from Hacker News

Roaring Kitty to testify on GameStop alongside hedge fund managers

by IamZeroBalance on 2/14/21, 6:12 AM with 208 comments

• by sillysaurusx on 2/14/21, 8:24 AM

  It's interesting watching /r/wallstreetbets oscillate between "We did nothing wrong!" to "Well okay, some people were doing some things that were wrong, but hopefully no one will notice."

  https://www.reddit.com/r/wallstreetbets/comments/lj8djx/day_...

  (I don't personally believe that anyone did anything that should be prosecuted here, but what I believe is irrelevant to courts.)

  There is one thing that (in my un-humble, ignorant opinion) should be prosecuted: according to https://www.youtube.com/watch?v=4RS4JIEVyXM&ab_channel=Benzi... the reason that trades were suspended is that the clearinghouse changed their requirements from 3% to 100% for GameStop specifically. And that clearinghouse settles 95% of all trades on Wall Street, so they effectively have a monopoly. Therefore that's why all the exchanges had to suspend GME training; no one had 100% collateral to cover GME for 3 days.

  Everything else -- Gill getting rich, WSB posts, Citadel's bailout of Melvin, etc -- is just a distraction. I hope one day they bring that clearinghouse to heel, since it was seriously uncool for them to change the rules of the game with the justification of "we said so."

• by tape_measure on 2/14/21, 8:02 AM

  RoaringKitty is also known as DeepFuckingValue. This name is probably more well known to the general public, but Reuters does not mention it.

• by mouzogu on 2/14/21, 8:59 AM

  What about Musk making tweets about bitcoin whilst his company has a large investment. Isn't that market manipulation or maybe does not apply to rogue billionaires.

• by Hnrobert42 on 2/14/21, 11:59 AM

  Can you imagine being called to testify before Congress and the news citing the username you chose at 2am when all the other usernames were taken? “Next they’ll the calling to the floor Preston Claghorn, also known as analmudflaps247.”

• by BLKNSLVR on 2/14/21, 8:24 AM

  Is this investigating Robinhood's halting of trade? That's mentioned towards the end of the very short article, but nowhere does it explicitly specify what is being investigated and why.

  The article says this: "The House Financial Services Committee is examining how an apparent flood of retail trading drove GameStop and other shares to extreme highs, squeezing hedge funds like Melvin Capital that had bet against it."

  Which is a sentence that answers it's own question.

  The political ripples of this will be very interesting to watch.

• by pjc50 on 2/14/21, 8:28 AM

  This is not a prosecution, just an investigation. The one he should be more worried about is:

  > Massachusetts securities regulators have also issued a subpoena seeking Gill’s testimony.

• by stereolambda on 2/14/21, 9:36 AM

  Older RoaringKitty YT spreadsheet videos (before he became all about GME and before much of anyone watched his streams) are interesting to watch for a person casually interested in finance. They are very nerdy in discussing his approach to investing, tools etc. and don't present any clear recipes. He had/probably still has a biggish public portfolio of stocks and seemed to base it on financial analysis applying the value investing style. I thought this style is pretty much dead, because market efficiency has increased compared to the times when Benjamin Graham analysed securities by hand. (Unless you have the name recognition and capital of Buffett.)

  I don't know if all this was completely sincere on RoaringKitty's part. Personally I believe that he mostly was at that time. Possibly he got carried away by money and fame later. But I 1) don't have to decide it for any official body 2) was never long GME, it was already too expensive (risky) compared to fundamentals when I learned of the story. What I'm trying to say is: fraudsters tend to want to sell you something, and at least it seemed that you weren't sold anything by RK.

  I can get recommendations on in-depth (practical), interesting, non-pushy financial content for casual viewer. Please don't say Matt Levine, he's a (great) commentator not a practitioner.

  Also, I think everyone interested is aware that no one should expect money from active investing, you should use something like index funds first while already having a comfortable amount of money in safer assets etc. That's why I say casually.

• by codecamper on 2/14/21, 3:16 PM

  The elephant in the room that I don't see much discussion about is the use of options by small retail accounts.

  There are piles of rules around trading in accounts < $25,000.

  But then those same guys are allowed to trade options.

  An option has a 100x built in leverage.

  A simple solution to this problem is to require the underlying amount of margin or cash in the account to purchase the option. ie. If you want to buy a $3 option for BBBY (costing $300) then this will take $2800 from your initial cash or margin.

  Yes, this effectively puts options out of reach to small investors, but... maybe that's a good thing.

• by nbar on 2/14/21, 8:13 AM

  What did Gill do that was illegal?

• by emteycz on 2/14/21, 8:18 AM

  Why is the central offender - Depository Trust & Clearing Corporation - not going to be there?

• by dehrmann on 2/14/21, 8:12 AM

  I realize this is just grandstanding by congress, but it feels like there are more important things to be working on right now.

• by puranjay on 2/14/21, 9:04 AM

  Really disappointed at HN's recent stance on both crypto and GME. Far too many calls for regulation and control.

  This is not the free market proponents platform I used to know.

• by yakaccount4 on 2/14/21, 8:07 AM

  that sucks

• by runawaybottle on 2/14/21, 8:09 AM

  Buying calls on GME for the hearing, expecting a pump up for the fiasco.

• by jb775 on 2/14/21, 8:06 AM

  Have reminder set, will be making popcorn

• by KDJohnBrown on 2/14/21, 9:09 AM

  Nice to know that the US legislature has deemed this a more important use of their time than the pandemic and the economy.

• by ajsharp on 2/14/21, 8:37 AM

  Hey -- he likes the stock: https://www.reddit.com/r/wallstreetbets/comments/lj8djx/day_...

  Nothing else matters.