The Patriot Post® · GameStop: Gamer Culture Hits Wall Street

It’s a game that no one should be playing. It results in vastly more losers than winners, and those who lose often lose big. The (rigged) game is Wall Street’s hedge fund-style speculation, which is entirely different from that of sound investment analysis. Hedge fund managers are everyone’s favorite villain. They literally produce nothing but accumulate enormous amounts of wealth, often by betting on the failure of others. It’s a legal racket, which may explain why political polar opposites like Senator Ted Cruz (R-TX) and Representative Alexandria Ocasio-Cortez (D-NY) actually found common ground on an issue.

What’s happening on Wall Street in recent days can be described as a perfect storm of two subcultures colliding — the gamer culture and Wall Street hedge funds. What initially was confined to those subcultures has spilled out into the broader American culture. How and where it will eventually end is anybody’s guess.

Many people’s eyes may have been opened to the nature of Wall Street’s “fat cats” and their double standards. It all started after a Reddit group called WallStreetBets learned of a gamer store called GameStop being shorted by short sellers. The group decided to squeeze the hedge funds and stick it to Wall Street by buying up GameStop stock in order to drive up the price. In so doing, a kind of a “social justice” moral crusade was unleashed. This was made possible thanks to online brokerage platforms like Robinhood Markets, which allow access to Wall Street for millions of people. As a result of the Reddit group’s actions, the shorted stock shot up by more than 1,000% as millions jumped on the gig. A stock that in reality should be worth little more than $10 a share is hitting trading highs upwards of $400. This resulted in the hedge fund Melvin Capital Management having to be bailed out by two other hedge funds.

Score one for the the little guy, right? Not so fast. Volatility surrounding GameStop stock caused panic on Wall Street. Robinhood shut down sales of the stock (at least in part to protect folks from buying into inevitable big losses) and temporarily limited access to the platform. This reaction is what brought out the ire of both Cruz and AOC, with the latter posting on social media, “This is unacceptable. We now need to know more about RobinhoodApp’s decision to block retail investors from purchasing stock while hedge funds are freely able to trade the stock as they see fit.”

Rush Limbaugh saw a populist element at play, stating on his radio program Thursday, “Folks, it’s not just political now. The elites are bent out of shape that a bunch of average, ordinary users have figured out how to make themselves billionaires. … Whatever you think is going on in politics, Washington establishment, the deep state, what have you — it’s the same thing in finance.” The elitist establishment versus the rest of us.

The trouble is, like almost all get-rich-quick schemes, it’s only a very few who actually do. In the end, there will be many more folks who wind up on the losing end of this latest incident. However, the problem will likely only become exacerbated when Washington steps in to “fix” things, as those who will ultimately be saved will be those deep-pocketed Wall Street “fat cats” whose DC connections ensure that their losses are covered.