Stock market is a "fully-fledged epic bubble" and will burst
Discussion
MikeKite said:
DaveA8 said:
Short selling has probably saved a lot of people a lot of money over the years, anybody who has ever invested in a vehicle that invests in a Hedge Fund will have been long/short.
For me the Short sellers here, if they have suffered, only suffered because they were greedy or had poor controls.
The writing was on the wall early last week and if Citron didn't think expansively then, they're not much good.
There is enough instruments and options in US stocks to cover, if they acted quickly and decisively.
This is a superb lesson for us all both long and short,
a stitch in time saves 9
"anybody who has ever invested in a vehicle that invests in a Hedge Fund will have been long/short."For me the Short sellers here, if they have suffered, only suffered because they were greedy or had poor controls.
The writing was on the wall early last week and if Citron didn't think expansively then, they're not much good.
There is enough instruments and options in US stocks to cover, if they acted quickly and decisively.
This is a superb lesson for us all both long and short,
a stitch in time saves 9
Not necessarily
Corrected by the underlying principle remains the same, the vast majority of Hedge Funds are long short funds at varying times
DonkeyApple said:
Clive Milk said:
I think it is more a question of stability than manipulation here.
My points would be
1. You have a system of hedging that allows this to happen, why do the authorities not change that?
2, If you think it is manipulation how do you stop it? We can't go back to 1980 and making read page 18 of the Daily Telegraph to see what the share prices are.
Personally I am an old fashioned investor who believes putting money into companies with good ethical management and good products, but I understand that people will not be like that if the market allows them, on both sides.
Re 1 what would you change?My points would be
1. You have a system of hedging that allows this to happen, why do the authorities not change that?
2, If you think it is manipulation how do you stop it? We can't go back to 1980 and making read page 18 of the Daily Telegraph to see what the share prices are.
Personally I am an old fashioned investor who believes putting money into companies with good ethical management and good products, but I understand that people will not be like that if the market allows them, on both sides.
Re 2, there are laws re manipulation. If the collusion of retail punters acting as a concert to deliberately manipulate the market becomes a relevant new phenomena then you push the issue into the executors to control and if those portals are offshore then it falls to the onshore executors that facilities their flow.
ferrisbueller said:
That's fair. I have a T212 account because my share trading platforms don't allow access to certain funds and shares I wanted to invest in. I've been watching GME but not partaking. I've had numerous alerts about trading limitations for GME and AMC.
Could you expand on what you've said above please? Given these are share trading accounts, not CFDs, including ISAs, that appear to be unable to buy shares, shouldn't they be able to make the trade?
These new share trading platforms don't execute themselves on the underlying exchange. If they did they would lose money as the fees they would pay the exchange are greater than the fees they can charge their clients. This is because they have built their client book on the back of ultra low visible fees. Could you expand on what you've said above please? Given these are share trading accounts, not CFDs, including ISAs, that appear to be unable to buy shares, shouldn't they be able to make the trade?
They have been able to do this because instead of taking a client order and physically executing it directly into the exchange at the quoted exchange price and levying an explicit commission they instead sell that client trade to a non exchange destination. That destination can make a quote that is different to the underlying exchange and make a nice turn. From that turn they pay a kickback to the owner of the client that is larger than that broker could charge the end client directly.
If we look at those destinations, they also operate as much as possible as a B book operator, not hedging the general flow but sticking it all in a bucket to naturally hedge against itself and where risk limits are exceeded they will specifically hedge on the actual exchange. The mechanism works well in normal market conditions but breaks down in periods of high volatility and low liquidity as they can't hedge. They must hedge out the risk but they cannot get the stock from the exchange because their volumes exceed what's available.
There are even 'brokers' who claim that their clients are trading in physical but aren't and are hedging nothing and delivering OTCs not physical to their clients. You can spot these firms because they don't charge Stamp duty. They don't need to because there is no physical execution going on. In reality they are delivering unleveraged CFDs off their own book. For those firms their liquidity is purely in-house and nothing to do with the real market. In fast events they have no liquidity so must close their book off to customers.
When this happens across a whole set of markets such as during a big general sell off then they will just turn their platform off to block client flow.
I don't agree that it's market manipulation. There was a really good explanation in a Bloomberg newsletter about why it isn't - and the key is that people are not trading on insider information, nor are they colluding to buy or sell. It's a few people on the internet expressing their opinions as to why the price should go up, and everyone else makes their own decisions. The Bloomberg guy compared it to the - perfectly legal - Wall Street dinners where individuals and companies suggest stocks and funds to invest in, and why they might hold the positions they do. It's not an invite to trade, it's not collusion, it's not illegal - it's just people saying this is what I think and why. If other people then invest on the back of that then so be it. The SEC did look at such a practice a few years ago and found no wrongdoing.
The only difference is that anyone can read the internet, whereas only a select few attend such dinners.
The only difference is that anyone can read the internet, whereas only a select few attend such dinners.
DonkeyApple said:
Clive Milk said:
I think it is more a question of stability than manipulation here.
My points would be
1. You have a system of hedging that allows this to happen, why do the authorities not change that?
2, If you think it is manipulation how do you stop it? We can't go back to 1980 and making read page 18 of the Daily Telegraph to see what the share prices are.
Personally I am an old fashioned investor who believes putting money into companies with good ethical management and good products, but I understand that people will not be like that if the market allows them, on both sides.
Re 1 what would you change?My points would be
1. You have a system of hedging that allows this to happen, why do the authorities not change that?
2, If you think it is manipulation how do you stop it? We can't go back to 1980 and making read page 18 of the Daily Telegraph to see what the share prices are.
Personally I am an old fashioned investor who believes putting money into companies with good ethical management and good products, but I understand that people will not be like that if the market allows them, on both sides.
Re 2, there are laws re manipulation. If the collusion of retail punters acting as a concert to deliberately manipulate the market becomes a relevant new phenomena then you push the issue into the executors to control and if those portals are offshore then it falls to the onshore executors that facilities their flow.
I was thinking about your apt point about Elon Musk being two faced about short sellers, that was spot on. The thing is that fans of Tesla cars have also acted in a similar, if less rude and in your face, way over the months in using the power of social media to "buy the dip" to give the hedgers heavy losses in Tesla. They only concentrated on one company rather than just multiple. Would you consider them market manipulators? It could be a fluid definition nowadays.....
It's an interesting topic and may only get bigger over time as technology advances. In the meantime rather than market manipulators I'll call them the Online Investment Club who drive the market, that is more accurate in my view
Or perhaps most succinctly... The Reddit Whale
Edited by Clive Milk on Thursday 28th January 12:41
Condi said:
Manipulation and collision, by it's very nature, is done without the market knowing what the plan is. If you discuss the plan in public I fail to see how that can be manipulation or collusion.
Agreed, it has now become a trend on how to buy stocks, just buy any shorted, so a market shift, rather than collusion.For instance
https://www.foxbusiness.com/markets/could-american...
"Another user chimed in with agreement, writing "Might hit $30 tomorrow with this market. I doubt the big traders will let this opportunity pass them again."
However, not everyone on the forum agreed that the airline -- which number one in carrying passengers in 2019 before the pandemic hits -- would be a safe bet.
"Do what you want with your money, but AAL is a lot bigger than GME," the user said. "Airlines have been showing bad earnings so far and tomorrow could be bad for American. Don't forget that GME and AMC started with good news."
That's not collusion.
Check out the AAL futures price today. It is sucking money out of the non shorted market though, so I am suffering with my "standard" portfolio.....
Edited by Clive Milk on Thursday 28th January 13:07
Condi said:
Manipulation and collision, by it's very nature, is done without the market knowing what the plan is. If you discuss the plan in public I fail to see how that can be manipulation or collusion.
Because in this case you are using the collective buying power of that public to achieve your goals. untakenname said:
That's not stopping people from closing positions at all. It's stopping any new shorts while simultaneously recognising that there is limited liquidity so trying to ensure that closing of long positions is done in an orderly manner. Interesting article, if like me you are clueless about all this
https://marketsweekly.ghost.io/what-happened-with-...
https://marketsweekly.ghost.io/what-happened-with-...
Anyone care to forecast what affect this will have on the markets?
https://www.newyorkfed.org/markets/opolicy/operati...
Does it mean they are just going to stop the scheduled injections? Ad-hoc as required can still be done and of course reparations?
https://www.newyorkfed.org/markets/opolicy/operati...
Does it mean they are just going to stop the scheduled injections? Ad-hoc as required can still be done and of course reparations?
Condi said:
Manipulation and collision, by it's very nature, is done without the market knowing what the plan is. If you discuss the plan in public I fail to see how that can be manipulation or collusion.
I don't think that's right. Market manipulation is fundamentally about actual behaviour and doesn't need to be based on any secret agreement. Take, for example, the Bunker Hunt situation I mentioned this morning where everybody in the silver market knew what he was doing. He still ended up bankrupted and with a huge fine.The concept is in some ways similar to the prohibition of retail price fixing. Tesco Waitrose and Sainsburys aren't allowed to hold a secret meeting and agree to fix prices. Similarly they're not allowed to sit quietly and operate on a basis where pricing strategies all follow each other. Imagine the three chains are all selling baked beans and competing fiercely so the price is low and nobody's making any profit. Then in its shops Tesco puts up the price of a tin of baked beans by 5p on a Monday, Waitrose "just happen" to do the same on Wednesday and Sainsburys "just happen" to do the same on Friday. If that becomes a clear pattern of actual behaviour they'll all be in the same trouble as would be the case with a specific price fixing agreement.
minimoog said:
Interesting article, if like me you are clueless about all this
https://marketsweekly.ghost.io/what-happened-with-...
What happened with GameStop?https://marketsweekly.ghost.io/what-happened-with-...
GameStop madness isn't David vs Goliath. It's Goliath vs. Goliath, with David as a fig leaf
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