Oh my god! GME is down to $150! It's down to $100! It's down to 30 cents! The hedgies are going to cover all their shorts at that 30cent price point! It's over!
Wrong.
No one is selling at these prices. Sure, maybe a few scared folk who don't know any better. Maybe they trigger a few stop losses. Maybe some margins get called. But it's not enough. Say it with me:
PRICE DOESN'T MATTER
WHAT?!
You heard me. 30cent GME? No problem.
They don't need a low price, they need your shares. If 10 people sell at 30c cents, and that's the only market activity, it's a "30 cent stock" but Melvin only netted ten shares. They are still fucked. They aren't buying 50 million shares at 30c, nor $100, nor $300, and that's their problem. It's an availability issue. Sometimes it's ALSO a price issue (too high for them) but primarily it's the availability.
All the activity driving down the listed share price are illegal ladder attacks (not that legality should be expected at this point, these folk are crooks). Those aren't actual sales though, it's just shares trading hands from hedgie to hedgie. They aren't gobbling up value. These people don't admit defeat, they are neither smart nor humble, they are crooks. They need 50 million+ shares. They need over 100% of the float to sell to them (that 50% float you hear about is accounting shennaigans, ignore it, they are still exposed). You can NOT close that many positions sniping a few shaky handed noobs. We aren't talking about a few shares they need to buy, we're talking about fucking ALL OF THEM.
I'll explain that in a second, but first let me repeat:
PRICE DOESN'T MATTER
So let's say you want to buy 50 million shares, let's look at what shares are being asked for in my hypothetical example market:
# of Shares - Price
x 20 - $0.30c
x 80 - $5
x 400 - $20
x 600 - $40
x 900 - $60
x 2,000 - $100
x 5,000 - $150
x 10,000 - $200
x 30,000 - $300
x 50,000 - $400
x 150,000 - $500
x 1 mil - $1,000
x 15 mil - $5,000
x 30 mil - $69,420
Get it? There are only a few people willing to sell at those low prices. By the time you've bought a quarter million shares (0.5% of what you need to buy) you're back up to the sustained highs. And these are just exaggerations to make a point. A stock price only reflects current trade values, not availability at those prices. If the hedgies are trading their shares back and forth to each other to drive down the price and they have ladder attacked down to a Nickel, that doesn't mean anyone's shares are only worth pocket change, that just means that that is what things are trading at in the moment. There's no volume to buy up at those costs. No one can force you to sell at a Nickel.
Get it?
PRICE DOESN'T MATTER
They need our shares, not a low price. The price does not reflect whether we are 'winning' or not. Their financial reserves indicate that, but there isn't a ticker for that. But be sure, every day the inevitable closes in. Sell out of fear if you like, but you'll just miss out in the end. People like me, as we shore up more funds, snipe these low prices, stealing away shares the hedgies use to ladder and taking shares away from shaky hands and putting them into steady ones.
This isn't financial advice, I just want to make sure people on this sub have the knowledge to not make fools of themselves in casual conversation.
Just to understand you correctly.. I am a complete rookie in actual trading but already registered at XTB (I live in Europe)..
Now that the price has falled below $90, I am willing to snipe at these low positions. I also understand I should not give fvck in to any actual fluctuations in order to win if I am looking for a short squeeze..
What is your expectation how the things will be playing out and in what timeframe? I definitely want to be a part of the history and also help the good cause.. I won't mind losing the money eventually..
But, OTOH, if the hedgies are gonna cash out, someone else is gonna end up a winner, right? Is it us? How long should we hold? A month, a year, 10 years, forever?
TIA for all tips and hints, Patriot
You did it right.
As for timeframe, I really don't know. This isn't my profession, I'm just a week into daily rabbit holes learning all this. System analysis and problem solving just happens to be my bread and butter.
Timeframe depends on trigger, and trigger depends on conditions. The trigger we are waiting for are the short sellers being forced to cover their positions. But what conditions make that necessary? Basically we are waiting for them being forced to cover from who they borrowed from. The conditions that we (I) expect are necessary for this is when they can no longer pay the interest (run out of money/people willing to loan them money).
Sustained high prices reduce the timeframe for this, sustained low prices increase the timeframe. But it will happen one way or another. There are also regulatory requirements being floated around that would give definitive dates, but I'm hesitant to repeat them simply because I don't understand them with absolute certainty.
But none of this helps you, so let me put it in actionable terms. Since it could be days, weeks, or even months (but not years, this isn't an infinite thing) my recommendation for your sanity is to become comfortable walking away from the scene anytime the not knowing starts to consume your thoughts. Just let your shares sit there and forget about them, you only need to hold after all. There's no danger of missing things either, when shit happens it's all anyone anywhere will be talking about.
But this isn't a play you should rely on to cover your rent end of month, or a play to make money to pay off the mob hit on you by friday. There is no definitive timeframe - everything the Hedgefunds are doing is to stretch things out so they can stay solvent longer than you can stay irrational. Their best successes simply buy them more time, never infinite.
This is OK.. What caught my attention was your remark about the hedgies not even trying to cover their positions.. this got me like WTF, if they are not forced to cover the shorts (either from the lenders or by legislation), then what sense does it make?
So, let me sum it up - they will need to cover ~120% of the shares.. that means they have to come and try to get my owned stock, sooner or later.. if we all hold, then they're fvcked.. now, my question, what exactly does it mean, fvcked? :)
What I mean is they aren't trying to cover their positions cheaply. If they don't it is true they'll be forced to cover at any cost. But they don't mind that option, they don't lose their house, just their job when the hedgefund collapses.
So their strategy is to wait out retial investors, make them think they lost, that they can't win, so they'll sell, and go away, and all the shares are in circulation again. They want to reset, and erase the last 3 months. They will never VOLUNTARILY cover, because their plan is to make you quit.
And when they fail, and they are fvcked, the price will shoot through the roof as they buy up all of our shares.
That is EXACTLY what I thought.. One more question... can't the hedgies somehow force/bribe/blackmail GameStop to start emission of new shares in order to make up for the missing stock? At least that is what I would try to achieve if I were a rogue player..