Hey everyone, Its Mark Cuban. Jumping on to do an AMA…. so Ask Me Anything
Why is the stock (GME) plummeting so much?
Supply and Demand, but in this case it literally could be because the source of demand has been crippled . When RH shut it down, then cut it back, lets put aside why, they cut of the greatest source of demand. They created a RobinHood Dive. No RH buyers, means sellers lower their price to find buyers. And they keep on lowering it till they find buyers. Keep the most natural buyers out of the market and the price keeps on FALLING.
Then that drop accelerates because the more the stock falls the more owners who bought on margin get margin calls. When that margin call happens, its brutal. They just take your stock, send you a fuck you note and sell your stock at the market price, no matter how low. They just want to get your cash to pay back the loan.
That then accelerates the selling.
Which then leads to what we are seeing in the market right now with GME in particular
So what to do ?
If you can afford to hold the stock, you hold. I dont own it, but thats what i would do.
Why ? because when RH and the other online brokers open it back up to buyers, then we will see what WSB is really made of. That is when you get to make it all work.
I have no doubt that there are funds and big players that have shorted this stock again thinking they are smarter than everyone on WSB.
I know you are going to hate to hear this, but the lower it goes, the more powerful WSB can be stepping up to buy the stock again. The only question is what broker do you use . Do you stay with RH , who is going to have the same liquidity problems over and over again, or do you as a group find a broker with a far, far, far better balance sheet that wont cut you off and then go ham on Wall Street.
What are your thoughts on the volume of the last couple of trading days? And Also, what is your view on the practise of Naked shorting/Short Laddering?
I actually love to see the companies I own shorted. If its a company I want to own, I know the shorts can be squeezed and if the company does really, really well, then the shorts will have to cover , creating more demand for the stock of the company I own, pushing the stock price up.
Back in the day I used to run a public company. I used to tell anyone and everyone i knew who didnt believe in us to short the stock
As far as naked shorting, thats not really a thing. Yes there can be more shares shorted than there are original float. That is by design. If i borrow a stock from you to short, and when I short it and your buddy buys it, then they can loan it to someone else to short, etc . All of those people who borrowed the stock paid to do so, and they realize that if enough people buy the stock and ask for the shares, they will get called in. So the chain of custody is there. The systems is doing what its designed to do.
So again, the more people shorting the stock in the company i own the better
Where you have to be careful is when the shorts are in a stock because the company is a fraud. If i short stocks, its only in companies i think are fraudulent and ripping off people . I actually produced a money about one element of this, The China Hustle
How do you think the SEC will respond to the GME situation? New regulations on retail trading?
The SEC is a mess. I wouldnt trust them to do the right thing ever. Its an agency built by and for lawyers to be lawyers and win cases rather than do the right thing
If the SEC gave a shit about ANYONE other than Wall Street you would be able to go there right now and read bright line guidelines about insider trading, shorting, what is a pump and dump, what are the rules for cutting off the purchase of stocks like happened with GME et al
But they wont. They would rather litigate to regulate, which means they love to sue people in order to create new legal precedents.
All you need to know about the SEC and how badly they want to fuck the little guy is that they have the option of using JUDGES THAT WORK FOR THE SEC when they sue you rather than you have the option to have jury of your peers in front of a judge that is independent . Thats how bad the SEC is. If you want fair markets that doesnt benefit Wall Street call your local politician and show them this
Do you have an advice for people who have lost money the last few weeks and how to go on from this?
I learned some expensive lessons when i first started trading stocks. It was painful. But i tried to learn what i got right and wrong. Right now, right here. The game is changing. The hard part is ask yourself if what you believed in has actually changed.
BTC HODLers are a great example to follow. Many bought at the highs in 2017 and watched it fall by 2/3 or more. But they held on because they believed in the asset.
The same applies to stocks. When I buy a stock I make sure i know why Im buying it. Then I HODL until till I learn that something has changed. THe price may go up or down, but if i still believe in the logic that made me buy the asset, I dont sell. If something changed that I didnt expect , then I look at selling.
Would you ever consider opening a brokerage that’s truly for the “little guys” like us? (Go Mavs BTW!)
The challenge is not opening the brokerage, the hard part is dealing with success. What fucked up RobinHood is that they didnt have enough cash to handle the number of customers they had, their margin loans and the requirements from the DTCC. They have now raised more than $5 billion and that may not be enough. And its not like they are charging anything for their trades.
The question becomes whether or not buyers would pay a commission or even a tip to a broker for doing their trades. Crypto has no problem paying a transaction fee, you may have to do business with a broker that charges you so that you dont get fucked in a RH stop the buy type situation again
What do you think could possibly change in the market after all of this is over? Any new regulations on your mind?
What has happened the past few weeks with WSB has all happened before, it was just the big guys doing the battling. The only new thing was WSB traders took them on .
Volkswagen was the short squeeze that was even crazier at the time. Ackmen vs Icahn on Herbalife was similar to this, but it was big money vs big money
Momentum and technical trading have been going on forever, which really is what is happening now broken down into charts and graphs.
What i love about this now, is that if you pick your spots right and work as a group, you can hit again and again
What single piece of advice do you have for us to succeed in shaking this up? Keen the language simple for 🦍 friends
Patience. Disruption is never easy or straight line. Is what you believe in still true. If it is, stay with it. If it’s not, figure out what changed, learn from it and reload for the next asset . As always DO THE WORK. Assets including stocks move for a lot of different reasons. Trading stocks isnt easy. Trading Crypto, NFT, whatever, isnt easy. None of this shit is easy. You know what it is ? Its time consuming and brain consuming. And when you learn share. If you want to beat old school Wall Street you have to share that knowledge and find the power in numbers
With this kind of volatility in the market, had WSB forever changed the way things will be done on Wall Street?
Yes. WSB leveraged the value of community. They took it to the people and made it bottom up. There is so much power and upside in this. Sometimes its expensive to learn. Anyone who has traded for a while has learned an expensive lesson they couldnt afford. I know i have.
next time WSB will be smarter. And next time can still be around GME, AMC, etc.
There will be a point in the stock where wall street starts saying “I told you so”, let that happen for a few weeks.
Then hit them again, at a broker with the financial strength to never have to shut you off
What do you think about the media. Lying about what Reddit wsb is talking and excited about. For me it showed that the world is evil and everyone is bought. I still trusted some media but u really can’t trust any of it. Anyway , my question is do you think the Robinhood class action lawsuit has a chance?
Its not about being evil. Its about being lazy. They write stories. They dont do much research. So you get stupid shit being stated about things they really dont understand
Is it in the realm of possibility that these hedge funds just, don’t cover their shorts at all? They go full felon and act like it never happened, ala “Fake News!”?
Their goal is to never cover their short. But that would take the company going out of business or being delisted. That wont happen here.
Best thing you can do is hold on to the stock and do business with GameStop. If everyone goes to their website and buys from them that is going to help the company which will help the stock which will help everyone here.
If you still believe in the reason you bought the stock, and that hasnt changed, why sell ?
Stepping away from gme for a min, What are your thoughts on the stock market this year? I see the almost-unjustifiable prices of the many “popular” companies, and it makes it hard to keep money in the market or expand my portfolio. Any advice?
1pct interest rates change all valuations. What is right or wrong is hard to determine. What is the right valuation , that is what the market is supposed to tell you. Stocks that dont pay dividends are only worth what someone will pay for them
Mark, what do you make of the blatant market manipulation and short ladder attacks occurring right this very minute by the Hedge Funds?
i dont think its manipulation. I think the rules are set to benefit them and they have years of experience exploiting those rules.
Your congress people can change the rules to make them fairer for small investors. They havent given a shit up till now. Maybe people on this board can change their minds
What industry that is relatively small now has potential to explode in the next 10 years?
De-Fi, NFT, but there will be a lot of ups and downs along the way
AI will change everything, but 99pct of the businesses out there that say they use AI are full of shit.
Precision Medicine, Nano Technology, the MRNA technology used in the vaccines will grow.
Robotics. Green Tech, all will grown
do you think anything will come out of this from wallstreets side? Do you think they’re going to change their fundamental strategies and habits when shorting?
They will be on the message boards monitoring activity, thats for damn sure
Do you think we can file a lawsuit against brokerages like Robinhood ETC ?
Yes. There will be class action suits. And you will win. And after legal feeds you will get your $4.00 settlement check
Hi Mark! I love you on Shark Tank! My question is what advice to you have for people following their dreams and starting from the beginning again? Thanks so much! 🙂
First, find a job to pay your bills. Got to take care of the basics. Then get back after it. Just remember, its not in the dreaming, its in the doing
Does the undercapitalization of brokers and collateral requirements of the DTCC make a case for a chain made of blocks?
Yes. Stocks will be on the block chain in the future, and that will make the markets much more efficient, transparent and available to the small investor
If you could tell your 20 year old self one thing, what would it be?
Drink less, party more. Too many hangovers fucked me up
Which alt coins do you like?
I own AAVE and Sushi, along with Eth, BTC and LTC
Final Thoughts By MC
Final thought. First thanks for the great questions. Thanks for changing the game. Thanks for taking on Wall Street. Thanks for making kids around the country if not the world, including my son, want to learn about stocks and try trading them (Including my son and daughter). WSB changed the game far more than everyone on this board will ever get credit for.
That said, you will do all this again. You will go after WS and the next time you will be smarter. There was only one thing that messed you all up: RobinHood and the other zero commission brokers that everyone used didnt have enough capital to fund the fight. They let you down in a big way.
When you load back up, fight a broker with TRILLIONS OF DOLLARS in assets on their balance sheet. Someone that can be there when the fight starts and wont blink an eye.
No disruption is easy or happens in a straight line. Stay with it. I am a believer
