RE:Establishment herd vs Retail herd on momentum stocksGood writeup. But blackberry doesn't have the same dynamic going on. Best we have is a spill over effect when GME eventually crashes. Retail will flock to the next ticker down the chain. But I could be wrong because they're both spiking around the same time. so will probably move together instead of yo-yo'ing off each other. Who knows....anyway interesting times.
Yasch22 wrote: There is actually more overlap between the two than a lot of the talking heads on mainstream media are letting on. I think the main issue is that the establishment doesn't like it very much when newcomers
(a) find ways to play the game that they can't control
(b) transfer big chunks of money from a handful of established players
(c) disrupt the already shady-shoddy business of setting price targets.
A lot of them right now are retailers, and the biggest lot of all are members of WallStreetBets -- but not all of them are.
N.B. there are niche trading houses in the establishment itself that track any momentum movements and pile in. These "algobot" traders make huge amounts of cash out of any volatility. They typically make pots of money from the retail day-trader. One of the only ways most retailers have to win is to find a really good sector and a handful of really great companies in that sector, and then just hold for years.
The arguments against WSB are mainly focused on what's happening with GameStop. But that's an outlier, a crazy anomaly that was caused by the greed of a few extremely wealthy hedge funds that specialize in short plays. These guys had already scored a giant win. The sp had dropped from $15 to $4 in a couple of years. But they piled in even more, apparently trying to drive GME down into penny stock territory, which in turn would make it hard to raise money or to reward good employees with options.
Basically, they were in the business of destroying GME. They got so greedy they didn't recognize the risk of the counter-move by the WSB-led retailers. They just kept buying and buying, suddenly turning the shorters' gains into losses. The shorters still couldn't admit defeat, so they doubled down. They brought in all kinds of allies, including Andrew Left of Citron Research -- but then he lost a ton of money too. The original short company -- Melvin -- finally managed to escape their position yesterday afternoon, but only after losing something like half of their $13b capitalization.
GME was able to skyrocket in the way that it did because the shorters were caught in an epic squeeze, but they set up the squeeze all by themselves, as the short position on GME got to the ridiculously greedy level of 140%, something that isn't even supposed to be possible. At levels like that, and with the sp rising, it gets harder and harder to even find the shares to buy back.
C'est la vie. It's impossible not to sympathize with the short squeezing retailers in this story. And it's ridiculous to see the Globe & Mail and Reuters side so easily with the long-established and "respectable" short selling hedge funds against ALL the momentum players who opposed them.