The source is unknown, but to whomever had the idea: All Hail!
The quote is apropos at this time as we have witnessed day-traders catch the hedge-funders in their own game. “Buy low, sell high” and whoever said that did not understand hedge funds. The stock markets have long been dominated by “Bet against stocks when they are high and cash in when they go low.” The problem with the strategy is that one must be correct in the bet, a bet that is highly leveraged. If, per chance, the stock goes high, then the hedge funders must make good on their bets to purchase.
GameStop, like most strip mall and mall retailers, was struggling. The hedge-funders bet that GameStop would fail. What the wizards of Wall Street failed to research was that there is one entire generation of day-traders who grew up in GameStop. This was no ordinary retailer. The Barometer spent more time in GameStop waiting to purchase the newest game; waiting for an appraisal so that her sons could trade in old games for new games, and just waiting in line. And GameStop was one sly retailer — whatever it paid for old games and equipment was paid only in store credits — no cash changed hands. Sort of like Wall Street until you get burned. To this day, the Barometer has $196.71 in GameStop credits that her sons never used.
We parents and our children bonded in GameStop. It was a way of life. We prayed together that there would be no more new video games. We were willing to become Amish so that there would be no electricity in our homes in order to stop the addictive hold that GameStop had on our youth. Apparently, however, our children had formed a lifelong bond. So, those children who grew up to be day-traders rallied together to “Save GameStop.” These former addicted youths were now adults with children. Who can parent without a local GameStop? So, social media addicts that they are, they got the word out. The day-traders bought put options as the hedge funders were buying call options. GameStop stock went from $2.43 a share on February 5, 2020 tp $491.98 per share on January 25, 2021.
The GameStop fans put it to the hedge funds. Literally and figuratively. They want the hedge-funders who were positioned short on GameStop to buy their shares. Oh, the weeping, wailing, and gnashing of teeth coming from the billionaires of hedge funds who have never imagined so much as a widget, let alone built one. They want the SEC to step in. The trading platforms are banishing GameStoppers from their sites. Trading on those platforms has been halted.
Truth be told, the amateurs got the better of the professionals at their own game. A revolution launched by former gamers who hung around GameStop with their parents. The novices beat the professionals at the game the professionals created that was one risky way to earn a living. They did very well, until they struck a company with a heart created by its fans.
From an ethical perspective, if you want to play a risky game, you play by the pre-established rules. And the rules are you must come up with the cash for those who stepped in under the same rules. Was it an organized effort to manipulate the stock? Only in the sense of its psychological bond. The same thing happened with K-tel stock when it was teetering. It went from $-0.39 to $1.39 during a similar bubble. However, the stakes were much lower. Folks did not want to lose those ads for the TV marketer who provided as much entertainment in hocking its products as whatever was provided by the shows themselves.
As the New York Times headline blared “The ‘Dumb Money’ Outfoxing Wall Street Titans.” Ante up, gang, you got beat at the game you started and for which you wrote the rules. Making money for doing nothing is a proposition that always has a downside. And you cannot even get a controller to step in and save you. But you might be able to purchase a used one at Game-Stop. Be sure to take a parent long; you seem to need adult supervision on your trades.