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Investment Thread - For all your money needs

Resilient Deac said:
OK that makes sense. This is what I was intending to say when I said there are time limits.
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If the stock isn't particularly volatile, you could have a short position for a long time (months). Borrowing costs generally keep you from holding a short for too too long, but that varies greatly depending on what you are shorting (short interest, volatility, etc).

For the record, there is nothing immoral about shorting stocks. It is costly to do so and you are taking a lot of risk. But if you think a company is a fraud or incredibly overvalued, I think you're actually doing something positive. Why do people celebrate the guys from "The Big Short"? What is different about what they did?
 
Liquid Karma said:
After a night of digesting the news...this had fuck all to do with fear of being sued and everything to do with their financial viability.
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Yes, I mean they've raised $1 billion, but I'm failing to see how a broker is at risk of being insolvent. I deposit $100, and I buy stock. If it goes up or down it shouldn't affect the broker. Except for the fact that they are employing people and not charging a commission, they're instead making money leaking some info to hedge funds, and those hedge funds must have said they're going to pull the plug.
 
DeacsATS said:
If the stock isn't particularly volatile, you could have a short position for a long time (months). Borrowing costs generally keep you from holding a short for too too long, but that varies greatly depending on what you are shorting (short interest, volatility, etc).

For the record, there is nothing immoral about shorting stocks. It is costly to do so and you are taking a lot of risk. But if you think a company is a fraud or incredibly overvalued, I think you're actually doing something positive. Why do people celebrate the guys from "The Big Short"? What is different about what they did?
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morality comes into play when the holder of a short position also advises others to ditch the stock, which I believe happened to at least some extent here (maybe I have conflated various reporting to invent this in my head)
 
Short sellers just remind me of the assholes at Crap tables that bet against everyone else. Enjoyed riding a heater with a bunch of friends making an old guy lose a shit ton of money betting against us.
 
DeacsATS said:
If the stock isn't particularly volatile, you could have a short position for a long time (months). Borrowing costs generally keep you from holding a short for too too long, but that varies greatly depending on what you are shorting (short interest, volatility, etc).

For the record, there is nothing immoral about shorting stocks. It is costly to do so and you are taking a lot of risk. But if you think a company is a fraud or incredibly overvalued, I think you're actually doing something positive. Why do people celebrate the guys from "The Big Short"? What is different about what they did?
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I'm not questioning the morality of shorting stocks

but I am curious about drawing a line between shorting stocks and on-the-ground benefit for real people in the economy -- what's the neoclassical economic rationale for naked shorts?
 
JuiceCrewAllStar said:
I'm not questioning the morality of shorting stocks

but I am curious about drawing a line between shorting stocks and on-the-ground benefit for real people in the economy -- what's the neoclassical economic rationale for naked shorts?
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Not sure I can make an intelligent, cohesive argument here, but examples like helping to expose fraud at Enron and Worldcom come to mind.

Because of the risk inherent in shorting stocks, most of those that do it spend a TON of time digging into these stocks and companies. I think that's generally a good thing.

Just my opinion.

I mean, Gamestop is a pretty shitty company. It's basically Blockbuster or whatever record store you used to have at your mall.
 
Louis Gossett Jr said:
Short sellers just remind me of the assholes at Crap tables that bet against everyone else. Enjoyed riding a heater with a bunch of friends making an old guy lose a shit ton of money betting against us.
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My hand got so cold last time I was in Vegas I started betting against myself when i had the dice in hand. Sometimes you gotta read the room.
 
stugotz said:
Yes, I mean they've raised $1 billion, but I'm failing to see how a broker is at risk of being insolvent. I deposit $100, and I buy stock. If it goes up or down it shouldn't affect the broker. Except for the fact that they are employing people and not charging a commission, they're instead making money leaking some info to hedge funds, and those hedge funds must have said they're going to pull the plug.
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I could play devil's advocate and say that nothing is free. If you aren't paying a trading commission on trades you make, somebody else is dealing with the costs of trading. I don't know that "leaking some info to hedge funds" is how I'd describe it. But there is certainly payment for order flow... That's kind of been encouraged by regulators for a long time because it increases liquidity and allows retail firms to lower commissions for investors.

To me, it's kind of like "Free Shipping" with buying things online... Shipping hasn't become free, the costs have shifted elsewhere.
 
Yeah but there is no inherent value in shorting Gamestop. Most people know that its a shitty company in the current environment and without changes will collapse all on its own. A company shorting it and putting downward pressure doesn't do anything but speed up the process (which I guess you could argue is good by facilitating change). More likely its providing no value but to make money, creates a bigger negative connotations driving the company down further making money for the company shorting, then drives price down allowing for a cheaper buyout and dismantling of the company by an investment firm. Said firm is only after the gamestop's customer database and rewards program information to then further sell to another company. Everyone makes money accept anyone with a real job associated with gamestop.
 
DeacsATS said:
Not sure I can make an intelligent, cohesive argument here, but examples like helping to expose fraud at Enron and Worldcom come to mind.

Because of the risk inherent in shorting stocks, most of those that do it spend a TON of time digging into these stocks and companies. I think that's generally a good thing.

Just my opinion.

I mean, Gamestop is a pretty shitty company. It's basically Blockbuster or whatever record store you used to have at your mall.
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I follow, I think

just not sure how it makes markets more efficient by allowing shorts -- what do shorts bring to the table that traditional buy/sell markets miss?

(to speak nothing on the extra-market behavior institutional investors can engage in to affect the short)
 
I think we're just going to have to disagree on this one. I don't think I have the ammunition to change minds on this.

Public companies have made a decision somewhere along the way to become public companies and have access to the equity market. If they run a shitty business they will ultimately go out of business, regardless of short selling.

LGJ (turftoega) - You are talking about a lot more in that paragraph than short selling. You lost me on negative connotations and driving down the price for a cheaper buyout. Not sure what short selling has to do with the valuation of a shitty company getting bought out for their database and rewards program. You're going to need to show me some examples there.

As for the employeees... If you work at Gamestop, I am sure you can find another retail job elsewhere. I'm not sure how that is relevant. Should we prop Gamestop up so the workers can keep their jobs?
 
i think shorts are "good" in that they make the market more efficient and provide liquidity, and i think were simply the extension of the search of market efficiency. but the natural extension of that are short squeezes and stuff like what happened last week, which provides even more market efficiency and provides a check against over aggressive shorting. i think the issue is then trying to restrict short squeezes which to me are needed to keep shorts from getting out of control.
 
Basically short selling would be fine in a vacuum if nobody knew you shorted the company. Instead its big company X shorted the company, well shit things must really be bad, thats the downward pressure.
 
Louis Gossett Jr said:
Basically short selling would be fine in a vacuum if nobody knew you shorted the company. Instead its big company X shorted the company, well shit things must really be bad, thats the downward pressure.
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right, but the threat of getting squeezed should be enough to keep those in equilibrium.
 
DeacsATS said:
I think we're just going to have to disagree on this one. I don't think I have the ammunition to change minds on this.
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perhaps not, but you also haven't even tried

you've said "short sellers do a lot of research" and "companies decided to become public and knew what they were getting into"

I'm just trying to understand the theoretical defense of naked shorts and how they, theoretically, improve the material conditions of the public at-large -- I'm having a hard time connecting the dots between the paper money gains of a successful naked short and the material gains in reality

especially in a world where over 100% of the float can be shorted -- that, at least, deserves some regulation, no?
 
DeaconBrews said:
the lingo is pretty pervasive

WE LIKE THE STOCK, diamond hands, if he's still in i'm still in, calling themselves r words, etc
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What is hilarious is that my firm has a quant team that does a lot of language processing work and they've been monitoring wallstreetbets... The lingo poses huge challenges for autonomous language processing algos. They've had to make some tweaks on the fly.
 
IAppreciateIt said:
i think shorts are "good" in that they make the market more efficient and provide liquidity, and i think were simply the extension of the search of market efficiency. but the natural extension of that are short squeezes and stuff like what happened last week, which provides even more market efficiency and provides a check against over aggressive shorting. i think the issue is then trying to restrict short squeezes which to me are needed to keep shorts from getting out of control.
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I don't think a company should be shorted 136%, and if it is allowed the people shorting it should be allowed to get caught with their pants down.
 
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