Thanks to Gamestop and a few other heavily shorted stocks, it’s been a wild week on Wall Street, but like a freight train, with all that’s happening in America, they probably should’ve seen this one coming.
Sweet, sweet revenge
Many have been left scratching their heads as to why and how online forums managed to kneecap the big wigs on Wall Street, even if just momentarily, but there’s a stunningly simple explanation: payback. Pretty much anyone who’s not a boomer has been repeatedly forced to recalibrate their financial lives to accommodate two “once in a lifetime” recessions, a f*cking pandemic, Marie Antoinette-level wealth inequality which widened by nearly a trillion dollars during said pandemic, and the looming consequences of climate change.
Given that context, is there any question why disillusioned investors aren’t interested in liquidity, stashing money into a 401K and playing by the rules determined by the elite? With a system structured so that America’s wealthiest 10% own 92% of stock market gains and 300 million unaccredited investors are shut out of Wall Street, why would it make sense to invest your money and trust the system to produce a healthy return over the next 50 years? Ok boomer. There’s no sense in earnestly playing a game you can’t win, so retail investors have adopted a Leeroy Jenkins attitude and are having fun blowing up the establishment via social collusion.
Establishment meets internet culture
For decades, the financial elites have sneered at retail investors as “dumb” money, compared to their “smart” money, while working to control the levers behind the scenes. Traditional financial values prioritize long-term planning, lowering risk and a more reserved outlook on money. Conversely, online forum retail investors value the journey and are more laissez-faire about their money. Instead, they seek clout through risky investments, while regularly broadcasting their activities to their peers. These disparate worldviews were bound to clash eventually and the Gamestop situation just happened to have satisfied the necessary conditions to ignite this powder keg.
Interestingly, this is where we can watch YOLO internet culture converge with IRL culture. Sharing your market wins and losses in a dimly-lit cigar room, with peers lounging in overstuffed leather wingback chairs, is perfectly acceptable by traditional standards, but sharing your wins and losses with peers like Thicc Dads Club in online forums is perceived as less credible. We know that ‘regular investors’ are perfectly capable of choosing their own investments, this is just industry snobbery playing out in real time.
Toothpaste can’t go back in the tube
Ironically, turning on ‘a rigged system’ has given nihilist internet users purpose. Perfectly on-brand for a generation who grew up watching dystopian movies about legions of people rising up against unfair and corrupt systems! 😉
Throngs of folks on the internet have just realized the historical power of a proletariat revolution. Only now, they don’t have to storm Versailles with pitchforks, they can do it from the sofa with their phone, which may actually be scarier.
Financial extremism through social collusion was, and remains the only option for millions of cynical retail investors who’ve been repeatedly burned by a system that’s blatantly rigged against them. Now that they’ve flexed their power to move markets, they aren’t likely to stop.