|| by MM 01/27/2021, 11:10am PST
||Here, let me take a break from washing down hormone pills with a soy latte that I'm holding with pinkie extended and copy the entire thread here, because posting the highlights and expecting you to click a hyperlink to get the full context is something straight out of Orwell's 1984:
Step 0: Citadel pays Robinhood for order flow. Citadel gets to see RH's orders a few milliseconds before they're filled. Citadel may choose to front-run some of those trades.
Step 1: RH's customers and WallStreetBets start manipulating $GME. This is happening in the open.
Officially, they're manipulating $GME (and $BB and $KOSS) because these low-value stocks are being very heavily shorted, and if something moves the value of the stock up (like, tens of thousands of retail investors acting in near unison), those short-sellers may be forced to sell
...to cover their borrowed shares. [Ed. note, this is a typo he corrects further down. He meant to say "buy to cover"] If most shares are held by retail investors who won't sell, the price will skyrocket (supply/demand) until someone does. The bear hedge funds and such will still have to buy to cover, which may cause a bit of a liquidity crisis for the funds.
The concept of "Screw the hedge fund vampires who exist only to destroy companies like Gamestop" is a big part of /r/WallStreetBets's messaging. It's a compelling message, and a decent secondary reason for this.
The primary reason to manipulate markets remains profit, though.
Step 2: HFTs buy shares ahead of Robinhood users.
Remember Citadel, the firm who can front-run robinhood trades, and got to see all of that RH data a little early because they paid for flow? Yeah. When do you think they started buying $GME in front of RH traders on momentum?
Because the volume of shares exchanged suggests that the HFT folks were all over this, all the way to $150. The message on WSB might be "lots of little guys screwing big Wall Street", but the truth is that the HFT robots were screwing everyone, while paying RobinHood a kickback.
Step 3: A hedge fund becomes insolvent. Today it was Melvin Capital Management. It very likely won't be the last.
Melvin immediately sells off a portion of itself, because it needs the influx of cash or it will vanish in a poof of smoke, vaporizing ~$15 Billion in the process.
Step 4: Who's the lead investor, picking up part of a usually successful fund at fire-sale prices?
Right. Citadel, probably with some of the cash they made by repeatedly profiting in the milliseconds before filling the trades that collapsed this fund.
WSJ News Exclusive | Citadel, Point72 to Invest $2.75 Billion Into Melvin Capital Management
Hedge fund Melvin Capital has been hit hard by a series of short bets to start the year, down nearly 30% for 2021 through Friday, people familiar with the firm said.
Step 5: Citadel still has access to RH order flows, is still allowed to front-run them and/or pocket the spread, and can use that and other information to determine the next over-leveraged fund that's going to get squeezed.
They might even be able to accelerate the squeeze.
So, the next time you discount the impact of "4chan with a bloomberg terminal", remember that they are not the only ones who stand to benefit from intentionally screwing exposed short-sellers.
The professionals are all too happy to amplify the efforts of the amateurs for profit.
Because if amateurs manipulate the market, uh, truthfully, then nobody loses their license.
"I (retail investor) bought because I hate Citron & hedge funds, and we're going to screw them for profit. Join us, but do your own due diligence. YOLO!" might just be legal. IANAL.
If a licensed broker/dealer did this, they'd lose their license, and probably go to jail. Martha Stewart did time for less.
But Citadel, by paying for order flow and sitting in the middle, gets to legally ride-along, printing money the whole way.
So, when you ask yourself, "who pays for no-commission trades, and why?" or "what's the harm of RobinHood's business model?", take a look at what happens behind the scenes, in the milliseconds after you press buy, but before you own those shares.
It's vampires all the way down.
buy. buy to cover. My kingdom for an edit button.
God bless r/WallStreetBets NT by 01/26/2021, 2:18pm PST
THEY DID IT by 01/26/2021, 2:53pm PST
I was just reading about this today also. Craziness NT by 01/26/2021, 3:14pm PST
Good recap of what's happened since Friday here by 01/26/2021, 5:34pm PST
Gamestop is just such a shitty company, I don't see how it won't backfire NT by 01/26/2021, 9:03pm PST
The value is being created by the short squeeze. Options expire on 1/29. NT by 01/26/2021, 9:36pm PST
Got it. NT by 01/26/2021, 9:46pm PST
In hindsight I should have listened to myself but those dumb retards on WSB by 02/04/2021, 2:47pm PST
Counter Argument: by 01/27/2021, 7:21am PST
Mischief Maker: How do you sleep at night? NT by 01/27/2021, 8:18am PST
WSB fucks Wall Street out of more money than the DSA ever dreamed of and he's by 01/27/2021, 8:19am PST
You didn't read the thread, did you? NT by 01/27/2021, 8:31am PST
Here's a thread reader link: by 01/27/2021, 8:34am PST
Citadel just gave Melvin 2.75 billion to go bankrupt. by 01/27/2021, 8:37am PST
Sorry I spoiled your meme. NT by 01/27/2021, 8:47am PST
The idea that poor people shouldn't stand to profit from two whales by 01/27/2021, 10:08am PST
Watching the hedge fund thieves cry like cunts about regulation is great. NT by 01/27/2021, 10:37am PST
Re: Citadel just gave Melvin 2.75 billion to go bankrupt. by 01/27/2021, 10:04am PST
That wasn't the start of the thread and what misinformation? by 01/27/2021, 11:10am PST
Re: misinformation? by 01/27/2021, 12:44pm PST
He isn't SAYING the redditors are in the wrong. NT by 01/27/2021, 2:24pm PST
...I shouldn't have used the term "Counter Argument," it implied the wrong thing NT by 01/27/2021, 3:03pm PST
Also by 01/27/2021, 1:00pm PST
Re: Also by 01/27/2021, 3:48pm PST
Martha Stewart went to jail because she lied to the feds, you moron NT by 01/28/2021, 1:44pm PST
"for less" does not mean "identical crime" professor genius. NT by 01/28/2021, 1:47pm PST
I'm afraid there's no way to shoehorn that into making sense by 01/28/2021, 1:55pm PST
Murder CAN'T be worse than jaywalking THEY'RE UNCONNECTED NT by 01/28/2021, 7:51pm PST
finished the beer, reread the post, realized I make no sense by 01/28/2021, 7:56pm PST
WSB Discord was shut down by 01/27/2021, 2:48pm PST
It's like the Borg if they were all morons NT by 01/27/2021, 7:44pm PST
Uh oh! Oh no!! by 01/27/2021, 7:45pm PST
You're still a valued member of our community. NT by 01/28/2021, 6:44am PST
lmao by 01/28/2021, 9:31am PST
Hoooooollly shit by 01/28/2021, 10:22am PST
Massively depressed trading volumes in the legacy stonks today by 01/28/2021, 9:46am PST
Mysterio is correct. by 01/28/2021, 10:30am PST
We'll put them in that jail we built for rich people who plunder the poor. NT by 01/28/2021, 4:55pm PST
Who do you think invented Dogecoin by 01/28/2021, 5:38pm PST
lol Forbes by 01/29/2021, 12:31pm PST
I got out narrowly before it crashed. between AMC, GSE, and BB I got a 15% RI NT by 02/02/2021, 5:11pm PST
Re: God bless r/WallStreetBets by 01/28/2021, 10:33am PST
GET SHORTY by 01/28/2021, 1:04pm PST
LMAO 349$/SHARE IN AFTER-MARKET TRADING GET FUCKED WALL STREET by 01/28/2021, 4:39pm PST
AOC, Ted Cruz, Elizabeth Warren, AND Donald Trump Jr all against Robinhood NT by 01/28/2021, 2:31pm PST
Re: AOC, Ted Cruz, Elizabeth Warren, AND Donald Trump Jr all against Robinhood by 01/29/2021, 6:09am PST
She's not wrong. Cruz and Hawley are traitors to the USA. by 01/29/2021, 6:48am PST
Robinhood pays off angry employees with $40 DoorDash coupons. by 01/30/2021, 6:13am PST
Look at this CRYBABY HEDGE FUND BITCH by 01/30/2021, 10:59am PST
POINT: GameStop is actually a good long term hold! by 02/03/2021, 11:47am PST
COUNTERPOINT: They made their employees deal with the public face to face during NT by 02/03/2021, 11:49am PST
Re: POINT: GameStop is actually a good long term hold! by 02/03/2021, 11:56am PST
Well, they have flipped their mgmt and their priorities... $20-50 seems fair? NT by 02/03/2021, 4:46pm PST
Well, they have flipped their mgmt and their priorities... $20-50 seems fair? by 02/04/2021, 9:28am PST
We have a great microbrew scene by 02/03/2021, 2:29pm PST
GameStop is this decade's Radio Shack by 02/04/2021, 3:02pm PST
But I have a galaxy brain. NT by 02/04/2021, 4:44pm PST
How do I download 60GB of game in Wyoming with an ADSL and a BW cap? NT by 02/04/2021, 7:05pm PST
Blu-Ray was designed solely to stall the conversion from physical to streaming by 02/05/2021, 1:50pm PST
"We'll serve the parts of the country without internet" is a bad business model by 02/10/2021, 8:33am PST
Which is why that's not their business model by 02/10/2021, 5:22pm PST
GameStop should become 1970's Radio Shack by 02/04/2021, 11:02pm PST
Sounds nice in theory by 02/05/2021, 1:44pm PST
Re: Sounds nice in theory by 02/05/2021, 2:25pm PST
Saw it a little at Best Buy today. by 02/06/2021, 9:31pm PST
That old guy is now hundreds of NT by 02/07/2021, 7:03pm PST
This was a beautiful post NT by 02/07/2021, 10:37pm PST
I would unironically like to see you try to turn around GameStop. by 02/10/2021, 8:46am PST
Re: I would unironically like to see you try to turn around GameStop. by 02/10/2021, 10:07am PST
Nah, we're all going to get hired by hedge funds and let GameStop burn. by 02/10/2021, 3:41pm PST
You don't understand, I was being dead siris by 02/10/2021, 4:36pm PST
DIAMOND HANDS NT by 02/08/2021, 11:03am PST
I hate the meme leaders almost as much as the hedge funds by 02/11/2021, 5:21am PST
You're right by 02/11/2021, 6:42am PST