GameStop Shorts Explained: How Reddit Is Bankrupting Wall Street
Instead of hedge funds making a 40% profit for zero risk they actually incurred losses of up to 4830% which cost Wall Street hedge funds billions of dollars.
GAMESTOP AND WHAT IT REALLY MEANS
For simplicity of explaining, we will use the term ‘Wall Street’ as a catchall for brokers and hedge fund managers. Brokers (Wall Street) make their profits by legally manipulating the markets by putting their clients money at risk to make themselves profit - at no risk - by ‘serving’ their client. There are two terms we need to understand. ‘Short Stock’ and ‘Short Squeeze’.
‘Short Stock’
Borrow shares expecting it to fall
Sell it
Buy it back after it falls
Return the shares to borrowee
Profit plus commission
Method:
1. You ‘borrow’ and sell shares at $10 a share
2. Buy back shares at $6 and return the shares
3. Profit = $4 per share
‘Short Squeeze’
A short squeeze occurs when a stock or other asset jumps sharply higher, forcing traders who had bet that its price would fall, to buy it in order to forestall even greater losses. Their scramble to buy only adds to the upward pressure on the stock's price. Wall Street rely on this self-regulating system to manipulate funds for huge returns and zero risk.
Wall Street Bets Reddit Community:
Reddit’s ‘Wall Street Bets’ Community (WSB) got wind that a number of hedge funds were going to ‘short sell’ Gamestop (GS) and were needing to cover their position (profits) soon. Using the very same system and rules that brokers legally use, WSB legally buys GS shares. This stops the planned fall that Wall Street were relying on by increasing prices (supply and demand). Instead of hedge funds making a 40% profit for zero risk they actually incurred losses of up to 4830% which cost WS hedge funds billions.
Wall Street did not like this and are utilising the mainstream propaganda machine to spin this story to manipulate public opinion. This is where Robinhood (the trading app used by common people) steps in and blocks the common people from buying Gamestock Shares. If nobody can buy GS (they can only sell) this will artificially drive the price back down to facilitate the short stock profits. This is basic supply and demand. If there is no perceived demand, prices fall.
Except there is a huge demand for Gamestop shares. Wall Street, Robinhood and other trading apps manipulated the system to appear to the algorithms that there is no demand. Prices fall, Wall Street makes huge profits.
The timeline:
1. Wall Street Hedge Funds legally ‘Short stock’ Gamestop shares.
2. Wall Street Bets (the common people) identifies Wall Street ‘Short Stock’ manipulation.
3. WSB see WS manipulation and legally organises a ‘short squeeze’
4. Robinhood immediately and illegally blocks common people from buying more stock, artificially forcing the GameStop share price down and increasing profit in the billions of dollars to Wall Street.
5. Discord , the servers on which Reddit operates immediately but ‘coincidentally’ bans Wall Street Bets ‘hate speech’
6. The DTCC/NSCC (https://www.dtcc.com) private self-regulators for the financial services market then ‘introduce’ new regulations to prevent common people from investing in the GameStop stock
7. Discord without stating reasons reverses it’s ban on Reddit’s servers.
8. The Common people are now unable to buy those shares.
Big tech manipulates the system without independent regulation to allow the rich get richer.
In plain sight.