origin: https://lemmy.whynotdrs.org/post/429107

TL;DR: As seen in Blurring DD part 3 a free and fair market will be on a self-custodial defi blockchain (link see below) which needs to be built on an open source platform. This will render nearly everything in the short toolkit useless. Stocks will no longer behave like infinite fiat money supply where you can always borrow more, but rather a finite share of a company. One thing left to them are (meme) stock traps. We have to begin understanding them. The DD has just begun.

Topics:

• A really free and fair market
• How would shorting work in such a market?
• Comparing todays short technics with those in a free and fair market
• What is left for shorts and how can we be one or two steps ahead?

A really free and fair market

First I want to thank the team of DRS GME, especially chives who went through several iterations of the post with me. I started writing it in mid 2022 and happy to share the thoughts now.

Counterfeit Shares 2.0 lists a lot of ways to create a counterfeit share. During the last years we got ample evidence that this is how the stock market operates (see last DD https://lemmy.whynotdrs.org/post/331876/). Looking at the loopring whitepaper (https://loopring.org/resources/en_whitepaper.pdf) and imagine a stock exchange based on self-custodial wallets and decentralized exchanges there eventually cannot be counterfeit assets, given certain conditions (see below). In this environment Fails to Deliver, Settlement Fails, Wrong labeling, False Locates, Naked Options and Perpetual Rolling may not occur. For context this is all about the loopring technology based on Etherium and not about their token (LRC).

As main condition everyone would have to use the particular uncompromised platform. E.g. the loopring wallet app for iPhone or Android, again not talking about LRC as a token here. If on the opposite every broker kept its own platform and would pinky promise to connect to the Loopring backend, we could probably end up in the same situation as today. Brokers could internalize orders or route to only certain exchanges. So how to solve this? A) only allow "Loopring App" for holding and trading shares B) implement authenticity checks at B1) shareholder interactions, like voting B2) other purposes, like interacting with products of the company (e.g. the Twitter Account would connect with your wallet and show the amount of shares you own). So this as an example for the "ownership" part (see also the DD about ownership here (https://lemmy.whynotdrs.org/post/331878), for the exchange part solution A would solve the issue, B maybe. A graphical overview of those stages:

We will go on in this post mostly assuming the green path would take the majority of shares and orders (aka “free and fair market”).

How would shorting work in such a market?

Here is a thought experiment on how shorting could work in such a free and fair market. Let’s say realGME was the token of the company and wrappedGME the derivative which you get instead of realGME when lending your share.

Here is a thought experiment on how shorting could work in such a free and fair market. Let’s say realGME was the token of the company and wrappedGME the derivative which you get instead of realGME when lending your share.

1. If you buy a tokenized stock you would always know that realGME is the one which is a real share, always with 1:1 voting rights and 1:1 rights of 1/(shares outstanding) of the company, always.
2. A buyer would therefore only buy realGME, not some wrappedGME (this is very different today with e.g. EU brokers going to EU exchanges and only offering GS2C instead of GME).
3. A shortseller would then need to somehow get realGME which he needs to sell to a buyer, he could not sell wrappedGME. Yes, you could maybe fuck around with the derivative wrappedGME, but you could not with realGME - thus any buyer always gets a real share, the lender may be cheated, true. So the lender should know the risk when getting wrappedGME. Today lenders and buyers are cheated. Also the (short-term) negative price pressure on realGME would still be there. Keep this in mind for now.
4. The new buyer becomes owner of the realGME with its voting and economic rights on the company attached, no one can take the realGME from him by whichever force.
5. The old owner who gave his share away to shortsellers receiving a wrappedGME which only signals the ownership rights on a realGME, but losing his voting and economic rights - the old owner got a derivative, which is clear at the time.

So the ownership right is clear in every second of this transaction. This is fundamentally different than today. And now to make this system work we would need:

6. wrappedGME could be provided by a smart contract which holds collateral from the short seller (e.g. ETH or some kind of USD).
7. the short seller can either buy back a realGME and exchange it for wrappedGME or in case of a "margin call" the smart contract will automatically buy back realGME and do the exchange.

7b) for this to work the margin call would always be below the value of the collateral.

7c) still, in extreme situations when the price of realGME is higher than the value of the collateral a buy back is not possible. Then the old owner would lose the realGME and receive the collateral instead.

7d) we'd likely see a huge number of variants in how collateral is paid, upon which terms, etc.

In short: shorts would still pretty much work, maybe even better than today. But it forces more honesty between two people or entities making a deal.

Comparing todays short technics with those in a free and fair market

However, there are many more tactics to influence a stock price and we will dive into each and look whether the whitepaper provides a solution.

Or in short:

What is left for shorts and how can we be one or two steps ahead?

Man, such a free and fair market would be something I am really scared of if I had a lot of naked shorts in nearly every stock on the planet. This would indeed something, shorts never forget. Since its also a few years that individual investors theorized such a system for GME, there is no way shorts haven’t been doing this for some years now. And while there might be countermeasures from shorts in the political, regulatory, behavioral and so many different corners, we will just look at their usual techniques and see what’s left. So the three main things which work independently of a free and fair market are pumps & dumps, poops & scoops, short & distort. Let’s call them traps.

So if they cannot beat individual investors by their normal tactics they have to probably level up on what’s left. Ah, and make no mistake also institutional investors are being played. Don’t forget, this is a game of longs vs naked shorts.

Now, to be one step ahead, we should discuss exactly the matter of this post. We know about GME pretty well, but we can only direct register every share once, so probably the question in which stock to invest is a pretty important questions. Maybe also some might want to become activist investors themselves. Therefore, to be two steps ahead we should already begin to understand short traps (where a subset is surely “meme traps”). And I imagine this is game where we never finish learning. Let’s begin.

Sources https://www.reddit.com/r/Superstonk/comments/v20yqz/best_tldr_of_this_whole_saga_by_ujgatprime/ (I really recommend you to look through the comments of JG-at-Prime) https://web.archive.org/web/20210131131256/http://www.counterfeitingstock.com/CS2.0/CounterfeitingStock20Full.pdf https://loopring.org/resources/en_whitepaper.pdf

Awesome WHYDRS team. Thanks for your work!

I feel this work is early, but spot on. GameStop can set the precedent for household investors waking up, realizing how the market works and with DRS have a relatively easy way to really impact the market.

As the question bothered me if GameStop is such an outlier or more or less business as usual, I gathered data and did some graphs. I never really finished or published them, cause I feel that still with GameStop and DRS we are testing an hypothesis and the result is still to be seen (successful business & high DRS & huge shorts should positively corelate with the price). Why start DRSing other stocks if the impact of the "biggest DRSing community" is still not really proven. At the same time, if the hypothesis proofs to be right, other stocks will follow.

However, I feel that here might be the place to share the drafts for Days /w FTD, 10y Turnover and daily average FTDs (as % of shares outstanding). I also did some other analysis, like price elasticity. This is not financial advice, also please proof and test the numbers, I might have made errors.

Sources:

• For Days with FTD and daily FTD the SEC data was used: https://www.sec.gov/data/foiadocsfailsdatahtm
• For Shares Outstanding the SEC API was used: https://data.sec.gov/api/xbrl/companyconcept/[CIK]/DEI/EntityCommonStockSharesOutstanding.json (where the CIK of the ticker is derived from https://www.sec.gov/Archives/edgar/cik-lookup-data.txt)
• The Volume was fetched using yahoo finance
• All data was curtailed for 2012 to 2022 (Q3), so about 10 years
• ETFs were filtered out
• Only the top ~400 tickers as of days with FTDs were used

10y Turnover (volume / shares oustanding) to Daily avg FTD

Days with FTD and daily avg FTDs as % of Shares Outstanding

Same as above but zoomed out

The work was inspired by u/sdfprwggv . Thanks! Even if I didn't finish the work - maybe someone wants to continue.

Could also provide the source. Everything was written in Python.

Special thanks go out to jackofspades, Bibic-jr, Chives, 6days1week and lawsondt for their contribution and support. Love you guys.

PREFACE – A quick little short squeeze

SOME OF THE GREAT DD AND ITS CONNECTION TO GAMESTOP AND THE STOCK MARKET

HOW LONGS WIN THIS WAR – SOMETHING THEY WILL NEVER FORGET

1. What is a share and where is it held?
2. How many entities technically have access to a share?
3. Where are the shares traded and how is the price derived?
4. How regular people think price discovery works and how it actually works?

WHAT NEEDS TO CHANGE FOR A FAIR MARKET

PREFACE – A quick little short squeeze

GameStop is what brought most of us here. I wasn’t really into GameStop and had experienced the short attacks and FUD on Tesla. So as Musk tweeted GameStonk!! [https://twitter.com/elonmusk/status/1354174279894642703] and Ihors3 with SI partners reported like 140% short interest [https://twitter.com/ihors3/status/1354477089471295492], I thought I had one short squeeze but how about a second one? A quick litte short squeeze cannot be wrong, can it?

I checked RC and Chewy and I thought I knew what I was doing clicking buy on my neo brokers interface. I thought I knew roughly how the market worked. I had shares before. I mean I thought I bought shares of US companies on the stock exchange.

Boy, I had no idea…

Credit to u/Mousiaris

So the price shot up and we won … oh no, actually brokers canceled the buy button for many stocks (https://twitter.com/magsonthemoon/status/1697231772252045333), the media tried to convince us that shorts closed (https://twitter.com/ihors3/status/1356261806612885509) and demonstrated that individual investors could never win in the current system.

And Just looking at the FTDs, volume, institutional ownership there are hundreds or even thousands of companies where the price is wrong (https://www.reddit.com/r/whydrs/comments/13ckpsz/unfinished_stonk_overview_for_days_w_ftd_10y/).

SOME OF THE GREAT DD AND ITS CONNECTION TO GAMESTOP AND THE STOCK MARKET

We learned from the Amazon Bust Out Scheme ™ (http://web.archive.org/web/20210601141915/https://www.reddit.com/r/Superstonk/comments/np33hr/amazon_bain_capital_and_citadel_bust_out_the/) that cellar boxing (https://investorshub.advfn.com/boards/read_msg.aspx?message_id=2543759) can be helpful to scoop up assets very cheaply. So big companies (like Amazon), lending banks, DTCC, shorts, corrupt board members, overpriced consultants, lawyers and corrupt politicians all profit from this.

The ones who lose are the bankrupted company, the employees who lose their job and of course us, individual investors.

Looking back to 2020 GameStop ticked all the cellar boxing boxes (https://www.reddit.com/r/Superstonk/comments/1663z0n/comment/jyhpdw5/):

• incompetent (and/or) fraudulent management with a losing strategy (https://www.sec.gov/Archives/edgar/data/1326380/000101359420000821/rc13da3-111620.pdf),
• which applied a 10% $216m debt during COVID (https://www.sec.gov/Archives/edgar/data/1326380/000132638021000032/gme-20210130.htm) while losing money since 2018 (smells like death spiral financing),
• bad press and
• a steadily declining share price from $44 2015 to under $4 2020 (pre-split) accompanied by huge volume (https://www.reddit.com/r/Superstonk/comments/wursjt/gme_outstanding_shares_turnover_compared_to_msft/), high institutional ownership and massive Failure to delivers (https://www.reddit.com/r/Superstonk/comments/wlrdlk/previous_research_found_that_tsla_and_bdlp_had/).

This stock market is designed this way. Individual investors don’t own stock, we got beneficial rights (https://www.whydrs.org/why-register-shares) where with many, especially international brokers you can’t even vote or votes are cut due to over-voting (https://cdn.ymaws.com/stai.org/resource/collection/1DEFBE7C-390F-4D83-AE14-99E53B32892E/2019.12.3_SEC_letter_re_Proxy_concept_release.pdf). With naked shorts broker-dealers collect 100% of the profit while giving out counterfeit shares, keeping everything in case the company goes bust (https://finance.zacks.com/tax-stocks-exchanged-through-merger-acquisition-11818.html). And this is not one stock, this is the stock market (https://www.reddit.com/r/whydrs/comments/13ckpsz/unfinished_stonk_overview_for_days_w_ftd_10y/).

I strongly believe a lot of the over 180.000 long-term DRSd individual investors are here for system change. To stop this unfair and corrupt market. Like Elon said, he didn’t start the fight with the SEC but he will finish it (https://twitter.com/elonmusk/status/1496564151493304324). So we will with predatory short sellers.

Part 2: https://lemmy.whynotdrs.org/post/331878

PREFACE – A quick little short squeeze

SOME OF THE GREAT DD AND ITS CONNECTION TO GAMESTOP AND THE STOCK MARKET

HOW LONGS WIN THIS WAR – SOMETHING THEY WILL NEVER FORGET

1. What is a share and where is it held?
2. How many entities technically have access to a share?
3. Where are the shares traded and how is the price derived?
4. How regular people think price discovery works and how it actually works?

WHAT NEEDS TO CHANGE FOR A FAIR MARKET

HOW LONGS WIN THIS WAR – SOMETHING THEY WILL NEVER FORGET

But how can longs win over shorts? Is a successful turnaround enough? Did for example naked shorts bleed with the Tesla meteoric rise in share price or did they just switch sides and end up earning even more money? Is pure DRS enough? How is the system working today anyway and what needs to change?

To answer those questions we will dive in:

1. What is a share and where is it held?

2. How many entities technically have access to a share?

3. Where are the shares traded and how is the price derived?

4. How regular people think price discovery works and how it actually works?

5. What is a share and where is it held?

A share of a company consists of voting and economic rights. Vote on the annual meeting and thus have direct influence of who runs the company and indirect to the strategy and organization

Economic right is the right to own and you would think also to buy and sell. But the right to buy and sell is not attached to a share but rather in combination with an exchange and a broker-dealer, e.g. the right to buy was removed per brokers during January 21 and in general with places like “the expert market”, where only a few brokers allow individual investors to buy, while one can sell anytime. Also some brokers (maybe the minority) allow one to select an exchange or OTC to place your order while some don’t.

Like with money you can decide where to hold your shares. Money can be held as hard cash in your wallet, in a bank account or even be invested and held in a derivative (e.g. overnight money). Thus, when giving the money to another party it becomes clear that they are technically able to do something with it, e.g. loan or invest it. This could technically be done without your consent, which might be legally required or not. So the next question is when changing the way to hold an asset (money or shares) how many entities have technically access to it.

2. How many entities technically have access to a share?

The place the share is held also defines how many entities technically have access to the share. Legally that’s a different story, but see with a broker-dealer you are holding an entitlement as beneficial owner. For Transfer Agent Regulations the SEC called for comments on transfer agent regulation in 2015, since current regulations are from 1977 (https://public-inspection.federalregister.gov/2015-32755.pdf, p. 1) . Obviously, no regulation was put into action and there is rather no action and meetings since 2019. Looking at what the SEC already state in 2015 is that shares maybe not safe with a transfer agent and issuer plan are typically not in the name of the investor (p. 194 and https://www.sec.gov/about/reports-publications/investor-publications/holding-your-securities-get-the-facts). Bibic-jr created this wonderful graph in showing the differences in the ways of holding shares:

Yet, it bugged me that all of those ways include at least one counterparty who technically has access. So I added one more step and compared the amount of entities having technical access with Money, Crypto and Shares:

Who should have access to your equity? Here's how to hold for your preference:

Wait a minute… so DRS is not the way? Indeed, it’s the only way. DRS and DWAC transfers into Direct Registration might be the only way out of this fraudulent system.. Still, one entity beside you always has access and could in theory also remove the buy button. Can MOASS happen with another entity having access? I don’t know and I repeat, without DRS we are stuck in the system with DTC.

Some may also ask, wait but Plan is equal to Pure DRS isn't it? Well the SEC said "[t]o hold in DRS once [plan shares] are acquired, you would need to instruct the transfer agent to move the securities from the issuer plan to DRS" (https://www.sec.gov/about/reports-publications/investor-publications/holding-your-securities-get-the-facts), since share plans (dividend reinvestment, direct stock purchase, etc.) could not be considered your property (https://www.sec.gov/comments/s7-27-15/s72715-40.pdf, p.12). Also finra says that “[y]ou’ll need to instruct the transfer agent to move [bought plan shares] to the DRS” https://www.finra.org/investors/insights/know-the-facts-direct-registered-shares.

Next, to exercise the economic right to buy or sell there must be an economic value, which is detached from the share and the place it is stored.

Part 3: https://lemmy.whynotdrs.org/post/331876

PREFACE – A quick little short squeeze

SOME OF THE GREAT DD AND ITS CONNECTION TO GAMESTOP AND THE STOCK MARKET

HOW LONGS WIN THIS WAR – SOMETHING THEY WILL NEVER FORGET

1. What is a share and where is it held?
2. How many entities technically have access to a share?
3. Where are the shares traded and how is the price derived?
4. How regular people think price discovery works and how it actually works?

WHAT NEEDS TO CHANGE FOR A FAIR MARKET

HOW LONGS WIN THIS WAR – SOMETHING THEY WILL NEVER FORGET

3. Where are the shares traded and how is the price derived?

Economic value is defined by the exchange (or OTC) where the share is traded. The market capitalization of a company is defined by the public exchange where the security is mainly listed, e.g. NYSE or NASDAQ.

For some security this exchange will have not the most volume, which is kind of odd isn’t it? Also the security might trade on foreign exchanges or in dark pools, the latter often deriving the price from public exchanges (https://www.investopedia.com/terms/d/dark-pool.asp), while having far greater volume than the public exchange.

Those exchanges use an order book to match bids for supply and demand. Watching the the Wallstreet Conspiracy (https://www.youtube.com/watch?v=26_IcexvePA) or The Problem (https://www.theproblem.com/episode-5-the-problem-with-the-stock-market/) it’s always about scraping pennies on the dollar. So doesn’t really feel that bad, does it?

Let’s recap how regular people think price discovery is working and see how price discovery it’s actually working with all we learned during the journey.

4. a How regular people think price discovery works?

Supply & Demand sets the Price. You can think of this as an orderbook, so for a price of $25 there are buy orders for 50 shares, while for a price of roughly $11 there are buy orders for 150 shares.At the same time for $25 there are sell orders for 150 shares and at ~$0 only 50 shares are paper handed. The intersection of those curves is than what defines the market price which is roughly $15 with a volume of roughly 100 shares exchanged hands.

Sounds easy right? And would look like this: Price is where Supply and Demand meet, 𝑄𝐷(𝑃)=𝑄𝑆(𝑃) where Q is quantity of D(emand) and S(upply) at a certain (P)rice (see: https://www.core-econ.org/the-economy/v1/book/text/leibniz-08-04-02.html)

Thanks to a young boy from Bulgaria (Vlad Tenev, https://www.youtube.com/live/RfEuNHVPc_k?t=1305) GME investors soon learned about Payment for Order Flow, which would route orders to wherever the counterparty, mainly Citadel and Virtu in our case, wants. The Problem with Jon Steward (https://www.theproblem.com/episode-5-the-problem-with-the-stock-market/what-is-the-stock-market) and also the movie Gaming Wallstreet (https://www.imdb.com/title/tt18332840/) brought the concept on the big screen.

The Problem states that this scheme is to make pennies off of every transaction processed. However, Dark Pools were literally defined to do large trades without price adverse effects on the price [https://www.investopedia.com/articles/markets/050614/introduction-dark-pools.asp]. Some of them use the past price of lit exchanges (https://www.investopedia.com/terms/d/dark-pool.asp), where individual investors trades barely go to. Rereading some old DD it feels like there are some logical flaws in the early DDs. Like this post claiming "I don't believe you can suppress the price of a stock through manipulation that only involves dark pools or off-exchange trading, as it is all publicly reported." (https://www.reddit.com/r/Superstonk/comments/o70lid/dark_pools_price_discovery_and_short/). But I rather agree with the logical deduction in the comment (https://www.reddit.com/r/Superstonk/comments/o70lid/comment/h2w36ex/?utm_source=reddit&utm_medium=web2x&context=3).

Price is a function of supply and demand (like shown above). If you now print several different graphs instead of one and spread demand over them the individual demand is lower, while as a big market maker supply is not a problem even without naked shorts. So naturally the price will be lower when having several exchanges with lower demand but high supply (sponsored by the liquidity fairy). As example, let’s take lemonade stalls. Supply of lemonade is ample. So imagine, there is just one stall and everyday there is a huuuge queue (high demand) in comparison to you having one stall but there are like 10 more lemonade stalls around you and the queue would spread equally. In which scenario would it be easier to raise the price of lemonade? Easy, isn't it?

Further there are settlement delays (T+2 at least) and shorting which allow broker-dealer and market makers to temporarily inflate supply and thus lower the price. The graph would change to the following:

Changed equation: Price is where increased Supply (by shorts and settlement delay -> QSi) and reduced Demand (by routing -> QDr) meet, 𝑄𝐷r(𝑃)=𝑄𝑆i(𝑃)

Wow we just lowered the price of the shares and also the market cap of a company.

Interestingly through the GameStop sneeze saga the size of the trades handled by dark pools shrank (https://www.reddit.com/r/Superstonk/comments/mx4j9p/dark_pool_dd_summary_and_a_quick_update_on_all/) leading to the theory of retail orders having no more influence on the share price.

Even if synthetic shares are mentioned here and then, even on The Problem with Jon Steward, it’s almost never clearly put like Mark Cuban put it “[t]heir goal is to never [close] their short”.

I didn’t understand it when he said it, but its as simple as that: someone sells shares, collects 100% of the money and doesn’t actually deliver the share, forever.

So, if you want to cellar box a company somewhen even temporarily inflated supply would not be enough to reach a certain price point. “Finance professor (not me) mathematically proves that it's impossible to short a stock to zero without naked shorting at least as many shares as there are outstanding, doubling the float in the process” (https://www.reddit.com/r/Superstonk/comments/nw8281/math_black_magic_vol_1_why_it_is_mathematically/ ).

Everything changes if supply can be inflated indefinitely. And naked shorts are just one way, finra often fines broker-dealers for wrongly labelling shorts as long [see Citadel has no clothes], also there is perpetual rolling and many more (see https://www.petepetit.com/mimedx/downloads/Counterfeiting-Stock.pdf). Synthetic shares are additional to the outstanding shares, meaning shares that should not exist.

4. b How is the price actually discovered?

Adding synthetic shares the Price is now where already reduced Demand (by routing -> QDr) meets infinite Supply (QS∞), 𝑄𝐷r(𝑃)=𝑄𝑆∞(𝑃), which obviously is at some point ~0, or should we say finally cellar boxed.

Imagine MOASS starts, Tomorrow was Today, in which of the above systems would you rather want to be?

What are implications of “Supply & Demand” being actually “(routed to lit market) Demand & (synthetic) Supply”?

• The seller of a synthetic share receives 100% of the cash but giving 0% of additional value. (The buyer receives some value still, e.g. the economic value and maybe partial voting rights)
• Derivatives are tied (mostly leveraged) to the price of the underlying, so little swings in the price can mean huge swings for derivatives. (if the price moves to much from the perceived fair price and investors are willing to invest/divest huge swings are not possible w/o moving the perceived fair price or buying power)
• The company loses market capitalization and thus value which credit score is tied to but also suppliers will look cautiously at the market cap and probably revise their payment terms (e.g. upfront payment instead of late payments).
• Cellar boxing and bankruptcy jackpot become possible only with naked shorts.
• …

In 2004 blurring wrote "[t]hese massive naked short positions need to be looked upon as huge assets that need to be developed." (https://investorshub.advfn.com/boards/read_msg.aspx?message_id=2543759). So what are the steps to do so?

WHAT NEEDS TO CHANGE FOR A FAIR MARKET

A massive short squeeze may not happen with GME under current market structure. Too many entities have access to shares in a way that the supply/demand relationship can always be manipulated through a nearly endless number of tactics including corrupt exchanges to suppress true price discovery. The main way an individual investor can change the current situation is by limiting access to their shares to exclusively themselves and that’s through the DRS system.

The second part beside exclusive ownership is something we cannot do ourselves easily. It’s an uncorrupt exchanges like tzero or loopring doing the absolute majority of the trades.

Only with those two pieces in place a large short squeeze may begin to unfold. The foundation of that happening is due to large short positions that exist as a hidden asset. The asset exists, but it’s hidden and therefore isn’t reflected in current market price. It is only through the extraction of this hidden asset that it will contribute to fair market price for the stock.

“Securities held pursuant to […] share plans (dividend reinvestment, direct stock purchase, etc.) should be registered such that they could not be considered property of the transfer agent. (https://www.sec.gov/comments/s7-27-15/s72715-40.pdf, p.12)

“DTCC shares the Commission’s concerns that securities and funds held by transfer agents are subject to a risk of loss from fraud, theft or other misappropriation or disruption and supports the Commission’s proposals to strengthen the practices and procedures involving the safeguarding of funds and securities by transfer agents.” (https://www.sec.gov/comments/s7-27-15/s72715-32.pdf, p. 8)

"[...] Plan Administrators maintain custody of purchased shares on the participants’ behalf, with the purchased shares typically being registered in the name of the transfer agent’s nominee." (https://public-inspection.federalregister.gov/2015-32755.pdf, p. 194)

Source: https://public-inspection.federalregister.gov/2015-32755.pdf)

Source: https://public-inspection.federalregister.gov/2015-32755.pdf, p. 201

This is a repost of the time when real dips and rips still happened from June 22 I posted on Superstonk (highly censored sub nowadays). I feel price movement is a thing we should start discussing again and its implications. Price as well as % DRS seem to be in "zen mode" lately for the last roughly 1y. We should talk about this! Special thanks to u/jonpro03 who helped me with all the data for the OG post.

Sup Apes?

In my post about "How is the probability of another monster dip? What are the determining factors for price movements and vice versa what do price movements cause?" with the hypothesis "GameStop share price will be below $77 caused by GDP slowing and liquidity drying up", I also talked about that "[t]he slope of "Total DRS Estimates" increases significantly after the dip in March, May and January as can be seen on https://www.computershared.net/ ".

This post now should give a glimpse on what dips and rips actually do cause. However, this is not proper statistic work and should only be seen as rough estimates. Especially since I am building on the data of computershared.net which contains estimates by itself (esp. the trimmed avg.).

TL;DR:

• All else equal DRS might pick up by a factor of 2-4 during the next dip (around $70-$90) leading to daily estimated DRS volume rising from 20-35k to 50-90k shares/day.
• Opinion: Hedgies are fukd because if they lower the price Apes accelerate their DRSing, if they raise the price they risk causing FOMO also from none Apes, esp. during times were other stocks are down hard.

Findings:

• After Dips Apes have DRS'd 3x (about 2-4x) the amount of shares in comparison to after / during Rips. In "rip" timeframes Apes DRS about 20-35k shares/day while during "dip" timeframes Apes DRS about 50-90k shares/day (varying for the dips/rips).
• There is a positive correlation between Price and "Day+4 (DRS) growth" (0.24). Interpretation: When the price rises after a dip, DRS'd shares rise.
• There is a significant positive correlation between Volume and "Day+9 (DRS) growth" (0.45). Interpretation: High volume days almost certainly lead to a peak in DRS'd shares over the next 9 days.
• There is a positive correlation between Volume and "Daily Price Delta" (0.35). Interpretation: with high changes in price (regardless if dip or rip) there comes higher volume.

Data used for the dataset:

• Daily low, Daily Volume: were taken from https://chartexchange.com/symbol/nyse-gme/historical [as of June 27]
• Daily Price Delta: the % difference in price regarding the day before (ignoring algebraic sign)
• Daily Price Delta in regards to 14d mean: Daily low divided by the arithmetic mean of the previous 14 days
• Estimate w trimmed mean: was taken from https://5o7q0683ig.execute-api.us-west-2.amazonaws.com/prod/computershared/dashboard/charts [as of June 27] (thanks to u/jonpro3, see https://www.reddit.com/user/jonpro03/comments/v3iyt4/how_does_computersharednet_work/)
• Daily DRS Volume: the absolute difference between "Estimate w trimmed mean" to the day before
• Day+4,+9,+19 growth: the sum of the "Estimate w trimmed mean" as of this date as well as the next 4, 9, 19 days to better illustrate

Assumptions:

• Growth in estimated DRS'd shares follows an repeating timely pattern and there will be visible peaks around such timely patterns visible by a peak of DRS'd shares over the next 4, 9 or 19 days. This includes the timeframe from buying (and DRSing from a broker) to posting.
• As I found that the time DRS picked up varies between each dip/rip I kind of manually assigned each dip/rip timeframe on the price side (left) and on the DRS volume side (right). I assumed that a dip is when the price relative to the 14d mean price is roughly around or below ~90% and that the relating DRS volume is around or slightly after this timeframe and is defined by an up rise in "Daily DRS volume".
• The timeframe for analysis started December 2021, since DRS before is assumed to be unrelated to price movements (first batches).

Limitations:

• I used my magic 8-ball for a lot... maybe some of you want to do a proper analysis with more time?
• The definition of DIP/RIP timeframes is not simplified and not properly done. I more or less used some crayons and just let them drop where the colors looked nice.

Happy to provide the dataset. Let me know what you think in the comments. The time I used for this was very limited, so please check for failures. And as said before, don't rely on this data or results.

Link to the archived version: http://web.archive.org/web/20220701032716/https://www.reddit.com/r/Superstonk/comments/vo7j41/state_of_the_dip_2a_how_are_dips_and_rips/

This is a repost of my thoughts on GME price movement from June 22 I posted in DDintoGME (highly censored sub nowadays). I feel price movement is a thing we should start discussing again and its implications. At the time of the post the low was [$19.25], the new low was [$15.41] in January 23. I added the price after the splividend in [brackets].

Hey Apes, Ssup? [...] Disclaimer:

This post is not to discuss opinions about people. Just possible price movements, especially on the downside, like materially aka monster dip. Also it should discuss some thoughts about the price movements.
... ehrm, this is not financial advice and I am treated for crayon addiction.

TL;DR:

• Some twatter posts formed the hypothesis "GameStop share price will be below $77 [$19.25] caused by GDP slowing and liquidity drying up"
• Price so far followed a "slide pattern" (up steeply, down gradually) with varying frequency to probably discourage new buyers. Also prices lead to maximized option maker profits. Apes bought and DRS'd the fkn dip and probably will do so again. SPECULATION: price upper bound is as low as possible also to discourage new investors.
• Questions to be clarified in Part 2: How much does GDP slowing aka recession combined with inflation lower Apes buying power? What's the ratio of buys vs sales in a monster dip under the conditions of 1 accompanied by massive MSM FUD? SPECULATION: price upper bound is as low as possible also to discourage new investors.

Part 1: The hypothesis.

Okay, the reason for this post - and again this should not be about people - were several twatter posts of Pulte - did I say that we don't want to discuss people here? - which made me think. Will and can there be a monster dip?

For those who haven't read the posts or can just remember the last 8 minutes because of massive TV addiction in their childhood, here they are:

Apr 12 (price low on this day: $141 [$35.25], high: $152 [$38]):

"[...] Only concern is short term stock price going down, potentially materially, with GDP slowing and liquidity drying up. [...]"

(Source: https://nitter.net/pulte/status/1513961584263110668)

May 12 (price low on this day: $77 [$19.25], high: $108 [$27]):

[Cited Tweet Apr 12]

"[...] I will HODL GameStop and at the right time I will buy more. It’s not time yet though. [...] Be smart! 🦍"

(Source: https://nitter.net/pulte/status/1524870198746046485)

Jun 7 (price low on this day: $126 [$31.5], high: $149 [$37.25]):

"[...] Again, I think downtrend is next, but still! How great! 🚀"

(Source: https://nitter.net/pulte/status/1534276687340441600)

Well, I am not sure if I mentioned that this post is not about people. Here you go. So we will abandon people for the time and phrase an hypothesis "GameStop share price will be below $77 [$19.25] caused by GDP slowing and liquidity drying up".

Before we think about how to test this hypothesis lets dive into A) the extend of it and in general discuss B) factors that may determine the price movement as well as C) vice versa effects of the price movement.

A) Since you all know the GME chart by heart this may be no news to you. Looking at the share price since June 2021 the lowest point was $77.58 on March 14, followed by May 12 with $77.77. So within one year the lowest dips were on and around those two days, followed by late January. (Source: https://chartexchange.com/symbol/nyse-gme/historical)

B) Of course price is a function of demand and supply. Nah, just kidding, the price is fake af and under working theory caused by the following:

1. As absolutely dominant factor since the big sneeze we see a "slide pattern", so like with a slide for kids it goes up very steep, coming back down gradual (see chart https://chartexchange.com/symbol/nyse-gme/). As speculation I think this is mainly to discourage possible new shareholders as the price goes down nearly all the time. Last year nearly every day new patterns were thought to be found on why and when the next upward movement would occur, but none really survived the "next cycle" and being absolutely crushed December last year to mid March this year.
2. Options play a further significant role. We see that most options end up expiring worthless (e.g. see here[OPTIONS DD LINK TO BE UPDATED]). Yes, one can make significant money with options - if one is right predicting the price movement. But price mostly moves to max pain, sometimes even below to crush more calls than puts (especially in Q1 22). If I find the time and someone is interested I maybe will publish the data in a different post. As speculation price at any given time may reflect a strategy by option makers to maximize their earnings.
3. SPECULATION: On the upper side the price is capped by ~~margin calls~~ (note: there are no margin calls for the big player), ~~keeping the balance in their books~~ (note: there are so many ways to hide their positions like swaps, companies abroad, ...). So the only real reason I can see to keep the price low is to just show new investors that GME is not an attractive investment.

C) What does price movement cause? You guessed it. Apes keep buying and DRSing the dip. The slope of "Total DRS Estimates" increases significantly after the dip in March, May and January as can be seen on https://www.computershared.net/. Also RC bought the dip on March 22 (Source: https://fintel.io/n/cohen-ryan). On the other hand it looks like high prices are followed by a decreased slope. Would love someone to run some statistics. What do you think u/jonpro03?

So yeah, nothing new, but an interesting comparison. Bananas cheap = Apes buy more bananas. Bananas expensive = Apes buy less bananas. As always.

TL;DR: Price so far followed a "slide pattern" (up steeply, down gradually) with varying frequency to probably discourage new buyers. Also prices lead to maximized option maker profits. Apes bought and DRS'd the fkn dip and probably will do so again. SPECULATION: price upper bound is as low as possible also to discourage new investors.

Further statistical research could be done on how the price influences DRS rates to better predict them in the future.

Part 2: How to test the Hypothesis.

Originally, I wanted to also post my conclusions to Part 2 already. But I decided to rather publish the questions first and get your thoughts on those, maybe add some as well as your thoughts on their answers.

So, how can the hypotheses "GameStop share price will be below $77 [$19.25] (aka the monster dip) caused by GDP slowing and liquidity drying up" be tested?

1. How much does GDP slowing aka recession combined with inflation lower Apes buying power?
2. What's the ratio of buys vs sales in a monster dip under the conditions of 1. accompanied by massive MSM FUD?

Your thoughts are very welcome.

Just some thought exercise until MOASS.

Shiver me timbers.

Link to the archived version: http://web.archive.org/web/20220623215829/https://www.reddit.com/r/DDintoGME/comments/vjlswr/state_of_the_dip_1_how_is_the_probability_of/--

Disclaimer: This is a repost from the deleted sub DRSyourGME. Since this sub got deleted by reddit as did related DRS subs without proper warning, one may wonder how deep reddit is into censoring GME.

Welcome to the ASS.

So, we should find ways to make the community more resilient against censorship, which necessarily needs platforms outside of reddit. Remember, not only does Reddit provide tools to censor, Reddit applies censorship rules for subs by themselves! We need Apes Shitstorm Shelter (ASS).

Quality of the Apes Shitstorm Shelter TM

We already defined censorship as deletion and suppression of content in part 1. Since companies cannot act against the law, we will exclude government ordered censorship. Further our Apes Shitstorm Shelter TM should have free access (registration via email, no payment required, no login required to read), it should be easy to publish content (small text to long from DD), if somehow possible it should already widely be known and accepted (so ado, also it should have a reliable platform (ddos resilient). As a bonus there should be end to end encryption for direct messages (DMs) to allow censorship free communication. Last but not least, we must know who owns a platform, so who has ultimate control over it and could have conflicting interests.

The platforms which may act as Apes Shitstorm Shelter TM

Some weeks ago GreeDplayer asked “What are the current alternatives for reddit?”. So here is the list: Minds, Youtube (Gangnam Style), mastadon, Twitter, Discord. There were also mentions of Telegram, Truth social, DIGG, Myspace Group, Lemmy. I won’t check those out but anyone is invited to do so and contribute.

Some of the biggest GME subs already have a Discord server, the two biggest by early 2022. While some of you might remember when Discord shut down VVSB in Jan 21, maybe it might be new to you that Fidelity became an investor in September 2021.

Rating the ASSes

Please poke holes into what I found. Happy to discuss ASS with you.

Minds and Twitter look promising

Looking at the table “Minds” looks like the perfect fit. I found it very interesting that before GreeDplayers post I haven’t in fact heard of it. Especially, since Patrick Byrne is on the board. Wow. However, the drawback is the comparably tiny user base. So “mental switching” costs might be too high for the majority.

Okay, so looking at the next best alternative this seems to be Twitter. But don’t they eat ASS I hear you say, don’t they delete or suppress content? They themselves say “Freedom of Speech, Not Reach” and define this within their rules and transparency policies. Well, trust is good control is better. Thankfully Twitter added the view count, so I checked Pultes tweets about [GME, $GME, GameStop, DRS] which without replies have about the same number of views as his other tweets (>100k-~600k or more). Additionally, there is GameStop, RC, Pulte and so many more active on twitter with a large active user base which might lead to a lower barrier to create an (additional) GME related account. A drawback certainly is that end to end encryption and long content is only provided for paid twitter blue accounts. Another issue to think about is, there is no content moderation but also no subs. So, everybody has to build up their follows or other techniques.

TL;DR: This post shall contribute in forming a backup communication plan, when shit hits the fan. While “Minds” looks like the optimal Apes Shitstorm Shelter, it is very limited in its user base yet. Twitter looks as it becomes the better solution with least censorship, a great reach already (RC, GameStop, Pulte, …) but end to end encryption and longer content creation has to be bought with twitter blue. Also, as there are no “subs” everyone has to build up their individual follows / news feed.