GameStop up nearly 50% - Cult Small Investors?

Diamond Hands!!

 

It's really not your classical pump n dump scheme. I followed it happening in real time. Yes - I'm on Reddit, and saw the posts as it was happening before it even hit the news the next day. r/WallStreetBets is a weird place.

What you had here was a guy who's essentially a type of influencer, who started doing stock videos. He picked GME (Gamestop) because he's a computer geek. He noticed (rightly so) that GME stock had a insane level of open short positions. And probably for good reason, as brick and mortar gaming stores have been dying a slow death. But he thought it was excessive. So he big against the shorts. And talked about it. And others followed his lead. And many of them heavily leveraged their bets by playing options. When the short squeeze happened, they made millions upon millions. Largely at the expense of wall street "experts" who overly shorted GME. The movie is actually quite entertaining in how it explains this - thought it drags towards the end, in my opinion.

The most foolish thing is all of this is the "let it ride", "hold" mentality. Make your point, force the short squeeze, and take your profits. Too many held on...

I won't touch GME (or AMC for that matter) with a ten foot pole. They're not trading on fundamentals. They are meme stocks, with an army of retail investors taking up nonsensical positions.

 

Some of these stocks are fun to play. Just have to realize it gambling and not investing. Wait till it bottoms out. Buy some. Wait two years for the kitty to post again. Profit.

 

Down about 40% today

 

Yeah, but (not in the movie, and I don’t recall the details) didn’t the Big Guys get a manufacturing bail out? And still the memers have to hold, not sell.

But I will again admit I don’t understand how shorts work, beyond betting on a loss on some set time frame.

Where does the “payout” go, and how does a memer get it?

 

Thanks!

I am still unclear, even after all your help.

So, these “many millions”….only upon selling, right?

 

They were contractually obligated to sell, they didn't really have a choice about selling. They only got to choose if they were going to go bankrupt doing it, or go out of business because they didn't honor their contracts.

 

Thanks phil.

But again, how do I GET MY MILLIES?

And clearly I am not in line, but I still don’t see how there a bunch of new millionaires here.

Spreadsheet only?

 

At some point presumably the SEC is going to have to take a hard look at whether some of this meme stock nonsense amounts to market manipulation that rises to the level of securities fraud, particularly if the folks pushing them hardest are making trades to profit off of the market movements they cause.

 

exactly, it came from the investment firms that shorted the stock...it was an entertaining movie. seems like more penalties should have been handed out. Especially to robin hood and their parent company.

 

As far as I can tell the meme stock stuff wouldn't hold up to fraud. The people pushing this stuff aren't our there saying "buy this or buy that." They are simply providing analysis for why they hold those positions and people are taking that information and doing what they want with it. It's not different than guys like Jim Cramer, in fact, I'd say it's less directive.

 

What are you on about?

 

I should have mentioned jumping on a small startup called Enron. I hear they have a naming rights deal with the astros that will be MAID any MINUTE.

(Emphasis for baseball fans that know)

 

Agree. The way meme stocks are promoted now reminds me a lot of the way stocks were promoted in the 1920's which ultimately led to the enactment of the Securities and Exchange Act of 1934 and the creation of the SEC.