Shorting has entered the political arena

[sekker]

With today's unprecedented block of common investors to buy and sell some stocks by online brokerage firms, while not blocking hedge funds, we are now in the political world.

There are already calls for a Congressional inquiry, according to AOC on Twitter.

Happened to be checking Musk's twitter thread around SpaceX launch, he is sharing some key views on stock shorting too (he thinks it should be illegal).

I think the key question is whether the average person is truly allowed to have the same access to stocks as banks and wealthier investors.

Right now, I cannot believe Wall Street is going to win here. Short Sellers provide very little value to society, and they cause a LOT of headache.

[cbelt3]

r/wallstreetbets is a mad herd of people who have completely bankrupted a hedge fund and a bank. And made a few thousand millionaires. And now the wall street machine is fighting back. It's a classic swarm approach and has worked.

And now Wall Street is fighting back and is doing ALL kinds of weird and 'this should be illegal' stuff.

With the Democrats in control, I have high hopes that this event may produce some serious rule changes. Hopefully in favor of the little guys. Because in the age of the internet, the little guys have as much smarts as the big guys.

[sekker]

More here.

And worse for Wall Street, there is going to be a formal 'review of the stock market.'

https://www.cnbc.com/2021/01/28/gamestop...reeze.html

RobinHood should have let this ride.

[Acer]

Oops, the unwashed masses crashed the rich people's dinner party. Capitalism for me, but not for thee.

[Lemon Drop]

Did the reddit people violate any laws?

[sekker]

Lemon Drop wrote:
Did the reddit people violate any laws?

I don't think so, but I do not think RobinHood did either. Nor the hedge funds.

That's because this whole are is largely unregulated.

This is about to change.

[sekker]

Acer wrote:
Oops, the unwashed masses crashed the rich people's dinner party. Capitalism for me, but not for thee.

Yep.

An inevitable outcome of trading costs going to zero, too.

I sure hope this also ends up with an end of superfast trading.

Maybe every trade has to cost 0.1 cent? Would entirely transform digital Wall Street.

[Acer]

IIRC, the arrival of fast, free, remote day-trading was a big part of the 1990's bubble and it's stratospheric IPOs.

[hal]

It appears that 100s of people joining together can dictate the market. If this is allowed to stand, these groups will grow to 1000s then millions. Then there will be no marketplace at all. If this isn't illegal collusion, it should be.

I don't see an equivalence of this group and a hedge fund. This is a mob against a single entity.

[sekker]

hal wrote:
It appears that 100s of people joining together can dictate the market. If this is allowed to stand, these groups will grow to 1000s then millions. Then there will be no marketplace at all. If this isn't illegal collusion, it should be.

I don't see an equivalence of this group and a hedge fund. This is a mob against a single entity.

Non-sense. There is no law that requires hedge funds to be financially viable. Most of the 'mob' would lose money if there were no short sellers.

I have a simple test - if the retail traders who bet against the company did not exist, would the 'mob' lose money? If so, there is no reason for laws as the market will protect most against this behavior.

Simple - if banks or fund managers don't want to lose money betting on failure, they can just stop shorting stocks.