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Old Yesterday, 09:46 AM
 
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Basically 'momentum' or 'meme' stock investing just a variation of the old school pump?

https://www.cnbc.com/2021/06/10/alex...g-not-new.html

Social media might be hyping instead of those vested in selling the stock but it's still a pump or promotion to buy by advocating it.
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Old Yesterday, 09:54 AM
 
Location: US
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I didn't read the article, but GME, AMC were pumped in my opinion, a different kind of pump though. At least it was based on seeing high short interest, therefore pumping it if successful would create a short squeeze. This is different than a pump n dump scam where a penny stock is slowly accumulated and then when they have enough they send out a newsletter to buy it now and then sell to those buying.
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Old Yesterday, 10:17 AM
 
Location: Fiorina "Fury" 161
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It really feels like it as it's acting exactly the same as penny pumps: put out some PRs, sell shares into the pump. Rinse and repeat. GME and AMC (I guess) were somewhat unique situations, but now I see a headline of this going on in a stock that a billionaire already owns, and while I am not going to call that fraud, I won't put up much of a disagreement if someone else does. "Playing the short squeeze" is a pump play to begin with, and I think these are getting too much attention, but that's the type of investing ere we seem to be in.
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Old Yesterday, 10:20 AM
 
Location: It's in the name!
6,594 posts, read 7,962,685 times
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Quote:
Originally Posted by anononcty View Post
Basically 'momentum' or 'meme' stock investing just a variation of the old school pump?

https://www.cnbc.com/2021/06/10/alex...g-not-new.html

Social media might be hyping instead of those vested in selling the stock but it's still a pump or promotion to buy by advocating it.
KEY TAKEAWAYS
* Pump-and-dump is an illegal scheme to boost a stock's or security's price based on false, misleading, or greatly exaggerated statements.
* Pump-and-dump schemes usually target micro- and small-cap stocks.
* People found guilty of running pump-and-dump schemes are subject to heavy fines.
* Pump-and-dump schemes are increasingly found in the cryptocurrency industry.

https://www.investopedia.com/terms/p/pumpanddump.asp


My thoughts:

Pump and dump is not entirely accurate. Ordinarily, a pump and dump would occur when a certain party pumps up a stock for no other reason than anticipated gains from price action. Only to dump it after profits are made. This is regardless of the company's performance.

GME and AMC aren't quite that simple. Initially, GME was considered as a post-covid play that was being heavily shorted to bankruptcy. A few people felt that was wrong and decided to counter the shorts by increasing the buying pressure. Thus, saving GME from bankruptcy.

After GME, people noticed the same thing happening to AMC. People saw the success with GME against the shorting and decided to buy into AMC as AMC was also close to bankruptcy.

The only way to counter the massive shorting and manipulation by hedge funds and market makers was to socialize the small "movement" that had grown since last year to save stocks that were being heavily shorted to essentially drive them out of business.

What we see now is a massive social movement to highlight and uncover the fraud and manipulation with these two stocks who's only effective tool is to buy and hold the stock increasing the price and squeezing the shorts so that they have to exit their positions. This will relieve the downward pressure on the stock allowing the company access to needed capital. As AMC has done this year strengthening its financial posture.

Pump and dumps usually don't last for 6+ months. They have no social mission to save a company from bankruptcy. Or to expose the fraudulent underpinnings of Wall Street.

While on the surface, there doesn't seem to be a distinction between the current movement and the basic definition of a pump and dump, When you look underneath, the current movement does not necessarily have criminal intent. While Pump and dump does.
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Old Yesterday, 10:30 AM
 
Location: It's in the name!
6,594 posts, read 7,962,685 times
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Quote:
Originally Posted by Free-R View Post
It really feels like it as it's acting exactly the same as penny pumps: put out some PRs, sell shares into the pump. Rinse and repeat. GME and AMC (I guess) were somewhat unique situations, but now I see a headline of this going on in a stock that a billionaire already owns, and while I am not going to call that fraud, I won't put up much of a disagreement if someone else does. "Playing the short squeeze" is a pump play to begin with, and I think these are getting too much attention, but that's the type of investing ere we seem to be in.

But one has to ask, before reddit and twitter, who had the massive resources to initiate a short squeeze? Historical short squeezes weren't initiated by retail investors.

The most often cited VW short squeeze happened because Porsche saw value in VW and wanted to own it so they scooped up all the remaining shares in the midst of shorts trying to bankrupt VW. This caught the shorts off guard and caused a massive short squeeze.

Fast forward to today with AMC. Now the retail investors are Porsche and AMC is VW. Retail investors scooped up all the remaining shares of AMC and now own the company. This caught the shorts off guard. We are now waiting for the squeeze to begin a second time. Because a majority of the short positions have not covered.

Also, there are currently synthetics and Naked shorting involved. If this was a clean squeeze play, Both AMC and GME would have completely squeezed in January.

Last edited by adelphi_sky; Yesterday at 11:06 AM..
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Old Yesterday, 10:35 AM
 
Location: US
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I'd say a big part of the buying during these squeezes were money managers. The idea that it's the small retail buyer against money managers is very false. There was big money coming in as buys and shorts. And I know numerous people who have tried shorting them as well and they aren't money managers or fat cats.
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Old Yesterday, 11:12 AM
 
Location: It's in the name!
6,594 posts, read 7,962,685 times
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Quote:
Originally Posted by bmw335xi View Post
I'd say a big part of the buying during these squeezes were money managers. The idea that it's the small retail buyer against money managers is very false. There was big money coming in as buys and shorts. And I know numerous people who have tried shorting them as well and they aren't money managers or fat cats.
Very false is a bit much. The CEO of AMC just released the shareholder count. more than 80% ownership is from retail investors. I would say a majority of retail investors aren't putting in $8m buy orders through Webull and Robinhood. I'm using Schwab. Of course I'm not rich enough to try to put a large block order in on their app.

Money managers are considered institutional buyers if they are buying for their clients or for the fund. There is a separate count for them.


Quote:
More than 80% of AMC shares are held by a broad base of retail investors with an average holding of around 120 shares.
https://investor.amctheatres.com/new...t/default.aspx
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Old Yesterday, 11:31 AM
 
Location: Fiorina "Fury" 161
2,961 posts, read 3,072,555 times
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Quote:
Originally Posted by adelphi_sky View Post
But one has to ask, before reddit and twitter, who had the massive resources to initiate a short squeeze? Historical short squeezes weren't initiated by retail investors.

The most often cited VW short squeeze happened because Porsche saw value in VW and wanted to own it so they scooped up all the remaining shares in the midst of shorts trying to bankrupt VW. This caught the shorts off guard and caused a massive short squeeze.

Fast forward to today with AMC. Now the retail investors are Porsche and AMC is VW. Retail investors scooped up all the remaining shares of AMC and now own the company. This caught the shorts off guard. We are now waiting for the squeeze to begin a second time. Because a majority of the short positions have not covered.

Also, there are currently synthetics and Naked shorting involved. If this was a clean squeeze play, Both AMC and GME would have completely squeezed in January.
None of this is new, and is most common on distressed assets (like AMC and GME). I see it all the time on investing boards, where people lose money and start talking about naked shorting as why; that "shorts are evil" and so forth. What I think now, though, is I'm seeing this in names that aren't distressed, and to me that is not organic reddit action, but big interests co-opting a "movement of meme" that really isn't much different than it's ever been (pump news).

Also, shorting provides an important function in the market, so that these companies aren't falsely inflating and/or propping up the values of their stocks when it's not warranted.

Retail investors shouldn't be worrying about shorting, but if they're making money on memes enough to be life-changing, I'm not gonna knock it.
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Old Yesterday, 11:39 AM
 
Location: US
22,886 posts, read 21,970,602 times
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Quote:
Originally Posted by adelphi_sky View Post
Very false is a bit much. The CEO of AMC just released the shareholder count. more than 80% ownership is from retail investors. I would say a majority of retail investors aren't putting in $8m buy orders through Webull and Robinhood. I'm using Schwab. Of course I'm not rich enough to try to put a large block order in on their app.

Money managers are considered institutional buyers if they are buying for their clients or for the fund. There is a separate count for them.




https://investor.amctheatres.com/new...t/default.aspx

There is no way to prove who is mass buying and mass selling, at least I don't think so. I'd be willing to bet there are hedge funds playing both sides. The idea that it's us little guys vs the big mean hedge funds is a good marketing tool to get newbies to make it personal and emotional to HODL (hold on to dear life) instead of taking profits, partial profits, using stop losses, etc.

Last edited by bmw335xi; Yesterday at 11:59 AM..
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Old Today, 11:48 AM
 
Location: It's in the name!
6,594 posts, read 7,962,685 times
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Quote:
Originally Posted by Free-R View Post
None of this is new, and is most common on distressed assets (like AMC and GME). I see it all the time on investing boards, where people lose money and start talking about naked shorting as why; that "shorts are evil" and so forth. What I think now, though, is I'm seeing this in names that aren't distressed, and to me that is not organic reddit action, but big interests co-opting a "movement of meme" that really isn't much different than it's ever been (pump news).

Also, shorting provides an important function in the market, so that these companies aren't falsely inflating and/or propping up the values of their stocks when it's not warranted.

Retail investors shouldn't be worrying about shorting, but if they're making money on memes enough to be life-changing, I'm not gonna knock it.
I'll put it this way. Had I known 20 years ago what I know now? I would be in a much better financial position that I am. And that is simply knowing that it is NOT a free and fair market. Those with power and resources bend the market to their will and use it as a playground. Ask yourself how could a fund manager be worth billions unless they had some advantage that the millions of other investors didn't? And we seemed to be perfectly fine with that imbalance. Until now.

I will agree that shorting is necessary. But of course we both know that there are always loopholes and even flat out fraud that occurs by institutions. Especially if the fine is microscopically smaller than the gains made from the criminal act. No one goes to jail in Wall Street. Losses from fines are just a cost of doing business. Fund managers account for this. Some investigations take years. By then, the fund has made billions, the manager gets hundreds of millions in bonuses and they hand over the $30m fine. Piece of cake. Do you think these funds lose customers? GO out of business if people kept reading about fraud and fines? Nope. These funds stay in business. Imagine that. So, obviously, they aren't scared of the SEC even if they get fined. I mean the fund manager isn't even replaced in most cases.

And I think that is the issue this current "reddit" movement is concerned about. You have institutions that have a web of conflicts of interest that provides them with a marked advantage. They aren't deterred by the SEC.

Their hands are in the entire transaction cycle of stocks. They can see the orders from retail investors before they pass them on. They can delay those orders. They have logs that can mount a strategy based on order flow. Yet, we don't see what they are doing. They have days/weeks to disclose their position while they see ours the moment we hit the buy or sell button.

And most importantly, with naked shorting being illegal and the evidence being out in the open for all to see, people should be angry that it is so blatant. There are Failure-to-deliver reports ever month. The fact that there are monthly reports hints at some inconsistencies. Some small, some glaring. Banks seem to do a pretty good job at accounting. I'm not sure how these market makers can't seem to count shares correctly. It's 2021. I'm sure this could have been resolved years ago.

When you have a congress and the SEC who allowed Wall Street to gain complexity through technology without staying ahead of the curve to understand it all, there is opportunity for criminal activity to flourish under that obscurity. That is the case today. I don't have faith that the SEC really has a handle on what's going on.

The SEC should go on a hiring spree just like the NSA. Hire every geek, nerd, you can find, pay them a competitive salary, and let them loose.

Right now you have a social media movement eating the SEC's lunch. The SEC should be out in front, proactive, not reactive.

PS. Whoever in the SEC thought that dark pools would turn out well was a fool. Create something to hide the transactions of market makers. I could see that train wreck a mile away. They get to play in dark pools while the order flow of retail investors are used as a commodity. Brilliant.
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