Announcement

**WARFAB** · 01-28-2021, 02:26 PM

The latest news is that Robinhood is actually selling customer's shares of GME to "minimize risk to their portfolios".

Anyone else remember the scene at the end of Fight Club?

**usmcveteran** · 01-28-2021, 05:45 PM

I got this email from them today. I haven't used them this year at all but have an account.

It’s been a tough day, and we’re grateful to you for being a Robinhood customer. In light of the extraordinary market conditions this week, we temporarily limited buying for certain securities this morning. Starting tomorrow, we plan to allow limited buys of these securities. We’ll continue to monitor the situation and may make adjustments as needed.

This was a temporary decision made to best continue serving you, and was not an easy one to make. We know it’s led to frustration and confusion, and wanted to provide some clarity.

As a brokerage firm, we have many financial requirements, including SEC net capital obligations and clearinghouse deposits. Some of these requirements fluctuate based on volatility in the markets and can be substantial in the current environment. These requirements exist to protect investors and the markets and we take our responsibilities to comply with them seriously, including through the measures we have taken today.

To be clear, this decision was not made on the direction of any market maker we route to or other market participants.

The past year in particular has shown us that the financial markets are for everyone—not just institutional investors and hedge funds. We’ve seen a new generation enter the market, and they’re sparking conversations about what it means to be an investor. We stand in support of you, our customers. Democratizing finance for all means giving more people access, not less.

We’ll keep monitoring market conditions and will update this Help Center article with the latest changes. We also published a blog post regarding today’s events.

Thank you again for being a Robinhood customer. We’re so grateful for your support.

Sincerely,
The Robinhood Team

**big flash** · 01-28-2021, 08:24 PM

Fuuuuuuuuck robinhood! What utter market manipulation bullPeshitta.

**usmcveteran** · 01-28-2021, 11:11 PM

It's possible some of the auto selling could be for people who bought on margin and those trading companies were essentially loaning money and sold to protect there investment when prices were dropping.

**WARFAB** · 01-29-2021, 08:23 AM

Now there are multiple headline articles saying that this phenomenon has gone global.

http://"https://www.cnn.com/2021/01/...ing/index.html

While US traders are coordinating on Reddit's "WallStreetBets" group, Indians are flocking to a board called "IndianStreetBets." The community now boasts 14,000 traders, and posters are discussing how to replicate what's playing out in the United States. Some are honing in on renewable energy company Suzlon, whose shares are up 5% Friday, while others are buzzing about alt-cryptocurrency Dogecoin, which has spiked 377% in the last 24 hours, according to Coindesk.

Discussions have even reached China, where many traders have called out what they see as exploitation of the market by institutional investors, my CNN Business colleague Laura He reports.

These specific short squeeze plays are entertaining to watch, but with international investors pouring in on the action, and people trying to replicate this with other stocks.... at some point this is going to have broader market implications. The market is overinflated due to government action, and now we've got a new administration in the white house that isn't exactly inspiring confidence.

**camper4lyfe** · 01-29-2021, 09:29 AM

Can someone put into laymen's terms what this means? I have zero knowledge of stocks or any of the terms.

**usmcveteran** · 01-29-2021, 09:43 AM

Originally posted by camper4lyfe View Post

Can someone put into laymen's terms what this means? I have zero knowledge of stocks or any of the terms.

I'm not expert either but to me this is an erosion of trust and confidence in the stability of the market. It also tells me that society is tired of being taken advantage of (capitol riots now this and who knows what else is to come).

Basically companies are betting game stop for example is going to have their stock price drop and they somehow make money on that. However people on reddit started buying shares to raise prices causing those who bet it would drop to buy more shares to protect themselves causing prices to go higher.

**thughes** · 01-29-2021, 09:55 AM

Originally posted by camper4lyfe View Post

Can someone put into laymen's terms what this means? I have zero knowledge of stocks or any of the terms.

You borrow stocks and then sell them, assuming the value will drop. You buy them back at the lower price, pocket the difference, and return them to the entity that you borrowed them from. The problems arise when you borrow a crap-ton of stocks and sell them, assuming the value will drop but them some renegade internet crowd drives the value up 1000%. Eventually you have to give back the stocks that you borrowed so when that time comes, you end up digging into your own pocket and paying 1000% more than you sold them for.

(don't ask me how one "borrows" stocks in the first place, not sure how that works)

**big flash** · 01-29-2021, 09:59 AM

i tried buying dogecoin last night to get in on the fun but can't get it through anyone but robinhood and I'm not about to give them the business right now. i have to look into it but new york must have some very different laws and issues than the whole rest of the country when it comes to coin based trading. i can't even make an full account on most of those apps/sites.

**WARFAB** · 01-29-2021, 10:07 AM

Originally posted by camper4lyfe View Post

Can someone put into laymen's terms what this means? I have zero knowledge of stocks or any of the terms.

'Shorting' or "short selling" a stock means you borrow the share at $4 and sell it to someone because you expect it to drop in price. If the share price drops to $2, you buy back a share at $2 to return what you borrowed and pocket the $2 difference. If the share price goes up to $6 instead of down to $2, you now need to buy the $6 share back (plus interest and fees) so you've lost money on the deal. If the share price goes up to $200, you've lost a ton of money and HAVE to buy at some point to replace the share you borrowed. To replace the share you borrowed (cover your short) you have to buy the share at market value. If the shareholders don't want to sell, you have to offer them a higher price to entice them to sell. Offering a higher price causes the stock price to rise more, which further magnifies your already bad situation.

Someone figured out that Wall Street hedge funds had shorted 140% of the GME stock. So a bunch of random people figured if they drove up the GME stock price and refused to sell, they could demand huge profits when the hedge funds HAVE to cover their shorts. The hedge funds need to buy more shares than exist to cover their short trades.

Some people are buying GME to make money on the situation. Some people are buying GME to eff with the oligarchs. Many are probably doing it for both reasons. The people who got in on the action early made tons of money. Wall street is losing billions.

**big flash** · 01-29-2021, 11:03 AM

saw a perfect response: "These hedge fund CEO's who lost billions need help. I suggest $600."

hahahaahahaaha

**thughes** · 01-31-2021, 08:44 AM

Entertaining synopsis: https://taibbi.substack.com/p/suck-it-wall-street

**WARFAB** · 01-31-2021, 08:56 AM

Will the WSB guys get more mileage out of GME? Will they be able to build a squeeze somewhere else now that the oligarchs know what the game is? Stay tuned for this week's exciting episode of Eat The Rich.

**big flash** · 01-31-2021, 10:03 AM

finally got to talk to my BIL about this whole thing, he works on wall street and has for almost 20 years. neither him nor his firm are even remotely involved in any of this as it's not what they do, but all he could pretty much do is laugh. he said, rules will definitely change, they always do. and they probably won't change to help any of us, they never do!

**WARFAB** · 01-31-2021, 08:35 PM

Originally posted by big flash View Post

he said, rules will definitely change, they always do. and they probably won't change to help any of us, they never do!

https://www.zerohedge.com/markets/ye...clearly-rigged

I am outraged by the hypocrisy of the financial services industry. Any doubt that the system is rigged has been eliminated. Why do the rich only ever get richer? Because of what happened last week.

In all my years of working in this industry, I have never heard of brokers pulling the plug on their clients because they were making too much money.

If anyone is to be banned from putting on risky trades, it should be the supposedly sophisticated hedge funds who’ve needed to be bailed again and again, not your cousin who recently bought a few shares of GME in her Robinhood app. Your cousin wasn’t the one who ****ed up in 1998 or 2008 or 2019 or 2020. She didn’t drive Lehman Brothers into the ground or destroy MF Global.

But the financial establishment — the same establishment who’s always gone out of its way to celebrate people like John Meriwether, Dick Fuld and John Corzine — decided that your cousin wasn’t allowed to play the same game, and had the audacity to pretend this was for her own protection.

The fact that she was making money off of hedge funds like D1 (one of Robinhood’s biggest investors) and Citadel (one of Robinhood’s biggest sources of revenues) had nothing to do with it. The fact that Ben Bernanke has been a senior advisor to Citadel and Janet Yellen has collected almost a million dollars in speaking fees from the same firm had nothing to do with it.

The issue here isn’t how the aggressive buying of stocks like Gamestop ends, because it’ll probably end badly. The issue is that nobody ever tries to stop hedge fund managers from doing the same exact thing. When they gamble with our futures, it’s called capitalism. But when retail people do it, it’s a menace to society that must be stopped.

Announcement

GME Stock Short Squeeze

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