Tag Archives: robinhood

Crypto, Economics, Finance, Observation

Elon Musk and Jack Dorsey vs. Warren Buffett and the Status Quo

Video

Above: Photo Collage Lynxotic – various

Bitcoin and Crypto’s reached a major turning point: why is cryptocurrency worth anything?

In a recent interview clip Jack Dorsey quietly states his opinion on the difference between people who “get” blockchain and crypto, and those that will forever be married to the past:

watch:

This is the simply stated portion that says it all:

“People who have questions in the world, people who have curiosity (and are) recognizing that the current systems, wether they be corporate financial systems or the government financial systems just aren’t working for them…”

Although the context of his statement is regarding bitcoin as the native currency for the internet, and in particular how people are responding to the fact that financial systems “just aren’t working for them” it is, nevertheless, a perfect statement of how the world is changing.

It has already changed into two distinct groups: those that are clinging to the status quo, since it has worked very well for them, and those that want to find a new and better way, because, in most cases, the current system did not work for them.

It’s important to realize that this statement is not coming from a disgruntled outsider, but from the hugely successful founder of Square, now called Block.

The fact that a large group of highly successful business leaders, such as Jack Dorsey and Elon Musk, although benefiting massively from the current financial systems, are at the same time embracing a new way of thought and action for the future, is at the crux of the issues addressed in this post.

Buffet vs Musk & Dorsey and the zero sum mindset of Malthusian Capitalism

There is a war waging between those that are open to, and welcoming of, bitcoin, crypto, blockchain, DeFi and other new financial innovations and those that reject all of it and would like nothing more than to see it stopped, by any means necessary.

The derision, insults and disdain lobbed at bitcoin, crypto and anyone that believes in them, by the “old guard” epitomized by Warren Buffet and Charlie Munger are now well known and documented:

A few quotes:

“Probably rat poison squared.” — Warren Buffett in Fox Business interview at 2018 meeting

“I think I should say modestly that the whole damn development is disgusting and contrary to the interests of civilization” – Charlie Munger vice chairman at Berkshire Hathaway

“I certainly didn’t invest in crypto. I’m proud of the fact I’ve avoided it. It’s like a venereal disease or something. I just regard it as beneath contempt.” – Charlie Munger vice chairman at Berkshire Hathaway

Interestingly, if you look deeper at the interviews and quotes, you’d see that, in spite of the headline grabbing hyperbole, it’s the price speculation that is at the heart of the criticism.

The comments that crypto and bitcoin “don’t produce anything” are ridiculous on their face, as if the fiat dollar “produces” products, services or anything else.

Oh, wait, the dollar does “produce” inflation (loss in value), and has done so very dependably over the last 100+ years.

Take a stat so well known that it is almost a cliché, any way you put it: a 2013 U.S. dollar (the year the federal reserve was created, not coincidentally) would be worth more than 16x what a dollar is worth today. One has to ask where that value is now?

Bitcoin, however, has over time only gained value. A lot. If bitcoin is rat poison, maybe the fiat system and the federal reverse are the rat?

100 year old billionaires are, aparently, not inclined to speak from enlightened self-interest. Or, to be kind, perhaps they are blinded by the success they enjoyed in a system that favors anyone at the top of the pyramid, one built on value theft?

One very big caveat, however, is clearly that the “everything bubble” is bursting, price speculation always ends in price crashes, and the massive gains in the value of various cryptocurrencies are a symptom of a larger systemic emergency, rather than a quality inherent to crypto itself. There’s that.

The gap between this kind of thinking vs. that of the forward looking cryptocurrency proponents, and what they consider to be positive innovations, is vast. In a time where divisive thought is nearly ubiquitous this is not news.

However, the fact that the legions of those that “get it” are as large as they are, and that they are constantly growing, has clearly taken the debate past the point of no return.

To get the full view of this divide it’s important to look also at just how the nearly 100 year old duo of Buffet & Munger got to be the “legends” that they are.

All the best known names they are associated with, from the initial Berkshire Hathaway purchase in 1962 to more recent investments in companies such as CocaCola, GEICO Insurance, RJ Reynolds Tobacco, Sees Candy, Clayton Homes and so on, paint a clear picture of extreme hierarchal and exploitative capitalism that is solely based on making themselves and shareholders rich, and doing it on the backs of consumers.

In an example of the thinking of those that do not worship the duo, in The Nation, David Dayen wrote: “America isn’t supposed to allow moats, much less reward them. Our economic system, we claim, is founded on free and fair competition. We have laws over a century old designed to break up concentrated industries, encouraging innovation and risk-taking. In other words, Buffett’s investment strategy should not legally be available, to him or anyone else.”

Exactly this kind of double standard, corrupt to the core, is built on systemic greed founded on a Malthusian “zero-sum mindset”. This is what has led millions to conclude that the system just isn’t working for them.

Being championed ad nausea for this lifetime of “achievement” is part and parcel of the status quo that many, from many in the 99% to the “nouveau 1%”, such as Elon Musk, Jack Dorsey, Vitalik Buterin and many others, are actively seeking alternatives to.

That distinction, being rich and powerful and yet not satisfied with the legacy of corruption and greed, is at the heart of the new wave of thought that has made bitcoin, crypto and DeFi a force to be reckoned with.

Moreover, seeing the state of the world that centuries of this kind of thinking has engendered, it’s natural for the young and more enlightened to want to search for other ways for things to work, ways that perhaps champion something other than monopolistic greed and exploitation.

In a recent Interview Elon Musk addressed precisely this issue – how many in the current system are focused on prospering at the expense of others and maintaining a zero-sum mindset. In the clip he outlines how important it is to understand the failure of that approach.

watch:

The idea that crypto will disappear is wishful thinking by those that cling to the systems of the past

A clip of Harrison Ford speaking at the Global Climate Action Summit was banned on some platforms as incendiary. Why? Because he passionately accuses those that are financially linked to fossil fuels of working to spread disinformation and misinformation, in order to perpetuate their massive incomes, even while the planet is on the brink of climate disaster.

Blocking this opinion, from a rich and famous film star, no less, is typical in the way that the established system works to suppress the idea that you should do anything about the fact that “it’s just not working” for you.

This is the same divide, mentioned above, that is nearly all pervasive today, but will never stop innovation in thinking about financial systems. It will not stop DeFi or DAOs or crypto or bitcoin.

It will not stop sustainable energy from becoming an ever bigger part of the world’s energy infrastructure. The point of going back has long since passed.

How money works according to Musk

Jack Dorsey has an understated and somehow “quiet” way of expressing revolutionary ideas. Elon Musk, on the other hand, is well known for controversial and flamboyant statements, and especially tweets.

But to get a taste of just how radical his thinking really is, particularly to those that disagree, you have to dig deeper into lengthy interviews, such as those with Lex Fridman, where he reveals his thinking more specifically on money, crypto and the governments role in the system of money.

watch:

Coming from the wealthiest person on earth, some may find it odd, yet his thoughts on crypto vs fiat money are well documented. It’s just this kind of stance, taken by so many in the “new” establishment at the top of the current financial pyramid, who also see the necessity for change toward new ideas and systems that can so away with the worst of the status quo, well represented above by Buffet & Munger and other “crypto haters”.

Government is a corporation in the limit

In yet another interview excerpt, Musk goes even deeper into his belief that – in his exact words: “if you don’t like corporations should really hate governments”

watch:

While this particular statement arose out of a spat with Senator Elizabeth Warren regarding taxes, the overall concept of challenging the status quo and the, clearly failed, systems perpetuated, remains in play.

Web3, and how Web2 and legacy financial structures are linked

Although fraught with infighting – the typical bitcoin vs. Ethereum vs. Doge vs. Shiba Inu internal debates and criticisms are not on the magnitude of the division between those that generally support and benefit from, for example, status quo financial structure and fossil fuel business, vs those that favor Blockchain and Sustainable energy.

Further, the spirit of the clash between Web2 and Web3 rests not on the tech or the systems themselves, which it can be argued are the same, but on the beliefs and intent of each camp.

The surveillance capitalism business models of web2, epitomized by Facebook and Google are diametrically opposed to the spirit and stated goals of web3, just as bitcoin was created out of a time that, not coincidentally, corresponded to the 2008 crash and crisis born of the greed and corruption of the legacy economic establishment.

There are two distinct camps that have emerged.

Those, such as Tesla and Elon Musk, that reject the traditional holy grail of shareholder value and instead embrace, for example, a more enlightened mission “to accelerate the transition to sustainable energy”. This aligns with any individual choosing the support crypto as a “Hodler” or at least believer, vs. those that support the legacy systems of finance, the fossil fuel industrial complex and Web2’s exploitative business model.

This divide is the ultimate test of our time and it will only grow in stature and importance.

The correspondence between forward looking innovation in all human thought, communication and action is already too big to stop and cannot be wished away.

There will undoubtedly be setbacks to these new directions, and there will be attacks using more than insults, such as those quoted above, but the time for the unstoppable force to be quelled is long since past. Coke and a smile? No thanks.

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Business, Crypto, Economics, Finance

Elon Musk is taking sides in the ‘True Battle’ between Crypto & Fiat

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Above:Photo Credit / Unsplash / Collage / Lynxotic

If you are stuck on the word ‘fiat’ this post can help you (everyone else too)

In a single, 14 word reply to a follower (@TheRealShifo) that asked “Yo Elon what do you think about the peeps who are angry at you because of crypto?” He gave a simple answer that is the often unmentioned, yet most important, question regarding crypto vs. fiat, government issued, currency such as the US dollar.

Looking around during the ongoing frenzy surrounding crypto and digital finance you’ll see countless ‘news” stories and blog posts comparing, or pretending to compare cryptocurrencies, especially the two biggest Bitcoin and Ethereum (as coin sometimes referred to as “Ether”) and they virtually always quote the “price” fluctuations of those coins as a certain number of dollars and cents.

Interestingly I have yet to see any of these “comparisons” use the reverse valuation method, such as, “the US dollar is currently worth .00002703 Bitcoin. Can you imagine everything using that as a standard – CNBC quoting stock prices in Bitcoin, your house is “worth” 32 Bitcoins (if you’re in California, for example).

The reason this comes off sounding strange and ridiculous is that all communication related to the US dollar, which has been a fiat currency since abandoning any “backing” (such as gold) and continuing on by decree (or fiat) of the government with no backing other than than decree, also carries a decree (tacit) not to undermine it in public.

So when Elon says:

“The true battle is between fiat & crypto. On balance, I support the latter.”

Simple and straightforward and yet intentionally shrouded in mystery

Musk is directly comparing crypto, generally, and fiat currencies around the world that “float” against each other. And by inference, doing so in terms of the difference between a fiat currency like the US Dollar and a crypto currency, like Bitcoin.

A fiat currency is money that is not backed by a physical commodity like gold, but instead backed by the government that issued it. Most modern currencies, such as the U.S. dollar, euro, pound and yen, are fiat money.

from Wikipedia

The term fiat derives from the Latin word fiat, meaning “let it be done” used in the sense of an order, decree or resolution.

— common Definition

The fact that Bitcoin was created as a digital alternative to fiat money stands at the forefront of that point. The fact that it was designed precisely to counter the drawbacks and dangers of a system based on fiat paper money (or digital ledgers of those paper dollars such as your bank balance or any method to keep track of how many “imaginary” paper dollars you “have”) is exactly the real issue at hand.

photo credit: twitter

It’s no secret that many attack those goals and intentions superficially and dismiss the entire discussion with a wave of the hand. They willfully use the complexity of the cryptographic solutions, at the heart of cryptocurrency, as a way to gloss over the real and substantive problems being targeted.

They prey on the ignorance of the majority to try and discount out of hand any value at all for the movement and the various products.

Opening up the door to this exact exchange and characterizing it as a “battle” in one fowl swoop clarifies and simplifies the real issues and the real reason for the existence, and according to many, including Elon Musk, the need for monetary “reform” or change via a shift toward crypto.

Opening up the door to this exact exchange and characterizing it as a “battle” in one fowl-swoop clarifies and simplifies the real issues and the real reason for the existence of, and the need for, monetary “reform” or change via a shift toward crypto.

D.L.

The “price” of Bitcoin or any other crypto currency on any given day has almost nothing whatsoever to do with that debate.

Speculation abounds but not just in Crypto

The “price” is a function of, mostly, speculation and scarcity, due, in the case of Bitcoin to the mining cap, or at least a perceived scarcity. And additionally the various perceived advantages of crypto such as privacy, decentralization, use of block chain systems, etc.

But the price is like the smoke above the battlefield, not the reason for the battle or any indicator who is winning or who is on the side of might or right.

Two major questions that arise from this tweet and the potential shift toward a clearer and simpler dialogue on crypto are the following:

  1. Is crypto generally, and Bitcoin / Ether more specifically established and entrenched enough to withstand the coming backlash from governments that feel threatened and other status quo institutions that will do whatever it takes to discourage or even stamp out crypto usage?
  2. Will the very battle itself, that Elon Musk says is the current “true” battle, bring even more attention to the weaknesses and problems with the current fiat money system and thereby increase, perhaps inadvertently yet massively, the size of the battle and its stakes?

Alternative systems of trade have been tolerated in the US for some time now. How are those air miles doing? What about the chips and points for perks you got at the Indian Casino? Is it too late to outlaw all crypto without causing a revolution in the streets?

The other side of the (clipped) coin

It is truly surprising to see how little is to be found in the media about the deeper reasons for the rise of crypto. How it sometimes seems like direct criticism of fiat currency is almost taboo.

Naturally any internet search will find many “rabbit hole” sources for all kinds of information critical of the current monetary system, the same system the near total collapse of which in 2008 inspired the creation of bitcoin.

It appears that Elon Musk is emphasizing, in a subdued manner, exactly the way that the nonsense-furor over huge price gains or declines is completely missing the actual point. The “true battle”.

Many stories in the media and millions of private comments are currently following a kind of convoluted logic – first the popularity of crypto (which is linked to the unpopularity of the very messed up fiat system) artificially and massively increases prices in many crypto assets.

This “bubble”, a typical outcome of human herding behavior in financial markets, inevitably bursts or sees large setbacks. Then the coin or crypto system itself is blamed for the human stupidity and greed that caused the distortions of price, just like happened in the dot-com bubble and the 2007 housing bubble and subsequent crash.

The difference is that the crypto bubble, in an interesting way, is in reality due to a surge in skepticism toward fiat currencies, a boom in the prevalence of mistrust toward governments and a combination of fear and greed that is growing, not dissipating.

Although many have rightly criticized Elon Musk’s tweets and odd Saturday Night Live appearance, and there is a kind of mini-backlash (growing?) against all things Musk, in this case it is a healthy and wise tweet that we have shown above.

Reframing, or more aptly refocusing the discussion away from prices and speculative profits and back to the real reasons that cryptos were initially created and why it has gained such massive support is a welcome shift. That this reframing comes from the likes of Musk himself, is fitting and who better to put forth a message to simplify and clarify the nature of the real “battle” at hand.

The following video has some interesting data and arguments for, and mainly against, the fiat regime under which we have lived for most of the last century. Although, in a sense, a kind of advertisement for Gold and Silver, the overview is nevertheless accurate and does not exaggerate the dangers and issues that revolve around the fiat system.

Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Lynxotic does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.

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Breaking News, Entertainment, Movies, Stock Market, Videos

Wolf of Wall Street has Pump & Dump and more to Inform during the Game Stop Craze

Video

Want know more about shorting? About the shady and complicated scams? And also see an incredible film?

The Wolf of wall street is simply a great movie. It’s even better though if you watch it in the context of stock market mania. Just like the one that’s happening now.

Beyond the fact that the story is incredibly entertaining it does also get into the heart of the “pump & dump” boiler room mentality. While the so called ‘retail investors” who are riding the Robinhood stock purchasing app to what they see as well deserved revenge on Wall Street, and Belfort who was the real life “Wolf of Wall Street” was more of a wannabe that couldn’t get into the establishment. He then set forth, with chutzpa and insanity and some drugs, built his own criminal empire, there are some very clear correlations between his tricks that made him rich and what the short-squeezing Reddit & Wall Street Bets chat room vigilantes are doing right now.

Read more: Confused about GameStop, Robinhood, Reddit and Wall Street Bets? Check out the Big Short

Can we all be like the guys, Jordan Belfort or Michael Burry, who was played by Christian Bale in the movie, and even though it was about going short, it’s sill ok, cause, Christian Bale?

Read more: GameStop, Dogecoin, Robinhood and Stonks: What’s going on!?

History does exist, even if it happened before your uncle was born

Up until 1934 many things were legal and rampant that today, technically, are not allowed. Insider Trading is the most obvious and best defined, look up Martha Stewart and jail time if you want to know more about that. 

Collusion in the market is another less well known practice, also known as “pump & dump” that has as many variations as Ponzi schemes and, though illegal, will never be stamped out. The technical terms for Colluding in relation to stock trading are “securities fraud” or “market manipulation.”

Not to get technical but here’s an partial excerpt of the legal specifics: 

15 U.S. Code § 78i – Manipulation of security prices

(a) – (2 To effect, alone or with 1 or more other persons, a series of transactions in any security registered on a national securities exchange, any security not so registered, or in connection with any security-based swap or security-based swap agreement with respect to such security creating actual or apparent active trading in such security, or raising or depressing the price of such security, for the purpose of inducing the purchase or sale of such security by others.

https://movietrailers.apple.com/movies/paramount/wolfofwallstreet/thewolfofwallstreet-tlr2_h1080p.mov

Read more: “GameStonks vs. Wall Street”: Heroes, Victims and Hogwash

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Breaking News, Business, Entertainment, Movies, Stock Market, Videos

Confused about GameStop, Robinhood, Reddit and Wall Street Bets? Check out the Big Short

Video

Stories from Past Crises can Reveal New Insights as we Encounter huge Challenges

https://movietrailers.apple.com/movies/paramount/thebigshort/thebigshort-onlinespot_h1080p.mov

The reality is sinking in, slowly, that the future is truly unknowable and that big changes and even bigger challenges are looming. Twin shocks of a health emergency and a financial crisis, intertwined and yet with separate trajectories, are still to be resolved in our near future.

Click to buy “The Big Short” 
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Also available on Amazon.

And then there’s the myriad of other challenges that were already acute, such as global warming and the “other” epidemic; corruption and greed. It’s almost too much to face up to, and no one can be blamed for wanting to just turn away.

Too much has been glossed over. After the 2008 crisis we all just wanted to put that ugly mess behind us and get on with our lives. I suppose the criminals that netted billions as a “reward” for almost destroying the entire global economy were also eager to just move on.

All that as it may be, perhaps, a way to begin the process of regaining our courage and looking into the future with some kind of hope, or at least a deeper understanding of the human dilemma and historical precedents, might be to enjoy films about small moments of triumph before great adversity. Here are a few recent options:

The Big Short

https://movietrailers.apple.com/movies/paramount/thebigshort/thebigshort-fte1_h1080p.mov

Barely 12 years ago, the financial collapse and ensuing “Great Recession” was a nightmare scenario. The aftermath of that debacle is also a contributor to the economic dangers we see before us in 2020. This film, likely the best based on that era, highlights how outsiders and misfits were able to prosper, even as they witnessed the corruption, failure and systemic injustice that brought the world to the brink of total economic chaos.

Starring: Christian Bale, Steve Carell, Ryan Gosling and Brad Pitt.

Anthropocene: The Human Epoch

https://movietrailers.apple.com/movies/independent/anthropocene/anthropocene-trailer-1b_h1080p.mov
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For a bird’s-eye overview and scientific perspective – Athropocene is a film for those ready to think deeply on how, once beyond the immediate danger, we would want to emerge into a new era as a species. A positive reaction to the current crisis, worldwide, has been a series of ideas and proposals that show a willingness to confront the challenges from an entirely new perspective. Maybe new leadership can mean starting over and making a pledge to try a new approach to literally everything.

‘The film follows the research of an international body of scientists, the Anthropocene Working Group who, after nearly 10 years of research, argue that the Holocene Epoch gave way to the Anthropocene Epoch in the mid-twentieth century as a result of profound and lasting human changes to the Earth.”

Unbroken

https://movietrailers.apple.com/movies/universal/unbroken/unbroken-tlr2_h1080p.mov

Facing death constantly is a reality in war times. This story is a testament to resilience and survival against all odds.

Angelina Jolie directs this adaptation from Laura Hillenbrand’s popular book, “Unbroken” stars Jack O’Connell, Domhnall Gleeson, Alex Russell, Miyavi and Finn Wittrock

Cinderella Man

This Depression era feel-good story takes on new meaning as we see a “Great Depression II” potentially looming. Looking for strength and courage facing forces that threaten our survival, and coming out at the end in a better place, that’s a synopsis and blueprint we can all benefit from observing, even if it’s packaged as a Hollywood vehicle. Russel Crowe at his best. Maybe worth a second look.

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Breaking News, Entertainment, Observation, Stock Market

GameStop, Dogecoin, Robinhood and Stonks: What’s going on!? We’ve got the real answers here

Confusing? Yea, but at the bottom it all it’s just…(parody)

It you have followed any of the unfolding madness with the “retail investors” and the revolution of unstoppable market manipulation that is heroic, not criminal cause, um, the other guys (Wall Street) are much more criminal.

Read more: “GameStonks vs. Wall Street”

The problem is, it’s all true! Yes, the idea that pumping up GameStop, which is basically a random stock that was cheap and easy to pump. This is basically making a mockery of the traditional idea of investing and of the laws against stock manipulation. But the market is, as so many are pointing out, basically a sham already.

Read more: Elon Musk, AOC, GameStop, Robinhood, Short Selling Hedge Funds

A lot is made of the bad and nasty “shorts” who think that, just because GameStop is a company with basically no future prospects, they think the price would like, do down. Strange. That’s ok though, we can pump it up and the squeeze force the shorty shorts to cover (buy back shares) and that will send the price soaring.

short shorts by Tesla

Then we can all be like the Wolf of Wall Street, Jordan Belfort and also totally like The “Big Short” guy, Michael Burry, who was played by Christian Bale in the movie, and even though it was about going short, it’s sill ok, cause, Christian Bale.

2008 was bad and done by very bad people that got away with it

And yes, it’s pretty much all a nasty business. But the nasty pros are the worst. And the whole system is a sham. And, anyway 2008. Right. Maybe this is like occupy Wall Street but for real. Occupy it literally inside of the market. Where they live.

So, in a nutshell it’s a mockery of a sham. And a travesty. So it’s a mockery of a sham and a travesty.

Seriously., though, perhaps pumping cheap stocks from around 5-10$ up to $500 or higher by coordinated buying executed by internet mobs should be made legal. Each “investor” can jump in and out where-ever they choose and daisy-chain into the wealth that dreams are made of.

Universal basic is basically good, really good

Perhaps this can be the new government stimulus plan. Give every citizen a “free” stock buying app like Robinhood (but a new one cause we all hate those guys now) and have each account pre-loaded with, say, $1000.

Then let everyone know that it’s ok to join Reddit groups or watch TikTok stock market gurus and everyone, like a swarm of locusts can just pump a stock up to the moon and then sell and crash it and move on to the next one.

Naturally, it will be necessary to always start with a stock that is cheap so the early buyers can get really, really rich when the stock (who care what company it is, right?) goes up around 32,000% is, say, a week. That’d be good.

I am looking for how this casino of the common man would be worse that the current system, and it’s hard to find a flaw. Maybe read a book? Naw, just buy and buy and get rich with stonks forever. Amen.

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Breaking News, Business, Stock Market

Picking up Quarters in front of a steam roller: Robinhood, GameStop and the Innocence of Ignorance

Tilting at Windmills as misnomers rule

Lots of confusion on all sides. There’s an internet storm brewing over the “injustice” of various entities – a ridiculous “free” trading app called, of all things “Robinhood”, the hedge funds who shorted an obviously overvalued stock. The army of short-squeezers who are screaming bloody murder that they were not able to cash in at the top (or commit Hari-kari by buying more the higher it goes).

Read more: Elon Musk, AOC, GameStop, Robinhood, Short Selling Hedge Funds

And then every pundit in the world sounding off – all the outrage and chaos with Ted Cruz & AOC & Elon Musk & Chris Cuomo & Mark Cuban and probably every celebrity in the world going nuts all at once by tomorrow and all sounding off like crazy over the “injustice”. Shake it up and shake in down.

Read more: Stonk Traders vs. Wall Street”: Heroes, Victims and Hogwash

The sheer volume of confusion over the “Robinhood Revolution” is staggering. Just wait it will be much, much worse. The depth of the ignorance is truly monumental.

Are there bad guys on “Wall Street”? Plenty. Are the google guys day traders that bid up a worthless stock to “burn” hedge funds and get rich quick heroes? Please.

https://twitter.com/RileyTaugor/status/1355005283622383617?s=20

And an App hilariously named “Robinhood” that charge phantom fees rather than stated charges (low, high or whatever) does no “stealing from the rich” and sure as hell no “giving to the poor”.

The good guys? Wanna buy the Brooklyn Bridge? I’ll sell you whichever one you want.

Traders and “Wall Street Insiders” know that danger is real. The idea of protecting “retail traders” from risk? As they tap into credit cards to buy worthless stocks that they believe they have a right to pump & dump?

And are they good guys cause they should be able to push the price of a stock endlessly higher for no reason whatsoever except that they get off on the letters from the ticker symbols that happen to sound similar to the ticker for a stock that Elon Musk did a two word tweet about (Signal, etc)?

Collusion and getting rich for doing basically nothing should be something that is available to everyone because criminals have gotten away with it left right and center?

That’s the solution? Solution to what problem exactly? And the big heroes are those who coin slogans such as “stocks only go up!”

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Breaking News, Business, Observation, Politics, Stock Market

Elon Musk, AOC, GameStop, Robinhood, Short Selling Hedge Funds: Fine People on all Sides!

Video

Short sellers and now Robinhood are getting critics of all stripes

Tesla CEO Elon Musk wrote in a series of tweets Thursday a litany of anti-short thoughts, punctuated with “get shorty”. Also said he “absolutely” agrees with Rep. Alexandria Ocasio-Cortez, D-NY., that the House Financial Services Committee should launch an investigation into Robinhood because of stock trade restrictions that were put into place by the online app-based brokerage related to GameStop.

Read More:“GameStop vs. Wall Street”: Heroes, Victims and Hogwash

Always a master of viral expression, Musk famously marketed “short-shorts” as a dig at short sellers that he felt were unfairly targeting volatile Tesla stock moves. In the end, at least so far, he has always had the last laugh.

Robinhood is blocking “investors” from initiating new positions in GameStop, AMC Entertainment Holdings, American Airlines, BlackBerry Ltd., Bed Bath & Beyond Inc., Express Inc., Koss Corp., Naked Brand Group, Nokia Corp, Trivago, and Tootsie Roll Industries, Inc. They are only permitting them to sell existing holdings. Margin requirements were also increased for various securities.

The actions likely have a two-fold justification, based on the situation. To protect Robinhood from litigation in the even, which is likely, that the stock will collapse and many novice “investors” will get hurt, and ostensibly, to protect the investors themselves.

Rep. Ocasio-Cortez stated: “We now need to know more about @RobinhoodApp’s decision to block retail investors from purchasing stock while hedge funds are freely able to trade the stock as they see fit.” And then added: As a member of the Financial Services Cmte, I’d support a hearing if necessary.

https://www.spacex.com/media/SN8_Website_03.mp4
video: SpaceX
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Business, Finance, Stock Market

“GameStonks vs. Wall Street”: Heroes, Victims and Hogwash

Above: Photo Collage / Lynxotic / Adobe Stock

The story that won’t stop and the very fine people on all sides

No heroes, plenty of villains and lots and lots of nonsense and stupidity. But before getting into the nuts and bolts of this tragic “new” phenomena, take a second and think about all those media stories, in nearly every online media outlet, even hitting local news.

Each “take” on the story has a different slant and spin and almost none go into the boring and complex technical details of stock trading schemes. Most, it appears, are cheering on, implicitly, the “main street” buyers in an imaginary “war” on Wall Street.

[Disclaimer: Nothing in this article should be construed as legal or financial advice.]

That will get you more clicks.

A few will point out that GameStop, the company that is, which has no real prospect to rise from its comatose state into a Tesla-like world beater, regardless of how high the stock climbs for a few weeks or so.

And they will, rightly, warn that in this game, the “innocent” main street “investor” will lose in the end. Those are the boring stories. Not as many clicks for them.

The longer more accurate story of what is going on touches on the Great Depression, the Dot-com bubble, the financial crisis of 2008 and an understanding of stock trading that goes beyond the patience threshold of the general public and the media, even beyond most so-called Wall Street Insiders.

History does exist, even if it happened before your uncle was born

Up until 1934 many things were legal and rampant that today, technically, are not allowed. Insider Trading is the most obvious and best defined, look up Martha Stewart and jail time if you want to know more about that.

Collusion in the market is another less well known practice, also known as “pump & dump” that has as many variations as Ponzi schemes and, though illegal, will never be stamped out. The technical terms for Colluding in relation to stock trading are “securities fraud” or “market manipulation.”

Not to get technical but here’s an partial excerpt of the legal specifics:

15 U.S. Code § 78i – Manipulation of security prices

(a) – (2 To effect, alone or with 1 or more other persons, a series of transactions in any security registered on a national securities exchange, any security not so registered, or in connection with any security-based swap or security-based swap agreement with respect to such security creating actual or apparent active trading in such security, or raising or depressing the price of such security, for the purpose of inducing the purchase or sale of such security by others.

Enter Reddit’s r/wallstreetbets forum. Not saying that there is anything illegal about “loving” a company as a group and choosing to “support” it by buying its shares.

Even if the motivation (false and imagined) is to “hurt” the short sellers in some kind of Robin Hood attack, that’s probably not something the SEC would care about. Short selling professionals can take care of themselves.

Enter another part of history: the allegedly overvalued company effect

Attacking short sellers has become a kind of sport, particularly when it’s about an emotional connection that was partly responsible for a company’s shares being “overvalued” by traditional metrics in the first place. Once “overvalued” therefore, a target to be sold short by traders and hedge funds that believe in quaint things like profit to earnings ratios and the like.

While company’s share prices being “overvalued” is based on opinion and often wrong, there have been recent cases, since the NASDAQ bubble burst in 2000, that have added a somewhat new, larger, twist on the typical understanding of these types of situations.

Bubble is as bubble does

To take the biggest example, there is Amazon (AMZN) which would take a thousand page book to accurately and fully elaborate on, but for the sake of brevity a couple of points could be made.

It is well known that Amazon posted substantial losses for many years while the stock price generally continued to rise. This was attributed to shareholders’ willingness to forgo proof of financial success within the company and persisted in buying & holding in the hope that share prices would continue to rise and that the company eventually would show profits and more success.

All of that seemed to happen, in the case of Amazon, when viewed casually, and now there is a sense, among some, that overvaluation, in “outlier” cases, is no longer a valid reason to sell (or short) a stock. Everybody’s happy right?

The uses of inflated value is a sticky-wicket if you are the loser

Not everybody. Naturally there are many “bad” short sellers who likely lost by shorting Amazon during it’s unrelenting rise since 2000. They are unlikely happy.

But also, and here’s the rub, there were whole industries crushed by the power that came with that “over-valued” stock price that seems, from looking at reams of data, to have been used to finance the selling of goods at substantial losses for “as long as it takes” to damage competitors.

Ultimately, for Amazon, creating a possibly dangerous monopoly (or monopsony, as it were) position with the potential for further damage to not just competition, and the overall marketplace, but to society as a whole.

This is, of course, opinion but ask, if you will, the various agencies in charge of anti-trust actions for further concurring opinions.

Tesla is a whole other story, but a completely unique one

However, the situation is clearly not black and white. An alternate opinion could be held regarding the similar, yet very different, situation at Tesla (TSLA). Short interest throughout the rise? Absolutely. Overvaluation by traditional metrics, yup.

But in this case there is both a technological argument to be made, as well as a geopolitical / moral one, that the company’s wider mission: “Tesla’s mission is to accelerate the world’s transition to sustainable energy” is a more than valid justification for wanting to support the company, in any way possible, including through the purchase of it’s purportedly overvalued shares.

That kind of goodwill is the x-factor that is now being twisted into a justification for pumping GameStop (GME) into the stratosphere, beyond the kind of overvaluations that either Amazon or Tesla ever enjoyed (and that’s saying a lot!) while downplaying the “dump” part of the “pump & dump” scenario.

Of course here’s the tragic part; the dump phase always comes, and in reality, is the whole point. Next… ooopsy, while writing this the dump started with GME in the form of a drop from around $500 per share to $226.

For a sub-$20 stock, of course, that’s still extremely high and there will no doubt be gyrations in both directions before the final drop back to obscurity.

Twas ever thus, but still not nice

But the tragedy is in the idea, bandied about in the media and amplified in social media infinitely, that there are “Robin Hood” actors in this game (not the company but the dude in the forest in the movie).

In the end there may be a few that knew all along that “dump” was an integral and necessary part of pump & dump and I am sure there will be plenty of celebration of their “genius” exploits.

But the focus from any of us in the media should be at the tragedy of those that got lost in the hype and stupidity and chose to offer themselves up to the gods of GameStop, the market and Reddit’s r/wallstreetbets as cannon fodder:

”I was in my early teens during the ’08 crisis. I vividly remember the enormous repercussions that the reckless actions by those on Wall Street had in my personal life, and the lives of those close to me. I was fortunate – my parents were prudent and a little paranoid, and they had some food storage saved up. When that crisis hit our family, we were able to keep our little house, but we lived off of pancake mix, and powdered milk, and beans and rice for a year. Ever since then, my parents have kept a food storage, and they keep it updated and fresh.”

”I bought shares a few days ago. I dumped my savings into GME, paid my rent for this month with my credit card, and dumped my rent money into more GME (which for the people here at WSB, I would not recommend). And I’m holding. This is personal for me, and millions of others.”

”You can drop the price of GME after hours $120, I’m not going anywhere. You can pay for thousands of reddit bots, I’m holding. You can get every mainstream media outlet to demonize us, I don’t care. I’m making this as painful as I can for you”.

ssauron on Reddit
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Emphasis mine

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