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Alright so a few people have asked me wtf is going on with the stock market so I made up my mind to come here and get a thread off. Mind you I have the flu and I'm full of medicine so I am a little loopy. So ignore my typos and cut me a little slack
Alright so on the simplest and most basic level, stocks are ways for companies to raise money for themselves. So if my company makes vacuums, I sell stock in order to have more money to buy more vacuum parts and sell more vacuums and make more money
My company wins because it is now more profitable and the people who own my stock win because their share of the company is worth more. A stock is a piece of a company. Each stock is worth a different amount of each company because of the total number of stocks they created
So 99% of you know that you buy a stock a low price, the company becomes more valuable, and then you sell that stock to make profit. So what most of you don't know is the opposite of that. What do you do when you think a company is going to lose money instead of gaining it?
The answer is you "short sell" it. Short selling [calling this "shorting" from now] is selling a stock that you do not own. So if my vacuum company is selling at $20/share and you short it at that price, when the price goes down, you actually buy the shares that you sold earlier
is that confusing? if it is I will try to explain it a little better. So if you short my stock at $20/share and then a week later my stock is worth $15/share and you buy it, then you made $5/share because you bought it at $15 and [short] sold it at $20.
Shorting is the key concept to what is going on right now. You may be asking how the hell can you sell stocks you don't actually own? That is really really complicated but I will try to simplify it for the purpose of this thread.
Lets say my friend has a a pound of gold. He lets me borrow that pound of gold for a week. Right now the pound of gold is worth $10 but I think it will be worth $5 at the end of the week? How do I profit from that?
The answer is I sell my friend's gold for $10, wait a week, buy a pound of gold for $5, and then give my friend his gold back. Nothing has changed for him, but I made $5. That is basically what shorting is...borrowing a stock, selling it, and then purchasing and giving it back
So there are some billion dollar companies on wall street that shorted companies like AMC, Gamestock, Nokia, and Blackberry. By shorting billions of dollars of those company's stocks, the wall street people are trying to prevent them from having access to cash needed to pay bills
So when these companies have hundreds of thousands of their stocks shorted, the value of the company immediately drops because it is going to be damn near impossible for them to gather more income through the stock market.
Here is the sinister part. I believe one of them wall street companies shorted gamestop ($GME) at $5/share for like 6 billion shares. That is a whole lot of money for a failing corporation to have to generate.
Wall Street company's plan was to make it to where Gamestop went bankrupt, purchase all of that shorted stock at $0, and make a $30 billion profit ($0/share purchase, $5/share short, 6 billion shares). Criminal, right? no. they do it every fuckin day
So what is all the fuss about? Well some people decided to say fuck that and bought up a wholeeeeeeee lot of Gamestop stock and the stock price soared. Right now it is at almost $350/share which would be a loss of over $2 trillion for that wall street company
That is why the government is stepping in. That is why NBC is going crazy. That is why I can't access Wall Street Bets on reddit anymore. The government doesn't have a problem with wall street fucking over regular people but will not let regular people fuck over wall street.
Alright thats all i got. I hope I explained it in a way that everybody can get it. Thats all I got. I hope everybody made them some money this week. Fight the power!
