# Reddit users trying to manipulate stocks
**URL:** https://boards.straightdope.com/t/reddit-users-trying-to-manipulate-stocks/931627
**Category:** Miscellaneous and Personal Stuff I Must Share
**Created:** [January 27, 2021, 6:14pm UTC](https://boards.straightdope.com/t/reddit-users-trying-to-manipulate-stocks/931627 "2021-01-27T18:14:22Z")
**Posts on this page:** 20
**Page:** 10
### Author:  [@SmartAleq](https://boards.straightdope.com/u/SmartAleq)
#### Post date: [January 29, 2021, 8:38pm UTC](https://boards.straightdope.com/t/reddit-users-trying-to-manipulate-stocks/931627/182 "2021-01-29T20:38:12Z")
Oh, and here’s an example of what people are posting on WSB–to insist these guys are “unsophisticated” and don’t know what they’re doing is disingenuous and reflective of the insanely common attitude that nobody can know anything about a subject UNLESS they make their living that way. I think the world markets are about to get a big education themselves–the internet is a great leveller and auto-didacts never stop learning.
> **[r/wallstreetbets - A Small Reminder of Some of the Risks Involved](https://old.reddit.com/r/wallstreetbets/comments/l7xj5z/a_small_reminder_of_some_of_the_risks_involved/)**
>
> 35,611 votes and 1,444 comments so far on Reddit
And u/DeepFuckingValue talked to the Wall Street Journal. I bet it chaps their ass that this guy is fucking them with a sandpaper dildo.
> **[WSJ News Exclusive | Keith Gill Drove the GameStop Reddit Mania. He Talked to...](https://www.wsj.com/articles/keith-gill-drove-the-gamestop-reddit-mania-he-talked-to-the-journal-11611931696)**
>
> The trader known as DeepF—ingValue on the WallStreetBets forum and “Roaring Kitty” on YouTube helped turn the investing world upside down. “I didn’t expect this.”
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### Author:  [@k9bfriender](https://boards.straightdope.com/u/k9bfriender)
#### Post date: [January 29, 2021, 8:57pm UTC](https://boards.straightdope.com/t/reddit-users-trying-to-manipulate-stocks/931627/183 "2021-01-29T20:57:08Z")
> [@asahi](#):
>
> You’ll have restaurant owners and individual, partnership, and family-owned businesses getting slaughtered, along with their employees.
Don’t forget that all these houses that people are losing are being bought up by investment groups that will raise the price of housing for everyone.
I have an employee who got her letter of approval from the bank, but she can’t find a house, because they are all pretty much already bought as soon as they go on the market.
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### Author:  [@asahi](https://boards.straightdope.com/u/asahi)
#### Post date: [January 29, 2021, 8:59pm UTC](https://boards.straightdope.com/t/reddit-users-trying-to-manipulate-stocks/931627/184 "2021-01-29T20:59:42Z")
Yep, another symptom of the disease - happened after the Great Recession, too, but it’s probably worse now.
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### Author:  [@Cervaise](https://boards.straightdope.com/u/Cervaise)
#### Post date: [January 29, 2021, 11:02pm UTC](https://boards.straightdope.com/t/reddit-users-trying-to-manipulate-stocks/931627/185 "2021-01-29T23:02:40Z")
> [@Fotheringay-Phipps](#):
>
> I don’t recall ever hearing of short sellers subsequently launching a leveraged buyout of their target company, and while I can’t guarantee that it’s never happened, I don’t believe it’s at all common.
I’m extrapolating from the EU rulebook (I work on the compliance side). You’re right, I’m not aware of an actual case, but I presume the regulators wouldn’t warn the private-equity people against kneeling on the neck of a distressed takeover target if it hadn’t been a problem previously.
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### Author:  [@MrMrmrmr](https://boards.straightdope.com/u/MrMrmrmr)
#### Post date: [January 29, 2021, 11:11pm UTC](https://boards.straightdope.com/t/reddit-users-trying-to-manipulate-stocks/931627/186 "2021-01-29T23:11:19Z")
After everyone gets done celebrating, you should check on your 401k.
I am down over $156,000 between all accounts in three days.
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### Author:  [@Yookeroo](https://boards.straightdope.com/u/Yookeroo)
#### Post date: [January 29, 2021, 11:22pm UTC](https://boards.straightdope.com/t/reddit-users-trying-to-manipulate-stocks/931627/187 "2021-01-29T23:22:57Z")
> [@Slow\_Moving\_Vehicle](#):
>
> @Ann_Hedonia, bit of a hijack just to say that between this and your posts in the QAnon and insurrection threads, you’re really proving your value to the board. Pretty much every post you’ve made in the past month has been worth reading, including that wonderful Pit rant. Thanks for taking the time!
I’ll second this.
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### Author:  [@SenorBeef](https://boards.straightdope.com/u/SenorBeef)
#### Post date: [January 29, 2021, 11:36pm UTC](https://boards.straightdope.com/t/reddit-users-trying-to-manipulate-stocks/931627/188 "2021-01-29T23:36:32Z")
No, I don’t think you were wrong. There was nothing especially noteworthy in the crypto market that happened in the last day (that I’m aware of), so this seems strictly like a “oh no, we ban our customers from all sorts of transactions all the time! it has nothing to do with our corrupt relationship with capital companies losing their ass” distraction/cover move.
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### Author:  [@asterion](https://boards.straightdope.com/u/asterion)
#### Post date: [January 30, 2021, 12:01am UTC](https://boards.straightdope.com/t/reddit-users-trying-to-manipulate-stocks/931627/189 "2021-01-30T00:01:28Z")
> [@MrMrmrmr](#):
>
> After everyone gets done celebrating, you should check on your 401k.
> I am down over $156,000 between all accounts in three days.
I don’t get to retire for another 30 years, if I get to retire at all. This week has no effect.
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### Author:  [@asterion](https://boards.straightdope.com/u/asterion)
#### Post date: [January 30, 2021, 12:04am UTC](https://boards.straightdope.com/t/reddit-users-trying-to-manipulate-stocks/931627/190 "2021-01-30T00:04:07Z")
> [@SenorBeef](#):
>
> No, I don’t think you were wrong. There was nothing especially noteworthy in the crypto market that happened in the last day (that I’m aware of), so this seems strictly like a “oh no, we ban our customers from all sorts of transactions all the time! it has nothing to do with our corrupt relationship with capital companies losing their ass” distraction/cover move.
I think it was Dogecoin, which was always more of a joke than anything else. I mean, all crypto is a joke, but Dogecoin started as one of those “Oh, Bitcoin’s hanging on as a thing, let’s make a new one and name it after a meme” follow-ons. Easy to go up 500% when it was exchanging at one cent per Dogecoin.
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### Author:  [@Chessic\_Sense](https://boards.straightdope.com/u/Chessic_Sense)
#### Post date: [January 30, 2021, 12:42am UTC](https://boards.straightdope.com/t/reddit-users-trying-to-manipulate-stocks/931627/191 "2021-01-30T00:42:50Z")
It must be tough to have lost all that in 3 days, erasing all you’ve gained since (checks notes) January 4th. The S&P 500 fell 3.7% from its high this week. So if you lost 156,000, then you started with $4.2 million. You’ll survive.
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### Author:  [@Heffalump\_and\_Roo](https://boards.straightdope.com/u/Heffalump_and_Roo)
#### Post date: [January 30, 2021, 12:45am UTC](https://boards.straightdope.com/t/reddit-users-trying-to-manipulate-stocks/931627/192 "2021-01-30T00:45:08Z")
> [@Fotheringay-Phipps](#):
>
> Some of it will go to Redditors, much of it will go to longer term (pre-squeeze) owners of the stock who thought it was worth holding at $15 but will jump at the chance to unload at these prices, and a lot of it will go to other hedge funds initiating new short positions.
ISTM that a rational seller would have sold a long time ago. The only reason the Redditors are holding is because they know why the stock is going up. If the people holding long positions saw the price go up, even a little, a rational seller would have sold, probably to a Redditor who was buying. At this point, anyone holding is either playing chicken or aren’t paying attention to the stock because as you say, there’s a lot of risk to holding at this point. Any pre-squeeze owners wouldn’t likely take on that risk for no reason unless they also were in on the game.
> [@Fotheringay-Phipps](#):
>
> They won’t all be losing. But collectively they will be losing.
This is the part I’m not following. If Melvin Capital put in $2.75B, then wouldn’t the Redditors collectively be up by $2.75B at least?
> [@Fotheringay-Phipps](#):
>
> Bottom line is that the action at these ridiculously inflated prices has hedge funds as net sellers (some hedge funds have had to buy to cover their prior shorts but in aggregate it would appear that hedge are selling as above) while the Redditors (and possibly other retail investors along for the Greater Fool ride) are net buyers.
Why couldn’t the Redditors also sell short on the way down? After all, many of them hold the long position, so they have the collateral.
> [@Fotheringay-Phipps](#):
>
> That doesn’t mean that every Redditor will lose money. Some will sell soon enough. But collectively there’s no way they can unload all the stock they purchased at prices close to what they paid for it. There aren’t enough non-Redditor buyers at these prices.
Aren’t the people who are selling short buyers in the sense that they have to cover their positions at some point?
> [@Fotheringay-Phipps](#):
>
> There’s an old joke about a new immigrant to the country who gets off the boat and sees a vending machine for the first time.
You have a very dim view of Redditors. I don’t share it. We’ll see what happens because definitely the power doesn’t reside with them, but some of the most intelligent conversation I’ve seen on the internet comes from Reddit, depending on the sub, of course.
In other [news](https://www.cnet.com/personal-finance/reddits-gamestop-stock-battle-with-wall-street-is-an-insane-war/), I just read this about Robinhood. Apparently, they have already been fined by the SEC previously for making misleading statements to customers.
> [@](#):
>
> Robinhood made its name by offering stock trades without a standard commission that people often payed at other firms. The SEC said that between 2015 and 2018, Robinhood made misleading statements and omissions, including “in FAQ pages on its website, about its largest revenue source when describing how it made money – namely, payments from trading firms in exchange for Robinhood sending its customer orders to those firms for execution, also known as ‘payment for order flow.’”
>
> The SEC estimated that Robinhood’s approach deprived users of $34.1 million, even after taking into account the savings from not paying a commission.
>
> Robinhood agreed to pay $65 million to settle the charges “without admitting or denying” the SEC’s findings.
Interesting how people are so upset about a few Redditors playing the market, but Robinhood robbing their customers of $34.1M doesn’t make anyone blink.
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### Author:  [@MrMrmrmr](https://boards.straightdope.com/u/MrMrmrmr)
#### Post date: [January 30, 2021, 12:45am UTC](https://boards.straightdope.com/t/reddit-users-trying-to-manipulate-stocks/931627/193 "2021-01-30T00:45:46Z")
Just a paper loss. I just wanted people to understand it isn’t just billionaires losing money.
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### Author:  [@Heffalump\_and\_Roo](https://boards.straightdope.com/u/Heffalump_and_Roo)
#### Post date: [January 30, 2021, 2:21am UTC](https://boards.straightdope.com/t/reddit-users-trying-to-manipulate-stocks/931627/194 "2021-01-30T02:21:01Z")
Jon Najarian on _Investor’s Business Daily_ confirms my thinking that some of the people on r/wallstreetbets are super sophisticated traders. This was not a freak accident. The leaders of the group have been doing sophisticated trades for a long time. Of course, there are also a bunch of people who don’t know anything, but they’re following the leads.
[Jon Najarian Explains GameStop Short Squeeze, What Traders Can Do Now](https://www.investors.com/videos/jon-najarian-explains-gamestop-short-squeeze-what-traders-can-do-now/) [video]
He also talked about this. These are the institutional investors who hold GME long but not all of them can trade because they’re in a fund portfolio.
[Nine Investors Instantly Make $16 Billion On GameStop Stock ‘Squeeze’](https://www.investors.com/etfs-and-funds/sectors/gme-stock-gamestop-investors-instantly-make-16-billion-gamestop-stock-squeeze/)
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### Author:  [@octopus](https://boards.straightdope.com/u/octopus)
#### Post date: [January 30, 2021, 2:33am UTC](https://boards.straightdope.com/t/reddit-users-trying-to-manipulate-stocks/931627/195 "2021-01-30T02:33:15Z")
Well, in the long run that sort of thing is irrelevant. It’s like worrying about the panic selling in March ‘20.
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### Author:  [@Little\_Nemo](https://boards.straightdope.com/u/Little_Nemo)
#### Post date: [January 30, 2021, 2:39am UTC](https://boards.straightdope.com/t/reddit-users-trying-to-manipulate-stocks/931627/196 "2021-01-30T02:39:27Z")
What happens if those people who are seeking to destroy Melvin Capital (and the other hedge funds who are shorting GameStop) succeed? Let’s say Melvin Capital says _“You got us. We were trying to short sell this stock and you drove up the price. This is too much for us to handle. We’re shutting down.”_
So Melvin Capital declares it’s out of money and closes its doors.
What happens to the brokers who loaned the shares to Melvin Capital? Melvin Capital sold those shares and just said it can’t pay for the replacements. Do the brokers just eat the loss? Are they obligated to buy replacement shares?
What happens to all of the reddit investors who are holding GameStop shares? They supposedly were buying these shares in anticipation of Melvin Capital being obligated to buy them. They figured it was a sure thing to buy them because they had a guaranteed buyer. But now that buyer has gone out of business. Nobody else has an obligation to buy GameStop shares. And nobody who isn’t obligated to buy GameStop shares is going to pay $300 a share for them. Or $200. Or $100. Or $50. Or $25. Or $10.
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### Author:  [@Heffalump\_and\_Roo](https://boards.straightdope.com/u/Heffalump_and_Roo)
#### Post date: [January 30, 2021, 3:20am UTC](https://boards.straightdope.com/t/reddit-users-trying-to-manipulate-stocks/931627/197 "2021-01-30T03:20:10Z")
Some recent headlines.
[https://www.msn.com/en-us/money/companies/gamestop-short-sellers-are-still-not-surrendering-despite-nearly-dollar20-billion-in-losses-this-year/ar-BB1ddqQp](https://www.msn.com/en-us/money/companies/gamestop-short-sellers-are-still-not-surrendering-despite-nearly-dollar20-billion-in-losses-this-year/ar-BB1ddqQp)
Although some short sellers have left the market, others have joined in. Also, an interesting history of short sellers.
[Short Sellers Face End of an Era as Rookies Rule Wall Street](https://www.bloomberg.com/news/articles/2021-01-29/short-sellers-face-end-of-an-era-as-rookies-rule-wall-street)
> [@](#):
>
> The biggest casualty came Friday, when Andrew Left’s Citron Research said it will discontinue offering short-selling analysis after 20 years of providing the service. Others are already adopting less-aggressive tactics or evolving into different forms and shapes altogether. Melvin Capital was [forced to retreat](https://www.bloomberg.com/news/articles/2021-01-27/melvin-capital-closes-out-its-gamestop-position-cnbc-reports) by dumping its short position on GameStop, Carson Block and others have [cut bets](https://www.bloomberg.com/news/articles/2021-01-27/carson-block-cuts-short-bets-ducking-online-mob-hunting-bears), and some of the mightiest hedge funds are nursing [double-digit losses](https://www.bloomberg.com/news/articles/2021-01-28/cohen-sundheim-lose-billions-to-reddit-traders-running-amok) and exploring their next steps.
> . . .
> As Citron’s Left put it in a YouTube video announcing his departure from the short world: “Twenty years ago I started Citron with the intention of protecting the individual against Wall Street – against the frauds and the stock promotions.” Since then, he added, Citron lost its focus: “We’ve actually become the establishment.”
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### Author:  [@BigT](https://boards.straightdope.com/u/BigT)
#### Post date: [January 30, 2021, 3:52am UTC](https://boards.straightdope.com/t/reddit-users-trying-to-manipulate-stocks/931627/198 "2021-01-30T03:52:48Z")
> [@Asuka](#):
>
> I’m not liking that CNN story that heavily implies in a negative way that Trump supporters are responsible for these wall street bets simply because Reddit has been [where Trump supporterd](https://www.cnn.com/2021/01/27/politics/gamestop-stock-surge-trumpism/index.html) hung out in the past.
This is also why Hank Green got involved. He has a nice simplified explainer on he and his brother’s vlogbrothers YouTube channel (where videos are usually 4 minutes long or less).
[ ](https://www.youtube.com/watch?v=zeiv64HpCJQ)
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### Author:  [@asahi](https://boards.straightdope.com/u/asahi)
#### Post date: [January 30, 2021, 3:58am UTC](https://boards.straightdope.com/t/reddit-users-trying-to-manipulate-stocks/931627/199 "2021-01-30T03:58:52Z")
Agreed - **Ann Hedonia** is consistently awesome at posting.
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### Author:  [@asahi](https://boards.straightdope.com/u/asahi)
#### Post date: [January 30, 2021, 4:01am UTC](https://boards.straightdope.com/t/reddit-users-trying-to-manipulate-stocks/931627/200 "2021-01-30T04:01:26Z")
I had a chilling thought today as a result of all this: we’re seeing the blueprint for financial terrorism.
That’s why, whether you agree with WSB or not, I have a feeling the feds are about to find reasons to get involved in replacing the invisible hand with the visible hand of regulation. It’s really a national security issue.
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### Author:  [@Little\_Nemo](https://boards.straightdope.com/u/Little_Nemo)
#### Post date: [January 30, 2021, 4:23am UTC](https://boards.straightdope.com/t/reddit-users-trying-to-manipulate-stocks/931627/201 "2021-01-30T04:23:05Z")
> [@asahi](#):
>
> I had a chilling thought today as a result of all this: we’re seeing the blueprint for financial terrorism.
I don’t feel this reaches that level. This is directed at a few specific hedge funds not at the financial industry as a whole. The worst case scenario is a few companies go broke. I don’t see it affecting our national economy or security.
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