Posted on 01/29/2021 2:29:44 PM PST by ConservativeInPA
Senator Elizabeth Warren sent a letter to the chairperson of the Securities and Exchange Commission Friday, asking that the group explain to Congress and the public what they are doing to address the recent market activity surrounding GameStop and other companies.
The Massachusetts senator wrote that the SEC, which oversees the stock market, has failed to control “years of distortion in securities markets,” exacerbating wealth inequalities. She is asking that the SEC respond to her questions by Feb. 5.
“The Commission must review recent market activity affecting GameStop and other companies, and act to ensure that markets reflect real value, rather than the highly leveraged bets of wealthy traders or those who seek to inflict financial damage on those traders,” Warren wrote in her letter.
(Excerpt) Read more at msn.com ...
The distortion is coming from the Fed.
What does Nick Saban have to do with this?
But she knows freedom is bad?
Bunch of kids on the internet brought her attention to it. As long as the checks cleared, she never noticed What the hedge funds were up to.
Pocahontas defending hedge funds. LOL
“Make sure markets reflect real value.” No one knows the real value—that is the whole POINT of a market. A market share’s real value is whatever anyone is willing to pay for it. No more no less.
Just like the salaries of CEOs or athletes or whatever else. They are worth what someone is willing to pay them. (But Warren would like to tinker with that too.)
I guess we know who owns her butt.
Regulation = Codified Fraud
Warren calling for regulation.
Color me shocked...SHOCKED I tell ya.
You don’t think she wrote the letter herself do you? ;-)
The intricacies of the inside the market (the broker-dealers) is very complex to understand. To try to put it succinctly, the short sellers borrow shares from long investors, usually without their knowledge or any payment to the long investors, and sell them hoping to drive the price down.
The situation in GameStop became so ridiculous that more than 100% of the shares were borrowed and sold. This is a market distortion, and should be technically impossible. But what it results in is that you have 100% of the shares held by longs, plus ANOTHER 100% in IOUs also trading, because some 3rd party bought the shares that were borrowed and sold. That means the supply of shares is double - or in this case more than double - the total number of shares issued by the company! When you double the supply, it is econ 101 that the price is likely to go down...
... unless of course the demand increases proportionally. In this case some people used social media to point out the distortion. When an investor is short the stock they need to have 100% of the collateral to buy it back. So if it goes from $20 to $40, the short seller needs to have $40 in collateral for his $20 bet. When it goes to $60, he’s lost 3x his investment and it is theoretically unlimited risk of loss for the short seller. These crowd-sourced retail investors decided to “stick it to the man” and they started to buy up shares, driving up the price. The shorts had to make the decision to raise more collateral, or buy their shorts back at a steep loss - which only furthers the rise in price and the squeeze on remaining shorts. Not to mention more shorts come in when they think the price is too high.
One of the bigger problems here is that there are different rules for different players. No surprise, but it’s actually a defect in the regulations that was exploited by both sides. The middle men, the market makers, are there to ensure efficient liquidity so they are allowed to effectively “naked short” shares, without borrowing, in order to keep liquidity. They generally have 10 days to cover that naked short, but they can effectively roll it over again and again every 10 days. They are supposed to not take a side, just make money on providing liquidity. But short sellers have taken advantage of that 10 day loophole, putting a lot of broker dealers into a squeeze. Then of course there is the options market. Options market makers have to hedge their risk and when a stock goes parabolic like GameStop, they also have to throw in and buy piles and piles of shares to keep their risk profile at or near zero.
GameStop is an extreme example of a quick exploitation, but I’d argue that other stocks such as Tesla TSLA stocks have been exploited in the same way, but over a much longer period of time.
There are no contracts on wall street without a counterparty. There are no sales on wall street without someone selling and someone buying. What kind of crack is she on. Exactly how do you intend to work around the meaning of a contract? Tradeing in laws for cash in one place happens at only place nationaly....First St SE, Washington, DC 20004.
I'd wager a guess that if the markets suddenly corrected to reflect "real value", every stock market on Earth would erase about 80% of the total stock values. That's definitely not helping my investments.
Yeah—only Wall Street can manipulate markets. Real people should not try doing that at home.
It is just a matter of time before she labels day-traders as Domestic terrorists.
Amazing how all these “progressives” who used to love tricks played on “the Establishment” when they were hippie kids in the ‘60s and ‘70s have morphed into the hard-line Establishment themselves.
fake populist
fake indian
How do you even get into a hedge fund ?! Guess ya gotta be a royalist.
I caught that too. Seems like all that talk about fighting Wall Street was just talk.
Fake injun always wants to be portrayed as some fiduciary guru but actually comes across as a complete clueless moron like most in government.
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