The price has been a solid $0.00 for over six years. 100% worthless
Then a few days ago it suddenly jumps to $0.0013
Sounds like the SEC have found a bunch of social media accounts in the early stage of doing a classic Pump & Dump on worthless penny stocks. Nothing at all to do with WSB
Sounds more like the SEC have found a bunch of worthless penny stocks they can use to justify some new rules and regulations that will also conveniently affect the stocks that have been all over the news without directly citing those stocks since that would surely cause an uproar.
serious philosophical question that i'm uneducated about -- please don't mistake it as my arguing with your statement :
what is the difference between total freedom and total anarchy?
Regulation seems to hurt personal choice for the sake of personal security/well-being; anarchy being a state of total non-regulation then appears to be the state that is closest to the point where personal freedom has escalated to the highest level possible.
Is this balanced by the opportunity that is awarded to those in a governed state that no longer exists for the person in a state of anarchy?
In other words : does the freedom of choice that a structured government gives the individual PLUS the benefits of said society (roads, medicine, whatever) ensure greater freedom of personal choice compared to the person who lives in a state of non-regulated anarchy and isn't afforded opportunity by the infrastructure -- but is uninhibited by regulation?
Is there any meaningful philosophical consensus on this idea, or is it by-and-large unanswered? I'm not really in-touch with the philosophy world.
anarchy is just an unstable state preceding despotism. my rationale for that isn't philosophical, it's game theoretical.
in anarchy, there isn't anything that can stop others from enslaving or murdering me or people I care about. actually, it's likely a positive outcome for my captors or killers. regulation and enforcement give me more freedom in the sense that opportunists exploiting their absolute freedoms go from +EV to -EV. note that the first one to eliminate opponents who employ the same strategy becomes the despot.
OK, but who are we protecting here? Someone who reads a social media post and makes an investment without doing any due diligence?
That's 90% of WSB, seeing a ticker and rocket emoji and YOLOing into the latest stock because someone said it was going up. Why is this different?
And these are OTC, pink slip stocks. Most major brokerages don't carry them and people who trade them know they're investing in distressed companies with low liquidity.
Sure, go after the pump & dumpers, but it's not clear what the criteria is for halting trading on a stock.
Risk is inherent in any investment. Don't invest what you're not willing to lose because you could lose everything. Your investment can always go to 0, wether it's in stocks, bonds, real estate or a business. And don't invest in what you don't understand.
The goal of the SEC is to ensure confidence in the stock market, to protect the stock market and the whole economy in general.
They were primarily setup to avoid another great depression. They are operating under the assumption that the great depression was caused by a general loss of confidence in the stock market (and other types of investments) and that if they insure confidence, it will never happen again.
They don't really care if an individual investor loses money.
But pump&dump schemes prey on inexperienced noob investors and are very effective at pulling all their money away to experienced pump&dumpers. The SCE are worried that many noobs will experience such a scam and decide that investing isn't for them. This deprives the sock market of funds which the SEC considers bad.
As for GME and WSB... well the SEC are in a bit of a tough spot.
In general the SEC wants the stock price to match reality, and WSB's short-squeezes are clearly violating that. But if the SEC does anything to drive the share price back to normality then it looks like they are siding with big hedge funds and that really reduces the confidence of retail investors.
I suspect they might eventually enforce a technical solution which provides live updates to the current status short positions. Such updates will mean that short squeezes can operate on the actual intelligence of short positions, rather than the wild speculation they are currently operating on. On the flip side, shorters will use the live updates to know when they are at risk of a short squeese.
So is what they're doing some sick joke? I doubt people couldn't care less about the damage done by functionally worthless companies. People are pissed at the perception of manipulation by wall street. This is hilariously myopic. People aren't upset about losing money. They're upset that the game _looks_ (and ostensibly is) rigged. That is where all the lack of confidence stems.
I’m sure this is true for a minority of participants in the stock market, and I’m sure this is true for a minority of retail investors.
I don’t believe for a second that this is true for a majority of retail money in the market. Most people care very much about losing money.
Just because there’s a bunch of noisy people making news about YOLOing their savings away, doesn’t mean they’re the majority. They’re just noisy and newsworthy.
Nailed it. The people upset by minor regulatory intervention to ensure fair markets are as ruthless as anyone in this equation, but they play the victim. If you knowingly manipulate the price of garbage stock for personal gain, you're not a victim, you're an asshole.
That make sense as a mission but that announcement alone will have the opposite effect. The last few weeks proved a lot of people that the game is rigged against retail investors. The is not what is needed to restore confidence, and stop the move to crypto.
In general I am with you - invest at your own risk.
That said, having read WSB for the last few weeks as someone who's actually versed in trading and finance, it was like reading a nutrition forum where people told each other how delicious and healthy lead is and how they couldn't wait to eat more of it (if only they weren't feeling so sick.)
So IF there's room in our society for the government prohibiting lead in the food because yes, plenty of people are that stupid, there's something here - though I think these people would find some other stupid thing to lose their last dollar on.
I'm not sure I'm on board with that lead analogy because everyone's investing goals are different.
I'd say WSB encourages highly volatile, short-term investments. For most people that's bad advice. For others, they'd much rather be broke or a millionaire than wait 40 years for their savings to steadily accumulate into a reasonable nest egg.
I popped on at the height of the turn to see multiple posts about a "short ladder attack", a concept that exists nowhere except in the echo chamber of WSB.
The groupthink levels are enormous and frankly terrifying
Maybe if we let the speculators take the hit of losing it all when playing these games, they’d stop playing. But instead we stop it from happening and prevent the hard lesson from being learned.
I think you're severely misreading the history here. Most of the constraints on our modern financial system, including the SEC, were built after the Great Depression to try and prevent it from repeating.
If they lose it all, they don't have anything left to play with and now society has some new destitutes to support. People losing everything imposes costs on everyone else, so it's in all of our interests to put up some guard rails.
2008 is about people investing in AAA funds which contained subpar stocks, often fraudulently.
2008 is about mortgages given to people who didn’t even have the money to rent a house, with a variable interest based on market conditions.
GMS is about a hedge fund (a fund who uses market volatility to extract value, i.e. not producing value, just taking it from other investors), getting short-squeezed because they are immensely unpopular with the mass of the citizen, due to their shady business practices, and those citizen don’t care about taking money since it is about taking revenge. The desired outcome is that hedge funds cease business, and sticking it to perceived wealthy people, hoping to make the business of hedge funds unreliable and risky. One should wonder whether the SEC shouldn’t weigh on the consumer side and make stock markets atteactive to the lowly again. Otherwise stock markets are just an exclusive tools to make the rich richer again (not that I mind — I ended up in the rich side, but wealth is clearly not correctly distributed).
I’m not a fan of this practice but investing in an arbitrage fund or hedge fund is for wealthy companies/individuals who can afford to lose money or win big; It is an entirely separate market from index funds with long-term investors expecting AAA reliability.
> I’m not a fan of this practice but investing in an arbitrage fund or hedge fund is for wealthy companies/individuals who can afford to lose money or win big;
Or, you know, companies that want to hedge. This idea that hedge funds are pure evil is getting a bit old, should we all cancel all insurance?
Exactly. You have to go out of your way to invest in the "pink sheets." And it's probably a good idea to make sure unsuspecting "investors" know the risks and common scams associated with these.
Question: if the price is literally zero, does that mean it can it be purchased for $0, that it's not for sale, or that there are literally no requests to buy it so the price can't be measured?
There some sells at the minimum price of $0.0001. But nobody is actually buying them. There is no room in the order book for buys. No trading is taking place.
Some stock APIs report this as $0.00, others report it as $0.0001. Both views are correct, you could buy some shares shares at $0.0001, but you can't sell any.
No you can't. A bid/offer of 0x1/0.05x25 could be what you see (i.e. 25 shares available at the offer price of 0.05 and 0 shares available at 0 - no one wants this shit) on these garbage-quality companies. So there's no one bidding on it.
So you could come in, place a bid at 0.025 and the updated OB would be like 0.025x1/0.05x25. If there's any autoquoters from the adversaries, then ok immediately they might throw some more offers up at like 0.045x100, since the interpretation of some bids coming in means that they can fill the orders at the tighter spread
I have the same question, but think we can answer it by reasoning.
If it could be purchased for $0, only the first stock would cost $0, and the price would then rise, but how would we calculate the price increase for a stock purchased at $0 that is now worth $0.1? So that's not it.
If it were not for sale, why would it be listed?
I think it's the third, and I'd further guess that any bid for the stock will be accepted, thus setting the price.
I thought the price was what someone was a rough idea of what people are willing to pay for it. So if it’s $0.00, why would you ever pay more than that? And if no one buys it for a penny or more, it’s “price” won’t go up.
In case it’s not clear: I only know the price is what I pay for it. I don’t fully understand where it comes from.
My understanding is that for each tradable asset, there are two prices: Bids and asks; and trades will only happen when asks and bids exist at the same price point.
Most prices we see on tickers are the lowest asks, I believe.
Most commonly, price you see on ticker quotes is the price the stock last traded at; i.e., the last price at which a buyer and seller exchange money for equity.
Yes, a trade represents an instant in time when a potential buyer and a potential seller agree on a price. The highest bid matches the lowest ask, and then the exchange "matching engine" generates a trade from them.
Instantaneously afterward, the highest remaining bid will be below the lowest ask.
When anyone talks about "the price" of a stock it is an approximation of some sort. Probably they mean the last traded price; maybe the midpoint (bid+ask)/2; maybe the symbol is in the middle of an auction and they mean the auction clearing price.
There's an order book listing buy and sell orders at a variety of prices clustered around big/ask, but the actual bid/ask numbers shown are a standardized summary view of the order book
I suspect this was just one or more discord/telegram pump&dump groups. They have been popular in the crypto-world for ages.
It's a members only group, where a leader will pick a stock that the whole group will buy. Then at an agreed time, the whole group will hype the stock on (slightly more) public social media. If they hype it correctly, everyone sells at a profit after a fixed hold period.
These groups might have a secret (or semi-secret) inner circle who get to see the decision before the main group. These people are able to profit from the main group even if the pump phase fails.
It's possible the SEC has infiltrated one (or more) of these groups. Or they are are simply looking for trading patterns in dead penny stocks.
There are plenty people who invest in pump&dump schemes fully knowing that it's a pump and dump. Because it's still possible to profit if you can predict the length of the pump and sell before the main dump.
There are a few strategies that might be in play: sentiment analysis and technical analysis. Sentiment analysis does what you describe. Technical analysis is similar, but only looks at price movement and attempts to either follow or buck the trend. In these examples, a social media post could push the stock from $0.0001 to $0.0002. Maybe a sentiment algorithm sees the positive post and a technical analysis algorithm sees the positive price actions and confirms the upward momentum, triggering a purchase that moves the price to $0.0003. That 300% gain gets noticed by others and so on.
Algorithms are really just a digital manifestation of group psychology. The same thing happens in a run on a bank, or a Tulip bubble. Word spreads and others follow.
With the timing and everything, it looks a lot like SEC got a wake-up call, looked at it, and saw a bunch of clearly illegal things it should be acting on. So they are acting on them.
The exceptions to this are PTTN & BLSP, which both have some low vote count posts - but there's always some brigade trying to pump something on reddit, why not the 100 or so other tickers as well?
PTTN and BLSP for instance, is listed amongst 'IGEN HPST GRNF IPNFF VMNT RNWF SHMN ZNOG COUV VISM CBBT BRTX ISWH TSNP ENZC PUGE ATVK BRLL NECA OPTI GMEV TTCM PMPG TSPG OZSC FORW BLSP GTLL PTTN VPER AGGI CTLE BLDV NWTT PVDG UATG MICT RSSV PPBT AKBA DSGT GRCV NAKD ACB ALPP BLSP GM TRUP' in 2 posts, what about the others? - feel free to cross-compare the list btw, I did. Those are the only 2 crossovers. A direct link to the hype post: https://old.reddit.com/user/pennystockguyz/comments/lf8zhg/h...
The claim of 'the latest in a string of temporary trading halts amid volatile trading in so-called “meme stocks.”' needs more information. Does the SEC have some criteria that doesn't include reddit (for instance, some scammer paying for facebook ads to unsavvy investors claiming "HLXW is the next gamestop")?
The SEC in https://www.sec.gov/litigation/suspensions/2021/34-91213.pdf uses the words "certain social media accounts may be engaged in a coordinated
attempt to artificially influence their share prices." alright, let's take it on good faith. It's not happening on reddit. Somewhere else maybe?
The only thing I can find is on twitter. The political class likes to pretend people care about twitter wayy more than they actually do. If you look for say, HLXW and let's just pick PTTN https://twitter.com/search?q=HLXW%20PTTN&src=typed_query&f=l... and scroll scroll scroll you'll see a few mentions, is that it? Things like this? https://twitter.com/AlexDelarge6553/status/13605979641719808... ... there's our IPWG, MRIB, BBDA and EVTI, we have 6 matches in that post. If this was a source, what about the others 16 in that list? Even if it's some incompetent DC person impressed by 24 retweets, it's still only a 27% crossover.
Is it this And weird trading patterns? Do they have some undisclosed tripwire model with conditions (say, some X trading pattern followed by some Y "influence metric" followed by some Z pattern?). And if this exists, shouldn't there be some disclosure so that innocent investors know what to avoid and when to divest? I always check reddit before I invest to make sure there's not some hypetrain bubble behind the security.
Also there's real people behind all these companies who, I assume, are just trying to do an honest job of overseeing waste management facilities or whatever these companies do. I'm sure they don't appreciate scammers playing around with their stock and getting it suspended and thus probably scaring off their actual investors.
I know for crypto back in 2015-2017 there were semi-private groups that would orchestrate P&D schemes for alt coins. I think "social media" is probably misused here as much if not more than "meme stock" - the internet just makes collusion that much easier.
Not secret necessarily, just spamming only niche groups on telegram and discord, not publicly spamming. I believe they think this makes it less likely they get caught whilst still covering a lot of ground. For an analysis of these private telegram groups doing pumping, see the following paper. It has an index at the end listing all the private channels they used in their analysis
In my Twitter feed a couple months ago, I saw a tweet (a promoted tweet? If they even have that and I’m remembering correctly) advertising a crypto “pumping group” on Discord. Yes, they actually referred to themselves as a “pumping group.”
I was never going to bother because I don't have any conspiracy theories about this
If the SEC says there's strange social media activity, I'll take it at face value. They're the SEC and these are dead companies, not really unexpected they'd be halted at some point
I'm just pointing out that there are less discoverable places that are pumping stocks right now
Nothing but the "suspicious social media activity" not being clearly defined would lead one to think that GME would be included in the list, GME being the focus of wsb for some time now.
Why would it? You can't suspend stocks because outsiders have suspicious social media behavior lol. We are not in the medieval ages, even though it sometimes seems that way.
You can suspend them if insiders have suspicious social media behavior.
I do not think it should include GME. I was pointing out the misleading headline.
> You can't suspend stocks because outsiders have suspicious social media behavior lol
That is exactly what is happening right now, you realize? They are suspending them because of possible P&D schemes run by outsiders to those companies.
"Wolf of Wall Street" with Leonardo DiCaprio vividly shows wild west of pump and dump schemes in late 80s - early 90s. The movie is based on a true story of Jordan Belfort who finally went to jail. But today's SEC lost most of last teeth they have had in the 90s. I doubt anyone will go to prison for the modern day pump-and-dump and Ponzi schemes (Bernie Madoff was the last one).
The SEC didn't really lose its teeth, everyone else used all the prior court filings and outcomes as instruction manuals on how to accomplish the same things compliantly
Most of that time that just means a slightly longer disclaimer, or the timing of a transaction, or not talking about your awareness of a specific regulatory nuance
This isn't NYSE or NASDAQ. Not all retail brokerages support OTC markets although it's become much more common in the past year or two. Even then it's usually partial support. Here's the instrument list https://www.otcmarkets.com/corporate-services/company-direct...
They've been generally discouraged (and thus not supported) for retail investors due to their complexity and risks, similar to derivatives and futures, which are still quite exotic to find in retail brokerages
You can also get foreign stocks over the counter (select by country from the link above). There's an ADR 30 similar to the DJIA index. You've likely heard of many of them https://en.m.wikipedia.org/wiki/OTCM_QX_ADR_30_Index . You can say, invest in Lenovo or Fujitsu via OTC. It's not everything, but it's the ones people are generally interested in.
It's exotic because if Lenovo doesn't move but say the Yuan does, then your dollar value does too. Also there's different fee schedules often for foreign investors (that's you here), etc. The complexity tries to be smoothed out by the brokerages (firstrade has offered otc since 2010, recommended if you want to give OTC a try* ) but it's not as simple as buying a bit of General Motors
I am a mod on r/WallStreetBets and wanted to share with you that our bots haven't seen any of the tickers mentioned in the SEC press release.
We filter tickers based on a number of factors, but low market cap (below $1B), is the most common reason for content being removed.
One of our biggest issues is data reliability. If you know of an API that can provide accurate data and an exhaustive list of tickers (especially on non-US exchanges), please reach out to our modmail. [0]
Can someone explain to me why this dedicated but unpaid volunteer is trying to keep Reddit compliant with SEC regulations? What other company on the planet would shift that burden to its own users???
Happy to discover I’m not understanding the situation, but that seems absolutely bonkers to me. Does Reddit not have any lawyers?
Because Reddit's answer would be to simply ban the entire community. There's not much choice on the mods' side.
Yes, Reddit would have other options of course. But they all cost money, so they wouldn't do it. Spez would just nuke WSB and move on with his day, secure in the belief that he saved Reddit from an SEC fine or whatever.
Correcting people helps preserving the precise meaning of words rather than letting them drift into thingy words. Donate to the endangered word conservation fund today!
Reddit would be happy to ensure it is compliant with SEC regulations, by banning the subreddit if necessary. Since WSB mods don’t want that, they take steps to ensure their subreddit is compliant, and doesn’t pose a legal risk to Reddit.
Reddit is not a financial market participant, the only SEC regulations it needs to remain compliant with are along the lines of "don't lie about Reddit in SEC documents and other communications to Reddit's investors". That and promptly responding to any subpoenas for user information and other related legal requests the SEC requires.
What the others said (reddit would enforced by banning) plus wallstreetbets are a group of people cooperating to make money. Our volunteer is helping the group make money and so helping himself/herself/etc-self.
IE, the "look how much reddit is exploiting these people" implication is unwarranted.
Reddit's approach to dealing with this is to ban the sub-reddit unless the sub-reddit sufficiently moderates itself. WSB moderators working so hard is what is preventing WSB from being banned.
Think of subreddits as modern analogies to local clubs (chess, fencing, etc.). Just because it's happening on the internet doesn't mean the members (and especially organizers) don't have real world interfacing responsibilities.
I'm actually writing an app that extracts company names or stock symbols from reddit posts. I'm using iexcloud.io to get a list of companies and their symbols. I haven't got the part of also adding financial information for those companies/stocks, but I'm sure it's not complicated.
I'm only fetching US and Canadian stocks from iexcloud and I've got around 24k of those. It's possible to fetch stocks from other countries but it seems most companies mentioned on Reddit are listed in a US exchange anyway.
People could also agree on a language to use in Reddit that uses a ticker to get through the approval system (e.g. AAPL) but then in the content of the message, indicate the ticker actually being discussed by look at the first letter of each of the first few words of the post.
For example
Subject: AAPL is awesome
Message: Generalizing My Equations in a very interesting way ...
When the mods catch on this and write bots to deal with it, we invent a new language. It's faster to invent codes than for mods to write bots so they can never keep up.
My favorite example of filter evasion in recent memory is "$SEARS" being used for "Roblox".
To your point, a "secret language" is only useful if it can evade detection and remain in use.
The former is difficult because moderators spend an inordinate amount of time perusing the subreddit.
The latter requires a sufficiently large "speaker base" in order for messages not to go unnoticed, discouraging speakers. This can be solved by making the "secret language" more accessible (that is, more obvious to new "speakers", but also mods) or by sharing the keys to the language through other channels (which, to some extent, defeats the point of using the subreddit).
What tends to happen more often is users using emojis to bypass filters. E.g. CC $eye_emoji V to represent CCIV, or the SOS emoji to represent SOS. Another strategy is obfuscating the message with interspersed noise, E.g. "A-,-A---P,,,L".
Generally speaking, these have the same pitfalls as mentioned above and are caught quickly.
You’d need some other channel to communicate with the tribe to exchange the new ciphers, by which time you might as well just use that other channel instead of reddit.
Hiya mate, nice of you to pop on by here. I'm a passable Redditor but I only sport concrete hands (ex Civ Eng nerd), certainly not diamond, but I will never despoil myself with paper hands!
What is the next step in cases like these? Let's say social media activity led someone to making an unwise trade. Suspending trading doesn't fix the problem for that person, now they're just stuck in a bad position. Does the SEC ever "fix it" for that person, or is it all damage control now to reduce the extent of the problem, and those that are already in are kind of screwed?
The SEC can order trades to be reversed but the broker is then on the hook to make good on any shortfalls. Long ago I had a federal judge appoint me as the CEO of a small-cap company whose prior CEO (who I then gathered evidence on to send him to federal prison) had improperly created and sold significantly more shares than they were reporting. I asked for all shares sold and not reported to be reversed. The SEC declined. The system as we have (well, had, as I hope it's changed some) makes this not very hard to do. In fact, I found out some years later that one of the SEC attorneys I'd worked with went private and then aided a different small cap to pull the same scam. He got some quality Club Fed time out of the deal.
A handful of the largest investors knew me virtually and colluded behind my back, err, had a conference phone call among themselves, and sent the judge faxes asking him to appoint me. I had taken a board seat to figure out what was going on when the price was not reflecting buys properly at the request of the largest shareholder who lived in Europe. I though I'd get a good education about things - I guess I did, but it was OJT. Anyway, during my first board meeting the CEO figured out I wasn't going to ignore what I thought were financial discrepancies and during lunch skipped off to Mexico with the literal suitcase full of cash. When I started looking for him, his secretary told me what he'd done, with some consternation. I held the board meeting anyway, and by chance the company attorney, who was an SEC specialist, knew an SEC investigator well enough to get me a meeting the next morning. They got me in front of a judge that afternoon (never seen a court move so quickly since). I'd told the largest shareholder what was going on and he'd contacted the others and had the appointment surprise waiting for me. A lot of people lost a lot of money when all was done, including me with a total loss as I spent my own money and time for a year on travel to find yachts and houses bought with corporate fund, and at the end with me able to recover less than 10%. A ridiculous amount went to the bankruptcy attorney to put it all to bed.
Because I was young and stupid and once I'd accepted the board seat I refused to quit just because I'd go broke. I eventually (after a couple of years) got my expenses back, but not my time or stock losses.
Edit: I haven't thought about this in awhile, so some things popped back, and this part sounds a little emotion-seeking. After I put out a press release about me taking the CEO position and the situation, I got a phone call from what was obviously a very old lady with difficulty speaking. She told me how her broker had encouraged her to invest in the stock, and that it was all she had. I was able to get the SEC to give me a printout (on wide perforated line printer paper, for those that remember that era), and there her name was, with near a million dollars lost. I felt really bad for her, and I had energy and an overprotective nature not yet beaten out of me at that point. Hence the adventure, but with minimal success, other than the jail time for the former CEO. I did get a nice piece of blown glass artwork as a "thank you for the effort" that I quite treasure from an artist famous at the time for making White House Christmas decorations - it sits in my home office.
OT/meta: Sometimes on very new comments you have to click the timestamp in order to actually reply. I believe it's in order to prevent (rather, somewhat slow down) flame war threads.
If it's an unwise but innocent lead - like your friend who is dumb telling you what stocks to buy - then nothing because nothing criminal has happened.
If it's illegal, say a company or investor in that company created a bunch of social media bots to convince others to buy into the companies stock - then they'll get to hire a lawyer and go to court, get fined, etc.
Algorithmic amplification of content is half baked. Outcomes will be random.
Algo amplification of content needs a timeout and a redesign.
Just look at HN. No one knows what will show up tomorrow morning. No one knows whether it will waste their time or be useful. Yet everyone shows up to consume the stream. And Like the SEC the mods have to react and counter react to what ever the hell happens.
If a simple HN algo amplification model has no roadmap to improvement cause no one really knows what to do about it, then to expect a roadmap to emerge in much more complex environments like Reddit, YouTube, Twitter, FB etc is delusional.
Therefore to prevent the constant periodic randomness injection into society that algo amplification of content produces, all algo amplification of all type of content should be put on hold.
Someone losing money on an unwise trade is more of a rhetorical instrument than an actual rationale. I don't think the SEC ever "fixes" it for an individual, but their investigations can open the door to fraud litigation (often class action) of some sort.
The SEC and the regulatory complex as a whole is more generally concerned with market integrity.
Statements like "social media attempts to artificially inflate their stock price" sound quite solid but is actually a nightmare to define directly. But, working definitions and action-inducers are usually related to market integrity issues.
The main goal isn't to undue harm done, it's to prevent further harm. Halting trading both draws attention to the fact that there's an anomaly, and gives everyone time to research what is really going on. Getting compensation for the harm done is done through the courts.
I wasn’t entirely serious when suggesting to use the gambling rules but I think it still holds.
Poker doesn’t have pre defined odds of winning but it is still gambling, you can have the same thing with stocks. Or like sports betting maybe?
With the lootboxes, it’s easy: Simply give the chance of the stocks that might be in the box.
The rules are still there for the companies’ obligations.
Add betting transparency rules to the mix, like exchanges must provide real time dashboard showing all the bets all the time. No more mystery on who bets on what, are short positions closed etc.
Honest question: How often does the SEC do something like this? More specifically: How often does volatility caused by hedge funds result in suspended trading of certain stocks?
Also check the previous years, they appear to be archived static pages as opposed to say a database query populating a template - really makes me wonder how this site is built.
To clarify, the issue here isn't just volatility. The companies in question haven't made any SEC filings in over a year, which generally means they're not really doing business anymore and certainly means it's hard to imagine a value-based case for trading them. The SEC often suspends trading after a few years of no filings (random example from 2020: https://www.sec.gov/litigation/suspensions/2020/34-89717-o.p...), and it's reasonable that a pumping scheme might push them to act faster.
The SEC's core reponsibility is to ensure you can get complete, accurate information about the securities you're buying, which for stock means information about the company's business operations and financials. Speculation in the sense of "I bet this business will do really well in 2 years" is fine and the SEC has no mandate to interfere.
Maybe something along the lines of it being better for society for capital to flow towards productive companies rather than gambling on zombies? I agree that it's an odd call.
>The mission of the SEC is to protect investors; maintain fair, orderly, and efficient markets; and facilitate capital formation. The SEC strives to promote a market environment that is worthy of the public's trust.
I think you are onto something. The most privileged class of "person" in the united states is corporations that get slaps on the wrist for breaking laws.
Now I understand why Dr evil from Austin powers ran a corporation.
There are a few books on this I haven't read about Corporations over the past 30 years using the court system to gain as much/more rights than citizens.
There are countless examples. I have an LLC. Self employed. People making minimum wage are getting $1.4k checks. The single owner LLC's (with max'ed out payroll capped at $100k), through PPP single owner LLCs get maxiumum $20.83k. It's never been more clear to me the slant to trusting corps over people. Also my business allows me to write off way more than a typical American Citizen.
My recommendation: equality with corps will be a near-impossible fight for someone like me, so all US citizens should have a personal business even if it is only making paper losses.
I’m confused at the end goal here. Is this for “protection” or for “fraud” concerns? Stock manipulation isn’t legal, but banding together to pump and dump and things like that... if they’re not part of the company where insider trading or anything could be a reason, how is that really anything that should be regulated? Sounds like free market to me.
This just seems like worries that the villagers are figuring out ways to band together and the rulers are scared.
I disagree with classism take on GME and other meme stocks. If anything else, it’s the opposite. The common person is being manipulated and the hedge funds and major personalities on these social media are raking in.
It’s the biggest misconception of this entire meme stock phenomenon.
I totally disagree. The whole market sold off both times GME squeezed, then popped back as GME receded. Bonds did the same this week. I could be wrong, but this tells me that people on the short side had to liquidate positions in order to maintain margin. I don't know any retail investors who can move the ten year. The fact that PFOF brokerages are the ones that halted buying tells you something about the nature of the buyers.
Of the retail participants with a position in the shares, what percent of the total positioning do you think is on the long side versus the short side?
Of the short positions, what percent do you believe are from retail traders?
That's the line of questioning that you have to answer for yourself. Might help if you stopped using hyperlinks as a surrogate for reasoning.
The original question still stands. If the issue of hedge funds shorting GME above 100% is true and (theoretically) hedge funds can pump as they like because they have the capital capacity and act as one entity, how can you regulate it?
It's not so much different that people banding together to pump a stock.
EDIT: I don't defend GME, imo it is a pump and dump. But how can SEC can regulate equally for this specific issue?
“Pumping” in the context of pump and dump is not buying, it is exhorting other people to buy. It is a form of fraud where person A lies to person B in order to extract money from them.
If you look at the list of stocks you can all see they are super super tiny companies so likely it is fraud schemes aka pump and dump. That's when a small group of people (typically) organize an effort to pump a stock using false information. Since these stocks are so small, even getting a few amount of small investors to buy in could result in significant profits for the fraudsters. Doing a pump and dump on a stock like GME would be extremely difficult to pull off.
The end goal here is to stop suspected illegal pump & dump activity.
The definition of "pump & dump" is to make false or misleading statements in order to get the price to go up, so that you can sell. It is not free market activity; it is fraud.
"In economics, a free market is a system in which the prices for goods and services are self-regulated by the open market and by consumers. In a free market, the laws and forces of supply and demand are free from any intervention by a government or other authority"
If you outlaw pump and dump scams, it's not a free market. I tend towards favoring less government rather than more, but I wouldn't invest in stocks in any sort of free market environment.
So imagine, you hold a large amount of stock of one particular company. If I put a gun on your head and tell you to sell your stock, it is a free market?
> if they’re not part of the company where insider trading or anything could be a reason, how is that really anything that should be regulated? Sounds like free market to me.
The “pump” is the action of fraudulently inducing someone to buy the security which is against the law.
Still, the consequence may be that the social media activity moves to venues that the SEC can't observe as easily.
In that case... good! The whole point of a pump & dump is that you get other people to bump the price for you, then you sell, and leave everyone else holding the bag. If they can't do it on social media, then they can't do it at all. It's not like selling drugs where people are going to move to some kind of black market for stock tips. It's just not going to be out there, so people won't fall for it because it won't exist anymore. Mission accomplished in my opinion.
Unless you plan to run a pump & dump scheme through Twitter/Facebook DMs?
Unfortunately they’ll never keep up with the ‘demand’ for market manipulation unless they fix the ‘supply’ of scared people that have no stable store of value. What you’re witnessing, is a vote of no confidence in monetary policy, and a scared populace, unfortunate breeding grounds for small time scammers as in these stonks. I’m sure there’s more; people don’t know anything about what they’re investing in. That includes top investors and analysts. It’s all pump and dump, just more elaborate as it gets bigger.
I don’t know what the fed’s objective is anymore (actually ever), but a successful nation is one in which people are not concerned with finances at all, except that they put their minds and hands to socially-positive activity. Now our savings account is an endless gamble on stocks. Might as well be sports betting; that’s at least a lot more transparent.
I don’t want to put 10 seconds a year into thoughts about finances, taxes, housing costs, inflation, deflation, interest rates, stocks, bonds, Bitcoin, or whatever. But their policies are forcing me and so many other people to put our whole lives into it. It’s probably 80% of the economy right now, totally wasted on a few people’s failed theories about macroeconomics, the same people over and over again, covering for their mistakes with new failing theories and policies. Unfortunately we can’t just write it down mathematically, program it into a computer, release source, and be done with it. No; it’s based on their personal feelings at any given moment. Oh and by the way, it all just so happens to make them and their families and friends and business and religious associates impossibly wealthy. Must be because they “understand” more than we do. Sure.
I wonder if they ever think, “hey, maybe if we want less financial manipulation, we should stop doing it ourselves.” (Not the SEC; they just react.)
You should not be an investor. You should save until you have everything you’ll ever need, and then invest in things you know about, and only because the money is going toward something productive and socially-valuable, as in the society that you, individually, want to live in. This is the most powerful form of voting. Index funds don’t solve the problem. That’s just paying someone else to steal your vote.
There's also that rubbish app (forgot its name) for parent control in phones is not in the list. Only 1 employee (founder) and in daylight using twitter to cash out, manipulate the price, issue more shares, etc..
What's next? Allowing only profitable trades? This is a worrying trend when SEC thinks they know better and usurp the right to tell people what to do with their own money. They should look at banning sales of borrowed shares, but that would upset their rich mates?
How so? Pre-pandemic AMC was at $7 per share, which might seem reasonable compared to the current $8 share price until you realize they diluted their shares by more than 3X during the pandemic via ATM offerings.
For AMC's current valuation to match pre-pandemic levels, the share price would have to fall by ~75%.
It looks like it jumped from ~$2 to $20 at the end of January.
I do think the coronavirus lockdown might have created more people that found they didn't miss the theater than those that did. And it also opened up faster to video channels that might be difficult to take back.
The $2->$20 bump was entirely the result of WallStreetBets pumping and others bandwagoning, but it's not an unrealistic valuation. It wasn't completely insane like GME. AMC only went up to $20 for one day (near its Oct 2018 price) and is now at $8.28 (roughly where it was at pre-pandemic).
Sadly for me I had it on deck as my next pandemic-recovery bet in January, waffled for a few days, and then those nutjobs at WSB ruined my plans.
> It's not an unrealistic valuation. It wasn't completely insane like GME. AMC only went up to $20 for one day (near its Oct 2018 price) and is now at $8.28 (roughly where it was at pre-pandemic).
I beg to differ. AMC has nearly tripled their share count during the pandemic via ATM offerings. So, an $8 share price now is not the same as it was pre-pandemic. AMC's valuation now is 3x higher than pre-pandemic, which is indeed, insane, considering the state of their business.
How share price reacts depends on a few factors: the price of the ATM offering, whether the offering is viewed as a sign of distress, and how the cash is used (or not used).
If the ATM offering is priced at the current share price, and the company plans to just sit on the cash that it raises, the share price won't move much. Reason being: even though your shares are diluted, the company's total valuation increases (bc of the extra cash it just raised). Smaller piece of a larger pie == same value.
However, AMC's offering was far from this ideal scenario. Instead of sitting on the cash raised, they're burning through all the cash they're raising just to keep the lights on. So, shareholders experienced dilution without any increase in company value. In a sane market, you'd expect share price to decrease by the dilution percentage. The fact that this hasn't happened (combined with the fact Cinemark's share price is still half of its pre-pandemic levels) should worry anyone with a long position.
What’s worse for prices in this market is the appearance that your business can’t grow. Based on AMC’s situation (which is zero as far as I’m concerned), all it can do is grow. Sounds ridiculous, but it’s a growth stock.
It’s in the same class as any tech ipo imho.
This gives some insight on where the company was at pre-pandemic:
But in general, I think there’s good evidence that non-box office releases depress overall revenue (Mulan). Big studios want to be in theaters.
It’s not in the movie industry’s interest to let AMC fall, and AMC and all the pandemic hit industries are going to have to run a lean business to overcome the debt. In the above article AMC said they didn’t want to run ads (non-trailer) before the movie - well, now they will have to. There’s a lot they can do.
> But in general, I think there’s good evidence that non-box office releases depress overall revenue (Mulan). Big studios want to be in theaters.
I do buy this.
> It’s not in the movie industry’s interest to let AMC fall.
But, I don't buy this. AMC going bankrupt doesn't mean theaters go away. In all likelihood, AMC would live on as a new corporation after paying out creditors in the bankruptcy process.
An AMC bankruptcy actually seems like a best case scenario for the movie industry. After relieving itself of debt, AMC can afford to lower prices (due to a lower cost structure). And, lower prices means more ticket sales and more studio revenue.
> In the above article AMC said they didn’t want to run ads (non-trailer) before the movie. There’s a lot they can do.
Definitely agree here, but all these opportunities existed prior to the pandemic. So, I'm wondering how you can justify the appreciation in valuation over this period. Was AMC just severely underpriced prior to COVID?
This is the part where I’m going to bust out some stock astrology. We need to trade AMC on sentiment outlook (and by sentiment, I mean literal feelings), not fundamentals.
Pre-pandemic there was little reason to put AMC in the same field of view as other growth stocks. It was visible along a completely different angle, that of a ‘declining industry, streaming will eat it’s lunch’. That’s where people crunched the numbers.
It’s been realigned with beaten up stocks now, and positioned in the same field of view of ‘recovery’. In fact, I’d also say it’s positioned now to answer the question of ‘Will steaming kill the movie theater?’. If they can survive a pandemic and regain attendance, then we get some serious answers about this business versus the one dimensional view of Netflix/Amazon just eradicating them pre-Covid.
In short, fundamentals don’t mean much for this stock right now. It’s set up to answer bigger questions. Will people go back to movies? Will people travel? Is remote working here to stay? We can’t crunch numbers for questions like this yet.
So I think it’s good to trade on sentiment right now and once we have answers about where things stand after the shuffle, we can go ahead and evaluate it’s exact price.
BUT, all bets must go in now. The sentiment will be priced in well before we ever get to their first real earnings report in the post pandemic world.
Right, but they've sold a ton of stock at highly inflated prices, used that to pay off debt, and are probably going to survive on continuing profits for at least a few years even if they're not going to exhibit much growth. They're now in a very solid position -- it's possible they're worth their valuation.
Sure. Try it with something worth more than zero and see if you can grab a significant position in order to make the scam worthwhile. Consider what the margins to make a killing on a pump and dump look like on a stock that sells for $100/ share.
Yes, ok, different agencies, different laws, different domains, different impact, but same brave new world and the divergent responses seemed moderately interesting.
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