Gotta admit, this post is making me start to root for the hedge funds.
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WA State just should rename itself Nanny State.
The good news is I won’t feel bad no matter who loses, unless they tank the whole economy and the most vulnerable lose - which is probably what’s going to happen.
I think WSB is actually Russia
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Well, remember that I was describing what happens for someone who’s short the stock - the broker is concerned that the stock price gets too high, so will naturally liquidate that position when the stock price gets really high. So you end up with people complaining - “I can’t believe my broker force covered my short right when the stock price was at its highest. So unfair!” Well, duh, when the stock price was at its highest, your equity cushion was at its lowest and the broker was most at risk, so that’s when they acted.
The flip side is when you buy stocks on margin, which I’m pretty sure is what most of the RH investors are complaining about. In that case, the equity cushion operates in reverse - it gets smaller and smaller as the value of the shares goes down. So similar to the above, it’s not suprising that RH would force close those margin long positions at the lows of the day - that’s precisely when the equity cushions were the lowest (violating maintenance levels) and the brokerage is most at risk. So they sell the stock to make sure the account has sufficient funds to pay back the margin loan.
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In general (as I’m sure there’s complexity), do hedge funds operate under these same constraints? Anybody on Wall Street texting these hedge fund bros, hey you need to like venmo us another couple of yards (just learned that’s slang for billion) or we’re closing you out of GME?
I mostly don’t know about the intricacies of hedge funds. But generally, I’d say yes - the hedge fund is borrowing either cash or shares from someone if they’re levered up or have open short positions, and that counterparty has enormous incentive to monitor the fund and make sure they maintain sufficient collateral for those borrowings. How well that works in practice is something I don’t know anything about.
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My theory is that the political changes we wish for won’t happen without the sort of crisis tanks the economy. I had high hopes that COVID could cause that sort of crisis when the stock market went down momentarily, but it has since recovered and I guess a war is the only thing that can cause that crisis now.
I mean, Robinhood’s whole business model is openly collusion-y, so this isn’t a big leap.
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Right, this was the discussion that happened earlier in this thread. It doesn’t make any sense at all to me, even though @m_reed05 (I think) logged into Schwab and saw that message when he tried to enter a purchase. The only explanation I can think of is that they meant to create a 100% margin requirement for buying and holding GME, and a 300% margin requirement for a short position in GME.
Very curious to find out the answer, though.
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They are using the user’s cash funds as the collateral for the price slippage during the 2-day time to complete transactions from clearinghouse-broker because the clearinghouse doesn’t have enough cash on hand to handle an extra volatility event with so much volume. Here is link to video explaining Investing (aka GameStonk and other gambling events) - #9414 by anon3530961
Yes.
Also, the explanation from @anon3530961 would explain why Schwab may intentionally have imposed a 300% long requirement. It doesn’t smell right to me for a broker as large as Schwab, but I don’t know the settlement/clearinghouse mechanics well enough to say that with any confidence.
This is why people don’t listen to academics - we just pontificate about how things work in theory, then we’re utterly lost when the shit hits the fan in practice.
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My fear is that the political changes that come from a crisis will go the other way - to the end of our Democracy. It’s almost happening now.
Do we have any chance of winning if we maintain the status quo? Or do we need to introduce some variance to the equation?
I see dogecoin trending. Did I get rich?
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I get fearing more regulation, but Robin hood has needed it for a while. Remember the story about the young kid killing himself after getting himself in a bad short position last year?
Did you have a large position 36 hours ago? If so, yes.
It wasn’t even a bad position iirc; he just misunderstood his screen. (This makes your main point stronger if anything.)
yes