The TRUTH About WallStreetBets

This is the truth about WallStreetBets that's behind the rise of Gamestop stock

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What happened to Gamestop (GME)? What happened to AMC stock? Lots of small cap stocks have risen over a thousand percent this year thanks to a group of people. Wallstreetbets is a subreddit or sub-community of reddit. Thanks to their efforts, they revealed one of the biggest flaws about the stock market which is the perception that we have a "free market".

First, it started with Gamestop. Usually when a stock goes up in price, it's because of a good quarterly earnings report or things like sales growth. Instead, Gamestop went up because of a technical exploit where people realized that they could drive up the price of a stock by buying up stocks that hedge funds thought would go down (that's called shorting a stock). By buying up all the inventory of Gamestop, it drove the price higher which forced the hedge funds to cover their positions by buying more stock from the people they borrowed the stock to begin with but at a much higher premium. This created an infinite feedback loop of the price skyrocketing higher and higher. Even Elon Musk tweeted "Gamestonk" which also helped grow the Wallstreetbets community to several million people - thus creating a miniature hedge fund of its own. This is where our story begins.

For the first time since I’ve ever been alive, we - the retail investors, are winning on a public level. In order to understand which stocks to buy and why - you have to understand situation and how each side makes money. One one hand, we have institutional investors or hedge funds. These investors are made up of extremely wealthy people that manage money for other people that you will probably not be able to invest with - because you don’t have enough money. Since the beginning of time - hedge funds ruled the stock markets. Until now.

This is where the retail investors come in. We realized this week that our strength in numbers allows to make a counter trade against hedge funds in order to make a profit and beat them at their game. We forced hedge funds to spend more of their money covering their positions which is why you’re seeing people on reddit become millionaires. But the best part is who is paying for people to get rich. Companies like Melvin Capital and Citron which have lost over 5 billion dollars trying to short GameStop. Hedge funds are bleeding money to the point of needing a bailout. But the story gets even deeper.

As a result, we had all the fintech companies like Robinhood and WeBull, including brokerages like TD Ameritrade and Charles Schwab (and the NASDAQ) shut down trading of those stocks which revealed to us how flawed the financial system is because it's rigged to help the wealthy hedge funds and protect them from being beaten. This understandably upset a lot of people but the again, the truth is more nuanced. The fintech companies are middleman between the buyers (ourselves) and the market makers. Ironically, it was Citadel that was the market maker for Robinhood. All Robinhood does is route our order flows through to them. The theory is that the entity responsible for shutting down trading could very well have been someone other than the brokerages people are looking at. We don't have all the facts yet.

Regardless of who we blame, this week revealed to us the need for DeFi, decentralized finance. Before this point, words like Bitcoin, Blockchain, Decentralization were just marketing words used to hype up cryptocurrencies. Instead, we found out just why we need them. To prevent censorship and to allow a free market to truly exist, we need to build investing platforms that have no central point of failure that cannot be shutdown by greedy corporations.

As far as which stocks you should buy - no one knows which stock will go up and you should be very careful investing your money into these short term trades because people will lose money - especially if this censorship and control continues to exist. What wallstreetbets did this week for the stock market was nothing short of miraculous and we're seeing history unfold in front of us.

*None of this is meant to be construed as investment advice, it's for entertainment purposes only. Links above include affiliate commission or referrals. I'm part of an affiliate network and I receive compensation from partnering websites. The video is accurate as of the posting date but may not be accurate in the future.

Видео The TRUTH About WallStreetBets канала Andrei Jikh