Thursday, January 28, 2021

Reddit vs. the Hedge Funds (stocks gone wild, GameStop and the hive mind)

Almost 20 years ago I knew a couple of math-wizard brothers who got into day-trading and were hugely successful at it — rare because 95+% of those who attempt it lose their shirts. But rarer still because this dynamic duo had no real prior experience in business, Wall Street, or the stock market whatsoever. What they DID have experience in (and lots of it) was gaming — and what they saw when they took a gander at the stock market one day was just one big mathematical game with little necessary connection to business fundamentals. 

I’ve long since been out of contact with them (though I’m sure they’re still successful), but fast forward to today and if you follow Wall Street news at all you know the biggest story going now is GameStop -- the little guys/investors, gathering on Reddit (starting with some gamers) socking it to the big fellas (hedge funds) — and a fascinating David-and-Goliath story (or hive-mind vs. the elites) it is, sure to play out over several weeks if not months to come… I mean a billion dollars here, a billion dollars there, and pretty quickly you’re talking some real money changing hands… and real frazzled nerves (...seriously, won’t be surprised at all to see some suicides result from all of this).

If you already know the GameStop story you can skip this post, ‘cuz it’ll add nothing new to your knowledge, but if you don’t know what I’m talking about (or only vaguely so) well, go ahead and check out the links to bring yourself a little up-to-date (while the story is continuing):


https://www.nbcnews.com/business/business-news/gamestop-reddit-explainer-what-s-happening-stock-market-n1255922?cid=sm_npd_nn_tw_ma


…and here’s a video (one of MANY on the topic):



…or another, here:

https://www.youtube.com/watch?v=8YrnTbzuOWM


Oh, but if you’re still confused and need a yet simpler version of what-the-heck is happening, well, check out this more basic explanation for clarification (…OK, NOT really):

https://twitter.com/timricchuiti/status/1354526957380235266


Anyway, this whole storyline will no doubt be a great Michael Lewis volume one day in the future, or hey, maybe Cathy O’Neil will tackle it in one form or another.


...meanwhile, past performance is no guarantee of future results.  ;)


ADDENDUM:

...and if you still want some more, Slates Money Podcast with Felix Salmon did their whole show on the Gamestop story this weekend:

https://slate.com/podcasts/slate-money/2021/01/whats-going-on-with-gamestop




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