders trading against one another, you are correct.
...but there is an ecosystem of traders intertwined and many of them are primary market participants, so the market does care, because the "gamblers" are providing liquidity to the legitimate participants.
Does anybody truly believe that this is a good thing?
The stock market is detached from reality. It creates its own universe. The efficiency we're talking about here is self-referential - it's not efficiency in producing object-level value, it's efficiency in enriching participants of the stock market. Which depends as much on the company itself as it depends on the hype the funds and the shareholders can make around it.
That WSB can tank or revive companies just for teh lulz only shows to demonstrate how the stock market is an universe of its own.
I find people who stand in disbelief of the markets often don't understand how they are working, and/or why they have and societal value.
Skepticism is healthy, but in this case, it's closer to ignorance.
The ability for corporations to go to the open market to secure capital is contingent upon a high liquidity of buyers and sellers present and actively participating.
The market doesn't exist without "primary" buyers and seller acting on behalf of their company to issue new stock (raising capital) or buying back stocks (returning capital (or via dividends)). Between these two types of transactions, there are participants that are constantly estimating the value of these share. If the price of the share deviates too far from what the company thinks it's worth, it will actually trigger one of those two events.
Options are just another more efficient mechanism to make these estimations on a specific timeframe. They allow traders to have a very specific thesis on what is mispriced and place a trade on it.
Without these trades, the market would lack liquidity, and companies would see an increase in their cost of new capital - which is bad for everyone because it means companies wouldn't invest in growth, equipment purchases, new jobs, etc...
The primary value traders provide is liquidity and decreased volatility. There is a fixed need for these two services.
Once you have served every customer the only way to make more money is to take customers away from other competitors, or grow the market as a whole. Traders do not influence the size of the market, they only increase efficiency, so the expectation is that you run into diminishing returns stays.
There is more than enough liquidity in the markets. Any more liquidity is not providing any value.
>Without these trades, the market would lack liquidity, and companies would see an increase in their cost of new capital - which is bad for everyone because it means companies wouldn't invest in growth, equipment purchases, new jobs, etc...
The Fed is already taking care of that. The bigger problem is that there is no reason to invest the Fed money and grow the market.
Increasing efficiency is pretty critical. For the vast majority of markets, there's no such thing as 'serving every customer'. Companies can always serve customers more especially if they can reduce the price.
However it takes capital to do this. It's not just about liquidity, investors basically influence the cost of capital for each company which has a big impact on how many customers each company can serve.
I guess I'm one of the ignorant; I'm still skeptical about derivatives. I get the need for hedging, but when you can construct something mathematically equivalent to a stock without actually putting money into the company, that seems like it could end very badly.
Sorry if my comment came off as critical - probably could have been worded better.
Derivatives are critical even to primary market participants. Farmers looking to secure their pay for future crop deliveries. Banks looking to remove interest rate risk on mortgages they've issued. Shipping companies looking to remove the risk of fuel fluctuations on their future transport costs.
Fluctuations of cost inputs and uncertainty of future revenues can be a company death sentence as they cause cash flow shocks. They have real value to the economy.
Often, they are only possible if there is a liquid market of people willing to take the other side of these transactions. Narrowing the spread between buy/sell prices on these derivative contracts allows more companies to be able to afford them, and that makes many low margin businesses able to exist at all.
Despite all the hate on social media, these markets have material value. ...even if there are these anomalies like this Gamestop incident.
I imagine the SEC is going to shut down that Reddit sub because these types if activities actually destroy liquidity but discouraging short sellers.
Regulation plays an important role in keeping markets running smoothly.
Commodities have to be traded as futures because you cannot move commodities instantaneously. So what you do is you write on a piece of paper (its digital today) that you will provide X amount of commodities for price Y in Z days. You can then sell the contract for the total value of the commodities and when the contract is due you just send the commodity to the holder of the contract.
> it's efficiency in enriching participants of the stock market.
Proponents would say that it is efficienct in funding ideas that are more likely to succeed, with the partecipants in the stock market taking a commission for the transactions.
This is true and not just true of the stock market. It's true of the economy as a whole. The stock market is just a manifestation of a specific part of the economy.
If inflation is low you can do the dumbest things imaginable and as long as you make your money back you can keep doing the dumb thing over and over again.
If there was decent inflation you would have to have at least some expectation of a future gain because inflation and by extension the increased interest rates would cause your net 0 investments to be a net loss.
My succeed was meant for the companies not the traders. A trader can succeed by being a parassite on the market, a company succeed by doing stuff. Whether there is more/too much parassitism is something I don't know.
This is sort of circular, the stock market can also devolve is pure speculation and go full casino, which are generally considered an example of a not-necessarily-net-positive addition to society.
it's not circular, but more to the point, you suggesting that the stock market can devolve (fail) is like saying "brakes on a car can fail, so brakes are stupid." Brakes are not stupid.
I did not say that, I said that just because the people working with stock are getting paid does not mean that the stock market is doing something useful. Parassitism also exists in free markets.
Stretching the brake analogy it would be similar to noting that just because you are pressing more your brake pedal it does not mean that your car is slowing down faster, sometimes you need an ABS
You’re a lottery winner, congrats. People made money during the tulip mania also. You’ve given money to the Wall Street, not taken it away. The biggest winners are companies like Robin Hood and hedge funds who buy their order flow data and hedge funds that take advantage of the bubble to play this, while the losers will be small investors who were late to the game and believed the bullshit about how it’s anything more than a bubble.
that's not how it works. Email me if you are genuinely interested in the how the institutional investors and market makers fit into this whole ecosystem. I'm tired of explaining market structure/incentives on HN. hint:
wall st money was lost on gme, not made. Market makers got killed trying to hedge those deltas, over and over again (it is impossible to statically hedge an option you have sold with a long/short position in the underlying tho in some cases like far ITM options, you can pretend like you can because the options delta is 1)
No I made this money myself. In any time in basically the last decade, if you leveraged up on the SPY or QQQ, you are now retired. People are too risk averse, they will be stuck in a job forever
No you gambled and got lucky. Good for you that’s great, but please recognize it for what it is. You played the market and won, just like people play the lotto, and some of them win too.
In options trading, every dollar you earn is a dollar someone else lost while trading options, and had to give to you. It's zero-sum. If you include fees, people lose slightly more money than they gain in options trading, on average.
This is pretty different from YCombinator's startup investment. No one has to lose for YC to win. The money ultimately comes from customers of YC-funded startups, who are in theory engaging in positive-sum trade (getting more in value than the money they paid for it). On average, people are earning lots of money investing in startups.
To be clear, options trading does have value in terms of letting people buy insurance and providing a price signal in terms of how many people believe prices will go up or down, but this is comparatively marginal and doesn't affect the options traders themselves.
People have been force-fed over and over that if they overpay their broker to have a 7% return yoy they will get to retire at 60 instead of 65. We have been repeatedly told by the same capitalists that make millions in a day that we are 'asking for too much' and that we are 'greedy'.
Honestly. Even if I lose everything (I am up >200%) in January alone, I will be glad to see those greedy jackasses bleed.
Here is the thing about deflation. Everyone, literally everyone, invests into the capital markets and becomes rich. People start liquidating their assets and spend them only to realize that the real economy is gone and their money is worthless.
And sell them at the right time, before they expire usually, usually people don’t have enough to actually go through with the contract if it’s in the money
Make sure to buy the right stock, at the right time. And make sure to sell it at the top, also at the right time.
But in all seriousness, for the past 12 years, there has been no fundamentals. Why? Because the Fed juiced the market with Quantitative Easing. Thereby flooding the market with infinite money.
QQQ is a good idea until you hit a bear market. So live through 10 years of consistent positive gains every year in the market and you too can leverage QQQ to make millions. Taking lots of risk is good in a bull market.
Yeah, running Hedge Funds like Melvin capital is where the real money is. They get a 30% cut of profits they make from their clients money and they have around $10 billion under management. They were up 50% last year so the management team took home ~$1.5 billion. They're deep in the red, down 30%, first month of 2021, due to the systemic risk they took on from all their bloated retail store short positions, but that's okay because the money they're losing is their clients and not theirs.
When they blow up, they talk to their media contacts and lay the blame on retail day traders ganging up on them and start a new fund.
Here's my account, that might be survivorship bias. I also traded tech stocks and cryptos and was able to significantly beat the market on the former and quit (also from Amazon) a few years ago.
I invested in NVidia after recognizing GPU shortages due to ML continuing hype.
I switched to AMD after recognizing their Zen CPUs are slowly beating Intel.
I switched to TSMC after realizing their accomplishments are significant part of M1 and Ryzen advantages.
My stock portfolio's growth is over +50% yoy over last five years on average (geomean).
The way I explain this to myself is that trading firms focus on economic fundamentals, which can not show upper hand in a specific technology. They are trying to recognize the later, but it requires understanding tech news articles, and best NLP AI methods are not there yet, whereas our brains can handle that task, especially if it is withing our own expertise.
If that theory is right, you can beat the market, but you have to be real expert in the area you are trying to trade in, and probably a few linked areas too.
If trading firms merely focused on economic fundamentals then we would see far less bubbles. You have to abandon economic fundamentals to cause and take advantages of bubbles and an economy built on bubbles is not healthy. It's built on mania.
I have the exact same thought, quants and AI cannot predict long term, and that’s where to compete. Didn’t think I’d find similarly thinking people out here, where do I find more to talk to?!
So funny you say this. The two stocks that got me started were Shopify and data dog. I knew datadog was a great freshly IPOd cloud play, Shopify would boom due to the lockdowns. So I put a ton of money in Shopify calls at the March bottom, then rolled the profits into Data dog, then Apple and so on. It was absolutely my understanding of e-commerce that gave me the confidence. Also how lockdowns related to the cloud. It’s only been lately that I’ve taken shots on MEME stocks. Deep tech understanding, scouring cathie woods ARKK etf has been very profitable.
But I think from a broader perspective, I’ve made huge leveraged bets on VTSAX/SPY/IWM on stimulus news. Very obvious that financial assets will inflate with each extra fed move.
I am keeping my bets conservative. These were all long term (1+ years) except a few option trades. Consider this a hedge against the very phenomenon discussed in this article.
You might got lucky or not, but your comment is very dangerous for the people who have no idea and haven't been in the field. FAANG compensation is not peasant to billions of people, so please don't do that.
Not sure if "dangerous" per se, but the OP's comment about having made millions leveraging on SPY and QQQ over the course of 100+ trades doesn't check out, given that a few days back, they created this throwaway account to complain about finding it hard to quit their job at Amazon because the pay is so good.
No kidding, this is HN lol people talk about taking drugs to slow aging, building recycled battery packs, open-source sex toys and a lot of other marginal topics. That's why most people actually like this community.
People are adult, if a simple comment makes you YOLO your life savings on options you probably had a lot of issues to begin with.
I make winning option trades as well, as a hedge against my portfolio. If you made a disproportionate amount of cash of an options play it was luck. I’ve done it before, made almost 1500% on an AGFS play when I saw a consistent downtrend in it. But it was luck and nothing else.
There do exist, in fact, some people who are very skilled at making money trading options. Some people do it for a living with rich people's money, and many of them have the same skillset/education as the general HN audience.
If this guy actually made millions over the course of dozens of trades, it makes more sense to let him talk than to downvote him and tell him that he's just an aberration of probability lol. Like, what do you gain by that? If he's lying, humor him and enjoy the conversation. If he's telling the truth, pick his brain.
I don’t have enough karma to downvote, dude. It’s also not a bad take. Institutional investors do indeed make a killing and you can do fine using i.e. the wheel strategy. But if you’re YOLOing on WSB and you aren’t an institutional investor it is almost certainly luck to turn thousands into millions.
First of all, if you're YOLOing on WSB and you are an institutional investor, you should really re-examine your choices lol.
My view is that most people don't talk publicly about windfalls, so if someone's willing to do it on a throwaway it's way more useful IMO to tease information out of him than to marginalize his comments. That's also the best way to determine whether or not he's lying.
If he's consistently lucky, then he's good.
Probabilistic tails are narrow but they do exist. By that, I mean you shouldn't assume that something isn't worth discussing just because it is improbable. That approach stifles the free exchange of thoughts and ideas, and neglects the reality that some people are in fact talented at things that most people can't do.
PS I didn't say you specifically downvoted the guy, but we as a collective have downvoted several of his comments on this article, and you as an individual are trivializing his (claimed) experience as luck.
I'm with you. I think the thing is that a YOLO play has better odds than winning the lotto or playing roulette. Some people make millions playing poker too.
Definitely it does, and it’s not all luck. As I said I’ve done pretty good myself with options with basic trend following techniques I learned as an aspiring algotrader. I believe I would have made money either way but my couple of >1000% gains were luck on top of the trend following.
Can you clarify: would you truly consider someone who works at FAANG as "middle class" and making "peasant money"?
HN, let's not lose our perspective. There are millions of "essential" workers, like daycare, teachers, elderly caregivers, laborers, etc. that didn't get a lick of compensation for their risky labor in COVID times. Many of these people had NO choice to stop working and NO choice to work from home. These are truly essential individuals who work for minimum wage or less, while truly making "peasant money" here.
Tip from an old fart who made some money a while ago: Stay humble. Life is long and there are ups and downs. Keep living costs low and you will live a happy life.
At least in this case, GameStop has filed to raise up to $100,000,000 through an ATM offering (selling shares to the public) [0]. So yes, the recent activity does help the company, in so far as GME is a company that can be helped by getting its hands on more cash.
Did that go through? Releasing new overpriced shares while the price is being obviously raising unrelated to the company performance sounds super dodgy.
They planned to sell them before the current rally (the document is dated December 8). They haven't released details of how many they sold, or on what dates.
It's not clear what view the SEC would take if they fast tracked an ATM offering now. Hertz were told to knock it off, but they were literally trading in bankruptcy. There's a pretty good argument to be made that issuing more shares is if anything the responsible thing to do to in response to increased demand, since it would help to correct the anomalous price rally.
Not directly. But driving up a company's market cap can make its stock more attractive to a potential acquisition target. Or it can simply sell shares of itself at the new, higher price.
Congratulations to you! Can I ask where/how did you learn to do what you did? Did you first learn general stock market investing or did you skip straight to options? Any advice and/or resources would be much appreciated. Thanks!
They're not winning. They're just minting a different set of losers and pushing the drawing out by a couple weeks.
And Reddit being Reddit you can never really be sure whether organic interest is pumping the stock or if they are being manipulated by an astroturfing campaign. If day trading weren't a conflict of interest for me I'd be looking into doing something like that (and consequently not blabbing about it on HN).
Melvin capital has been forced to take multiple capital injections and bail outs, to avoid being margin called. Short sellers have mark to market losses of over $6 billion, and should the momentum continue, they will be forced to sell at the worst times (infinity short squeeze).
'The system' and 'Wall St' don't just play the surface game here. Cool, nice, you short squeezed a hedge fund. It's awesome but ... you bet WSBers still involuntarily shoveled money to Wall St one way or another because every single step of the game is rigged asswards and back.
Isn't that what's happening? Melvin Capital sold a share of their revenue stream for billions in cash to avoid being margin called. That's not exactly "winning" but it's a way to save their butt at a lower loss, perhaps.
They are winning. That’s what people don’t get. This whole dumb money never wins mantra is what’s driving WSB. It’s a bucking of that false narrative. People working on Wall Street aren’t gods, but it’s their job to convince you they are
WSB is a public subreddit. Traders, pms, hedge fund guys all participate and win often bigger because they have more to play with. They pump and dump and ride the emoji rockets like everyone else.
There are only the winners, which include the $60k/yr nurse, the $600k/yr FAANG principal, and the $6M/yr Senior PM who timed their call options right.
And the losers which include the same but timed it wrong.
The engineers and finance folks who lost will have a bad week. The lower-middle income earners will have a bad year.
Is Melvin Capital winning with their short position? When they’re contractually obligated to repurchase millions of shares and there are no shares left to purchase, what do you think is going to happen? There are winners and losers, but in this case the loser could very well be an investment firm with 12B in assets. Some wealthy investors are about to have that wealth redistributed. I think that’s the point.
I think I'm convinced of manipulation. The memeing and the gameifying investment, calling each other retards (because you, user, you don't know _anything_) and the long obscure unfalsifiable ramblings about predictions or valuable investments hitting the top of the page, it all just seems a little fishy to me.
On the other hand, the multi-billionaires who are loaning one another billions of dollars to batten down their GME shorts....that seems somewhat manipulative to me.
These hyper-rich guys babble on about efficient markets but they work together to corner the market on particular securities. And they don't do it in public on the internet. They use the full weight of their reputations and relationships.
/r/wsb has always struck me as being an offshoot of 4chan, with their self-labelling as autists and retards.
And 4Chan a) isn't dumb, but they like doing dumb shit and b) they love brigading. Pool's closed etc.
But what's interesting is how the institutional outrage is merely fuelling the brigading.
The institutional investors crying in the media only confirms WSB's beliefs that they've found a weak spot in the institutions, so they're going to stick it in harder.
I admire their attitude, but not enough to put my money in to what feels like an giant troll.
The tagline for WSB is "It's like if you gave 4chan a Bloomberg terminal."
Personally, I'm buying in the money puts expiring in 2023. No way Gamestop is doing better now, or has a better future now, than it did five or ten years, yet their stock's at an all time high? These hijinks may continue for some time, but I doubt it'll last years, price will settle and I'll hopefully make a modest profit.
That comes from chans, which the average wsber from 3 years ago would have spent their teen years in. It is literally men hitting middle age, finding they have more money than they know what to do with and shit posting with it.
This is said as someone who has made high six figures from yolo trades because I thought it would be funnier to lose the money than put it in a savings account.
Occam's razor: posts you don't understand are not part of a dark conspiracy involving 2 million people with secret codes and manipulation; you just don't know as much as them.
They essentially drove one of wall streets very successful hedge funds of recent years to near failure they had to make a deal for an emergency investment today to stay afloat. I’d call that winning.
They will probably use the infusion of money to just ride out this raid and make a mint when the wsb bubble pops, which it inevitably will. To say that the hedge fund is "near failure" is the same as saying they did not fail. If they bridge this gap they win double.
They need to buy the stock back and pay interest. They shorted the stock at say 20, or 30. Now they will have to buy it back at 90 and pay interest on it.
They have repeatedly resorted to market manipulation to drive the price down and cut their losses, but people are not selling, there do not exist enough shares for them to close their position. They screwed up royally, they doubled down, from 128% shorted stock to 140% shorted stock, then they resorted to blatant market manipulation, using the media and painting a false narrative.
Why do you think they need to close their position? They need to meet margin requirements, which they can do by raising cash. Closing their position is the worst of their options and I don’t see why they would take it.
Everyone who is short has to pay the vig every day, so that hasn’t changed.
the bull thesis has been laid out in detail for months and it's a good one, this is organic interest, Ryan Cohen and others coming over from Chewy was the most recent catalyst
People exist who in the past two days paid $150 for a share that most analysts think is worth about $14 — at a company with negative earnings for six of the last seven quarters, and minimal earnings growth over the past few years.
I'm sure there was some bull case for the company, and it might have had a snowball's chance in hell around $14 or even $20/share. But at $60+ ? What on God's good earth is supposed to make the company worth that much?
"Most analysts" are hum-drum Wall Street hacks who cover dozens of companies and don't really have a clue about how the lion's share of them are run. I remember a few years back there was one analyst who kept talking about how NAND keeps getting cheaper and that's hurting memory suppliers...but the analyst's metrics didn't normalize for advancements in NAND speed nor the maturing of capital investments, so the analyst was basically looking at totally expected price declines over time and interpreting it as for some kind of static commodity while claiming it as a bear thesis.
A few of them are really clever and knowledgeable. The rest are chumps.
It's extremely difficult to judge GME based on regular metrics because their long-term outlook is a function of strategy and their short-term survival is a function of COVID. Sure, the company sells stuff that you can buy online, and sure, they sell it at malls and other places where nobody goes these days, but its stock was over-shorted and this was going to happen sooner or later anyway.
Maybe my numbers are off, so correct me if I'm wrong....At today's closing price, GME, which has $6B/yr revenue, is worth a sixth of BBY, which has 43B/yr revenue.
Comparing revenue might make sense if they were in the same slice of retail, but they aren't, so I think you can take zero value from such a comparison.
Lol. "This is flawed so it is worth zero" is a bad argument even when you present an alternative, but it's downright lazy when you just mail in the criticism without suggesting something else.
GME sells consoles and consumer electronics in addition to games, so I'd put BBY on the short list of comps for sure. But if you think the product mix is so different as to make them incomparable, that's ok. Pick a better metric and explain why GME was accurately priced at $260mm market cap when the company does billions in revenue.
Then, go back and explain why AMD was worth $2/share in 2014.
Then, go to every other heavily shorted name and wave your hands around looking for reasons to justify obviously overshorted valuations.
The point of the post is that sentiment drives value, not the other way around. It’s a profound thesis and it makes the opinions of analysts irrelevant.
If enough people want GameStop to succeed then it will. Ironically it’s the same thesis that wealthy SV investors go by when they decide to invest in a startup. Except the word invest is usually misleading. Most of the time they’re just looking for a vehicle to inject capital and influence, and the people and product are interchangeable parts used to achieve a a profitable outcome.
The sentiment story is that if enough people want to pay $150 a share for approximately $0/yr in earnings, they will. What this glosses over is the reason for the sentiment, the question: "why do people want to pay this?"
Traditional stories analysts tell would have people pay $150/share because they expect $8-$15/yr. This story is that people will pay $150/share because people want a way to say 'fuck wall street' and 'fuck analysts' and have unreasonable expectations of becoming wealthy. The former sentiment is sustainable in a way that the latter story kinda isn't.
$AMD was at $0.15, AMD was the only company besides Intel that actually had x86-64 patents. Intel would have never let AMD fail because they would be a monopoly and that is worse than leading a duopoly.
Notice the bean counter Intel ceo, the yields getting worse over time, the performance not improving besides a 1-2% year over year and Intel getting complacent, repeatedly to screwing over the customer with requirement of buying a new motherboard with every new release.
AMD was a steal for anyone in the know.
Counter argument 2:
Any price target posted by Citron was wrong.
Counter argument 3:
Why would any analyst give a proper price target when they can screw you over?
These remarks are presented for the interest of passerbys, not because the comment I reply to has merit and deserves them.
Counterpoint 1: AMD was a chipmaker with skilled engineers on staff and a growth story where they could seize market share with better technology. Gamestop is a retailer with retail clerks on staff and a story where increasing competition from PC and console app stores slowly eats away at their market share. Exact same thing, right?
Counterpoint 2: Saying the price target is wrong is one thing, and may in many circumstances be eminently defensible. Saying the correct price is $50-$150 is another.
Counterpoint 3: This exemplifies the thinking going on here. "I don't understand the stock market and think someone is screwing us over. Let's define our own alternate reality, and gang up on them for revenge! Revolution!" Last time we saw that show was January 6. For a few people, who get out at the right time, this will be a much more successful revolution, but on the whole, it succeeds only with a transient disruption, and harm the individual would-be revolutionaries the most.
> These remarks are presented for the interest of passerbys, not because the comment I reply to has merit and deserves them.
Ouff.
> AMD was a chipmaker with skilled engineers on staff and a growth story where they could seize market share with better technology. Gamestop is a retailer with retail clerks on staff and a story where increasing competition from PC and console app stores slowly eats away at their market share. Exact same thing, right?
Do your due diligence this is just one, https://www.gmedd.com, there have been many others and they all converge to the same argument. GME is worth much more than the $10 PT given by analysts.
> Counterpoint 2: Saying the price target is wrong is one thing, and may in many circumstances be eminently defensible. Saying the correct price is $50-$150 is another.
Except citron was wrong in every single price target they have given by more often than not an order magnitude, except for 1. If you pay enough attention, you will see that many of the same 'pages' play both the bull and bear game, if only to come out and say they were correct.
> Counterpoint 3: This exemplifies the thinking going on here. "I don't understand the stock market and think someone is screwing us over. Let's define our own alternate reality, and gang up on them for revenge! Revolution!"
Had you done your due diligence and paid attention to the situation as it unfolded, you'd have seen that the market made sense, the stock was over shorted and in no way reflective of the actual price targets created by various models and analyses such as the one I linked above.
> Last time we saw that show was January 6. For a few people, who get out at the right time, this will be a much more successful revolution, but on the whole, it succeeds only with a transient disruption, and harm the individual would-be revolutionaries the most.
We saw that show in every single revolution. This only reinforces the belief that the average proletariat is getting screwed over and manipulated by the same class of people. Hint, it was the proletariat that paid for the greed, not the institutions, the hedge funds or the MMs. It is the proletariat that are stuck between a rock and a hard place, it is the proletariat that are getting manipulated into intra class wars.
DoorDash has had negative earnings for all but 2 (1?) quarters it has existed, and trades at about $190 a share, despite direct competition from multiple functionally identical competitors.
The market is broken, at least retail investors are benefiting for once.
I don't think you understand the point I was trying to make. The point wasn't that share price is completely meaningless, the point was that it's meaningless without more information.
A share of AAPL now costs $139, a share of GOOG costs $1860. How would you compare the two companies based on that? How does the price of a single share relate to whether or not the company has positive or negative earnings?
Agreed. The difference this time is that the gains are socialized this time, not retained in the fraternity of HF, PE, and IB.
Which is exactly why Wall Street and financial media is denigrating it. They hate that they don't have the edge, or a monopoly on profits in this case.
It’s a short squeeze. Short selling investors who get margin called have to close their short positions, thus forcing them to purchase GME stock and driving it further up
good point, to clarify the bull thesis wasn't bullish to the current absurdity. i think the bull case is a good one but im not going to lay out the case here. check out the user RoaringKitty 's videos on youtube from a few months ago. (the stock was hovering around 4 then)
right now though the chaos has nothing to do with the underlying value. now it's all about the squeeze. but that's never been part of the bull thesis
> We have
rounded the multiple to 15.2x in honor of Tylee, Cohen’s toy poodle and
Cohen’s reputation as an aggressive, entrepreneurial founder.
OK, I'll pay $300 for a stock that will be worth $169 in 4 years assuming that Ryan Cohen has 100% chance of using is legendary Ryan Cohen powers to seize digital game sale margins from all the walled gardens, because somebody on WSB bought a domain name and used orange and green highlights in a spiffy PDF.
One answer is given at gmedd.com, which presents analysis suggesting that even in the “bear case”, GME could be fairly valued at about $40/share. Disclaimer: I don’t know if their analysis is any good, but would like to hear your thoughts.
Gamestop has the same problem that drove other retailers like suncoast, sam goody, strawberries, and many other ones out of business; you cannot survive the digitalization of your primary products.
Gamestop relies on console systems and videogames both new and used to make the core of its primary business. These are what draw people into their locations and to their web site, and allow add on sales like memberships, warranties, collectibles, and accessories to be sold. They generally go to malls, either interior or open.
The problem is the decrease in physical games over digital kills the primary reason to go into their stores, and also prevents middlemen from existing; there is no value add to getting a digital code from gamestop as opposed to steam, ps store, etc. It also murders the high value used game and console sales because now there is less product to trade in.
That just leaves them with collectibles, which they've always been low quality and too expensive, accessories, and a tiny assortment of physical games that now they barely even have stock of. They "advertise" the top 100 games or so in their store, yet don't have stock of many of them ,and their used games are barely a shelf of them.
The problem with being an internet retailer is amazon already does what they do better; it's an uphill battle where they have no real value add. Even Amazon seems to have less and less new physical games, and they have an infinite amount of chinese sellers dramatically lowering the price of game accessories.
I don't see any way to be bullish on them because of their actual business.
edit: its not just them. There's a regional game store chain where I live, and they suffer the exact same problems. They are desperately trying to carry anything and everything geek related just to fill the store with inventory; records, collectible card games, comics, manga, crt tvs, used movies, anime accessories, model kits, etc. They actually are losing the game store focus, as used product even in the retro market is dead now...very few retro systems and games.
It works at the start, but the problem is that the people who want to sell their positions need to dump it on the losers and just keep pumping the price and making late comers lose lots of money.
The reality of wealth building is that short term it’s always 0 sum game, long term it’s a way to get rich.
Well sort of... in this case, there are a ridiculous amount of short sellers... more than 100% of all the shares have been sold short.
That means that there is in some ways infinite demand... every single share currently owned HAS to be bought by a short seller at some point, in order to return it to the borrowed actual owner... so as long as all the current owners hold fast, they can sell their shares for as high as they can go.
It doesn't even matter if the company itself is worthless, the demand is there.
You are right about the zero sum in this case, though... it just might be the short sellers who are left holding the bag.
I feel like a lot of the commenters here either never actually went on /r/wsb or are trying to glorify it with a narrative that is absolutely disconnected from the real thing.
They are not somekind of community trying to "stick it to wall street", they are mostly just random people shitposting all the time, posting their gains and losses. Right now it's GME, before it was SPY/TSLA/NIO. No need to overthink it.
Sure the GME thing has an actual borderline smart twist to it which gives the entire community a different spin, but it's still just an outlier in the wsb timeline.
What I like about wsb is it is fueled by endless optimism and celebrates wins and losses equally, with a sense of humor that the rest of Reddit or the internet cannot tolerate anymore. In the comments of a good due diligence (DD) post, you usually find people saying "I don't understand anything, but I'm in". And frankly speaking, that's fun. There's no politics or moral posturing on there. HN, on the other hand, is a gold mine for skepticism, almost like a "code review" but for ideas, which can get a bit negative at times. I will continue to visit both communities.
You and me both. I go to /r/wsb because I can see some 1047% ROI and some screenshots of people losing their life savings with comments like "That's what you get for betting agains't Papa Musk you f*king retard". It's just so surreal.
But isn't that kind of the point of the discussion? A bunch of shitposters band together and manage to align themselves with someone with resources and interests to create a "movement" that is self-sustaining. The article makes parallelisms with the Capitol attack and other forms of self-fulfilling prophecies. Enough believers is the fuel, someone with resources makes a spark, things ignite.
WSB didn't create it. A billionaire founder created it and retail came along for the ride. The differences in holdings, excluding the anomolous millionaires, are enormous. Attributing this to WSB is calling them more powerful than they are.
Precisely, /u/DeepFuckingValue which started this thing on WSB literally has only $15M in GME on a $5B cap. In the grand scheme of thing that's not significant.
A couple of hedge fund managers shorting GME may have gotten kicked in the nuts, but Wall Street as a whole is laughing all the way to the bank. A friend of mine working at a high-frequency trading co says 2020 was their best year ever and by a long shot, because volatility plus clueless retail investors (yes, that means you, /r/wsb'ers YOLOing on Robinhood) means arbitrage and frontrunning rakes in money.
I can't tell if this is in jest... if you're actually interested, the role of HFT in markets is hotly debated. The HFT side argues that they improve markets by providing liquidity - and that's true to an extant, spreads have narrowed drastically over time. And yes, there is the opposite side arguing they are purely "parasites", and exchanges like LTSE have been built specifically to counter HFT (Flash Boys, etc.)
Perhaps I don't like the word "criminals" being thrown around so loosely.
The comment I'm replying to uses the word frontrunning to describe their activity. Frontrunning is a crime. Hardly a loose use of the word to describe the perpetrators of crime as criminals.
Retail investors are supposed to buy and hold all of the stocks, because they couldn't possibly be smart enough to pick the good ones.
Hedge funds are supposed to be allowed to naked short the stocks they don't like into oblivion, transferring wealth from retail investors to hedge funds.
The hysteria and pearl clutching at this wealth transfer being reversed is hilarious.
SEC doesn't actually do anything. Failures to Deliver for GameStop stock has been on the securities threshold list for more than a month and off and on for the past year. I believe OverStock was on it in the past for over a year at one point and the SEC did nothing.
> This does not necessarily mean a lot of people are doing evil illegal nefarious naked shorting! Really, I promise! There is no special limit on shorting at 100% of shares outstanding! Here is an explanation of how options market makers (discussed below) are allowed to short without a locate, but I want to offer an even simpler explanation. There are 100 shares. A owns 90 of them, B owns 10. A lends her 90 shares to C, who shorts them all to D. Now A owns 90 shares, B owns 10 and D owns 90—there are 100 shares outstanding, but190 shares show up on ownership lists. (The accounts balance because C owes 90 shares to A, giving C, in a sense, negative 90 shares.) Short interest is 90 shares out of 100 outstanding. Now D lends her 90 shares to E, who shorts them all to F. Now A owns 90, B 10, D 90 and F 90, for a total of 280 shares. Short interest is 180 shares out of 100 outstanding. No problem! No big deal! You can just keep re-borrowing the shares. F can lend them to G! It's fine.
Citadel can see 80% of retail orderflow such as Robinhood and is massively long since last Friday as can be seen from the calls they are selling.
Now it is likely the steam has run out(gamma cascade) so they are placing their bets on the opposite side by taking over Melvin which is massively short without causing too much market impact.
I may be wrong, but there is an information firewall between Citadel Securities (the market maker that pays for order flow), and the Citadel LLC (the hedge fund that is bailing out Melvin Capital)
I've seen comments about the supposed "information firewall" a couple of times in various threads related to the GME WSB fiasco across a few different websites.
I am not a financial professional, but I am not stupid.
Anyone who believes that 1. this firewall exists, 2. is up to snuff (ie. working like it should), and 3. is not being constantly undermined formally or informally is sorely mistaken.
It's disturbing and dishonest how the media is painting an image where the day traders on WallStreetBets are the villains and the hedge funds shorting this stock to over 100% of float for over the past year and also purchasing large numbers of puts so market makers naked short to hedge are the victims.
The float has been over 100% shorted for over a year. The shorts could have easily covered or trimmed their position when the stock was trading in the $3-$4 range this spring and summer for a profit but they chose not to. Book value was estimated to be $10 at that time. News came out that improved GameStop's situation and its future appeared less bleak. There should have been short covering on each of those pieces of news: GameStop paying off debt early, Ryan Cohen first buying 5% of the company, then 13%, then joining the board with 2 other CHEWY executives, the new PlayStation and XBox consoles releasing and always being immediately sold out, the microsoft profit sharing deal, huge ecommerce growth yoy, etc. But the shorts chose not to cover at all! Short float remained the same at over 100% as more new people bought into the company on the good news.
Many people may not know this but a new CEO was hired 2 years ago: George Sherman, and he's been doing a good job of turning around the company by doing unsexy things like shutting down unprofitable stores like where there's 2 GameStops in a single mall and improving their supply chain logistics and ecommerce business. 95% of all GameStop stores are 4 wall ebitda profitiable was what they said on a conference call 2 years ago.
I would also like to point out GameStop is a highly cyclical business. It depends a lot on the 7 year playstation and xbox console cycle. Look back on the historic stock chart. People think it's failing because revenue declines year over year then the stock goes parabolic in the new console release year. It's like the console cycle isn't priced in until it hits people in the face.
yes this is 100% accurate. All these dummies laughing at ARK/Cathie Wood while she talked about Tesla/AMD/Biotech innovation years ago. WSB is far more educated compared to MSNBC/Jim Cramer crowd.
The jury is still deliberating whether WSB is an effective cartel or not. At the end of the day, the members total investment is so small that it doubtfully makes any difference. It is probably more analogous to Ed Thorp's Beat the Dealer. He devised an algorithm to count cards. Ran a simulation on a computer at MIT, got bankrolled, and went to Reno to test it in person. Why didn't he continue counting cards in Nevada? Because hedge funds are more lucrative per effort.
Nonetheless, after he published Beat the Dealer casinos greatly benefitted rather than a situation where they lost revenue from Blackjack card counters. Thousands of people believing that they could make a fortune using his system went to the casinos. Between the free drinks and the inability to focus, people lost fortunes instead. Moreover, Blackjack remained hugely popular.
You never hear about people losing money in Vegas, only about that one time someone won big. It's the same with WSB, sort of. They do lose money and lots of it. Moreover, they post the losses. It is only during squeezes like with Tesla do we hear about it in the media.
Still, at the end of the day, they invest a very, very small sum of money and can't have much influence. I thought for a while that maybe there were outside influences driving memes to get the cartel to behave a certain way, but decided they are not much of a force.
>> You never hear about people losing money in Vegas, only about that one time someone won big. It's the same with WSB, sort of.
I'm not sure about that. This guy[0] lost his life savings investing in ornamental gourd futures. Its actually a pretty comical account simply to me because it seems so absurd.
It's like everyone has forgotten the past meme stocks of /r/wsb. GME is not something out of the ordinary. They do this all the time. First someone will pick a stock to pump and if it rises some people win and some will be left holding the bag. Remember the SPY puts at the beginning of 2020? The Chinese coffee startup that got delisted? NKLA? How PLTR pump lost the energy?
I've been a member of WSB since January 2020 and this is not entirely accurate. If you look closely, it is unclear whether WSB is actually what drives a pump. Quite often, something happens, a stock gains insane valuations and WSB finds it after the fact and spins some narrative or tries to profit even more.
The SPY puts weren't at the beginning of 2020. I was actually one who took a huge profit from being early with SPY and DAX puts, but I also lost some money later on when SPY puts were still the rage.
The fascinating part is that you don't really know if WSB is actually the pumper. With smaller caps, that might be true to some extend. They banned mentioning of small caps with less than 1 billion in market capitalization a while ago for this reason.
WSB pumps and dumps: SPCE, LL
Certainly not: MSFT, SPY drop in Feb/March 2020, TSLA, AAPL
Probably not: HTZ
Unclear about the extend: GME, BB, PLTR
So, is WSB a driver of stock prices or is someone else driving the prices and blaming it on the "retards" on WSB? This happened in July/August 2020 with tech and one culprit was Softbank.
That was just a rough estimation. I have been following them for the last few years and my point is that they don't always win. Before 2020 (where every stock market on earth started giving huge profits) they were mostly known for their losses. In fact the only WSB stock still worth buying is TSLA. Everything else is pumped, dumped and gone.
Funny that you say this. TSLA is the mother of all pump and dumps, but it'll take a while for this to play out. Not driven by WSB of course.
But yeah, they don't always win for sure.
Still, there are a few gems in that sub if you know where to look imho. Do they have a crystal ball? Certainly not. But it's interesting for its different perspective.
WSB isn’t doing anything that isn’t typical on actual Wall St.
The market is, and always has been, a ridiculous game. WSB is just showing the world. But the folks on actual Wall St would prefer no one else can see how the sausage is made.
People and the media is not stating the simple fact that they short interest has been over 100% since June. I bought a bunch and told all my friends/family about it and everything laughed at me. Now those people asking me what they think about it.
Likely they started short positions around $10 in 2019, had a nice profitable trade, started to bleed out then doubled down and increased position as it picked up momentum. Now they are far over their head and from the looks of things, stock is going to $200.
Lots of people made tons of money shorting tesla. Until they didnt and stock kept doubling.
I cover this chatter as a sideproject. Wallstreetbets is seeing higher levels of chatter than when the coronavirus broke out. I think it may be the highest level this year.
Can someone extrapolate what happens (hopefully) in a half a year when we get to herd immunity and the economy opens fully when a lot of these people (I'm guessing) will decide to cash-in in their stocks in order to go to a nice vacation, get a new car ect.
Can we expect some sort of economic recovery followed by hyperinflation?
Interesting point. I recall some analysis that the froth in the market is being driven by (1) reduced spending -> increased investing, at least for those who kept their jobs (2) cancellation of sports, leading to more speculation as a substitute form of entertainment.
If that's correct, then yeah, we could potentially see a slide. I suspect it won't be massive, and it could be counterbalanced by economic growth that happens at the same time due to the reopening. Don't forget that the stimulus/bailout/money-printing is also driving the market up too.
If you predict hyperinflation then which goods do you think will we have a shortage of? Because that is what inflation is. Too much spending and not enough things to buy.
post WW1 Germany both had a broken economy and a massive amount of foreign debt. What makes you think that similar events will take place? What prevents the economy from simply recovering in 1 or 2 years?
Some self-acknowledged idiots making a few million on the stock market isn't going to have any measurable impact on the entire economy. And it'll be balanced out by a few hedge fund millionaires having to sell their third yacht.
>We can remain retarded longer than they can remain solvent.
There is a tremendous amount of spite involved here. They hate the boomers, and they hate the institutional wallstreet investors and hedgies. And why shouldn't they? These people play with our lives and get fantastically wealthy by gambling with our retirement accounts.
I saw that some hedge fund got wiped out today by this. Sorry I won't be shedding any tears over that. Maybe the hedgies should have to learn to code.
Yes it is out of spite. I am up >200% in January, with all of my life savings, and I am willing to lose everything so that they bleed and they lose everything. I have nothing to lose because I am used to living with nothing. I have but my chains to lose.
The '08 crisis was in part for a similar reason. Some hedge funds shorted housing stocks and crashed everything. We were at the risk of losing our home, my mother working for the gov was unemployed, she went to the private sector and they squeezed the life out of her.
They bring nothing useful back and play god without permission.
I am already broke. The money I invested isn't enough to change my life, but the returns are. I can fast for a week or two, I can walk to school instead of taking the metro. I am poor af and they can't take that away from me.
But you know, melvin capital is already 30% of their equity down in January.
>melvin capital is already 30% of their equity down in January
The thing is, they won (bigly) almost every year since their inception, it's a relatively minor mishap for them even if they gain nothing for the rest 11 months.
Guess what, they and their clients will be laughing their asses off and move on along with their high life.
They are employing every trick in the book, they have vilified retail, they are launching ladder attacks, they (citadel) are exploiting information about stop losses set up by users, they keep funding articles and smearing the people.
This isn't how somebody in control acts. They even doubled down on their position and increased the number of shorted stocks in the previous week.
> These people play with our lives and get fantastically wealthy by gambling with our retirement accounts.
I’m actually kinda confused by this. Are we not rooting for them in some respect? As long as I make money too and my retirement account grows what do I care if they take some off the top? The returns I get are way better than I could get on my own.
> As long as I make money too and my retirement account grows what do I care if they take some off the top?
You should care because for long term investing, an actively managed fund is very likely to underperform the market. The vast majority of hedge fund managers aren't doing anything that you couldn't do yourself, i.e. pick a few stocks out of the S&P 500 and hope that they outperform the market.
> The returns I get are way better than I could get on my own.
Look into index based ETFs. They simply track an index so your performance is equal to the market's, so no handpicking stocks or gambling. They are traded like stocks, so you can probably buy them with your broker. The best part about them is that they have almost no fees - the most popular ETFs cost 0.10-0.20% per year.
If you're American and believe that the American stock market will continue to outperform the rest of the world, then an ETF like SPY (tracks the S&P 500) would be a good bet. If you'd like something more diversified, have a look at funds tracking indices like the MSCI World or FTSE All-World.
Quick note: There is also FTSE Developed World, which has outperformed All-World over the last few years AND has a lower TER than most All-World indeces. You can always hold 10% Emerging Markets + Developed World.
The FTSE All-World has returned 82.5% over the last 5 years, while the FTSE Developed has returned 82.9% [1]. The difference is neglible if you ask me, and 5 years isn't that long anyway. The fees depend on the ETF you buy - in Europe, the difference between ETFs tracking All-World and Developed is around 0.08%. The biggest difference is that the Developed index "only" has 2000 stocks instead of the 4000 of All-World.
Another issue in Europe is that the accumulating ETFs (more tax efficient in most countries) tracking the Developed index have low liquidity.
And likewise - if they lose loads of money, isn't that a bunch of people's retirement accounts?
We're not just talking about some Wall Street traders losing some money (who can likely afford to), but regular people may suddenly be finding they can't afford to retire as soon as they had planned.
Hedge funds are only allowed to manage the money of accredited investors, people with over $1 million in assets and sophisticated financial knowledge and experience. So when a hedge fund screws up, its investors might have to put off getting a new Ferrari for a year or two, but no one is ending up destitute.
I can make $200k selling covered calls every month with a few million in capital. Options prices are crazy right now. It makes you think about how silly money is.
OK but this is not exactly risk-free. You are on the hook for the downside risk of whatever you own behind those calls. Selling covered calls comes with a lot of exposure.
OT @ tempsy: I need to say thank you. I found WSB through a random comment of yours about Tesla/WSB in January 2020, read a lot about options, liquidated my portfolio in February, bought puts on SPX and DAX and made €400k after taxes in a few weeks.
It's kind of crazy that your random comment on HN lead me down this path. That's why I'm a reader of HN since 2008 or so – exposure to randomness ;)
Yes the exposure is much worse. If you are long a stock you can sell it whenever you feel like it is about to lose value. When you sell covered options you may be forced to hold the stock until the contract expires. That’s the whole point of the call: the buyer pays you the premium and in exchange you are taking all of the risk for the duration of the contract.
You can actually buy the call back whenever as long as someone is selling (which market makers generally are) to exit the position - you don't have to wait until expiration.
no it’s not. i’m talking about covered calls which is where you sell a call against your shares. you collect the premium from the option in exchange for potentially limited upside if your sold call goes in the money at the time of expiration.
What do you mean? If the call doesn't finish ITM, you collect premiums. If it does you're only missing on the upside. You don't make as much money as you could have, but either way you make a profit.
Or is that not how it works? I've never written my own options.
Today I noticed that Bad Bath and Beyond rallied 40% in the morning with no major news. It closed only +1.5%. I was wondering what's going on. I think that's one warning sign not to invest in companies that often flactuate greatly with no major news. It often happens with small companies so it's good to stay away from such companies. But BB&B seem to have a market cap of a few billions so it's not expected.
Maybe cause $BB&B is close to $BB, either the bots are mistaking it for $BB or the WSB "retards" are. Either way there's a bit of a "rocketship emoji" drive for $BB on WSB.
This is essentially a crowd-sourced Ponzi scheme. But is it really so different from the market at large right now? It's more clearly identifiable in that there are explicit signals in the message board. But the primary signal is probably the stock trajectory itself, just as it is with the broader market. People are buying mostly because people are buying, and the higher the price goes, the more sensitive it will become to perturbations, until something---maybe a tiny fluctuation in some obscure part of the market---causes it to collapse.
It's market hot potato/ponzi scheme. You buy in to capitalize on growth, funded by increased interest in the meme, and try to cash out before the meme isn't funny anymore.
Damn, here I was thinking /u/DeepFuckingValue was winning by turning 53k into 13M, more than any of the jealous fucks here will make in their lifetime working their miserable engineering jobs and afraid to take any risks in life
I'm happy that guy did well. But one guy taking a negative expected value bet and winning big doesn't really help all the other little guys on WSB who got roped in to buying GME at 100+ today or might even be ITM on their calls but will get crushed by insane spreads, theta decay due to halts and don't have the capital to exercise.
I'm not spiteful of KG and the other people who are making the real money off all the crowds at the option casino, if anything I respect their shrewdness - Citadel prints insane money on these option premiums, and as a bonus KG gets to invest in Melvin at firesale prices and probably gets to extract insane terms.
As far as 'jealous fucks working miserable engineering jobs' - I think you might be projecting a bit there :)
>But one guy taking a negative expected value bet and winning big doesn't really help all the other little guys on WSB who got roped in to buying GME at 100+ today
I don't disagree with your post overall, but do want to give some credit to the particular user being discussed. He had a solid bull value thesis that was well thought out and not at all based on memes, with the short squeeze potential being a mere afterthought. He has a great youtube channel where he explains his thesis in-depth. While he posts occasionally on WSB he does not seem to fit the wild gambler image that WSB has.
I don't have enough experience or knowledge to speak intelligently on whether his play was actually negative or positive expected value but it was not a random gamble.
Just felt the need to throw this out there because with all the attention this is getting I've seen him unfairly (in my opinion) being grouped with the admittedly large amount of people who are essentially just gambling.
That guy bought and held GME since 2019 at ~$5 who yolo'd $53k with call options. Just one of many who took a diamond-handed bet on a lowly priced stock to be the 0.0001% of those who became multi-millionaires as soon as the short were squeezed up to $155 a share. Well played to that guy and others who didn't sell and got in very early.
As soon as it's reported on the news, for that stock at least it is probably too late to get in.
> more than any of the jealous fucks here will make in their lifetime working their miserable engineering jobs and afraid to take any risks in life
I'm afraid you're spot on. But I'm sure that some may say it is less risky to work at those FAANMG companies than it is to go all in your life-savings into meme stocks. (TSLA, GME, etc.)
On the other hand, building startups is also very risky, via the VC route or bootstrapped route. Depending IF you attract VCs to invest in it, its either you get acquired for >10x or IPO (might become a multi-m/billionaire), or you return their money or go completely bust.
Some play it safe whilst they watch others take risks.
Yea and Elon Musk made 170B. Meanwhile, the average HN user probably made somewhere around 200k. I made 1.3 million last year. I know it's not a lot because I know people several orders of magnitude richer than myself, but I also know that there are risks worth taking in life, and no one becomes Elon Musk, Ken Griffin, DeepFuckingValue or even myself by calmly working a desk job. You have to have balls to really succeed in life.
There's an argument to be made that it's not worth it, that you are happy enough with your low 6 figure existence, but the sentiment here clearly shows that's not the case. The sentiment here shows that people are not happy in their FANG and other engineering jobs, and they are in fact incredibly jealous of Musk, Griffin and the newly rich WSBers, and instead of admit that jealousy, they make up lies claiming that the WSBers aren't winning, when it's clear as day they are in this moment and big hedge funds are the losers.
I'm not saying WSB will continue to win, I think hedge funds will get their shit together and not get themselves into a GME-like position again in the near future. However, let's call a spade a spade while it lasts. DeepFuckingValue and his WSB brigade have scored a HUGE win, many becoming overnight multi-multi millionaires, and instead of bash them, why not celebrate them for a day.
Can’t upvote this enough. HN has turned to shambles over the years as people here are way more concerned with “getting out” than they are with building companies. It’s not surprising the place is a cesspool of jealousy whenever someone succeeds.
I’ve called them out on this shit years ago. It still hasn’t changed.
This seems like a case of randomness plus sample bias equals overgeneralization. In case of indignation, multiply by 10x.
Separately: Could you please stop creating accounts for every few comments you post? We ban accounts that do that. This is in the site guidelines: https://news.ycombinator.com/newsguidelines.html.
You needn't use your real name, of course, but for HN to be a community, users need some identity for other users to relate to. Otherwise we may as well have no usernames and no community, and that would be a different kind of forum. https://hn.algolia.com/?sort=byDate&dateRange=all&type=comme...
We pour our money into index funds with the understanding that they will continue to perform like one American index did for 2 decades during a time when a) index funds didn't exist b) index funds didn't make up 50% of all invested money c) the internet wasn't widespread.
If your retirement plan can't accommodate Nikkei-tier growth, you are Wall Street gambling.
Where is the evidence that most of the volume came from wsb users? Genuinely curious because I don't know the details. Is it possible that a third party saw the situation and joined in?
Robinhood is the app of choice for WSB users. Robinhood also leans heavily towards the younger crowd. Robinhood released numbers recently on how many people have tsla, gme, pltr and other stocks in their portfolio. Google it.
this a profound (intentional?) misreading of how a short squeeze functions. the shorts are the ones who end up "holding the bag" in that they are contractually obligated to buy shares at current (higher) value in order to cover their position.
hence the "taking on wall street" angle - institutional shorts are the chump, not the retail investors (and the institutions going long with them)
no it’s not. the squeeze is what makes the price rise, but once the wsb people start taking their profits, there will no longer be a shortage of shares and it’ll work in reverse, cascading down.
it doesn’t just magically stay high forever after the shorts are covered.
same cascading down effect can happen if gamestop simply issues new shares
even now there’s people on reddit who said they FOMOd in at 150 price point
Short squeezes happen when shorts have to cover due to risk limits or margin requirements. Their covering impact is very aggressive (at times they're not even the ones covering, but rather their brokers or institutions), so it moves the stock. Then when things settle down, the people who are long can sell the stock more slowly.
Also, there are several positive externalities to a rally. Stock price is something of a self-fulfilling prophecy, partially because companies can issue shares to raise money -- or use shares to buy another company. In some cases, a rally could lead a convertible bondholder to exercise and sell shares, effectively reducing the firm's debt.
Even if this rally were to be short lived, short-sellers are unlikely to feel as comfortable selling the stock short in the future, and thus unlikely to impact the stock downward.
no one is saying anything "magically" happens. The profit-taking has happened and will continue to happen - there are a finite number of shares to be purchased, yet shares are still being purchased by shorts.
There is room for profit-taking at every cost basis except for the very top - looking at that subreddit, there are no illusions that it will literally last forever, only that selling en masse now (when shorts are actively working together to fight back) undermines the squeeze.
Yeah, it's definitely a bubble, it's just a question of who takes the big loss -- if Melvin has to cover now, they do, otherwise it's people who are going long at the top & holding (which is what all the r/WSB noise is promoting). This is why Citadel and Point 72 backstopped Melvin -- if they can weather this bubble, that's their best outcome. In fact, increasing the short position now might be a great move.
I mean of course it doesn’t stay high once the shorts are covered. But everyone who sells to people with short positions will absolutely come out on top which is the point.
Anyone on WSB buying in at this price knows what they are getting into, there's no deception. It is clear you are betting on lots of other traders holding onto their shares, and hoping that the hedge funds are forced to cover and buy your shares back higher. It is also very clear at any time this could all come crumbling down.
The real concern I have is the millions of people who blindly trust a financial advisor fresh out of college, who has never made a profitable trade in their life. We've all been told to buy into indexes and that we can retire rich. What happens when the market doesn't grow for 10 years? Why should the market continue to grow if the US loses its economic superiority and population growth in the US slows?
At the end of the day, a share of a single stock is only worth what someone else will pay for it. The company or business behind a share does not matter for the average retail investor, since by owning shares they really don't control much of anything. This particular WSB saga is a bunch of people trying to force some hedge funds to pay them more money for their shares than they are worth. It is as simple as that.
I'll defend it if you want. I browsed WSB a ton in 2016/2017, while in college. Doubled my initial investment (not much) in a year, and most importantly, learned a ton. I'm still trading now, but don't browse there as much and still have success. I guess maybe I'm one of the lucky ones? I have a friend who browsed the sub back then as well. He bought some of the meme stocks at the time (mostly AMD) and has been holding since. AMD was ~$7 then and is now ~$94.
Yeah, there's a lot of dumb crazy bets on there, and it has become a bit different since options trading started on Robinhood, but it's still a great place to learn things and get investment ideas.
Most of the meme stocks have seemed to perform well (outside of biopharmaceuticals they memed about back then).
That will increase the level of useful information: lots of people here are refusing to let their complete ignorance of WSB stop them from commenting on it.
Well put. I was explaining to a friend of mine a few weeks ago why cynicism is so prevalent in our generation: we graduated in 2008 where banks, not our parents, got the bailouts; we got stuck with thousands in student debt; the dream of marrying a pretty wife and having a few kids, working for a company for 40 years, and retiring in Cabo is a relic of the 1950s; we lived with our parents until our 30s, and in spite of being so "connected," we are more lonely, have less friends, and are having less sex than previous generations; unless, I guess, you count the COVID shutdowns screwing young people yet again.
It's a never-ending shit-show. At least some of us are getting rich in /r/wallstreetbets.