© Reuters
Burr Geoffrey Smith
Investing.com – This is a historic moment in the stock markets. As such, historians will understand what is happening now better than those trained in the mathematics-based disciplines usually required to succeed in financial markets.
They won’t enjoy it much.
The victories that migrant retailers have scored against hedge funds for short selling are identifiable by a combination of revolutions and revolutions over the centuries. They all have their signature moment when the oppressed and the disenfranchised suddenly realize the strength they have when they get together and organize.
This week’s winners are in Game Stop Corp. (NYSE 🙂 or AMC Entertainment Holdings Inc (NYSE 🙂 as seen storming the Bastille in 1789, throwing tea in Boston Harbor in 1773, and stalking European monarchs from their palaces in 1848.
This is a social and cultural moment as well as a financial one. Take this example, an infinite one, from the WallStreetBets Intern Twitter account: “A reminder to everyone who has it. # WSB $ GME $ AMC $ BB No Wall Street executives have been sanctioned due to the 2008 financial crisis.
Or this one from another Twitter account named AOC’s Stonk Daddy (The Revolution Is Only Bipartisan):
“I’ve never seen a better chance to spoil the people I hate so badly. Every protest, every direct act I participated in. Compare Pales.”
It is very clear that it is a desire for revenge above all. Complaints can be specific, such as those from those who have been on the wrong side of rude practices from short sellers, high-frequency traders, or simply Main Street brokerages. Or it could be public, directed against the Wall Street “corporation” (which, unsurprisingly, includes the SEC that has just awakened the public outside its doors)
“Eat. For the rich. Damn the suits” and so forth. This is a moment fueled by anger.
We know from history what will happen next. Most of the time, the mafia, whose successes bear fruit, commits transgressions that harden the resolve of their opponents, who always have better resources, and when things are low, they are just as desperate. The ruling class regains its courage, the solidarity of the rebels fractures under pressure, and the status quo is restored through violent repression. The narrative is the same from antiquity (the Jewish revolution in AD 70) through to the Middle Ages (Paris 1358, London 1389) to the era of the Empire (Scotland, 1746, Volga in 1775, Prussia 1849, India 1857) and up to modern times. The list is literally endless.
Even the most successful of the elevators generally sour as the victors turn against each other. The unit of the mafia or its source of power is strictly limited in time. Any answer to the question “When do I sell GME / AMC / BB?” It will produce losers who will divert their anger from the “establishment” toward traffickers and traitors.
None of this distorts the origins and realities of the grievances driving this moment. It is not our duty to overlook the inequalities created by the last boom-and-bust cycle, or the injustices implicit in the current market structure. It’s just to say that moments like this usually end with heads between bars or bodies attached to gags. Make sure that you are not one of them.
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