GameStop is a retailer which was facing a lot of hurdles because of the Covid-19 pandemic. It was planning to close 450 stores this year. Why would this matter to you? Well, even if you’re not in their target market, and even if you’re not interested in stocks, you should pay attention to this little story, if only because it sets a very interesting precedent in our economy. Here we go. Bear with me, the story will be short and sweet. About a month ago, GameStop share was trading for roughly $20. At the moment of writing, it trades for $328 and the trend looks still very bullish. How did this happen? Well, it looks like corporate investors “smelled blood” a couple months ago, and decided to short this stock. If you’re not familiar with stock markets, shorting is a relatively dangerous, but highly profitable maneuver, in which a trader borrows shares and then resell them, hoping to buy them back at a lower price. Well, if the price never gets lower, the losses of those who borrowed can be huge. Now, back to our story: some corporate funds decided to short the GameStock shares. But, surprise, a significant amount of retail investors (read: individual folks, trading on their mobile phones) decided they don’t agree and, in a very open and public way, created a strategy to raise the price, basically buying every bit of the stock that was made available. They colluded in a subreddit called [/r/wallstreetbets](https://www.reddit.com/r/wallstreetbets/), in which they are sharing how much they bought, how much they intended to, and so on, and so forth. By raising the price, they also aim at triggering what’s called a “short squeeze”, in which short positions were called off, pushing the price even higher. Two things emerged from here: the price rose dramatically, almost 10x in a month, and those who bet against the stock, the short betters, lost incredible amounts of money. At the moment of writing, according to [this story in The Guardian](https://www.theguardian.com/business/2021/jan/27/gamestop-stock-market-retail-wall-street), the total losses are $6.12 billions. Billions. I will write this again: billions. # Entering The “Post-Fundamentals” Economy What’s happening here is known in the cryptocurrency world as “pump and dump”, and it’s a strategy in which a group of investors are colluding together to drive the price of an asset higher, by aggressively buying it, until the market “bites”, and other people, driven by FOMO (Fear Of Missing Out) are chipping in. When that happens, they liquidate their positions, driving the price lower, and making a nice profit in the process. These are highly coordinated activities, some of them lasting just dozens of minutes. To be correct until the end, what we’re seeing in the GameStop saga is just the first part, the “pump” one. We don’t know yet if there will be a selling at some point, but the odds are in favor of it: even retail investors would want to take profits at some point. But what’s important here is something else, namely the fact that this market price has almost nothing to do with the fundamentals of the asset. It’s the result of plain market manipulation. Only this time it happens by an impromptu group of individuals, and not by a bunch of corporate funds. Which, ironically, are soliciting now to stop the trading (obviously, to stop their losses). If you’re wondering why is this happening, there are two reasons, in my humble opinion: First: because it’s possible. The shorting mechanisms built in the market are allowing for this kind of behavior. It has happened before. It’s just that now it happens outside the walled gardens of corporate funds. And this is big. Second: because it was about time. There is a certain threshold over which certain events are possible. Events like Cambridge Analytica, for instance. There were just the right causes and conditions for it to happen: enough data gathered, enough exposure for the manipulative messages, etc. Similarly, this time, there were just enough people willing to take this on, having the funds, the platform, the opportunity. I’m not advocating market manipulation. I’m just observing it, it was already there, like I said. I just see how market manipulation happens now if enough ordinary people believe in it, organize together and do it. That’s huge. That means that trust is now migrating way easier from one constituent of the reality to the other. It means there’s way more fluidity in how reality follows intentions of organized groups. It means that, theoretically, the price of everything is not based on the fundamentals (or market analysis, which is based on history and comparable stocks) but on how much a big enough group of people is willing to be. After a “post-factual” world, in which facts aren’t relevant, but only opinions about them, we’re entering an age in which every tradeable thing can be worth anything, if enough ordinary people are colluding to that goal. It’s at the same time great and scary, I know. *** _I'm a geek, blogger and ultrarunner. You can find me mainly on my blog at [Dragos Roua](http://dragosroua.com) where I write about productivity, business, relationships and running. Here on Hive you may stay updated by following me @dragosroua._ <center> ![Dragos Roua](https://dragosroua.com/wp-content/uploads/2014/05/bamf-e1448824881306.png)</center> <hr/> <center> <h2>Wanna know when you're getting paid?</h2> </center> <table width="100%"> <tr> <td width="50%" align=left> </td> <td width="50%" valign="top"> I know the feeling. That's why I created <a href="http://hive.supply" target="_new">hive.supply</a>, an easy to use and accurate tool for calculating your HIVE rewards </td> </tr> <tr> </table> <center><h2>It's free to use, but if you think this is a useful addition, I'd appreciate your <a href="https://hivesigner.com/sign/account-witness-vote?witness=dragosroua&approve=1" target="_new">witness vote</a>.</h2> <h1>Thank you!</h1> </center> Posted Using [LeoFinance <sup>Beta</sup>](https://leofinance.io/@dragosroua/the-gamestop-takeaway-we-re-already-in-a-post-factual-world-but-we-re-just-entering-a-post-fundamentals-economy)
author | dragosroua |
---|---|
permlink | the-gamestop-takeaway-we-re-already-in-a-post-factual-world-but-we-re-just-entering-a-post-fundamentals-economy |
category | hive-167922 |
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captainklaus | 0 | 10,304,380,459 | 100% | ||
mrhill | 0 | 8,444,784,027 | 40% | ||
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mytechtrail | 0 | 50,063,796,878 | 15% | ||
soluce07 | 0 | 2,859,787,773 | 50% | ||
cryptonized | 0 | 60,352,416,311 | 12% | ||
gorc | 0 | 1,619,623,058 | 29% | ||
pixietrix | 0 | 1,054,875,825 | 29% | ||
shadowlioncub | 0 | 1,180,780,428 | 29% | ||
gillianpearce | 0 | 1,559,586,723 | 50% | ||
icuz | 0 | 1,927,548,937 | 50% | ||
glenalbrethsen | 0 | 339,679,549,149 | 40% | ||
runningproject | 0 | 46,754,845,611 | 40% | ||
thomasthewolf | 0 | 66,481,079,732 | 96% | ||
onepercentbetter | 0 | 15,732,517,403 | 12% | ||
schlafhacking | 0 | 311,515,802,211 | 100% | ||
run.vince.run | 0 | 7,064,857,232 | 20% | ||
memepress | 0 | 1,516,904,303 | 50% | ||
tresor | 0 | 17,810,184,064 | 9.36% | ||
adeyemidrey | 0 | 379,978,582,956 | 100% | ||
we-are-one | 0 | 903,382,715 | 100% | ||
enforcer48 | 0 | 137,576,989,227 | 15% | ||
merlion | 0 | 4,975,696,736 | 12% | ||
mama13 | 0 | 0 | 3.01% | ||
sbi5 | 0 | 199,132,766,654 | 99.28% | ||
aminealaoui | 0 | 69,665,398,920 | 100% | ||
steinz | 0 | 1,618,375,515 | 100% | ||
zuerich | 0 | 528,079,546,616 | 10% | ||
raiseup | 0 | 62,521,779,701 | 12% | ||
steemaction | 0 | 87,926,267,447 | 12% | ||
memeteca | 0 | 1,218,255,144 | 9.36% | ||
bluerobo | 0 | 99,616,716,729 | 100% | ||
yff | 0 | 20,535,632 | 10% | ||
hungrybear | 0 | 452,492,602 | 12% | ||
gruntalpha | 0 | 7,279,748,136 | 50% | ||
haxxdump | 0 | 116,074,166 | 10% | ||
steemvpn | 0 | 29,732,802,191 | 100% | ||
grunt | 0 | 7,265,451,697 | 50% | ||
stubborn-soul | 0 | 1,447,012,931 | 50% | ||
sbi-tokens | 0 | 3,319,275,723 | 7.94% | ||
mk-leo-token | 0 | 209,772,665 | 100% | ||
tonimontana.leo | 0 | 399,532,856 | 21.1% | ||
policewala | 0 | 61,529,075,673 | 12% | ||
gimp | 0 | 57,720,317,816 | 9% | ||
drew0 | 0 | 609,160,869 | 5% | ||
dapplr | 0 | 966,490,129 | 6% | ||
zelegations | 0 | 11,950,699,497 | 100% | ||
bnk | 0 | 12,078,836,898 | 9.36% | ||
timhorton | 0 | 9,247,158,188 | 100% | ||
cerberus-dji | 0 | 2,995,501,659 | 100% | ||
localgrower | 0 | 2,421,401,825 | 3% | ||
hivecannabis | 0 | 5,767,843,708 | 100% | ||
hive-vpn | 0 | 2,536,945,764 | 100% | ||
intacto | 0 | 13,411,660,056 | 1% | ||
nathen007.leo | 0 | 1,687,248,861 | 25% | ||
tfranzini | 0 | 880,051,083 | 100% |
It shows how apps like robin hood can change and reshape the financial market. Small investors can also influence the big numbers. It feels like the telegram groups for pump and dump, where coins are inflated or like McAffes announcements from 2017. Every tweet was followed by a massive pump and a massive dump, killing most projects after that. Posted Using [LeoFinance <sup>Beta</sup>](https://leofinance.io/@alexvan/re-dragosroua-6evznd)
author | alexvan |
---|---|
permlink | re-dragosroua-6evznd |
category | hive-167922 |
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Yeah, pecisely. Posted Using [LeoFinance <sup>Beta</sup>](https://leofinance.io/@dragosroua/re-alexvan-2zeqag)
author | dragosroua |
---|---|
permlink | re-alexvan-2zeqag |
category | hive-167922 |
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It's an amazing story. A story of the power of the decentralized flock. A story of a big middle finger party. I did not notice that until yesterday, was not involved. But I see it as a strong example how powerfull a large group of small budgets can be. Image next time it's not a "fuck you" movement, but a large group of small budgets that want something good to be done. Something that is too big for a small startup, but easy if millions chip in a few bucks. Crowdfunding at its best :D
author | schlafhacking |
---|---|
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Yeah, that is the "this is great" part of it. But there is also the "this is scary" part, in which ANY stock can be sent to the moon *regardless* of the fundamentals. I get the part in which people colluding together can tilt the balances, and I agree this is groundbreaking. But, as with any new development / advancement / breakthrough, this can also turn into toxic shit, the kind of "pump and dump" we've seen thousands of times in the crypto world with ephemeral, worthless, scammy shitcoins. Posted Using [LeoFinance <sup>Beta</sup>](https://leofinance.io/@dragosroua/re-schlafhacking-29wypd)
author | dragosroua |
---|---|
permlink | re-schlafhacking-29wypd |
category | hive-167922 |
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everything has a price and a value. A herd of trolls might change the price, but not the value. Playing only long games, value and price will eventually always meet at a real crossing point. Obviously price of that stock is above the value. Also obviously, value of Bitcoin still is above its price. So its clear what to buy and what not. :) In my opinion this story is not about "investing". It is more or less a "vote" with money involved. The poeple should do more voting. Also regarding governments and their political decisions and actions.
author | schlafhacking |
---|---|
permlink | re-dragosroua-qnnb9f |
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