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Re: National, Regional and Local News

#46

Post by JazzNU »

dave g wrote: Sun Jan 24, 2021 2:02 am Hmmm. Mine came in the mail as a check. Do we have any verification of other people getting their stimulus money in VISA cards?

My mom got a VISA card back in late spring. We have no clue why she got a card and not a check. Entirely too many hoops to figure out for just the average person. I figured it out fine and came up with a plan for her to not lose much in the total, but honestly, it's a bad idea and they shouldn't use them. In theory, I think they might make sense and seem easy, ubt in practice it screws people out of some of the amount, and realizing you are going to lose money may not be obvious to all, especially senior citizens, functioning illiterates, and those without regular internet access. If you don't realize you'll be losing money with different transactions, you'll wind up losing even more than is necessary, which I'm guessing happened frequently.

If you do get a VISA card - read the fee sheet online. I believe I determined the best way would be to do one ATM withdraw for a few hundred, the first one was not subject to a fee. That let the amount fall below $1000, I believe that may have been the cap on a per transaction basis the first time. Then go to the bank and see a teller and ask for a full withdraw of the remaining amount, which would be a small one time fee.
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Re: National, Regional and Local News

#47

Post by ponchi101 »

The card I got (the example above) specifically stated I COULD NOT got to my bank and withdraw the money in one lump sum and therefore pay only one withdrawing fee.
I always have said that the VISA logo is a pigeon, not a dove. And you are the statue.
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Re: National, Regional and Local News

#48

Post by ti-amie »

Taking sticking it to the man to the next level. The stock is now trading at $370 a share.


What the Hell Is Going On With GameStop’s Stock?
How an army of Reddit users massively inflated the price of a flailing video game chain—in no small part to stick it to Wall Street.

By ALEX KIRSHNER
JAN 26, 202110:42 AM

In April, GameStop was a struggling video game and electronics retailer trying to sort out its future as the pandemic worsened consumer trends that were already working against it. The chain was losing money and staring down a long-underway shift in the gaming industry that pushed business away from GameStop’s brick-and-mortar model. (It turns out people don’t like walking into stores during a pandemic to buy games they could just download from home.) The company had posted $470 million in losses in 2019, eight years after reporting a $340 million profit. Right as the pandemic hit, it announced it would close 300 locations permanently. GameStop’s stock price on April 1 was $3.25.

It’s not clear things have improved much for GameStop. The company is actually closing more stores than it expected at the onset of the pandemic. But one thing has changed for the better: When trading ended on Monday, GameStop stock had hit $76.79—four times its price to end 2020 and 23 times its price from the early days of the pandemic. (The stock then jumped to $96.67 on Tuesday morning before dropping into the 80s as its roller-coaster run continued onward.)

GameStop has not, as far as anyone knows, completed the greatest comeback story in the history of free enterprise. But it has had one of the most memorable runs on the stock market ever. It’s a story that encapsulates quite a lot about life in 2021: the democratization of financial markets, the mobilization of a giant online community, and the ability of obsessed amateurs to alter reality when they put their minds to it, especially when there isn’t much else to do.

The tale of GameStop’s stock price—and the central role of a subreddit called r/WallStreetBets—will be taught in business schools one day, no matter how it ends. The stock had been in steady decline since late in 2015, when the company reported disappointing earnings. GameStop, which was founded in 1984, had a simple business model: selling video games and equipment out of its physical locations. That became less lucrative as it became more common for gamers to buy games online, generally from non-GameStop sources, and download them directly to their consoles or PCs. The pandemic crash in March brought the stock to an all-time low, and a slight rebound over the spring and summer lagged behind the major indexes.

In August, the well-known investor Ryan Cohen—founder of online pet food giant Chewy—took a 13 percent stake in GameStop. In November, he wrote a harshly worded letter to the company’s board, lambasting it for not keeping up with “the transition from physical hardware to digital streaming,” among other errors. He took specific aim at GameStop’s CEO and blamed the company for squandering billions of dollars and “a massive amount of market share.”

The letter generated a lot of press. By January, GameStop appointed Cohen and two associates from his investment company to serve on a newly expanded board. Cohen’s arrival turned GameStop into a “cult stock,” one financial analyst explained to Bloomberg News, where retail investors believed he’d be a corporate savior. Two days after the announcement that Cohen had joined the board, GameStop’s stock surged more than 50 percent, going from $20.42 to $31.40 after reaching as high as $38.65. That’s when the company’s story went from typical to bizarre.

Around this time, institutional investors, apparently including at least one well-known hedge fund, took out massive short positions against the stock, which trades as GME. These investors figured that amateur investors saw Cohen’s big name and ignored the difficult fundamentals facing the business, overvaluing the stock as they bought it up in droves. So the professional investors tried to make money off GME’s decline by borrowing the stock, selling it high, buying it back low, and pocketing the difference, minus the fees to borrow the stock.

Lots of investors tried to short-sell the stock. (How many investors have “long” and “short” positions is not difficult to figure out.) As of Monday, 71.2 million shares of GameStop stock involved a short position, per Bloomberg, more than the total amount of publicly tradable shares, something that’s only possible because not all shares of GME are available for purchase.

One group that noticed the shorts on the stock was r/WallStreetBets. The Wall Street speculation community has more than 2 million members, hundreds of thousands of whom are online at any given time, to say nothing of lurkers. In September, an enterprising subredditor had posted a seven-point treatise titled “Bankrupting Institutional Investors for Dummies, ft GameStop.” The subredditor noted the stock already had a significant short exposure (months before Cohen joined the board) and predicted that short sellers would be forced to abandon their positions and, in buying back their stocks, drive the price up. R/WallStreetBets users delighted in the idea and took it as a chance to egg one another on.

Hype around GME continued bubbling up around r/WallStreetBets over the ensuing weeks, from posters who apparently saw it all along as a profit opportunity. The stock’s boom has made some of them big money. The most famous is a user calling themselves “(expletive)” who had apparently turned a six-figure investment into nearly $14 million by this Monday.

Others may have just wanted to screw short sellers, who are by definition rooting for shareholders and companies to suffer. They’re also often considered to be sophisticated investors, cast against the determined amateurs populating internet forums. At the end of November, the subreddit ascertained that hedge fund Melvin Capital Management was shorting GameStop, and the community rallied with fury against the New York–based fund.

“When these boomers made their bet, GME wasn’t a big thing on WSB yet,” one poster wrote. “I don’t feel bad at all taking money from these rich greedy hedge fund managers.”

They’re not even playing with their own money,” another wrote.

“I’m an old millennial. I’m tired of getting screwed by the globalist elites,” said another. “This isn’t left or right republican or Democrat. It’s the 1% versus everyone else.”


Whether for profit or ideological reasons, the Redditors are winning. They’ve bought the hell out of GME, and short sellers have begun to abandon their positions en masse, leading the stock to go up even more as they buy it back. It’s a classic short squeeze. Melvin Capital was down 15 percent for the year on Jan. 22, according to the Wall Street Journal, leading the fund to take a $2.75 billion rescue package from other rich investors. On that day alone, short sellers against GameStop lost $1.6 billion, financial analytics firm S3 Partners said.

It’s not clear how the story ends. Some professional analysts think the stock is due for a crash. Citron Research managing partner Andrew Left has argued the stock will fall to $20 per share. He tried to explain his reasoning in a livestream last week but couldn’t because his Twitter account got locked after too many people tried to guess his password. He posted the video on YouTube and said GameStop backers were sending pizzas to his house and signing him up for dating profiles. Left decided to stop bashing GameStop, citing harassment by the “angry mob.”

It isn’t just a technological shift that has worked against GameStop. Gaming companies now offer subscription plans, like Xbox’s Game Pass, that have made individual game purchases obsolete for some players. Future consoles might not even have a slot for a disc, further pushing the industry into downloaded games. GameStop does have a loyal fan base that enjoys the experience of walking into a store and buying a title. It also has a large trade-in business, though it’s not clear how the post-pandemic world will affect that.

All of which is to say: GME’s future could go any number of ways, but the reason its stock price quadrupled in three and a half weeks isn’t that its business fundamentals are just that great. It’s that, under a strange set of colliding circumstances, one group of stock traders sees GameStop as the perfect weapon against another.

If this feels outrageous, it might only be because a bunch of supposedly unwashed Reddit users are involved. After all, GameStop isn’t the first stock to be subject to a giant short squeeze or to see its resulting value make little sense. When Porsche bought up a bunch of Volkswagen stock in 2008, short sellers scrambled to get out of their positions and briefly made VW the world’s most valuable company. It’s not clear why Porsche’s boardroom should have any more authority to dictate what happens in the market than a group of internet users operating in public view.

Certainly, GameStop isn’t the first stock to move heavily based on what a specific group of people has to say about it. Financial professionals spend all day talking about stocks on their Bloomberg terminals and yelling at one another on the phone about them. If one considers the Redditors to be untowardly moving the market by talking in public, aren’t professional traders doing the same when they talk in private? Is there any difference between internet dorks hyping a stock and some hedge fund magnate going on CNBC to explain why the market will do as he’s predicted?

Viewed through another lens, the rebels of r/WallStreetBets are doing old-fashioned internet organizing of the guerrilla kind you might find in politics today. TikTok teens and K-pop stans can sabotage the ticketing operation of a presidential rally. As long as there are enough amateur investors to throw weight around, they can decide whether a stock moves up or down. (Unfortunately, as with other internet hordes, some from this one have a taste for harassment.)

Viewed through still another lens, someone on Reddit who’s investing for profit is merely doing what professional Wall Streeters do every day. Anyone doing it to sabotage the pros on the other side of the GME deal is betting with their heart, not unlike internet gamblers betting on sports or presidential politics.

The GameStop saga isn’t just a lesson in the internet’s broadening of access to markets, but in how the pandemic has accelerated that trend. A significant share of the bets on GME’s stock going up have taken the shape of call options, where an investor pays a smaller amount up front for the right to buy a stock at a certain price by a certain date. For instance, the viral Redditor whose GameStop holdings are now worth nearly $14 million apparently spent $25,000 to buy options on 80,000 shares (at about 31 cents per share) that give them the right to buy the stock at $12 until April 16. The value of those options at the end of the day Monday was $5.2 million.*

Call options are not new, but they’ve become a smash hit among casual investors on the internet during the pandemic. As white-collar professionals sat cooped up in their homes and watched their disposable income grow with less to spend money on last spring and summer, user-friendly investment apps like Robinhood saw significant growth. Young traders reportedly gravitated toward options, which can generate quick windfalls but are riskier than standard stock purchases. (If you pay $3 for the right to buy a stock at a particular price, and the stock doesn’t exceed that price to give you a quick profit, then your three bucks were a total loss.) Plenty of inexperienced investors have lost their shirts this way during the pandemic. Others decided to buy options on GameStop, and some of them have made life-changing money.

Does any of this make sense? Not really. But it makes no less sense than the stock market itself sitting near record highs each day just as expiring federal unemployment benefits are pushing 8.1 million Americans into poverty and U.S. senators are balking at an enhanced stimulus package. It wasn’t the GameStop stock’s Reddit hype team that first decided the market needed little tether to the daily realities facing most people, or even to a specific video game retailer.

In other words, hate the game, not GameStop.

https://slate.com/technology/2021/01/ga ... s-gme.html
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Re: National, Regional and Local News

#49

Post by JazzNU »

Hate the game? I kinda love the game
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Re: National, Regional and Local News

#50

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“Do not grow old, no matter how long you live. Never cease to stand like curious children before the Great Mystery into which we were born.” Albert Einstein
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Re: National, Regional and Local News

#51

Post by ti-amie »

Sebastian
@SebZwO
I don't think "it's currently gamified" really gets to the point.

It was always a game. The usual players just aren't used to be on the losing end.

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Re: National, Regional and Local News

#52

Post by ponchi101 »

Kurt Vonnegut Jr said it ages ago. They are "The Casinos in Wall Street".
About driving a hedge fund that SHORTED a company into insolvency: awright. Can you do another?
(Shorting should be illegal. It is basically betting that somebody else will go bankrupt, and profiting from that).
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Re: National, Regional and Local News

#53

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I'm betting there will be regulations put into effect to stop this from happening again. The Republicans will push for them and they'll be in effect before stimulus checks and improved UI are.
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Re: National, Regional and Local News

#54

Post by ponchi101 »

Don't think they can. Shorting is one of the way that these scum make a lot of money. I would love for shorting to be outlawed, but Wall Street loves it too much.
They will find a way to recoup their losses. They always do.
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Re: National, Regional and Local News

#55

Post by JazzNU »

It's not just GameStop, they started doing it with other retail stocks. Twitter does these event summaries and then related Tweets so you can catch up on what is happening. But their summary is the most complete this time, so copying it here so you can have an idea of the other stocks.


Shares of AMC Entertainment surge more than 200% as feverish buying continues from retail traders

On Wednesday morning, AMC Entertainment shares increased by more than 200% during premarket trading and hit more than $15 per share, nearly seven times the average analyst price target. AMC joins GameStop, BlackBerry, Bed Bath & Beyond, Etsy and a list of heavily shorted stocks that have recently seen eye-opening gains thanks to encouragement from individual investors on Reddit’s WallStreetBets. Hedge funds that are short on the other side have been rushing to cover their losses.
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Re: National, Regional and Local News

#56

Post by ti-amie »

This is how I understand shorting.

I buy a widget worth $5. Someone comes along and says it's really worth $10 when it's not. This someone gets people to buy at the $10 rate. I then sell when it hits $10 making, about a $3.00 profit after fees and taxes. So they do this on a massive scale and make money because the widget's value will fall back to $5.00 or less?

I really don't understand. And I'm sure my example is wrong.
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Re: National, Regional and Local News

#57

Post by ponchi101 »

JazzNU wrote: Thu Jan 28, 2021 12:26 am It's not just GameStop, they started doing it with other retail stocks. Twitter does these event summaries and then related Tweets so you can catch up on what is happening. But their summary is the most complete this time, so copying it here so you can have an idea of the other stocks.


Shares of AMC Entertainment surge more than 200% as feverish buying continues from retail traders

On Wednesday morning, AMC Entertainment shares increased by more than 200% during premarket trading and hit more than $15 per share, nearly seven times the average analyst price target. AMC joins GameStop, BlackBerry, Bed Bath & Beyond, Etsy and a list of heavily shorted stocks that have recently seen eye-opening gains thanks to encouragement from individual investors on Reddit’s WallStreetBets. Hedge funds that are short on the other side have been rushing to cover their losses.
Photo via @Forbes
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Re: National, Regional and Local News

#58

Post by JazzNU »

ti-amie wrote: Thu Jan 28, 2021 12:28 am This is how I understand shorting.

I buy a widget worth $5. Someone comes along and says it's really worth $10 when it's not. This someone gets people to buy at the $10 rate. I then sell when it hits $10 making, about a $3.00 profit after fees and taxes. So they do this on a massive scale and make money because the widget's value will fall back to $5.00 or less?

I really don't understand. And I'm sure my example is wrong.

Your example is mostly right. Shorting means you are investing because instead of thinking that it will gain in price, you think it will lose and you are trying to make money off of those losses. It is a very risky trading strategy, because as happened today, there is not technically a ceiling that a stock ceiling it can reach, so while you're betting it will lose in value and thus make you money, if you're wrong, it can really come back to bite you. Typically, the amount you would lose isn't going to be as significant as this of course, because swings in prices aren't usually anywhere near this dramatic. For this GameStop situation, you had investors such as the main hedge fund they took down, heavily invested in shorting the stock and so the losses were monumental.

But it's not necessarily that the company isn't worth the stock price all of the time. A lot of things go into the stock price. Many times, because of the nature of these assholes, they know what they are doing. If there's a lot of short selling for a stock, that alone can help to drive down a stock price in the short term at least, so they are helping to drive the stock in the direction they are looking to go. But they are also aware of other behaviors of the market or corporate owners and taking advantage of them.


Also, speaking from entirely too much knowledge of this, let me say, the last 3 months is hardly the time to claim GameStop is an extinct and dying retailer. They've had some of their best sales months recently, after struggling like other retailers during the early months of the pandemic. They've closed hundreds of stores in the last year, and they needed to, they seemed to have a Blockbuster kind of location store model where they were everywhere and that's truly not necessary anymore, so that was probably a much needed kick they needed to trim their store numbers. But as one of the main PS5 retailers in the US, they've been rebounding significantly since November. Look up the ridiculous PS5 craze if you don't have a teenager in your life and you haven't been stuck trying to score the ungettable console. GameStop has had regular drops of stocks (today included, I was a sucker yet again refreshing that damn site constantly trying to get one) and have been slammed the entire holiday season selling out of PS5s and X-Box consoles the moment they are out. Literally not figuratively. They are sold out in matter of seconds. So it's interesting that the stock price appeared to barely reflect this. Definitely a split between dealing with them in the real world and what Wall Street says about them.
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Re: National, Regional and Local News

#59

Post by mmmm8 »

ti-amie wrote: Wed Jan 27, 2021 11:58 pm I'm betting there will be regulations put into effect to stop this from happening again. The Republicans will push for them and they'll be in effect before stimulus checks and improved UI are.
ponchi101 wrote: Thu Jan 28, 2021 12:08 am Don't think they can. Shorting is one of the way that these scum make a lot of money. I would love for shorting to be outlawed, but Wall Street loves it too much.
They will find a way to recoup their losses. They always do.
I think Ti was talking about outlawing this type of collusion among small investors rather than outlawing short-selling?

I find the whole situation hilarious.
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Re: National, Regional and Local News

#60

Post by ponchi101 »

Shorting 101.
Investor A has stock in some company.
Hedge fund B wants to short it. So, HFB "borrows" the stock, at a price, plus a fee to Investor A. They commit to return the stock by certain date.
HFB then sells the stock in the market. This is done at a price, of course.
Because HFB felt that the stock would drop in price, by the time they have to return the stock to Investor A, they have to go back and buy the stock again. If the stock has indeed dropped in price, that is where they make the profit. They sold for (example) $100 and bought back at $20. The difference is all theirs.
Because of this bet that the stock would drop is what drives the transaction, HFB has a huge interest in seeing the stock price drop. Remember, they are bound to return the stock, regardless of the price, to investor A. What used to be a correcting mechanism has now become a bet that profits from companies that go through financial pains and now, because the shorting is public, face the reality that people know somebody is betting they will bankrupt. HFB makes a huge profit the more the company suffers. So shorting has become predatory; HFB has the interest in seeing the stock (and the company) fail and as they are usually huge funds, they have the power for the company to do so. They succeed from the misery of others.
The catch in this gamestop saga is: they HAVE TO BUY THE STOCK BACK, REGARDLESS OF PRICE. So, if all these small investors gang together and drive the price UP, they will make a profit. They know that at a given date, somebody has to buy huge amounts of stock. Investor A could also be interested; after all, he will be receiving stock that is now way more valuable than when he lent it.
So the Hedge Fund is the one in the bind. Thousands of little piranhas are now biting the big shark, and it is ALL LEGAL. The Reddit People have done nothing more than buy stock, and hold it until a given day. And if WS or the SEC outlaw that, it would be the equivalent of outlawing the market.

So, for once, good for the little guys.

---0---
Been watching CNN this morning and none of the financial experts have said anything about this. They are only saying that some people will lose money, without explaining that it will be the hedge fund. Tiptoeing around the real subject.
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