Opinion

HART: GameStop’s Reddit Raiders — Goliath Beaten By David, Then They Change The Rules

(Michael M. Santiago/Getty Images)

Ron Hart Contributor
Font Size:

Because I started on Wall Street with Goldman Sachs in the 1980s, folks have asked me to explain the GameStop story. So here it goes.

Hedge funds are the showy, big money types. If a Salvation Army band is playing outside their building, they ostentatiously raise money for the band to have a string section. They make inordinate money. Since most are based in New York and Connecticut, they essentially buy cover from Democrat lawmakers up there. They are the bullies of Wall Street, often crowding into the same trade to ruin a company like GameStop, which sells video games at malls. GameStop is the Radio Shack of retail and is admittedly a good stock to “short,” but here is where greed got the bullies.

Most markets in thin stocks are 1,000 shares bid for, 1,000 shares offered. When big orders come in on such stocks, they can move the stock — a lot, 68% in one day as in GameStop’s case. We used to say at Goldman Sachs about the market-making stock trading desk, “What is the difference between a hooker and a stock trader? The hooker will not change her price when she sees your size.”

Enter the Reddit Raiders, a group of “normal guys” who exchange investing ideas online. They trade on Robinhood, ProNvest and other small online sites. They decided, with more than 100% of GameStop stock being sold short (how is that even legal?), they’d make it hard for the hedge funds to buy back their short positions by running up the stock price. The Davids caught the Goliaths with their shorts down.

GameStop’s stock symbol is GME, but it became WTF. It was trading at $18 on January 1. Reddit Raiders noticed the inordinate short position and started buying it, causing the stock price to soar as high as $483 a share.

The hedge funds who have sold short are forced to buy back the stock at higher prices. All legal. But when “average” Americans started making money, hedge funds cried to their bought-and-paid-for elected officials and regulators. They stopped buy orders in GameStop, allowing the price to drop and bailing hedge funds out — to the detriment of the Reddit Raiders. Normal investors had figured that they could beat hedge funds at their own game … and they did, until the regulators and tech oligarchs stepped in.

What happened next was also interesting. Another social media platform server banned the group, just like Amazon de-platformed Parler. The “justification,” as it always is, was that users engaged in hate speech and spread misinformation. These are the same bogus reasons Twitter and Facebook ban conservative writers.

Many do not know how Wall Street works. Many think it’s just like playing the lottery for guys who wear khakis. But it is an overly regulated game, usually won by those who pay the most to politicians to protect them and keep competition away. Every regulation makes it harder for smaller firms to compete and further entrenches the “too big to fail” firms with their co-conspirators in government who protect them. In this case, they did it again.

The stock market is a dangerous place. Even Kim Kardashian could lose her ass. But when the little guy figures it out and wins, regulators should not step in and protect the big boys. This tells you what government thinks of us.

In fact, Janet Yellen, Federal Reserve chair under Obama and the new Treasury Secretary, earned more than $800,000 in speaking fees from some of these same hedge funds. And she “regulates” them? We know Dems are against free speech, but charging $800k for it?

Where are the Keystone Kops at the SEC? They are going after small investors here.

I do not worry about the stock market. I have all my money tied up in those machines that rewind videotape cassette movies. But even rebel billionaire Elon Musk is showing concern. I hear he is thinking of taking everything he owns and slowly moving it to another planet.

Biden noticed these uppity, average American day traders making money, and he has sent John Kerry from the Keystone XL Pipeline speech to tell them they cannot make money that way. They should learn to make solar panels instead.

Ron is a libertarian syndicated op-ed humorist, award-winning author and TV commentator. He can be reached at Ron@RonaldHart.com or on Twitter @RonaldHart.

PREMIUM ARTICLE: Subscribe To Keep Reading

Sign up

By subscribing you agree to our Terms of Use

You're signed up!

Sign up

By subscribing you agree to our Terms of Use

You're signed up!
Sign up

By subscribing you agree to our Terms of Use

You're signed up!

Sign up

By subscribing you agree to our Terms of Use

You're signed up!
Sign up

By subscribing you agree to our Terms of Use

You're signed up!

Sign Up

By subscribing you agree to our Terms of Use

You're signed up!
Sign up

By subscribing you agree to our Terms of Use

You're signed up!
Sign up

By subscribing you agree to our Terms of Use

You're signed up!
BENEFITS READERS PASS PATRIOTS FOUNDERS
Daily and Breaking Newsletters
Daily Caller Shows
Ad Free Experience
Exclusive Articles
Custom Newsletters
Editor Daily Rundown
Behind The Scenes Coverage
Award Winning Documentaries
Patriot War Room
Patriot Live Chat
Exclusive Events
Gold Membership Card
Tucker Mug

What does Founders Club include?

Tucker Mug and Membership Card
Founders

Readers,

Instead of sucking up to the political and corporate powers that dominate America, The Daily Caller is fighting for you — our readers. We humbly ask you to consider joining us in this fight.

Now that millions of readers are rejecting the increasingly biased and even corrupt corporate media and joining us daily, there are powerful forces lined up to stop us: the old guard of the news media hopes to marginalize us; the big corporate ad agencies want to deprive us of revenue and put us out of business; senators threaten to have our reporters arrested for asking simple questions; the big tech platforms want to limit our ability to communicate with you; and the political party establishments feel threatened by our independence.

We don't complain -- we can't stand complainers -- but we do call it how we see it. We have a fight on our hands, and it's intense. We need your help to smash through the big tech, big media and big government blockade.

We're the insurgent outsiders for a reason: our deep-dive investigations hold the powerful to account. Our original videos undermine their narratives on a daily basis. Even our insistence on having fun infuriates them -- because we won’t bend the knee to political correctness.

One reason we stand apart is because we are not afraid to say we love America. We love her with every fiber of our being, and we think she's worth saving from today’s craziness.

Help us save her.

A second reason we stand out is the sheer number of honest responsible reporters we have helped train. We have trained so many solid reporters that they now hold prominent positions at publications across the political spectrum. Hear a rare reasonable voice at a place like CNN? There’s a good chance they were trained at Daily Caller. Same goes for the numerous Daily Caller alumni dominating the news coverage at outlets such as Fox News, Newsmax, Daily Wire and many others.

Simply put, America needs solid reporters fighting to tell the truth or we will never have honest elections or a fair system. We are working tirelessly to make that happen and we are making a difference.

Since 2010, The Daily Caller has grown immensely. We're in the halls of Congress. We're in the Oval Office. And we're in up to 20 million homes every single month. That's 20 million Americans like you who are impossible to ignore.

We can overcome the forces lined up against all of us. This is an important mission but we can’t do it unless you — the everyday Americans forgotten by the establishment — have our back.

Please consider becoming a Daily Caller Patriot today, and help us keep doing work that holds politicians, corporations and other leaders accountable. Help us thumb our noses at political correctness. Help us train a new generation of news reporters who will actually tell the truth. And help us remind Americans everywhere that there are millions of us who remain clear-eyed about our country's greatness.

In return for membership, Daily Caller Patriots will be able to read The Daily Caller without any of the ads that we have long used to support our mission. We know the ads drive you crazy. They drive us crazy too. But we need revenue to keep the fight going. If you join us, we will cut out the ads for you and put every Lincoln-headed cent we earn into amplifying our voice, training even more solid reporters, and giving you the ad-free experience and lightning fast website you deserve.

Patriots will also be eligible for Patriots Only content, newsletters, chats and live events with our reporters and editors. It's simple: welcome us into your lives, and we'll welcome you into ours.

We can save America together.

Become a Daily Caller Patriot today.

Signature

Neil Patel