Tesla, TSLA & the Investment World: the Perpetual Investors' Roundtable

[bpjod]

It sounds like you're struggling to grasp the specific, underlying scenario I'm discussing. Don't feel bad, this is dark and shadowy as it gets on Wall St.

The scenario you describe above is how naked shorting by MMs is supposed to work, and why an exception allowing it for MMs was made in SEC Regulation SHO.

What I'm talking about is abuse of the short selling exemption, when a MM undertakes to sell a share short on their own behalf, for profit, as part of their proprietary trading. This is specifically NOT allowed under Regulation SHO, but is difficult to detect thus poorly policed, and seldom enforced.

When a MM does a naked short sale for their own benefit, the follow problems occur (among others):

• they receive full payment for the share, yet have zero capital outlay (nobody checks MMs accts)
  
• there is no 3rd party responsible for the return of the share
  
• there is only the MMs own capital reserves to back the transaction
• this imples there is huge risk for the low-probability worst-case outcome (MM failure)
  
• they can literally create as many shares as needed to move the SP to the point they desire (unfettered by the need to locate a share b4 selling, and with ZERO elasticity of demand setting the SPs)
  
• they often have no need to deliver those shares at all, as long as they succeed in driving down the price within 13 days (when an FTD report would be required) to the point where they can buy to cover
  
• this creates an tremendous financial incentive to create large short positions, well beyond what the market may indicate is appropriate (wonder why TSLA at 1/10th the size of AAPL has a larger short interest?)

So, I suggest you narrow your focus to the specific problem under test, and redo your analysis. I think you'll find the combination of inherent secrecy and financial gain is a powerful enabler for MM misbehavior.

Cheers!

It took me about two years of trying to digest
posts here, on Papafox’s thread and books by Matt Taibbi to finally wrap my head around what you’ve so succinctly explained in this post. I wish I’d read it about three years ago.

Another nomination for parts of particular merit.

 

[M|S|M MYP]

Careful, you might get another boy, then you need to go for number 4...

Why stop there....get the starting lineup for a basketball team...2 was my cutoff...i was happy at 1. However, seafood, whisky on a beautiful night....y'all know how that story ends 9 months after.

 

[Krugerrand]

Not OT but not about stocks>
I really hate that one of my favorite words is getting ruined in my own mind. Naked. Such an awesome state of dress...and friggin the stock market makes it so sad.

But Now to the real deal...
"It's the Batteries, Stupid."
Fuggin A, It just hit me. All these cars are for the teenagers to giggle and point at. Or the teenager within us.
It's the Batteries. All EV's are just an extension of what is in the batteries.

POWER. All it is about is POWER.
You got power, you got the ability to do what you want. Screw having anything without having POWER.
Power/Sunlight does not need to be found. It is semi-available. Batteries make it always available. Screw the dust particle in a 100 kw car battery pack. Screw the car, whether it is an S3X or Y. Cars are only physical tools. Get control of the power. First Order Principle SH!T. Catch it, keep it, use it. Panels,batteries,cars.
It is not even the batteries...It is the Sun. Elon is domesticating the Sun. He is turning the thing man and the world have been influenced by on every level and every minute of every life into a utility. Quantifiable containers of POWER. Sunlight as a commodity. As an inexhaustible commodity... Sunlight, actually is not a commodity. Until it isn't.
And the big part that is missing (for now); Batteries...enough financially and logistically acceptable Batteries.
We are all ants, incapable of little else.

I feel like you’ve been on a week long bender.

 

[oldTAVguy]

I had a little brain fart when I typed that. I didn't mean "naked shorts" I meant selling shares that don't exist.

Same thing. Naked shorts create new shares that don't exist. But they are evil new shorts.

 

[jbcarioca]

Oddly, this resource actually exists: (although I did the search as a joke)

Forensic Accounting For Dummies eBook: Kass-Shraibman | www.amazon.ca

But seriously, if this is really happening, it's a closely held secret on the order of 2008.

You aren't going to find a text book. However, you may write one in 10 years if you work hard...

Cheers!

Google IndyMac and OneWest. Back in 2008/2009 I led acquisition evaluation for several failing banks. The IndyMac acquisition by Steve Mnuchin and his group, including George Soros bought it for a song and fed the dregs to the FDIC and subsequently the US Treasury. The litany of abusive and deceptive practices involved in that is well documented. In perhaps Kamala Harris' least attractive moments she bowed to Federal pressure and did not prosecute. The acquisitions I evaluated happened over our objections. Both of the involved institutions are famous names that 'failed', parenthetically because they were acquired under pressure.

Anybody who actually thinks short sellers are in any way supervised should read about the events of 2008 and the genius of Henry Pauling and his erstwhile colleagues.
Then look at Long Tern Capital management. Bluntly, regulators regardless of political party, cannot effectively control the financial system. The disasters inevitably follow Republican disdain for control and land in the laps of Democrats who are unable to actually disclose all the facts.

For context read Dark Towers. That shows just how no regulators anywhere have managed systemic risk from the giant speculators.

This is off-topic on the surface. All of this explains very simply how things like the Bernie Madoff Rule came to be when he was head of Nasdaq. That directly enabled the massive massive short selfing we see today.The SEC is completely ineffective to stop any of this, or even investigate it.

A clear understanding of this and Black Scholes etc provides clear evidence that options and every derivative are not for any investor benefit, but for the market makers.
Being a part fo this stuff for a couple fo decades and having directly participated in some of that is why I advise to stay out entirely. Retail investors are customers in a casino: The house always wins, unless the house itself;f is corrupt. Then one must read Dark Towers for understanding.

 

[Todd Burch]

 

[mejojo]

Its funny...my kids have the exact same birthday April 13th, 2 years apart...first was the boy and then came the diva. Congrats!

Do you and your spouse really, really enjoy fireworks?

 

[Unpilot]

Man this thing is flat as a pancake.
Looks like I better sell a share or two...THAT should spur some action!

 

[vikings123]

Ok have a lot of experience with tesla and market but cannot figure out trading from August 21 to the 28th. Who would sell a share for less than the closing price on the 20th since they will not own the share on the 28th to get the dividend. Who will buy a share for more than where the stock will open after the dividend? How will option expiration on the 28th be handled? Who will want to convert shares from in the money calls when those shares will not be split? I assume the conversion of volume adjustments and target price will not occur until shares awarded on the 31st

This is from the AAPL stock split FAQ and should apply to TSLA as well. I assume options will continue to trade like normal but I'm expecting this to be a low volume trading week unless something crazy happens with macros.

What happens if I buy or sell shares on or after the Record Date and before the Ex Date?
If you sell shares on or after the Record Date (August 24, 2020) but before the Ex Date (August 31, 2020) you will be selling them at the pre-split price. At the time of the sale, you will surrender your pre-split shares and will no longer be entitled to the split shares. Following the split, the new owner of the shares will be entitled to the additional shares resulting from the stock split.

If you buy shares on or after the Record Date but before the Ex Date, you will purchase the shares at the pre-split price and will receive (or your brokerage account will be credited with) the shares purchased. Following the split, you will receive (or your brokerage account will be credited with) the additional shares resulting from the stock split.

 

[lafrisbee]

let me nip this girl boy child thing in the bud.
I got 5 kids, that I know of. Perhaps some of you are raising them. Two were given to the Catholic church in their "Baby provided to Good Catholics" Program. And two of em (both boys) I met on the street with the Mother and Father accompanying. One Father was well aware of the source of the child, the other was tricked (and the reason I have yet to do an "Ancestry and Me" swab).
It is so filling to know I have my genes disbursed into the future. There is hope for humanity. The oldest is 42. Heck one of you might be him?

 

[woodisgood]

Do you and your spouse really, really enjoy fireworks?

Not gonna lie, I did the back calculation and came to the same conclusion.

 

[Tslynk67]

We need some volume, can some of you guys buy some sh!t?

 

[M|S|M MYP]

...because there’s never been an elaborate fraud involving Wall Street, ever...

I don’t know what if anything shady is going on or how it’ll play out, but from life experience I know the following;

When money is involved good people do things they might normally not do, including friends and family.

When money is involved not so good people definitely put forth an effort to line their pockets as much as possible.

When a lot of money is involved, all bets are off. People will quite literally kill for it.

Have we all forgotten about KODK already?

 

[M|S|M MYP]

Do you and your spouse really, really enjoy fireworks?

Apparently we do.....

 

[M|S|M MYP]

let me nip this girl boy child thing in the bud.
I got 5 kids, that I know of. Perhaps some of you are raising them. Two were given to the Catholic church in their "Baby provided to Good Catholics" Program. And two of em (both boys) I met on the street with the Mother and Father accompanying. One Father was well aware of the source of the child, the other was tricked (and the reason I have yet to do an "Ancestry and Me" swab).
It is so filling to know I have my genes disbursed into the future. There is hope for humanity. The oldest is 42. Heck one of you might be him?

Definitely extending that week long bender into the weekend.....

 

[wipster]

Well, at least we're gaining a bit today... was expecting perhaps a bit more since they got it up to 1,686 (USD) in Germany this morning. Regardless, still a happy camper for this unanticipated but highly welcome week!

 

[Sudre]

I believe they are just now starting to see the steamroller approaching.

They have not yet realized the steamroller is going down a steep mountain, has no brakes, and the battery is full so no regen either.

 

[Off Shore]

Since we haven't stopped talking about dishwashers, thought I'd post my desktop.

 

[MikeQ]

I'm 53 and just announced my retirement to my employer today. Thanks TSLA!

 

[woodisgood]

We need some volume, can some of you guys buy some sh!t?

Sorry, just here for the yuks. Not even sure what TSLA does...