An economic and social revolution is taking place. The elite are losing billions by the day. They are angry. They are getting desperate. They are terrified. Why?.Because for once, the market is being manipulated, and they’re not the ones getting their cut. Because they are being forced to bailout their imploding parasitic hedge funds with their own money. Because every kid with a smart-phone now has a shot at financial independence. .Do not bother looking out of your window, it is not happening outside – and the revolution sure as hell will not be televised. Occupy Wall Street (OWS) veterans pay attention..Last Friday, shares in video game retailer Gamestop (GME) jumped from ~$40 to $65 USD. Then again, this Monday to $76, then $147 Tuesday, $344.99 yesterday and $500 at the time of writing. If you bought GME shares last Thursday, chances are you are up 1,000 per cent. If you bought shares in December, you are up some 2,100 per cent..On Tuesday, AMC Theatres (AMC) was at $5 USD. Yesterday morning it hit a pre-market high of almost $25 and closed at $19.88. Yes, a theatre company shot up 300% in 24 hours during the COVID-19 pandemic..Canada’s Blackberry was $14 USD last Friday: it hit $28 yesterday and closed at $25. Data analytics firm Palantir (PLTR) was $32.55 USD Friday, hit $45 yesterday before closing at $39..But what does any of these have to do with “sticking it to the man”?.Sometime in 2019, hedge funds concluded that GameStop was the next Blockbuster and saw their latest opportunity to cash in on the anticipated misfortune of others. Leveraging their networks of “objective” analysts seeded across purportedly reputable financial institutions, they created the narrative that GME was a holdover of a bygone time. How could this dinosaur with thousands of physical locations across North America possibly hope to compete in the digital era where consumers could instantly download the newest games from the comfort of their couch? They aggressively shorted GME shares and as the pandemic began their narrative seemed prophetic – shares had fallen from $20 to $3..But while the vultures were back-slapping each other for another hit-job well done, they, again, forgot to pay attention to the fundamentals. Through prudent management, GME quickly established a strong online-platform and revived itself, with its Q3 2020 earnings reporting 257 per cent growth in e-commerce sales. Despite the pandemic, GME still hauled in Q3 sales of $1 billion, missing expectations by only $80 million..But GME did not surge ~12,000 per cent in six months because they made it easier to sell FortNite styled nerf-guns online. While the old boys club was trying to run GME into the ground, the troubled retailer also caught the attention of certain members of the subreddit group r/wallstreetbets (WSB)..The WSB community is a mish-mash of long-term investors, kids with a trading app on their phone and $60 bucks in their bank account, and all the regular wage-earning folk in between. Typically, these self-described “trolls”, “degenerates”, and “autists” pick stocks based on which companies are associated with the spiciest/funniest memes (i.e., “meme stocks”). What seems to bind them together is a shared sense of simultaneous dejection and exuberance..On one hand, they regard themselves as cogs in an uncaring social machine. Witnesses to unfathomable wealth always out of reach, held back by soul-crushing daily grinds and debts. Berated by society, the same which benefitted from the post-WWII reconstruction era, as being lazy and entitled. Then, on the other hand, they regale in sharing stories of how they just YOLOed (you only live once) their entire savings/paycheque/student loan on a meme stock. When you feel like you have nothing to live for, and that the deck is stacked against you, there is catharsis in irreverence. It reminds people that they are still individuals capable of free choice, even if the choice is imprudent..Most importantly, others are doing it, and on WSB you are winning and losing as a family and community. If you want to understand WSB psychology and worldview, watch this parody captioned scene from 2019’s Joker where clinically depressed Arthur Fleck, now the Joker, (WSB) is interviewed by TV Host Murray Franklin (finance personality Jim Cramer as a stand in for all of society) (warning the video has explicit language and violence).. WSB memeAn example of WSB “due diligence .For whatever reason, GME was the straw that broke the camel’s back. Noticing that GME was the most shorted stock on the global market at 140 per cent, some WSB members came up with the plan that if they could rally retail investors (average people) to buy GME stock en mass and raise the price, they could financially destroy those doing the shorting. WSB members set wild targets for the $3 stock: $100, $400, $1,000, $5,000. It was not about fundamentals or money, it was about sending a message. The 99 per cent were no longer going to tolerate the market manipulation by the wealthy and their agents in hedge funds and financial institutions (the “money managers” or MMs)..The battle began about two weeks ago. WSB members began buying millions of GME shares. The price jumped from ~$17 USD to $40. By Friday of last week, WSB drew first blood: hedge fund Melvin Capital had already lost nearly $4 billion or 30 per cent of its $12.5 billion portfolio. Fellow hedge funds Citadel Pont72 rushed in with a $2.75B bail-out but it was not until Tuesday that Melvin pulled out of its GME position. By Tuesday GME had more than doubled again to $145. It is still unclear what the total losses are for Melvin & co..Last Friday’s losses were drops in the bucket for the MMs. The top 10 hedge-fund managers earned $7.7 billion in fees alone in 2018 (with combined net worth around $70B). A $2.75B infusion (with their clients’ money) was not pain, it was paying for your buddy’s socks at Walmart because they had a rough night and got their wallet stolen. Not understanding that this was an existential war for WSB members and not some get rich quick scheme, the MMs thought they could manipulate the GME buying spree in their favour and make their money back..On Monday, as GME euphoria circulated over the weekend, the MMs bet that FOMO (fear of missing out) would entice even more retail investors (whether affiliated with or even aware of WSB) to buy into GME. They held off from participating in the morning so buyers would control the action, letting the price rise quickly. Around 10:30am, GME had spiked 300 per cent to $160 USD. Then the MMs jumped in with rapid sell orders (a tactic MMs often use to trick automated trading algorithms into thinking a massive sell-off is occurring and dump their shares as well). Within half an hour the price plummeted down to $60. Billions for the MMs. But WSB came back, and the next day, and the next..The MMs have lost every battle since. WSB has since gone on to YOLO into other stocks being shorted by Melvin and other MMs (e.g., NOK, AMC, BBBY). After each day’s market close, WSB “captains” and “generals” share breakdowns and embolden the troops to “HOLD” (i.e., not sell their positions, thereby forcing the price further up). Apparently, part of the strategy is to keep the price up until this Friday when many call options expire on the assumption it will trigger an even greater short squeeze. As one WSB user posted, “no price is off the table”..Predictably, and without any sense of introspection or shame, the same industry that has spent the last five decades demanding greater deregulation and exalting the “free market” (while constantly having their finger on the scales) is now crying for WSB to be shut down..Massachusetts’ Secretary of State has called for a 30-day suspension in GME trading: “it has no basis in reality… it’s dangerous to the marketplace.” The White House is similarly “monitoring” WSB “influence”. Reddit was pressured yesterday into making WSB a private forum but almost immediately capitulated and set it back to public after near-instantaneous global pressure from users. The voice-channel platform Discord shut down the WSB chatroom over allegations of “hate speech” and now there are further attempts to connect WSB with alt-right politics. Even the language news media uses to frame WSB is suspect, phrasing WSB actions as “bets”..The hypocrisy of the entire situation is a bit hilarious. Remember, when JPMorgan makes a risky play, it’s an “investment”. When you do it, it’s a “bet”. When in 2007 the banks, hedge funds, insurers, and ratings agencies were rollicking in bed together over the billions from sub-prime loans they were shoving into the entire global market through fraudulent derivatives of derivatives, they were “supporting the economy”. When you and your buddies coordinate your investments, it’s “dangerous to the marketplace”..This is not about the couple of billions the rich have lost this week to the middle class. It is about who controls the gates to the financial markets. The MMs are terrified that everyone from sub-urban moms, to small business owners, to 18-year olds with a smart-phone are starting to figure out how the stock market works. With a little bit of effort, research, and a few hundred well placed dollars, they are making small fortunes. People are making an entire month’s rent in a few days. Certainly, many are also losing significant sums, but the general trend seems to be that these everyday “retail” investors are succeeding..When you or I invest via Wealthsimple (or Robinhood in the US), we are not just depriving the MMs of their precious fees and performance bonuses (usually 2 per cent and 20 per cent, respectively), we are depriving them of their ability to leverage our money to influence the market. Your bank does not just sit on the money in your chequing or savings accounts. They actively invest and loan it out, making billions year after year (pre-COVID). These are the same banks that will also, with a straight face, send you a yearly flyer muttering something about tough times and that they need to raise your banking fees. God only help you if you use your debit card too many times in a month..What is unfolding before our eyes has the potential to be an unprecedented democratization and decentralization of wealth and capital. The MMs are betting the farm that WSB will dissipate, that the plebs will get distracted with something else, that the peoples’ unity will falter. If WSB users and sympathizers start taking profits, a sell-off could be sparked and the price would tumble – the MMs may even turn a profit yet!.What they do not get is that this is becoming a world-wide phenomenon. With every sore-loser attempt to leverage their political and media relationships to shut down WSB, they are letting their masks slip and exposing themselves as the hypocritical and greedy bastards that they are. The people know it is these MMs that are (largely) responsible for our ever-frequent recessions and the misery and hopelessness that have followed. They also know it’s their hard-earned tax-payer money that the MM’s government buddies use to bail the parasites out each and every time..Since the 1970’s, Western economies – particularly the US and Canada – splintered into two. The “real” economy, where things were produced, purchased, and used. And the synthetic financial sector that produces nothing, yet has come to account for the near totality of all money volume. The central banks continue to ply the economy with liquidity, often through quantitative easing (i.e., letting banks loan out a higher ratio compared to their assets) to try and keep the party going for a few more songs..Up until the past few years, most people have been completely shut out from this growth. The media tells us about these all-time highs in the stock market and record profits by major companies. As I wrote in 2016, we have yet to see a nickel of this “unprecedented growth”. Our salaries are stagnant, student loans anchored to our necks, and we are priced out of home ownership. We have been relegated to consume and not question the order of things..The WSB community is giving everything it has to show people around the world that they too can stand up to the MMs. The MMs and elite want you to think that stocks are “difficult”, “scary”, and “risky”, and that only a trained professional should be handling your money (for a fee of course).. jokermoney .Chances are you own a smart-phone, which means you hold in your hand the collective sum of all human knowledge. There is nothing you cannot accomplish, learn or master. Investing can be difficult and is a skill. Like any skill, it requires discipline, patience, humility, and learning from your mistakes. Live your life as you wish, but WSB’s message is to not live in fear, but to embrace life, and make and own your decisions..As a closing comment, for those MMs that may think they can outlast the WSB community, I only wish to point out that the WSB folk are of the same caliber as the 4Chan trolls who in 2017 repeatedly messed with actor Shia LaBeouf, stealing his “HE [Trump] WILL NOT DIVIDE US FLAG”. Most notably, using nothing but the fact there was an airplane in the sky in the video LaBeouf posted of the flag (the trolls used radar data to triangulate the flag’s position, and summarily steal it again)..Andrej Litvinjenko is the Financial Columnist for the Western Standard and a lawyer specializing in corporate/commercial law.
An economic and social revolution is taking place. The elite are losing billions by the day. They are angry. They are getting desperate. They are terrified. Why?.Because for once, the market is being manipulated, and they’re not the ones getting their cut. Because they are being forced to bailout their imploding parasitic hedge funds with their own money. Because every kid with a smart-phone now has a shot at financial independence. .Do not bother looking out of your window, it is not happening outside – and the revolution sure as hell will not be televised. Occupy Wall Street (OWS) veterans pay attention..Last Friday, shares in video game retailer Gamestop (GME) jumped from ~$40 to $65 USD. Then again, this Monday to $76, then $147 Tuesday, $344.99 yesterday and $500 at the time of writing. If you bought GME shares last Thursday, chances are you are up 1,000 per cent. If you bought shares in December, you are up some 2,100 per cent..On Tuesday, AMC Theatres (AMC) was at $5 USD. Yesterday morning it hit a pre-market high of almost $25 and closed at $19.88. Yes, a theatre company shot up 300% in 24 hours during the COVID-19 pandemic..Canada’s Blackberry was $14 USD last Friday: it hit $28 yesterday and closed at $25. Data analytics firm Palantir (PLTR) was $32.55 USD Friday, hit $45 yesterday before closing at $39..But what does any of these have to do with “sticking it to the man”?.Sometime in 2019, hedge funds concluded that GameStop was the next Blockbuster and saw their latest opportunity to cash in on the anticipated misfortune of others. Leveraging their networks of “objective” analysts seeded across purportedly reputable financial institutions, they created the narrative that GME was a holdover of a bygone time. How could this dinosaur with thousands of physical locations across North America possibly hope to compete in the digital era where consumers could instantly download the newest games from the comfort of their couch? They aggressively shorted GME shares and as the pandemic began their narrative seemed prophetic – shares had fallen from $20 to $3..But while the vultures were back-slapping each other for another hit-job well done, they, again, forgot to pay attention to the fundamentals. Through prudent management, GME quickly established a strong online-platform and revived itself, with its Q3 2020 earnings reporting 257 per cent growth in e-commerce sales. Despite the pandemic, GME still hauled in Q3 sales of $1 billion, missing expectations by only $80 million..But GME did not surge ~12,000 per cent in six months because they made it easier to sell FortNite styled nerf-guns online. While the old boys club was trying to run GME into the ground, the troubled retailer also caught the attention of certain members of the subreddit group r/wallstreetbets (WSB)..The WSB community is a mish-mash of long-term investors, kids with a trading app on their phone and $60 bucks in their bank account, and all the regular wage-earning folk in between. Typically, these self-described “trolls”, “degenerates”, and “autists” pick stocks based on which companies are associated with the spiciest/funniest memes (i.e., “meme stocks”). What seems to bind them together is a shared sense of simultaneous dejection and exuberance..On one hand, they regard themselves as cogs in an uncaring social machine. Witnesses to unfathomable wealth always out of reach, held back by soul-crushing daily grinds and debts. Berated by society, the same which benefitted from the post-WWII reconstruction era, as being lazy and entitled. Then, on the other hand, they regale in sharing stories of how they just YOLOed (you only live once) their entire savings/paycheque/student loan on a meme stock. When you feel like you have nothing to live for, and that the deck is stacked against you, there is catharsis in irreverence. It reminds people that they are still individuals capable of free choice, even if the choice is imprudent..Most importantly, others are doing it, and on WSB you are winning and losing as a family and community. If you want to understand WSB psychology and worldview, watch this parody captioned scene from 2019’s Joker where clinically depressed Arthur Fleck, now the Joker, (WSB) is interviewed by TV Host Murray Franklin (finance personality Jim Cramer as a stand in for all of society) (warning the video has explicit language and violence).. WSB memeAn example of WSB “due diligence .For whatever reason, GME was the straw that broke the camel’s back. Noticing that GME was the most shorted stock on the global market at 140 per cent, some WSB members came up with the plan that if they could rally retail investors (average people) to buy GME stock en mass and raise the price, they could financially destroy those doing the shorting. WSB members set wild targets for the $3 stock: $100, $400, $1,000, $5,000. It was not about fundamentals or money, it was about sending a message. The 99 per cent were no longer going to tolerate the market manipulation by the wealthy and their agents in hedge funds and financial institutions (the “money managers” or MMs)..The battle began about two weeks ago. WSB members began buying millions of GME shares. The price jumped from ~$17 USD to $40. By Friday of last week, WSB drew first blood: hedge fund Melvin Capital had already lost nearly $4 billion or 30 per cent of its $12.5 billion portfolio. Fellow hedge funds Citadel Pont72 rushed in with a $2.75B bail-out but it was not until Tuesday that Melvin pulled out of its GME position. By Tuesday GME had more than doubled again to $145. It is still unclear what the total losses are for Melvin & co..Last Friday’s losses were drops in the bucket for the MMs. The top 10 hedge-fund managers earned $7.7 billion in fees alone in 2018 (with combined net worth around $70B). A $2.75B infusion (with their clients’ money) was not pain, it was paying for your buddy’s socks at Walmart because they had a rough night and got their wallet stolen. Not understanding that this was an existential war for WSB members and not some get rich quick scheme, the MMs thought they could manipulate the GME buying spree in their favour and make their money back..On Monday, as GME euphoria circulated over the weekend, the MMs bet that FOMO (fear of missing out) would entice even more retail investors (whether affiliated with or even aware of WSB) to buy into GME. They held off from participating in the morning so buyers would control the action, letting the price rise quickly. Around 10:30am, GME had spiked 300 per cent to $160 USD. Then the MMs jumped in with rapid sell orders (a tactic MMs often use to trick automated trading algorithms into thinking a massive sell-off is occurring and dump their shares as well). Within half an hour the price plummeted down to $60. Billions for the MMs. But WSB came back, and the next day, and the next..The MMs have lost every battle since. WSB has since gone on to YOLO into other stocks being shorted by Melvin and other MMs (e.g., NOK, AMC, BBBY). After each day’s market close, WSB “captains” and “generals” share breakdowns and embolden the troops to “HOLD” (i.e., not sell their positions, thereby forcing the price further up). Apparently, part of the strategy is to keep the price up until this Friday when many call options expire on the assumption it will trigger an even greater short squeeze. As one WSB user posted, “no price is off the table”..Predictably, and without any sense of introspection or shame, the same industry that has spent the last five decades demanding greater deregulation and exalting the “free market” (while constantly having their finger on the scales) is now crying for WSB to be shut down..Massachusetts’ Secretary of State has called for a 30-day suspension in GME trading: “it has no basis in reality… it’s dangerous to the marketplace.” The White House is similarly “monitoring” WSB “influence”. Reddit was pressured yesterday into making WSB a private forum but almost immediately capitulated and set it back to public after near-instantaneous global pressure from users. The voice-channel platform Discord shut down the WSB chatroom over allegations of “hate speech” and now there are further attempts to connect WSB with alt-right politics. Even the language news media uses to frame WSB is suspect, phrasing WSB actions as “bets”..The hypocrisy of the entire situation is a bit hilarious. Remember, when JPMorgan makes a risky play, it’s an “investment”. When you do it, it’s a “bet”. When in 2007 the banks, hedge funds, insurers, and ratings agencies were rollicking in bed together over the billions from sub-prime loans they were shoving into the entire global market through fraudulent derivatives of derivatives, they were “supporting the economy”. When you and your buddies coordinate your investments, it’s “dangerous to the marketplace”..This is not about the couple of billions the rich have lost this week to the middle class. It is about who controls the gates to the financial markets. The MMs are terrified that everyone from sub-urban moms, to small business owners, to 18-year olds with a smart-phone are starting to figure out how the stock market works. With a little bit of effort, research, and a few hundred well placed dollars, they are making small fortunes. People are making an entire month’s rent in a few days. Certainly, many are also losing significant sums, but the general trend seems to be that these everyday “retail” investors are succeeding..When you or I invest via Wealthsimple (or Robinhood in the US), we are not just depriving the MMs of their precious fees and performance bonuses (usually 2 per cent and 20 per cent, respectively), we are depriving them of their ability to leverage our money to influence the market. Your bank does not just sit on the money in your chequing or savings accounts. They actively invest and loan it out, making billions year after year (pre-COVID). These are the same banks that will also, with a straight face, send you a yearly flyer muttering something about tough times and that they need to raise your banking fees. God only help you if you use your debit card too many times in a month..What is unfolding before our eyes has the potential to be an unprecedented democratization and decentralization of wealth and capital. The MMs are betting the farm that WSB will dissipate, that the plebs will get distracted with something else, that the peoples’ unity will falter. If WSB users and sympathizers start taking profits, a sell-off could be sparked and the price would tumble – the MMs may even turn a profit yet!.What they do not get is that this is becoming a world-wide phenomenon. With every sore-loser attempt to leverage their political and media relationships to shut down WSB, they are letting their masks slip and exposing themselves as the hypocritical and greedy bastards that they are. The people know it is these MMs that are (largely) responsible for our ever-frequent recessions and the misery and hopelessness that have followed. They also know it’s their hard-earned tax-payer money that the MM’s government buddies use to bail the parasites out each and every time..Since the 1970’s, Western economies – particularly the US and Canada – splintered into two. The “real” economy, where things were produced, purchased, and used. And the synthetic financial sector that produces nothing, yet has come to account for the near totality of all money volume. The central banks continue to ply the economy with liquidity, often through quantitative easing (i.e., letting banks loan out a higher ratio compared to their assets) to try and keep the party going for a few more songs..Up until the past few years, most people have been completely shut out from this growth. The media tells us about these all-time highs in the stock market and record profits by major companies. As I wrote in 2016, we have yet to see a nickel of this “unprecedented growth”. Our salaries are stagnant, student loans anchored to our necks, and we are priced out of home ownership. We have been relegated to consume and not question the order of things..The WSB community is giving everything it has to show people around the world that they too can stand up to the MMs. The MMs and elite want you to think that stocks are “difficult”, “scary”, and “risky”, and that only a trained professional should be handling your money (for a fee of course).. jokermoney .Chances are you own a smart-phone, which means you hold in your hand the collective sum of all human knowledge. There is nothing you cannot accomplish, learn or master. Investing can be difficult and is a skill. Like any skill, it requires discipline, patience, humility, and learning from your mistakes. Live your life as you wish, but WSB’s message is to not live in fear, but to embrace life, and make and own your decisions..As a closing comment, for those MMs that may think they can outlast the WSB community, I only wish to point out that the WSB folk are of the same caliber as the 4Chan trolls who in 2017 repeatedly messed with actor Shia LaBeouf, stealing his “HE [Trump] WILL NOT DIVIDE US FLAG”. Most notably, using nothing but the fact there was an airplane in the sky in the video LaBeouf posted of the flag (the trolls used radar data to triangulate the flag’s position, and summarily steal it again)..Andrej Litvinjenko is the Financial Columnist for the Western Standard and a lawyer specializing in corporate/commercial law.
