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0 pointsEEMac5y ago0 comments

I can't find any evidence that a short squeeze is illegal. (https://duckduckgo.com/?q=illegal+short+squeeze&t=ffab&ia=we...)

Also: If a big hedge fund shorts a stock, expecting to drive its price down, that's cool. (Search "big short drives down stock price")

But if regular people buy a stock expecting to drive its price up, that's terrible.

Sorry, this position just isn't credible.

0 comments

simias5y ago

Shorting in and of itself has a builtin risk/reward scenario. You're betting on the company's future performance. What's happening here is that people saw that some investors went overboard with shorting, so they started pumping the stock in order to extract money from said investors. Nobody actually cares about Gamestop's actual worth as a company, it's just a metagame effectively. Once the play is over the stock will collapse back.

I don't know if it is or should be illegal but I can see why it raises some questions.

vkou5y ago

> Shorting in and of itself has a builtin risk/reward scenario. You're betting on the company's future performance.

No, you're betting on the stock's future performance, not the company's future performance. There's an ocean of difference between the two.

If the company does poorly, but the stock price rises, or stays the same (Say, because we're in the middle of a COVID recession, and the printing presses are working overtime), you're going to lose a lot of money.

mynameisvlad5y ago

> Nobody actually cares about Gamestop's actual worth as a company, it's just a metagame effectively.

How do you know that everyone who bought it actually doesn't care about Gamestop's worth? There isn't really any way to prove that every single person (or even a majority of people, or really even a good portion of the people) don't care about GameStop's success and are solely doing it as a metagame.

unityByFreedom5y ago

Well there's the rub, we do need proof and that takes investigation. It's obvious what's going on but we will need to wait for whoever is conning this to leave a trail. It's just a matter of time.

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