Disclaimer: I am not a financial advisor. This entire post represents my personal views and opinions, and should not be taken as financial advice (or advice of any kind whatsoever). I encourage you to do your own research, take anything I write with a grain of salt, and hold me accountable for any mistakes you may catch. Also, full disclosure, I hold a net long position in GME, but my cost basis is very low (average ~$67--I have to admit, the drop today was too tasty so my cost basis went up from yesterday)/share with my later buys averaged in), and I'm using money I can absolutely lose. My capital at risk and tolerance for risk generally is likely substantially different than yours. In this post I will go a little further and speculate more than I'd normally do in a post due to the questions I've been getting, so fair warning, some of it might be very wrong. I suspect we'll learn some of the truth years from now when some investigative journalist writes a book about it.
Thank you everyone for the comments and questions on the first and second post on this topic.
Today was a study in the power of fear, courage, and the levers you can pull when you wield billions of dollars...
Woops, excuse me. I'm sorry hedge fund guys... I meant trillions of dollars--I just briefly forget you control not just your own but a lot of other peoples' money too for a moment there.
Also, for people still trading this on market-based rationale (as I am), it was a good day to measure the conviction behind your thesis. I like to think I have conviction, but in case you are somehow not yet familiar with the legend of DFV, you need to see these posts (fair warning, nsfw, and some may be offended/triggered by the crude language). The last two posts might be impressive, but you should follow it in chronological order and pay attention to the evolution of sentiment in the comments to experience true enlightenment.
Anyway, I apologize, but this post will be very long--there's just a lot to unpack.

Pre-Market

Disclaimer: given yesterday's pre-market action I didn't even pay attention to the screen until near retail pre-market. I'm less confident in my ability to read what's going on in a historical chart vs the feel I get watching live, but I'll try.
Early in the pre-market it looks to me like some momentum traders are taking profit, discounting the probability that the short-side will give them a deep discount later, which you can reasonably assume given the strategy they ran yesterday. If they're right they can sell some small volume into the pre-market top, wait for the hedge funds try to run the price back down, and then lever up the gains even higher buying the dip. Buy-side here look to me like people FOMOing and YOLOing in at any price to grab their slice of gainz, or what looks to be market history in the making. No way are short-side hedge funds trying to cover anything at these prices.
Mark Cuban--well said! Free markets baby!
Mohamed El-Erian is money in the bank as always. "upgrade in quality" on the pandemic drop was the best, clearest actionable call while most were at peak panic, and boy did it print. Your identifying the bubble as the excessive short (vs blaming retail activity) is money yet again. Also, The PAIN TRADE (sorry, later interview segment I only have on DVR, couldn't find on youtube--maybe someone else can)!
The short attack starts, but I'm hoping no one was panicking this time--we've seen it before. Looks like the momentum guys are minting money buying the double dip into market open.
CNBC, please get a good market technician to explain the market action. Buy-side dominance, sell-side share availability evaporating into nothing (look at day-by-day volume last few days), this thing is now at runaway supercritical mass. There is no changing the trajectory unless you can change the very fabric of the market and the rules behind it (woops, I guess I should have knocked on wood there).
If you know the mechanics, what's happening in the market with GME is not mysterious AT ALL. I feel like you guys are trying to scare retail out early "for their own good" (with all sincerity, to your credit) rather than explain what's happening. Possibly you also fear that explaining it would equate to enabling/encouraging people to keep trying to do it inappropriately (possibly fair point, but at least come out and say that if that's the case). Outside the market, however...wow.

You Thought Yesterday Was Fear? THIS is Fear!

Ok short-side people, my hat is off to you. Just when I thought shouting fire in a locked theater was fear mongering poetry in motion, you went and took it to 11. What's even better? Yelling fire in a theater with only one exit. That way people can cause the financial equivalent of stampede casualties. Absolutely brilliant.
Robin Hood disables buying of GME, AMC, and a few of the other WSB favorites. Other brokerages do the same. Even for people on 0% margin. Man, and here I thought I had seen it all yesterday.
Side note: I will give a shout out to TD Ameritrade. You guys got erroneously lumped together with RH during an early CNBC segment, but you telegraphed the volatility risk management changes and gradually ramped up margin requirements over the past week. No one on your platform should have been surprised if they were paying attention. And you didn't stop anyone from trading their own money at any point in time. My account balance thanks you. I heard others may have had problems, but I'll give you the benefit of the doubt given the DDOS attacks that were flyiing around
Robin Hood. Seriously WTF. I'm sure it was TOTALLY coincidence that your big announcements happen almost precisely when what has to be one of the best and most aggressive short ladder attacks of all time starts painting the tape, what looked like a DDOS attack on Reddit's CDN infrastructure (pretty certain it was the CDN because other stuff got taken out at the same time too), and a flood of bots hit social media (ok, short-side, this last one is getting old).
Taking out a large-scale cloud CDN is real big boy stuff though, so I wouldn't entirely rule out nation state type action--those guys are good at sniffing out opportunities to foment social unrest.
Anyway, at this point, as the market dives, I have to admit I was worried for a moment. Not that somehow the short-side would win (hah! the long-side whales in the pond know what's up), but that a lot of retail would get hurt in the action. That concern subsided quite a bit on the third halt on that slide. But first...
A side lesson on market orders
Someone printed bonus bank big time (and someone lost--I feel your pain, whoever you are).
During the face-ripping volatility my play money account briefly ascended to rarified heights of 7 figures. It took me a second to realize it, then another second to process it. Then, as soon as it clicked, that one, glorious moment in time was gone.
What happened?
During the insane chop of the short ladder attack, someone decided to sweep the 29 Jan 21 115 Call contracts, but they couldn't get a grip on the price, which was going coast to coast as IV blew up and the price was being slammed around. So whoever was trying to buy said "F it, MARKET ORDER" (i.e. buy up to $X,XXX,XXX worth of contracts at any price). This is referred to as a sweep if funded to buy all/most of the contracts on offer (HFT shops snipe every contract at each specific price with a shotgun of limit orders, which is far safer, but something only near-market compute resources can do really well). For retail, or old-tech pros, if you want all the contracts quickly, you drop a market order loaded with big bucks and see what you get... BUT, some clever shark had contracts available for the reasonable sum of... $4,400, or something around that. I was too stunned to grab a screencap. The buy market order swept the book clean and ran right into that glorious, nigh-obscene backstop limit. So someone got nearly $440,000 PER CONTRACT that was, at the time theoretically priced at around $15,000. $425,000 loss... PER CONTRACT. Maybe I'm not giving the buyer enough credit.. you can get sniped like that even if you try to do a safety check of the order book first, but, especially in low liquidity environments, if a HFT can peak into your order flow (or maybe just observes a high volume of sweeps occurring), they can end up front running your sweep, pick off the reasonable contracts, and slam a ridiculous limit sell order into place before your order makes it to the exchange. Either way, I hope that sweep wasn't loaded for bear into the millions. If so... OUCH. Someone got cleaned out.
So, the lesson here folks... in a super high volatility, low-liquidity market, a market order will just run up the ladder into the first sell order it can find, and some very brutal people will put limit sells like that out there just in case they hit the jackpot. And someone did. If you're on the winning side, great. It can basically bankrupt you if you're on the losing side. My recommendation: Just don't try it. I wouldn't be surprised if really shady shenanigans were involved in this, but no way to know (normally that's crazy-type talk, but after today....peeking at order flow and sniping sweeps is one of the fastest, most financially devastating ways to bleed big long-side players, just sayin').
edit *so while I was too busy trying not to spit out my coffee to grab a screenshot, piddlesthethug was faster on the draw and captured this: https://imgur.com/gallery/RI1WOuu
Ok, so I guess my in-the-moment mental math was off by about 10%. Man, that hurts just thinking about the guy who lost on that trade.*
Back to the market action..

A Ray of Light Through the Darkness

So I was worried watching the crazy downward movement for two different reasons.
On the one hand, I was worried the momentum pros would get the best discounts on the dip (I'll admit, I FOMO'd in too early, unnecessarily raising my cost basis).
On the other hand, I was worried for the retail people on Robin Hood who might be bailing out into incredibly steep losses because they had only two options: Watch the slide, or bail. All while dealing with what looked to me like a broad-based cloud CDN outage as they tried to get info from WSB HQ, and wondering if the insta-flood of bot messages were actually real people this time, and that everyone else was bailing on them to leave them holding the bag.
But I saw the retail flag flying high on the 3rd market halt (IIRC), and I knew most would be ok. What did I see, you ask? Why, the glorious $211.00 / $5,000 bid/ask spread. WSB Reddit is down? Those crazy mofos give you the finger right on the ticker tape. I've been asked many times in the last few hours about why I was so sure shorts weren't covering on the down move. THIS is how I knew. For sure. It's in the market data itself.
edit So, there's feedback in the comments that this is likely more of a technical glitch. Man, at least it was hilarious in the moment. But also now I know maybe not to trust price updates when the spread between orders being posted is so wide. Maybe a technical limitation of TOS
I'll admit, I tried to one-up those bros with a 4206.90 limit sell order, but it never made it through. I'm impressed that the HFT guys at the hedge fund must have realized really quickly what a morale booster that kind of thing would have been, and kept a lower backstop ask in place almost continuously from then on I'm sure others tried the same thing. Occasionally $1,000 and other high-dollar asks would peak through from time to time from then on, which told me the long-side HFTs were probably successfully sniping the backstops regularly.
So, translating for those of you who found that confusing. First, such a high ask is basically a FU to the short-side (who, as you remember, need to eventually buy shares to cover their short positions). More importantly, as an indicator of retail sentiment, it meant that NO ONE ELSE WAS TRYING TO SELL AT ANY PRICE LOWER THAN $5,000. Absolutely no one was bailing out.
I laughed for a minute, then started getting a little worried. Holy cow.. NO retail selling into the fear? How are they resisting that kind of price move??
The answer, as we all know now... they weren't afraid... they weren't even worried. They were F*CKING PISSED.
Meanwhile the momentum guys and long-side HFTs keep gobbling up the generously donated shares that the short-side are plowing into their ladder attack. Lots of HFT duels going on as long-side HFTs try to intercept shares meant to travel between short-side HFT accounts for their ladder. You can tell when you see prices like $227.0001 constantly flying across the tape. Retail can't even attempt to enter an order like that--those are for the big boys with privileged low-latency access.
The fact that you can even see that on the tape with human eyes is really bad for the short-side people.
Why, you ask? Because it means liquidity is drying up, and fast.

The Liquidity Tide is Flowing Out Quickly. Who's Naked (short)?

Market technicals time. I still wish this sub would allow pictures so I could throw up a chart, but I guess a table will do fine.
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Date	Volume	Price at US Market Close
Friday, 1/22/21	197,157,196	$65.01
Monday, 1/25/21	177,874,00	$76.79
Tuesday, 1/26/21	178,587,974	$147.98
Wednesday, 1/27/21	93,396,666	$347.51
Thursday, 1/28/21	58,815,805	$193.60

What do I see? I see the shares available to trade dropping so fast that all the near-exchange compute power in the world won't let the short-side HFTs maintain order flow volume for their attacks. Many retail people asking me questions thought today was the heaviest trading. Nope--it was just the craziest.
What about the price dropping on Thursday? Is that a sign that the short-side pulled a miracle out and pushed price down against a parabolic move on even less volume than Wednesday? Is the long side running out of capital?
Nope. It means the short-side hedge funds are just about finished.
But wait, I thought the price needed to be higher for them to be taken out? How is it that price being lower is bad for them? Won't that allow them to cover at a lower price?
No, the volume is so low that they can't cover any meaningful fraction of their position without spiking the price parabolic almost instantly. Just not enough shares on offer at reasonable prices (especially when WSB keeps flashing you 6942.00s).
It's true, a higher price hurts, but the interest charge for one more day is just noise at this point. The only tick that will REALLY count is the last tick of trading on Friday.
In the meantime, the price drop (and watching the sparring in real time) tells me that the long-side whales and their HFT quants are so certain of the squeeze that they're no longer worried AT ALL about whether it will happen, and they aren't even worried at all about retail morale to help carry the water anymore.
Instead, they're now really, really worried about how CHEAPLY they can make it happen.
They are wondering if they can't edge out just a sliver more alpha out of what will already be a blow-out trade for the history books (probably). You see, to make it happen they just have to keep hoovering up shares. It doesn't matter what those shares cost. If you're certain that the squeeze is now locked in, why push the price up and pay more than you have to? Just keep pressing hard enough to force short-side to keep sending those tasty shares your way, but not so much you move the price. Short-side realizes this and doesn't try to drive price down too aggressively. They can't afford to let price run away, so they have to keep some pressure on at the lowest volume they can manage, but they don't want to push down too hard and give the long-side HFTs too deep of a discount and bleed their ammo out even faster. That dynamic keeps price within a narrow (for GME today, anyway) trading range for the rest of the day into the close.
Good plan guys, but those after market people are pushing the price up again. Damnit WSB bros and Euros, you're costing those poor long-side whales their extra 0.0000001% of alpha on this trade just so you can run up your green rockets... See, that's the kind of nonsense that just validates Lee Cooperman's concerns.
On a totally unrelated note, I have to say that I appreciate the shift in CNBC's reporting. Much more thoughtful and informed. Just please get a good market technician in there who will be willing to talk about what is going on under the hood if possible. A lot of people watching on the sidelines are far more terrified than they need to be because it all looks random to them. And they're worried that you guys look confused and worried--and if the experts on the news are worried....??!
You should be able to find one who has access to the really good data that we retailers can only guess at, who can explain it to us unwashed masses.

Ok, So.. Questions

There is no market justification for this. How can you tell me is this fundamentally sound and not just straight throwing money away irresponsibly?? (side note: not that that should matter--if you want to throw your money away why shouldn't you be allowed to?)
We're not trading in your securities pricing model. This isn't irrational just because your model says long and short positions are the same thing. The model is not a real market. There is asymmetrical counterparty risk here given the shorts are on the hook for all the money they have, and possibly all the money their brokers have, and possibly anyone with exposure to the broker too! You may want people to trade by the rules you want them to follow. But the rest of us trade in the real market as it is actually implemented. Remember? That's what you tell the retailers who take their accounts to zero. Remember what you told the KBIO short-squeezed people? They had fair warning that short positions carry infinite risk, including more than your initial investment. You guys know this. It's literally part of your job to know this.
But-but-the systemic risk!! This is Madness!
...Madness?
THIS. IS. THE MARKET!!! *Retail kicks the short-side hedge funds down an infinity loss black hole\*.
Ok, seriously though, that is actually a fundamentally sound, and properly profit-driven answer at least as justifiable as the hedge funds' justification for going >100% of float short. If they can be allowed to gamble INFINITE LOSSES because they expect to make profit on the possibility the company goes bankrupt, can't others do the inverse on the possibility the company I don't know.. doesn't go bankrupt and gets a better strategy from the team that created what is now a $43bn market cap company (CHWY) that does exactly some of the things GME needs to do (digital revenue growth) maybe? I mean, I first bought in on that fundamental value thesis in the 30s and then upped my cost basis given the asymmetry of risk in the technical analysis as an obvious no-brainer momentum trade. The squeeze is just, as WSB people might say, tendies raining down from on high as an added bonus.
I get that you disagree on the fundamental viability of GME. Great. Isn't that what makes a market?
Regarding the consequences of a squeeze, in practice my expectation was maybe at worst some kind of ex-market settlement after liquidation of the funds with exposure to keep things nice and orderly for the rest of the market. I mean, they handled the VW thing somehow right? I see now that I just underestimated elite hedge fund managers though--those guys are so hardcore (I'll explain why I think so a bit lower down).
If hedge fund people are so hardcore, how did the retail long side ever have a chance of winning this squeeze trade they're talking about?
Because it's an asymmetrical battle once you have short interest cornered. And the risk is also crazily asymmetrical in favor of the long side if short interest is what it is in GME. In fact, the hedge funds essentially cornered themselves without anyone even doing anything. They just dug themselves right in there. Kind of impressive really, in a weird way.
What does the short side need to cover? They need the price to be low, and they need to buy shares.
How does price move lower? You have to push share volume such that supply overwhelms demand and price therefore goes down (man, I knew econ 101 would come in handy someday).
But wait... if you have to sell shares to push the price down.. won't you just undo all your work when you have to buy it back to actually cover?
The trick is you have to push price down so hard, so fast, so unpredictably, that you SCARE OTHER PEOPLE into selling their shares too, because they're scared of taking losses. Their sales help push the price down for free! and then you scoop them up at discount price! Also, there are ways to make people scared other than price movement and fear of losses, when you get right down to it. So, you know, you just need to get really, really, really good at making people scared. Remember to add a line item to your budget to make sure you can really do it right.
On the other hand..
What does the long side need to do? They need to own as much of the shares as they can get their hands on. And then they need to hold on to them. They can't be weak hands either. They need to be hands that will hold even under the most intense heat of battle, and the immense pressure of mind-numbing fear... they need to be as if they were made of... diamond... (oh wow, maybe those WSB people kind of have a point here).
Why does this matter? Because at some point the sell side will eventually run out of shares to borrow. They simply won't be there, because they'll be safely tucked away in the long-side's accounts. Once you run out of shares to borrow and sell, you have no way to move the price anymore. You can't just drop a fat stack--excuse me, I mean suitcase (we're talking hedge fund money here after all)--of Benjamins on the ticker tape directly. Only shares. No more shares, no way to have any direct effect on the price whatsoever.
Ok, doesn't that just mean trading stops? Can't you just out-wait the long side then?
Well, you could.. until someone on the long side puts 1 share up on a 69420 ask, and an even crazier person actually buys at that price on the last tick on a Friday. Let's just say it gets really bad at that point.
Ok.. but how do the retail people actually get paid?
Well, to be quite honest, it's entirely up to each of them individually. You've seen the volumes being thrown around the past week+. I guarantee you every single retailer out there could have printed money multiple times trading that flow. If they choose to, and time it well. Or they could lose it all--this is the market. Some of them apparently seem to have some plan, or an implicit trust in certain individuals to help them know when to punch out. Maybe it works out, but maybe not. There will be financial casualties on the field for sure--this is the bare-knuckled capitalist jungle after all, remember? But everyone ponied up to the table with their own money somehow, so they all get to play in the big leagues just like everyone else. In theory, anyway.
And now, Probably the #1 question I've been asked on all of these posts has been: So what happens next? Do we get the infinity squeeze? Do the hedge funds go down?
Great questions. I don't know. No one does. That's what I've said every time, but I get that's a frustrating answer, so I'll write a bit more and speculate further. Please again understand these are my opinions with a degree of speculation I wouldn't normally put in a post.

The Market and the Economy. Main Street, Wall Street, and Washington

The pandemic has hurt so many people that it's hard to comprehend. Honestly, I don't even pretend to be able to. I have been crazy fortunate enough to almost not be affected at all. Honestly, it is a little unnerving to me how great the disconnect is between people who are doing fine (or better than fine, looking at my IRA) versus the people who are on the opposite side of the ever-widening divide that, let's be honest, has been growing wider since long before the pandemic.
People on the other side--who have been told they cannot work even if they want to, who wonder if congress will get it together to at least keep them from getting thrown out of their house if they have to keep taking one for the team for the good of all, are wondering if they're even living in the same reality.
Because all they see on the news each day is that the stock market is at record highs, or some amazing tech stocks have 10x'd in the last 6 months. How can that be happening during a pandemic? Because The Market is not The Economy. The Market looks forward to that brighter future that Economy types just need to wait for. Don't worry--it'll be here sometime before the end of the year. We think. We're making money on that assumption right now, anyway. Oh, by the way, if you're in The Market, you get to get richer as a minor, unearned side-effect of the solutions our governments have come up with to fight the pandemic.
Wow. That sounds amazing. How do I get to part of that world?
Retail fintech, baby. Physical assets like real estate might be a bit out of reach at the moment, but stocks will do. I can even buy fractional shares of BRK/A LOL.
Finally, I can trade for my own slice of heaven, watching that balance go up (and up--go stonks!!). Now I too get to dream the dream. I get to feel connected to that mythical world, The Market, rather than being stuck in the plain old Economy. Sure, I might blow up my account, but that's because it's the jungle. Bare-knuckled, big league capitalism going on right here, and at least I get to show up an put my shares on the table with everyone else. At least I'm playing the same game. Everyone has to start somewhere--at least now I get to start, even if I have to learn my lesson by zeroing my account a few times. I've basically had to deal with what felt like my life zeroing out a few times before. This is number on a screen going to 0 is nothing.
Laugh or cry, right? I'll post my losses on WSB and at least get some laughs.
Geez, some of the people here are making bank. I better learn from them and see if they'll let me in on their trades. Wow... this actually might work. I don't understand yet, but I trust these guys telling me to hold onto this crazy trade. I don't understand it, but all the memes say it's going to be big.
...WOW... I can pay off my credit card with this number. Do I punch out now? No? Hold?... Ok, getting nervous watching the number go down but I trust you freaks. We're still in the jungle, but at least I'm in with with my posse now. Market open tomorrow--we ride the rocket baby! And if it goes down, at least I'm going down with my crew. At least if that happens the memes will be so hilarious I'll forget to cry.
Wow.. I can't believe it... we might actually pull this off. Laugh at us now, "pros"!
We're in The Market now, and Market rules tell us what is going to happen. We're getting all that hedge fund money Right? Right?
Maybe.
First, I say maybe because nothing is ever guaranteed until it clears. Secondly, because the rules of The Market are not as perfectly enforced as we would like to assume. We are also finding out they may not be perfectly fair. The Market most experts are willing to talk about is really more like the ideal The Market is supposed to be. This is the version of the market I make my trading decisions in. However, the Real Market gets strange and unpredictable at the edges, when things are taken to extremes, or rules are pushed beyond the breaking point, or some of the mechanics deep in the guts of the Real Market get stretched. GME ticks basically all of those boxes, which is why so many people are getting nervous (aside from the crazy money they might lose). It's also important to remember that the sheer amount of money flowing through the market has distorting power unto itself. Because it's money, and people really, really, really like their money--especially when they're used to having a lot of it, and rules involving that kind of money tend to look more... flexible, shall we say.
Ok, back to GME. If this situation with GME is allowed to play out to its conclusion in The Market, we'll see what happens. I think all the long-side people get the chance to be paid (what, I'm not sure--and remember, you have to actually sell your position at some point or it's all still just numbers on your screen), but no one knows for certain.
But this might legitimately get so big that it spills out of The Market and back into The Economy.
Geez, and here I thought the point of all of this was so that we all get to make so much money we wouldn't ever have to think and worry about that thing again.
Unfortunately, while he's kind of a buzzkill, Thomas Petterfy has a point. This could be a serious problem.
It might blow out The Market, which will definitely crap on The Economy, which as we all know from hard experience, will seriously crush Main Street.
If it's that big a deal, we may even need Washington to be involved. Once that happens, who knows what to expect.. this kind of scenario being possible is why I've been saying I have no idea how this ends, and no one else does either.
How did we end up in this ridiculous situation? From GAMESTOP?? And it's not Retail's fault the situation is what it is.. why is everyone telling US that we need to back down to save The Market?? What about the short-side hedge funds that slammed that risk into the system to begin with?? We're just playing by the rules of The Market!!
Well, here are my thoughts, opinions, and some even further speculation... This may be total fantasy land stuff here, but since I keep getting asked I'll share anyway. Just keep that disclaimer in mind.

A Study in Big Finance Power Moves: If you owe the bank $10,000, it's your problem...

What happens when you owe money you have no way to pay back? It's a scary question to have to face personally. Still, on balance and on average, if you're fortunate enough to have access to credit the borrowing is a risk that is worth taking (especially if you're reasonably careful). Lenders can take a risk loaning you money, you take a risk by borrowing in order to do something now that you would otherwise have had to wait a long time or maybe would never have realistically been able to do otherwise. Sometimes it doesn't work out. Sometimes it's due to reasons totally beyond your control. In any case, if you find yourself there you have no choice but to dust yourself off, pick yourself up as best as you can, and try to move on and rebuild. A lot of people had to learn that in 2008. Man that year really sucked.
Wall street learned their lessons too. Most learned what I think most of us would consider the right lessons--lessons about risk management, and the need to guard vigilantly against systemic risk, concentration of risk through excess concentration of leverage on common assets, etc. Many suspect that at least a few others may have learned an entirely different set of, shall we say, unhealthy lessons. Also, to try to be completely fair, maybe managing other peoples' money on 10x+ leverage comes with a kind of pressure that just clouds your judgement. I could actually, genuinely buy that. I know I make mistakes under pressure even when I'm trading risk capital I could totally lose with no real consequence. Whatever the motive, here's my read on what's happening:
First, remember that as much fun as WSB are making of the short-side hedge fund guys right now, those guys are smart. Scary smart. Keep that in mind.
Next, let's put ourselves in their shoes.
If you're a high-alpha hedge fund manager slinging trades on a $20bn 10x leveraged to 200bn portfolio, get caught in a bad situation, and are down mark-to-market several hundred million.. what do you do? Do you take your losses and try again next time? Hell no.
You're elite. You don't realize losses--you double down--you can still save this trade no sweat.
But what if that doesn't work out so well and you're in the hole >$2bn? Obvious double down. Need you ask? I'm net up on the rest of my positions (of course), and the momentum when this thing makes its mean reversion move will be so hot you can almost taste the alpha from here. Speaking of momentum, imagine the move if your friends on TV start hyping the story harder! Genius!
Ok, so that still didn't work... this is now a frigging 7 sigma departure from your modeled risk, and you're now locked into a situation that is about as close to mathematically impossible to escape as you can get in the real world, and quickly converging on infinite downside. Holy crap. The fund might be liquidated by your prime broker by tomorrow morning--and man, even the broker is freaking out. F'in Elon Musk and his twitter! You're cancelling your advance booking on his rocket ship to Mars first thing tomorrow... Ok, focus--this might legit impact your total annual return. You need a plan, and you know the smartest people on the planet, right? The masters of the universe! Awesome--they've even seen this kind of thing before and still have the playbook!! Of course! It's obvious now--you borrow a few more billion and double down again first thing in the morning. So simple. Sticky note that Mars trip cancellation so you don't forget.
Ok... so that didn't work? You even cashed in some pretty heavy chits too. Ah well, that was a long shot anyway. So where were you? Oh yeah.. if shenanigans don't work, skip to page 10...
...Which says, of course, to double down again. Anyone even keeping track anymore? Oh, S3 says it's $40bn and we're going parabolic? Man, that chart gives me goosebumps. All according to plan...
So what happens tomorrow? One possible outcome of PURE FANTASTIC SPECULATION...
End of the week--phew. Never though it'd come. Where are you at now?... Over $9000^\)!!! Wow. You did it boys, and as a bonus the memes will be so sweet.
^\)side note: add 8 zeros to the end...
Awesome--your problems have been solved. Because...
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..
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BOOM
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Now it's EVERYONE's problem. Come at me, Chamath, THIS is REAL baller shit.
Now all you gotta do is make all the hysterical retirees watching their IRAs hanging in the balance blame those WSB kids. Hahaha. Boomers, amirite? hate when those kids step on their law--I mean IRAs. GG guys, keep you memes. THAT is how it's done.
Ok, but seriously, I hope that's not how it ends. I guess we just take it day by day at this point.
Apologies for the length. Good luck in the market!
Also, apologies in advance for formatting, spelling, and grammatical errors. I was typing this thing in between doing all kinds of other things for most of the day.
Edit getting a bunch of questions on if it's possible the hedge funds are finding ways to cover in spite of my assumptions. Of course. I'm a retail guy trying to read the charts and price action. I don't have any special tools like the pros may have.

First-time traders are getting a free financial education on YouTube, but not everyone is as they seem:
https://www.telegraph.co.uk/technology/2021/02/13/inside-murky-world-investment-advice-youtube/
Alternative link to article: https://archive.vn/qLxkd
edit - added full article text
Kayla Kilbride decided to teach herself how to trade during a dinner at her family home in Los Angeles last November. Her sisters had been showing her their smartphones, displaying recent winnings on the trading app Robinhood and the conversation around the table kept turning to stocks.
Unemployed and in the midst of the pandemic, the 24-year-old quickly became hooked, waking up at 4.30am to study the markets before they opened, watch YouTube tutorials and simulating trades for six hours a day, four days a week.
“When I first heard the words bullish and bearish I had to Google them,” Kilbride says. “YouTube has been the most educational platform for me, which is so funny. I never thought I'd ever say that.”
Kilbride is one of hundreds of thousands of young people bored and stuck at home turning to YouTube to learn the tricks of the trade. Apps like Robinhood, WeBull, ThinkorSwim and eToro have allowed anyone to buy and sell shares and financial instruments, but many have no idea what they are doing. Top trading channels have up to half a million subscribers each, and live streams of traders studying their screens are watched by thousands at a time.
Some are drawn by clips that attract clicks with colourful thumbnail images showing the presenter surrounded by dollar emojis and green arrows pointing up. Titles like “How one 19-year-old took his brokerage account to $187,000 (£135,000) in two months”, “How I made $1,000 in 25 minutes, and “This stock is about to explode!” promise stories of traders having fun and making fortunes at the same time.
One teenage YouTuber known as Biaheza regularly posts about the money he makes on trading apps Robinhood and WeBull to his 725,000 subscribers.
In one, he lets a stray cat decide whether he should buy $10,000 worth of Tesla puts or calls - leveraged options betting against and for the stock respectively - by placing the words “puts” and “calls” on a piece of paper placed under two dishes. The cat picked puts, Tesla shares went down, and Biaheza made $1,000.
This week, the 19-year-old shared a video in which he borrowed $70,000 from Robinhood to place on Tesla, eventually making himself $5,000.
Reddit, a very different social network, has been put at the centre of the GameStop bonanza that rattled markets last month. But YouTube also lit up with videos explaining or promoting the phenomenon. One of the heroes of the saga was Roaring Kitty, a YouTuber who also worked as a financial advisor. A Massachusetts securities regulator is now investigating whether the trader, real name Keith Gill, broke securities rules by advising which stocks to buy. Arguably YouTube's broadcasts have more power over the market than forums because they hit the web as a finished product that cannot be altered, allowing one skilled presenter to broadcast to many.
Tom Sosnoff, who sold his brokerage ThinkorSwim to TD Ameritrade for $606m in 2009, has since become a hit on YouTube with his Tasty Trades channel becoming a stop-off for more risky investment strategies.
Tasty Trades is focused on grey area instruments, like leverage, options and futures. Financial experts warn that these are challenging, high risk and can be low reward. Sosnoff, says the interest in alternative trading is a reaction to the tedium of traditional financial TV.
“There was a demand for intelligent, challenging financial content, because to me, Bloomberg and CNBC and places like that were full of stuff that anybody can watch, but it wasn't intellectually challenging,” he says. “Who cares what somebody else thinks? Who cares what the news is? I'm not looking for somebody to repeat the news to me. I'm looking for somebody to explain to me how the markets work and how can I make this actionable.”
Kilbride, who now trades just one hour a day after finding a job, says YouTube creates more good than harm. When she decided to move from fake trades to real money she started small and, after one big loss, is now up around 20pc from a starting point of $500. But not everyone will take her measured approach.
“I think overall it's probably good for markets that more people are educating themselves and that you don’t need a fancy Ivy League degree to do it,” says Vincent Deluard, a macro strategist for the brokerage StoneX and Professor of finance at Saint Mary's College in California. “Information should be public.”
"The people who fall for the YouTube videos with the man standing by a fancy red car will lose money, that is just the way markets work."
Clem Chambers, chief executive of stocks, shares and cryptocurrency website ADVFN, says people are falling for “conspiracy theories” on YouTube that promise thousands of dollars. “They’re all rubbish,” he says.
Chambers, who has 30 years of trading experience, says he recognises a similar pattern as during the dotcom boom, which he says scared an entire generation off investing.
“It is a tragedy because investing in the stock market is one of the few ways a normal guy can become wealthy,” he says. “But there's a whole group of people that try to ensnare the beginner. There's a whole gauntlet of people that will strip the unwary of their money.”
eToro, a social trading app which is available in the UK, warns on its website that 67pc of retail trader accounts lose money. Even amateurs with a level head are likely to make 3pc gains at most. Those pushing between 5 and 10pc would be destined for some of the best firms in the world, not YouTube.
YouTube traders can still generate revenue from their streams even if they make a loss trading. Those with more than 10,000 views are eligible to receive a cut of YouTube's targeted advertising revenue. Many sell merchandise and some receive compensation for promoting trading apps.
“The problem is when you have got videos saying how to spot ‘hot stock’,” says Susannah Streeter, senior markets analyst at Hargreaves Lansdown. “It’s almost like it has become a game and people are treating the market like it is a form of entertainment, not a strategy.”
Ironically, Streeter says the vast amount of videos and user commentary on YouTube is helping the industry the presenters are trying to disrupt. “I would expect that hedge funds are analysing the YouTube videos that are being posted, as they are watching social media posts,” she says. With algorithms that take into account what is trending on Twitter, it should come as little surprise.
"YouTube is completely unregulated. When you get official investment advice published by a broker then the person publishing the advice is a licensed individual who is certainly culpable for the statements that they make.” says Kevin Mak, a lecturer at Stanford Graduate School of Business, “And that's not really the case for YouTube broadcasters.”
YouTube says it doesn’t allow “get rich quick” schemes but did not return the Telegraph’s inquiries into what it was doing to curb "pump-and-dump" schemes where an investor hypes to stock to sell at the peak.
As regulators will attest, it is incredibly hard to prove market manipulation. Many of the accounts that appear to be spamming comment sections with the names of certain stocks are pseudonymous. The Federal Trade Commission says it is keeping an eye on influencers who promote gambling, and British politicians have called on a ban of celebrities from Love Island and Geordie Shore promoting unregulated foreign exchange trading.
Vocal critics of the disruptors fear speaking out after a social media pile-on for anyone who dared to fault them. Hedge fund billionaire Steve Cohen left Twitter after his children received threats amid the GameStop backlash. Short-seller Andrew Left, whose company Citron was one of the hedge funds to spark the battle with small-time traders, said in a YouTube video last month that his company - once the anti-establishment - would no longer publish short-selling research.
Professor Joel Hasbrouck, Stern School of Business, New York University, says he occasionally finds teachings of value on YouTube, although these are few and far between.
“For better or for worse, YouTube is a repository of popular wisdom, experience and folklore,” he says. “It appeals to our affiliation tendencies. We're told that maybe if we all pull together on this one we can bend the market to our advantage,” he says.
This coordination would be prosecuted by British and US officials if it were arranged by two large banks and caught on trading room chat transcripts, he says. But don’t expect this Wild West to be tamed anytime soon.
“In this instance the players are small and dispersed,” he says, “and the coordination is loose and casual, so regulation seems unlikely.”

Yes, as you read, cross post from boringpeople, but it's well worth a read, as long as it is. All credit to u/jn_ku, and go read the other parts. Godspeed autists
​
Disclaimer: I am not a financial advisor. This entire post represents my personal views and opinions, and should not be taken as financial advice (or advice of any kind whatsoever). I encourage you to do your own research, take anything I write with a grain of salt, and hold me accountable for any mistakes you may catch. Also, full disclosure, I hold a net long position in GME, but my cost basis is very low (average ~$67--I have to admit, the drop today was too tasty so my cost basis went up from yesterday)/share with my later buys averaged in), and I'm using money I can absolutely lose. My capital at risk and tolerance for risk generally is likely substantially different than yours. In this post I will go a little further and speculate more than I'd normally do in a post due to the questions I've been getting, so fair warning, some of it might be very wrong. I suspect we'll learn some of the truth years from now when some investigative journalist writes a book about it.
Thank you everyone for the comments and questions on the first and second post on this topic.
Today was a study in the power of fear, courage, and the levers you can pull when you wield billions of dollars...
Woops, excuse me. I'm sorry hedge fund guys... I meant trillions of dollars--I just briefly forget you control not just your own but a lot of other peoples' money too for a moment there.
Also, for people still trading this on market-based rationale (as I am), it was a good day to measure the conviction behind your thesis. I like to think I have conviction, but in case you are somehow not yet familiar with the legend of DFV, you need to see these posts (fair warning, nsfw, and some may be offended/triggered by the crude language). The last two posts might be impressive, but you should follow it in chronological order and pay attention to the evolution of sentiment in the comments to experience true enlightenment.
Anyway, I apologize, but this post will be very long--there's just a lot to unpack.
Pre-Market
Disclaimer: given yesterday's pre-market action I didn't even pay attention to the screen until near retail pre-market. I'm less confident in my ability to read what's going on in a historical chart vs the feel I get watching live, but I'll try.
Early in the pre-market it looks to me like some momentum traders are taking profit, discounting the probability that the short-side will give them a deep discount later, which you can reasonably assume given the strategy they ran yesterday. If they're right they can sell some small volume into the pre-market top, wait for the hedge funds try to run the price back down, and then lever up the gains even higher buying the dip. Buy-side here look to me like people FOMOing and YOLOing in at any price to grab their slice of gainz, or what looks to be market history in the making. No way are short-side hedge funds trying to cover anything at these prices.
Mark Cuban--well said! Free markets baby!
Mohamed El-Erian is money in the bank as always. "upgrade in quality" on the pandemic drop was the best, clearest actionable call while most were at peak panic, and boy did it print. Your identifying the bubble as the excessive short (vs blaming retail activity) is money yet again. Also, The PAIN TRADE (sorry, later interview segment I only have on DVR, couldn't find on youtube--maybe someone else can)!
The short attack starts, but I'm hoping no one was panicking this time--we've seen it before. Looks like the momentum guys are minting money buying the double dip into market open.
CNBC, please get a good market technician to explain the market action. Buy-side dominance, sell-side share availability evaporating into nothing (look at day-by-day volume last few days), this thing is now at runaway supercritical mass. There is no changing the trajectory unless you can change the very fabric of the market and the rules behind it (woops, I guess I should have knocked on wood there).
If you know the mechanics, what's happening in the market with GME is not mysterious AT ALL. I feel like you guys are trying to scare retail out early "for their own good" (with all sincerity, to your credit) rather than explain what's happening. Possibly you also fear that explaining it would equate to enabling/encouraging people to keep trying to do it inappropriately (possibly fair point, but at least come out and say that if that's the case). Outside the market, however...wow.
You Thought Yesterday Was Fear? THIS is Fear!
Ok short-side people, my hat is off to you. Just when I thought shouting fire in a locked theater was fear mongering poetry in motion, you went and took it to 11. What's even better? Yelling fire in a theater with only one exit. That way people can cause the financial equivalent of stampede casualties. Absolutely brilliant.
Robin Hood disables buying of GME, AMC, and a few of the other WSB favorites. Other brokerages do the same. Even for people on 0% margin. Man, and here I thought I had seen it all yesterday.
Side note: I will give a shout out to TD Ameritrade. You guys got erroneously lumped together with RH during an early CNBC segment, but you telegraphed the volatility risk management changes and gradually ramped up margin requirements over the past week. No one on your platform should have been surprised if they were paying attention. And you didn't stop anyone from trading their own money at any point in time. My account balance thanks you. I heard others may have had problems, but I'll give you the benefit of the doubt given the DDOS attacks that were flyiing around
Robin Hood. Seriously WTF. I'm sure it was TOTALLY coincidence that your big announcements happen almost precisely when what has to be one of the best and most aggressive short ladder attacks of all time starts painting the tape, what looked like a DDOS attack on Reddit's CDN infrastructure (pretty certain it was the CDN because other stuff got taken out at the same time too), and a flood of bots hit social media (ok, short-side, this last one is getting old).
Taking out a large-scale cloud CDN is real big boy stuff though, so I wouldn't entirely rule out nation state type action--those guys are good at sniffing out opportunities to foment social unrest.
Anyway, at this point, as the market dives, I have to admit I was worried for a moment. Not that somehow the short-side would win (hah! the long-side whales in the pond know what's up), but that a lot of retail would get hurt in the action. That concern subsided quite a bit on the third halt on that slide. But first...
A side lesson on market orders
Someone printed bonus bank big time (and someone lost--I feel your pain, whoever you are).
During the face-ripping volatility my play money account briefly ascended to rarified heights of 7 figures. It took me a second to realize it, then another second to process it. Then, as soon as it clicked, that one, glorious moment in time was gone.
What happened?
During the insane chop of the short ladder attack, someone decided to sweep the 29 Jan 21 115 Call contracts, but they couldn't get a grip on the price, which was going coast to coast as IV blew up and the price was being slammed around. So whoever was trying to buy said "F it, MARKET ORDER" (i.e. buy up to $X,XXX,XXX worth of contracts at any price). This is referred to as a sweep if funded to buy all/most of the contracts on offer (HFT shops snipe every contract at each specific price with a shotgun of limit orders, which is far safer, but something only near-market compute resources can do really well). For retail, or old-tech pros, if you want all the contracts quickly, you drop a market order loaded with big bucks and see what you get... BUT, some clever shark had contracts available for the reasonable sum of... $4,400, or something around that. I was too stunned to grab a screencap. The buy market order swept the book clean and ran right into that glorious, nigh-obscene backstop limit. So someone got nearly $440,000 PER CONTRACT that was, at the time theoretically priced at around $15,000. $425,000 loss... PER CONTRACT. Maybe I'm not giving the buyer enough credit.. you can get sniped like that even if you try to do a safety check of the order book first, but, especially in low liquidity environments, if a HFT can peak into your order flow (or maybe just observes a high volume of sweeps occurring), they can end up front running your sweep, pick off the reasonable contracts, and slam a ridiculous limit sell order into place before your order makes it to the exchange. Either way, I hope that sweep wasn't loaded for bear into the millions. If so... OUCH. Someone got cleaned out.
So, the lesson here folks... in a super high volatility, low-liquidity market, a market order will just run up the ladder into the first sell order it can find, and some very brutal people will put limit sells like that out there just in case they hit the jackpot. And someone did. If you're on the winning side, great. It can basically bankrupt you if you're on the losing side. My recommendation: Just don't try it. I wouldn't be surprised if really shady shenanigans were involved in this, but no way to know (normally that's crazy-type talk, but after today....peeking at order flow and sniping sweeps is one of the fastest, most financially devastating ways to bleed big long-side players, just sayin').
Back to the market action..
A Ray of Light Through the Darkness
So I was worried watching the crazy downward movement for two different reasons.
On the one hand, I was worried the momentum pros would get the best discounts on the dip (I'll admit, I FOMO'd in too early, unnecessarily raising my cost basis).
On the other hand, I was worried for the retail people on Robin Hood who might be bailing out into incredibly steep losses because they had only two options: Watch the slide, or bail. All while dealing with what looked to me like a broad-based cloud CDN outage as they tried to get info from WSB HQ, and wondering if the insta-flood of bot messages were actually real people this time, and that everyone else was bailing on them to leave them holding the bag.
But I saw the retail flag flying high on the 3rd market halt (IIRC), and I knew most would be ok. What did I see, you ask? Why, the glorious $211.00 / $5,000 bid/ask spread. WSB Reddit is down? Those crazy mofos give you the finger right on the ticker tape. I've been asked many times in the last few hours about why I was so sure shorts weren't covering on the down move. THIS is how I knew. For sure. It's in the market data itself.
I'll admit, I tried to one-up those bros with a 4206.90 limit sell order, but it never made it through. I'm impressed that the HFT guys at the hedge fund must have realized really quickly what a morale booster that kind of thing would have been, and kept a lower backstop ask in place almost continuously from then on I'm sure others tried the same thing. Occasionally $1,000 and other high-dollar asks would peak through from time to time from then on, which told me the long-side HFTs were probably successfully sniping the backstops regularly.
So, translating for those of you who found that confusing. First, such a high ask is basically a FU to the short-side (who, as you remember, need to eventually buy shares to cover their short positions). More importantly, as an indicator of retail sentiment, it meant that NO ONE ELSE WAS TRYING TO SELL AT ANY PRICE LOWER THAN $5,000. Absolutely no one was bailing out.
I laughed for a minute, then started getting a little worried. Holy cow.. NO retail selling into the fear? How are they resisting that kind of price move??
The answer, as we all know now... they weren't afraid... they weren't even worried. They were F*CKING PISSED.
Meanwhile the momentum guys and long-side HFTs keep gobbling up the generously donated shares that the short-side are plowing into their ladder attack. Lots of HFT duels going on as long-side HFTs try to intercept shares meant to travel between short-side HFT accounts for their ladder. You can tell when you see prices like $227.0001 constantly flying across the tape. Retail can't even attempt to enter an order like that--those are for the big boys with privileged low-latency access.
The fact that you can even see that on the tape with human eyes is really bad for the short-side people.
Why, you ask? Because it means liquidity is drying up, and fast.
The Liquidity Tide is Flowing Out Quickly. Who's Naked (short)?
Market technicals time. I still wish this sub would allow pictures so I could throw up a chart, but I guess a table will do fine.
DateVolumePrice at US Market CloseFriday, 1/22/21197,157,196$65.01Monday, 1/25/21177,874,00$76.79Tuesday, 1/26/21178,587,974$147.98Wednesday, 1/27/2193,396,666$347.51Thursday, 1/28/2158,815,805$193.60
What do I see? I see the shares available to trade dropping so fast that all the near-exchange compute power in the world won't let the short-side HFTs maintain order flow volume for their attacks. Many retail people asking me questions thought today was the heaviest trading. Nope--it was just the craziest.
What about the price dropping on Thursday? Is that a sign that the short-side pulled a miracle out and pushed price down against a parabolic move on even less volume than Wednesday? Is the long side running out of capital?
Nope. It means the short-side hedge funds are just about finished.
But wait, I thought the price needed to be higher for them to be taken out? How is it that price being lower is bad for them? Won't that allow them to cover at a lower price?
No, the volume is so low that they can't cover any meaningful fraction of their position without spiking the price parabolic almost instantly. Just not enough shares on offer at reasonable prices (especially when WSB keeps flashing you 6942.00s).
It's true, a higher price hurts, but the interest charge for one more day is just noise at this point. The only tick that will REALLY count is the last tick of trading on Friday.
In the meantime, the price drop (and watching the sparring in real time) tells me that the long-side whales and their HFT quants are so certain of the squeeze that they're no longer worried AT ALL about whether it will happen, and they aren't even worried at all about retail morale to help carry the water anymore.
Instead, they're now really, really worried about how CHEAPLY they can make it happen.
They are wondering if they can't edge out just a sliver more alpha out of what will already be a blow-out trade for the history books (probably). You see, to make it happen they just have to keep hoovering up shares. It doesn't matter what those shares cost. If you're certain that the squeeze is now locked in, why push the price up and pay more than you have to? Just keep pressing hard enough to force short-side to keep sending those tasty shares your way, but not so much you move the price. Short-side realizes this and doesn't try to drive price down too aggressively. They can't afford to let price run away, so they have to keep some pressure on at the lowest volume they can manage, but they don't want to push down too hard and give the long-side HFTs too deep of a discount and bleed their ammo out even faster. That dynamic keeps price within a narrow (for GME today, anyway) trading range for the rest of the day into the close.
Good plan guys, but those after market people are pushing the price up again. Damnit WSB bros and Euros, you're costing those poor long-side whales their extra 0.0000001% of alpha on this trade just so you can run up your green rockets... See, that's the kind of nonsense that just validates Lee Cooperman's concerns.
On a totally unrelated note, I have to say that I appreciate the shift in CNBC's reporting. Much more thoughtful and informed. Just please get a good market technician in there who will be willing to talk about what is going on under the hood if possible. A lot of people watching on the sidelines are far more terrified than they need to be because it all looks random to them. And they're worried that you guys look confused and worried--and if the experts on the news are worried....??!
You should be able to find one who has access to the really good data that we retailers can only guess at, who can explain it to us unwashed masses.
Ok, So.. Questions
There is no market justification for this. How can you tell me is this fundamentally sound and not just straight throwing money away irresponsibly?? (side note: not that that should matter--if you want to throw your money away why shouldn't you be allowed to?)
We're not trading in your securities pricing model. This isn't irrational just because your model says long and short positions are the same thing. The model is not a real market. There is asymmetrical counterparty risk here given the shorts are on the hook for all the money they have, and possibly all the money their brokers have, and possibly anyone with exposure to the broker too! You may want people to trade by the rules you want them to follow. But the rest of us trade in the real market as it is actually implemented. Remember? That's what you tell the retailers who take their accounts to zero. Remember what you told the KBIO short-squeezed people? They had fair warning that short positions carry infinite risk, including more than your initial investment. You guys know this. It's literally part of your job to know this.
But-but-the systemic risk!! This is Madness!
...Madness?
THIS. IS. THE MARKET!!! *Retail kicks the short-side hedge funds down an infinity loss black hole\*.
Ok, seriously though, that is actually a fundamentally sound, and properly profit-driven answer at least as justifiable as the hedge funds' justification for going >100% of float short. If they can be allowed to gamble INFINITE LOSSES because they expect to make profit on the possibility the company goes bankrupt, can't others do the inverse on the possibility the company I don't know.. doesn't go bankrupt and gets a better strategy from the team that created what is now a $43bn market cap company (CHWY) that does exactly some of the things GME needs to do (digital revenue growth) maybe? I mean, I first bought in on that fundamental value thesis in the 30s and then upped my cost basis given the asymmetry of risk in the technical analysis as an obvious no-brainer momentum trade. The squeeze is just, as WSB people might say, tendies raining down from on high as an added bonus.
I get that you disagree on the fundamental viability of GME. Great. Isn't that what makes a market?
Regarding the consequences of a squeeze, in practice my expectation was maybe at worst some kind of ex-market settlement after liquidation of the funds with exposure to keep things nice and orderly for the rest of the market. I mean, they handled the VW thing somehow right? I see now that I just underestimated elite hedge fund managers though--those guys are so hardcore (I'll explain why I think so a bit lower down).
If hedge fund people are so hardcore, how did the retail long side ever have a chance of winning this squeeze trade they're talking about?
Because it's an asymmetrical battle once you have short interest cornered. And the risk is also crazily asymmetrical in favor of the long side if short interest is what it is in GME. In fact, the hedge funds essentially cornered themselves without anyone even doing anything. They just dug themselves right in there. Kind of impressive really, in a weird way.
What does the short side need to cover? They need the price to be low, and they need to buy shares.
How does price move lower? You have to push share volume such that supply overwhelms demand and price therefore goes down (man, I knew econ 101 would come in handy someday).
But wait... if you have to sell shares to push the price down.. won't you just undo all your work when you have to buy it back to actually cover?
The trick is you have to push price down so hard, so fast, so unpredictably, that you SCARE OTHER PEOPLE into selling their shares too, because they're scared of taking losses. Their sales help push the price down for free! and then you scoop them up at discount price! Also, there are ways to make people scared other than price movement and fear of losses, when you get right down to it. So, you know, you just need to get really, really, really good at making people scared. Remember to add a line item to your budget to make sure you can really do it right.
On the other hand..
What does the long side need to do? They need to own as much of the shares as they can get their hands on. And then they need to hold on to them. They can't be weak hands either. They need to be hands that will hold even under the most intense heat of battle, and the immense pressure of mind-numbing fear... they need to be as if they were made of... diamond... (oh wow, maybe those WSB people kind of have a point here).
Why does this matter? Because at some point the sell side will eventually run out of shares to borrow. They simply won't be there, because they'll be safely tucked away in the long-side's accounts. Once you run out of shares to borrow and sell, you have no way to move the price anymore. You can't just drop a fat stack--excuse me, I mean suitcase (we're talking hedge fund money here after all)--of Benjamins on the ticker tape directly. Only shares. No more shares, no way to have any direct effect on the price whatsoever.
Ok, doesn't that just mean trading stops? Can't you just out-wait the long side then?
Well, you could.. until someone on the long side puts 1 share up on a 69420 ask, and an even crazier person actually buys at that price on the last tick on a Friday. Let's just say it gets really bad at that point.
Ok.. but how do the retail people actually get paid?
Well, to be quite honest, it's entirely up to each of them individually. You've seen the volumes being thrown around the past week+. I guarantee you every single retailer out there could have printed money multiple times trading that flow. If they choose to, and time it well. Or they could lose it all--this is the market. Some of them apparently seem to have some plan, or an implicit trust in certain individuals to help them know when to punch out. Maybe it works out, but maybe not. There will be financial casualties on the field for sure--this is the bare-knuckled capitalist jungle after all, remember? But everyone ponied up to the table with their own money somehow, so they all get to play in the big leagues just like everyone else. In theory, anyway.
And now, Probably the #1 question I've been asked on all of these posts has been: So what happens next? Do we get the infinity squeeze? Do the hedge funds go down?
Great questions. I don't know. No one does. That's what I've said every time, but I get that's a frustrating answer, so I'll write a bit more and speculate further. Please again understand these are my opinions with a degree of speculation I wouldn't normally put in a post.
The Market and the Economy. Main Street, Wall Street, and Washington
The pandemic has hurt so many people that it's hard to comprehend. Honestly, I don't even pretend to be able to. I have been crazy fortunate enough to almost not be affected at all. Honestly, it is a little unnerving to me how great the disconnect is between people who are doing fine (or better than fine, looking at my IRA) versus the people who are on the opposite side of the ever-widening divide that, let's be honest, has been growing wider since long before the pandemic.
People on the other side--who have been told they cannot work even if they want to, who wonder if congress will get it together to at least keep them from getting thrown out of their house if they have to keep taking one for the team for the good of all, are wondering if they're even living in the same reality.
Because all they see on the news each day is that the stock market is at record highs, or some amazing tech stocks have 10x'd in the last 6 months. How can that be happening during a pandemic? Because The Market is not The Economy. The Market looks forward to that brighter future that Economy types just need to wait for. Don't worry--it'll be here sometime before the end of the year. We think. We're making money on that assumption right now, anyway. Oh, by the way, if you're in The Market, you get to get richer as a minor, unearned side-effect of the solutions our governments have come up with to fight the pandemic.
Wow. That sounds amazing. How do I get to part of that world?
Retail fintech, baby. Physical assets like real estate might be a bit out of reach at the moment, but stocks will do. I can even buy fractional shares of BRK/A LOL.
Finally, I can trade for my own slice of heaven, watching that balance go up (and up--go stonks!!). Now I too get to dream the dream. I get to feel connected to that mythical world, The Market, rather than being stuck in the plain old Economy. Sure, I might blow up my account, but that's because it's the jungle. Bare-knuckled, big league capitalism going on right here, and at least I get to show up an put my shares on the table with everyone else. At least I'm playing the same game. Everyone has to start somewhere--at least now I get to start, even if I have to learn my lesson by zeroing my account a few times. I've basically had to deal with what felt like my life zeroing out a few times before. This is number on a screen going to 0 is nothing.
Laugh or cry, right? I'll post my losses on WSB and at least get some laughs.
Geez, some of the people here are making bank. I better learn from them and see if they'll let me in on their trades. Wow... this actually might work. I don't understand yet, but I trust these guys telling me to hold onto this crazy trade. I don't understand it, but all the memes say it's going to be big.
...WOW... I can pay off my credit card with this number. Do I punch out now? No? Hold?... Ok, getting nervous watching the number go down but I trust you freaks. We're still in the jungle, but at least I'm in with with my posse now. Market open tomorrow--we ride the rocket baby! And if it goes down, at least I'm going down with my crew. At least if that happens the memes will be so hilarious I'll forget to cry.
Wow.. I can't believe it... we might actually pull this off. Laugh at us now, "pros"!
We're in The Market now, and Market rules tell us what is going to happen. We're getting all that hedge fund money Right? Right?
Maybe.
First, I say maybe because nothing is ever guaranteed until it clears. Secondly, because the rules of The Market are not as perfectly enforced as we would like to assume. We are also finding out they may not be perfectly fair. The Market most experts are willing to talk about is really more like the ideal The Market is supposed to be. This is the version of the market I make my trading decisions in. However, the Real Market gets strange and unpredictable at the edges, when things are taken to extremes, or rules are pushed beyond the breaking point, or some of the mechanics deep in the guts of the Real Market get stretched. GME ticks basically all of those boxes, which is why so many people are getting nervous (aside from the crazy money they might lose). It's also important to remember that the sheer amount of money flowing through the market has distorting power unto itself. Because it's money, and people really, really, really like their money--especially when they're used to having a lot of it, and rules involving that kind of money tend to look more... flexible, shall we say.
Ok, back to GME. If this situation with GME is allowed to play out to its conclusion in The Market, we'll see what happens. I think all the long-side people get the chance to be paid (what, I'm not sure--and remember, you have to actually sell your position at some point or it's all still just numbers on your screen), but no one knows for certain.
But this might legitimately get so big that it spills out of The Market and back into The Economy.
Geez, and here I thought the point of all of this was so that we all get to make so much money we wouldn't ever have to think and worry about that thing again.
Unfortunately, while he's kind of a buzzkill, Thomas Petterfy has a point. This could be a serious problem.
It might blow out The Market, which will definitely crap on The Economy, which as we all know from hard experience, will seriously crush Main Street.
If it's that big a deal, we may even need Washington to be involved. Once that happens, who knows what to expect.. this kind of scenario being possible is why I've been saying I have no idea how this ends, and no one else does either.
How did we end up in this ridiculous situation? From GAMESTOP?? And it's not Retail's fault the situation is what it is.. why is everyone telling US that we need to back down to save The Market?? What about the short-side hedge funds that slammed that risk into the system to begin with?? We're just playing by the rules of The Market!!
Well, here are my thoughts, opinions, and some even further speculation... This may be total fantasy land stuff here, but since I keep getting asked I'll share anyway. Just keep that disclaimer in mind.
A Study in Big Finance Power Moves: If you owe the bank $10,000, it's your problem...
What happens when you owe money you have no way to pay back? It's a scary question to have to face personally. Still, on balance and on average, if you're fortunate enough to have access to credit the borrowing is a risk that is worth taking (especially if you're reasonably careful). Lenders can take a risk loaning you money, you take a risk by borrowing in order to do something now that you would otherwise have had to wait a long time or maybe would never have realistically been able to do otherwise. Sometimes it doesn't work out. Sometimes it's due to reasons totally beyond your control. In any case, if you find yourself there you have no choice but to dust yourself off, pick yourself up as best as you can, and try to move on and rebuild. A lot of people had to learn that in 2008. Man that year really sucked.
Wall street learned their lessons too. Most learned what I think most of us would consider the right lessons--lessons about risk management, and the need to guard vigilantly against systemic risk, concentration of risk through excess concentration of leverage on common assets, etc. Many suspect that at least a few others may have learned an entirely different set of, shall we say, unhealthy lessons. Also, to try to be completely fair, maybe managing other peoples' money on 10x+ leverage comes with a kind of pressure that just clouds your judgement. I could actually, genuinely buy that. I know I make mistakes under pressure even when I'm trading risk capital I could totally lose with no real consequence. Whatever the motive, here's my read on what's happening:
First, remember that as much fun as WSB are making of the short-side hedge fund guys right now, those guys are smart. Scary smart. Keep that in mind.
Next, let's put ourselves in their shoes.
If you're a high-alpha hedge fund manager slinging trades on a $20bn 10x leveraged to 200bn portfolio, get caught in a bad situation, and are down mark-to-market several hundred million.. what do you do? Do you take your losses and try again next time? Hell no.
You're elite. You don't realize losses--you double down--you can still save this trade no sweat.
But what if that doesn't work out so well and you're in the hole >$2bn? Obvious double down. Need you ask? I'm net up on the rest of my positions (of course), and the momentum when this thing makes its mean reversion move will be so hot you can almost taste the alpha from here. Speaking of momentum, imagine the move if your friends on TV start hyping the story harder! Genius!
Ok, so that still didn't work... this is now a frigging 7 sigma departure from your modeled risk, and you're now locked into a situation that is about as close to mathematically impossible to escape as you can get in the real world, and quickly converging on infinite downside. Holy crap. The fund might be liquidated by your prime broker by tomorrow morning--and man, even the broker is freaking out. F'in Elon Musk and his twitter! You're cancelling your advance booking on his rocket ship to Mars first thing tomorrow... Ok, focus--this might legit impact your total annual return. You need a plan, and you know the smartest people on the planet, right? The masters of the universe! Awesome--they've even seen this kind of thing before and still have the playbook!! Of course! It's obvious now--you borrow a few more billion and double down again first thing in the morning. So simple. Sticky note that Mars trip cancellation so you don't forget.
Ok... so that didn't work? You even cashed in some pretty heavy chits too. Ah well, that was a long shot anyway. So where were you? Oh yeah.. if shenanigans don't work, skip to page 10...
...Which says, of course, to double down again. Anyone even keeping track anymore? Oh, S3 says it's $40bn and we're going parabolic? Man, that chart gives me goosebumps. All according to plan...
So what happens tomorrow? One possible outcome of PURE FANTASTIC SPECULATION...
End of the week--phew. Never though it'd come. Where are you at now?... Over $9000*!!! Wow. You did it boys, and as a bonus the memes will be so sweet.
*side note: add 8 zeros to the end...
Awesome--your problems have been solved. Because...
..
BOOM
Now it's EVERYONE's problem. Come at me, Chamath, THIS is REAL baller shit.
Now all you gotta do is make all the hysterical retirees watching their IRAs hanging in the balance blame those WSB kids. Hahaha. Boomers, amirite? hate when those kids step on their law--I mean IRAs. GG guys, keep you memes. THAT is how it's done.
Ok, but seriously, I hope that's not how it ends. I guess we just take it day by day at this point.
Apologies for the length. Good luck in the market!
Also, apologies in advance for formatting, spelling, and grammatical errors. I was typing this thing in between doing all kinds of other things for most of the day.

Your 12-minute Wednesday report in 2971 words.

November 18 timeline

Nevada's Clarke County (Las Vegas) has officially recognized the Artsakh Republic.
https://twitter.com/ANCA_Wstatus/1328753472565493761
9:37: 1700 Artsakh refugees have returned home so far. The population was around 145,000 before the war. Some 10-20% never left.
https://armenpress.am/arm/news/1035190.html
10:09 PM Pashinyan presented the roadmap: It is time to talk about methods to overcome the current situation. I have already stated that I consider myself the number-one responsible for the situation. I am also responsible for overcoming the situation and establishing stability and security in the country.
1) Negotiations must resume in OSCE format, with the emphasis on Artsakh status and the return of Artsakh residents to their homeland.
2) Secure Artsakh residents' rights to return home. Fully restore daily life. Repair infrastructure.
3) Social aid for families of fallen soldiers.
4) Repairing infrastructure damaged in the Republic of Armenia.
5) Aid for wounded soldiers, obtaining prosthetics, educational training courses for changing professions if necessary.
6) Returning POWs and aid for their families. Clarification of the status of those who are missing, and aid for their families.
7) Rehabilitation system for those who participated in the war, and for the general public, too.
8) The beginning of reforms in the army.
9) Defeating COVID and overcoming its consequences.
10) Restoration of the environment for economic activity.
11) Activation of demographic programs.
12) Reforming electoral laws [opposition and the govt had agreed to lower the passing threshold to allow more opposition parties to enter Parliament, etc.]
13) Introduction of the Institute of Specialized Judges as the first step in establishing an anti-corruption courts. Launching the process to confiscate illegally embezzled property.
14) Conducting regular consultations with representatives of the Armenian political and civil community.
15) Consultations with diasporan institutes and individuals.
The goal is to ensure the democratic stability of Armenia and to create guarantees that nothing threatens the formation of power in Armenia through the free will of the people. For this, I'll make changes to the government team.
We will need 6 months to launch the aforementioned tasks. In June 2021, I will report to you the progress, and based on the public response, we will decide on what to do next.
Full: https://armenpress.am/arm/news/1035193.html
11:11: US Senator Bob Menendez called on the US government to impose sanctions on Turkey and Azerbaijan for the military aggression, and to end weapon supplies to them.
He called for a $100 million aid to Artsakh refugees.
https://youtu.be/JCh49hna7hA
https://armenpress.am/arm/news/1035203.html
11:42 COVID stats: +4,109 tested. +1,589 infected (down). +1,726 healed. +28 deaths. 38,082 active (down).
HealthMin Torosyan: the percentage of positive tests and the absolute numbers are declining, but the healthcare system is still under stress.
We still have 375 patients waiting for beds, 25 of whom are in serious condition. We will likely hospitalize them sometime today. A few days ago the waiting list was 800. The trend can change again with the resumption of schools.
Our main issue right now is oxygen supplies. Without it, the medication is ineffective. We'll soon receive more oxygen stations, followed by four large stations in December. We had purchased many oxygen stations during the first wave but today's large numbers, partly a result of the war, were outside of our predications.
We're negotiating over vaccines. There are agreements. They will likely arrive in mid-Spring.
We have no shortage of COVID test kits. New test labs are opening; two in the past week alone.
https://armenpress.am/arm/news/1035206.html , https://armenpress.am/arm/news/1035232.html
11:43: earlier this year, a part of a residential apartment complex collapsed in Yerevan. The govt has issued free housing certificates to the affected residents.
https://armenpress.am/arm/news/1035207.html
12:05: several soldiers returned from Artsakh and decided to organize a demonstration in support of PM Pashinyan. PM's office and QP party urged them to stay home and not to gather, citing the Martial Law that currently prohibits large gatherings and demonstrations.
A dozen prominent opposition figures were charged with ignoring the Martial Law and organizing demonstrations earlier. If found guilty, they are facing anywhere between a $415 fine to 2 months of jail.
https://armenpress.am/arm/news/1035208.html , https://armenpress.am/arm/news/1035240.html , https://armenpress.am/arm/news/1035245.html , https://www.arlis.am/documentView.aspx?docid=69646 , https://news.am/arm/news/614215.html
12:27: Aznavour Foundation and the Armenian Foundation of France have launched a committee to coordinate the aid process from France. Earlier they met President Macron about humanitarian aid and Artsakh's recognition.
Links in the article: https://armenpress.am/arm/news/1035213.html
12:38: Parliament Speaker QP MP Ararat Mirzoyan was severely beaten by rioters on November 10th. Healthcare Minister says he will soon recover after one more surgery [which was done today].
https://armenpress.am/arm/news/1035215.html , https://armenpress.am/arm/news/1035236.html
12:45: German-Armenian pianist Margarit Hovhannisyan gave a solo performance to collect aid for Armenia Fund (www.HimnaDram.org). She donated $5,000 in proceeds. The German colleagues expressed support for Artsakh and Armenians.
https://armenpress.am/arm/news/1035216.html
12:49: diasporan-Armenian singer Iveta Mukuchyan went to Artsakh's Dadivank church and performed "Sirt im sasani" (Սիրտ իմ սասանի) religious music.
Video: https://www.facebook.com/watch/?v=845836856202879
Mukushyan released a German-language video: https://www.facebook.com/watch/?v=782524012332940
13:50: The US will donate $5 million to Red Cross and other orgs to help those who suffered from the war.
https://factor.am/311291.html
14:02: the identification of soldiers who died in battles continues. 81 more names were published, bringing the total identified to 1586. Around 800 remain unidentified. Several hundred bodies were exchanged recently. The process continues.
MoD Tonoyan: The list of missing soldiers is shrinking; many soldiers end up being discovered alive and well. We drafted a bill to aid the families of soldiers who're missing.
Update: HealthMin Torosyan: we've examined 2425 bodies. 250 of them remain unidentified.
https://youtu.be/zrXQBUJLdK0
https://armenpress.am/arm/news/1035225.html , https://armenpress.am/arm/news/1035249.html , https://armenpress.am/arm/news/1035288.html
14:05 Armenia Fund (Himnadram) report: hundreds of thousands have donated. The aid was provided to Artsakh and Armenia from the first day of the war.
Diesel generators, emergency vehicles, medical products, basic consumer products, heating devices, portable gas stoves, mobile fuel stations, beds, etc. were purchased during the war. Simultaneously, 100 tons of aid was coordinated.
Himnadram will help Armenia's budget to pay for social welfare, healthcare, infrastructure repair, etc. The documents are ready. Tens of thousands of Artsakh refugees were aided.
International independent auditors will examine the finances.
 
During a Parliamentary session, the Deputy PM Mher Grigoryan confirmed that Himnadram has transferred some of the funds for humanitarian work.
In response, former regime's HHK MP Armen Ashotyan, without evidence, claimed the money is being stolen.
[Context: The former regime is mad because they were caught stealing Himnadram's donations in 2018. After the 2018 revolution, the Pashinyan administration busted HHK's Himnadram director with stealing the funds and using them on gambling. The director confessed and returned part of the stolen money. Himnadram then underwent a complete change in administration which raised the trust towards the fund. Now the former regime is sabotaging the diaspora's donation efforts for political gain.]
More: https://armenpress.am/arm/news/1035224.html , https://news.am/arm/news/614194.html
14:14: there are over 40 suspects charged with mass riots, attempts to forcefully seize power, and overthrowing the constitutional order, after the November 10 attack on the government buildings.
5 are arrested, 5 are told not to leave the country. 70 suspects, some of whom severely beat Parliament Speaker Mirzoyan and vandalized PM's residence, were also identified. They are on the wanted list.
Rioters who physically abused Pashinyan's spokeswoman Mane Gevorgyan, and broke into Azatutyun media outlet's office, are also wanted by police. Some were arrested.
https://youtu.be/1qA8iJ1JXmM?t=197
https://youtu.be/kSQ389vQA8U?t=3
https://armenpress.am/arm/news/1035226.html
14:18: Opposition LHK has its roadmap: no elections necessary, PM resigns, the ruling QP party appoints new PM, the new PM appoints ministers from various political parties. [similar to what Pashinyan did in 2018 when he appointed opposition Ministers for a brief period].
https://factor.am/311328.html
14:19: Azerbaijan earlier shot a Russian helicopter in Armenia. Two Russian pilots died and one was wounded. Armenia issued them military service medals.
https://armenpress.am/arm/news/1035227.html
14:49: video showing more Russian peacekeepers moving to Artsakh:
https://youtu.be/o7nwWmN59d8
15:18: Italian community of Viareggio has officially recognized the Artsakh Republic.
https://factor.am/311370.html
15:55: Aurora humanitarian organization will help Artsakh residents. IDeA's first aid program will begin today. They're open to humanitarian program suggestions. Link in the article:
https://armenpress.am/arm/news/1035237.html
16:27: Aghdam is one of the adjacent regions that's being given/returned to Azerbaijan. Seven villages with a combined 2,000 population will be resettled elsewhere.
https://news.am/arm/news/614171.html
16:42: food prices in October YoY rose +0.6%. Consumer price index +1.3%.
https://factor.am/311385.html
16:44: the head of Military Control Service Movses Hakobyan had resigned on November 10th. It was announced today.
https://armenpress.am/arm/news/1035242.html , https://news.am/arm/news/614169.html
17:04: will Germany follow France and ban the Turkish extremist-terrorist "Grey Wolves" organization? German Parliament will hold a discussion tomorrow. Two bills were proposed. One of them appears to be bipartisan.
https://armenpress.am/arm/news/1035248.html
17:05 Healthcare Minister Torosyan: we need to build a new 250-bed center for wounded soldiers and their rehabilitation. We need to maximally use the existing resources; some of them require upgrades. This will cost approximately $5.2 million.
https://armenpress.am/arm/news/1035247.html
17:09: Legatium Prosperity Index 2020 has ranked Armenia 55th in the world. That's a 23-step improvement over 2010. The strongest point was the business & investment atmosphere, with the environment being the weakest point.
Georgia 53, Armenia 55, Azerbaijan 78, Iran 120.
https://news.am/arm/news/614184.html
17:58: My Step charity foundation will double the number of wounded soldiers they help. The center will provide therapy, dental, and other services for 600 former soldiers.
https://armenpress.am/arm/news/1035262.html
14:57: it's SNOWING in Gavar and Jermuk cities, and roads near Sevan and Aparan! Georgian roads are also snowy; the Lars transport hub with Russia is open only for large cargo trucks.
https://armenpress.am/arm/news/1035233.html , https://armenpress.am/arm/news/1035253.html
17:38: Pashinyan was in Parliament to discuss various topics and answer questions. The opposition BHK and LHK parties boycotted and left.
Ind. MP: do you support forming a government of national accord, which could be one of the ways to find a solution out of the current situation?
Pashinyan: our task is to create an atmosphere of agreement in the country. No government can stay in power without the permission of the people. At atmosphere of agreement is not always achieved by forming [aforementioned type of govt consisted of various parties]. There is a need for agreement around two points: security and stability, and to guarantee democracy.
Ind. MP: will there be changes in the government?
Pashinyan: we are discussing it. Structural changes aren't being discussed right now.
Full: https://youtu.be/64iJuNWbk_Q
https://armenpress.am/arm/news/1035259.html , https://news.am/arm/news/614076.html
17:58: another video from November 4th showing battles on the outskirts of Shushi. [still believe it was "given away" without a fight? 🤔]
Hovhannes Avagyan, one of the deputy Artsakh army commanders, was killed during Shushi battles on November 7th. He received the Combat Cross medal posthumously.
https://youtu.be/yrzBbKvXFO4
https://www.panarmenian.net/arm/news/287858/
18:18: the 16 opposition parties resumed their demonstrations. They demand the government's and Pashinyan's resignation. The police urged them to respect the Martial Law and not to gather.
They will also hold a demonstration on Saturday and present a document, presumably their own roadmap.
https://armenpress.am/arm/news/1035264.html , https://armenpress.am/arm/news/1035280.html
18:21 Police: body of the 27-year-old Garnik Petrosyan was found under Kievyan Bridge on November 13th. A medical examination was carried out and an investigation was launched.
The examination revealed that Petrosyan was among the rioters who broke into the govt building and caused destruction on November 10th. A felony case was launched against him and he was arrested shortly afterward.
On November 13th he was charged with multiple felony counts. The same day, at 8 pm, his 3-day detention period had expired so he was released from the police station. The same day, prosecutors asked the court to arrest him for 2 months before his trial.
Petrosyan was questioned until 9 pm. The tragic incident happened at 10:04 pm. Social media spread rumors that he was allegedly murdered and it wasn't a suicide by jumping from the bridge.
Investigation revealed a witness who was walking nearby and saw how a man grabbed a flag pole and climbed at the center of the bridge at around 10 pm. By the time the witness picked up the phone to call 911 it was too late. Immediately afterward, two other people and the witness looked down the bridge and saw the body laying on the road below the bridge.
The police arrived. The witnesses were questioned. The victim was there alone.
CCTV footages were examined. It showed how the victim went there by himself, climbed on the edge, and jumped.
It was revealed that the victim had attempted suicide in 2010 by overdosing on medications. He was registered at a special center up until 2019, where he was taking special medication. He stopped taking them in January 2019 at his own will.
[Media outlets run by the former regime, and a Telegram channel called Mediaport, had earlier circulated rumors, without evidence, that the rioter was murdered by a ruling party member Hayk Sargsyan. The latter often finds himself the target of rumors]:
https://armenpress.am/arm/news/1035265.html
18:22: Ara Ayvazyan is the new Foreign Minister. He is a graduate of YSU eastern studies Arabic faculty. Served in the Soviet army. Graduated from Beirut's Haykazyan college. Worked in MFA since 1995. Served as ambassador to several states in 1996-2018.
https://armenpress.am/arm/news/1035266.html
18:56: despite being told to stay home, Pashinyan supporters gathered in front of the govt building, urging him not to resign.
"I came from Martakert outposts. I have participated in war since 1992, and so did my family members. They [former regime] should have purchased weapons instead of private islands and mansions," said one demonstrator. "By hitting the Parliament Speaker Mirzoyan you're hitting me."
PM's aide met the demonstrators and said his resignation isn't being discussed.
Pashinyan went outside to meet them and asked them to go home, "I know that there are tens of thousands of you who are ready to gather in Public Square if necessary. Thank you. I bow to all the volunteers, fallen soldiers, and their families. Go home now. If necessary, I will invite you."
The police began telling the gathered crowd to leave, citing the Martial Law.
Pashinyan goes outside: https://youtu.be/ueXhEKJhcwA
Soldiers: https://youtu.be/vgoGD89vNeA
Soldiers: https://youtu.be/KhXFjOiERY4
Soldiers: https://youtu.be/G00E049LsdY
https://armenpress.am/arm/news/1035268.html , https://armenpress.am/arm/news/1035271.html , https://armenpress.am/arm/news/1035279.html
18:56: Russian humanitarian envoy will help Artsakh authorities to travel around and document the damage to civilian infrastructure.
https://armenpress.am/arm/news/1035269.html
19:01: the army published names of soldiers who committed acts of bravery during the war.
Lt. Colonel Ryurik Semyonov blew up 2 Kamaz trucks full of ammo, 2 anti-tank equipment, 3 tanks, 8 cars, 1 TR artillery unit.
Lt. Colonel Arthur Qaramyan destroyed 3 and captured another 3 tanks. He helped to save 600 soldiers from encirclement.
Private Suren Gabrielyan shot 6 armored vehicles and 2 tanks.
Lieutenant Tigran Petrosyan shot 6 tanks.
More: https://factor.am/311564.html
19:04: a soldier uploaded a video from trenches saying the army wasn't properly prepared and that the trenches have been in poor shape for 30 years. "Not deep enough to defend against explosions."
He says this Martakert position was defended during the war despite the poor condtions.
https://youtu.be/aWPzBZwk2j4
20:54: the opposition ended today's demonstration and promised to return at 2 pm on Saturday. They called for PM's resignation again. HHK Shawarmazanov said, "we won't engage in active politics if he resigns".
Opposition Arthur Vanetsyan announced plans to participate in elections if they take place now.
https://youtu.be/ZAuGcDRJ3uk
https://news.am/arm/news/614243.html , https://news.am/arm/news/614239.html , https://factor.am/311610.html
21:05: the City Council of Paris has a resolution that urges the Paris mayor to ask the French MFA to officially recognize the independence of the Artsakh Republic.
It takes into account a recent push by 15 French mayors to recognize Artsakh, Azeri-Turkish aggression and the use of hired jihadists, war crimes against Armenian civilians, destruction of 80% of infrastructure objects in Stepanakert (including schools and clinics).
Full: https://armenpress.am/arm/news/1035284.html
21:11: Azerbaijan's opposition National Front criticized the govt for placing Russian peacekeepers on the borders with Artsakh. They held a demonstration and chanted "Putin, leave. Turkey, come."
https://factor.am/311609.html
21:57 photos: these boys defended the borders:
https://hetq.am/hy/article/124436
Here are the tankists: https://hetq.am/hy/article/124452
22:02: the government of Armenia and Artsakh formed a joint committee to coordinate humanitarian work. 1) Social issues 2) Education 3) Healthcare 4) Business environment 5) Infrastructure repair.
https://armenpress.am/arm/news/1035291.html
22:50: Nations League Soccer Spoiler Alert! The Armenian team defeated Northern Macedonia 1-0, after winning the match against Georgia a few days ago.
For the first time ever, the team, led by Spanish expert Joaquin Caparros, is the leader in its group.
What does this victory mean?
This tournament has four tiered Leagues: A, B, C, D. League A contains the "best" countries who compete for the champion's cup. The teams in lower leagues compete to climb up to higher leagues, with the ultimate goal of making into League A and winning the cup.
Armenia has just advanced from League C to League B.
https://armenpress.am/arm/news/1035292.html
https://en.wikipedia.org/wiki/2020%E2%80%9321_UEFA_Nations_League
23:40: A1+ outlet wants to restore its TV broadcasting rights. They were suspended by the Kocharyan regime. They insisted it was politically motivated for their opposition views. The media outlet was targeted for covering the March 1st, 2008 events.
Several outlets are currently competing for public airway licenses. The winners will be known in January. The TV regulator said those with the best programming will receive the license.
https://www.armtimes.com/hy/article/201204
23:47: The French Senate will discuss the need to recognize the Artsakh Republic. Presidents of the five largest parties supported the idea to hold a discussion.
http://www.civilnet.am/news/2020/11/18/Ֆրանսիայի-Սենատը-որոշում-է-կայացրել-քվերակության-ներկայացնել-«ԼՂՀ-ճանաչման-անհրաժեշտության-մասին»-բանաձևի-նախագիծը/408863

You can help Artsakh & Armenia

www.1000plus.am (soldiers' medical help)
www.HimnaDram.org (for Artsakh & Armenia)
www.ArmeniaFund.org (U.S. tax-deductible)
 
Prior events:
Nov 17, Nov 16, Nov 15, Nov 14, Nov 13, Nov 12, Nov 11, Nov 10, Nov 9, Nov 8, Nov 7, Nov 6, Nov 5, Nov 4, Nov 3, Nov 2, Nov 1, Oct 31, Oct 30, Oct 29, Oct 28, Oct 27, Oct 26, Oct 25, Oct 24, Oct 23, Oct 22, Oct 21, Oct 20, Oct 19, Oct 18, Oct 17, Oct 16, Oct 15, Oct 14, Oct 13, Oct 12, Oct 11 , Oct 10, Oct 9 , Oct 8, Oct 7,Oct 6, Oct 5, Oct 4, Oct 3, Oct 2, Oct 1, Sep 30, Sep 29, Sep 28, Sep 27

Obviously this isn't set in England, but spiritually this piece is within my English Football series. The first six episodes covered Nottingham Forest's 21st century woes, the dickpic that consigned Notts County to the non-league, a reignited rivalry between Derby County and Leeds United, Stoke City's legendary shithouse era, the English Golden Generation of the 00s descending into farce, and Wimbledon FC's controversial relocation to Milton Keynes
This spin-off piece follows on from the main question raised by the Wimbledon FC/MK Dons saga. When does a club stop being a club? Is it the legal entity or something rather more intangible? These were questions posed with regards to one of the titans of Scottish football earlier this decade.
Background - The Establishment Club
Rangers FC has long cultivated an image as Scotland's 'establishment club', it isn't just a sports team, but an institution that embodies a particular way of living and worldview. Alongside other institutions like the Church of Scotland, the club is perceived as embodying traditional and small-C conservative Scottish values. Alongside Celtic (more on them in a bit) Rangers have dominated Scottish football since the league started. No club other than the two Glaswegian sides has won the league since 1985. Rangers have 54 league titles, Celtic have 51. The joint 3rd best sides (Aberdeen and the Edinburgh pair Hearts and Hibernian) have just four a piece. And yet as a legal entity the club ceased to exist in 2012. What happened? Does Rangers FC still exist?
It would be impossible to tell this tale without telling the tale of the Old Firm and the profound political, cultural, and religious divides involved. Glasgow's two largest clubs have a rivalry that defies comparison to anything in the rest of Scotland or in England. Essentially Rangers FC and its supporters represent Protestantism and British Unionism, while Celtic FC are considered to be aligned with Catholicism and Irish Nationalism. When the two sides meet, the Scottish saltire is rarely flown by supporters. Rangers supporters prefer the Union Jack or Ulster Banner, Celtic fans are likely to fly Irish tricolours. It is as if somebody took the socio-cultural conflict of Northern Ireland and transplanted it into a football ground.
Which is sort of what happened. Ultimately a big factor was migration to Glasgow in the early 20th century - Irish Catholics in Glasgow set up Celtic FC as their club, while Protestants from Northern Ireland (who are historically of largely Scottish extraction) who worked in the shipyards of the Clyde came to adopt Rangers which was located near the shipbuilding areas. Local Scots, being generally Protestant, inclined to support Rangers and many would have shared the religious and political feelings of the newcomers from Northern Ireland. This has meant that at matches both clubs have sections of support who chant about the Northern Irish conflict - some Rangers fans have a 'songbook' including the Loyalist anthem The Sash (which commemorates King William III, the Dutchman invited to become King of England and Scotland who defeated a Catholic army at the Boyne in 1690), while Celtic fans might sing in support of the Irish Republican Army. This involves by no means the majority of supporters, but it is important in setting the atmosphere at games.
Rangers FC had until the late 1980s an alleged policy of not signing any player known to be a Catholic. This led legendary Celtic manager Jock Stein to joke that if offered a Catholic or a Protestant to sign for Celtic, he would sign the Protestant in the knowledge that Rangers would never sign the Catholic. I cannot find evidence of any player ever transferring directly between Celtic and Rangers in the postwar era, with the low number of players who have turned out for both having had a 3rd club in between. Another example of the intensity is the way in which the clubs traditionally share shirt sponsors. This sounds innocuous, but the only way to sponsor one of the clubs without triggering a mass boycott by the other supporters was to simply sponsor both.
No other football rivalry in Britain has a dynamic like this (Liverpool and Everton did to a far lesser extent before about the 1960s, but sectarianism largely died out there decades ago), even in the days when hooliganism was a serious blight on English football it never quite reached the sort of scenes on display at the 1980 Scottish Cup Final.
Which club is the 'biggest'? It is impossible to say. Rangers have had more League titles, but Celtic being the first British club to win a European Cup in 1967 is a fairly potent trump card. What is without a doubt is that they are the two best supported Scottish clubs and their rivalry is possibly like no other.
Chasing the Rainbow
Avid readers of this series will notice a theme. The 1990s were a boom time for football and everyone involved in the sport. TV revenue started to really take off, as did the prizes for winning European competitions. Many clubs sought to capitalise on the windfall and Rangers were no exception.
Their chairman, Sir David Murray, had become one of Scotland's weathiest businessmen by leveraging debts against future revenue. He spent big on Rangers in the hope that they would win a major European trophy and repay his investment. Top players like Paul Gascoigne came to Rangers where before it was fairly rare for big name players from other leagues to move to Scotland. Domestically his investments paid off, from 1989-97 Rangers won nine League titles in a row, equalling the record set by Jock Stein's great Celtic side between 1966-74.
Unfortunately this did not translate to the windfall a Champion's League win would have given. While Murray was bankrolling Rangers, other clubs around Europe were likewise chasing the new massive financial prizes. Rangers came close to getting past the group stage of the new Champion's League format in 1992-93, but no Scottish club would enter a Champion's League knockout round until Rangers do so in 2005-06.
The debts mounted and Murray sought ways to manage the debts and hedge them against future revenue anticipated from TV fees and European prize money. He allowed the Bank of Scotland to buy a stake in the club with a mortgage allowing them to recover their losses in the event of the club defaulting on its repayments. Nothing to worry about, surely? David Murray had become a wildly successful businessman by effectively managing credit lines and debt against future income to fund expansion.
But a far bigger problem was just three small letters.
EBT
Put simply, Employee Benefit Trusts are a way of not paying tax, it was legal in some cases at the time but is generally illegal now.
Murray sought, from 2000, to pay his players through EBTs. This meant that they would be able to offer high net wages to players while cutting tax costs. In Britain most employees have all their tax payments deducted by the employer, so schemes like this and ones where employees are paid in dividends are a way of essentially not paying tax.
By 2010 HMRC had begun to investigate the case, concluding that Rangers may have evaded £49m in taxes, a vast amount for a club already overleveraged in debt in a league not known for being particularly wealthy.
By about 2008 Murray had had enough of Rangers and was looking to sell up. He had gambled and lost huge amounts of money on the club, which was now saddled with huge amounts of debt. The prospect of paying £49m to HMRC if the courts ruled against Rangers deterred any serious buyer and it took some years for a buyer to emerge. Another serious issue was the sheer amount of debt Rangers had to Lloyds (who had taken over the Bank of Scotland), with fans in 2009 threatening a boycott of the banking chain if the bank called in its debts.
Would a buyer emerge and save Rangers from this predicament?
Well, a buyer would emerge in 2011. Not the other bit, sadly.
Enter Craig Whyte
Craig Whyte had once been Scotland's youngest millionaire as a venture capitalist. He bought the club for £1 from Murray but desperately needed to leverage some funds to settle the Lloyds debt, so he borrowed a cool £26.7m against future season ticket sales. This on the face of it should have set alarm bells, even the biggest clubs don't make huge amounts of money on matchday tickets in relation to their massive costs.
Whyte also indulged in a bit of tax fiddling. But rather than setting up an avoidance mechanism and letting the lawyers fight it out, he just stopped sending Her Majesty's Revenue and Customs the income tax payments for the club players and staff. Definitely not the sophistication of Murray.
Matters only got worse. In early 2012 BBC Scotland aired a BAFTA-winning documentary about Whyte and Rangers, which revealed that Whyte had been once banned from working as a company director for seven years. The Scottish Football Association agreed, Whyte was not a 'Fit and Proper' person to own a football club.
At about this time Rangers entered administration. When this happens in Britain, the company's creditors can agree to a 'Company Voluntary Arrangement' (CVA) which essentially means agreeing a plan for the company to continue operating while in administration so the creditors can recover their debts. HMRC, with the outstanding £49m tax case from Murray's era plus the money owed by Whyte's outright failure to pay tax, voted against allowing this to happen.
In the absence of a CVA and agreement with creditors, this meant that Rangers FC as a company ceased to exist in June 2012, with all assets transferred to 'Sevco Scotland Ltd'.
Could this have been avoided? In the end, the £49m owed to HMRC which proved such a millstone has been substantially reduced and the cases around it are still ongoing. But ultimately, Rangers had vast amounts of debt not just to HMRC.
For his part Whyte would be bankrupted by his loan to buy the club and would be faced with a far longer ban on acting as a company director.
Sevco FC?
Sevco inherited everything Rangers had. The players had an opportunity to transfer their employment to Sevco, which also gained Ibrox Stadium and Ranger's membership of the Scottish Premier League.
For the club owned by Sevco to be able to play in the SPL next season, 2/3rds of members had to vote in favour. Clubs such as Aberdeen, Dundee United, and Hearts bowed to fan feeling that Rangers could not continue where they left off. In the end, no club voted in favour of Rangers remaning in the SPL with only Kilmarnock abstaining. This event would generate a huge amount of bad feeling and bitterness from Rangers fans who felt that supporters of other clubs were content to throw them under a bus for reasons not of their making. There was definitely a sense of schadenfreude from supporters of other clubs, watching Scotland's 'Establishment Club' go to the wall.
Could Rangers join the Scottish First Division and gain promotion to the Premier League? First Division clubs didn't want to face the consequences of a Premier League problem, so they also rejected it.
In the end, the Scottish Football League allowed Rangers FC to rejoin the league in the Third Division, a largely semi-professional league three divisions below the Premier League. Their first competitive game was a Challenge Cup (competition for the two lower leagues in the Scottish Football League) tie against Brechin City, who represent a sleepy town of just 7,000.
Clawing their way back up
Most of Ranger's players had refused their statutory right to transfer employment to the new company. Nonetheless, the 2012-13 season started well with their first home league game setting a world record for the best attended fourth division match in history as over 49,000 attended Rangers vs East Stirlingshire. A strong league performance saw Rangers confirm promotion into the 3rd tier by the end of March.
2013-14 saw another promotion as Rangers had an unbeaten season in League One (the leagues were renamed at about this time) to secure promotion to the Championship, the first league which would be wholly filled with professional clubs after the mix of professional and semi-professional that plies their trade in Scotland's lower leagues.
Rangers didn't make it three back-to-back promotions as they lost a promotion play-off final 6-1 to Motherwell, one of Scotland's more successful non-Old Firm clubs who had suffered a stint in the 2nd tier.
During this season they met Celtic in the cup. Some Celtic fans placed an advert in a newspaper claiming that the 'Old Firm' was over and while they had enjoyed a rivalry with Rangers FC they did not recognise the new club as the same entity. This caused some controversy, not just with Rangers fans, but with Celtic fans who were indeed looking forward to the first Old Firm in some time. The accusation that Rangers were 'Zombies' or 'Sevco FC' would become a common one from Celtic supporters at games and remains as such.
Rangers won the 2016-15 Scottish Championship to secure promotion, while also beating Celtic in a Scottish Cup semi-final. But, the 'Gruesome Twosome' of Scottish football would once again grace the top flight together.
Same as before?
Celtic had done very well out of the previous few years. They had won a succession of League titles at a canter with the accompanying European qualification giving them financial muscle the other clubs couldn't compete with. Rangers finished a respectable 3rd, but Celtic once again dominated the league.
After an embarrassing elimination out of the Europa League at the hands of a semi-professional side from Luxembourg, Rangers didn't improve on their 3rd place and Celtic won again. It wasn't until 2018-19 that Rangers finished 2nd.
With Celtic winning again.
Could Celtic's domination be broken before they won 10 titles in a row and broke the record jointly held by 1960s-70s Celtic and 1990s Rangers? Perhaps not yet.
2019-20 started well, Rangers had a fantastic run in the Europa League under Steven Gerrard and beat Celtic at their ground for the first time since 2010. COVID put paid to an increasingly close title race with Celtic awarded the title based on Points Per Game with the season abandoned.
This season has very much been Ranger's season though. At the time of writing they seem, barring a miracle/disaster, overwhemingly likely to win the League this year and deny Celtic the coveted ten in a year.
Postscript
Is the Rangers FC of today the same club as that pre-2012? Displays from Celtic fans would say not, and as a legal entity it certainly isn't the same. But UEFA allows for 'sporting continuity' for a club in terms of identity and honours even if the holding company or corporate structure changes. This suggests something that many football supporters would agree with - a club is as much as community asset as it is a company or business and the stories we have looked at explore the issues when the business and the community collide.
Next time, we'll take a look at how Arsenal Fan TV revolutionised football social media while turning their club into a laughing stock

 Remember, Remember, the 5th of NoRender... 

I am surprised there aren’t any posts about Chronicles of Elyria on HobbyDrama yet! The community was so rife with drama from start to finish that I don’t even know where to begin.
Throwaway because I will probably be doxxed if I post on my main.

What is Chronicles of Elyria?

Chronicles of Elyria was pitched as a Kickstarter in May 2016 as a dynamic MMORPG with procedurally-generated quests, a fully destructible environment, closed economy, finite resources, and survival elements. The goal was $900k, but they made about $1.3 million in the initial campaign, and through their subsequent crowdfunding efforts made close to $8 million total over the next few years.

What went wrong?

In terms of lofty ideas, Chronicles of Elyria was right up there with Star Citizen, but with a fraction of the funds. We’d be here all day if I went into detail about all of the game’s proposed features, because it’s like they were trying to be Crusader Kings meets medieval life simulator meets Harvest Moon meets survival game meets action RPG all at once. Browse through their Developer Journals; even without a background in game development, it’s clear that the scope of what they were trying to pull off would have been ambitious for a major studio, let alone a small crowdfunded team.
The game’s initial release date was a laughably unrealistic Q4 2017, so it was no surprise that this would get pushed back again and again over the course of development. However, on March 24, 2020, lead developer Caspian made an announcement that rocked the community: State of Elyria: Into the Abyss (autoplay warning). In his typical long-winded fashion, Caspian spent the bulk of the post outlining the milestones the team reached over the past year, but only in the last few paragraphs did he mention that due to financial stressors from COVID-19, they ran out of money and had to lay off the entire team, shuttering development of Chronicles of Elyria. Because of several factors I’ll cover in the next few sections, the community did not take this well. In less than two weeks, the Washington State Attorney General’s Office reported they had received over 150 official complaints against Soulbound Studios, the most they had ever received for a company in that amount of time. Community whales formed a 'CoE Lawsuit' discord and discussed plans for a class-action lawsuit, demanding accountability and refunds. Some of them even pledged over $20k on the game, and they weren’t going to let Caspian cut and run.
Amidst threats of legal action, on April 9 Caspian dropped another blog post, A Letter from Soulbound Studios to Our Community claiming that the March 24 post came from a “very emotional place.” He said that the community misinterpreted his intent, and that he was actually trying to communicate that he was still working on the game while looking for ways to secure additional funding. As you can expect, this was just as poorly-received as his last announcement.
​

Wait, why did people spend so much money on this game? And how did the drama get so spicy?

By its own design the game stirred up drama even before release. With social stratification based on medieval feudalism literally built into the system, there was no way around it; the developers cheekily called it the “Dance of Dynasties.” There were multiple tiers of "pledges" and if I’m remembering correctly, the prices after the kickstarter were $500 for a Mayor title, $1000 for Count, and $3000 for Duke. The most coveted were of course the King/Queen titles, which had people shelling out a whopping $10000 for the chance to be royalty in an unreleased game. Even with the limited supply (6 kingdom slots per server iirc), these kingdom packages sold out all but one server. A few monarchs even purchased TWO kingdom slots to guarantee their supremacy on their chosen server.
It’s very difficult to overstate the cult-like mentality of the community during the “peak” years of 2016-2018. There was an official CoE discord server where the developers frequently engaged with players, but most of the drama happened in what were called the Discords of Elyria. These were community-run discords for individual kingdoms, duchies, counties, towns, and baronies. Each had their own cliques of ‘advisors’ and elite roleplaying cabals.
No, ‘elite roleplaying cabals’ is not an exaggeration; these people were spending thousands of dollars for a title to justify RPing as nobility to lord over the peasant rabble. This attracted a lot of entitled narcissists; the game’s structure practically encouraged it! I’ll give you an anecdotal example: I was really active within a kingdom discord and was eventually appointed as an advisor (the equivalent of what a guild officer would be in a normal MMO). This title was almost useless until release, so it was mainly just a glorified clique with a secret discord channel where we would theorycraft and talk shit about people we didn’t like in the kingdom. But I was the only one on the advisory council that did not possess a noble title, and a Countess kicked up a big fuss about this. Just like the real-life aristocracy, she was scandalized! Wording it in an RP-appropriate way with paragraphs of purple prose, she claimed that the $60 I pledged to the funding of the game wasn’t enough to prove I was fully committed. She and her cronies were so bothered that they tried to get me off the council. They went around DMing a bunch of people, accusing me of being a spy because I used to RP with some guy that left for a rival kingdom, and dredged up screenshots of year-old discord posts as proof my conduct was “unbecoming” of a representative of the kingdom.
There’s a saga behind that story and many others; I can absolutely go into more detail in another post if enough people are interested in the byzantine “Dance of Dynasties” and the inter- and inner-kingdom drama that went down during the development of this beautiful disaster of a game… and developer involvement in said drama. If you want to waste several hours of your life, there is plenty of RP cringe archived on the read-only forums. For now, that’s just a small slice to help illustrate how detached from reality and cult-like this community was. Going back to the downfall...
​

Early Red Flags

As I alluded to, there were already red flags when the game was first pitched on Kickstarter. Despite hitting the initial $900k and going well into their stretch goals, the devs were still encouraging players to crowdfund long after the Kickstarter ended. There were several additional promotional events (somewhat outdated post that doesn't include everything) selling both cosmetic items and mechanically useful items, despite the developers going through hoops to justify over and over again why the game was not pay to win (it was). Eventually, the constant promotions and gamey tactics prompted community members to question why we were seeing more promotional events than development updates.
The devs then admitted that the original Kickstarter campaign was meant to raise enough to be able to create a demo to attract investors and secure a stream of income that didn’t rely on crowdfunding. Unfortunately, no investors took a gamble on a risky debut from an inexperienced team, and despite Caspian making a few weird statements on Discord and implying they had “other sources” of funding that they did not have to divulge to the community, he too later admitted that they were relying solely on crowdfunding to make this game work.
Well, this news was a departure from their previous claim that all they needed was 900k to develop the game for a Q4 2017 release, and that all funds would be used towards the development of Chronicles of Elyria. No one knew this was all just for a demo to attract investors, and people were justifiably upset.
​

The Community Begins to Turn

There was (and still is, last I checked!) a particularly loyal and obsessive subset of the community. At the slightest hint of criticism they’d quickly jump in to defend the game and devs. The community moderators were no better, and a lot of posts were censored or deleted from the forums. The developers had built up a sort of cult of personality with their over-involvement with the community. Despite a hilarious lack of transparency about the actual development of the game, they were… uncomfortably close to the playerbase.
Caspian complained about specific players on the official discord and publicly accused two kingdoms of cheating during a cheap browser event meant to (surprise) raise more money. A player made a post on the forums saying the community outreach manager should be replaced (he was known for being snarky and condescending). Said community outreach manager actually private messaged people that upvoted the post, basically saying “if you think I should be replaced, please don’t contact me if you ever need anything in the future.”
Yes, that came from the guy handling outreach.
The "Map Selection" event was rife with its own kingdom vs kingdom drama, but the devs weren't able to redeem themselves here. After months and months of delays for a map event, Caspian failed to deliver the high-resolution maps as promised on November 5, 2018, claiming they were taking too long to render.
"Remember, remember, the 5th of NoRender" became a meme and rallying cry across the community in reference to the constant delays and deception, to the point where people were banned just for saying it in the official discord.
Then there was the issue of Prelyria. Prelyria was the low-poly pre-alpha client of the game they were developing. Meant to be like a graybox, it became a lot more involved than that and seemed to eclipse the development of the “real” game. People felt they had been bamboozled when they looked back:
Pre-alpha video May 2016
Pre-alpha video September 2019
Some players with industry experience were pointing out that the amount of time the devs were spending on building the Prelyria assets and developing the low-poly client first (it was a lot more involved than a simple graybox) was actually going to be more cumbersome and definitely not save all the time the devs hoped it would. At this point, Caspian still looked like a well-intentioned idea guy with his head in the sky, and most people didn’t think he was intentionally scamming anyone. Personally, I believe Caspian definitely started out in earnest, but he spoiled his own vision with mismanagement and obfuscation.
Funding was always a touchy subject.
Despite first claiming they only needed $900k to finish the game, then saying no wait actually we need like $3 mil, Chronicles of Elyria raised almost $8 million in total and after 4 years in development had nothing close to a minimum viable product.
We later learned that $500k of that initial $900k came from Caspian himself. This of course was not disclosed until after the Kickstarter.
On March 20, 2020 (four days before the infamous Into the Abyss announcement), the devs released an exciting update claiming that Pre-Alpha Testing Has Officially Begun! Players that had pledged (iirc) $1000 or more now had access to test Alpha I! But excitement quickly faded as players realized this wasn’t really an alpha, but a 10-15 minute demo showing off movement and parkour mechanics and ONLY that. I didn’t have alpha access so I don’t know how bad the demo really was, and those who played it are still under NDA, but I heard it was terrible, and looked like something that could be slapped together in a couple weeks using Unity store assets.
Let’s look again at the timeline Caspian pulled out at the end of 2017 when he admitted the Q4 2017 release date wasn’t going to happen:

1. V3 of the Website (Q3 2017)
2. ElyriaMUD (Q4 2017)
3. Alpha 1 (T1 2018)
4. Server Selection (T1 2018)
5. Settlement / Domain Selection (T2 2018)
6. KoE (T2 2018)
7. Design Experiences (T3 2018)
8. Alpha 2 (T3 2018)
9. Beta 1 (S1 2019)
10. Prologue & CoE Adventure Toolkit (S1 2019)
11. Exposition (S1 2019)
12. Beta 2 (S1/S2 2019)
13. Stress Test (Any paid account)(S2 2019)
14. Launch (S2 2019)

By March 2020, the only milestones they hit were V3 of the Website, Server Selection in November 2018, and Settlement/Domain Selection (after a series of delays that included a period of radio silence lasting over 100 days, it began somewhere around Summer 2019 and never officially concluded).
​

The Downfall

Now for the big question I’m sure all of you have: why was it such a big deal when he announced they ran out of funding?
Indeed, projects are cancelled or become vaporware all of the time. While it's obvious Caspian and team were drowning in too many ideas and not enough tangible progress, why was this scummy enough to warrant hundreds of complaints to the AG and a class-action lawsuit?
About a week before the March 24 announcement, Caspian launched the “Settlers of Elyria” event. It’s hard to explain out of context, but basically all the unclaimed duchies, counties, and baronies were going on sale, and players could purchase them at reduced prices.
Yes, up to a day before he announced he laid off the entire team, he was allowing people to spend thousands of dollars on fake titles. Worse was the fact that this event was designed for new members of the community that didn’t have a chance to buy titles before or weren’t able to because of the prohibitive cost.
Illegal? Maybe not. Fucked up? Absolutely. This, combined with Caspian taking a PPP loan right afterwards painted a damning portrait of a man squeezing every last penny out of this failed endeavor before he ran.
Caspian kept the official discord open for a couple days after announcing the shuttering of the studio, but on March 29, he “fired” all of the community mods and deleted the discord, claiming that people were saying “horrible, unimaginable things” about him. There were rumors that he was cheating on his wife with a (much younger) community member. Apparently, a dev was corroborating these statements and providing receipts. Whether these awful rumors were true or not, Caspian’s reaction in the mod forum was nuclear.

The Future of CoE

After nearly six months of radio silence, a few days ago on December 17, 2020, Caspian gave interviews to MassivelyOP and MMORPG.com and released an “update” video that is a nothingburger rehash of old 'gameplay' footage and platitudes. He keeps saying that CoE is in development, but he has nothing to show. He keeps saying some of the staff have volunteered to work on it, yet based on their LinkedIn profiles it looks like most of the original team have found jobs elsewhere. He refuses to release the results of the studio’s audit. The new FAQ on the website is an obvious attempt to avoid lawsuits and in the two interviews he hilariously continues to extol his own transparency while being as transparent as a brick wall.
People are still able to find justifications for Caspian's actions and to this day are in the community-run discords and subreddit trying to keep the hype train going. Maybe it's a combination of Stockholm Syndrome and Sunk Cost fallacy, but a lot of people still maintain absolute trust in his vision. I personally did not invest a significant amount of money (but I did waste my time, RIP), but it's still as saddening as it is maddening. Yes, those "Dance of Dynasty" posts on the forum might be cringey now, but people put SO MUCH creative energy and passion into coming up with lore for their kingdoms and duchies and towns and such, and despite being a skeptic for most of my time with the community, it was an incredibly unique experience to be part of this group. I just wish they would move on; put that energy into something productive and not waste it on a failed game. Caspian used them and he will continue to use them if people keep giving him a platform.
​
EDIT: added more links
EDIT2: Obligatory "wow I didn't expect this to blow up!" but I really didn't! Thanks for the gold x2!

Previous Results

1945 – Sir Archibald Sinclair (Liberal)
1950 – Clement Davies with 50% of the vote
1951 – Clement Davies with 58% of the vote
1955 – Sir Anthony Eden with 67% of the vote
1959 – Harold Macmillan with 75% of the vote
1964 – Jo Grimond with 73% of the vote
Last week the results were: Jo Grimond (Liberal) 73%, Sir Alec Douglas-Home (Conservative) 16%, Harold Wilson (Labour) 11%
Lab vs Con only: Sir Alec Douglas-Home (Conservative) 56%, Harold Wilson (Labour) 44%
The Actual results from 1964 were:
Labour: 317 seats, 44.1% of the vote
Conservative: 304 seats, 43.4% of the vote
Liberal: 9 seats, 11.2% of the vote

Profiles

• Harold Wilson is the 50 year old current Prime Minister, and Leader of the Labour Party, a post he has held since 14th February 1963
• Edward Heath is the 49 year old current Leader of the Conservative Party, a post he has held since 28th July 1965
• Jo Grimond is the 52 year old current Leader of the Liberal Party, a post he has held since 5th November 1956

Background

• 1964 – The election of 1964 saw the end of an era of Conservative dominance with Harold Wilson’s Labour Party winning the election. However, Wilson only won a majority of 4 MPs due to a late Tory uptick which placed him in a precarious position. Wilson wanted another general election to secure a larger majority. In early 1966 the Labour MP for Hull North unexpectedly died. This was a seat Labour had only flipped in 1964 and had a majority of only around 2.5%. This could have been a routine pick up for the opposition, but the end result was a swing of +8.9% to Labour, signifying Labour could perform well electorally. The Liberals also saw a bit of a revival in 1964 gaining 3 seats and increasing their share of the vote by 5.3%, the Liberals also picked up seats in London, whereas from 45-64 they had been seen as a party which clung on in the fringes of the country: Cornwall, Wales and Scotland’s Highlands and islands.
  
• The Economy Stupid – One of the largest issues facing Labour as soon as then entered office was the large deficit and poor balance of trade left by the Conservatives. Labour moved quickly – establishing a new ministry of technology, unveiling a national plan for the economy, and cutting back on the military, raising protective tariffs on imports, and raising taxes. The deficit has been cut from £750m to £350m and the balance of trade has also improved. This early “test” reflected positively on Wilson and Labour’s ability to run the economy. Labour have also repealed the controversial charges on prescriptions and increased the amount of houses being built.
  
• The 1965 Conservative Leadership contest – After the defeat of 1964 Douglas-Home may have been able to stay as leader of the Conservatives after the improvement in Conservative polling, however the party had been in power for 13 years and reacted very negatively to its return to opposition and Home did not believe he was suited to being leader of the opposition. Home changed the Conservative Party’s leadership election process which had led to so many issues for Home. Now a simple election between Conservative MPs with each having one vote decides the next leader. The winner of this contest is Edward Heath. Heath was somewhat of a surprise with the more widely known former Chancellor of the Exchequer Reginald Maulding expected to win. Heath however had served as Chief Whip – with his job being to wrangle Conservative MPs into voting one way or another and Heath had a more intimate knowledge of how to win over his party members while fighting a clear and focused campaign.
  
• Heath vs Wilson – Heath and Wilson will (spoiler!) fight over 4 general elections so let’s compare them. In many ways both are remarkably similar. Both were born in 1916 and both had middle class upbringings, both excelled at school and won scholarships to Oxford. Because of this both are seen as more modern “technocrats” as opposed to the nobility who traditionally became Prime Minister. Both were involved in Oxford student politics although Wilson only somewhat. Heath on the other hand became President of the Oxford Union debating society and of Oxford University’s Conservative society. Heath travelled extensively throughout Europe before World War 2, even attending a Nuremburg Rally in 1937 and attending an SS cocktail party with Goering, Goebbles and Himmler (whom he described as the most evil man he’d ever met). Heath therefore stood as a pro-interventionist candidate in student politics, heavily backing the Spanish Republic and defeating a pro-Franco candidate for leader of the Conservative society. Heath fought in World War 2 and rose to the rank of Lieutenant-Colonel whereas Wilson signed up but was regarded as too important to fight in the war and stayed in Britain organising coal stocks. Both served in multiple ministerial positions and both as President of the Board of Trade. Here Heath instituted an extremely controversial policy during Home’s last year as Prime Minister – lifting the restrictions on the amount of foods Supermarkets could buy. This law was put in place to help small grocers and Heath was warned if he repealed it he’d split the party before an election by antagonising one of the Conservative’s key supporters in small business owners (Heath went on anyway and the split never happened). Heath’s experiences as chief whip during the Suez Crisis, negotiating entry into the EU, and in repealing this law imbued a great deal of self-confidence within him as he’d soldiered through incredibly difficult circumstances but always come out the other side undamaged. On the other hand Wilson’s time as “Nye Bevan’s dog” during the battles between Bevan and Gaitskell reinforced the importance of maintaining party unity and managing big personalities within government.
  
• The quiet man – Heath however has one key disadvantage when compared to Wilson in his charisma or lack thereof. Wilson is incredibly witty and charismatic, but Heath seems to shun the concept of even giving interviews, sometimes going years between television appearances and appearing very stiff and wooden when he does talk. This hasn’t helped the fact that Heath has had less than a year as Leader of the Conservatives before the election. As a result very few voters have even heard of him, and Wilson is incredibly effective at making fun of Heath. Heath believes that the electorate will tire of Wilson and see him as a fake like Heath does (for his public persona and Wilson’s exaggerations about his childhood and upbringing with Wilson trying to paint himself as rising from the working class despite being comfortably middle class) and because of this… Basically does very little to make arguments as to why the voters should back him, instead just sitting back and waiting. This has alarmed his supporters who elected him as a direct answer to Wilson.
  
• Liberal dilemmas – For the Liberals 1964 was a great success. While still nowhere as near as popular as Labour or the Conservatives the Liberals did manage to make themselves seem like a true 3rd party instead of some regional relic of the 1800s. Grimond however is facing new issues – Grimond presented himself as a young, radical alternative to the old Tories but that role has become adopted by Wilson and the Tories elected a technocrat. Grimond is the oldest of the 3 leaders and a firm member of the upper class of society. Grimond also struggled with supporting Labour. Since Labour had such a thin majority there was always the question of if the Liberals would agree to support Labour on certain issues which many Liberals disliked the thought of. Wilson and Grimond seemed to come to an agreement on institution proportional representation – a long-term aim of the Liberals but Wilson has not upheld his end of the bargain. Grimond is also struck by the suicide of his son Andrew during the campaign which takes a great mental toll on Grimond and seemed to take a lot out of him (as you’d expect).
  
• Europe again – Edward Heath is one of the firmest supporters of Britain’s entry into the European Economic Community, a policy which the Liberals also support. Wilson’s position is more confused. Wilson personally opposes entry as does the left-wing of the Labour party, but those on the right support entry. Wilson in a desire to keep the party together has made speeches indicating he supports entry but has not committed to actually joining and has accused Heath of “rolling on his back like a spaniel at any kind gesture from the French”.
  
• 9-5-1 – Heath has managed a rare hit on Wilson by referring to Britain’s economic figures. As mentioned before Labour has gained the trust of the public by managing to quickly bring down Britain’s budget and trade deficits but Heath has referred to 9-5-1 meaning the 9% rise in wages, 5% rise in prices and meagre 1% rise in production. Heath is warning about the issue of inflation, but Wilson saw the unpopularity of Home’s attempts at a wage pause, and also wishes to continue full employment both of which have led him to committing little action to combatting inflation.
  

Issues

Labour:

• New incentives for exports, maintenance of tariffs on imports, cuts onoverseas military expenditure, new taxes on overseas income and control over the export of capital to stop the flight of the rich abroad
• Increased productivity by selective investment, incentives to reinvest profits, a new corporation and board to reorganise industry and increase productivity
• Encouragement of agricultural and horticultural co-operation, increased and cheaper marketing of foodstuffs, support for farm workers
• Fixed income, prices, and rent control to curb the cost of living
• 500,000 new homes a year by 1970, continuation of Crown Land Commission to seize land at below-market prices to combat “land famine” and remove land from the free market, improved public transport for commuters, modernization of old city centres, and continuation of the policy of building new towns
• Commitment to full employment, new recognition of the right to a trade union, equal pay for equal work
• increase by 1970 the annual spending on hospital building to a figure double the highest sum spent in any year by the Conservatives, increase in medical students, rapid expansion on health and welfare services for old and disabled
• Creation of “The Open University” by using TV and Radio to deliver University lessons
• A new tax on gambling and gaming, and a land tax based on the difference between the value of the land as it’s currently used and the price received when its sold for redevelopment
• Votes at 18 years old, reorganisation of civil service, local governments, law commission to revise and modernize old laws, and a conference to review the UK’s voting system
• “Realistic” controls on immigration
• Increase in police officers, new youth parole system to cut down on numbers in jail
• Commitment to European Free Trade Association but no commitment to join or stay out of European Economic Community

Conservative:

• Tax incentives for saving money, a new act for industrial relations to end restrictive practices, intimidation and establish that agreements between unions and employers are legally enforceable, encouragement of competition between businesses
• Wider ownership of houses, pensions and capital
• Restrictions on immigration and fairer treatment for immigrants
• An attack on rising rates of crime
• Goal of 500,000 new houses
• Entry into the European Economic Community
• New cost effectiveness department to cut government waste, reorganisation of economic ministries into one department as well as combining the Ministry of Health, the Ministry of Pensions and National Insurance and the National Assistance Board into a single Department, hiring of university and industry professionals to help draft legislation and policies
• New inspectors of welfare to co-ordinate support between local authorities and hospitals, improved benefits for old, children, and widows
• Establishment of education television centre to help teach children, more power to local education providers and authorities, more choice in education for parents
• Expansion of education and higher education budgets for Scotland and Wales
• Initiate peace talks to break the deadlock in Rhodesia
• Support for admission of China into the U.N.

Liberal:

• Simplification of tax system, reduction of direct taxes, cutting of tariffs, continuation of incomes policy but wages to rise in line with productivity,
• New works councils to force management of businesses to regularly consult and negotiate with workers, workers to become shareholders in their place of work, A standard contract of service to be introduced covering the right to Union representation; an equal range of security benefits for wage and salary earners; holiday pay based on average earnings; a guaranteed opportunity for further education and training in employer's time; and equal rates of pay for men and women doing identical work
• Increased prices for beef, expansion of production of cereals to eventually end tariffs on cereal imports
• Parliaments for Scotland and Wales, elected regional councils responsible for the use of land, including new towns and new industries, public transport and hospital building, water supplies, regional resources and all facilities for leisure and the arts, streamlining of government ministries
• Creation of new motorways but for all new motorways to be pay roads
• No controls on amount of immigrants entering UK, expansion of teaching facilities to teach immigrants English and special funds for housing in areas with rapidly growing immigrant communities
• Cuts to defence spending, British nuclear weapons to be given to international organisations
• Proportional representation, votes at 18
• Increase in state pensions, encouragement of employers to supplement them, increase in sick and unemployment pay, paid for by A Social Security Tax, replacing National Insurance stamps and levied on employer (two thirds) and employee (one third)
• Increase in number of GPs and nurses, better facilities for them, and new hospitals as well as improvements to existing hospitals
• salaries, working conditions and pensions of teachers to be improved, 11+ exam to be abolished, slum schools to be improved
• Entry into European Economic Community
• Increased trade and international aid for poverty stricken countries, pressure on Rhodesian government to step down and the formation of a new government to represent all Rhodesians

Read the full manifestos here:

Conservatives
Labour
Liberal

Vote here (all parties): https://rankit.vote/vote/kg17GSV1AAOpr3qbJXRo

Vote here (Labour vs Conservative): https://rankit.vote/vote/vEyeMxyH6CRIZIj0wXjt

Please try to vote as if you are a British citizen in 1966 without knowledge of what will happen after the election.