The game is rigged, and it’s not for you

Bobby Verhey, RubicOnline|February 9, 2021

Flickr Creative Commons

Wall Street became the center of national attention last week as the soap opera of $GME played out.

For a couple days in the end of January, a group of Reddit vigilantes and average people flipped the script on the hedge funds of Wall Street. After years in which these hedge funds and banks have made billions in the stock market, profiting off of the failures (and even artificially-crafted failures) of American companies’ stocks via high-leverage shorts, they finally got caught overexposed. A group on Reddit, accurately named “WallStreetBets” for the way they treat the stock market as a casino, learned that some hedge funds had been short selling, or betting against, GameStop stock ($GME) so much that they had tanked the price to below what investors call the Fundamental price. The members of WallStreetBets recognized that if enough investors began to buy $GME then the price of the stock would go up and trigger a short squeeze sending the stock “to the moon”. A short squeeze skyrockets the price of the stock as the hedge funds that held short positions would have to buy back the stock to cover their losses, further increasing the stock’s price.

The plan was executed perfectly. From Thursday, Jan. 21 to Wednesday, Jan. 27 the stock increased by nearly 800% closing with a price of $347.51. Many of the hedge funds still held their position in the stock hoping that the price would go down so that they would be able to cover their shorts, however the rise in price cost them billions. The story became national news, as it appeared that the “little guy” who was held responsible for paying tax bailouts for Wall Street’s mistakes in 2008 were finally beating Wall Street at their own game, and many new investors were ready to jump on the $GME ship Thursday morning when the markets re-opened.

However, the rules were changed and a stark reminder was sent out that the free market is only truly free for those in control of the game.
Major brokers like Robinhood and WeBull made it so that investors on their platforms would not be able to buy $GME and other potential short squeeze stocks. However, they continued to allow the stock to be sold resulting in a plummet of the stock price. By day’s end, the price had gone down by nearly 50% which allowed hedge funds to get out of their shorts at a significantly cheaper price.
The move to “limit trading” was claimed by Robinhood as a way to protect inexperienced investors in a time of market volatility.

However, public figures including the likes of Congresswoman Alexandria Ocasio-Cortez, Tesla CEO Elon Musk, Barstool Sports founder Dave Portnoy, CNN’s Chris Cuomo, and Senator Ted Cruz heavily criticized Robinhood’s decision and claimed that the move was not made to protect investors, but instead hurt them. They argued that the move clearly benefited hedge funds, who had been hemorrhaging money prior to the stoppage.


The move looked even more shady when it was revealed that Robinhood uses the Citadel, a hedge fund involved in the shorting of $GME, as a partner to help complete 60% of its trades. Without the Citadel’s support, Robinhood cannot operate. Because of this, conspiracy theories and logical connections were made that all seemed to lead to the same idea: The game is rigged.


Despite the entire might of the internet, the system in place, in which these Wall Street funds make a ton of money when they’re right and are bailed out when they’re wrong, held strong.
Anyone with two eyeballs and neurons could figure out that what took place was shady. Robinhood and the hedge funds made such a felonious move in broad daylight for the world to see. The sad part is they didn’t even care that the public could see their under-the-table deals. They know that they control the game and that if they get caught, they are only going to face a small slap on the wrist. So, they cheated. They changed the rules. They saved their hedge fund buddies, while costing the millions of average Americans the savings they had invested into these stocks. They got caught. And… they didn’t care.

Over a week has passed now, $GME has gone down 80% as the limits on trading have continued, and the story is beginning to drift away from the nation’s focus. However, while the story goes away, the message that has come out of it is clear.

The game was made for Wall Street, not you. So, stay out of their business and let them make their billions. And if they’re wrong (of course) you’ll be there to foot the bill.