Users of the social media forum Reddit organized last Wednesday to save the game retailer GameStop from being driven into bankruptcy by hedge fund managers.
Wealthy hedge funds targeted GameStop in a tactic called Short and Distort. They trigger a selling frenzy by selling large volumes of stock and profit when they fall.
It’s a classic struggle between the Fat Cats and the Downtrodden.
The Reddit users, called redditors, were incensed. The responded with a “short squeeze,” forcing the price of the stock up. The subreddit group /r/WallStreetBets came to the rescue. Followed the lead of an influential redditor with the handle /u/deepf**kingvalue they bought shares in GameStop. That drove the price of shares up, thus thwarting the plans of the evil hedge fund managers.
Redditors were rubbing their hands together in glee as short sellers lost $20 billion.
I spoke to a redditor, I’ll call Bob. He had tripled his investment in GameStop which has seen hard times during the pandemic. “The proletariat are rising up,” said Bob, “and sticking to the man.”
Another redditor, who goes by /u/mooglie51, sent me an email:
“Who would have thought this bunch of f**king dweebs [introverted redditors] could have pissed off Wall Street so much that, all the professional financial advisors would be spraying angry spittle on television cameras everywhere. The most beautiful thing about this is that (/r/WallStreetBets) manipulated the market the same way hedge funds call a day at the office. Except in a positive way.”
Money managers are dismissive of redditors. David Baskin, president of Baskin Wealth management says:
“Some poor idiot, probably sitting at home in his basement, in his sweatpants, paid $482 a share for GameStop and maybe that was his rent money,” Baskin said. “Now he’s lost half his money in one day.”
Not so, said Bob. Redditors don’t invest any more than they can afford to lose. And they are prepared to lose if they can “stick it to the man.” There’s a real sense of community.
Reminiscent of Occupy Wall Street, the new version is shaking up the establishment. This time, Occupy Wall Street 2.0 is using smarter tactics, seeking revenge from inside the system.
The original Occupy Wall Street was launched on October 15, 2011 in places around the world, including Kamloops. Protestors demonstrated against the growing disparity between the rich and poor that resulted from the Great Recession of 2008 when the big shots who caused the problem were bailed out and poor citizens lost their homes.
Occupy Wall Street 2.0 is bringing opposite ends of the political spectrum together. Congresswoman Alexandria Ocasio-Cortez, a Democrat, complained about a trading company app that was blocking the purchase of GameStock shares in a tweet:
“We now need to know more about @RobinhoodApp’s decision to block retail investors from purchasing stock while hedge funds are freely able to trade the stock as they see fit.”
Remarkably, Senator Ted Cruz, a Republican and a vocal supporter of former U.S. president Donald Trump, responded: “Fully agree.”
Dozens of members of the New York Young Republicans Club jumped on the anti-Wall Street bandwagon Sunday, gathering to blast the hedge-fund managers targeting GameStop.
It makes me wonder. Maybe the political spectrum isn’t a line but a circle, with both ends of meeting in defense of the poor.