What does the GameStop scandal tell us about stock markets?

In the weeks following the GameStop scandal it emerged that one of the most prominent figures in the WallStreetBets Reddit forum that artificially inflated the price of GameStop stocks was a chartered financial analyst. Keith Gill used the user name Roaring Kitty to persuade other Redditors to instigated the short squeeze tactic that bankrupted Melvin Capital in order to profit personally, while holding multiple broker licenses and working for large investment firms such as Massachusetts Mutual Life Insurance Co. This means the entire GameStop short squeeze may have been engineered by an inside stock broker, and in doing do Gill is thought to have undermined the integrity of the market by violated numerous industry rules and regulations, and possibly several securities laws, for which he is now a defendant in a lawsuit.

aljazeera.com/economy/2021/2/17/us-investor-roaring-kitty-sued-over-gamestop-rally

Far from only having stock market implications, the GameStop scandal also has political implications as it will probably end in some form of regulation and reveals a huge conflict of interest in President Joe Biden's pick Treasury Secretary. US Treasury Secretary Janet Yellin has earned almost a million dollars in speaking fees from the hedge fund Citadel, and is now in the position of briefing the president on what has happened in this scandal, and many are pointing out this as a clear conflict of interest. For many this illustrates the revolving door between Wall Street and the government perfectly, with figures like Yellin likely to be extremely reluctant to prosecute market manipulation or any illicit activity perpetrated by the big hedge funds that have boosted her personal wealth.

dailymotion.com/video/x7yz79l mintpressnews.com/janet-yellens-conflict-interest-augurs-retail-investment-regulation/275098 redstate.com/nick-arama/2021/01/28/318226-n318226 youtube.com/watch?v=-EtlN2ZrvKI

The GameStop scandal revealed that the stock market is nothing more than a gambling hall, just glancingly based on any economic fundamentals in any real way, demonstrating stocks can be pumped up and markets manipulated artificially and this is how hedge funds make money. Reddit users are now taking on the “pump and dump” schemes that Wall Street relies on and have used the same tactics to loot the market. In this crazy dynamic the Wall Street traders are even less legitimate as they are the ones not even gambling with their own money and are profiteering from public markets with someone else's money, these Reddit users have at least done so with their own investment. The stock market has been revealed as the artificial game it is, and when effectively playing in a casino, you lose sometimes.

silverdoctors.com/headlines/world-news/captain-ewave-the-stock-market-has-become-nothing-more-than-a-gambling-hall reuters.com/article/us-gamestop-regulator-idUSKBN29W2Q1 tradersmagazine.com/departments/equities/the-stock-market-is-now-a-casino

This case demonstrates both a tech company's and various hedge fund's shocking disregard for stock market norms, and amounts to robbery of Robinhood customers. The ironically named Robinhood app, was actually stealing information from the poor to sell to the rich, and when the app was used otherwise they manipulated their user's behaviour to guide stock prices in Melvin Capital's favour. What Robinhood did was stepped in an deliberate attempt to favour selling, completely undermining the integrity of US capital markets, that should put them out of business forever, and smaller investors are now rightly fleeing and boycotting the Robinhood app. Many are calling this completely illegal [1], Robinhood was meant to function as a broker, and brokers should not take positions on the market. The Robinhood/Melvin Capital collusion is, in effect, hedge funds publicly stating that you are not allowed to get a bunch of people together and distort the stock market, that's our job…

[1] twitter.com/stoolpresidente/status/1354848771184750598 usanews.co/steve-cohen-and-dave-portnoy-feud-over-gamestop-on-twitter youtube.com/watch?v=vfIWgXi0UwE nypost.com/2021/01/29/small-investors-flee-robinhood-in-wake-of-gamestop-restrictions

Many people are reading class issues into this event to try and manipulate the narrative and pull at people's emotions to make them see it from one side or the other. But the GameStop story is essentially just independent day traders copying hedge fund trading techniques but doing so at odds with hedge funds. The class assertions are fleeting, it has captured the imagination of many that are in financially difficult situations, but it's just some Reddit users that have figured out what hedge funds do and are trying to make profits in similar ways, this is far from a populist or revolutionary movement. Beating financial corruption or stock market manipulation will not come from beating the mega rich at their own game, they can just manage their funds differently, or in this case get bailed out from similar institutions, real financial reform will have to come through persistent political change.

theguardian.com/commentisfree/2021/jan/31/market-is-rigged-in-favour-of-rich-as-gamestop-fiasco-reveals?utm_term=Autofeed&CMP=twt_gu&utm_medium&utm_source=Twitter#Echobox=1612093171 msn.com/en-us/money/topstocks/robinhood-and-other-investment-apps-could-face-tighter-regulation-over-gamestop-actions/ar-BB1dd8sn youtube.com/watch?v=atHMYQtunF0

Many of the Reddit users were posting message regarding the Robinhood/GameStop fiasco as a form of "class warfare", and is just an example of people wanting to damage the stock market and hedge funds out of spite for the rich. Many of the people involved in this "protest" have been using government stimulus money to destabilise the stock markets at a time when workers and market forces should be working in tandem to facilitate economic recovery after COVID. However such acts will only inflate bubbles in the economy that cannot be justified by the company's revenue, regulations are likely to come down the line moving forward, in order to deal with this volatility threat.

msn.com/en-us/money/savingandinvesting/the-gamestop-saga-feels-like-class-warfare-and-its-far-from-over/ar-BB1dcUHL netcoins.ca/blog/class-warfare-reddit-gamestop-hedge-funds fool.com/investing/2021/01/27/gamestop-trading-ought-to-be-halted-for-30-days-on politico.com/news/2021/01/28/gamestop-stock-aoc-trump-jr-cruz-463539 youtube.com/watch?v=mI-nItz56Fs

"Shitposting" is the act of posting absurd, ironic, or aggressive content to Internet message boards, with the intention of derailing the topic of conversation. In this way the use of Robinhood by Reddit users to bankrupt Melvin Capital has been described as financial shitposting, an absurd collective action of casual day traders, making a stand against predatory hedge funds that profit from failing businesses. It is not just GameStop but many nostalgic or niche brands (Nokia, AMC, Blackberry, Nokia) that are being boosted by Reddit users investment in order to short squeeze hedge funds. From the stocks involved there does seem to be an underlying pattern, but Reddit investors intentions were varied, some clearing wanting to make money, and others taking a stand against hedge funds manipulating the stock market to squeeze out competition and cannibalising businesses. But clearly the stock market is just as susceptible to shitposting as the Internet.

melmagazine.com/en-us/story/gamestop-and-the-future-of-financial-shitposting theguardian.com/commentisfree/2021/jan/28/anarchy-in-jokes-and-trolling-the-gamestop-fiasco-is-4chan-think-in-action

The genie is out of the bottle from the GameStop scandal, the public will learn that brut force is a factor in the market and can be used to undermine stock market profiteering, to profit from the stock market, or to invest in failing businesses. Hedge funds have long used the brut force of their capital to manipulate the market to their own advantage, but with a large amount of accumulated capital from people staying at home for a prolonged period, thousands of day traders can use that same brut force right back at these hedge fund monoliths. This is likely to be leveraged in the future, and is already underway with a series of other similar businesses, such as AMC theatres, Nokia, American Airlines and even Tootie Roll - businesses that people do not want Wall Street to drive towards going bust. Where the occupy movement failed efforts like this will cause major long lasting ripples that could change finance in the longterm.

silive.com/news/2021/01/gamestop-stock-storm-is-the-real-occupy-wall-street-opinion.html marketwatch.com/story/reddit-co-founder-alexis-ohanian-compares-gamestops-epic-ride-to-occupy-wall-street-i-dont-think-we-go-back-to-a-world-before-this-11611843100 theglobeandmail.com/opinion/article-the-gamestop-rally-could-represent-the-evolution-of-occupy-wall-street foxbusiness.com/markets/robinhood-lawsuits-gamestop-amc-restrictions