THREAD on Robinhood/Reddit/GME: CONGRESS is calling for action, but no one has clearly articulated what they actually want.

We could look back on this as the biggest “Pump & Dump” in history... with the little guys carrying all the water & then getting it dumped on their heads.

It started with a SMART discovery, Melvin Capital (hedge fund) broke the cardinal rule of short selling. They took on way too big of a short position given the size of their fund, how heavily shorted the stock already was and the amount of shares outstanding.

Technically, they were RIPE to get squeezed, but there was virtually no case for anyone following fundamentals (earnings, growth etc...) to want to buy this sleepy, brick and mortar video game retailer.
Short selling is absolutely legal and adds to efficiency of the market.

More often than not, the short seller gets hurt & not the company. But there are many who believe it’s harmful to American businesses and short sellers to use media and unsavory practices to put struggling companies in further distress.

This week will definitely bring back the debate on banning short selling. This is a huge win for Elon Musk who has been battling & defeating short sellers for years and wants the practice irradicated.
He’s been unsuccessfully trying to get lawmakers to focus on this for a while.