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2021 Stock Market

ISUCyclones2015 said:
If you read between the lines of why it was even discussed and why this might happen again next Monday, it's pretty astonishing someone even found it. This short squeeze will be discussed for decades in Finance Classes across colleges around the world.
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I should add on, TSLA was hyping of a stock and WSB did a great job at it and honestly Musk is a person that can "manipulate" without actually manipulating. This Gamestop short squeeze is totally different but then it has the hype on an actual good play
 
discydisc said:
Can someone ELI5 what is happening with GME?
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People were betting against the stock, meaning they would make money if the price went down. Because the value of the company was so low a few people could coordinate with each other to raise the price.

Once the price started to rise, the people betting against it wanted to get out of their position, because the higher the price goes the more money they lose. Remember, they make money if the price goes down.

so the more the price went up, the more people who bet against it had to get out, raising the prices even more. That she ELI5 version. Happy to give you the ELI25 version next
 
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mtowncyclone13 said:
People were betting against the stock, meaning they would make money if the price went down. Because the value of the company was so low a few people could coordinate with each other to raise the price.

Once the price started to rise, the people betting against it wanted to get out of their position, because the higher the price goes the more money they lose. Remember, they make money if the price goes down.

so the more the price went up, the more people who bet against it had to get out, raising the prices even more. That she ELI5 version. Happy to give you the ELI25 version next
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So is there really that much buying power in these smaller investors that they can take on these larger institutions that were shorting the stock?
 
discydisc said:
So is there really that much buying power in these smaller investors that they can take on these larger institutions that were shorting the stock?
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This can get super technical, but there can be times where more people are betting a stock goes down than people betting on it to rise, and because the company was so small a few well-coordinated people could force it one way or the other.

It couldn't happen to a company like Apple or GM or Johnson and Johnson because they are too big, but google search "penny stock manipulation" for examples of how a few people can shift the price of a small company stock. GME was so odd and unique we probably won't see that happen to a "legit" company again anytime soon, but this happens weekly to stocks worth a penny.

...

So this is super ELI5, but imagine people betting on cars either going fast or slow down the street. It's a lot easier to control/manipulate the speed of traffic on a single lane road along a mountain pass than an 8-lane highway patroled by state troopers. What GME people did was realize the stock was the single lane road.
 
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@discydisc regarding your question about gamestop. In general, the price of a stock goes up when you have more buy orders than sell orders. A price of a stock decreases when you have more sell orders than buy orders. In the case of gamestop, you had a lot of people short selling the stock (profit in the decrease in price). From what I can tell, and also based on @mtowncyclone13 , once the price of gamestop began to increase, (more buy orders) the short sellers began to show losses. So, in order to close out a short sale on a stock, you have to buy back the stock, therefore, creating more buy orders. Overall, this created a lot more buy orders and thus demand for the stock, thus increasing the price (think supply and demand).

If you don't know how short selling works, here is an article from Investopedia that explains it.
 
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Saw this explanation:
Let's say 5 bananas cost $10.
1 person on the market has 5 bananas.
Next person asks to borrow 5 bananas for a bit and instead sells the 5 bananas thinking price will go down soon (shorting). He thinks he can buy them later for less and give them back to the first person, so he makes a profit on the difference.

Group of people notice what that 2nd person is doing and decides to buy all of those bananas on the market until that 2nd person has no other choice but to buy from those individuals that carry the bananas in order to return what they borrowed. If the group stays strong and holds, price will go up.
 
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SCNCY said:
@discydisc regarding your question about gamestop. In general, the price of a stock goes up when you have more buy orders than sell orders. A price of a stock decreases when you have more sell orders than buy orders. In the case of gamestop, you had a lot of people short selling the stock (profit in the decrease in price). From what I can tell, and also based on @mtowncyclone13 , once the price of gamestop began to increase, (more buy orders) the short sellers began to show losses. So, in order to close out a short sale on a stock, you have to buy back the stock, therefore, creating more buy orders. Overall, this created a lot more buy orders and thus demand for the stock, thus increasing the price (think supply and demand).

If you don't know how short selling works, here is an article from Investopedia that explains it.
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I get the basic gist of short selling, what I don't really grasp is how a sub reddit basically rallied a stock from ~$18 to over $114 (at the time of this post) despite institutional money betting on the short.
 
discydisc said:
I get the basic gist of short selling, what I don't really grasp is how a sub reddit basically rallied a stock from ~$18 to over $114 (at the time of this post) despite institutional money betting on the short.
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If I had to guess, the institutional money wasn't willing to wait it out long enough. With volatility in the market currently, they were probably afraid to let their short sales get too out of hand, thus quickly ending their position.
 
This article is a relatively short read that explains the situation really well: https://finance.yahoo.com/news/wallstreetbets-pushed-gamestop-shares-moon-145722466.html

An additional piece this talks about that I didn't think of is that all the WSB people were calling their brokers and asking them not to loan their shares for short sales (I didn't know you could do this), which makes it harder for new short sales to happen while the price is going up. So with no one selling, combined with few new short sell bets to offset the rise, the people who are being short squeezed are faced with just watching their loss position continue to add up, or to close their short position, which also drives the price higher.
 
I just can not look away from this GME insanity!

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Any bets on when it might end? Though about throwing a little into the pot yesterday when it was in the $70's but I'm a chicken. Approaching $250 in after hours trading. :oops:
 
KnappShack said:
Long term. Always long term. Sure it's fun to play some trades. I've had a lot of luck with a few trades, but my eye is always to a long horizon.

I'm getting smoked on some trades today, but that's the game.
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I have one account I do this in and then another that I am buying stocks but mostly doing options with. Call debit spreads/Put debit spreads. Things like that. I love it. Started in September and have essentially doubled my account. Hoping to be up 3x by another 6-7 weeks
 
Tailg8er said:
I just can not look away from this GME insanity!

View attachment 81219


Any bets on when it might end? Though about throwing a little into the pot yesterday when it was in the $70's but I'm a chicken. Approaching $250 in after hours trading. :oops:
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You are at, or near the peak, when everyone is in agreement about its direction. Seen it a million times in the commodities.
 
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