Good day all. This story is still breaking and frankly, it’s confusing as Hell. Here is what I know so far. Several Wall Street Hedge funds decided to short the stock of Gamestop, and a Reddit group called Wall Street Bets took notice and decided to buy all the Gamestop stock they could.
This caused the stock price to rocket upwards something like 1000%. It wasn’t just Gamestop, there were several other companies that were being shorted by the Hedge funds. Several trading apps, the most popular one being Robinhood, suddenly stopped allowing their users to buy any shares of Gamestop or the other targeted companies.
Now to explain why this is a big deal, you need to understand how short selling works, and I will do my best to give a very basic explanation of it. When you “Short” a company’s stock, it means that you are betting their stock price is going to fall. In order to profit from this, you would borrow shares of stock and sell them. If the price drops, you would buy back the shares at a lower price, return the shares to the owner you borrowed them from with a small fee and pocket the profits from the original sale.
The problems arise if you, the short seller, guess wrong and instead of going down, the stock price goes up. You have to buy the stock back at the higher price in order to return it to it’s owner, along with the agreed upon fee. This is apparently what happened to the Hedge funds, and, to put it bluntly, the shorts took it in the shorts big time.
Gamestop is a company that is, to be honest, circling the drain. It’s business model is failing and it looks to be going the way of Blockbuster Video. The Hedge funds saw this and sank several billion dollars into short selling the stock in Gamestop and the other companies in question. The Reddit group, Wall Street Bets, decided to short circuit the hedge funds and started buying up all the available shares and then driving the price up. This caught the Wall Street hedge funds off guard and a couple are near collapse because of the buying spree of the small traders.
It looks like the hedge funds called in some favors and got Robinhood and the other trading companies to stop their users from being able to buy any shares in Gamestop and the other companies, and only allowed them to sell their holdings. Further, it appears that Robinhood may have taken it upon themselves to sell the holdings of their users without consent.
Now there is one reason they might do this. If the users had borrowed money to make their purchases, (Called margin), then Robinhood may be within their rights to make these sales to cover the margin calls. However, if they sold their users holding and it wasn’t to cover a margin call, then things get rather…sticky.
Now, I am NOT a broker, I am NOT a lawyer and I am no expert in the finer aspects of securities law. While I do invest in the markets, I do not do short selling. (If I want to throw away money, I will set it on fire. At least I will be warmed by the flames and can cook a hot dog over it) My late father was a broker and did understand this, and tried to explain it to me. I did dabble, once in puts and calls, but lost the investment, so decided “No thanks!”
As of now, we’re seeing calls for investigations from both sides of the aisle in Congress. You even have Ted Cruz and Alexandria Occasional-Cortex agreeing, (Although AOC, once she heard Senator Cruz agreed with her, doubled down on her stupidity and accused him of trying to kill her) There are lawsuits already in the process of being filed, and I suspect that the Securities and Exchange Commission is looking into this. The New York Attorney General is also starting to look into Robinhood and the hedge funds.
One group that doesn’t have anything to say is the regime of the Fake President, Dementia Joe. They are refusing to comment on it. This isn’t surprising since the Wall Street “Banksters” hated President Trump and sent every penny they could to the senile pedophile and retired prostitute’s campaign. This includes the Hedge funds that have been having their heads handed to them. Here’s what Fox News has to say about it:
Press secretary Jen Psaki was peppered with questions she refused to answer directly about the market volatility involving a Reddit group called WallStreetBets banded together to squeeze short-sellers out of their positions by buying up stock in video game retailer GameStop and other flailing companies.
The Reddit group temporarily went private. Trading app Robinhood and online broker Interactive Brokers restricted trading in certain securities because of the recent volatility in a number of stocks, igniting controversy.
“Given all the volatility surrounding Wall Street and GameStop, what is the Biden administration doing to protect the average American investor if there’s going to be, potentially a major market correction?” CNN reporter Kaitlin Collins asked.
And the answer is about what you would expect from this pack of incompetent, corrupt scum. The ran for the hills.
Psaki referred her to an SEC statement, which said the commission was “monitoring the on-going market volatility.”
“Beyond just monitoring it, has he had any conversations with economic officials about what’s going on?” Collins pressed.
“He’s briefed by his economic team frequently,” Psaki said. “But I don’t have anything more to read out for you.”
So that would be a no then? Next we have a question regarding the bought and paid for minion of the hedge funds, Janet Yellen.
A third reporter asked Psaki if Treasury Secretary Janet Yellen would recuse herself from advising the president on GameStop, given that she received around $810,000 in speaking fees from Citadel, the hedge fund that bailed out one of the primary losers in the Gamestop frenzy.
Both Citadel and Point72 infused almost $3 billion into Melvin Capital, which saw massive losses after betting against the pumped up stock. The White House said on Wednesday that Yellen was monitoring the situation.
So that would be another no then? I’m not surprised. The Greatest President of the 21st Century, Donald Trump had a few choice things to say, and you can bet that his administration would have been on this like UpChuck Schumer on a TV News camera crew.
Now what does the future hold? That is a very good question, and I’m afraid my crystal ball is in the shop right now. This is an ongoing story and could, hopefully, explode into a major scandal for the Fake President and his cronies. Congress seems to be interested in actually looking into why Robinhood suddenly shut down trading, apparently at the behest of the hedge funds, and not the SEC. I wonder where their lawyers and compliance people were. Someone on Twitter remarked:
They’re probably all in a conference room having a gang snort of some Colombian Marching Powder.
I expect the lawyers are salivating at the fees and judgments they are going to get if this turns out to have been Robinhood and the other trading sites giving preferential treatment to the Hedge funds. I understand that several lawsuits have already been filed. Now, I have one question. Where can I get popcorn futures?
Thatisall
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