Losses on short positions in U.S. firms top $70 billion - Ortex data

Reuters ^

[nonliberal]

Safer, probably. But that option only applies to the little guy. Hedge funds can do whatever the hell they want.

[Starboard]

I’m sure it was all gamed out well in advance of any effort to short the stocks. That said, they figured out the optimal strategy but yet failed to assess (or ignored) the worst case scenario. The hedge funds didn’t hedge to protect themselves.

People get paid very good money to figure out ways to manipulate the markets. Just saying.

[freedumb2003]

Never short more money than you can afford to lose.

It is just like any other form of gambling.

[Alberta's Child]

What triggered the buying of Gamestop was people on Reddit noticing that short sellers had sold 140% of the actual amount of Gamestop stock.

I'm not so sure there is a legal problem here. If the same 10 shares of GameStop stock changed hands twice in one day, I think it may show up in the financial records as 20 transacted shares. That would mean it's legitimately possible for short-sale shares to be reported as more than 100% of the actual number of company shares on the market.

[TigerClaws]

Disclose.tv
@disclosetv
JUST IN - #Robinhood app has reportedly begun to automatically sell shares of $GME for some customers, “for their own good.

quote:

Max Burns
@themaxburns
In case you aren’t following the Reddit/WallstreetBets/$GME stock market madness,
@RobinhoodApp
is now selling off many Redditors’ shares *whether they want to sell them or not.*

[NWFree]

Gambling is mostly chance and luck. None of this happened by chance.

[CurlyDave]

This is the first thing my stock market savvy son told me; that there were more shorts than available stock. That’s where institutions will be in legal jeopardy. Some Reddits may not clear the profits they expected. I’m hoping the smart Reddits just put themselves at risk with a few hundred dollars. Entertainment dollars you know.

I don't think that is quite true. If I am a small investor who just bought 100 shares of a company, but the brokerage who promised to deliver can't, but are in big trouble with the law if they can't, there is some price at which I am willing to sell my shares back to the brokerage. No complaints, no one is hurt, no legal trouble.

The real issue is that the price involved is much higher than the brokerage is willing to pay -- right now. Give it a few days, and if I am hard nosed about wanting my stock, the price will hit a point where I am satisfied. This hurts the brokerage, but that is the way the game is played.

[TigerClaws]

Info here from alleged insider says White House now involved. (Bad language alert)

https://patriots.win/p/11SKBxiXVz/stolen-from-wsb-i-knew-that-bide/c/

[Taffini]

*

[Texan]

Remember Long-Term Capital Management? A few years ago they almost blew up the entire United States and thus the world economy.

[pierrem15]

So, if Hedge Funds short companies that is okay. But, if Retail Investors jump in to catch the companies in their shorting, they are evil white supremicists?

You got it! Time to run for Congress!

[Malsua]

I'm not so sure there is a legal problem here. If the same 10 shares of GameStop stock changed hands twice in one day, I think it may show up in the financial records as 20 transacted shares. That would mean it's legitimately possible for short-sale shares to be reported as more than 100% of the actual number of company shares on the market.

Exactly. I short sell a stock to person A, then I short sell person A's stock to Person B. Then I sell person B's stock to person C. Etc. I'm not quite sure how far down that rabbit hole it's possible to go, but you could easily hold more shorts than outstanding shares.

That said, one could surmise that if there are more shorts than shares, that means hedge funds are heavily shorting a stock making it ripe for a run-up.

[Governor Dinwiddie]

It's what they did in Mel Brooks's comedy The Producers (1967). They sold more shares than existed in a Broadway play. When the show Springtime for Hitler turned into a hit (instead of the expected failure) they were screwed. They couldn't pay off the investors.

[pierrem15]

This could be why the big boys are trying to stop trading: it could be that the clearing firms will have to take it in the shorts to clear the options.

[dfwgator]

“Where did we go right?”

[thescourged1]

I would have gladly thrown a few hundred bucks just to watch a hedge fund lose nearly 3 million.

[dfwgator]

And thanks for referencing the original, and not the god-awful remake.

[Political Junkie Too]

When you own the regulatory agencies, the prosecutors, and the judges, there is no such thing as “illegal”.

Or, put another way, when you can make $1 billion on an illegal trade and then pay the $10 million fine to the SEC, why not?

-PJ

[Yo-Yo]

Short selling and put buying turns an investment medium into a casino.

[jimfr]

I know nothing about stocks, but from what I get from Wikipedia it is when someone sells stock shares that he does not have at say $100 hoping he can buy some other shares at say $60 to give to the person that bought the $100 shares. Thereby making $40. Is this correct?
And what happened recently the price went up to $150 causing him to loose $50. Is this correct? Is it legal?
This seems unethical by the first person and stupid by the second person.
Can someone please comment?