Reddit’s ‘GMEBagHoldersClub’ Is Where GameStop Stock Buyers Admit They Messed Up

https://www.vice.com/en/article/k7ayga/reddits-gmebagholdersclub-is-where-gamestock-stock-buyers-admit-they-messed-up

by miles • 5 years ago

54 89 5 years ago

atsushin2• 5 years ago

FOMO is one of the deadliest threats to sound decision-making. I bought some GME just as it dipped to $90, smacked myself back to reality and sold the same day -- thankfully with a small profit. I'm dipping my toes back in with two shares at $70 but I'm not expecting anything to come next week. I think /r/wallstreetbets is going to be 'ruined' by its newfound popularity for the foreseeable future, we can already see the subreddit drama and disinformation in full swing.

FeistyOtter• 5 years ago

Isn't it what WSB is all about? Pick a stock, bet on it, and when you lose you post your loss porn to the subreddit? I assume people new to WSB will take this seriously, and it does pose a threat to the sub's health, but older members know exactly what they are getting into.

guerrilla• 5 years ago

That was my view of it too. It really creeps me out that there are all these articles with "Should you take investing advice from reddit?" when WSB has never, as far as I know, been anything but high-risk fucking around for fun and profit (or loss.)

jedmeyers• 5 years ago

Isn't it what WSB is all about?

I mean, yeah, the "bet" is even in the name.

aahortwwy2• 5 years ago

The vast majority of WSB members weren't on the subreddit two weeks ago. At this point it may as well be a completely different community.

yongjik• 5 years ago

I don't know exactly what WSB is all about, but there are way too many people who seriously think this is some kind of popular uprising against evil hedge fund to take back the profit they deserve. (Or at least there were, until a few days ago.)

I don't think they'll like "Bro, it was always about making fun of how much money you lost."

rvz• 5 years ago

I think /r/wallstreetbets is going to be 'ruined' by its newfound popularity for the foreseeable future, we can already see the subreddit drama and disinformation in full swing.

It already is ruined. Given the influx of media attention, new users, bots and the GME after-party of bag-holders who missed the ship. The 'actual' old members (who got in early as $5 - $20) are already gone with their gains. Now it's just full of latecomers who bought as high as $200 - $465 posting screenshots of losing their entire life savings.

The subreddit already had users pretending and memeing to be idiots until the real idiots came in and those posting screenshots of their huge losses with their life savings with disinformation, ape emojis, 'diamond hands', 'hodl' as the stock fell etc.

Not only they didn't know that they have become a meme, They are now going to be featured in the new WallStreetBets movie. Won't be surprised if they called it 'Diamond Hands' or 'The big short squeeze'.

atsushin2• 5 years ago

I wonder where the old users will be migrating to. There were quite a few aspects of WSB I really enjoyed before 2020 / 2021 happened.

nikitaga3• 5 years ago

If you want to get rich quick, you need to understand what you're doing, and put in honest work. Everything else is somewhere between fraud, gambling and a distraction (at best).

Hyping up meme stocks is just the newest addition to tactics like wire fraud, MLMs, etc. It too will in time be thoroughly discredited, yet never eradicated completely.

You can certainly get lucky gambling on crypto, TSLA, etc. You can also trade those profitably by knowing your shit. You will occasionally make poor decisions either way, so make sure you can handle the consequences.

newswasboring2• 5 years ago

Hyping up meme stocks is just the newest addition to tactics like wire fraud, MLMs, etc.

I think your examples and meme stock are two completely different things. MLMs, frauds etc are by design lies while meme stocks are jokes and usually big hive mind mistakes. This is an apples to oranges comparison

nikitaga3• 5 years ago

I guess that's true for wire fraud, but the similarity to MLM is undeniable: participants end up financially interested in perpetuating the bubble, enticing more victims. The last ones in end up holding the bag, the first ones in get the profits.

But there are differences too of course. The virality built into modern tech makes it easy to amplify opinions into full on bubbles. You don't need to create your of Herbalife to defraud people. Now you just need to find an organic idea / trend that you could profit from ("Buy GME because short squeeze, let's show wall street!"), and hype it up with bots and followers to bootstrap the bubble, hoping that it will snowball on the same kind of virality that put it on your radar in the first place.

The new scheme is better because you don't need to create a company that can be sued. You're just a redditor caught in a meme / joke with thousands of others like you. Some newbies took this too seriously and lost their money. Well duh, their fault, should have been more careful.

Nice and clean, see.

phire2• 5 years ago

I've watched meme coins and similar "hivemind" investing happen in the cryptocurrency currency world for years.

When GME hit the fan, I couldn't help but feel how familiar it felt. The cricle was completed when I saw a "if we can drive up the price of GME/AMC with memes, then we can drive up the price of dogecoin -- Buy and HOLD until it reaches $1" appear on near the top of /r/all.

It's not a hivemind mistake. The hivemind seems to create a cycle of individual victims who buy and then once they are invested, they quickly realize how the cycle works and that they need to meme and hype to maintain the price so they can get their investment out.

Sure there are many people who just invest for the meme, but so many fresh people get dragged along who think this is a sure way to make some money.

Then there are also people who have seen it all before and think they can outsmart the mob to make a profit. Many of them do make a profit.

And that's before we even start to consider the people who actively try to stear the hivemind towards new investment (that they have pre-bought)

pjc506• 5 years ago

Round here, the ads I'm seeing for "investment" apps seem to be required to have the disclaimer "75% of retail CFD investors lose money". And yet people look at that and think they'll be one of the 25%.

vasco• 5 years ago

Calling CFDs investments is a travesty. They have practically no financial purpose as compared to other instruments like options, that provide a lot of financial flexibility and can act as insurance.

Online CFD brokerages look to me like the gambling industry wanted to have a section that was branded as "investments" so they could extract that money from uninformed casuals.

I'm not one for banning things, but I really wish there was more financial literacy. Half of the stories in europe of "retail investor loses shirt" are with CFDs when the so called investor likely doesn't even know the difference between a stock and a CFD.

Moreover, because anyone in the financial industry knows this, I assume all companies offering CFDs as their core product, and making their best attempts to make it look like they're selling actual stock, are all ran by a bunch of scammers.

iamacyborg7• 5 years ago

I used to work for a spread betting company in London. That stat becomes even worse when you learn about B book brokers and how they can directly profit from their client’s losses.

I recall I’d been made redundant and went to interview at another broker based around Imperial Wharf. Downstairs they had their “education” department where people paid large sums to “learn” how to trade, which mostly involved drawing shapes in stock charts and pretending they had meaning (if trading were that easy algo trading would be trivial). Upstairs I got to see the broker they ran, which they funnelled everyone who learnt how to trade into using. Dude interviewing me was coked out of his head, sniffing every 10 seconds. They were, essentially, pretending to teach people to trade while running the trading platform that would take all their money.

They offered me the job. I turned it down.

TheAdamAndChe• 5 years ago

Those are still much better odds than with normal gambling.

raverbashing• 5 years ago

There are stocks (and options, of course) riskier than some bet options on bookmakers.

(It's the same math pretty much and Bookmakers are doing the risk calculations in real time so for example you could settle your bet and get a partial return on a bet on the US election for example after the election but before the final counts came)

malwarebytess• 5 years ago

I think there's going to be some level of litigation and maybe prosecution at the end of this. It was clear by last thursday at least what was happening, and yet there were multiple actors -- some of them organized -- trying to pump the stock and persuade people to keep buying.

One example that may not be criminal but is certainly suspect is the "top moderators" on reddit's WallStreetBets sub seem to have been suppressing all posts about $GME that weren't pumping the stock, quite thoroughly, until reddit staff stepped in and removed them. Some screenshots flying around that appear to depict the same moderators discussing payouts and investors. Doesn't seem right.

pjc506• 5 years ago

At least one of the possible instigators, a financial advisor, is under investigation: https://markets.businessinsider.com/news/stocks/gamestop-red...

voisin4• 5 years ago

I don’t see what he did as wrong. He seems to be caught in a technicality in that he has a broker license (though was not, in his day job, in a role advising on investments), but never used his role (or even identified his role - or even his name for someone else to identify him and his brokerage license and consequently rely on his licensing in making their own decisions) to cause others to make investment decisions. He simply presented his own due diligence on the stock, which is only “wrong” in this cause because unbeknownst to viewers he has his brokerage license.

I think it is ludicrous that they are going after him.

waheoo3• 5 years ago

Seriously? Fuck off vice. Such shit reporting.

GME bagholders didn't do anything wrong.

Look at the candles. That isn't a short squeeze.

That is a short squeeze into a week of market fuckery at the highest level to keep it low enough hedge funds don't go out of business and get a chance to cover at something that isn't astronomical.

Yes, if they allowed it to happen it would have bought some institutions down. No I don't think that would have actually been a bad thing.

Shits fucked and the media is all about that click bait.

Silver was a complete pump and dump carried out by the media at the behest of Citadel.

- made 400% of GME, got out when I noticed the bank's weren't going to let it happen.

bo1024• 5 years ago

I'm not convinced that you're right, but I would love the Congressional investigation to try to find out. It's hard to know what would have happened if buying hadn't been shut down, and it's still hard to understand exactly why buying was shut down by different parties. Guessing if we learn the one, we'll know the other.

_trampeltier2• 5 years ago

I just don't believe suddenly all exchanges for the "small people" are not allowd to buy (just sell) GME stocks because of a liquidity problem at the same time.

I mean, it was not just about GME now. If it worked out, it would happen again. Now everybody knows .. the big guys just allways bend the rules and you have no chance, so you don't even try a second GME.

lilSebastian• 5 years ago

Yes, if they allowed it to happen it would have bought some institutions down.

Aren't the hedges involved insured to the tune of Trillions (USD)?

LatteLazy5• 5 years ago

I might be wrong but... I don't think hedge funds are insured against losses like that. They're generally pretty secret about theur strategy and insuring against losses would mean disclosing them and getting the insurers permission to change them, as well as a hefty premium...

spicyramen• 5 years ago

Agree, when the mass media and my uncle knows about it is time to cash in. Bitcoin and GME

JacobSuperslav3• 5 years ago

conspiracy. theories.

waheoo3• 5 years ago

Not really, most of it can be explained by everyone acting in their own self interest.

We got fucked by big money and big media. That's all.

harambae2• 5 years ago

Silver was a complete pump and dump carried out by the media at the behest of Citadel

I think citation is needed for the Citadel connection.

I'll agree that something incredibly weird happened with silver. It wasn't just medium-obvious reddit bots pushing it on WSB, but major outlets like CNBC and drudgereport suddenly going all in with silver coverage too.

Honestly I'd prefer someone investigate the silver angle more than gamestop, even though it was wildly less successful that GME manipulation. It looked better coordinated.

FrozenVoid• 5 years ago

what they expected? Stock market is ruled by big investors, funds and corporations, not people betting their life savings on random reddit meme. Retail investors are not market makers - they're simply pawns of these meme brokers directing them to specific actions, without any understanding of underlying mechanisms: Reddit crowds treated it as another cryptocurrency pump and WSB fed this delusion with vague memes(that look absurd and ironic in perspective, "Buy these stocks to punish greedy Wall Street and get big profits!").

LatteLazy5• 5 years ago

It's sort of reassuring to see this all wrapped up in under a month. We waited over 4 years for the Trump bubbles to burst and at least some are still (physiologically) invested in those.

LatteLazy5• 5 years ago

(meant to say psychologically)

buryat4• 5 years ago

I lost $500k on GME so far, lessons learned, i guess i’m a bag holder now

reitzensteinm• 5 years ago

So far, meaning you're still holding?

buryat4• 5 years ago

yes, what’s the point of selling now, I hope it’s going to come back, at least that’s what people on wsb are saying and i’m a big sucker for believing everything

iamacyborg7• 5 years ago

Yikes. I hope that’s just play money for you and that you learn some hard lessons from this.

buryat4• 5 years ago

family money, have to hide this hole now and keep working hard meanwhile with new lessons i guess

jimbob45• 5 years ago

If you read the threads, everyone always says, “never bet more than you’re 100% willing to lose”. I feel like these people shouldn’t be regretting anything if they followed that advice.

onion2k• 5 years ago

You can lose money that you can afford to lose and still regret it. You've still made a loss, it just means you're not going to starve.

technicolorwhat• 5 years ago

ELI5: I think I got this but just to be sure. Can someone just to make it extra clear to me just in case I miss something. If someone is making money with a stock, some other person is losing money right? Their ain't like some magic magic money making machine or premium added somewhere in the process? Right? If so, what were these people thinking investing. That they were the first to get out?

One thing you could ask is is the average Redditor smart enough to see the consequences or is this really a bunch of teens putting up their savings being hyped by a hype machine?

martin_bech• 5 years ago

Well that was the idea, take the hedgefunds money..

At first it was a value play for some, GME was undervalued, then it became a, look all these funds are so short the stock, we can make them hurt, and make them pay us.

amf122• 5 years ago

If someone is making money with a stock, some other person is losing money right?

Not necessarily. Investing in stocks isn't necessarily a zero-sum game like a lot of people assume. Both the buyer and seller could make profit on a transaction.

Imagine person A bought AMZN for 1000 and later sold it to person B for 2000. A made 1000, and now B made 1000+ on it.

thinkingemote3• 5 years ago

There's also people C and D who sold to A and bought from B...

So looking at it from a whole is different from just the buyer and seller. There's a chain.

I agree it's not a zero sum as stocks can rise independently of just market activity if the company is doing well.

pjc506• 5 years ago

No, there's a real flow of money: a stock entitles you to (a) the future dividends, if any (b) potential income from stock buybacks, which are basically dividends with a different tax treatment, and (c) a vote on the company to control the first two.

(Some companies have non-voting stock, and some don't pay dividends, but in all cases everyone is holding out for the eventual promise of capital returned from the business's actual profits.)

praptak• 5 years ago

Obligatory reading (too late for these folks but still): http://edmarkovich.blogspot.com/2013/12/why-i-dont-trade-sto...

mckirk6• 5 years ago

I'm a bit surprised by the general tone in the comments here, tbh.

This was, originally, not a 'pump and dump' that everyone with two working brain cells should immediately have recognized as one. Buying into a pump'n'dump when it's already rising is not a smart decision -- but buying into a short squeeze of potentially HF shattering proportions, even after the underlying stock has already gone up dramatically in value, is a quite different scenario, and rationally justifiable imho.

The point where it all went wrong was probably the buying restrictions for retail customers that killed the momentum completely. Without that element, ridiculously high meme prices like $1k per share could have been realistically achievable, driven by FOMO and further fueled by Melvin-copy-cat hedge funds that might actually have been margin called at those ridiculous prices.

So, I'm a bit disheartened by the view here that 'of course it was always going to go wrong, what did they expect'. It definitely was naive to believe everything would go 'smoothly' when billions are on the line, and markets are put under stress they might have never seen before. But the whole thing wasn't destined to fail like it did.

Looking back, I believe the only real mistake many made was not realizing the variant of the prisoner's dilemma that people were in had rapidly shifted on Thursday to favor defecting, even if just to let the dust settle and reevaluate their position. But when you're caught up in an echo chamber that still promotes 'holding' above all else, it becomes difficult to realize that, since holding would indeed have been the right decision if everybody else had done the same. In retrospect it's of course ridiculous to expect a huge group of ultimately self-interested people to coordinate on that level. Still, people held because they got caught up in the herd mentality. After that point though, it indeed turned into a serious of small pump-and-dumps that one should have better left alone.

All in all, I think people shouldn't beat themselves up too badly about what happened, because there _was_ no good template for any of this that one should have consulted.

It was at least a very interesting lesson in stock market mechanics and the kind of manipulation that people with tons of money will engage in when cornered. The decisions leading to retail being prevented from buying may or may not have been indirectly influenced by a motivation to stop the squeeze, but the 'WallstreetBets has moved on to Silver' was definitely a widespread disinformation campaign -- kinda cool to see one of those in action for once.

aahortwwy2• 5 years ago

The point where it all went wrong was the buying restrictions for retail customers that killed the momentum completely.

In my opinion, the point where it all went wrong was when Melvin announced that they had closed their short position and the WSB hivemind decided that they were lying to the public. The conversations after that became increasingly conspiratorial and divorced from reality.

mckirk6• 5 years ago

Indeed, that could also have been the point.

Although it of course seemed quite strange at the time that they would publicly announce that they had closed their positions, unless they wanted the price to drop... heh, it was a mess.

In a sense it was the perfect combination of "limited knowledge" (because only a select few had access to Short Interest estimates) and "limited understanding" (because people thought an unchanging level of Short Interest would necessarily imply that no shorts had closed their positions -- when in reality it was much more likely that new, quite reasonable shorts had instantly taken their place).

Ironically though, I think there could have still been a larger squeeze simply because there still was plenty of shorted stock and people continued to buy, not understanding that their main "opponent" had already tapped out.

LatteLazy5• 5 years ago

A short squeeze with many participants means someone will sell before the shorts are totally squeezed. So it is effectively a pump and dump.

mckirk6• 5 years ago

Hmmm, I've thought about that as well since writing my above comment. You are correct in that the scenario has many similar elements to a pump and dump, in the sense that you also had to play it smart and set your expectations realistically if you didn't want to end up losing money.

Just like in a pump-and-dump, some people were always going to be bag holders with GME, namely those that misunderstood what 'short interest over 100%' meant and thought they could set their price at $42069.

But I still think there was an important difference: The point at which the best move switches from cooperate to defect comes sooner in a regular PnD, because there is no 'outside money' to be gained when cooperating for long enough. So, in a PnD, you should probably sell as soon as the momentum has really picked up, whereas in this case, the momentum actually increased the chance of cooperating being a successful strategy -- up to a point that would have had to be determined.

pjc506• 5 years ago

ridiculously high meme prices like $1k per share could have been realistically achievable

And then what? How long is meme inflation good for? AMC managed to issue stock to cash in; how long would it have been before GME's management sold out and also did a share issue?

variant of the prisoner's dilemma

It's an amazing one where you can meet someone on the virtual street, con them into working with you, defect against them, and leave them worse off.

mckirk6• 5 years ago

And then what?

And then, I suppose, the expectation was to sell most shares to desperate hedge funds and maybe keep one or two because you actually like GameStop. The idealistic and completely unrealistic narrative being that it would only be short sellers that pay for the redditor's profits, of course. I think GME wouldn't really have had the opportunity to capitalize on the situation, because them issuing shares would have angered basically 95% of reddit -- and if you're dependant on gamer's liking you, that would probably be a death sentence.

con them into working with you

I'm not sure how much active misleading was going on, when the narrative that most people believed allowed for motivating people to buy/hold without any nefarious motives.

yawaworht1978• 5 years ago

True, r/wsb looks very similar to the many telegram channels pushing clandestine cryptocurrency coins. This has all the elements of a financial Jonestown, cult figure(dfv), listen to no reason from outside the echo chamber and hold on to the bitter end(hold or buy more or buy the dip etc).

domano• 5 years ago

Well i bought into it and i will hold, the damage is already there and this way i get to see it play out with some minor emotional investment. I've had more expensive lessons in my life so it is ok.

Still i think Gamestop has a good future ahead of it, just nothing to warrant even the current stock price. But hey, maybe the squeeze will come ;)

thinkingemote3• 5 years ago

The end result appears to be more regulations and more limitations on trading by retail / normal people. And it appears that normal people will welcome it (given the sentiment in these comments). Protect the people from economic and political scammers via regulations and censorship.

After 2008 one of the "solutions" was to limit day trading to normal trading.

In other words it's knee jerk bad solutions to make the problem disappear from view whilst ensuring the root cause continues as normal.

traveler01• 5 years ago

Clearly people here and these news articles are clearly missing the point.

People aren't betting on GME not only because they think they'll get lots of profits. Heck, some clearly say they're expecting to lose the money. They're doing it to screw over Wall Street hedge funds and some of them really did get screwed.

As always people lack to see the root of the issues and take or praise the wrong measures. It's as always the problem of the chicken and the egg but nobody seems to have the clue on who's the chicken.

BoorishBears• 5 years ago

No, I think you're missing the point.

WSB has gotten very large very quick since the WSBGod saga

In the old days enough people would have went in with that mentality to make it representative of the situations, but today most people there are just people looking for a ticker to buy because they heard WSBs has made people millionaires

Percentage-wise the people who did this with the primary motive of screwing over hedges and were ok with losing money are a large part of where this started but an extremely small part of where this ended up.

That's why places like Citadel are showing retail investors were net selling almost immediately after this blew up past the subreddit

It's out of date to give WSB this much credit, a bunch of people saw dollar signs off a pump and "hold the line until I can dump" and got screwed

Reddit’s ‘GMEBagHoldersClub’ Is Where GameStop Stock Buyers Admit They Messed Up

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