![]() The funds’ bet against GameStop was so popular that it had left them with a very narrow escape hatch if the price started to rise sharply for some reason. Some users had grasped that investment funds were exposed to unlimited losses because they had engaged in a technique called “short selling” that allowed them to profit if stock prices fell - the opposite of what most investors do. There were more than two million members of WallStreetBets by that day, and the group’s membership would quadruple within a couple of weeks as they shocked the financial establishment. Now they were playing a new and dangerous game - ruining the lives of hedge fund bosses. Over the past year or so, they had noticed that some stocks rose simply because they and a lot of strangers they had met on Reddit bought them. If a stock went up for a week, or a day, or even a few hours and they sold it in time, the degenerates were happy. This was so obvious that it seemed like every hedge fund manager on Wall Street had piled into a bet that its share price was eventually headed to zero.īut the pros suddenly found themselves facing a group that wasn’t interested in cash flows or when the next Xbox was coming out. From editing columns about the chain over the years and from my sons’ recent preference for bypassing the store and buying digital games online, I knew it was a dying business - sort of like Blockbuster Video after Netflix really started to take off. I had driven them there countless times as they bought discs and then later traded them in for different ones. With three sons, I was all too familiar with GameStop. When I said he should count himself lucky and sell and he said he absolutely wouldn’t, I was intrigued and began to read the forum. The reason was that a friend of his, a bright boy I had known since they were both in kindergarten, had bought shares in the video game retailer after reading about it on WallStreetBets and had nearly doubled his money in a couple of days. My oldest son had prompted my deep dive into the subreddit by asking whether I was writing something about GameStop. From what I saw and heard that morning, though, Wall Street wouldn’t be laughing anymore. Traders and fund managers thought it was hilarious. ![]() But they were doing dumb things too like buying the shares of bankrupt companies or snapping up stocks with names that sounded like ones mentioned on Twitter by Elon Musk but that actually were worthless shells. The amateurs plunged in, and soon they were running circles around investing legends like Warren Buffett. Not the degenerates, though- maybe because they didn’t know any better. When the economy ground to a halt and stocks plunged as the world grasped the severity of the pandemic, older, grayer investors once again failed to follow their own advice about buying when others were panicking. It was to the publisher of the book you’re holding in your hands. It wasn’t to their mom or their principal or even a child psychologist. After less than ten minutes of scrolling, I began to draft an email. With my newsroom shut by COVID-19, I was working from home the morning of January 25, 2021, when I stopped editing a column for the next day’s Wall Street Journal midsentence to see what they had been up to on the internet. I’ll never forget the day I found out that my sons were degenerates. The following is an excerpt from “The Revolution That Wasn’t.” “They love it when markets are volatile, and they really, really love it when people get excited and think they can beat ‘the house.’” “Most of Wall Street is made up of middlemen,” Jakab told “Marketplace” host Kai Ryssdal. In a new book called “The Revolution That Wasn’t: GameStop, Reddit, and the Fleecing of Small Investors,” Wall Street Journal editor Spencer Jakab argues that though some hedge funds lost money and a few retail investors got rich, the real winners of the GameStop stock trading frenzy were professional investors and the American financial services industry. At the time, GameStop shares’ skyrocketing price was seen as a revolt against Wall Street’s Establishment, with some commentators calling it a “seminal moment” for retail investing. Last year, stock ticker GME caught the attention of Wall Street, the media and even Congress, thanks to the collective action of retail investors on a Reddit forum.
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