![]() The market doesn't index productivity, it tracks naked speculation - Brother Q. I didn't imagine this kind of outcome, but I'm still amused it happened bc like I said, none of this is real. Redditors couldn't disrupt a multibillion dollar firm on their own they triggered a stampede. I didn't imagine this kind of outcome, but I'm still amused it happened bc like I said, none of this is real.” There's a group of insiders seeing overexposed hedge funds shorting GameStop and rigging the market to kill them.- Matt Stoller January 27, 2021įormer certified financial advisor and current Contributing Editor at Macleans, Andray Domise, indicated his trust in Stoller’s theory: “Redditors couldn't disrupt a multibillion dollar firm on their own they triggered a stampede. People like and may know of the market-rigging and cheer it on. There are likely insiders in the Reddit forums talking up the stock. There's a group of insiders seeing overexposed hedge funds shorting GameStop and rigging the market to kill them.” If true, Stoller’s next tweet is devastating to those who view this chaos as a victory against the stock market elites: “There are likely insiders in the Reddit forums talking up the stock. ![]() Stoller argued that Citadel was exploiting the redditors' use of Robinhood by buying market orders from the trading app before redditors can purchase them, which then “sets an arbitrary 'market price' to cash in on options.” 27, American Economic Liberties Project economist Matthew Stoller alleged that the efforts of the now famous subreddit were simply cover for Citadel to exploit its close relationship with Robinhood. On social media, the official Twitter account for r/wallstreetbets has gained more than 200,000 followers in less than a week.īut there may be another side to this story. Many people are now realizing that the stock market is simply a casino rigged to benefit the rich. Other stocks, such as AMC Entertainment and Blackberry, have now been targeted by redditors, causing their prices to spike. This phenomenon has reportedly touched dozens of large financial hedge funds and firms. The hedge fund could lose up to $13 billion once the contracts affected by the stock short must be bought back, forcing it into insolvency. Rather than complete an easy short with Gamestop as its victim, Melvin Capital has already lost billions. The worst-case scenario is, theoretically, unlimited.” That drives up the price of the stock even higher, so it’s a bit of a double whammy for shorts. Vox detailed the potential result of a short squeeze: “when the price of the stock being shorted starts to climb, it forces traders betting it will fall to buy it, to try to stem their losses. They realized that if the price of the shorted stock rises - rather than drops, as expected - the hedge fund is compelled to buy back their sold shares at full cost, failing to make any profit and putting them into debt. Redditors disapproved of these actions, so they found a legal loophole to exploit. As Gamestop’s price per share decreased, Melvin Capital profited from the company’s losses. The more money that a hedge fund bets against the success of a company, the more quickly they drive down its stock value by scaring shareholders into selling. Melvin Capital, a multi-billion dollar hedge fund, was attempting to short the stocks of retail store Gamestop.Īs Vox explained: “When a hedge fund or investor shorts a stock, they basically speculate that its price will go down.” It had attempted to pick stocks and boost them collectively many times over the years. The platform’s goal was to support a community of “regular Joes” who could invest together and maybe strike it rich. R/wallstreetbets was founded in July 2012. What’s the deal with Gamestop and r/wallstreetbets? Join his Patreon, The Canada Files' Patreon, or both. Aidan Jonah is the founder and editor-in-chief of The Canada Files.
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