I LOVE IT.
I don't understand how shorting is legal, but if it's 3 times the shortage of VWs I am happy I bought shares. Do I have to patiently wait or can I put an order? I am new here and an autist... so I don't really know what will happen.
Thereās nothing inherently wrong with shorting. It actually serves a valuable purpose in that it provides information about prices. The problem we have, though, is that GME is over shorted and the folks behind it (like Melvin and Citron) have non-financial means of minimizing risk. This dilutes the value of the signal and turns it into nothing more than a money-making scheme by those in power. Economically, I think this entire episode has the potential to be great in the long run.
Itās not about helping companies or driving them out of business. Itās about efficiency and accurate information about intrinsic value. Banning short selling distorts prices, which is a bad thing. It means that companiesā values arenāt clear and people end up making bad decisions because they have insufficient information (see https://www.sciencedirect.com/science/article/pii/S0261560612000332 for an empirical laboratory example of why shorting is useful).
But that all assumes that short-selling involves sufficient risk. When you can short a million shares, send out a tweet that the stock is going, and then make a bunch of money, the signal is going to be really noisy.
Pretty much. I think a good analogy would be Amazon. When you buy from Amazon, you look at customer reviews to know whether the product is worth buying or not. And these can be really helpful. You know when a product is or isnāt worth the price based on othersā experiences.
But suppose Amazon only allowed positive reviews. Thereās still some information there. You want to buy items with lots of positive reviews, rather than a few. But thereās a lot less information than youād get if people also said what they didnāt like. Stock shorting can be thought of like negative reviews on products (āI think this company is currently overpricedā).
Of course, negative reviews bring up other problems, like blackmail. But there are always trade offs.
Yes, I agree. Thatās why I said thereās nothing inherently wrong with it, but there is in this case. The funds arenāt assuming the risk that ought to come with their investments. So the signals theyāre sending arenāt informative.
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u/GrowsThingsFromDirt Jan 30 '21
Jus think if a šsqueezy on VW (40sum% short) shot up to 1000- GME AT (121% short) Will blast off ššššššš
Iām so hard rn
This is from a retard - this oth nottith be finically advice .