this thread is for posting matt levine quotes in

JPMorgan made money that it did not, you would have to say, "deserve" to make

Probably what *this* should be called.
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Re: this thread is for posting matt levine quotes in

Post by Rylinks » Thu Jan 28, 2021 11:41 pm

Crunchums wrote:
Thu Jan 28, 2021 10:23 pm
I say all this not so much because I think GameStop will sell stock into this wild rally, or even because I really think that it should, but because … shouldn’t this be something? Shouldn’t there be some connection between the fun gambling that is going on in GameStop’s stock, and the actual company GameStop? “It is the deep background fact of the stock market,” I once wrote, “the thing that allows it all to work: The point of stock trading, in some vague notional sense, is that it allows companies to raise money by selling partial ownership of themselves.” Companies issue stock to fund projects, stocks go up because investors think companies have good projects to fund, companies use their stock price to recruit employees and pay for mergers and make decisions about what projects to pursue in the real world. I don’t know, I feel like a moron typing all of this. But I just have to type it! Think of how GameStop’s board must feel! The market is telling them something, but it is hard to hear what it’s saying through its maniacal laughter.
stock market = nonsense confirmed
It is just the case, just inevitably the case, that if you are going to have financial markets that are optimized for those purposes—that are liquid and complete, that attract smart people, that are open to everyone—they are also going to have a certain amount of nonsense. It’s not like WallStreetBets invented financial nonsense! Financial-market nonsense is, like, 70% of what we talk about around here on a normal day. How many times have I written about hedge funds tricking each other using credit default swaps? Financial markets exist to foster price discovery and capital formation, but the way they do that is mostly by letting smart people mess with each other all day.

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Re: this thread is for posting matt levine quotes in

Post by Ashenai » Thu Jan 28, 2021 11:51 pm

Rylinks wrote:
Thu Jan 28, 2021 11:37 pm
Ashenai wrote:
Thu Jan 28, 2021 11:12 pm


I really don't know what's going on! But I can easily imagine valid reasons for RH doing what it did. Apparently it had to borrow several hundred million dollars before/as it was doing these things, which seems to confirm what I said about excessive collateral.

Robin Hood is not, like, a portal into the magical Stock Shop where you can browse the shelves and buy stock. It's a broker, a middleman, and it does a lot of work behind the scenes to make the somewhat arcane process of settling stock purchases easy and invisible to the buyer. And while I just don't know enough about their collateral obligations to say anything definite, it seems very likely that Robin Hood simply did not have enough funds to complete all the trades that people wanted it to do, under these frankly unprecedented market conditions.
no matter how unprecedented the market conditions or how onerous the SEC requirements, selling people's positions on the bottom tick of the trading day is worthy of all the scorn they're getting
Sure. If you're a broker, you better be brokering. If you fail at completing people's trades, they won't trust you, you'll lose business. There might be regulatory implications, it's quite possible the SEC will breathe down RH's neck for this. This is all a given, and there's nothing wrong with any of it. RH was caught with its pants down and they're rightfully being criticized/shunned for it.

What I'm saying is that it looks like this might be all that happened. No conspiracy, no clandestine Wall Street meetings with fat rich old men chewing on cigars and saying things like "youse'd best halt the trading, see? gnyaaah." Just the market taking off after traders did a Weird Move, and RH wasn't prepared for the Weird Move, and the traders weren't expecting RH not being prepared for the Weird Move.

Maybe RH should have been prepared! Or maybe the move was too weird, and it was unreasonable to expect any brokerage to cope with the resulting collateral obligations. I don't know, but I'm very tired of the stupidest voices always being the loudest.

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Re: this thread is for posting matt levine quotes in

Post by Doug » Thu Jan 28, 2021 11:53 pm

Glenn Reynolds wrote:In the words of George Carlin, it’s a big club and you ain’t in it. But this is especially awkward for Robinhood, which is acting like a Deputy Sheriff of Nottingham. I assume its status as a cool brand for millennials and Gen Z will take a major hit.
Charles Payne wrote:The shorts, first of all, all this nonsense, all of this noise, all this whining by Wall Street, it’s making me sick! 140% of GameStop was short. I didn’t hear one person on TV complaining about Wall Street trying to crush GameStop, 140% short!
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Re: this thread is for posting matt levine quotes in

Post by Ashenai » Thu Jan 28, 2021 11:54 pm

Matt Levine wrote:Every day people email me to say “I don’t understand how more than 100% of a company’s shares can be shorted, isn’t that illegal?” No, it is fine. I wrote about it on Monday. Footnote 3 here. I suppose I will keep doing this forever.

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Re: this thread is for posting matt levine quotes in

Post by Ashenai » Fri Jan 29, 2021 12:01 am

But maybe there was a conspiracy! That is also possible! I can't stress enough that I don't have enough information, which is why I'd like to hear from someone who does, instead of all the Tyler Durdens, politicians, and redditors with victim complexes.

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Re: this thread is for posting matt levine quotes in

Post by Doug » Fri Jan 29, 2021 12:43 am

Ashenai wrote:
Fri Jan 29, 2021 12:01 am
But maybe there was a conspiracy! That is also possible! I can't stress enough that I don't have enough information, which is why I'd like to hear from someone who does, instead of all the Tyler Durdens, politicians, and redditors with victim complexes.
That's just an avatar. Tyler Durden isn't real
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Re: this thread is for posting matt levine quotes in

Post by Ashenai » Fri Jan 29, 2021 12:43 am

prove it

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Re: this thread is for posting matt levine quotes in

Post by Doug » Fri Jan 29, 2021 12:44 am

It's like how you have a picture of a dog but that doesn't mean dogs can post
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Re: this thread is for posting matt levine quotes in

Post by Rylinks » Fri Jan 29, 2021 1:01 am

Ashenai wrote:
Fri Jan 29, 2021 12:01 am
But maybe there was a conspiracy! That is also possible! I can't stress enough that I don't have enough information, which is why I'd like to hear from someone who does, instead of all the Tyler Durdens, politicians, and redditors with victim complexes.
conspiracies are just the pleb way of expressing scorn

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Re: this thread is for posting matt levine quotes in

Post by Crunchums » Fri Jan 29, 2021 2:26 am

Jeb Bush 2012 wrote:
Thu Jan 28, 2021 11:13 pm
Crunchums wrote:
Thu Jan 28, 2021 11:04 pm
i mean yeah but the flip side is just because there are people screaming loudly doesn't mean that they're wrong, you know? i wouldn't be totally blown away if the picture that that article paints is broadly correct. the thing that would be most surprising is, if you're literally backroom-deal-making to shut down trading, isn't that an obviously illegal thing that you're going to get in trouble for? but an answer to that is "why would you find it surprising for rich people to do crazy things and completely get away with it", like that's basically what happened in the most recent financial crisis, right?
I think that blends together totally different stuff under the banner of "doing crazy things"

but like, even ignoring that: there are plenty of examples of, say, famous celebrities committing really weird crimes. but if you see an anonymous zero hedge dot com blogpost accusing some celebrity of committing a really weird crime you should still ignore it
ok but what about this person on twitter https://twitter.com/justinkan/status/13 ... 0762253315
he even has a blue check!!
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Re: this thread is for posting matt levine quotes in

Post by Crunchums » Fri Jan 29, 2021 2:27 am

Rylinks wrote:
Thu Jan 28, 2021 11:37 pm
no matter how unprecedented the market conditions or how onerous the SEC requirements, selling people's positions on the bottom tick of the trading day is worthy of all the scorn they're getting
what exactly does it mean to sell "on the bottom tick"? they sold and it happened to be at the lowest price for the day? they sold in a way that was guaranteed to be the lowest price of the day? something else?
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Re: this thread is for posting matt levine quotes in

Post by Crunchums » Fri Jan 29, 2021 2:29 am

Ashenai wrote:
Fri Jan 29, 2021 12:01 am
But maybe there was a conspiracy! That is also possible! I can't stress enough that I don't have enough information, which is why I'd like to hear from someone who does, instead of all the Tyler Durdens, politicians, and redditors with victim complexes.
nods
i am eagerly awaiting matt levine's column tomorrow
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Re: this thread is for posting matt levine quotes in

Post by Rylinks » Fri Jan 29, 2021 2:29 am

sold at the lowest price for the day yes

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Re: this thread is for posting matt levine quotes in

Post by Crunchums » Fri Jan 29, 2021 2:32 am

yeah but like, by happenstance or by design?
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Re: this thread is for posting matt levine quotes in

Post by Rylinks » Fri Jan 29, 2021 2:37 am

i have no idea what actually prompted RH to sell these positions so i can't be sure, but often with things like this they are sold low because the broker is selling a lot of stock, doing so right after a big downward price movement that triggers whatever risk flags, and they don't structure the trade to get the best price, they just want to close it out as quickly as possible to minimize the risk to themselves.

obviously none of this guarantees you will bottom tick the market but it doesn't help

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Re: this thread is for posting matt levine quotes in

Post by Shiny Days » Fri Jan 29, 2021 2:46 am

Crunchums wrote: ok but what about this person on twitter https://twitter.com/justinkan/status/13 ... 0762253315
he even has a blue check!!
Image

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Re: this thread is for posting matt levine quotes in

Post by Starprintsky » Fri Jan 29, 2021 2:50 am

Still vaguely mystified that "the thing that confirms a famous person is who they say they are" somehow got so politicised

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Re: this thread is for posting matt levine quotes in

Post by Jeb Bush 2012 » Fri Jan 29, 2021 2:53 am

Crunchums wrote:
Fri Jan 29, 2021 2:26 am
ok but what about this person on twitter https://twitter.com/justinkan/status/13 ... 0762253315
he even has a blue check!!
blue check is neutral, it's the green check that tells you the tweet is true

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Re: this thread is for posting matt levine quotes in

Post by Rylinks » Fri Jan 29, 2021 4:33 am

Image

this graphic seems reasonable

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Re: this thread is for posting matt levine quotes in

Post by Crunchums » Fri Jan 29, 2021 4:48 am

i don't understand it and don't want to put in the work to change that
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Re: this thread is for posting matt levine quotes in

Post by Khaos » Fri Jan 29, 2021 4:04 pm

Rylinks wrote:
Wed Jan 27, 2021 8:54 pm
Jeb Bush 2012 wrote:
Wed Jan 27, 2021 8:47 pm
Khaos wrote:
Wed Jan 27, 2021 8:35 pm
ok now why are puts a thing. you can just buy stock instead

i think its because people love gambling
the answer (as for all these more complicated instruments) is that selling a put doesn't do the exact same thing as buying a stock, and sometimes you need to do the more complicated thing if you want to create a vehicle that reliably makes you money if your belief x is right (which will in turn help to incorporate belief x into prices)

I think the justification for puts is more obvious on the buying them side - buying a put is basically buying insurance against a stock falling below a certain value, and you can't buy that insurance unless someone is allowed to sell it
yes, insurance is another way financial derivatives are good besides incorporating belief X into stock prices

let's say there's a farmer and it's 6 months before the harvest. Right now corn prices are high, so the farmer decides to plant corn. If the price of corn crashes in the next six months, the farmer might be financially ruined. This is bad for a variety of reasons, but most of all it's bad for the farmer, who presumably likes farming and doesn't want to have to sell his business and change careers.

By buying options on corn futures, the farmer can ensure he won't go bankrupt. This is a valuable service in the same way fire insurance is, and often banks will charge a few % for this service in the same way fire insurance has negative EV.
i was thinking about this, and it all makes sense to me for buying options. but what about options trading? is there some value being created there that i'm missing? i feel like it's crossing the line from insurance into just pure gambling

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Re: this thread is for posting matt levine quotes in

Post by Ashenai » Fri Jan 29, 2021 4:23 pm

Every trade has a counterparty side. You can't buy options without someone selling options. The value of selling options is that someone who wants to buy options can then do so, which we've established is useful.

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Re: this thread is for posting matt levine quotes in

Post by Khaos » Fri Jan 29, 2021 4:36 pm

i... i guess that makes sense

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Re: this thread is for posting matt levine quotes in

Post by Jeb Bush 2012 » Fri Jan 29, 2021 4:45 pm

Khaos wrote:
Fri Jan 29, 2021 4:36 pm
i... i guess that makes sense
it's probably helpful to think about what a literal insurance company does. the individual positions they're taking all look very reckless (I get some money, unless some low-probability event happens and I get totally blown out), but because people want to buy insurance and are willing to accept negative expectation to do so you can get positive expectation on these positions, and so then you build up a portfolio of these positions such that your chance of getting blown out overall is very low (if you do it right, lol)

the most basic way of doing this for insurance is just insuring lots of different uncorrelated risks but there's lots of instruments that do this in different ways

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Re: this thread is for posting matt levine quotes in

Post by Khaos » Fri Jan 29, 2021 4:57 pm

Jeb Bush 2012 wrote:
Khaos wrote:
Fri Jan 29, 2021 4:36 pm
i... i guess that makes sense
it's probably helpful to think about what a literal insurance company does. the individual positions they're taking all look very reckless (I get some money, unless some low-probability event happens and I get totally blown out), but because people want to buy insurance and are willing to accept negative expectation to do so you can get positive expectation on these positions, and so then you build up a portfolio of these positions such that your chance of getting blown out overall is very low (if you do it right, lol)

the most basic way of doing this for insurance is just insuring lots of different uncorrelated risks but there's lots of instruments that do this in different ways
yea i get that, what im talking about is more like

i buy a home insurance policy on my house -> good

a bunch of people who don't own houses buy insurance policies on my house, and trade those policies among themselves. they don't usually collect, but trade constantly and as wildfire conditions worsen in my province, some of the policies become more valuable and so sell to other non-home owners for a higher price -> not sure if good

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Re: this thread is for posting matt levine quotes in

Post by Ashenai » Fri Jan 29, 2021 6:38 pm

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Re: this thread is for posting matt levine quotes in

Post by Rylinks » Fri Jan 29, 2021 9:02 pm

You can’t give margin loans against stocks with 500% realized volatility, come on.

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Re: this thread is for posting matt levine quotes in

Post by Doug » Fri Jan 29, 2021 9:04 pm

I mean, come on
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Re: this thread is for posting matt levine quotes in

Post by Rylinks » Fri Jan 29, 2021 9:05 pm

On the afternoon of Monday, June 15, the U.S. Securities and Exchange Commission called up Hertz and said: “Come on! Come on! Come on!” This is not an exact quote

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Re: this thread is for posting matt levine quotes in

Post by Rylinks » Fri Jan 29, 2021 9:50 pm

How to Buy GME etc [Loophole]

Robinhood and other shitty brokerages are allowing us to buy 2, 5, or very low numbers of GME. However, they are allowing option contracts.

Here’s a trick that will work.

1) Go to Feb 5 option. 2) Scroll all the way down the call list 3) Buy GME call option with the cheapest +x.xx% 4) Immediately exercise.

I just exercised 2 contracts and now have 200 shares, blocking the shorts. You can repeat this process over and over if you are buying a lot.

Best of luck out there! Let’s get them!!!

P.S. If you can afford 100 shares but can’t afford the risk, you can sell (heh...) some shares after you exercise and take risk off the table.
classic Robinhood lmao

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