Hey friends. thanks for watching. please note that this is a VERY simplified version of how short selling works. It's purely the concept. in real life there are all sorts of other nuanced dynamics that I didn't even scratch the surface on. but the concept remains the same and I hope this can help in some way if you are interested in understanding what's happening with the Game Stop situation. thank you all for being here. Lots more videos in the works. K bye!
How Redditors "got wind" of the glitch is not as interesting as who found it. You had it right in the beginning ..."The big short". Just like the subprimes, Michael Bury is at the inception of it. It is not retail vs hedge fund it is hedge fund vs hedge fund vs the US government. Maybe now they will regulate.
Also, hedge funds shorted more Charizard cards than were ever printed. They borrowed all the cards, sold some and then went to the people they sold to and borrowed them again, as if they were new cards, without paying back the original owners. This crazy logic is why everyone is laughing at the hedge funds that got burned.
And also, they couldn't just sit and wait forever to the prices go down. When you borrow a card, you promisse back *with interest* . At some point you have to buy it back (however the price) or be crushed by interests.
yea this is one of the important parts, its not just that they are shorting. They are shorting over 100% of the available shares (also called the float). Another important thing to take into account is that a short position can to forced to close, so if your little brother sees that the price of Charizard cards is going up and fears you cant pay back, he can force you to buy one now instead of later. That is the short squeeze, forcing the hedgefund to buy back the stock at a much higher price than what they borrowed it for.
Everyone on reddit is laughing because these hedge funds that do this shit have the capital to cripple companies and they've been doing it to the detriment of struggling companies for decades.
kinda curious whats stopping people from just doing this with random low value stocks now. does it count as insider trading if one person just has a shit ton of people invest in the same place?
Nobody can become financially successful overnight. They put in background work but we tend to see the finished part. Fear is a dangerous component, hindering us from taking the bold steps we need in other to reach our goals.
I think it's not always about fear, Sometimes realistic factors discourage people from reaching their goals in life. For instance, I've tried investing in the stock market several times but always got discouraged by fluctuations of stock value
@@jesbensommichael8397 This is the problem! Most times people with little or no knowledge of the stock market try investing by themselves. It once happened to me, then I learned my lesson and contacted a US-based finance consultant by name MARTHA ALONSO HARA and everything changed. I started enjoying huge returns from my investment.
Real but faulty and missed the point 💯 like most MSM. Louis Rossmann explained it multiple times over the last week th-cam.com/video/XX6-jPy98YA/w-d-xo.html
If Johnny read wallstreetbets FACTS instead of simply slandering and assassinating the character of 8 MILLION members of a Reddit board... vs character of Wallstreet Hedgefunds! (They are worse) 🙄🤯
Nah, I don’t think so, but I really hope so or I hope I could be on the other side the wsb and hedge-funds side, because it’s so crazy to think about really how profitable they are and could be today still and living probably with national million/billion dollars of debt each year and no one really cares because they take debt on debt and so on until they die and lived happy life probably. Really hoping that future financial business men all over the world can compete with these all different types of hedge-funds and make them tremendous amounts of losses with many peoples agreement that wsb or any hedge-fund overall has money in it
Teachers simply don’t have the liberty to teach, they are controlled by the government just like everyone else. I believe that it’s ignorant to view teachers as the villain, the problem is with the systen itself.
@@user-fh4zi7po7i I apologise if it seemed I was making the teachers seem like villains. My aim was not to do so but I do realise I did not word my original comment very well. I understand that is the systems that do not allow teachers to work in such a way and my point should’ve been worded maybe more like “if every teacher was able to teach and explain the basics of topics like Johnny, rather than the system making them teach towards exams only, then I’m pretty sure kids would actually enjoy learning.”
Wow dude congrats. If you dont mind me asking how much did you invest/buy the stocks initially? Sorry not a finance person not familiar with the terms 😅
Hedgefunds manipulating the market: "It's fine, this is the way it's meant to be" Hedgefunds getting beat at their own game: "NO, THIS IS WRONG, YOU CAN'T DO THIS!? HELLO!? FREEZE THE MARKET!?"
what they did was basic market manipulation. Using the internet to inflate the price of the stock and then claming they were fighting against wall street!!!
The pokemon analogy is uncanny: in 2008, a friend of mine at university was explaining to me the economic crash that followed the hedge funds crisis, using pokemon cards, and specifically Charizard ! This analogy is relevant !
Well it’s probably because Charizard is the best example of a worthless item skyrocketing in price that is actually fairly known to the common people and not just collectors
Just one detail about “why” it rallied that much. Hedge funds who were short selling and panicked started buying back the shares they borrowed. This is what drove the craziest rally. Reddit ppl have bumped the stock price a bit, but the drastic rise was due to the panicked of hedge funds having to buy at any price.
You forgot to mention that Melvin Capital not only borrowed tons of Charizard cards, they sold tons of cards they didn't even have. And somehow that was legal.
They borrowed shares from lenders who owned the shares legally and were willing to lend out their shares (for a fee), and then sold them to willing buyers, paying the fair market price for the shares. So why would that be illegal?
If you first borrow from the owner of the share, and sell it to a new owner, you can then borrow it from the new owner, and sell it to a new-new owner. This way you can short the same share twice, and have a double short position.
South Park covered that exact topic, the financial market craziness, the fact that money is based on "faith" (trust), etc, twelve years ago. The name of the episode was Margaritaville. "They didn't listen" - Randy Marsh
Does that mean, that they borrowed card from the brother that haven't been bought yet? or they borrowed it from brother and sold to say his sister and then again borrowed it from their sister. I understood everything about what's going on, but i dont know how can someone short more stocks than there are in existence
@@dev-ok1li It just means that the hedge funds shorted more Charizard cards than were ever printed. They borrowed all the cards, sold some and then went to the people they sold to and borrowed them again, as if they were new cards, without paying back the original owners. This crazy logic is why everyone is laughing at the hedge funds that got burned.
@@dev-ok1li Imagine a fictitious theoretical company with only a single share in its stock pool. Alice holds that share. Bob borrows that share from Alice. Bob short sells that share to Charlie. Charlie borrows that share to Dylan. Dylan short sells that share to Emma. Now 200% of the stock pool has been shorted.
Long position - Buying a stock at a price and selling it at a different price Short position - Borrowing a stock at a price and returning it at a different price
@@xxxxxx8818 I have a question and it might be a dumb one but I don't know the first thing about stocks. So if there is a risk of these hedge funds only borrowing your stocks because they think in the future it won't do well then why do those companies allow these hedge funds to borrow their stocks in the first place. Or is it because if a company is publicly traded then they don't have a say in who can or cannot borrow publicly traded shares?
i see regulation in the future, that prevents market manipulation, maybe a symbolic ban on specifically short selling more than the company has publically traded. but a hard ban on any encouragement of purchases on public platforms
Derivative markets, like short selling would fall under, have vital places in helping manage the market. Not only do they take on risk, they add liquidity capital for all traded companies, and can help prevent bubbles by staking against inflated positions. It's the market manipulation (coalitions of many billions of dollars driving specific, predetermined market outcomes) that is screwing the financial markets.
I have been literally trying to understand the concept of short-selling for years. You finally made me understand it within a couple of minutes of using a Pokemon example. Thank you!
Hope your cousin has/is selling. Because right now, all your cousin has are "paper gains". I'm not saying "liquidate it all" but he probably should sell some on the spikes... and then if he wants to buy back on the dips (but keep some of the original payout). Hard to know when the ride will be over. Best of luck to your cousin!
One very important aspect you've missed is that the stocks are not borrowed for free. The broker charges an interest and they require a certain amount of collateral in the short seller's account. The interest is based on the price of the stock. That's why a short seller can't just say, "let me borrow the stock for one more year," and wait for the price to drop again. The higher a stock's price goes, the more interest they have to pay, the more money they need to put into their account.
I don't know much about shorting, but I thought the Hedgies had to buy the stock when the trading period ended - which is every 28 days. So I don't understand why they could borrow the stock for a year.
Ahh that explains the incentive for stockholders to allow their stock to be borrowed in the first place and how there’s more money to made if that future stock rises rather than falls. Thanks for the breakdown 👍🏼
This is exactly what I was wondering! I was thinking why should hedge funds be panicking, can't they just hold their stocks until the value drops at some point...
On its own it doesn't mean anything. You can get to over 100% short ratio just by many people doing many small shorts on top of each other. Each of them has a different entry price too, when the stock is so volatile, so now just by looking at that indicator you can't tell how far you are from any potential squeeze.
liam robertson Johnny is on the side of the redditers? ... you mean the 8M users he called “Stock bros, trolls, misogynistic as hell, irreverent, foul mouthed” - he’s on their side?
@@bthemedia yeah, he is - I think you maybe missed his intention with that point. He made it pretty clear that he supports the cause of "getting back at the hedge funds" etc. which is what the redditors are trying to do. I think he was just trying to draw a contrast between the wealthy established wall street investors and the random laypeople on r/wallstreetbets. The users on r/wallstreetbets sort of position themselves as self-aware "stock bros" and so Johnny was just pointing out the character that the redditors are playing; he wasn't actually trying to disparage them.
Hi just wanted to say I love all your videos and I really appreciate how you were able to cover this topic but explain in a way that makes it a lot easier for people to grasp. I really admire you and your work, and I'm excited to see what you have in the works for the next year ❤
Great explanation man. Not only is it great info but as a video professional I love just watching your work. Keep up the good work, praying for you man!
There were certainly a bunch of people who invested in Gamestop as a meme, but there were also just as many people who invested because they had an emotional connection to GameStop and didn't want to see it shorted. For many people, GameStop provided them with many of the games that shaped their childhood and they have fond memories of visiting their stores. To see out of touch suits hoping the company that helped build your childhood dies so they can get rich...that's gonna piss a lot of people off. And it did. That's what was beautiful about the GameStop stock surge. It was one of the first times the stock market was affected by emotion rather than math.
💯 true! It’s all emotion and feelings in the stock market. And opportunity... Louis Rossmann explained it multiple times over the last week th-cam.com/video/XX6-jPy98YA/w-d-xo.html
Thank you. Just remember that it is not effortless. It has been many many years of practice and lots of making terrible work so that I could eventually make good work. Keep going.
Louis Rossmann explained it FACTUALLY BETTER multiple times over the last week th-cam.com/video/XX6-jPy98YA/w-d-xo.html Just not as cinematic as Johnny 😉
Wow this was so helpful. I have been trying to rap my head around this idea. Visuals really help me connect the dots as well as your clear explanation. Thanks Johnny!
Been visiting there from time to time. There's certainly a lot of millenials and zoomers trolling around but I wouldn't say that they're all misogynistic. Misogyny is a strong term. I'd rather label them as chaotic nerds if anything.
The word “reddit bros” also kind of links them with some kind of alt right trump supporting group, which is simply not true. It is one of the least politiced subreddits, and no one wants it to be politiced. Calling them reddit bros makes it really lose its meaning, and gives reason for the media and hedgefunds to portray wallstreetbets as the one who is in the wrong here, not the hedgefunds who shorted a stock 140%
@@philipkorteknie4816 In my case, as a non-American, "Reddit Bros" doesn't sound so bad. For me, I interpret it as a group of people who shows comradery while standing up againsts the big guys. But yeah, I see what you're saying. Especially with all the drama that's been going on in the US.
@@philipkorteknie4816 "Bro" doesn't have any ALT Right connotation whatsoever. It's more about immature, male energy like you would have in a college fraternity.
My 10-year-old brother just watched this with me and understood it (the pokemon got him very interested) - which really shows how well you explain things! Thanks, Johnny, and hi from Denmark!
Best explanation about this topic so far. Loved it! It would be great to see more of these videos about finances and other varied topics. Keep up the great work Johnny!
The true nature of our entire monetary economic system, (as expressed in Dollars, Pounds, Marks, etc) is really a shared illusion which is only as stable as our expectations that future currency will be of roughly equal value to the last 'dollar' we earned. Yet few realize, by virtue of inflation alone, that the future value of those 'dollars' always declines.
Slow inflation isan overall boon to the economy. It encourages people to spend instead of stockpile their money, which in turns fans continuing economic growth.
Anyone know the difference between this and fractional reserve banking (there is more borrowed money from banks than the banks actually have in reserve)? I mean, I know with normal money that’s okay cause the government ends up printing money during currency reserve crisis’s, but I don’t see whether companies would do the same for short sellers.
Hey Johnny, please let the world know what is going on in Myanmar. A lot of people are picking sides, due to their recent national crisises, without knowing the full story.
A few key points that were not addressed: 1) The idea of short squeeze, the fact that as shorts have to buy back the charizard card to return it, they drive the price even higher. (and may be forced to buy back because of margin calls) 2) The fact that they borrowed more charizard cards than actually exist. 3) Robinhood's clearance deposit requirements suddenly increasing that lead to the trading limits.
He doesn’t even have to mention stocks. Just telling people to use a business causes others to invest in it, thinking it will explode in value, causing people to purchase stocks If it’s public
Yeah, and that's a great way to end up with the SEC hitting you with billions of dollars in fines and decades worth of jail sentences. Securities fraud is no laughing matter.
Your description of short selling is excellent. On the issue of why Robinhood limited trading, as you likely know by know, it had to do with settlement and all the collateral that the clearinghouse was demanding.
Forgot the part that due to accounting magic, Gamestock was shorted by 140%.... ie hedge fund short sellers had borrowed and sold more shares of gamestock than the company actually had. In a word, there wasn't enough gamestock shares in existence to cover the hole that the short sellers dug themselves in.
I agree with all of this except for the Robinhood part. The reason why they stopped trading was not because Citadel had a huge stake in it. But rather because they didn't have the funds to sustain such large trades. They needed to raise money prior to resuming trading for these meme stocks.
First time I heard someone explain the financial market & feel like I understand it a lot better... for the most part. Honestly, really impressed with how you broke it down into layman's terms!
Wallstbets community chose GME specifically because the stock was short 140% ( meaning shorting the same stock again and again) , when this happens even a small demand can shoot up the price
Borrowing Charizard and expecting it to fail in the future is a weird concept in stock market so much so that we don't do that kind of practice in my country.
buying a failing company means a infinite amount of risk I still don't understand why they do like this in america?suppose you brought a share of $4 and then in 1 year it became 1 cent and probabiliy it might get removed from the stock market.
I think that Johnny missed/undersold/did not explain fully the nuances of how shorting companies cause companies to go bankrupt, how the people of Reddit are individuals that did not have any formal organization or commitment to this push with GameStop, how there hedgefunds have a unfair advantage at manipulating the market, and the hypocrisy of the hedgefunds and robinhood
![[TH] 2024 PMSL SEA W2D5 | Fall | พลาดวันนี้ จะต้องเสียใจ](http://i.ytimg.com/vi/A5-Cuo12p6A/mqdefault.jpg)
Hey friends. thanks for watching. please note that this is a VERY simplified version of how short selling works. It's purely the concept. in real life there are all sorts of other nuanced dynamics that I didn't even scratch the surface on. but the concept remains the same and I hope this can help in some way if you are interested in understanding what's happening with the Game Stop situation. thank you all for being here. Lots more videos in the works. K bye!
from what I read, the problem with Robin Hood was a liquidity problem, that's why you could sell but not buy the meme stocks
Please make a video about homophobia in India
How Redditors "got wind" of the glitch is not as interesting as who found it. You had it right in the beginning ..."The big short". Just like the subprimes, Michael Bury is at the inception of it. It is not retail vs hedge fund it is hedge fund vs hedge fund vs the US government. Maybe now they will regulate.
Johnny at what price did you buy your Gamestop stocks?
Thank you I finally understand
Johnny is one of the most professional unprofessional journalists ever 🤣
No one has every described Johnny better than you. This explains everything.
Not quite a professional stock buyer 😅
if you buy now
He is a TH-camr as can be seen with his thumbnails talent.
@@MrAlexander6666 he buys for the "I gotta be there"/"this is history"/memes. 12k views later I'm sure he's making his money back.
@@Contractor48 But he doesn't clickbait.
They said 2021 will be awesome. Maybe that's why Johnny has 4 videos in like 10 days
biden got 6x more money from wall street than trump
i bet biden's supporters are angry at reddit
@@LowerYourExpectationsPleb Your name is funny and ridiculous at the same time. I like it.
@@mousammallik7526 first time i ever hear a democrat saying they like facts
2021 looking real good.
Literally
The fact that a GameStop share went from $4 to $469.420 is definitely a pro gamer move.
I was hoping someone else would notice that
They be pulling a Joker here:
"It's not about the money, it's about sending a message."
theyre rebelling against *SOCIETY*
@@LakeGameCreepr they are rebelling against people who manipulate stocks by counter manipulation, that’s actually rebelling for society
YES. And we can stay solvent (with our couple of shares) than they can lol
except it is about the money lmao
its more like the biggest hold my beer moment
Also, hedge funds shorted more Charizard cards than were ever printed.
They borrowed all the cards, sold some and then went to the people they sold to and borrowed them again, as if they were new cards, without paying back the original owners. This crazy logic is why everyone is laughing at the hedge funds that got burned.
And also, they couldn't just sit and wait forever to the prices go down. When you borrow a card, you promisse back *with interest* . At some point you have to buy it back (however the price) or be crushed by interests.
yea this is one of the important parts, its not just that they are shorting. They are shorting over 100% of the available shares (also called the float). Another important thing to take into account is that a short position can to forced to close, so if your little brother sees that the price of Charizard cards is going up and fears you cant pay back, he can force you to buy one now instead of later. That is the short squeeze, forcing the hedgefund to buy back the stock at a much higher price than what they borrowed it for.
@@rtk1st which continues to add to the price of the stock!
Glad I didn't have to scroll too long to find this comment. Everyone should also read this.
Everyone on reddit is laughing because these hedge funds that do this shit have the capital to cripple companies and they've been doing it to the detriment of struggling companies for decades.
This was good but Johnny’s breakfast crisis was the best drama I’ve ever watched.
Lol .. even I commented about it .
In a way, the breakfast crisis is what started it all.
Lol
Huh, what's this? What's the joke? :(
Where is the video? I didn’t see it.
0:43 “I don’t fully understand this, but I feel like I need to be a part of it”
I think that’s the real reason gamestop’s stock price has gone up
HAHAHAHA
kinda curious whats stopping people from just doing this with random low value stocks now. does it count as insider trading if one person just has a shit ton of people invest in the same place?
@@just1it1moko Nope. Hedge funds do this all the time. There's basically nothing preventing the people to do it again of they wanted.
@@just1it1moko Gamestop was mostly because the short positions were like 140% of the company stock,short positions are usually 10%.
Nobody can become financially successful overnight. They put in background work but we tend to see the finished part. Fear is a dangerous component, hindering us from taking the bold steps we need in other to reach our goals.
I think it's not always about fear, Sometimes realistic factors discourage people from reaching their goals in life. For instance, I've tried investing in the stock market several times but always got discouraged by fluctuations of stock value
@@jesbensommichael8397 This is the problem! Most times people with little or no knowledge of the stock market try investing by themselves. It once happened to me, then I learned my lesson and contacted a US-based finance consultant by name MARTHA ALONSO HARA and everything changed. I started enjoying huge returns from my investment.
@@georgerobinson2021 Oh, that sounds good but how do I reach out to MARTHA ALONSO HARA
@@jesbensommichael8397 Look up her name on the webpage
@@georgerobinson2021 Okay, thank you. I just found her website very impressive and dropped a message for her.,. I hope she replies to me
Johnny's journalism feels real. Like he's actually talking to me. Agressively.
Real but faulty and missed the point 💯 like most MSM. Louis Rossmann explained it multiple times over the last week th-cam.com/video/XX6-jPy98YA/w-d-xo.html
If Johnny read wallstreetbets FACTS instead of simply slandering and assassinating the character of 8 MILLION members of a Reddit board... vs character of Wallstreet Hedgefunds! (They are worse) 🙄🤯
I WILL TELL YOU THIS AMAZING STORY SIT THE FUCK DOWN SON
Nah, he's talking to me. You're just eavesdropping.
@@bthemedia did you actually watch the video? Slandering and assasinating, what?
"eventually people are gonna figure out how powerful they are and it will be interesting to see what we do with that" - Hank Green
LOL how powerful are they??
I wonder how much money they lost with 'holding the line' and 'diamond hands' huh :-)
Hank hill actually said that. Get your facts straight you simp.
Nah, I don’t think so, but I really hope so or I hope I could be on the other side the wsb and hedge-funds side, because it’s so crazy to think about really how profitable they are and could be today still and living probably with national million/billion dollars of debt each year and no one really cares because they take debt on debt and so on until they die and lived happy life probably.
Really hoping that future financial business men all over the world can compete with these all different types of hedge-funds and make them tremendous amounts of losses with many peoples agreement that wsb or any hedge-fund overall has money in it
@@lelouch3 *gained
@@wildfire9280 *Lost
If every teacher explained the basics of topics like Johnny then I’m pretty sure kids would actually enjoy learning. Keep up the awesome content dude!
Teachers simply don’t have the liberty to teach, they are controlled by the government just like everyone else. I believe that it’s ignorant to view teachers as the villain, the problem is with the systen itself.
@@user-fh4zi7po7i I apologise if it seemed I was making the teachers seem like villains. My aim was not to do so but I do realise I did not word my original comment very well. I understand that is the systems that do not allow teachers to work in such a way and my point should’ve been worded maybe more like “if every teacher was able to teach and explain the basics of topics like Johnny, rather than the system making them teach towards exams only, then I’m pretty sure kids would actually enjoy learning.”
@@user-fh4zi7po7i what the hell did this have to do with governments? Dude just wanted to support johny
I totally agree
I payed off my parents house because of this meme. Never thought scrolling Reddit at work would have actually been productive.
Wow that’s so awesome I’m happy for you and your parents enjoy.
Now way, that’s awesome.
Congratz, good thing you took initiative.
Wow dude congrats. If you dont mind me asking how much did you invest/buy the stocks initially? Sorry not a finance person not familiar with the terms 😅
That’s amazing
Johnny getting his 💎🙌
Johnny bought at least 500 shares
He said next ‘few days’ that aint diamon hand enough
Who's Johnny?
Lmao wonder how he feels about it now
🦍🦍💪💪🙌🙌💎💎
Hedgefunds manipulating the market: "It's fine, this is the way it's meant to be"
Hedgefunds getting beat at their own game: "NO, THIS IS WRONG, YOU CAN'T DO THIS!? HELLO!? FREEZE THE MARKET!?"
what they did was basic market manipulation. Using the internet to inflate the price of the stock and then claming they were fighting against wall street!!!
@@mikatu Not like Hedgefunds don't do that on a daily basis :^)
"Internet Trading Mob"
God damn the news is fucking hilarious
The only journalist out there with diamond hands.
"I don't know a lot about Pokémon." Suurrree 😉
MR BEEASSST
@@giddeywrld He is not Mr. Beast. He is Mr. Beat.
Hey Mr. Beat! I Love Your TH-cam Channel!
@@xantos5043 OKAY MR. SMARTYPANTS.
MR BEAT***
I mean he call Charizard a dragon...
Id love to see an updated version of this once the whole gamestonk saga is over
hype
Thank you. This is far from over.
You need to update this for current GME situation. It gets much deeper
how so? i'm from europe so stonks are kinda weird here.
Deep Fucking Value..."I like the stock"
The pokemon analogy is uncanny: in 2008, a friend of mine at university was explaining to me the economic crash that followed the hedge funds crisis, using pokemon cards, and specifically Charizard ! This analogy is relevant !
Well it’s probably because Charizard is the best example of a worthless item skyrocketing in price that is actually fairly known to the common people and not just collectors
Im holding on my Rainbow Charizard, wish me luck on another 10 years
@@CriticalCorrie there gona re print a mask amount of em sell it now or lose it all
@@CriticalCorrie If Nogla keeps opening packs and drawing Charizards, he's going to tank the Charizard market
Literally him : I dont need sleep, I need answers "
: )
but for real
@Pavani Menta nobody should watch that. Mind boggingly law "comedy"
I NEED A PART 2, I BELIEVE IT IS VALUABLE! xD
robinhood no longer allowing people to buy gamestop stock is just amazing. so you only like unadulterated capitalism when you win huh?
Just one detail about “why” it rallied that much.
Hedge funds who were short selling and panicked started buying back the shares they borrowed. This is what drove the craziest rally. Reddit ppl have bumped the stock price a bit, but the drastic rise was due to the panicked of hedge funds having to buy at any price.
Yes exactly they panic and basically dig themself even more.
You forgot to mention that Melvin Capital not only borrowed tons of Charizard cards, they sold tons of cards they didn't even have. And somehow that was legal.
They borrowed shares from lenders who owned the shares legally and were willing to lend out their shares (for a fee), and then sold them to willing buyers, paying the fair market price for the shares. So why would that be illegal?
It is legal, as legal as if you borrow money from a bank and buy a house
If you first borrow from the owner of the share, and sell it to a new owner, you can then borrow it from the new owner, and sell it to a new-new owner. This way you can short the same share twice, and have a double short position.
A week or two after this video released, McDonald’s now includes Pokémon Cards and now everyone is buying a ton of happy meals lol.
South Park covered that exact topic, the financial market craziness, the fact that money is based on "faith" (trust), etc, twelve years ago. The name of the episode was Margaritaville.
"They didn't listen" - Randy Marsh
You forgot to mention they shorted the stock 120-140% thanks for the video 💕
Does that mean, that they borrowed card from the brother that haven't been bought yet? or they borrowed it from brother and sold to say his sister and then again borrowed it from their sister.
I understood everything about what's going on, but i dont know how can someone short more stocks than there are in existence
@@dev-ok1li It just means that the hedge funds shorted more Charizard cards than were ever printed.
They borrowed all the cards, sold some and then went to the people they sold to and borrowed them again, as if they were new cards, without paying back the original owners. This crazy logic is why everyone is laughing at the hedge funds that got burned.
@@Sounditoutahhwet thanks
@@dev-ok1li
Imagine a fictitious theoretical company with only a single share in its stock pool.
Alice holds that share.
Bob borrows that share from Alice.
Bob short sells that share to Charlie.
Charlie borrows that share to Dylan.
Dylan short sells that share to Emma.
Now 200% of the stock pool has been shorted.
@@roadent217 meaning a lot more people are doomed ?
I've been trying to explain shorting to Kara for the last 72 hours.....thank you🙏
Ayeee didn’t know you were into finance
Long position - Buying a stock at a price and selling it at a different price
Short position - Borrowing a stock at a price and returning it at a different price
Ooo one of my favourite TH-camrs commenting on another one of my favourite TH-camr’s video!
💎 🙌🏼
🚀 🌙
I’ve been trying to understand it for days now. Read about a dozen articles and still didnt fully understand it until now. Thank you!
@@xxxxxx8818 I have a question and it might be a dumb one but I don't know the first thing about stocks. So if there is a risk of these hedge funds only borrowing your stocks because they think in the future it won't do well then why do those companies allow these hedge funds to borrow their stocks in the first place. Or is it because if a company is publicly traded then they don't have a say in who can or cannot borrow publicly traded shares?
I was literally waiting for someone to explain this to me and I think I really got it thank you! You made this whole topic actually really thrilling!
I'm so freaking glad that a journalist like you exists, man. Thanks for this vid.
2007, financial market screws people: Well, it is what it is… 🤷♂️
2021, people screw financial market: But that's illegal! 😱
i see regulation in the future, that prevents market manipulation, maybe a symbolic ban on specifically short selling more than the company has publically traded. but a hard ban on any encouragement of purchases on public platforms
THE SYSTEM KEEPS REVEALING IT'S SECRETS
Derivative markets, like short selling would fall under, have vital places in helping manage the market. Not only do they take on risk, they add liquidity capital for all traded companies, and can help prevent bubbles by staking against inflated positions. It's the market manipulation (coalitions of many billions of dollars driving specific, predetermined market outcomes) that is screwing the financial markets.
Nobody is saying it's illegal. I understand the line is borrowed, but it's really not. You're just being ignorant. Intentionally... that's scary
I could sit and watch johnny for 5 hours in a row and understand everything he says but cant focus for 10 mins in class
He’s an excellent journalist
He makes all those mumbo jumbo bullshit understandable.
THATS IT!
It's because he's almost super gorgeous
SAME!
I have been literally trying to understand the concept of short-selling for years. You finally made me understand it within a couple of minutes of using a Pokemon example. Thank you!
I like how Johnny summarized this whole thing philosophically.
My cousin invested 22k on GameStop ,some months ago.He made it big some days ago 👍
Hope your cousin has/is selling. Because right now, all your cousin has are "paper gains". I'm not saying "liquidate it all" but he probably should sell some on the spikes... and then if he wants to buy back on the dips (but keep some of the original payout). Hard to know when the ride will be over. Best of luck to your cousin!
💎💎💎🙌🙌🙌
Wait is he u/DeepFuckingValue?
@@AlexOnFinance He sold on high at the right time .Honestly, that was pure speculation and it paid off.
@@Ducanralf You sell at the wrong time, cos the best time hasn't arrive yet
One very important aspect you've missed is that the stocks are not borrowed for free. The broker charges an interest and they require a certain amount of collateral in the short seller's account. The interest is based on the price of the stock. That's why a short seller can't just say, "let me borrow the stock for one more year," and wait for the price to drop again. The higher a stock's price goes, the more interest they have to pay, the more money they need to put into their account.
I don't know much about shorting, but I thought the Hedgies had to buy the stock when the trading period ended - which is every 28 days. So I don't understand why they could borrow the stock for a year.
Ahh that explains the incentive for stockholders to allow their stock to be borrowed in the first place and how there’s more money to made if that future stock rises rather than falls. Thanks for the breakdown 👍🏼
This really helped me understand, thanks!
This is exactly what I was wondering! I was thinking why should hedge funds be panicking, can't they just hold their stocks until the value drops at some point...
@@luboyanev I have the same question and no answer, explain please.
Hey Johnny are you able to do a runner up video to this one?
Great video, many thanks! I like your format
“Power resides where men believe it resides. It’s a trick. A shadow on the wall. And a very small man can cast a very large shadow.” - Lord Varys
Lmao good job, you read Game of thrones. Congrats
@@lelouch3 Lol. I haven't read it but I have watched it though.
Me: Doesn't understand this gamestop saga
Johnny: Hold my beer
Johnny missed the point though 🤦
Louis Rossmann explained it multiple times over the last week th-cam.com/video/XX6-jPy98YA/w-d-xo.html
Johnny explained short selling via Pokémon - not the fundamentals for this “short squeeze” because 120-140% of GameStop stock was shortened.
Fundamentally: you cannot short sell 140% of all Pokémon cards that exist in the world! You’ll get called out on it when people buy the stock.
There was a point i thought i will never understand it until i saw this video.
Hold my orange coat*
The Pokemon cards analogy makes me think you could make an entire video about the economy of trading card games and make it really entertaining.
Sad (and good for you) that this explanation of shorting a stock is better than the ones of channels focused on finances!
The hedge funds also shorted way more shares than are available for trading
On its own it doesn't mean anything. You can get to over 100% short ratio just by many people doing many small shorts on top of each other. Each of them has a different entry price too, when the stock is so volatile, so now just by looking at that indicator you can't tell how far you are from any potential squeeze.
Exactly 💯 the critical point Johnny missed. Apparently he didn’t read wallstreetbets beyond slandering the character of 8M Reddit users.m
@@bthemedia he missed a lot but he's quite obviously on the side of the redditors here lol
liam robertson Johnny is on the side of the redditers? ... you mean the 8M users he called “Stock bros, trolls, misogynistic as hell, irreverent, foul mouthed” - he’s on their side?
@@bthemedia yeah, he is - I think you maybe missed his intention with that point. He made it pretty clear that he supports the cause of "getting back at the hedge funds" etc. which is what the redditors are trying to do. I think he was just trying to draw a contrast between the wealthy established wall street investors and the random laypeople on r/wallstreetbets. The users on r/wallstreetbets sort of position themselves as self-aware "stock bros" and so Johnny was just pointing out the character that the redditors are playing; he wasn't actually trying to disparage them.
This guy bought gamestop shares for us. That’s dedication
Hi just wanted to say I love all your videos and I really appreciate how you were able to cover this topic but explain in a way that makes it a lot easier for people to grasp. I really admire you and your work, and I'm excited to see what you have in the works for the next year ❤
Great explanation man. Not only is it great info but as a video professional I love just watching your work. Keep up the good work, praying for you man!
This has been the funniest drama in a long time!
i mean wont the people who work at the hedgefund lose thier jobs?
@@cybercery5271 yes, probably. Idk im not a trader
@@cybercery5271
They'll likely be able to get another job. I doubt they'll miss any boat payments.
Not funny for billionaires 😅
@@Slashplite Lots of ordinary people have investments in hedge funds - it's not just (or even primarily) billionaires.
So, the rich people were clearly displaying class solidarity in this episode. As they do.
There were certainly a bunch of people who invested in Gamestop as a meme, but there were also just as many people who invested because they had an emotional connection to GameStop and didn't want to see it shorted. For many people, GameStop provided them with many of the games that shaped their childhood and they have fond memories of visiting their stores. To see out of touch suits hoping the company that helped build your childhood dies so they can get rich...that's gonna piss a lot of people off. And it did. That's what was beautiful about the GameStop stock surge. It was one of the first times the stock market was affected by emotion rather than math.
THANK YOU for finally explaining what shorting is!!!!!!!!!! I could not understand the 15+ explanations but yours was clear
Finally someone who can explain this madness in terms I understand! Cheers Johnny, great presentation as usual!
Louis Rossmann explained it FACTUALLY BETTER multiple times over the last week th-cam.com/video/XX6-jPy98YA/w-d-xo.html
Johnny missed the key point
... you cannot short 140% of the stocks (or Pokémon cards) that actually exist.
The "Value" of the company doesn't move the price, but people does. "Perceived Value" would be the term! Thanks Johnny!
💯 true! It’s all emotion and feelings in the stock market. And opportunity... Louis Rossmann explained it multiple times over the last week th-cam.com/video/XX6-jPy98YA/w-d-xo.html
This was SUPER helpful with the Pokémon explanation. Thanks so much!
God I fucking love your filmmaking. I spend so much time trying to do what you make look effortless
Thank you. Just remember that it is not effortless. It has been many many years of practice and lots of making terrible work so that I could eventually make good work. Keep going.
The Big Short has Margot Robbie to explain
TH-cam has Johnny Harris to explain
Louis Rossmann explained it FACTUALLY BETTER multiple times over the last week th-cam.com/video/XX6-jPy98YA/w-d-xo.html
Just not as cinematic as Johnny 😉
@@bthemedia I saw that one. He's pretty good.
What was the movie in the clip he had?
@@bthemedia Johnny's less abrasive. I like Rossmann, but damn can he be annoying to listen to.
Johnny explaining Gamestop drama is the best start to this week
Facts got coffee and breakfast ready for another video.
Very good way to explain short selling. Teaching something is harder than learning something.
Wow this was so helpful. I have been trying to rap my head around this idea. Visuals really help me connect the dots as well as your clear explanation. Thanks Johnny!
Kind of a sweeping generalisation to say all people on r/wallstreetbets are misogynistic. Thanks for that
Been visiting there from time to time. There's certainly a lot of millenials and zoomers trolling around but I wouldn't say that they're all misogynistic. Misogyny is a strong term. I'd rather label them as chaotic nerds if anything.
The word “reddit bros” also kind of links them with some kind of alt right trump supporting group, which is simply not true. It is one of the least politiced subreddits, and no one wants it to be politiced. Calling them reddit bros makes it really lose its meaning, and gives reason for the media and hedgefunds to portray wallstreetbets as the one who is in the wrong here, not the hedgefunds who shorted a stock 140%
@@philipkorteknie4816 In my case, as a non-American, "Reddit Bros" doesn't sound so bad. For me, I interpret it as a group of people who shows comradery while standing up againsts the big guys.
But yeah, I see what you're saying. Especially with all the drama that's been going on in the US.
@@astral6749 i’m not an american as well, but from my understanding the term ... bros has taken some kind of alt right meaning. I could be wrong tho
@@philipkorteknie4816 "Bro" doesn't have any ALT Right connotation whatsoever. It's more about immature, male energy like you would have in a college fraternity.
This is driving me nuts. 3 vids in 1 week? Man, I’m thrilled for 2021
My 10-year-old brother just watched this with me and understood it (the pokemon got him very interested) - which really shows how well you explain things! Thanks, Johnny, and hi from Denmark!
This really explained everything for me. Thanks so much.
the public, when rallied together, is always more powerful.
It will not end well for the little guy.
@@JettSkoll but we ARE the little guys
this had more impact to the rich people in wall street than what occupy wall street did
"Value is what a bunch of people think value is" - Johnny Harris
You just made it so much easier to explain shorting 🙌🏼🔥
MINE TOO!!!! The Big Short is just toooo good - wish there where more films like that out there
Best explanation about this topic so far. Loved it! It would be great to see more of these videos about finances and other varied topics. Keep up the great work Johnny!
The true nature of our entire monetary economic system, (as expressed in Dollars, Pounds, Marks, etc) is really a shared illusion which is only as stable as our expectations that future currency will be of roughly equal value to the last 'dollar' we earned. Yet few realize, by virtue of inflation alone, that the future value of those 'dollars' always declines.
Slow inflation isan overall boon to the economy. It encourages people to spend instead of stockpile their money, which in turns fans continuing economic growth.
Was there ever a follow-up to this? I'd love to see Johnny's subsequent analysis.
The way you explain things is always informative and soothing. Thanks for the vid!
Finally someone that's using reddit screenshots in dark mode! Thank you
Yesssssstonks!!
You’re forgetting the part where they were allowed to borrow and short more Charizard cards than actually exist 🙃
how is this legal
@@izzurzuhri THAT is the main question that needs to be answered. Because to this day that is still legal.
@@izzurzuhri There are laws against it, but enforcement...?
Most underrated comment here.
Anyone know the difference between this and fractional reserve banking (there is more borrowed money from banks than the banks actually have in reserve)? I mean, I know with normal money that’s okay cause the government ends up printing money during currency reserve crisis’s, but I don’t see whether companies would do the same for short sellers.
Thanks for explaining it. Your presentations are always very clear.
Thank you for such a simple yet effective explanation!!! This is awesome.
I wish my high school teachers would have taught me about stuff like u just did !!!!
Hey Johnny, please let the world know what is going on in Myanmar. A lot of people are picking sides, due to their recent national crisises, without knowing the full story.
do you live in myanmar?
Yea
A few key points that were not addressed:
1) The idea of short squeeze, the fact that as shorts have to buy back the charizard card to return it, they drive the price even higher. (and may be forced to buy back because of margin calls)
2) The fact that they borrowed more charizard cards than actually exist.
3) Robinhood's clearance deposit requirements suddenly increasing that lead to the trading limits.
Thank you, Johnny.
Truly the enlightening!!
"I don't know a lot about this... so first thing i'm gonna do is buy gamestop shares" 😂😂😂
Elon has gained monopoly in stocks. His one tweet is enough to raise the stocks from $5 to $1500
He doesn’t even have to mention stocks. Just telling people to use a business causes others to invest in it, thinking it will explode in value, causing people to purchase stocks If it’s public
Michael Burry is shorting Tesla.
Yeah, and that's a great way to end up with the SEC hitting you with billions of dollars in fines and decades worth of jail sentences. Securities fraud is no laughing matter.
i love how you can talk about any topic and keep my attention
Your description of short selling is excellent. On the issue of why Robinhood limited trading, as you likely know by know, it had to do with settlement and all the collateral that the clearinghouse was demanding.
This guy is has been killing it for some time and I think his doing a great job at journalism infused with a sick editing experience and sound design.
I love how this is explained in understandable terms Cuz it's hard to understand the stock market
It is a very esoteric field
Forgot the part that due to accounting magic, Gamestock was shorted by 140%.... ie hedge fund short sellers had borrowed and sold more shares of gamestock than the company actually had. In a word, there wasn't enough gamestock shares in existence to cover the hole that the short sellers dug themselves in.
I was watching this unfold and was like, “Johnny needs to make a video on this so I can understand this chaos.”
Sooo thanks 🙃
I agree with all of this except for the Robinhood part.
The reason why they stopped trading was not because Citadel had a huge stake in it. But rather because they didn't have the funds to sustain such large trades. They needed to raise money prior to resuming trading for these meme stocks.
^^^^ this, it's so aggrevating that so many people are getting this wrong
You've really inspired me in so many ways that would take so long to explain. But in short thank you so much, really you've done so much for me.
It’s not over NOT EVEN CLOSE
I bet Johnny has like 10 Charizard cards at home. 😂
lolol
That’s a cool $5M
Mental note: This video has zero maps
That might be the strangest thing of all... ;-)
First time I heard someone explain the financial market & feel like I understand it a lot better... for the most part. Honestly, really impressed with how you broke it down into layman's terms!
Wallstbets community chose GME specifically because the stock was short 140% ( meaning shorting the same stock again and again) , when this happens even a small demand can shoot up the price
it's eye opening to think any group of people could effect the market so easily
This is the most I've ever been interested in stock market.
The most ANYONE has ever been in the longest time
Borrowing Charizard and expecting it to fail in the future is a weird concept in stock market so much so that we don't do that kind of practice in my country.
buying a failing company means a infinite amount of risk I still don't understand why they do like this in america?suppose you brought a share of $4 and then in 1 year it became 1 cent and probabiliy it might get removed from the stock market.
Actually invest your money so you’re not broke in retirement.
@@CVerse um.... I’m guessing you’ve never invested any money like a responsible adult...
“Vlad the stock impaler” - elon musk
this comment is underrated
Thanks, your example of short selling is very easy to understand. 👌🌟👍
I think that Johnny missed/undersold/did not explain fully the nuances of how shorting companies cause companies to go bankrupt, how the people of Reddit are individuals that did not have any formal organization or commitment to this push with GameStop, how there hedgefunds have a unfair advantage at manipulating the market, and the hypocrisy of the hedgefunds and robinhood