The only thing I would disagree with in your post is the fact that the Reddit Mob was exploiting this to make money. I think it is pretty clear now that this has changed to simply sticking it to the hedgies, and I don’t have a problem with that because it has shown a bright light on the total corruption of wallstreet and illuminated it for mainstreet. Until the masses see how everything is corrupt, nothing will change for the better. The Reddit Mob has to know they are going to lose money on this eventually cuz you can’t bid up a stock 10 20 50 100fold over its traditional price and expect it to stay there. But I suspect these are paper profits for most of them, and their starting capital was small...probably their WuFlu stimulus check, which they viewed as not really their’ money to begin with so they could afford to use it to stick it to someone as ‘justice’. Not saying that is right or wrong because when the world is run by fraud, you have to expect the masses to use fraud when the system was gamed against the masses with the very same fraud.
I definitely agree that all parties need to be held to moral hazard. Like I said, I think the Reddit Mob really has already figured this money is lost. It’s the hedgies and wallstreet that doesn’t want to lose a dime. Same as in 2008 which is why we had ‘too big to fail’. Moral hazard has to come back. Rule of Law. Equal protection and EQUAL OPPORTUNITY under the law. Unfortunately, with everything being corrupted, I don’t think we will return to this until the corrupt system is forced to collapse. The Powers That Be have too much of a vested interest in letting the fraud that enriches them be corrected without massive pain for everyone. There in lies the problem.
I believe that if the short ratio falls below 100%, a high short price can collapse.
I also believe that due to uncertainty about the ratio and the possibility of side and time extension deals, a high short price can collapse even when the short ratio actually above 100%.
I’m not an expert, so your money, your risk.
We don't disagree at all. BOTH side were exploiting legal and available market mechanisms to make money. BOTH sides made risky bets. BOTH sides were exposed to losing money.
Capital Markets are inherently risky. Derivatives are riskier than core securities. Risk carries a premium because it risky ... a tautology, but often forgotten or dismissed. Big gains stem from big risk ... big risk also brings big loss.
I don't mean to be preachy, but everyone in the market at any level is putting their capital as some risk ... there are no guarantees. A so-called "Redit Mob" is no different than a MorningStar forum opining about how a like-minded group of market players might want to pool capital to try to increase their chance of winning a risky bet.
Naked short selling (especially by folks who advertise and discuss their bearish outlooks on a security in market press is no different. so-called "market experts" are far more wrong than they are ever right.