Before starting to count, it is important to understand the superficial functioning of the financial market: companies are quoted on the stock exchange and their securities vary according to investments. Compared to other less bizarre sports betting: like the pelotaris on the fronton, companies compete on the stock market. Spectators can choose one or the other depending on the characteristics of the pelotaris, in order to guess who will win the game. In the case of the stock exchange, according to supply and demand: as the demand for shares of a company increases, the prices of these shares increase; as the demand decreases, they decrease.

A less well-known operation for the general public is the sale of short selling or discovered. If in the purchase of shares you wager on the increase in their prices, with short selling you wager on the drop. In short, it is a question of taking the stock on loan with a very low interest, selling them at first and, with the expectation that prices will fall, buying them before returning them. A lot of money can be made, but it has its risk: they have a limited benefit, the total value of the stock borrowed can be earned if it sank; but the loss is unlimited, as the stock can grow to infinity. In other words, the opposite of what happens in an ordinary sale of shares. This operation is so ethically doubtful that it is banned in many countries, for example in most of Europe. But not in the United States.

Identifying companies with a downward trend is not that difficult, for example, because their business model has become obsolete. These are the ones that support the most sales in the subsoil and go down even further. There are investors who have been doing business for years with their decay. This is what was happening with GameStop. This chain of video game stores lived better times. The price of this company, both online and shopping, had been declining for some time. Therefore, most of its shares consisted of the short selling transactions against it by investment funds.

David and Goliath

Let us therefore tell the event this week: The idea of rising up and attacking the stablishment of Wall Street emerged on the Reddit website, where you can read More In the city’s Wall Street Bets forum, over two million users came together to organize a coordinated action and address the massive purchase of GameStop shares. This crew of shoppers is not made up of professionals, they're ordinary people, they're very scholarly. Those who, despite their modesty, have their rooms saved. Despite being small investors, the group is so large and has advanced so synchronized that they have achieved the result they expected. The capitalisation of this company has skyrocketed this week: 18% Monday, 93% Tuesday, 134% Wednesday…

 

 

 

 

 

 

This unexpected movement has caused the disaster of several major investors and vulture funds heading to the ravine with the autopilot through short selling operations. This sudden change in trend has forced the loss reduction actions to resume as quickly as possible. This casual settlement (short squeeze) has led to an even greater increase in the value of these shares. This has caused millions of people to have escaped their pockets within a few days. However, despite the fact that the rules of the game are clear, they have not assumed responsibility and, with the helmet, have denounced the project of this group of young people.

Even if it seems contradictory, this financial elite, which has so far ruled out any regulation of the free capitalist market, in order to avoid such unforeseen events, has been in favour of intervention in the media during these days. After the 2008 crisis, after extolling deregulation following the doctrine of the Chicago economic school, it has become clear: interference yes, but for their benefit. It's about to see how much they're going to be credited to, because let's not forget that we're talking about the rich people who have sown the U.S. power network for years.

Melvin Capital is one of the examples, one of the largest and most unjust investment funds in the world. It has complained that, among other things, the increase in GameStop’s shares could lead to its own bankruptcy, which has recognised a loss of $2 billion. Wall Street has allowed him to leave the short selling operations without meeting the deadlines, so he does not respect the contracts. Thanks to this trick, it has prevented crumbling and many other funds.

As if that were not enough, regulators started to review the GameStop quote. On Thursday, brokers, including applications such as Robinhood, which have been used most by these young people, paralysed GameStops stock purchases (not sales), revealing manipulation in favor of large funds. As a result, on Thursday there was a 55% drop in the value of this company. On Friday, yes, they went back and authorised “restricted” purchases.

What would you do in the future?

It remains to be seen what will happen from now on. These start-up investors have started revitalising 11 other companies such as Blackberry, Nokia or AMC. Companies far from their effervescence. And encouraged by the boom they've had, thousands of people have come together. However, let us not forget that the bubble has a high risk of explosion, as the GameStop quote does not reflect its real value. Not even those of the companies mentioned.

They were baptized as Bienhechores or as Robin Hood contemporaries, as most of them hit the table with the aim of destroying vulture investments. Those of Nostalgia, GameStop and save old companies. There will be someone who has come together to make money. But it would be desirable, instead of understanding it as an isolated anecdote, to analyze it and deepen it as a weak point of the capitalist free market. And that is that what happened shows that small, organized people can participate in the game of great people and win respecting their game rules. Even though the elites have managed to change these rules from one day to the next, even though they talk so much about equal opportunities, power can be called into question.