What will happen if you always call people “dumb” and treat them as your aliping sagigilid? The chances are that they will strike against you when you least expect it. That is exactly what happened when amateur traders on r/WallStreetBets joined forces to mete out vengeance against the corporatists who think that the masses are too stupid to beat them. These Reddit retail investors despise Wall Street businessmen for manipulating markets, funding corrupt politicians, making crony connections, and talking down on ordinary people. So as they proudly wore the slurs that the finance moguls slapped on their cognitive abilities, the Reddit traders banded to buy the stocks of a struggling video game company called GameStop (GME) --- and triggered an avalanche of losses for Wall Street.
Before this financial revolution, Wall Street’s big-time hedge fund managers engaged in short selling:
Borrow low-value stocks like GME.
Pledge to return the stocks at a pre-arranged date.
Sell those stocks that they only borrowed at market prices (e.g. $100 per stock).
Earn fees from selling the stocks (e.g., profit of $100 per stock)
Wait for the price of the stocks to plummet.
Once the stocks plummet, buy the stocks back at prices lower than their original market prices and therefore lower than the fees that they earned (e.g., stock that plummeted is now worth $60).
Pocket the difference between the original price and lowered price as profit ($100 - $60 = $40 worth of earnings per stock minus the commission and the interest).
Return the stocks at the pre-arranged date.
But what happened was, the retail investors at r/WallStreetBets bought their own GME stocks, forbade their brokers from lending those stocks, and refused to sell them, thus pushing the price to soar far beyond what the Wall Street titans imagined. The hedge funds now have no choice but to buy back more expensive GME stocks which are STILL resulting in losses, some amounting to BILLIONS (“short squeeze”)! The Reddit investors, who the finance world deemed too stupid to win big, are now earning hundreds of thousands to millions of dollars for holding on to their GME stocks, at least on paper unless they sell. Many are refusing to cash out, which drives GME’s value higher. Now the elites are having one meltdown after another: from Wall Street investors, to mainstream media commentators, to the Big Tech executives who think that anyone who disagrees with them is hateful.
Surely, people must unite around causes that are better than getting revenge against hedge funds (e.g., supporting excellent companies that are good to their employees). Moreover, many of those Reddit traders will lose massive amounts of money once overvalued GME stocks fall. But they’re holding the line anyway. Why? Perhaps because if you’ve lost everything --- your job, money, dignity, loved ones --- due to Wall Street’s corruption, you’re going to feel that you’ve got nothing more to lose if you give the system a dose of its own medicine. Click the links below to learn more about this epic phenomenon!
Understanding Short Selling by Wall Street Survivor
Short Squeeze by Investopedia
Wall Street Elites DESTROYED, Beaten by Redditors at Their Own RIGGED Game by Saagar Enjeti, commentator at The Hill
The GameStop Controversy is About Much More Than Stocks by Dinesh D’Souza, political commentator
GameStop: How Reddit Screwed Wall Street Hedge Funds by Chris Chappell, commentator at America Uncovered
Meet the Redditor who made millions off GameStop and started a market Frenzy by the New York Post
Retail Investors are Revolutionizing the Stock Market. Stop Calling them ‘Dumb Money’ by Jennifer J. Schulp, Director of Financial Regulation Studies at Cato Institute
Mark Cuban’s Advice for Day Traders Who ‘Get Long and Get Loud’ by Sonali Basak, contributor at Bloomberg
(Display photo by Jp Valery; meme from Reddit)
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