So what is happening with Gamestop now ?

[theRepublic]

Chrkeller said:

Bofferbrauer2 said:

I find it funny that now some of the old guard of traders decry this as gambling. As if the whole wall street, them included ain't gambling on the stock market. The only thing that changed is that they can't guide and thus predict where the stocks are heading...

The original reason of shares was to give a company some money in exchange for the buyers to have a word about where the company is heading. Now how many shareholders buy shares to be able to tell the company what to do next? That number tends to zero outside of company acquisitions these days. Pretty much all the rest is simply gambling on where the stocks are heading.

It's like a giant roulette table where you can only bet on red or black and analysts have  access to a brake underneath the table to ensure the ball drops where they want it to, and are whining now because somebody took their access to the brake.

So what prevents this from continuing nonstop?  Same group of people just all agree to buy the same stock and make money hand over fist?  If everybody does this, then money essentially becomes worthless. 

Though I suppose these folks still need to be able to sell, and I'm guessing few buyers are available.  To each their own, but if I was in on this, I would sell immediately.  It will tumble at some point, might as well be the first one out. 

At some point intentional market manipulation is illegal, which is exactly what is going on.  

It can only happen to stocks that are heavily shorted.  It was estimated that 140% of available Gamestop stocks were shorted.  The Wall Street Bets group found out about the bad position, and a lot of people starting buying up as much stock as they could.  They were able to move the needle enough to start the short squeeze.  I also heard a rumor that rival hedge funds are also buying stock to pressure the short positions.

https://en.wikipedia.org/wiki/Short_squeeze

It also happened with Volkswagen back in 2008.  This one was a little different because Porsche bought up a ton of outstanding stock themselves, making the available stock very low.  It meant that suddenly there were too many short positions.

"Prior to October 2008, Porsche alone had already controlled 30% of VWs shares.  Next, the government fund of Lower Saxony (the home province of VW in Germany) owned an additional 20% of VW as a strategic stake.

In addition, various index funds owned around 5% of VW due to VWs large weighting in the DAX index.  These index funds were required to hold VW in proportion to its weight in the DAX, such that they would not be able to sell simply due to changes in the price of VW.  Volkswagen alone made up 17% of the DAX index at the time.

Looking at the above, it is clear that heading into October of 2008, around 55% of VW shares were already unavailable in the market for any realistic purposes.  As a result, when Porsche increased its stake by an additional 44%, it meant that the true available float went down from 45% of outstanding shares to around just 1% of outstanding shares.  Suddenly the seemingly “low” short interest of 12.8% turned in to a massive supply and demand imbalance.  Millions of shares needed to be bought immediately even though there were simply no shares available to be sold."

https://moxreports.com/vw-infinity-squeeze/