Decentralisation of Opportunity: Anti-establishment, Truth and “We The People
In the last week, the financial markets have witnessed an unnerving phenomenon resulting from organised effort of retail traders to challenge the big players on Wall street and it has been very successful so far — not least the attention it has gotten in traditional and social media. This organised effort played out specifically in the unexpected rise in share prices of GameStop Corp. (GME) and AMC Entertainment Inc.(AMC). What precipitated this unexpected reaction from the “little guys” (often seen by wall street as the suckers to take lunch money from), was the audacious move albeit normal in hedge fund circles, by Melvin Capital to short 140% of GME stocks in order to profit from GME going out of business. Retail traders organised within the sub-reddit r/wallstreetbets and mounted a successful counter-assault, which has stunned Wall Street, regulators and financial pundits alike. GME stock price as well as AMC and others have risen up to 1700% within a few days of trading with significant volatility experienced in post-market trading.
Wallstreetbets not bids
Could this be the beginning of viral stock trading by online groups outside Wall street? Are these free-spirited millenials (most of them are) in it only for the profit? There is no denying that a group made up of over 6 million members are motivated by ideology alone. Some are in it for the profit opportunity and have made significant sums in the last week. However, the general sentiment in the subreddit (before it went private on January 27) points towards an ideological motivation. Posts have alluded to the fact that in 2008, wall street got bailed out for bad behaviour and no CEO went to jail (moral hazard); of how the guy on “main street” became a bagholder(term for holding a losing position) with no bail-out from the government. Reading threads from the subreddit reminded me of the same argument put forward in 2009, when a certain extremely clever individual under the pseudo name of Satoshi Nakamoto, published a white paper of a peer-to-peer electronic cash system and alluded to the moral hazard in wall street and the fed as seen after the 2008 crisis as his motivation to work on the trustless innovation — Blockchain. This led me to ponder on a larger lack of trust in the establishment everywhere around the globe and how that has resulted in the people employing the use of social media to challenge the current power structures.
It will be reckless to write-off the r/wallstreetbets crowd as not knowledgeable enough and stupid. Just like Satoshi and the Bitcoin community are made of very smart individuals who have done their homework and continue to do so. In both cases, the mainstream media was viewed as part of the cover-up, further alienating the protesters in their search for equality in opportunities. How ever one perceives, we all have to admit that this search for transparency in the establishment and viewing the media as in on it, led to the rise of Trumpism and the election of Donald Trump as the 45th US President; as well as the 74million+ voters who casted their votes in 2020 still in his favour irrespective of what he was perceived as. Main street is crying out for an end to being treated as clueless, and will take action if they do not get what they want.
“Robbing-Hood”
The dark side of this anti-establishment phenomenon is what manifested on January 6th with the storming of the US Capitol. Irrespective of the deductions one may make from that incident; from the WallStreetBets community or from the Bitcoin and Cryptocurrency movement, one cannot ignore the wave of disruption (positive and negative) that will ensue in all areas where main street perceives the chips biased in favour of the elite. In this particular episode, the end remains uncertain especially with the realisation that brokers like Robinhood, ETrade and IG have been suspending bids on specific stocks GME, AMC, NOC, NAKD — manipulation in plain sight, again in favour of Wall street and hedge funds. Brokerages have clearly taken sides and a brokerage as Robinhood which built its reputation on giving the common man and woman unfettered access to the markets may have just tarnished their very foundation by this one move.
It is my prediction that this wont be just an isolated incident of the public taking the fight to the elites but symptoms of a wider global trend where citizens of nations use the power of decentralised media to change institutional behaviour. The weapon of choice is the use of social media platforms. There will be more Arab Springs, more Brexits; more Trumpism and more WallStreetBets until the point where the current power structures inject a great deal of transparency and accountability to their actions. The decades ahead are pregnant given ‘the pursuit of truth is now in the hands of “We the people” who will continue to push for the “decentralisation of opportunity”. It pays to not discard the impact of these sentiments.
Affaire à suivre!
