Ranjan Roy, the Margins:
Even the “retail” is plenty of well-off people. While most of the media coverage focuses on laid-off college-aged kids and uses the term “mom and pop” investors (is that even okay in 2021?), I can promise you plenty of friends in tech (who often make a lot more than friends in finance nowadays [Haha, sorry -Can]) and doctors are sending me $GME or $AMC gain porn. The already wealthy are having a laugh, catalyzed by r/WSB. I mean, the world’s richest man joined in [on] the fun. Can we please stop making this about the “little guy” vs. “Wall Street”?
But when that stock starts absolutely tanking — what happens? Does it stop exactly at some reasonable enterprise valuation? That’s not how momentum works. In trading, everyone loved the adage “don’t try to catch a falling knife” but while everyone enjoyed the lulz on the way up (other than Melvin Capital), it will be [GameStop CEO Jim] Bell’s job to catch the knife on the way down to try to keep as many of these people still employed as possible. Whatever happens, it will dangerous and ugly. Real employees could lose their real jobs thanks to the lulz.
The rally around heavily-shorted stocks like GameStop and AMC has been a surprisingly gripping story for something so inherently dull. From GameStop’s
But Roy’s essay is the best thing I’ve read so far about this event. The part of this story that caught my eye from the beginning is that the rally’s earliest Reddit– and YouTube-based cheerleader bought
If this puts a damper on your enthusiasm for this story, I’m sorry.