It’s not often that I go straight from a Twitter post to an article, but since I wrote a Twitter dissertation, I figured that there wasn’t a need to write a separate article on what’s happening with Wallstreetbets.
Robinhood and other trading apps halting trading on #GME, #NOK, & #BB goes deeper. Citadel Securities, they sit in front of the Robinhood no fee trades, bailed out one of the hedge funds involved in the short squeeze. This should be illegal.
These everyday traders on #wallstreetbets are doing to the hedge funds what they do to normal people every day. They pump up the value of a stock and sell it. They push down the value of a stock to make money. Both can substantially hurt every day investors.
None of the information so far on #wallstreetbets is insider trading (can we say the same about hedge funds). It's all publicly available Sure you have the trolls and the groupies. Isn't that just the same thing with people looking to Kramer or "stocks to buy now" articles
Science knows that from determining the number of marbles in a jar to editing Wikipedia, the combined knowledge of the crowd is better at coming up with the right result than the "experts".
What we see on #wallstreetbets is analysis by the crowd and a combined financial effort to muster enough financial resources to take on these billion dollar hedge funds.
If a hedge fund can bring together hundreds of investors to do the same thing that #wallstreetbets is doing with thousands of investors, how is one better than the other? Both end up with the same result; a short squeeze is a well understood and used trading strategy.
Michael Lewis exposed this same type of financial manipulation by the banks in the Big Short. Financial institutions were being squeezed hard by the mortgage defaults & they made sure to off load tremendous losses on investors while telling them these were good investments.
Remember the guy passing off securities backed by "dog shit mortgages" as good investments to unknowing institutional investors like retirement funds? Or how about securities rating agencies knowingly giving A+ ratings to securities they knew were anything about?
I'm a capitalist. I'm an investor. I realize that the #StockMarket is anything but rational in the short term. Momentum trading among many other strategies, that hedge funds use also, is legal.
When the little guys who make up #wallstreetbets are hurt, nobody cares. But when hedge funds are looking at billions of dollars of loses suddenly financial institutions and regulatory bodies begin to care.
When #melvincapital and other investors treat the stock market like a casino, they shouldn't take umbrage when the casino wins.
Follow me on twitter @Alertingmainst
Help support what I write by clicking on the ad below. You know the offering is tailored to what you’re looking for!