The stupid questions thread.

Minlak

custom titis
Because that.

There are many different types of flat pedals, and many types of clip-in pedals. The chances of the previous & new owners having the same taste are not necessarily high.
Yeah I guess hadn't thought that way - Probably because I always get new pedals with a new bike - Hope they are adjusting the price accordingly :)
 

pink poodle

気が狂っている男
Can someone explain the game shop stock market thing please? I'm only finding surface level news...which I suspect is because it isn't an easy thing for "journalists" to explain.
 

moorey

call me Mia
Can someone explain the game shop stock market thing please? I'm only finding surface level news...which I suspect is because it isn't an easy thing for "journalists" to explain.
Not really, but I’ll try. There’s big companies that bet on small companies going under. SubReddit readers rallied little GameStop after a big company bet they’d go under.....then they didn’t. Big company lost big, went bankrupt, even though others tried to prop them up.
That’s a short and poor summary of a big industry and story...as I see it.
 

Litenbror

Eats Squid
Can someone explain the game shop stock market thing please? I'm only finding surface level news...which I suspect is because it isn't an easy thing for "journalists" to explain.
As @moorey said but theres a bit more to it. The particular hedge fund that bet against GameStop undertook what is know as naked shorting where they sold shares that didn't exist to create the short (very illegal but no one does anything about it). From what I have read the estimate is there were about 113% of shares out. Reddit's Wall Street Bets (WSB) saw this and a few of the traders worked out that if they could get the price up, there is no way to buy back 113% of stocks so creating massive short squeeze, costing the hedge fund billionaires billions.

This has now morphed into a bit of a movement now because hedge funds are one of the main reasons the USA is going under. They make most of their money for their wealthy clients by running American companies into bankruptcy, where they profit on their short sales. They were a big part of the 08 financial crisis and WSB see this as a way to make them pay for destroying the country.

This is a very abridged version.

Edit: fixed 'own' to 'didn't exist' as most shorts are using borrowed shares.
 
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Dales Cannon

lightbrain about 4pm
Staff member
Concept of shorting is to take an option on shares without actually paying for them, sell those shares which you dont really own for market value on the basis that shit talking or other forces will drive the price down. They then buy those shares from anywhere for less than they sold them for and hand back the shares pocketing the difference. So let's say minlak gets an option of 10 of poodle's coffees and on sells them for $5 ea for $50 cash. Then through various means convince everyone that poodle's coffees are only worth $2 each. Minlak buys 10 coffees for $20 and give poodle back his 10 coffees and has $30 in his pocket. But there were no cheap coffees and in fact the price got driven up and up until minlak couldnt buy the coffees and went bust.
 

Litenbror

Eats Squid
Good catch @Dales Cannon when shorting you don't own the shares you borrow them from someone who does (pension fund, super fund etc) and pay interest for using them. The naked short is where you don't borrow them from someone who owned them you just make them up and sell them, creating the113% of of GameStop shares in the market. This isn't a problem if the price goes down but becomes a massive problem if the price goes up. Last I saw hedge funds had lost 70 billion and it's going to get much worse for them next week.
 

dirtdad

Wants to be special but is too shy
Add that the WSB punters betting on it going up were mostly buying call options. This creates its own feedback loops of people who sold them the options going out to hedge their positions by... (you guessed it) buying stock.

To muddy the waters on the naked short bit.... A covered short is where you've borrowed the shares first. So assume there are only 10 coffees. You borrow the 10 coffees from poodle and sell them to someone else. That's a covered short. But technically there is now more than 10 coffees out there (on paper). Poodle still thinks he owns 10, and can ask you to return them at any time. But the person you sold them to was a pension fund, who has a long term investment horizon and also lends it's coffees out for a bit of extra $$. You borrow 10 coffees from the pension fund, and sell those. Now there's 200% short interest. But technically you borrowed the coffees each time, so you were "covered" and could deliver the coffees to their new owners. And interesting that poodle and the fund (plus whoever bought the second lot of shorts) both think they own 10 coffees. Now start to unwind that when the price of coffee goes up and you have to buy back 200% of the issued coffees to cover your shorts... what happens to the price of coffee.
 
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