Stock market is a scam....

[Authentic Nouveau]

Their brand of socialism will be much better.

I'm stocking up now

The uneducated socialists say stock market is a scam. but they want the wealth shared. Give us your money.

 

[1776]

I'll say it for the hundreth time. Only the house and insiders win.....

The concept of shorting sounds like a recipe for disaster, where the losses are unlimited.....Who participates in shorting? People that enjoy high risk(have money to burn), and the regular joe that cant afford to buy stocks.

So basically Robinhood, seems to be a place that attracts amatuer stock traders. I'd assume who got burnt the most is the regular people that shorted the stock, not the Hedge Fund, as the Hedge Fund got bailed out.

Even Elon Musk called shorting a scam, and only legal for vestigal purposes.

Sure you can make billions short selling but again the risk is high, therefore people lose more money then they make.

But all Political saber rattling is (for show), they know who their masters are. All they are doing is trying to save the public faith in the stock market(just like the public faith in elections).

I've heard no talk of shutting down this predatory investing(shorting)......

I wouldn't say the stock market is a scam.
Like most things, people with more capital have greater advantages. If you have a $1 million account, you are more likely to spend $200/mo for real time news releases and a data platform that gives more insight to in depth market activity. You would also have better access to margin leverage and exotic derivatives.

No different than a housing market where, if you had a $250k income and $1 million in assets, you could better utilize leverage to buy a more expensive home with less down payment and a better rate than a guy with no savings and making $30k. Much of these advantages are risk adjusted, thats all.

In theory, shorting stocks isn't nefarious at all. It's just another way for someone to profit off what they see as a mispricing of an asset. With Gamestop trading at $200-400, there is no discounted cash flow analysis that justifies such a price given Gamestop's deteriorating earnings and assets. Sure, its "risky", but was buying a stock like Amazon or Tesla when they were burning through cash and issuing more debt and equity with no earnings....or buying Gamestop stock at $100/share!

The problem with shorting stocks is that due to the delay in settlement, the same stock that was borrowed/shorted could be borrowed, shorted to yet another speculator. That could be cleaned up with updating settlement procedures to same day settlement.

 

[Thistle]

I wouldn't say the stock market is a scam.
Like most things, people with more capital have greater advantages. If you have a $1 million account, you are more likely to spend $200/mo for real time news releases and a data platform that gives more insight to in depth market activity. You would also have better access to margin leverage and exotic derivatives.

No different than a housing market where, if you had a $250k income and $1 million in assets, you could better utilize leverage to buy a more expensive home with less down payment and a better rate than a guy with no savings and making $30k. Much of these advantages are risk adjusted, thats all.

In theory, shorting stocks isn't nefarious at all. It's just another way for someone to profit off what they see as a mispricing of an asset. With Gamestop trading at $200-400, there is no discounted cash flow analysis that justifies such a price given Gamestop's deteriorating earnings and assets. Sure, its "risky", but was buying a stock like Amazon or Tesla when they were burning through cash and issuing more debt and equity with no earnings....or buying Gamestop stock at $100/share!

The problem with shorting stocks is that due to the delay in settlement, the same stock that was borrowed/shorted could be borrowed, shorted to yet another speculator. That could be cleaned up with updating settlement procedures to same day settlement.

And I think in most firms' hypothecation agreements the firm at its option can forcibly buy you in if they need to have a stock back in its' original account. Of course you understand ther reluctance to do that particularly if it would create an enormous loss.

 

[1776]

And I think in most firms' hypothecation agreements the firm at its option can forcibly buy you in if they need to have a stock back in its' original account. Of course you understand ther reluctance to do that particularly if it would create an enormous loss.

True, but like all business contracts, you should read the fine print before signing!
I've never seen such an agreement which allows a firm to forcibly call back a short position for any vague reason. It's almost always tied to margin/leverage exposure by the borrower. Some of these newer, less chaptalized firms like Robin Hoodwink may well have some non-traditional contracts...wouldnt shock me.

 

[Mike McK]

Fine for everyone? How about the ones that lost their homes and destroyed their families gambling their life savings?

If they gambled their life savings, then that's their own fault.

 

[Thistle]

True, but like all business contracts, you should read the fine print before signing!
I've never seen such an agreement which allows a firm to forcibly call back a short position for any vague reason. It's almost always tied to margin/leverage exposure by the borrower. Some of these newer, less chaptalized firms like Robin Hoodwink may well have some non-traditional contracts...wouldnt shock me.

Well, it's there. The reason being is that they may have lent out all their shares for which they have hypothecation agreements, and the actual owner wants to sell his shares for some reason. He has an absolute right to sell his shares any time he wants. So they will have to find someone who has the shares short, buy that fellow in, and deliver those share to the guy who wants to sell, who is long the stock, and wants to be flat. If your broker has not advised you of this risk, he's not done you any favors.

 

[1776]

Well, it's there. The reason being is that they may have lent out all their shares for which they have hypothecation agreements, and the actual owner wants to sell his shares for some reason. He has an absolute right to sell his shares any time he wants. So they will have to find someone who has the shares short, buy that fellow in, and deliver those share to the guy who wants to sell, who is long the stock, and wants to be flat. If your broker has not advised you of this risk, he's not done you any favors.

Yes....that's all true and is part of the risk of shorting. But its a rare occurrence. If you are experienced enough to short stocks, you should know how to check the market liquidity of the stock, the short ratio and available shares of the stock and to know if your broker is a market maker with its own inventory of the stock. When you buy a stock, you risk losing money because the company goes bankrupt, pisses away assets while taking on more debt, or dilutes your position by selling more shares. More people lose more money buying stocks than shorting...its just that shorting is more volatile.

Unfortunately, we have an influx of RobinHooders reminiscing about waiting in line at Gamestop at midnight for the newest Call of Duty release and they buy into a narrative of killing hedge funds and saving Gamestop but they dont even know that 140% of shares were short or what that even means. Haha!

 

[Thistle]

Yes....that's all true and is part of the risk of shorting. But its a rare occurrence. If you are experienced enough to short stocks, you should know how to check the market liquidity of the stock, the short ratio and available shares of the stock and to know if your broker is a market maker with its own inventory of the stock. When you buy a stock, you risk losing money because the company goes bankrupt, pisses away assets while taking on more debt, or dilutes your position by selling more shares. More people lose more money buying stocks than shorting...its just that shorting is more volatile.

Unfortunately, we have an influx of RobinHooders reminiscing about waiting in line at Gamestop at midnight for the newest Call of Duty release and they buy into a narrative of killing hedge funds and saving Gamestop but they dont even know that 140% of shares were short or what that even means. Haha!

Whats that old expression about shorting, it's like picking up nickels in front of a steamroller?

 

[1776]

Shorting Gamestop 3 months ago at $20 was a nickel in front of a bulldozer.
Shorting 1 month ago at $400 was like taking candy from a baby.
It's all relative! ;-)

 

[Thistle]

Shorting Gamestop 3 months ago at $20 was a nickel in front of a bulldozer.
Shorting 1 month ago at $400 was like taking candy from a baby.
It's all relative! ;-)

?

 

[wiseones2cents]

You don't have a clue on what Quants do.

My dad was a farmer. Trying to convince him owning bank stock which had a solid cash dividend history for 100 years and a better yield was better than the same bank offered in the Trust Department for his investments after fees.
Owning US savings bonds is a gamble.

If the yield is less than inflation, you lose.
Just to rub it in. Your Canadian dollar is a loser. Loser. Down 20% in 8 years.

And you dont have a clue what your talking about. The market is a scam looking for suckers.

What does that have to do with the facty millions of people have lost their shirt?lol

Yes the Canadian dollar was artificially lowered to facilitate NAFTA.

 

[wiseones2cents]

What's wrong with you?

Nothing at all. Whats wrong? Does the truth hurt?

 

[wiseones2cents]

I wouldn't say the stock market is a scam.
Like most things, people with more capital have greater advantages. If you have a $1 million account, you are more likely to spend $200/mo for real time news releases and a data platform that gives more insight to in depth market activity. You would also have better access to margin leverage and exotic derivatives.

No different than a housing market where, if you had a $250k income and $1 million in assets, you could better utilize leverage to buy a more expensive home with less down payment and a better rate than a guy with no savings and making $30k. Much of these advantages are risk adjusted, thats all.

In theory, shorting stocks isn't nefarious at all. It's just another way for someone to profit off what they see as a mispricing of an asset. With Gamestop trading at $200-400, there is no discounted cash flow analysis that justifies such a price given Gamestop's deteriorating earnings and assets. Sure, its "risky", but was buying a stock like Amazon or Tesla when they were burning through cash and issuing more debt and equity with no earnings....or buying Gamestop stock at $100/share!

The problem with shorting stocks is that due to the delay in settlement, the same stock that was borrowed/shorted could be borrowed, shorted to yet another speculator. That could be cleaned up with updating settlement procedures to same day settlement.

It is indeed a scam. Just like crypto currencies, and the entire global economy. It has no real value backing it. The stock market is run on puire speculation. More people buy, the higher the stock goes. The more people that sell the lower the stock goes. Therefore people that can afford to buy and sell large stocks, can manipulate the market at will. If your an insider you can make millions without building a sweat. More people are becoming millionaires without lifting a finger. If your an insider, the market is a gold mine. if your not an insider, your losing your hard earned money....

 

[1776]

It is indeed a scam. Just like crypto currencies, and the entire global economy. It has no real value backing it. The stock market is run on pure speculation. More people buy, the higher the stock goes. The more people that sell the lower the stock goes. Therefore people that can afford to buy and sell large stocks, can manipulate the market at will. If your an insider you can make millions without building a sweat. More people are becoming millionaires without lifting a finger. If your an insider, the market is a gold mine. if your not an insider, your losing your hard earned money....

That's silly. Seriously...that statement is very shortsighted. There's a scam, but half of the scam is tricking you into blaming the wrong party.

A corporation is a legally registered, individual entity granted the same legal protections as individual citizens. The corporation is organized with a set number of shares representing fractional ownership. By the time a company has reached IPO status, they've already established a business model and financial performance which has been fully audited and scrutinized before allowed to trade in public markets.
Corporations have extensive financial reporting and auditing requirements EVERY 3 MONTHS. Their operations and financials are scrutinized by auditors, accountants, managers, investors and competitors. All of this information is available to the public.

You buy a stock hoping that the company may initially be unprofitable as it allocates all capital toward research, design, marketing and growing the business. Eventually they establish themselves as profitable enough to run/grow the business, pay all expenses, pay down debt and maybe even begin paying actual cash dividends directly to the shareholders.

In the beginning, the company is speculative and risky, so they issue 1 million shares at $1 each. 20 years later, they have sales of 100 million with maybe 20% net profit, $20 million/year and they pay out $2/share in cash dividends.
OBVIOUSLY each share is "worth" more than $1....but how much? Now we get into economic environment, market competition, growth rates, discounted cash flow analysist, etc. A market is nothing more than a public gathering of people selling and buying those sdhares and the prices represent the differing opinionms of all participants.

Someone sees a long term opportunity and wants the security of dividend income...and has a different fair value price than someone who sees a short term imbalance between available buyers and sellers...or someone who thinks the company's technology is vulnerable to a competitor.

The exchanges themselves are open exchanges with all participants' bid and ask offers open to mall market participants and each trade recorded and available to the public within minutes or seconds. Now, you can imagine that as global markets facilitate BILLIONS of trades each day, the cost and expertise of running such an operation is extremely expensive, so yes some of the data and access they provide costs money.

Yes. People with more capital have more leverage and more access. So what?
They can buy better houses, cars, food, cell phones, etc.
Did you know that over 70% of millionaires didnt become millionaires until around the age of 50 or later?

Thats why YOU should save and invest when you're young so you have better access to markets.

The scam is the US government and the Federal Reserve running a fractional reserve fiat currency based welfare/bailout state where they spend and spend and spend and spend....then print ludicrous amounts of money t with increasingly worthless dollars.to keep the drunken party going and maybe...someday....pay the debt with worthless dollars.

The decades of artificially low rates, quantitative easing and stimulus spending have created massive asset bubbles as the value of the dollar is crushed and the largest HOLDERS of dollars...yes, the rich....other corporations, other central banks, etc...they rush to spend those dollars on real assets.

So yes, the rich disproportionately benefit, but the stock market isnt the scam....its just one of the symptoms of the real scam.

 

[Authentic Nouveau]

That's silly. Seriously...that statement is very shortsighted. There's a scam, but half of the scam is tricking you into blaming the wrong party.

Corporations have extensive financial reporting and auditing requirements EVERY 3 MONTHS. Their operations and financials are scrutinized by auditors, accountants, managers, investors and competitors. All of this information is available to the public.

You buy a stock hoping that the company may initially be unprofitable as it allocates all capital toward research, design, marketing and growing the business. Eventually they establish themselves as profitable enough to run/grow the business, pay all expenses, pay down debt and maybe even begin paying actual cash dividends directly to the shareholders.

In the beginning, the company is speculative and risky, so they issue 1 million shares at $1 each. 20 years later, they have sales of 100 million with maybe 20% net profit, $20 million/year and they pay out $2/share in cash dividends.
OBVIOUSLY each share is "worth" more than $1....but how much? Now we get into economic environment, market competition, growth rates, discounted cash flow analysist, etc. A market is nothing more than a public gathering of people selling and buying those sdhares and the prices represent the differing opinionms of all participants.

Someone sees a long term opportunity and wants the security of dividend income...and has a different fair value price than someone who sees a short term imbalance between available buyers and sellers...or someone who thinks the company's technology is vulnerable to a competitor.

The exchanges themselves are open exchanges with all participants' bid and ask offers open to mall market participants and each trade recorded and available to the public within minutes or seconds. Now, you can imagine that as global markets facilitate BILLIONS of trades each day, the cost and expertise of running such an operation is extremely expensive, so yes some of the data and access they provide costs money.

Yes. People with more capital have more leverage and more access. So what?
They can buy better houses, cars, food, cell phones, etc.
Did you know that over 70% of millionaires didnt become millionaires until around the age of 50 or later?

Thats why YOU should save and invest when you're young so you have better access to markets.

The scam is the US government and the Federal Reserve running a fractional reserve fiat currency based welfare/bailout state where they spend and spend and spend and spend....then print ludicrous amounts of money t with increasingly worthless dollars.to keep the drunken party going and maybe...someday....pay the debt with worthless dollars.

The decades of artificially low rates, quantitative easing and stimulus spending have created massive asset bubbles as the value of the dollar is crushed and the largest HOLDERS of dollars...yes, the rich....other corporations, other central banks, etc...they rush to spend those dollars on real assets.

So yes, the rich disproportionately benefit, but the stock market isnt the scam....its just one of the symptoms of the real scam.

So the Federal Reserve is not audited and financials are not shared.
The real ugly is the permission for Chinese equities to be sold on our exchanges, They are not audited and do not meet reporting requirements.

Chinese equities remind me of the old Vancouver Exchange and its penny stock mining stocks.

 

[Authentic Nouveau]

And you dont have a clue what your talking about. The market is a scam looking for suckers.

What does that have to do with the facty millions of people have lost their shirt?lol

Yes the Canadian dollar was artificially lowered to facilitate NAFTA.

Suckers. And our adult children have stock that hit 58 dollars which was purchased for 32 cents a share in their trust funds.
How many years have I told you to save up 50 cents and look for Samuelsons econ 101 textbook at a garage sale.

 

[Thistle]

Shorting Gamestop 3 months ago at $20 was a nickel in front of a bulldozer.
Shorting 1 month ago at $400 was like taking candy from a baby.
It's all relative! ;-)

When you're looking at that chart that shows the all time high is 200, how do you know it's going to subsequently go to 400?

 

[Thistle]

That's silly. Seriously...that statement is very shortsighted. There's a scam, but half of the scam is tricking you into blaming the wrong party.

A corporation is a legally registered, individual entity granted the same legal protections as individual citizens. The corporation is organized with a set number of shares representing fractional ownership. By the time a company has reached IPO status, they've already established a business model and financial performance which has been fully audited and scrutinized before allowed to trade in public markets.
Corporations have extensive financial reporting and auditing requirements EVERY 3 MONTHS. Their operations and financials are scrutinized by auditors, accountants, managers, investors and competitors. All of this information is available to the public.

You buy a stock hoping that the company may initially be unprofitable as it allocates all capital toward research, design, marketing and growing the business. Eventually they establish themselves as profitable enough to run/grow the business, pay all expenses, pay down debt and maybe even begin paying actual cash dividends directly to the shareholders.

In the beginning, the company is speculative and risky, so they issue 1 million shares at $1 each. 20 years later, they have sales of 100 million with maybe 20% net profit, $20 million/year and they pay out $2/share in cash dividends.
OBVIOUSLY each share is "worth" more than $1....but how much? Now we get into economic environment, market competition, growth rates, discounted cash flow analysist, etc. A market is nothing more than a public gathering of people selling and buying those sdhares and the prices represent the differing opinionms of all participants.

Someone sees a long term opportunity and wants the security of dividend income...and has a different fair value price than someone who sees a short term imbalance between available buyers and sellers...or someone who thinks the company's technology is vulnerable to a competitor.

The exchanges themselves are open exchanges with all participants' bid and ask offers open to mall market participants and each trade recorded and available to the public within minutes or seconds. Now, you can imagine that as global markets facilitate BILLIONS of trades each day, the cost and expertise of running such an operation is extremely expensive, so yes some of the data and access they provide costs money.

Yes. People with more capital have more leverage and more access. So what?
They can buy better houses, cars, food, cell phones, etc.
Did you know that over 70% of millionaires didnt become millionaires until around the age of 50 or later?

Thats why YOU should save and invest when you're young so you have better access to markets.

The scam is the US government and the Federal Reserve running a fractional reserve fiat currency based welfare/bailout state where they spend and spend and spend and spend....then print ludicrous amounts of money t with increasingly worthless dollars.to keep the drunken party going and maybe...someday....pay the debt with worthless dollars.

The decades of artificially low rates, quantitative easing and stimulus spending have created massive asset bubbles as the value of the dollar is crushed and the largest HOLDERS of dollars...yes, the rich....other corporations, other central banks, etc...they rush to spend those dollars on real assets.

So yes, the rich disproportionately benefit, but the stock market isnt the scam....its just one of the symptoms of the real scam.

That's a very well written post. Anybody who's not familiar with market ought all to read it.

 

[1776]

When you're looking at that chart that shows the all time high is 200, how do you know it's going to subsequently go to 400?

You wouldn't. It was simply supply and demand. All the shorts were desperately scrambling to buy the stock to cover their positions and limit losses. Everyone in the market knew it so there were very few sellers as they all watched the mania and as the demand overwhelmed supply, the buyers had to bid up higher and higher to get someone t sell.

Same on the way down. Eventually everyone was done laughing at the shorts and realized GME was worth NOTHING CLOSE to $400 and they all rushed to sell before the euphoria ended.

Course, there were a lot of Reddit suckers who bought at $100-200 who arent very happy now. The mania is over, but the supply demand imbalance isnt resolved.

GME isnt worth $130. It will be under $50 within weeks/months.

 

[Thistle]

You wouldn't. It was simply supply and demand. All the shorts were desperately scrambling to buy the stock to cover their positions and limit losses. Everyone in the market knew it so there were very few sellers as they all watched the mania and as the demand overwhelmed supply, the buyers had to bid up higher and higher to get someone t sell.

Same on the way down. Eventually everyone was done laughing at the shorts and realized GME was worth NOTHING CLOSE to $400 and they all rushed to sell before the euphoria ended.

That's a fact.

Course, there were a lot of Reddit suckers who bought at $100-200 who arent very happy now. The mania is over, but the supply demand imbalance isnt resolved.

Well as I sit here on 4 March at 2:01 central time I'm seeing 130.51 which even a week and a half ago I'm not sure I would've believed. This has been one battle royale.

GME isnt worth $130. It will be under $50 within weeks/months.

I suppose the question is, is there any way to leverage their current market cap to raise money and adapt their market strategy to something is more likely to succeed in the long run? Perhaps a firm like Ladenburg Thalmann & Co. Inc., might be able to put together a syndicate to pull a deal like that off. That would strike me as center cut for a for a firm like that.