Daily Advice Thread - All basic help or advice questions must be posted here. Investing |
- Daily Advice Thread - All basic help or advice questions must be posted here.
- Gamestop Big Picture: The Short Singularity
- $GME part III. At this point, it doesn't look like its about the profits anymore, it looks like its about moral code now. Sentiment looks like retail investors plan on holding.
- What happens if Melvin Capital filed for bankruptcy?
- MSFT blows away Q2 expectations
- ELI5: How is massive shorting of a stock any different than a pump and dump scheme besides the direction of the momentum?
- What if Citadel Securities goes bankrupt???
- ARK Invest's Big Ideas 2021
- What I got out of Palantir Demo Day
- The fall of Melvin and the aftermath.
- $GME - Opening a pandora's box?
- I wanted to share Matt Levine's discussion on Market Manipulation and GME, it's a good laymen's explanation of the legal ambiguities in securities law
- How long can shorts wait until they're forced to cover? GME
- The GME narrative seems to be half truth
- AMD smashes EPS and revenue estimates
- World’s largest money manager says sustainable investing surge to continue, pushes for more disclosure
- FOMO, and fear of crash. I know my feelings are not rational, yet they are bothering me.
- ELI5: Why aren't the GME shorts covering? Won't the price fall once it isn't over 100% shorted?
- [GME] - What happens when the shorts are out?
- What happens if Institutional Investors start selling GME?
- Why does the U.S. Stock Market consistently increase in value over the long term while many overseas markets remain stagnant?
- Barrons: China’s own numbers as well as independently collected economic data do not tell the story of a blockbuster rebound. Instead, they show a full-year recession hiding in plain sight,” with economic numbers being “wildly inflated”
- Do I understand it correctly, that Grayscale is charging $400M/year for holding Bitcoin?
- Good Starting Portfolio For A Student
- Wall Street Journal New Article about Reddit Investing - "BlackBerry, AMC and Other Reddit YOLO Favorites That Aren’t GameStop"
- Why did VW dip before the big squeeze in 08?
| Daily Advice Thread - All basic help or advice questions must be posted here. Posted: 27 Jan 2021 02:00 AM PST If your question is "I have $10,000, what do I do?" or other "advice for my personal situation" questions, you should include relevant information, such as the following:
Please consider consulting our FAQ first - https://www.reddit.com/r/investing/wiki/faq And our side bar also has useful resources. Be aware that these answers are just opinions of Redditors and should be used as a starting point for your research. You should strongly consider seeing a registered financial rep before making any financial decisions! [link] [comments]  |
| Gamestop Big Picture: The Short Singularity Posted: 26 Jan 2021 11:11 AM PST Disclaimer: I am not a financial advisor. This entire post represents my personal views and opinions, and should not be taken as financial advice (or advice of any kind whatsoever). I encourage you to do your own research, take anything I write with a grain of salt, and hold me accountable for any mistakes you may catch. There are numerous posts on this sub and others diving into the technical guts behind some of the recent moves behind GME, so I will keep it high level for everyone scratching their heads wondering what's going on. There has been much talk on CNBC and in other financial media calling what's happening in GME a distortion of the market and an unjustifiable departure from the fundamentals. That is undeniably true. That being said, the distortion is not what's playing out now, but rather what happened about 1.5 years ago when short interest in GME first began to approach (and later exceed) 100% of the available float. Short selling is usually a tool that aids in price discovery, but like most market mechanisms, at the extremes things get more complicated. Short sellers, having borrowed shares, are guaranteed (indeed obligated) future buyers of the stock. They put themselves in that position on the thesis that there are reasons to expect the stock price to go down, such that when they buy the shares back they can return what they borrowed at a lower price and pocket the difference. As such, as short interest grows, there is a short term downard push on the price (the initial sale of the borrowed shares), but also future upside pull on the stock price as a natural result, kind of like gravity, but pulling the price upward. Normally that pressure is so slight and subtle that short interest in and of itself should not be a mover of the stock price. That being said, a common rule of thumb is that you should start to concern yourself with that pressure when short interest crosses the threshold of between 20% and 25% of the effective float (shares actually available to trade). At that level and above, the pressure starts to become noticeable, kind of like the moon causing currents and tides. GME short interest was recently 140% of the float. In recent days, short interest has actually continued to accumulate (I'll explain why later). There is, in effect, a critical mass of short interest hanging over GME's price exerting not subtle pull, but face-ripping force like the gravity of a black hole. A short singularity, if you will. Previous short squeeze case studies such as VW or KBIO were all about someone engineering a way for effective float to evaporate, suddenly leaving what was previously a relatively reasonable aggregate short interest position in a world of hurt. This is the first time where we're seeing a situation play out where it wasn't someone engineering a shrinkage of effective float, but large market-moving players simply blowing up the short interest to the point where it simply overtook effective float by a large margin. Why would they do that? Because they expected GME to declare bankruptcy in the very near term so that returning borrowed shares costs $0, as the shares are worthless at that point. Also, an arguably intentional side-effect of this massive artificial sell-side pressure on the stock is that it becomes more difficult for GME to obtain any kind of financing to avoid bankruptcy, making it, in theory, a self-fulfilling prophecy. GME, however, did not go bankrupt for reasons that are well explained by other posters. In order to close their positions and limit their exposure (which remains theoretically infinite otherwise), short interest holders need to collectively buy back more shares than are available on the market, and especially since GME is no longer at risk of imminent bankruptcy, that buying action would push the price into a parabolic upward move, likely forcing brokers to liquidate short interest-holding accounts across the board on the way to buy shares at any price to cover their otherwise infinite liability exposure (and that forced covering will push the price further upward into a feedback loop--like crossing the event horizon of the black hole in our analogy). So what is happening now, and where do we go from here? Right now, short-side interests are desperately trying to drive the price down. There has been an across-the-board media blitz to try to scare investors away from GME. But there is really only one way to drive price down directly, and that is selling. In fact, given that most of the large holders of GME long positions are simply sitting on their shares, it means selling. even. more. shares. short. Even as price has been grinding upward, and liquidity has been evaporating, short sellers, who have lost billions mark-to-market currently (my guess is on the order of $10bn by the end of trading today), can only keep selling, piling on even more exposure and losses, staving off oblivion hour by hour, minute by minute. GME might also decide to issue more shares to recapitalize its business on the back of the elevated share price, but it is unlikely they could issue enough shares to change the overall trajectory of the stock at this point (especially not given their fiduciary responsibility to current stock holders). It might, however, run the clock out a little while longer. At this point it looks like there will either be some type of external market intervention by regulators (though I can't see any reason for them to step in myself), or we will soon see what happens when short positions representing ~$8bn in current mark-to-market liability goes parabolic. *edited for grammar* edit Please keep discussion to helping everyone understand what's happening, which is the point of this post, not giving advice or telling people to take actions! [link] [comments]  |
| Posted: 26 Jan 2021 10:15 PM PST At this point, it doesn't look like its about the profits anymore, it looks like its about moral code now. Sentiment looks like retail investors plan on holding. The psychological aspect of people sticking it to financial institutions may be the next driver for $GME. From the amount of times $GME has been mentioned on Reddit, Twitter and Facebook groups, the sentiment looks like retail investors plan on holding. What happens to price when there is demand and no supply? You guessed it. On the flipside, this thing can either go up to $1,000 or down to $100 by Friday, as options expire on Friday. Do hedge funds have a trick up their sleeves? IMO, after this fiasco, federal regulators will need a scapegoat to blame, and do something to regulate this. People in power hate looking foolish. This will be interesting in the next couple of weeks. Like GameStop Says, "Power to the People". How ironic. [link] [comments]  |
| What happens if Melvin Capital filed for bankruptcy? Posted: 26 Jan 2021 08:51 PM PST Melvin Capital received a 2.75 bln cash infusion from Citadel and Point72. If they did not receive this and were forced to file for bankruptcy, what are the implications to GME and their short positions? I assume they close their short positions, but wouldn't there is no one forced to buy the shares and essentially disrupting the short squeeze? I tried searching but have not been able to find anything. Sorry for the n00b question. If this question has already been asked, could you provide a link to that discussion? [link] [comments]  |
| MSFT blows away Q2 expectations Posted: 26 Jan 2021 01:32 PM PST +5% after hours.
[link] [comments]  |
| Posted: 26 Jan 2021 05:37 AM PST So from what I understand, pump and dump is when you inflate a stocks price by coordinating a demand that by normal means does not exist to give a stock an upwards trajection that it should not have, and then selling high once other people are in on it. And what most of these hedge funds did was to short stocks that were priced fairly to dip them into lows they should not have been in the first place to profit by covering their positions at low prices. How are these 2 things different in any way besides one targeting the bulls and the other targeting the bears? [link] [comments]  |
| What if Citadel Securities goes bankrupt??? Posted: 26 Jan 2021 10:21 PM PST My friend and I have done a deep dive on the liabilities being created by these insane short squeezes. What I think we've uncovered is that if these short squeezes continue and bankrupt the hedge funds who sold them, the positions will ultimately be the responsibility of market makers like Citadel Securities. And they are absolutely obliterating them. That's why they bailed out Melvin, because it's their problem anyways. Moreover, I believe we have uncovered is that the Citadel fund and Citadel Securities - both of which are owned by the same Griffin guy - only have (had) about $35-$40B of assets to their name collectively. They've already had to bailout Melvin to the tune of $2B. And that was at GME $150. That's pretty wild considering CS' total "record" revenue in 2020 was 6B. I've also learned that short interest in GME is INCREASING, and this may not let up. So what if GME actually goes above $500? That might sound crazy, but that's a move from like $15B market cap to $35B market cap? We all know that's actually possible in this market. What if the short squeeze mania spills out into the other heavily shorted stocks? Pretty concerning for CS because, I've also learned that Citadel Securities is responsible for processing about 25%-40% of ALL stock market transactions. So uh. What if they go bankrupt? I don't mean to be speaking in extremes, but is this potentially a 2008 mortgage backed securities crisis type of situation? Serious educated answers would be sincerely appreciated. [link] [comments]  |
| Posted: 26 Jan 2021 05:20 PM PST The annual report was posted today. An interesting read for all your ARK folks: [link] [comments]  |
| What I got out of Palantir Demo Day Posted: 27 Jan 2021 02:38 AM PST Palantir Demo Day was recently steamed yesterday. Here is what I got out of it. Their Foundry software can literally be used in any case depending on the data you provide it. No code interface provide easily customizable dashboard to any situation that the company's faces. It translate any data/model into knowledge that can be used to make decisions. Their ontology and simulation frame can be used with real-time data coming from different users from different departments to make real-time decision. Think of Foundry as an Adobe photoshop or Unity game engine but instead of editing photo and making games it provide you with a overview of how your organization is running in real-time. The level of details and what you want to do is used on how you customize the software to your specific need. So basically is an editing tools used abstract away the hard stuff of data/model/simulation by providing an easy to use interface just like how Photoshop and Unity make it easier to edit your photo and make games. The possibility of foundry is endless it all depends on how you apply and customize the software to your need, which is done by the end-user/client. Gotham looks straight out of a sci-fi FPS video game with AI/ML capabilities. Enough Said. Apollo is what will allow Palantir to massively scale their business. It is about to provide feature delivery, security updates, and system configurations, no matter where in the world they are and in no matter what devices, such as drones, submarines, tanks, etc. Apollo basically turned Palantir into a SaaS company that provide efficiently+security+reliable+scalability. Also Apollo support multi-cloud capabilities where you can move data from public cloud, such as google cloud, AWS, AZure to-and-from private cloud to-and-from hybrid cloud to-and-from classified environments seamlessly. Apollo also allow Palantir to go where no Saas had gone before, because it is still able to provide a SaaS like feature through challenging physical conditions or low-bandwidth environment like inside of submarines and humvee. [link] [comments]  |
| The fall of Melvin and the aftermath. Posted: 26 Jan 2021 06:50 PM PST With melvinf filing bankruptcy and the 2 billion bailout they got up in smoke , what would you expect to fall/crash and be ready for a pick-me up? Melvin has cancelled all it's baba positions so I expect baba to take a small tumble . What else has Melvin affected that would be worth to invest in? [link] [comments]  |
| $GME - Opening a pandora's box? Posted: 26 Jan 2021 09:39 PM PST I'm not certain if people thought this through. I have skin in the game. Small position in $BB, $GME, $AMC, and others in the last two weeks. I'm not certain how to exit these positions at the top without being a bagholder. I do think people should continue to pile into these stocks and continue the squeeze. I'm rooting for the gains every day. This is history in the making. However, what will happen if these hedge funds do go bust? What are the fallouts: to its clients, the market, economy, new regulations? The current sentiment feels like the mob rushing the Washington Capital. Act now, think later. I hope we're not shooting ourselves in the foot. The straw that broke the camel's back. Remember, with every winner, there is a loser on the other side of the trade. [link] [comments]  |
| Posted: 26 Jan 2021 09:56 AM PST Do me, and everyone else a favor and read the entire thing before commenting. There's a significant trend on this sub of people just commenting bullshit based on what they think a post might say before reading it. There's a lot of explanation and context here so take your time if you're looking to learn. Just a straight copy/paste from his newsletter today: If a lot of people on Reddit band together to drive the price of a stock higher, is that illegal? I have been asked that question a lot recently, and I want to be clear that:
That said I suppose we should talk about the question in general and extremely not-legal-advice terms. I guess my answer would be that it might be illegal in all sorts of ways, but it is not obviously illegal, and if the U.S. Securities and Exchange Commission were to go after WallStreetBets for this stuff they will be breaking new ground and going beyond their previous cases. I do not want to say "this stuff is all fine," but I will say I am not all that bothered by it. There are two main things that are illegal. One is "securities fraud." This basically means lying about a stock. The other is "market manipulation." Nobody knows what this means. Legally, it means something like:
So if you buy stock with the purpose of pushing the price up so that other people will buy it, that's market manipulation. If you buy stock hoping that the price will go up because other people buy it, that's not market manipulation; that's just normal. Those things are not so different. There is a "traditional four-part test for manipulation that has developed in case law":
So consider the general concept of a "pump-and-dump" scheme. The most classic pump-and-dump goes like this: 1) I buy some GameStop stock. 2) I put out rumors—in my subscription newsletter, on Reddit, in fake press releases, whatever—about some catalyst for the stock to go up. "Hey I hear from an inside source that GameStop just got an exclusive contract to supply downloadable video games in Tesla cars," etc. 3) People see these rumors, believe them and buy GameStop stock, pushing the price up. 4) I sell the stock to them at the higher prices. This is very straightforwardly illegal and the SEC goes after this stuff all the time, alleging securities fraud. Lying about stocks. Here is the SEC's "Investor Alert: Social Media and Investing -- Stock Rumors," which pretty much defines a pump-and-dump this way:
There are variations. The SEC has gone after forms of dishonesty that aren't quite lying about the stock. For instance, if you are a widely followed stock promoter with a subscription tip newsletter, and you email tips to your subscribers and then sell your stock to them while saying that you're buying, that seems dishonest, and the SEC will go after you. Or if you are a promoter or research firm and you put out positive research about a company, but you don't disclose that the company paid you to put out the research, that is also bad. Now, I think you could do a pump-and-dump without any actual lying. For instance:
In this version, I have not lied about a stock. On the other hand, I have effected transactions in the stock to create trading activity and raise the price, for the purpose of inducing people to buy it. Seems like market manipulation, "painting the tape" or something. The SEC goes after stuff like this occasionally. I think that in modern markets you could even do a bit better than that and have a completely honest pump-and-dump:
The point here is that it is at least theoretically possible that no one buys stock for any reason other than "hey it's a fun pump." That is, no one is deceived about the fundamentals (there's no fake news about the company), and also no one is deceived about the technicals. No one says "huh this stock is up on a lot of good buying pressure, I should buy some"; everyone who buys says "hey this stock is up because it's being pumped, and if I get in now I might still get out before it collapses, and that'll be fun." It is "respect the pump" as a quasi-mystical mantra. I bet the SEC would say that's market manipulation, but I am not so sure. I suppose we did our trading "for the purpose of inducing the purchase or sale of such security by others," but not by deceiving them about what's going on. "Join us in a fun game of chicken," was our basic message here. Did we try "to create or effect a price or price trend that does not reflect legitimate forces of supply and demand"? Who's to say what's "legitimate"? Surely the price did not reflect expectations about future cash flows, but just as surely the price reflected supply and demand: We all wanted to own it because we were having fun, so the price went up. Anyway, the actual GameStop situation. I suppose it's possible that someone on Reddit has posted fake rumors about GameStop's business, but I haven't seen any. The posts I've seen about GameStop have been either (1) substance-free "GME to $1,000" stuff or (2) arguments based on publicly available information plus personal opinion and guesses about the future. They might be wrong or exaggerated or misstated, but it's not, like, core fraud. Is it manipulation? Well, there is not a lot of deception here. No one is buying GameStop stock because they think to themselves "boy this stock is going up a lot on heavy volume, must be a bunch of big institutions who see fundamental value here." There is absolutely wall-to-wall coverage of GameStop in financial media, and it pretty much all says "lol those crazy redditors, pushing up the stock for no reason." So at worst this is a sort of honest pump, people banding together to do it for the lolz and hoping they can get out before it collapses. I'm not even convinced it's that though. The stock closed Friday at its all-time high. Roaring Kitty was up $11 million. Everyone came back on Monday and did it again. My model here—and I should emphasize this is purely a guess—is that the people most identified with the GameStop trade on Reddit, at this point, are much more interested in securing their legendary status on Reddit than they are in taking profits at the expense of whoever came in later. You could have other miscellaneous theories about words like "collusion" and "short squeezes." Is it illegal for people to band together to all buy stock at the same time? "If institutional investors had an internet site or chat where they arguably cajoled each other or coordinated to buy stock to move the price higher," one reader asked me by email, "wouldn't that be stock manipulation and wouldn't the SEC get involved?" Well, a while back there were reports that the SEC was looking into hedge fund "idea dinners," where hedge funds get together to pitch each other on their third-best ideas. 1 That sounds like institutional investors having a chat where they cajole each other to buy stock in a coordinated way. But the SEC wasn't concerned about market manipulation. The SEC was concerned that the hedge funds might be a "group" under the securities laws, if they teamed up to own more than 5% of the stock, and that they hadn't made the necessary group disclosures. This is less of a concern for small retail investors, just because they are less likely to get above 5% of the company. 2 Also it doesn't seem like the idea-dinner probe went anywhere. Telling your friends that you like a stock and they should buy it is, more or less, fine. Or is a short squeeze illegal? One popular topic on WallStreetBets is recalling stock borrow. Kochkodin's article describes one call to action in April 2020:
If everyone bands together to recall stock borrow, there will be fewer shares available for short sellers, and the short sellers will be forced to cover their bets by buying stock, pushing the price up more. Is that illegal? Is it illegal to make borrow impossible with the goal of messing with short sellers? The SEC might think so, actually. In 2012, it brought charges against Phil Falcone and Harbinger Capital Partners LLC for, among other things, having "conducted an illegal 'short squeeze' to manipulate bond prices." I confess I do not understand why the SEC thought a short squeeze was illegal, or what they think the fraud was, but the Falcone short squeeze is one of my all-time favorite financial stories and I advise you to read the complaint for humor and inspiration. Quick summary: Falcone owned some bonds of a company called MAAX Holdings Inc. "After hearing rumors that a Wall Street financial services firm was shorting the MAAX bonds and also encouraging its customers to do the same, Falcone decided to seek revenge." So he bought all the MAAX bonds. Then he bought more: Short sellers would borrow MAAX bonds (presumably from him), and then sell them to him, so that he ended up with "22 million more bonds than MAAX had ever issued." Then he stopped lending them out, forcing the short sellers to buy bonds to cover their shorts. But there were no bonds to be bought, since he owned them all (and more). At some point an executive from the "Wall Street firm" called up Falcone to talk about the situation, and even in the SEC's dry language you can tell that it was one of the greatest conversations in all of Wall Street history:
"Just keep bidding for the bonds," "sometimes you are just on the wrong side of a trade," I love it so much. Where were we? Oh, right, GameStop. I suppose a really coordinated successful effort to squeeze borrow might count as market manipulation, at least in the SEC's view, but I'm not sure how serious this effort was. In any case it hasn't worked. "Despite a punishing two weeks and relentless chat-room taunting, GameStop Corp. haters are showing no signs of surrender," Bloomberg reported yesterday; short interest has barely budged, and there are still shares available to borrow. I don't know. Taking a step back: Should the SEC care about all of this? On the one hand, I do not see a whole lot of deception in this GameStop situation. The SEC's core concerns, about people lying about stocks and tricking the innocent, don't seem especially implicated here; everyone is having reasonably informed and consensual fun. On the other hand it is all pretty dumb? Like if you are a securities regulator, you can think of your job narrowly as preventing people from lying about stocks, or more broadly as encouraging capital formation and fostering confidence in markets and moving markets toward efficiency and perfection. And, you know, this is the opposite of that. A popular conclusion from the GameStop story is "well I guess the stock market is nonsense now," and I'm not sure that conclusion is wrong. Seems like the sort of thing the SEC wouldn't like. But what can they do about it? Here's the full article, there's a bunch of linked sources where he adds resources on previous occurrences or other court cases/SEC actions, but I'm way too lazy to edit all of those links in: https://www.bloomberg.com/opinion/articles/2021-01-26/will-wallstreetbets-face-sec-scrutiny-after-gamestop-rally [link] [comments]  |
| How long can shorts wait until they're forced to cover? GME Posted: 26 Jan 2021 11:17 PM PST With significant majority of shorts entered around $5-10 how much longer can they hold without being forced to cover when they're underwater by such a huge degree? Wouldn't we of seen maybe the start of a squeeze when pretty much every single short position is in the red? [link] [comments]  |
| The GME narrative seems to be half truth Posted: 26 Jan 2021 08:02 PM PST I've been thinking about this for awhile now. Something doesn't add up. Why would Citadel throw good money at bad money? Even more so, 10 figures worth of it. I've seen posts suggesting that they are doing it because they have billions at stake as MMs for options. That's irrelevant. Citadel is the directional hedge fund, not the sister MM firm Citadel Securities. Even for MMs like Citadel Securities, they run a balanced book across a plethora of asset classes. You can be assured that distortions in a single asset will most certainly be balanced out in some way or another because of their other positions. Most pressingly, MMs are most certainly not selling unhedged options after last Fri's debacle. So let's put that out of the way for the moment. I've read the comments from Griffin and Cohen about Plotkin. They portray a brilliant man. Someone who is a seasoned player of the market.
And then this
Something doesn't add up. You're telling me a really smart guy who averages 30% y-o-y doesn't know when to cut his losses? So I did more digging. The more I've dug the more I'm convinced the narrative being peddled is inaccurate. I've seen people constantly misquoting Melvin Capital's position as a naked short. This is false. According to the 13F filed Nov 2020 for the period ending Sep 2020, Melvin Capital only had a PUT position in GME. That means that unlike what some people are suggesting, Melvin Capital's losses are NOT bound to infinity. Yes, they might also have ran a short position that does not need to be reported in the 13F but any fund manager worth his salt would have quickly moved to a synthetic short with derivatives the moment things went slightly south. There is a real possibility that their entire PUT position is now -99%, but that does not mean that their other holdings are affected. Now of course, the MMs that sold them these positions could be on the hook if their positions were unhedged. But this is highly unlikely considering MMs are supposed to be delta neutral. https://www.sec.gov/Archives/edgar/data/1628110/000090571820001111/xslForm13F_X01/infotable.xml So all those extrapolations of Melvin Capital imploding are farfetched. Yes, Melvin Capital had 13.1b AUM in Mar 2020. The article used as the source in that same post says they started the year with 12.5b AUM. And they lost 30% from there. https://www.reddit.com/r/wallstreetbets/comments/l5jwnj/melvin_is_down_another_25_on_gme/ Firstly, these numbers are unsubstantiated. We don't know if the "sources" have a vested interest in the directionality of GME. Secondly, this 30% loss is across their entire portfolio, so the GME move might be painful for them, but it's not entirely responsible for their 30% loss. So maybe they might have lost another 5-10% but most certainly not another 25% and are most certainly not wiped out by the AH move. Thirdly, if they had maintained their short position entirely in the form of options, they might have lost the entire premium but they are most certainly not bleeding money every day. So what's happening here instead? Yes, there are still more shorts than float and a further squeeze is definitely possible. But this is not going to come from Melvin Capital blowing up. In fact, quite the contrary, I'm expecting them to have clawed back some of their losses through sheer brilliance. It was hiding in plain sight all along. How? It's really simple. I posit to you what Mr Plotkins presented to Griffin and Cohen at their emergency meeting that was so irresistable - He was going to take the cash infusion and buy CALL OPTIONS to hedge out his put position that was in the hole. With the size of the moves since the infusion was announced, there's a non-zero possibility that part of the fresh calls were from Mr Plotkin. Don't be surprised if Melvin Capital announces another 30% return at the end of this year. What are the implications? This means that the impending nirvana short covering rally might not be as near as peddled and the players with actual short interests might be not be as concentrated as a single HF. The biggest risk to the rally is this buying spree might run out of steam before reaching valhalla. Honestly, the gamma squeeze narrative has more legs than shorts folding. Or I might be entirely wrong and Melvin Capital blows up spectacularly. This irregularity aside, the move seems to have turned into a self fulfilling prophecy where old money is profiting by dumping the hot potato on newer money. This game of musical chairs will continue as long as the narrative stays the same. So enjoy it while it lasts. [link] [comments]  |
| AMD smashes EPS and revenue estimates Posted: 26 Jan 2021 01:21 PM PST ― Quarterly revenue of $3.24B up 53% year-over-year; Full year revenue of $9.76B up 45%; quarterly and full year net income more than doubled from prior year ― AMD smashed its 4th quarter EPS and revenue consensus. EPS turned out way higher due to a tax benefit. Revenue: $3.24 billion (+53% yoy) vs. $3.02 expected Diluted EPS: $1.45 (+867%) vs. $0.47 expected Net Income: $1.781 billion (+948%) [link] [comments]  |
| Posted: 26 Jan 2021 07:40 AM PST BlackRock CEO Larry Fink said Tuesday in his annual letter to CEOs that the "tectonic shift" toward sustainability-focused companies is accelerating in the wake of the coronavirus pandemic. "More and more people do understand that climate risk is investment risk. ...When finance really understands a problem, we take that future problem and bring it forward," the head of the world's largest asset manager said on "Squawk Box." BlackRock is asking companies to disclose how their business model will be compatible with a net-zero economy. What do you think about these key points? Article here: https://www.cnbc.com/2021/01/26/blackrock-calls-for-climate-change-disclosure-expects-sustainable-investing-to-continue.html [link] [comments]  |
| FOMO, and fear of crash. I know my feelings are not rational, yet they are bothering me. Posted: 26 Jan 2021 08:27 PM PST I have been DCA for a few years now, but recently I have been worried more and more about a potential market crash. I know that those cannot be predicted, but I cannot help but deep inside feel like the market is being weird right now. With what happened to Tesla, and more and more people finding out about investing and dumping their entire savings into $GME or $TSLE because it will go to the moon for sure. Obviously we all know it will crash at some point, and rationally I know that there is no point in trying to predict a crash and cashing out. But, that doesn't make me feel better. Can someone show me some math that will make me more confident? And honestly, also please tell me why I shouldn't just invest into the next meme stock - not that I have confidence in WSB, but I do have FOMO when my friends are making thousands. It feels the same when someone won the lottery, but now they are also talking about how smart they are for learning about WSB and following their advice. [link] [comments]  |
| ELI5: Why aren't the GME shorts covering? Won't the price fall once it isn't over 100% shorted? Posted: 26 Jan 2021 10:48 PM PST I was going to buy GME after reading many posts on it (I take too long to decide...) but on the day I was finally convinced by a post on why Shorts had to cover, the stock skyrocketed from $20... and I chickened out from buying and was looking for a better entry point... but it seems the best time to buy was yesterday and the next best time is now... History: Volkswagen From what I can tell Volkswagen infinite squeeze happened because 12.8% of the stock was shorted, but Porsche secretly bought a huge amount of stock and the public float was reduced to 1%. Suddenly 1280% of the public float was shorted (I'm not exactly sure how is it possible to cover at that point). Bull Case for GME The bull case is that shorts will have to cover at some point. As long as the shorts are holding 138.4% of the float, and they keep getting margin called and driving the price up, this seems to be an endless bull run. Maybe the buyers will stop and take profits but the current market is endlessly greedy and I don't see how it can ever stop. Even if GME issues a stock offering, it only improves the financials and is a net positive. My worry that Shorts secretly exit GME has a total of 70M shares, with 51M in the public float, and 71M is shorted (138.4% of the public float). Yesterday GME traded 179M shares according to Market Screener . With this kind of volume, won't it be easy for the Shorts to liquidate most of their positions without us knowing? Once the Shorts are mostly out, won't the price fall since there's no more possibility of the mother of all short squeezes, then the Shorts can come back in to short it on the way down. So my question is why don't the Shorts secretly cover? Or is holding short long term, even if the price goes up another 200% a cheaper option than buying back now? I bought some CRSR, BB and Nokia recently (8% of my portfolio) but I think they will all fall if GME falls so I might as well buy GME. Hoping you all can share some insights and alleviate this fear before I throw in some money in GME. [link] [comments]  |
| [GME] - What happens when the shorts are out? Posted: 26 Jan 2021 11:15 PM PST I am genuily curious as to what happens on Friday when the price remains that high. As I understood, all shorts will wiped out and the positions will close. I presume the stock will increase even further. But then what? Eventually someone got to sell right? Do the redditors then turn against each other and it is a race to the exit? If so are we going to witness the biggest drop in history? [link] [comments]  |
| What happens if Institutional Investors start selling GME? Posted: 27 Jan 2021 02:34 AM PST 17 % of GME is owned by retail investors, what happens if the instituional investors decide to sell? Currently they could profit from the trend? Are there reasons for them not to sell in the near future? Instituional owners Percentage distribution of Investors [link] [comments]  |
| Posted: 26 Jan 2021 05:49 PM PST I am a relatively new investor and have noticed that it is a common refrain on both this sub and from many other sources of financial advice that the easiest/safest way to invest is to dollar cost average into an S&P 500 ETF or index fund. My question is why 6-7% year over year growth in the US Market viewed as a foregone conclusion? Sure there will be down years but the US market always recovers and seems to grow far faster than its peers. Since 1995 the S&P 500 is up around 700% while the Nikkei 225 (Japan) is up around 50%, the DAX (Germany) is up 550%, the FTSE (United Kingdom) is up 88%, and the CAC 40 (France) is up 175. Since 2010 the FTSE MIB (Italy) has seen virtually no growth while the S@P/TIS (Canada) has grown 55%. Why is it that the United States stock market has significantly out performed seemingly every other highly developed, democratic, capitalistic, market except for maybe Germany. What makes the US unique? [link] [comments]  |
| Posted: 26 Jan 2021 08:13 PM PST https://www.barrons.com/articles/the-great-chinese-rebound-not-so-fast-51611622798 China has officially become the world's only major economy to expand year-over-year in 2020, with 2.3% real GDP growth. That's an especially bright figure against the backdrop of an estimated 4.3% contraction in the overall global economy, pulled down by severe recessions in the U.S. and the euro zone. Investors, expecting this outcome for months, have been pouring into Chinese equities and commodities, boosting assets to record levels while also fueling a self-reinforcing China comeback narrative. The problem? The People's Republic of China's own numbers as well as independently collected economic data do not tell the story of a blockbuster rebound. Instead, they show a full-year recession hiding in plain sight. A close look at official Chinese statistics reveals that key economic numbers have been wildly inflated. Downward revisions to their 2019 baselines created the appearance of growth, when in fact the economy continued to struggle in 2020. Let's begin with the all-important numbers for fixed asset investment, which counts total purchases of capital goods and land. Published at a high frequency, this metric is seen as a leading indicator of the health of the Chinese economy. In a series of revisions over the course of 2020, China's statistics bureau cut the aggregate amount of 2019 FAI down by over 4.7 trillion yuan (equivalent to about $720 billion). The largest revisions came in the fall, raising immediate analyst concerns. These revisions helped Beijing create the illusion of a V-shaped recovery in investment spending. The revised 2020 FAI figures show investment cratering in the wake of the pandemic but then recovering rapidly and surreptitiously expanding above the previous year's levels in the final four months of 2020. By quietly changing the baseline, China masked what was in fact a year-long contraction in investment spending. When aggregated over the full year, the unadjusted data show FAI shrinking roughly 5.9% compared to 2019. The baseline for another critical metric, total retail sales, which gauges consumer strength, was also revised down, showing positive on-year growth each month since August 2020. The original figures indicated positive growth starting a month later, in September, and at a slower rate for the remainder of the year. More importantly, they show that in aggregate total retail sales contracted year-over-year by 4.8% or approximately 1.97 trillion yuan. Even based on the retroactively revised data, accumulated retail sales fell by 3.9% in 2020 compared to the previous year. No matter how you slice the official numbers, they reject the idea of China seeing a broad-based recovery that includes Chinese consumers. That said, official economic statistics are routinely revised. So why should revisions by China be treated skeptically? First, the methods of China's National Bureau of Statistics have long been questionable. A central problem is a practice by which firms surveyed in a given year are dropped in future years if their revenue falls below a certain threshold. Their prior data is then stripped out of historical records. This cherry-picking approach can produce trillions of yuan worth of adjustments. The resulting figures are no longer representative of the entire economy. Second, transparency is lacking. The NBS did not provide a meaningful explanation of why numbers for FAI or total retail sales were adjusted down for 2019, nor did it publish a revised series openly acknowledging the revisions. Third, and relatedly, the bureau has now removed all nominal FAI data for 2019 and 2020 from its online database, making it cumbersome for analysts to decode these changes in the first place. It's difficult but to conclude that these revisions are aimed at distorting reality rather than giving a more accurate read on the economy. Reliability of official statistics is not the only reason to question if China's economy actually grew in 2020. Private data also do not show an economy running at pre-Covid levels. My firm, China Beige Book, surveys over 3,000 Chinese executives every quarter. These proprietary surveys show the economy continuing to recover into the fourth quarter. But each of our key performance metrics, every sector, and all regions posted a fourth consecutive quarter of on-year contraction, a first in a decade of surveying the Chinese economy. Our data show that China's recovery over 2020 has been less robust than official numbers portray. Chinese consumption remains weak. The fourth quarter brought a services sector recovery, but one driven by businesses not consumers. Consumer-facing sectors like travel, hospitality, and restaurants lagged behind business-to-business industries. Retailing fared even worse, becoming the only sector with slower growth in the fourth quarter. Even Chinese executives do not say their businesses have fully recovered. Last quarter we asked C-level executives when they expected their companies' sales, profitability, and hiring to return to 2019 levels. On each metric, approximately two-thirds said that recovery was still more than three months away. Beijing has declared victory prematurely. By claiming growth in several key metrics, Beijing signaled to markets that it would eventually report year-on-year expansion in the economy and achieve the mythical V-shaped recovery. Many investors and market commentators latched on to that narrative with little interest in looking under the hood. And herein lies the problem. Not only does a forensic review of official data show a weaker economy than officially acknowledged, but both government statistics and independent data show lackluster consumption. Rising investment flows into China and a rally in Chinese stocks may very well be justified by virtue of China's recovery over the past 9 months, which is no doubt impressive compared to most of the rest of the still-suffering world. But these investments should not be driven by official GDP growth or a belief that China's economy has returned to normal. The evidence simply does not bear that out. [link] [comments]  |
| Do I understand it correctly, that Grayscale is charging $400M/year for holding Bitcoin? Posted: 26 Jan 2021 11:59 PM PST So I looked up Grayscales Bitcoin Trust and was surprised that they have an annual fee of 2%: https://grayscale.co/bitcoin-trust/ I am not sure if I understand this number correctly. GBTC currently has a market cap of about $21B. If Grayscale charges 2% of that, this would be $400M per year. $400 million for running a simple algorithm that buys/sells Bitcoin based on in/outflow of investors and keeping those bitcoins safe? This seems pretty much to me. Anything I am missing? [link] [comments]  |
| Good Starting Portfolio For A Student Posted: 27 Jan 2021 12:17 AM PST TLDR: Young kid trying to make an initial investment for long-term holdings. Looking for advice on a mock portfolio that would have an initial $1000 invested in it. As the title says I'm looking to get into investing as I want to get in while I am young and able to capitalize fully on the potential of my investments. As I am a student I have both limited knowledge and limited funds to throw around from the outset and do not want my first investments to go poorly due to a lack of knowledge. For context, I have no interest in trading as it seems dangerous for the ill-informed and too hands-on. Also, for this reason, I've taken a general interest in ETFs and Index Funds instead of stocks as I feel I will not have the time to do proper research and analysis of multiple stocks. I've attempted to put together a portfolio that I believe is solid for my initial investment ($1000) and plan to expand as I learn and develop a deeper understanding of what exactly I'm doing. Portfolio 90/10
- I was going to go into BEP but I figured investing in the parent company will expose me to its subsidiaries and thus provide a broader net into renewable energy
- While this goes against my individual stock feelings I believe cannabis will become a sizable market provided a successful rollout into the USA. And I also believe for this industry I may see the best returns investing directly in a singular company rather than an index like the MJ or HMMJ
- Being in the tech field I believe there is a large value to be placed on cybersecurity, and from what I've seen. I do not feel like the current market necessarily reflects that.
- Along the lines of cybersecurity (but to a lesser degree) I believe 3D printing and the technologies associated with it will become much more prevalent over the next decade so getting in now seems right to me
- Again going with the tech theme I think this ETF holds value as while I am double dipping in some 3D printing and cybersecurity holdings. I get my foot in the door with companies such as Tesla. Which, while maybe overvalued right now, I believe Tesla has established itself as a company that will consistently perform well.
- To round out my portfolio a bit especially due to the volatility of tech I believe it would be responsible to allocate some of my investments into a bond such While I feel like this is a solid portfolio, I don't know if a balanced 18% through my stocks/ETFs is the right call or if I should swap a tech-based ETF out for an index fund like the Vanguard S&P 500 Index to keep everything a little more diversified, or even play it a little riskier and pick up some stocks within AMD/NVIDIA. Any and all feedback/opinions are welcomed and I would appreciate it greatly. [link] [comments]  |
| Posted: 26 Jan 2021 12:27 PM PST BlackBerry, AMC and Other Reddit YOLO Favorites That Aren't GameStopA frenzy from online traders is sending shares of some companies soaringOn Reddit forums, ordinary investors are swapping stock tips. It isn't just GameStop. Shares of the Texas-based videogame retailer surged as much as 145% on Monday alone, before giving up most of their gains to end up only 18%. But GameStop Corp. is far from alone in going vertical this year. Everything from a hydrogen battery maker to a struggling movie-theater chain have rocketed in the past few weeks. Behind the swings, many see ordinary investors, stuck at home in the pandemic, swapping tips and hatching trading strategies on online forums like Reddit's WallStreetBets—often buying things Wall Street has bet against. Many tout their long-shot wagers with the expression "YOLO," or, "You only live once." Here's a look at what else has their attention: AMC Entertainment Holdings AMC 8.71% Inc. Shares of the movie-theater operator have risen more than 30% this week after the company announced a $917 million financing deal to avoid filing for bankruptcy. But day traders' enthusiasm for the company had already allowed it to sell millions of dollars' worth of shares last year, helping raise much needed cash. BlackBerry Ltd. BB 1.50% Security software and service provider BlackBerry is another stock with a notable short position finding support online from individual investors. Shares have climbed around 25% this week, leaving many analysts scratching their heads. The company said Monday it wasn't aware of any material developments or change in its business that would account for the recent jump. NIO Inc. NIO -0.43% The Chinese electric-vehicle maker has received enduring interest from individual traders on social media platforms including Discord and Reddit, sending shares of its ADR up more than 1,000% in the past 12 months. NIO now ranks among the world's top five auto makers, with a market capitalization around $96 billion. The company delivered 43,728 vehicles in total last year. That compares to around 449,000 deliveries by Tesla Inc., TSLA 0.40% and more than 9 million from Volkswagen AG . Palantir Technologies Inc. PLTR -1.27% Data-analytics firm Palantir Technologies' shares have soared over 260% since the company went public back in September, making it one of last year's best performing stock offerings. The company has also become a favorite of individual investors posting online, who like it because of the exposure to big data and government contracts. Later today, Palantir will show off the latest developments in its software to the public for the first time ever, a move some analysts expect to have positive ramifications for the stock. Plug Power, PLUG 10.82% Inc. Shares of hydrogen battery maker Plug Power have gained more than 370% in the past three months, powered by investors eager to cash in on the green economy. Individual investors online lauded Plug Power as the next big thing after South Korea-based SK Holdings Co. invested $1.5 billion in the company earlier this month. Others are less optimistic, with hedge funds including Kerrisdale Capital Management betting against the stock, saying hydrogen batteries face numerous challenges including efficiency and safety. Bed Bath & Beyond Inc. BBBY 18.42% Shares surged as much as 50% Monday before paring gains and are now up around 70% in 2021, even after the home-goods retailer this month reported third-quarter earnings per share of 8 cents, short of the 19 cents analysts expected, along with a 5% drop in revenue from the same period last year. Online traders point to an early 2020 change in management and the fact that the company is buying back shares as signs that the share price will continue to increase. [link] [comments]  |
| Why did VW dip before the big squeeze in 08? Posted: 27 Jan 2021 02:58 AM PST With all the hoopla surrounding GME I'm looking at the big squeeze of VW. There's a clear climb where the squeeze has begun but a big drop to pre-squeeze levels before skyrocketing. I was not involved in stocks back then, but does anyone know why? Was it a big doubling down by shorts to instil fear in the market by slamming through stop losses? Were there other factors at play? Is it something that could possibly happen with GME? Here's the graph [link] [comments]  |
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