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pheller
pheller UltimaDork
1/27/21 12:40 p.m.
Ian F (Forum Supporter) said:

In reply to captdownshift (Forum Supporter) :

The issue is when it stops becoming an investment and turns into speculation.  Buying a stock solely on the hope the price of that stock increases so you can sell it for a profit.  

In another thread going on a dozen or so pages, I argue that same thing about land/property. 

Investors reguarly boohoo pump and dump schemes, but it happens in a lot of different financial areas. While I might give credit to an fund that digs deeper into the health of a business, there is also a fair amount of "hey look everyone, we're buying over here, you should buy over here!" then once they've made their profit, they jump out of said investment and let the inflated prices crash. 

I don't wonder how much this isn't an attempt to full the AI systems as well. Can spending enough money on a pump and dump scheme fool automatic investment systems into saying "ooo we should buy stocks over here"  while the "real" investors know there is nothing but fluff in that investment?

Ian F (Forum Supporter)
Ian F (Forum Supporter) MegaDork
1/27/21 1:00 p.m.

In reply to pheller :

Very possible - and I agree about the land speculation part.  Essentially a different symptom of the same illness: super-low interest rates that discourage normal saving. 

In the end, it's probably an "a little bit of everything" - excess money flooding the system; younger investors (speculators) playing games with the AI; older investors/speculators playing games with everyone, and regular people just trying to save for the future.  All the latter can hope for is to not get screwed too badly as it all plays out.

californiamilleghia
californiamilleghia SuperDork
1/27/21 1:27 p.m.

Ok......when this goes back down to $100 a share , who is losing the most ?

The original short investors that Elon is pissed at had to be gone a long time ago , 

So now you have "Angel investors" feeding off other "Angel investors"

Or maybe I just do not understand how the Original guys get more hurt than  after the first jump ???

Flynlow (FS)
Flynlow (FS) HalfDork
1/27/21 1:33 p.m.
californiamilleghia said:

Ok......when this goes back down to $100 a share , who is losing the most ?

The original short investors that Elon is pissed at had to be gone a long time ago , 

So now you have "Angel investors" feeding off other "Angel investors"

Or maybe I just do not understand how the Original guys get more hurt than  after the first jump ???

Most of the original short investors (speculative hedge funds) have not cashed out yet.  They were overleveraged, and had (short) sold too many shares.  There are something like 1.4 shares sold short for every 1 share currently available.  If the hedge funds tried to square up their accounts, they would HAVE to purchase massive amounts of stock to cover, driving the price through the roof and costing them ever-increasing amounts of money to do so ("short squeeze").  They have a small window where they can do nothing, basically floating the balance on margin, but when the grace period ends, they MUST purchase the shares. 

There is speculation from retail investors that the margin calls will be coming due sometime this week or next, hence the wild panic buying and stock price oscillations.  The retail investors (reddit, musk, whoever) are basically buying all the stock the hedge funds need to cover their shorts and holding it to deny them the ability to cover their shorts at reasonable prices. 

Flynlow (FS)
Flynlow (FS) HalfDork
1/27/21 1:39 p.m.

My sympathy for billionaire hedge funds getting caught making stupid speculative bets is very limited.  "The market can remain irrational longer than you can remain solvent" applies to everybody, and has been an investing guideline for decades.  I just hope we let them go bankrupt this time, no bailouts.  Like how every other business is supposed to work. 

Fueled by Caffeine
Fueled by Caffeine MegaDork
1/27/21 1:55 p.m.

And now the bots are descending upon wsb to pump and dump other stocks. 
 

These dudes strangled the golden goose. 
 

https://apple.news/A1s9mFnrrQHKcfR9GLRKQWA

 

looks like state regulators are looking for a 30 day hold on trading 

captdownshift (Forum Supporter)
captdownshift (Forum Supporter) UltimaDork
1/27/21 2:13 p.m.

In reply to Fueled by Caffeine :

They didn't strangle the golden goose, they're highlighting that it should be nobody's golden goose or future. 

 

To those saying or proclaiming that the average person's retirement including mutual funds and IRAs should allow for stock ownership, I argue that then the stocks that should be owned and purchased should be done so without knowing company name or CEO and simply based off of earnings reports, balance sheets, and assets owned. People actually purchase stock based off of PE ratio and/or dividends The stocks that everybody owned and held would be vastly different. If you want to get speculation out of the stock purchasing make it so you don't know the name of the stock that you're actually purchasing. Make it like the dating game from the '70s, you don't actually know who's on the other side of that wall you just know the answers that they're giving you and you're basing your decision upon that and not sex appeal. 

alfadriver (Forum Supporter)
alfadriver (Forum Supporter) MegaDork
1/27/21 2:53 p.m.
STM317 said:
 

What should retirements be based on in your opinion? How should companies raise funding if not selling stock, and who should/shouldn't be allowed to invest in companies?

Pension?  Where the employer has a fund that they guarantee to be there when you retire?  That used to be the only way.  And there are plenty of employers who still use that, who have no stock to sell, or can even invest in companies.  

Then someone invented the 401k, and people pretended that they can do better than a good pension fund.  When the long term data has consistently shown that a no load set of index funds have done better for the investor (growth-fees) than active funds.  

IMHO, the loss of the golden handcuffs/pensions has lead to a MASSIVE turn over problem in companies.  Which has lead to higher wages for those who change jobs, and costing more money to keep training people who are new to jobs- even when they have experience.  I stayed because I wanted my pension- but now that it's not an option, people come and go at will.  So much time and money wasted because of that.

WRT the whole issue of stock trading- that's just a massive frustration to me.  It's just gambling, and should be treated as such.

Fueled by Caffeine
Fueled by Caffeine MegaDork
1/27/21 3:02 p.m.

In reply to captdownshift (Forum Supporter) :

You're misu understanding me. These dudes will be victims of their own success.  That's my only suggestion. 

NOHOME
NOHOME MegaDork
1/27/21 3:07 p.m.

'What you're seeing and what you're reading is not what's happening'

In what might turn out to be one of this century's most ironic moments, the above might very well be true.

captdownshift (Forum Supporter)
captdownshift (Forum Supporter) UltimaDork
1/27/21 3:09 p.m.

In reply to Fueled by Caffeine :

I'm not misunderstanding, unless you're referring to the hedge fund managers, The redditors aren't doing it for the primary purpose of making money, they're doing it to put a massive cannon hole in the side of the ship in the efforts of having it take on water. 

I can't explain more without floundering so I will not go there. 

slowbird
slowbird SuperDork
1/27/21 3:18 p.m.

I could flounder so hard but I'll refrain. Suffice to say, my opinion on the stock market is that it is a net negative for society.

NOHOME
NOHOME MegaDork
1/27/21 3:29 p.m.

In reply to slowbird :

I so want to join in on that, can I buy you a sandwich?

 

 

pheller
pheller UltimaDork
1/27/21 3:32 p.m.

It is my understanding that floundering is only when we start getting into party affiliation, finger pointing at various politicians, or personal attacks based on political opinions. 

In this post, we're talking about economics. I don't think there is anything wrong with saying "the stock market has been built up with 401k funds as a means for the wealthy to play games with the money from the rest of us." 

That may be an attack on class, but I don't think it's an inherently political statement. 

Flynlow (FS)
Flynlow (FS) HalfDork
1/27/21 3:39 p.m.

There's also a difference between "401k" and "hedge fund".  I'm not sure that's completely clear in this discussion thread.  If you're in a Vanguard/Fidelity/other mega-provider total market index fund, you're fine.  They charge 0.1% to hopefully earn you between 7-11%/year on your savings.

 

If you're invested with a hedge fund taking "2 and 20", which is 2% of assets under management (vs the 0.1% above) and 20% of the hedge fund's profit, well, talk to your company's 401k administrator, because they're berkeleying you.

 

alfadriver (Forum Supporter)
alfadriver (Forum Supporter) MegaDork
1/27/21 3:49 p.m.

In reply to pheller :

My issue with the stock market is how important we make it- way over 90% of what happens are trades, and for companies raising money to do something, that is meaningless.  The money raised when stock is sold is a VERY big deal.  After that, it's just trading between people who have a different view on the value- someone wants to sell at X when someone else is buying at X.

While I have been at Ford, our stock has been in the mid 30 range (which is a correction to current value) and down to 1.4.   Realistically that meant nothing to us at Ford.  What has mattered was the profit we have made, and when that didn't work when people were brave enough to loan us a few billion.  Which is to say, once the stock is out, it's meaningless to a company on a day to day basis (not including buy backs, and sells- just the trading).   In theory, it's an indicator of how healthy a company is- but that's regularly published to our share holders in much greater detail.  And what's been frustrating is to see the value go in the opposite direction of the news.  

And on that note- when Jac the knife was our CEO, he was obsessed with high P/E like tech companies.  For a 100 year old company, I very much don't understand why you would chase that goal- all it tells me is that it's over valued.  

anyway- I just can't see how the news obsesses over Wall St- heck in the last 15 years, there have been massive stock growths that have not been matched in the general economy.

Fueled by Caffeine
Fueled by Caffeine MegaDork
1/27/21 3:52 p.m.

In reply to captdownshift (Forum Supporter) :

I still think you're misunderstanding me. My comments ain't that deep. 

NOHOME
NOHOME MegaDork
1/27/21 4:06 p.m.

In reply to pheller :

What you might be seeing is the inversion of stock price engineering that was invented this century. Share price engineering at the expense of the individual investor has been wildly successful with no natural born predators and powerful enablers, but now social media has found a way to become the ant infestation at the feast. If not for the layer of terrifying sauce on top, I would find this fascinating.

93EXCivic
93EXCivic MegaDork
1/27/21 4:41 p.m.
alfadriver (Forum Supporter) said:
STM317 said:
 

What should retirements be based on in your opinion? How should companies raise funding if not selling stock, and who should/shouldn't be allowed to invest in companies?

Pension?  Where the employer has a fund that they guarantee to be there when you retire?  That used to be the only way.  And there are plenty of employers who still use that, who have no stock to sell, or can even invest in companies.  

Then someone invented the 401k, and people pretended that they can do better than a good pension fund.  When the long term data has consistently shown that a no load set of index funds have done better for the investor (growth-fees) than active funds.  

IMHO, the loss of the golden handcuffs/pensions has lead to a MASSIVE turn over problem in companies.  Which has lead to higher wages for those who change jobs, and costing more money to keep training people who are new to jobs- even when they have experience.  I stayed because I wanted my pension- but now that it's not an option, people come and go at will.  So much time and money wasted because of that.

WRT the whole issue of stock trading- that's just a massive frustration to me.  It's just gambling, and should be treated as such.

eastsideTim
eastsideTim PowerDork
1/27/21 4:49 p.m.

I think a big part of the problem with the stock market is the move away from dividends and towards capital gains.  Problem is, the US tax code favors capital gains (at least on a long term basis).  A focus on dividends would probably make the market a lot less exciting, which, let's face it, the entire financial sector should be boring.

dxman92
dxman92 Dork
1/27/21 4:51 p.m.

It's called a bunch of people wfh cooped up bored out of their mind and nothing better to do!

alfadriver (Forum Supporter)
alfadriver (Forum Supporter) MegaDork
1/27/21 4:57 p.m.
eastsideTim said:

I think a big part of the problem with the stock market is the move away from dividends and towards capital gains.  Problem is, the US tax code favors capital gains (at least on a long term basis).  A focus on dividends would probably make the market a lot less exciting, which, let's face it, the entire financial sector should be boring.

That, too- but it's borderline floundering.  Thing is- everyone knows it's gambling, but do that in a casino, you get taxed differently.  Income is income- should be treated equally.

But on a very different note- for all of the money not in stocks and bond, what if all of that money was being invested into actually making stuff??  Let alone the manpower directed at the same as opposed to making stuff.  It's not as if there are no really obvious opportunities that would benefit the entire economy- like batteries, or lower CO2 energy *anything*, or making aluminum in a less power intensive manner, or real diesel emission, or thousands of options to invest in where the benefit to society would pay you a literal mint.

alfadriver (Forum Supporter)
alfadriver (Forum Supporter) MegaDork
1/27/21 5:02 p.m.

So an investigation question... since that's going to happen.

I'm trying to figure out what the reddit page possibly did wrong.  So there's a group of people who are advocating stocks to buy and/or sell- how is that different than every single business channel  that tells you the same thing?  For that matter, one of the guys shorting this stock publicly said he was doing that- which can be considered a recommendation.  

If all of the info was publicly available, how can any of what they did be wrong?  

So someone lost big because of their work- had that one person succeeded in tanking the company, how is that not making a big loser of all of the current share holders, the owners, and the workers of the company?  

To claim some kind of collusion would also be ignoring the small problem that there are 1.4x as many shorts as there are stocks- which sounds like a lot of people colluding to make money shorting it.

Can anyone explain what things the reddit group did that can be considered illegal?  Assuming no insider info. 

eastsideTim
eastsideTim PowerDork
1/27/21 5:08 p.m.

In reply to alfadriver (Forum Supporter) :

Pretty sure they didn't do anything illegal.  I guess if they had enough cash, they could try to corner the market on the stock, but Im pretty sure that isn't illegal unless an entity owns a certain percentage (12.5 maybe, it's been a while since I looked into this) without disclosing it.  They were discussing it publicly, so it's not like they were hiding anything.  As far as I can tell, it was just an overshorted stock that a bunch of people decided to put a squeeze on.

Flynlow (FS)
Flynlow (FS) HalfDork
1/27/21 5:20 p.m.
alfadriver (Forum Supporter) said:

To claim some kind of collusion would also be ignoring the small problem that there are 1.4x as many shorts as there are stocks- which sounds like a lot of people colluding to make money shorting it.

THIS is what I want investigated by the SEC.  I don't care about a bunch of kids on reddit.  I care about hedge funds and "professionals" (defined in this case as having to file with the SEC) being able to get into these short positions in the first place.  This is ILLEGAL:

https://www.investopedia.com/terms/n/nakedshorting.asp

And if major hedge funds are too stupid to put stop losses on their open shorts, well, maybe the investing world isn't for you.

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