These are beautiful days. I can turn on the PBS News Hour without getting a preemptive knot in my stomach by wondering what travesty has come out of the White House, or having to watch a press briefing given by a blonde twit spouting lies and lame reasons for those travesties. Dr. Anthony Fauci is unchained, free to give us the factual updates on the coronavirus. Donald Trump even left a note behind for Biden, which contained all the details of his health plan. All is right with the world.
As I compose this piece a couple of days ahead of my usual last-minute, sweat-inducing, brain drain, the GameStop stock trade is in the news. You most likely heard about it, but may not know how it works. I don’t either, but that won’t prevent me from pretending I do know. Near as I can figure, the hedge fund managers put their dice away and bet millions on GameStop stock’s going down the tubes. Then when it did, they’d make a big payoff on their bet.
What happened was just the opposite, much to their chagrin. The stock price soared. How could that be? Why did the stock go up, to cause weeping and gnashing of teeth on Wall Street? Who cares? It went up because a bunch of little guys, day traders, got together and decided they didn’t want GameStop to fail, or at least until they made some money off of it. So they put away their crack pipes, pooled their resources, and pumped money into the company to drive up the price of the stock. When it was jacked up high enough and there was no more money to pump in, they sold the shares at a profit. Because it was just the opposite of what the billionaire hedge fund managers had bet on, they lost big time, which led to the aforementioned weeping and gnashing.
The average, every-day, run-of-the-mill day trader doesn’t make large enough investments to even produce a blip on the stock market radar. They just stare at their computers most of the day, ignore the dog peeing on their legs because they haven’t left them outside, and buy a stock when the day traders think it’s low. They sell it a little while later when, hopefully, their dogs have gone in another room to chew up the furniture and their stock has risen to new heights. Small potatoes stuff. That is, until a bunch of them get together.
Now the billionaire fund managers are upset, no longer same happy-go-lucky traders in misery they had been. Beaten at their own game, they’ve come down on the average Joe wet-pants-leg day traders who did the beating, and try to find ways to keep that from ever happening again. Day traders beating them, I mean, not dogs peeing on day traders’ legs.
Pumping money into a losing company to jack up the price of the stock is nothing new. Because I’m an old guy, I seem to recall it was back around 1960 (before mass quantities of alcohol and ear-piercing rock and roll altered my perception of reality) when The Mob (please don’t kill me; what I’m about to write is already public information…at least I hope it is…it is, isn’t it?…uh-oh) decided to do this thing with Cameo Records. Cameo had some up-and-coming talent such as Bobby Rydell, Chubby Checker, but the Company wasn’t an RCA or Mercury in the music industry. The Mob Boys figured they could make “legitimate” money off the company by investing a lot of cash in the business. Cameo owners were happy for a while, anyway, because they now had money to play in the big leagues. Unfortunately, a few weeks later when their stock price was up a couple of hundred percent, the Boys sold all their stock, took their profits, and went back to cementing loan-defaulters’ feet and dropping them in sewers.
Although I’m not shedding any tears for them (hedge fund managers, that is; I may end up shedding blood for The Mob), it eventually may have an effect on the retirement plans of the rest of us if we have these manipulated stocks in our portfolios. If Wall Street panics, which it usually does, and the stock market tumbles, which will take my retirement portfolio with it, I always can sell my eyeballs or a seldom-used internal organ. Right now though, I’m happy to see these Wall Street guys chewing their fingernails over this bit of GameStop turmoil. It puts a smile on my face while I prepare to change my name, move to Costa Rica, and start a worm farm.