The Wall Street Bets community executed a short squeeze through Reddit on stocks like GameStop and AMC Theatres this week. But what is a short squeeze? How did they and others buying stocks and options cause the stock to go up at least in the short term? Is short selling bad? Why potentially some brokers had to halt trading in certain names? A look back to the late nineties when internet chat rooms were pushing stocks. Examples of the little investor turning thousands into millions, and vice versa. How short sellers can root out fraud in companies with examples.  Jay Pestrichelli and Derek Moore get into this and more in this very timely and fascinating episode.   What is a short squeeze? What is the GameStop short squeeze? How did Reddit group Wall Street Bets execute a short squeeze? How some people have made a lot of money How other people may lose a lot of money? What is short interest ratio? What is short interest as percent of float? What is a delta or gamma squeeze in options on stocks? Large in the money option open interest in GameStop at expiration How short selling adds liquidity. What are short days to cover metric? Short sellers uncovering fraud in Amazon Prime documentary the China Hustle. Short sellers with Enron, Nikola, Wirecard Trading halts and liquidity requirements on brokerages Congressional hearings coming on Robin Hood and Wall Street Bets GameStop activity Examples of pump and dump in 2000 by Michael Lewis in New York Times Short selling was found useful even in 1918. How short selling in itself does not bankrupt companies. How short selling that drives price lower can impact ability for secondary equity offering.         Mentioned  in  this  Episode:   Explaining Delta and Gamma Options Squeeze Robinhood vs Softbank Whale https://brokenpiechart.libsyn.com/robinhood-option-traders-vs-the-softbank-whale     Derek Moore’s Book Broken Pie Chart https://amzn.to/2YoxRaF   Documentary “The China Hustle” on Amazon Prime Video https://amzn.to/39uBJgm   Michael Lewis article on 16-year-old penny stock trader 2001 https://www.nytimes.com/2001/02/25/magazine/jonathan-lebed-s-extracurricular-activities.html   ZEGA Financial www.zegafinancial.com    Jay Pestrichelli’s Buy and Hedge Book on Amazon https://amzn.to/2YoJDSg  

Lately things like the Universal Basic Income (UBI) and Social Security are debated on TV. Commentators throw around numbers and whether a program can be paid for. Plenty of debate on each side but why not understand for yourself where all these numbers are coming from. In this episode Derek Moore covers what makes up the Federal Budget, Tax Revenue, Interest Payments on Debt, and how much something like a UBI would cost so you can decide. Plus, the effect rising rates and increases in debt with have on annual net interest payments as a percentage of the Federal Budget.   What is the Universal Basic Income or UBI? How much would a Universal Basic Income cost? How much is the current US debit held by the public? What is the annual amount of interest paid annually on the US debt? What are the mandatory, discretionary, and net interest payments of the US Federal Budget? How much does Social Security, and Medicaid, Medicare cost? Difference between total US debt and debt held by the public What interest rate does the US pay on its national debt? What percentage of the federal budget does net interest payments on debt make up? What and when were the largest annual budget deficit in the US?         Effective historical tax rates versus marginal tax rates How much free cash flow do the largest corporations generate annually? For each additional Trillion in debt, how much more interest needs to be paid? For each 1% increase in interest rates, how much do interest payments rise?   Mentioned  in  this  Episode:   Average interest rates on US Treasury Securities https://www.treasurydirect.gov/govt/rates/pd/avg/avg.htm   Annual interest on US debt outstanding https://www.treasurydirect.gov/govt/reports/ir/ir_expense.htm   Gross debt versus debt held by the public explanation https://www.crfb.org/papers/qa-gross-debt-versus-debt-held-public   Federal surplus or budget deficit historical chart https://fred.stlouisfed.org/series/FYFSD   Breaking down the 2020 US Federal Budget https://www.thebalance.com/u-s-federal-budget-breakdown-3305789   2010 US Census breakdown of adults 18 and over, 62 and over, and total population https://www.census.gov/prod/cen2010/briefs/c2010br-03.pdf   Historical tax revenue as percentage of GDP by year https://fred.stlouisfed.org/series/FYFRGDA188S   Historical effective tax rate on top 1%  https://taxfoundation.org/taxes-rich-1950-not-high/   Historical top federal income tax bracket rates https://bradfordtaxinstitute.com/Free_Resources/Federal-Income-Tax-Rates.aspx