Thursday night.
I really hate it when I’m right. That means my worst, more cynical instincts were correct, and the reality matched my expectations, which had been low to begin with.
Today, Wall Street fought back. Just when Gamestop’s shares reached $500 in premarket trading, Robinhood, the popular fractional-share app-based trading platform, announced that they would freeze new orders on Gamestop and other over-shorted stocks that had been set to pop. One important distinction: they didn’t freeze all the trading on those stocks. They merely froze new orders. If you’d bought some of those stocks, you could only sell them: you couldn’t buy more. If you were a short-seller, you could buy and close out your position. In other words, the only new buyers were short-sellers. That was a highly efficient way to manipulate the market and drive the prices down.
Robinhood was joined by a couple of other online brokers. My own broker, Ally, decided to just stop letting people log in. Heh. That’s one way to do that, I suppose. Their social media people started out by apologizing for the delay and promising they’re working on it. They ended by posting this tweet, in which they blatantly admitted that their clearing firm, Apex Clearing, banned all new transactions on Gamestop – and didn’t deign to lift the ban until 3pm, at which point us peasants were finally allowed the mighty privilege of logging into our own investment accounts. (If you’re not a stock market person: it’s open only between 9:30am-4pm Eastern, Monday through Friday.) As far as I know, the only major online broker that didn’t sabotage its customers was Fidelity.
To quote a viral meme making rounds on Twitter, the market’s invisible hand was definitely very visible today. That was such blatant and arrogant manipulation… One of the online brokers’ VIPs said the quiet part out loud during a TV interview earlier today: he said they had to halt the trading to protect themselves. Ho hum. Some reports also claim that Robinhood had some liquidity issues and was presumably on the verge of collapsing if not for this intervention. They removed the block on trades toward the end of the day, and said they’ll allow limited trades tomorrow. How nice of them to treat their adult customers as if they were unreliable teenagers.
It’s very strange for me… I was into epidemiology most of my adult life (I’ve read almost every CDC memoir out there!) and I’m an avid investor. This week, everyone on social media has been talking exclusively about stocks, and a little bit about this pandemic we’re in. It’s so bizarre – it’s as if everyone is channeling my brain. I’ve stopped my recreational reading and gaming: I just can’t stop reading, and sharing, and commenting. Never before have I been so fully involved in the online zeitgeist.
There were repercussions, of course. Someone has already filed a class-action lawsuit against Robinhood. (Though whatever penalty they get, if any, won’t make a dent in the profits their partners made today.) A lot of politicians are saber-rattling, though some seem a bit confused and want to investigate common investors, and not the over-shorting situation that started this all, or the blatant collusion and market manipulation. More importantly, young people are very, very angry. This incident has shown them all just how rigged the game really is: play their game by their rules, and the moment you start winning, they’ll flip over the table. Long-term, I expect to see a lot of people abandon stock investing and move to other venues: precious metals, crypto-currency like Bitcoin, real estate, and who knows what else. What happened here, on January 28th, was unprecedentedly blatant: not the worst thing Wall Street has ever done – far from it – but the most blatant one. It will have giant ripples that will last for decades.
Toward the end of the day, all the stocks that had high activity levels earlier this week closed in the red, though they picked up in the afterhours. Tomorrow is Friday, when a lot of options contracts will expire. I’m very curious to see what strange new dirty tricks The Powers That Be will roll out tomorrow. If shares of those stocks end above certain critical price points, that will set off a giant short squeeze. VIPs would do anything to avoid that. Nasdaq’s CEO has already said that they’ll halt an entire stock’s trading if they see high levels of social media chatter. In a way, that gives them the license to manipulate the market any which way they want, provided they can point at some posts they didn’t like later on, if they feel like it. Might makes right, eh? Tomorrow will be ugly… I wouldn’t be surprised if the r/wallstreetbets community on Reddit got shut down completely due to all the external pressure from all the VIPs for whom they constitute an existential threat.
Nonetheless, it’s pretty funny that a prophecy came true: those crazy glorious bastards really did drive the price to $420.69. Today’s high point – though briefly – was $483. Not a bad run for a stock that was just $37 only one week ago.
In covid news, there is a disturbing new report from the UK’s Economist Intelligence Unit. (No, I’ve never heard of them either. Heh.) The report claims that after vaccinating all the critical population, Canada won’t achieve full mass vaccination until mid-2022. The report estimates that Canada will lag six months behind the US and Europe. Seeing as Canada has no leverage and no vaccine-manufacturing capacity, that’s certainly possible. One minor consolation: the EU would not be able to block the exports of Moderna’s vaccine, which is manufactured in Switzerland, which is not part of the EU. But Pfizer’s vaccine could definitely end up being held hostage because, once again, might is right – and there is no such thing as a fair game. Hopefully, that report is just a particularly disturbing exercise in creative non-fiction. Hopefully, the recent reports of just how few Pfizer doses Canada will get are wildly inaccurate. Hope everlasting…
Good night, y’all.