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We don't even have to wait. Giant companies are bleeding billions. Right now. Rented at 10, sold, planned on re-buying at 4. Now having to rebuy at 140.
Some small investors will lose a couple of Benjamins. Some billion-dollar hedge fund companies are losing their shirt.
precise enough!
Quote:
So they shorted Gamestop (GME) from $20, to $10, to $4. Their greed kept compounding. They kept doing it again, and again, for months. Making billions of dollars, and almost bankrupting this company. (shares and share price are used as collateral for loans and access to capital).
So they shorted Gamestop (GME) from $20, to $10, to $4. Their greed kept compounding. They kept doing it again, and again, for months. Making billions of dollars, and almost bankrupting this company.
Enter Wallstreetbets- A trading/investing subreddit.
Someone noted that these hedgefunds shorted 140% of all shares available.
These hedgefunds were so damn greedy, they borrowed more shares than actually existed. That's how arrogant and dumb they were.
the bolded is the REAL key.
Look, if Gamestop (or any brick and mortar retailer, without a real online play) is losing $500M/year (what I've read), then they're not worth anything close to $20/share. So, shorting them to $10 makes a lot of sense.
It's when the financial instrument play is so high - in this case more shares than existed in a concerted attempt to drive the price down - that the statistically large amount of risk DESERVES to come into play.
2019 dividend is almost meaningless as it's an airline and COVID.
Why specifically AAL rather than other airlines? No idea. I know nothing of the stock, the fundamentals, the relative strength or weakness in an industry that has been hammered. All it means is the outlook is pessimistic and more investors think AAL is overvalued than other airlines.
Day trading is really zero sum stuff. You're making money because someone lost money. It's amusing to see a hedge fund lose a lot of money to a bunch of retail investors on Reddit but really it's just someone making money and someone losing money. On the way back down there will be lots of both hedge funds and retail investors taking money from the people who bought because they got overly emotional and excited about taking money from the rich and then get burned when the pump goes dump. It's really an amoral thing and emotion doesn't belong in the calculation.
without going too far down the AAL rabbit hole, their earnings were up 8% 2019 over 2018. Their P/E was < 10 then. And they paid a 5% yield.
Airlines lost gobs of money in 2020 for one reason, a clear reason - Covid shut down travel. Sure, most of 2020 travel will not be "made up" in 2021 or 2022, but people will be getting on airplanes soon enough. And the airlines have/will be getting their share of $500B of low-interest gov't loans for all their losses.
And yes, the typical/stereotypical day-trader is hoping for his 1/2% daily slice and hoping he can do it day after day, or at least at the end of the year he's made 3x the market.
I highly, highly suggest you both read the Wallstreetbets subreddit to get a better understanding of where a lot of people's mindset is at with regards to GameStop. A lot of what I have read on that subreddit has nothing to do with people wanting to make a buck or a profit.
All lot of them are going in, fully knowing, that all the money they put on Gamestop can get wiped out, but they don't care. They don't care because they want to squeeze the family jewels of the hedge fund elites to get back at a system they percieve to have as a separate set of rules for your everyday plebes vs those at the top, which to them, was was very apparent with regards to what happened to Robinhood and other firms preventing the buy of GameStop.
Now as far as what percentage of all retail investors have this mindset, who knows. But it seems many are putting money down with full knowledge that their money will be a loss. And wether it's right or wrong, to them it's literally what The Joker said in The Dark Knight: " It's not about moneys, it's about sending a message"
If 100K people want to donate $100 or $1,000 to make their point, so be it. I think it's great. From what I've seen (some videos) there's encouragement to keep it up/buy more, which is where an unlicensed/unregistered "broker" gets in trouble.
If Robinhood is selling shares, that's big trouble ... but how much money do THEY have? I suppose with some attorneys, you'd be able to tie the hedge funds buying the other side and truly bankrupt them too.
without going too far down the AAL rabbit hole, their earnings were up 8% 2019 over 2018. Their P/E was < 10 then. And they paid a 5% yield.
Airlines lost gobs of money in 2020 for one reason, a clear reason - Covid shut down travel. Sure, most of 2020 travel will not be "made up" in 2021 or 2022, but people will be getting on airplanes soon enough. And the airlines have/will be getting their share of $500B of low-interest gov't loans for all their losses.
And yes, the typical/stereotypical day-trader is hoping for his 1/2% daily slice and hoping he can do it day after day, or at least at the end of the year he's made 3x the market.
The question is really can American survive 2020 and 2021. Maybe. Most of their debt is aircraft and those are pretty much useless. Nobody wants airplanes right now. There's really no upside to them going bankrupt to anyone. Either they can make their debt payments or they can't. It's not like there's creditors banging on the doors for their money because, well, it's a stone right now that has nothing of value and even if they can't make their debt payments now hopefully they can next year which is the best their going to do.
Maybe Bidens Sec of the treasury will help the little guy.... Opps maybe not, it appears she is busy buying a new mansion with $800,000 she got from the Citadel hedge fund for a "speaking Fee"
Guess the other guy's SecTreas would have been better? Mnuchin literally is a hedge fund manager.
Now we know why certain Dem pols were talking about neo nazis on reddit, they will soon be de_platformed by bezo's or one of the other tech lords.
How dare the proles make sport of the nobility.
The reddit group was an attack on hedge fund operators. Thats a both side of the aisle entity. Shutting them down was to protect the hedge fund gys,
It will be really interesting to see if the hedge funds try to double down and take some huge short positions in the next week or two to recoup their losses. If the little guy can hold long enough, or even buy more shares, it could wipe out a hedge fund.
The big boys got caught with their pants down, shorting more shares than available to buy. But now they don't want to play by the rules and take the infinite losses on a squeeze. So they work with the powers that be to restrict buying by the little guy. Total manipulation, and I hope there's an investigation to expose it.
We don't need an investigation to expose it -- they did it right out in the open for everyone to see. And the fact they felt comfortable enough to think they'll get away with it doesn't give me a very good feeling about the current state of the rule of law in this country.
We don't need an investigation to expose it -- they did it right out in the open for everyone to see. And the fact they felt comfortable enough to think they'll get away with it doesn't give me a very good feeling about the current state of the rule of law in this country.
Because there's nothing else for them to do, right?? Like maybe pass a stimulus bill maybe? /sarcasm
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