Fellow Mashed Potato Brains,
First – Monke Diamond Hands Banana Rocket Rocket Rocket Rocket Moon
This is not financial advice. This is speculation based on my limited understanding of SEC rules and documents. Sources linked. Please read edits. TLDR:
My opinion is that Shorts will continue to drive the price down with ladders and try to break the chain of consecutive days where GME is listed as a threshold security.
They need at least 1 non-Failure To Deliver day before EoD Thursday. If they an individual short gets even 1 day without aggregate Failure To Deliver then the entire 13 consecutive day count restarts *for that short. They The shorts as a whole need 5 consecutive days without aggregate Failure To Deliver to have GME fully removed as a threshold security. Selling is good for them and bad for diamond hands. Ape strong together. Diamond Hands get the Rocket Ship. No idea if achieving 13 consecutive days will force the squeeze or not.
My opinion is that Shorts don’t plan to cover their position by Tuesday. They don’t have to. Instead, they will drive the price down for as many days as possible and attempt to break the chain of consecutive settlement (read: business) days where they fail to deliver. GME has been listed as a
threshold security (see below) for
10 *37 consecutive business days (please check my math. I had to count on my fingers). *Individual Shorts (not the short collective as a whole) need to break their chain of failure to deliver on that threshold security before it reaches
13 consecutive business days. “Participants of a registered clearing agency must immediately purchase shares to close out fails to deliver in ‘threshold securities’ if the fails to deliver persist for 13 consecutive settlement days.” [SEC Rule 204] (link below)
If diamond handed monke can HOLD strong and reach 13 consecutive days *of failure to deliver* as a threshold security, then the shorts will (in theory) should have to cover the positions by buying GME shares or equivalent shares of like kind and quantity. If maths good, that puts Thursday Feb 4th as day #13. Ape hold strong. **Edit 5: Math not good. Jan 18th was holiday. We are at 37 consecutive days. Edit 3 & 6 at bottom for more details.
We've seen confusion, fear, uncertainty, and doubt surrounding what happened Monday Feb 1st. Remember that FUD is one of their greatest weapons against retail investors right now. They want to use it to divide retail and to convince people to sell based on emotion. I’M NOT FUCKING SELLING!
Warning: I am not a financial professional or a financial advisor. I read at a grade-3 level. This is not financial advice. - Read below here if you can or care.
- Why no squeeze Monday after $320+ close on Friday?
Shorts weren’t required to cover their positions on Monday. I think that they have T+2 (time of close + 2 business days) to cover their position. If true, this means they have until EoD Tuesday to cover. After that, they will have failed to deliver on the security. That isn’t good for them, but it isn’t as bad as it sounds. Failure to deliver is like a steppingstone in the process. After 5 consecutive business days with *aggregate Failure To Deliver, the stock is listed as a threshold security. NYSE Threshold Securities can be checked here
https://www.nyse.com/regulation/threshold-securities It takes 13 consecutive days being listed as a threshold security before the positions must be closed
(If the rules still apply to them). *I believe this is individual short positions that must be closed not all the shorts as a whole.*
So, instead of covering, shorts spent the day driving the price down to a more favorable position for them. They may have scared away some paper hands along the way too.
- How does that help the shorts?
Lower price means it costs less to cover and the Shorts have more room to negotiate with other funds. A cheaper darkpool buyout is good for them. If they can lower it enough, covering becomes a non-issue compared to a full on squeeze.
Shorts want to avoid days where GME fails to deliver and they want to create non-Failure To Deliver days to break the chain of consecutive failures to deliver. This is easier for them if the price is lower.
- So squeeze on Tuesday/Wednesday right?
I don’t think the squeeze happens Tuesday or Wednesday. I think the shorts are setting up the next part of their plan. I think if the squeeze happens this week, it happens because the shorts reach 13 consecutive days where they fail to deliver. This means diamond hands and limiting the number of cheap shares that shorts can buy after ladder attacks aka diamond hands.
- We’ve heard this before. So what?
I agree with the idea that adding RC & friends to the board had a positive influence on the stock price. I don’t think that was the only thing happening when we saw price rise during mid-January. Going back to the idea of 13 consecutive days as a threshold security, we can refer to our NYSE tracker
https://www.nyse.com/regulation/threshold-securities Starting at the beginning of the year, we see that Jan 4th is the first day GME is marked as a threshold security.<- True but it was already listed as a threshold security starting Dec. 8th. It stays listed as a threshold security through Jan 15th. Remember we don’t count weekends so the count resumes January 19th (18th was a holiday)
January 18th. On the 18th, it falls off the list for the day and comes back on January 19th. Without this single day drop-off, the 13-day countdown would have ended at EoD Wednesday Jan 20th. I believe that the price jump we saw can be partially attributed to the fact that *some of* the shorts NEEDED to avoid another Failure To Deliver or they would risk being uncovered. That was pre-spike. Now
they some shorts are in a similar position closing in on *their own* 13th consecutive day. They will do whatever they can to avoid that 13th consecutive day because that means they will avoid having their record books searched through by someone outside their firm/fund.se
Threshold Securities Def: Threshold Securities are equity securities that have an aggregate fail to deliver position for
· Five consecutive settlement days at a registered clearing agency; and
· Totaling 10,000 shares or more; and
· Equal to at least 0.5% of the issuer’s total shares outstanding.
If you see any mistakes or if I missed something, let me know. Looking to keep this as accurate and up to date as possible.
Relevant links
SEC -
https://www.sec.gov/investopubs/regsho.htm See rule 204 “Closing-out Requirements”
Edit: 'We must hang together or surely we shall all hang separately.' - maybe some smooth brain that has his face on money
Edit 2: It has been brought to my attention that I didn't count Jan. 18th as a holiday when checking the threshold securities list. Going back to check my work now and will mark any edits that are made. Information will not be removed, but I will do my best to address any mistakes I have made. Thank you for your help.
Edit 3: Dec. 25th, Jan. 1st, and Jan 18th were all holidays and NYSE was closed. Going back we see Dec. 8th has GME listed as a threshold security. It was correctly pointed out (
u/AlexGu812 ) that this brings us to 37 consecutive days. I don't know enough about this stuff to confidently say what that means. I think it may have to do with the close-out requirements or it could be a sign of bad faith actions. "The requirement to close out fail to deliver positions in threshold securities that remain for thirteen consecutive settlement days does not apply to any positions that were established prior to the security becoming a threshold security" <-- This may explain why we haven't seen mass closeouts despite passing the 13 day threshold.
Sourced from
https://www.sec.gov/rules/final/34-50103.htm#P235_88503 - relevant section can be located with the find tool and typing "98". For me, it is 1 of 18. Clicking the 98 hyperlink will take you to a written example provided by the SEC.
Edit 4: If you feel this doesn't matter because the SEC won't enforce it then please consider contacting your representatives. Rules and regulations should be enforced. We can't encourage a lack of action just because things are hard or more complicated than we thought they would be.
Edit 6: The 37 consecutive days are the shit splatters on an otherwise decent toilet. Let's try to clean it up without automatically assuming foul play. This is a thought exercise,
but I do not know if it holds true in the real world. In the post, I refer to "The Shorts" as a collective, but that's incorrect to assume. Not all shorts are making the same decisions or acting at the same day/time. We know that Failure to Deliver is measured as an aggregate, which is a net balance. If delivered are (+) and failed are (-) then we can figure out if a security failed to deliver by seeing if the net total is positive or negative (my understanding is that as retail we get the data as it becomes available rather than being able to measure it ourselves in real time). Within that net total, some actors will deliver their shares and some will fail to deliver.
Just because a security fails to deliver on the day doesn't mean every actor has failed to deliver. It just means the aggregate is net negative (for this example). If this line of thinking is correct, it is possible that no individual actor has failed to deliver a threshold security for 13 consecutive days.
Again, edit 6 is a thought exercise. Additional input, comments, criticism, and other lines of thinking are welcome. Strikethrough (removed) , * (added), and "edit #" are used to mark changes.
Disclaimer: I am not a financial advisor. This entire post represents my personal views and opinions, and should not be taken as financial advice (or advice of any kind whatsoever). I encourage you to do your own research, take anything I write with a grain of salt, and hold me accountable for any mistakes you may catch. Also, full disclosure, I hold a net long position in GME, but my cost basis is very low (average ~$45/share with my later buys averaged in), and I'm using money I can absolutely lose. My capital at risk and tolerance for risk generally is likely substantially different than yours. First, thank you everyone for the comments and questions on
my first post on this topic. Given the traffic and sheer volume of questions, I figured writing another post would be better (and actually something I can manage).
I wanted to focus this post on a few common themes I saw in the comments to the first post, as well as questions people were asking me directly, and related themes I saw on other posts and subs that I believe would be informative for this sub.
First, a simplified recap of the 1/27/2021 trading day as I saw it. The following is my interpretation of events, and may include personal opinions, assumptions, and outright errors. Apologies for the length, but I hope this helps some of the newer traders thinking about jumping into the water with these sharks. I honestly don't think that you should, but you make your own decisions. I'll just try to help provide some information to help if I can.
Euro Market Hours: Retail Euphoria & The Setup
After-hours and Euro market activity rockets the stock in an essentially unbroken streak from ~$146 to $365. GME long social media is going ballistic.
Volume is too low. There is no sell-side pushback. Allowing consolidation at these prices would be a major setback for the short-side, yet they are doing nothing on volume they could easily push back.
I smell a rat. This is too easy.
5am Eastern: Fear, Uncertainty, Doubt (FUD)
If you ask most retail market participants about how quants with their algorithms, hedge funds with their trading strategies, sophisticated experienced traders, etc., conduct their operations, you will probably get responses about sophisticated programs and high frequency trading, fundamental analysis, risk hedging strategies, lots of math, etc. That is largely true, but it is critically incomplete. The most successful hedge fund managers also deeply understand that beneath the surface, the primal forces driving markets are fear and greed, and they know how to best leverage information asymmetry to play other investors--and especially retail investors--like fiddles.
As retail sentiment reaches fever pitch, Andrew Ross Sorkin gets a call from Melvin Capital just before the start of CNBC's Squawk Box, by far the most-watched pre-US market show and files a
breaking news alert at the start of the show.
(Paraphrasing) Melvin Capital is out. They didn't go bankrupt but they came close and took a huge loss. Congratulations WSB, you've won and you've burned the house down, and now that the shorts are out this whole thing is going to crash and burn all the retail investors you dragged along with you.
"
Who's going to be left holding the bag?... uh, the thing that concerns me most, at this point, is whether
some of these investors will actually start to get out today--they'll look at this and say 'we won the game'--if that's winning, uhh unclear, you know, where the finish line is, uh in that regard, but uh, as much pain as they may have uh, created for Melvin Capital for example, umm,
my-my great anxiety at this point is the number of-of retail investors that have been jumping into this uhh.. in literally the last 24 hours who very well may get hurt, uh, far more, and lose far more than some of the hedge funds that were involved, uh in this. Um, let's just show you where we are now..."
"
Where are the regulators.. and is this just the beginning?"
Meanwhile, as if it had been choreographed and rehearsed, the Squawk Box team are outraged--absolutely outraged at what is going on, while a big graphic of GME price crashing off a cliff dominates 2/3 of the screen and social media is flooded with messages and posts skillfully crafted to stoke the fear.
In WSB, other subs, and other social media sites, dozens of bots start posting bogus messages purporting to mock the retail investors with messages like "Thanks for the free gainz retards!".
The fear is almost palpable coming through my monitor. People start trying to sell, then start asking why their market sell orders won't go through while they're watching a practically vertical dive on the GME chart next to Joe Kernan as he says "If you think there's speculation in crypto [...] and-and-
now they're looking for the next mark, right? They'll-they'll find another Gamestop, once they're done with Gamestop, but
in the meantime, there's gonna be BLOOD".
Congratulations Squawk Box--you beautifully played your part in engineering peak, nigh-hysterical fear among the less experienced retail investors, and basically shouted "FIRE!!!" in the market equivalent of a locked theater. I truly believe your feelings were sincere, and you truly do have concern for the retailers who have been and will be hurt in all of the volatility, but that made your actions all the more effective in driving many try to lock in losses. C'mon, you can do better--I've seen you do good work and am thankful for what you did getting good info out during the peak of the pandemic--please do some investigation before spreading only one side of the narrative handed to you by financially conflicted parties. You have analysts doing your background research--any of them could tell you the short interest in GME would take more than an entire trading day to unwind even if the buy-side of every single transaction that day was to close a short position and no new short positions were initiated. Also, any of them could tell you that it's unlikely Melvin Capital held 100% of all short interest in GME. Melvin leaving is not equal to all shorts being covered--and you didn't even get confirmation that Melvin actually covered! Get them to say it themselves on air rather than carrying their water and letting them ride on your reputation and providing cover from an SEC stock manipulation investigation.
Most retail brokerages don't open pre-market trading until around 7am. All those people could do was watch their positions bleed as GME plummeted over the remainder of the next 2 hours, hitting the floor of $182, nearly 50% down from the peak about 3 minutes before retail brokerages open pre-market trading.
Wow. I have to hand it to the short-side hedge funds. Some of your traders must have studied drama for their undergrad or something--that is almost perfect timing.
Almost, but not quite.
Pre-Market Tears... of Joy and Relief
The engineered crash was probably intended to run right through the open of retail pre-market, with the idea of getting panicking retail to sell into the low liquidity environment for more violent downward price moves without the benefit of Limit Up/Limit Down halts, causing a stampede for the exits. Man, how many hours did you guys spend thinking this strategy up? I'm honestly impressed.
Two minutes prior to pre-market open, however, some deep conviction, deep pocket players, understanding the market mechanics and fundamentals behind the recent wild ride in GME started raking in the shares at discount prices they probably never thought they'd ever see again during this campaign. I'm sure tears of joy were shed, as they realized floor-to-close of regular trading gains of nearly 100%. Whoever you are, well played.
I would note here that those people could easily have waited for the engineered crash to drain the blood of the fearful retailers who would have punched out, which would have allowed them to lock in greater share volumes at even lower prices, but they stopped the crash early instead. I don't know if that was their intention, but a lot of retail people were probably saved because of that.
With the almost literally last-minute reversal, price rode green candles upward through the retail pre-market open, and many who would have despaired and punched out to lock in losses instead white-knuckled through the chop and held, with very bullish action through to the market open. Those who survived the day--good on you, I know it couldn't have been easy.
Chamath
Let's let the man
speak for himself (and speak up for retail). Well worth spending 30 minutes to watch if you have the time. I have to give Scott Wapner credit--he asks tough questions and he repeatedly brings on guests that he know will go toe-to-toe with him with the gloves off to ensure that there is a good, vigorous debate representing diverse viewpoints. Be on the right side of history big boy, lol.
Skirmishing continues at lower volume than the last 2 trading days. Bullish patterns everywhere--buying up on high volume, straggling down on low volumes. Liquidity is running out. Short-side is rationing, saving ammo for the end-of-day push.
Shenanigans, End of Day, More Shenanigans
At various points throughout the day, levers are pulled to flush retail positions out by margin calling profitable accounts across many of the retail brokerage firms, changing margin requirements with no notice.
Short-side attacks coincide with ominous warnings on news media about potential regulator action, short-side touts spreading FUD across mainstream media.
Short-side's rationed insufficient shares to make meaningful progress on the last tick of regular trading. This is key, as prime brokers of highly levered players pay a lot of attention to the status of accounts at the end of regular trading each day.
After hours it looks like more retail traders are dumped out of their profitable portfolios due to margin change requirements--right into the abyss of super-low after-hours volume. Had their brokers at least liquidated their accounts toward the end of the main trading day into meaningful trading volume they would have gotten much better returns. Dumping them into no volume means the last few accounts took massive losses vs mark to end of trading day market price. Thank, you brokerages, for protecting those people from themselves. Hopefully they took lower profits vs being dumped into the red.
Some people see the diving ticker and panic again.
One thing that was particularly irritating to me is that people were all over CNBC multiple times a day, making outrageous claims of how retail traders were slamming risk into the market via leveraged trades even as the retail brokers changed their policies in realtime to disallow use of any margin in accounts holding GME, and dumped those retail traders out of their positions. I knew what kind of volatility to expect, so I had maintained a net cash position in my account ever since buying, just in case something like this happened--thank goodness.
Technical Analysis for the Day
I wish this sub would allow charts, but I'll describe instead.
On the daily chart, RSI has been in an ascending channel since April '20(!), and rocketed to 98+(!!!) at the end of the trading day. Price is dislocating wildly higher every day for the past 4 days into descending volume.
My read of the chart is that it shows massive buy-side dominance into worsening sell-side weakness and lower liquidity. I read this as mind-meltingly, parabolically bullish, and something that would not be possible if not for the distortion of the supercritical mass of short interest, and I guess this is what a short squeeze looks like when you have access to all the data retail fintech can provide. The technicals tell me to expect massive volatility, but also that this is possibly the most asymmetrical risk environment imaginable.
I feel bad for the retail shorts that I know were out there. I saw a few posts about people taking short positions because Andrew Left got on TV and told them GME is going bankrupt, it's going back to $20, and he's an expert unlike you reddit amateurs, and by the way about 30 other experts followed and backed him up over the past few days. For this reason I'm glad that many of the retail brokerage firms have disallowed shorting GME and other volatile names. I hope they got out before their accounts got obliterated.
Lessons Learned
I wondered what kind of things you might see when billions of dollars were on the line, and I have to say that the short-side guys know how to go all-in and pull surprise after surprise out of the hat. They are good at manipulating people, letting them build up euphoric feelings only to slam them in the face with nonstop fear. They do it in media, and they do it in sudden price-crushing rushes, slamming the ticker down to try to get weak hands to fold. As I stated earlier, I am trading deep in the money, on capital I can afford to lose, and even I can't avoid feeling it. I honestly don't know how some of you trading on borrowed money meant for next month's rent can handle it.
The short-side players are running out of ammo, but they don't just go toe-to-toe in the market--they'll blanket media and even flood your discord server, message board, and social media with well-coordinated bot attacks. You will face those moments of stark terror--they are good getting people to feel fear. If you're thinking of getting into this trade--please understand that before deciding whether to jump in. You might not think that a stock that's been going basically vertical could leave long-side casualties on the field, but believe it--fear and volatility can get you to zero your account (or worse!) in any environment.
FAQs from the First Post (comments and messages)
(answers are my opinions only--do not take as financial advice. I've consolidated common themes.)
- I'm afraid I'm missing out on a unique opportunity to make returns that could change my life trajectory in a positive way. Should I buy in at this point?
First, each person decides on their own what trades they choose to make. However, I will say this: Fear is giving you this anxiety. Maximum FOMO is when you see green candles going up until the fear makes you punch the buy order in. Maximum despair and fear of life-altering losses hits peak during deep downward price movements, making you punch out to avoid losing your entire position. Fear makes you buy high and sell low. HFT houses are full of algorithms designed to exploit fear through the price movement, and find gaps in your risk mitigation strategy (e.g. stop-loss hunting algorithms, etc.). If fear is driving you to trade, I urge you not to swim in low-liquidity waters with sharks who specifically make their money exploiting fear.
- I am a regular investor holding broad ETFs or mutual funds for my retirement. I do not actively trade, but I am concerned that what's happening here might impact the broader market, and maybe even my retirement account. Have you thought of that while you're having all this fun? What about systemic risk?
You may be surprised to hear that I, and likely many others have thought quite a lot about these things. In fact, I hold about 75% of my capital in the same type of boring IRA and 401(k) accounts you're talking about, and I maybe rebalance them a few times a year and don't even check the balances regularly otherwise.
As for what kinds of impacts there may be--in all honestly, no one knows. Specifically, no one knows because no one knows exactly what the levered hedge funds involved hold, how they trade, etc. The massive short interest in GME is basically a deliberately engineered market distortion that is now blowing off, and distortions blowing off are always scary, and can spell financial damage or disaster for the unprepared.
That, however, is part of the market. To paraphrase Dr. King and Keynes, the arc of the market may be long (and longer than you can remain solvent), but it bends toward efficiency, given the right conditions. The US stock market is pretty good in this respect.
Now I won't deny that these hedge funds are run by smart people, but they occasionally get either arrogant or too clever for their own good and get caught. In GME they essentially voluntarily engineered themselves into a short squeeze entirely on their own while no one was even looking. In fact, the only way the trade works is if no one ever finds out and GME quietly goes bankrupt. In the meantime, a legitimate fundamentals-based turnaround story came to light and just lit the fuse. They’re crying now about being cornered, but they walked into that corner themselves, then dug themselves in so deep that the only way out was GME bankruptcy, and sat there for a year just assuming GameStop would go bankrupt while no one was paying attention and they’d take their free money and walk. If this doesn't make sense, and you have a free 20 minutes and tolerance for mild profanity, I suggest you watch this video:
https://www.youtube.com/watch?v=4EUbJcGoYQ4 Anyway, That being said, market "corrections" are aptly named, even if painful, because they are, in essence, corrections of various distortions in the market. The longer they go uncorrected, the harder, faster, and more drastic the move when it does happen--with usually worse consequences (see the 2008 financial crisis, which was a distortion 10+ years in the making before blowing off).
- It looks like maximum gains on this trade would have started if you bought in at $4. Should I be looking for names at <$4 to find another opportunity like this? I heard some people made a lot of money on Hertz. Is this like Hertz?
I have no idea. I wasn’t looking at Hertz at the time. Obviously it's different in that GME is not going bankrupt despite what some people on the news might say (honestly, I don't understand their apparent conviction on this given most of them profess to not even know any details about Gamestop).
The sense I get is that some people realized that many stocks had their prices artificially suppressed by the pure panic in the market at the time, and were likely to bounce back. Stocks crushed down to penny stock land could easily bounce back multiple hundreds of percent just by moving back up by $1, and if you had a good reason to think they'd survive, that's a pretty good deep value trade.
Some people seemed to jump on that bandwagon with the mistaken idea that you should basically just scan all stocks for things <$5 today that used to be >$20 or whatever and assume the 90+% drop will result in a bounce off the floor, even if it’s a “dead cat” bounce on the way to $0. DO NOT TRY TO TRADE THIS.
The theory is that a $100 stock that drops to $10 on its way to bankruptcy could bounce back to $15 first—a return of 50% if you time the floor and the bounce perfectly. In practice almost everyone who tries this loses all their money much sooner rather than later.
By the same token, people who “know” a company is heading to bankruptcy get their accounts wiped out when they short something on margin right as it hits a floor on the way down, get margin called on the bounce, and subsequently join the company in insolvency as they end up owing their broker more than they put in. Being right in the end is cold comfort at that point.
- Could Gamestop just issue shares to bail out the short sellers?
I guess it could, speaking entirely theoretically. That being said, consider the following:
They’ve already filed to issue $100mio worth of shares, or 500k shares using $200/share as a price assumption. I don’t know if they’ve begun to execute on that.
That was just to give them the runway required to take bankruptcy completely off the table.
As you note, at these prices, using stock to finance a turnaround is absolutely feasible.
There are, however, a few things to consider:
- They have a fiduciary responsibility to their shareholders. They need to be able to justify how issuing even more shares is ultimately beneficial for the company and shareholders. “Because our stock price is high right now” is not typically a compelling reason, though maybe these circumstances are an exception to that rule given the extremity of the price.
- While a healthy balance sheet would be an improvement, debt is usually cheaper than equity when it comes to financing a company’s activities. If they can secure solvency with the $100mio stock issue already authorized, and leverage the healthier balance sheet and insanely improved market cap to instead borrow what they need to restructure, especially in this ultra low interest rate environment, that would be better for the company and shareholders.
- They can’t just make a snap judgment to do so. It takes time, board approvals, regulatory paperwork that is public, etc. There is a lot of work and potential risk in this process—particularly for this company.
- Even if they did this, the incredible total volume of short interest being squeezed means that in practice it would be hard for the share issue to change the trajectory of the stock. The main effect might be to terrify some retail longs into bailing out of their position depending on how the news is presented to them.
- _______ securities pricing theory/model means short interest has no impact on a security's price, short positions can be held infinitely so there really is no obligation to cover, so the thesis behind the short squeeze trade is invalid, etc. Mathematically long and short positions are the same thing.
That may be true in some ideal theory assuming you are trading in some kind of mathematically ideal market using very specific assumptions, but you’re trading in a real market that includes things like counterparty risk, regulatory and contractual limits on ability to borrow (at least in theory--Hello SEC, threshold securities list??), interest cost, etc. that make trading in an real market different. I'll build on Box by saying all models are wrong, but some are useful--
within the bounds of certain assumptions. The situation playing out now tells you that the short interest of GME is wildly outside the bounds of whatever models the hedge fund people are using to model position risk.
You can, in theory, infinitely roll your debt forward if you can continue to find willing lenders and are ok paying interest forever. Maybe this works out to be mathematically preferable to a squeeze to infinity.
But, step away from pure theory for a moment. We don't even have to look at empirical evidence in real markets. All we need to do is build a stochastic model of an equity market sophisticated enough to model margin limits and dynamic account balances tied to securities being traded as they are in real markets and you’ll see the probability of continuing to carry a short position converges to 0 over time. The only question is which happens first: you cover proactively, the underlying company goes bankrupt (and you cover for $0 less interest paid to borrow the stock), or you’re margin called and forced to cover with potentially unlimited downside. Take bankruptcy off the table as we have in the case of GME and you have one of two choices--get out or eventually get squeezed out. There is no such thing as infinite ability to roll borrowing forward in real markets, and if your risk models assume that I feel sorry for you.
- Is this illegal? Will the SEC step in somehow?
I am not a lawyer. I do not give legal advice. And, honestly, I have no idea. I can't think of any securities regulation that at least I may have violated, but I also don't have the ability to lobby the SEC on international news.
- So what will happen next?
I don't know, and most likely anyone who tells you they know is kidding themselves. All I see is a good fundamentals-based position I bought into at a reasonable but bullish valuation followed by the most bullish chart I've ever seen from a TA perspective. I have theories, but there are doubtless other people better qualified to opine on that.
All I can say is if you're in the trade, strap in and prepare for a wild ride. If you're watching from the sidelines get out the popcorn. The rate at which liquidity is disappearing means whatever is going to happen will happen soon (assuming the SEC doesn't step in with an extended pause in trading to bail out the hedge funds).
Thank you for reading, and good luck with your trades.
*Update from Original Draft, 1/28 Pre-Market\*
We're seeing tons of retail brokerages limit trading on GME to only allow selling, even when current positions and intended trades would be cash only?
Wow, I mean it kind of occurred to me in some sort of theoretical, abstract sense that somehow limiting large swathes of retail to sell-only was actually better than a general 2-way trading suspension, but who knew the short-side people could actually get retail brokers to do something so bonkers?? I guess you really do find a way to try basically anything when you're about to lose that much money.
*edits to fix formatting issues*
submitted by For the last couple of weeks I've been studying the uses of the subjunctive intensively for a couple of weeks, wading through inane comments like "it's just something only natives know for sure; to everyone else it is invisible magic" (a very unfortunately common and reductive opinion I've seen around), scouring forums to study how people use it, reading guides and books and the whole thing. Not much seemed to be working; the whole thing still seemed arbitrary, impossible to predict, and totally random.
But last night I had a breakthrough, and damn near everything fell into place. I read a few things; I read a great write up on how in spirit English uses the "idea" of the subjunctive mood in various auxiliary verbs from "I think..." to "could", etc, and how it often parallels things in Spanish. I then read through a whole chain of spanishdict questions and answers on the topic, and someone made a comment talking to a new learner who used the indicative in the context of questioning whether or not she had popped a ball when she should have used the subjunctive. His comment was "if you're uncertain that the ball was popped...then why is your next sentence TELLING ME that the ball was popped?"
I frowned. "Why would that say that?" I asked myself. "It wasn't as if she was literally telling him that the ball was popped from her perspective, instead she was just...she was...just..."
Finally it all hit me; the subjunctive mood makes NO SENSE... on its own. The fatal flaw -- one that comes down to a critical misunderstanding between how english's and Spanish's primary moods operate -- isn't that I didn't understand the subjunctive per se
It was that I had no real idea what the hell the indicative mood really was, nor how well-learned Spanish people interpret it to their ears.
How could I? Nobody had explained it well to me. EVERYONE only talks about the subjunctive but never the indicative. Because it's obvious, right? It's the same in English as it is in Spanish, right? Let's barely even touch on it when discussing the subjunctive, how could they be related? It's like English, the subjunctive is just a weird thing dangling from under it.
No it's not. Guys, the indicative mood is far stronger than english's. It isn't about an implication of rules, it isn't about an implication of concrete reality. It is ABOUT reality, truths, and our perceptions of that truth, directly. There is no implication, it's the outright direct meaning. ANY time we use the indicative, we communicate that what we are saying is a FACT to our perception, and everyone else will hear us like that's what we're saying even if the sentence would imply otherwise; it doesn't act subordinate to the sentence context, so if you use it in the wrong context they crash into each other.
This is the key. The subjunctive isn't about being emotional, it isn't about possibilities, it isn't about hypotheticals per se.
It is about NOT being the indicative, and literally the only real "rule" to the subjunctive is "do I want to give my sentences a strong meaning of truth, factual declaration, and concrete reality here? Or would that focus hurt my sentence?" The subjunctive is a mood of avoidance. It's used to AVOID the implications of the indicative. It can only properly be understood by contrast to spanish's usage of the indicative mood, and once you properly grasp that it's the easiest thing in the world to see.
I was up till 5 am checking all the examples I could find, reading Spanish forums online and all their usages. I couldn't find one that didn't make sense to me anymore, not a single damn one. All those weird irregularities? Sensible. The reasons for why it seems to spread over so many theoretical topics? Sensible. I had done it, I'd cracked the meaning behind things. And regardless of what some people on forums had claimed, it's absolutely not magic or something you can only get by speaking for 10+ years. What it is is simply misexplained by means of being talked about in a vacuum.
And with it came a LOT of sudden, cascading realizations about Spanish and how it truly differs from English. I will explain all of this below to help my fellow English-to-spanish people.
First off: "Nice catch", you probably think, "but it's so abstract. How does realizing the implications of the indicative mood help me?"
Allow me to demonstrate. First off, it must be said that the indicative is way simpler than the subjunctive in terms of its scope. In fact the entire reason why the subjunctive seems to cover so many things in theory is just that it is nothing more and nothing less than a reflection of everything the indicative is not, so covers more topics on paper (even if it's used far less frequently in reality) Like I said, literally all of it makes sense when you just flip things around and denote subjunctive as "that thing that gets called when the STRONG indicative mood would ruin things with its overwhelming presence." We can interrogate sentences in Spanish, piece by piece, and I'll show you exactly how it lines up.
Let's take the classical example. "Estoy feliz que estés aqui!" Let's NOT ask ourselves why the subjunctive is here...instead, let's ask ourselves why the indicative ISN'T here.
Indicative comes off as -- again, not merely implies like equivalent statements in English but outright states a purpose of -- declaring facts, discussing concrete reality of the here and now, our declarative plans, etc.
Can you see why this would be "wrong"? It is in fact not wrong, at all -- it's just incongruous in context. If you said "estas aqui" with the mood that declares facts...well, at best you just announced to them that they are here, carrying the meaning of you wanting to let them know this fact. Rather bizarre under most circumstances, seeing as how they damn well know that they are already here and don't need us to declare this for them! So, normally we won't do it unless in context we really do want to declare this to them for some reason.
"Es posible que él es aqui"Let's apply the same process! "Why wouldn't the indicative be good here?" Well let's look at the first half. "Es posible que..." alright so what we say next is possible! And next we say "es aquí". As in, we used the declarative, factual, concrete reality mood. In other words if we used "es" here, we would be outright saying that we firmly believe -- that it is a fact to us -- that this man is here
Well if we firmly believed that already, then why the hell did we lead with "it's possible?" This is just an incongruous statement! Therefore, we don't use it like this (unless we really do want to make such an incongruous statement).
Talking about an object that doesn't or may exist? Well when you refer to it with the indicative, you DIRECTLY STATE that to you that object might as well be reality. Poetic, but also rather delusional. Therefore, we don't use the indicative.
Making conditional plans, like "we will go to the mall once grandma arrives?" If you use the indicative on the latter half, you directly state that her arriving is your reality...even if she hasn't arrived yet. See what I said above about being delusional.
And so on and so on. Whenever you are confused about why a subjunctive is used, the proper question is not "why is it here". The proper question is "why is the indicative not here?" It's a subtle difference -- but an important one.
What we have to understand is that Spanish is not a neutral-statement language. It is binary. You ARE asserting reality. Or you are not; those are the only options, and to speak in the indicative is to presume to be asserting your interpretation of facts for others to hear. It is not a subtle effect or theory, this is how the spanish-trained brain will unconsciously view your sentences and why it will tell them that 'something' is off about what you said. You indicated to them that you wish to discuss something factual that is in fact not, and their / our-future-brains aren't really sure how to interpret that. In fact, if you aren't already thinking of the indicative in this manner or interpreting sentences with that subtext, it's time to start; that's how the spanish speaking mind will interpret its usage, and if we want to learn this language well we need to interpret it as that as well.
Those are the examples off the top of my head. I will now explain why, in terms of the structure of english and spanish, this idea is so hard to get across to native english speakers.
This entire effect is a direct contrast to English, which is why it's alien to use until properly explain, and why to native Spanish speakers our confusion is foreign. To both of you -- english-to-spanish students and people who speak spanish first, i will note the following lingual truth that most people don't realize by virtue of not thinking about it: english is a flexible, and often neutral language. Let me repeat that; english is NEUTRAL by default. We DON'T communicate this kind of meaning with our basic sentences, ever. English is like a buffet rather than a binary. Its base forms are almost always implicationless by design specifically so that we can choose to insert auxiliary words to enchant it with such meanings as English speakers please. This is likely also why most of its true subjunctive mood has faded into niche forms; English genuinely has no real need of it with so many ways of putting a sentence together. Spanish, by and large, has 2, and you will not escape from them nor their implications. (Well and imperative, but I'm not talking about it because both of our languages share that one nearly identically in concept). A statement is a statement, indicative is your reality and your attempts to declare facts for others to hear and discuss, and subjunctive is the only way to indicate that what you speak of isn't that. That's it. That's all there is to it.
Also, I'll tell all spanish-first readers who happen to read this the same thing i told my Spanish friends irl: you have no idea how confusing the subjunctive is when you are coming from a place where the "primary" prose can imply anything due to a) that being what we think of thanks to English b) most people not going out of their way to firmly correct this misconception. It would be damn near useless and indeed extremely random to perceive in usage if not for its reflections on the indicative, which is different from what we think at first. THIS is why your English speaking friends who are trying to learn Spanish struggle so hard with the concept, while you just know it. (And on the flip, why none of my Spanish-first friends realized the neutrality underlining English until i directly pointed it out to them. A lot of us aren't aware of the underlying mechanics; this is fine going from Spanish to English since English is flexible as hell, but not so much the other way around, unfortunately for us.)
Now, after all of this, can I make a request to the general community: can we PLEASE not presume that the subjunctive is magic and that the indicative is so obvious? That kind of common notion is at least in part why a lot of English-to-spanish students wrestle with the concept. For some reason we're often taught (I sure was) that the indicative in Spanish is synonymous with English and to not think more on it in comparison to its bizarre cousin, when in reality the differences between English normal prose and Spanish's indicative are both easy enough to explain and also EXACTLY why the subjunctive exists. Trying to explain how and where to use the subjunctive is like trying to put a car together with a wrench and a few bolts; good luck figuring it out easily with so much essential context missing. Maybe my teachers just didn't think about it? Do people in general not just realize this crucial difference between English's loose neutral structure and Spanish's much stricter and meaning-laden structure? Who knows.
And no, realizing this doesn't mean we don't have to practice. I'll forget use cases, not be able to realize when I needed to switch moods until hindsight, etc. I recommend "demystifying the subjunctive" for a book, it helped me out immensely. But at least now we understand it. Learning, as Spanishdude on YouTube says, is just an act of giving context to things we already know, and now we can do that without being lost. It IS a simple and easy to grasp concept at its heart, it's just not usually explained well and requires explaining what precisely is the difference between how english approaches delivering information and how Spanish does. Former is neutral, latter always communicates a meaning. The indicative in particular always imparts a sense of speaking of concrete reality no matter what sentence it happened to be in, and the subjunctive is nothing more than its replacement for when the indicative's strong statements on reality simply don't work with the matters being discussed. Of the two, the indicative is both more strict and also more narrow, and thus the clause of 'use indicative until its determinate attitude of only being used to address factual reality shits the sentence up' reigns best for the quickest and easiest way to conceptually grasp the subjunctive.
It is all about the indicative; always has been.
Anyway that's all I got. I'm finally going to bed, work will suck tomorrow but oh well, I'm too happy to care. After that I'll...maybe finally learn some decent vocabulary. I'm a heavily grammar based learner, so this was actually one of the first stops on my way through my new language, so I've still got a lot of learning to do. Still, now that i get this, I am much more confident of the rest of the way onward.
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Couple of more fun tidbits, if anyone is still reading. I also realized the English conditional is WAY wider than Spanish's, and that this is in part because in English it has come close to replacing separated subjunctive grammar in a lot of cases. If you ever notice how often we through "can" and "could" around, it is in part because of this.
I also realized that in a theoretical sense, the "true" purpose of future tense in Spanish is to discuss plans for the future, not to indicate that it will happen. Technically a small detail and probably obvious to most, but for some reason I needed this realization to realize why the subjunctive isn't triggered by its speculation; merely declaring plans is a concrete thing, after all. For some reason in English I get the subtle sense of trying to will over the future when I use it. Might be a slight language difference in intent, or maybe I'm just presumptuous about the future in English.
Finally, just a piece of trivia I liked; I realized "to think" and "creer / pensar" aren't really good translations for each other in implication. You ever wondered why it doesn't trigger the subjunctive in a positive usage? This helps to reinforce one last bit; for such things when it comes to certainty vs uncertainty, it's likely just a concept being used slightly differently in Spanish. While they mean literally the same thing, their connotations are nearly inverted. Spanish uses it to affirm that you believe something to be true (hence why it's also translated as to believe), while English uses it to instead imply subjectivity and impart doubt to a clause. It would absolutely be a subjunctive trigger in Spanish if it were transplanted directly since our usage of it in spirit is completely synonymous with Spanish's own usual triggers, but well it isn't. My Spanish speaking colleagues thought that one was interesting in particular for some reason, maybe they didn't really know how i had meant it this whole time?
submitted by The housing bubble and ensuing financial crisis offers a good example of how uncertainty avoidance can impact an entire country. The United States was at the core of the housing bubble, with ... Although, quite a number of countries fall in the category of low uncertainty avoidance countries, Jamaica, Denmark, and Singapore are regarded as the lowest uncertainty avoidance countries. Academic Research on Uncertainty Avoidance. Uncertainty avoidance and the preference for innovation championing roles, Shane, S. (1995). Uncertainty Avoidance, “a society’s tolerance for uncertainty and ambiguity”. It reflects the extent to which members of a society attempt to cope with anxiety by minimizing uncertainty. … Acceptance of assumed causes or explanations of a situation as facts to escape the discomfort associated withambiguity or uncertainty. “In cross-cultural psychology, uncertainty avoidance is a society’s tolerance for uncertainty and ambiguity. It reflects the extent to which members of a society attempt to cope with anxiety by minimizing uncertainty.” Uncertainty Avoidance Uncertainty avoidance is simply the level of of acceptance for ambiguity and uncertainty in the society. Some people feel more comfortable with uncertainty than others, and the level to which individuals contribute in certain behaviors to stay in comfortable situations is known as uncertainty avoidance. Uncertainty avoidance is the level of stress that an organization, society or culture experiences when faced with uncertainty and ambiguity.This is commonly used to model the character of a nation or organization. The following are illustrative examples of uncertainty avoidance.
