Merv's Politically Incorrect Audio Blog

Like challenging a profit of Melvin Capital that is speculating on multibillion dollars shorts is a thread to National Security? Well I would say is a broad definition, what about 2008 when full bunch of Wall Street fucks almost brought down the country? Were they considered a threat to National Security? I missed something

 

Sorry, I misspoke. It's not the mechanics of shorting or market manipulation or whatever that I'm not sure about. It's the overall battle of retail investors and the Wall street types. One of the two camps is making bad bets (wall street in the short term obviously) but I can't figure out which one. It's the longer term ramifications that I'm not seeing.

 

Longer term is that a few hedge funds lost (reportedly) about $3BN so far and there's a whole boatload of capital that's wondering how exposed their positions are if Robinhood doesn't "shut these little mouth breathing reddit porkers" down. the whole purpose of a hedge fund is to place bets on both sides of the table. Or, in finance terms, to take positions on behalf of the investor so that both "shares go up" and "shares go down" result in returns. More if "shares go up" but certainly not losses if "shares go down". To do this requires huge margin, since shorting has the potential to be an infinite loss position. Equities can go only to zero (plus interest or minus insurance), but equities can always become more valuable. Add on top of that the derivatives market which is speculative on valuation without any actual equities involved, and that $3BN (reported today) loss can quickly turn into a $15-30BN loss across the sector, depending on how leveraged any firm might be.

Long story short, the ability for an institutional investor to actually hedge may be a bit more difficult in the future if their shorts are being squeezed on an increasing frequency by retail investors who read reddit and just want a solid pump and dump.

I'll be the first to claim I don't understand this tho, I'm only an armchair market watcher.

 

Losses top US$70 bln on short positions in US firms —Ortex data after the market closed.
$3BLN was just loses so far of of one hedge fund Midland capital, covering part of their shorts.
They would have to shut down trading on a lot of stickers. the r/WallStreetBets has the list of companies heavily shorted by hedge funds.
I talked to a couple of young people, my son friends, who invested <$1k in either Gamestop or some other company. They do not care much is they loose or not, they do not sell, it is fun for them. they had a taste of the game, if they makes some money, they will move to another target. Of course like in every case there will be some people hurt but.. remember 2008.
Robinhood committed a ritual suicide as a company on behalf of hedge funds.

And if the financial security of the rich is is treated as a mater of national security.. well I remember some governments in Eastern Europe that treated everything as a matter of national security, literally everything. And rightly so, at some point they disappeared. They are not around anymore.

 

The likelihood of Joe Average becoming a trading genius overnight and bringing down “The Man” seems statistically unlikely.

This is a few smart people driving the strategy and using influencer platforms to get the trade volumes required. When the whole thing crashes it won’t be just the hedge funds that are screwed - it will also be most of the Joe Averages who helped. The few guys that are running the show are the only ones guaranteed to “win”.

And who’s to say those few guys aren’t the “elites”, the wall street types? It’s just that now they’re doing it for themselves instead of for their employers.

I dunno. The whole thing is very rotten.

 

Hedge funds and private equity ruined numerous businesses who went public or agreed to sell. They can't cry foul when they are ruined in return. That's their own goddamn fault for going into that line of business.

"FOR THIS IS THE BUSINESS WE'VE CHOSEN." - Hyman Roth, The Godfather Part II

 

It's a misconception the US is a purely capitalist economy. We have a mixed market that is also socialist, just often on behalf of corporations rather than individuals.

 

Not related to current discussion sorry but how can people dislike Bernie Sanders after watching him speak? it’s just such basic common sense stuff as long as you don’t use the scary word “socialism”

 

I think we do not appreciate, certainly I did not, the significance what happened with Gamestop. But I think that big wigs on Wall Street and Silicon Valley grasped it immediately. That's why no effort will be spared to destroy r/WallStreetBets.
Until now internet users appeared to be a crowd of defenseless, faceless sheep. We can censor them, ban them, manipulate them, whatever.
Until now. The possibilities are just emerging. r/WallStreetBets has just 3 mln users and only maybe 50% are invested. What about 10 times as much? What is they start selling stock instead of buying, or stop buying, you hear that Amazon? And it is trendy now, and spreads among a small investors that have never even heard about r/WallStreetBets? You do not have to sell a lot to drive the price down, hypertrading computers know that and use this tactics everyday. The difference is that through internet users can be almost as fast.

Of course serious journalists from left and right are covering this as it unfolds. But these days they live of substack.
And that brings another exciting possibility: what if the same is done to the media as it was done to Melvyn Capital. Not as easy as in case of overconfident bozos who have probably 80% of their capital in shorts, but not doable? We will see a lot of interesting development.

So what next? The word collusion was used yesterday at CNBC and it is only the question of time before Putin will make the first appearance in this "collusion" on CNN.
Also at CNN it was an interesting exchange if people should be allowed to exchange information about market and investing. I am serious. The dilemma for the media, Wall Street and Silicon Valley: how many people we can eliminate from Internet before we start eliminating ourselves?
UPDATE: Laura Unger former SEC, already compared Gamestop squeeze to Jan 6th riots and demanded police stops it.

 

I think Bernie speaks a good game. The problem is most Americans probably don’t fully agree with his plans. My personal issue with all of the financial help and healthcare he and the more left-leaning Democrats want to give to Americans is: who is going to pay for it? I would like to see a great deal of thought and transparency put into these plans. My question for you and other supporters is are you willing to fork over 50% of your paycheck in order to have government-run healthcare? I work in the biggest federal health care system and I don’t want health care from it. I also don’t want to pay high taxes to be forced into it. The redistribution of wealth is a scam.

 

I take the above as pure sarcasm, but if not:
whatever you are smoking, I want some lol

 

When I was serving in the Navy, I had a friend who worked as a Congressional Physician. He was tied to his phone 24/7 in case a Congress-person had a health concern. No joke, he got the “I think my dick is going to fall off” call more than you want to know. Executive Medicine is concierge Medicine taken to the next level.

Tests are a decent part of the cost, but the real money is in unnecessary procedures. That’s an ethically slippery slope though. At my government hospital the majority of preop testing is unnecessary and I’ve asked why we do this, but management is unwilling or doesn’t care enough to change. That’s our tax dollars at work bro.

 

The VA is a joke. I know plenty of Vets who are Hardcore Conservatives who refuse to use the VA for anything, calling it socialism. Yet these are same guys will say it is not socialism with regards to their benefits and SSI. Dunno, just weird to me.

 

The VA isn’t a joke, it is just overrun by bureaucrats who don’t give a crap about Veterans because they haven’t served themselves. We provide good free care but it isn’t efficient nor cheap. People that bad mouth the VA are usually justified though because there are widely varying patient experiences in the VA systems.
In regards to free money (especially tax-free disability), I would assume everyone can justify it to themselves in some way. Most vets, like me, say, “I earned that money through pain and suffering in the service.”

 

But at the same time, it's legit.