1/27
I'm no expert on the stock market but watching $GME this week has been fascinating. If you haven't been paying attention, GameStop, a retail business that has looked like a zombie for the last few years, is up 348% from Monday—from $96.80 to $347.51, as of closing today. That's fucking bananas. There are a lot of reasons for this that I'm not qualified to explain in detail but there are a handful of themes and questions being raised that are worth considering. Why are hedge funds allowed to operate the way they do? How big of a demographic is the "average" /r/wallstreetbets user? Where did their culture come from? Why does the stock market appear to be detached from the economy in such an extreme way? Is that okay? It's a lot to dig into; this is a moment in stock market history. To help, I've collected some of the best related content I've consumed so far. Trust me, it's way more interesting than anything I would have written this week.
First off, this Twitter thread (threader version) is a good primer and summary of how we got here. It introduces the key players and keeps the jargon to a minimum. The catalyst for this, /u/DeepFuckingValue has been investing in GameStop for a long time and transparently posting updates during that time.
Next, I recommend Chamath Palihapitiya's interview on CNBC from earlier today. Unfortunately, CNBC chopped it up (and omitted quite a lot) but Chamath points out the problems with the way Melvin Capital was shorting GameStop (to the tune of 40% more than available stock) and also pointing out the legitimacy of what a community like WSB is doing. He also speaks to "idea dinners" where hedge fund managers informally meet and discuss how and where they may invest their money in the future. That sounds rather shady to me. You can listen to the entire interview here, though it gets a bit chippy towards the end.
For a deeper dive, the video in this reddit post goes through the situation in great detail. If you're more the reading type, the top rated comment in the thread is a transcript.
This article on Bloomberg also does a fine job of walking through the history and the current state of the situation objectively.
And if you're curious about the nature of /r/wallstreetbets itself, this is an entertaining write up about where and who may belong to that community. There's plenty of generalizing in there and it doesn't give credit to the folks who are actually drawing rational conclusions but I do think it speaks to a cohort within.
Once this ride ends, there will be a lot of fascinating retrospectives as to why this happened. Maybe we'll even get a The Big Short style movie for the masses. Either way, I'm glue to my computer following the $GME ticker and sifting through mounds of opinion for kernels of fact.