Gamestonk’s gamified guerilla trading made losers of both the good and bad guys

    
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It seems like a long time ago, but just a few weeks back, the mainstream news cycle was absolutely obsessed with Gamestop thanks to celebrity investors and retail stock-buyers on Reddit pumping up the stock in a successful bid to damage hedge funds that were writing uncovered calls for it. During the melee, trading apps exposed weaknesses, retail investors were stifled, government representatives got involved, lawsuits were filed, and the short-sellers got short-squeezed. Short-squozed. Short-squozen.

But as we noted from the start, the fallout from the pump and dump was going to be heartbreaking, and now the internet is compiling lists of both victims who lost money and winners you really didn’t want winning. For example, The Wall Street Journal has a piece up on some of the amateurs who got swept up in the “to the moon!” rhetoric on Reddit. The most depressing example is the 20-something who apparently took out a $20,000 loan to buy the stock at $234. The New York Times and Forbes chronicled multiple people who lost even more, which rather outweighs the puff pieces about how a cute kid made three grand.

As readers know, the stock has fallen from its peak of nearly $500 per share value down to a tenth of that, where it sits now, meaning many of the people who bought it late or who didn’t sell early are screwed – and they weren’t all doing it to fight the hedge funds, which are already back to business as usual. And that’s just Gamestop; there were multiple other stocks being pumped in similar ways, like Blackberry and AMC.

Meanwhile, some of the people who’d been sitting on Gamestop stock for a long time while it was worthless suddenly made megabucks off it once folks like Elon Musk and Reddit anons started promoting it, and that includes the trading apps and some hedge funds themselves. In fact, one of the early proponents on Reddit – Keith “Roaring Kitty” Gill, who turned his $53,000 2019 GME investment into $48M last month – is set to testify before the US House Financial Services Committee on Thursday, February 18th. Gill, it’s worth noting, is a a licensed securities broker who worked for MassMutual, a sharp reminder that a lot of the “anons” on the WallStreetBets sub are not amateurs whose chief goal is helping the proletariat Fight The System, so following advice and bandwagons from the sub may not be in your best interests.

If you’re hungry for more while waiting for the government hearings, The Verge has a really interesting (that’s not sarcasm) interview up with CNBC business journalist Jon Fortt; during the first half, which is specific to the Gamestonk scenario, they discuss the “Fight Club fanfiction” of taking down the hedge funds, the scams and malice that can lurk in the anonymity of message boards about stocks, the very real and justified anger people have toward Wall Street following the 2008 financial crisis, and the fact that hedge funds that weren’t shorting GME still made bank off all this in spite of some retail traders’ willingness to lose money to bring them down. The most provocative bit in the interview comes when Fortt rejects the idea that Gamestonk represents an advance in democratizing finance (which he supports overall) and argues that Reddit and trading apps dovetail into a form of not-necessarily-positive gamification.

“Investing is not Candy Crush, right?” he says. “It doesn’t work that way. And if there’s a system set up that makes it feel like that, that might just be bad for retail investors.”

Source: WSJ, The Verge
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Does not check email

Reddit users with limited resources or Wall Street with access to trillions of dollars – my money was on Wall Street. Sure someone lost their yacht inside a yacht and the Reddit people manipulated each other for a few days. Now the chickens will come to roost.

I was roasted alive online for saying it but I don’t care – Gamestoop is not a viable business long term. All this money was pumped into a zombie that has no plans. Just because you love a business doesn’t mean it’s a good investment.

Be passionate but don’t get manipulated. Especially if you take finance advice from anonymous someone named Potato-ass online.

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omega59er

The whole Gamestop/AMC thing drew me into learning about stock trading and the market; I did my research and went in on GME and and AMC. I made a small profit and got out, but continued to watch the graphs daily and analyzed what kind of manipulation the hedgies could do and it was astounding; It was like a crash course in everything related to the market over the span of 2 weeks.
It was an eye opening experience as to how easy it is to make and lose money on the market. I’ve continued trading every day since and continued to make money easily. I’m extremely grateful that this all happened as it showed me the money is there and easily taken as long as you aren’t greedy and you don’t get into the riskier more advanced aspects of trading.

Fisty
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Fisty

I can’t feel sorry for these people.

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cannotweep

The finance moguls? I agree. Why would anyone feel bad for them?

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Peregrine Falcon

Yes, some people got hurt. But the hedge funds lost $70 BILLION because of this.

Also, their manipulation of system was exposed, prompting civil lawsuits and criminal investigations. It’s possible, though not likely, but possible that a billionaire or two may even end up behind bars because of this.

So some things were accomplished. Many people were careful and didn’t lose more than they could afford to, some people weren’t. I feel for them but, sadly, you can only warn people, you can’t protect them from themselves.

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Dankey Kang

A blind man could have seen this coming, but at least we got a few laughs and some lessons were learned, I hope.

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Bruno Brito

I can’t laugh at little people getting screwed by ill-intentioned people, sorry.

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Dankey Kang

well maybe you can laugh at the big people losing billions of dollars then.

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Bruno Brito

I can, but their damage is passable. The little people who got swept by this will suffer through.

I just didn’t find anything good about this news.

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Greaterdivinity

And the heavy metal dude from The Big Short made something like $300M in his hedge fund.

It really does seem like there were only a handful of retail winners, mostly folks like DFV that were holding for long, long before this nonsense and actually understand the market. Plenty of small winners which is great too. But a lot of it was just…people who don’t know how markets work, didn’t do their research, and bought into the stupid WSB narrative and are losing/going to lose pretty hard.

Melvin wasn’t bankrupted. Some hedges lost money, but seemingly pretty routine losses with shorts on average, some hedges and retail investors won big, but most retail investors lost or didn’t make much at all. Seems like pretty normal/routine stock market trading to me, despite all the competing narratives and chest thumping and conspiracy theorizing and fictional narratives that everyone desperately wanted to believe in : /

Reddit and trading apps dovetail into a form of not-necessarily-positive gamification.

https://www.cnn.com/2020/06/19/business/robinhood-suicide-alex-kearns/index.html

This already happened last year to a poor young guy who thought he owed almost $1M when he absolutely didn’t. Because for all the talk of Robin Hood and whatnot, there is still no serious push for retail investor involvement in a meaningful way. Because it requires extensive education about the complexities of the markets, complexities which I know I barely understand (even with the past months crash course in looking up a ton of info to learn more), that companies aren’t willing to invest in.

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Bruno Brito

For example, The Wall Street Journal has a piece up on some of the amateurs who got swept up in the “to the moon!” rhetoric on Reddit. The most depressing example is the 20-something who apparently took out a $20,000 loan to buy the stock at $234. The New York Times and Forbes chronicled multiple people who lost even more, which rather outweighs the puff pieces about how a cute kid made three grand.

This just hurts.

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Greaterdivinity

DIAMOND HANDSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSS

Seriously though, I really worry that a lot of vulnerable folks who don’t have the financial security to dump thousands/tens of thousands/take out mortgages to play around with some meme stock are gonna get absolutely wiped the fuck out because of this. And with Reddit being Reddit…there seems like there were quite a few : (

Some assholes who can afford to do this even though it hurts and will mean they have to start budgeting? Well, sucks to suck and be an idiot, but hopefully they’ve learned a good lesson. The folks that can afford to do this without any negative consequences? Fuck you. Seriously, just fuck you.

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Jon Wax

We still haven’t heard about the pensions

A lot of hf are just managing pensions. I have a feeling a bunch of teachers, firefighters, etc are gonna take a hit

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Bruno Brito

Preaching to the choir, GD. I had to endure dipshits here on MOP saying that this was capitalism, and capitalism made the US empire “prosper”, and the entire world better. Imagine that. Almost 300k deaths from Covid, an entire system built on sistematic oppression, the complete lack of healthcare which in turn makes the US the country that most bankrupts households because of medical debts…but it’s prosperous.

I guess Empire is the right word: Only the royals are partaking on the table. Fuck the rest of us.

I have absolutely no respect for this sociopathic behavior of speculative market that produces nothing, claims everything and shreds lives at their beck and call. The entire world would be better without these fucks.

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Tim Nicholson

Yeah, I was seriously considering buying in while it was up. I was inches from jumping on that WSB hype train and then I talked myself out of it. So glad I did. I read so many comments on that sub about people liquidating the equity in their homes or even their retirement savings. Truly a sad story.

BTW, how do I make an account without linking my FB account? Thanks.

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Greaterdivinity

Yeah, WSB has historically like, been for loss porn. People posting screencaps of their portfolio 10’s of thousands of dollars in the red etc.

Don’t get me wrong, part of me muses with the thought of buying early and just selling the stock on that DIAMOND HANDS FRIDAY for an absolute killing…but I feel like with what little I’ve learned about the market it’s not even remotely that simple so I’ll continue to not play with things I don’t understand.

And I just use an old google account. IIRC there are a few different login options, FB/Twitter/Google/Reddit. So you can switch accounts or just create a new “this is my anonymous internet commenting account” on any of those platforms and go with it.