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www.ppesydney.net
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| | | | | In the flurry of hot takes on the GameStop adventure, three common features emerge. First, almost everyone agrees, this is so much fun! That a Reddit community of amateur traders could take on a big hedge fund and win - at least temporarily - is cause for a roaring gotcha. Second, the reactions of Wall Street and more recently of Robinhood - the app used by the Redditors that subsequently sought to deprive them of their victory - are unanimously deemed outrageous: gambling with other people's money, these predators dare claim, is a serious business that should be left to professionals. One suspects that wounded short sellers do not merely cry over the billions they lost. Equally painful is the fact that, instead of being regarded as cynical geniuses of finance, they have been exposed as not so subtle conmen whose tricks can be foiled by novices. Third, and as we shall argue, unfortunately, most commentators - especially on the left - downplay the political meaning of the Reddit insurgency. Prominent progressives such as Elizabeth Warren and Alexandria Ocasio-Cortez were certainly amused by the woes of hedge funds such as Melvin Capital. AOC was also quick to call for a congressional investigation of Robinhood's decision to prevent the users of the app from buying more GameStop stock while financial institutions remained free to trade their own shares. However, neither the Massachusetts Senator nor the New York Congresswoman treated the episode as anything but another cautionary tale about the folly of casino capitalism. The main political lesson they drew from the exploits of the Redditors was that Wall Street should be taught some sense in the form of taxation and regulations. On the face of it, Warren, AOC and the columnists who share their views are right. While eager to give hedge funds a bloody nose, the myriad of amateur investors meeting on the r/WallStreetBets forum are not the heirs of the Occupy movement: their main purpose is to make money for themselves, not to challenge financial capitalism. Moreover, saving GameStop and other retail stores - such as AMC, Bed, Bath and Beyond, Blackberry, and Nokia - from short sellers is unlikely to advance progressive causes such as the Green New Deal, racial justice, or healthcare for all. Yet, regardless of their motives and of the causes they choose to embrace, the Redditors' actions attest to the fact that speculation is now available to a vastly wider population than the usual suspects. That high stake gambling is not just the game of banks, mutual funds, pension funds, and hedge funds raises the political question of whether what can be done for the luster of videogame consoles and antiquated cell phones can be put to other uses. For better or worse (so far, largely for the worse), platforms, even more than markets, have become key institution of our brave new world. Markets are places where commodities are exchanged. Platforms, on the other hand, are primarily made for sharing, in the social media sense of the [...] | |
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ritholtz.com
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| | | | | Macro Perspective on the Capital Markets, Economy, Geopolitics, Technology, and Digital Media | |
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www.chrisritchie.org
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advisors.bokfinancial.com
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