GameStop, a video game retail store, is open for business in Alhambra, California, U.S., Jan. 27, 2021.
Recently, the U.S. stock market erupted in an epic battle of retail investors versus Wall Street financial giants, with millions of grassroots retail investors fighting in a group, beating several Wall Street financial giants to the ground and losing over $5 billion. Then, the financial predators unplugged the network, delete the code, shut down the server, blatantly cheating. This action has been suspected of breaking the law, and there are already members of Congress demanding an investigation.
Millions of retail investors in the United States defied Wall Street
A U.S. video game retailer called GameStop (GME) was recently shorted by several Wall Street financial institutions and was on the verge of bankruptcy and delisting. On the US social networking site Reddit, a group of retail investors expressed their determination to save their “childhood favorite” game store and launched a blockade that the financial predators had not expected. A battle of leeks against financial predators has never been fought before.
In the past, when retail investors in the stock market barricade financial institutions, often end up being cut leeks, but this Time the U.S. retail investors are unprecedented “solidarity”. In just two weeks, the influx of retail investors has led to a legendary reversal and continued surge in GME’s share price, which has risen more than 16 times in just 10 trading days.
Melvin Capital, a $10 billion hedge fund in the U.S., cleared all of its short positions in GME on the afternoon of the 26th after suffering huge losses, but did not announce the exact amount of the losses to the public. However, according to data released by New York-based financial technology and data company “S3 Partners”, the losses of GME’s short financial institutions had totaled more than $5 billion as of Jan. 26.
In addition to GameStop, U.S. retail investors have also been pulling up the stock prices of AMC Cinemas, Blackberry and Nokia (NOK), which were severely shorted by financial predators, by constantly chasing after them, and beating the Wall Street short-selling big boys by losing a lot of money.
Wall Street financial giants change the rules to round up retail longs
Most of these retail investors, who have performed miracles against the financial giants, are gathered in WallStreetBets, a Reddit subreddit where they have set up a “server” on the group chat platform Discord for members to discuss stock trading plans, which is the Home base of retail investors.
Screenshot of WallStreetBets website.
Just as retail investors were riding high, Wall Street’s financial giants suddenly launched a siege on them from all sides.
On Wednesday afternoon, social media platform Discord suddenly announced that it had blocked WallStreetBets’ servers. The action was immediately and widely condemned by public opinion, and even the administrators of the Reddit community posted on their platform, criticizing Discord for this move: “Discord threw dirty water on us. This is very unethical.”
Discord argued that the reason they blocked the WallStreetBets server was because a user had posted “hateful content” that had nothing to do with the trading activity the group was discussing. This excuse was called “an American cover-up” by users.
Immediately afterwards, U.S. stock trading platforms began to target specific stocks such as GameStop: Robinhood, an online brokerage with a large concentration of retail investors in the U.S., shut down trading in shares of GameStop (GME), AMC Cinemas (AMC) and Nokia (NOK) for a time, after After being condemned from all walks of Life, Robinhood announced restrictions on trading in stocks such as GME and AMC, allowing only retail investors to sell and not buy, surprisingly to “protect the company and its customers”.
Robinhood restricts trading in certain stocks.
In fact, in addition to “Robinhood”, a number of U.S. securities firms, including TD Ameritrade and Charles Schwab, have also announced similar trading restrictions. There are also Wall Street giants have said that retail investors may be prosecuted for “stock market manipulation” charges.
However, some industry insiders pointed out that the so-called “stock market manipulation” charges are difficult to establish, because retail investors did not spread rumors to raise stock prices, their discussions on social media platforms are legal, and the above-mentioned countermeasures taken by the elite on Wall Street only show that they are a group of “sore losers “The above-mentioned counter-measures taken by the Wall Street elites only show that they are a group of people who can’t afford to lose money, and are suspected of breaking the law by changing the rules of stock trading arbitrarily.
Even Chinese netizens on the other side of the ocean have posted posts mocking the U.S. free market as “too hypocritical” and criticizing the Wall Street elites for “only allowing state officials to set fires, not allowing people to light lamps.
(Screenshot)
Sources said that a member of Congress has already sent a formal letter accusing the above-mentioned securities dealers of illegal behavior and asking DOJ to investigate it.
Retailers’ representatives have something to say about this grassroots battle against the odds
Chamath Palihapitiya, CEO of “Social Capital” and a representative of retail investors in the U.S., recently took on the hosts of the CNBC TV show and asked the following questions.
First, the root cause of GME’s surge is that the stock was shorted 140% by the institutions and retail investors caught the backlash. How could this extra 40% have been caught short by retail investors if not for the fact that Wall Street institutions use tools that retail investors cannot use every day?
Second, the level of research on stock trading on internet forums is comparable to that of hedge funds in many cases, so why shouldn’t retail investors be able to trade stocks based on this research?
Third, the quantitative funds on Wall Street have always traded without looking at fundamentals, so why should these financial elites not be blamed for trading without looking at fundamentals, while retail investors should be blamed for not looking at fundamentals?
Fourth, from the history of tesla shares shorted by financial predators, all hedge funds are wrong, all retail investors are right, why hedge funds must be right than retail investors?
Fifth, hedge funds are open to large investors but not to retail investors, and now that retail investors are making money, hedge fund institutions are upset and want to change the rules to restrict retail investors.
Palihapitiya further pointed out: hedge funds rely on $ 1 billion of principal, you can get the brokerage $ 10 billion of leverage, these are the retail investors do not have the advantage. And retail investors do not monopolize the investment market by having fancy dinners and hooking up with each other like the Wall Street elite, and retail investors are transparent in their discussions on the forums.
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