Incase you haven't caught up yet, a subreddit with 2 million users decided to Bognadof the Gamespot stock, so much that 3 days ago it closed $40 US dollars, then yesterday it was $75 and just now when the market closed it was $145 US. Gamespot is now worth 10 billion dollars, the first time ever in it's history and Melvin Investment, a hedgefund that was short selling the stock has lost an estimated 6 billion dollars, after receiving a 2.75 billion bailout yesterday from 2 other investment firms. This really is entertaining to watch and is costing someone rich a lot of money.
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I've been somewhat aware of it. Jim's friend has been putting out some really funny content about the whole affair.
I bought some about a year ago when Reggie joined the company. I think it was at like $3/share. I figured he'd at least do something.
Sold a lot of it at $40/share, because I don't believe it's worth that much.
Sold most of the rest of it yesterday at $70/share, because obviously it's not worth that much.
Still just laughing every time I check its price now. As far as I'm concerned, short selling isn't investing. It's gambling. Fuck the people who choose to gamble, and especially fuck them for forcing everybody to participate in their game because they've made every other form of investment unaffordable or uncompetitive.
The official song of sane GameStop investors everywhere
Well, fair enough, except that's still just a shell game where someone else is left holding the bag when there's a problem. It doesn't actually solve any problem, it just shuffles it off to someone else who's just unlucky or not as savvy.
I'm actually not a big fan of commodities futures either for the same reason: it's just gambling. It's literally counting chickens before they hatch.
You are describing insurance. Insurance is not purchased on the stock market.
Well sure, that's one way to look at it. Other people use shorts and options as tools/insurance.
This, I don't get. I don't get why people get so upset about contracts, options, etc. Some people want that risk/reward. I'm not into that personally, I buy and hold stuff very long term, and that's worked out very well for me. But nothing is free here, they are accepting the risk that they get wiped out. I mean, did you see the panic like a year or two with oil? Where the contracts went negative 'cause people were going to have to take delivery of hundreds of barrels of crude, and there was nowhere to store it? It was hilarious, people were paid thousands of dollars to take the oil.
It's not the contracts in themselves, per se. My objection is more the last part of the sentence you quoted: that there are obscene amounts of money to be made simply by shuffling money around. They've effectively forced me to put a large chunk of my savings into their gambling process through laws around taxing income vs. not taxing contributions to approved retirement investment accounts. There is an entire parasitic system built around the stock market and finance in general that contributes nothing tangible to society, yet has forced itself into our lives and some sort of indispensable service that we can't disengage from.
So perhaps my disgust isn't 100% correctly placed, but until there's somewhere more specific and concrete to direct it, I still stand by it: fuck these guys. Get a real job. I'll enjoy watching them fail, and hopefully the investment firms that are desperately lending them money to keep them afloat fail as well. At this point they're propping up a shell game and they'll get what they deserve.
"Shuffling money around" is the backbone of any economy that has private ownership. It's an important role of banks, for example, and the phrase I'm familiar with that helps show it's benefits is "transferring funds from those who want to save money to those who want to borrow it" (i.e. from trader to "owner"). I think the problem with it stems from the fact that it's being done by huge companies that get to write their own rules and put themselves in too-big-to-fail scenarios. Don't knock actual individual investors, tho, because it's a super interesting way to make money while helping the economy function.
Yeah, I think your ire is somewhat misplaced. All these contracts have 2 sides to them. This stuff might all seem really abstract, with people trading contracts and doing it all on credit, but people aren't just printing money here. There are (normally) real consequences for fucking up, bad analysis, bad planning, bad luck, stupidity.
Having said that, real problems start when the government bails people out (or there's an expectation that they will), because it distorts the market. People start doing irresponsible risky stuff that they'd never do otherwise, because hey, free money basically (since risk is a cost, and lower risk = lower cost). And yes, everyone is paying for that. So maybe that's what you are getting at.