We are experiencing a true revolution on Wall Street. Young, social media savvy, meme-conscious small investors have made a dramatic entrance in the market, taking on billion dollar hedge funds and winning.
The “experts” on Wall Street seemed to think that the retail investors are not bright enough to invest their own money. Better to invest in hedge funds, they claimed. Hedge funds like Melvin capital, which reportedly lost around 23 billion dollars on GameStop short squeeze fueled by retail investors around WallStreetBets subreddit.
Wall Street insiders are thrilled with their monopoly on the market in question. Now, some segments of the mainstream media have joined the attack against these” retail investors” who dare to invest as they see fit, by trying to tie them to the “alt-right” and “far right”.
Financial Times was the first to draw that connection, mentioning that “some” of the “Reddit bros” were “alt-right supporters”.
After only two hours, the article was amended, the disputed sentence removed and updated with a statement by the editor.
Time magazine mentioned “remnants of other, often far right, meme movements” in WallStreetBets culture. They also contacted writer Ryan Broderick who made the connection even more explicit.
“They use the memes of the far right. I don’t want to go so far as to say that there’s like a fascist or authoritarian bent here. But they’re using the tools that these groups have built. Like it’s the same playbook. They’re just doing it on the stock market, as opposed to the Trump campaign.”
The outrage by MSM was ridiculed by Twitter users who compared the WallStreetBets logo to Pepe the Frog, a cartoon frog that was designated as a “hate symbol” by the “hate-watch group” ADL.
What outraged WallStreetBets even more was the inexplicable move by Robinhood to restrict buying of GameStop and other stocks. Robinhood was the app that facilitated small investors to push the GameStop stock up in the first place.
“In light of recent volatility, we are restricting transactions for certain securities to position closing only, including $AMC, $BB, $BBBY, $EXPR, $GME, $KOSS, $NAKD and $NOK. We also raised margin requirements for certain securities”, the statement wrote.
The company stated they were determined to provide investors “the tools and resources to help them invest responsibly for their long-term financial futures”, raising the question of whether the company thinks it should dictate its users on what a responsible investment is.
Retail investors were not happy. The ratings for the Robinhood App on Google Play and the AppStore quickly plummeted to one star, as huge masses of angry traders left angry reviews accusing the company of market manipulation and bad customer-relations practices.
A user named Donny Dominguez called the app “Market Manipulator” and added “I choose how I spend my money, but apparently Robinhood thinks otherwise.”
Another user named J Bobo thought that “Sheriff of Nottingham is a better app name”, complaining that the app violated his freedom to trade as he wants.
Kassandra Combest protested “Wouldn’t allow me to buy stock available on market-no reason given. What happened to free market?”
What is more, the block on stock purchases really hit the stocks hard. On January 28, hours after the Robinhood announcement, GameStop fell from $400 to $120 in less than an hour.
GameStop debacle really shows how the free market can empower ordinary people. It also shows how much power is in the hands of the special interests, that will use the government to bail them out and to punish their competitors whenever they start losing.