Meme Stocks Are An Attempt At Control
“We like the stock! YOLO. Diamond Hands. To the Moon!”
A quick stopover in the WallStreetBets (WSB) subreddit will blind you with the amount of memes and posts repeating these same phrases over and over. According to the subreddit FAQ, “(WSB) is a community for making money and being amused while doing it. Or, realistically, a place to come and upvote memes when your portfolio is down.”
With well over 4 million subscribers and growing rapidly, the subreddit is ablaze with enough material to last you a lifetime.
And they’re wreaking havoc on Wall Street and getting rich while doing it.
Financial advisors and pundits alike are in panic mode as WSB users have completely turned the stock market on its head by pumping up stocks like GameStop (GME) and AMC. Hedge funds who held the shorts on these stocks have been forced to sell their positions, causing massive losses for some firms.
According to The Wall Street Journal, one hedge fund, Melvin Capital, received more than $2 billion in emergency funds to stabilize itself and be able to pay to close out it’s position in GME. One of the top performing hedge funds entering the year, Melvin had started the year with $12.5 billion in assets, but had lost almost 30% of that as of last Friday.
They are not the only victims of the meme lords in WSB, as financial-analytics firm S3 Partners reported that GME shorts year-to-date as of close on Friday had cost firms $3.3 billion.
So, why has WSB decided to wage war on Wall Street?
To really understand what’s at play here, one simply has to look at a post by user ssauronn titled “An Open Letter to Melvin Capital, CNBC, Boomers, and WSB”.
The post starts out by recalling the events of the economic collapse in 2008, with u/ssauronn saying, “I was in my early teens during the ’08 crisis. I vividly remember the enormous repercussions that the reckless actions by those on Wall Street had in my personal life.” The user goes on to detail the hardships that his family and friends endured in the fallout of the crash, scraping by where they could and helping others when possible.
The user then takes aim at Melvin Capital, stating “you stand for everything that I hated during that time. You’re a firm who makes money off of exploiting a company and manipulating markets and media to your advantage.”
The user goes on to mention the reported allegations of illegal short selling and market manipulation via after-hours trading, saying that Melvin’s “continued existence is a sharp reminder that the ones in charge of so much hardship during the ’08 crisis were not punished.”
Next to incur u/ssauronn’s wrath was CNBC, with the user saying their “staple audience will soon become too old to care” and “every person affected by the ’08 crash that’s now paying attention to GME, are going to remember how you stuck up for the firms that ruined so many of us, and tried to tear down the little guys.”
“Boomers and/or people close to that age” rounded out the groups that u/ssauronn spoke to, asking them to “realize that, even if you weren’t adversely effected(sic) by the ’08 crash, your children and perhaps grandchildren most likely were? We’re not enemies, we’re on the same side.”
This is who is driving the change in the markets. This user, like countless others, who watched as 401(k)’s, retirement funds, savings accounts, and every form of safety net for the average person was drained away at the drop of a hat by corporate greed.
They watched as the Obama administration bailed out market speculators, only to have them give themselves massive bonuses and vacations and keep on doing what had caused the crash in the first place.
What the talking heads on financial shows and in hedge funds offices have now come to realize, perhaps a bit late for some of them, is that the same people who watched all this unfold are the same people that they are dependent on to make their money. Without so-called “retail investors”, the money being pumped into investment portfolios and hedge funds will eventually dry up. You can’t speculate with someone else’s money if it’s under their mattress.
Unfortunately for them, those “retail investors” have made it their goal to seek retribution against a system they see as rigged and have found a way to wrestle control away from the suits on Wall Street, if even for a little while.
At a time when the world is completely out of their control, with the country shut down and normal life taken away from them, this is what allows the average trader the ability to control even a small portion of their life, while sticking it to the “man.”
And regardless of the press hounding them and doubters saying they’re going to end up losing all their money, there appears to be no end in sight thanks to their true belief in one phrase from the 2015 film, The Big Short: “I say when we sell!”
Godspeed, you magnificent bastards.
