Big Game Hunters Become the Game Then Outgame the New Gamers

By A. Burnham Shute (Moby-Dick edition - C. H. Simonds Co) [Public domain], via Wikimedia Commons

The youthful gamers have taken control, and that raises the question, “Who is the game now? Who is stalking whom?”

Last week, a large number of small-time investors drove up the price of GameStop’s (GME) stock a historic 1,784 percent. But this was no mere spike in some obscure stock. The stock’s price spiked in part as a result of efforts by “an army of smaller investors who have been rallying on Reddit and elsewhere online to support GameStop’s stock and beat back the professionals.”

The Mises Institute

It didn’t pay to be a hedgehog last week, betting on GameStop’s failure, because the masses on Robinhood learned how to crowdfund market manipulation. They figured out how to outplay the players by banding together on a Reddit thread and decided to pull the big guys’ shorts down.

It worked well. And that’s a good thing, as Shark Tank’s Kevin O’Leary noted:

Definition of the market is speculation. If you are short you now run a new risk that these effective social media vigilantes are going to come after you and squeeze you and its good because it will make a lot of hedge funds think for a second time before shorting.


Those who got pantsed are finally worried that the rigged stock market may be coming unglued. At last, the billionaires who got sharked are worried that the market is at risk of falling apart from too much democracy coupled to too little sense.

Said another big fish in the Shark Tank about the overinflated market right now:

There will be a deflation of some sort in those appreciable assets and it’s going to be scary when that happens.

Mark Cuban, CNBC

Like O’Leary, Cuban sees what the retail crowd is doing as being a great equalizer in the market, and Robinhood’s merry band of Reddit Raiders laughed on their way to the bank with scant sympathy.

Had this only been just another scheme by some Wall Street insiders against some other Wall Street insiders the story would probably have ended there. But that’s not what happened. Rather, it appears that, for many of the smaller investors who were involved, much of this “short squeeze” was conducted for the purposes of throwing a monkey wrench in the plans of Wall Street hedge funds which exist within the rarified world of billionaires and their friends.

The Mises Institute

You see, it became a big story only because the wrong players got played — the ones who are supposed to be the winners, according to the old rules.

As I said in my generally available post on the subject, who cares if it is just the T-Rex crowd of ancient market riggers getting eaten by the velociraptors? What is of note is how the longtime stalkers of big game are now concerned about the new gamers possibly eating the market alive because everyone gave up on caring about economic sense quite a ways back.

Suddenly nearly every analyst is fretting that the market may be flying apart from its own stupidity now that it makes sense to go long on companies that are going broke just because the giant hedgehogs of olden days are all shorting it. And everyone should beware because nothing as overblown as this market bursts without causing a lot of damage.

The reactions to the event from media pundits and other commentators were telling in that there was clearly fear and outrage over the fact that business as usual on Wall Street wasn’t being enforced. Predictably, much of the reaction to the Reddit rebellion was to label it a “fiasco,” “insanity,” and something sure to leave a “trail of destruction….” Jim Lebenthal at CNBC, for example, declared the “short-squeeze fiasco is a threat to the proper functioning of financial markets.”

Proper functioning of financial markets? Since when has this been a properly functioning financial market? Guided by algorithms too deep and mysterious for anyone to fully comprehend, boosted by buybacks in the billions, floated by Fed fiat, gamed by the glamorous on Wall Street, and bailed out in backroom bond deals, the market became unhinged from the economy to become its own matrix of unreality.

Please! They’re now suddenly concerned the market is becoming untethered due to the Robinhood crowd? No, the gamers are just being out gamed by those younger and more nimble. They’re concerned that someone turned their own corrupt rules against them. The market started down the rabbit holed into Wonderland years ago and has gone deeper and deeper until now all we see is mad hatters hopping around.

All the old gamers are really doing is lamenting what they turned the market into.

Where it really fell apart

The shrieks and growls could be heard everywhere over the past week or so, but it was the most deserving who were dying most.

The fearmongering went beyond even the usual places we hear about financial news. On The View, for example, Meghan McCain delivered the sort of status quo–defending bromides we’ve come to expect from her. She insisted the GameStop affair could spiral into an economy-killing disaster because “If the stock ends up plunging because of this, because of GameStop and Wall Street loses billions, at a certain point, it will impact stocks like Apple and Disney and stocks that a lot of average Americans do invest in, and if that happens, average Americans will end up losing even more money.”

Like they care!

This is what happens in a market that devolved into fun and games long time ago once the new gaming crowd figures out how the old controls work and seizes the game controllers.

The old center is no longer holding, and the market is flying apart from its own centrifugal force and flawed bindings. Who could have seen that coming? The billionaires that made bank at this long-rigged game now fear for their lives. So may it be! Nothing is too big to fail, so let it all fall apart because it hasn’t been anything but a game for past decade anyway. Such is the path that catches the market back down to economic reality.

Now, of course, the big boys are already fighting back by demanding Washington intervene and save their game by forcing the new players to abide by their old rules. (And that’s a game the big boys still own — The Wall Street Chutes and Ladders game.)

The financial sector has become accustomed to enjoying bailouts, easy money, and the resulting financialization which puts ever greater amounts of the US economy into the hands of Wall Street money managers. The sector is now built on corporate welfare, not “free markets.” No matter what happens, Wall Street expects the deck to be stacked in its favor.… It’s why Lebenthal thinks anything out of the ordinary is a threat to the “proper functioning of financial markets.” If some free market innovation and inventiveness actually takes place in some small corner of the marketplace, well, then we’re all expected to get very upset.

Indeed, as one writer on pointed out …

Fear has now turned into rage. Hordes of new retail investors are banding together to take on Wall Street. They are not willing to sit back and watch naked short sellers, funded by big banks, manipulate stocks, harm companies, and fleece shareholders…. The battle that launched this week over GameStop between retail investors and Wall Street-backed naked short sellers is the beginning of a war that could change everything.

God forbid anyone change the rules the dinosaurs had in place for themselves. So, listen to them cry:

This is an egregious act against capital markets, and it’s caused billions of dollars in damage.

The markets are no longer playing by our rigged rules, screams the writer on

Both foreign and domestic schemers have attacked Canada in an effort to bring down the stock prices of its publicly listed companies.

Isn’t that what hedge funds did for decades? Until Robinhood pantsed them by pulling down their shorts? When did hedge funds ever care if they destroyed real companies or real markets?

In Canada alone, hundreds of billions of dollars have been vaporized from pension funds and regular, everyday Canadians.

Yup. You’re just crying because you’re no longer the one doing it. You’re no longer the one benefiting from the highly rigged markets. A younger crowd that uses your rules against you grabbed the game controller out of your grubby hands. It must be stopped by using the ropes the older crowd still control — the ropes that connect the puppet politicians to the grubby hands of the old game masters.

They scream that the democratization of the rigged casino of stock speculation is jeopardizing the integrity of capital markets. What integrity? They ended integrity with all their market shorting games and buyback schemes and central-bank deep funding years ago. This is just how it falls apart once you’ve turned it all into funds and games and divorced all economic sense.

But, but, but…

And big banks and financial institutions are turning a blind eye to some of the accounts that routinely participate in these illegal transactions because of the large fees they collect from them. These institutions are actively facilitating the destruction of shareholder value in return for short term windfalls in the form of trading fees. They are a major part of the problem and are complicit in aiding these accounts to create counterfeit shares.

Oh, THAT’S news! Big banks being willing to do anything so long as it makes big bucks for them? They call that Goldman Sucks.

That is market manipulation. Plain and simple.

Yes, it’s ALL market manipulation plain and simple. As I’ve been writing about for a decade. Stock buybacks, a game only played by rich board members to enrich themselves further by using their own company’s cash to buy back THEIR stocks is market manipulation, plain and simple. Central banks creating all the new money within large investment banks so it can be poured into “capital markets” is market manipulation pain and simple. The president’s Plunge Protection Team is market manipulation plain and simple. The algorithms of the trading bots written to out-game each other are all market manipulation plain and simple! The ability to short markets and do other speculative things that have NOTHING to do with profiting from ownership in a viable company are all lesser forms of long-accepted market manipulation plain and simple. Ever heard of a company being taken down by a single whale capable of shorting it to death?

A rigged market is exactly what you all long created and now its been democratized. When the rigging is no longer working for you, that’s when you finally scream that it is so unfair!

Hey, I”ve nothing against the author screaming out about this. I’ve been screaming out about it for a decade. As the author points out “naked shorts’ have long been supposedly illegal, yet that never stopped them because they were working out well for the 1%.

I’m just pointing out that the chickens are now coming home to roost because the people screaming are the rich bastards who long profited from all the gaming. (Maybe the author above didn’t play that game (I don’t know), but plenty that did are now screaming … mostly at their pocket politicians to suddenly save them from their own games.)

As Wolf Richter just wrote,

The historic short squeeze, engineered by a bunch of deeply cynical small traders, exposed just how rigged the market has been…. It has finally blown into the open for all to see. The stock market has been broken for a while, for a long time, actually. The idea that the stock market is where price discovery takes place on a rational transparent basis, with ups and downs, and some amount of chaos, but free of rampant manipulations – that idea has now totally imploded.

Wolf Street

It’s not even so much that it has now totally imploded, but that everyone can now plainly see the emperor has long been swimming with no clothes on. As Wolf says,

What has been visible for a long time but now blew into the open is just how manipulated the market is, by all sides, how overleveraged the big players are because the Fed encouraged them to, and how enormous the risks are, and how crazy the trading strategies are.

Thus …

the stock market soared to record out-of-whack valuations, in a terrible economy where at least 10 million people have lost their jobs and are still out of work, and where entire industries have gotten crushed. The whole thing is propped up by stimulus and bailout payments to consumers and companies alike.

That has been an obviously absurd state of affairs for a long time that has kept some of us out of the market because we don’t trust the rigging and just want to invest in an honest market based on real corporate values and realistic expectations for future values.

So, along came a new bunch of co-conspirators to crush the old ones at their own game:

This coordinated buying by the crowd on WallStreetBets, of a handful of small most-shorted stocks, drove up their prices sometimes by 100% or more in a day, which pushed the hedge funds that were short these stocks to the brink. And it pushed online broker Robinhood to the brink. And it revealed for all to see just how broken the stock market has been.

Who cares? It’s long overdue, so …

Hear them scream

You know it’s serious when the New York Times puts a stock chart at the top of its front page which it did in its Saturday morning edition – and not any stock chart but a chart of GameStop, one of the stocks targeted by what likely became the biggest and most widely organized and most effectively manipulated short squeeze in history…. The folks on WallStreetBets that openly conspired to create this short squeeze – their number is heading toward 10 million people – well, they didn’t create the situation. They just took advantage of an opportunity.

An opportunity built into place by years of gaming standards — not financial standards, not business standards, not economic standards … just gaming standards.

They even outdid the hedgehogs’ old practice of helping the stocks they were shorting go down with propaganda:

It was highly effective stock manipulation. And it outdid by a huge margin the stock manipulation schemes that those hedge funds had undertaken to push down the share price. Those hedge funds look practically amateurish with their reports that they spread across the media in order to crush those shares they were short…. Hedge funds have long done everything they could to manipulate stocks their way. Short sellers came out with devastating reports about a company. Some of the facts were true and some were false, but it didn’t matter. This is the game of “short and distort.”

Is it game over or rule-change at halftime?

Don’t worry. The dinosaurs will regroup to work in consort with each other and their politicians to put the squeeze back the other way, and the two competing sides — the proletariate Reddit Raiders and the One Percenters will blow the long over-rigged market into glowing shrapnel with their greed. Someone will make bank along the way. As that happens, here are some of the screamers:

Thanks to the people on WallStreetBets, now everyone gets to see the manipulations, even on the front page of the New York Times which has for years purposely ignored just how badly the market is broken…. A lot of wealthy people gave their money to those hedge funds to beat the market with and make a killing, and now their money was going down to heck in days or hours.

Almost everyone knows the system is broken, they just refuse to consider the possibility that the fraud will be disrupted, or that it will be allowed to fail. The old mantra “too big to fail” is a lie. NOTHING is too big to fail, and that includes the US economy, the dollar and the elaborate Kabuki theater that keeps them both afloat. All it takes is a single moment, an epiphany that the Ponzi scheme is unsustainable rather than unstoppable…. I think we are witnessing the beginning of a similar end of mass faith in fraud in the US.

Let’s hope so. Nothing is too big to fail nor too big to flail. It was, as I’ve always maintained, just a matter of when the rigged market’s numbered days would be up. Now that the rich see where the rest are going to eat them up, however, the market’s end-times battle is enjoined:

Not surprisingly, these moves have forced the establishment to intervene to some extent to essentially stop renegade traders from freely investing. Accusations are flying and deplatforming has ensued. The idea that the system is a functional fraud is gone; The world now knows it is a dysfunctional fraud, and collapse cannot be very far behind…. The collusion between banks, hedge funds and Big Tech is blatantly revealed. These relationships are supposed to remain hidden in the ether. They are obvious to anyone with any financial knowledge and sense, but they aren’t supposed to be wielded in the open. Conspirators aren’t supposed to admit to the conspiracy? Right?

But there is also this:

Some people might say the establishment has been forced to unmask by activists. Maybe. But, as I have been warning for many years, when criminals start openly admitting to their crimes it is probably because they think that it’s too late for anyone to do anything about it.

Thus, we come to the old “will they still get away with it” because they have the political side of the battle so fully controlled? Will they just find ways to stop the new gamers while keeping back doors and failsafes open for themselves? Will the market hold together long enough for them to do that, or will these news competing mega forces manage to blow it all up before the old gamesters can create a newly faked market?

As Brandon Smith says in the article above, which is exactly where I was going with this, too:

The point is, bankers and globalists have ways of avoiding responsibility for the disasters they engineer. When the con-game breaks, they always have patsies to take the fall.

It won’t likely be the big guys who take the fall now that their game is exposed in one small area of the market’s rigging. Heady in their short-term battle victory, the retailers are likely to again play the role of those who take it in the shorts as they always have; so, my advice to myself alone is just to stay out of the way:

This sets up a bizarre dynamic in which the money elites that constructed the economy like a time-bomb are treated like victims (or heroes) and the people telling the truth about the fraud are treated like villains and criminals. Are activist stock market traders and silver market guerrillas to blame for any crisis that erupts in the near future? No, of course not, but they will be blamed anyway.

And, so, the politicians and their apparatchiks have been engaged:

We will discuss whether or not the recent events warrant further action. We need to understand deeply what happened before we go to action but certainly we’re looking carefully at these events.

Janet Yellen, US Treasurer

Yellen’s words can be best translated, “We will intervene, but we must figure out how to do it so the old-world gamers still have game to play and win the end of this round, too. Be right back.”

As is always the case, when anyone “works with regulators,” it is only to ensure that Wall Street banks have the ongoing ability to “rape and pillage” retail investors with impunity….

Real Investment Advice

Even Gramma Yellen probably doesn’t know that is what she means because they all tell themselves they are saving the rich for the sake of saving everyone else. It is the only path to saving the world they know. That is simply the way their brains are wired: save the rich to save the rest.

Given that Wall Street’s regulators are effectively owned, including the Federal Reserve and the Treasury, there is little incentive to “fix” the system. It is much easier to punish a retail investor for playing the same game and calling it a victory to appease the media….

Wall Street turns a blind eye to their large hedgefund accounts that routinely participate in these illegal transactions because of the large fees they collect from them. These institutions are actively facilitating the destruction of shareholder value in return for short term windfalls in the form of trading fees. Wall Street, not retail investors, are the problem and are complicit in aiding hedge funds to create counterfeit shares…. As I stated last week, Wall Street wins again.

At the same time, some of those who see themselves as the people’s politicians are going after Robinhood because when things overheated and Robinhood was about to burn out of cash, it pulled the plug, locking the little guys into losses, which helped turn things back in favor of the rich:

The biggest remaining question, other than “when will the crash come,” is what the regulatory implications will be here. Alexandria Ocasio-Cortez and Ted Cruz have both called for hearings into what happened with Robinhood, and appear likely to get them. And Elizabeth Warren took the SEC to task for not being more involved: “To have a healthy stock market, you’ve got to have a cop on the beat,” she said. “That should be the SEC.” Robinhood in particular is also facing huge damage to its reputation, even if it avoids the scarier legal ramifications.


It can be ugly at the top.

The pros are reeling

Hearing the pain — or the observations of pain — from some of the big guys at the top gives some perspective of the move that just happened and more importantly how this play reveals the vulnerabilities of the market’s corrupt rigging.

Long-held strategies such as evaluating company fundamentals have gone out the window in favor of momentum. War has broken out between professionals losing billions and the individual investors jeering at them on social media. Meanwhile, the frenzy of activity is stirring regulatory and legal concerns, as well as the attention of the Biden administration.

“I didn’t realize it was this cultlike,” said short seller Andrew Left of Citron research, who has become a particular target of some of the investors on social media. “It’s just a get-rich-quick scheme.”

The Wall Street Journal

Really? You want us to believe you just figured that out after having played the game to get rich quick yourself? Now that it turned against you, so you’re complaining about how the game works? Some of us have been writing about the flawed rigging for too many years to believe you just figured out how it was rigged and are now the victim of the rigging you profited from!

The little guys take it in the end

It wasn’t all fun and games even for the Reddit Raiders:

The trader (or traitor?) who started a good part of the Gamestop (no don’t) action — Keith Gill — almost got wiped out as he made the mistake of thinking the hedgehogs would never learn from their pain, so he carried the game too far. He could have made millions more on his short-term play, but by staying in a day too long, he lost $13-million of what he had just amassed. He still closed highly positive, but that just shows the old money does quickly catch on to what is happening, and then the new players who are playing the old players get played back. It became play-back time:

The value of his stake dropped by $13.6 million on Tuesday as GameStop’s share price tumbled 60 percent, adding to a roughly $5.2 million loss on Monday.

The Sun

At the top, Gill, who led the pack, screamed out the ethos that drives much of the Reddit crowd and revealed the conspiratorial intention behind the trade:



(Edited for the faint of heart.) It was a give-it-to-the-rich moment.

Then the rich gave it back. Gill got out in time to save more than a third of his total winnings. Many do no not at this juncture in the frenzy. As I’ve often warned, people like Gill, in fact, are often what the old money counts on at the top of the market like a casino that gives out occasional huge wins to whip the rest of the customers up into a gambling frenzy. The retail crowd gets some big wins, they go nuts, and that way the rich can sell all they want to unload into the flaming market at its top and let the retail traders take the fall.

You see, not everyone who won big in January was of the Reddit Crowd. Sometimes the old money is in the right position and because it is the “smart money” it knows how to regroup to that position if it is not already caught with its shorts falling down:

Nine investors, including large fund-running institutions like Fidelity’s FMR and BlackRock … plus some well-positioned individuals like Chewy … co-founder Ryan Cohen watched the value of their GameStop holdings soar more than $1 billion apiece just this year…. All told, these nine investors made a total of roughly $16 billion on their GameStop stakes, just in January. That means they grabbed roughly three-quarters of the $20.4 billion gain in the company’s market value this year.

Even the guy who started WallStreetBets, says

It’s a little like watching one of those horror films where you can see the bad guy slowly going up the stairs…. You see this train wreck happening in real time.

The Wall Street Journal

What has been done has been done before. It was the same way for the all the new riders in 2000:

On Wall Street, urgent stupidity has one terminal symptom, and it is the belief that money is free. Investors have turned the market into a carnival, where everybody “knows” that the new rides are the good rides, and the old rides just don’t work. Where the carnival barkers seem to hand out free money just for showing up. Unfortunately, this business is not that kind – it has always been true that in every pyramid, in every easy-money sure-thing, the first ones to get out are the only ones to get out.

John Hussman, March 7, 2000

It was ‘party’ in 1999 that screwed the shorts, and now it’s ‘gang up inc.’ It didn’t end well in 1999 when the dot-com bubble popped. Been there, done that. Old scars.”

David Tepper, CNBC

It’s a long game long played.

In the latter stage of the bull market culminating in 1929, the public acquired a completely different attitude to the investment merits of common stocks. Why did the investing public turn its attention from dividends, from asset values, and from average earnings, to transfer it almost exclusively to the earnings trend, i.e. to the changes in earnings expected in the future? The answer was, first, that the record of the past were proving an undependable guide to investment; and, second, that the rewards of offered by the future had become irresistibly alluring.

Benjamin Graham and David L. Dodd, Security Analysis, 1934

You see? Same ol’, same ol’. The retail crowd arrives to feed on the chum only to find out they are the chum. It’ll be a strange new world if they actually win the market’s last round when the Everything Bubble goes down.

I have a good friend who once built a modest stake into a small fortune. Then along came a stock called Alphanumeric. In addition to providing an exciting name, it also promised to revolutionize the method of feeding data into computers. My friend was hooked. I begged him to investigate first whether the huge future earnings that were already reflected in the price could possibly be achieved given the likely size of the market…. He thanked me for my advice, but dismissed it by saying that stock prices weren’t based on ‘fundamentals’ like earnings and dividends. ‘They are based on hopes and dreams’…. [He rushed in], buying at $80, which was close to the peak of a craze in that particular stock. The stock plunged to $2, and with it my friend’s fortune.

Burton Malkiel, A Random Walk Down Wall Street, 1973

Last but not least, the inimitable Adam Smith

Obviously no one rationally would want to buy at the top, and yet enough people do to produce a top. It is really quite amazing how time horizons and money goals can change when there are stocks around that are going up 100 percent in six months. Finally it all turns into a marvelous carmagnole that is great fun if you leave the party early.”

Bottoms up … because they are.

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