Unless you've been living under a rock, you're probably aware of GME and how Melvin Capital got short-squeezed out of their positions.
Some might or might not agree that it involved deep pockets, and the retailers were only the catalyst. But fact remains, this is unprecedented.
To understand how it all unfolded, follow this Twitter thread that details the journey from Sep 2019
We've been seeing a lot of submissions asking for how to take position in GME, and benefit from this. Or worse, how to coordinate buys to execute a short squeeze like what had happened with GME.
Such posts would get removed if they don't add any new information or insight.
There's a socio-political aspect to it, that has a broader appeal. But this community isn't the place for that.
Let's start by addressing the FOMO first.
No, this level of short squeeze isn't going to happen in India anytime soon.
Read this from Zerodha on borrowing and shorting.
From @drjoe
For a short squeeze like this to happen, there needs to be more than 100% in short position, which other than SEC; very few regulators all over world would allow.
Our F&O markets aren't that mature or advance. Fortunately (or unfortunately) most likely not going to happen with any Indian penny stock.
IANAL, and do check with r/LegalAdviceIndia on this; but if you think about it, it is not, strictly speaking, market manipulation.
Market Manipulation is when you withold or hide material information to mislead investors into doing your bidding.
If someone says they bought a stock or its calls, shares screenshots, share their reasons for buying the stock - then they are being quite transparent & upfront about it.
Not exactly hiding any material information here. It can be securities manipulation, if it later turns out those were fake and was only intended to drive up or down the price.
Position or Ban is good enough to weed out the manipulators, and agree with it or not, WSB mods have done a great job in the face of such hailstorm.
Market regulators might still go after these people, but their defense lawyers can fight back in court along these lines.
However, that doesn't mean platforms hosting these communities cannot go after them. Discord most likely already did.
If you wish to understand legality & history of SEC actions, Matt Levine has done a good job, and there's a great discussion summarizing this, from r/investing.
Am nobody to tell you what you should or shouldn't invest in. If you understand the situation, have done your own due diligence; vote with your wallet!
But if not, stay as far away from this as possible. Most FOMO stories don't end well.
As a colleague at work puts it, it's a money pit with a guillotine hanging on top, that can fall any moment.
Risk-taking has two requirements: the need for it, and the capacity for it.
Do you need to take this risk, to reach your financial goals? And if so, do you have the capacity or abilty to handle yourself when the worst that can happen, actually happens?
Some HN-ers were blaming Federal Reserve and their unprecedented liquidity injection for this.
I'd be cautious about it. One sentence time and time again people have repeated, is this time, it's different.
Some might or might not agree that it involved deep pockets, and the retailers were only the catalyst. But fact remains, this is unprecedented.
To understand how it all unfolded, follow this Twitter thread that details the journey from Sep 2019
Why this thread?
We've been seeing a lot of submissions asking for how to take position in GME, and benefit from this. Or worse, how to coordinate buys to execute a short squeeze like what had happened with GME.
Such posts would get removed if they don't add any new information or insight.
There's a socio-political aspect to it, that has a broader appeal. But this community isn't the place for that.
Can we do this in India?
Let's start by addressing the FOMO first.
No, this level of short squeeze isn't going to happen in India anytime soon.
Read this from Zerodha on borrowing and shorting.
From @drjoe
For a short squeeze like this to happen, there needs to be more than 100% in short position, which other than SEC; very few regulators all over world would allow.
Our F&O markets aren't that mature or advance. Fortunately (or unfortunately) most likely not going to happen with any Indian penny stock.
Isn't it market manipulation?
IANAL, and do check with r/LegalAdviceIndia on this; but if you think about it, it is not, strictly speaking, market manipulation.
Market Manipulation is when you withold or hide material information to mislead investors into doing your bidding.
If someone says they bought a stock or its calls, shares screenshots, share their reasons for buying the stock - then they are being quite transparent & upfront about it.
Not exactly hiding any material information here. It can be securities manipulation, if it later turns out those were fake and was only intended to drive up or down the price.
Position or Ban is good enough to weed out the manipulators, and agree with it or not, WSB mods have done a great job in the face of such hailstorm.
Market regulators might still go after these people, but their defense lawyers can fight back in court along these lines.
However, that doesn't mean platforms hosting these communities cannot go after them. Discord most likely already did.
If you wish to understand legality & history of SEC actions, Matt Levine has done a good job, and there's a great discussion summarizing this, from r/investing.
Should I just invest in GME and ride this wave?
Am nobody to tell you what you should or shouldn't invest in. If you understand the situation, have done your own due diligence; vote with your wallet!
But if not, stay as far away from this as possible. Most FOMO stories don't end well.
As a colleague at work puts it, it's a money pit with a guillotine hanging on top, that can fall any moment.
Risk-taking has two requirements: the need for it, and the capacity for it.
Do you need to take this risk, to reach your financial goals? And if so, do you have the capacity or abilty to handle yourself when the worst that can happen, actually happens?
Is this the New Normal?
Some HN-ers were blaming Federal Reserve and their unprecedented liquidity injection for this.
I'd be cautious about it. One sentence time and time again people have repeated, is this time, it's different.