Diamond Hands: GME to the Moon
To be honest I didn't have much to write about Demian so far. I'm lucky to have the creative liberty to write about whatever has been on my mind this week. Luckily, I do have something for that: the stock market.
I've been a long time follower of Reddit's Wall Street Bets. When I heard about the plan to try screw-over Melvin Capital and other hedge funds who shorted GameStop, I figured it was time to get my feet wet into the stock market. When GameStop's stock (GME) was at $45 per share, I put a decent chunk of change into it. Last week when its value soared to over $350 per share, I sold it; this ending up giving me 600% ROI and I made quite a bit.
There's a far more interesting conversation to be had other than me making some money on the side. It's the politics and economics that's behind it all. The entire reason that it was possible to short squeeze GME was that hedge funds had shorted it over 140%. Simple explained, when a stock is shorted over 100%, it's high risk, high reward for hedge funds. This time though, a community got together and pumped up the stock by mass buying it, forcing hedge funds to lose on a lot of money. Their only options were to either cover their shorts, essentially buy back the stock which further fueled the increase in price. The thing about shorts is that the risk associated with them is infinite.
There's more to this story than just that though. Melvin Capital, the aforementioned hedge fund, had the most to lose; to help cover their incurred costs, Citadel, yet another hedge fund, loaned them 2.75 billion dollars. What's interesting about Citadel is that they are the company that fulfills most of the orders placed through the popular stock trading app Robinhood. Allegedly, Citadel ordered Robinhood to disable the ability for Robinhood's users to purchase shares of GME; users were only allowed to sell their shares. With over 6.5 million users of Robinhood owning at least one share, providing them with the option to only sell led to mass panic sells causing the stock price to tank. However, what's even worse is that before Citadel allegedly ordered Robinhood to disable purchasing GME, Citadel themselves reloaded their shorts on GME. This is market manipulation at its finest.
Also, I've never been one to criticize mainstream media too heavily. I've always viewed the critics of the media to be crazy people; in reality, the mainstream media has never spread misinformation relating to something I care about. That all changed with their coverage of the volatile stock market. First, CNBC published a bogus report saying that Melvin Capital had covered their all their shorts on GME last Wednesday; to that I say bullshit. It takes one look at the volume of trades going on to see that there is no way that Melvin Capital actually did so. This was just an attempt to drive down prices. The mainstream media goes as far as calling the individuals of Wall Street Bets to be an alt-right group; this is so far from the truth after having spent most of my time in high school following that subreddit.
When billionaires treat the stock market as a casino, it's business as usual. When regular folks like me and you do so, the billionaires bitch and want more regulation. You know its bad when Ben Shapiro, AOC, and Ted Cruz all gave billionaires the finger on Twitter. Who would've thought that what brings bipartisanship was a meme stock getting pumped.
GME to the moon; the gamma squeeze is coming.
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