Who wrote the article "Pandemic Villains: Robinhood"; Matt Taibbi or one of the pearl clutchers he mocks here?
Taibbi on Dec 9th: "What could possibly go wrong with bringing more people into the stock market? A lot, as it turns out."
Taibbi today: "The only thing 'dangerous' about a gang of Reddit investors blowing up hedge funds is that some of us reading about it might die of laughter."
One of these was one of your worst takes (the first one) and one of these was the correct take (the latter). Together, though, it's a comedy of hypocrisy just as the one you mock here.
The Robinhood story was about Robinhood taking advantage of their customers, and about the issues involved with selling deal flow. I wasn't being critical of more people entering the stock markets. If anything this episode - in which Robinhood abruptly halted trading with the equivalent of a post-it note left on the fridge - underscores some of the issues with those platforms.
And, more often than not (from what I see), getting the complete wrong end of the stick... I've noticed the trend too and it absolutely baffles me because it's not as though the message in that "Pandemic Villains: Robinhood" piece, for example, was difficult to take in.
So you're paying a monthly subscription to either wilfully misinterpret or totally miss the point of these articles and then whine back about them. Very odd.
Yeah I don't get why those people are here. Maybe some of them signed up for a year because someone recommended it, but they actually don't like Matt's writing and they can't get a refund. So they troll the comments. That theory sounds pretty farfetched now that I write it out.....I'm not sure why there are so many commenters on every story trying to prove Matt wrong or prove he messed up.
i'm not setting MT up as some Infallible Golden God, but there are clearly commentities here who have some vested interest in trying to make him look bad. that makes for fun reading; trolling techniques perfected on twitter don't work so well here because of the smaller audience and necessarily longer attention span
i mean, if i, a normal person, subscribed to someone's newsletter and decided it was terrible, i would shrug, eat the loss, and move on. but why subscribe in the first place when many free examples are available? why indeed
I think some commenters are uncomfortable with Matt’s stories on media wokeness at the expense of what they expect is a traditional Rolling Stone lefty/partisan D perspective. If mainstream Ds (and their focus on wokeness as internal party discipline) are the new social power brokers, a lot of people are uncomfortable thinking on the social margins. It’s why Hilldog accused Tulsi Gabbard of being a Russian agent-power slapping back.
Matt, did you watch the interview with the CEO of WeBull yesterday attempt to explain the mechanics of what's happening and how trading firms allowed sells and not buys? It made no sense to me even after his deep dive explanation. If you had a chance to listen to it, can you with in on is accuracy? It sounded as though he didn't answer the question.
It's the same problem RH has - you can explain margin calls by volatility, you can even explain not offering options by claiming the market makers are overwhelmed temporarily (though their prices can easily rise to reflect that).
You can't explain a blanket prohibition on buys and not on sales, especially not by saying effectively you think prices are wrong because they're speculative. Price discovery is the supposed value the stock market offers.
Either this was blatant manipulation for their main client, Citadel, or the market AS A WHOLE was minutes from a liquidity crisis. Either way transparency and regulators should be here.
ESPECIALLY when the fund most affected was propped up by your biggest investor (Citadel) and THEN you took action that kept your own customers from cashing in on that loss.
BTW, besides RobinHood and that fund that was shorting the stocks, you know who else Citadel owns? Janet Yellen. They've paid her more than she will make in four years of "public service". AND, good news for Citadel, SHE is the person who is explaining the whole affair to Joe Biden.
Man, I guess it's all above board, Citadel is just really lucky and wealth inequality remains inexplicable.
The market makers are not overwhelmed they are just pricing the call options wrong. Probably done by an algorithm that doesn’t include the sheer disgust and hatred people have for Ivy League elites, vulture capitalists, and Wall Street thugs in its pricing model.
How do you price in spite and contempt into your Black Scholes model?
It's pretty straightforward. When you buy securities, your broker executes the trade and submits the trade for clearance to the NSCC. NSCC multilaterally nets down buys and sells from all the different NSCC participants, reducing settlement costs and settlement risk. Since NSCC doesn't just net down, but also novates all of these transactions, they require collateral between T and T+2 from the participant with the net settlement obligation. Brokers have to fund that themselves. Even if the customer has cash in their account siufficient to pay for the securities, the broker can't use that cash (it's sitting the customer reserve account) until after settlement date. NSCC calculates required collateral on a VAR basis. If all of a sudden you have a bunch of one-sided buys in stocks showing high levels of vol, NSCC is going to require higher collateral from the brokers submitting the one-sided orders in those names. Some brokers, particularly less well capitalized ones like Robinhood, may have difficulty satisfying those requirements, so they did the right and conservative thing of curtailing trades to ensure they wouldn't be hit with NSCC collateral requirements they couldn't satisfy.
Appreciate you walking through this. It's helpful to understand. I'm still confused by the ban on buying but green light to sell. If I sold 1000 shares of GME yesterday, the ban prevented anyone from buying it. So what happened to the shares being sold?
If your broker has 1MM shares of net purchases that are somewhere between T and T+2, a sell order will reduce the NSCC collateral requirement, since NSCC novates all these transactions and calculates VAR on your rolling net purchase or delivery obligation. An additional buy order will increase it.
If every NSC participant was unwilling to take additional buy orders, you are right that Robinhood permitting customers to sell wouldn't work because there would be no purchasers. But that isn't the case. Most BDs did not restrict purchases or sales, just the ones that had NSCC collateral issues (and a few that didn't but were seeking to limit headline risk of letting retail do something stupid). If you wanted to execute buy orders clearing Pershing, Instinet, NFS or JPMSI yesterday, you had no issue.
No. First of all, no broker-dealer is going to tell customers they can't close positions. Second, there isn't an economic reason to even want to do that. Ridiculously, RH doesn't accept short sales (like, ever), so the positions RH customers have are long positions. RH's collateral requirements go down for long sales. They would welcome that.
So the risk they are trying to limit is a broker refusing to honor the "rewritten" sales contracts where everything is grouped together? Sorry if this question doesn't make sense, it's based on googling "novate".
I guess another way to ask is what is the risk to NSCC? Since the money in the customer reserve account is no longer accessible by the client, isn't it guaranteed to be available whenever the trade is cleared?
Yes, NSCC, is trying to limit the likelihood that an NSCC participant (ie, a broker-dealer) defaults on its obligations to NSCC.
The NSCC has no visibility into what the customer of its member broker does or does not have in their account. Frankly, the NSCC doesn’t even distinguish between broker trades on behalf of customers and breaker prop trades. It would be the same NSCC requirement either way.
As Mike Macchiaroli of the SEC humorously and accurately stated after Dodd Frank forced derivatives into central counterparty clearing, clearing houses don’t so much solve liquidity crises as radiate them outward.
"As Mike Macchiaroli of the SEC humorously and accurately stated after Dodd Frank forced derivatives into central counterparty clearing, clearing houses don’t so much solve liquidity crises as radiate them outward." Who benefits from this?
And if they'd suspended trading on both sides, that might make sense. However they suspended only the buys - even if they were required collateral only on buys, that goes directly against their claim that they didn't want to fuel speculation.
You'd prefer they also suspend sales? Preventing long sellers from closing their positions? That's a minority view. Broker-dealers never want to be in a position of prohibiting customers from closing positions. Remember, Robinhood does not accept short sales.
Wow. Thanks for the explanation. I never understood that before. But when robinhood is facing a liquidity crisis, shouldn't they just get emergency funding from their investors or commercial lines of credit? Doesn't the fed even have a facility for this? The way they chose to solve their liquidity crisis was to put a massive finger on the scales of the market which had a material negative effect on a huge group of their customers. That's unexcusable, and should end with them being shutdown by regulators.
That's exactly what they did, but - and I'm not a VC guy, so I may be mistaken - VCs probably aren't that used to do doing $1B investment rounds with 48 hour turn-around times. What they needed were unsecured NSCC spike-line facilities. News reports suggest that they drew $500-600MM (unclear whether spike lines at the BD level or unsecured revolver at holdco level that holdco in turn contributed as either equity or unsecured financing) on credit facilities, so they had liquidity that they thought was appropriate for spikes in NSCC clearing fund deposit requirements, but they underestimated the size of their liquidity needs. For context, here is Robinhood Securities' most recent publicly-available balance sheet (Robinhood Securities is the clearing firm for Robinhood Financial): https://cdn.robinhood.com/assets/robinhood/legal/RHS%20Unaudited%20Statement%20of%20Financial%20Condition%2006.30.20.pdf
It shows clearing deposits of $235MM. Assuming that was self funded with equity, and the additional $600 drawn is all in excess of normal RH clearing fund deposit requirements, they were hit with $800MM+ NSCC clearing deposit requirement, a littles less than 4x normal liquidity needs.
It's worth noting here that Robinhood is new to clearing. For most of its history, it cleared at Apex (the old Person). It has been self-clearing for only like a year or two and they are doing it with less than half a billion of shareholders equity. For comparison, Interactive Brokers and Fidelity's NFS maintain close to $6B shareholder's equity and they have decades more experience with unusual NSCC spikes. It's easy to criticize new businesses as amateurs and idiots, but remember, they still built a bigger broker-dealer than anyone in this comment section did.
Why couldn't they have limited the amount of new money transfers coming into users accounts or put additional holds on the money coming in. Surely they knew that new money coming in was soon to be used to buy stocks and add to their liquidity problem. They also could have margin called people and closed their positions, right? This theory also doesn't explain why they blocked users from even searching for GME or AMC. It didn't even show up, you couldn't even look at the chart. Like WTF is the reason for that?
Customers depositing money in their accounts isn't the cause of their liquidity issues and refusing their deposits wouldn't solve the issue. Also, not all stock purchases will have the same impact under NSCC's VAR calculation. Its purchases of these wildly volatile securities that have been generating the outlandish collateral requirements. I have the same answer re margin calls. Margin generally isn't the issue. Of course, no one is particularly interested in taking some of these over-valued securities as collateral and most BDs have increased house margin on these names substantially if not to 100%.
I really can't comment on the search issue you are raising. First I have heard of it, don't know if it is accurate, but assuming it is, a wild guess is that in a desperate attempt to avoid admitting the liquidity crises, they tried to reduce orders in the securities by obscuring and hiding info. Sort of the brokerage equivalent of standard Twitter political behavior. But this isn't informed. I really don't know.
My point is that if they wanted to reduce their liquidity problem without tipping the scales for certain stocks, delaying new funds would have had the effect of reducing the new purchases of GME and that would have helped them. I mean could they have just sold all their customers GME for them. Why not do that?
Regarding the search, I'm a customer and I experienced it myself. A search for GME or AMC came up empty on Tuesday. It's mentioned in the class action lawsuit filed Thursday: “Robinhood purposefully, willfully, and knowingly removing the stock ‘GME’ from its trading platform in the midst of an unprecedented stock rise thereby deprived retail investors of the ability to invest in the open-market and manipulating the open-market,” said the lawsuit, filed in Manhattan federal court. “Retail investors could no longer buy or even search for GME on Robinhood’s app.”
Just a guess, but it is entirely possible that the searches were creating backend/server issues so they chose to reduce overhead (allowing app to continue working for other trades) by eliminating those search results. I have no idea if this is true, just speculating (no pun intended).
As a customer I'd rather that their whole platform shut down when server load gets too high than they start pulling specific stocks. (They had outages every trading day last week) They shouldn't be allowed to have the power to move billion dollar markets with their decisions about how to manage server overloads. There's too much opportunity for insider trading and corruption there among IT staff and others.
That seems like a much bigger disruption to customers - many of whom have no interest in GME - than just declining new opening orders in these names. While forcing margin customers to sell GME would have reduced NSCC clearing deposit requirements, it is worth reiterating that the mere act of holding already settled GME shares is not the issue and is not contributing to those NSCC clearing deposit requirements. The NSCC clearing fund deposit is to secure member obligations between trade date and settlement date. After settlement date, there is no obligation to NSCC. The securities have been paid for, and RH has debited customers' accounts the cash it used to pay for it.
As a customer, while I'm mildly infuriated by a service disruption, I find blocking buys on certain stocks to be simply unacceptable. They've had site-wide complete service disruptions for hours across every trading day last week. That's inconvenient but at least it seemed fair. Given that the rise in these stocks was driven by traders on Robinhood, they are unilaterally short circuiting investor sentiment and price discovery in the market while traders on other platforms are free to trade. It's just unbelievable to me that they would choose to cause large swings in the prices of some select securities rather than just shutting the service down. It's just the antithesis of what you want a broker to be. It gives one person (robinhood ceo) the power to cause $30B swings in the market when these restrictions are imposed or lifted. The opportunities for insider trading or corruption are mind boggling.
I don't know the legal definition of "protected speech" but the class action lawsuit will go though the courts and we'll get to see if what they did is illegal or not.
I read a NUT story explaining that. You did a good job, except some terms you use might not be understood by a layman such as myself.
But what I gathered from that article, the process has exposed RH’s weakness. If someone, such as the Barstool guy and the WSB people really wanted to crush RH, all they would need to do is pick stocks that are more or less stable and trade them like the devil, all on RH naturally, billions of trades, for a few days. That would cause NSCC to require even more cushion. RH would have to get more infusions of venture capital loans, and pretty soon, they would be way over their potential market value and wouldn’t be able to issue an IPO. Crushed.
Or robinhood just halts buys on those stocks as soon as they detect they may need more cash which is exactly what they did. But that solution pisses off so many customers and people lose faith that they will be able to trade that robinhood's long term future is in question.
They simply shouldn't allowed that amount of customer money to be transferred into their platform until they had enough capital to buffer all the trading with that money in any stock. They could have delayed new customer accounts of limited incoming transfers to $1000 a week or something like that. Their platform shows you the most popular stocks other people are trading. It actively gamifies and encourages trading like this. They should have planned for the consequences on their liquidity.
They can’t halt buys for every stock. The main strategy, I think, would be to make billions of trades on a daily basis to a limited number of stocks. That way RH becomes a drain on the rest of the brokers. They have to add more money to the reserve to cover all the trades at RH.
One consequence, even if venture capitalists loan RH even more money, is that would pressure the other brokers and NSCC to abandon RH. No clearinghouse, no brokerage, no IPO. Leave the two rats holding their multibillion dollar dead app.
How dare they screw the little guys.
But, you know, I’m not wise in the ways of Wall Street. Perhaps it isn’t possible to do what I think can be done. It sure seems that that would be a way to destroy RH.
Well they were limiting 50 different stocks so I think their strategy is just to keep doing that as much as they need to. But it also seems like without it even being a coordinated or intentional attack on robinhood, traders are breaking the platform just by buying volatile shares quickly. This will likely continue and be an ongoing PR problem, liquidity problem, lawsuit problem, and also potentially a regulatory problem for Robinhood. It seems to me their future is very much up in the air.
The little guys want blood. I don't blame them. RH has already used up internal funds and got another billion from their original backers. Which means they are pretty leveraged out, flat busted broke. One or two more wild rides and they won't be able to come up with the reserves needed to keep doing business with the clearinghouse. Traders just need to pick stocks that are not in the list RH came up with. Volume of trades. That's the key.
That list has been changing throughout each day. The stocks change and the quantity of each stock change. There were 50 stocks at one point earlier this week. Now there are 8. What makes you think they wouldn't stay ahead of it and add a new stock to the list before it gets too far?
That would be blatant market manipulation if RH blocked all stocks that had an uptick in volume. The SEC would have to act, if that happened. Especially if it was a stable stock, such as, IDK, Intel.
This is all speculation, on my part. I don't know nothing about the stock market. I know WSB has a tremendous tool they can use. Numbers. That would allow them to disperse their power out however they wanted to use it.
Now that all the unrestricted trading from Wednesday has cleared and they have secured hundreds of millions in funding, we should expect the restrictions should be reducing right? HA I'm not holding my breath. Currently, as of Sunday morning, GME is limited to a single share: https://robinhood.com/us/en/support/articles/changes-due-to-recent-market-volatility/
I'm not sure. I'm super curious to see whether they actually failed on an NSCC call and got hit with an additional adequate assurance deposit requirement.
That may be, but if it is, they aren't keeping their customers informed. If they cared about their customers ability to make their own investment choices and about price discovery for these tickers in the market, wouldn't it be helpful for them to be more transparent about what's going on so we (and the market) could know what to expect? They don't they only care about themselves.
I would definitely start with the assumption that price discovery for these issuers’ securities is way, way down their list of concerns. Watching the directions of ACATs is going to be consuming much more of their attention.
Well the regulators should be concerned with a broker screwing with price discovery. Or at least that what I want my regulators to be concerned with. Elizabeth Warren seems concerned. I had to google ACATs ("The Automated Customer Account Transfer Service is a system that facilitates the transfer of securities from one trading account to another") but yeah I heard Fidelity is swamped with new business right now. I immediately got my cash balance out of Robinhood and luckily I have other accounts I can trade in.
But... admit it, you were worried for a minute there. Before RH started manipulating GME by preventing buying, and making it clear where they stood, there had to have been a moment where you thought you might have to praise RH :)
The problem with them selling order flow to make money off customers is independent of the problem with them preventing buys of specific stocks. If they hadn't restricted anything and simply allowed people to trade normally they wouldn't really be deserving of any praise, that's what everyone expects a brokerage to do.
Absolutely. But, when the squeeze was on initially, you had people positioned to profit from this order flow making essentially the same argument Matt was "we shouldn't celebrate the inexperienced accessing the market when they could mess stuff up", but for the opposite definitions of "stuff". Matt was worried about the masses getting slaughtered by pros. While the pros were worried about getting slaughtered by the masses.
RH restricting buy access changes the argument. It's no longer about how dumb or smart the retail investors are. It's about the fact that RH is there purely to provide a flow that is profitable to those that are paying for it.
The redditors, but they're hoping to have taken down some hedge funds before that happens. For the most part, this isn't people trying to get rich, it's people willing to spend (and lose) a few hundred bucks in order to take down some multi-billion dollar hedge funds that got greedy and over-shorted stock.
A couple of hundred bucks is, in a lot of people's minds, a small price to pay to achieve more in a few days than Occupy Wall Street ever achieved in months of protesting.
I had a person in my office, (who now I know participates in the r/wsb forum) tell me just that. I’ve chosen to potentially take a loss and surrender “taxes” to achieve a community goal. The invert of “if you’re going to tax me I want representation” is “me and some others are going to volunteer for potential taxation to achieve a goal our community supports.” He considered GME a charity fundraiser with potential profits.
«A couple of hundred bucks is, in a lot of people's minds, a small price to pay to achieve more in a few days than Occupy Wall Street ever achieved in months of protesting.»
It would have been much better and longer lasting if the bucks had gone to labor union memberships and their political funds so the labor unions could buy their own gaggle of representatives and senators like Wall Street and the Business Roundtable do.
But a large part of the attacks on labor unions by Republicans and "centrist" Democrats was precisely because of that: their sponsors want to be the only ones allowed to buy politicians.
I am presuming you have never worked in NYC. Having done so, I can give an anecdotal reason why I despise labor unions. My job back in the mid-90s involved transporting computers between buildings in Midtown - mostly for repair. I had one of those folding hand trucks. The reason I had a folding one rather than a real hand truck, which would have been way more useful than that cheap folding thing, is that you a. can't use the freight elevator and b. can't roll a hand truck through the lobby of buildings. Unless you are union, that is. Of course, being an IT support guy for one of the building tenants, I didn't qualify for any union that controlled the building anyway, even if I were interested in joining.
My little anecdotal story can be extended out to strikes in Great Britain over not much at all, the slowdowns in getting things off the docks or through railroad systems in the US. Anything that has a union involved is slowed down and the service sucks. Ever wonder why there are so many long haul trucks running around spewing diesel fumes? You have your answer.
Unions make life suck just a little more for everyone.
«why I despise labor unions. [...] can't roll a hand truck through the lobby of buildings. Unless you are union, that is.»
So you despise free markets and freedom of contract between consenting parties! The building owner and the union have reached an agreement and exercised that freedom of contract, and your employer have chosen in the free market to be a tenant in that building, and nobody is stopping them from choosing from the free market a non-union building in NYC or anywhere else if necessary.
That's the American Way: capitalism means that winners do whatever it takes, and if a party have the leverage to fuck over their customers, they do it to the fullest extent they can get away with.
In particular in the vast majority of cases it is employers that have the leverage to fuck over their employees, and it is corporations that have the leverage to fuck over customers, and impose as many restrictive practices as they can on customers and employees, and labor unions do that in only a minority of cases.
Regardless, in the case you give as example, the party really responsible for the restrictive practices is the building owner, because neither you nor your employer have contract with the union, that you cannot carry stuff yourself is certainly a rule in the tenancy contract between the building owner and your employer.
Why did the building owner put them in the tenancy contract? Because, given their leverage vs. that of the labor union they had two alternatives:
* Give them a higher wage without restrictive practices, and the cost of that falls on them.
* Give them a lower wage plus a monopoly on certain types of work, and the cost of that falls on tenants.
I don't share your love of laissez-faire capitalism. It results in coercive, abusive, totalitarian monopolies. Exactly that kind of policy resulted in Marxism's rise and grinding a hundred million or more into graves. Color me not a libertarian. How much and what kind of regulation are required is a matter for debate, but labor unions solve no problems at all and create new ones.
"Rage against the dying of the light." That is what is happening here. At that point it doesn't matter anymore, it's about making a stand and sending a message.
I'm not one of the WSB guys, but I interpret the message to be rage against the decoupling from useful work and financial rewards in American society. I'm glad some of them got rich, although I'm not sure how much a digital dollar is going to be worth in a while.
The Puritan work ethic has been utterly hollowed out. People can see it. It's visible. Hard work doesn't get you ahead financially. Personal connections and knowing how to game the system are what gets you ahead. The elite are scam artists.
Exactly. And that is why this is happening. The curtain has been pulled back as far as it can go. Nobody can deny the markets, the "system," the American Dream is now, and has been for decades, a crock of shit.
You are right about the sequelswhen I was a kid-I loved the evil dwarf king Roquat/Ruggedo-he got mind erased and had to pick a new name or something-in The Emerald City of Oz and subsequent books.
Agree-I’m not jealous of blown up financial stock value and I don’t feel bad when it disappears. If you can’t handle the game, stay off the field-and don’t change the rules mid-game either b/c you are losing.
"don’t change the rules mid-game either b/c you are losing."
haha, this is exactly what the big public trading platforms are doing right now by locking down buys on GME etc. If Twitter is to be believed, Robinhood is actually selling GME holders' shares against their will. That's a pseudo-factoid I can't verify, but I thought I'd throw it out there.
I guess it depends on what your definition of 'getting ahead financially' is but I can't agree with your post. Most people I know have, in fact, 'gotten ahead financially' by working hard and rising either through their ranks or building clientele. America's dream isn't fake, it just isn't being taken advantage of by some people.
The billionaire head of a major U.S. venture capital firm is the self-made child of dirt poor immigrants. He put himself through school, obtained several bio and business degrees, and worked 18- hour days to get where he is. He remains peripatetic and aggressive, working probably 10 times as hard, in real terms, as a randomly chosen nine to fiver. Without venture capital, we wouldn't have Apple or Google, or Silicon Valley, the latter a mixed blessing, or many healthcare innovations. The problem is the excess and greed,the personal jets and steroidal houses, the narcissistic culture we're seeing now, the lack of perspective or proportion, the protestant work ethic/help your neighbor raise his barn restraints. That lack of restraint and greed is what the U.S. must address, the debauched bonus and pay often not always at the expense of the stretched taxpayer. Warren had that right.
Most people who are rich possess the drive to make money -- being smart never hurts. Most people may not have that overweening drive -- they make do and spend time with family, watch the tube, or want to teach, help the sick and the infirm, write, protect the planet, make the world a better place for the innocent or helpless. We make choices. Some phone it in, and gripe about not being rich. In a matter of 15 years, my sister's immigrant gardener, originally from Mexico, became a full-blown landscaping enterpreneur with three beautiful trucks and crews. His brother owns an electrician business that services major developments. They made that happen. The landscaper put his profits back onto the company, and performed consistent, reliable, good work. The result is a thriving business.
There's nothing funnier to me than the people who think WSB is a bunch of principled populists sticking it to the man. It's a tiny minority of that but it's largely nihilistic opportunists laughing at memes and rallying together because they've proven the ability to move the market many times over (GME isn't close to the first time this has worked). To be clear, I have no problem with that! Let 'em rip! The vast majority that are doing it know that it's a stupid idea but it's _fun_! More power to them, I have non problem with it but will always laugh at people who back-fit a populist rebellion on it. Even more so when Taibbi decries the great evils of Robinhood for encouraging reckless trading and then a month and half later praises reckless trading on Robinhood as populist rebellion!
I think you would be surprised. I didn't really care until big tech started trying to deplatform these people. And, then today when the hedge funds and brokerage houses conspired to prohibit buys (not sales, only buys) it exposed a level of corruption that we suspected existed but had never seen so blatantly in the daylight before.
So, I willing to lose a few thousand dollars to help my fellow apes take billions of dollars from Gabe Plotkin. And, I can't wait to be seated next to Gabe at the Applebees.
For me this is 100% protest. I'm not the type of guy who is going to attend a rally in DC. I'm a boring ass 45 year old, but I have diamond hands.
I think I have a found THE connection - it's all about 1967!
*January 4 – The Doors release their début album The Doors, which contains "Light My Fire".
**Ronald Reagan, past movie actor and future President of the United States, is inaugurated as the new governor of California.[1]
***The Human Be-In takes place in Golden Gate Park, San Francisco; the event sets the stage for the Summer of Love.
****February 18 – New Orleans District Attorney Jim Garrison claims he will solve the John F. Kennedy assassination, and that a conspiracy was planned in New Orleans.
*****March 1 -The Red Guards return to schools in China.
******March 12 -The Velvet Underground's first album, The Velvet Underground & Nico, is released in the United States. It is initially a commercial failure but receives widespread critical and commercial acclaim in later years.
*******March 17 - The Grateful Dead debut their first album 'the Grateful Dead' consisting of the songs; The Golden Road, Beat it down on the Line, Good morning little schoolgirl, Cold rain and snow, Sitting on top of the world, Morning dew, New new minglewood blues, and Viola Lee blues
******** March 21 - Charles Manson is released from Terminal Island. Telling the authorities that prison had become his home, he requested permission to stay. Upon his release, he relocates to San Francisco where he spends the Summer of Love.[4]
*********April 28 - In Houston, Texas, boxer Muhammad Ali
refuses military service. He is stripped of his boxing title and barred from professional boxing for the next three years.
**********May 12 – The Jimi Hendrix Experience release their debut album, Are You Experienced.
**********June 12 - Loving v. Virginia: The United States Supreme Court declares all U.S. state laws prohibiting interracial marriage to be unconstitutional.[13]
So... you ask why the history lesson?...well I heard a whisper in a cloud today wafting from the desert...from the THE WESTERN LANDS....IT said - read that magazine if you can still find it and...
“A paranoid is someone who knows a little of what's going on. A psychotic is a guy who's just found out what's going on.”
I don't entirely disagree about the mix, but the nihilist group will get out on time so it's not like everyone who backed the move is going to get rekt
Anyway... the redditors who lose will lose no more than they put in
The hedge fund guys will lose geometrically and that's what's charming about the story
I feel like Matt's uber fan boys think me mocking his gross hypocrisy here project on me that I don't find this charming/hilarious. I'm pro WSBers here! It's great! It's just Matt had his two totally predictable takes and they're directly opposed to one another.
As he explained to you already - and the majority of the rest of us agree with his explanation - you grotesquely misread his posts. What we have here is a junior high school tirade: You made a very public attack on his credibility, and now claim the moral high ground for bravely refusing to apologize when you're obviously in the wrong.
You work for Wall Street. That meme thing is just what the hedge fund scum have been using on the news. Wall Street is fake, dude. It's fake for everyone. Let us know where you live and when you will be out of town next so we can go through your shit.
This trade is safer by leaps and bounds than buying index funds at ATHs, right? The hedgies have publicly disclosed that they are short 140% of the float in $GME and keep loading up every time it climbs. In that scenario a swing group of buyers controls the price. It would be reckless to not pile on, right?!
I agree about people trying to back-fit a populist rebellion onto this. Well said.
I disagree with the idea that Matt's two articles are in conflict. It's funny that these guys sent the hedge funds running. But at the end of the day, the stock price will fall, or else GME will have to find a new business model. If the Robinhood crowd wind up with a majority of the stock, they'd own the company. But what do they do with it? Hire a new board to do what?
Sometimes public companies go private. They do so because they think the company is worth more than the market value. Do these investors think that's true in this case?
[Who is to say the original planners are still the ones moving the stock? Robinhood is allowing buys of ONE share? That ain't gonna move anything.]
The real story here was the proof of concept. For the first time in my 40+ years, I've seen the populous stick it to the wealthy in a way that they actually give a shit about. I liked Occupy, but at the end of the day Finance didn't ultimately care that much. It didn't affect their money long-term and they were already experienced with waiting out a Long position in their penthouses.
This seems like it might be different. They're panicking so much over this that they're being blatantly... blatant about it in their hypocritical calls for regulation. That and the fact that they're losing money and maybe the citizens finally found something that will threaten them.
They were pretty confident that no "movement" with such exacting concern for the divisive dynamics of social justice would last very long. Which confidence proved to be well-founded.
At this point, that which discomfits my enemy is welcome. IF there were such a thing as "Trumpism" (outside the tiny brains of hysterical blue checks), and IF it could be shown this little blow against the Empire was committed by "Trumpistas"...I'd still approve.
It's going to take some bitter hatred and a willingness to absorb loss for this to get turned around. If it gets turned around.
I could be reading him wrong but my understanding is that Matt thinks that the populists and the socialists would be much more effective at learning even the basics of Finance. He's said as much before.
For example - setting aside losing twice in races that were absolutely rigged in various ways against him - Bernie might have got the edge he needed to tip past the long odds in 2020 if he had been able to talk solutions to the Finance issues like Warren was able to do. Warren was able to peel enough of the "I'm a socialist but I'm a serious ADULT! harumph" vote off of Bernie mostly (in my opinion) due to the fact that she could talk a wonky finance game. Warren may or may not have been all talk with her "Plans" but she could still talk, and they weren't even hugely complicated concepts! Imagine if Bernie could have trumped (original meaning) Warren with his own specific finance regulation/tax plans?
My take is this is asymmetrical political warfare, and sometimes the poorly equipped/financed teams can win the battle using guerrilla warfare. Using their weapons against them is a key principle of guerrilla. VC sent France and the US limping out of their country by using their own weapons against them. VC would take discarded ration cans left by soldiers and fix them into mines.
The question of which opportunists/deplorables/gamerpoopsocks constitute the meme stock class is beside the point. This has been a proof of concept for a strategy that works because it's a counterstrike that the elites actually give a shit about. It gutted some of them where it hurt the most. It's plausible that the populists could further develop this strategy and bring back a little wealth in doing so. I want to see where this goes because nothing else that has been tried in recent decades has done anything to make them care.
Well just right now there's AMC and BB as well. Prior to this you had Hertz, NIO, NKLA, arguably TSLA, possible AMD argument, though that one really matches well with fundamentals. There's been more but these are some I remember from the top of my head.
Exactly, there are people all in on Gamestop, but the majority put in as much as they're willing to lose. If and when their position's value evaporates, it will have been more than worth it. Per WSB, "Diamond Hands" don't sell.
After prohibiting the purchase of shares and options earlier, the big market makers implemented a short ladder attack, wherein they put in lower and lower bid prices between themselves with little volume, and since no one can buy, it causes the stock price to appear to be plummeting. However, people who follow the subreddit quickly learned of the ruse. The shorts are still screwed for the foreseeable future.
You think the Feds (ie, you and me) are gonna bail out individual investors on reddit? Obviously you don't know how gov't works. Gov't 101: Unless one of those redditors is the great great grandson of the old bags McConnell or Pelosi or Schumer or the son a hedge fund manager (who donates to list of previous old bags) who stole his dad's money and screwed him, there will be no bailout.
Did anybody even mention "a bailout" for these plebes?? Don't think so.
Quite the contrary, BIden's press secretary's brother ran the hedge fund that got caught with their shorts down. Janet Yellen made a million dollars in "speaking fees" from Citadel alone! I think people know what "side" our public servants are on.
BTW, the press secretaries LinkedIn profile had her brother scrubbed from it, TODAY.
"Who do you think is going to be holding the bag when GME goes tits up?" - as always, the last few to pile on, the ones who paid $200+ for the stock, when it's worth maybe $20. On the bright side, the publicity will probably help keep the company alive. Retail is a tough business, these days.
«as always, the last few to pile on, the ones who paid $200+ for the stock, when it's worth maybe $20»
A critical detail is that the redditors are not buying the stock, for $20 or $200, they are buying call options on the stock. They know very well that their call options will eventually and soon become worthless, most of them have only bought a $100-$200 of call options and they can afford to lose them.
The big banks selling the call options will lose a lot of money though because their option pricing algorithms make them buy the stock to cover their positions. A large part of the story is that if a stock price ramps up very quickly, those algorithms probably underprice those call options because they have a built-in lag.
calls on GME are a lot more than $100-$200. One contract at current price will set you back $7500. The ones that made out well bought $1000s of calls below $100 and made out huge. The people jumping in now are either long buying small amounts or spending a small fortune for calls. Puts are also wildly inflated too so someone sees the writing on the wall. Truth be told a lot of the last few days are FOMO guys and aren’t going to get rich.
“calls on GME are a lot more than $100-$200. One contract at current price will set you back $7500. The ones that made out well bought $1000s of calls below $100 and made out huge”
You are missing two important details:
* The huge rise on GME happened because a few days ago calls were "below $100". We are discussing how the stock could have jumped so much in so few days, the past, not the present. As I wrote part of the issue is likely that "those algorithms probably underprice those call options because they have a built-in lag", and the lag has shrunk.
* Most of the Redditors buy calls and stock on RobinHoodm and the important selling point of RobinHood is that they "sell" fractional shares and calls. That a lot of people are buying fractions is strongly hinted by RobinHood having to suspend new purchases of fractions for a while while they went out and raised capital for collateral, which makes sense only if they are the actual holders of the unfractioned shares and calls.
Greedy uneducated FOMO amateurs. Stack Market is gambling pure and simple and if you don't study and understand the odds you will leave the table broke. The house (Wall Street) always wins in the end. But those that understand the odds will at times score big time. This is a grown up world, these are not kindergarteners investing their milk money hoping to ride the pony outside. You make your bets and you takes your chances. If mom and pop have their life saving in a managed account and their account manager is not aware of the GameStop danger then they surely chose the wrong place to trust their saving s to. Anyone buying in at $200 has to know the risk.
Or, "Anyone buying in at $200 has to have $200 to lose." And I'm pretty sure most of them do.
Wonder how they're going to phrase the message that "You're not getting your $1400 Covidbux checks because some of you might do something irresponsible with it."
They'll have to first set it up that it's all the fault of "Trumpers" or "Alt-righters", which, with a fully compliant media, they'll probably be able to dl.
Who do you think was going to be holding the bag when GME goes tits up without the WSB/RH rise? GME was shorted 140%, so we know who was going to make money - the guys who just lost their asses. So who would have lost without WSB and RH?
Exactly my sentiment. I'd bet dollars to donuts that Andrew has only a vague idea who is holding GME stock, and much more important, Andrew's has never, ever voiced concern for that group prior to this situation.
Everyone who agrees with, "Hold the line" - although, quite a few of the "holders" didn't invest their life savings (we can only hope). It sounds as if most of my fellow redditors simply threw in nominal amounts and let the network effect take hold.
You think the Feds (ie, you and me) are gonna bail out individual investors on reddit? Obviously you don't know how gov't works. Gov't 101: Unless one of those redditors is the great great grandson of the old bags McConnell or Pelosi or Schumer or the son a hedge fund manager (who donates to list of previous old bags) who stole his dad's money and screwed him, there will be no bailout.
Unless something really crazy happens it will be a lot of Redditors and some of the hedge fund guys. You're totally right, though, they have 100% stuck it to Melvin and have proven (they already had, this is just the biggest time) they can squeeze a short with great effect.
To be totally fair to the story here, WSB is promoting a Robinhood boycott after this GME fiasco. I know that you're specifically attacking Matt's take on bringing in more retail investors overall, but if you simplify his point down to "Robinhood bad," WSB would agree in solidarity. They were the ones who orchestrated the mass 1-star ratings on Robinhood, after all.
In any case, it's nice to see Matt get a different perspective on retail investing. Curious to see if his perspective shifts after WSB "GME loss porn" begins making headlines. I always knew that WSB was somewhere special, but to see it get this much attention and scrutiny, leading to nonsense "alt-right" takes and censorship from Discord... well, it's a little bittersweet, like seeing your favorite indie band go mainstream. Let the autists trade in peace, I say!
Amen. Agreed across the board. As you said, though, my point is Matt rips Robinhood for letting and even encouraging its users to be reckless and then now praises their recklessness. I would do neither and just say "let the reckless be reckless, it's their choice".
Say that I wrote an article about how Tesla automobiles are unsafe - they spontaneously combust, they spontaneously accelerate, the autopilot will crash, etc.
Then say I wrote an article about how the National Automobile Dealers Association lobbying states pass laws prohibitively regulating factory-owned automobile dealerships (i.e. Tesla) is an attempt to ban competition and corner the market.
Is this a comedy of hypocrisy? No, both things can be true at the same time. A product can be unsafe and its competitors can be cheats.
Are you really suggesting Matt was off base in the earlier article when he questioned the true nature of Robinhood? Today? After Robinhood straight up drove the prices of a number of stocks down by only allowing users to sell?
The main claim of that article was that RH is incentivized to encourage investors to behave in ways that are profitable to those that are pfof... Today we witnessed the extent to which RH is willing to go encourage specific behavior (only allowing closing of gme positions).
There is no inconsistency here. You can enjoy watching retail investors fuck with hedge fund managers for fun and possibly profit and, at the same time, observe that RH is designed for the benefit someone other than the users of the app.
Let me first accept your leading sentence as true.
If you encourage investors to behave in ways that are are profitable to PFOF, that isn't inherently bad. It's only bad if those ways are actually themselves harmful to the investors. Well what are the users encouraged to do that is harmful? Things that are reckless gambles with high possible returns like buying short dated, OOTM options also known as what's going on with WSB and GME. So either encouraging this behavior is bad or it isn't. In his RH article, he makes it pretty clear he views encouraging this behavior is bad.
Taibbi makes clear in this article that he's in favor of this behavior and even encourages it specifically!
"Buy the ticket, take the ride, nitwits."
Either encouraging this behavior is bad or it isn't!
Me? IDGAF, play whatever stupid games you want! But I'm always going to laugh at the blatant hypocrisy. Just as I laughed at the hypocrisy Taibbi lays out in this article.
>Well what are the users encouraged to do that is harmful?
Yesterday, when RH removed the ability to buy gme, users were encouraged to sell.
Again, there is no hypocrisy here... One can believe that RH encouraging harmful behavior is bad, and still enjoy it when the entire thing backfires on them.
Nuh-uh. Well we reached the end. Maybe I'll send Matt another $5 if he can get Substack to erase the comment section. It's just Twitter with 150 percent more pedantic lard.
This article is good and if I wrote the other article, it would be really short and go something like: "Robinhood revolutionized retail trading by giving end users an easy to use platform to trade for free. This made every other platform offer free trades. You can also buy fractional shares so if you can't afford expensive stocks, you can still get in on the action. It's pretty much completely idiotic to trade options but RH gives you those too if you want to play like the big boys. All in all, a pretty great innovation for the little guy!"
All the same, they are bad for traders in tons of little ways. They've been great training wheels — and midwifed an important market transformation — but when you figure out how to balance you probably want something that doesn't have plastic tires and an open recall on it.
"What could possibly go wrong with bringing more people into the stock market? A lot, as it turns out." Yes, for the hedge fund folks
"The only thing 'dangerous' about a gang of Reddit investors blowing up hedge funds is that some of us reading about it might die of laughter." Yes at the hedge fund folks
I don't see the hypocrisy here. In both cases it applies to the hedge fund folks who got bit and are now getting laughed at. I get the joke. Evidently you didn't.
Taibbi on Dec 9th: "What could possibly go wrong with bringing more people into the stock market? A lot, as it turns out."
Taibbi today: "The only thing 'dangerous' about a gang of Reddit investors blowing up hedge funds is that some of us reading about it might die of laughter."
I see no problem there: more people putting their pension savings in the stockmarket has at least three huge downsides that are all quite bad for everybody but Wall Street, a gaggle of redditors burning a few hundred each to mock a faction of Wall Street is just comical, it has next to no implications for everybody but Wall Street.
The three huge downsides of putting everybody's pension savings in the stockmarket are:
* It creates, as Grover Norquist has boasted, extraordinary political pressure to bail out stock prices.
* It exposes pension savers to losing 30-60% of their pensions in Wall Street fees.
* It gives either "dumb money" or those managing their funds a ridiculous level of influence on capital allocation decisions.
Interesting, let's look at the context of that Dec 9th quote:
"What could possibly go wrong with bringing more people into the stock market?
A lot, as it turns out. “Every time someone says they want to ‘democratize access,’” says Joe Saluzzi of Themis Trading, “I get very scared.”
On June 12th, a 20-year-old University of Nebraska student named Alexander Kearns looked at his app and saw what he thought was a negative balance of $730,000. Misunderstanding the readout, which only showed part of a series of options trades he’d made, Kearns mistakenly believed he’d been ruined financially. He killed himself by stepping in front of a train, leaving behind a note asking, “How was a 20-year-old with no income able to get assigned almost a million dollar’s worth of leverage?”
Please explain how the quote you cited implies what you stated in your comment?
If you really think that limited context breaks my point, why don't I use this passage:
"Brewster isn’t buying it. “Everything is designed to make investing look like DraftKings,” he says. Moreover, the company’s practice of offering push notifications when customers’ stocks move up or down 5% or 10% could trigger an endless cycle of dopamine-generating responses, combining FOMO/clickbait psychology with the betting urge. Customers think, “if it’s down, I gotta get out. If it’s up, I gotta buy more,” says Brewster.
The obvious problem is that a lot of these younger customers have no clue what they’re doing. “Retail investors don’t understand stocks, let alone options,” sighs Saluzzi. He compares the service to bringing amateur poker players to Vegas and seating them not at a table with old ladies and tourists, but with the best players in town. “It’s throwing them right in with the sharks,” he says."
Shouldn't you be talking about how this is out of context or something? Maybe making a bad point about false equivalence? ;)
The fish ravaged a couple sharks, a bunch of sharks have been feeding on the chum generated and we still have to wait a bit to see how the fish work out in a couple months.
You can be on Team Piranha or Team Remora. My wholly speculative thesis is that the sharks are doomed in the end; Nature's antediluvian cretins, cruising the oceans with nowhere to go.
Sorry, I don't see how that makes your claim any more accurate. Stating that RH encourages bad behaviors while also allowing ppl to stick to the man are both true statements, a lot of RH users don't know much about the market, and the latest GME frenzy is actually given them a way to "fight back" (a lot of them don't understand how or why, but they know that predatory firms are hurting because of it), plus RH made clear today that it expects only one type of behavior.
First, is there anything more annoying than starting a comment with a faux "sorry"? Strap on a pair (balls or tits, your choice) and just say what you want to say.
> Stating that RH encourages bad behaviors while also allowing ppl to stick to the man are both true statements, a lot of RH users don't know much about the market, and the latest GME frenzy is actually given them a way to "fight back" (a lot of them don't understand how or why, but they know that predatory firms are hurting because of it), plus RH made clear today that it expects only one type of behavior.
Agreed but also totally irrelevant to my claim that Matt is a hypocrite in these two articles. In the RH article, Matt makes it clear that RH is a villain because it encourages bad behavior such as buying short dated, OOTM calls. In this article, Matt glorifies the same behavior as a populist rebellion. If the behavior is bad and RH is bad for encouraging then Matt is just as guilty of the crime when he says "Buy the ticket, take the ride, nitwits" and glorifies the selfsame behavior he vilified RH for encouraging. Matt's RH article isn't much further from the pearl clutching he calls out as bull shit here.
My take is let the people do whatever they want in this case. If RH wants to give uninformed retail investors the tools for their own demise, it's the uninformed retail investors' job to use them in a way that matches their risk appetite. If they want to informally gang up to put Melvin in a short squeeze, let 'em rip! RH wasn't doing anything wrong until the closed down the ability to trade GME and friends.
It wasn't a faux "sorry" actually, I really didn't get your point.
> Agreed but also totally irrelevant to my claim that Matt is a hypocrite in these two articles.
I'm missing something again, because if you agree that both statements can be true, how is that not relevant to your claim?
> Matt makes it clear that RH is a villain because it encourages bad behavior such as buying short dated, OOTM calls. In this article, Matt glorifies the same behavior as a populist rebellion.
Yes, RH is a villain encouraging bad behaviors, and following the same patterns as facebook and the likes, what's happening with GME is using that system against itself, and in the case of RH it enabled people to stick it to their bosses, both are true and renders your argument moot IMO.
> I'm missing something again, because if you agree that both statements can be true, how is that not relevant to your claim?
Because my claim is he holds wildly inconsistent standards depending on his populist flavor of the day not whether you can both claim the RH encourages bad behavior and also that it gives access to tools to create a short squeeze.
In Matt's world, when RH encourages risky trading that's bad and makes RH a "Pandemic Villain" but when Matt encourages risky trading that's good and is a populist revolt. That's inconsistent. This is a completely different question for what you're talking about as a set of consistent views.
> Yes, RH is a villain encouraging bad behaviors, and following the same patterns as facebook and the likes, what's happening with GME is using that system against itself, and in the case of RH it enabled people to stick it to their bosses, both are true and renders your argument moot IMO.
Look, either it's bad to give newbies access to and encourage the use of highly risky, speculative investments or it's not! It can't be that RH encouraging it is bad and Matt Taibbi encouraging it is good and you stay self-consistent. RH ISN'T evil (not even it's temporary shutting down of GME trading after further research: https://www.ft.com/content/9a1b24e6-0433-462a-a860-c2504ea565e4). Nor is Matt evil in this article for encouraging idiotic (I guess it's arguable if it's idiotic or not) use of investment platforms. But it is wildly inconsistent to vilify RH for encouraging use of risk, speculative investment vehicles and then turn around and do the exact same thing.
I get your point, but I don't see any hypocrisy in Matt's view. He was scolding robinhood for offering easy access to instruments normally offered to more experienced traders only. And in general Matt's probably right that most millenials on Robin Hood really shouldn't be messing around with options trading. We know of at least one kid who committed suicide over a misunderstanding, and i'm sure there are many more who have lost substantial sums of money. But it turns out that a few sophisticated investors on WSB were able to harness the power of the masses in a novel way. Why not have a laugh? Why not be delighted that for once things turned out for the better? If anything it is a lesson to not underestimate the internet hive mind.
This is true, Matt’s point about RH giving newbie investors easy access is sort of the same logic as saying why inexperienced drivers shouldn’t be given easy access to McLarens or 7 year olds access to jet skis-it’s not legality, it’s about not being able to handle high powered machinery-sometimes it ends spectacularly bad.
I get your point more now (I think), from your perspective Matt calling out RH as evil is in contradiction in praising retail investors who engage in "bad" behaviors. I can see an argument there but it seems to be a false equivalency, Matt is praising retail investors using the system to stick it to these big hedge funds, it doesn't mean it's not a risky/bad behavior, only that it's being used against ppl everyone dislike.
The same way one can criticize Facebook for encouraging terrible behaviors while still praising people who use Facebook to do interesting and useful things.
I mean, did you read the article this comment thread is on? Half of it is Matt, correctly, mocking the hypocrisy of the people trying to shut down WSB. It's just that Matt was doing the same idiotic complaining when he wrote about how evil RH was.
Who wrote the article "Pandemic Villains: Robinhood"; Matt Taibbi or one of the pearl clutchers he mocks here?
Taibbi on Dec 9th: "What could possibly go wrong with bringing more people into the stock market? A lot, as it turns out."
Taibbi today: "The only thing 'dangerous' about a gang of Reddit investors blowing up hedge funds is that some of us reading about it might die of laughter."
One of these was one of your worst takes (the first one) and one of these was the correct take (the latter). Together, though, it's a comedy of hypocrisy just as the one you mock here.
The Robinhood story was about Robinhood taking advantage of their customers, and about the issues involved with selling deal flow. I wasn't being critical of more people entering the stock markets. If anything this episode - in which Robinhood abruptly halted trading with the equivalent of a post-it note left on the fridge - underscores some of the issues with those platforms.
You seem to have a dedicated following of people dead set on finding and pointing out any perceived hypocrisy they can find in your writing.
And, more often than not (from what I see), getting the complete wrong end of the stick... I've noticed the trend too and it absolutely baffles me because it's not as though the message in that "Pandemic Villains: Robinhood" piece, for example, was difficult to take in.
So you're paying a monthly subscription to either wilfully misinterpret or totally miss the point of these articles and then whine back about them. Very odd.
Yeah I don't get why those people are here. Maybe some of them signed up for a year because someone recommended it, but they actually don't like Matt's writing and they can't get a refund. So they troll the comments. That theory sounds pretty farfetched now that I write it out.....I'm not sure why there are so many commenters on every story trying to prove Matt wrong or prove he messed up.
see e.pierce's comment above
i'm not setting MT up as some Infallible Golden God, but there are clearly commentities here who have some vested interest in trying to make him look bad. that makes for fun reading; trolling techniques perfected on twitter don't work so well here because of the smaller audience and necessarily longer attention span
i mean, if i, a normal person, subscribed to someone's newsletter and decided it was terrible, i would shrug, eat the loss, and move on. but why subscribe in the first place when many free examples are available? why indeed
I think some commenters are uncomfortable with Matt’s stories on media wokeness at the expense of what they expect is a traditional Rolling Stone lefty/partisan D perspective. If mainstream Ds (and their focus on wokeness as internal party discipline) are the new social power brokers, a lot of people are uncomfortable thinking on the social margins. It’s why Hilldog accused Tulsi Gabbard of being a Russian agent-power slapping back.
also William Lee's
not only am i always late to the party, nobody wanted me there in the first place
Matt, you only respond to the trolls of your articles and not the inquisitive, idea-spitballing supporters...
Don't we all? Trolling's a thing because it works.
Matt, did you watch the interview with the CEO of WeBull yesterday attempt to explain the mechanics of what's happening and how trading firms allowed sells and not buys? It made no sense to me even after his deep dive explanation. If you had a chance to listen to it, can you with in on is accuracy? It sounded as though he didn't answer the question.
He didn't.
It's the same problem RH has - you can explain margin calls by volatility, you can even explain not offering options by claiming the market makers are overwhelmed temporarily (though their prices can easily rise to reflect that).
You can't explain a blanket prohibition on buys and not on sales, especially not by saying effectively you think prices are wrong because they're speculative. Price discovery is the supposed value the stock market offers.
Either this was blatant manipulation for their main client, Citadel, or the market AS A WHOLE was minutes from a liquidity crisis. Either way transparency and regulators should be here.
ESPECIALLY when the fund most affected was propped up by your biggest investor (Citadel) and THEN you took action that kept your own customers from cashing in on that loss.
BTW, besides RobinHood and that fund that was shorting the stocks, you know who else Citadel owns? Janet Yellen. They've paid her more than she will make in four years of "public service". AND, good news for Citadel, SHE is the person who is explaining the whole affair to Joe Biden.
Man, I guess it's all above board, Citadel is just really lucky and wealth inequality remains inexplicable.
We should "circle back" on that later.
Yellen has received 800K in speaking fees from Citadel over the past several years.
The market makers are not overwhelmed they are just pricing the call options wrong. Probably done by an algorithm that doesn’t include the sheer disgust and hatred people have for Ivy League elites, vulture capitalists, and Wall Street thugs in its pricing model.
How do you price in spite and contempt into your Black Scholes model?
"How do you price in spite and contempt into your Black Scholes model?" should win the internet today.
It's pretty straightforward. When you buy securities, your broker executes the trade and submits the trade for clearance to the NSCC. NSCC multilaterally nets down buys and sells from all the different NSCC participants, reducing settlement costs and settlement risk. Since NSCC doesn't just net down, but also novates all of these transactions, they require collateral between T and T+2 from the participant with the net settlement obligation. Brokers have to fund that themselves. Even if the customer has cash in their account siufficient to pay for the securities, the broker can't use that cash (it's sitting the customer reserve account) until after settlement date. NSCC calculates required collateral on a VAR basis. If all of a sudden you have a bunch of one-sided buys in stocks showing high levels of vol, NSCC is going to require higher collateral from the brokers submitting the one-sided orders in those names. Some brokers, particularly less well capitalized ones like Robinhood, may have difficulty satisfying those requirements, so they did the right and conservative thing of curtailing trades to ensure they wouldn't be hit with NSCC collateral requirements they couldn't satisfy.
Appreciate you walking through this. It's helpful to understand. I'm still confused by the ban on buying but green light to sell. If I sold 1000 shares of GME yesterday, the ban prevented anyone from buying it. So what happened to the shares being sold?
If your broker has 1MM shares of net purchases that are somewhere between T and T+2, a sell order will reduce the NSCC collateral requirement, since NSCC novates all these transactions and calculates VAR on your rolling net purchase or delivery obligation. An additional buy order will increase it.
If every NSC participant was unwilling to take additional buy orders, you are right that Robinhood permitting customers to sell wouldn't work because there would be no purchasers. But that isn't the case. Most BDs did not restrict purchases or sales, just the ones that had NSCC collateral issues (and a few that didn't but were seeking to limit headline risk of letting retail do something stupid). If you wanted to execute buy orders clearing Pershing, Instinet, NFS or JPMSI yesterday, you had no issue.
Does that mean it's possible RH users can find themselves unable to close positions in stocks where RH is submitting one-sided sell orders?
No. First of all, no broker-dealer is going to tell customers they can't close positions. Second, there isn't an economic reason to even want to do that. Ridiculously, RH doesn't accept short sales (like, ever), so the positions RH customers have are long positions. RH's collateral requirements go down for long sales. They would welcome that.
So the risk they are trying to limit is a broker refusing to honor the "rewritten" sales contracts where everything is grouped together? Sorry if this question doesn't make sense, it's based on googling "novate".
I guess another way to ask is what is the risk to NSCC? Since the money in the customer reserve account is no longer accessible by the client, isn't it guaranteed to be available whenever the trade is cleared?
Yes, NSCC, is trying to limit the likelihood that an NSCC participant (ie, a broker-dealer) defaults on its obligations to NSCC.
The NSCC has no visibility into what the customer of its member broker does or does not have in their account. Frankly, the NSCC doesn’t even distinguish between broker trades on behalf of customers and breaker prop trades. It would be the same NSCC requirement either way.
As Mike Macchiaroli of the SEC humorously and accurately stated after Dodd Frank forced derivatives into central counterparty clearing, clearing houses don’t so much solve liquidity crises as radiate them outward.
If m reading this article right:
https://finance.yahoo.com/news/robinhood-ceo-refutes-game-stop-hedge-fund-conspiracy-theory-and-reveals-what-actually-happened-234600703.html
With RH having their clearing system in-house, they should’ve been able to use customer funds as collaterall?
"As Mike Macchiaroli of the SEC humorously and accurately stated after Dodd Frank forced derivatives into central counterparty clearing, clearing houses don’t so much solve liquidity crises as radiate them outward." Who benefits from this?
And if they'd suspended trading on both sides, that might make sense. However they suspended only the buys - even if they were required collateral only on buys, that goes directly against their claim that they didn't want to fuel speculation.
You'd prefer they also suspend sales? Preventing long sellers from closing their positions? That's a minority view. Broker-dealers never want to be in a position of prohibiting customers from closing positions. Remember, Robinhood does not accept short sales.
"That's a minority view." What are you basing that on? Did you check with the 7.9M people on WSB?
Instead of firmly putting their thumb on the scale?
Yes, of course.
Again, note Robinhood's supposed reason, which was that the markets were too volatile, not that they couldn't cover buys.
Wow. Thanks for the explanation. I never understood that before. But when robinhood is facing a liquidity crisis, shouldn't they just get emergency funding from their investors or commercial lines of credit? Doesn't the fed even have a facility for this? The way they chose to solve their liquidity crisis was to put a massive finger on the scales of the market which had a material negative effect on a huge group of their customers. That's unexcusable, and should end with them being shutdown by regulators.
That's exactly what they did, but - and I'm not a VC guy, so I may be mistaken - VCs probably aren't that used to do doing $1B investment rounds with 48 hour turn-around times. What they needed were unsecured NSCC spike-line facilities. News reports suggest that they drew $500-600MM (unclear whether spike lines at the BD level or unsecured revolver at holdco level that holdco in turn contributed as either equity or unsecured financing) on credit facilities, so they had liquidity that they thought was appropriate for spikes in NSCC clearing fund deposit requirements, but they underestimated the size of their liquidity needs. For context, here is Robinhood Securities' most recent publicly-available balance sheet (Robinhood Securities is the clearing firm for Robinhood Financial): https://cdn.robinhood.com/assets/robinhood/legal/RHS%20Unaudited%20Statement%20of%20Financial%20Condition%2006.30.20.pdf
It shows clearing deposits of $235MM. Assuming that was self funded with equity, and the additional $600 drawn is all in excess of normal RH clearing fund deposit requirements, they were hit with $800MM+ NSCC clearing deposit requirement, a littles less than 4x normal liquidity needs.
It's worth noting here that Robinhood is new to clearing. For most of its history, it cleared at Apex (the old Person). It has been self-clearing for only like a year or two and they are doing it with less than half a billion of shareholders equity. For comparison, Interactive Brokers and Fidelity's NFS maintain close to $6B shareholder's equity and they have decades more experience with unusual NSCC spikes. It's easy to criticize new businesses as amateurs and idiots, but remember, they still built a bigger broker-dealer than anyone in this comment section did.
Why couldn't they have limited the amount of new money transfers coming into users accounts or put additional holds on the money coming in. Surely they knew that new money coming in was soon to be used to buy stocks and add to their liquidity problem. They also could have margin called people and closed their positions, right? This theory also doesn't explain why they blocked users from even searching for GME or AMC. It didn't even show up, you couldn't even look at the chart. Like WTF is the reason for that?
Customers depositing money in their accounts isn't the cause of their liquidity issues and refusing their deposits wouldn't solve the issue. Also, not all stock purchases will have the same impact under NSCC's VAR calculation. Its purchases of these wildly volatile securities that have been generating the outlandish collateral requirements. I have the same answer re margin calls. Margin generally isn't the issue. Of course, no one is particularly interested in taking some of these over-valued securities as collateral and most BDs have increased house margin on these names substantially if not to 100%.
I really can't comment on the search issue you are raising. First I have heard of it, don't know if it is accurate, but assuming it is, a wild guess is that in a desperate attempt to avoid admitting the liquidity crises, they tried to reduce orders in the securities by obscuring and hiding info. Sort of the brokerage equivalent of standard Twitter political behavior. But this isn't informed. I really don't know.
My point is that if they wanted to reduce their liquidity problem without tipping the scales for certain stocks, delaying new funds would have had the effect of reducing the new purchases of GME and that would have helped them. I mean could they have just sold all their customers GME for them. Why not do that?
Regarding the search, I'm a customer and I experienced it myself. A search for GME or AMC came up empty on Tuesday. It's mentioned in the class action lawsuit filed Thursday: “Robinhood purposefully, willfully, and knowingly removing the stock ‘GME’ from its trading platform in the midst of an unprecedented stock rise thereby deprived retail investors of the ability to invest in the open-market and manipulating the open-market,” said the lawsuit, filed in Manhattan federal court. “Retail investors could no longer buy or even search for GME on Robinhood’s app.”
Just a guess, but it is entirely possible that the searches were creating backend/server issues so they chose to reduce overhead (allowing app to continue working for other trades) by eliminating those search results. I have no idea if this is true, just speculating (no pun intended).
As a customer I'd rather that their whole platform shut down when server load gets too high than they start pulling specific stocks. (They had outages every trading day last week) They shouldn't be allowed to have the power to move billion dollar markets with their decisions about how to manage server overloads. There's too much opportunity for insider trading and corruption there among IT staff and others.
That seems like a much bigger disruption to customers - many of whom have no interest in GME - than just declining new opening orders in these names. While forcing margin customers to sell GME would have reduced NSCC clearing deposit requirements, it is worth reiterating that the mere act of holding already settled GME shares is not the issue and is not contributing to those NSCC clearing deposit requirements. The NSCC clearing fund deposit is to secure member obligations between trade date and settlement date. After settlement date, there is no obligation to NSCC. The securities have been paid for, and RH has debited customers' accounts the cash it used to pay for it.
As a customer, while I'm mildly infuriated by a service disruption, I find blocking buys on certain stocks to be simply unacceptable. They've had site-wide complete service disruptions for hours across every trading day last week. That's inconvenient but at least it seemed fair. Given that the rise in these stocks was driven by traders on Robinhood, they are unilaterally short circuiting investor sentiment and price discovery in the market while traders on other platforms are free to trade. It's just unbelievable to me that they would choose to cause large swings in the prices of some select securities rather than just shutting the service down. It's just the antithesis of what you want a broker to be. It gives one person (robinhood ceo) the power to cause $30B swings in the market when these restrictions are imposed or lifted. The opportunities for insider trading or corruption are mind boggling.
Would a brokerage changing their interface in order to manipulate order flow be considered protected speech?
I don't know the legal definition of "protected speech" but the class action lawsuit will go though the courts and we'll get to see if what they did is illegal or not.
I meant in the sense of speech government shall make no law prohibiting.
I read a NUT story explaining that. You did a good job, except some terms you use might not be understood by a layman such as myself.
But what I gathered from that article, the process has exposed RH’s weakness. If someone, such as the Barstool guy and the WSB people really wanted to crush RH, all they would need to do is pick stocks that are more or less stable and trade them like the devil, all on RH naturally, billions of trades, for a few days. That would cause NSCC to require even more cushion. RH would have to get more infusions of venture capital loans, and pretty soon, they would be way over their potential market value and wouldn’t be able to issue an IPO. Crushed.
Or robinhood just halts buys on those stocks as soon as they detect they may need more cash which is exactly what they did. But that solution pisses off so many customers and people lose faith that they will be able to trade that robinhood's long term future is in question.
They simply shouldn't allowed that amount of customer money to be transferred into their platform until they had enough capital to buffer all the trading with that money in any stock. They could have delayed new customer accounts of limited incoming transfers to $1000 a week or something like that. Their platform shows you the most popular stocks other people are trading. It actively gamifies and encourages trading like this. They should have planned for the consequences on their liquidity.
*shouldn't HAVE allowed*
No edit button! Arrrrrrrrrrgggggg
More and more people are saying this.
They can’t halt buys for every stock. The main strategy, I think, would be to make billions of trades on a daily basis to a limited number of stocks. That way RH becomes a drain on the rest of the brokers. They have to add more money to the reserve to cover all the trades at RH.
One consequence, even if venture capitalists loan RH even more money, is that would pressure the other brokers and NSCC to abandon RH. No clearinghouse, no brokerage, no IPO. Leave the two rats holding their multibillion dollar dead app.
How dare they screw the little guys.
But, you know, I’m not wise in the ways of Wall Street. Perhaps it isn’t possible to do what I think can be done. It sure seems that that would be a way to destroy RH.
Well they were limiting 50 different stocks so I think their strategy is just to keep doing that as much as they need to. But it also seems like without it even being a coordinated or intentional attack on robinhood, traders are breaking the platform just by buying volatile shares quickly. This will likely continue and be an ongoing PR problem, liquidity problem, lawsuit problem, and also potentially a regulatory problem for Robinhood. It seems to me their future is very much up in the air.
The little guys want blood. I don't blame them. RH has already used up internal funds and got another billion from their original backers. Which means they are pretty leveraged out, flat busted broke. One or two more wild rides and they won't be able to come up with the reserves needed to keep doing business with the clearinghouse. Traders just need to pick stocks that are not in the list RH came up with. Volume of trades. That's the key.
Interesting. Whatever happens.
That list has been changing throughout each day. The stocks change and the quantity of each stock change. There were 50 stocks at one point earlier this week. Now there are 8. What makes you think they wouldn't stay ahead of it and add a new stock to the list before it gets too far?
That would be blatant market manipulation if RH blocked all stocks that had an uptick in volume. The SEC would have to act, if that happened. Especially if it was a stable stock, such as, IDK, Intel.
This is all speculation, on my part. I don't know nothing about the stock market. I know WSB has a tremendous tool they can use. Numbers. That would allow them to disperse their power out however they wanted to use it.
Certain companies displease the Generalissimo for one reason or another and become the Vanishing Commissar. Free market gonna free market!
Sorry. NYT
Now that all the unrestricted trading from Wednesday has cleared and they have secured hundreds of millions in funding, we should expect the restrictions should be reducing right? HA I'm not holding my breath. Currently, as of Sunday morning, GME is limited to a single share: https://robinhood.com/us/en/support/articles/changes-due-to-recent-market-volatility/
I'm not sure. I'm super curious to see whether they actually failed on an NSCC call and got hit with an additional adequate assurance deposit requirement.
That may be, but if it is, they aren't keeping their customers informed. If they cared about their customers ability to make their own investment choices and about price discovery for these tickers in the market, wouldn't it be helpful for them to be more transparent about what's going on so we (and the market) could know what to expect? They don't they only care about themselves.
I would definitely start with the assumption that price discovery for these issuers’ securities is way, way down their list of concerns. Watching the directions of ACATs is going to be consuming much more of their attention.
Well the regulators should be concerned with a broker screwing with price discovery. Or at least that what I want my regulators to be concerned with. Elizabeth Warren seems concerned. I had to google ACATs ("The Automated Customer Account Transfer Service is a system that facilitates the transfer of securities from one trading account to another") but yeah I heard Fidelity is swamped with new business right now. I immediately got my cash balance out of Robinhood and luckily I have other accounts I can trade in.
So Matt misfired with his comments on why Robinhood stopped trading then.
Weigh in
But... admit it, you were worried for a minute there. Before RH started manipulating GME by preventing buying, and making it clear where they stood, there had to have been a moment where you thought you might have to praise RH :)
RH has been a part of the club all along. You cannot get into the stock market/financial sector without membership.
All you have to do is look at who their investors are to know they're absolutely in the club.
Well that and the fact that google just deleted a bunch of negative reviews that came from them preventing their users from using their platforms
The problem with them selling order flow to make money off customers is independent of the problem with them preventing buys of specific stocks. If they hadn't restricted anything and simply allowed people to trade normally they wouldn't really be deserving of any praise, that's what everyone expects a brokerage to do.
Absolutely. But, when the squeeze was on initially, you had people positioned to profit from this order flow making essentially the same argument Matt was "we shouldn't celebrate the inexperienced accessing the market when they could mess stuff up", but for the opposite definitions of "stuff". Matt was worried about the masses getting slaughtered by pros. While the pros were worried about getting slaughtered by the masses.
RH restricting buy access changes the argument. It's no longer about how dumb or smart the retail investors are. It's about the fact that RH is there purely to provide a flow that is profitable to those that are paying for it.
out of context, false equivalence
in the 1st quote he's talking about little-guy investors being exploited by the platform
in the 2nd quote he's talking about how hilarious it is it blew up in their faces
Robinhood is Wile E. Coyote
Who do you think is going to be holding the bag when GME goes tits up?
The redditors, but they're hoping to have taken down some hedge funds before that happens. For the most part, this isn't people trying to get rich, it's people willing to spend (and lose) a few hundred bucks in order to take down some multi-billion dollar hedge funds that got greedy and over-shorted stock.
A couple of hundred bucks is, in a lot of people's minds, a small price to pay to achieve more in a few days than Occupy Wall Street ever achieved in months of protesting.
I had a person in my office, (who now I know participates in the r/wsb forum) tell me just that. I’ve chosen to potentially take a loss and surrender “taxes” to achieve a community goal. The invert of “if you’re going to tax me I want representation” is “me and some others are going to volunteer for potential taxation to achieve a goal our community supports.” He considered GME a charity fundraiser with potential profits.
Bear em’ at their own game-can’t get more American can do spirit than that.
«A couple of hundred bucks is, in a lot of people's minds, a small price to pay to achieve more in a few days than Occupy Wall Street ever achieved in months of protesting.»
It would have been much better and longer lasting if the bucks had gone to labor union memberships and their political funds so the labor unions could buy their own gaggle of representatives and senators like Wall Street and the Business Roundtable do.
But a large part of the attacks on labor unions by Republicans and "centrist" Democrats was precisely because of that: their sponsors want to be the only ones allowed to buy politicians.
I am presuming you have never worked in NYC. Having done so, I can give an anecdotal reason why I despise labor unions. My job back in the mid-90s involved transporting computers between buildings in Midtown - mostly for repair. I had one of those folding hand trucks. The reason I had a folding one rather than a real hand truck, which would have been way more useful than that cheap folding thing, is that you a. can't use the freight elevator and b. can't roll a hand truck through the lobby of buildings. Unless you are union, that is. Of course, being an IT support guy for one of the building tenants, I didn't qualify for any union that controlled the building anyway, even if I were interested in joining.
My little anecdotal story can be extended out to strikes in Great Britain over not much at all, the slowdowns in getting things off the docks or through railroad systems in the US. Anything that has a union involved is slowed down and the service sucks. Ever wonder why there are so many long haul trucks running around spewing diesel fumes? You have your answer.
Unions make life suck just a little more for everyone.
«why I despise labor unions. [...] can't roll a hand truck through the lobby of buildings. Unless you are union, that is.»
So you despise free markets and freedom of contract between consenting parties! The building owner and the union have reached an agreement and exercised that freedom of contract, and your employer have chosen in the free market to be a tenant in that building, and nobody is stopping them from choosing from the free market a non-union building in NYC or anywhere else if necessary.
That's the American Way: capitalism means that winners do whatever it takes, and if a party have the leverage to fuck over their customers, they do it to the fullest extent they can get away with.
In particular in the vast majority of cases it is employers that have the leverage to fuck over their employees, and it is corporations that have the leverage to fuck over customers, and impose as many restrictive practices as they can on customers and employees, and labor unions do that in only a minority of cases.
Regardless, in the case you give as example, the party really responsible for the restrictive practices is the building owner, because neither you nor your employer have contract with the union, that you cannot carry stuff yourself is certainly a rule in the tenancy contract between the building owner and your employer.
Why did the building owner put them in the tenancy contract? Because, given their leverage vs. that of the labor union they had two alternatives:
* Give them a higher wage without restrictive practices, and the cost of that falls on them.
* Give them a lower wage plus a monopoly on certain types of work, and the cost of that falls on tenants.
The builder owner are proper americans!
I don't share your love of laissez-faire capitalism. It results in coercive, abusive, totalitarian monopolies. Exactly that kind of policy resulted in Marxism's rise and grinding a hundred million or more into graves. Color me not a libertarian. How much and what kind of regulation are required is a matter for debate, but labor unions solve no problems at all and create new ones.
"Rage against the dying of the light." That is what is happening here. At that point it doesn't matter anymore, it's about making a stand and sending a message.
I'm not one of the WSB guys, but I interpret the message to be rage against the decoupling from useful work and financial rewards in American society. I'm glad some of them got rich, although I'm not sure how much a digital dollar is going to be worth in a while.
The Puritan work ethic has been utterly hollowed out. People can see it. It's visible. Hard work doesn't get you ahead financially. Personal connections and knowing how to game the system are what gets you ahead. The elite are scam artists.
Exactly. And that is why this is happening. The curtain has been pulled back as far as it can go. Nobody can deny the markets, the "system," the American Dream is now, and has been for decades, a crock of shit.
This is why Library of Congress lists The Wizard of Oz America's most popular book! They still want the delusions.
Maybe it's Wall Street's version of the Thucydides trap?
The older I get, the more I appreciate every little detail of The Wizard of Oz.
Baum's great, kind of like Dickens; he kept cranking them things out to make bank. Most of the sequels are crazier and better than the original.
I was a particular fan of "Dorothy and the Wizard in Oz": https://en.wikipedia.org/wiki/Dorothy_and_the_Wizard_in_Oz
You are right about the sequelswhen I was a kid-I loved the evil dwarf king Roquat/Ruggedo-he got mind erased and had to pick a new name or something-in The Emerald City of Oz and subsequent books.
Agree-I’m not jealous of blown up financial stock value and I don’t feel bad when it disappears. If you can’t handle the game, stay off the field-and don’t change the rules mid-game either b/c you are losing.
"don’t change the rules mid-game either b/c you are losing."
haha, this is exactly what the big public trading platforms are doing right now by locking down buys on GME etc. If Twitter is to be believed, Robinhood is actually selling GME holders' shares against their will. That's a pseudo-factoid I can't verify, but I thought I'd throw it out there.
Robinhood will not make it out of this clown show intact-and they don’t deserve to. They are the equivalent of a ref taking a bribe mid-game.
As opposed to before the game?
I think he was referring to the "right out in front of God and 20 million viewers" blatancy aspect of it, not the timing.
I guess it depends on what your definition of 'getting ahead financially' is but I can't agree with your post. Most people I know have, in fact, 'gotten ahead financially' by working hard and rising either through their ranks or building clientele. America's dream isn't fake, it just isn't being taken advantage of by some people.
The billionaire head of a major U.S. venture capital firm is the self-made child of dirt poor immigrants. He put himself through school, obtained several bio and business degrees, and worked 18- hour days to get where he is. He remains peripatetic and aggressive, working probably 10 times as hard, in real terms, as a randomly chosen nine to fiver. Without venture capital, we wouldn't have Apple or Google, or Silicon Valley, the latter a mixed blessing, or many healthcare innovations. The problem is the excess and greed,the personal jets and steroidal houses, the narcissistic culture we're seeing now, the lack of perspective or proportion, the protestant work ethic/help your neighbor raise his barn restraints. That lack of restraint and greed is what the U.S. must address, the debauched bonus and pay often not always at the expense of the stretched taxpayer. Warren had that right.
Most people who are rich possess the drive to make money -- being smart never hurts. Most people may not have that overweening drive -- they make do and spend time with family, watch the tube, or want to teach, help the sick and the infirm, write, protect the planet, make the world a better place for the innocent or helpless. We make choices. Some phone it in, and gripe about not being rich. In a matter of 15 years, my sister's immigrant gardener, originally from Mexico, became a full-blown landscaping enterpreneur with three beautiful trucks and crews. His brother owns an electrician business that services major developments. They made that happen. The landscaper put his profits back onto the company, and performed consistent, reliable, good work. The result is a thriving business.
There's nothing funnier to me than the people who think WSB is a bunch of principled populists sticking it to the man. It's a tiny minority of that but it's largely nihilistic opportunists laughing at memes and rallying together because they've proven the ability to move the market many times over (GME isn't close to the first time this has worked). To be clear, I have no problem with that! Let 'em rip! The vast majority that are doing it know that it's a stupid idea but it's _fun_! More power to them, I have non problem with it but will always laugh at people who back-fit a populist rebellion on it. Even more so when Taibbi decries the great evils of Robinhood for encouraging reckless trading and then a month and half later praises reckless trading on Robinhood as populist rebellion!
I think you would be surprised. I didn't really care until big tech started trying to deplatform these people. And, then today when the hedge funds and brokerage houses conspired to prohibit buys (not sales, only buys) it exposed a level of corruption that we suspected existed but had never seen so blatantly in the daylight before.
So, I willing to lose a few thousand dollars to help my fellow apes take billions of dollars from Gabe Plotkin. And, I can't wait to be seated next to Gabe at the Applebees.
For me this is 100% protest. I'm not the type of guy who is going to attend a rally in DC. I'm a boring ass 45 year old, but I have diamond hands.
This is the same deplatforming that’s happening everywhere. We all think we’re citizens until they decide we’re just subjects.
"Trying to buy a stock? Nope, sorry,not allowed"
Wait until you try to take your "money" out of the "bank."
Then wait till you try to tell people about it on the Internet.
"Your post was deleted due to a violation of our rules and polices, as follows:
Trumpism
Sincerely,
Internet Ministry of Trust and Security"
I guess that a standard question at interviews will be: "Are you now or have you ever been a member of MAGA or of the Bernie Bros?"
I like how you made this gag just a few days before it was reported that the Biden admin is mulling appointing a Secretary of Reality.
"I willing to lose a few thousand dollars to help my fellow apes"
Return to Monke!
The Mod Gorilla Boss, brought to you by Gamespot (sadly not GameStop, which would have perfected the bit: https://comicvine.gamespot.com/strange-adventures-201-the-mod-gorilla-boss/4000-9403/
Issue details
Name
The Mod Gorilla Boss!
Volume
Strange Adventures
Issue Number
201
Cover Date
June 1, 1967
I think I have a found THE connection - it's all about 1967!
*January 4 – The Doors release their début album The Doors, which contains "Light My Fire".
**Ronald Reagan, past movie actor and future President of the United States, is inaugurated as the new governor of California.[1]
***The Human Be-In takes place in Golden Gate Park, San Francisco; the event sets the stage for the Summer of Love.
****February 18 – New Orleans District Attorney Jim Garrison claims he will solve the John F. Kennedy assassination, and that a conspiracy was planned in New Orleans.
*****March 1 -The Red Guards return to schools in China.
******March 12 -The Velvet Underground's first album, The Velvet Underground & Nico, is released in the United States. It is initially a commercial failure but receives widespread critical and commercial acclaim in later years.
*******March 17 - The Grateful Dead debut their first album 'the Grateful Dead' consisting of the songs; The Golden Road, Beat it down on the Line, Good morning little schoolgirl, Cold rain and snow, Sitting on top of the world, Morning dew, New new minglewood blues, and Viola Lee blues
******** March 21 - Charles Manson is released from Terminal Island. Telling the authorities that prison had become his home, he requested permission to stay. Upon his release, he relocates to San Francisco where he spends the Summer of Love.[4]
*********April 28 - In Houston, Texas, boxer Muhammad Ali
refuses military service. He is stripped of his boxing title and barred from professional boxing for the next three years.
**********May 12 – The Jimi Hendrix Experience release their debut album, Are You Experienced.
**********June 12 - Loving v. Virginia: The United States Supreme Court declares all U.S. state laws prohibiting interracial marriage to be unconstitutional.[13]
So... you ask why the history lesson?...well I heard a whisper in a cloud today wafting from the desert...from the THE WESTERN LANDS....IT said - read that magazine if you can still find it and...
“A paranoid is someone who knows a little of what's going on. A psychotic is a guy who's just found out what's going on.”
― William S. Burroughs
I have noted the irony of WSB and WSB. Once again we as a country have embarked on Strange Adventures.
I made an entirely different WSB investment. Have been cashing in since 1978. No remorse. No regrets.
I don't entirely disagree about the mix, but the nihilist group will get out on time so it's not like everyone who backed the move is going to get rekt
Anyway... the redditors who lose will lose no more than they put in
The hedge fund guys will lose geometrically and that's what's charming about the story
I feel like Matt's uber fan boys think me mocking his gross hypocrisy here project on me that I don't find this charming/hilarious. I'm pro WSBers here! It's great! It's just Matt had his two totally predictable takes and they're directly opposed to one another.
As he explained to you already - and the majority of the rest of us agree with his explanation - you grotesquely misread his posts. What we have here is a junior high school tirade: You made a very public attack on his credibility, and now claim the moral high ground for bravely refusing to apologize when you're obviously in the wrong.
But, hey, you go wave your SJW flag, pal ...
People enjoy their victories most when they set the rules and keep score. It seems.
You work for Wall Street. That meme thing is just what the hedge fund scum have been using on the news. Wall Street is fake, dude. It's fake for everyone. Let us know where you live and when you will be out of town next so we can go through your shit.
I don't work for Wall Street.
Also, wtf is this: "Let us know where you live and when you will be out of town next so we can go through your shit."??
A threat.
You're definitely a good person.
I think he's a good poster!
...as if one's shit isn't gone through every time one applies for a job or a credit card. Hilarious!
This trade is safer by leaps and bounds than buying index funds at ATHs, right? The hedgies have publicly disclosed that they are short 140% of the float in $GME and keep loading up every time it climbs. In that scenario a swing group of buyers controls the price. It would be reckless to not pile on, right?!
Hah, maybe! Fingers crossed you're onto something
I agree about people trying to back-fit a populist rebellion onto this. Well said.
I disagree with the idea that Matt's two articles are in conflict. It's funny that these guys sent the hedge funds running. But at the end of the day, the stock price will fall, or else GME will have to find a new business model. If the Robinhood crowd wind up with a majority of the stock, they'd own the company. But what do they do with it? Hire a new board to do what?
Sometimes public companies go private. They do so because they think the company is worth more than the market value. Do these investors think that's true in this case?
[Who is to say the original planners are still the ones moving the stock? Robinhood is allowing buys of ONE share? That ain't gonna move anything.]
The real story here was the proof of concept. For the first time in my 40+ years, I've seen the populous stick it to the wealthy in a way that they actually give a shit about. I liked Occupy, but at the end of the day Finance didn't ultimately care that much. It didn't affect their money long-term and they were already experienced with waiting out a Long position in their penthouses.
This seems like it might be different. They're panicking so much over this that they're being blatantly... blatant about it in their hypocritical calls for regulation. That and the fact that they're losing money and maybe the citizens finally found something that will threaten them.
They were pretty confident that no "movement" with such exacting concern for the divisive dynamics of social justice would last very long. Which confidence proved to be well-founded.
Very good point. It started off as a class uprising and people supported it. And then...
Even if it's mostly nihilistic, it's a protest in spite of itself.
At this point, that which discomfits my enemy is welcome. IF there were such a thing as "Trumpism" (outside the tiny brains of hysterical blue checks), and IF it could be shown this little blow against the Empire was committed by "Trumpistas"...I'd still approve.
It's going to take some bitter hatred and a willingness to absorb loss for this to get turned around. If it gets turned around.
I could be reading him wrong but my understanding is that Matt thinks that the populists and the socialists would be much more effective at learning even the basics of Finance. He's said as much before.
For example - setting aside losing twice in races that were absolutely rigged in various ways against him - Bernie might have got the edge he needed to tip past the long odds in 2020 if he had been able to talk solutions to the Finance issues like Warren was able to do. Warren was able to peel enough of the "I'm a socialist but I'm a serious ADULT! harumph" vote off of Bernie mostly (in my opinion) due to the fact that she could talk a wonky finance game. Warren may or may not have been all talk with her "Plans" but she could still talk, and they weren't even hugely complicated concepts! Imagine if Bernie could have trumped (original meaning) Warren with his own specific finance regulation/tax plans?
My take is this is asymmetrical political warfare, and sometimes the poorly equipped/financed teams can win the battle using guerrilla warfare. Using their weapons against them is a key principle of guerrilla. VC sent France and the US limping out of their country by using their own weapons against them. VC would take discarded ration cans left by soldiers and fix them into mines.
The question of which opportunists/deplorables/gamerpoopsocks constitute the meme stock class is beside the point. This has been a proof of concept for a strategy that works because it's a counterstrike that the elites actually give a shit about. It gutted some of them where it hurt the most. It's plausible that the populists could further develop this strategy and bring back a little wealth in doing so. I want to see where this goes because nothing else that has been tried in recent decades has done anything to make them care.
Can you give a few more examples of WSB moving the markets? I'm genuinely curious.
Robinhood's list of stocks you cannot buy today gives a partial list.
<Due to ongoing market volatility, the following securities are currently set to position-closing only:>
AAL
AMC
BB
BBBY
CTRM
EXPR
GME
KOSS
NAKD
NOK
SNDL
TR
TRVG
https://robinhood.com/us/en/support/articles/changes-due-to-recent-market-volatility/
Well just right now there's AMC and BB as well. Prior to this you had Hertz, NIO, NKLA, arguably TSLA, possible AMD argument, though that one really matches well with fundamentals. There's been more but these are some I remember from the top of my head.
Exactly, there are people all in on Gamestop, but the majority put in as much as they're willing to lose. If and when their position's value evaporates, it will have been more than worth it. Per WSB, "Diamond Hands" don't sell.
After prohibiting the purchase of shares and options earlier, the big market makers implemented a short ladder attack, wherein they put in lower and lower bid prices between themselves with little volume, and since no one can buy, it causes the stock price to appear to be plummeting. However, people who follow the subreddit quickly learned of the ruse. The shorts are still screwed for the foreseeable future.
You think the Feds (ie, you and me) are gonna bail out individual investors on reddit? Obviously you don't know how gov't works. Gov't 101: Unless one of those redditors is the great great grandson of the old bags McConnell or Pelosi or Schumer or the son a hedge fund manager (who donates to list of previous old bags) who stole his dad's money and screwed him, there will be no bailout.
Did anybody even mention "a bailout" for these plebes?? Don't think so.
Quite the contrary, BIden's press secretary's brother ran the hedge fund that got caught with their shorts down. Janet Yellen made a million dollars in "speaking fees" from Citadel alone! I think people know what "side" our public servants are on.
BTW, the press secretaries LinkedIn profile had her brother scrubbed from it, TODAY.
"Who do you think is going to be holding the bag when GME goes tits up?" - as always, the last few to pile on, the ones who paid $200+ for the stock, when it's worth maybe $20. On the bright side, the publicity will probably help keep the company alive. Retail is a tough business, these days.
«as always, the last few to pile on, the ones who paid $200+ for the stock, when it's worth maybe $20»
A critical detail is that the redditors are not buying the stock, for $20 or $200, they are buying call options on the stock. They know very well that their call options will eventually and soon become worthless, most of them have only bought a $100-$200 of call options and they can afford to lose them.
The big banks selling the call options will lose a lot of money though because their option pricing algorithms make them buy the stock to cover their positions. A large part of the story is that if a stock price ramps up very quickly, those algorithms probably underprice those call options because they have a built-in lag.
calls on GME are a lot more than $100-$200. One contract at current price will set you back $7500. The ones that made out well bought $1000s of calls below $100 and made out huge. The people jumping in now are either long buying small amounts or spending a small fortune for calls. Puts are also wildly inflated too so someone sees the writing on the wall. Truth be told a lot of the last few days are FOMO guys and aren’t going to get rich.
“calls on GME are a lot more than $100-$200. One contract at current price will set you back $7500. The ones that made out well bought $1000s of calls below $100 and made out huge”
You are missing two important details:
* The huge rise on GME happened because a few days ago calls were "below $100". We are discussing how the stock could have jumped so much in so few days, the past, not the present. As I wrote part of the issue is likely that "those algorithms probably underprice those call options because they have a built-in lag", and the lag has shrunk.
* Most of the Redditors buy calls and stock on RobinHoodm and the important selling point of RobinHood is that they "sell" fractional shares and calls. That a lot of people are buying fractions is strongly hinted by RobinHood having to suspend new purchases of fractions for a while while they went out and raised capital for collateral, which makes sense only if they are the actual holders of the unfractioned shares and calls.
Greedy uneducated FOMO amateurs. Stack Market is gambling pure and simple and if you don't study and understand the odds you will leave the table broke. The house (Wall Street) always wins in the end. But those that understand the odds will at times score big time. This is a grown up world, these are not kindergarteners investing their milk money hoping to ride the pony outside. You make your bets and you takes your chances. If mom and pop have their life saving in a managed account and their account manager is not aware of the GameStop danger then they surely chose the wrong place to trust their saving s to. Anyone buying in at $200 has to know the risk.
Or, "Anyone buying in at $200 has to have $200 to lose." And I'm pretty sure most of them do.
Wonder how they're going to phrase the message that "You're not getting your $1400 Covidbux checks because some of you might do something irresponsible with it."
They'll have to first set it up that it's all the fault of "Trumpers" or "Alt-righters", which, with a fully compliant media, they'll probably be able to dl.
Who do you think was going to be holding the bag when GME goes tits up without the WSB/RH rise? GME was shorted 140%, so we know who was going to make money - the guys who just lost their asses. So who would have lost without WSB and RH?
Do you fret for people who are stuck holding lottery tickets that don't win too?
Exactly my sentiment. I'd bet dollars to donuts that Andrew has only a vague idea who is holding GME stock, and much more important, Andrew's has never, ever voiced concern for that group prior to this situation.
Tell me more about these donuts
Everyone who agrees with, "Hold the line" - although, quite a few of the "holders" didn't invest their life savings (we can only hope). It sounds as if most of my fellow redditors simply threw in nominal amounts and let the network effect take hold.
You think the Feds (ie, you and me) are gonna bail out individual investors on reddit? Obviously you don't know how gov't works. Gov't 101: Unless one of those redditors is the great great grandson of the old bags McConnell or Pelosi or Schumer or the son a hedge fund manager (who donates to list of previous old bags) who stole his dad's money and screwed him, there will be no bailout.
Some of the redditors. A lot of the hedge fund guys. There's no neat answer here.
I think you got your modifiers reversed :)
Unless something really crazy happens it will be a lot of Redditors and some of the hedge fund guys. You're totally right, though, they have 100% stuck it to Melvin and have proven (they already had, this is just the biggest time) they can squeeze a short with great effect.
And a lot of people who have no idea what's going on and think they can buy and sell for profit.
To be totally fair to the story here, WSB is promoting a Robinhood boycott after this GME fiasco. I know that you're specifically attacking Matt's take on bringing in more retail investors overall, but if you simplify his point down to "Robinhood bad," WSB would agree in solidarity. They were the ones who orchestrated the mass 1-star ratings on Robinhood, after all.
In any case, it's nice to see Matt get a different perspective on retail investing. Curious to see if his perspective shifts after WSB "GME loss porn" begins making headlines. I always knew that WSB was somewhere special, but to see it get this much attention and scrutiny, leading to nonsense "alt-right" takes and censorship from Discord... well, it's a little bittersweet, like seeing your favorite indie band go mainstream. Let the autists trade in peace, I say!
Amen. Agreed across the board. As you said, though, my point is Matt rips Robinhood for letting and even encouraging its users to be reckless and then now praises their recklessness. I would do neither and just say "let the reckless be reckless, it's their choice".
Say that I wrote an article about how Tesla automobiles are unsafe - they spontaneously combust, they spontaneously accelerate, the autopilot will crash, etc.
Then say I wrote an article about how the National Automobile Dealers Association lobbying states pass laws prohibitively regulating factory-owned automobile dealerships (i.e. Tesla) is an attempt to ban competition and corner the market.
Is this a comedy of hypocrisy? No, both things can be true at the same time. A product can be unsafe and its competitors can be cheats.
Are you really suggesting Matt was off base in the earlier article when he questioned the true nature of Robinhood? Today? After Robinhood straight up drove the prices of a number of stocks down by only allowing users to sell?
Matt expressed two broad problems with RH in that article:
1) That PFOF is predatory.
2) RH preys on the inexperienced and dupes them into reckless investment choices.
I disagree with #1 (see here for more: https://twitter.com/matt_levine/status/1340030132627509248)
#2 is what I'm mocking. He villainized RH for encouraging reckless investment and now praises it as populist rebellion. That's hilarious.
The main claim of that article was that RH is incentivized to encourage investors to behave in ways that are profitable to those that are pfof... Today we witnessed the extent to which RH is willing to go encourage specific behavior (only allowing closing of gme positions).
There is no inconsistency here. You can enjoy watching retail investors fuck with hedge fund managers for fun and possibly profit and, at the same time, observe that RH is designed for the benefit someone other than the users of the app.
Let me first accept your leading sentence as true.
If you encourage investors to behave in ways that are are profitable to PFOF, that isn't inherently bad. It's only bad if those ways are actually themselves harmful to the investors. Well what are the users encouraged to do that is harmful? Things that are reckless gambles with high possible returns like buying short dated, OOTM options also known as what's going on with WSB and GME. So either encouraging this behavior is bad or it isn't. In his RH article, he makes it pretty clear he views encouraging this behavior is bad.
Taibbi makes clear in this article that he's in favor of this behavior and even encourages it specifically!
"Buy the ticket, take the ride, nitwits."
Either encouraging this behavior is bad or it isn't!
Me? IDGAF, play whatever stupid games you want! But I'm always going to laugh at the blatant hypocrisy. Just as I laughed at the hypocrisy Taibbi lays out in this article.
>Well what are the users encouraged to do that is harmful?
Yesterday, when RH removed the ability to buy gme, users were encouraged to sell.
Again, there is no hypocrisy here... One can believe that RH encouraging harmful behavior is bad, and still enjoy it when the entire thing backfires on them.
NO, you missed with everything you wrote. Because you lost money.
No, you lost money
Nuh-uh. Well we reached the end. Maybe I'll send Matt another $5 if he can get Substack to erase the comment section. It's just Twitter with 150 percent more pedantic lard.
nooooooooooooo
this troll loves the comment section. what will I do without a bridge over my head?
Well why don't you write a better article, instead of playing gotcha like a 5-year-old.
This article is good and if I wrote the other article, it would be really short and go something like: "Robinhood revolutionized retail trading by giving end users an easy to use platform to trade for free. This made every other platform offer free trades. You can also buy fractional shares so if you can't afford expensive stocks, you can still get in on the action. It's pretty much completely idiotic to trade options but RH gives you those too if you want to play like the big boys. All in all, a pretty great innovation for the little guy!"
I think you wasted you time in college getting an MBA.
I mean, you could actually just Google my name and probably figure out who I am. You're not very good at guessing...
And you're not very good at guessing how many shits are given about that.
All the same, they are bad for traders in tons of little ways. They've been great training wheels — and midwifed an important market transformation — but when you figure out how to balance you probably want something that doesn't have plastic tires and an open recall on it.
"What could possibly go wrong with bringing more people into the stock market? A lot, as it turns out." Yes, for the hedge fund folks
"The only thing 'dangerous' about a gang of Reddit investors blowing up hedge funds is that some of us reading about it might die of laughter." Yes at the hedge fund folks
I don't see the hypocrisy here. In both cases it applies to the hedge fund folks who got bit and are now getting laughed at. I get the joke. Evidently you didn't.
You comment has not aged well, given RobinHood's subsequent criminal actions.
Taibbi on Dec 9th: "What could possibly go wrong with bringing more people into the stock market? A lot, as it turns out."
Taibbi today: "The only thing 'dangerous' about a gang of Reddit investors blowing up hedge funds is that some of us reading about it might die of laughter."
I see no problem there: more people putting their pension savings in the stockmarket has at least three huge downsides that are all quite bad for everybody but Wall Street, a gaggle of redditors burning a few hundred each to mock a faction of Wall Street is just comical, it has next to no implications for everybody but Wall Street.
The three huge downsides of putting everybody's pension savings in the stockmarket are:
* It creates, as Grover Norquist has boasted, extraordinary political pressure to bail out stock prices.
* It exposes pension savers to losing 30-60% of their pensions in Wall Street fees.
* It gives either "dumb money" or those managing their funds a ridiculous level of influence on capital allocation decisions.
Interesting, let's look at the context of that Dec 9th quote:
"What could possibly go wrong with bringing more people into the stock market?
A lot, as it turns out. “Every time someone says they want to ‘democratize access,’” says Joe Saluzzi of Themis Trading, “I get very scared.”
On June 12th, a 20-year-old University of Nebraska student named Alexander Kearns looked at his app and saw what he thought was a negative balance of $730,000. Misunderstanding the readout, which only showed part of a series of options trades he’d made, Kearns mistakenly believed he’d been ruined financially. He killed himself by stepping in front of a train, leaving behind a note asking, “How was a 20-year-old with no income able to get assigned almost a million dollar’s worth of leverage?”
Please explain how the quote you cited implies what you stated in your comment?
If you really think that limited context breaks my point, why don't I use this passage:
"Brewster isn’t buying it. “Everything is designed to make investing look like DraftKings,” he says. Moreover, the company’s practice of offering push notifications when customers’ stocks move up or down 5% or 10% could trigger an endless cycle of dopamine-generating responses, combining FOMO/clickbait psychology with the betting urge. Customers think, “if it’s down, I gotta get out. If it’s up, I gotta buy more,” says Brewster.
The obvious problem is that a lot of these younger customers have no clue what they’re doing. “Retail investors don’t understand stocks, let alone options,” sighs Saluzzi. He compares the service to bringing amateur poker players to Vegas and seating them not at a table with old ladies and tourists, but with the best players in town. “It’s throwing them right in with the sharks,” he says."
Seems like the little fish ate the sharks in the past coupla' days.
Shouldn't you be talking about how this is out of context or something? Maybe making a bad point about false equivalence? ;)
The fish ravaged a couple sharks, a bunch of sharks have been feeding on the chum generated and we still have to wait a bit to see how the fish work out in a couple months.
Icthyology fun fact-piranhas will not bite/attack each other-they will whip each other with their tales, but will not attack their own with teeth.
incredibly underrated comment
You can be on Team Piranha or Team Remora. My wholly speculative thesis is that the sharks are doomed in the end; Nature's antediluvian cretins, cruising the oceans with nowhere to go.
It’s always hilarious to listen to the hedgies and institutionals bitch about retail when they’re always the worst villains no matter what the topic.
Sorry, I don't see how that makes your claim any more accurate. Stating that RH encourages bad behaviors while also allowing ppl to stick to the man are both true statements, a lot of RH users don't know much about the market, and the latest GME frenzy is actually given them a way to "fight back" (a lot of them don't understand how or why, but they know that predatory firms are hurting because of it), plus RH made clear today that it expects only one type of behavior.
First, is there anything more annoying than starting a comment with a faux "sorry"? Strap on a pair (balls or tits, your choice) and just say what you want to say.
> Stating that RH encourages bad behaviors while also allowing ppl to stick to the man are both true statements, a lot of RH users don't know much about the market, and the latest GME frenzy is actually given them a way to "fight back" (a lot of them don't understand how or why, but they know that predatory firms are hurting because of it), plus RH made clear today that it expects only one type of behavior.
Agreed but also totally irrelevant to my claim that Matt is a hypocrite in these two articles. In the RH article, Matt makes it clear that RH is a villain because it encourages bad behavior such as buying short dated, OOTM calls. In this article, Matt glorifies the same behavior as a populist rebellion. If the behavior is bad and RH is bad for encouraging then Matt is just as guilty of the crime when he says "Buy the ticket, take the ride, nitwits" and glorifies the selfsame behavior he vilified RH for encouraging. Matt's RH article isn't much further from the pearl clutching he calls out as bull shit here.
My take is let the people do whatever they want in this case. If RH wants to give uninformed retail investors the tools for their own demise, it's the uninformed retail investors' job to use them in a way that matches their risk appetite. If they want to informally gang up to put Melvin in a short squeeze, let 'em rip! RH wasn't doing anything wrong until the closed down the ability to trade GME and friends.
It wasn't a faux "sorry" actually, I really didn't get your point.
> Agreed but also totally irrelevant to my claim that Matt is a hypocrite in these two articles.
I'm missing something again, because if you agree that both statements can be true, how is that not relevant to your claim?
> Matt makes it clear that RH is a villain because it encourages bad behavior such as buying short dated, OOTM calls. In this article, Matt glorifies the same behavior as a populist rebellion.
Yes, RH is a villain encouraging bad behaviors, and following the same patterns as facebook and the likes, what's happening with GME is using that system against itself, and in the case of RH it enabled people to stick it to their bosses, both are true and renders your argument moot IMO.
> I'm missing something again, because if you agree that both statements can be true, how is that not relevant to your claim?
Because my claim is he holds wildly inconsistent standards depending on his populist flavor of the day not whether you can both claim the RH encourages bad behavior and also that it gives access to tools to create a short squeeze.
In Matt's world, when RH encourages risky trading that's bad and makes RH a "Pandemic Villain" but when Matt encourages risky trading that's good and is a populist revolt. That's inconsistent. This is a completely different question for what you're talking about as a set of consistent views.
> Yes, RH is a villain encouraging bad behaviors, and following the same patterns as facebook and the likes, what's happening with GME is using that system against itself, and in the case of RH it enabled people to stick it to their bosses, both are true and renders your argument moot IMO.
Look, either it's bad to give newbies access to and encourage the use of highly risky, speculative investments or it's not! It can't be that RH encouraging it is bad and Matt Taibbi encouraging it is good and you stay self-consistent. RH ISN'T evil (not even it's temporary shutting down of GME trading after further research: https://www.ft.com/content/9a1b24e6-0433-462a-a860-c2504ea565e4). Nor is Matt evil in this article for encouraging idiotic (I guess it's arguable if it's idiotic or not) use of investment platforms. But it is wildly inconsistent to vilify RH for encouraging use of risk, speculative investment vehicles and then turn around and do the exact same thing.
I get your point, but I don't see any hypocrisy in Matt's view. He was scolding robinhood for offering easy access to instruments normally offered to more experienced traders only. And in general Matt's probably right that most millenials on Robin Hood really shouldn't be messing around with options trading. We know of at least one kid who committed suicide over a misunderstanding, and i'm sure there are many more who have lost substantial sums of money. But it turns out that a few sophisticated investors on WSB were able to harness the power of the masses in a novel way. Why not have a laugh? Why not be delighted that for once things turned out for the better? If anything it is a lesson to not underestimate the internet hive mind.
This is true, Matt’s point about RH giving newbie investors easy access is sort of the same logic as saying why inexperienced drivers shouldn’t be given easy access to McLarens or 7 year olds access to jet skis-it’s not legality, it’s about not being able to handle high powered machinery-sometimes it ends spectacularly bad.
I get your point more now (I think), from your perspective Matt calling out RH as evil is in contradiction in praising retail investors who engage in "bad" behaviors. I can see an argument there but it seems to be a false equivalency, Matt is praising retail investors using the system to stick it to these big hedge funds, it doesn't mean it's not a risky/bad behavior, only that it's being used against ppl everyone dislike.
The same way one can criticize Facebook for encouraging terrible behaviors while still praising people who use Facebook to do interesting and useful things.
Ooooooh, hit him with the "hypocrite" tag, the lowest form of criticism available in Darwin's waiting room.
I mean, did you read the article this comment thread is on? Half of it is Matt, correctly, mocking the hypocrisy of the people trying to shut down WSB. It's just that Matt was doing the same idiotic complaining when he wrote about how evil RH was.
Maybe he was moving fast/breaking things?