Robinhood app: Stealing from the poor and giving to the rich.


During the month of January, an outdated electronics retail company GameStop would become the battleground for a war between Wallstreet and the American people. Reddit community “wallstreetbets” amassed nearly 10 million followers to simultaneously buy up stock and call options of GameStop— rocketing the price to the moon. One day a 50% jump, followed by a 92% jump, then finally a 134% single-day increase on January 27th. In total GameStop stock rose 1,914% in just under one month, making millions of everyday rookie investors a small fortune. The dramatic price increase forced many hedge funds (such as Melvin Capital) who were shorting GameStop to sustain massive losses.


Hedge funds don’t play by normal rules. Typically aiming for on average a 10%-20% yearly return, a single month loss of 50% meant Melvin Capital, run by Gabriel Plotkin would do everything humanly possible to reverse the situation. This would include leveraging personal connections to completely halt the buying of GameStop, just as it was gaining national attention which would potentially double or triple in price. Brokerages including Robinhood, Charles Schwab, TD Ameritrade, and more without warning completely removed the ability to buy GameStop stock, but allowed it to be sold. Limiting rookie investors from buying the stock resulted in the price plummeting and ending the losses for Melvin Capital. Yet, this came at the cost for the millions of Americans who were buying and profiting off GameStop completely fairly. 


When a hedge fund loses money, they bend the rules to benefit themselves, but when a retail investor loses money it’s just business as usual. Hedge fund managers went on TV saying the trading halt on GameStop was “saving retail investors from themselves.” as if retail investors hadn’t just struck it rich for once at the expense of those who could afford it the most. It is unknown how high GameStop’s stock price would have climbed on January 27th before trading was halted, but it all came at the cost of everyday regular Americans. Some rookie investors were fortunate enough to secure profits and sell leaving only with a big “what if” the stock continued to trade, but many Americans were caught buying at the price peak and left to bag hold the leftovers of Wallstreet’s market manipulation.


The playing field has always been tipped in favor of hedge funds. In 2006 hedge fund manager Jim Cramer sat down for an interview he thought wouldn’t be published or seen on the internet, where he went on to describe in detail the methods used by hedge funds to manipulate the stock market on an everyday basis. Mentioning that the Securities and Exchange Commission was completely incompetent, opening the doors for hedge funds to artificially driving up or down stock prices for easy profit. Jim Cramer said: “What’s important when you’re in that hedge fund mode, is to not do anything remotely truthful.” He later went on to describe how these practices were almost mandatory to have an operational hedge fund. Stealing from the poor and giving to the rich has been the strategy of Wallstreet for decades and only now are people starting to take notice.