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My thoughts on $GME, Market Manipulation, Discord Servers, the SEC's role, and more:
Warning: Long thread, but not as long as my #ChipotleCount threads
Warning: Long thread, but not as long as my #ChipotleCount threads
First off... I don't know how everything with Gamestop escalated so quickly. I browse r/WallstreetBets probably a couple of times a week just to see how the internet as a whole feels about the stock market. I don't know how they influenced the market so heavily, and...
I don't think that it was entirely r/WallstreetBets's doing for GME's stock price to take off the way it did. Yes, I know about the short squeezing and gamma squeezing, I just don't think it's a clear cut "David vs. Goliath" battle that the media is selling.
On to Robinhood... I believe their actions today are only making things worse for everyone by not only restricting trading on certain stocks, but also restricting visibility on those stocks as well. I think it's a bad look for them and the finance community as a whole.
Do I believe market manipulation took place with $GME? Yes. Has market manipulation happened elsewhere/is it still happening now? Absolutely.
I have seen so many TikToks of people bragging about their Discord group taking a stock from 30 cents per share to $13 and making people a bunch of money.
This is textbook market manipulation and should be stopped.
This is textbook market manipulation and should be stopped.
What these TikToks don't show are the people who were late to the alert, got in at or near the top, and lost most of their money when the stock went back down to where it was (and where it should be).
Those discord servers are hurting so many more people than they're helping.
Those discord servers are hurting so many more people than they're helping.
I cannot stress enough how shady these discord servers are. Here is the core process behind all of them:
- Moderators of the server choose a stock with low volume to artificially boost
- Mods buy in to said stock with a "price target"
(continued below)
- Moderators of the server choose a stock with low volume to artificially boost
- Mods buy in to said stock with a "price target"
(continued below)
- Mods get out of stock before the price target hits, ensuring maximum gains for themselves
- Everyone else sells at price target, causing a massive sell-off in the stock.
Anyone who isn't the early buyers of the stock gets majorly screwed in this, including...
- Everyone else sells at price target, causing a massive sell-off in the stock.
Anyone who isn't the early buyers of the stock gets majorly screwed in this, including...
outside investors who jump in thinking that they're missing something that everyone else knows about.
(Investors, like most people, have MAJOR FOMO anxiety, myself included)
(Investors, like most people, have MAJOR FOMO anxiety, myself included)
(If you're wondering, no I haven't gotten burned by or participated in a discord server in the past, I have just seen this firsthand many times.)
What is the SEC's role in all of this? They can't possibly look through every transaction and determine if it is market manipulating or not. There is no way to tell the motivation behind a buy or a sell order.
However, I think it is sometimes possible to identify key players whenever significant market manipulation occurs.
I know the SEC has processes in place to prosecute market manipulation (they even lay it out on their website https://www.sec.gov/enforce/how-investigations-work.html), BUT...
I know the SEC has processes in place to prosecute market manipulation (they even lay it out on their website https://www.sec.gov/enforce/how-investigations-work.html), BUT...
...because of the legal cost and time it takes to properly prosecute someone, it is much more efficient for the SEC to only pursue high $ cases as opposed to the (relatively) smaller infractions.
The SEC needs to have a new system in place to efficiently and effectively identify and enforce ALL market manipulation.
Also! Regarding the hedge funds that way over-shorted $GME... I believe that the 300% test in Section 18(a)(1) of the Investment Companies Act should be put in place for ALL funds, not just mutual funds. This would stop companies from over-leveraging their assets.
I didn't think I would rant about these things for so long, but here we are. Couple disclaimers at the end:
Disclaimers:
Don't take my advice as investment advice. Please consult a stock broker.
I do not own any shares of GME, nor have I owned any shares since pre-2017.
Disclaimers:
Don't take my advice as investment advice. Please consult a stock broker.
I do not own any shares of GME, nor have I owned any shares since pre-2017.
