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Investment Thread - For all your money needs

DeacMan said:
The same people pissed at RH for stopping Uncle Joe from using leverage to pile into a stock that was trading at 130x trailing 12 mos net income (net income that declined over 50% YoY) as of this morning, would normally be the same ones saying RH took advantage of Uncle Joe by letting him act like a dumb ass.
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Do people get mad at online brokerage firms when the market tanks? Was there a huge backlash against Etrade, Charles Schwab, etc. in 08 that I was unaware of?

Think you're just making stuff up.
 
DistrictDeacon said:
Citation?
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There are plenty of law firms that make their livings bringing class action lawsuits against companies or otherwise representing plaintiffs with the aim of squeezing out legal fees. It's a cottage industry and covers a host of areas. In my experience ERISA, securities, patents and even products liability claims.

As but one example, years ago most companies would offer their common stock as an investment choice in their 401(k) plans. Securities suits and ERISA based suits brought an end to that "choice" for employees in a lot of companies. First it was securities suits when a company's stock would drop. Then it became ERISA based suits (essentially claiming offering the stock in the benefit plan was irresponsible and illegal). Why offer the stock as an investment choice if ultimately you can avoid the legal claims?

Another example is what happens when a public company buys another public company that requires shareholder approval. The deal gets announced.
The filings with the SEC are drafted weeks later. But within a couple of days after the deal gets announced they'll be sued by multiple law firms who want to represent the company's stockholders as a class. The complaints all state the filings with the SEC (the same ones that have not yet been written) are insufficient. Often the complaints don't even properly list the buyer correctly throughout the complaint - they'll miss a few places in their form where the last defendant they sued is still named. That's the rush to be first.

Here RH is probably getting sued regardless now and obviously has a big PR issue. They're just a deer in the headlights of several oncoming trucks now.

The real fallout from all of this will be to see how Congress and regulators ultimately change rules. Will it be to further restrict access to public markets for the average Joe or will it be to loosen it up. The populists in this case obviously want more access. But is that how the rules will be changed?
 
texasdeac said:
Do people get mad at online brokerage firms when the market tanks? Was there a huge backlash against Etrade, Charles Schwab, etc. in 08 that I was unaware of?

Think you're just making stuff up.
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Did e-trade, Schwab, etc. halt access to their platforms back in 2008 unilaterally? Were they the focal point of a loosely co-ordinated movement to pump individual equities in order to squeeze out shorts?

I know plenty of companies that held mortgage backed securities in their treasury sued the banks that issued them. I know of at least one company that sued and got a sizable settlement on the grounds the bank disclosed it would sometimes purchase the securities at regularly scheduled auctions. What that bank apparently failed to do was inform the company that they were the only buyer at those auctions more often than not. That obviously meant there was no market if the bank decided to no longer "buy" and thereby left the sellers holding all the risk the securities wouldn't price.
 
DeacMan said:
Here RH is probably getting sued regardless now and obviously has a big PR issue. They're just a deer in the headlights of several oncoming trucks now.

The real fallout from all of this will be to see how Congress and regulators ultimately change rules. Will it be to further restrict access to public markets for the average Joe or will it be to loosen it up. The populists in this case obviously want more access. But is that how the rules will be changed?
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Didn't take long. https://www.bloomberg.com/news/articles/2021-01-28/robinhood-customers-sue-over-removal-of-gamestop
 
DeacMan said:
The real fallout from all of this will be to see how Congress and regulators ultimately change rules. Will it be to further restrict access to public markets for the average Joe or will it be to loosen it up. The populists in this case obviously want more access. But is that how the rules will be changed?
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This we agree on. Huge litmus test for the Democratically controlled government. Will they continue to bail out corporations, or has the progressive push of the last decade started to change the party?

If they choose Wall Street and limit access, its a big deal. Could leave to some continuous primaries.
 
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BillBrasky said:
This we agree on. Huge litmus test for the Democratically controlled government. Will they continue to bail out corporations, or has the progressive push of the last decade started to change the party?

If they choose Wall Street and limit access, its a big deal. Could leave to some continuous primaries.
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I don't think the issue is a "bailout" here or maybe I'm not understanding your use of the word. To me the monetary system bailout has been in place for months and isn't going to change. That's the money printer going brrr and the Fed (which supposedly is independent) doing massive QE. Now we'll see what fiscal stimulus the Dems advance (which will likely further boost the markets).

Historically it has been the Dems more than the GOP (or what used to be the GOP) who want to "protect" the little guy from the predators. So I'm thinking maybe you're going to see the Dems likely focus on what they don't want institutions to be able to do vs. expanding what it is the regular Joe has access to do. It was, what, two months ago that Tlaib proposed to put the "STABLE" act in place for crypto. It isn't poor in theory, but in execution it was all wrapped up in making sure the little guy is protected from companies. That's maybe going to be the problem here. The guys like Cruz will say let's just allow more people access and the folks like Tlaib are perhaps more likely to want to not change the access rules but limit what the institutions can do when they trade. Although AOC's certainly screaming about just letting the common guy do his thing. So maybe that will be the course she and others chart.
 
Well she put him in his place so order has been restored.
 
DeacMan said:
I don't think the issue is a "bailout" here or maybe I'm not understanding your use of the word. To me the monetary system bailout has been in place for months and isn't going to change. That's the money printer going brrr and the Fed (which supposedly is independent) doing massive QE. Now we'll see what fiscal stimulus the Dems advance (which will likely further boost the markets).

Historically it has been the Dems more than the GOP (or what used to be the GOP) who want to "protect" the little guy from the predators. So I'm thinking maybe you're going to see the Dems likely focus on what they don't want institutions to be able to do vs. expanding what it is the regular Joe has access to do. It was, what, two months ago that Tlaib proposed to put the "STABLE" act in place for crypto. It isn't poor in theory, but in execution it was all wrapped up in making sure the little guy is protected from companies. That's maybe going to be the problem here. The guys like Cruz will say let's just allow more people access and the folks like Tlaib are perhaps more likely to want to not change the access rules but limit what the institutions can do when they trade. Although AOC's certainly screaming about just letting the common guy do his thing. So maybe that will be the course she and others chart.
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Sorry not a financial bailout (although I wouldn't put it past these hedge funds to have their hand out) but I meant are they going to change the rules to limit access. Populist progressives (which I consider myself to be) would be in favor of more access, but also more regulation that is equally applied to all investors.
 
BillBrasky said:
Sorry not a financial bailout (although I wouldn't put it past these hedge funds to have their hand out) but I meant are they going to change the rules to limit access.
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Yeah, as I understand it the most recent rules changes have actually further restricted who can invest in some of these funds. I'm not sure if they've touched the accredited investor definition or if other rules have just gone into place that changed the equation a bit. I also seem to recall there being a movement a year or two back that would have made it possible for people to invest in PE funds via their 401(k) plans. Not sure where that went.

The quid pro quo on accredited investors is that they are presumed to know what they are doing which provides a line of defense for those who manage funds. That would likely be the price for opening up access. You assert you are savvy and can bear the risk and it makes it harder for claims to stick if you lose bc you put money in a more speculative venture capital fund.

I do think it is ridiculous that some folks can avail themselves to various "bets" and others cannot more or less solely on the basis if net worth. I also know if the rules do get changed it will lead to a broader range of outcomes for investors. A millionaire who makes a mistake is probably not ending up in the soup line if they have not made too big of a bet. On average they can make more "mistakes" before they get really hurt than a person with a smaller net worth.

One thing that might drive opening things up. If that happens it will likely pump up markets even more, which seems to be a policy aim of both parties at the moment.
 
Note - not my account. But screenshots like that are popping up on twitter where Robinhood forced a sale of their shares even if they intended to hold through this mess.

That is theft.
 
if there is any truth to these Twitter rumors that Griffin reloaded his short position before Robinhood closed up shop on GME then that seems like a pretty big deal
 
CDeacMan said:
Hmmmm - wow

That is the low point on the day
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I feel like that one could be photoshopped. It's too perfect.

Also, if you bought the shares on margin can't the brokerage legally force a sale?
 
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