Dakota Beacon

Membership in the establishment elite conveys more than access to political power and the ability to structure laws for the benefit of the members. It also means reaping financial wealth as well. Membership in the club of elites transcends political identification. Democrats, Republicans, and Independents ignore their political differences when befriending each other in the club. As a result, many leave political office wealthier than when they arrived.

Donald Trump was never a member of the establishment or the political elite. In their view he should never have acceded to the presidency because he played outside the bounds of their rules. Consequently, he was criticized and isolated even by many in his own party. Nevertheless, what conservatives always touted, but never attained, Trump accomplished with the moral backing of most Americans. This without the help of many conservative politicians. Hold this thought.

Well, well. In the financial realm turnaround is fair play as we shall see with GameStop, a gaming merchandise retailer. The discussion below sets the scene for an upset of the elite using their own devices in true Trump tradition.

In the stock market, a short sale of stock befits a way of profiting from a falling market. A short sale is the sale of stock the seller does not own. It is generally a transaction in which an investor sells borrowed securities in anticipation of a price decline. The seller of borrowed stock is required to return the shares to the lender before a set date.

For example, if an investor thinks that GameStop stock is overvalued at $625 per share, and is going to drop in price, the investor may "borrow" 10 shares of GameStop from their broker, who then sells it for the current market price of $625. If the stock goes down to $500, the investor could buy the 10 shares back at this price, return the shares to their broker, and net a profit of $1,250 ($6,250 - $5,000). However, if the GameStop price rises to $700, the investor would lose $750 ($6,250 - $7,000).

Short sales are considered risky and in fact involve amplified risk. When an investor sells short, they can lose a significant amount of money because theoretically a stock's price can keep rising indefinitely. As in our example, if an investor had a short position in GameStop (or sold it short), and the price rose to $2,000 before the investor exited, the investor would lose $1,325 per share or $13,250 total. There is technically no limit to the amount that could be lost. In some cases, investors and their hedge fund managers could end up owing substantial amounts of money.

Enter Robinhood, the commission-free investing website where a lot of people buy stock such as GameStop, a stock unloved by hedge fund managers. On the Robinhood platform traders aggressively bought GameStop stock driving up the price per share. Previously, several major hedge fund managers who did not think much of GameStop, encouraged establishment-types to sell short. They ganged up, so to speak, to drive the price per share down in order to buy the stock back making money for their already-rich elite clients. But their plan backfired. A particular server associated with Wall Street Bets (WSB) is a subset of the Reddit website called a “subreddit”. It has 10.5 million users and it is where participants discuss aggressive stock buys and options trading. These “subreddit” traders then went to the Robinhood trading platform to execute their trades. The hedge funds were caught in what is called a “short squeeze.” This meant the short-selling elites were squeezed into huge losses. Robinhood, TD Ameritrade, and E-Trade were pressed to restrict trade so that clearing houses could catch up and raise the necessary collateral to cover short sales.

The establishment certainly was not happy and took out their frustration on Robinhood pressuring them through social media to shut down the trading of GameStop. Sound familiar? Just like Big Tech shut down Parler. Just like the elites shut down any other free speech outlets on the internet. GameStop buyers did nothing wrong or illegal. They played the market the same way hedge fund managers do when they make the elite rich richer. But the elites determined this activity is off limits for non-elites. Big Hedge Fund shut down the GameStop action.

Here is the point. Ordinary folks are not permitted to make money at the expense of the elite. Hedge funds practice the short selling game often to make money for their clients at the expense of the ordinary investor by driving down the price of stock shares. Normal ordinary investors are not supposed to enter into this arena. That would violate hedge fund “community guidelines.” But an army of retail investors did play the game. In the uproar that followed, the ordinary guy and gal who gathered on the subreddit WSB to strategize a profit-making plan were accused in social media spreading misinformation, engaging in hate speech, and inciting “violence” – all the usual blarney directed at conservatives. That army of investors bid up the price per share of GameStop incurring huge losses for the hedge funds. On cue, Representative Maxine Waters, a member in good standing of the elite, convened hearings to investigate GameStop. And, oh, by the way, speaking of the Swamp, Biden Treasury Secretary Janet Yellen received $810,000 in speaking fees from other hedge funds that bailed out primary hedge fund losers in the GameStop short selling scheme.

GameStop’s motto is “Power to the Players.” In this gambit it was “Power to the People.”

Dennis M. Patrick can be contacted at (JavaScript must be enabled to view this email address).