Immediately, Wall Street and its corporate media got to work publicly decrying the actions of the Reddit investors as manipulative and antithetical to the way stock markets are “supposed” to function. Market Manipulation?Īs shares of GameStop and AMC soared, some hedge funds suffered significant losses.
The rich are playing both sides, manipulating the general public’s well-deserved hatred of their own hedge funds to prop up their new long positions. Unscrupulous wealthy investors have supported a slew of misinformation about how holding onto GameStop stock hurts hedge funds, even as share prices tanked 40% on Thursday, January 28. The trading activity has since taken on a life of its own far beyond the reddit group that initiated it.īillionaire investors have since entered the fray, betting on GameStop stock to climb even further. This created a “ short squeeze,” a classic trading situation that causes the stock price to rise very quickly. The traders investing in these companies at the same time created a small but still influential market interest that increased the prices of these stocks, forcing the hedge funds to close their positions in a panic. Over the past two weeks, this sparked a viral campaign amongst individual traders using the stock trading app Robinhood and other online brokerages. The subreddit collectively bet against hedge funds by buying up a large number of shares in companies being sold short like GameStop and the movie theater chain AMC. Some of these short sellers caught the attention of the subreddit WallStreetBets, made up of individual investors that discuss high risk trading strategies amongst themselves. Short selling is a popular strategy for hedge funds, which are Wall Street partnerships that use complex trading methods to generate returns for their wealthy client base. When the price goes down, the shorts make money when it goes up, they lose money. The classic way of understanding the stock market is that one can purchase shares of a company in the hopes that their value will rise as the performance of that company rises, or going “long.” But another less intuitive way to take a position on the outlook of a company’s stock is to sell it “short” in the hopes that the price falls. The lead story on reads “Hedge Fund Legends Lose Billions to Reddit Traders Running Amok.” Could Average Joes on social media sites really have united in an unprecedented act of internet solidarity to take down big Wall Street investors? The Short Squeeze Coming off the cataclysmic global effects of Wall Street’s greed in the Great Recession of 2007-2009, it has never been clearer that financial markets are simply a casino for the rich and provide nothing useful to broader society.īut over the past week, a viral campaign surrounding the video game retailer GameStop has appeared to come out of nowhere to throw classic Wall Street power dynamics into chaos. stock market soared, increasing the wealth of the country’s billionaires by over $1 trillion additional dollars. While working people lost their lives, jobs, and healthcare, the U.S. The year 2020 starkly revealed, amongst many other issues about our society under capitalism, that this was a complete lie. The ruling class and its corporate media have always tried to convince working people that if the stock market is doing well, so are you.