Just in case you haven’t noticed, there is a big thing going down on the New York stock exchange at the moment.
Short sellers targeted a company called Gamestop (ticker: GME) which is pretty much Blockbuster for video games in the U.S., meaning that they have bricks-and-mortar stores all over the place selling video games. As you can imagine, that’s not been going too well recently, so the stock price was gradually falling; right up until someone on a sub-Reddit called “wallstreetbets” pointed out that there was more stock being shorted than had ever been issued by the company. This surprised and shocked a lot of others, and provoked quite a lot of people to try to establish a short squeeze, to teach the pesky short-sellers a lesson . A short squeeze is where the price rises instead of falling, making the short holders loss-making, so they have to actually buy shares to return to the lender, thereby pushing the price up even more. Anyway, the whole thing has turned into a cultural war between the evil Wall Street manipulators and the righteous mob, who started buying shares in GME hand over fist, and causing a massive bubble. The mainstream media (even in the UK) are now falling over themselves to make out that it’s all under control, market regulators have been alerted, and there’s nothing to see here. The BBC, ever lighthearted in the face of news, points out that some people have even been confusing the Robin Hood Society with a share trading platform called Robinhood – how droll!
Anyway, all this led me to the following article, which I want to put out for your consideration, even though I haven’t fact checked any of it (I don’t know how to) and I have know idea who wrote it. I think it counts as an “interesting thing in the world” anyway. It’s a bit concentrated, but I thoroughly recommend that you read it.
(The original link to this document at http://www.counterfeitingstock.com has mysteriously disappeared, but I found it elsewhere and I now host it myself, so that you can read it. This version contains several appendices as well as the article itself. Incidentally, references to www.articledash.com around the last part are spurious – it’s a site advertising highly dubious services of a sexual nature!)
https://aprendo.co.uk/interestingthings/p-content/Counterfeiting-Stock.pdf
This article was written in 2007, as far as I can tell. I doubt anything much has changed since then. After reading this, do I wonder how the SEC will choose to deal with the “regulatory problem” posed by Gamestop.
Meanwhile, the GME shorts have doubled down and found a few more billions to add to their short postition, driving the price down – a bit. But the righteous mob is not giving up! Since this is obviously a massive bubble in the making, I signed up with a trading platform which trades on the NYSE, so that I too can “stick it to the man”, make a bundle and feel smug. I had to pass two “tests” of my understanding of financial markets to be allowed to trade in ordinary shares – I’m pleased to say I aced them both (although I did have to cheat, and look up the difference in voting rights between preferred and ordinary stocks). Alas, it took ages to get some money through, so I will have to wait until tomorrow before I can buy my (one) share. And FYI, DeGiro don’t deal in fractional shares (some other platforms do). But they are super-cheap. And now I am almost “in the game”. Bwahaahaa!
Of course, nothing I say, have said, or implied, or you have misinterpreted, should be construed as investment advice; or indeed taken any more seriously than you, as final arbiter of your own judgements, decide to think fit. You should be aware that I am not even a regular Redditor, but a mere blogger, with the financial education of a wallpaper brush, and the intelligence of a damaged thermometer.