Wall street bets is just exposing the facade of wallstreet. As more information about investing becomes available, hedge funds and investors will look increasingly less sophisticated. Platforms like Robinhood will erode their edge by increasing liquidity, lowering transaction costs, and providing access to more exotic investments and financial derivatives.
Really great contribution there, appreciate you sharing your thoughts and furthering the conversation.
What LogicSlave said is dead on accurate. Lowering the barrier to market entry has empowered millions of people to make their money work for them. Is some of it unhealthy? Absolutely. But not all gamblers are addicts, and its not all counter-productive either. The downside is that many are jumping in without fully understanding the risks, but in my opinion, the best way to learn the game is to play. Investopedia fantasy portfolios are a risk free way to try it out, but those have been around for decades and few people use it as an opportunity to learn the market.
There's nothing nonsense about it. These big firms have billions on the line and are interested in protecting it. WSB is a comedy outlet where active posters are at least in the high end of hobbyist traders, and they realized that some very greedy short selling left an opening for a decent buck. The vast majority of Robinhood's userbase couldn't even come close to explaining to you the mechanism through which this happened, let alone know when it's happening elsewhere and how to enter and exit. Nobody there has any delusions that they would be able to take on a large firm if the large firm was able to hit back.
Markets and the choices you make them in can be incredibly complex. Most people don't have the time and drive to deal with that, no matter how much you "democratize" the technology.
> Markets and the choices you make them in can be incredibly complex. Most people don't have the time and drive to deal with that, no matter how much you "democratize" the technology.
Fully agreed here. My point wasn't to say that people are taking on Wall St. and getting rich quick by developing a deep understanding the mechanizations of the market. But you don't have to understand a gamma squeeze to make money. In the past, brokers were a luxury only the wealthy could afford, and I think it's a great thing that that is no longer the case.
Also, I think it's overlooked how much of the banter on wallstreetbets does not necessarily dictate how participants invest. There are probably many people who read, joke, and occasionally make a risky investment, but who otherwise maintain a relatively conservative portfolio. Wallstreetbets is just the most entertaining way to casually pick up knowledge on the subject.
This is what's really pissing off a lot of people who think they're "somebodies" in the finance world.
A bunch of people who didn't attend Columbia, Harvard, and Yale Business Schools are using a fucking phone app to do what only they used to be able to do - manipulate the market. And its pissing them off. For decades, these arrogant little shits were told they were the Masters of the Universe.
Now they're finding out firsthand that it just ain't so, and their egos can't handle it.
A hedge fund with $12.5 billion in assets lost so much money that two other hedge funds had to step in and save it with a capital injection of $2.75 billion.
People - and here I mean the average person, not the ultrawealthy - were conned into buying things they couldn't afford, not exotic investments. Assuming the exotic investments you're talking about were the various derivatives markets propped up by bullshit, that was massive corporations making investments and taking on risk they didn't even understand. Unfortunately, the fallout impacted average people who weren't even directly involved.
I don't understand why people think /r/wallstreetbets is really that interesting or provides insight into actual wall street? Anyone who knows anything about actual options trading / building strategies knows these people are idiots. Sure, there's a lot of money flowing around - but most people don't realize that to many $60k is pocket change.
How can you be outsmarting people when you're just taking public advice from random people on the Internet?
Unless you're the guy posting the "hot tips" that you just happened to buy a bunch of shares in a few minutes ago hoping that the sheep will push up the price for a moment.
It’s also very easy to think you’ve found easy money. When I first heard about options, I was super excited about how I could make money if a stock went up or down. It was less obvious that you can lose 100% of your money if the stock fails to move much at all. Thankfully I did my homework and didn’t get too wrapped up in option trading.
Albeit, it's incredibly entertaining - however anyone who things any of it is "real information" who doesn't have pre-existing professional experience is a moron. Unless you're already a professional I highly doubt anyone can cut through the noise to signal ratio.
I don't think anybody thinks that it has anything to do with Wall Street, and anyone who thinks that Wall Street has anything to do with modern markets is also about 15 years behind the times (hint: Chicago is much more important than NYC).
But as someone who spent most of their career running sizeable vol books, there are a few people on /r/wsb who do understand options, or at least they understand gamma, which is more than I can say for 90% of the morons on Twitter.
But even on /r/wsb there are clearly people who are trading at proper buyside shops. You can tell by the way they write, the things they say, and the knowledge they hold. And yet they come to /r/wsb for some of the same reasons that TFA highlights.
"Wall Street" is a metonym for the US finance industry. It doesn't refer to the actual location. Much like how if "the White House" does something, it means someone working for the POTUS, regardless of whether they're in that specific building or not.
The author is basically quoting the community here rather than actually diagnosing anyone with autism. The subreddit usually calls themselves some variation of "autist," "autistic," or "retard."
This is a poorly written article trying to time a large economic exploitative event. WSB is, genuinely, pretty dumb but they actually advocate normal positions like index holdings, and only trading on "moonshots" with a very small % of portfolio. Their offensive language and such is a product of being on Reddit though.
I think the author was right that its 4chan language. I wouldn't say its a product of being on Reddit. Besides /r/the_donald and /r/wallstreetbets/, I've only ever seen that kind of language on 4chan-specific subreddits like /r/greentext and /r/4chan.
> It’s a bunch of autistic losers that live in their mom’s basement who are gambling what little money they have to try and become rich to live lifestyles of hedonism
square with
"These people were involved in very meaningfully moving a stock price around" ?
It's the same paradox as 4chan /b/ and /pol/ influencing real-world events despite similar stereotypes about the userbase. And /r/wsb is, after all, if 4chan found a Bloomberg Terminal.
The former is how they view themselves in a tongue and cheek fashion. The latter has more to do with how much the community has grown and how many people this community apparently resonates with.
Well, they apparently do move markets. Whether that's good or bad remains to be seen and there's no telling what sort of action the SEC will take to curtail this. IMO all it will take is one bad day to have something happen. But wsb does understand one thing: the barriers to entry are artificially there - it doesn't take a quant with an MIT education to make and lose money.
Seems unlikely. More likely that wsb is a sampling of common knowledge among people who invest in markets, and markets also move based on common knowledge.
The movement of stocks they are talking about, like GME recently, defy traditional analysis. There is no reason for GME to be where it is, in a traditional analysis sense, other than WSB talking about them.
At some point they move the needle just enough for the algorithmic trading, and FOMO of others to take over. But it still started there. Although now there is probably some level of watching WSB to see what their next move is and just trying to ride that wave.
That is why I said 'in a traditional analysis sense.' It defies all traditional stock / economic analysis. There is nothing significantly better about Game Stop's actual business today compared to say Sept 1st.
Sep 1: $7.65
Nov 2: $10.75
Jan 4: $17.25 (125% Gain here already)
Jan 25: Intraday high: $159.18 (More than 20x Sep 1), Close $76.79 (Right about 10x Sep 1)
There is nothing in any form of business analysis that justifies that. The best explanation that exists is WSB. Its not just WSB doing the trades, they just are a spark that ignites the fire. After that people (and algorithms) are trying to ride a wave of momentum.
> There is nothing in any form of business analysis that justifies that.
You haven't consulted all the business analysts in the world before saying that though. There might be something.
I get that you're convinced - but you aren't presenting an actual line of thinking that links the two things. You've just noticed that WSB is talking about something and the thing goes up - this is the famous correlation and causation problem.
> On the surface, it seems really weird but it’s mostly a type of gallows humor that permeates a lot of especially young millennials and zennial men.
It is a humorous constructed setting that is not necessarily reality. As an aside, I'd never seen the phrase "gallows humor" to describe this sort of ?? post-irony.
That line - which I read - doesn't really negate the previous one. And if you keep reading the article mentions a lot of debt and not being able to get ahead and the like. But clearly, there's some money sloshing around there. Is it just a ton of people with a little bit? A few that have a lot? Maybe it doesn't take that much to move one kind of crappy stock? I'm just curious really.
> The basic surface-level story of WSB is this. It’s a bunch of autistic losers that live in their mom’s basement who are gambling what little money they have to try and become rich to live lifestyles of hedonism.
> On the surface, it seems really weird but it’s mostly a type of gallows humor that permeates a lot of especially young millennials and zennial men.
The key is "the basic surface-level story" and "it's mostly a type of gallows humor". It's a story or myth, not reality. You'll see a lot of this self-deprecating humor on other 4chan-adjacent communities.
Also, I do not think that Jeromy Sonne is speaking from a position of experience with the wsb community. He has an entry-level understanding of internet communities but the article is mostly fluff and speculation instead of first-hand knowledge or research. Plus, a lot of content on wsb is "artistic works of fiction and falsehood", just like 4chan.
These days, especially with the pandemic, there are many single folks making over $50k a year living with their parents. That times a few hundred thousand, plus the hangers-on, is definitely enough to move a stock, at least for a little bit.
Collectively I doubt WSB posters alone moved GME to any large degree, but the media attention, feuds, and popular memes allowed them to punch well above their weight.
Attracting attention about GME, a stock with more shares sold short than exist, gave a much larger pool of players a rallying cry to drive a short squeeze.
I try to avoid going there, but from what I have seen its somewhat of a snowball effect. You have someone post about some crazy YOLO move they made and see massive gains on. The next time someone posts something a little crazy more people do it. And a few get real rich again. And eventually you seem to have a lot of folks who have enough money to move the needle. And once it starts moving, the FOMO piles on and it gets out of control.
Add on top of that algorithmic / momentum trading following trends.
You have stuff like this person, top 3 post of all time on there from Friday (2 days ago): https://www.reddit.com/r/wallstreetbets/comments/l2x7he/gme_... Based on the way things went today, they had to be up over $10M maybe even $15M for a minute there. People see that and get jealous. Say they cashed out. Now they have at least 10x the money as before and can move the needle even more. Also worth noting initial price of what they have now is almost $800k. So while the description is about gambling little money, high stakes gambling pays off for some. Going back in history, this person seems to have started piling in to GMU in June of 2019, and kept going since. But no real indication of how much they had to start with, or anything like that. Did they have some other bet that they played before this? No idea.
If you don't have enough money to pay your rent but winning means getting a Ferrari then yes. Losing means nothing and winning is everything. At least that's the point I was trying to make.
You're literally describing gambling. I watch people drop entire paychecks on scratchers at the local liquor store every week in hopes of a new mustang. If I head up north to the Chumash Casino, I'll find hundreds playing Keno with their entire lifesavings trying to win it big. WSB's is no different. Hell, it's even in the name of the sub!
Also, although WSB has had some affect on the GME squeeze, it was originally identified by no other than Michael Burry, the guy from the movie the Big Short. He's been in the GME game long before the reddit army joined in.
No, they're just leveraged beyond their bankroll. Any broker will have a backend stop-loss and force margin call them before the broker lets the client go negative.
uh, there's way too much analysis here lol. at it's core it's a fun distraction and people are gamblers. it's no different than fantasy football or going to your local casino.
there's a big subset there that is obviously cash strapped and desperate. there are also people there with 6-7 figure net worths that are just passing the time.
the DD is actually "okay" once you cut thru the lingo and I'd be willing to bet most people learn a lot about market mentality with trial by fire.
There's a lot of analysis to do on people at a casino as well, and I expect there's actually a significant demographic difference between them and r/wsb. Fantasy sports probably has a closer profile. And there is a LOT of money to be made analysing why people who like gambling do one type or another.
Well, you can't really change the odds or outcome of fantasy footballs or casinos. But at WSB, with enough retards (WSB terms), they can change the outcome.
Your unwillingness to even look at the "insensitive language" is part of the point of that group. Recall how anti facial recognition technologies have sprung up, guerrilla style, like "Dazzle." Similarly, these groups who do not want certain types of people looking at them adopt this language and behold, some do indeed look away.
It is describing the presented public image of r/WSB. The next paragraph makes it clear that this is intended by r/WSB to be humor. I personally don't think that an article reporting on offensive humor should itself be flagkilled.
It's not sufficient, because the culture of WSB is such that they refer to themselves as autists. To not use the term would be an inaccurate description
You don't get it, so here goes: they refer to themselves as autistic losers, and "retards" and such, precisely because it "triggers" someone exactly like you. You won't look any deeper, having been "triggered," and that's mission accomplished for them.
Boy, I'm only a fraction of the way through this article. What a fantastic piece.
Nietzsche is a frightening author, but I think what he writes is the logical conclusion of what we've done by championing existentialism. "The end doesn't matter, the true meaning is the friends we make along the way." WSB is taking that and running with it.
Even before existentialism was formulated people behaved in such a way. They always have. What we think of as modern day absurdity or boldness is nothing new
I think half the story here is not just the role of r/wallstreetbets but also the curious phenomenon of shows like Mad Money and their decline.
My general take on these shows is that you get a bunch of men in their 30s, put them in a gym where the blood is flowing and they’re thinking about how their life compares, and put a TV in front of them with stock advice. Bam! Manipulation.
If you had a short position and a TV show, wouldn’t you want to convince other people that your short position is correct? And if you could mobilize more people to take a long position, couldn’t you make money that way, too?
WSB is hilarious. It’s also such a place of sadness.
Taking credit card advances to YOLO into short-dated OTM call options is drug-addict level desperation. People joke about YOLOing their inheritance - and I suspect there’s some reality to it. Their parents’ entire life’s wealth can’t dig them out of whatever hole their in.
The CNBC guys freaking out is incredible. Their Cramer feud is gold. But... this trend is different than people picking random internet stocks in the 90s. It’s desperate.
Agreed. I think it is lazy to look at the rise in real income and not look at the rise in real expenses and decline in stable, non-precarious employment.
All three of those things are things that are hard to outsource. My suspicion for a long time has been that we've actually had massive inflation since roughly the year 2000, but it's been masked by the effect of outsourcing and automation reducing the price of pretty much all manufactured goods.
Housing is a tough one; houses on average cost the same amount on an inflation adjusted basis per square foot as they did in the 1970s. However, houses are on average twice as big as they were back then, and contain far fewer occupants on average, too. In 1970 the average household was 3.14 people, today it's 2.5 people.
[edit] There's a lot of reasons for the increase in the actual price of accommodation. They're largely driven by local ordinances. Setback rules, minimum size rules, minimum number of bathrooms/closets/etc all - all sorts of code things.
Further, in major metros city councils refuse to increase supply to meet demand - to benefit existing landowners.
One solution to this is national zoning rules like Japan has.
The inflation adjusted cost of buying a house today is actually cheaper per square foot than it was in 1980, and that's before you factor in the 14% mortgage rates of the era.
While prices vary wildly from city to city and type to type, I'd like to show you the King County price index that shows the trend in housing prices since 1975.
Agreed. These artificial constraints are playing out in desirable locations everywhere in our country, as compared to say eastern Kentucky or Ashtabula, Ohio.
While incomes have indeed gone up in real terms, mandatory living expenditures for all Americans who don't consider a park bench to be shelter have also gone up in real terms in a more than proportional manner.
Education only makes up 2.3% of household expenditures and healthcare 8.2%.[1] You're cherry picking and ignoring strong deflationary pressures increasing the affordability of food (13% of expenditures), clothing (3%), transportation (17%), utilities (6.5%), entertainment (5%), and furniture and appliances (3.3%).
As for housing, the cost per square foot, adjusted for inflation, is only 12% higher than it was in 2000. (Moreover this doesn't account for the major improvements in new housing stock, such as fire safety, attached garages, swimming pools, high ceilings, central A/C, high-capacity electrical circuits, etc.) The median cost of housing has only gone up, because consumers have demanded substantially larger homes.
And this ignores the fact that mortgage rates are substantially lower than historical averages. Even accounting for our bigger, nicer homes, the percent of expenitures on shelter has barely budged from 18.7% in 2000 to 19.1% in 2019.
> You're cherry picking and ignoring strong deflationary pressures increasing the affordability of food (13% of expenditures), clothing (3%), transportation (17%), utilities (6.5%), entertainment (5%), and furniture and appliances (3.3%).
I'm not ignoring these at all, and it should be clear where these lie on Maslow's hierarchy versus shelter, healthcare, and earning potential (education) [1]. Mortgage rates being low only means you're bidding up scarce assets further by borrowing with the little income you have. This attempts to sell affordability in the same way a car dealer salesperson sells you on the payment, not the price.
And transportation? The average price of a new car just surpassed $40k [2]. There's a reason 7 year car loans have become common [3].
> The average price of a new car just surpassed $40k
In nominal terms, the inflation rate of new cars was in aggregate 3.5%[1] since 1995 (not 3.5% per year, 3.5% total.) Over the same period, household after tax income increased by 111% in nominal terms. Therefore the affordability of a new car, for the average household, doubled over the period.
Moreover the average longevity of a car increased from 8.5[3] years to 11.9 years[4]. That means the amortized cost of one year of car ownership, in terms of household income, has fallen by a factor of three.
This looks like household incomes, not incomes for individual earners. There has been a huge rise in double income households - i.e. households where there are two working adults. In the 60's 25% of households were double income, compared to ~60% now. If incomes are up 40%, but it requires a commensurate increase in work, is that really an improvement?
I think you really have to look at fed policy and the stock market to understand this. We're in the midst of a barely-uncontrolled pandemic that has caused massive disruption and unemployment in particular sectors, and yet the stock market is hot as shit. I don't think it's irrational to look at that and conclude that it's better to get it while the getting is good.
Agreed. Just wanted to add that the policy in question is reacting to recessions using monetary policy instead of fiscal stimulus, because of gridlock and regulatory capture. The government is largely at fault for the current bubble. I fear for what will happen if/when it pops.
I like going to /r/wallstreetbets. I'm not even sure if those YOLO posts are real. Maybe some are. But it seems a lot of people are there just to have fun. I want to think that someone who posts about YOLOing on GME is really someone just invested in ETFs. Every now and then, there's actually really good advice on /r/wallstreetbets. It's one of the rare subreddits where you can just let loose joining in on the fun and memes, but then if you ask a serious question, you usually get a serious and useful answer.
I posted a quarter million GME YOLO on WSB over a week ago and it was real (ended up making around $300k and I only have 1000 shares left, so even if it went to $0 right now I'd still have a nice profit)
I saw posts yesterday asking if it's still worth buying GME at market open. I was sure these people are crazy and about to lose their asses. I just checked price action a few minutes ago and it went from $60 to $144 before selling off back to $70s. Crazy.
This was the craziest day of trading I have ever seen. As GME was crashing down from $155, there was a moment when the entire market went down 5-10% and futures spiked. I ended up triggering limit sales on VXX that I had set weeks ago and forgotten about.
Truly, this is a speculative bubble that is going to pop very, very hard.
I think it's funny when people say this when there are still 11 months left in the year. Just because I made $300k on this doesn't mean I'll owe taxes on that
You only pay taxes on your yearly capital gains so I don't think it makes sense to pay estimated taxes. I could lose those gains. Not sure where AMT cones in
I am not a tax professional but I would recommend at least talking to a tax professional about that. Taxes are generally due upon realization of income/capital gains; the quarterly thing is simply because it would be too onerous to have to report literally every single gain/loss as they happened. But I'm not going to sit here and argue with you :)
The problem is, at least now, that you have to have a pretty good understanding already to determine if the answer you get is good advice or complete BS. There are countless comments that fundamentally don't understand the basics of a stock exchange. These are often comments that get voted up because they support a stock currently being pumped on /r/wsb.
That would be a "retarded yolo", not "Diamond Hands". If they hold onto those shares as the price drops and/or sky rockets in hopes of further future gains, that would be "diamond handing".
>Taking credit card advances to YOLO into short-dated OTM call options is drug-addict level desperation.
It's actually somewhat rational. Say you just graduated college and make 30k as a waiter. You scrape together savings, loans, CCs, etc. and pull together 20k. Take that to Robinhood 2-3x it with margin and place a 50k bet that has a 8% chance to pay off 10x. If you "win" you're up 15 years of wages or more. If you lose, well, you declare bankruptcy and shit gets wiped. It's not like you were buying a house or a nice car on 30k a year anyways.
The sensible response from society is unfortunately restricting personal bankruptcy laws. Essentially this is an organized attack on civilized society and it needs to be shut down, somehow.
if this is the only alternative you can come up with, then you unfortunately suffer from a lack of imagination. another solution would be to make that $30k enough for a comfortable life so the bet doesn't seem that attractive in the first place.
If you're so daft that you think its okay to give literally trillions of aid to companies in the form of tax breaks, bailouts, subsidies, and other horseshit, but letting people write off mere millions in bankruptcy proceedings because they know at a fundamental level that the system is - if not broken, definitely malfunctioning - then brother, you are part of the problem here.
In a country where we just handed out $50 billion dollars to airlines (again) a bunch of poor WSB tards abusing bankruptcy is not really a problem. Especially considering how predatory the CC companies et. al. are. It's like a zebra killing a lion with a lucky kick and thinking "tut tut we need to change the rules of the hunt".
or just double the amount of time that bankruptcy stays on your credit report and let the lenders handle it as they see fit. I will say I find your take rather dramatic. I don't see screwing over a couple hedge funds as an "organized attack of civilized society".
The sensible response from society is to say "if credit card companies were foolish enough to give unsecured cash loans to these people, then that's their problem".
I mean, it's still rational for professions too. If you make gamble and lose, then you just need to work a little longer to catch back up. But if you win, then you might never need to actually work again.
Throwing $500-1000 a month into OTM options trading can generate life-changing amounts of money. That's like the lease payment on a 3 Series BMW. So it's pretty sustainable for working pros.
A 92% chance of bankruptcy (to use your example) seems like a poor idea. Its not about the outcomes of winning vs losing, the smart move is to not play. A college graduate hopefully will not be making $30k/yr for too long, and being almost completely cut off from credit for a decade is really going to sting when they do want to finance a car or other large purchase.
For what its worth, I made less than $30k/yr (with zero benefits) for a few years after graduating college about 10 years ago, despite working full time. I make more now, but probably less than you'd think based on the group here - I dont work in tech.
Most of these people have parents they can rely on to borrow car loan type money. Homes are out of the question at 30k a year anyway so it doesn't matter that they can't get a mortgage.
It just doesn't add up to me. If you take Gamestop (GME) today's hot item, it's trading 170M shares back and forth, at say, $70. That's $11B sloshing back and forth.
You're telling me 10,000 (if even?) guys sitting at home doing retail trading have $1M each in positions driving this? 100,000 people with $100,000 each, during the day?
if i give you a dollar and you give it back to me 7 billion times, 14 billion in volume occurred with $1. some percentage of this is tomfoolery that triggers cascades in the HFT space and create a lot of volume without much sound.
Yeah, I wonder if ML-driven investing is being tricked by reddit into buying stock in failing companies and causing a runaway effect. If so, it makes me nervous that lots of stocks might be massively over-inflated right now.
market makers who write the options but want to hedge the risk by taking a related position in the market itself. they don't want risk, they just want the premium, so they don't care about the price of the underlying most of the time. what they do is continuously adjust the position as the price changes and time to expiration gets shorter. you can imagine the amount needed to hedge gets very nonlinear the closer to expiration and the closer to the money the option is, hence a single short time to expiry near the money contract can cause a lot of volume.
it is an exploit; not sure if serious, as conditions required to trigger it are quite extraordinary. couple hundred million loss isn't a big deal for them but pricing models will be updated for sure.
The narrative of GME has been building for weeks before any news coverage happened. This isn't the first stock to blow up from WSB, but there are a few others in past weeks (none that have reached GME levels) such as BB, PLTR, and previously ABNB (whatever new stock that has IPO'd).
There are a handful of users that have $1M positions (some smaller ones, like a user that reported $250k into $7M, back down to $4.2M). Collectively, the community appears to drive hype towards different stocks based on flimsy things.
Without a doubt there's HFT (High frequency trading) happening, but these social communities are having an impact.
Yes. The former creator of WSB, jartek, was removed from the subreddit because he masqueraded as 'WSBgod' an anon user with crazy gains, but it was fake. He also sold ad space in the about section for $1500.
yeah it doesn't quite add up to me either. my mostly uneducated guess is that the wsb activity is a spark that triggers a positive feedback loop in some trading algorithms. these algorithms must have some ability to filter out noise from low-information traders, but perhaps no one considered the possibility that a large group of people might make bad trades on purpose?
> You're telling me 10,000 (if even?) guys sitting at home doing retail trading have $1M each in positions driving this? 100,000 people with $100,000 each, during the day?
No, it's the same retail people trading in and out. Someone w/ $100 in buying power can generate $2000 in traded value pretty easily just buying & selling 20 times, which some retail people do because they don't know what they're doing.
There's also going to be HFT market makers flipping their position and taking the other side, which almost doubles the volume compared to what it would be if there were no MMs. It's not a capital intensive business and they can trade huge volumes with very small capital.
Then there's going to be GME options market makers who are getting gamma squeezed and hedging their deltas. That would explain a bit.
The hedge funds getting squeezed explain about ~30m of the volume (assumption that 50% of the short float got squeezed), or perhaps more if they covered their position yesterday and decided to put it back on today.
Probably also some totally new hedge funds coming in today with a short as well, although that won't explain much volume since the entire float was shorted (and them some, due to naked shorting) and naked shorting is technically not allowed.
I'm sure all the prop firms were all over it today, as well, and they're going to be in and out with up to $1m positions.
>You're telling me 10,000 (if even?) guys sitting at home doing retail trading have $1M each in positions driving this? 100,000 people with $100,000 each, during the day?
Matt Levine wrote about this in his Money Stuff newsletter today. I highly recommend the newsletter.
In summary, the options have an amplifying effect on the total volume because of the hedging by market makers. Pair it up with a meme stock, and you have a lot of weird stuff happening all at once.
Primarily explained in the 2nd paragraph, but setup in the 1st paragraph.
"Second, a lot of people (on Reddit) who like GameStop don’t buy stock; they buy call options. If you are a retail trader looking to gamble on a stock, you can buy call options to get leveraged exposure to the stock. For instance, last Tuesday (Jan. 19), you could have bought a $50-strike call option on 100 shares of GameStop stock expiring this coming Friday (Jan. 29). Bloomberg tells me this option would have cost you about $3.35 per share, or about $335 for a 100-share option contract; the stock closed that day at $39.36. If you sold the options on Friday (Jan. 22), when the stock closed at $65.01, they were worth $18.16 per share. 4 You put in $335 and got back $1,816; you made a 442% return in four days. If you had just bought 100 shares of stock instead, you would have had to put in $3,936 to get back $6,501, a 65% return. Of course if the stock had stayed flat instead of going up to $65.01, you’d have lost 0% by buying shares and 100% by buying the options. So options are great if you have a relatively small amount of money and want to take a lot of risk with it. If, for instance, you are a retail trader on WallStreetBets."
"Meanwhile the market maker who sold you the options would have hedged its option exposure by buying about 40 shares of GameStop stock, for about $1,575. (This—the fraction of the underlying shares that the market maker buys to hedge the option—is called “delta.” 5 ) Your $335 of option premium caused $1,575 of stock buying. More important, as the stock goes up, the market maker will adjust its hedge by buying more stock—by the end of the day on Friday, the market maker would have owned about 80 shares. (The change in delta as the stock price changes is called “gamma,” and people who like this sort of technical explanation love talking about “gamma.” 6 ) You haven’t done anything else—you bought the options on Tuesday, and then stopped trading—but the market maker kept buying hundreds of dollars more stock as the stock went up to keep the option hedged. 7 Multiply that by the extreme popularity of GameStop options, and you get a lot of stock being bought as the price goes up—which, of course, pushes the price up more."
In this scenario, How does the market maker unload the 80 overvalued shares that they bought to cover their exposure. Who ultimately gets stuck holding the bag when reality kicks in?
I have been paying attention to r/wallstreetbets for the past few weeks - I don't have the source handy (it was on WallStreetBets), but there are reputable big name funds / companies who are long on GME. Other big name companies are short, of course, and the WSB community has picked a side in this battle.
So the idea that WallStreetBets is a significant player in all this is nonsense and actually might be propaganda flak coming from the "responsible" people in the media, etc - journalists in the financial sector love rumors and such things and it is a nice cover story as "fog" to hide the fact Wall Street is so manipulated by the big players.
I’m very sure you’re wrong. If you’ve ever traded a larger position, you quickly realize that it doesn’t take a ton of volume to move the price of a stock like GME. Take a look at how quickly the GME threads on WSB get 100k posts and take a look at how many posters there are on the WSB Discord and note that the ratio of lurkers to posters is high on most forums.
a bunch of dudes bought a bunch of contracts $50 or $500 or whatever cheap price a piece for 100 shares so far out of the money they'd be worth $6000 if price got there. market makers bought anywhere between 1 and 10 shares to hedge the risk of the price getting there.
you could say the market was broken for a couple hours this friday. funds not used to losing money (market makers like citadel) lost money. eyebrows were raised.
I understand technically what a gamma squeeze is and how it happens, but I don't understand why the banks/brokers are on the other side of you buying a call option. It seems totally exploitable.
Are banks/brokers selling you the call because they think they will make money from it? Or are they doing it because they are acting as a market maker role and just wanting to have liquidity in the market?
Edit: read some other comments here and I think I understand now.
They are generally acting in a market maker role. That doesn't mean they don't think they'll make money from it though. Hedging even large delta and gamma heavy positions doesn't tend to move the market much. Something like 70-80% of options expire OTM, so they do consistently make money from collecting premiums.
But a situation like the one on GME where there is MASSIVE and sudden interest in the stock to the tune of billions of dollars worth of buy orders for both stock and options being placed in a short amount of time along with tens of thousands of people encouraging each other not to sell combined with the insane short interest and shares held by institutions that reallocate infrequently...you can end up with a disaster like the GME gamma squeeze that leaves MM's in somewhat of a prisoner's dilemma. They're more or less obligated to cover because the others are more or less obligated to cover. Meaning that they're ultimately all going to have to cover, driving the price up.
So usually they do make good money from selling options since they ultimately keep the premium of most options. Sometimes they don't though.
They definitely do move markets. What you need to know is that they are buying short-dated call options. These options expire in less than 2 weeks, and are usually far out of the money. They require "dealer hedging" as the market makers providing these options do not want to be exposed to the massive amount of risk implied with the movement of price. The market makers are then required to buy massive amounts of the stock in order to hedge against any movement in the underlying stock, which can cause a "gamma squeeze" when market makers are unable to purchase enough of the underlying asset.
They say selling call options is "picking up pennies in front of a steamroller": most of the time you collect premium, and then occasionally you get run over by a steamroller. This is the steamroller.
I was more pointing out that even though "More often than not, the calls will expire worthless." is true, the quote refers to the fact that buyers of calls have limited defined risk while sellers of naked call options have unlimited and undefined risk. That's the steamroller.
This post is a great tutorial in why we shouldn't derive meaning from expressed language. Imagine if you sat in a room of software engineers and tried to make conclusions about their life views based on their jargon: "I think what they're saying is you just need to form a single value store and react to it, dividing life into small composable micro components that are DRY. We can really comprehend how this minimalism impacts engineers..."
Language like WSB uses is meant to frustrate outsiders and limit posers. It makes it hard for the media to reprint things that are said, and even if it does, it would be nonsense. That's intentional.
And yes, there's double meanings and jokes to some of this language. Many WSB'ers comprehend the gambling-esque nature of what they do, and how many of their strategies aren't traditionally recommended.
This comment reads like a "they're really playing 4-dimensional chess" moment.
There are definitely some smart people on wsb, but I very much doubt the use of silly language (like, say, calling bears "gay bears") is anything other than users being intentionally ridiculous and funny.
The language there is definitely used as a shibboleth, a stenograph, and a ward. Enough of the people there are knowledgeable enough to know 1) the types of automation that go into mining social media, and 2) how to communicate in a manner that maintains plausible deniability in the event of interest from authorities. Everyone else plays along so they can be part of the group.
>Language like WSB uses is meant to frustrate outsiders and limit posers.
This is true, but WSB is also fundamentally nihilistic.
4Chan started as teenage boys from middle class families saying bad things for and fun trolling for fun. "haha lol normies take it seriously" Typical teenage nihilism that is normally not very harmful. Then it gradually escalated into really hurting people and crazy people joining. https://en.wikipedia.org/wiki/Kill_All_Normies
1. It wasn't a coup, it was a protest to protest the unfair election and overall left wing bias. Same way BLM was to protest the unfairness of how black people are treated.
2. It was mostly organized on Facebook and the general "normie" web
A coup can't succeed without support from the military, the police or a majority of the population. A few hundred badly organized crazy people can't perform a coup, they can however perform acts of terrorism which is what they did. Crazy people sometimes kills high level politicians, there are many cases like that in history, doesn't mean it was a coup or it was even near succeeding.
I guess I'll be pedantic for a moment. A coup, by definition, is a seizure of power from government. If they are not successful at seizing power, then it was not a coup.
If I show up at the capitol building alone and demand to be put in charge, is that also a coup attempt? Obviously where you draw the line is subjective, but this event never had anything close to the requisite backing to become an actual coup, so calling it that feels a bit disingenuous to me. What it was is a riot and and an insurrection, but not a coup.
It's an insurrection (non-government/military attacking government property/people). A coup would be if it was another wing of the government or the military doing the attacking.
The belief that a bunch of 20 year olds can joke a president into office, stage a coup using memes or currently take down Wall Street with emojiis is the funniest thing and is itself a joke created by and believed by these forums.
I don't think you can make specific philosophical assertions about a very large group based off a hobby. Just like we can't say that all react developers are minimalists, we can't say all WSBer's are nihilists or anything else.
I think you have some very fundamental misunderstandings about 4chan, including who it was composed of and what both their stated and achieved goals were. As a hint, remember that 4chan is a chan made up of several sub-boards with different user niches across boards. Even if we narrow it down to /b/ or /pol/, you still have competing internal factions and different movements across time.
Nor is your quote an example of nihilism, even in context. Nihilism is a rejection of perceived realities and the certainties tied to those realities - someone who believes truth doesn't really exist is engaging in a form of nihilism. You seem to want to say something like "they're attacking social norms" as best as I can understand.
> we can't say all WSBer's are nihilists or anything else
This type of counterargument seems to be very common in the internet.
Can you explain how valid you consider "we can't say all X" argument being in general? How can you make reasonable arguments about group or people so that this argument is not valid.
So usually a setup of "All Xs are Y" is used to setup a straw man. By taking a large and diverse group and simplifying it down to a single viewpoint (that's not a tautology) then you're setting up an out group to be attacked under a single characteristic. An example of this usually goes: "Well, Christians believe the world was created in 7 days, and since we have good evidence the world wasn't created in 7 days, Christians must be insane." You just took 2 billion different people, who are spread across factions with internal debates and arguments, and simplified them into a straw man that at most represents a small percentage of that slice.
Sometimes we do want to make broad statements. "Kids like minecraft!" is kind of wrong, but it's kind of right and isn't necessarily a straw man. It'd be more accurate to say something like "About 70% of kids report playing minecraft"[1], or we can keep to anecdotal evidence: "all my nieces and nephews play minecraft". Those statements are generally correct. We still have some data problems - a kid is generally going to give you the answer they think makes you happier, and they're probably pretty relaxed about half-truths to annoying uncles/aunts asking them about gaming habits.
If our goal is to make truthful (as in, accurately representing reality) statements, then we need to be precise and avoid broad strokes when we describe a group. [2]
[1]: I'm making that stat up as an example
[2]: On the other hand, if our goal is to define an out-group and attack them, then broad strokes and vague insults are really useful and hard to counter
> we can't say all WSBer's are nihilists or anything else
The parent poster didn’t say that, though. They said that the group was nihilist. A community can have a shared attitude and outlook; that doesn’t mean that outlook is shared 100% by the members of that community.
If you think "Kill All Normies" as a statement used on 4chan is serious, then you better call the FBI and start reporting all the #KillAllMen for Twitter users.
You are a textbook example of someone who simply just "does not get it".
I don't understand the claim that it's a 'middle class' phenomenon, it's just where the nerdy side of the work class youth ends up. That was I've observed first hand and from my personal experience.
I don't get how this hurts the elites or whoever else apathetic to the WSB crowds. Margin loans are collateralized. Wall street firms are making record trade profits (or at least much better than main street banks). Like lottery this can only hurt those who actually play the game.
Language like WSB uses is meant to amuse edgelords and (hopefully) upset 'normies'. When normies are offended by cavalier use of slurs and labels (and if you're offended, you're by definition a normie), the edgelords point and laugh at the normie who doesn't share their same nihilistic worldview.
WSB is what happens when immature, nihilistic, overly online middle class boys grow up into immature, nihilistic, overly online men-children. The only thing that changed as they aged is now they have to hide their power level while in normie society.
i think that's reductive and while it feels true, it probably isn't. it's the same logic with which i can say HN is a bunch of mostly male programmers who take themselves too seriously, think they are much smarter than everyone and probably mostly all share the same personality traits
it's not quite true, and reducing a whole lot of people into one easy bucket dumbs all of the conversations down. IMO wsb is pretty riveting, and i would love to hear more nuanced takes on the sociology/mindset behind these types of communities, especially the legality when it comes to the market and what the future holds. at what point will WSB become illegal in the way that it moves stocks around? etc.
WSB is more about laughing at themselves rather than trying to amuse or offend someone. WSB doesn’t care much about so called “normies”, they have never attacked anyone outside of wsb and labels don’t spread outside of wsb either.
WSB never had nihilistic worldview, there’s plenty of people supporting each other, there’s regular donations to charities, and etc.
WSB is just a tongue-in-cheek ridicule of the finance world, that’s it. Attempts to see some specific class of people lurking there is just not true at all and mostly people project their views on the finance world onto WSB as well while it’s a completely different thing.
And I think that's fundamentally the point (for those who think through it that far and aren't just following the crowd).
2008 produced a lot of resentment of the heads-I-win, tails-you-lose financial arrangement (in terms of financial services companies) of the Western world, but there wasn't any attainable way of actually taking action based on that belief.
Now, there is. WSB gets to have its lulz, specifically at the expense of those they feel wronged them (banks, traders, etc).
As the saying went in Eve Online from Goonswarm, it doesn't matter if you lose 1,000 ships, if everyone wants to hang out with you instead of the other team. Cultural victory.
I imagine the first HFT firms felt very similarly.
As someone who has spent the last few months following WSB, to me it feels very much like an old school Internet club/social scene/etc. Reminds me a lot being involved in a niche IRC community or something.
Along with all the silliness, there are a lot of smart people posting very interesting things on the forum. Open, free for anyone to read (in a hack-the-finance-planet) sorta way.
You have people writing in-dept thesis' on which way a stock is heading / what happened yesterday / how to "play" the trade. Its clear some of the people are serious as they put hundreds of thousands up against their theory.
Along with this you get a bit of a stick-it-to-the-man feeling as well. I will shed 0 tears if a bunch of people on reddit bring multiple hedge funds down. Perhaps the entire finance world should be more open, equitable and accessible!
There are a lot of statements in these subcultures that can't be definitively pinned down as ironic or not ironic. For example, calling software "broken" started as a gross oversimplification that drew attention to itself as a gross oversimplification. It could be used when you wanted to gloss over complex questions of what the software is good for and what you need it to do, while at the same time, to avoid lying by omission, drawing attention to what you were omitting.
But then people started calling software "broken" to express, "My gut feeling is that this software sucks, and I think it would be a waste of time for me to question or attempt to substantiate this feeling," and they felt validated in that attitude because there was a perfect means for expressing it in the programming lexicon.
Now when I hear someone say "broken," it doesn't have the reassuring subtext of "I know this is a gross oversimplification, and I'm open to providing more detail about my reasoning." It might mean the opposite. (Or it might mean, "I'm making outrageous statements because I know I'm right, and I would relish the opportunity to bully anyone who questions me.")
Similarly, one person might say "everybody hates me, and I can't blame them because I'm worthless" in a deliberately ironic way, to express an emotion and at the same time signal their awareness that what they believe under the influence of that emotion is not true (since their mom is bringing them tendies in the basement.) The next person might say the same thing with no intended irony.
Whatever "nihilism" WSB exhibits is as nothing compared to Wall Street and the securities/finance industry overall. It's almost laughable to talk about, I'd say. They're like a dog chasing its tail. It's a mistake to take them more seriously than they're taking themselves.
With interest rates at 0% and a quarter of all US dollars in existence having been created in the last year, there is no other choice besides speculation to have any hope of getting ahead. Policymakers have made quite clear that "work hard, save money" is a suckers bet.
have they? my meme positions have barely broken even this year, while the S&P 500 is up ~19% over the same time period. working hard and investing the bulk of my savings in broad market ETFs is working quite well for me so far.
This is just your own sample not representative of the overall picture (not claiming that mine is representative either). Out of my group of friends that I talk to almost every day and bet on "meme positions" (all fairly similar to each other in terms of which positions we pick), it is all over the place.
Just for this year alone:
One person in a significant negative this year.
One with a small negative.
One with 45%+.
One with 77%+.
One with 110%+.
One with 247%+.
It is less about which specific "meme positions" you enter, but when you enter them and when you exit them. As well as predicting certain "meme positions" before they show up on WSB, but that one had a very small effect on our portfolios, given it is something really difficult to predict correctly. And mine you, none of us went full yolo wsb-style. None of us bet our life savings, we were just betting fairly consistently and on a lot of different things. And even the highest gainers never went full yolo and dropped more than 5-7% of their portfolio on their biggest bets
> It is less about which specific "meme positions" you enter, but when you enter them and when you exit them.
this is a good point. I mostly entered my positions after the symbols had gotten a day or two of buzz on wsb, which is usually too late to realize significant gains. my buddy had more of a yolo strategy: "buy anything sufficiently ridiculous the first time you see it on wsb". he did a lot better than I did. I do it for fun mostly. I realized early on I don't have the stomach to put large amounts of my money into memes, and the amount of time I've spend watching tickers for 2-4% of my portfolio value simply isn't worth it on a $/hr basis.
my main point is just that this was a great year for frugal people with good jobs who invested their savings somewhat conservatively. the (unrealized) gains from my s&p etfs this year exceeded my actual salary by quite a bit. I don't feel like a chump for not going all in on short-dated options.
Pretty good analysis, but I don't know if I agree with some of the final lines. Hard to see this as a "Molotov cocktail through the front window of the country and the global financial system". I mean they are literally playing by the rules of the financial system. This isn't Occupy Wall Street, or anything close to that. Sure, I get that they will declare bankruptcy and move on, but ultimately the major players of the global financial system are happy if people are buying stocks, win or lose.
Mostly a fringe benefit I think or some sort of minor act of rebellion against the system they feel screwed them over rather than some sort of organized protest like Occupy.
WSB (r/Wallstreetbets) is basically just an ultra-popular subreddit for gambling via buying options on stocks, which allow you to significantly increase your risk for potentially insane returns (feasible chances at 100-500%+ returns, but also a great chance you will literally go broke). This style of gambling is very easy to do and requires nothing more than a phone app for a brokerage (most commonly Robinhood) and a little cash (a few hundred dollars is definitely enough for some fun), with many users having little prior investing experience or knowledge. It's also much more fun to do in groups and to brag about on the Internet, as most things are.
Although many of the users have a lot of fun doing this, I'd personally estimate it has so far caused more than ten suicides, perhaps significantly more. I don't have a source for this aside from the number of subscribers (2,000,000) multiplied by an approximate amount of how many experience gambler's ruin at some point (..a lot, even many lucky ones), multiplied by a very low suicide success rate for some people who are hit particularly hard by losing money they've worked and saved for for years or decades. Having been near people gambling in one way or another for many years, it's difficult to state the amount of pain that someone can experience from abrupt financial losses, but we have had confirmed suicides from something as 'minor' as a glitch showing a user they had lost much more than they actually had (QA literally saves lives!): https://www.forbes.com/sites/sergeiklebnikov/2020/06/17/20-y...
Coupling this with the current scenario of our market (very high volatility and strong upwards momentum in sectors anywhere from tech to IPOs to SPACs to cryptocurrencies) we are living in some interesting times. Investing has felt increasingly more like a casino to me over the last few years, and it seems to be entering its final phase at this point: you may want to avoid the casino, but the casino has become quite efficient at making this very hard to do, expanding its reach until you somehow find yourself surrounded by slot machines and lottery ticket winners. With popular stocks from FANG to Tesla having doubled or even 10-20X'd investors' money within months, you will be hard-pressed to keep yourself on the safe side of the gambling<->investing dichotomy.
I'm not sure exactly where this ends up, besides, well, exactly where we are right now: more and more speculation, gambling, and volatility. Whether we will enter a 'single' bubble and eventually crash or just maintain this higher-risk chaotic state is of course, not predictable by me (and even if I could could predict bubbles, it is useless without precise and accurate timing predictions), but I must admit I've found myself falling into higher and higher risk 'investing' as well, especially as I found myself growing bored during covid lockdowns. I do think we will see some changes from the SEC at some point to try to curb this as well (also very interested in what they will do with WSB at some point, if anything), but those that want to gamble will always find ways to do so, so it may be futile. All I can say for certain is that you should be careful and to repeat the old adage of never investing what you cannot afford to lose, but both financially and emotionally.
Interesting take - especially the tie in to other internet culture. I think it might be a bit over analysis and a lot of people just effing around (people actively taking advantage) enjoying the ridiculousness/oneupmanship of the subreddit thread. I would say that the thread rewards ridiculous behavior by the upvote dopamine loop (small but some level of street cred in the subreddit).
I also wonder how many institutional investors now have algorithms developed or at least monitor this thread.
I understand the nihilism. When you start earning vast sums of money very quickly, and see other people do the same, you start getting a sense that money isn’t really worth working all that hard for.
I’ve been making about 5k or 6k a week regularly this past year in the stock market with little effort, through stock appreciation and selling options. It definitely makes me feel less motivated to do my job, but the one thing that keeps me going is that I know this situation is not forever and the market goes through feast and famine cycles, so I need to maintain a job. But certainly nothing more ambitious than that, I have no plans to ascend into management or whatever bullshit that has me taking more work and responsibility for slightly more pay. Once I have a resilient source of passive income I’m off to be a gentleman hacker. Working hard for money is a waste of life.
This is certainly part of it too and something I wish I expanded on more. When you can make so much money without really doing much hard work can seem like a suckers game.
Society looks up to people who make a lot of money through hard work, but a person who makes a lot of money with little effort is kind of seen as a lazy douche, only looked up to by people who also want to make fast effortless money (r/wallstreetbets).
But what really crushes me is people who work a lot harder than me and make a lot less money. I dated a younger girl recently who worked hard every week while also finishing her university courses. She prided herself on being a hard worker and assumes I work hard too since I make a lot of money. But the truth is I can make what she makes in a week by selling a couple option contracts while on my phone taking a dump. To me it pretty much feels like she’s a slave. All that youth being wasted chasing small amounts of money.
Of course, I would never want to give up my income stream just to feel better.
"It’s a bunch of autistic losers that live in their mom’s basement who are gambling what little money they have to try and become rich to live lifestyles of hedonism."
Clearly written by someone who has never interacted with the community beyond reading the sidebar on reddit. Also explains why the rest of the article is mostly wrong.
Along this note, the new generational warfare is Gen Z vs Millenials.
Gen Z posters are mostly tired of the millenial narrative of boo-hoo the system is rigged, I'm so poor, why won't someone give me free stuff and it's a meme to make fun of millenials on TikTok for saying this.
I wonder how it'll go for them given they're mostly still in college / high school but we shall see. They've mostly graduated into a booming economy, got well paying jobs just as they graduated but that might all change in the next few years.
I for one am pretty tired of all the doom and gloom inequality nonsense all the time. I did everything right and am not successful story doesn't resonate with me at all for one. Most people who went to college and chose a standard, decent major (business, law, medicine, engineering) are doing pretty well for themselves. Yes we had 2008 and things really sucked just as we were graduating, but so what? Lots of people (including me) have dug ourselves out of that deep career hole. Don't blame rich people for your nonexistent career. Even if you took away all of Jeff Bezos' wealth and wiped out college loans, the career you've built for yourself doesn't change.
There's a bit of survivorship bias in this response, some eras are a lot less forgiving than others. It would be disingenuous to claim that hard work is the only factor for success.
Yeah that's fair. I think I need some concrete data before making statements like these - In absolute numbers, Millenials haven't been hitting the financial milestones that their parents did (incomes, home ownership %, retirement savings etc.).
If that's worth the non stop complaining, I have to figure out.
I love WSB. Up 200% on GME, 240% NIO, 60% on Carnival Cruise. They have decent insight when you learn their lingo. They also admit this is gambling.
Current GME argument. A short squeeze will come around April. Long term the guy that fixed Chewy is going to take over. It will become a good company again. However between those two sentences is a gap where the stock will go back down to 5-10. Current theory: ride the fucker to 300-500 like VW when it was short squeezed. Get out while there are still bag holders. Get back in later.
Thinking aloud, it's not the easiest thing to calculate. You can can short a stock and acquire it right after without closing the two net-zero positions. Why? To mess with short interest calculations. You do lose trading fees and spreads whenever you do it.
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[ 1.8 ms ] story [ 280 ms ] threadReally great contribution there, appreciate you sharing your thoughts and furthering the conversation.
What LogicSlave said is dead on accurate. Lowering the barrier to market entry has empowered millions of people to make their money work for them. Is some of it unhealthy? Absolutely. But not all gamblers are addicts, and its not all counter-productive either. The downside is that many are jumping in without fully understanding the risks, but in my opinion, the best way to learn the game is to play. Investopedia fantasy portfolios are a risk free way to try it out, but those have been around for decades and few people use it as an opportunity to learn the market.
Markets and the choices you make them in can be incredibly complex. Most people don't have the time and drive to deal with that, no matter how much you "democratize" the technology.
Fully agreed here. My point wasn't to say that people are taking on Wall St. and getting rich quick by developing a deep understanding the mechanizations of the market. But you don't have to understand a gamma squeeze to make money. In the past, brokers were a luxury only the wealthy could afford, and I think it's a great thing that that is no longer the case.
https://www.youtube.com/watch?v=w2euIWm6Ch4&t=1m15s
A bunch of people who didn't attend Columbia, Harvard, and Yale Business Schools are using a fucking phone app to do what only they used to be able to do - manipulate the market. And its pissing them off. For decades, these arrogant little shits were told they were the Masters of the Universe.
Now they're finding out firsthand that it just ain't so, and their egos can't handle it.
You tell me.
People having access to exotic investments they didn't understand (and hence couldn't correctly price) was exactly how we got 2008.
Wall Street benefits from volatility and all of this trading, they aren't losing any edge.
Unless you're the guy posting the "hot tips" that you just happened to buy a bunch of shares in a few minutes ago hoping that the sheep will push up the price for a moment.
But as someone who spent most of their career running sizeable vol books, there are a few people on /r/wsb who do understand options, or at least they understand gamma, which is more than I can say for 90% of the morons on Twitter.
But even on /r/wsb there are clearly people who are trading at proper buyside shops. You can tell by the way they write, the things they say, and the knowledge they hold. And yet they come to /r/wsb for some of the same reasons that TFA highlights.
> It’s a bunch of autistic losers that live in their mom’s basement who are gambling what little money they have to try and become rich to live lifestyles of hedonism
square with
"These people were involved in very meaningfully moving a stock price around" ?
Well, they apparently do move markets. Whether that's good or bad remains to be seen and there's no telling what sort of action the SEC will take to curtail this. IMO all it will take is one bad day to have something happen. But wsb does understand one thing: the barriers to entry are artificially there - it doesn't take a quant with an MIT education to make and lose money.
Seems unlikely. More likely that wsb is a sampling of common knowledge among people who invest in markets, and markets also move based on common knowledge.
What is the evidence for this?
At some point they move the needle just enough for the algorithmic trading, and FOMO of others to take over. But it still started there. Although now there is probably some level of watching WSB to see what their next move is and just trying to ride that wave.
It isn't possible to assert that there is no other reason. The world is very large, there are a lot of people in it and strange things happen.
Us not being able to think of a reason apart from WSB is different from WSB being a cause of something.
Sep 1: $7.65 Nov 2: $10.75 Jan 4: $17.25 (125% Gain here already) Jan 25: Intraday high: $159.18 (More than 20x Sep 1), Close $76.79 (Right about 10x Sep 1)
There is nothing in any form of business analysis that justifies that. The best explanation that exists is WSB. Its not just WSB doing the trades, they just are a spark that ignites the fire. After that people (and algorithms) are trying to ride a wave of momentum.
You haven't consulted all the business analysts in the world before saying that though. There might be something.
I get that you're convinced - but you aren't presenting an actual line of thinking that links the two things. You've just noticed that WSB is talking about something and the thing goes up - this is the famous correlation and causation problem.
> On the surface, it seems really weird but it’s mostly a type of gallows humor that permeates a lot of especially young millennials and zennial men.
It is a humorous constructed setting that is not necessarily reality. As an aside, I'd never seen the phrase "gallows humor" to describe this sort of ?? post-irony.
> On the surface, it seems really weird but it’s mostly a type of gallows humor that permeates a lot of especially young millennials and zennial men.
The key is "the basic surface-level story" and "it's mostly a type of gallows humor". It's a story or myth, not reality. You'll see a lot of this self-deprecating humor on other 4chan-adjacent communities.
Also, I do not think that Jeromy Sonne is speaking from a position of experience with the wsb community. He has an entry-level understanding of internet communities but the article is mostly fluff and speculation instead of first-hand knowledge or research. Plus, a lot of content on wsb is "artistic works of fiction and falsehood", just like 4chan.
Attracting attention about GME, a stock with more shares sold short than exist, gave a much larger pool of players a rallying cry to drive a short squeeze.
Any “risk of short-squeeze model” just imploded in the last 96h.
Any “guaranteed profit” short positions just exited imo.
Add on top of that algorithmic / momentum trading following trends.
You have stuff like this person, top 3 post of all time on there from Friday (2 days ago): https://www.reddit.com/r/wallstreetbets/comments/l2x7he/gme_... Based on the way things went today, they had to be up over $10M maybe even $15M for a minute there. People see that and get jealous. Say they cashed out. Now they have at least 10x the money as before and can move the needle even more. Also worth noting initial price of what they have now is almost $800k. So while the description is about gambling little money, high stakes gambling pays off for some. Going back in history, this person seems to have started piling in to GMU in June of 2019, and kept going since. But no real indication of how much they had to start with, or anything like that. Did they have some other bet that they played before this? No idea.
Edit: Also, forgot to mention if you move the needle enough short sellers end up getting margin calls driving the price further up as they get liquidated. https://markets.businessinsider.com/news/stocks/gamestop-sto...
Someone posts: 36x gain!!!1
And then someone posts: I lost everything.
Should that be a motivation to spend all your money playing roulette?
Also, although WSB has had some affect on the GME squeeze, it was originally identified by no other than Michael Burry, the guy from the movie the Big Short. He's been in the GME game long before the reddit army joined in.
[1]https://www.businesswire.com/news/home/20190819005633/en/
there's a big subset there that is obviously cash strapped and desperate. there are also people there with 6-7 figure net worths that are just passing the time.
the DD is actually "okay" once you cut thru the lingo and I'd be willing to bet most people learn a lot about market mentality with trial by fire.
short squeeze ain't over btw
I think the cultural links with 4chan are interesting and non-obvious to someone who didn't grow up knowing about those sorts of communities.
Gross. How has this not been flagkilled for ableism yet?
Just "losers" is sufficient.
See, for example, ThoughtSlime's coverage of fascist militias.
https://www.youtube.com/watch?v=pZMWQDvZQZs
Nietzsche is a frightening author, but I think what he writes is the logical conclusion of what we've done by championing existentialism. "The end doesn't matter, the true meaning is the friends we make along the way." WSB is taking that and running with it.
My general take on these shows is that you get a bunch of men in their 30s, put them in a gym where the blood is flowing and they’re thinking about how their life compares, and put a TV in front of them with stock advice. Bam! Manipulation.
If you had a short position and a TV show, wouldn’t you want to convince other people that your short position is correct? And if you could mobilize more people to take a long position, couldn’t you make money that way, too?
Taking credit card advances to YOLO into short-dated OTM call options is drug-addict level desperation. People joke about YOLOing their inheritance - and I suspect there’s some reality to it. Their parents’ entire life’s wealth can’t dig them out of whatever hole their in.
The CNBC guys freaking out is incredible. Their Cramer feud is gold. But... this trend is different than people picking random internet stocks in the 90s. It’s desperate.
In 1999, people under 40 were gambling large sums that, if lost, could be made back through x months of work.
In 2021, people under 40 are gambling any random ad hoc payment they receive in the attempt of calling it a career.
The reason? 10% of our country have great jobs, and the rest have none. That is a result of policy.
https://www.census.gov/data/tables/time-series/demo/income-p...
I'm not here to argue a failed economic system in this thread, but the motivation behind wsb's nihilism is exceptionally clear.
https://www.pewresearch.org/fact-tank/2020/09/04/a-majority-... (A majority of young adults in the U.S. live with their parents for the first time since the Great Depression)
https://www.cnbc.com/2019/02/11/this-is-the-real-reason-most... (66% of bankruptcies are tied to medical issues)
https://www.theatlantic.com/ideas/archive/2020/02/great-affo... (The Great Affordability Crisis Breaking America)
https://www.theatlantic.com/ideas/archive/2019/02/new-americ... (Globalization)
https://www.lynalden.com/money-printing/ (Assets bubbles from central reserve QE)
https://fred.stlouisfed.org/series/WALCL (Fed Total Assets)
[edit] There's a lot of reasons for the increase in the actual price of accommodation. They're largely driven by local ordinances. Setback rules, minimum size rules, minimum number of bathrooms/closets/etc all - all sorts of code things.
Further, in major metros city councils refuse to increase supply to meet demand - to benefit existing landowners.
One solution to this is national zoning rules like Japan has.
https://fred.stlouisfed.org/series/ATNHPIUS53033A
While incomes have indeed gone up in real terms, mandatory living expenditures for all Americans who don't consider a park bench to be shelter have also gone up in real terms in a more than proportional manner.
As for housing, the cost per square foot, adjusted for inflation, is only 12% higher than it was in 2000. (Moreover this doesn't account for the major improvements in new housing stock, such as fire safety, attached garages, swimming pools, high ceilings, central A/C, high-capacity electrical circuits, etc.) The median cost of housing has only gone up, because consumers have demanded substantially larger homes.
And this ignores the fact that mortgage rates are substantially lower than historical averages. Even accounting for our bigger, nicer homes, the percent of expenitures on shelter has barely budged from 18.7% in 2000 to 19.1% in 2019.
[1]https://www.bls.gov/cex/2019/combined/age.pdf [2]https://www.statista.com/statistics/682549/average-price-per... [3]https://www.bls.gov/cex/2005/standard/multiyr.pdf
I'm not ignoring these at all, and it should be clear where these lie on Maslow's hierarchy versus shelter, healthcare, and earning potential (education) [1]. Mortgage rates being low only means you're bidding up scarce assets further by borrowing with the little income you have. This attempts to sell affordability in the same way a car dealer salesperson sells you on the payment, not the price.
And transportation? The average price of a new car just surpassed $40k [2]. There's a reason 7 year car loans have become common [3].
[1] https://www.reuters.com/article/us-usa-fed-dudley-ipad/ipad-... (“I can’t eat an iPad.”)
[2] https://www.usatoday.com/story/money/cars/2021/01/07/new-car...
[3] https://www.npr.org/2019/10/31/773409100/the-7-year-car-loan...
In nominal terms, the inflation rate of new cars was in aggregate 3.5%[1] since 1995 (not 3.5% per year, 3.5% total.) Over the same period, household after tax income increased by 111% in nominal terms. Therefore the affordability of a new car, for the average household, doubled over the period.
Moreover the average longevity of a car increased from 8.5[3] years to 11.9 years[4]. That means the amortized cost of one year of car ownership, in terms of household income, has fallen by a factor of three.
[1]https://www.in2013dollars.com/New-cars/price-inflation/1995-... [2]https://www.bls.gov/cex/1995/aggregate/age.pdf [4]https://www.caranddriver.com/news/a33457915/average-age-vehi...
You should compare workforce participation from 1999 and 2021, and you should compare savings rates by age bracket.
Two large expenses, health and housing, have skyrocketed in the past two decades.
https://www.pewresearch.org/ft_dual-income-households-1960-2...
Truly, this is a speculative bubble that is going to pop very, very hard.
I am not a tax professional but I would recommend at least talking to a tax professional about that. Taxes are generally due upon realization of income/capital gains; the quarterly thing is simply because it would be too onerous to have to report literally every single gain/loss as they happened. But I'm not going to sit here and argue with you :)
It's actually somewhat rational. Say you just graduated college and make 30k as a waiter. You scrape together savings, loans, CCs, etc. and pull together 20k. Take that to Robinhood 2-3x it with margin and place a 50k bet that has a 8% chance to pay off 10x. If you "win" you're up 15 years of wages or more. If you lose, well, you declare bankruptcy and shit gets wiped. It's not like you were buying a house or a nice car on 30k a year anyways.
If you're so daft that you think its okay to give literally trillions of aid to companies in the form of tax breaks, bailouts, subsidies, and other horseshit, but letting people write off mere millions in bankruptcy proceedings because they know at a fundamental level that the system is - if not broken, definitely malfunctioning - then brother, you are part of the problem here.
(I skipped a few obvious steps.)
Throwing $500-1000 a month into OTM options trading can generate life-changing amounts of money. That's like the lease payment on a 3 Series BMW. So it's pretty sustainable for working pros.
Not if you're buying options (calls or puts to open). Maybe you're thinking about short selling, or selling naked options.
I think you might be in a well paying profession
The average salary for people with a college degree is about $50k: https://www.indeed.com/career-advice/pay-salary/average-sala...
> Say you just graduated college and make 30k as a waiter.
This is only rational in the US
You're telling me 10,000 (if even?) guys sitting at home doing retail trading have $1M each in positions driving this? 100,000 people with $100,000 each, during the day?
I think it's quant and algorithmic trading.
I would love to hear from an expert though.
Market cap > available shares Available shares > traded shares Traded shares > actual $ involved
Yeah, I wonder if ML-driven investing is being tricked by reddit into buying stock in failing companies and causing a runaway effect. If so, it makes me nervous that lots of stocks might be massively over-inflated right now.
https://www.bloomberg.com/opinion/articles/2021-01-25/the-ga...
The narrative of GME has been building for weeks before any news coverage happened. This isn't the first stock to blow up from WSB, but there are a few others in past weeks (none that have reached GME levels) such as BB, PLTR, and previously ABNB (whatever new stock that has IPO'd).
There are a handful of users that have $1M positions (some smaller ones, like a user that reported $250k into $7M, back down to $4.2M). Collectively, the community appears to drive hype towards different stocks based on flimsy things.
Without a doubt there's HFT (High frequency trading) happening, but these social communities are having an impact.
What that means is that people controlling those communities (including mods) have an immense advantage.
No, it's the same retail people trading in and out. Someone w/ $100 in buying power can generate $2000 in traded value pretty easily just buying & selling 20 times, which some retail people do because they don't know what they're doing.
There's also going to be HFT market makers flipping their position and taking the other side, which almost doubles the volume compared to what it would be if there were no MMs. It's not a capital intensive business and they can trade huge volumes with very small capital.
Then there's going to be GME options market makers who are getting gamma squeezed and hedging their deltas. That would explain a bit.
The hedge funds getting squeezed explain about ~30m of the volume (assumption that 50% of the short float got squeezed), or perhaps more if they covered their position yesterday and decided to put it back on today.
Probably also some totally new hedge funds coming in today with a short as well, although that won't explain much volume since the entire float was shorted (and them some, due to naked shorting) and naked shorting is technically not allowed.
I'm sure all the prop firms were all over it today, as well, and they're going to be in and out with up to $1m positions.
Matt Levine wrote about this in his Money Stuff newsletter today. I highly recommend the newsletter.
In summary, the options have an amplifying effect on the total volume because of the hedging by market makers. Pair it up with a meme stock, and you have a lot of weird stuff happening all at once.
Primarily explained in the 2nd paragraph, but setup in the 1st paragraph.
"Second, a lot of people (on Reddit) who like GameStop don’t buy stock; they buy call options. If you are a retail trader looking to gamble on a stock, you can buy call options to get leveraged exposure to the stock. For instance, last Tuesday (Jan. 19), you could have bought a $50-strike call option on 100 shares of GameStop stock expiring this coming Friday (Jan. 29). Bloomberg tells me this option would have cost you about $3.35 per share, or about $335 for a 100-share option contract; the stock closed that day at $39.36. If you sold the options on Friday (Jan. 22), when the stock closed at $65.01, they were worth $18.16 per share. 4 You put in $335 and got back $1,816; you made a 442% return in four days. If you had just bought 100 shares of stock instead, you would have had to put in $3,936 to get back $6,501, a 65% return. Of course if the stock had stayed flat instead of going up to $65.01, you’d have lost 0% by buying shares and 100% by buying the options. So options are great if you have a relatively small amount of money and want to take a lot of risk with it. If, for instance, you are a retail trader on WallStreetBets."
"Meanwhile the market maker who sold you the options would have hedged its option exposure by buying about 40 shares of GameStop stock, for about $1,575. (This—the fraction of the underlying shares that the market maker buys to hedge the option—is called “delta.” 5 ) Your $335 of option premium caused $1,575 of stock buying. More important, as the stock goes up, the market maker will adjust its hedge by buying more stock—by the end of the day on Friday, the market maker would have owned about 80 shares. (The change in delta as the stock price changes is called “gamma,” and people who like this sort of technical explanation love talking about “gamma.” 6 ) You haven’t done anything else—you bought the options on Tuesday, and then stopped trading—but the market maker kept buying hundreds of dollars more stock as the stock went up to keep the option hedged. 7 Multiply that by the extreme popularity of GameStop options, and you get a lot of stock being bought as the price goes up—which, of course, pushes the price up more."
[1] https://www.bloomberg.com/opinion/articles/2021-01-25/the-ga...
$1816 in profits, from this one trade, while nice, isn’t really a game changer.
The likelihood is that you’ll make increasingly bad bets, and will eventually lose all your principle.
So the idea that WallStreetBets is a significant player in all this is nonsense and actually might be propaganda flak coming from the "responsible" people in the media, etc - journalists in the financial sector love rumors and such things and it is a nice cover story as "fog" to hide the fact Wall Street is so manipulated by the big players.
turns out there were so many of them the market makers got the price in the money just by hedging via a chain reaction of sorts, called 'gamma squeeze'. see also https://www.swfinstitute.org/news/83341/what-is-a-gamma-sque...
you could say the market was broken for a couple hours this friday. funds not used to losing money (market makers like citadel) lost money. eyebrows were raised.
Are banks/brokers selling you the call because they think they will make money from it? Or are they doing it because they are acting as a market maker role and just wanting to have liquidity in the market?
Edit: read some other comments here and I think I understand now.
But a situation like the one on GME where there is MASSIVE and sudden interest in the stock to the tune of billions of dollars worth of buy orders for both stock and options being placed in a short amount of time along with tens of thousands of people encouraging each other not to sell combined with the insane short interest and shares held by institutions that reallocate infrequently...you can end up with a disaster like the GME gamma squeeze that leaves MM's in somewhat of a prisoner's dilemma. They're more or less obligated to cover because the others are more or less obligated to cover. Meaning that they're ultimately all going to have to cover, driving the price up.
So usually they do make good money from selling options since they ultimately keep the premium of most options. Sometimes they don't though.
More often than not, the calls will expire worthless.
If this guy is legit, he spent $40,000 on OTM calls, at $0.40, and bought 1000 contracts.
The contracts went up to $48.65, being worth $4.83 million.
That is some serious YOLO.
Language like WSB uses is meant to frustrate outsiders and limit posers. It makes it hard for the media to reprint things that are said, and even if it does, it would be nonsense. That's intentional.
And yes, there's double meanings and jokes to some of this language. Many WSB'ers comprehend the gambling-esque nature of what they do, and how many of their strategies aren't traditionally recommended.
There are definitely some smart people on wsb, but I very much doubt the use of silly language (like, say, calling bears "gay bears") is anything other than users being intentionally ridiculous and funny.
[edit] to be clear, I'm parroting WSB.
Massively increase the mutation rate, provide instant fitness feedback, and run the simulation for a substantial amount of time.
You're essentially selecting for the most mematic strains on the user population.
This is true, but WSB is also fundamentally nihilistic.
4Chan started as teenage boys from middle class families saying bad things for and fun trolling for fun. "haha lol normies take it seriously" Typical teenage nihilism that is normally not very harmful. Then it gradually escalated into really hurting people and crazy people joining. https://en.wikipedia.org/wiki/Kill_All_Normies
4chan trolling nearly resulted in a coup, its reached a new level of seriousness.
A few things:
1. It wasn't a coup, it was a protest to protest the unfair election and overall left wing bias. Same way BLM was to protest the unfairness of how black people are treated.
2. It was mostly organized on Facebook and the general "normie" web
There are several documented terrorists who are active duty police officers and the terrorist who was killed was an Air Force officer.
Seems like this coup attempt had plenty of support from the Military and Police.
I think you have some very fundamental misunderstandings about 4chan, including who it was composed of and what both their stated and achieved goals were. As a hint, remember that 4chan is a chan made up of several sub-boards with different user niches across boards. Even if we narrow it down to /b/ or /pol/, you still have competing internal factions and different movements across time.
Nor is your quote an example of nihilism, even in context. Nihilism is a rejection of perceived realities and the certainties tied to those realities - someone who believes truth doesn't really exist is engaging in a form of nihilism. You seem to want to say something like "they're attacking social norms" as best as I can understand.
This type of counterargument seems to be very common in the internet.
Can you explain how valid you consider "we can't say all X" argument being in general? How can you make reasonable arguments about group or people so that this argument is not valid.
Sometimes we do want to make broad statements. "Kids like minecraft!" is kind of wrong, but it's kind of right and isn't necessarily a straw man. It'd be more accurate to say something like "About 70% of kids report playing minecraft"[1], or we can keep to anecdotal evidence: "all my nieces and nephews play minecraft". Those statements are generally correct. We still have some data problems - a kid is generally going to give you the answer they think makes you happier, and they're probably pretty relaxed about half-truths to annoying uncles/aunts asking them about gaming habits.
If our goal is to make truthful (as in, accurately representing reality) statements, then we need to be precise and avoid broad strokes when we describe a group. [2]
[1]: I'm making that stat up as an example
[2]: On the other hand, if our goal is to define an out-group and attack them, then broad strokes and vague insults are really useful and hard to counter
The parent poster didn’t say that, though. They said that the group was nihilist. A community can have a shared attitude and outlook; that doesn’t mean that outlook is shared 100% by the members of that community.
You are a textbook example of someone who simply just "does not get it".
WSB is what happens when immature, nihilistic, overly online middle class boys grow up into immature, nihilistic, overly online men-children. The only thing that changed as they aged is now they have to hide their power level while in normie society.
it's not quite true, and reducing a whole lot of people into one easy bucket dumbs all of the conversations down. IMO wsb is pretty riveting, and i would love to hear more nuanced takes on the sociology/mindset behind these types of communities, especially the legality when it comes to the market and what the future holds. at what point will WSB become illegal in the way that it moves stocks around? etc.
WSB never had nihilistic worldview, there’s plenty of people supporting each other, there’s regular donations to charities, and etc.
WSB is just a tongue-in-cheek ridicule of the finance world, that’s it. Attempts to see some specific class of people lurking there is just not true at all and mostly people project their views on the finance world onto WSB as well while it’s a completely different thing.
2008 produced a lot of resentment of the heads-I-win, tails-you-lose financial arrangement (in terms of financial services companies) of the Western world, but there wasn't any attainable way of actually taking action based on that belief.
Now, there is. WSB gets to have its lulz, specifically at the expense of those they feel wronged them (banks, traders, etc).
As the saying went in Eve Online from Goonswarm, it doesn't matter if you lose 1,000 ships, if everyone wants to hang out with you instead of the other team. Cultural victory.
I imagine the first HFT firms felt very similarly.
Along with all the silliness, there are a lot of smart people posting very interesting things on the forum. Open, free for anyone to read (in a hack-the-finance-planet) sorta way.
You have people writing in-dept thesis' on which way a stock is heading / what happened yesterday / how to "play" the trade. Its clear some of the people are serious as they put hundreds of thousands up against their theory.
Along with this you get a bit of a stick-it-to-the-man feeling as well. I will shed 0 tears if a bunch of people on reddit bring multiple hedge funds down. Perhaps the entire finance world should be more open, equitable and accessible!
But then people started calling software "broken" to express, "My gut feeling is that this software sucks, and I think it would be a waste of time for me to question or attempt to substantiate this feeling," and they felt validated in that attitude because there was a perfect means for expressing it in the programming lexicon.
Now when I hear someone say "broken," it doesn't have the reassuring subtext of "I know this is a gross oversimplification, and I'm open to providing more detail about my reasoning." It might mean the opposite. (Or it might mean, "I'm making outrageous statements because I know I'm right, and I would relish the opportunity to bully anyone who questions me.")
Similarly, one person might say "everybody hates me, and I can't blame them because I'm worthless" in a deliberately ironic way, to express an emotion and at the same time signal their awareness that what they believe under the influence of that emotion is not true (since their mom is bringing them tendies in the basement.) The next person might say the same thing with no intended irony.
that's also an element of internet troll evil clown: "oh, you didn't really think that I meant that!"
Which reinforces WSB's claim of the market having no grounding in reality.
Just for this year alone:
One person in a significant negative this year.
One with a small negative.
One with 45%+.
One with 77%+.
One with 110%+.
One with 247%+.
It is less about which specific "meme positions" you enter, but when you enter them and when you exit them. As well as predicting certain "meme positions" before they show up on WSB, but that one had a very small effect on our portfolios, given it is something really difficult to predict correctly. And mine you, none of us went full yolo wsb-style. None of us bet our life savings, we were just betting fairly consistently and on a lot of different things. And even the highest gainers never went full yolo and dropped more than 5-7% of their portfolio on their biggest bets
this is a good point. I mostly entered my positions after the symbols had gotten a day or two of buzz on wsb, which is usually too late to realize significant gains. my buddy had more of a yolo strategy: "buy anything sufficiently ridiculous the first time you see it on wsb". he did a lot better than I did. I do it for fun mostly. I realized early on I don't have the stomach to put large amounts of my money into memes, and the amount of time I've spend watching tickers for 2-4% of my portfolio value simply isn't worth it on a $/hr basis.
my main point is just that this was a great year for frugal people with good jobs who invested their savings somewhat conservatively. the (unrealized) gains from my s&p etfs this year exceeded my actual salary by quite a bit. I don't feel like a chump for not going all in on short-dated options.
WSB (r/Wallstreetbets) is basically just an ultra-popular subreddit for gambling via buying options on stocks, which allow you to significantly increase your risk for potentially insane returns (feasible chances at 100-500%+ returns, but also a great chance you will literally go broke). This style of gambling is very easy to do and requires nothing more than a phone app for a brokerage (most commonly Robinhood) and a little cash (a few hundred dollars is definitely enough for some fun), with many users having little prior investing experience or knowledge. It's also much more fun to do in groups and to brag about on the Internet, as most things are.
Although many of the users have a lot of fun doing this, I'd personally estimate it has so far caused more than ten suicides, perhaps significantly more. I don't have a source for this aside from the number of subscribers (2,000,000) multiplied by an approximate amount of how many experience gambler's ruin at some point (..a lot, even many lucky ones), multiplied by a very low suicide success rate for some people who are hit particularly hard by losing money they've worked and saved for for years or decades. Having been near people gambling in one way or another for many years, it's difficult to state the amount of pain that someone can experience from abrupt financial losses, but we have had confirmed suicides from something as 'minor' as a glitch showing a user they had lost much more than they actually had (QA literally saves lives!): https://www.forbes.com/sites/sergeiklebnikov/2020/06/17/20-y...
Coupling this with the current scenario of our market (very high volatility and strong upwards momentum in sectors anywhere from tech to IPOs to SPACs to cryptocurrencies) we are living in some interesting times. Investing has felt increasingly more like a casino to me over the last few years, and it seems to be entering its final phase at this point: you may want to avoid the casino, but the casino has become quite efficient at making this very hard to do, expanding its reach until you somehow find yourself surrounded by slot machines and lottery ticket winners. With popular stocks from FANG to Tesla having doubled or even 10-20X'd investors' money within months, you will be hard-pressed to keep yourself on the safe side of the gambling<->investing dichotomy.
I'm not sure exactly where this ends up, besides, well, exactly where we are right now: more and more speculation, gambling, and volatility. Whether we will enter a 'single' bubble and eventually crash or just maintain this higher-risk chaotic state is of course, not predictable by me (and even if I could could predict bubbles, it is useless without precise and accurate timing predictions), but I must admit I've found myself falling into higher and higher risk 'investing' as well, especially as I found myself growing bored during covid lockdowns. I do think we will see some changes from the SEC at some point to try to curb this as well (also very interested in what they will do with WSB at some point, if anything), but those that want to gamble will always find ways to do so, so it may be futile. All I can say for certain is that you should be careful and to repeat the old adage of never investing what you cannot afford to lose, but both financially and emotionally.
I also wonder how many institutional investors now have algorithms developed or at least monitor this thread.
I’ve been making about 5k or 6k a week regularly this past year in the stock market with little effort, through stock appreciation and selling options. It definitely makes me feel less motivated to do my job, but the one thing that keeps me going is that I know this situation is not forever and the market goes through feast and famine cycles, so I need to maintain a job. But certainly nothing more ambitious than that, I have no plans to ascend into management or whatever bullshit that has me taking more work and responsibility for slightly more pay. Once I have a resilient source of passive income I’m off to be a gentleman hacker. Working hard for money is a waste of life.
Society looks up to people who make a lot of money through hard work, but a person who makes a lot of money with little effort is kind of seen as a lazy douche, only looked up to by people who also want to make fast effortless money (r/wallstreetbets).
But what really crushes me is people who work a lot harder than me and make a lot less money. I dated a younger girl recently who worked hard every week while also finishing her university courses. She prided herself on being a hard worker and assumes I work hard too since I make a lot of money. But the truth is I can make what she makes in a week by selling a couple option contracts while on my phone taking a dump. To me it pretty much feels like she’s a slave. All that youth being wasted chasing small amounts of money.
Of course, I would never want to give up my income stream just to feel better.
Clearly written by someone who has never interacted with the community beyond reading the sidebar on reddit. Also explains why the rest of the article is mostly wrong.
"The basic surface-level story of WSB is this."
The author is trying to explain that this is how the majority of the world sees the group, but the reality is different.
The video and comments here sum up a lot of it:
https://www.reddit.com/r/wallstreetbets/comments/l1u036/wsb_...
Gen Z posters are mostly tired of the millenial narrative of boo-hoo the system is rigged, I'm so poor, why won't someone give me free stuff and it's a meme to make fun of millenials on TikTok for saying this.
I wonder how it'll go for them given they're mostly still in college / high school but we shall see. They've mostly graduated into a booming economy, got well paying jobs just as they graduated but that might all change in the next few years.
I for one am pretty tired of all the doom and gloom inequality nonsense all the time. I did everything right and am not successful story doesn't resonate with me at all for one. Most people who went to college and chose a standard, decent major (business, law, medicine, engineering) are doing pretty well for themselves. Yes we had 2008 and things really sucked just as we were graduating, but so what? Lots of people (including me) have dug ourselves out of that deep career hole. Don't blame rich people for your nonexistent career. Even if you took away all of Jeff Bezos' wealth and wiped out college loans, the career you've built for yourself doesn't change.
If that's worth the non stop complaining, I have to figure out.
Current GME argument. A short squeeze will come around April. Long term the guy that fixed Chewy is going to take over. It will become a good company again. However between those two sentences is a gap where the stock will go back down to 5-10. Current theory: ride the fucker to 300-500 like VW when it was short squeezed. Get out while there are still bag holders. Get back in later.
VW’s squeeze was different as it turned out their parent was holding almost all the shares. There was only one seller left.
Here is a discussion on why they think it will go up. https://www.reddit.com/r/wallstreetbets/comments/l4tu4r/why_...
Thinking aloud, it's not the easiest thing to calculate. You can can short a stock and acquire it right after without closing the two net-zero positions. Why? To mess with short interest calculations. You do lose trading fees and spreads whenever you do it.
Then you have all of the options going around.