$70 billion redistributed: WallStreetBets 1 – 0 Wall Street

By: Charlie Hancox
Charlie Hancox
Alongside his passion for trading, Charlie has represented Great Britain and won national championships as a water polo player,… read more.
on Jan 29, 2021
  • Losses on short positions in U.S. firms top $70 billion
  • Friday set to be another day of drama and controversy
  • No sympathy from retail investors - revenge for 2008?

It has been a truly manic week. The WallStreetBets strategy to gamma squeeze hedge funds has resulted in unprecedented market movements for stocks like GameStop (GME) and AMC Entertainment Holdings (AMC), and now the enormity of the losses for some institutional investors have become clear. Are retail investors finally getting some payback for the nearly $500 billion in 2008?

Reddit takes down Wall Street

Having witnessed the event of the last few days, I couldn’t help but recall an iconic scene from Dreamworks’ Antz (1998).

You let one ant stand up to us, and they all might stand up! Those "puny little ants" outnumber us a hundred to one. And if we ever let them figure that out... THERE GOES OUR WAY OF LIFE! It's not about food. It's about keeping those ants in line.

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Through the power of Reddit, retail investors have finally discovered their collective capacity to fight back. By working together, they have been able to take on the might of the establishment and their risky short positions.

This was genuine trickle-down economics in action, but then the current financial system showed its true colours. One of America’s largest stockbrokers, the ironically named Robinhood, decided that the rich were losing too much money and flagrantly restricted buy positions for 13 different stocks including GME and AMC.

Whilst this induced a shakedown as the shorters tried to claw back their profits, this wasn’t enough for Robinhood CEO and all-round scumbag, Vladimir Tenev, who proceeded to illegally liquidate the positions of Robinhood users in GME without permission.

Reasons to be upbeat

Despite the spirited collusion of certain brokers with hedge funds, the impact of the gamma squeeze on Wall Street is remarkable.

This has become more than a group trading strategy: it is now a fully-fledged movement that aims to take on the establishment in an unprecedented fashion. Keep an eye on the news today because things could be about to get even more dramatic.

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Market reaction

Institutional shorters haven’t exactly received a lot of sympathy from retail investors. Having waited months for help from the federal government and receiving a stimulus cheque for just $600, Average Joe won’t be weeping for the losses of the corporate fat cats anytime soon.

There is a lingering concern for retail investors, and many are getting the sense that this could be another 2008. If these unprecedented movements continue to cause serious repercussions in the market, will the federal government step in with another bailout? Are institutions still too big to fail? After months of having their finances crippled by COVID-19 restrictions, investors will be hoping that Uncle Sam doesn’t have a sickener up his sleeve.

As the NYSE edges towards the commencement of trading today, retail investors are poised for a day that will undoubtedly offer drama, controversy, and potentially serious profit.

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