Budapest Post

Cum Deo pro Patria et Libertate
Budapest, Europe and world news

Why I joined the online army taking on the hedge funds

Why I joined the online army taking on the hedge funds

I spent most of last week drenched in sweat, launching a vicious assault on Wall Street hedge funds which cost them $20 billion. Along with thousands of other ‘degenerates’, I bought shares in GameStop, a struggling videogame shop whose value has recently soared by 2,000 per cent.
Behind the surge is an online community called WallStreetBets, where bored young men gamble on barely researched stock tips and crack tasteless jokes. The community, which lives on the social media website Reddit, has a history of hilariously aggressive stock-market bets. In 2019, for example, a 19-year-old member made $700,000 and then lost it all again within two weeks.

Last week WallStreetBets became global news. You’ve probably read about it by now: the forum’s members have driven GameStop’s price up by buying masses of shares, inflicting huge damage on the hedge funds who were betting against — or ‘shorting’ — the company’s prospects. The WallStreetBets board is now deluged with ‘gain porn’ —  screenshots of trading accounts showing enormous returns, though real WallStreetBets addicts seem just as happy posting ‘loss porn’ when things go wrong.

The most famous winner is a man named Keith Gill, who goes by an obscene moniker on WallStreetBets and is known as ‘Roaring Kitty’ on YouTube. At last count, his initial $50,000 investment had returned $36 million. He’s cashed out a third of it, but the rest is still in play. Gill is a 34-year-old father who works in insurance and dresses like a teenager: aviator sunglasses, sweat bands on his wrists and a bandana. As he passed the $10 million mark, he celebrated by dipping some fried chicken in a glass of prosecco.

Smaller wins have been life-changing, too. A member called llweasel told me he made $35,000 which he will spend on a custody battle for his daughter: ‘I started stock trading to be able to afford a lawyer as my ex has an expensive lawyer.’

When I revealed to a trader friend that I’d joined the frenzy, she told me: ‘GameStop has been the bane of my life for the last two weeks.’ Another friend in finance said his superiors had quietly banned the topic. Others lamented the fact that regulations stopped them joining in themselves.

But for many of us, the mania proved irresistible. As GameStop’s price soared, and the craze spread to other unloved stocks like Nokia and BlackBerry, the fear of missing out became overwhelming. I heard one successful banker say he was buying Nokia shares because he ‘liked their 5G strategy’. Course you do, mate.

As the price of GameStop swung wildly, it became impossible to do anything other than glare at the screen and chew gum ferociously. When the price tanked on Monday, I sold in a panic, making a £400 loss. Almost immediately, the price shot back up. The next day, I went straight back in and I’ve been holding on for dear life ever since. The US markets open at 2.30 p.m. GMT, and for the next six hours I do nothing except watch the price while texting friends who are doing the same.

I am a textbook example of the brainless amateur investor. When the price is falling, I only think about getting out. When it’s rising, I scold myself for not buying more. That’s gambling for you. The whole game is pure speculation. Some people may have got into GameStop at the beginning because they spotted some ‘deep value’ in this declining company, but we are now long past that point. Prices are driven by hype: on Reddit, then in the media, then by the actual increase in price.

Traditionally, these scenarios have not ended well. And the risks amateur investors are taking are pretty scary. On WallStreetBets, you’ll see many examples of people betting their entire life savings, maxing out credit cards or taking out personal loans.

One user, Volkswagen1 (gains: $540,000) tells me: ‘I liquidated everything. I don’t have a penny to my name any more. I sold my silver and gold collection. I sold my Bitcoin. I sold my other stocks. I put mortgage payments, savings, checking, and my spare change jar money into this. I skipped meals so I had extra money to put in. I’d sell my cat for extra GameStop shares if someone would buy it. Do you want a cat?’

In fairness, Volkswagen1 seemed willing to accept the consequences. He also had a logical exit strategy. A lot of other users had a similar attitude: they had aggressively bet on a rare opportunity, got lucky and were enjoying the ride. Which is about as healthy as your attitude can be if you’re piling your life savings into a videogames shop which Wall Street thinks is worthless.

Others should not be in the casino. This week a post appeared from a user called Hyre, titled: ‘Hi, I’m back. You may remember me from such events as gambling away $7 million.’ It begins: ‘I’ve been to rehab, I’ve lost custody of my kids, lost my house. However I still found a way to play.’ He then announced he is holding $15,000 of shares in GameStop plus a $50,000 bet on silver prices.

If ever you wanted a sign of market mania, the ‘irrational exuberance’ which precedes a crash, surely the GameStop saga is it. It’s reminiscent of the dotcom bubble; comparisons have also been made with the Dutch tulip bubble, which was started by bored men playing a drinking game during a plague.

The problem for participants, of course, is how the hell you cash out. At the time of writing, the price was crashing. I’m still holding two shares, and I’m down about £400. So how do we get out? The original plan was to ‘squeeze’ the hedge funds until they dropped their bets against GameStop, which would in turn push the price up further. There was talk of this driving the price past $1,000 per share, or even higher. But it looks like the hedgies have given up.

A lot of people have been quietly cashing in. Others are adamant that the price is still going up. One user showed me his sell plan, which saw him dump his holding at stages from $1,000 to $250,000. I was curious about what he’d do if it never reached those heights. ‘Make a new plan. Or I’m screwed,’ he told me. I encouraged him to make a new plan. As for me, I’m getting out. Anybody want to buy some silver?
AI Disclaimer: An advanced artificial intelligence (AI) system generated the content of this page on its own. This innovative technology conducts extensive research from a variety of reliable sources, performs rigorous fact-checking and verification, cleans up and balances biased or manipulated content, and presents a minimal factual summary that is just enough yet essential for you to function as an informed and educated citizen. Please keep in mind, however, that this system is an evolving technology, and as a result, the article may contain accidental inaccuracies or errors. We urge you to help us improve our site by reporting any inaccuracies you find using the "Contact Us" link at the bottom of this page. Your helpful feedback helps us improve our system and deliver more precise content. When you find an article of interest here, please look for the full and extensive coverage of this topic in traditional news sources, as they are written by professional journalists that we try to support, not replace. We appreciate your understanding and assistance.
Newsletter

Related Articles

0:00
0:00
Close
Severe Heatwave Claims 2,300 Lives Across Europe
Declining Beer Consumption Signals Cultural Shift in Germany
Emails Leaked: How Passenger Luggage Became a Side Income for Airport Workers
Polish MEP: “Dear Leftists - China is laughing at you, Russia is laughing, India is laughing”
Western Europe Records Hottest June on Record
BRICS Expands Membership with Indonesia and Ten New Partner Countries
Elon Musk Founds a Party Following a Poll on X: "You Wanted It – You Got It!"
China’s Central Bank Consults European Peers on Low-Rate Strategies
France Requests Airlines to Cut Flights at Paris Airports Amid Planned Air Traffic Controller Strike
Poland Implements Border Checks Amid Growing Migration Tensions
Emirates Airline Expands Market Share with New $20 Million Campaign
Amazon Reaches Milestone with Deployment of One Millionth Robot
Yulia Putintseva Calls for Spectator Ejection at Wimbledon Over Safety Concerns
House Oversight Committee Subpoenas Former Jill Biden Aide Amid Investigation into Alleged Concealment of President Biden's Cognitive Health
Amazon Reaches Major Automation Milestone with Over One Million Robots
Extreme Heat Wave Sweeps Across Europe, Hitting Record Temperatures
Meta Announces Formation of Ambitious AI Unit, Meta Superintelligence Labs
Robots Compete in Football Tournament in China Amid Injuries
China Unveils Miniature Insect-Like Surveillance Drone
Marc Marquez Claims Victory at Dutch Grand Prix Amidst Family Misfortune
Germany Votes to Suspend Family Reunification for Asylum Seekers
Budapest Pride Parade Draws 200,000 Participants Amid Government Ban
Southern Europe Experiences Extreme Heat
Xiaomi's YU7 SUV Launch Garners Record Pre-Orders Amid Market Challenges
Jeff Bezos and Lauren Sanchez's Lavish Wedding in Venice
Russia Launches Largest Air Assault on Ukraine Since Invasion
Massive Anti-Government Protests Erupt in Belgrade
Iran Executes Alleged Israeli Spies and Arrests Hundreds Amid Post-War Crackdown
Hungary's Prime Minister Criticizes NATO's Role in Ukraine
EU TO HUNGARY: LET THEM PRIDE OR PREP FOR SHADE. ORBÁN TO EU: STAY IN YOUR LANE AND FIX YOUR OWN MESS.
Hungarian Scientist to Conduct 30 Research Experiments on the International Space Station
NATO Members Agree to 5% Defense Spending Target by 2035
NATO Leaders Endorse Plan for Increased Defence Spending
U.S. Crude Oil Prices Drop Below $65 Amid Market Volatility
International Astronaut Team Launched to Space Station
Macron and Merz: Europe must arm itself in an unstable world
Germany and Italy Under Pressure to Repatriate $245bn of Gold from US Vaults
Iran Intensifies Crackdown on Alleged Mossad Operatives After Sabotage Claims
Trump Praises Iran’s ‘Very Weak’ Response After U.S. Strikes and Presses Israel to Pursue Peace
Oil Prices Set to Surge After US Strikes Iran
BA and Singapore Airlines Cancel Dubai Flights Amid Middle East Tensions
Trump Faces Backlash from MAGA Base Over Iran Strikes
Meta Bets $14 B on Alexandr Wang to Drive AI Ambitions
FedEx Founder Fred Smith, ‘Heart and Soul’ of the Company, Dies at 80
Chinese Factories Shift Away from U.S. Amid Trump‑Era Tariffs
Pimco Seizes Opportunity in Japan’s Dislocated Bond Market
Labubu Doll Drives Pop Mart to Status as China’s Most Valuable Toy Maker
Global Coal Demand Defies Paris Accord Goals
United States Conducts Precision Strikes on Iran’s Nuclear Sites
US strikes Iran nuclear sites, Trump says
×