Anyone even casually following finance news is aware of the wild stunt that a bunch of investors on Reddit’s r/wallstreetbets pulled off in the past few days: Shitposting their way to massive gains on GameStop stock that was supposed to be worthless, thereby dealing incredible damage to hedge funds that took a short position on the beleaguered video game retailer.
CNBC's David Faber said he is hearing a number of hedge funds are in similar trouble that Melvin Capital saw in its GameStop $GME and may need to be bailed out. pic.twitter.com/KAiADPUnOD
— Streetinsider.com (@Street_Insider) January 27, 2021
You don’t have to think of the WSB crew as socialist revolutionaries — they’re not, despite a fair amount of commoners versus the elites rhetoric — to be amused at the headache they’ve caused for big firms. In my opinion, the proper reaction to hearing that Melvin Capital has lost $3.75 billion in a few short weeks falls somewhere between “who cares” and “lol.” Maybe it’s “play stupid games, win stupid prizes.” But the internet is crawling with many kinds of guys, and it turns out that some of the worst have a characteristically whiny take on the matter. I really don’t know what they mean to accomplish by simping for the hedge funds. Hope they see this, bro.
I get that people think its funny when bad things happen to Wall Street types, but this GameStop thing is not a joke.
These are stock traders conspiring to manipulate the markets in open view of us all and using the "nah, its for the lulz, and the other side sucks" as an excuse.
— Jeremy C. Owens (@jowens510) January 26, 2021
Markets will need protection from these types of maneuvers.
— Vishal (@vishalkgupta) January 26, 2021
This has not been the purpose of a stock market for a long, long time. It has become a casino for the rich to get richer while gutting workers and communities. Hedge funds are getting a taste of their own medicine and discovering how bitter it is. https://t.co/9zPj3Vyn0j
— Robert Cruickshank (@cruickshank) January 27, 2021
We could argue over whether a coordinated mob fucking with the market is any worse than, say, hedge funds and banks creating the housing bubble that led directly to the Great Recession, but it happens to be moot for one very important reason: Wall Street is going to be just fine. A few institutional giants are taking a beating right now — others are raking it in. BlackRock, the world’s largest asset manager, appears to have made over $1 billion on the GameStop moonshot, since they owned 9.2 million shares before WSB started pushing them higher. And it’s a given that other major players are gaming out how this phenomenon can work for them.
Point being, it’s not like “the rich” lose whenever the redditors win. Some are still getting richer. If even an ultra-wealthy plutocrat like Elon Musk is hyping the raid, it’s not exactly class warfare.
And given that it’s blackrock, that means GME is probably being held in a bunch of their retirement accounts…which means the hated BOOMERS might be having the last laugh!
— tyson brody (@tysonbrody) January 26, 2021
I built a Reddit scraping tool for hedge funds.
Shows top 30 trending companies (you’ve shorted some)….
That Reddit folks are gonna go after next. Don’t be the next Melvin!
It’s called greenhat ?
Who wants access?
— Nathan (Founderpath.com) (@NathanLatka) January 27, 2021
Today, hedge funds called in favors to have trading shut down for specific companies across several giant platforms so they could buy time to gather in private to decide what to do next. If that's not market manipulation, I don't know what is.
— Jordan Schachtel (@JordanSchachtel) January 27, 2021
Shorting a company, as Melvin Capital did with GameStop, is an inherently risky strategy. Any realistic person must be prepared to lose that bet, and should that loss jump an order of magnitude, then the Wall Street establishment has quite a few tools for protecting itself from further hemorrhage. It’s the retail investors who lack a safety net, and some are bound to come crashing down to earth.
In the meantime, you absolutely do not have to announce that you’re shedding a tear for the overpaid professionals who weighed the odds and ate shit, nor is it necessary to act as though the WSB horde has trashed the otherwise unviolated moral code of an economic space that is, in fact, defined by parasitic greed and squeezing the vulnerable.
Game spot is kind of like a late millennial’s toys-r-us, and watching a bunch of day-trading Reddit bros toy with it like orca play with a seal’s corpse is kinda grotesque and violating.
— Noah Rothman (@NoahCRothman) January 27, 2021
It’s a little sad. They were good at what they did. What happened should have been impossible, and it made no sense.
— Joshua Kessler (@JoshuaKessler1) January 27, 2021
Except it’s not just “talking” about a stock
It was a concerted group effort to squeeze hedge funds out of their shorts, forcing liquidation to cover the margin calls and potentially wrecking the investments of their clients
and on trash tickers to boot
— J-Fearless (@iamjfearless) January 27, 2021
Gross! Try investing in some self-respect, boys. It’s free, and it never depreciates in value.