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GameStop exposes the rigged system

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1 minute ago, El Nikko said:

That George Gammon video I posted above is very good.

I know there's a lot of traders on here who understand this stuff so much more but it's scary stuff.

Again I am 99.9% sure we're going to see a crash but the longer it holds off the more worried I get....corrections are necessary 

Maybe it speaks volumes that the traders are quiet right now? Busy making money before the SHTF....Just a thought..

But what would I know

A lot of people got out of the market today. Biggest dive since last October. Biden does NOT inspire confidence. He is big on wasting money and buying votes. 

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14 minutes ago, El Nikko said:

Yeh I remember coming home from school (I'm in the UK) and seeing my house up for sale...that was a shocker but I think it was in the 80s (maybe 90s??) when interest rates hit the same levels.

 

My home purchase was about 1980. 

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1 minute ago, ronwagn said:

I am storing food, and planning on staying home in any crisis. I will also store water and have a large water filter. Also studying wild edibles. We also have chickens on our acre. I could raise rabbits and chickens in my crawl space until I got caught. It is six foot tall. We are only allowed six. 

I only have a 1/3 of an acre plot which is quite big for the UK 

1111.jpg

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(edited)

I have heard of people growing a lot of food on a simiar lot. Are you allowed chickens? They provide great fertilizer but it is too "hot" so needs to be mixed with wood chips or other cellulose. What growing climate are you in? https://www.gardeningknowhow.com/planting-zones/uk-hardiness-zones.htm

Edited by ronwagn
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11 minutes ago, ronwagn said:

I have heard of people growing a lot of food on a simiar lot. Are you allowed chickens? They provide great fertilizer but it is too "hot" so needs to be mixed with wood chips or other cellulose. What growing climate are you in? 

Actually I've been reading so much about all of this stuff, in the old days this information would have been passed down but we have a broken society now so youtube is like 'the old guy over the road'. 

We have a horse so we're bringing back loads of manure and I have been composting wood chippings ( not deliberate...I was just being lazy) and apparently chippings and leaves are full of carbon and accelerate the compositing of high nitrogen stuff like manure or grass cuttings.

After the (probably stolen) election fiasco I'd decided to get outside and stop caring and that is the result lol. I've been working on this plot for a few years. This time last year we had 6 storms/gales in a row, I was working and I couldn't go fishing either but the storms put everything back two months. On top of that I yet again lost a contract due to our clients pulling back in advance of the crash that came later Feb/March 2020.

We're getting loads of so called free money here in the UK and while I am a massive worrier and have made my own life even worse (through stress) over the last year I've at times enjoyed being unplugged. If I could be guaranteed to live this frugal life then I'd honestly be ok with it.

 

 

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19 minutes ago, ronwagn said:

I have heard of people growing a lot of food on a simiar lot. Are you allowed chickens? They provide great fertilizer but it is too "hot" so needs to be mixed with wood chips or other cellulose. What growing climate are you in? https://www.gardeningknowhow.com/planting-zones/uk-hardiness-zones.htm

Actually our deeds say we cannot keep chickens here lol

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(edited)

1 hour ago, ronwagn said:

So she is on board with the rest of the crony gang now?!

To be fair, she condemned the shorting hedge fund as well in the above the yellow box. 

I guess the best way is to remove Derivatives as they won't help productivity but even can harm it, should not just banning shorting. Shorting evil or not depends case by case. I think the upstick rule should re applied as least. Theoretically we can have a large number of individual to attack the stock by shorting as well but larger funds have an upper hand on either case.

Edited by SUZNV
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(edited)

On 1/29/2021 at 3:54 PM, ronwagn said:

OK, so if big hedge funds ruthlessly attack companies to make profits why is that even legal. I understand there is a lawsuit because Robinhood is owned by Citadel, a major hedge fund, and it was warned what was happening. What will happen from here?

Citadel shorting is not illegal.

Reddit group buying a heavily shorted stock (140% of outstanding stock was shorted) is not illegal.

So 140% X 70 Million shares = 98 million shares were shorted down between $17 - $20 .  Big Loss.  Tough to unwind.  

The Elites are just pissed off when the little guy wins.  

Supposedly Robinhood Trading tipped off Citadel they were going to prohibit buying the stock.  THAT'S ILLEGAL.  Some say Citadel told them to do it. Probably. 

The problem is how do you buy back 140 % . 

Today GME closed at $325 . There are 70 million shares outstanding.  That gives GameStop a $ 22 Billion valuation.  

What if Citadel was bankrupt when the stock was trading up here between $300 to $400. 

Many could just walk away from their short positions and the Broker Dealers that lent them the stock are on the hook.  

Edited by Roch
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(edited)

4 hours ago, ronwagn said:

What will happen from here?

What always happens, the well to do will try everything they can to kick the barbarians out of "their" casino. It'll be a big ass fight if my 30 year old friend is any indication of what the younger crowd is motivated by, it ain't money.

 

Screenshot 2021-01-29 at 2.55.15 PM copy.jpg

Had to send that meme to him :D

 

Edited by Strangelovesurfing
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This event exposes the total fraud that is America.  A short sale means you are selling something you do not have.  In honest countries, this is illegal. But America has no morals, so anything goes. Kissinger: “The illegal we do immediately; the unconstitutional takes a little longer.”  Pompeass: We lie, we steal, we kill.  Are any Americans honest?  If yes, why do you tolerate such fraud and immorality? 

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6 hours ago, El Nikko said:

I only have a 1/3 of an acre plot which is quite big for the UK 

1111.jpg

What happened to the guy in the plastic wrap?

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6 hours ago, ronwagn said:

I have heard of people growing a lot of food on a simiar lot. Are you allowed chickens? They provide great fertilizer but it is too "hot" so needs to be mixed with wood chips or other cellulose. What growing climate are you in? https://www.gardeningknowhow.com/planting-zones/uk-hardiness-zones.htm

Chickens stink, man!  The putrid smell of ammonia.  Nasty.  

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6 hours ago, El Nikko said:

Actually our deeds say we cannot keep chickens here lol

Because they stink!  I mean their smell will punch you in the nose and knock you back.

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(edited)

22 hours ago, SUZNV said:

To be fair, she condemned the shorting hedge fund as well in the above the yellow box. 

I guess the best way is to remove Derivatives as they won't help productivity but even can harm it, should not just banning shorting. Shorting evil or not depends case by case. I think the upstick rule should re applied as least. Theoretically we can have a large number of individual to attack the stock by shorting as well but larger funds have an upper hand on either case.

Actually, your comment touches on 3 very serious problems with Wall Street today:  Derivatives, algorithms run by all the big houses, and the fact that they ALL sell short AND go long all day every day

Derivatives are pure evil.  The epitome of bundled up unknowns, priced at the will of Wall Street.

Algorithms paid for by the big houses prey on investors, acting as automated harvesting machines.  Or maybe sheep sheers is a better example: shave the sheep, allow them to grow back and sheer them again.  Up OR down, by the penny or by the pound (intended), or by the millions.

Shorting, under normal circumstances, is no more evil than having reason to believe a stock will go up, meaning you buy with the belief that the stock price will rise.  Shorting is just the opposite, but if you are paying attention to a stock or even an industry, you can sometimes follow a stock or index price downwards instead of upwards.  That's why the big houses drive price up AND down, and make their daily profits even when the markets are doing "nothing".  The trouble only happens when someone is trying to elbow in on their daily feeding.  In cases like that you can bet your bottom dollar that someone got into the big house's algo and harvested some of THEIR money.  They don't like that...

Edit/Add:  I wanted to add one more "evil" about trading the markets.  Wall street allows a certain amount of "after hours trading", but it is largely their own domain.  If one watches the patterns of: closing price, after hours closing price, pre-trading readjustment price, opening price and then the price about 45 minutes to 1 hour after opening, a certain insider dance can be detected.  Blatantly and glaringly detected.  

This actually involves all 3 of the earlier serious problems I touched on.  After hours trading is said to be for "settling", or all trades to be tallied, matched and valued before the final closing price is "settled upon".  However, when you watch this price adjustment together with the following morning's adjustment, you start to notice that in many cases the "adjusted" price of the previous evening and the current morning will show a move up or down, sometimes by a significant percentage, which can set off trading trigger points, which will execute trades for many small time investors (or sheep in need of sheering).  

For example, if the after hours and pre-trading adjustments trend upwards, and that upwards trend is consistent with recent days of upward, albeit slow, trends, many a trader will watch the pre-trading and say "hey, that's a 7% (pick your %) uptick.  What's happening?", and then enter a trade to capitalize at the opening bell.  Then, once the sheep are all ready for sheering (45-60 minutes into the trading day), the algo will instantly kick in using multiples of derivatives to sell large blocks of the shares, driving the price back down, effectively sheering today's flock.  Unless a trader can obtain day-trader status, it is very difficult to beat this largely automatic harvesting that The Street carries out each and every day.

 

Edited by Dan Warnick
pray vs prey, after hours trading
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7 hours ago, ronwagn said:

OK, so if big hedge funds ruthlessly attack companies to make profits why is that even legal. I understand there is a lawsuit because Robinhood is owned by Citadel, a major hedge fund, and it was warned what was happening. What will happen from here?

Its not legal. There's a clip probably down now but Jim Cramer was talking about how easy it was anytime your loosing you just use shorts to manipulate a little guy back to profits. Its only illegal if you can get caught. Getting the evidence to say a large enough group is manipulating something isn't so easy. This week my buddy wasn't able to use his BMO app and my BANK was super slow and had a warning about excessive times for trades. My buddies wasn't showing prices at all. Robinhooders on Twitter were saying they wernt allowed to buy GME so its effectively short or sell only aka pure manipulation yet again favoring the big guys. I dono what happens next im steering clear just annoying its effecting all the banking apps like there linked.

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7 minutes ago, Dan Warnick said:

Actually, your comment touches on 3 very serious problems with Wall Street today:  Derivatives, algorithms run by all the big houses, and the fact that they ALL sell short AND go long all day every day

Derivatives are pure evil.  The epitome of bundled up unknowns, priced at the will of Wall Street.

Algorithms paid for by the big houses pray on investors, acting as automated harvesting machines.  Or maybe sheep sheers is a better example: shave the sheep, allow them to grow back and sheer them again.  Up OR down, by the penny or by the pound (intended), or by the millions.

Shorting, under normal circumstances, is no more evil than having reason to believe a stock will go up, meaning you buy with the belief that the stock price will rise.  Shorting is just the opposite, but if you are paying attention to a stock or even an industry, you can sometimes follow a stock or index price downwards instead of upwards.  That's why the big houses drive price up AND down, and make their daily profits even when the markets are doing "nothing".  The trouble only happens when someone is trying to elbow in on their daily feeding.  In cases like that you can bet your bottom dollar that someone got into the big house's algo and harvested some of THEIR money.  They don't like that...

 

I can't speak to derivatives but for shorts I can say they can be used for downward profit or hedging. Say 2 oil producers in Colombia one with high debt and land near a border another debt free near a port (example made up) youd short the high debt and long the low debt so in good times the low debt would our perform and in rough times say uprising or war the high debt would also see more downside. So youd loose beta or volatility to gain in either direction. Or you could just be sure the company's assets arnt as good as the market understands. But the problem is that longs you need the money for shorts you pre sell and therefor its cheaper or easier so the greed of abusing that is easier. So shorting isn't bad but how it can be used is. Like a long can be manipulation also it just costs alot more (in most cases).-from what I understand of self learnt 4years of trading. 

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1 hour ago, Rob Kramer said:

I can't speak to derivatives but for shorts I can say they can be used for downward profit or hedging. Say 2 oil producers in Colombia one with high debt and land near a border another debt free near a port (example made up) youd short the high debt and long the low debt so in good times the low debt would our perform and in rough times say uprising or war the high debt would also see more downside. So youd loose beta or volatility to gain in either direction. Or you could just be sure the company's assets arnt as good as the market understands. But the problem is that longs you need the money for shorts you pre sell and therefor its cheaper or easier so the greed of abusing that is easier. So shorting isn't bad but how it can be used is. Like a long can be manipulation also it just costs alot more (in most cases).-from what I understand of self learnt 4years of trading. 

Pretty much right on the money, if you'll pardon the pun.

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7 hours ago, Dan Warnick said:

What happened to the guy in the plastic wrap?

He said that the election wasn't stolen 

 

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6 hours ago, Dan Warnick said:

Because they stink!  I mean their smell will punch you in the nose and knock you back.

Yep and we live near a river so there's already plenty of rats about. 

I think if you compost the waste properly it reduces the smell but I've never tried it. I'll stick with the horse manure since we've got a never ending supply of it....bloody horse!

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https://www.zerohedge.com/markets/robinhood-caps-maximum-holdings-36-stocks-just-one-share

Robinhood Caps Maximum Holdings In 36 Stocks To Just One Share

Tyler Durden's Photo
BY TYLER DURDEN
FRIDAY, JAN 29, 2021 - 16:59

Something bad is about to go down at Robinhood.

One day after the company drew down on its bank lines and obtain a $1 billion rescue capital investment, the company found itself in lockdown mode, allowing just a handful of shares to be bought at a time, effectively shutting down in all but name (it couldn't risk another day of furious public outcry and massive client departures if it blocked trading completely).

However, just before the close, things got downright surreal when in a blog post the broker - which should probably change its name from Robinhood to Suit - made a shocking announcement: going forward, customers will be subject to maximum aggregate limits in 51 securities of which 14 are capped at position limits of just 5 shares, while allowing total holdings in 36 securities to be just one share!

 

In other words, as of this moment, no client is allowed to one more than 1 share in names like GME, AMC, AG, BBBY, BYND, WKHS and many others. Even boring, low vol names like GM and SBUX are limited to just one share.

This is what the blog post said:

"The table below shows the maximum number of shares and options contracts to which you can increase your positions. Please note that these are aggregate limits for each security and not per-order limits, and include shares and options contracts that you already hold. These limits may be subject to change throughout the day."

RH%20list.jpg?itok=QDcxEQDz

Panicked clients who are wondering if this means that their current holdings which exceed 1 laughable share will be forcefully liquidated can breathe for now: the company said that "outside of our standard margin-related sellouts or options assignment procedures, your positions will not be sold for the sole reason that you are currently over the limit. However, you will not be able to open more positions of each of these securities unless you sell enough of your holdings such that you are below the respective limit." (we expect that to change on Monday, if the company is still around.)

In other words, virtually nobody can buy any new securities.

 

The company also disclosed that no fractional shares can be bought going forward as "fractional shares are currently position closing only for all of the securities listed in the table above. This means you can sell and close your fractional positions, but you can't open new fractional positions. However, you can still open new whole share positions according to the limits listed above."

Why is this happening? The most likely reason is that between DTC, clearinghouses and other regulatory entities, Robinhood was found to be in another capital deficiency position - even with the billions raised overnight - and it is being forced to delever.

This likely means that Robinhood is as of this moment, scrambling to obtain even more capital, although we somehow doubt it will be just as easy to "take from the rich" as it was late last night especially since the client exodus is surely accelerating.

It also means that we may have to have another "Lehman Weekend" situation on our hands, only this time it will be a "Robinhood Weekend", and an urgent acquisition from a strategic buyer may be required to prevent the worst case outcome. We only hope that the billions in funds held in custody for clients is segregated should the company collapse (pinging Jon Corzine here).

In any case, expect a lot of Robinhood related news over the weekend.

* * *

And as a postscript, while we expect that the turmoil will be contained at Robinhood, whether in the form of new capital infusion, a takeover, or bankruptcy, there is the possibility that the liqudity shortfall goes as far as the clearinghouses. What happens then? Below we excerpt from a monthly letter written by Horseman's Russell Clark who had a good recap of "what if":

Pre-financial crisis, banks and clearinghouses were part of one big and messy system. Banks mainly traded with other banks as it was cheaper, but every now and then they would trade through a clearinghouse. There were two types of trades. Circular trades, which are trades where each bank has a position, but the system has a flat position, and directional trades, where the system would match up buyers who wanted to take a view on future movements of financial markets. Directional trades are more dangerous; risk will be less evenly distributed as it will have no offsetting trades.

When Lehman went bust, LCH, the biggest interest rate derivative clearinghouse, found they only needed one third of the initial margin to cover losses. This encouraged regulators to move clearinghouses to the center of the financial system. However, this has caused two big problems.

Firstly, clearinghouses have no real "skin in the game". They act like a bookie, that takes bets from punters, and transfers money from winners to losers. But how much risk should they take? What is the correct level of initial margin? Clearinghouses used to piggyback on bank's risk measures, but without banks to guide them, how should they set risk? Clearing houses and regulators chose to use a backward-looking model, with risks set from market data from between 3 and 10 years in the past. This has caused the markets to have a built-in momentum model which amplifies cycle both ways. Hence, many of the normal trading rules don't apply. There will be no signs of problems in the market until right at the last moment. Markets are no longer discounting mechanisms and have become more akin to momentum models.

Secondly, banks are now deeply capital constrained, and at the start were very reluctant to move old trades to a centrally cleared model. This problem was resolved through a carrot and stick approach. The stick is uncleared trades carry a capital charge, and the carrot is that the exchanges offer very attractive "netting". What netting means is that banks can give details of all their trades to a third party, and any circular trades can then be netted off thus requiring less margin. LCH claim to have done a quadrillion of compression trades or netting in the last year, this is more than twice the notional of all outstanding interest rate derivatives.

The problem should be apparent. Clearinghouses were safe because, if there was a problem, the circular trades netted off on settlement. But by aggressively netting off at the margin stage they are no longer as safe. In fact they are very risky. This was highlighted by the near failure of a small clearinghouse in Europe last year. Using BIS data on the penetration of central clearing, and pricing of interest rate derivatives as a proxy of initial margins, I would say that initial margin in the system needs to rise by about 6 times to make the system "safe". Looking at previous periods of rising initial margins in 2000-2002 and 2007-2009, the pro-cyclicality of claringhouses should be obvious.

Finally, cash hoarding and repo market problems could be a sign of counterparties beginning to worry about clearinghouses. If initial margins rise significantly, the only assets that will see a bid will be cash, US treasuries, JGBs, Bunds, Yen and Swiss Franc. Everything else will likely face selling pressure. If a major clearinghouse should fail due to two counterparties failing, then many centrally cleared hedges will also fail. If this happens, you will not receive the cash from your bearish hedge, as the counterparty has gone bust, and the clearinghouse needs to pay from its own capital or even get be recapitalised itself. One way to think about it is that the financial crisis only metastasized when MG failed, because at that point, everyone suddenly became un-hedged, and everyone needed to sell.

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So is this all over now or will we have another crazy week to see the end of it and really how bad is this? While an amusing distraction I guess it's just hurt a few of the more greedy hedge funds and maybe one or two companies go bankrupt?

I'm always a little suspicious when the media blow up a story like this, I wouldn't be surprised if they start talking about more internet regulations for a start.

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21 hours ago, El Nikko said:

 

Using the words "market integrity" together is just as bad as saying "media ethics"

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1 minute ago, Ward Smith said:

Using the words "market integrity" together is just as bad as saying "media ethics"

I agree, I just posted that for another perspective 

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20 hours ago, ronwagn said:

 

I remember believing the short sellers and getting on the wrong side. Not as an investor though. 

Have a Google it was a intense battle, history shows who won.

Tesla under investigation by the SEC

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