2 Commits

Author SHA1 Message Date
dirkson 2880004ea8 dnd bookkeeping 8 months ago
dirkson 42c6ef5fdc Added gme 8 months ago
  1. 28
  2. 130


@ -20,3 +20,31 @@ Anyway, I love playing with you all. See you next weekend!
## Detailed Finances
There are all rounded to the nearest dollar, roughly. The monthly costs tend to shift a bit as I add and delete map patreons.
### One-time costs
* $50 - Foundry
* $275 - D&D "books" on D&D Beyond
Total: $325
### Monthly costs
* $5 - D&D Beyond (Paid annually)
* $7 - D&D Beyond/Foundry integration
* $40 - Maps and tokens (Via multiple separate patreons)
Total: $52
### Donation totals
* One-time: $310 (After paypal fees)
* Recurring: $0


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## GME
GME is sus. Here's why.
There are a lot of apparently unsourced claims here. Most of them are best sourced by [looking at historical GME stock data](https://finance.yahoo.com/chart/GME). This is tedious to link to again and again, so instead I will endeavor to mark any unsourced claims or speculation.
All references to "stock" or "short position" or similar are solely in reference to GME.
This article gets edited to improve it, and I don't keep a historical record of it. It's intended to be my best guesses about what's going on only. It's not intended as financial advice, legal advice, grooming advice, or really advice of any sort.
### The initial setup
We start our story around the new year, the last time that everyone can solidly agree on the short interest statistics. The stock has been shorted to hell - Literally over 100% short interest, possibly 140%, or possibly 212%. This is... a problem. A margin call would force the stock to be purchased at any price, and there is more stock that needs to be purchased than exists.
Long story short, if enough margin calls happens, demand becomes infinite and supply continues to be non-infinite. The "correct" market price in such a situation is infinite. People notice this, and begin buying and holding onto the stock. (Unsourced - Linking to historical reddit is Hard) A few of those people also notice that this particular stock is remarkably [high in 'Failures to deliver'](https://wherearetheshares.com/) (FTD's) for some reason. This is when a stock is promised, but not delivered on time.
Around February, this starts working. The stock price shoots up once, then twice. Huge amounts of money are flooded into shill accounts on reddit, trying to divert attention away from GME to other stocks. ((Unsourced - Linking to deleted historical reddit content is Crazy Hard)
Immediately, one of the heaviest shorting hedge funds ("melvin") [receives a bailout](https://www.prnewswire.com/news-releases/melvin-announces-2-75-billion-investment-from-citadel-and-point72--301214477.html) directly from two other hedge funds with known heavy short positions. This investment appears timed to prevent additional margin calls by allowing Melvin to throw capital at its margin calls instead, which helped ensure that the price didn't rise high enough to margin call the other two firms. The "why" here is obviously speculation, but the timing is so incredible that I really can't imagine any other compelling reason.
For fun, [here's the CEO of Melvin telling congress it wasn't a bailout.](https://www.youtube.com/watch?v=ThTE2taU0vI)
[A curious ad begins to be promoted](https://www.reddit.com/r/wallstreetbets/comments/l8539h/cnbc_now_running_ads_promoting_that_melvin/) to inform people that they've closed their positions. This seems like an oddly specific thing to promote for CNBC. Could it be the shorts? But if you've actually closed your position, there's no benefit to you to saying it, let alone paying to say it. There must be some reason that shorts would be willing to pay.
And then the price crashes. HARD. With no change in overall reddit sentiment. (Unsourced - Linking to historical reddit is Hard) And along with it, the officially reported short interest crashes. What happened?
Observed facts:
* Short interest started over 100%
* A major shorting hedge fund was bailed out by two other short hedge funds in an apparent bid to stave off margin calls.
* Failures to deliver are common in this stock.
* Money was spent to try to divert reddit's attention
* Short companies may have had some vested interest in saying they've closed out their GME short positions.
* Official short interest has crashed through the floor at the same time that the price did. Wut?
* The price crashed without any particular change in market sentiment. How did that happen?
### The stonk returns
All was quiet on the western front. The stock trickled down to barely $40, down from its high of $350+. And it stayed that way for a good two weeks.
And then, on exactly no news, with no public action from any source, the stock doubled in value in a single day. This was not based on any news, or mass reddit buy-in. Something else did this, but hell if there's any indication what it was.
And funny thing - When GME goes up, the market as a whole goes down. Rather consistently. That's... weird.
The stock behaves with exceptional volatility through the next month, with massive surges and dips well beyond retail's abilities to affect. When it rises, there's some indications that retail is adding to the movement, buying more on the upswing. But the downswings are oddly bereft of actual selling pressure, apparently being driven much more by short sales than straight sales. Even on the red days, the ratio of buys to sales is skewed towards sales.
Wait, wut? Surely in the stock market, every buy *is* a sale?
And that's correct. Except when you naked short. Which would juuuust about explain the high amount of FTD's noticed earlier. A problem that has, by the way, been [getting worse](https://www.reddit.com/r/GME/comments/lla13n/top_ftd_stocks_by_value_gme_is_predictably_in_the/) as time goes on. ([Direct link to unformatted data over time](https://www.sec.gov/data/foiadocsfailsdatahtm))
Oh, and the volume has been huge. Well more than retail can generate - The whole float changes hands multiple times per day.
Observed facts:
* The stock made a huge upward movement without any apparent reason.
* GME has developed a negative beta relationship with the market.
* The stock continued to make massive movements without rhyme or reason.
* Retail doesn't actually appear to be selling much.
* Naked short selling appears to be happening. A lot.
* Volume is huge
### The long, slow trickle
And things "settle down" a little. Admittedly, the price has consolidated around $200-$150, rather than its original $10 or interim $40. So that's... weird. Why is there institutional support at this level?
But hey, we've had a couple good pieces of news in the time period. GME's earning report came out, and they came within one penny of their projections. The stock responded by... dropping through the floor? And then recovering just as quickly? I'm sorry?
Well, whatever, probably just a weird fluke. Next, it was announced that Ryan Cohen, who made his Chewy animal food company a wild success, was going to be named chairman of the board. This is fantastic news, and the market responds by, wait for it... dropping through the floor.
And then it happens a third time. OK.
Curiously, some of GME's [official paperwork](https://sec.report/Document/0001326380-21-000032/) actually mentions a short squeeze. And it mentions this as an ongoing concern, not just a concern in the past. These documents are generally extremely carefully worded by lawyers.
Which actually brings to mind another funny thing - Gamestop itself hasn't sold its stock holdings. Not either time the stock was above $300, and not before any piece of news they released. They did, however, [update their paperwork](https://gamestop.gcs-web.com/news-releases/news-release-details/gamestop-announces-market-equity-offering-program) on the number of shares they may choose to sell - They decreased the number of shares they may sell by half, and increased the amount of money they may earn from any such sale by a factor of 10. By all appearances, Gamestop itself seems to thinks its own stock is going up, not down.
Oh, and speaking of large entities betting on GME going up, we've been seeing that too. We keep seeing call chains being set up. I.e. Institutional investors are buying calls that allow them to purchase gamestop in the future for $800/share. That's... funny. (Unsourced - Most of this is L2 data, which isn't public, but gets screenshotted to chat with some frequency.)
As the price slowly dips over time, people notice something funny - [There aren't exactly many shares available to short.](https://iborrowdesk.com/report/GME) (Partially sourced- Historical data appears to fall off the source) In fact, on most days this number starts out in the mid 100,000's, then rapidly slams to zero. Someone is shorting this stock so hard that they literally borrow every single share there is to borrow. And they're doing this every day. And while this happens, the short fee remains trivially low, all the way down to 0. [These fees are *much* lower than other similarly hard-to-borrow stocks.](https://www.reddit.com/r/GME/comments/mgo0go/the_biggest_anomaly_in_gmes_data/) Wut?
Observed facts:
* There appears to be widespread institutional support for a price point 15x where this stock started the year.
* The stock appears to be inversely connected to its own fundamentals? Wut.
* Gamestop itself appears to think that a short squeeze is still on.
* Gamestop itself is betting heavily that its stock will go up from current numbers.
* Other institutional investors appear to be betting GME will go up too.
* Short fees do not appear to be reacting to supply and demand, and someone is taking advantage of that to short the everliving fuck out of the stock.
### Now, we speculate
Great. So we've got a lot of weird shit to explain. Can we explain it with normal market movements? Umm... No. No none of this makes the slightest bit of sense from that perspective. Something else is going on.
So let's put ourselves in the position of the shorts. What is a sensible reaction to this chain of events?
The price surges, and you immediately go into damage control mode. Some quick and depressingly simple math suggests that if you and others in short positions attempt to immediately close your positions, the stock price will shoot to whatever price actually makes sellers sell en-masse. This price will almost certainly be enough to entirely bankrupt your company. Therefore, *any and all* laws that are punishable by fine alone are now on the table. ANY fine amount is going to be less than bankruptcy, so it makes no sense to avoid these actions out of some misguided sense of duty alone.
So what do you need to happen? You need retail to think they won already, and/or to forget about GME. So you fund advertisements waving the white flag - "You won! We covered! Grr, we're so mad". You flood their forums with messages trying to redirect them to another stock. If you can manage it, any and all stock price manipulation tactics are on the tables - Again, fines are better than bankruptcy. Naked short sales to drive down price AND delay when you need to cover? That's a no brainer, if you can pull it off.
If naked shorting *is* going on, that perfectly explains why the short fees for GME are so low AND why the Fail to delivers are so high. Supply is only limited by whatever scheme is being used to naked short sell, resulting in a massive oversupply of short sales. And when you sell a stock you don't have, of course you're going to have issues delivering it.
In short, "short's didn't cover" theory explains a lot of the bizarre facts we've been observing, leaving remarkably few dangling tails. Nothing else I've been able to come up with comes close.
### Could it be...
#### A traditional pump and dump?
The sustained, increasing price floors over time and non-retail dominated movement seem to suggest that this isn't the case.
#### A squeeze that has already been squoze?
The movement in late February suggests that this is not the case, since it requires a large institutional purchase order to exist. The shorts' "advertise we closed" reaction to the January price spike also seems to indicate that the squeeze was not squoze at that point at least.
### Stuff I've left out.
There are a few things I've left out because I don't understand them.
* There appears to be some game played with ETF's that allows companies to manipulate prices and/or short the unshortable.
* There are many proposed mechanisms for naked short selling. I understand one, which I wrote an article about, and it may be one method used. But there are many other methods that may also be in use.
* "Deep ITM Calls" - I don't understand why, but [some people](https://www.reddit.com/r/GME/comments/lylvrb/update_35_1625_million_of_deep_itm_gme_calls_have/) are very excited about them.
* Gamma squeezes - These are a thing, and play a big part in actually triggering short squeezes, but I don't understand them. I think we've had a few on GME though.
* Expected movement dates and future known events - These are out of scope for this article