In a weekend note to clients, Goldman Sachs said it expects the S&P to end next year at about 4,300 points (indicating 17% upside), an admittedly "optimistic" forecast contingent on increased corporate earnings and a low-interest rate environment that remains favorable for corporations.

Read more:

https://www.forbes.com/sites/jonathanponciano/2020/12/21/stock-market-2021-outlook-goldman-sachs-morgan-stanley/?sh=17c006955afd

Meanwhile:

• 1MDB scandal: The playboys, PMs and partygoers
• Malaysia ex-PM given 12-year term for corruption 
• US targets Monet and Warhol artworks in 1MDB case

The amateur traders united through Reddit and Discord this week, causing hedge funds to lose billions of dollars by purchasing stock in companies such as GameStop, which Wall Street was betting against.

However, the ironically named Robinhood – which acted as one of the main platforms for the traders to purchase through – responded on Thursday by banning the purchase of the stocks in question, prompting allegations of a rigged and anti-free market.

HomeUSA News

‘Stealing millions from users’: Squad members Tlaib and AOC call for congressional hearing over Robinhood ‘market manipulation’

28 Jan, 2021 17:36

Get short URL

‘Stealing millions from users’: Squad members Tlaib and AOC call for congressional hearing over Robinhood ‘market manipulation’

Democratic congresswoman Rashida Tlaib has called for a House hearing over trading app Robinhood banning the purchase of certain stocks after amateur traders humiliated Wall Street. Fellow ‘Squad’ member AOC seconded the idea.

The amateur traders united through Reddit and Discord this week, causing hedge funds to lose billions of dollars by purchasing stock in companies such as GameStop, which Wall Street was betting against.

However, the ironically named Robinhood – which acted as one of the main platforms for the traders to purchase through – responded on Thursday by banning the purchase of the stocks in question, prompting allegations of a rigged and anti-free market.

Tlaib – a member of the progressive congressional ‘Squad’ – joined thousands of Americans condemning Robinhood and called for an official hearing on the matter, branding the trading app’s decision “beyond absurd.”

In a Twitter post, the Michigan congresswoman said the US House Committee on Financial Services needs “to have a hearing on Robinhood’s market manipulation.” She accused the app of “blocking the ability to trade to protect Wall St. hedge funds, stealing millions of dollars from their users to protect people who’ve used the stock market as a casino for decades.”

Read more:

https://www.rt.com/usa/513950-squad-aoc-tlaib-robinhood-hearing/

Read from top...

I have no idea what this means but please don't blame Donald for this one: It's a US tradition...

This week, the biggest story in the financial markets is the absurdist, pretty-sure-I-hallucinated-it drama involving GameStop, a struggling video-game retailer that became the rope in a high-stakes tug of war between Wall Street suits and a crusading internet mob.

The simplest explanation for what happened is that a bunch of hyper-online mischief-makers in Reddit’s r/WallStreetBets forum — a clan of self-described degenerates with user names like “dumbledoreRothIRA” and “Coldcutcombo69” — decided it would be funny and righteous (and maybe even profitable, though that part was less important) to execute a “short squeeze” by pushing up the price of GameStop’s stock, entrapping the big-money hedge funds that had bet against it.

The strategy worked. Within two days, GameStop was the most heavily traded stock in the world, Elon Musk and Representative Alexandria Ocasio-Cortez got behind the revolt, and r/WallStreetBets users were posting screenshots of their suddenly inflated account balances. The scheme’s originator, whose Reddit user name is unprintable in a family paper, claims to have turned an initial investment of $50,000 into a windfall of more than $40 million. One of the hedge funds that had shorted GameStop’s stock, Melvin Capital, had to get a $2.75 billion bailout from two other investors after it was hammered with huge losses.

Depending on whom you ask, the GameStop saga is either a cautionary story about a bunch of reckless nerds destabilizing the stock market for laughs in a way that is likely to backfire on them spectacularly, or a David-and-Goliath morality tale about a fearless band of retail investors cleverly putting one over on corrupt financial elites. (The truth is somewhere in the middle. There really is a “revenge of the nerds” angle here, but there are also plenty of rich investors cashing in on GameStop alongside the line cooks and high school students.)

In any reading, the most unusual thing about Wall Street’s being challenged by a rowdy band of Redditors is that it took so long to happen. This kind of populist revolt — internet-based insurgents gleefully pulling down the pants of the unsuspecting  establishment — has been happening for years, to many powerful institutions.

In fact, it’s harder to think of a pillar of the global establishment that hasn’t been trampled by a similar stampede in recent years. Book publishers, movie studios, restaurant chains — all of them have, in some way, been forced to cede power to their online critics. Our politics, too, have been transformed by internet activists, with TikTok teens disrupting presidential rallies and Twitch-streaming memelords storming the Capitol.

No matter what their goals are — moving a stock, overturning a presidential election, getting the graphics on a Sonic the Hedgehog movie changed — these internet-based insurgencies tend to follow a similar pattern. One day, a group decides to take action against a system it feels is immoral or corrupt. Members identify structural weak points (a vulnerable political party, a risk-averse studio head, an overexposed short position) and figure out creative ways to exploit them, using social media for leverage and visibility. With enough highly motivated people pushing in the same direction, they eventually prevail, or get enough attention that it feels like they did.

These online crusades can be waged in good faith or in bad faith, and some can become deeply destructive. (The classic example of a bad-faith battle is Gamergate, a 2014 culture war that started as a feud over video game journalism but morphed into a toxic campaign of violent misogyny and racism that paved the way for the alt-right.) But the best ones can jolt the status quo in useful ways: exposing injustice, challenging outdated norms or merely putting indolent gatekeepers on notice.

Wall Street was among the last powerful institutions to be overrun by online populists, in part because it had a higher barrier to entry. Anyone with an internet connection and a Twitter account can start a hashtag campaign, but because trading stocks costs money — and required some level of expertise and time commitment — it was mostly left to professionals.

Smartphone-based trading apps like Robinhood changed that, by introducing commission-free trades and an interface that made executing a gamma squeeze as straightforward as ordering a burrito from Uber Eats. Suddenly, millions of amateurs could organize themselves, generate their own market research and investment theses, drum up excitement in Reddit threads and TikTok videos, and enter the casino with the big boys. (Whether storming the high-roller tables has helped them financially is another question entirely.)

Plenty of reporting on the GameStop saga has captured the jokey, profane enthusiasm of the traders, and the stunned disbelief of their Wall Street antagonists. But there’s an economic justice angle that is easy to miss. On r/WallStreetBets, you’ll find impassioned essays from traders who say betting on GameStop has made them feel newly empowered in a financial system that has only taken advantage of them and their families for years.

“Greed is absolutely out of control at the top, and this funny little news story is tangible proof of that,” wrote one user in a popular post on Wednesday. “Do not let them gaslight you into thinking that it’s wrong for you to get a slightly larger sliver of the pie.”

If you can get past the all-caps lunacy and strange inside jargon, the Redditors make some good points. Big banks and hedge funds really do play by different rules than retail investors. Wall Street banks really did get bailed out after the 2008 financial crisis while Main Street homeowners suffered. M.B.A.s in fancy suits are probably no more likely to give you good investing advice than guys on YouTube with names like “RoaringKitty.”

Read more:

https://www.nytimes.com/2021/01/28/technology/gamestop-stock.html

See also:

http://www.yourdemocracy.net.au/drupal/node/9309

http://www.yourdemocracy.net.au/drupal/node/9296

https://www.blogotariat.com/node/4359795 (not Gus's)

Please note:

60% automated stock market:

Machines are making the trading decisions. Computer programs execute buy and sell orders based on complex algorithms and formulas, without a human involved in the process. On a typical trading day, computers account for 50% to 60% of market trades, according to Art Hogan, chief market strategist... 

Bloody greedy machines!!!!!!

I may have mentioned this on this site, but back in 1983, having finished a mega engineering project, Sir Gus de Leoniskyi y Bahamaso inc. thought of developing a system of computerised stock market trading. The stint was simple: connect a set of three computers betting against each other all linked to a single bank account that would fill up exponentially (or at least making 67 % per annum). The system was programmed NOT TO LOOSE, even if one or two computers would loose on “bets”… To rig such a system was difficult due to the technology not being up to scratch (the 386 were pathetic) and rules and regulations, though computers were used since the 1970s for “trading”. DOT was implemented in 1984… But it was not till sex-starved Bill Clinton relaxed the banking rules that the derivative market “exploded” into a huge monster… presently trading about $2,000 trillion per annum (GDP of the planet: barely $100 trillion)…

Trading used to be limited by how fast one human could shout at another and agree upon a price. Now it's limited by the speed of an electron through copper wire. This has caused, to put it mildly, some changes.

In April 2013 bombs went off at the White House and Barack Obama was injured, the Associated Press reported. The news sent markets lurching downward with the Global Dow index losing 150 points (thereby wiping out $136bn in market value) before the AP announced that its Twitter account had been hacked - no bombs had gone off, Obama was fine. But that didn't stop robotic trading algorithms from quickly selling off their holdings within seconds of the news.

This was not the first time automated electronic trading platforms – "high-frequency traders" – led downward lurches in the market. In 2010 the Dow Jones Industrial Average plummeted by over 1,000 points with the stocks of some major companies falling by over 90 per cent, a market disturbance so potent that it came to be known as "the flash crash". Various shares' values were wiped out. Billions were lost. And it all happened in less than an hour.

Read more:

https://www.theregister.com/2013/06/21/hft_financial_trading_rise_of_the_machines/

Please note that present computers "are so fast" (light speed) and companies were getting closer physically to the stock exchange trading centre in order to be trading first, that they had to use authorised "same lengths" of optic cables (copper wires are obsolete) to all the trading computers to make sure the playing field was "level"...

But this still leave room for a few clowns to manipulate the trading (read postings above) that would send computerised trading into a tizz...