GameStop. How many of us have been in front of us at least once? The malls are full of them and how I lived it, I have always considered it a successful chain at least discreet. Then the Covid, the first restrictions on free circulation, lockdowns... and stores, GameStop included, begin to struggle. For a company listed in the stock exchange, however, this means decrease in value (just a few income = few dividends = little money to those who own shares) and at the same time a decrease in price. There are people who speculate on this, bringing these titles even more to the bottom of what in theory would be the balance of market... But let’s go with order and proceed to a “exploitation”, since probably some of you will be fasting in finance.
Whether you know it or not, there are no “comprehensive” and “sales”, but “long” and “short”. To open a "long" position means to buy a title hoping that its value goes up, then increases price and it is possible to sell it then to cash out the difference between purchase price and sale. Simple not? "Short" instead consists in borrowing a virtual title and selling it hoping that the value decreases over time, so that you can then buy a real copy at reduced prices and give it back to those who have lent it. Here too the difference arises, but it is speculated that the value of an action falls.
But the world of finance is like the casino: the bank always wins. In this case the banks. Or more properly those who have a lot of money, like the so-called “hedge funds”, that is companies that do nothing but accumulate capital and move it from securities to other titles. What happens when the little investor plays in the bag? It happens that money has a tot, usually a very limited “tot” compared to the big investors. So the small investor, in order to protect his own capital must set limits of loss beyond which he is not willing to sacrifice his own wallet. So if I, Noldor, buy a GameStop action and its value drops to a peak, I will prefer to sell at a lower price, therefore claiming a loss, rather than find myself in front of the possibility of holding paper.
So suppose we buy a title of a company that inspires confidence. Mr. Hedge arrives and throws up on the market many small shorts so as to form an impressive volume (of course I make it easy, but in reality it is a little more complex, since this happens even in quite long times) of sales (actual short is a sale of a title). The more a title is sold, the less it is worth (until here everything is easy not? You follow me? ). The less a title, the lower the price. Poor Noldor is therefore forced to sell to cope with his losses. Like him, thousands of other investors cause a chain effect that allows the title to collapse. Once you've collapsed, guess who's gaining? Who had “shortato”, that is the man with the gun. And it is known that when the man with the gun meets the man with the gun...
But it's not over! As the title arrived to cost little in relation to its actual value, the bank or hedge fund will have the money to buy back all the shares sold (and even more) at an advantageous price. Poor Noldor, on the other hand, can no longer afford to invest because his finances are limited and if he loses more money, his wife beats him with a bat.
The institutions of course limit these games, setting up some mechanisms to avoid market manipulations, but in part by connivence, partly by slowness in legion, these mechanisms are easily circumventable... And in the meantime, companies suffering from devaluation are forced to quit (read this story if you understand English).
Fast-forward at the end of January: a group of people who are friendlyly called “debosciate”, “imbecilli”, etc... decide on Reddit (subreddit wallstreetbets) to buy the shares of GameStop.
It happens that the phenomenon becomes viral and GameStop sees its value increase to the stars. The hedge fund “Melvin Capital” that has heavily shortened the title wants to protect its investment by shortening even more. The GGente are more and the title goes up. The more salt and more people buy, the more people buy and the more Melvin Capital is forced to stem their losses, at this point you get to the limit of sustainable, in fact buying to cover shorts, thus increasing even more the value of GameStop. At this point the title is at the stars. The debosciates celebrate and while there are those who buy an avalanche of Nintendo Switch to donate them to a pediatric hospital, newspapers like the Financial Times try to fly public opinion with an article describing the stock situation with the following words: “[...] users of subreddit wallstreetbets – some of which supporters of right-wing extremism – [...]”. Note that wallstreetbets today has SETTEMILIONS of readers. Practically imagine a child peeing on a bus, they're like they said: “[...] the passengers of a bus – some of which are great pesciasotto – [...]”. Obviously the Financial Times was corrected shortly after, but it is important that you understand what the hidden message was, namely: “Oh, you... you do, asshole. You who are taking off the rich, you've put the Nazis behind you. Shame!”.
Why do these things happen? Of course. The great capitals have tentacles (ndr: attacking this capitalism does not necessarily mean that I have a political vision of some kind, I limit myself to explain the facts!) in many large companies, some of which are active in the media field. Yes, but why do they write this? More obvious. To leverage the conscience of the poor investor who feels to point his finger against and therefore for fear of being associated with the Nazis, he will end up selling... thereby limiting the losses of Melvin Capital.
On the other hand ‘I’ll beat it if I’m pissed all n’der place. At the cry, on the contrary by emoticon of #iamondhands ,, that is “hands of diamond”, small investors bought and are holding the actions because to them je piace er title. Another catchphrase ritual is in fact #ilikethestock or “I like this action”.
Following GameStop, a handful of other companies such as AMC Entertainment Holdings (cinema) and even Nokia! Yes, because Nokia in fact is a company even in profit, that from the advent of the first smartphones tried in every way to shoulder to hold a position in the market. Nokia is not only 3310, but has a portfolio of incredible technologies, many of which are used in a completely invisible way to all of us. So why has he been declining for years (image below)? Speculation.
The madness of the “imbecilli” (it should be noted that the small investor is called “dumb money” by the big investor, that is “smart money”) has even infected the market of alt-coin (bitcoin anyone?), seeing the crypto more controversial, even created by joke, increase its value to dismeasure (before decreasing and taking a break – your faithful hopes even higher Dogecoin!
In the most total delirium and in the increasingly red accounts, many of the brokers (i.e. the agencies through which the investor places his money on shares & co.) have suspended the trading of the stars, also trying to protect their masters. The most famous, “Robinhood”, had to face an avalanche of negative reviews and many complaints to the U.S. state organ (the SEC) that deals with protecting investors. Many other brokers have had “malfunctions” and “technical problems due to unusual trading volume” which made it impossible for many to sell or buy in real time, in fact losing to so many other people opportunities and money. Technical assistance pages were obviously disconnected.
Seeing the ecstasy, my personal feeling is that the message “Today Melvin, tomorrow... Watch your shoulders” was given... and I imagine that a reform of the international investment system is behind the doors.
That said: #SendDogeToTheMoon🚀🚀🚀 !
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- Vice Direttore di KotaWorld.itRecent Articles
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