To paraphrase Oscar Wilde, one must have a heart of stone to read the death of Wall Street hedge funds and not laugh. I know that it’s turned into my favorite story of 2021—hell, it may just be my favorite story ever, even though we have yet to see how it all turns out in the end.
In case you missed it, a motley crew of Redditors known as r/wallstreetbets (motto: Like 4chan found a Bloomberg terminal) noticed that gaming retailer GameStop—which has seen its fortunes plummet year over year for quite some time now—had an unusually high number of short positions on its stock: somewhere in the neighborhood of 140%, to be precise. This meant that a lot of institutional investors were betting that the stock was gonna take a big tumble, from which they stood to make truckloads of money.
Now, if you’re not an investment guru, you might be asking how this works. It’s really quite simple. A hedge fund manager goes to a brokerage house and asks, “Hey, you mind if I borrow a few hundred thousand shares of GameStop? I’ll give ’em back to you in a couple weeks and pay you a fee of 4% of the stock value.” The broker, who is very interested in keeping the manager happy (they’re great customers, after all), says, “Sure! No problem! Sign this here contract and it’s a done deal.” So the manager signs on the dotted line, takes possession of the shares…and then sells them on the open market. Shares he does not own. How is this legal, you might ask? Well, it is—and here’s the kicker: the hedge fund manager is betting that the stock will go down in value, after which he will buy them back for less than the original selling price and pocket the difference. Ka-ching! Easy money—and he didn’t even need to use any of his own cash to make it.
Of course, if the stock goes up, that creates a bit of a problem for the hedge fund, because they’re obligated to give the stock back to the brokerage house by a certain date—which means they need to buy back all those shares they sold, even if it now means losing money. This is what’s known as a short squeeze, which is what happened with GameStop this week.
Basically, the Wallstreetbets guys saw all those short positions on GameStop and decided to turn the tables on the Wall Street fat cats by buying up a bunch of the company’s stock. And guess what happens when thousands of people start buying a certain stock? The price, of course, goes up. Hedge funds, meanwhile, see what’s happening—and now faced with the potential of utter ruin, suddenly they have to start buying the stock back as well. This, of course, only drives the stock price even higher! By some accounts, the hedge funds that held all those short positions have lost something in the neighborhood of $5 billion, while individual Wallstreetbets investors have pocketed millions in gains.
Which brings us to this morning, and the news that online trading site Robinhood, which is what the majority of Wallstreeetbets used to buy their shares, has halted all buying of Gamestop stock—along with Nokia, AMC Theaters and others:
— Michael Handschuh (@mhandschuh) January 28, 2021
What happened? Well, it seems that Wall Street bigwigs had a little chat with Robinhood and said to them, “Nice site you got there. Be a shame if something happened to it.” Or, in non-Cosa Nostra parlance, the billionaire oligarchs who basically run the country put a stop to Joe Sixpack interfering with their ability to manipulate the markets for their own ends. If Wallstreetbets can’t buy stock, they can’t keep the price elevated—and so it crashes back down, thus ensuring the billionaire class gets to keep shorting stock as much as they want without having to worry about the little guy cutting in on their scam.
In other words, they just rigged the system against you.
Sound familiar? It should, because a similar thing happened last November, only in an electoral sense. When Donald Trump looked to be cruising to an easy win that Tuesday night, five battleground states suddenly stopped counting votes—long enough for the ruling class to step in and make sure they “found” enough votes to put Joe Biden, their preferred candidate, over the top. So whether it’s manipulating stock prices or manipulating vote totals, we have been told in no uncertain terms by our betters that we simply cannot be trusted to make the correct decisions for the economy and the country. Better to just let our masters make those decisions for us. After all, who are we to disagree with them?
In both cases, the sheer brazenness of these moves has made it more and more obvious what’s going on. Only time will tell if that’s a good thing–and if we’re prepared to do something about it.
COVID-19 lockdowns are taking down an independent news outlet
Nobody said running a media site would be easy. We could use some help keeping this site afloat.
Colleagues have called me the worst fundraiser ever. My skills are squarely rooted on the journalistic side of running a news outlet. Paying the bills has never been my forte, but we’ve survived. We have ads on the site that help, but since the site’s inception this has been a labor of love that otherwise doesn’t bring in the level of revenue necessary to justify it.
When I left a nice, corporate career in 2017, I did so knowing I wouldn’t make nearly as much money. But what we do at NOQ Report to deliver the truth and fight the progressive mainstream media narrative that has plagued this nation is too important for me to sacrifice it for the sake of wealth. We know we’ll never make a ton of money this way, and we’re okay with that.
Things have become harder with the coronavirus lockdowns. Both ad money and donations that have kept us afloat for a while have dropped dramatically. We thought we could weather the storm, but the resurgence of lockdowns that mainstream media and Democrats are pushing has put our prospects in jeopardy. In short, we are now in desperate need of financial assistance.
The best way NOQ Report readers can help is to donate. Our Giving Fuel page makes it easy to donate one-time or monthly. Alternatively, you can donate through PayPal as well. We need approximately $17,300 to stay afloat through March when we hope the economy will be more open, but more would be wonderful and any amount that brings us closer to our goal is greatly appreciated.
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We’re heading in the right direction and we believe we’re ready talk to patriotic investors who want to not only “get in on the action” but more importantly who want to help America hear the truth. Interested investors should contact me directly with the contact button above.
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