Let's talk about another insane situation, let's rewind about a year late january, all eyes, as we were sitting inside because of the rhona all eyes, especially in the markets, were on a little ticker. We like to call gme better known as gamestop late january. Just over a year ago, this thing went haywire almost made it up to 500 per share and a lot of people were saying: hey people are getting squeezed and we know certain people were such as melvin capital uh, but there was a big big desire from the Retail trading public for more information, because when this went nuts the game was stopped in the first quarter. We had brokerages such as robin hood, such as weeble taken away the buy button from the retail trading public, so that only really left these big institutional players.

To do what they want, so on the retail side, when you can only sell what happens well, it goes down and that's exactly what happened to gamestop and really a year and some change later. That's what led to this exact conversation well a little bit before right now in about mid-october, we got the official gamestop report from the sec and it left a lot to be desired, a lot to be desired and one of the most interesting things from him was It was saying that this actually wasn't a short squeeze. Well now, there's some academics who are saying what what what are you? What are you talking about and that brings the question: did the sec lie to us? Meme stock frenzy gets a fresh look that questions. The sec's narrative, academics say stock rally was driven higher by shorts, covering scc cast out on short squeeze in its october gamestop report.

Meme stock mania might have been a case for traders banding together to take down hedge funds. After all, that's the contention of new research that challenges the sec's view on a so-called short squeeze played little part in pushing gamestop into the stratosphere in january 2021. A lot of you watching right now are probably thinking yeah duh. We get that.

We know that people blew up, we knew that it was short, but this is just more insane that someone's, like academics, are coming back out talking to the sec, saying dude. What would you, what are you talking about? The regulator failed to examine relevant security, lending data that and didn't study a long enough stretch of transactions, a half dozen academics from columbia, university university of notre dame and elsewhere certain papers sent in a recent weeks to the sec chair gary gensler. Let's get a little bit more into the details, so they went into this data and it was pretty interesting um. So if you read the report, that's still out there, i'm talking about the official sec october mid-october, like gamestop report um, they basically said shorts covering, were not really the cause for it to go up and as you're about to find out, they didn't really address any Concept of a gamma squeeze and they really they minimally, just like even acknowledge ftds, which was like one of the biggest upsetting aspects to me.

But anyway, shorts who closed out their bets only played a minor role in driving the rally. That was the assertion from the sec um speculated. It was just because traders were optimistic about video game retailers, prospects and thought they were triggering a short squeeze. So once again, this is the sec's assertion that was exclusively going up, not well, i shouldn't say exclusively minimally.

Just a little crumb, a little crumb going up, because the short squeezing when reality it was just like fervor and excitement from the retail trading public. The sec's october analysis used incomplete data and flawed methods to research. Erroneous conclusions regarding the events of january 2021 said: joshua mitch lead author of the study in a columbia, university law. Professor, our findings suggest that the sec's response to gamestop and other meme stocks may be deeply misguided drama.

The sec also fell short in examining the effects of the so-called gamma squeeze, which occurs when options delay. Dealers buy a rising stock to balance their exposure to contracts they have sold, pushing shares even higher. Now this is your first time hearing about a gamma squeeze. Basically, a bunch of out of the money calls are sold, they end up going in the money and the person who sold them to protect their own book.

Their own position ends up buying more stock. Well, buying is buying so that pushes it up and, as you can see, between a gamma squeeze and a short squeeze, they can interplay with each other. A little bit of a gamma squeeze could be a little bit of a short squeeze and they play and it gets out of hand and then also when you're, throwing a couple dashes of fomo buying. That's what i like to refer to as the three horsemen of buying fomo buying gamma squeeze and then the good old one short squeeze moving on anti-fraud and anti-manipulation.

Rules need to be overhauled. For social media era said mitch, who has long petitioned the sec to toughen rules around short selling, the sec should focus on the distortive effects of short squeezes and gamma squeezes on the market and the harms they cause ordinary investors. I 100 agree with this. This event.

Gamestop january 2021 really highlighted and showcased the fragility of our overall market and since then, a lot of people across the globe who had no interest in the market, whatever started to find out other things about potentially the harmful practices of business. I guess dealings between brokerages and market makers also aka retail wholesalers. I'm talking about payment for order flow, really hurting the price discovery about looking into 13 apps. Why do they report longs? Calls puts, but not short positions that doesn't make sense, feels like they're hiding something with about pattern day trading.

We're told that we have the best most robust markets, they're free markets. Everyone should be engaging in it, but if you have less than 25 000, why are you treated differently than someone with over 25 000? This event, the gamestop movement, the crazy movement and really leading to brokerages stopping the buy button and all that stuff led to kind of a thread situation. People started pulling on it and it led to an entire can of worms. In this particular study.

The sec said shorts purchasing gamestop to close positions, made up quote unquote a small fraction of overall by volume during the company's surge and the stock price remained uh elevated after the direct effects of covering shorts would have waned once again. This is what the sec is saying, but mitts joshua mitz, the person who's, the lead author, along with all of his other helpers, didn't examine individual customer accounts or include data on all short sellers. The academics argued uh. The agency also didn't review short selling data before december 24th, 2020..

Investing c's shorts had already mostly bailed on gamestop before the stock went especially haywire in january 2021. So from there, it's very interesting to see that this particular event has bled into the world of academia and now they're actually saying hey. We actually don't agree with how you looked at the data and the conclusion from the data that you drew. Their academics are hitting back, so i would love to see.

I don't know if gary gensler, the current sec chairman, will ever be responding to this, or maybe someone else. I don't know if it goes directly to him or someone else, but i'm personally interested in seeing how this all actually ends up playing out in real time. Uh because i i think in october, it's safe to say that myself definitely and many of you watching when you saw that gme report, you probably read through it a couple times and you're like this, doesn't make sense. It's kind of a a well-written essay on what a short squeeze is, but didn't really dive into any specifics that the public wanted.

So it it. It left a lot to be desired and now even the little things that it, the conclusions that it did draw other people are saying that actually doesn't make sense. So with all that being said, i would love to get your thoughts on this. Do you think it's going to move the needle? Do you think that the sec also drew incorrect, erroneous conclusions, because i definitely know where i stand on that, but we'd love to hear your thoughts? You.