Market/Financial Thread

[Kyyle23]

40 minutes ago, Texsox said:

The hedge funds are in a tough position. It's *almost* like paying ransom. 

It's like taking the kidnappers ransom note and handing it back to the kidnapper 

[caulfield12]

But something else was going on too. These newly-empowered investors insisted they were sending short sellers, hedge funds and Wall Street writ large, a message. They were tired of being on the wrong end of the proverbial investment stick. In other words this wasn’t just investing, it was about torches and pitchforks.

“It makes me think of Occupy Wall Street, in this case instead of protesting corporate greed, they were given the tools to participate in it,” says Doug Boneparth, president of wealth management firm, Bone Fide Wealth. These investors had figured out a Wall Street pain point: Ganging up on short sellers.

...

What [WSB investors are] doing is not investing,” Jaime Rogozinski, Wall Street Bets founder, told Yahoo Finance. “They're using the stock market like a casino in a very unapologetic way. They're not posting information about the fundamentals. They're posting funny videos on people to go ahead and risk the same. They're not investors.”

...

It's just another chapter in this ongoing book of excessive speculation,” says economist David Rosenberg. “And it’s not really a different crowd than who was buying Hertz’s stock when it declared bankruptcy last spring. One can argue that we have a grand new neophyte type of investor in the market. But I think a lot of the ‘rich man-poor man,’ investors, might be overplayed.”

“All manias die out,” Jeremy Siegel, professor of finance at Wharton School, told Yahoo Finance. “It will go back to fundamental value. It's the greater fool's theory. ‘I know it's not worth this, but I know someone else who is more foolish who will buy it from me at a higher price. I'm smart enough to get out in time.’ Obviously there will be a lot of people holding the bag at the end. They're going to be the losers.”

https://finance.yahoo.com/news/how-the-reddit-gamestop-robinhood-story-is-part-of-5-bigger-trends-130701087.html

 

[southsider2k5]

This is how people will get taken down.  Read the part circled in red below. There was clear attempts at coordination.  This type of exchange happening with in a firm would get someone fired, charged with market manipulation and eventually barred from being able to be licensed and allowed to trade securities again. It's right there in plain English. 

 

[caulfield12]

https://www.ajc.com/sports/mike-check-blog/could-braves-benefit-from-mets-connection-to-gamestop-stock-saga/T6LJ244MPVCMNO6JHTQ7G2DKD4/

[Texsox]

On 10/23/2018 at 9:46 AM, southsider2k5 said:

For my two cents, always look for an index fund first.  Those are going to be the lowest expenses, and they are going to track the market dollar for dollar.  While some funds can beat the market on an annual basis, they aren't going to do it on an ongoing basis.  It just doesn't happen.

Also don't worry too much about YTD returns as of now.  With the market correction currently going on, gains for the year have been pretty well wiped out, so that an index being slightly down on the year is to be expected.

You are doing a great job of saving for retirement, but I without knowing your financial situation, be sure that you aren't accumulating consumer debt at the same time, otherwise you are giving away future spending power anyways.  Pay down your debt by highest interest rate to lowest.  Move down your 401k contributions a bit if you need extra cash to do it.

I know I'm bumping an old post here but besides being great advice it ties into a couple threads that are active. 

One of the problems with student loans besides preventing savings for retirement is they tend to put young people in a hole without savings and then consumer debt takes hold. 

In the old days when people were paid cash they would budget via the envelope system. They divided up the cash and put it literally in the envelope that was going to be used to pay that bill. It was a very visual and real way to budget and I've come around to believing for most people, it would probably work better than what they are doing. 

Which leads me to Wall Street Bets. I love it.  Gamble on a stock like it's the lottery.  But pull from that envelope. Don't pull from your retirement envelope,  or your emergency fund, or obviously food, shelter,  or raiment. 

I teach my high school students that retirement isn't an age,  it's a financial condition. 

I'm going to leave that sitting by itself for emphasize.  With compounding at 7% your money doubles every ten years.  Spending ten thousand less on a car in your 20s and investing it piles up quickly. 

It's $20,000 at 40

$40,000 at 50

$80,000 at 60

That's will zero additional money saved. 

$320 per month, 7% gains,  starting at 25 and you will be a millionaire at 65. 

 

[caulfield12]

27 minutes ago, Texsox said:

I know I'm bumping an old post here but besides being great advice it ties into a couple threads that are active. 

One of the problems with student loans besides preventing savings for retirement is they tend to put young people in a hole without savings and then consumer debt takes hold. 

In the old days when people were paid cash they would budget via the envelope system. They divided up the cash and put it literally in the envelope that was going to be used to pay that bill. It was a very visual and real way to budget and I've come around to believing for most people, it would probably work better than what they are doing. 

Which leads me to Wall Street Bets. I love it.  Gamble on a stock like it's the lottery.  But pull from that envelope. Don't pull from your retirement envelope,  or your emergency fund, or obviously food, shelter,  or raiment. 

I teach my high school students that retirement isn't an age,  it's a financial condition. 

I'm going to leave that sitting by itself for emphasize.  With compounding at 7% your money doubles every ten years.  Spending ten thousand less on a car in your 20s and investing it piles up quickly. 

It's $20,000 at 40

$40,000 at 50

$80,000 at 60

That's will zero additional money saved. 

$320 per month, 7% gains,  starting at 25 and you will be a millionaire at 65. 

 

The problem with that is most are expecting to need at least $2-3 million for retirement, especially when SS perhaps is theoretically cut by 20% in 2035.

Of course, there are no easy shortcuts.

The problem with the GME story is it encourages day trading as a career (yet again, remember 1998-2002?), instead of disciplined, dollar cost averaging monthly/quarterly investments.

The other issue is counting on 7% for the next decade.  You still need to factor in taxes and inflation.

Things have gone so well for so long...one can just look up the ten year return for VTSAX, VFINX, etc., and believe that 200% returns over a ten year time frame are going to be the new norm.

 

Of course, setting out too ambitiously leads to lots of young people losing patience...look at the returns for many from let’s say the tech crashes of 1998-99, 9/11...through the worst of 2008/09, you might have very little growth or even losses over that time frame.   But if you panicked and sold then, chased high returns and sold low...or panicked again this March.  Heck, there were many who thought Trump would destroy the stock market were he to be elected, and he had the second best GOP record after Reagan of all the modern presidents.  So best to ignore all that noise, look at your porfolio once or twice a year and keep plugging away.

But for young people, tuition costs/loans, saving increasing amounts for house down payments, marriage/ring/honeymoon and then the exorbitant cost of child raising and health care make saving a challenge until age 45-50, when it’s way too late to take advantage of the effects of compounding.

Edited January 31, 2021 by caulfield12

[caulfield12]

https://www.yahoo.com/news/billionaires-blaming-gamestop-surge-covid-214435191.html
 

This is rich, Wall Street blaming stimulus checks for upending the market.  Interestingly enough, the $2000 stimulus checks are either disappearing or being cut down quite dramatically as we speak as proposed stimulus package is cut from $1.9 trillion to roughly $600 billion. 

[CentralChamps21]

3 hours ago, caulfield12 said:

https://www.yahoo.com/news/billionaires-blaming-gamestop-surge-covid-214435191.html
 

This is rich, Wall Street blaming stimulus checks for upending the market.  Interestingly enough, the $2000 stimulus checks are either disappearing or being cut down quite dramatically as we speak as proposed stimulus package is cut from $1.9 trillion to roughly $600 billion. 

The $600 billion number is from a proposal by 10 Republicans. There's no way the final number is that low.

[ron883]

GME dropped a good amount. Is it ova?!?!

Edited February 1, 2021 by ron883

[Soxbadger]

1 minute ago, ron883 said:

GME dropped a good amount. Is it ova?!?!

It was over last week, they retail traders just didnt realize it yet. 

[southsider2k5]

19 minutes ago, Soxbadger said:

It was over last week, they retail traders just didnt realize it yet. 

Eventually these guys were going to take profits.  Once that damn breaks, you can't really put the water back.  There is still a couple of hundred dollars of retracement that is waiting to happen.

[southsider2k5]

After hours it is back into the 180's.  We will see if this lasts, and then if some of the restrictions get pulled.

[Texsox]

I wonder when the first story of a 10 year old that lost thousands will appear? I've already read a couple that made thousands. 

[GREEDY]

4 hours ago, ron883 said:

GME dropped a good amount. Is it ova?!?!

They literally closed one side of the trade. 

I have sponsored ads in my twitter feed from CNBC saying Melvin Capital closed their shorts (they had or have not). 

Ja Rule is being interviewed as the representative of the WallStreetBets community (Google: "least trustworthy person")

And entire "#SilverSqueeze" campaign was launched everywhere except WallStreetBets, advertised as the next short squeeze supported by WSB when no one at WSB gives a damn about SLV.

To answer your question, it was OVA when *someone* decided that burning the 10 billion that was shorted to the tune of...... 660 billion (if the estimated $15 shorts had to cover at $1,000) would be terrible for the entire market (not denying this)... and that it had to stop at all costs.

I'm not bitter (lol). 

 

[Soxbadger]

3 hours ago, southsider2k5 said:

After hours it is back into the 180's.  We will see if this lasts, and then if some of the restrictions get pulled.

 

It seems like they are pretty delusional right now. Basically saying institutions are creating ladder attacks to artificially spook the market down. That institutions still need to buy more shares than are out there.

 

 

19 minutes ago, Texsox said:

I wonder when the first story of a 10 year old that lost thousands will appear? I've already read a couple that made thousands. 

 

Unlikely any kid who had thousands to throw at GME as a 10 year old likely came from a wealthy family and it wont make for a great headline. The other kids got GME as gift etc when it was $5 and you could give them 10 shares for $50 instead of 1 video game.

 

[caulfield12]

2 hours ago, Soxbadger said:

 

It seems like they are pretty delusional right now. Basically saying institutions are creating ladder attacks to artificially spook the market down. That institutions still need to buy more shares than are out there.

 

 

 

Unlikely any kid who had thousands to throw at GME as a 10 year old likely came from a wealthy family and it wont make for a great headline. The other kids got GME as gift etc when it was $5 and you could give them 10 shares for $50 instead of 1 video game.

 

Pretty sure the ten shares were at $16 but the point still holds...unfortunately, it probably doesn’t make the news at all if it was a middle class Asian kid.

[Texsox]

https://www.cnn.com/2021/02/01/investing/robinhood-gamestop-vlad-tenev/index.html

Interesting how everyone seems tied to everyone and has to play nice. 

[caulfield12]

GameStop at $134 and falling.

Just wait until after Robinhood’s IPO and they invariably get hit by a short squeeze in revenge...how will they manage to officiate that one in a way that won’t turn into a PR disaster?

[bmags]

30 minutes ago, caulfield12 said:

GameStop at $134 and falling.

Just wait until after Robinhood’s IPO and they invariably get hit by a short squeeze in revenge...how will they manage to officiate that one in a way that won’t turn into a PR disaster?

they get hit by a short squeeze? Why would they care that their price is getting bid up against people betting against them?

If their price is getting artificially pushed down too far, they'll just take it private. Or get SPAC to take them public, get the money without the hassle.

[southsider2k5]

48 minutes ago, caulfield12 said:

GameStop at $134 and falling.

Just wait until after Robinhood’s IPO and they invariably get hit by a short squeeze in revenge...how will they manage to officiate that one in a way that won’t turn into a PR disaster?

You can't short an IPO.

[southsider2k5]

GME now under 100.

[StrangeSox]

More general econ than stock gambling, but the job market for people 18-59 has been flat for 20 years. All job gains over the past two decades have gone to people age 60+

 

 

[caulfield12]

7 minutes ago, StrangeSox said:

More general econ than stock gambling, but the job market for people 18-59 has been flat for 20 years. All job gains over the past two decades have gone to people age 60+

 

 

Would love to see the average salary of those over 60 taking all these jobs out of financial desperation/inability to keep up with health care and prescription medicine costs.

Of course, lowering MediCare eligibility to age 60 would mean tax increases somewhere....but there must be so many displaced workers in that 50-65 range who are struggling mightily. 

[southsider2k5]

21 minutes ago, southsider2k5 said:

GME now under 100.

75

[Chisoxfn]

3 minutes ago, southsider2k5 said:

75

And now up to $92.  I'm sure soon enough it will be below 75.