A remarkable shift is taking place in financial trading at the moment, indicating a potential transformation in the balance of power in U.S. stock markets. The excitement revolves around Gamestop and the powerful trading tool called options, which can bet on and against financial securities and increase returns and losses. The video game chain, which has been devastated by the coronavirus, has struggled to stay afloat for years due to the online marketplace.
Currently, Redditors, led by Subreddit r/WallStreetBets, along with private investors and GameStop enthusiasts, have joined together to buy the video game retailer's surging stock (along with other random stocks such as Blackberry, Nokia and AMC), and they have a lot to be happy about. In what is termed a "short squeeze," many individual investors have become millionaires on paper as GameStop shares have skyrocketed more than $300 from $17.25 at the beginning of the new year. On the flip side, short-sellers have lost over $19 billion in betting against GameStop as they wage war with Reddit traders.
A closer look at the movement driving this incredible rally reveals something much greater than a mission to serve a struggling gaming retailer or sharp trading skills being put to good use. Instead, the driving force could be defined as a powerful populist uprising in the financial markets that is squarely political. To be clear, the same government that jumps to support Wall Street and Washington DC is also brazenly defending the deep state swamp.
Specifically, they are protecting the three main divisions of an emerging and self-serving oligarchy that strives to drastically alter our nation's political and economic landscape and steer it down a path that many believe will lead to irreparable and devastating consequences. The three divisions—corporate media, big tech/big business, and establishment politicians—are baring their souls in broad daylight, and we should all take notice.
As Wall Street Titans lose billions, big business wasted no time aligning with big brokerage firms to stop individual investors' ability to make transactions on certain securities, including GameStop. The popular trading app Robinhood, which has seen a surge in online trading during the pandemic as millions of individual investors are stuck at home, paused trading on Thursday, barring investors from purchasing shares of GameStop and other companies.
The move was immediately met with widespread outrage, as Reddit investors announced on Twitter and to their 5.8 million message board followers that a "hero" had filed a class-action lawsuit against Robinhood. Elon Musk chimed in and called for an investigation into the trading platform. Late Thursday, Robinhood reversed course, with co-founder Vlad Tenev announcing on Twitter, "Starting tomorrow, we plan to allow limited buys of these securities. We’ll continue to monitor the situation and make adjustments as needed." GameStop's stock price exploded once again Friday morning, with premarket trading surging to $389.50 well before 7 am. WallStreetBets traders hope to continue driving the company's share price higher, as the forum talked it up as their "golden goose." They urged each other to hold onto the stock through the market turbulence.
Following right alongside big business on behalf of big tech is the server and talk channel platform Discord, who wasted no time suppressing the online speech of individual investors by banning the server of r/WallStreetBets for allowing "hate speech." The Reddit group found a new server shortly after the ban.
Next, assisting the self-serving oligarchy is corporate legacy media, most notably CNBC, boldly supporting the billion-dollar hedge funds instead of individual investors. Indeed, brokerages often lend investors money to make their trades and could be exposed to huge losses if many investors are suddenly wiped out and can't pay back the borrowed funds. In an interview Thursday on CNBC's "Closing Bell," Interactive Brokers chairman and founder Thomas Peterffy outlined some of the concerns that prompted his brokerage to restrict trading, stating, “If our customers are unable to pay for their losses, we have to put up our own money,” he said, adding that Interactive Brokers “doesn’t have a problem,” as it has $9 billion in equity as a cushion, presumably from shorting companies like GameStop. Interestingly, CNBC stayed quiet when big brokerage firms' mission was to drive companies like GameStop to zero to turn a massive profit.
Lastly, and arguably most concerning in this scenario, is big government's establishment politicians. Their role in protecting and often quietly promoting the self-serving oligarchy agenda is an issue that demands our attention. Big business has paid newly appointed Biden Treasury Secretary Janet Yellen $7.2 million over just the last two years, which raises the question of whether she is taking the side of Wall Street Titans over the side of the regular investor.
It remains to be seen whether the efforts of the self-serving oligarchy to silence the collective strength of individual investors taking a stand against Wall Street billionaire investors (as well as corporate media, big tech/big business, and establishment politicians) will ultimately be successful, or if we will witness a true disruption of the financial system. Either way, we should all be paying attention.