As GameStop hits US$325 and markets grow increasingly volatile, many retail investors appear to be waving past Nirvana by holding on to shares that could soon be rendered worthless. Now is probably the time to cash out – so why are they staying in?
“They’re afraid because there is no model, no predicting what sick, complete morons on a kamikaze mission will do next. We’re poors at wars, and we’re f—ing winning. Onward,” wrote one user of WallStreetBets, a reddit forum that has become a hub for retail investors intent on driving up the price of GME.
“All the big companies and firms and hedge funds etc. knew everything was going to crash and they allowed it to happen. Did nothing to stop it. Then many of them went on to make tons of money off of it while millions of Americans lost everything they have to their names,” said another.
Of course, if the value of my investment was at least partly riding on a large number of first-time retail investors holding on to a stock, I too might use populist rhetoric and invoke the memory of Occupy Wall Street to make sure they keep doing that. The number of retail investors involved is likely also overstated. Standing right alongside the guy spending his disability cheque is the world’s richest man, Elon Musk. Those with the resources to dump six figures (or more) into GME aren’t exactly Karl Marx’s target audience. Nor are the enormous institutional investors who account for most of the trading volume.
But it’s hard to deny that the rallying call is an attractive one. The big institutions have been warning for years that inequality risks ripping a hole in the fabric of society, and laced through all the bluster and B.S. in WallStreetBets is the underlying feeling that a great many people have been left out of the American dream. The same forces that propelled Donald Trump into the White House and drove unrest through the American summer of 2020 are also at work here.
To some, the money they earn from taking a punt on GameStop is “life-changing”. Others, raised in the shadow of the GFC, see what they’re doing as a kind of revenge – though the targets are often nebulous, a shadowy “they” who fixed the system against the common man. Whatever the case, the unwashed masses are bringing their fight to the market.
While the idea that what we’re seeing with GME will somehow become the norm is ludicrous, it’s not impossible that similar co-ordinated actions (and they are co-ordinated) will occur again in the future. While the factors that have made the GME short squeeze possible are unlikely to continually reoccur, an army of newly minted retail investors are now clued in to their ability to move markets. Only time will tell what they do with that ability.
