Moving on.... it's Biden/Harris Administration time (#124)

[Roussette]

Previous thread...

www.mumsnet.com/Talk/am_i_being_unreasonable/4141906-For-there-is-always-light-Thread-123-is-belong-to-President-Biden?watched=1&msgid=103967923#103967923

Trumpy is at it again.

He appears to be doing more work than when he was actually in office

Oh, I hadn't realised Trump never got a better approval rating than 29%.

@AskingQuestionsAllTheTime

Oh, I hadn't realised Trump never got a better approval rating than 29%.

That was my first thought too.

www.bbc.co.uk/news/uk-england-northamptonshire-55849608

I have to admit the GameStop thing is over my head. I have no idea why or how this is causing such a hissy with the 'big boys'. Price goes up, but they're losing money because they expected the stock to tank? I guess that's why I'm not a zillionaire.

In other news, so Doofus' endorsement 'means more than any other endorsement at any other time'. Good God, that man's ego knows no bounds!

[quote derxa]www.bbc.co.uk/news/uk-england-northamptonshire-55849608[/quote]
State Department spokesman Ned Price said: "The United States government has declined the United Kingdom's request for extradition of a US citizen involved in a tragic vehicle accident that occurred in the United Kingdom.

"Our decision in that regard was final.

In other words, political expediency, before justice.

Acrossthepond.

They "borrowed stock", sold it at a high price, encouraged the price to drop so they could buy it back at a lower price. They then "return" the stock and pocket the difference between the prices. But if the prices go up instead of down it costs them more to buy it back so they have to pay for that difference out of their own pocket because the stock was "borrowed" and not theirs.

Quotes are because my understanding of a hedge fund is that it is managed on behalf of someone else. So technically within the rules. But ethically questionable. Hence why they are cross, the lay people are beating them at their own game and costing them money.

@HillsBesideTheSea

Acrossthepond.

They "borrowed stock", sold it at a high price, encouraged the price to drop so they could buy it back at a lower price. They then "return" the stock and pocket the difference between the prices. But if the prices go up instead of down it costs them more to buy it back so they have to pay for that difference out of their own pocket because the stock was "borrowed" and not theirs.

Quotes are because my understanding of a hedge fund is that it is managed on behalf of someone else. So technically within the rules. But ethically questionable. Hence why they are cross, the lay people are beating them at their own game and costing them money.

Thanks. I think I get it. The idea that one can 'borrow' stock is odd to me, I didn't know that happened. The 'encouraging' the price drop certainly sounds unethical.

Hopefully this will lead to some worthwhile financial reform. But I doubt it. Money talks, the rest walks.

The people who are doing the borrowing are the hedge fund managers who manage the investment porfolio for the investors. So it is the investors money/stock, that the hedgefund managers have access to to "borrow" in this way. In normal circumstances the investors would be unaware their stock had been "borrowed" in this manner and would suck up the loss in value of the stock, without realising it was sold and rebought to provide the manager with profit.

It probably will lead to some sort of reform as the practise can destablise markets and can lead to some interesting stock exchange effects. Also the people who are losing money have power/influence (i suspect contributors to fundraising of politicians etc) But the regulators aren't going to want to see another stock market crash, so will step in. Also leads to the question of insider trading. Unfortunately I suspect you are right with the money talks side of thing and that it is the little people who are going to get badly burnt rather than the money. Regulation might be to stop this happening again rather to change practises/improve regulation/stop money getting away with it.

AcrossthePond55

Let's hope I've got my analogy right...

Minou: "Hi AcrossthePond55. Can I borrow you're phone? Can I borrow it for free, for about a week? It'll be fine, I'll get it back to you."
AcrossthePond55: "yes of course you can borrow it for free Minou. But I must get it back by next week"

Minou at the Pawnshop
Minou: "Hello Mr Pawnshop, I'd like to sell this phone, how much will you give me?"
Pawnshop:"I'll pay you $500.

Minou no longer has the phone, but does have $500.
Minou "Everyone, AcrossthePond55's phone is shit. Is worth fuck all. Spread it around"

1 week later
Minou: "Hello Mr Pawnshop, I'd like to buy back that phone I sold you."
Mr Pawnshop: "Well, the phone isn't worth much anymore, so i'll sell it to you for $300.
Minou: "Aww, isn't that a shame. Ill buy it back, no worries.

Minou now has the phone back and $200 profit
Minou skips to AcrossthePond55 House and hands back the phone

Its crappy right?
So, people of Reddit have infiltrated and caused some bother.

If we go back to the story where Minou was selling your phone to the pawnshop for $500.

Minou is in the Pawnshop and has sold AcrossthePond55 phone for $500
Reddit are behind the door in the Pawnshop listening to Minou.

Reddit "right people. Enough is enough. Minou is selling something she has borrowed knowing the value of the phone will go down. Lets party people!"

Reddit people all spend $10 each to bling the phone up. They add diamonds, those obnoxious dangly things and a new phone cover

1 week later
Minou: "Hello Mr Pawnshop, I'd like to buy back that phone I sold you."
Mr Pawnshop "it amazing the phone is fantastic and has become the latest phone everyone wants. I'll sell it to you for $900."
Minou "Fuuucckkkk"

Minou has to get the phone back to AcrossthePond55, so she gives back the $500 she got when she sold it and also has to go to her own bank and get the other $400. Minou has lost $400 of her own money.

Its like that, but with billions

@AcrossthePond55 here's a thread that explains it www.mumsnet.com/Talk/_chat/4149361-north-american-stock-market-what-s-happening

I'm surprised it's not being more spoken about over here. This has massive ramifications, although admittedly it's not as "shock horror" as it was earlier today now that both sides of the house have come out in favour of / stood up for wallstreetbets.

@minou123 your analogy is pretty much correct but AFAIK, the person who borrowed the phone IS paying interest to borrow it.

Also imagine the redditors had bought the phone for £500. And they're all just selling to each other for £550, £600, £750, £800.

The borrower is doing everything in their power to drive the price down. The BANKS are stopping people from being able to buy phones (so the next redditor can't buy it for £850) but they ARE allowed to sell phones.

Except all of the redditors have been banned from buying.

So the only person they're now allowed to sell to is the borrower, who wants it for £300.

But the redditors band together and refuse to sell! Even if the value becomes £10, they're refusing to sell, because the borrow has to pay interest every single day they haven't given the phone back

At least that's my understanding of it anyway but it's the "banks banned buying but not selling" that's key because it's created a situation where it's one rule for millionaires, and one rule for the little men.

It's literally history in the making.

Yeah what they said^^ Also such elegancy in the words and knowledge on the thread they said it better

@HillsBesideTheSea

@minou123
@eatlovemerry

You guys are GREAT!!!

Thanks for 'dummying' it down for me. I get it now.

And this is why I love these threads

eatlovemerry

Yes, you are right Minou does need to pay AcrossthePond55 interest for borrowing the phone.

You have expanded on my analogy brilliantly.

Minou doesn't want to pay $900 for the phone, so she starts running around looking for a similar phone, only to find Reddit people have bought all the phones.

What happens next is what is happening today
a new rule is issued (where from - no one knows), but Reddit people can only sell the phones to Minou
Minou demands they sell the phone for $300, Reddit people say "No, on ya bike were not selling"

This is where we are today. Who knows what will happen next?
Will Minou just have to cough up the $900 and lose money?
Will Reddit keep ahold of thier phones, even if the value reduces to $10?
Will 'whoever' stopped Reddit people selling the phones to each other relent?
Will "Shorting" or "betting" or selling borrowed stocks become more regulated?

Who knows... stay tuned.

@minou123 love it

I have two phones in the race. Genuinely have a limit order for $848.97.

Prob s l i g h t l y optimistic but I bought them for $70 so who cares I'm not selling my phones 😂.

[quote eatlovemerry]@minou123 love it

I have two phones in the race. Genuinely have a limit order for $848.97.

Prob s l i g h t l y optimistic but I bought them for $70 so who cares I'm not selling my phones 😂. [/quote]
Fantastic. Let us know how you get on and what happens.

It is a bugger to get your head around.
I'm no expert in this, but what the hedge fund people are doing is the opposite of what we knkw about buying/selling shares and stocks.

For all us normal people, when we think about stocks and shares, "we buy low, sell high"
For example:
We all get in a time machine to 1986 (stop.it...no comments about our dodgy hair styles!)
We meet a man called Bill Gates, who has started a company called Microsoft.
"Pah", says Minou "what a load of bollocks. Everyone have thier own PC? This internet shite will never catch on:.
"oh, I don't know" says AcrossthePond55, "this might be worth investing in. The stock/shares are only $1 each and I have $25,000 spare doing nothing. Ill buy 25,000 shares, please

Roll forward to 2021:
AcrossthePond55: "I think I'll sell my shares today. Yippee! I've sold them for $5,975,000. Champagne for me tonight"
Minou ^^

So, shorting is kind of doing the opposite of this. You are buying/selling shares/stocks hoping the value of them goes down.

(Sorry if you all know this and I'm telling you something you already know)

@minou123 I think it's more akin to what us common folk do with matched betting.

So in matched betting, your are laying the bet.

Someone bets £10 that Madrid will win, and they'll get £20 if Madrid win.

Another person lays the bet. So they're betting that Madrid will not win. That means if Madrid loses, or draws, they'll keep the betters £10. But if Madrid wins, the layer has to pay the winnings.

So what these hedge fund managers are doing is effectively laying.

Except they do it in a much more... questionable way. Because it's not a football game that can't be influenced by external forces. It's a market where the only thing that dictates the winners and losers are the external forces.

From what I've read, the hedge fund managers pick a company and they actually announce what they're doing openly. They let everyone know that they're about to start shorting i.e they're backing that the stock WONT win.

So everyone who has that stock sees billy big balls throwing tonnes on money into the death of this stock, and they think that billy big balls must have some insider knowledge.

So they cut their losses and sell. Which forces the price down (bc more people are selling than buying). More panic. More selling. Until the price is so artificially low that they come and hoover up all the stocks at low prices.

They basically make the thing happen just by announcing it will happen.

It's like the powder trick in the episode of Peaky Blinders where they fuck with the horse's price by making everyone believe it's magic. The people who laid those bets would make a killing, because they know the horse won't win and the price is artificially high.

It's basically a reverse powder trick where they make everyone betting believe that the horse is cursed.

So they're the master manipulators who are now being manipulated .

But seriously the stock market is insane. I was under the impression for years that you bought a stock (or a fraction of a stock) and you sold it.

Nope.

When it starts getting into options and futures it honestly melts my brain. This has genuinely sparked a bit of motivation in me to read up and learn more about it though. I only (kindof) understand what's going on here because I used to be big into matched betting (which is just simple maths, really), and from there I got into scalping horse races etc (which is absolutely insane and not for the faint hearted) 😂.

Anyhoo I'm going off on a tangent, but I'll update on how my phones do also I think I've found my people. I work remotely in a team with 20 American's (although I live in the UK) and I think I've burned my poor husband out on American politics / current affairs 😂.

whats happening now if what i’ve read is true, is that robinhood is selling the reddit guys phones - whether the reddit guys want to sell or not, so, a next day class action case has been brought. no idea what happens next.

It's very interesting to see what will happen. Someone in the Biden administration is throwing their hands up and declaring "fucks sake everyone, we're quite busy already without having to deal with this too".

Be afraid...

www.theguardian.com/us-news/2021/jan/29/sarah-sanders-raises-1m-in-four-days-in-run-for-arkansas-governor

The food lm “The Big Short” is a good introduction to the lack of morals of the stock market. (Whether we should expect to stock market to behave morally is another question.)

Yes, you are right Minou does need to pay AcrossthePond55 interest for borrowing the phone.

So assuming all goes to plan, a low risk investor has earned interest, and a high risk investor has limited their risk to the change in value, assuming they still have the borrowed £500.

But doesn’t a hedge fund manager also limit risk by hedging?

Also I’m guessing that an individual investor would either be taking on a massive amount of risk or making minimal profits, but if you are investing for a fund, the profits become worthwhile.