I don't usually pay attention to the stock market, because I don't have any money -- and even if I did, I wouldn't be buying stocks, since it's clear that it's a sucker's game for small investors.
But I do like a good troll, and in this case, Reddit users have created one of the best.
You have a bunch of angry young men who are pissed about their dead end jobs, burdensome school loans, and bleak futures, and they hate the 1%. They're pissed that the media keeps talking about the booming "economy" when what they really mean is people wealthy enough to make money on stocks. (I mean, who needs three yachts?) I'd agree that the current culture of excess is the sign of a very sick economy.
So why not band together to stick it to the Bigs -- and maybe make a few bucks in the meantime? The L.A. Times' Michael Hiltzik:
On the Reddit forum WallStreetBets and among other small investors posting online, the glee is palpable. “You guys are making such an impact that these fat cats are worried that they have to get up and put in work to earn a living,” a moderator of the forum posted a few days ago.
A lot of the financial columnists complain that the Reddit investors are, well, not quite sporting. (Which, if you'll recall, is what the British said about the colonials in the Revolutionary War for using guerrilla tactics like jumping out of trees to make up for their lack of numbers and guns.) They see short-sellers as an important part of the market, while the Reddit trolls see them as one piece in a very corrupt game. Plus, they're doing it for the lulz. Via Vox:
By Kochkodin’s recounting, a bull case for GameStop (basically, an argument that its stock is good) started showing up on WallStreetBets about two years ago and has, off and on, been bubbling up. Scion Asset Management, the hedge fund run by Michael Burry, who you might know from The Big Short, revealed he had a position in the company, which inspired some confidence, and then Ryan Cohen, the co-founder of the pet e-commerce company Chewy, disclosed last August that he had a big stake in GameStop. Earlier this month, he was added to its board. That’s been interpreted as positive for GameStop.
As Reddit and retail traders started to take notice of GameStop, they also took notice of how heavily shorted the stock was — information that’s generally pretty easy to get. And they figured out a way that, if they acted all together, they could sort of screw the shorts over and make a profit doing it. Kochkodin points to a post from four months ago starting to plot. It's subject: “Bankrupting Institutional Investors for Dummies, ft Gamestop.”
This Slate story has a good explanation, concluding:
Does any of this make sense? Not really. But it makes no less sense than the stock market itself sitting near record highs each day just as expiring federal unemployment benefits are pushing 8.1 million Americans into poverty and U.S. senators are balking at an enhanced stimulus package. It wasn’t the GameStop stock’s Reddit hype team that first decided the market needed little tether to the daily realities facing most people, or even to a specific video game retailer.
In other words, hate the game, not GameStop.
Yep. Here's what one Redditor wrote this morning: "I can now write my mom a check and put my sister through Lymes treatment. This has been a very rough year, but I’m so thankful for every single one of you."
We are witnessing the French Revolution of Finance
— Anthony Scaramucci (@Scaramucci) January 27, 2021
Trying to make sense of the Gamestop thing as a 42 year old who has covered econ and markets for 20 years, I feel like Don Draper sitting back and trying to listen to the Beatles, then giving up after a short while, confused and discomfited. pic.twitter.com/TSukoLIG2D
— Neil Irwin (@Neil_Irwin) January 27, 2021
Game Stop trading at $260 a share now.
Meme Lords - 1
Wall Street - 0
— Pomp 🌪 (@APompliano) January 27, 2021
maybe it was an error to allow rampant underemployment, no safety net and low wages to create a generation completely cut off from conventional investing until eventually their best bet at affluence came from YOLOing gamestop during a pandemic?
no its the children who are wrong
— Walter Hickey (@WaltHickey) January 27, 2021
My latest: The GameStop folly isn't just a get-rich-quick scheme. It's a tale of inequality. "This is a cry for help, combined with a way to even the score." https://t.co/9bJrQPPtyt
— Helaine Olen (@helaineolen) January 27, 2021
If you're late to the GameStop news and wondering what the hell is going on, we can help: https://t.co/wkCak01Dy4
— VICE (@VICE) January 27, 2021
#GameStop shares have surged another 80% on Wednesday on Wall Streethttps://t.co/YBOaKZAL34
— CNBC-TV18 (@CNBCTV18News) January 27, 2021