On Thursday, in the retail investors while gritting their teeth while sharpening their guns ready to take advantage of the Time, I did not expect Wall Street began to “go rogue”: Wall Street shut down the server, unplug the network cable, do not open positions, even the stock code is missing.
This can be angry with the sharpened knife of the retail investors.
Yesterday, a user of WSB forum released an open letter, the whole network screen, the U.S. retail investors have said on behalf of many people’s voice.
The open letter began by rebuking Wall Street institutions represented by Melvin Capital, saying that they had caused great suffering to millions of ordinary people in the 2008 financial crisis, but had not been punished in any way, but had been bailed out, and now they were openly and illegally shorting stocks like GameStop and engaging in market manipulation, without learning the slightest lesson from the crisis.
The open letter accuses mainstream media outlets like CNBC of being sponsored by large corporations, giving them a voice and demonizing retail investors for their speculation in stocks like GameStop, saying, “An entire generation will remember what you did.
The letter calls on older baby boomers not to fall under the media’s spell, hoping they will understand that the Wall Street institutions now under attack by retail investors are the same ones that made their children and grandchildren suffer during the financial crisis, and that retail investors are now taking the once-in-a-lifetime opportunity to punish these institutions.
Now, because of this diatribe, many people are asking if there is a manipulator behind the retail investors.
So the eyes, first of all, are on the founder of WallStreetBets (WSB) on the Reddit community.
Who are the founders?
A revolutionary who intends to overthrow Wall Street? Or a Robin Hood who robbed the rich and gave to the poor? Or maybe it was a “hidden” but cynical Wall Streeter?
Neither.
Meet the founder
In a middle-class neighborhood outside of Mexico City lives a middle-aged couple with two adorable twin children.
For Jaime Rogozinski, the 39-year-old husband, Life is like most middle-aged couples, with his job as a professional advisor on the one hand, and spending a lot of time caring for his two three-year-old twin “bear children” on the other.
This is the kind of ordinary life that has recently been brought to the forefront.
Yes, Rogozinski is the founder of WallStreetBets forum.
Time rewind to 9 years ago.
Rogozinski, who had just reached his prime, was working as an information technology consultant for the Inter-American Development Bank in Washington, DC.
At that time, he had a good job, a decent life, and could be called a golden bachelor.
However, with money on hand, he also had troubles. For Rogozinski, who was still young at the time, just investing in index funds was too meaningless.
He wanted to invest in the stock market. However, there was no way to start, and he couldn’t figure out what companies to invest in for a while.
He felt that the views of investment bank analysts on TV were boring: they only knew how to analyze the P/E ratio.
They only know how to analyze the price-to-earnings ratio, cash flow, it’s just an earnings report repeater! What a bore!
He turned to the Internet, where he would ask other investors for their opinions in stock market forums.
Whenever he picked a company he liked, he would go to the forum and ask, “Dude, what about this stock? Can you help me look at it?”
However, the answer he gets is almost always the same: It’s too risky, don’t touch it! Dude, go to sleep, you voted for this stock and you’re trapped! You’ll lose all your money!
This is very frustrating for Rogozinski. Why is it so hard to invest? Is there no one in the same boat?
Of course not.
He found that when browsing online investment forums, there were many people who had similar thoughts as he did, and they couldn’t listen to the long fundamental analysis and just wanted to gamble.
At this point, Rogozinski thought, “Why don’t I just start my own forum?
So he created a community on Reddit, gathering people with similar ideas to his, called WallStreetBets, which means “bet on Wall Street”.
Their slogan is “YOLO”, which stands for “you only live once”.
In other words, you either get rich or die poor.
Wall Street thought of sinking, but turned the gun on itself
In its earliest years, the WallStreetBets community had only a few thousand users, a niche among Reddit’s many community boards.
In those initial years, although U.S. stocks had emerged from the gloom of the financial crisis, they were still an institutionally dominated market, and there was a certain threshold for ordinary retail investors to participate directly in market gaming.
In particular, for many Americans, after the financial crisis, they have broken once, to get money to invest in U.S. stocks, but also to pay commissions, think about it.
Rogozinski recalls that many years ago, in order to buy shares of Google, he had to call a brokerage firm, answer a bunch of cold questions from customer service on the other end of the phone, and pay a commission of about $30.
That all changed in 2019.
Two years ago, the brokerage giants Fidelity Investments and Charles Schwab decided to implement a “sink” strategy, eliminating trading commissions and attracting retail investors, not content with just making money from their Wall Street counterparts.
A mosquito’s leg is meat, not to mention the hundreds of millions of people in the U.S. Think about if everyone comes to speculate in stocks, this is not a good business this is what?
The threshold for retail investors to invest directly in U.S. stocks was immediately lowered.
After that, as long as there is a phone or Internet, anyone can trade anytime, anywhere, and more and more people are coming to participate in the investment forums, including WallStreetBets, is a mule is a horse, we come out to walk.
In 2019, the number of WallStreetBets users quickly surpassed 500,000.
By March of last year, when the world was panic selling financial assets, the number of users of this forum reached 1 million, and in this recent long-short showdown with Wall Street, the number of users of this forum doubled again to 2 million.
Two million users, Wall Street, still dare to pretend not to see?
Rogozinski said.
A large group of people have huddled together and taken their place at the poker table, a game that was previously only available to invitees.
Now, no one can ignore the retail investors.
Breaking Wall Street’s “rules”
These retail investors, not only had Wall Street at a loss in trading, but also their usual discussions, and the old-fashioned and dull atmosphere of Wall Street.
WSB users, not only to show how much money they have made, but also “commemorate their losses”, those who do not return, free fall down the asset curve also show.
This kind of post often gets the most likes, as if people are patting the shoulders of failed investors and saying, “Dude, it’s just money, it’s nothing.”
This particularly grounded atmosphere is so different than those hedge funds who have to go around looking for reasons and excuses when they lose money.
Rogozinski also said.
Many other forums that discuss trading are very pompous.
And WallStreetBets users have posts that are both ‘look how much money I made’ and ‘look how much money I lost’, which I think is what is refreshing.
Terrified founders
Rogozinski, who was just looking for fellow investors at the time, never imagined that the forum he started would nearly take down a Wall Street hedge fund giant, let alone draw the world’s attention to this little forum.
Rogozinski said.
I feel like I’m watching a horror movie right now, watching a demon with an axe walk slowly up the stairs.
It’s like I’m watching this train go out of control and then have an accident.
Rogozinski is also worried about the unseen side of WSB, which he finds increasingly problematic.
When the forest gets big, all the birds come out.
In the now extremely divided American society, many people are spreading hate speech on the WSB board.
Last year, Rogozinski decided to overhaul and purge the community of hate speech.
As a Jew married to a Mexican wife, he especially could not stand the racist comments.
There are a handful of moderators who are outright white supremacists.
I have thick skin, and I don’t care what people say, but I do have principles.
I don’t want my children to think that their father is so cowardly that people can say whatever they want about him.
Rogozinski eventually fired some of the moderators. Backlash soon came, however, as many users expressed their displeasure with him for these practices.
Eventually, he was expelled by other moderators. He hasn’t held a moderating job on the community since last April.
Bigger trouble may be ahead
The various hate speech and inflammatory comments are just one side of the many problems on WSB right now.
More importantly, there are potential legal issues with WBS.
As WallStreetBets has grown, it has faced allegations of market manipulation, which are often brought by angry short sellers.
Moderators urged users not to post posts that incited group trading behavior, but that hardly quelled outside criticism of the community.
Still, Rogozinski, who is the founder, can’t completely disassociate himself from WallStreetBets, even though he no longer runs the forum.
Just last week, he received a call from Andrew Left, founder of Citron Research.
Left said he had been attacked online by a large number of angry investors, some of whom had even threatened his children.
With power on the sidelines, Rogozinski can’t do much to help these days, and Left’s call was painful for him to hear.
What the future holds for WSB, perhaps Rogozinski doesn’t know.
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