MESSAGE
| DATE | 2021-01-29 |
| FROM | Ruben Safir
|
| SUBJECT | Subject: [Hangout - NYLXS] you are watching a repeat of the 1929 stoclk
|
> It is a tinderbox, brought to you by your 24/7 need to be on your cellphone.
>
GameStop, Bitcoin and QAnon: How the Wisdom of Crowds Became the Anarchy
of the Mob
Christopher Mims
9-12 minutes
This was the week that the stock market became the stonks market. For
those of you unaware, “stonks” is an internet meme, an absurdist play on
the word “stock” that’s now almost unavoidable on social media. On Jan.
26, Elon Musk, recently the world’s richest man, tweeted “Gamestonk!!”,
and received more than 200,000 likes. It included a link to the
WallStreetBets forum on the internet message-board platform, Reddit.
WallStreetBets has become the communications hub for a phalanx of
bored-at-home, stick-it-to-the-man retail traders who have cast
themselves as the heroes in a David-vs.-Goliath battle against hedge
funds, big banks and other avatars of America’s elite. These include the
“blue checks” on Twitter, talking heads on CNBC, even Robinhood, the
trading platform on which many of them had been buying options, until it
halted some of those trades Thursday morning. (The financial
machinations of this battle have been described in fascinating detail by
my colleagues, including an interview with the man who started, then
subsequently lost control of, WallStreetBets.)
But this is a tale of something much bigger and more consequential than
the fate of a single stonk, I mean stock, or even, as homebound day
traders look for other quick wins, a handful of them. What’s happening
on WallStreetBets is of a piece with other internet phenomena, from
bitcoin mania to the online conspiracy theories of QAnon, and the events
leading up to the Capitol riot.
Research on how innovation happens has revealed that small groups of
people, not large networks of them, are often the best at incubating new
ideas, which only later spread to the world at large. But in the case of
recent collective manias, people are developing ideas that may carry a
kernel of truth, but are largely fictions, often crafted in defiance of
authorities—and of authoritative information.
Once cultivated in small, anything-goes online forums, these fringe
ideas-turned-movements are amplified by a powerful complex of
social-media giants, including Facebook, Twitter, TikTok and YouTube.
The algorithms on these platforms that select for the most engaging
content—that is, content that moves, inspires and/or terrifies us—push
these notions in front of as many people as possible, and eventually
into the mainstream.
Whereas these phenomena might have once remained virtual, bounded by the
internet, they’re now breaking into the “real world.” What begins as
idle forum chatter now has the power to rock political and financial
power centers, at least temporarily.
The process, in its current form, privileges a kind of gleeful anarchy,
whether it’s the blow-up-Washington populism that led some to
participate in the Capitol riot, the end-the-global-monetary-system
mind-set of some bitcoin enthusiasts, or the idea that by continuing to
buy and hold GameStop stock and call options, an army of keyboard
warriors could simultaneously end wealth inequality and bring down
“predatory” hedge funds.
In this case, their method was buying shares and options of GameStop in
order to squeeze short sellers who were betting the stock would drop.
The result was a buying frenzy that lofted the stock’s value into the
stratosphere, well beyond any price at which it reflected a plausible
future for the fundamentals of GameStop’s business.
That might sound like hyperbole, but it’s precisely the hyperbole that,
for the past few days, has been splashed all over the WallStreetBets
forum, the Discord chat server associated with it (before it was shut
down for what Discord said was repeated hate-speech violations),
Twitter, and corners of TikTok and YouTube.
Thousands, perhaps tens of thousands, of the retail traders behind the
rally in the price of GameStop’s and other stocks clearly see themselves
as revolutionaries. And their fervor is so intense that politicians like
Rep. Alexandria Ocasio-Cortez, member of the House Financial Services
Committee, declared her sympathy with them. When Robinhood and the other
trading platforms that had enabled this run-up in the value of GameStop
disabled the ability of traders to continue buying it, Ms. Ocasio-Cortez
called for an investigation. Sen. Ted Cruz, rarely a fan of Rep.
Ocasio-Cortez’s policy prescriptions, tweeted “Fully agree” in response
to her declaration. (Donald Trump Jr. and Sen. Elizabeth Warren have
also sounded off—on the same side of the topic.)
“I do think this is a seminal moment. I don’t think we go back to a
world before this because these communities, they’re a byproduct of the
connected internet,” Reddit co-founder Alexis Ohanian said in an
interview with CNBC on Thursday. “Whether it’s one platform or another,
this is the new normal,” he added.
As GameStop’s stock price continued to climb, these investors egged one
another on to continue buying and holding the stock, posting screenshots
of their gains, jibes about the consternation their mania was inspiring
among Wall Street traders and career stock-market observers, and memes
borrowed from Batman and Lord of the Rings.
On WallStreetBets, one popular post, typical of the genre, urged
investors to “Buy High, Sell Never,” a subversion of standard investing
wisdom that was reminiscent of the Bitcoin ideology “HODL” (a meme
variation on “hold”). Some cryptocurrency investors believe the key to
getting rich from bitcoin is never to cash out, since its value will
only appreciate in the long run. In line with that thinking, another
popular WallStreetBets post declared that at its current rate of
appreciation, GameStop’s stock, which had been trading at less than $20
a share at the beginning of January, would eventually be worth $5,000.
The way in which WallStreetBets members convinced themselves that their
quest was just and good echoes the logic, if not the sentiment, found in
QAnon forums. Both are what philosophers call “closed epistemic
systems,” worldviews that are unaffected by information that contradicts
them. It’s confirmation bias on steroids. It’s also the logic of a cult,
achieved with some of the same psychological tricks.
Those tricks are amplified by the mediums on which they spread. Ample
research has described the addictive potential of social media, and apps
like Robinhood, which make trading stocks feel like gambling, also have
the same potential. Put the two together, drop them into a stew of
sensation-seeking young people with limited entertainment options during
a pandemic, and it’s hardly surprising that all of this has come to pass.
Share Your Thoughts
Are social media platforms doing enough to manage the rise of large
subcultures that reject traditional authority and expertise in favor of
alternate views? Join the conversation below.
That the price of GameStop’s stock would likely peak and even crash,
leaving some of these gung-ho investors with heavy losses, was not a
headline that made it to the top of WallStreetBets. Commentators who
brought it up in other forums were attacked. The usual mechanisms of
online harassment—trolling on social media, even menacing and sharing
the contact information and addresses of short sellers and their
families—have also come into play.
Meanwhile, as the GameStop buzz built, attention seekers with large
followings but no particular qualifications piled on, from a
self-described “verified nobody” with over 200,000 followers to rapper
and failed Fyre Festival impresario Ja Rule. In unison they amplified
the message that what was going on was a popular rebellion, and anyone
who said otherwise was a shill for the systems that oppress the majority
of Americans.
In a meme recently appropriated by the WallStreetBets crowd, the Joker,
portrayed by the late Heath Ledger, sets fire to an enormous pile of
cash. “It’s not about the money,” he says. “It’s about sending a message.”
As we see internet-fueled, alternate-reality manias continue to
proliferate, the lesson is this: These freak outbursts are not going
away. From the Rohingya ethnic cleansing in Myanmar and WhatsApp-related
killings in India to the Capitol riot and the stock-market takeover,
these individual phenomena are each unlikely, but social media all but
guarantees more of them. The leverage the algorithms provide for those
who wish to spread these ideas, however extreme, gives them the ability
to reach us all.
How Options-Trading Redditors Fed the GameStop Frenzy
0:00 / 4:14
3:26
How Options-Trading Redditors Fed the GameStop Frenzy
How Options-Trading Redditors Fed the GameStop Frenzy
Wall Street is in an uproar over GameStop shares this week, after
members of Reddit’s popular WallStreetBets forum encouraged bets on the
video game retailer. WSJ explains how options trading is driving the
action and what’s at stake.
For more WSJ Technology analysis, reviews, advice and headlines, sign up
for our weekly newsletter.
Write to Christopher Mims at christopher.mims-at-wsj.com
--
So many immigrant groups have swept through our town
that Brooklyn, like Atlantis, reaches mythological
proportions in the mind of the world - RI Safir 1998
http://www.mrbrklyn.com
DRM is THEFT - We are the STAKEHOLDERS - RI Safir 2002
http://www.nylxs.com - Leadership Development in Free Software
http://www2.mrbrklyn.com/resources - Unpublished Archive
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http://www.brooklyn-living.com
Being so tracked is for FARM ANIMALS and extermination camps,
but incompatible with living as a free human being. -RI Safir 2013
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