The common man against the mighty. This is the narrative sold on social media. It’s the romantic idea of David versus Goliath. But is that true? A group of traders who greedily go through the roof and use networks to manipulate the markets can hardly be called a revolution. On Reddit, we find a lot of aspirants to be the next wolf on Wall Street. Are the Jordan Beforts of this world heroes of the revolution or mere profiteers from fraudulent activities?
The young man, seduced by the promises of big profits, opens an account with Robinhood and in a few days goes to the Reddit forums to get rich. Robinhood offers all kinds of products. And the company presents itself as a caring nun. The idea is to democratize the financial world. Apparently the “common man” is a little angel who was taken from heaven. That is, it doesn’t know greed. She’s innocent like a Disney girl. And the big bad guy is Wall Street: the banks, the big funds and the institutions. There when there is greed, deception and manipulation. And above all, exclusion. Robinhood is the place for the “common man”. The victim. The innocent. The excluded.
Read Next: Rise Of The Robinhood Dealers: Wall Street In Trouble?
The mere fact of being an “ordinary man” seems like safe behavior to benefit from bad practice. In other words, the “common man” is always innocent. The mighty are always guilty. That is the mindset of the resentful. You check out Twitter and Reddit and learn the mindset of these new traders. Jordan Berfort is a little boy by comparison. The difference is that everything is now an anti-system revolution. We are all heroes. Of course it’s not about the money. It’s about noble ideals. I mean, in the time of the truth, it’s all a matter of storytelling.
Do you remember the 1987 movie Wall Street? “Anacott Steel loves blue horseshoes.” In the famous scene, the phrase was spoken on a payphone. But nobody uses public phones anymore. Everything is digital now. Today’s Bud Fox is on the Reddit forums. This practice is known as “pump and dump”. And it’s older than the suction cup. Pump and dump is a way of making money by increasing the price of a cheap stock that is bought through manipulation or forgery of information and then sold at a higher price.
Was a Bud Fox (an ordinary man) a Wall Street revolutionary fighting greed? Participating in pump and dump programs from online forums is not an investment. That doesn’t make you a successful trader. That doesn’t make you part of a revolution. Gordon, Bud, and others certainly made a lot of money playing the Anacott Steel game delivered to Sir Lawrence Wildman. Similarly, Robinhood traders have made a lot of money using various pump and dump systems and hurt various investors. But the idea of romanticizing these cheating games as part of the common man’s struggle against the established powers is too ridiculous.
The debate over whether or not a thief who steals another thief has 100 years of forgiveness already complicates matters. Does one evil justify another evil? Let’s be honest This about the revolution is a delusion. It’s greedy and unethical here. The revolutionary narrative is used because everything is one great novel now. But deep down, it’s the same old story. People who want to make money quickly. It’s the story of Bud Fox and Jordan Belfort. Everyone says they hate Gordon Gekko, but deep down everyone wants to be like Gordon Gekko.
Read Next: The Price Of Bitcoin: What Are The Predictions?
Now the goal is silver. The silver market is growing and everything seems to be suggesting that it is a move being driven by the Reddit forums, much like GameStop. Should we buy silver? One might be tempted to take these steps for a quick win. The problem is that the puppets are known, but not the puppeteer’s intent. People who were lucky with the GameStop move didn’t know which song they were dancing to. We have to remember that it’s all a joke. What happened to Gordon Gekko? They gave him his own medicine. The silver movement can be orchestrated to harm the participant. It is unknown.
I would recommend staying 100% off the pump and dump schematics on the forums. When it comes to these coordinated attacks, you never know for sure whether you will be on the losing or winning side. There is a story that is not told. The short positions in the GameStop case were not wholly owned by institutional capital. There was a lot of money from small investors who listened to the forums. They were the cannon fodder for the manipulators. The truth is that there was institutional capital on both sides and retail capital on both sides. Revolution or fraudulent scheme?
Everything is easy to analyze in retrospect. And there are always people who post their earnings for listening to a forum. Unfortunately, more people lose than people gain in these forums. I have had a lot of calls lately from young people wanting to get into the world of Robinhood-inspired investing. Everyone wants a simple recipe to make millions overnight. They want a tip. Buy something? How much will i earn?
Read on: Arguments against and for: Is Bitcoin a bubble?
Dear millennials. They didn’t invent greed or retail speculation. Fraud, manipulation and deception have been around for a long time. Manipulating a stock through a forum or pumping and draining the silver market is not a revolution. It’s a scam. Sometimes money is made. And sometimes not. But a scam is a scam. Jordan Belfort knew exactly what he was doing. He knew he was making money fraudulently. He didn’t openly admit it, but at least he was honest with himself. No convenient narrative was invented.
A few days ago I had the opportunity to hear an interview on German news broadcaster DW with one of these Robinhood dealers. During the interview, the interviewee said with a smile that he did not mind losing all of his money in this program because he understood it was a good thing. According to him, it was an attack on Wall Street. You’re wondering: what the hell is he talking about?