1/
#WallStreet is not a scam just for letting share owners trade.
#Redditors banding to provoke a short squeeze aren't either.
Borrowing stock, just like borrowing money, is not inherently evil.
#Melvin played w fire. But plenty redditors won't do well.
Here's why..
#GME
#WallStreet is not a scam just for letting share owners trade.
#Redditors banding to provoke a short squeeze aren't either.
Borrowing stock, just like borrowing money, is not inherently evil.
#Melvin played w fire. But plenty redditors won't do well.
Here's why..
#GME
2/
Buy a $100 stock and $100 is the most you can lose, but upside is limitless.
Short a $100 stock and $100 is the most you can win, but downside is limitless.
Maximizing geometric expected return is THE investing strategy that outperforms ANY other over the LONG run.
#GME
Buy a $100 stock and $100 is the most you can lose, but upside is limitless.
Short a $100 stock and $100 is the most you can win, but downside is limitless.
Maximizing geometric expected return is THE investing strategy that outperforms ANY other over the LONG run.
#GME
3/
Maximizing GER was long ago considered UNIVERSALLY BEST even by the finance community ('finance' as in financial science).
Thing is, if one of your outcomes can be ZERO, then your geometric expected return is ZERO, no matter how great the other possible outcomes are.
#GME
Maximizing GER was long ago considered UNIVERSALLY BEST even by the finance community ('finance' as in financial science).
Thing is, if one of your outcomes can be ZERO, then your geometric expected return is ZERO, no matter how great the other possible outcomes are.
#GME
4/
Therefore it's ALWAYS wrong to borrow stock & sell it (or alternatively borrow money & invest). Because there's a chance you can go to zero, so the GER is zero.
#Melvin ignored this, just like the finance geniuses at the now forgotten Long-Term Capital Management.
#GME
Therefore it's ALWAYS wrong to borrow stock & sell it (or alternatively borrow money & invest). Because there's a chance you can go to zero, so the GER is zero.
#Melvin ignored this, just like the finance geniuses at the now forgotten Long-Term Capital Management.
#GME
5/
The redditors might pull something off with the short-covering deadline being on Friday, but they're day trading, & not selling an obviously overvalued stock, neither of which is sound, intelligent investing.
#GME #melvincapital #HoldTheLine
The redditors might pull something off with the short-covering deadline being on Friday, but they're day trading, & not selling an obviously overvalued stock, neither of which is sound, intelligent investing.
#GME #melvincapital #HoldTheLine
6/
One extra risk for the #redditors is that #Gamestop could in theory take advantage and issue a ton of stock. This is an extra risk for shorts as well, since company can also buyback a ton of stock.
Wish everybody well (especially #redditors), but this can't end well for all.
One extra risk for the #redditors is that #Gamestop could in theory take advantage and issue a ton of stock. This is an extra risk for shorts as well, since company can also buyback a ton of stock.
Wish everybody well (especially #redditors), but this can't end well for all.
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