Originally Posted by Bucking Bar (Post 3183439)

Impressed that you get that part of the puzzle. Just to continue the conversation I reply, "Did it? Really? Or did a chosen few get very rich with no basis in law (or common sense) for what happened?

Would the world have sank if Goldman Sachs only made a 200% profit on reselling CDO coverage it got from AIG for $0.0004 per dollar instead of whatever the rate of return is going from $0.0002 to $1? Micheal Lewis (author of the Big Short) figured it out after he wrote his book. Let me try to explain it here.

From 2004 to 2007 mostly Wall Street players underwrote several trillion of sub-prime loans. To peddle this garbage off they made it look better by underwriting it with insurance against default. The insurance was priced at about two basis points per dollar. Later, rates were increased to 4 basis points, then as high as seven. Goldman Sachs and other big investment banks positioned themselves as brokers of this "insurance" marking it up 400% to its customers.

Insurance is 100%-total-profit, when you sell it, ** IF ** you do not have a loss. Yes, there are administrative expenses and reinsurance costs if you peddle the risk off to someone else (like say some rich prince in the Saudia Arabia (who will never f'n pay you)). If you multiply 450 billion of yearly coverage by $0.0004 that's $180 million for the sixteen or so managers of AIG FP (Financial Products) and $720 million for the Goldman boys. They were doing this on an annual basis and it grew from that $450bn snapshot.

In the Big Short people observed this absurdly underpriced insurance and began to place bets on having a loss. The amazing deal was on the retail level, Goldman was pricing this stuff at about 16 basis points, but the loss paid out $1. You can't get that kind of payoff in Vegas.

Buying an insurance policy usually requires an "insurable interest." For example, I could not buy insurance on your mother's life because it does not affect me if something were to happen to her; I have no skin in the game. As a matter of public policy, we do not want insurance companies to be gambling houses. However, both political parties have gone along with deregulation in the name of profits.

Typically when this kind of thing happens the Insurer (underwriter) declares bankruptcy and offers something like ten cents on the dollar of coverage. Those who had placed their bets would have still received a $0.10 return for every $0.0016 invested, which is huge. Anyone with any sense wonders why not let Goldman Sachs, Deutsche Bank and Goldman handle this like any other bankruptcy with investors taking haircuts, as they damn well should? Maybe we should look at the resumes of those involved in engineering the bail out starting with the chief architect of the thing:

Hank Paulson: CEO of Goldman. Wiki notes "Before becoming Treasury Secretary, he was required to liquidate all of his stock holdings in Goldman Sachs, valued at over $600 million in 2006, in order to comply with conflict-of-interest regulations.[17] Because of a tax provision passed under President George H.W. Bush, Paulson was not subject to capital gains tax. This saved him between $36 and $50 million in taxes.[18]"

So yeah, there's that. Love Mr. Lewis. He got closer than most writers to figuring this mess out.

Further reading https://haraldhau.com/The_Man_Who_Crashed_the_World.pdf

Originally Posted by ebl14 (Post 3184586)

Are any of you folks shorting GME?

Originally Posted by Buck Rogers (Post 3184774)

Instead of trying to buck the trend, I find I can lose just as much money and just as quickly by momentum investing, where the trend is your friend. :D Hold on with GME it could be a wild ride in either direction.



edit...it was just halted on up volume...Ive never seen that before

Originally Posted by Gunfighter (Post 3184794)

I can't short sell in my Brokeragelink account so I looked at buying puts, but the premium for today's expirations was ridiculous. I decided to sell $2.50 worth of premium via CC @ 55 with 1/22 expiration. For some reason I couldn't sell the cash secured puts. Come on lucky 7, close above 55, daddy needs a new pair of shoes.

Originally Posted by Trip7 (Post 3184930)

FYI, for those that are dabbling in growth stocks at eye watering valuations, hope you have a strong stomach and very long time horizon

$QCOM fell 58% - 21 years to get back to break even.
$MSFT fell 65% - 17 years to get even.
$AMZN fell 95% - 10 years to even.
$INTC fell 82% - still isn’t even.
$CSCO fell 89% - isn’t even close to back to even.

Originally Posted by Gunfighter (Post 3184963)

The tech bubble was a wild ride. I was flying a desk for a computer manufacturer back then. The move over to aviation provided more stability.

I was looking at a leveraged portfolio of dividend stocks while taking advantage of the low margin rates at Interactive Brokers. CSCO popped up as a dividend stock worth considering. I'm not willing to gamble on growth stocks, but a good dividend yield covers the margin interest with a nice profit. Has anybody used IBKR Pro?

Originally Posted by Trip7 (Post 3184930)

FYI, for those that are dabbling in growth stocks at eye watering valuations, hope you have a strong stomach and very long time horizon


$QCOM fell 58% - 21 years to get back to break even.
$MSFT fell 65% - 17 years to get even.
$AMZN fell 95% - 10 years to even.
$INTC fell 82% - still isn’t even.
$CSCO fell 89% - isn’t even close to back to even.



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Originally Posted by Big E 757 (Post 3184966)

I never used IBKR Pro, but I did use IB for trading years ago. I didn’t like the platform. I’m much happier at Tradestation.

Originally Posted by tripled (Post 3186932)

Anyone else riding gme up? Is occupy wall street striking back?

Originally Posted by LAXtoDEN (Post 3186939)

“How A Gamma Squeeze Works: The first step in a gamma squeeze is that one large trader or a legion of small retail traders, such as the Reddit WallStreetBets community, buys short-dated call options in a stock such as GameStop. When they buy these call options, the institutional brokers and investment banks that sell them essentially become short the underlying stock. The more call options the traders buy, the more shares of the underlying stock institutional brokers and market makers must buy to offset their short position.



When an appropriate stock is selected and the call buying is done on a large enough scale, a positive feedback loop is created.



“That gamma effect adds buyer after buyer in the stock, with no one able to short the stock because it is hard to borrow,” Lagator said.



The ideal candidate for this type of squeeze is a heavily shorted stock like GameStop. When forced short covering is also added to the mix, the positive feedback loop is fueled further.



How It Ends: This type of gamma squeeze has worked wonders for the stock prices of GameStop and other heavily-shorted stocks in the short term. Traders that got in on the squeeze early have ridden GameStop shares higher by 552% in the past 30 days, and call buyers have likely far exceeded those returns in that stretch.



Without any underlying value creation in GameStop’s struggling video game retail business, however, Lagator said the gamma squeeze eventually comes to an end and it could get ugly for traders still long at that point.



“Eventually, the short squeeze in the equity itself ends, and maybe that just means the stock goes sideways a bit. What then happens in the options is the opposite effect where all those pumped upside calls that have been hedged...start to decay to zero, meaning the market makers now have stock to sell because they have over-hedged,” Lagator told Benzinga.



Benzinga’s Take: The leaders within the Reddit trading community and other online groups have put a new spin on the pump-and-dump trading strategy by taking advantage of the leverage of the option market. They select short squeeze targets by identifying stocks that are heavily shorted by hedge funds. Then they take advantage of market maker hedging by focusing on the option market rather than buying the stock itself, intentionally triggering a gamma squeeze.



It’s a brilliant strategy, and the traders that get in early enough in the process have likely already made a killing. However, it’s extremely difficult to time entry and exit points of a short squeeze once it has begun, so anyone trading GameStop stock at this point is playing with fire.”

Originally Posted by Gunfighter (Post 3187110)

My college age son is active on reddit. I thought he was just comparing gaming strategies. Apparently he's been on r/wallstreetbets. He used his discretionary college funds to open a Robinhood account and joined the crowd in squeezing the GME shorts. The way he explains it, there is a mob mentality of retail traders who want to "stick it to the man". He knows it's a fools errand and closed a portion of his position after a 4x gain. I'm not sure if I should applaud his interest in trading or be worried about a gambling problem. At least he has demonstrated initiative in looking for ways to make a buck.

Originally Posted by LAXtoDEN (Post 3187362)

I’m still holding $AMC, I don’t care about the over 350% I’m up on it. They actually have threatened multiple times on halting trading and “price manipulation” fines. Yet all these renewable energy stocks with zero profit are up a zillion. This originally was a “stick it to the short hedge funds” now it’s a stick it to the suits. Hedge funds trade off momentum, yet they now claim this is reckless?

I’m actually really upset now as well on how they’re using the SEC to bail them out yet they gamble with money everyday. This just became personal for many investors.

The new movement on Reddit is “we’re the Whales now, you’re the bottom feeders” 😂😂😂

Like I said this is biblical, the SEC is jumping on CNBC making threats as we speak, but **** them.

Watch the Chamath Palihapitiya interview on CNBC.

Originally Posted by LAXtoDEN (Post 3187362)

I’m still holding $AMC, I don’t care about the over 350% I’m up on it. They actually have threatened multiple times on halting trading and “price manipulation” fines. Yet all these renewable energy stocks with zero profit are up a zillion. This originally was a “stick it to the short hedge funds” now it’s a stick it to the suits. Hedge funds trade off momentum, yet they now claim this is reckless?

I’m actually really upset now as well on how they’re using the SEC to bail them out yet they gamble with money everyday. This just became personal for many investors.

The new movement on Reddit is “we’re the Whales now, you’re the bottom feeders” 😂😂😂

Like I said this is biblical, the SEC is jumping on CNBC making threats as we speak, but **** them.

Watch the Chamath Palihapitiya interview on CNBC.

Originally Posted by Nantonaku (Post 3187382)

Palihapitiya manipulated the market by announcing he was buying GME on Twitter(he has 1 million followers). The next day he sells all his shares. How much did he make? Just like Ackman announces on CNBC last April the world needs to shut down and then throws in millions of dollars into the market at the low points he helped to create and proceeds to make almost a half billion dollars. I agree with Chamaths sentiment but he isn’t a friend of the common man.

Originally Posted by Seneca Pilot (Post 3188070)

With all the press surrounding GME the squeeze will be ending sooner, rather than later. I am very interested in selling two Jan, 2022 100.00 calls and taking the 50K and buying a bunch of Jan, 2023 40.00 puts. Actual future value of the stock is probably about zero.


Edit: this is not trading advice. Go see a professional before making any investment decisions. Do not get your investment advice from an internet forum.

Originally Posted by Buck Rogers (Post 3190289)

Intresting 20 min read about crypto currencies if anyone does that...I'm interested in ur take. Seems well researched

https://crypto-anonymous-2021.medium.com/the-bit-short-inside-cryptos-doomsday-machine-f8dcf78a64d3

Originally Posted by Planetrain (Post 3190306)

https://crypto-anonymous-2021.medium.com/the-bit-short-inside-cryptos-doomsday-machine-f8dcf78a64d3

Originally Posted by Trip7 (Post 3191099)

Buyer beware to those on the ARKK train to the "Moon". Personally I would take some(probably most) gains here and diversify into more reasonably valued assets like Emerging Markets.

*Not Investment Advice DYODD


Cathie Wood Has Wall Street’s Hottest Hand. Maybe Too Hot. https://www.wsj.com/articles/cathie-...ot-11612544044

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Originally Posted by Trip7 (Post 3199213)

I know SPACs have been all the rave in this thread but just a fair warning on the dangers of speculative investing. I believe WKHS was talked about openly on here and I think one poster even said they toured the factory. Turns out they didn't get the USPS contract and the stock was taken to the woodshed.

Looks like a permanent loss of capital for investors and even deeper wound if leverage was used. Be careful out there folks. Stocks rapidly rising without fundamentals to justify the rise will eventually meet gravity, and the fall will be even swifter than the climb! https://uploads.tapatalk-cdn.com/202...c6b33a07ed.jpg

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