Lee Hak-young column stock market overheating that a man bit a dog

Anger exploded in vested interests
‘Happy ending’ is difficult

Don’t loose money
To wash away the hostility between generations and classes
Honest Job Policy and System

Hak-Young Lee, Senior Editorial Advisor

“More than ten years ago, there was a once in a lifetime opportunity to punish those who caused great pain to us.” It was posted last month in the American online community Reddit’s stock discussion room’Wall Street Bethes’. The’Game Stop Duel’, in which millions of individual investors joined forces and fed a shot to hedge funds that sold short, is a topic of the world beyond Wall Street. On the 8th of last month, the stock of GameStop, a video game retailer that was $17.69, soared 19 times in about a fifteenth or so, and short sellers, who had bet on the decline in stock prices, suffered a loss of $23.6 billion (about 26 trillion won). The ant alliance has also hit a total of over $90 billion in several other stocks as well. Some hedge funds even received emergency bailouts due to the bankruptcy crisis.

Wall Street turned over when institutional investors, who were incomparable to individuals in terms of organization, information, and financing capabilities, were faced with a’real story’. Short-selling expert Jim Chanos lamented’the derailment of the stock market’, but cheers and admiration poured out such as’David’s victory over Goliath’ and’A luxury financial drama where the armies hunted the wolves on Wall Street’. Among the many metaphors, “a man bit a dog” (Holman Jenkins, Wall Street Journal columnist) attracts the most attention.

In 2008, the financial crisis from New York, which ravaged the global stock market as well as the real economy, caused tremendous pain to many people. It’s not just the money of stock investors that has blown away. As companies were rushing to bankruptcy, many people were slumped and lost their jobs. Nevertheless, most of Wall Street financial companies, which are the’causes of the crisis’, survived from bailouts rather than deserved punishment. After the stock market stabilized, Wall Street managers even received huge bonuses. It was the 2011 ‘Occupy Wall Street’ protests with unbearable people, but Wall Street did not budge.

The Wall Street group has become more and more a symbol of’greed’ for the bad guys, but it’s not just financial companies. Another online chat room on Reddit’s online community posted an accusation of the greed of General Electric’s (GE) executives, who are struggling with poor performance. “GE decided to give a special bonus of $47 million (approximately 51.7 billion won) to CEO Larry Cullf if the company’s stock price exceeds $10. We must work together to stop it.” Individuals’ anger against the’eat well and live well’ group has risen as the gap between the classes has been widened due to the corona crisis. The’Game Stop Incident’ will be recorded as a definitive example of how much the general public’s opposition is growing.

The problem is that the individual’s rebellion does not seem to end with a’happy ending’. As the Wall Street Journal awakened in its editorial, “Herbert Stein’s Law”, “If it can’t last forever, it will stop one day”, it is clear that offline game vendors cannot maintain a market cap of $13.5 billion forever. There are also a lot of concerns that there will be a vicious cycle in which individuals’ hostility toward Wall Street will increase, as many individual investors lose due to missed selling points in the process of finding their place in the gamestop stock price.

There is something to be pointed out over the excitement of “feeding the bad guys a room and feeling cool”. Are hedge funds and short-selling investors just villains? In the stock market, where passive investments that follow various indices are the mainstream, it is difficult to close their eyes to the fact that hedge funds and short-selling investors dig into the performance of listed companies to increase transparency and find appropriate stock prices. In June of last year, it was a hedge fund that caught the accounting corruption of Wirecard, a leading fintech company in Germany, and prevented investors from further damage.

Government officials and politicians should take the message of the’Game Stop Incident’ that is causing great resonance in Korea as well. The distortion of the market economy is serious due to the ultra-low interest rate and the full amount of money that has continued since before the coronavirus outbreak. It is also said that the young generation, who could not go to casinos and bars due to “corona distance”, flock to stock investment apps to relieve stress with “roulette games”. Above all, the despair of those who have been forced out of work and marginalized is growing. There is an urgent need for an honest breakthrough that will bring the economy back to life rather than releasing’or not’ money.

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