GameStop, AMC Trading Now Being Restricted at TD Ameritrade, Schwab (marketwatch.com) 148
Some major brokerage houses have begun to respond to a frenetic surge in the price of shares of companies that has been attributed to rabid buying by individual investors on social-media platforms. From a report: On Wednesday, TD Ameritrade said it was restricting trading for GameStop and AMC Entertainment Holdings, as well as other names, amid a triple-digit percentage surge in the price of those companies in recent days. "In the interest of mitigating risk for our company and clients, we have put in place several restrictions on some transactions in $GME, $AMC and other securities," a spokeswoman for TD Ameritrade told MarketWatch, referring to the ticker symbols of the companies. "We made these decisions out of an abundance of caution amid unprecedented market conditions and other factors," she said. Charles Schwab, which bought TD Ameritrade but is still operating as an independent retail brokerage platform, said that it has tightened margin requirements in some of those trading names, including GameStop. A Schwab spokeswoman said that the platform changed its margin requirements, or how much an investor can borrow, on Jan. 13 and said it has placed "restrictions in place on certain transactions in GME and other securities."
Real Speak (Score:5, Insightful)
Re:Real Speak (Score:4, Insightful)
Real speak: We are limiting your stupid decisions so you don't lose all your money in a few weeks
Re:Real Speak (Score:5, Insightful)
Re:Real Speak (Score:5, Insightful)
Look, when you're buying on margin you're taking a loan, the lender can easily decide that the loan is too risky to offer at any price, and buying stocks that are several hundred percent overvalued due to a short squeeze and will quickly come crashing again is the definition of a risky bet. If you really feel it's worth doing get a loan elsewhere and buy the stock outright instead of buying on margin.
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Exactly. Brokerages OFTEN restrict various stocks from margin such as IPO shares, penny stocks/ companies with too low a market cap, and those that have been highly volatile lately or seem to be a heavy risk, and every broker will have conditions on the price and regularly updated lists that they determine to be non-marginable securities [investopedia.com]. A stock with an anomalous surge of 300% within a few days sounds likely to make the list of many brokers - I imagine those mentioned in the article would be Not
Re:Real Speak (Score:5, Insightful)
They aren't doing this to limit people shorting. They are blocking people taking long positions because of the number of funds that have aggressively shorted. They are trying to shield institutional investors who made a stupid risky bet from arbitrage being conducted by retail investors. In other words: there's too much freedom in this market and it is hurting the capital class, so they are protecting themselves.
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They aren't doing this to limit people shorting. They are blocking people taking long positions because of the number of funds that have aggressively shorted. They are trying to shield institutional investors who made a stupid risky bet from arbitrage being conducted by retail investors. In other words: there's too much freedom in this market and it is hurting the capital class, so they are protecting themselves.
So, in other words, the major brokerage houses are trying to protect hedge funds engaged in predatory shorting from getting hosed by a bunch of gamers on Reddit?
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They aren't doing this to limit people shorting. They are blocking people taking long positions because of the number of funds that have aggressively shorted. They are trying to shield institutional investors who made a stupid risky bet from arbitrage being conducted by retail investors. In other words: there's too much freedom in this market and it is hurting the capital class, so they are protecting themselves.
It wasn't a stupid risk bet given that GameStop is naturally going down the drain, a company shackled to a legacy system modus operandi. I love GameStop, but it is just short of going the way of Blockbusters. Ergo, short selling it is simply logical.
All these viral stock pumpers, they are emotionally invested, and that's making them do the real stupid risky bets. They are pumping money on a dying business model. This is not different from coal workers betting on making coal great again 2020 instead of tr
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So great, hedge funds lost, what, 3 billion today. Ok good, that's value lost not only on them, but down the line to other accounts that have nothing to do with it (401ks, etc.)
Well then, maybe investing in the stock market isn't for them.
Because the stock market is and always has been a risky gamble. If you want guaranteed investments, go buy some treasury bonds.
They made a gamble and lost. It doesn't matter why. That shit happens every single day in the stock market. They aren't owed money. They don't get a guaranteed profit from every investment.
They should be just like everyone else, and should get treated just like everyone else.
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Though today Robinhood DID block long positions in GME on their platform, which frankly is stupid. I can see restricting leveraged buys, that's their skin in the game, but to simply tell investors that you think the stock is too risky for them to invest in is pure BS, they're adults let them invest it how they want. If they wanted a less risky investment they'd go with a mutual fund or index fund.
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Robinhood doubled down on their stupidity and started liquidating peoples positions! I think they just lost a LOT of customers. I know for sure that I won't be using the services of a retail broker that arbitrarily decides what I can and can't buy and what I shouldn't be holding!
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That's unfortunate for RH, but still not the conspiracy that is echoing here on /.
https://www.nytimes.com/2021/0... [nytimes.com]
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My understanding is that the brokerage in this announcement were all just blocking leverage buys yesterday. Today Robinhood blocked new open positions on GME but is allowing anyone who holds it to liquidate their position. Personally I find that repulsive and wouldn't utilize a brokerage that didn't allow me to buy a stock because they didn't like how risky it was.
Re:Real Speak (Score:5, Interesting)
They are not protecting you they are protecting themselves. When trade on margin, does not matter if its short/long/puts/calls etc the collateral is the securities in the portfolio.
Margin requirements are pretty frequently adjusted for high volatility, thinly traded securities, and stuff with small floats because prices can move quickly. If large parts of your porfolio consist of small number of very volatile positions the collateral is not dependable. You go bust and can't pay your margin debt the broker has nothing to sell to make themselves whole.
Just like if take out home equity loan. The bank will likely want an appraisal and to consider the size of the senior lien; before they hand you a pile of cash; because if you can't pay it back they want to make sure there are assets they claim!
Re: duh? (Score:2)
It sounds like they're not doing anything about shorts. They want to stop the asset from trading. This would cause the price to get stuck and stop shorts from getting margin called as the price rises. It would also give the shorts more time to find creative hedges for when the stoppage is lifted.
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Fuck that. These are adults making decisions for themselves.
What part of the world this past year makes you in any way think it's full of adults capable of making a decision?
Re: Real Speak (Score:2)
It doesn't matter if they are capable. What matters is they are personally responsible. It's their loss. Adults are allowed to gamble and lose all their money.
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What part of society makes you think people are personally responsible?
Financial stupidity is a burden on society itself. Their loss leads to cascading problems:
- Potential loss of rent to landlords / foreclosure.
- Demands on social security.
- Fracturing of families (which in turn has all sorts of negative societal consequences that a poor upbringing does including putting education at a disadvantage).
- Dramatically increased likelihood for fraud as desperation increases.
"Their loss" is taking a very narrow
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No, fuck you, it took me 10 minutes to get a trade to complete this morning and I lost $25 because of it.
I don't care how bad they manipulate the market, but if excess, wasteful activity is crashing the platforms then they need to pause trading in those stocks until demand returns to what the platforms can handle.
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Real Adults with experience don't make decisions like this, the problem is experience, these people have never been on the losing side. They think that if they throw their money around it will always go up.
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As long as you treat investments like gambling (because while they may be wiser and calculated, they're still gambles) you'll be ok, and in that regard: never make a bet you cannot afford to lose.
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There will be buyers... all the shorts will have to be covered and that means buying stock. They aren't just pumping stocks... they are pumping stocks that massive institutions have huge short positions on. What ameritrade and the like are doing is making sure people can't sell the stock at these levels so institutions can drive the prices back down without having to actually take the fold on the position. Basically forcing your vision to become reality. If they didn't interfere those short positions would
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As of today, it appears Robin Hood and the like are indeed stopping people from buying the stock with their own money, only allowing to sell what they already have.
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Re: Real Speak (Score:2)
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No, they are freezing trading on AMC and GME which means they want to leave the buyers holding the bag after their friends drive down the price instead of leaving the wall street players with the massively red short positions having to close them.
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They'll never let you get into the negative, they'll start liquidating securities before that happens until you have nothing left. It's not fun when that happens.
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Re:Real Speak (Score:4, Insightful)
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Really real speak
"We are limiting YOUR stupid decisions, so OUR earlier stupid decisions don't lose US OUR OWN money and YOU cannot gain anything from OUR mistakes."
They are the clowns that bet several Billion dollars, with a capital B, on a stock losing value. For us, it's a loss no more than a lottery ticket. To them, it's Billions. They don't want to protect Grandma from losing 300 bucks for her 1 share. They want to protect the heavily-connected 7 investors in that stupid hedge fund and the managers who
Other way around. Not making 15X as much profit (Score:3)
GameStop hasn't suddenly started making fifteen times as much money. Or any more money. Which means the company is not more valuable than it was a month ago.
People buying it at 15X it's value are the people who are going to lose tons of money when it falls later this week or so. People shorting it now are selling it at 15X the fair price and will sell I next week for 93% less than they bought it for.
The Redditors caused a problem for a few people who were already short GameStop by too much, but it's goin
Re:Other way around. Not making 15X as much profit (Score:5, Insightful)
In this case, the ones who started the scam are going to make huge profits, all at the expense of the sophisticated investors who thought they had a sure thing shorting the stock. We believe that the sophisticated gamblers have a higher moral ground because they are gambling with other peoples money and lives.
If we were worried about people losing money, we would end these complex schemes, not trading by the average person. There is nothing wrong with me buying stock with money I have. There is everything wrong with shorting on a margin. That is gambling with money you donâ(TM)t have.
Shorting on a margin is worse (Score:3)
It's like bringing a rifle to the race track.
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"Who have the means to make _sure_ said target loses."
Exactly. It's no longer even 'gambling' at that point, it's just burn and loot.
It's no different than fixing a race, except what they do is considered legal.
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"Hey, we're not the ones supposed to be losing money! Quick... shut it down!"
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"GameStop hasn't suddenly started making fifteen times as much money. Or any more money. Which means the company is not more valuable than it was a month ago."
That doesn't matter. The speculative market isn't really tied to the profits or success of gamestop in any tangible way. As long as people have faith in gamestop's stock price without regard to the performance of the company the stock will remain liquid at that price. There isn't some point where the company being broke matters because there isn't a p
Re:Other way around. Not making 15X as much profit (Score:4, Insightful)
"Markets can remain irrational longer than you can remain solvent"
Re: Other way around. Not making 15X as much profi (Score:3)
The ones buying the stock at 15x are largely market makers. Institutional middle men with vast fortunes and profits. No one cares. No one should.
The Redditors are buying leveraged call options, forcing the middle men to buy stock to cover potential losses if the price goes up. I'm not sure how these market makers hedge for this, but I'm guessing before it all crashes it's going to largely be the shorts holding the bag.
They already wiped out about $5B in short interest. Those losses will cover profits for a
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According to the BBC, it's personal [bbc.com]:
"Among the many aspects of this story that are strange, what is so unusual is the peculiar vigilante morality of the traders pumping the stock. They seem hell-bent on taking on Wall Street, they seem to hate hedge funds and threads are peppered with insults about 'boomer' money.
"It's a generational fight, redistributive and all about robbing the rich to give to the millennial 'poor'."
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Comment removed (Score:5, Informative)
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THIS ^
Margin requirements on hard to borrow stocks or high volatility securities are frequently adjusted. Every broker this isnt even that unusual. Its just all eyes happen be on these specific tickers right now.
Re:Real Speak (Score:4, Informative)
A Schwab spokeswoman said that the platform changed its margin requirements, or how much an investor can borrow, on Jan. 13 and said it has placed “restrictions in place on certain transactions in GME and other securities
I don't see anywhere where the have disallowed ALL transaction (including cash transactions).
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What you said makes sense if they were only prohibiting purchases on margin, but they are prohibiting cash secured positions as well.
That's not what the article says. If you have a source that would be very interesting, I've never heard of anything similar happening previously.
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It is much more complicated than that. A market maker will be unable to find sellers real-time for a stock like that, so they would borrow the shares themselves (potentially with a hedge). Usually you see this with a high spread between bid and ask. If it persists for a full day or two, then the transactions cannot be easily unwound. Reducing leverage is one way to push shares to become available and allow settlement.
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That's pretty much it, wrapped in a "we're just looking out for you" message.
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In order to limit the losses of Friends and Family ...
No... in order to limit their own losses. The restriction is they are stopping trading with borrowed money - 100% margin requirement: They don't want to get left holding the bag when the stock rapidly goes back down, and "average" people lose their shirt and will go bankrupt or not able to Repay the borrowed money - They are fine with you losing your own money, and you can still buy it as long as you aren't using margin debt.
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More clearance needed (Score:2)
The article mentions "tightened margin requirements". That is not actually unreasonable. Margin means the broker lends money for the trade. So it is their money to restrict.
However I could not find out whether they restrict people's own money, too. That would be something completely different.
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"The article mentions "tightened margin requirements". That is not actually unreasonable. Margin means the broker lends money for the trade. So it is their money to restrict.
However I could not find out whether they restrict people's own money, too. That would be something completely different."
Schwab tightened margin but only on some transactions. So they may be choosing sides or the distinctions might be legitimate technical reasons. The others are blocking trading which is a foul that would prevent peopl
They limit credit available to buy those stocks. (Score:5, Insightful)
What they are limiting are a client's ability to go into debt buying these volatile stocks. 'Buying on margin' is using money you don't have, it's like paying for stocks with a credit card instead of a debit card.
All stock purchases should be required to be cash sales, but that's just me. I also think short selling is unethical.
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"If you have the cash you can still buy any and all the stock you want."
Only schwab reduced margin, the others blocked trading.
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"If you have the cash you can still buy any and all the stock you want."
Only schwab reduced margin, the others blocked trading.
Do you have a source? The article mentions robinhood requiring 100% cash.
Re:They limit credit available to buy those stocks (Score:5, Informative)
I also think short selling is unethical.
As with many things in the "Options, Futures and Other Derivatives" universe, this is not as clear cut as it sounds. Short sellers have a fiancial incentive to discover anything wrong with your company. Who do you think discovered that Enron was a big scam? People holding Enron stock? People going long (the oposite of short selling) on Enron?
Same with the Toxic Mortages market in 2008.
Having said that, OF&oDs are like atomic energy, cool if used for good, dangerous if used for evil.
So, short selling is not unethical, but some/many short sellers are greedy evil unethical bastards.
TFTFY
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For the detractors (Score:5, Informative)
Limiting margin means you can't borrow money for these stocks. If you are borrowing money for these stocks, you probably shouldn't, think of it like taking the keys away from a drunk teenager. There is a very high likelihood that the stock will go down (after a 300% increase for no reason), they are doing those that don't know what they are doing a favor (and preventing whining when people lose their money).
You can still buy the stock, if you have cash.
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You can still buy the stock, if you have cash.
Obviously, this is peasant-only rule that does not apply to hedge funds with friends in high places.
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Not true, if your a hedge fund you still have to have margin, but you buy bonds or other securities to back yourself up. It's when things get up ended that you have real issues.
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You can still buy the stock, if you have cash.
Nope.
Schwab is doing what you claimed. TD Ameritrade is also restricting cash transactions.
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Wow they really are taking away the keys.
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Time for your anal schwab (Score:2)
Coincidental naming here looking at the article in particular below this in the feed...
Why limit it to AMC and GME? (Score:2, Interesting)
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Because some millionaire might lose a few thousand dollars so he waddled around in his shit-filled diaper screaming at the top of his lungs.
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Smart people trade on the results of research (scanners, fundamentals, knowledge of "events" such as earnings reports, etc). The research differs by trading styles such as day-trading, swing trading, long term, etc.
People trading on "feelings" are trading on pure speculation. Vegas offers better odds, because the odds are known.
I only trade with my money, so the limits do not impact me at all. In fact I did quite well on a day trade on AMC just this afternoon (well after the initial surge).
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Clearly the guys shorting 139% of the GME stock when good news was announced are the elder gods of risk managing.
Abuse... (Score:2)
Institutions are colluding and exploiting freezes to crush the price and swap around the shorts in the after hours. Look at AMC, down from $19.90 to $14 after hours while trades are frozen.
https://finance.yahoo.com/quote/AMC?p=AMC&.tsrc=fin-srch
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Wow... at 3:43pm cst just minutes after I posted this I watched the after hours ticket switch from $15 and change to $19.90 (the same as the close).
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Go to the chart category on that yahoo finance page in OP (or just click on the chart), from the the gear icon (settings) enable extended hours, optional choose 5D timespan, then you can drag to center then zoom with the mouse wheel in on the latest extended trading part of the chart. Looks fine to me. Price goes up and down.
AMC is not halted at this time, or basically since noon, latest stock halts: at nasdaqtrader (includes nyse) [nasdaqtrader.com]
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Thanks for the UI tips!
Here is a direct link to the chart [yahoo.com] of AMC
i.e.
* finance.yahoo.com/chart/AMC
Not what is happening (Score:2)
We need to be honest about what is happening.
Hedge Fund Short sellers sold Gamestop short, and published damaging reports on it. Retail investors realized there was a giant sized short squeeze going on, due to a number of hedge funds mispricing for example Gamestop. Gamestop's prospects are much better than previously though, due to new gaming platforms.
Retail investors piled onto a few stocks, realizing that because of the short squeeze, they could hurt short sellers and make potentially ludicrous profit
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Hedge Fund Short sellers sold Gamestop short, and published damaging reports on it.
They also shorted about 140% of the shares that are available to trade. So it's a bit more outrageous than a "normal" short.
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They took a risk, thinking they could kill Game Stop through some sleazy, quasi-legal manipulation, and and it blew up in their faces- hoist by their own petard, as it were.
I've zero sympathy for them, and I'm going to laugh when Melvin Capital and Citron Capital take it in the shorts.
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https://www.marketwatch.com/st... [marketwatch.com]
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>Gamestop's prospects are much better than previously though, due to new gaming platforms.
bro, seriously stop gobbling up your own excrements :) I fully agree with the rest of your post, but lets not kid ourselves, Gamestop is a corpse.
Tin Foil Hat Explanation (Score:4, Insightful)
Live by the sword (Score:2)
A significant part of /u/DeepFuckingValue's strategy here was to publish his position on reddit. I don't think he'd be up 10s of $millions without that. Trouble is, he's attracted just a bit too much attention now. I think he wins in the end though. If they try to claw back his gains, there will be yet another street march. There will be severe political repercussions, perhaps even violent street protests and I think TPTB have had enough of that for now.
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Damn. I want to see an Internet investment wonk lives matter march.
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Damn. I want to see an Internet investment wonk lives matter march.
It didn't take long [twitter.com]. OK, it's not very big but it's some kind of protest. If the trading had been halted longer, we might have seen more of that kind of thing. It was a cold rainy day too, and these folks got outside. I think there was a similar sized event on the actual Wall Street in NYC.
I'd say it's surreal to see reddit slogans such as "I like the stock" printed on cardboard; but my surreal sensor is burnt out from 2020.
Influencer propelled stocks (Score:2)
A popular influencer can push stocks up more than technology or intrinsic qualities. Especially someone who either has a cult following or is known as a billionaire obviously can misdirect better because their word carries a lot of weight. I am sure share holders already pay popular people online to say something great things about a particular stock. I bet the amount of companies doing that will increase especially after this GME thing.
Applying the “Who Benefits” Test (Score:2)
Now we’ve got a huge number of Americans sat at home with time on their hands, some with severance checks and others with relief checks... and companies like RobinHood and others are there, only too happy to take some of that money in commissions.
Combining the
Re: Applying the “Who Benefits” Test (Score:2)
Robin Hood does not charge commissions. They collect interest on your cash balance. And they offer a monthly premium service. They don't benefit directly from heavy trading. They probably profit mostly from the delay in moving money onto the platform. While you're waiting for your $20k to become available, they're collecting interest on it.
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RobinHood does benefit directly from heavy trading: a good chunk of their revenue comes from "payment for order flow".
I think this generally balances out OK for small investors - but you should probably understand how this trade-off works before using RobinHood.
No margin==Bigger squeeze (Score:2)
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What makes these companies think they know better? (Score:2)
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Crowd pump and dump is not.
Re:Hey dipshits! Pump and dump is fraud (Score:5, Informative)
Whereas, "hey everybody let's buy this to drive up the price and take the short-sellers' money" does not meet that definition.
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Ethics? I thought the media dumped those of years ago.
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Wasn't GG about exposing cronyism and cliquing?
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It was about some dipshit ex boyfriend wanting revenge and weaponizing autistic gamers to get it.
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Yeah, but proctor and gamble sales are up, because those morons are still weaponized, and Braun sounds really macho.
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