Most people are familiar with GameStop and what happened in January 2021. One of the few times the plebs managed to step up to the patricians. GameStop, an old and beloved by man, corporation which became known thanks to its video games stores, was underperforming in the stock market and some hedge fund crows thought it was easy prey. Despite its financial status being tip top and GME not being exposed to any risky loans or lacking liquidity, they decided to short it. They miscalculated though that the subreddit Wall Street Bets community understood what was going on and decided to take advantage.
Numerous small time traders using mostly Robin Hood used the stock market to bet against the hedge funds in other words short squeeze it, resulting in a skyrocketing GME's share price increase. Their heavy response resulted in the hedge funds not being able to cover their losses with White Square Capital, a fund based in London being the first one to shut down. Melvin Capital lost 53% of its value because of its exposure to GME’s short attempt. While the true impact of this event is unknown, it is currently estimated that the funds lost around $70 billion from a reddit prank page community.
That’s in very few words the story most people know about GameStop. But is this the end? Most news outlets have stopped sharing any news about this story so it must have ended. As with many other stories which caught the public eye, there is much more to it and in this case, more is yet to be seen.
My approach
As with most normal people, my feelings towards hedge funds, investors and the global financial establishment in general aren’t those of love. I try to keep my bias aside though and see how I can benefit from this system. Cryptocurrencies are just part of it. I try to be informed from as reliable sources as possible and to combine a wide variety of them to cross check info. Therefore I follow CNN, BBC, FOX, Al Jazeera but also Reddit, BitcoinTalk, Telegram and other less known sources to get as close to the truth as possible. Post January 2021 I started digging deeper into US and international finance and discovered what I think to be an opportunity of a lifetime.
The story
When Robin Hood blocked transactions it appeared to be the end. Those who managed to cash out and make some money out of it were the lucky ones. The rest of us had to keep praying for the new DOGE. But then I found it. Online brokerage companies, which we cannot name, haven’t been playing by the book. Today most people purchase and trade in the stock market using such fintech companies’ products. They create an account, deposit their money with one of the many available ways and then start to trade. Aiming at quick profits most people trade shares quickly and don’t hold them for long. This created an opportunity for sketchy operators. What if, instead of the actual share, we sold them a form of promissory note or IOU which of course they can sell anytime they want and we keep the actual shares to ourselves allowing us to keep full control. We can adapt depending on users' transactions and make huge profits without anyone noticing. It was too good to be true but when people are making plans the gods are laughing. This practice created a huge number of iconic stocks with the potential of another crash.
As long as traders trade their shares frequently everything works well as potential pressure created on any registered corporation is avoided. When they don’t do so, well we block their accounts and that’s it. But what if they didn’t keep their shares online but registered to themselves legally as they are entitled to. This would make it impossible for anyone to block their shares or access to their account in the event of a high price surge. And that’s exactly what is going on. A huge number of online traders, some whales but many small timers or newbies are purchasing GME stocks and registering them to their names. As a result GME is the stock with the largest short ratio. The hedge funds have overshorted GME about 140% according to some estimates and the question is when this will crash.
The inevitable can’t be postponed forever and unless the state steps in, the funds inability to pay their shorting bills will lead to liquidations and potential bail outs. As if the 2008 crisis would have taught them something.
What now?
I, as the author, have myself invested financially in this scenario and I advise to take part only if you do your own research and invest an amount your pocket can afford. Never put your life savings in a bet, any bet. Should you decide to do so, avoid purchasing stocks via apps as it will make the situation more complicated. Use a traditional broker. They also have easy to use websites. Fill in your correct details, create your account, make a deposit and once it arrives to your account purchase as many GME shares as you wish. After you do so, give it a few days and then select to register the shares in your name. After you do you will receive a mail confirmation and that’s it. The shares are yours and nobody can touch them. Now just wait.
Why?
The reason I decided to write this article is the same that makes me like cryptos. If the information is correct, this is an opportunity for the little man to win against the establishment for once. All my adult life has been dominated by international crises, the 2008 financial crisis, the Eurozone debt crisis, Covid and now the “Ukraine war”. The details change but the main story remains, some big bank, fund or government messes up and then the people pay the price. Always has been and always will be. Cryptos was introduced partly to address this problem with a decentralized empowering of individuals over the centralized authority.
But from time to time opportunities arise. The house almost always wins otherwise. Whether purchasing GME stocks will change your life remains to be seen. There are thousands of investment tips around the globe and most of them are pure scams. Like always you must do your own research and decide if this is a worthy risk. I might be motivated by personal reasons but based on the information I have read it is evident the big guys screwed up and the question isn’t if they will pay but when. If I can use this to my advantage so I can get a new car, go vacation in Bali or earn some extra drinks with my pals, I will take it.
So in brief, save, buy GME, transfer them to your name registry and wait as lightning always strikes twice.
