And just like that, everyone in America knows what a short squeeze is.
Actually, check that: I’m pretty confident no one knows what a short squeeze is, but I am confident at least one person on Reddit knows what a short squeeze is, and as a result, millions of Americans think they know what a short squeeze is, and as a result of that, the obvious stuff starts happening: A dying retailer’s stock soars by about infinity percent, hedge funds nearly go belly-up, retail bros are booking million-dollar profits, trading gets halted, lawsuits are filed, and …
And before I had breakfast this morning (Lucky Charms, a little on the nose, wouldn’t you agree?) I bought 40 shares of Nokia at $5.81 pre-market because Reddit said so and then shortly thereafter found myself nodding in agreement with a tweet from Donald Trump Jr., who I normally rank somewhere between “loathe” and “disgust.”
It took less than a day for big tech, big government and the corporate media to spring into action and begin colluding to protect their hedge fund buddies on Wall Street. This is what a rigged system looks like, folks! #RobinHood #RedditArmy #GME #GMEtothemoon https://t.co/UhrwGHCjng
— Donald Trump Jr. (@DonaldJTrumpJr) January 28, 2021
It’s been a weird day, guys.
And more than anything, it highlights the key differences between sports betting, casino gambling, and the stock market. In fact, I’ve come up with five key differences. Let’s do a list for simplicity’s sake:
- Yeah, there’s no difference.
- Actually, you know what?
- The stock market is worse.
What, exactly, is happening?
OK first, let’s try to nutshell what exactly is going on, specifically with GameStop. So first you need to understand what a “short call option” is, so for that let’s go through this 19-minute explainer on YouTube and … actually, to hell with this. Who are we kidding. You want to understand this stuff, here’s a guy on TikTok explaining it because nothing matters anymore.
Either way, I think we all understand enough to agree on this: It appears a lot of Wall Street heavies found themselves upside down when retail bros started gobbling up GameStop stock.
Now that we have the technical analysis out of the way, let’s talk about what happened this morning: Robinhood, and then other brokerages, stopped allowing people to buy GameStop and other stocks that were being bought in outrageous numbers in an attempt to screw the suits and get that short squeeze a-squeezin’. People were still allowed to sell, but they weren’t allowed to buy. This caused tremendous upset, as everybody, from every side of the political aisle, was pretty well ticked off.
This was highlighted succinctly by — who else — Dave Portnoy, the founder of Barstool Sports, the face of Barstool Sportsbook, America’s top pizza critic, the head honcho at Davey Day Trader Global, probably the guy in front of you at Dunkin’, the fella saving American small business … where was I: Oh yes — highlighted nicely by Portnoy when he pointed out Trump Jr. (my new spirit animal) and Alexandria Ocasio-Cortez were on the same team on this one.
— Dave Portnoy (@stoolpresidente) January 28, 2021
Portnoy ain’t wrong, I’ll tell you that much.
What appeared to be happening — and who knows what, let’s all just wait for Michael Lewis to write a book about it — but it appeared by halting the buying of these stocks, it would create a rush for people to sell the stocks, thereby helping bail out the hedge fund billionaires. (Yes, I’m still aware I have no idea what I’m talking about, I’ll watch the TikTok again.)
But for real: When AOC and DTJr. are on the same side of an issue, it’s probably safe to say we, the people, are getting royally screwed.
But wait, there’s more
And just when it seemed it couldn’t get worse, folks on Twitter started saying Robinhood was selling people’s shares whether they wanted to sell them or not.
They are automatically selling shares. pic.twitter.com/o9XCdL9ND1
— Sunny (@555Sunny) January 28, 2021
Imagine a similar scenario in the big bad world of sportsbooks. Imagine all the sportsbooks saying, “Nope, can’t bet on the Chiefs anymore.” And then, just when you thought it couldn’t get weirder, they started cashing out your Chiefs bets at a fraction of what you would’ve won otherwise.
OK fine, the above scenario is completely ludicrous; fact is, no matter how hard I try, I can’t come up with a sportsbook or casino analogy that accurately represents the hellscape that is Wall Street, where apparently rules can change on the fly and if you’re left holding the bag, well, thanks for playing and screw you.
But when they all open buying…
You got some pissed off memer's..
— Reddit Trading 🚀 (@reddittrading) January 28, 2021
Seriously: What’s the worst a sportsbook can do? Limit people from placing bets, inviting bettors to a competing sportsbook? And while that for sure happens, it’s peanuts compared to what’s going on with GameStopGate. (Are we at “gate” levels here? I think we’re at “gate” levels.) Same with a casino; worst case scenario, they give you the boot for counting cards. And an online casino? Has anyone ever been banned from there?
So yes: Next time you get limited on player props, always know it could be worse: They could take your action on Derrick Henry over 115 yards, and then when everyone takes the over, they can prevent you from placing any more bets, and then they can cash you out at a fraction of what you would’ve made … and yeah, again: There is no analogy. All I know is sportsbook operators and casino honchos all of a sudden look like Mother Teresa and Mister Rogers compared to hedge fund billionaires.
By the way, I sold NOK at $4.68 after breakfast. Am I doing this right?