The peasants had a go at one of the hedge funds in the GameStop spasmatron last week and this was not good at all. Shorting a stock can be a legitimate move based on analysis of market and/or company realities. Make it a big enough short, however, and other investors might sit up and take notice possibly causing the short become a self-fulfilling prophecy. If the target company falters as a result of the revelation of its predicament, the decline in its stock price, supplier hesitancy, lender alarm, and other sequelae, well, that’s too bad. Learn to code, chaps.
But if some mere blokes and babes learn how to work the pedals in a different fashion then that, pilgrims, is a horse of a different color. Can’t have THAT. As Mr. McMaken points out in his article the reaction of the anointed ones is unalloyed horror.
This “exemption from free market discipline” is what Wall Street is all about these days. The financial sector has become accustomed to enjoying bailouts, easy money, and the resulting financialization which puts ever greater amounts of the US economy into the hands of Wall Street money managers. The sector is now built on corporate welfare, not “free markets.” No matter what happens, Wall Street expects the deck to be stacked in its favor.
McMaken suggests that it’s not quite what meets the eye and bigger, more experienced entities may also have found it advantageous to take the upside position of this play, if I’ve got the Wall Street lingo correct. But, by and large, it appears to be a Peasant Play and outrage ensued.
I remember my father in the 1950s poring over his subscription to a print investment publication called “The Value Line.” This arrived by snail mail and his focus in managing his investments was on company underlying health, management competence, and growth. Now, God only knows how small investors look at the market. As I’ve written with great regularity, I think their incentive is to (1) throw money into the stock market to escape vaporous returns on their money in mere savings accounts (it is to laugh), (2) hopefully do better than that in the market, and (3) even stay ahead of inflation (horse laugh) which is zooming right along.
Well, that’s one class of investor but Dad seems definitely in the relic class now in a world of day traders, discount brokerages, deindustrialization, dumb ass hysteria over “climate change,” superstitious hostility to “fossil fuels,” and the worship of foreigners and minorities. Take the matter of high-frequency trading where sophisticated computer-based trading takes place with, are you ready, a fraction of an advance peek at the stock market numbers available to the HFT traders. Doesn’t that just scream level playing field to you?
Then there’s the matter of the hedge fund(s) in the GameStop shortfest shorting more GameStop shares than there are GS shares in existence. Nothing to see here, ‘chachos.
Yes, those cheeky peasants threatening to upset these and other manipulations and under-the-table scams. A menace to decency and good order, dudes, and that’s a fact.
It counts as one of the great tragedies of the four years of the Trump administration that Mr. Trump remained clueless about the huge insider game that Congress, Wall Street, the media, and the massive corporate monopolies play. To the end he remained wedded to the notion that a manipulated stock market bubble of epic proportions was an indicator of economic health. Yet the rot was all around him and he proved unable to articulate the nature of the problem or rally his supporters behind specific initiatives as opposed to vague “oppose the deep state” twittering.
 “The GameStop Rebels Vs. ‘Too Big To Fail’.” By Ryan McMaken, ZeroHedge, 2/3/21.