The GameStop Reckoning Was a Long Time Coming - The New York Times - 0 views
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In any reading, the most unusual thing about Wall Street’s being challenged by a rowdy band of Redditors is that it took so long to happen. This kind of populist revolt — internet-based insurgents gleefully pulling down the pants of the unsuspecting establishment — has been happening for years, to many powerful institutions.
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Book publishers, movie studios, restaurant chains — all of them have, in some way, been forced to cede power to their online critics. Our politics, too, have been transformed by internet activists, with TikTok teens disrupting presidential rallies and Twitch-streaming memelords storming the Capitol.
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these internet-based insurgencies tend to follow a similar pattern. One day, a group decides to take action against a system it feels is immoral or corrupt. Members identify structural weak points (a vulnerable political party, a risk-averse studio head, an overexposed short position) and figure out creative ways to exploit them, using social media for leverage and visibility. With enough highly motivated people pushing in the same direction, they eventually prevail, or get enough attention that it feels like they did.
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These online crusades can be waged in good faith or in bad faith, and some can become deeply destructive. (The classic example of a bad-faith battle is Gamergate, a 2014 culture war that started as a feud over video game journalism but morphed into a toxic campaign of violent misogyny and racism that paved the way for the alt-right.)
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because trading stocks costs money — and required some level of expertise and time commitment — it was mostly left to professionals.
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Smartphone-based trading apps like Robinhood changed that, by introducing commission-free trades and an interface that made executing a gamma squeeze as straightforward as ordering a burrito from Uber Eats. Suddenly, millions of amateurs could organize themselves, generate their own market research and investment theses, drum up excitement in Reddit threads and TikTok videos, and enter the casino with the big boys
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author Martin Gurri calls “the revolt of the public.” Mr. Gurri writes that the internet has empowered ordinary citizens by giving them new information and tools, which they then use to discover the flaws in the systems and institutions that govern their lives. Once they’ve discovered these shortcomings, he writes, these citizens often rebel, tearing down elites and dominant institutions out of anger at having been lied to and withheld from.
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Big banks and hedge funds really do play by different rules than retail investors. Wall Street banks really did get bailed out after the 2008 financial crisis while Main Street homeowners suffered. M.B.A.s in fancy suits are probably no more likely to give you good investing advice than guys on YouTube with names like “RoaringKitty.”
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If you can get past the all-caps lunacy and strange inside jargon, the Redditors make some good points
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The result, Mr. Gurri writes, is a kind of vengeful nihilism, an urge to burn down the establishment without a clear sense of what’s supposed to replace it.
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Retail investors, armed with new kinds of tools and information that allow them to compete on equal footing with professionals, are looking at the Masters of the Universe and going: Really? Those guys run the market?
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this is not just a speculative bubble or a stupid prank. It’s an authority crisis. And even if GameStop stock crashes or regulators step in and call off the party, these disillusioned day traders will keep trying to create chaos for the elites they feel have spent decades profiting at their expense.
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for the Reddit day traders, the important victory was always the symbolic one. They might lose their shirts, but they’ve sent the message that with enough passion and rocket-ship emojis, a crowd of profane, irreverent degenerates — again, their words, not mine — can turn the stock market on its head.