Current Events > Explain the Gamestop situation like I'm ten and barely understand stocks

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umax555
01/27/21 9:11:09 PM
#1:


por favor
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DoomtheGrav
01/27/21 9:13:11 PM
#2:


hedge fund bad money good monkey together strong
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dave_is_slick
01/27/21 9:13:46 PM
#3:


So basically, stonks

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#4
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#5
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MabusIncarnate
01/27/21 9:14:54 PM
#6:


Where money

Gamestop - Here money

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sktgamer_13dude
01/27/21 9:15:32 PM
#7:


Hedge fund managers borrowed more stocks than there were available to lower the price so much that theyd get a major profit but didnt sell in time so now they owe billions because the prices skyrocketed from the 20s to the 300s.
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umax555
01/27/21 9:15:44 PM
#8:


LivingLegend posted...
Billionaires were gambling that GameStop stock was going to go down.

people on Reddit decided to team up and spend all their money buying game stop stock which made it go up This caused the billionaires who gambled on it to go down to lose a fuck ton of money.

Thats pretty much it.

Lmao. Thanks.
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KiwiTerraRizing
01/27/21 9:16:14 PM
#9:


Hedgefund bet that GME would go bankrupt and bet so much it equaled more stock than exists. WSB figured this out and began buying it, forcing the fund to buy the actual stock to keep from losing the entire bet this in turn drive the price up even more and here we are.

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AllegraD
01/27/21 9:19:00 PM
#10:


Have you ever seen Casino Royale? The rich bad guy plots to blow up the airplane company's newest protoype and cause the stock to crash. The rich bad guy shorts 1 million shares because he plans to just repay the shares after the bomb and after the company's stock crashes.

James Bond saves the prototype plane and the rich bad guy's stock short plan actually turns out to fail, and costs him like $500 million dollars of other people's money (druglords, crime bosses, people like that)

^ there. That's a fitting explanation. Except, it's Gamestop instead of an airplane company. And instead of James Bond it is the Internet.

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Accolon
01/27/21 9:19:43 PM
#11:


Lol I still don't understand this

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s0nicfan
01/27/21 9:19:48 PM
#12:


https://www.bbc.com/news/business-55817918
Key to what's going on is "shorting", where, say, a hedge fund borrows shares in a company from other investors in the belief that the price of stock is going to fall.

The hedge fund sells the shares on the markets at, for example, $10 each, waits until they fall to $5, and buys them back. The borrowed shares are returned to the original owner, and the hedge fund pockets a profit.

That's the somewhat simplistic theory, anyway.



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Garioshi
01/27/21 9:21:17 PM
#13:




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averagejoel
01/27/21 9:24:35 PM
#15:


the stock market is basically a big roulette wheel where each stock is a different number on the board. the payout structure is such that the optimal play is to bet [total investment] */ n dollars on each space, where n is the number of squares on the board. that's more or less what a hedge fund is.

a "short" is borrowing shares that someone else owns, selling them, and hoping you can buy the shares back for cheaper to make money on the difference. essentially making a bet that the price will tank.

so basically what happened is this:

hedge funds took out bets that $GME would decrease in value.
the subreddit decided to start way overpaying for shares in order to fuck over the hedge funds
the stock price is now so inflated that it's about to cause those hedge funds to implode because they can't cover the cost of their bets anymore

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AllegraD
01/27/21 9:24:49 PM
#16:


Only problem with this is that apes are now buying bananas for $500 a piece and the price is going to crash soon and somebody is going to lose a fuck ton of money.

Actually the only problem with that was that it sucked.

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Turtlebread
01/27/21 9:25:37 PM
#17:


LivingLegend posted...
Only problem with this is that apes are now buying bananas for $500 a piece and the price is going to crash soon and somebody is going to lose a fuck ton of money.

Also apes and snakes dont barter with United States dollars


doesnt matter
snakes already lost


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averagejoel
01/27/21 9:26:17 PM
#18:




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Hayame Zero
01/27/21 9:26:30 PM
#19:


Imagine a seal (Gamestop) swimming along in the ocean when a group Great White Sharks (Hedge Funds) notice an easy kill. They circle the seal at the surface because they're sharks and who's going to mess with them? All of the sudden, a boat full of angry monkeys (Retail Investors/WSB) start hauling ass towards the sharks. How did monkeys learn to drive a boat? Why are they attacking sharks? Who knows? But the sharks in their hubris left themselves exposed to the monkeys and are now getting thoroughly trounced by these land mammals who somehow found a way to organize themselves instead of throwing shit at one another.

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Accolon
01/27/21 9:27:26 PM
#20:


So who did the hedgefund borrow the stocks from, and what do those people get out of this?

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AllegraD
01/27/21 9:29:41 PM
#21:


Accolon posted...
So who did the hedgefund borrow the stocks from, and what do those people get out of this?

They borrowed the stocks from the Investment banks who own the stocks. Those people get fees for loaning said stocks.

Have you ever seen Wolf of Wall Street? In that movie, the investment bank was doing an IPO for Steve Madden. That means the investment bank owned all the stocks - to sell how they saw fit on the market.

Investment Banks being:

Goldman Sachs
JPMorgan/Chase
Deutsche Bank
Merril Lynch
etc.

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Kakapo
01/27/21 9:29:51 PM
#22:


Hayame Zero posted...
Imagine a seal (Gamestop) swimming along in the ocean when a group Great White Sharks (Hedge Funds) notice an easy kill. They circle the seal at the surface because they're sharks and who's going to mess with them? All of the sudden, a boat full of angry monkeys (Retail Investors/WSB) start hauling ass towards the sharks. How did monkeys learn to drive a boat? Why are they attacking sharks? Who knows? But the sharks in their hubris left themselves exposed to the monkeys and are now getting thoroughly trounced by these land mammals who somehow found a way to organize themselves instead of throwing shit at one another.

This is the best explanation.

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BreezyExcursion
01/27/21 9:31:08 PM
#23:


the people explaining this to you are also ten and barely understand stocks

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ghettoraider81
01/27/21 9:31:14 PM
#24:


Accolon posted...
So who did the hedgefund borrow the stocks from, and what do those people get out of this?


They get their shares back

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AllegraD
01/27/21 9:32:24 PM
#25:


BreezyExcursion posted...
the people explaining this to you are also ten and barely understand stocks
yeah, which is why I Just said watch Casino Royale. It's a good movie and deals with a plot that hinges on a villain shorting stocks.

all these dumb explanations using bananas and apes and stuff are dumb.

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AngelsNAirwav3s
01/27/21 9:33:24 PM
#26:


LivingLegend posted...
Only problem with this is that apes are now buying bananas for $500 a piece and the price is going to crash soon and somebody is going to lose a fuck ton of money.

Also apes and snakes dont barter with United States dollars

The snakes arent buying the bananas back yet, and they are contractually obliged to buy the bananas on Friday, which will send the monkeys to the moon

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Doom_Art
01/27/21 9:34:12 PM
#27:


Is this going to negatively affect GameStop

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AllegraD
01/27/21 9:35:39 PM
#28:


Doom_Art posted...
Is this going to negatively affect GameStop
no, it will do the opposite.

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AlCalavicci
01/27/21 9:37:31 PM
#29:


These are great explanations thanks

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Doom_Art
01/27/21 9:38:48 PM
#30:


AllegraD posted...
no, it will do the opposite.
Wonderful

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Veggeta X
01/27/21 9:40:09 PM
#31:


So GameStop just happens to be the medium

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Christian RULES
01/27/21 9:42:28 PM
#32:


Do you remember in Star Wars where a small band of rebels took on the Galactic Empire in the name of justice and peace? Just imagine Wall Street billionaires as the Galactic Empire and the everyday people as the Rebel Alliance, and Gamestop as Luke Skywalker and the one spark that will burn the First Order down.

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AllegraD
01/27/21 9:43:18 PM
#33:


Christian RULES posted...
Do you remember in Star Wars where a small band of rebels took on the Galactic Empire in the name of justice and peace? Just imagine Wall Street billionaires as the Galactic Empire and the everyday people as the Rebel Alliance, and Gamestop as Luke Skywalker and the one spark that will burn the First Order down.
Do you remember the time Bobby Boucher showed up at halftime and the Mudd Dawgs won the Bourbon Bowl, do ya?!

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__aCEr__
01/27/21 9:43:39 PM
#34:


And yet still no PS5s smh

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Veggeta X
01/27/21 9:43:42 PM
#35:


Christian RULES posted...
Do you remember in Star Wars where a small band of rebels took on the Galactic Empire in the name of justice and peace? Just imagine Wall Street billionaires as the Galactic Empire and the everyday people as the Rebel Alliance, and Gamestop as Luke Skywalker and the one spark that will burn the First Order down.
But everyone believes they are.the rebellion and the opposition the evil empire

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Don't like it? Don't watch it. It's that simple
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Christian RULES
01/27/21 9:51:29 PM
#36:


Veggeta X posted...
But everyone believes they are.the rebellion and the opposition the evil empire

War! There are heroes on both sides. Evil is everywhere!

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Sir Will
01/27/21 9:51:57 PM
#37:


Man I hate the stock market. But fuck those betting for things to fail, that's the worst. So good to see them get fucked.

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sktgamer_13dude
01/27/21 9:55:39 PM
#38:


Sir Will posted...
Man I hate the stock market. But fuck those betting for things to fail, that's the worst. So good to see them get fucked.

Its not that they bet for it to fail. Its that they bet over the amount of stocks available for it to fail.

Your last line still remains true tho
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#39
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AngelsNAirwav3s
01/27/21 10:02:23 PM
#40:


https://youtu.be/4EUbJcGoYQ4

this is actually a really good explanation that isnt too complicated

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008Zulu
01/27/21 10:03:12 PM
#41:


So now the firms are crying to the government for another bailout now?

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Dathrowed1
01/27/21 10:03:37 PM
#42:


metallica846 posted...
Rich people bet that stock would go down. Reddit found out and made stock go up. Rich people lost billions. Reddit people made millions.
And then they were shutdown because of "hate speech"

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ThyCorndog
01/27/21 10:05:21 PM
#43:


Garioshi posted...
based. return to monke

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#44
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Ruvan22
01/27/21 10:52:53 PM
#45:


Tangential question- the investment firms that loaned out the stocks to hedge fund managers - don't they profit too as they get more money (per stock) when the stocks are returned ?
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AllegraD
01/27/21 11:32:40 PM
#46:


Ruvan22 posted...
Tangential question- the investment firms that loaned out the stocks to hedge fund managers - don't they profit too as they get more money (per stock) when the stocks are returned ?
the investment firms will make a profit off shorting. That's the reason they do it - it's high risk/high reward for both parties. Except one party is 1 human being, and the other party is the investment behemoth. :P They also charge fees for loaning the stocks.

$$$

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AllegraD
01/27/21 11:36:21 PM
#47:


honestly, if you want to boil everything down: think of stocks as money. And think of the person shorting the stocks as a guy going to an ACE CASH EXPRESS and getting a money loan.

It's basically the same damn thing, except instead of "money" its stock - and instead of ACE it's a giant investment bank. :) :)

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creativerealms
01/27/21 11:43:23 PM
#48:


Christian RULES posted...
Do you remember in Star Wars where a small band of rebels took on the Galactic Empire in the name of justice and peace? Just imagine Wall Street billionaires as the Galactic Empire and the everyday people as the Rebel Alliance, and Gamestop as Luke Skywalker and the one spark that will burn the First Order down.
And let me guess you want the Empire to win.

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WaterLink
01/27/21 11:51:53 PM
#49:


I gotta say, this is far more productive than Occupy Wall St. Because this is doing actual damage to them rather than just standing in the streets and parks like hobos.
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Hayame Zero
01/28/21 12:54:30 PM
#50:


WaterLink posted...
I gotta say, this is far more productive than Occupy Wall St. Because this is doing actual damage to them rather than just standing in the streets and parks like hobos.
Occupy Wall Street was an unfocused mess. Many of the people involved didn't even know what they were protesting, and that's why the steam ran out before any change was made in the first place.

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