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GameStop Stock Manipulation War

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LOL The Irony

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The subreddit r/wallstreetbets has been manipulating the US stock market, starting off with the struggling video game & electronics store GameStop. All the hedge fund managers have thrown their toys out of the pram over this and Wall Street is currently at war with the subreddit. Other stocks targeted include AMC Theaters (who own Odeon & Cineworld), BlackBerry, Nokia and Kodak. Fallout from this has included the messaging service Discord removing the wallstreetbets server under "hate speech" and trading service RobinHood has de-listed several stocks.
A battle between day traders and Wall Street pros over the soaring share price of GameStop is set to continue.
Shares in the loss-making video games retailer were up around 16% in New York, adding to massive gains seen earlier this week.
Professional investors have lost large sums after betting billions of dollars that GameStop's shares would fall.
But buying by amateur investors, swapping tips on social media sites like Reddit, pushed up the share price.
Shares in GameStop have now risen more than 700% since last week, and regulators are monitoring trading amid fears of illegal market manipulation.
But the amateur investors say they are just playing Wall Street at its own game.

Key to what's going on is "short selling" or "shorting", where a big investment company such as a hedge fund tries to make money by betting that a company's share price will fall.
The hedge fund borrows shares in a company from other investors (for a fee) and sells the shares on the markets at, for example, $10 each, waits until they fall to $5, and buys them back. The borrowed shares are returned to the original owner, and the hedge fund pockets a profit.
It even has a Wikipedia page;
 
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nlogax

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Now that major online brokers have restricted trades on GME the price is tumbling again. Pretty inevitable, though no doubt there are lots of new Redditor millionaires out there already who cashed in at the peak.

/r/wallstreetbets is usually a bit of a freakshow but this has been an entertaining ride watching a bunch of online warriors make a hedge fund back down like that.
 

Darandio

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Now that major online brokers have restricted trades on GME the price is tumbling again. Pretty inevitable, though no doubt there are lots of new Redditor millionaires out there already who cashed in at the peak.

/r/wallstreetbets is usually a bit of a freakshow but this has been an entertaining ride watching a bunch of online warriors make a hedge fund back down like that.

And seemingly plenty of the big shots were tipped off before the restrictions were placed. Calls for heads to roll and inquiries at the very top.
 

nlogax

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And seemingly plenty of the big shots were tipped off before the restrictions were placed. Calls for heads to roll and inquiries at the very top.
Unsure what the legalities are behind brokers restricting certain stocks to closing positions but it seems very suss and it needs to be determined who's putting them up to this.
 

brad465

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In short, free market capitalism is a myth unless you're in the top 1%.

Unsure what the legalities are behind brokers restricting certain stocks to closing positions but it seems very suss and it needs to be determined who's putting them up to this.
I do hope there is some illegality about what's going on, it will expose just how rigged the world economy is.
 

tbtc

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A rather amusing story, but also a glimpse into just how rigged the markets are and how hard it would ordinarily be for ordinary investors to swim in an ocean with such sharks, and how businesses can be dragged into peril through none of their own actions, just one person sniffing a potential "victim" (which then encourages others to do likewise).


The repercussions re the appallingly named "RobinHood" could be interesting though - we've got a situation where even Ted Cruz is agreeing with Alexandria Ocasio-Cortez on it, showing just how'd the "short sellers" look. It's dressed up as sophisticated but it's pretty naked stuff - I can argue in favour of capitalism but this kind of stuff is beyond the pale (short selling 140% of the stock!) - you can be right of centre but still believe in a system that lets "the little guy" stand a chance - whereas the short squeeze here (and compliant trading platforms showing their true colours by protecting the hedge funds) is very hard to swallow - I'd naively like to think that someone will use this debacle to argue in favour of some kind of "responsible capitalism" but I fear that the US will become polarised between ordinary people who accept the sharks (because Fox News tells them to) and the remainder become disillusioned with a "status quo" that looks a long way from the American Dream and into the mittened arms of Bernie Sanders.
 
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Unsure what the legalities are behind brokers restricting certain stocks to closing positions but it seems very suss and it needs to be determined who's putting them up to this.
The alt-finance website ZeroHedge (WARNING: some of the content on this site can be distinctly conspiratorial) has been covering this and reported earlier that legal action has already been filed against the RobinHood trading app for blocking trading in Gamestop and one or two other of the ‘most-shorted’ stocks.


I tried to copy a quote but it seems it is a very fast-moving situation and is constantly being updated. Looking just now, Congressperson Alexandra Ocasio-Cortez has apparently tweeted about the situation, she has a position on the House Finance Committee.
 

nlogax

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The alt-finance website ZeroHedge (WARNING: some of the content on this site can be distinctly conspiratorial) has been covering this and reported earlier that legal action has already been filed against the RobinHood trading app for blocking trading in Gamestop and one or two other of the ‘most-shorted’ stocks
Great link, thank you. Editorial hyperbole aside it really lays things out simply. This is becoming a really eye-opening situation. Need to look closely at those alleged ties between RobinHood and Citadel, that made me do a bit of a double take.
 

LOL The Irony

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Unsure what the legalities are behind brokers restricting certain stocks to closing positions
I believe only the government can. Elon Musk received a large fine from the regulator a few years ago after simply tweeting his intention to buy back Tesla stock.
 

Bevan Price

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I find it hard to have much sympathy for those parts of the finance industry who moan when they lose money, but who are all too willing to destroy thousands of jobs if it increases their profits by speculation.
 

Cowley

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I find it hard to have much sympathy for those parts of the finance industry who moan when they lose money, but who are all too willing to destroy thousands of jobs if it increases their profits by speculation.
Likewise Bevan. They’re all playing a game, so on that front I have little sympathy if it goes wrong for them.
 

BluePenguin

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Now when it comes to investment advice I would never usually turn to Reddit as my first choice. From the looks of that sub Reddit it seems as though there are some very smart people who know what they are doing. Well done to them I say. This stuff certainly isn't for the faint hearted but if a few ordinary people can get one up on Wall street good on them. It is a shame the odds are so stacked against the rest of us.

Similarly, there was a lot of excitement over Bitcoin reaching £30,000 not long ago. Reddit was packed with experts speculating on whether the price would double, triple or increase maybe even more, People are at home a lot more these days and have time on their hands. Amateur investors can do well if they know how. It seems to be a case of jumping on the band wagon at exactly the right time.
 

Jozhua

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Hats off to the people who first discovered the insane 120% shorting of the stock!

What happened after was a typical short squeeze, perhaps atypical in the fact so much was shorted that the price rocketed.

The firms responsible were then bailed out and went right back to the casino... It could only go down... Right?

But then the message had spread, it was viral. Everyone wanted to buy in, even at small amounts, to be a part of history.

I purchased £2.50 as a meme when markets opened. I watched as it shot up to well over £3...then the market shut. It was sitting around $400 a share, up around $100 from the day before. The brokers had made the same mistake of shorting again! But this time, it appears they leveraged the retail investment companies to stop allowing the purchase of shares. You could only sell...

There are whistleblowing reports from Robin Hood that calls from the White House and Citadel (the company that bailed out the first hedge fund) were made to force them to shut down buying. In fact, there appears to be a sale of around 433,000 shares just before it shut to purchases. At current market prices, that would be about $130 million. So very suspicious.

The stock price, inevitably dropped, but began to make a recovery to around yesterday's levels. Now people are holding onto the stock in an attempt to hurt the shorters as much as possible, although some funds are claiming they have closed out their positions anyway.

Of course the companies will defend their actions, saying they wanted to avoid consumers getting hurt. But the actions are also in line with blatant market manipulation. The investigations will be interesting.
 

LOL The Irony

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Silver is now the target of r/wallstreetbets.
Silver prices leapt to a five-month high on Monday, amid social media calls to buy the metal and emulate the frenzy that drove up shares in the US video games retailer GameStop .
Shares in a handful of smaller Australian mining firms surged as small-time traders bought en masse.
Argent Minerals jumped 60% while Investigator Resources was up 47%.
Coin-selling websites also reported unprecedented demand and flagged delays in delivering silver.

Silver rose by more than 10% to $29.74 an ounce, its highest value since mid-August.
The moves are the latest example of small-time traders buying stocks and other assets that large Wall Street funds bet against, resulting in large losses for major investors.
Some users in the Reddit forum Wall Street Bets argued that silver is a heavily manipulated market, and a surge in the silver price could hurt large financial services companies.
"Think about the Gainz. If you don't care about the gains, think about the banks like JP Morgan you'd be destroying along the way," said Reddit user RocketBoomGo, in a widely circulated post.
The recent GameStop surge, which was also fuelled by amateur investors, was also seen as a revolt against large institutional investors.
Unlike GameStop, which was a loss-making gaming retailer that many investment funds had bet against, silver has seen strong growth over the past year.
 

A Challenge

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Silver is now the target of r/wallstreetbets.
That's harder to stop I would think, but I don't know what's been done in the last 7 hours, as it is a commodity rather than a stock, which may be partly why Reddit has gone for it this time (and I do think silver is easier to do this on than gold).

With regards to last week's issues, I can certainly see that it may be necessary for a company to stop selling a particular stock (as indeed it could need to a commodity) if they have a run on it (I remember being told of one stock platform that had to stop trading on Gold as there was an error in their system that was causing the amount to fluctuate much more than the market price), which there definitely was on GAME thanks to Reddit, but this does seem like the way it was done may be unfair.
 
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From BullionStar (bolding not mine):


The silver short squeeze in physical silver at present is unprecedented. Even so, the spot price of paper silver is not even close to the real physical equilibrium price of silver. BullionStar may soon have no option but to abandon setting prices based on silver spot price altogether and move to fixed prices.


Thanks to r/WallStreetBets (WSB) and related spin offs, the wider public is starting to open its eyes to the corruption and cronyism in the financial markets including in the paper gold and paper silver markets.


For years, BullionStar has been one of the strongest critics of the manipulated precious metals markets where paper issuance of silver (out of thin air) exceeds the physical availability of real silver at a multiple of at least 100 to 1.


While some in the WSB movement have suggested purchases of SLV shares and call options, many others are recommending physical silver. It’s important to understand that purchases of SLV shares does not equate to putting pressure on bullion banks. Bullion banks provide various services to ETF’s, such as custodial services, and ETF’s are known for

The only way to put pressure on the corrupted paper silver market and on the bullion banks is to . Only then is there a chance that price discovery for real physical silver will shift to be based on the actual trading of physical silver instead of being inherited from synthetic paper trading prone to manipulation.

It appears that the squeeze is actually occurring in the market for physical silver. Unconfirmed reports elsewhere of wholesale and retail suppliers having run out of stock, some sellers on eBay achieving as much as $40-$45 per troy ounce.
 
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