Wall Street Wins Again As GameStop Becomes Game Over

However, after this past week, that number has declined sharply. Such is the very essence of the Wall Street axiom:

“Pigs get fat. Hogs get slaughtered.” 

A lesson for all investors to learn here is the value of taking gains.” What often seems like a winning trade that can’t lose often is the one trade that loses the most. 

Unfortunately for Gil, not only did he lose a healthy amount of gains, he is about to become the scapegoat of the regulators.

Regulatory Action

Of course, to provide cover for Wall Street, the people owned by the major banks and brokerage firms jumped to the fore to “investigate” the matter.

On Thursday, Treasury Secretary Janet Yellen stated.

“We will discuss whether or not the recent events warrant further action. We need to understand deeply what happened before we go to action but certainly we’re looking carefully at these events.”

As is always the case, when anyone “works with regulators, it is only to ensure that Wall Street banks have the ongoing ability to “rape and pillage retail investors with impunity. 

How do you know this?

Because Janet Yellen had to get an “ethics waiver” to oversee the regulatory committee after taking more than $7 million from Wall Street firms in “speaking fees” since leaving the Fed. Considering that she didn’t even show up for some of the events, “speaking fees” are essentially a legal “bribe” for making sure “regulatory actions” favor your firm.

It wasn’t the “retail traders” that caused the problems with GameStop and other companies. The issue came from Wall Street firms, primarily hedge funds, “shorting” these stocks “naked.”

How do you know this was happening? Because GameStop had over 120% of its shares shorted.

Being Naked

There is nothing wrong with legally “shorting” a stock. Investors buy stocks expecting the price to rise. Shorting a stock is simply a bet the price will decline. Shorting stocks can hedge risk in a primarily long-equity portfolio.

It is currently legal to borrow shares from someone who is long the company and then sell those shares to someone else. When the price declines, the person “short” the shares, repurchases them at a lower price and returns the shares to the lender.

What is illegal is to sell shares short that you have neither borrowed nor made arrangements to buy. Such is being naked.”

So when the seller cannot cover or “settle” in this instance, the price of GameStop shares skyrocket as there were simply no shares to buy.

When the system provides the ability to sell an unlimited number of non-existent shares in a publicly-traded company, those firms have the power to destroy and manipulate the share price at will. 

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Alexandra Gray 2 months ago Member's comment

The problem is the trapped bears feel a need to post negative comments to protect themselves from losing millions.