: Stop laughing about GameStop’s stock mania — no, really

United States

After watching a third consecutive day of Redditors helping to push the stock of a beleaguered retail chain to an undeserved record valuation of more than $ 10 billion Tuesday, I saw rapid fire jokes on Twitter about the situation.

So I fired off a response to the general tone of the conversation.

“I get that people think it’s funny when bad things happen to Wall Street types, but this GameStop GME, +67.87% thing is not a joke,” I tweeted. “These are stock traders conspiring to manipulate the markets in open view of us all and using the ‘nah, its for the lulz, and the other side sucks’ as an excuse.”

The response to my tweet was a cacophony of anger, even though I had been saying similar things for days and I was not alone in my assessment. The overwhelming sentiment was that I was siding with Wall Street in what has been presented to the larger public as a battle between big banks and the little people — a view that the message board has enthusiastically gotten behind.

But look at how I described the people on WallStreetBets: Stock traders, just like whatever your vision of “Wall Street” probably entails. They are doing this for the money, not for any sense of “justice” against hedge funds or a good chuckle.

Many posters trade for a living, and not all of them are day-trading their Tesla profits — Wall Street knows about WallStreetBets as it makes its bets, at the very least, and has not been excluded from GameStop’s rise. With its own share of most pies and high-frequency traders front-running the Robinhood crowd, the sheriff of Nottingham will get his tax no matter what.

Read: Here are other heavily shorted stocks shooting higher

Two links in the same chain

I see two links in the same chain, and I am not choosing one over the other. I am — as the name of this site demands — watching the market. And I see a group of investors acting in concert to artificially inflate the valuation of an asset beyond what is rational, which really smells like market manipulation.

And they have attracted an army who promise the group to have “diamond hands” until the very top, as support and exultations to “HODL” swarm them from the others on the board. In the end, some of these unsophisticated investors are likely to be left holding the bag on GameStop at an unreasonable valuation.

You may think it’s funny to value GameStop like it’s 2007 again and hurt some hedge funds in the process, but you might not think the next target is funny, nor the next, nor the next. You won’t laugh when you read the eventual feature about a teenager misplaying GameStop options on his dad’s account and costing them the house, or a first-time investor putting their savings into GameStop just before it all fell apart.

The dot-com bubble had the Yahoo message boards, which eventually led to pump-and-dump charges against individual investors, and the current market hysteria will forever be tied to Reddit. A Reddit spokeswoman told MarketWatch that its policies “prohibit posting illegal content or soliciting or facilitating illegal transactions.”

“We will review and cooperate with valid law enforcement investigations or actions as needed,” she said in an emailed statement.

I don’t know how regulators will eventually seek to address what is happening on WallStreetBets, nor if prosecutors will ever attempt to untangle who is the most liable and levy charges. But a hammer will come down in some way in an attempt to dissuade this type of behavior.

And it won’t be funny.