“Wall Street’s greed took away my teens.”

“Even if you drop the stock price, I will fight until the end”


This article was posted on the online community Reddit’s investor community’Wall Streetbets’ (WSB) at dawn on the 28th (local time). In the form of an open letter, they expressed their willingness to “go to association” toward Wall Street’s hedge fund company’Melvin Capital’.

WSB is a base for individual investors, which has become a hot topic by putting hedge funds such as Melvin Capital into a corner through the so-called’short selling confrontation’. They bet on the decline of a stock called GameStop and intensively bought stocks against hedge funds that started selling short, and soared stock prices. This is the first Wall Street incident in which the’ant’ surrendered a huge hedge fund.

Why did they jump into the’battle’ that looked so reckless? The investor who sent an open letter that day cited the’experience of the 2008 financial crisis’ as the reason. At the time, he said, “I vividly remember the tremendous impact of Wall Street’s irresponsible behavior on the lives of people around me.”

He said he spent his teenage years with the aftereffects of the subprime mortgage crisis. Fortunately, he didn’t lose his home, but as his parents’ income drastically declined, he was said to have endured eating pancakes and milk powder that had been piled up in the food storage for a year. Those around me who lost their homes faced a more difficult situation. He watched his aunt live on top of him and painfully looking for a job, and his friends said he got used to the taste of tomato soup made from ketchup.

The investor said, “Melvin Capital symbolizes everything he hated during that period.” “The Melvin Capital of today exists because Wall Street financial companies manipulate markets to make money, exploit companies (by short selling), and are not punished even though they have committed acts that violate the law, and they have received bailouts.” Insisted.

“I recently poured out my monthly rent to buy GameStop stock,” he said. “Because I have a once-in-a-lifetime opportunity to condemn those who suffered millions of people 10 years ago.”

Reddit users also expressed sympathy by posting 7700 comments to his post. Each of them was accompanied by personal histories, such as anecdotes of witnessing him jumping on the track in 2008 due to financial difficulties, and the story of a mother who lost his job and struggled with no help. Regardless of the truthfulness of individual stories, one of the main drivers that mobilized numerous individual investors in GameStop’s’short selling confrontation’ was the public’s resentment against Wall Street, which has accumulated since the 2008 financial crisis.

Bloomberg also commented, “It’s’greedy’ that usually boosts the stock price, but there’s’anger’ in the bubble of GameStop.” It is said that the frustration and anger of American middle-class children who suffered from the financial crisis as a child became the background of collective action. He said, “It is not easy to analyze the phenomenon because I have never seen’an angry bubble’ like this.”

CNN made a similar analysis. Reddit’s users are Millennials and Gen Z, and they are the generation that led the 2011’Occupy Wall Street’ protest. In fact, Reddit users raised prices by intensively buying stocks (AMC, Blackberry, etc.) that hedge fund companies took short selling positions in addition to Game Stop.

The open letter was posted after midnight on the night of the 27th, when hedge fund companies Melvin Capital and Citron surrendered a white flag with losses. It was also a time when after-hours trading fell after Gamestop’s stock price rose by 134% to $347 amid offensive by individual investors.

According to financial analysts and others, Melvin Capital is estimated to have lost about 30% of its assets. Melvin Capital is an investor that boasts the best performance on Wall Street, operating $12.5 billion (about 1,390 trillion won) until the beginning of this month.

Reports of “individual investors won” as the two hedge fund companies knelt down, but this was not the end. On the 28th, the stock price of GameStop fell to -44% ($193). The intraday low price was -67% ($112). Some stock trading applications, such as’Robin Hood’, were highly influenced by limiting transactions, claiming that the stock price fluctuates. Gamestop’s’buy’ button did not work, only the’sell’ button was activated. On the other hand, short selling transactions of hedge funds were possible.

Then, voices of criticism came out from various fields, including the political world. On the 28th (local time), Democrat Congressman Alexandria Okashio-Cortez tweeted, “It is unacceptable. While hedge funds are free to trade as they wish, Robin Hood blocked private investors from trading. As a member of the House Financial Services Commission, if necessary I will support the hearing.” Republican Senator Ted Cruz also said “I totally agree” with Okashio’s Twitter. Tesla Chief Executive Officer Elon Musk, who has expressed antipathy against the short-selling forces, also commented, “Of course,” in a tweet from Congressman Okashio.

Eventually, the US Congress decided to hold a hearing on the GameStop incident, and New York prosecutors started investigating Robin Hood.

According to the founder of Reddit Wall Streetbets, the individual investor group, which had only had thousands in 2018, surpassed 1 million in March 2020, and has exceeded 2 million when the recent GameStop incident.

Reporter Jeong Eun-hye [email protected]