I thought this was a very interesting story for a few reasons.
First off, there is the appearance that Robinhood (and others) put their thumb on the scale to help out the hedge funds. Robinhood insisted that there were technical reasons for why they had to halt buys of $GME. Failsafes kicked in, the trade clearing house required the brokers to put up collateral due to the price and volume of buys, something of that nature. Is that true? I don't know, and I'm not sure that anybody is completely satisfied with that explanation.
There's also the question of what actually happened. The story has the appeal of modern folklore: some yahoos on a message board came up with a harebrained idea to take on the hedge-funds, and won. But is that all there is to it? Some people think there may have been more to it than that. I think I have read that since the Gamestop squeeze, they have detected "bot" activity on Reddit attempting to manipulate the Reddit mob. Somebody could get rich if the mob at WallStreetBets takes an idea and runs with it like they did with Gamestop. It goes without saying that people will be trying to create "the next Gamestop" with some stock that they already own. Which raises the question: what if last month's Gamestop was itself invented by somebody who already had skin in the game? Could some institutional investor have conned the kids at Reddit into creating this fiasco?
This guy on Reddit bought $53,000 of Gamestop stocks in 2019 when it cost 60 cents a share:
from r/wallstreetbets
He posted this video in July 2020 when it was worth $4 a share to explain why he was holding his stocks.
He sold something like $13 million worth and was still holding a bunch more. One of the first things he talks about is Scion Capital and Michael Burry (if you've seen "The Big Short", those names will ring a bell) being bullish on Gamestop. So, "Roaring Kitty" or "u/DeepFuckingValue" might have been the Reddit champion of the stock, but Scion Capital was already on board, and probably they weren't the only ones. Is it out of the question that some big money player helped stoke the fires over at Reddit? And if they did, is there anything wrong with that? People were shocked that a bunch of Redditors exchanging publicly available information could have such an impact, people were asking "is this market manipulation? Is this illegal? Does the government have to do something?" But really, how is that different from Jim Cramer going on TV and telling his audience "buy this, sell that" etc? It seems like the powers that be are comfortable with people buying stocks that a guy on CNBC says they should buy, but not comfortable with people buying stocks that people on a message board are buying. I'm curious what the difference is.
I think the main reason I found the Gamestop story so interesting is that it agreed with my existing biases against the stock market. People keep pointing to the stock market as if it was a barometer of economic health, but clearly it's not. That has become more clear than ever in the age of covid, where the economy as a whole is sicker than it has been in decades, while the stock market is at heights never seen before.
Here's Jim Cramer talking about manipulating the market:
"The great thing about the market is that it's nothing to do with the actual stocks."
-k