Here Come The Citadel Conspiracy Theories
As a new week dawned, investors and traders from around the globe were greeted with a mishmash of conspiracy theories and generalized confusion emanating from US markets, which are now just a microcosm of the country. That is: An irritated, shrill cacophony of conspiratorial, profane blame-casting.
Not surprisingly, Citadel is the subject of all manner of speculation, running the gamut from eminently plausible to totally ridiculous.
While hardly a secret, the firm's relationship with Robinhood
Unless I am missing something (quite possible)- it should be relatively simple to figure out what happened to the GME shares that were sold during the hours that Robinhood allowed selling but not buying.
Sort of need a buyer and a seller – even just to allow “selling”.
H-Man, the scary part (or the greedy part) is the Robinhood crowd knows it can drive a stock up. The issue is how many times can they do it?
JETS, TSLA, GME, SLV, AMC, BBBY. These are just off the top of my head. Barring a crash in the financial markets where the Fed has to come in and bail out Wall Street (again!), this can go on a long time.
It “ain’t over until it is over”.
Once the shorts cover, stock price will revert to a price that exists between a willing buyer (who is not trying to cover a short- and therefore is not truly “willing”) and a willing seller- which will probably be much lower.
The real lesson is that it is stupid to be short in a 140% short position. Won’t the hedge funds be frantically covering other positions where they are “way too short “ – so that it doesn’t happen again, as you allude to?
Then, once these over-shorted positions flush through the system, I can’t imagine history will repeat itself-at least in regard to “over shorting”.
As of 1/31 720 pm est, Robinhood users are still restricted to owning 1 share of gme and 10 shares of amc. If one already owns more they may not increase their position but it will not be closed.
The restrictions on Starbucks and General Motors have been lifted.
It doesn’t appear to be the conspiracy theory that has gained traction in the public. But, the recklessness, fragility, and negligence of the system and its plumbing as it operates is being exposed again for what it is. And that is a sort of “conspiracy” in substance if not form. It’s just a slightly different one from the theory that has gone mainstream.
Experts can condescend to retail traders all they want (which would be rather tone deaf considering retail just outsmarted the experts), but nevertheless if the system is to have any integrity at all in the public eye, it is incumbent on the institutions involved this situation, including the SEC, to justify to the public things like if and how the re-hypothecation that made this infinity squeeze situation possible in the first place is legal and why it ‘should be’ legal, in the context of events like the GFC which we are all still paying the price for. That is a very tall order.
Ordinary people are about to learn more about concepts like custody, settlement, chain of title, re-hypothecation, etc.
Personally I find it hilarious that we are all now spending our weekends thinking about whether or not the markets can systemically withstand some overleveraged bets in irrelevant small caps blowing up.
+1 on both your comments.