Why Did Reddit Trigger a GameStop Stock Surge?

[Vanadium 50]

Ever deal with Treasury Direct? It could possibly be thos most annoying website in the world. Just one disadvantage of I-series bonds.

Full disclosure: I bought a ton of TIPS during my June rebalance.

 

[Bystander]

Treasury Direct? It could possibly be thos most annoying website in the world. Just one

That's what I wanted to know...gonna spend a little time tossing coins now, thankee.

 

[BWV]

Ever deal with Treasury Direct? It could possibly be thos most annoying website in the world. Just one disadvantage of I-series bonds.

Full disclosure: I bought a ton of TIPS during my June rebalance.

Sure, but the -7.5% yield on 1-year TIPS makes the Treasury Direct site palatable

 

[kyphysics]

 

[BWV]

12/31/19 market cap of US stocks was ~$34T, down 20% after the COVID crash that would be $27T, $100B is not that much money on that scale

 

[kyphysics]

12/31/19 market cap of US stocks was ~$34T, down 20% after the COVID crash that would be $27T, $100B is not that much money on that scale

There's no implication that stimulus-fueled retail investors somehow single-handedly lifted the U.S. stock market. I think the basic point was to just say they ploughed a decent amount of their stimmie checks into it is all. . .I think.

 

[kyphysics]

https://www.cnn.com/2022/06/07/investing/sec-retail-investors-payment-for-order-flow/index.html

New York (CNN Business)The agency that oversees Wall Street is weighing major changes to the way millions of everyday investors buy and sell stocks. That could be bad news for so-called free-trading apps like Robinhood as well as the lesser known firms that underpin their business models.

Today, when you buy or sell a stock on an app, the trade appears to be instantaneous. But beneath that simple buy/sell action is a complex web of Wall Street players exploiting tiny differences in price to rake in huge amounts of cash.

Here's how it works: When you tap buy or sell, Robinhood (or your broker of choice), takes your order to a firm known as a wholesaler or market maker — the middlemen who are supposed to get you the best price and who pay the brokers for the privilege of executing the trades. They typically make pennies off each transaction. . .

Gensler and other critics of the process say the brokers and market makers, such as Citadel Securities, have a clear conflict of interest, and that payment for order flow screws over everyday investors while amassing huge wealth for Wall Street firms.

Now, it appears that the SEC may roll out new rules as early as Wednesday, according to The Wall Street Journal, citing unnamed sources.

One proposed new rule, the paper said, would add more competition at the middleman level to ensure retail investors are actually getting the best prices. In that scenario, orders would be routed into auctions where trading firms would have to compete to execute them.

 

[Vanadium 50]

Sure, but the -7.5% yield on 1-year TIPS makes the Treasury Direct site palatable

It's still pretty doggone annoying. I found a GreaseMonkey script which makes it a little less intolerable. It at least allows logins with a password manager.

I-bonds are at 9.62%. Worse case, interest gets reset to zero after 6 months and you dump the bond after a year, you get half that. Not a bad deal at all, assuming this fits into your financial goals.

T-bills are eating high-yield savings accounts for lunch at the moment. The best HYSA's are at 0.75-0.8% (neglecting teaser rates) Yesterday's 28-day T-bill auction was at 1.055%. A 28-day T-bill is a little less liquid, but not much. So yes, I am using the US Treasury as my personal bank.

 

[kyphysics]

Bitcoin - down 13% pre-market
Ethereum - down 17% pre-market

other cryptos crashing too ...

 

[phinds]

Bitcoin - down 13% pre-market
Ethereum - down 17% pre-market

other cryptos crashing too ...

Stock market looks to be headed for a terrible day on top of a terrible couple of days ending last week. Right now DIA implies that the DJIA will open down 500 and the S&P 500 and the NASDAQ are looking to do even worse percentage-wise.

Inflation is being blamed, probably rightly. With inflation the way it is, expectations for companies future profits have to be discounted

June 13, 2022 08:41 AM ET (BZ Newswire) -- Cryptocurrency


Cryptocurrency-related stocks, including Coinbase Global Inc (NASDAQ:COIN), Marathon Digital Holdings Inc (NASDAQ:MARA) and Riot Blockchain Inc (NASDAQ:RIOT), are trading lower Monday amid a sharp decrease in the price of Bitcoin (CRYPTO: BTC) and Ethereum (CRYPTO: ETH).

Bitcoin, the world's oldest cryptocurrency, fell to its lowest levels since the end of 2020 on Monday. The crypto market seems to be falling amid a selloff in broader risk assets after traditional markets traded sharply lower last week in the wake of runaway inflation data.

Crypto lending company Celsius stopped withdrawals for its customers, which has sparked investor fear. Binance also paused Bitcoin withdrawals, citing a "stuck transaction."

 

[Vanadium 50]

Stock market looks to be headed for a terrible day

It's interesting that people think "up is good, down is bad", but it depends on whether you are buying or selling, doesn't it? And based on comments in this thread, it appears we have more buyers than sellers.

You can drive yourself batty worrying about unrealized gains and losses. But you can't buy a BigMac with unrealized gains.

 

[russ_watters]

Bitcoin - down 13% pre-market
Ethereum - down 17% pre-market

other cryptos crashing too ...

It's interesting that Bitcoin had a remarkably stable May, hovering around $30,000 almost the entire month. Sure, it had lots of $1,000+ swings, but it just went back and forth around $30k. It did something similar at $40k in April (the drop from $40k to $30k happened over just a few days in the first week in May). It looks like people are setting buying price targets at $10k increments, which hold it at that level until the buying runs-out. If that's the trend it could be dropping to $20k and then holding for the rest of the month...

 

[kyphysics]

Well, getting close to $20K...I own zero BTC, so this would be pretty funny to me if it got to like $1,000.

Lots of stories of people going broke on crypto lately.

What do you all make of the argument that BTC is the real deal, while other cryptos are not (either Ponzi schemes and/or lack the truly decentralized and scarcity traits BTC has)?

 

[russ_watters]

What do you all make of the argument that BTC is the real deal, while other cryptos are not (either Ponzi schemes and/or lack the truly decentralized and scarcity traits BTC has)?

I've heard crypto advocates argue the opposite, that other cryptos have features that address flaws in Bitcoin and so are "better". But none as far as I can tell address their schizophrenic nature and lack of reason for existing (not that I'm a general expert in crypto).

 

[kyphysics]

$20,800 for BTC... this is getting interesting!

 

[BWV]

with Celsius, we have a good old fashioned bank failure - crypto, at best, has successfully recreated the instable private banking / money system of the 1800s. But this would be the most optimistic take on it, I personally believe this is just the early innings of a complete wipeout of bitcoin and other CCs. Celsius maybe is analogous to Bear Stearns failing, when Tether collapses later this year it will be analogous to Lehman, but there is no bailout and miners won't support the ecosystem if mining becomes unprofitable, so ISTM the collapse will be fast, not slow. The baseball card you overpaid for in the 90s can gather dust in your dresser forever, what happens to BTC when no one will spend the $ to maintain the network?

 

[fluidistic]

with Celsius, we have a good old fashioned bank failure - crypto, at best, has successfully recreated the instable private banking / money system of the 1800s. But this would be the most optimistic take on it, I personally believe this is just the early innings of a complete wipeout of bitcoin and other CCs. Celsius maybe is analogous to Bear Stearns failing, when Tether collapses later this year it will be analogous to Lehman, but there is no bailout and miners won't support the ecosystem if mining becomes unprofitable, so ISTM the collapse will be fast, not slow. The baseball card you overpaid for in the 90s can gather dust in your dresser forever, what happens to BTC when no one will spend the $ to maintain the network?

Celsius, and other platforms (such as popular exchanges), are indeed doing similar shady things than banks (no need to go back to the 1800's, just what is going on now). That's not cryptocurrencies though.

Interesting question about mining becoming unprofitable. If this occurs reasonably slowly, this won't be profitable on some hardware but still yes on other hardware. I am guessing that a sort of centralization might happen, a bit like it was the case with Monero a few months ago, where a single mining pool had over 50% of all mined blocks, i.e. the 51% attack was possible. People on reddit gathered up and started to ask people to mine themselves, or join other pools, eventually they were successful (current standing visible at https://pools.xmr.wiki/) to lower the dominance of that pool. People did that because they believed in Monero (and its future), as they were probably losing a little bit of money (could have been worse if the blockchain was "hacked", it wouldn't even be directly visible, which is terrible.).

I would like to see Tether fail sooner than later. Everyone knows it's going to collapse, at least on reddit.

 

[Office_Shredder]

I would like to see Tether fail sooner than later. Everyone knows it's going to collapse, at least on reddit.

It's pretty tough to know. There is a decent chance it's fully backed, and a decent chance they stole a bunch of money, and a decent chance they over- risked their book and don't have enough capital in the down market.

 

[BWV]

Another rumored crypto implosion

https://cryptobriefing.com/3ac-says-its-committed-working-this-out-wipeout-rumors-rage/

 

[Vanadium 50]

crypto implosion

In the words of Ralph Wiggum, "That's unpossible!" Isn't crypto supposed to be a stable store of value?

Seriously, if crypto can't make up its mind whether it is a currency or a casino, it deserves to crash. Indeed, For that matter, does the world really need two orders of magnitude more cyptocurrencies than national currencies? I would argue that 99.9% of them should fail.

 

[Office_Shredder]

In the words of Ralph Wiggum, "That's unpossible!" Isn't crypto supposed to be a stable store of value?

Seriously, if crypto can't make up its mind whether it is a currency or a casino, it deserves to crash. Indeed, For that matter, does the world really need two orders of magnitude more cyptocurrencies than national currencies? I would argue that 99.9% of them should fail.

If diablo immortal needs eight different in-game currencies to manage their freemium offerings, why shouldn't the world writ large have 8,000 of them?

 

[russ_watters]

https://www.cnn.com/videos/business/2022/06/16/nightcap-crypto-collapse-clip-orig-no.cnn

I must admit to some schadenfreude, but that's mostly because of the arrogance of cryptobros. The main reason, though, that I want to see crypto go to zero is that the sooner it goes to zero the fewer people will get hurt/less money will be lost. And on the other side of the...coin...I see the cryptobros as abusers. The next level up in the pyramid, trying to scam-up the level below them. So I have very little sympathy for the evangelists, but some for the followers.

Also, the commentator talks about the people being laid-off from Coinbase. Should I have sympathy for them? Ehh, I guess, maybe a little? If you're 27 and working for a startup you know the deal, don't you? High risk, high reward? I think those people are going to be ok, anyway. No, it's the friend of a friend who "invested" because a bro convinced them to that I have real sympathy for.

 

[kyphysics]

No, it's the friend of a friend who "invested" because a bro convinced them to that I have real sympathy for.

^^reposting from the Today I Learned thread
I think this is where position sizing matters a lot. I've heard a ton of people say to just take 1% of your assets/net worth and put it into bitcoin, b/c if it goes to the moon and turns out to be the greatest investment of all time, then you don't want to miss this. On the other hand, 1% won't kill you if it went to absolute 0.

You might say 1% wouldn't gain you much either. Fair enough. And you could also say that lots of early stage speculative companies might have just as equal of a chance of getting you 100x gains - like gene editing or artificial intelligence stocks - so why choose bitcoin (esp., after it's gone up so much already)...?

All fair questions/critiques. I'm just reporting what I've seen lots of people say.

The thing I don't understand with people investing in bitcoin or crypto is why they'd put like 50% or more of their assets into it. Some are just so crazed they are basically 100% into it. That is diversification suicide obviously...violates basic investing principles and common sense. I do feel bad, too, for those who were tricked into buying crypto by Ponzi scheme pumpers, but I still feel like many should have known not to put everything into it.

And, if someone was like 40 years old+ doing that?...really bad. I figure if you're in your 20's...maybe up through 30's even (at most) and don't have a lot of life experience with investing, okay, I could see you making this dumb mistake...40 y/o+...? should have known better. Why put ALL your eggs into this shaky asset?

 

[kyphysics]

Who thinks there should be mandatory investing curriculum in high school?

 

[Office_Shredder]

Who thinks there should be mandatory investing curriculum in high school?

It's not obvious that kind of thing will help.

https://money.usnews.com/money/personal-finance/family-finance/articles/2018-08-28/do-financial-literacy-courses-work

I think it would especially not have helped here. No 40 year old was going to learn about stablecoins in school. Most of the people putting all their money in these things are incapable of losing money, and I doubt a class 24 years ago would have helped him realize that this wasn't true.

 

[kyphysics]

It's not obvious that kind of thing will help.

https://money.usnews.com/money/personal-finance/family-finance/articles/2018-08-28/do-financial-literacy-courses-work

I think it would especially not have helped here. No 40 year old was going to learn about stablecoins in school. Most of the people putting all their money in these things are incapable of losing money, and I doubt a class 24 years ago would have helped him realize that this wasn't true.

Did you mean incapable of managing money instead for bolded part?

Just in news:
https://www.cnbc.com/2022/06/24/hac...n-in-crypto-from-harmonys-horizon-bridge.html

$100 million worth of crypto has been stolen in another major hack​

 

[kyphysics]

speaking of these hacks...can someone explain why this seems more common vs. people hacking people's brokerage accounts (at like, say, Fidelity, Schwab, Vanguard, etc.)?

Is it easier to hack crypto accounts vs. brokerages and steal money? ...Is it due to a money trail that would take place with a brokerage...like needing to sell all that person's stocks, then transfer the cash to the thief's bank account, which would leave a trail?

Does this trail (if it is the main diff.) not happen with hacked crypto? I don't invest in it, so don't know how it works.

 

[Vanadium 50]

I doubt a class 24 years ago would have helped him realize that this wasn't true.

I doubt it would as well. We have people who think they understand ginance based on raeding a few tweets and listening to a couple of podcasts.

Besides, what would this replace? Math? English? Cut a little out of every other course?

Furthermore, to channel my inner Montgomery Burns, why should I care? We have a bunch of people who think they are experts because of the aforementioned tweets and podcasts. I'm happy to be their counterparty. Excellent...

 

[russ_watters]

Who thinks there should be mandatory investing curriculum in high school?

It's not obvious that kind of thing will help.

I think it would especially not have helped here. No 40 year old was going to learn about stablecoins in school. Most of the people putting all their money in these things are incapable of losing money, and I doubt a class 24 years ago would have helped him realize that this wasn't true.

I doubt it would as well.

I don't know, it might. To me it is more basic/broad than learning stablecoins specifically. And even such basic things as "don't be stupid", "don't be gullible", "if it sounds too good to be true it probably is" and "you're an adult now, start acting like it" are things a lot of people need to hear/get.

However, this specific case reminds me of an anecdote in a book I've talked about here that my dad first bought me maybe 25 years ago. It's called "The Only Investment Guide You'll Ever Need". It describes a bunch of basic investment vehicles and, for the most part, why you shouldn't use them (it also talks about what most people should do). [edit] Updated this year to include crypto, nfts, etc. But that's not the point.

The anecdote is about how there was a hot trend in investing in the early '80s (?) when people were converting their dollars to Mexican Pesos and depositing them into Mexican banks because they offered better interest rates than American banks. Cool hack, and completely safe since the Peso was pegged to the dollar by the Mexican government.

Until it wasn't. Oops.

So the advice was: don't use alternative currency as an investment because you don't know how stable it's going to be. Fits pretty well here -- very direct for stablecoin, and would apply to regular crypto too if it ever starts looking like a real currency.

Besides, what would this replace? Math? English? Cut a little out of every other course?

Gym? Art? Put the "economics" back in "home economics"?

 

[kyphysics]

I don't know, it might. To me it is more basic/broad than learning stablecoins specifically. And even such basic things as "don't be stupid", "don't be gullible", "if it sounds too good to be true it probably is" and "you're an adult now, start acting like it" are things a lot of people need to hear/get.

The anecdote is about how there was a hot trend in investing in the early '80s (?) when people were converting their dollars to Mexican Pesos and depositing them into Mexican banks because they offered better interest rates than American banks. Cool hack, and completely safe since the Peso was pegged to the dollar by the Mexican government.

I could see a history/lesson(s) in the following being helpful:

i.) compounding of wealth
Einstein said compound interest was the Eighth Wonder of the world. Many people may not realize how important/powerful it is to start early. The math is crazy in terms of how much more money you have to invest later in life to "catch up" to someone who started earlier (with less contributions).
ii.) the dangers of debt
It can be compounding in reverse if you get stuck in a spiral.
iii.) asset bubbles & Ponzi schemes
iv.) how to buy a house (biggest asset most people will purchase)

It's sad that very prominent investors/finance people sometimes say the financial advisory industry is more sales sometimes than helpful advice. It can vary...but some firms are known for more of a salesman-like quality vs. looking out for your best interests. I interviewed with Ameriprise before and they felt like a cheap sales firm. Granted, that was a long time ago and maybe they've changed or it was just that one location. But, basically, it felt like I was in the movie Boiler Room with Ben Affleck.

I do wonder, though, if these topics would seem too "foreign" to those living in a very poor community? The counter might be that they might need this information the most.

 

[Nugatory]

However, this specific case reminds me of an anecdote in a book I've talked about here that my dad first bought me maybe 25 years ago. It's called "The Only Investment Guide You'll Ever Need". I

First investment book I bought, at age 22. Dated now of course, but still readable and the mindset is timeless.

 

[fluidistic]

^^reposting from the Today I Learned thread
I think this is where position sizing matters a lot. I've heard a ton of people say to just take 1% of your assets/net worth and put it into bitcoin, b/c if it goes to the moon and turns out to be the greatest investment of all time, then you don't want to miss this. On the other hand, 1% won't kill you if it went to absolute 0.

You might say 1% wouldn't gain you much either. Fair enough. And you could also say that lots of early stage speculative companies might have just as equal of a chance of getting you 100x gains - like gene editing or artificial intelligence stoc

The thing I don't understand with people investing in bitcoin or crypto is why they'd put like 50% or more of their assets into it. Some are just so crazed they are basically 100% into it. That is diversification suicide obviously...violates basic investing principles and common sense. I do feel bad, too, for those who were tricked into buying crypto by Ponzi scheme pumpers, but I still feel like many should have known not to put everything into it.

And, if someone was like 40 years old+ doing that?...really bad. I figure if you're in your 20's...maybe up through 30's even (at most) and don't have a lot of life experience with investing, okay, I could see you making this dumb mistake...40 y/o+...? should have known better. Why put ALL your eggs into this shaky asset?

The 1 percent shouldn't be a general rule. I don't blame people who have very little saved (say less than 15k dollars), who even though are in their 20s, 30s or 40s won't ever be able to afford to buy a place to live if they continue with their current job/carrier path. They have very little to lose in placing most of their money into crypto, even if they lose 100 percent of it. It won't make a big difference in their lives. If bitcoin or whatever they bought goes up 3x or 5x in their lifetime, it might make a little change, and if it goes 100x, then they would have won.

About diversification, sure... easy to do when you're rich and can afford the whole spectrum of things to invest in. Art, gold, stocks, cryptos, appartments, etc. When you're broke, you don't have much diversification possible. Bitcoin in particular is becoming increasingly correlated to the stock market, which makes a similar asset, and isn't as a diversified asset as it may seem at first glance.

 

[Vanadium 50]

They have very little to lose in placing most of their money into crypto,

Sure, but by same token they can "invest" in horse racing, lottery tickets and roulette.

About diversification, sure... easy to do when you're rich and can afford the whole spectrum of things to invest in

It is much easier now than it used to be: VTTXX (Target 2060 retirement) is a mix of domestic large cap, domestic small cap and international stocks, domestic bonds and international bonds. It is heavily weighted towards stocks, but over time the bond fraction will grow. Minimum initial investment is $1000; for subsequent investments it's $1. The expense ratio is 0.08%

Investment products are much, much easier to access than thy were when I was starting out. (Back then, stock prices were measured in eighths of a dollar, that's how long ago it was,)

 

[fluidistic]

Sure, but by same token they can "invest" in horse racing, lottery tickets and roulette.
It is much easier now than it used to be: VTTXX (Target 2060 retirement) is a mix of domestic large cap, domestic small cap and international stocks, domestic bonds and international bonds. It is heavily weighted towards stocks, but over time the bond fraction will grow. Minimum initial investment is $1000; for subsequent investments it's $1. The expense ratio is 0.08%

Investment products are much, much easier to access than thy were when I was starting out. (Back then, stock prices were measured in eighths of a dollar, that's how long ago it was,)

I agree. There are nuances though, between horse racing, lottery and cryptocurrencies in general. With lottery, it's easier to figure out your chances of winning (and how much you'll more likely lose if you "invest" in lottery tickets over the years), in horse racings you may gain knowledge and have a higher chances of winning than others, whereas with crypto, you have to either bet it's useless/useful and/or worthless/worth of something.

Ok and thanks for the rest, I'll investigate.

 

[Vanadium 50]

I'd go a step further - crypto should not be an "investment",. If it's a currency, it's supposed to be a stable store of value. (Currencies can fluctuate with respect to each other, but that's the intent. And yes, it doesn't always work out that way. Failures to maintain a stable store of value include the Zimbabwe dollar, Venezuelan Bolivar, a handful from Brazil, etc.)

Or is crypto an investment, with ups and downs? If so, what's the underlying asset?

It can't be both.