A front-page report in Thursday’s New York Times on the GameStop stock-shorting controversy, by Matt Phillips and Taylor Lorenz, caught flack from denizens of every political sector for its condescending word choice and apparent sympathy for hedge traders, over the small individual investors who have pushed the video game retailer’s stock price to dizzying heights. The headline hinted at that tone: “The ‘Dumb Money’ Outfoxing Wall Street Titans.”
The press in general and the Times in particular have made the knee-jerk assumption that any mass online movement against elites, whether media or financial, must be suspect (perhaps especially when video games are involved) and they didn’t waste any time piling on the insults. Unfortunately for the paper, their contemptuous coverage is garnering some fierce pushback from all points of the political spectrum (save a particular kind of technocratic liberal elitism).
A real estate salesman in Valparaiso, Ind. A former line cook from the Bronx. An evangelical pastor and his wife in Huntington Beach, Calif. A high school student in the Milwaukee suburbs.
They are among the millions of amateur traders collectively taking on some of Wall Street’s most sophisticated investors -- and, for the moment at least, winning. Propelled by a mix of greed and boredom, gleefully determined to teach Wall Street a lesson, and turbocharged by an endless flow of get-rich-quick hype and ideas delivered via social media, these investors have piled into trades around several companies, pushing their stock prices to stratospheric levels.
As if there was anything else to do, with the Times and most other media outlets cheering on the coronavirus lockdowns that have kept people away from their jobs and stuck at home.
….the trade that captures the David-versus-Goliath nature of the moment involves GameStop, the troubled video game retailer that was once a fixture in suburban malls.
On Wall Street, individual investors are often derided as “dumb money,” destined to lose against the highly compensated analysts and traders who buy and sell stocks for a living. But in recent days, individual investors -- many of them followers of a popular, juvenile, foul-mouthed Reddit page called Wall Street Bets -- have upended that narrative by banding together to put the squeeze on at least two hedge funds that had bet that GameStop’s shares would fall.
…Wall Street Bets, the wildly popular Reddit forum focused on options trading that has become a sort of public hive mind where retail investors loosely coordinate their collective buying power on targets that are most likely to amplify price pops. In recent weeks, posts began to appear on the forum spotlighting the large amount of GameStop shares held short, and explicitly urging others to buy shares and options to move the price higher.
“Rally the troops, my brothers, for the war could be over very soon,” a commenter who goes by Gardeeon wrote on Jan. 19. “You control the power, GME is not going to the moon, but to the edge of the [expletive] observable universe.”
The reporters suggested this was sleazy, but couldn’t identify any actual security regulations being broken.
Such outright calls on social media for investors to coordinate their behavior struck many observers as skirting the line of market manipulation. On Wednesday, the S.E.C. said in a statement it was “actively monitoring the ongoing market volatility.”
Lawyers say platforms like Wall Street Bets are incredibly difficult to police, and it is not clear that there have been any violations of securities law.
A New York Times tweet of the story featured the already infamous “greed and boredom” line, which made it the object of mass contempt by commenters. One of the story’s coauthors, Taylor Lorenz, tried to fight back on the same thread, suggesting in response to a critic of the “Twitter headline” that she was also on the side of the critics:
I don't get to write the headlines :( but I'll pass this feedback along for sure
But the supposedly offensive tweet is only quoting the story Lorenz cowrote with Matt Phillips. In fact, the actual story is more blunt. While the tweet hedged that amateur investors were only “Perhaps propelled by a mix of greed and boredom,” the story itself simply states: “Propelled by a mix of greed and boredom….”