we think we know what we're doing

 it don't mean a thing.

it's all in the past now, cause money changes everything. (c. Lauper / the Brains)

so what happened yesterday ? let me give a very basic explanation followed by very specific allegations.

normally we think of investing as buying stock ABC for $ 100 and eventually selling ABC for a price greater than $100....as Pat Garry would say  Buy low / Sell High.....but some people look at stocks and don't want to invest because they think the future is not bright for the ABC ( long term or short term). So their investment objective is the reverse , sell high / buy low , but how do you sell something that you do not own ?  on wall street you borrow it . 

simple example:  Eggroll  wants to buy ABC at $5 ,  Mac agrees to sell him 100 shares that he does not have. Mac borrows the shares from Schwab...........Schwab collects the $500 from Eggroll and gives Eggroll the  shares on behalf of Mac......Schwab keeps the $500 in an account for Mac until he settles the loan and gives them back their 100 shares. a week later ABC is trading at $3.50 ......Mac buys 100 shares for $350 , he gives schwab their shares and they give him his $500 ( he just made $150) Eggroll still has his 100 shares in a shoebox under his futon and he hopes someday that ABC bounces back.

Schwab charges Mac a fee for borrowing the shares , but where do they get their shares to give eggroll ? That's where MARGIN comes in......when a client trades on Margin they can borrow $$ from a brokerage based on the loan value of their portfolio, but they also enter into a rehypothecation agreement....which means the stocks that are used as collateral for the loan can be lent out by the brokerage firm....so schwab takes shares from their clients' inventory and uses them to give to eggroll, knowing that someday Mac will return the 100 shares and they will put them back in Matteau's account......In order for this whole merry go round to work, there has to be an abundance of shares available to lend/borrow......it's much more complicated than my example as there are hundreds of millions of stocks and shares in play everyday and rules on borrowing..... years ago , the stock loan dept was very powerful...as brokerages could lend shares to other brokerages in addittion to lending to their clients......so Morgan Stanley and Goldman both call schwab and ask to borrow 100 ABC , but schwab only has 100 ABC......who decides who gets the shares ? the stock loan dept.......and how did they decide ?  Ranger tickets in the skybox and a nice steak dinner usually did the trick.........ah but i digress.....today it's all computerized and tracked.

But the problem of availability is still an issue........

so if a hedge fund thinks ABC is going down they start selling short.......and selling more and more shares and borrowing from everyone on the street.......but if a brokerage can no longer lend the shares they must immediately call back their original loan ( a short squeeze) .......say Matteau wants his shares back for whatever reason...or an average Joe buys shares and does not want to be on Margin ( so the brokerage can NOT lend his shares) ...now the hedge fund HAS to give back the shares, but where do they get them if they can't borrow them ? they have to BUY them on the open market.....which makes the stock go up...........multiply that by 10,000 reddit nerds buying 100 shares each and the Hedge funds having to also BUY the shares to make delivery and you have 2 million shares traded in a previously a thinly traded stock, and that's how it  goes up 130% overnight.

now what happened at Robinhood ? ? 

well the allegations are that Stevie Cohen of the Mets lent his Pal at Citadell the money to cover his shares of Gamestock....legal.....and he used his influence to convince Robinhood to block the general public from buying GME until Citadell could cover their short....NOT LEGAL.

simple example.....yesterday at 9:30 if you were reading the wall street journal and following the GME story, you may have logged into Robinhood and said let me buy 100 shares of ABC because i know Citadell and others are being forced to buy ABC...and so the price goes up as demand increases....BUT....Robinhood said NO...and they blocked you from buying ABC until after the Hedge funds either bought shares to cover their shorts or were able to find someone on the street willing to lend them shares...and that of course,,,if accurate....is illegal.

side note... Citadell paid Janet Yellen 800K for giving a few speeches last year.......the White House is not concerned with the newly confirmed Treasury Secretary having such friendly ties to someone that will soon be under investigation...........imagine if this was Trump and Mnuchin ?

side note.....Joe Kennedy built his fortune as a whiskey bottlegger and stock scammer.....in 1928 he figured a way to sell more shares than actually existed in certain securities ( think the Producers, where 10 different people owned 100% of the plays proceeds...impossible) and when the company folded....well the stock certificates were worthless.......that lead to the Crash of 1929 and ensuing depression.......and when the market tried to come back they created the SEC to regulate the thiefs....and who was the first President of the SEC ? well yes of course it was Joe Kennedy.....takes a thief to catch a thief...

side Note.......Denny Forrest asked Steve Cohen on Twitter if he would be able to buy Beeeer at Citifield this year with his Bitcoin after it's worthless.

from the bob dylan radio theme on dogs  " one dog told another dog that he was crazy and should go see a physchiatrist........the second dog said he would love to, but he's not allowed on the couch.

happy friday , cheer up...we'll all be dead before long.