“the hedge fund managers are pissed and when they get pissed they rip out their Bloomberg terminals and throw them through the wall of their $27 million penthouses and then yell for their maids to come clean everything up and also to make them a sandwich. Alternatively, they go on CNBC to complain that this is bullshit and unfair and not the way any of this is supposed to work. Hedge fund billionaire Leon Cooperman happens to know what we’re talking about:
“The reason the market is doing what it’s doing is people are sitting at home getting their checks from the government, okay, and this fair share is a bullshit concept,” Cooperman shouted on the business network earlier today. “It’s just a way of attacking wealthy people. It’s inappropriate and we all gotta work together and pull together.”
While Cooperman does not appear to have been affected by the GameStop carnage, at least in a meaningful way, he’s basically the perfect person to show up on TV and scream about how wealthy people are being attacked. If you’re unfamiliar with the guy, he’s long been known for going apeshit when people suggest that the über-wealthy aren’t paying their fair share, or when politicians express anything less than total respect for the “job creators” of the world. During the Obama years, he claimed that the 44th president’s decision to call Wall Street executives “fat cat bankers” right after the financial crisis was encouraging “class warfare” and that Obama’s “tone” was “cleaving a widening gulf…between the downtrodden and those best positioned to help them,” i.e. the benevolent rich. During the 2020 Democratic primary, he sparred with Elizabeth Warren over her supposedly “shitting on” the American dream and for being mean to the 0.000001%. And after the Democratic primary race came down to Joe Biden and Bernie Sanders, he claimed that Sanders was “a bigger threat [to the stock market] than the coronavirus.” Yes, the coronavirus. (Later, he went on CNBC and cried, claiming he’d been so antagonistic about 2020 because he cares so much about America.)
Anyway, Cooperman predicts this will “end in tears,” though if you’ve got silk tissues to wipe your nose with and a yacht on which to rest your weary head, you’ll probably end up fine.“
Cry me a river. Why shouldn’t the masses be able to coordinate and game the market to their benefit. I can’t think of any reason why not. Calling it herd mentality or populism is also bs in my opinion...what makes it so..social media, organized like minded people, by that coin, the union movement and the movement for black lives are just populism and herd mentality.
I think this is very inspiring and I would like to see activists get together and leverage a little bit of money millions chipping in $2 - $27 and use market manipulation as a form of societal reorganization. It could be used just like boycotts. Don’t like nestle? Find some floundering subsidiaries jack them up and cash them out raise more capital and keep moving up to leverage against the bigger fish. This has potential to really destabilize and potentially even the playing field a bit more for the rest of us.
^ You're missing the broader point. I assume the last two paragraphs are your thoughts and not VF's, so correct me if I'm wrong. You are writing like this is some revolutionary issue on class warfare. It's not. Just because hedge fund managers lose some money doesn't mean average Joe benefits. At the end of the day, real people are buying real stocks in a real company that is in a death spiral and has a failing business model. Where's the nobility in that? Continuing with my analogy earlier, these dipshits followed Trump to the Capitol, broke in, hurt some people, but now what? What do they do now? They own worthless, shitty stock. Some victory.
^ You're missing the broader point. I assume the last two paragraphs are your thoughts and not VF's, so correct me if I'm wrong. You are writing like this is some revolutionary issue on class warfare. It's not. Just because hedge fund managers lose some money doesn't mean average Joe benefits. At the end of the day, real people are buying real stocks in a real company that is in a death spiral and has a failing business model. Where's the nobility in that? Continuing with my analogy earlier, these dipshits followed Trump to the Capitol, broke in, hurt some people, but now what? What do they do now? They own worthless, shitty stock. Some victory.
These are the same people that broke into the capitol? Or you mean they are swept up in this like Trumpers? The broader point to me is this might be a few dopes, but if people organized their collective pithy amounts of wealth in a concerted way we could potentially destabilize the market in favor of the little guy. So some people are gonna get swept up and lose big and some average people are gonna lose small and some average people are gonna actually win big. How is this any different than the current model? 80% of stocks in this country are owned by the wealthiest 10%...that’s called hoarding and it needs to change.
yes everything after t he quotes are my thoughts.
sure this instance specifically is bonkers, but it to me shows how ridiculous the sandcastle called the stock market is and additionally brings to light how these practices could potentially be used through collective action to make positive social change and potentially redistribute some of the hoarded wealth.
Imagine an MLK, Cesar Chavez, Eugene Debs type getting behind and organizing a movement for the people to take over the stock market on their terms or at least use it as a means of wealth redistribution.
I honestly don’t see a down side to this, but then again I’m not part of the stick holding class, I’m just an elder millennial that is already trying to ruin the economy by not buying diamonds or purchasing over valued real estate while I eat my avocado toast and day drink on the weekends and spend too much money on vinyl!
^ You're missing the broader point. I assume the last two paragraphs are your thoughts and not VF's, so correct me if I'm wrong. You are writing like this is some revolutionary issue on class warfare. It's not. Just because hedge fund managers lose some money doesn't mean average Joe benefits. At the end of the day, real people are buying real stocks in a real company that is in a death spiral and has a failing business model. Where's the nobility in that? Continuing with my analogy earlier, these dipshits followed Trump to the Capitol, broke in, hurt some people, but now what? What do they do now? They own worthless, shitty stock. Some victory.
These are the same people that broke into the capitol? Or you mean they are swept up in this like Trumpers? The broader point to me is this might be a few dopes, but if people organized their collective pithy amounts of wealth in a concerted way we could potentially destabilize the market in favor of the little guy. So some people are gonna get swept up and lose big and some average people are gonna lose small and some average people are gonna actually win big. How is this any different than the current model? 80% of stocks in this country are owned by the wealthiest 10%...that’s called hoarding and it needs to change.
yes everything after t he quotes are my thoughts.
sure this instance specifically is bonkers, but it to me shows how ridiculous the sandcastle called the stock market is and additionally brings to light how these practices could potentially be used through collective action to make positive social change and potentially redistribute some of the hoarded wealth.
Imagine an MLK, Cesar Chavez, Eugene Debs type getting behind and organizing a movement for the people to take over the stock market on their terms or at least use it as a means of wealth redistribution.
I honestly don’t see a down side to this, but then again I’m not part of the stick holding class, I’m just an elder millennial that is already trying to ruin the economy by not buying diamonds or purchasing over valued real estate while I eat my avocado toast and day drink on the weekends and spend too much money on vinyl!
Take over the stock market on their terms? While the wealthiest own the most, the amount of wealth connected to 401ks, pension funds, and other managed assets are astronomical and would have a enormously negative impact on millions of average Americans. And to what end? The market, like our democracy, is absolutely fragile and it's built on trust and belief in the value of the assets. My retirement is pinned to that and so are the retirements of many people that you work with, neighbors and fellow members of the PJ board. Sure they're not super rich, but it's still their nest egg. And yes, my analogy was about the retail investors on WSB getting swept up into the madness. Trump didn't storm the Capitol and I guarantee most of the people that started this madness have cashed out long ago. Collective purchasing of a shitty stock does not make that company more profitable. I'm sorry it's simply not part of a broader narrative. That's people trying to stretch what is really happening. The price of a share is indicative of its perceived value. These shitty companies (GME, Blackberry, AMC) still have a shitty business plan and a shitty outlook.
^ You're missing the broader point. I assume the last two paragraphs are your thoughts and not VF's, so correct me if I'm wrong. You are writing like this is some revolutionary issue on class warfare. It's not. Just because hedge fund managers lose some money doesn't mean average Joe benefits. At the end of the day, real people are buying real stocks in a real company that is in a death spiral and has a failing business model. Where's the nobility in that? Continuing with my analogy earlier, these dipshits followed Trump to the Capitol, broke in, hurt some people, but now what? What do they do now? They own worthless, shitty stock. Some victory.
These are the same people that broke into the capitol? Or you mean they are swept up in this like Trumpers? The broader point to me is this might be a few dopes, but if people organized their collective pithy amounts of wealth in a concerted way we could potentially destabilize the market in favor of the little guy. So some people are gonna get swept up and lose big and some average people are gonna lose small and some average people are gonna actually win big. How is this any different than the current model? 80% of stocks in this country are owned by the wealthiest 10%...that’s called hoarding and it needs to change.
yes everything after t he quotes are my thoughts.
sure this instance specifically is bonkers, but it to me shows how ridiculous the sandcastle called the stock market is and additionally brings to light how these practices could potentially be used through collective action to make positive social change and potentially redistribute some of the hoarded wealth.
Imagine an MLK, Cesar Chavez, Eugene Debs type getting behind and organizing a movement for the people to take over the stock market on their terms or at least use it as a means of wealth redistribution.
I honestly don’t see a down side to this, but then again I’m not part of the stick holding class, I’m just an elder millennial that is already trying to ruin the economy by not buying diamonds or purchasing over valued real estate while I eat my avocado toast and day drink on the weekends and spend too much money on vinyl!
Take over the stock market on their terms? While the wealthiest own the most, the amount of wealth connected to 401ks, pension funds, and other managed assets are astronomical and would have a enormously negative impact on millions of average Americans. And to what end? The market, like our democracy, is absolutely fragile and it's built on trust and belief in the value of the assets. My retirement is pinned to that and so are the retirements of many people that you work with, neighbors and fellow members of the PJ board. Sure they're not super rich, but it's still their nest egg. And yes, my analogy was about the retail investors on WSB getting swept up into the madness. Trump didn't storm the Capitol and I guarantee most of the people that started this madness have cashed out long ago. Collective purchasing of a shitty stock does not make that company more profitable. I'm sorry it's simply not part of a broader narrative. That's people trying to stretch what is really happening. The price of a share is indicative of its perceived value. These shitty companies (GME, Blackberry, AMC) still have a shitty business plan and a shitty outlook.
When has the stock market been about making a company more profitable? Isn’t the whole point to use it as a tool for financial gain? I’m all for people being able to do this, and I think it would be interesting to see what happens when some people with actual brains and motives put it to use. The whole thing is based on funny money, if people are putting their faith in stockmarketeers and trust in megaconglomos and the inflated valuation of their assets that’s on them especially if the system is so fragile a bunch of maroons on Reddit can game it.
^ You're missing the broader point. I assume the last two paragraphs are your thoughts and not VF's, so correct me if I'm wrong. You are writing like this is some revolutionary issue on class warfare. It's not. Just because hedge fund managers lose some money doesn't mean average Joe benefits. At the end of the day, real people are buying real stocks in a real company that is in a death spiral and has a failing business model. Where's the nobility in that? Continuing with my analogy earlier, these dipshits followed Trump to the Capitol, broke in, hurt some people, but now what? What do they do now? They own worthless, shitty stock. Some victory.
These are the same people that broke into the capitol? Or you mean they are swept up in this like Trumpers? The broader point to me is this might be a few dopes, but if people organized their collective pithy amounts of wealth in a concerted way we could potentially destabilize the market in favor of the little guy. So some people are gonna get swept up and lose big and some average people are gonna lose small and some average people are gonna actually win big. How is this any different than the current model? 80% of stocks in this country are owned by the wealthiest 10%...that’s called hoarding and it needs to change.
yes everything after t he quotes are my thoughts.
sure this instance specifically is bonkers, but it to me shows how ridiculous the sandcastle called the stock market is and additionally brings to light how these practices could potentially be used through collective action to make positive social change and potentially redistribute some of the hoarded wealth.
Imagine an MLK, Cesar Chavez, Eugene Debs type getting behind and organizing a movement for the people to take over the stock market on their terms or at least use it as a means of wealth redistribution.
I honestly don’t see a down side to this, but then again I’m not part of the stick holding class, I’m just an elder millennial that is already trying to ruin the economy by not buying diamonds or purchasing over valued real estate while I eat my avocado toast and day drink on the weekends and spend too much money on vinyl!
Take over the stock market on their terms? While the wealthiest own the most, the amount of wealth connected to 401ks, pension funds, and other managed assets are astronomical and would have a enormously negative impact on millions of average Americans. And to what end? The market, like our democracy, is absolutely fragile and it's built on trust and belief in the value of the assets. My retirement is pinned to that and so are the retirements of many people that you work with, neighbors and fellow members of the PJ board. Sure they're not super rich, but it's still their nest egg. And yes, my analogy was about the retail investors on WSB getting swept up into the madness. Trump didn't storm the Capitol and I guarantee most of the people that started this madness have cashed out long ago. Collective purchasing of a shitty stock does not make that company more profitable. I'm sorry it's simply not part of a broader narrative. That's people trying to stretch what is really happening. The price of a share is indicative of its perceived value. These shitty companies (GME, Blackberry, AMC) still have a shitty business plan and a shitty outlook.
When has the stock market been about making a company more profitable? Isn’t the whole point to use it as a tool for financial gain? I’m all for people being able to do this, and I think it would be interesting to see what happens when some people with actual brains and motives put it to use. The whole thing is based on funny money, if people are putting their faith in stockmarketeers and trust in megaconglomos and the inflated valuation of their assets that’s on them especially if the system is so fragile a bunch of maroons on Reddit can game it.
No it's not funny money. A stock price is a reflection of the value of the company, specifically the future value. Amazon trades for so much because its profits are high, revenue has a strong growth trajectory and a management team that investors believe in. And an investor only recognizes that value when they sell, a dividend is paid or the company is sold at a price higher than what they paid. That's why this is all so foolish. GME is fundamentally a dying company. It doesn't matter how high the price rises, the outlook is the same. So some of these Robin hood investors are going to lose their shirts.
Keep in mind, what I'm talking about is not the same thing that the Hill is talking about. They're all mad because RH halted trading while institutional investors continued. That's a different issue. I think all trading on the stock could have been stopped, defensibly. Or everyone keeps trading. The bubble will burst though.
I recant my statement above about RH continuing to allow trading. I didn’t realize they did margin lending. The pace of trading made it impossible for them to do their margin calls which was inevitable. That would have accelerated the bubble burst and likely bankrupted RH. Maybe it violates their terms of service and they are open to class action (doubtful because I’m sure they have arbitration only terms which prohibits class action), but regardless of whether it’s fair or not, it’s a no brainer to stop trading if it’s likely to bankrupt your company. Fuck AOC and Ted Cruz who likely have no clue about the margin lending that enabled these traders to buy up the volume they did.
^ You're missing the broader point. I assume the last two paragraphs are your thoughts and not VF's, so correct me if I'm wrong. You are writing like this is some revolutionary issue on class warfare. It's not. Just because hedge fund managers lose some money doesn't mean average Joe benefits. At the end of the day, real people are buying real stocks in a real company that is in a death spiral and has a failing business model. Where's the nobility in that? Continuing with my analogy earlier, these dipshits followed Trump to the Capitol, broke in, hurt some people, but now what? What do they do now? They own worthless, shitty stock. Some victory.
These are the same people that broke into the capitol? Or you mean they are swept up in this like Trumpers? The broader point to me is this might be a few dopes, but if people organized their collective pithy amounts of wealth in a concerted way we could potentially destabilize the market in favor of the little guy. So some people are gonna get swept up and lose big and some average people are gonna lose small and some average people are gonna actually win big. How is this any different than the current model? 80% of stocks in this country are owned by the wealthiest 10%...that’s called hoarding and it needs to change.
yes everything after t he quotes are my thoughts.
sure this instance specifically is bonkers, but it to me shows how ridiculous the sandcastle called the stock market is and additionally brings to light how these practices could potentially be used through collective action to make positive social change and potentially redistribute some of the hoarded wealth.
Imagine an MLK, Cesar Chavez, Eugene Debs type getting behind and organizing a movement for the people to take over the stock market on their terms or at least use it as a means of wealth redistribution.
I honestly don’t see a down side to this, but then again I’m not part of the stick holding class, I’m just an elder millennial that is already trying to ruin the economy by not buying diamonds or purchasing over valued real estate while I eat my avocado toast and day drink on the weekends and spend too much money on vinyl!
Take over the stock market on their terms? While the wealthiest own the most, the amount of wealth connected to 401ks, pension funds, and other managed assets are astronomical and would have a enormously negative impact on millions of average Americans. And to what end? The market, like our democracy, is absolutely fragile and it's built on trust and belief in the value of the assets. My retirement is pinned to that and so are the retirements of many people that you work with, neighbors and fellow members of the PJ board. Sure they're not super rich, but it's still their nest egg. And yes, my analogy was about the retail investors on WSB getting swept up into the madness. Trump didn't storm the Capitol and I guarantee most of the people that started this madness have cashed out long ago. Collective purchasing of a shitty stock does not make that company more profitable. I'm sorry it's simply not part of a broader narrative. That's people trying to stretch what is really happening. The price of a share is indicative of its perceived value. These shitty companies (GME, Blackberry, AMC) still have a shitty business plan and a shitty outlook.
When has the stock market been about making a company more profitable? Isn’t the whole point to use it as a tool for financial gain? I’m all for people being able to do this, and I think it would be interesting to see what happens when some people with actual brains and motives put it to use. The whole thing is based on funny money, if people are putting their faith in stockmarketeers and trust in megaconglomos and the inflated valuation of their assets that’s on them especially if the system is so fragile a bunch of maroons on Reddit can game it.
No it's not funny money. A stock price is a reflection of the value of the company, specifically the future value. Amazon trades for so much because its profits are high, revenue has a strong growth trajectory and a management team that investors believe in. And an investor only recognizes that value when they sell, a dividend is paid or the company is sold at a price higher than what they paid. That's why this is all so foolish. GME is fundamentally a dying company. It doesn't matter how high the price rises, the outlook is the same. So some of these Robin hood investors are going to lose their shirts.
Keep in mind, what I'm talking about is not the same thing that the Hill is talking about. They're all mad because RH halted trading while institutional investors continued. That's a different issue. I think all trading on the stock could have been stopped, defensibly. Or everyone keeps trading. The bubble will burst though.
Amazon makes money because of tax breaks and horrible business practices. If you feel like that is good economics that’s great, I don’t. Many others don’t as well.
As far as the GME my understanding is that millions of people were buying in basically pretty cheap maybe a few hundred and weren’t planning on getting rich but just upsetting the balance, if that’s the case mission accomplished. If people are foolish enough to spend $400 on a single GME stock well they are morons. I’m not sure people are understanding that this was partially motivated by sticking it to the man..that’s the part that I think is beautiful.
Why not put a stop to the lending that drives short selling altogether? Does it really serve a purpose that needs to be maintained? It only seems like an open door to chicanery to me, but I'm more of a farmer's market guy than a stock market guy.
^ You're missing the broader point. I assume the last two paragraphs are your thoughts and not VF's, so correct me if I'm wrong. You are writing like this is some revolutionary issue on class warfare. It's not. Just because hedge fund managers lose some money doesn't mean average Joe benefits. At the end of the day, real people are buying real stocks in a real company that is in a death spiral and has a failing business model. Where's the nobility in that? Continuing with my analogy earlier, these dipshits followed Trump to the Capitol, broke in, hurt some people, but now what? What do they do now? They own worthless, shitty stock. Some victory.
These are the same people that broke into the capitol? Or you mean they are swept up in this like Trumpers? The broader point to me is this might be a few dopes, but if people organized their collective pithy amounts of wealth in a concerted way we could potentially destabilize the market in favor of the little guy. So some people are gonna get swept up and lose big and some average people are gonna lose small and some average people are gonna actually win big. How is this any different than the current model? 80% of stocks in this country are owned by the wealthiest 10%...that’s called hoarding and it needs to change.
yes everything after t he quotes are my thoughts.
sure this instance specifically is bonkers, but it to me shows how ridiculous the sandcastle called the stock market is and additionally brings to light how these practices could potentially be used through collective action to make positive social change and potentially redistribute some of the hoarded wealth.
Imagine an MLK, Cesar Chavez, Eugene Debs type getting behind and organizing a movement for the people to take over the stock market on their terms or at least use it as a means of wealth redistribution.
I honestly don’t see a down side to this, but then again I’m not part of the stick holding class, I’m just an elder millennial that is already trying to ruin the economy by not buying diamonds or purchasing over valued real estate while I eat my avocado toast and day drink on the weekends and spend too much money on vinyl!
Take over the stock market on their terms? While the wealthiest own the most, the amount of wealth connected to 401ks, pension funds, and other managed assets are astronomical and would have a enormously negative impact on millions of average Americans. And to what end? The market, like our democracy, is absolutely fragile and it's built on trust and belief in the value of the assets. My retirement is pinned to that and so are the retirements of many people that you work with, neighbors and fellow members of the PJ board. Sure they're not super rich, but it's still their nest egg. And yes, my analogy was about the retail investors on WSB getting swept up into the madness. Trump didn't storm the Capitol and I guarantee most of the people that started this madness have cashed out long ago. Collective purchasing of a shitty stock does not make that company more profitable. I'm sorry it's simply not part of a broader narrative. That's people trying to stretch what is really happening. The price of a share is indicative of its perceived value. These shitty companies (GME, Blackberry, AMC) still have a shitty business plan and a shitty outlook.
When has the stock market been about making a company more profitable? Isn’t the whole point to use it as a tool for financial gain? I’m all for people being able to do this, and I think it would be interesting to see what happens when some people with actual brains and motives put it to use. The whole thing is based on funny money, if people are putting their faith in stockmarketeers and trust in megaconglomos and the inflated valuation of their assets that’s on them especially if the system is so fragile a bunch of maroons on Reddit can game it.
No it's not funny money. A stock price is a reflection of the value of the company, specifically the future value. Amazon trades for so much because its profits are high, revenue has a strong growth trajectory and a management team that investors believe in. And an investor only recognizes that value when they sell, a dividend is paid or the company is sold at a price higher than what they paid. That's why this is all so foolish. GME is fundamentally a dying company. It doesn't matter how high the price rises, the outlook is the same. So some of these Robin hood investors are going to lose their shirts.
Keep in mind, what I'm talking about is not the same thing that the Hill is talking about. They're all mad because RH halted trading while institutional investors continued. That's a different issue. I think all trading on the stock could have been stopped, defensibly. Or everyone keeps trading. The bubble will burst though.
Only the dumbest ones lol
Isn't the bulk of the price increase caused by the squeeze, by the short sellers being forced to cover their bad bet?
Why not put a stop to the lending that drives short selling altogether? Does it really serve a purpose that needs to be maintained? It only seems like an open door to chicanery to me, but I'm more of a farmer's market guy than a stock market guy.
My perspective on this whole thing changed yesterday. I think I mention earlier in the thread that I have a Robinhood account that I use as a way to make some investment. It’s not my only one, but whatever. Wednesday afternoon I decided to throw a few dollars into the craze. I purchase a few shares of GameStop, AMC, and Nokia. I dumped the Nokia later that afternoon and pocketed around $50 in profit. No big deal. I decided to let the others ride to sell on Thursday.
Thursday. Robinhood was complete shit in the morning prior to the open. Wouldn’t load, things of that nature. I figured due to demand. Around 9am, I decided to dump my AMC shares. Would have netted a $100 profit. Big money! I placed the sell order. Usual it’s instant, but this order went into pending status. Around the same time Robinhood suspend people from purchasing the meme stocks and others, you could only sell those shares. I think you can see the problem. My sell order for AMC sat for almost an hour. I went from looking at a modest gain of $100 to a loss of $12. Mean while, institution trades and a few retail brokers had free reign to buy and sell this stocks. Basically, many retail brokerage firms locked out a huge amount of people from participating in a capitalist, free market while others were able to do as they wished. There was sorts of shady shit happening.
Then the Street and and Robinhood CEO start flapping their lips about how they halted all of this to “protect” individuals. That the people participating in this don’t realize what they are doing, they’re gambling, blah, blah...
Since when is it their duty to tell people what to do with their money? Were they this concerned during the run-up to the 2008 crash? Are some people going to loss some money, yup. I’ve never heard these folks speak up or act to prevent people from buying lotto tickets, going to a casino, or gambling on sports. Their just pissed they and their greedy friends had the tables turned and some are getting cleaned. Case in point, watch that fucker Leon Cooperman’s interview from yesterday. He’s so up-and-up that he plead guilty to insider training.
I’m all for the long term investments that russel talks about. Smart investments in index funds, blue chips, so on. That’s what I do. Everyone should have the same access to invest if they chose to do so. Whether it’s $100k or $5. But if I or others want to “play the market” like the hedge funds, short sellers, and those that attend “idea dinners,” those who we are told are “savvy investors” then we should be able to. If they lose, good. If I, or others lose, well that’s the breaks. The problem is they don’t like eating a shovel full shit once in a while. Change the regs to level the field. Fuck them.
Im also closing my Robinhood account and headed over to fidelity after the GameStop fiasco ends.
My perspective on this whole thing changed yesterday. I think I mention earlier in the thread that I have a Robinhood account that I use as a way to make some investment. It’s not my only one, but whatever. Wednesday afternoon I decided to throw a few dollars into the craze. I purchase a few shares of GameStop, AMC, and Nokia. I dumped the Nokia later that afternoon and pocketed around $50 in profit. No big deal. I decided to let the others ride to sell on Thursday.
Thursday. Robinhood was complete shit in the morning prior to the open. Wouldn’t load, things of that nature. I figured due to demand. Around 9am, I decided to dump my AMC shares. Would have netted a $100 profit. Big money! I placed the sell order. Usual it’s instant, but this order went into pending status. Around the same time Robinhood suspend people from purchasing the meme stocks and others, you could only sell those shares. I think you can see the problem. My sell order for AMC sat for almost an hour. I went from looking at a modest gain of $100 to a loss of $12. Mean while, institution trades and a few retail brokers had free reign to buy and sell this stocks. Basically, many retail brokerage firms locked out a huge amount of people from participating in a capitalist, free market while others were able to do as they wished. There was sorts of shady shit happening.
Then the Street and and Robinhood CEO start flapping their lips about how they halted all of this to “protect” individuals. That the people participating in this don’t realize what they are doing, they’re gambling, blah, blah...
Since when is it their duty to tell people what to do with their money? Were they this concerned during the run-up to the 2008 crash? Are some people going to loss some money, yup. I’ve never heard these folks speak up or act to prevent people from buying lotto tickets, going to a casino, or gambling on sports. Their just pissed they and their greedy friends had the tables turned and some are getting cleaned. Case in point, watch that fucker Leon Cooperman’s interview from yesterday. He’s so up-and-up that he plead guilty to insider training.
I’m all for the long term investments that russel talks about. Smart investments in index funds, blue chips, so on. That’s what I do. Everyone should have the same access to invest if they chose to do so. Whether it’s $100k or $5. But if I or others want to “play the market” like the hedge funds, short sellers, and those that attend “idea dinners,” those who we are told are “savvy investors” then we should be able to. If they lose, good. If I, or others lose, well that’s the breaks. The problem is they don’t like eating a shovel full shit once in a while. Change the regs to level the field. Fuck them.
Im also closing my Robinhood account and headed over to fidelity after the GameStop fiasco ends.
Robinhood is not a serious platform. I’m sorry to say. No serious traders use it. It’s a great platform for an introduction to the market and good for blue chips and long term investing. I would never use is to “trade” or purchase volatile stocks. It’s gone down before and it’s not trustworthy.
My perspective on this whole thing changed yesterday. I think I mention earlier in the thread that I have a Robinhood account that I use as a way to make some investment. It’s not my only one, but whatever. Wednesday afternoon I decided to throw a few dollars into the craze. I purchase a few shares of GameStop, AMC, and Nokia. I dumped the Nokia later that afternoon and pocketed around $50 in profit. No big deal. I decided to let the others ride to sell on Thursday.
Thursday. Robinhood was complete shit in the morning prior to the open. Wouldn’t load, things of that nature. I figured due to demand. Around 9am, I decided to dump my AMC shares. Would have netted a $100 profit. Big money! I placed the sell order. Usual it’s instant, but this order went into pending status. Around the same time Robinhood suspend people from purchasing the meme stocks and others, you could only sell those shares. I think you can see the problem. My sell order for AMC sat for almost an hour. I went from looking at a modest gain of $100 to a loss of $12. Mean while, institution trades and a few retail brokers had free reign to buy and sell this stocks. Basically, many retail brokerage firms locked out a huge amount of people from participating in a capitalist, free market while others were able to do as they wished. There was sorts of shady shit happening.
Then the Street and and Robinhood CEO start flapping their lips about how they halted all of this to “protect” individuals. That the people participating in this don’t realize what they are doing, they’re gambling, blah, blah...
Since when is it their duty to tell people what to do with their money? Were they this concerned during the run-up to the 2008 crash? Are some people going to loss some money, yup. I’ve never heard these folks speak up or act to prevent people from buying lotto tickets, going to a casino, or gambling on sports. Their just pissed they and their greedy friends had the tables turned and some are getting cleaned. Case in point, watch that fucker Leon Cooperman’s interview from yesterday. He’s so up-and-up that he plead guilty to insider training.
I’m all for the long term investments that russel talks about. Smart investments in index funds, blue chips, so on. That’s what I do. Everyone should have the same access to invest if they chose to do so. Whether it’s $100k or $5. But if I or others want to “play the market” like the hedge funds, short sellers, and those that attend “idea dinners,” those who we are told are “savvy investors” then we should be able to. If they lose, good. If I, or others lose, well that’s the breaks. The problem is they don’t like eating a shovel full shit once in a while. Change the regs to level the field. Fuck them.
Im also closing my Robinhood account and headed over to fidelity after the GameStop fiasco ends.
Read this please (as should everyone). It's the best explanation I have seen of RH's perspective. Yes, the phrase about protecting users is a little far fetched. But if this analysis is right, then they were protecting themselves and adhering to capital requirements. Yes it's their fault they were in this mess, as they were over run by the mob here. But if this is an accurate assessment, I would have shut it down too.
Hey now, I like funny memes. I just don't like memes that purport to educate.
As far as the other commentary, I would be completely fine if shorting was made illegal. It reminds me a lot of the mortgage tricks adn tools that were so popular leading up to 2008 (stated income, large balloons, interest only, etc.). When they were used by the very wealthy, they worked. When they came to the masses, they were abused by the brokers, lenders, etc. and it was one of the primary reasons we crashed.
My perspective on this whole thing changed yesterday. I think I mention earlier in the thread that I have a Robinhood account that I use as a way to make some investment. It’s not my only one, but whatever. Wednesday afternoon I decided to throw a few dollars into the craze. I purchase a few shares of GameStop, AMC, and Nokia. I dumped the Nokia later that afternoon and pocketed around $50 in profit. No big deal. I decided to let the others ride to sell on Thursday.
Thursday. Robinhood was complete shit in the morning prior to the open. Wouldn’t load, things of that nature. I figured due to demand. Around 9am, I decided to dump my AMC shares. Would have netted a $100 profit. Big money! I placed the sell order. Usual it’s instant, but this order went into pending status. Around the same time Robinhood suspend people from purchasing the meme stocks and others, you could only sell those shares. I think you can see the problem. My sell order for AMC sat for almost an hour. I went from looking at a modest gain of $100 to a loss of $12. Mean while, institution trades and a few retail brokers had free reign to buy and sell this stocks. Basically, many retail brokerage firms locked out a huge amount of people from participating in a capitalist, free market while others were able to do as they wished. There was sorts of shady shit happening.
Then the Street and and Robinhood CEO start flapping their lips about how they halted all of this to “protect” individuals. That the people participating in this don’t realize what they are doing, they’re gambling, blah, blah...
Since when is it their duty to tell people what to do with their money? Were they this concerned during the run-up to the 2008 crash? Are some people going to loss some money, yup. I’ve never heard these folks speak up or act to prevent people from buying lotto tickets, going to a casino, or gambling on sports. Their just pissed they and their greedy friends had the tables turned and some are getting cleaned. Case in point, watch that fucker Leon Cooperman’s interview from yesterday. He’s so up-and-up that he plead guilty to insider training.
I’m all for the long term investments that russel talks about. Smart investments in index funds, blue chips, so on. That’s what I do. Everyone should have the same access to invest if they chose to do so. Whether it’s $100k or $5. But if I or others want to “play the market” like the hedge funds, short sellers, and those that attend “idea dinners,” those who we are told are “savvy investors” then we should be able to. If they lose, good. If I, or others lose, well that’s the breaks. The problem is they don’t like eating a shovel full shit once in a while. Change the regs to level the field. Fuck them.
Im also closing my Robinhood account and headed over to fidelity after the GameStop fiasco ends.
Robinhood is not a serious platform. I’m sorry to say. No serious traders use it. It’s a great platform for an introduction to the market and good for blue chips and long term investing. I would never use is to “trade” or purchase volatile stocks. It’s gone down before and it’s not trustworthy.
I agree, and it’s done. The only reason I even had it was that at the time I was looking for something to play around with. they were really the only accessible place without “fees” and was easy to use. Then they became one of the first for fractional shares and crypto. But they done fucked up.
My perspective on this whole thing changed yesterday. I think I mention earlier in the thread that I have a Robinhood account that I use as a way to make some investment. It’s not my only one, but whatever. Wednesday afternoon I decided to throw a few dollars into the craze. I purchase a few shares of GameStop, AMC, and Nokia. I dumped the Nokia later that afternoon and pocketed around $50 in profit. No big deal. I decided to let the others ride to sell on Thursday.
Thursday. Robinhood was complete shit in the morning prior to the open. Wouldn’t load, things of that nature. I figured due to demand. Around 9am, I decided to dump my AMC shares. Would have netted a $100 profit. Big money! I placed the sell order. Usual it’s instant, but this order went into pending status. Around the same time Robinhood suspend people from purchasing the meme stocks and others, you could only sell those shares. I think you can see the problem. My sell order for AMC sat for almost an hour. I went from looking at a modest gain of $100 to a loss of $12. Mean while, institution trades and a few retail brokers had free reign to buy and sell this stocks. Basically, many retail brokerage firms locked out a huge amount of people from participating in a capitalist, free market while others were able to do as they wished. There was sorts of shady shit happening.
Then the Street and and Robinhood CEO start flapping their lips about how they halted all of this to “protect” individuals. That the people participating in this don’t realize what they are doing, they’re gambling, blah, blah...
Since when is it their duty to tell people what to do with their money? Were they this concerned during the run-up to the 2008 crash? Are some people going to loss some money, yup. I’ve never heard these folks speak up or act to prevent people from buying lotto tickets, going to a casino, or gambling on sports. Their just pissed they and their greedy friends had the tables turned and some are getting cleaned. Case in point, watch that fucker Leon Cooperman’s interview from yesterday. He’s so up-and-up that he plead guilty to insider training.
I’m all for the long term investments that russel talks about. Smart investments in index funds, blue chips, so on. That’s what I do. Everyone should have the same access to invest if they chose to do so. Whether it’s $100k or $5. But if I or others want to “play the market” like the hedge funds, short sellers, and those that attend “idea dinners,” those who we are told are “savvy investors” then we should be able to. If they lose, good. If I, or others lose, well that’s the breaks. The problem is they don’t like eating a shovel full shit once in a while. Change the regs to level the field. Fuck them.
Im also closing my Robinhood account and headed over to fidelity after the GameStop fiasco ends.
I am encouraging everyone I know to dump their Robinhood accounts too.
The investor who helped direct the world’s attention to GameStop, leading a horde of online followers in a bizarre market rally that made and lost fortunes from one day to the next, says he’s just a normal guy.
“I didn’t expect this,” said Keith Gill, 34 years old, known as “DeepF—ingValue” by fans on Reddit’s WallStreetBets forum and “Dada” by his 2-year-old daughter. He said he didn’t set out to draw the attention of Congress, the Federal Reserve, hedge funds, the media, trading platforms and hundreds of thousands of investors.
“This story is so much bigger than me,” Mr. Gill told The Wall Street Journal in his first interview since the unboxing this week of a volatile new stock market game. “I support these retail investors, their ability to make a statement.”
To many of them, Mr. Gill—who until recently worked in marketing for Massachusetts Mutual Life Insurance Co.—is the force behind the triple-digit gains in shares of the videogame retailer GameStop, up more than 900% this year through Thursday. On Wednesday, the stock jumped 135% to $347.51, a record, before plunging to $194 a share Thursday as online brokerages clamped down. At the start of the year, GameStop shares went for around $18.
Many online investors say his advocacy helped turn them into a force powerful enough to cause big losses for established hedge funds and, for the moment, turn the investing world upside down.
Mr. Gill posted a screenshot of his brokerage account Wednesday, showing a roughly $20 million daily gain on GameStop shares and options. “Your steady hand convinced many of us to not only buy, but hold. Your example has literally changed the lives of thousands of ordinary normal people. Seriously thank you. You deserve every penny,” replied one Reddit user, reality_czech.
Online traders credit Mr. Gill with helping power the GameStop frenzy this week.
The next day, Mr. Gill posted another screenshot—showing about a $15 million loss. After Thursday’s market close, his E*Trade brokerage account, viewed by the Journal, held around $33 million, including GameStop stock, options and millions in cash.
“He always liked money,” said Elaine Gill, his mother. As a child, she said, “he would get money from those scratch tickets that people didn’t know they’d won. People would throw them on the ground…A lot of times there was still money on them.”
Mr. Gill’s online persona—he goes by “Roaring Kitty” on YouTube—has drawn tens of thousands of fans and copycats who share screenshots of their own brokerage accounts. As the GameStop frenzy peaked this week, hundreds of thousands of new investors downloaded applications like Robinhood to join the action, according to Apptopia Inc.
How Options-Trading Redditors Fed the GameStop Frenzy
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How Options-Trading Redditors Fed the GameStop Frenzy
Wall Street is in an uproar over GameStop shares this week, after members of Reddit’s popular WallStreetBets forum encouraged bets on the video game retailer. WSJ explains how options trading is driving the action and what’s at stake.
Mr. Gill said he wasn’t a rabble-rouser out to take on the establishment, just someone who believes investors can find value in unloved stocks. He never expected to have a legion of fans debating his identity online, or millions of dollars in his trading account, he said. He was just a dad with an online hobby and a plastic kiddie slide on the front lawn of a Boston suburb.
Mr. Gill began investing in GameStop around June 2019, he said, when it was hovering around $5 a share. Earlier that year, the game retailer was hunting for its fifth chief executive in a little over 12 months. Mr. Gill kept buying. Although he never played much besides Super Mario or Donkey Kong, he saw potential for the struggling retailer to reinvigorate itself by attracting new customers with the latest videogame consoles.
“People were doing a quick take, saying GameStop was the next Blockbuster, ” he said, a chain caught in a retail decline. “It appeared many folks just weren’t digging in deeper. It was a gross misclassification of the opportunity.”
Mr. Gill, tall with shoulder-length hair, opened a YouTube channel last summer, and he worked in the basement of the home he rents in Wilmington, Mass., to avoid disturbing his daughter after bedtime, he said. On his channel, he touted GameStop and Belgian beers. His favorite is Delirium Tremens.
On a recent YouTube live-stream, he wore a red headband and aviator sunglasses while fielding questions on stocks. He poured himself Prosecco then switched to beer as he celebrated big gains and gave shout-outs to legions of viewers and traders in a seven-hour-plus extravaganza. The stream has tallied more than 200,000 views.
Mr. Gill’s obscene username on Reddit’s WallStreetBets forum is supposed to reflect a belief in value investing—buying shares of companies that are inexpensive relative to the underlying business.
Among his many Reddit fans, Mr. Gill “will go down as the greatest legend in the history of WallStreetBets,” said Jon Hagedorn, a 34-year-old training supervisor based in Ronkonkoma, N.Y. “He’s the original OG.”
The stock’s wild ride, seemingly divorced from standard measures of corporate value, has spurred complaints that investors banding together to provoke this kind of frenzy amounts to market manipulation.
The Securities and Exchange Commission said Friday it would “act to protect retail investors when the facts demonstrate abusive or manipulative trading activity.” Mr. Gill said he hasn’t heard from the SEC.
Fast times
“The first thing that I had asked him when this craziness started was: is this illegal or anything dishonest? He said, ‘No mom, it’s not,’” recalled Ms. Gill, who lives in Brockton, Mass., where she and Steve Gill raised their son.
In high school, Mr. Gill was a distance runner, and he earned national honors on the team at nearby Stonehill College, where he graduated in 2009 with an accounting major. He ran a four-minute mile until sidelined by an Achilles injury.
Mr. Gill moved to New Hampshire for a few years and found a mentor, an investor and software developer his aunt introduced him to. He holds a designation as a Chartered Financial Analyst and said he was drawn by the complexity and challenge of stock picking, which became an outlet for the energy he once put into running. He started working at MassMutual in 2019.
A notebook with notes on stocks and an '8 Ball' toy that Keith Gill uses in his video streams. At the end of his YouTube stream, Mr. Gill and his viewers ask questions of the '8 Ball' about how a stock will perform.
In the summer of 2019, he started building his position in GameStop and would post screenshots of his E*Trade account’s options positions on WallStreetBets forum. “Holy s— bro, what made you drop 53K on GameStop?” one trader posted about one of Mr. Gill’s screenshots in September 2019.
In the months that followed, he posted regularly, putting up a “GME YOLO update,” a reference to GameStop’s ticker and the mantra “you only live once.” He showed off gains in the five- and six-digits, and times when his investments plunged.
Mr. Gill stuck with GameStop, and his wagers became day-trader lore.
To fans, he tapped into the desire by millions of amateur investors around the U.S. to try their hand at stock trading. Trading fees have fallen to zero, and apps allow investors to buy and sell on their phones. The easy market access is augmented by an online community swelled with eager helpers.
SHARE YOUR THOUGHTS
Did you join in the trading frenzy this week?Join the conversation below.
Many first-time investors stuck at home in the pandemic said they found solace in chatting with others online about trading stocks or options, as well as hearing from those making profitable bets.
The discourse isn’t always positive. An off-Reddit chat room associated with WallStreetBets is filled with obscenity, racism and antigay screeds. Many on the platforms lash out against Wall Street power players, and some express a desire to see the financial pros reel from losses.
“I’m not out for anybody,” Mr. Gill said. “Roaring Kitty was an educational channel where I was showcasing my investment philosophy.”
Bear bust
Many on Wall Street disagreed with Mr. Gill’s bullish view on GameStop and have taken a big hit as a result. Hedge funds and other investment professionals piled into wagers that the shares would tumble.
To bet against a stock, hedge funds borrow shares and sell them, hoping to buy them back later at a lower price and return them. That allows them to pocket the difference between the prices. But when a shorted stock stages such a dramatic rally, it turns painful, often forcing them to exit from the positions by purchasing shares at a loss. In turn, that can inspire sharp gains in stocks, known as a “short squeeze.”
The bearish positioning of hedge funds was part of what drew many small GameStop investors, anticipating a short squeeze. Mr. Gill said his investing strategy didn’t entirely depend on a short squeeze, but he knew others were potentially betting on it.
So far, the professionals have been wrong, giving a win to Mr. Gill and other individual investors who bet big on GameStop. Hedge funds like Melvin Capital Management and Maplelane Capital were the ones burned, as well as jeered by boastful Reddit investors.
Many others have piled into GameStop, trying to ride the rally “to the moon,” as many Reddit investors say. Individual investors have also piled into shares of companies like AMC Entertainment Holdings Inc. in the hopes of catching similar momentum and making a quick buck.
GameStop has garnered hundreds of thousands of posts over the past month across Reddit, Twitter and Facebook, according to data this week from Meltwater, a global media intelligence company. As the stock has vaulted higher, its shares have traded in a frenzy, making it one of the most popular bets in the U.S. market in recent days, according to Dow Jones Market Data.
Keith Gill at his basement work station in Wilmington, Mass.
Seasoned traders are starting to take into account the behavior of influential investors like Mr. Gill and others.
Mark Sebastian, founder of Chicago-based Options Pit and an options trader for around 20 years, has developed a screener analyzing reams of stocks to spot those with heavy activity from individual investors. He buys or sells options based on which stocks are gaining momentum, trying to ride the wave higher or lower. Recently, this included AMC, though he said he wasn’t a fan.
“We’re trying to get on these names before they completely take off,” Mr. Sebastian said, calling one recent trade “free money.”
Mr. Gill said his life has changed overnight and hasn’t set his future plans. He would like to continue the “Roaring Kitty” YouTube channel, maybe buy a house. “I thought this trade would be successful,” he said, “but I never expected what happened over the past week.”
He has one dream in mind. “I always wanted to build an indoor track facility or a field house in Brockton,” he said of his hometown. “And now, it looks like I actually could do that.”
The investor who helped direct the world’s attention to GameStop, leading a horde of online followers in a bizarre market rally that made and lost fortunes from one day to the next, says he’s just a normal guy.
“I didn’t expect this,” said Keith Gill, 34 years old, known as “DeepF—ingValue” by fans on Reddit’s WallStreetBets forum and “Dada” by his 2-year-old daughter. He said he didn’t set out to draw the attention of Congress, the Federal Reserve, hedge funds, the media, trading platforms and hundreds of thousands of investors.
“This story is so much bigger than me,” Mr. Gill told The Wall Street Journal in his first interview since the unboxing this week of a volatile new stock market game. “I support these retail investors, their ability to make a statement.”
To many of them, Mr. Gill—who until recently worked in marketing for Massachusetts Mutual Life Insurance Co.—is the force behind the triple-digit gains in shares of the videogame retailer GameStop, up more than 900% this year through Thursday. On Wednesday, the stock jumped 135% to $347.51, a record, before plunging to $194 a share Thursday as online brokerages clamped down. At the start of the year, GameStop shares went for around $18.
Many online investors say his advocacy helped turn them into a force powerful enough to cause big losses for established hedge funds and, for the moment, turn the investing world upside down.
Mr. Gill posted a screenshot of his brokerage account Wednesday, showing a roughly $20 million daily gain on GameStop shares and options. “Your steady hand convinced many of us to not only buy, but hold. Your example has literally changed the lives of thousands of ordinary normal people. Seriously thank you. You deserve every penny,” replied one Reddit user, reality_czech.
Online traders credit Mr. Gill with helping power the GameStop frenzy this week.
The next day, Mr. Gill posted another screenshot—showing about a $15 million loss. After Thursday’s market close, his E*Trade brokerage account, viewed by the Journal, held around $33 million, including GameStop stock, options and millions in cash.
“He always liked money,” said Elaine Gill, his mother. As a child, she said, “he would get money from those scratch tickets that people didn’t know they’d won. People would throw them on the ground…A lot of times there was still money on them.”
Mr. Gill’s online persona—he goes by “Roaring Kitty” on YouTube—has drawn tens of thousands of fans and copycats who share screenshots of their own brokerage accounts. As the GameStop frenzy peaked this week, hundreds of thousands of new investors downloaded applications like Robinhood to join the action, according to Apptopia Inc.
How Options-Trading Redditors Fed the GameStop Frenzy
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UP NEXT
0:00 / 4:14
4:14
How Options-Trading Redditors Fed the GameStop Frenzy
Wall Street is in an uproar over GameStop shares this week, after members of Reddit’s popular WallStreetBets forum encouraged bets on the video game retailer. WSJ explains how options trading is driving the action and what’s at stake.
Mr. Gill said he wasn’t a rabble-rouser out to take on the establishment, just someone who believes investors can find value in unloved stocks. He never expected to have a legion of fans debating his identity online, or millions of dollars in his trading account, he said. He was just a dad with an online hobby and a plastic kiddie slide on the front lawn of a Boston suburb.
Mr. Gill began investing in GameStop around June 2019, he said, when it was hovering around $5 a share. Earlier that year, the game retailer was hunting for its fifth chief executive in a little over 12 months. Mr. Gill kept buying. Although he never played much besides Super Mario or Donkey Kong, he saw potential for the struggling retailer to reinvigorate itself by attracting new customers with the latest videogame consoles.
“People were doing a quick take, saying GameStop was the next Blockbuster, ” he said, a chain caught in a retail decline. “It appeared many folks just weren’t digging in deeper. It was a gross misclassification of the opportunity.”
Mr. Gill, tall with shoulder-length hair, opened a YouTube channel last summer, and he worked in the basement of the home he rents in Wilmington, Mass., to avoid disturbing his daughter after bedtime, he said. On his channel, he touted GameStop and Belgian beers. His favorite is Delirium Tremens.
On a recent YouTube live-stream, he wore a red headband and aviator sunglasses while fielding questions on stocks. He poured himself Prosecco then switched to beer as he celebrated big gains and gave shout-outs to legions of viewers and traders in a seven-hour-plus extravaganza. The stream has tallied more than 200,000 views.
Mr. Gill’s obscene username on Reddit’s WallStreetBets forum is supposed to reflect a belief in value investing—buying shares of companies that are inexpensive relative to the underlying business.
Among his many Reddit fans, Mr. Gill “will go down as the greatest legend in the history of WallStreetBets,” said Jon Hagedorn, a 34-year-old training supervisor based in Ronkonkoma, N.Y. “He’s the original OG.”
The stock’s wild ride, seemingly divorced from standard measures of corporate value, has spurred complaints that investors banding together to provoke this kind of frenzy amounts to market manipulation.
The Securities and Exchange Commission said Friday it would “act to protect retail investors when the facts demonstrate abusive or manipulative trading activity.” Mr. Gill said he hasn’t heard from the SEC.
Fast times
“The first thing that I had asked him when this craziness started was: is this illegal or anything dishonest? He said, ‘No mom, it’s not,’” recalled Ms. Gill, who lives in Brockton, Mass., where she and Steve Gill raised their son.
In high school, Mr. Gill was a distance runner, and he earned national honors on the team at nearby Stonehill College, where he graduated in 2009 with an accounting major. He ran a four-minute mile until sidelined by an Achilles injury.
Mr. Gill moved to New Hampshire for a few years and found a mentor, an investor and software developer his aunt introduced him to. He holds a designation as a Chartered Financial Analyst and said he was drawn by the complexity and challenge of stock picking, which became an outlet for the energy he once put into running. He started working at MassMutual in 2019.
A notebook with notes on stocks and an '8 Ball' toy that Keith Gill uses in his video streams. At the end of his YouTube stream, Mr. Gill and his viewers ask questions of the '8 Ball' about how a stock will perform.
In the summer of 2019, he started building his position in GameStop and would post screenshots of his E*Trade account’s options positions on WallStreetBets forum. “Holy s— bro, what made you drop 53K on GameStop?” one trader posted about one of Mr. Gill’s screenshots in September 2019.
In the months that followed, he posted regularly, putting up a “GME YOLO update,” a reference to GameStop’s ticker and the mantra “you only live once.” He showed off gains in the five- and six-digits, and times when his investments plunged.
Mr. Gill stuck with GameStop, and his wagers became day-trader lore.
To fans, he tapped into the desire by millions of amateur investors around the U.S. to try their hand at stock trading. Trading fees have fallen to zero, and apps allow investors to buy and sell on their phones. The easy market access is augmented by an online community swelled with eager helpers.
SHARE YOUR THOUGHTS
Did you join in the trading frenzy this week?Join the conversation below.
Many first-time investors stuck at home in the pandemic said they found solace in chatting with others online about trading stocks or options, as well as hearing from those making profitable bets.
The discourse isn’t always positive. An off-Reddit chat room associated with WallStreetBets is filled with obscenity, racism and antigay screeds. Many on the platforms lash out against Wall Street power players, and some express a desire to see the financial pros reel from losses.
“I’m not out for anybody,” Mr. Gill said. “Roaring Kitty was an educational channel where I was showcasing my investment philosophy.”
Bear bust
Many on Wall Street disagreed with Mr. Gill’s bullish view on GameStop and have taken a big hit as a result. Hedge funds and other investment professionals piled into wagers that the shares would tumble.
To bet against a stock, hedge funds borrow shares and sell them, hoping to buy them back later at a lower price and return them. That allows them to pocket the difference between the prices. But when a shorted stock stages such a dramatic rally, it turns painful, often forcing them to exit from the positions by purchasing shares at a loss. In turn, that can inspire sharp gains in stocks, known as a “short squeeze.”
The bearish positioning of hedge funds was part of what drew many small GameStop investors, anticipating a short squeeze. Mr. Gill said his investing strategy didn’t entirely depend on a short squeeze, but he knew others were potentially betting on it.
So far, the professionals have been wrong, giving a win to Mr. Gill and other individual investors who bet big on GameStop. Hedge funds like Melvin Capital Management and Maplelane Capital were the ones burned, as well as jeered by boastful Reddit investors.
Many others have piled into GameStop, trying to ride the rally “to the moon,” as many Reddit investors say. Individual investors have also piled into shares of companies like AMC Entertainment Holdings Inc. in the hopes of catching similar momentum and making a quick buck.
GameStop has garnered hundreds of thousands of posts over the past month across Reddit, Twitter and Facebook, according to data this week from Meltwater, a global media intelligence company. As the stock has vaulted higher, its shares have traded in a frenzy, making it one of the most popular bets in the U.S. market in recent days, according to Dow Jones Market Data.
Keith Gill at his basement work station in Wilmington, Mass.
Seasoned traders are starting to take into account the behavior of influential investors like Mr. Gill and others.
Mark Sebastian, founder of Chicago-based Options Pit and an options trader for around 20 years, has developed a screener analyzing reams of stocks to spot those with heavy activity from individual investors. He buys or sells options based on which stocks are gaining momentum, trying to ride the wave higher or lower. Recently, this included AMC, though he said he wasn’t a fan.
“We’re trying to get on these names before they completely take off,” Mr. Sebastian said, calling one recent trade “free money.”
Mr. Gill said his life has changed overnight and hasn’t set his future plans. He would like to continue the “Roaring Kitty” YouTube channel, maybe buy a house. “I thought this trade would be successful,” he said, “but I never expected what happened over the past week.”
He has one dream in mind. “I always wanted to build an indoor track facility or a field house in Brockton,” he said of his hometown. “And now, it looks like I actually could do that.”
Sounds like amateur makes good story. What was his portfolio several years ago? I didn’t see that in the story. I’m not anti wealth. If the guy went from 70k-100k a year at a sit down job and created millions with his hobby that is great. If he had millions to begin with that’s a different story.
As far as sticking it to the man not being his original concern, that’s great, but for many that bought in that seems to be the whole point after browsing the Reddit for an hour.
The investor who helped direct the world’s attention to GameStop, leading a horde of online followers in a bizarre market rally that made and lost fortunes from one day to the next, says he’s just a normal guy.
“I didn’t expect this,” said Keith Gill, 34 years old, known as “DeepF—ingValue” by fans on Reddit’s WallStreetBets forum and “Dada” by his 2-year-old daughter. He said he didn’t set out to draw the attention of Congress, the Federal Reserve, hedge funds, the media, trading platforms and hundreds of thousands of investors.
“This story is so much bigger than me,” Mr. Gill told The Wall Street Journal in his first interview since the unboxing this week of a volatile new stock market game. “I support these retail investors, their ability to make a statement.”
To many of them, Mr. Gill—who until recently worked in marketing for Massachusetts Mutual Life Insurance Co.—is the force behind the triple-digit gains in shares of the videogame retailer GameStop, up more than 900% this year through Thursday. On Wednesday, the stock jumped 135% to $347.51, a record, before plunging to $194 a share Thursday as online brokerages clamped down. At the start of the year, GameStop shares went for around $18.
Many online investors say his advocacy helped turn them into a force powerful enough to cause big losses for established hedge funds and, for the moment, turn the investing world upside down.
Mr. Gill posted a screenshot of his brokerage account Wednesday, showing a roughly $20 million daily gain on GameStop shares and options. “Your steady hand convinced many of us to not only buy, but hold. Your example has literally changed the lives of thousands of ordinary normal people. Seriously thank you. You deserve every penny,” replied one Reddit user, reality_czech.
Online traders credit Mr. Gill with helping power the GameStop frenzy this week.
The next day, Mr. Gill posted another screenshot—showing about a $15 million loss. After Thursday’s market close, his E*Trade brokerage account, viewed by the Journal, held around $33 million, including GameStop stock, options and millions in cash.
“He always liked money,” said Elaine Gill, his mother. As a child, she said, “he would get money from those scratch tickets that people didn’t know they’d won. People would throw them on the ground…A lot of times there was still money on them.”
Mr. Gill’s online persona—he goes by “Roaring Kitty” on YouTube—has drawn tens of thousands of fans and copycats who share screenshots of their own brokerage accounts. As the GameStop frenzy peaked this week, hundreds of thousands of new investors downloaded applications like Robinhood to join the action, according to Apptopia Inc.
How Options-Trading Redditors Fed the GameStop Frenzy
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UP NEXT
0:00 / 4:14
4:14
How Options-Trading Redditors Fed the GameStop Frenzy
Wall Street is in an uproar over GameStop shares this week, after members of Reddit’s popular WallStreetBets forum encouraged bets on the video game retailer. WSJ explains how options trading is driving the action and what’s at stake.
Mr. Gill said he wasn’t a rabble-rouser out to take on the establishment, just someone who believes investors can find value in unloved stocks. He never expected to have a legion of fans debating his identity online, or millions of dollars in his trading account, he said. He was just a dad with an online hobby and a plastic kiddie slide on the front lawn of a Boston suburb.
Mr. Gill began investing in GameStop around June 2019, he said, when it was hovering around $5 a share. Earlier that year, the game retailer was hunting for its fifth chief executive in a little over 12 months. Mr. Gill kept buying. Although he never played much besides Super Mario or Donkey Kong, he saw potential for the struggling retailer to reinvigorate itself by attracting new customers with the latest videogame consoles.
“People were doing a quick take, saying GameStop was the next Blockbuster, ” he said, a chain caught in a retail decline. “It appeared many folks just weren’t digging in deeper. It was a gross misclassification of the opportunity.”
Mr. Gill, tall with shoulder-length hair, opened a YouTube channel last summer, and he worked in the basement of the home he rents in Wilmington, Mass., to avoid disturbing his daughter after bedtime, he said. On his channel, he touted GameStop and Belgian beers. His favorite is Delirium Tremens.
On a recent YouTube live-stream, he wore a red headband and aviator sunglasses while fielding questions on stocks. He poured himself Prosecco then switched to beer as he celebrated big gains and gave shout-outs to legions of viewers and traders in a seven-hour-plus extravaganza. The stream has tallied more than 200,000 views.
Mr. Gill’s obscene username on Reddit’s WallStreetBets forum is supposed to reflect a belief in value investing—buying shares of companies that are inexpensive relative to the underlying business.
Among his many Reddit fans, Mr. Gill “will go down as the greatest legend in the history of WallStreetBets,” said Jon Hagedorn, a 34-year-old training supervisor based in Ronkonkoma, N.Y. “He’s the original OG.”
The stock’s wild ride, seemingly divorced from standard measures of corporate value, has spurred complaints that investors banding together to provoke this kind of frenzy amounts to market manipulation.
The Securities and Exchange Commission said Friday it would “act to protect retail investors when the facts demonstrate abusive or manipulative trading activity.” Mr. Gill said he hasn’t heard from the SEC.
Fast times
“The first thing that I had asked him when this craziness started was: is this illegal or anything dishonest? He said, ‘No mom, it’s not,’” recalled Ms. Gill, who lives in Brockton, Mass., where she and Steve Gill raised their son.
In high school, Mr. Gill was a distance runner, and he earned national honors on the team at nearby Stonehill College, where he graduated in 2009 with an accounting major. He ran a four-minute mile until sidelined by an Achilles injury.
Mr. Gill moved to New Hampshire for a few years and found a mentor, an investor and software developer his aunt introduced him to. He holds a designation as a Chartered Financial Analyst and said he was drawn by the complexity and challenge of stock picking, which became an outlet for the energy he once put into running. He started working at MassMutual in 2019.
A notebook with notes on stocks and an '8 Ball' toy that Keith Gill uses in his video streams. At the end of his YouTube stream, Mr. Gill and his viewers ask questions of the '8 Ball' about how a stock will perform.
In the summer of 2019, he started building his position in GameStop and would post screenshots of his E*Trade account’s options positions on WallStreetBets forum. “Holy s— bro, what made you drop 53K on GameStop?” one trader posted about one of Mr. Gill’s screenshots in September 2019.
In the months that followed, he posted regularly, putting up a “GME YOLO update,” a reference to GameStop’s ticker and the mantra “you only live once.” He showed off gains in the five- and six-digits, and times when his investments plunged.
Mr. Gill stuck with GameStop, and his wagers became day-trader lore.
To fans, he tapped into the desire by millions of amateur investors around the U.S. to try their hand at stock trading. Trading fees have fallen to zero, and apps allow investors to buy and sell on their phones. The easy market access is augmented by an online community swelled with eager helpers.
SHARE YOUR THOUGHTS
Did you join in the trading frenzy this week?Join the conversation below.
Many first-time investors stuck at home in the pandemic said they found solace in chatting with others online about trading stocks or options, as well as hearing from those making profitable bets.
The discourse isn’t always positive. An off-Reddit chat room associated with WallStreetBets is filled with obscenity, racism and antigay screeds. Many on the platforms lash out against Wall Street power players, and some express a desire to see the financial pros reel from losses.
“I’m not out for anybody,” Mr. Gill said. “Roaring Kitty was an educational channel where I was showcasing my investment philosophy.”
Bear bust
Many on Wall Street disagreed with Mr. Gill’s bullish view on GameStop and have taken a big hit as a result. Hedge funds and other investment professionals piled into wagers that the shares would tumble.
To bet against a stock, hedge funds borrow shares and sell them, hoping to buy them back later at a lower price and return them. That allows them to pocket the difference between the prices. But when a shorted stock stages such a dramatic rally, it turns painful, often forcing them to exit from the positions by purchasing shares at a loss. In turn, that can inspire sharp gains in stocks, known as a “short squeeze.”
The bearish positioning of hedge funds was part of what drew many small GameStop investors, anticipating a short squeeze. Mr. Gill said his investing strategy didn’t entirely depend on a short squeeze, but he knew others were potentially betting on it.
So far, the professionals have been wrong, giving a win to Mr. Gill and other individual investors who bet big on GameStop. Hedge funds like Melvin Capital Management and Maplelane Capital were the ones burned, as well as jeered by boastful Reddit investors.
Many others have piled into GameStop, trying to ride the rally “to the moon,” as many Reddit investors say. Individual investors have also piled into shares of companies like AMC Entertainment Holdings Inc. in the hopes of catching similar momentum and making a quick buck.
GameStop has garnered hundreds of thousands of posts over the past month across Reddit, Twitter and Facebook, according to data this week from Meltwater, a global media intelligence company. As the stock has vaulted higher, its shares have traded in a frenzy, making it one of the most popular bets in the U.S. market in recent days, according to Dow Jones Market Data.
Keith Gill at his basement work station in Wilmington, Mass.
Seasoned traders are starting to take into account the behavior of influential investors like Mr. Gill and others.
Mark Sebastian, founder of Chicago-based Options Pit and an options trader for around 20 years, has developed a screener analyzing reams of stocks to spot those with heavy activity from individual investors. He buys or sells options based on which stocks are gaining momentum, trying to ride the wave higher or lower. Recently, this included AMC, though he said he wasn’t a fan.
“We’re trying to get on these names before they completely take off,” Mr. Sebastian said, calling one recent trade “free money.”
Mr. Gill said his life has changed overnight and hasn’t set his future plans. He would like to continue the “Roaring Kitty” YouTube channel, maybe buy a house. “I thought this trade would be successful,” he said, “but I never expected what happened over the past week.”
He has one dream in mind. “I always wanted to build an indoor track facility or a field house in Brockton,” he said of his hometown. “And now, it looks like I actually could do that.”
Sounds like amateur makes good story. What was his portfolio several years ago? I didn’t see that in the story. I’m not anti wealth. If the guy went from 70k-100k a year at a sit down job and created millions with his hobby that is great. If he had millions to begin with that’s a different story.
As far as sticking it to the man not being his original concern, that’s great, but for many that bought in that seems to be the whole point after browsing the Reddit for an hour.
Yeah sure, but if you are able to quit a job and day trade, you have substantial liquid cash to start. People livign paycheck to paycheck cannot do such a thing. And yes, you're right, it's about sticking it to the man now. But unless you sell at a profit, which plenty will not, it still seems counterproductive.
The investor who helped direct the world’s attention to GameStop, leading a horde of online followers in a bizarre market rally that made and lost fortunes from one day to the next, says he’s just a normal guy.
“I didn’t expect this,” said Keith Gill, 34 years old, known as “DeepF—ingValue” by fans on Reddit’s WallStreetBets forum and “Dada” by his 2-year-old daughter. He said he didn’t set out to draw the attention of Congress, the Federal Reserve, hedge funds, the media, trading platforms and hundreds of thousands of investors.
“This story is so much bigger than me,” Mr. Gill told The Wall Street Journal in his first interview since the unboxing this week of a volatile new stock market game. “I support these retail investors, their ability to make a statement.”
To many of them, Mr. Gill—who until recently worked in marketing for Massachusetts Mutual Life Insurance Co.—is the force behind the triple-digit gains in shares of the videogame retailer GameStop, up more than 900% this year through Thursday. On Wednesday, the stock jumped 135% to $347.51, a record, before plunging to $194 a share Thursday as online brokerages clamped down. At the start of the year, GameStop shares went for around $18.
Many online investors say his advocacy helped turn them into a force powerful enough to cause big losses for established hedge funds and, for the moment, turn the investing world upside down.
Mr. Gill posted a screenshot of his brokerage account Wednesday, showing a roughly $20 million daily gain on GameStop shares and options. “Your steady hand convinced many of us to not only buy, but hold. Your example has literally changed the lives of thousands of ordinary normal people. Seriously thank you. You deserve every penny,” replied one Reddit user, reality_czech.
Online traders credit Mr. Gill with helping power the GameStop frenzy this week.
The next day, Mr. Gill posted another screenshot—showing about a $15 million loss. After Thursday’s market close, his E*Trade brokerage account, viewed by the Journal, held around $33 million, including GameStop stock, options and millions in cash.
“He always liked money,” said Elaine Gill, his mother. As a child, she said, “he would get money from those scratch tickets that people didn’t know they’d won. People would throw them on the ground…A lot of times there was still money on them.”
Mr. Gill’s online persona—he goes by “Roaring Kitty” on YouTube—has drawn tens of thousands of fans and copycats who share screenshots of their own brokerage accounts. As the GameStop frenzy peaked this week, hundreds of thousands of new investors downloaded applications like Robinhood to join the action, according to Apptopia Inc.
How Options-Trading Redditors Fed the GameStop Frenzy
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UP NEXT
0:00 / 4:14
4:14
How Options-Trading Redditors Fed the GameStop Frenzy
Wall Street is in an uproar over GameStop shares this week, after members of Reddit’s popular WallStreetBets forum encouraged bets on the video game retailer. WSJ explains how options trading is driving the action and what’s at stake.
Mr. Gill said he wasn’t a rabble-rouser out to take on the establishment, just someone who believes investors can find value in unloved stocks. He never expected to have a legion of fans debating his identity online, or millions of dollars in his trading account, he said. He was just a dad with an online hobby and a plastic kiddie slide on the front lawn of a Boston suburb.
Mr. Gill began investing in GameStop around June 2019, he said, when it was hovering around $5 a share. Earlier that year, the game retailer was hunting for its fifth chief executive in a little over 12 months. Mr. Gill kept buying. Although he never played much besides Super Mario or Donkey Kong, he saw potential for the struggling retailer to reinvigorate itself by attracting new customers with the latest videogame consoles.
“People were doing a quick take, saying GameStop was the next Blockbuster, ” he said, a chain caught in a retail decline. “It appeared many folks just weren’t digging in deeper. It was a gross misclassification of the opportunity.”
Mr. Gill, tall with shoulder-length hair, opened a YouTube channel last summer, and he worked in the basement of the home he rents in Wilmington, Mass., to avoid disturbing his daughter after bedtime, he said. On his channel, he touted GameStop and Belgian beers. His favorite is Delirium Tremens.
On a recent YouTube live-stream, he wore a red headband and aviator sunglasses while fielding questions on stocks. He poured himself Prosecco then switched to beer as he celebrated big gains and gave shout-outs to legions of viewers and traders in a seven-hour-plus extravaganza. The stream has tallied more than 200,000 views.
Mr. Gill’s obscene username on Reddit’s WallStreetBets forum is supposed to reflect a belief in value investing—buying shares of companies that are inexpensive relative to the underlying business.
Among his many Reddit fans, Mr. Gill “will go down as the greatest legend in the history of WallStreetBets,” said Jon Hagedorn, a 34-year-old training supervisor based in Ronkonkoma, N.Y. “He’s the original OG.”
The stock’s wild ride, seemingly divorced from standard measures of corporate value, has spurred complaints that investors banding together to provoke this kind of frenzy amounts to market manipulation.
The Securities and Exchange Commission said Friday it would “act to protect retail investors when the facts demonstrate abusive or manipulative trading activity.” Mr. Gill said he hasn’t heard from the SEC.
Fast times
“The first thing that I had asked him when this craziness started was: is this illegal or anything dishonest? He said, ‘No mom, it’s not,’” recalled Ms. Gill, who lives in Brockton, Mass., where she and Steve Gill raised their son.
In high school, Mr. Gill was a distance runner, and he earned national honors on the team at nearby Stonehill College, where he graduated in 2009 with an accounting major. He ran a four-minute mile until sidelined by an Achilles injury.
Mr. Gill moved to New Hampshire for a few years and found a mentor, an investor and software developer his aunt introduced him to. He holds a designation as a Chartered Financial Analyst and said he was drawn by the complexity and challenge of stock picking, which became an outlet for the energy he once put into running. He started working at MassMutual in 2019.
A notebook with notes on stocks and an '8 Ball' toy that Keith Gill uses in his video streams. At the end of his YouTube stream, Mr. Gill and his viewers ask questions of the '8 Ball' about how a stock will perform.
In the summer of 2019, he started building his position in GameStop and would post screenshots of his E*Trade account’s options positions on WallStreetBets forum. “Holy s— bro, what made you drop 53K on GameStop?” one trader posted about one of Mr. Gill’s screenshots in September 2019.
In the months that followed, he posted regularly, putting up a “GME YOLO update,” a reference to GameStop’s ticker and the mantra “you only live once.” He showed off gains in the five- and six-digits, and times when his investments plunged.
Mr. Gill stuck with GameStop, and his wagers became day-trader lore.
To fans, he tapped into the desire by millions of amateur investors around the U.S. to try their hand at stock trading. Trading fees have fallen to zero, and apps allow investors to buy and sell on their phones. The easy market access is augmented by an online community swelled with eager helpers.
SHARE YOUR THOUGHTS
Did you join in the trading frenzy this week?Join the conversation below.
Many first-time investors stuck at home in the pandemic said they found solace in chatting with others online about trading stocks or options, as well as hearing from those making profitable bets.
The discourse isn’t always positive. An off-Reddit chat room associated with WallStreetBets is filled with obscenity, racism and antigay screeds. Many on the platforms lash out against Wall Street power players, and some express a desire to see the financial pros reel from losses.
“I’m not out for anybody,” Mr. Gill said. “Roaring Kitty was an educational channel where I was showcasing my investment philosophy.”
Bear bust
Many on Wall Street disagreed with Mr. Gill’s bullish view on GameStop and have taken a big hit as a result. Hedge funds and other investment professionals piled into wagers that the shares would tumble.
To bet against a stock, hedge funds borrow shares and sell them, hoping to buy them back later at a lower price and return them. That allows them to pocket the difference between the prices. But when a shorted stock stages such a dramatic rally, it turns painful, often forcing them to exit from the positions by purchasing shares at a loss. In turn, that can inspire sharp gains in stocks, known as a “short squeeze.”
The bearish positioning of hedge funds was part of what drew many small GameStop investors, anticipating a short squeeze. Mr. Gill said his investing strategy didn’t entirely depend on a short squeeze, but he knew others were potentially betting on it.
So far, the professionals have been wrong, giving a win to Mr. Gill and other individual investors who bet big on GameStop. Hedge funds like Melvin Capital Management and Maplelane Capital were the ones burned, as well as jeered by boastful Reddit investors.
Many others have piled into GameStop, trying to ride the rally “to the moon,” as many Reddit investors say. Individual investors have also piled into shares of companies like AMC Entertainment Holdings Inc. in the hopes of catching similar momentum and making a quick buck.
GameStop has garnered hundreds of thousands of posts over the past month across Reddit, Twitter and Facebook, according to data this week from Meltwater, a global media intelligence company. As the stock has vaulted higher, its shares have traded in a frenzy, making it one of the most popular bets in the U.S. market in recent days, according to Dow Jones Market Data.
Keith Gill at his basement work station in Wilmington, Mass.
Seasoned traders are starting to take into account the behavior of influential investors like Mr. Gill and others.
Mark Sebastian, founder of Chicago-based Options Pit and an options trader for around 20 years, has developed a screener analyzing reams of stocks to spot those with heavy activity from individual investors. He buys or sells options based on which stocks are gaining momentum, trying to ride the wave higher or lower. Recently, this included AMC, though he said he wasn’t a fan.
“We’re trying to get on these names before they completely take off,” Mr. Sebastian said, calling one recent trade “free money.”
Mr. Gill said his life has changed overnight and hasn’t set his future plans. He would like to continue the “Roaring Kitty” YouTube channel, maybe buy a house. “I thought this trade would be successful,” he said, “but I never expected what happened over the past week.”
He has one dream in mind. “I always wanted to build an indoor track facility or a field house in Brockton,” he said of his hometown. “And now, it looks like I actually could do that.”
Sounds like amateur makes good story. What was his portfolio several years ago? I didn’t see that in the story. I’m not anti wealth. If the guy went from 70k-100k a year at a sit down job and created millions with his hobby that is great. If he had millions to begin with that’s a different story.
As far as sticking it to the man not being his original concern, that’s great, but for many that bought in that seems to be the whole point after browsing the Reddit for an hour.
Yeah sure, but if you are able to quit a job and day trade, you have substantial liquid cash to start. People livign paycheck to paycheck cannot do such a thing. And yes, you're right, it's about sticking it to the man now. But unless you sell at a profit, which plenty will not, it still seems counterproductive.
I just think the whole thing is fascinating, and like every other weird thing that happens here in the USA don’t expect it to be the last occurrence.
Robinhood,
the online trading app heralded by some as a democratizing force to
empower small investors, has spent the past few years nurturing a close
relationship with one of Wall Street’s biggest players and building ties
with some of the most powerful institutions in Washington.
The
Silicon Valley-based trading platform makes a large amount of revenue
from Citadel Securities, a Chicago-based financial-services giant.
Robinhood’s regulatory filings show the company charges large investment
firms called “market makers” fees to access real-time information about
which stocks its users are buying and selling, a practice some
regulators and industry watchers have seen as a potential conflict of
interest.
Robinhood
routes more than half of its customer orders to Citadel, by far its
largest market-making partner by volume, Robinhood disclosures show. The app also works with Virtu, G1 Execution Services, Wolverine and Two Sigma.
Robinhood’s
relationships with these investment firms is likely to face new
scrutiny after the online broker took the extraordinary step Thursday of
limiting trading of certain stocks that were propelled to meteoric
heights by conversations on Reddit message boards. After the trading
halt, Reddit users accused Citadel and its billionaire founder, Ken
Griffin, of pressuring Robinhood to limit trading of certain stocks, a
move that may have prevented further losses for the short-sellers that
lost billions betting against GameStop.
On
Twitter and the Reddit forum Wallstreetbets, retail investors
speculated that Robinhood had caved to pressure from its powerful
business partner. Because the company does not charge its users any
fees, a key part of Robinhood’s business model relies on Citadel and
similar companies.
In a blog post
Thursday afternoon, Robinhood strongly denied its move was influenced
by the large investment firms it works with to execute trades. “This was
a risk-management decision, and was not made on the direction of the
market makers we route to,” the company wrote. A spokeswoman for
Robinhood declined to comment on the company’s relationships with market
makers.
Josh
Zeitz, a spokesman for Citadel Securities, said in a statement that the
company “has not instructed or otherwise caused any brokerage firm to
stop, suspend, or limit trading or otherwise refuse to do business.”
Citadel LLC, a separate hedge fund also founded by Griffin, recently helped bail out Melvin Capital, a fund that sank 30 percent in a few weeks after shorting GameStop.
The
events triggered a swift response from a wide range of lawmakers, from
Rep. Alexandria Ocasio-Cortez (D-N.Y.) to Sen. Ted Cruz (R-Tex.), who said they supported
an investigation of Robinhood’s decision to block trading in GameStop.
Rep. Maxine Waters (D-Calif.) announced that the House Financial
Services Committee would hold a hearing to examine how the market “has
been manipulated by hedge funds and their financial partners to benefit
themselves while others pay the price.”
Lauren
Hitt, a spokeswoman for Ocasio-Cortez, told The Washington Post that
the congresswoman believes “Citadel’s role needs to be examined.”
On Friday, the Securities and Exchange Commission said
the agency was “closely monitoring” the stock-market volatility, which
it said “has the potential to expose investors to rapid and severe
losses and undermine market confidence.”
Robinhood
announced it would allow “limited buys” of GameStop and other heavily
shorted stocks to resume Friday, sending shares of GameStop soaring more
than 70 percent.
Congress
plans to examine Citadel’s agreement to obtain trading data from
Robinhood in exchange for millions of dollars. These types of
arrangements, called payments for “order flows,” have become more common
in recent years and more lucrative during the pandemic trading boom of
the past year. They have also drawn growing scrutiny from federal regulators who have raised concerns that they can hurt average investors.
Because
of the GameStop frenzy, “the regulators have a chance to really examine
what’s going on and get access to information about what these
relationships really are like,” said Robert Weissman, president of
Public Citizen, a nonprofit consumer advocacy organization.
Robinhood
and other brokerages cannot execute trades directly, so they usually
work with market-making firms. Robinhood is required by law to work with
market makers that can give their users the best market prices for a
given trade. When Robinhood directs a transaction to one of these third
parties, the market maker learns which security is being bought or sold
before the trade happens.
Citadel
and other market makers pay Robinhood a small fee for this privilege,
which gives the market-making firms information about retail trading
patterns. Citadel said it uses this information to improve its trading
algorithms. Market makers also take a small profit on the “spread,” or
difference in price between what a Robinhood user pays and the price at
which the security is being sold in the market.
Robinhood
generated $271 million from all order-flow payments in the first half
of 2020, according to regulatory filings. Because it is a closely held
company, Robinhood does not disclose how much of its total revenue comes
from order-flow payments. A spokeswoman for Robinhood declined to
comment on the company’s business model.
TD
Ameritrade, another major online brokerage, generated about $560
million from those payments over the first half of 2020, but because the
company makes money from other services, that represented only about
one-fifth of its sales over that period.
Critics
of these arrangements say they amount to a hidden tax on unsuspecting
mom-and-pop investors. Democrat Carl Levin, a former senator
representing Michigan, recently argued in an editorial for the Financial Times that the Biden administration should abolish the practice of order-flow payments.
Last month, Robinhood paid $65 million to settle
a charge by the SEC related to its order-flow agreements. The federal
agency found Robinhood had misled its users by failing to disclose the
payments it received from investment firms and failing to find
investment partners that offered the most competitive rates for
executing trades.
At
the time, Robinhood said in a statement that it has been fully
transparent in its communications with customers about current revenue
streams and that the settlement related to “historical practices that do
not reflect Robinhood today.”
The
new regulatory scrutiny around GameStop trading will test the political
influence of two companies that have invested in building connections
in Washington. Last year, Robinhood bulked up its regulatory staff,
spent $275,000 lobbying the federal government and hired lobbyists with
ties to a Wall Street regulator and congressional oversight committees, according to disclosure filings and an analysis by the Center for Responsive Politics.
Robinhood’s
chief legal officer is Dan Gallagher, a Republican appointee to the SEC
who served as a commissioner there from 2011 to 2015 and was known for
his persistent criticism
of the Dodd-Frank Act, financial regulation passed after the 2008
crisis. Beth Zorc, a lawyer who worked at the Department of Housing and
Urban Development in the Trump administration after roles as a senior
aide to the Senate Banking Committee and the House Financial Services
Committee, joined Robinhood late last year to help oversee its federal
lobbying efforts.
“There’s
a lot of hard competition, but the financial sector is one of the
worst, most egregious areas for revolving door between government and
regulated industry,” Weissman said.
Citadel spent $520,000 on lobbying in 2020 and counted a former Treasury Department employee and a former tax aide on Capitol Hill among its lobbyists.
Citadel
also paid Janet Yellen, President Biden’s newly installed treasury
secretary, between $710,000 and $760,000 in speaking fees in 2019 and
2020, according to her financial disclosure forms.
When asked in a news briefing Thursday about the payments and whether
Yellen would recuse herself from advising Biden on issues related to
Robinhood, White House press secretary Jen Psaki said it is normal for
experts such as Yellen to be paid for advice while not actively serving
in a government role.
“The
secretary of treasury is one of the world-renowned experts on markets,
on the economy,” Psaki said. “It shouldn’t be a surprise to anyone she
was paid to give her perspective and advice.”
Citadel declined to comment on its lobbying or payments to Yellen.
Yellen said in her ethics agreement
upon her nomination that she would seek written authorization before
she participated “personally and substantially” in any matter involving
Citadel or other financial firms she received speaking fees from.
Asked
whether Yellen would seek that authorization, Treasury Department
spokesman Calvin Mitchell did not respond directly. “Secretary Yellen of
course will abide by her ethics pledge in all instances,” Mitchell
said.
Not today Sir, Probably not tomorrow.............................................. bayfront arena st. pete '94
you're finally here and I'm a mess................................................... nationwide arena columbus '10
memories like fingerprints are slowly raising.................................... first niagara center buffalo '13
another man ..... moved by sleight of hand...................................... joe louis arena detroit '14
Meh. This is mostly conjecture that both parties deny. It should be investigated. It will be clear if they were under financial distress or not. Further, RH is incentived to make as many trades as possible. Their deal flow revenue isn't exactly immaterial. It's a primary revenue source along with the lending.
‘Is this really happening right now?’: A 10-year-old cashes in his GameStop shares By Sydney Page January 30 at 6:00 AM EST The GameStop stock surge has benefited small-scale investors, many of them surprised at their unlikely windfalls. Perhaps none so much as a 10-year-old boy from San Antonio. The fifth-grader was gifted 10 GameStop shares, each at $6.19, as a Kwanzaa present from his mother in December 2019. She bought the stock simply because her son liked to buy video games at the store and she wanted to teach him a little about the stock market. In a matter of minutes this week, Jaydyn Carr became an unexpected beneficiary of the market mayhem, as his $60 stake in the video game retailer grew to $3,200. “Is this really happening right now?” Jaydyn’s mother, Nina Carr, remembers asking herself. “I couldn’t believe it was true.” [What you need to know about GameStop’s stock price chaos] Carr, 31, was working in her home office on Wednesday when a slew of news alerts about GameStop’s Reddit-spurred surge started appearing on her phone. Her jaw dropped. Once she absorbed the news, she sprinted to her son’s bedroom. “I was so excited for him,” she said. In simple terms, she described to Jaydyn what happened to his GameStop shares and why they suddenly skyrocketed. “She was saying that stocks hardly ever go up this way, so if I wanted to sell it, we should sell it now,” Jaydyn said. Ultimately, the choice was his. “It wouldn’t be fair for me to make the decision on his behalf,” Carr explained. Besides, she added, “if he lost the money, it would have been a lesson learned.” So, she asked her only child the burning question: “Do you want to sell or stay?” To her relief, Jaydyn decided to sell. “I was so excited. I thought it wasn’t even reality,” Jaydyn said. Carr then walked her son through the selling process, and he cashed out his shares. The plan is to put $2,200 in Jaydyn’s savings account and then invest the remaining $1,000 as a mother-son team. [EXPLAINER: Why GameStop’s stock surge is shaking Wall Street] When Carr bought the 10 GameStop shares in 2019 as a Kwanzaa gift, she certainly did not anticipate the value would one day spontaneously soar, she said. Her sole intention in purchasing the stock was to teach her then-eight-year-old son about Ujamaa, which means, “cooperative economics.” It’s one of the seven principles of Kwanzaa. “The goal was to ensure he knows the value of a dollar and how to manage money,” Carr said, explaining that Ujamaa is the idea of sharing wealth while also strengthening personal finances and self-reliance. Beyond relating the gift to the deeper meaning of the holiday, Carr said that since Jaydyn’s father passed away in February 2014, it has been a priority for her to educate her son about money management. “I am very frugal, and saving is a big part of what I do. Being the only parent, I want to set a good example for him,” she said. “I got into finance when his dad passed away. I wanted to make sure his future was in good hands.” According to Jaydyn, he has already learned a lot from his mom: “She is always teaching me what to do in emergencies in life and how to save money to one day buy a car and a house,” he said. Carr — who is a public health nutritionist and runs her own business — felt the gift was an opportunity to reinforce the importance of investments, she said. As for deciding which company to invest in, the choice was obvious: Jaydyn is a video game enthusiast, so “we were always in and out of GameStop, constantly getting different video games,” Carr explained. “I thought, ‘How can I mix our principles of Kwanzaa with something I know he really wants?’ ” In an effort to ensure her son still had a proper present to open, “I had to figure out something to give this kid to unwrap,” she recalled. “I printed out a template and filled in his information, put it in a picture frame, and wrapped it up.” While the gift may not have been the Xbox One he was hoping for, “he was definitely excited because it had GameStop’s name on it,” said Carr. Plus, Jaydyn was especially jazzed after his mother explained to him that he owned a small portion of a company he loves. More than two years later, the frame still sits in a place of honor in Jaydyn’s bedroom. Now, though, it carries new meaning — a memento of a once-in-a-lifetime experience. While market manipulation is not a new phenomenon, the “magnitude, scale and speed of this was unprecedented,” Veljko Fotak, a finance professor at the University of Buffalo, said. [Reddit’s /r/wallstreetbets astronomical rise] Although the scheme is problematic in many ways, Fotak said, “I think the more kids learn and the more they understand the markets, the better equipped they are to plan for their own retirement, and the better off we are as a society.” For Jaydyn, this is just the beginning. He has already got big plans: “I am now looking for companies that pay dividends,” he said confidently.
Not today Sir, Probably not tomorrow.............................................. bayfront arena st. pete '94
you're finally here and I'm a mess................................................... nationwide arena columbus '10
memories like fingerprints are slowly raising.................................... first niagara center buffalo '13
another man ..... moved by sleight of hand...................................... joe louis arena detroit '14
Comments
“the hedge fund managers are pissed and when they get pissed they rip out their Bloomberg terminals and throw them through the wall of their $27 million penthouses and then yell for their maids to come clean everything up and also to make them a sandwich. Alternatively, they go on CNBC to complain that this is bullshit and unfair and not the way any of this is supposed to work. Hedge fund billionaire Leon Cooperman happens to know what we’re talking about:
“The reason the market is doing what it’s doing is people are sitting at home getting their checks from the government, okay, and this fair share is a bullshit concept,” Cooperman shouted on the business network earlier today. “It’s just a way of attacking wealthy people. It’s inappropriate and we all gotta work together and pull together.”
While Cooperman does not appear to have been affected by the GameStop carnage, at least in a meaningful way, he’s basically the perfect person to show up on TV and scream about how wealthy people are being attacked. If you’re unfamiliar with the guy, he’s long been known for going apeshit when people suggest that the über-wealthy aren’t paying their fair share, or when politicians express anything less than total respect for the “job creators” of the world. During the Obama years, he claimed that the 44th president’s decision to call Wall Street executives “fat cat bankers” right after the financial crisis was encouraging “class warfare” and that Obama’s “tone” was “cleaving a widening gulf…between the downtrodden and those best positioned to help them,” i.e. the benevolent rich. During the 2020 Democratic primary, he sparred with Elizabeth Warren over her supposedly “shitting on” the American dream and for being mean to the 0.000001%. And after the Democratic primary race came down to Joe Biden and Bernie Sanders, he claimed that Sanders was “a bigger threat [to the stock market] than the coronavirus.” Yes, the coronavirus. (Later, he went on CNBC and cried, claiming he’d been so antagonistic about 2020 because he cares so much about America.)
Anyway, Cooperman predicts this will “end in tears,” though if you’ve got silk tissues to wipe your nose with and a yacht on which to rest your weary head, you’ll probably end up fine.“
Cry me a river. Why shouldn’t the masses be able to coordinate and game the market to their benefit. I can’t think of any reason why not. Calling it herd mentality or populism is also bs in my opinion...what makes it so..social media, organized like minded people, by that coin, the union movement and the movement for black lives are just populism and herd mentality.
I think this is very inspiring and I would like to see activists get together and leverage a little bit of money millions chipping in $2 - $27 and use market manipulation as a form of societal reorganization. It could be used just like boycotts. Don’t like nestle? Find some floundering subsidiaries jack them up and cash them out raise more capital and keep moving up to leverage against the bigger fish. This has potential to really destabilize and potentially even the playing field a bit more for the rest of us.
There are no kings inside the gates of eden
yes everything after t he quotes are my thoughts.
sure this instance specifically is bonkers, but it to me shows how ridiculous the sandcastle called the stock market is and additionally brings to light how these practices could potentially be used through collective action to make positive social change and potentially redistribute some of the hoarded wealth.
There are no kings inside the gates of eden
And yes, my analogy was about the retail investors on WSB getting swept up into the madness. Trump didn't storm the Capitol and I guarantee most of the people that started this madness have cashed out long ago.
Collective purchasing of a shitty stock does not make that company more profitable. I'm sorry it's simply not part of a broader narrative. That's people trying to stretch what is really happening. The price of a share is indicative of its perceived value. These shitty companies (GME, Blackberry, AMC) still have a shitty business plan and a shitty outlook.
There are no kings inside the gates of eden
Keep in mind, what I'm talking about is not the same thing that the Hill is talking about. They're all mad because RH halted trading while institutional investors continued. That's a different issue. I think all trading on the stock could have been stopped, defensibly. Or everyone keeps trading. The bubble will burst though.
not sure what margin lending is.
There are no kings inside the gates of eden
There are no kings inside the gates of eden
There are no kings inside the gates of eden
Since when is it their duty to tell people what to do with their money? Were they this concerned during the run-up to the 2008 crash? Are some people going to loss some money, yup. I’ve never heard these folks speak up or act to prevent people from buying lotto tickets, going to a casino, or gambling on sports. Their just pissed they and their greedy friends had the tables turned and some are getting cleaned. Case in point, watch that fucker Leon Cooperman’s interview from yesterday. He’s so up-and-up that he plead guilty to insider training.
I’m all for the long term investments that russel talks about. Smart investments in index funds, blue chips, so on. That’s what I do. Everyone should have the same access to invest if they chose to do so. Whether it’s $100k or $5. But if I or others want to “play the market” like the hedge funds, short sellers, and those that attend “idea dinners,” those who we are told are “savvy investors” then we should be able to. If they lose, good. If I, or others lose, well that’s the breaks. The problem is they don’t like eating a shovel full shit once in a while. Change the regs to level the field. Fuck them.
Im also closing my Robinhood account and headed over to fidelity after the GameStop fiasco ends.
https://www.nationalreview.com/2021/01/why-robinhood-halted-gamestop-trading/
As far as the other commentary, I would be completely fine if shorting was made illegal. It reminds me a lot of the mortgage tricks adn tools that were so popular leading up to 2008 (stated income, large balloons, interest only, etc.). When they were used by the very wealthy, they worked. When they came to the masses, they were abused by the brokers, lenders, etc. and it was one of the primary reasons we crashed.
Good on you!
There are no kings inside the gates of eden
There are no kings inside the gates of eden
The investor who helped direct the world’s attention to GameStop, leading a horde of online followers in a bizarre market rally that made and lost fortunes from one day to the next, says he’s just a normal guy.
“I didn’t expect this,” said Keith Gill, 34 years old, known as “DeepF—ingValue” by fans on Reddit’s WallStreetBets forum and “Dada” by his 2-year-old daughter. He said he didn’t set out to draw the attention of Congress, the Federal Reserve, hedge funds, the media, trading platforms and hundreds of thousands of investors.
“This story is so much bigger than me,” Mr. Gill told The Wall Street Journal in his first interview since the unboxing this week of a volatile new stock market game. “I support these retail investors, their ability to make a statement.”
To many of them, Mr. Gill—who until recently worked in marketing for Massachusetts Mutual Life Insurance Co.—is the force behind the triple-digit gains in shares of the videogame retailer GameStop, up more than 900% this year through Thursday. On Wednesday, the stock jumped 135% to $347.51, a record, before plunging to $194 a share Thursday as online brokerages clamped down. At the start of the year, GameStop shares went for around $18.
Many online investors say his advocacy helped turn them into a force powerful enough to cause big losses for established hedge funds and, for the moment, turn the investing world upside down.
Mr. Gill posted a screenshot of his brokerage account Wednesday, showing a roughly $20 million daily gain on GameStop shares and options. “Your steady hand convinced many of us to not only buy, but hold. Your example has literally changed the lives of thousands of ordinary normal people. Seriously thank you. You deserve every penny,” replied one Reddit user, reality_czech.
Online traders credit Mr. Gill with helping power the GameStop frenzy this week.
The next day, Mr. Gill posted another screenshot—showing about a $15 million loss. After Thursday’s market close, his E*Trade brokerage account, viewed by the Journal, held around $33 million, including GameStop stock, options and millions in cash.
“He always liked money,” said Elaine Gill, his mother. As a child, she said, “he would get money from those scratch tickets that people didn’t know they’d won. People would throw them on the ground…A lot of times there was still money on them.”
Mr. Gill’s online persona—he goes by “Roaring Kitty” on YouTube—has drawn tens of thousands of fans and copycats who share screenshots of their own brokerage accounts. As the GameStop frenzy peaked this week, hundreds of thousands of new investors downloaded applications like Robinhood to join the action, according to Apptopia Inc.
Mr. Gill said he wasn’t a rabble-rouser out to take on the establishment, just someone who believes investors can find value in unloved stocks. He never expected to have a legion of fans debating his identity online, or millions of dollars in his trading account, he said. He was just a dad with an online hobby and a plastic kiddie slide on the front lawn of a Boston suburb.
Mr. Gill began investing in GameStop around June 2019, he said, when it was hovering around $5 a share. Earlier that year, the game retailer was hunting for its fifth chief executive in a little over 12 months. Mr. Gill kept buying. Although he never played much besides Super Mario or Donkey Kong, he saw potential for the struggling retailer to reinvigorate itself by attracting new customers with the latest videogame consoles.
“People were doing a quick take, saying GameStop was the next Blockbuster, ” he said, a chain caught in a retail decline. “It appeared many folks just weren’t digging in deeper. It was a gross misclassification of the opportunity.”
Mr. Gill, tall with shoulder-length hair, opened a YouTube channel last summer, and he worked in the basement of the home he rents in Wilmington, Mass., to avoid disturbing his daughter after bedtime, he said. On his channel, he touted GameStop and Belgian beers. His favorite is Delirium Tremens.
On a recent YouTube live-stream, he wore a red headband and aviator sunglasses while fielding questions on stocks. He poured himself Prosecco then switched to beer as he celebrated big gains and gave shout-outs to legions of viewers and traders in a seven-hour-plus extravaganza. The stream has tallied more than 200,000 views.
Mr. Gill’s obscene username on Reddit’s WallStreetBets forum is supposed to reflect a belief in value investing—buying shares of companies that are inexpensive relative to the underlying business.
Among his many Reddit fans, Mr. Gill “will go down as the greatest legend in the history of WallStreetBets,” said Jon Hagedorn, a 34-year-old training supervisor based in Ronkonkoma, N.Y. “He’s the original OG.”
The stock’s wild ride, seemingly divorced from standard measures of corporate value, has spurred complaints that investors banding together to provoke this kind of frenzy amounts to market manipulation.
The Securities and Exchange Commission said Friday it would “act to protect retail investors when the facts demonstrate abusive or manipulative trading activity.” Mr. Gill said he hasn’t heard from the SEC.
Fast times
“The first thing that I had asked him when this craziness started was: is this illegal or anything dishonest? He said, ‘No mom, it’s not,’” recalled Ms. Gill, who lives in Brockton, Mass., where she and Steve Gill raised their son.
In high school, Mr. Gill was a distance runner, and he earned national honors on the team at nearby Stonehill College, where he graduated in 2009 with an accounting major. He ran a four-minute mile until sidelined by an Achilles injury.
Mr. Gill moved to New Hampshire for a few years and found a mentor, an investor and software developer his aunt introduced him to. He holds a designation as a Chartered Financial Analyst and said he was drawn by the complexity and challenge of stock picking, which became an outlet for the energy he once put into running. He started working at MassMutual in 2019.
In the summer of 2019, he started building his position in GameStop and would post screenshots of his E*Trade account’s options positions on WallStreetBets forum. “Holy s— bro, what made you drop 53K on GameStop?” one trader posted about one of Mr. Gill’s screenshots in September 2019.
In the months that followed, he posted regularly, putting up a “GME YOLO update,” a reference to GameStop’s ticker and the mantra “you only live once.” He showed off gains in the five- and six-digits, and times when his investments plunged.
Mr. Gill stuck with GameStop, and his wagers became day-trader lore.
To fans, he tapped into the desire by millions of amateur investors around the U.S. to try their hand at stock trading. Trading fees have fallen to zero, and apps allow investors to buy and sell on their phones. The easy market access is augmented by an online community swelled with eager helpers.
SHARE YOUR THOUGHTS
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Many first-time investors stuck at home in the pandemic said they found solace in chatting with others online about trading stocks or options, as well as hearing from those making profitable bets.
The discourse isn’t always positive. An off-Reddit chat room associated with WallStreetBets is filled with obscenity, racism and antigay screeds. Many on the platforms lash out against Wall Street power players, and some express a desire to see the financial pros reel from losses.
“I’m not out for anybody,” Mr. Gill said. “Roaring Kitty was an educational channel where I was showcasing my investment philosophy.”
Bear bust
Many on Wall Street disagreed with Mr. Gill’s bullish view on GameStop and have taken a big hit as a result. Hedge funds and other investment professionals piled into wagers that the shares would tumble.
To bet against a stock, hedge funds borrow shares and sell them, hoping to buy them back later at a lower price and return them. That allows them to pocket the difference between the prices. But when a shorted stock stages such a dramatic rally, it turns painful, often forcing them to exit from the positions by purchasing shares at a loss. In turn, that can inspire sharp gains in stocks, known as a “short squeeze.”
The bearish positioning of hedge funds was part of what drew many small GameStop investors, anticipating a short squeeze. Mr. Gill said his investing strategy didn’t entirely depend on a short squeeze, but he knew others were potentially betting on it.
So far, the professionals have been wrong, giving a win to Mr. Gill and other individual investors who bet big on GameStop. Hedge funds like Melvin Capital Management and Maplelane Capital were the ones burned, as well as jeered by boastful Reddit investors.
Many others have piled into GameStop, trying to ride the rally “to the moon,” as many Reddit investors say. Individual investors have also piled into shares of companies like AMC Entertainment Holdings Inc. in the hopes of catching similar momentum and making a quick buck.
GameStop has garnered hundreds of thousands of posts over the past month across Reddit, Twitter and Facebook, according to data this week from Meltwater, a global media intelligence company. As the stock has vaulted higher, its shares have traded in a frenzy, making it one of the most popular bets in the U.S. market in recent days, according to Dow Jones Market Data.
Keith Gill at his basement work station in Wilmington, Mass.
Seasoned traders are starting to take into account the behavior of influential investors like Mr. Gill and others.
Mark Sebastian, founder of Chicago-based Options Pit and an options trader for around 20 years, has developed a screener analyzing reams of stocks to spot those with heavy activity from individual investors. He buys or sells options based on which stocks are gaining momentum, trying to ride the wave higher or lower. Recently, this included AMC, though he said he wasn’t a fan.
“We’re trying to get on these names before they completely take off,” Mr. Sebastian said, calling one recent trade “free money.”
Mr. Gill said his life has changed overnight and hasn’t set his future plans. He would like to continue the “Roaring Kitty” YouTube channel, maybe buy a house. “I thought this trade would be successful,” he said, “but I never expected what happened over the past week.”
He has one dream in mind. “I always wanted to build an indoor track facility or a field house in Brockton,” he said of his hometown. “And now, it looks like I actually could do that.”
There are no kings inside the gates of eden
There are no kings inside the gates of eden
Robinhood and Citadel’s relationship comes into focus as Washington vows to examine stock-market moves
Trading firms at center of Reddit-fueled stock surges have worked closely to share users’ market data, build political influence
Robinhood, the online trading app heralded by some as a democratizing force to empower small investors, has spent the past few years nurturing a close relationship with one of Wall Street’s biggest players and building ties with some of the most powerful institutions in Washington.
The Silicon Valley-based trading platform makes a large amount of revenue from Citadel Securities, a Chicago-based financial-services giant. Robinhood’s regulatory filings show the company charges large investment firms called “market makers” fees to access real-time information about which stocks its users are buying and selling, a practice some regulators and industry watchers have seen as a potential conflict of interest.
Robinhood routes more than half of its customer orders to Citadel, by far its largest market-making partner by volume, Robinhood disclosures show. The app also works with Virtu, G1 Execution Services, Wolverine and Two Sigma.
Robinhood’s relationships with these investment firms is likely to face new scrutiny after the online broker took the extraordinary step Thursday of limiting trading of certain stocks that were propelled to meteoric heights by conversations on Reddit message boards. After the trading halt, Reddit users accused Citadel and its billionaire founder, Ken Griffin, of pressuring Robinhood to limit trading of certain stocks, a move that may have prevented further losses for the short-sellers that lost billions betting against GameStop.
GameStop stock roars back after Robinhood lifts trading freeze
On Twitter and the Reddit forum Wallstreetbets, retail investors speculated that Robinhood had caved to pressure from its powerful business partner. Because the company does not charge its users any fees, a key part of Robinhood’s business model relies on Citadel and similar companies.
In a blog post Thursday afternoon, Robinhood strongly denied its move was influenced by the large investment firms it works with to execute trades. “This was a risk-management decision, and was not made on the direction of the market makers we route to,” the company wrote. A spokeswoman for Robinhood declined to comment on the company’s relationships with market makers.
Josh Zeitz, a spokesman for Citadel Securities, said in a statement that the company “has not instructed or otherwise caused any brokerage firm to stop, suspend, or limit trading or otherwise refuse to do business.”
Citadel LLC, a separate hedge fund also founded by Griffin, recently helped bail out Melvin Capital, a fund that sank 30 percent in a few weeks after shorting GameStop.
The events triggered a swift response from a wide range of lawmakers, from Rep. Alexandria Ocasio-Cortez (D-N.Y.) to Sen. Ted Cruz (R-Tex.), who said they supported an investigation of Robinhood’s decision to block trading in GameStop. Rep. Maxine Waters (D-Calif.) announced that the House Financial Services Committee would hold a hearing to examine how the market “has been manipulated by hedge funds and their financial partners to benefit themselves while others pay the price.”
Lauren Hitt, a spokeswoman for Ocasio-Cortez, told The Washington Post that the congresswoman believes “Citadel’s role needs to be examined.”
On Friday, the Securities and Exchange Commission said the agency was “closely monitoring” the stock-market volatility, which it said “has the potential to expose investors to rapid and severe losses and undermine market confidence.”
Robinhood announced it would allow “limited buys” of GameStop and other heavily shorted stocks to resume Friday, sending shares of GameStop soaring more than 70 percent.
Billionaire blasts 'Robinhood market' as Jon Stewart, others herald GameStop investor rebellion
Congress plans to examine Citadel’s agreement to obtain trading data from Robinhood in exchange for millions of dollars. These types of arrangements, called payments for “order flows,” have become more common in recent years and more lucrative during the pandemic trading boom of the past year. They have also drawn growing scrutiny from federal regulators who have raised concerns that they can hurt average investors.
Because of the GameStop frenzy, “the regulators have a chance to really examine what’s going on and get access to information about what these relationships really are like,” said Robert Weissman, president of Public Citizen, a nonprofit consumer advocacy organization.
Robinhood and other brokerages cannot execute trades directly, so they usually work with market-making firms. Robinhood is required by law to work with market makers that can give their users the best market prices for a given trade. When Robinhood directs a transaction to one of these third parties, the market maker learns which security is being bought or sold before the trade happens.
Citadel and other market makers pay Robinhood a small fee for this privilege, which gives the market-making firms information about retail trading patterns. Citadel said it uses this information to improve its trading algorithms. Market makers also take a small profit on the “spread,” or difference in price between what a Robinhood user pays and the price at which the security is being sold in the market.
Robinhood generated $271 million from all order-flow payments in the first half of 2020, according to regulatory filings. Because it is a closely held company, Robinhood does not disclose how much of its total revenue comes from order-flow payments. A spokeswoman for Robinhood declined to comment on the company’s business model.
TD Ameritrade, another major online brokerage, generated about $560 million from those payments over the first half of 2020, but because the company makes money from other services, that represented only about one-fifth of its sales over that period.
Critics of these arrangements say they amount to a hidden tax on unsuspecting mom-and-pop investors. Democrat Carl Levin, a former senator representing Michigan, recently argued in an editorial for the Financial Times that the Biden administration should abolish the practice of order-flow payments.
What you need to know about GameStop's stock price chaos
Last month, Robinhood paid $65 million to settle a charge by the SEC related to its order-flow agreements. The federal agency found Robinhood had misled its users by failing to disclose the payments it received from investment firms and failing to find investment partners that offered the most competitive rates for executing trades.
At the time, Robinhood said in a statement that it has been fully transparent in its communications with customers about current revenue streams and that the settlement related to “historical practices that do not reflect Robinhood today.”
The new regulatory scrutiny around GameStop trading will test the political influence of two companies that have invested in building connections in Washington. Last year, Robinhood bulked up its regulatory staff, spent $275,000 lobbying the federal government and hired lobbyists with ties to a Wall Street regulator and congressional oversight committees, according to disclosure filings and an analysis by the Center for Responsive Politics.
Robinhood’s chief legal officer is Dan Gallagher, a Republican appointee to the SEC who served as a commissioner there from 2011 to 2015 and was known for his persistent criticism of the Dodd-Frank Act, financial regulation passed after the 2008 crisis. Beth Zorc, a lawyer who worked at the Department of Housing and Urban Development in the Trump administration after roles as a senior aide to the Senate Banking Committee and the House Financial Services Committee, joined Robinhood late last year to help oversee its federal lobbying efforts.
The Technology 202: GameStop controversy sparks scrutiny of Robinhood, fintech apps
“There’s a lot of hard competition, but the financial sector is one of the worst, most egregious areas for revolving door between government and regulated industry,” Weissman said.
Citadel spent $520,000 on lobbying in 2020 and counted a former Treasury Department employee and a former tax aide on Capitol Hill among its lobbyists.
Citadel also paid Janet Yellen, President Biden’s newly installed treasury secretary, between $710,000 and $760,000 in speaking fees in 2019 and 2020, according to her financial disclosure forms. When asked in a news briefing Thursday about the payments and whether Yellen would recuse herself from advising Biden on issues related to Robinhood, White House press secretary Jen Psaki said it is normal for experts such as Yellen to be paid for advice while not actively serving in a government role.
“The secretary of treasury is one of the world-renowned experts on markets, on the economy,” Psaki said. “It shouldn’t be a surprise to anyone she was paid to give her perspective and advice.”
Citadel declined to comment on its lobbying or payments to Yellen.
Yellen said in her ethics agreement upon her nomination that she would seek written authorization before she participated “personally and substantially” in any matter involving Citadel or other financial firms she received speaking fees from.
Asked whether Yellen would seek that authorization, Treasury Department spokesman Calvin Mitchell did not respond directly. “Secretary Yellen of course will abide by her ethics pledge in all instances,” Mitchell said.
Not today Sir, Probably not tomorrow.............................................. bayfront arena st. pete '94
you're finally here and I'm a mess................................................... nationwide arena columbus '10
memories like fingerprints are slowly raising.................................... first niagara center buffalo '13
another man ..... moved by sleight of hand...................................... joe louis arena detroit '14
By Sydney Page
January 30 at 6:00 AM EST
The GameStop stock surge has benefited small-scale investors, many of them surprised at their unlikely windfalls. Perhaps none so much as a 10-year-old boy from San Antonio.
The fifth-grader was gifted 10 GameStop shares, each at $6.19, as a Kwanzaa present from his mother in December 2019. She bought the stock simply because her son liked to buy video games at the store and she wanted to teach him a little about the stock market.
In a matter of minutes this week, Jaydyn Carr became an unexpected beneficiary of the market mayhem, as his $60 stake in the video game retailer grew to $3,200.
“Is this really happening right now?” Jaydyn’s mother, Nina Carr, remembers asking herself. “I couldn’t believe it was true.”
[What you need to know about GameStop’s stock price chaos]
Carr, 31, was working in her home office on Wednesday when a slew of news alerts about GameStop’s Reddit-spurred surge started appearing on her phone. Her jaw dropped.
Once she absorbed the news, she sprinted to her son’s bedroom.
“I was so excited for him,” she said. In simple terms, she described to Jaydyn what happened to his GameStop shares and why they suddenly skyrocketed.
“She was saying that stocks hardly ever go up this way, so if I wanted to sell it, we should sell it now,” Jaydyn said.
Ultimately, the choice was his.
“It wouldn’t be fair for me to make the decision on his behalf,” Carr explained. Besides, she added, “if he lost the money, it would have been a lesson learned.”
So, she asked her only child the burning question: “Do you want to sell or stay?”
To her relief, Jaydyn decided to sell.
“I was so excited. I thought it wasn’t even reality,” Jaydyn said.
Carr then walked her son through the selling process, and he cashed out his shares. The plan is to put $2,200 in Jaydyn’s savings account and then invest the remaining $1,000 as a mother-son team.
[EXPLAINER: Why GameStop’s stock surge is shaking Wall Street]
When Carr bought the 10 GameStop shares in 2019 as a Kwanzaa gift, she certainly did not anticipate the value would one day spontaneously soar, she said. Her sole intention in purchasing the stock was to teach her then-eight-year-old son about Ujamaa, which means, “cooperative economics.” It’s one of the seven principles of Kwanzaa.
“The goal was to ensure he knows the value of a dollar and how to manage money,” Carr said, explaining that Ujamaa is the idea of sharing wealth while also strengthening personal finances and self-reliance.
Beyond relating the gift to the deeper meaning of the holiday, Carr said that since Jaydyn’s father passed away in February 2014, it has been a priority for her to educate her son about money management.
“I am very frugal, and saving is a big part of what I do. Being the only parent, I want to set a good example for him,” she said. “I got into finance when his dad passed away. I wanted to make sure his future was in good hands.”
According to Jaydyn, he has already learned a lot from his mom: “She is always teaching me what to do in emergencies in life and how to save money to one day buy a car and a house,” he said.
Carr — who is a public health nutritionist and runs her own business — felt the gift was an opportunity to reinforce the importance of investments, she said.
As for deciding which company to invest in, the choice was obvious: Jaydyn is a video game enthusiast, so “we were always in and out of GameStop, constantly getting different video games,” Carr explained. “I thought, ‘How can I mix our principles of Kwanzaa with something I know he really wants?’ ”
In an effort to ensure her son still had a proper present to open, “I had to figure out something to give this kid to unwrap,” she recalled. “I printed out a template and filled in his information, put it in a picture frame, and wrapped it up.”
While the gift may not have been the Xbox One he was hoping for, “he was definitely excited because it had GameStop’s name on it,” said Carr.
Plus, Jaydyn was especially jazzed after his mother explained to him that he owned a small portion of a company he loves.
More than two years later, the frame still sits in a place of honor in Jaydyn’s bedroom. Now, though, it carries new meaning — a memento of a once-in-a-lifetime experience.
While market manipulation is not a new phenomenon, the “magnitude, scale and speed of this was unprecedented,” Veljko Fotak, a finance professor at the University of Buffalo, said.
[Reddit’s /r/wallstreetbets astronomical rise]
Although the scheme is problematic in many ways, Fotak said, “I think the more kids learn and the more they understand the markets, the better equipped they are to plan for their own retirement, and the better off we are as a society.”
For Jaydyn, this is just the beginning. He has already got big plans: “I am now looking for companies that pay dividends,” he said confidently.
Not today Sir, Probably not tomorrow.............................................. bayfront arena st. pete '94
you're finally here and I'm a mess................................................... nationwide arena columbus '10
memories like fingerprints are slowly raising.................................... first niagara center buffalo '13
another man ..... moved by sleight of hand...................................... joe louis arena detroit '14