Right. And where did that $20 billion come from? Speculation means that if so much value has been “created” both by shorting and by pumping and dumping, that money has to enter the system somewhere and at some point in time.
Lost, not made.
Which means they could (if they aren’t already) find themselves in the red.
Whatever else this is, it’s still a pump and dump. In every pump and dump ever the money goes from the people who got in late to the people who got in (and cashed out) early. That’s just how they work.
There can be some other malarkey going on, like those early short positions held by some hedge funds, but those still kinda follow the same rules.
And if that red is paid to the people it is owed, and isn’t currently owned by the people who owe it, where does the $20 billion come from?
You can’t just create money. It has to enter the market at some point. Where does it enter from? Later investors. That’s how speculative markets work.
Who said anything about that getting paid back? People can promise to pay whatever doesn’t mean it will happen or that it physically/mathematically is possible to happen.
On top of that, I wouldn’t be surprised if it was a cumulative loss figure, without taking gains into account - so, sort of like if you lost 200, gained 300, and lost 200, saying you’ve lost 400 rather than that you’re up 100.
If anyone is replying to me in this thread, please quote me or make the post a reply, because I’m not sure if you are agreeing or disagreeing or want a better explanation or anything.
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In that case, I’m technically replying to you, but by adding on to what SWATrous was saying. And to clear that up, I’m speculating about why the figure is so large.
Not directly related to going on right now, but this is a great piece written by Michael Lewis about Jonathan Lebed, a 15 year old accused by the SEC of trying to manipulate the stock market:
“I finally came clean with a thought: the S.E.C. let Jonathan Lebed walk away with 500 grand in his pocket because it feared that if it didn’t, it would wind up in court and it would lose. And if the law ever declared formally that Jonathan Lebed didn’t break it, the S.E.C. would be faced with an impossible situation: millions of small investors plugging their portfolios with abandon, becoming in essence professional financial analysts, generating embarrassing little explosions of unreality in every corner of the capital markets. No central authority could sustain the illusion that stock prices were somehow ‘‘real’’ or that the market wasn’t, for most people, a site of not terribly productive leisure activity. The red dog would be off his leash.”
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EDIT: Well, not what I expected.
Team GameStop is blasting off again!
And landing in court.
https://ca.finance.yahoo.com/news/roaring-kitty-sued-securities-fraud-173103369.html
If you buy Gamestop and hold, and they go bankrupt, you could just end up helping to pay Gamestop’s debts. Pay your friend’s and family’s medical and student loan debts instead.
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Update on the GameStop short squeeze.
I am not an economist, obviously.
But if we look around right now, COVID, coins, stuck boats, and other things are causing shortages in lots of areas. Semiconductor shortage is well known. There’s a huge lumber shortage going on. I even saw someone upset that dishwashers are hard to get right now. It’s not everything, we seem to have plenty of toilet paper again, but a large number of things are in short supply and prices are climbing an amount that is causing real damage while demand is steady.
It’s safe to say we’re now in a period of supply side inflation, yes? If that is true, what is the smart thing to do money-wise to win at capitalism (assuming we don’t successfully destroy capitalism in the near future)?
There’s likely something more subtle going on here.
The margins on all (real) things have tightened. There’s no good way to make money doing basically anything ethically. All the slippage and “waste” that in the past almost “greased the wheels” of society is gone.
It’s little things that disappeared over time. Pensions. Companies keeping unproductive people on board for personal or historical reasons rather than firing/replacing them. Corporate sponsorship of local social structures that didn’t actually provide any brand loyalty or increased profits. Etc…
My day job is a product manager. I’ve been doing this type of work for over a decade. And honestly, I can’t figure out how anything makes money. Nothing is sustainable. Nothing scales.
The only reason anyone makes money on anything is due to exploitation of other people further down the chain. I’m not talking about the long tail of misery of global capitalism down to the people toiling in rare earth metal mines (though that is also a serious problem). I’m talking about things only a couple steps removed from the products themselves.
Look at videogames. The people who make them are paid almost nothing relative to the work they do. Prices are artificially low and based on the perceived value of the product: not the resources necessary to create that product. The products, arguably, should never have been made in the first place. The sole reason they are made, at a profit, is due to the underpaid labor available.
Indie games? TTRPGs? They usually have a wealthy patron, are the result of someone working themselves to death, or by people who have day jobs.
A big part of my job is analyzing the market feasibility of a product. And I struggle to find anything, anywhere on Earth, that is feasible. The barriers to entry are too high, the public could not afford the cost-based value of the product, etc…
Prices need to rise because they have been artificially low for ages, due to labor exploitation. If labor was paid better, those prices might well be sustainable. But there would be fewer profits to skim off the top.
TL;DR: I have no idea. Get a high-paying day job and bide your time? There’s a reason I’m not-at-all-joking very communistic in my political beliefs.
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This also explains the rise of bullshit fake things like NFTs and cryptocurrency.
The margins are infinite on something that doesn’t exist and isn’t real in any meaningful way. You can speculate on nothing.
People realized they could skim profits from speculation on mostly-fake things like CS skins. A lot of those kinds of things are basically proto-NFTs designed to create a fiction of transactions but a reality of pure skimming from eventual suckers.
NFTs just remove the fiction entirely. They’re just nothing.
Personally, I’m not sure what to do. While my previous investments are all chugging away, I’ve actually taken to sitting on a lot of cash right now. I’m not sure what’s coming, I don’t think any of it is good, and I’m trying to be flexible, adaptable, and open to possibly radical changes to my life if necessary.
Also, very related:
Pokemon cards also in a big shortage. How could I forget the most important one.
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