The Revolution That Wasn't: Gamestop, Reddit, and the Fleecing of Small Investors

In January 2021, which now seems like about 3 years ago, the price of the stock of Gamestop, a video game and electronics retailer, soared to over $480, when it was all but left for dead earlier that year. It had become a heavily traded stock on an active day, and there were limited cases of suspended trading on some retail platforms. On social media, there was a wild ruckus at the prospect of retail traders having upended a hedge fund, and some of the more frenzied commentators on social media said this may have been an act of revolution. (If you believe that last one a year later, I have option about a bridge in Brooklyn to sell you.) With all the ruckus, Congress made a grand show of a hearing. What happened?<br /><br />Jakab writes a summary of events for the general reader but one with an interest in finance. He brings up the vulgar slang of Reddit but also what a gamma squeeze is- the interaction of some terms that are less known to the layman or some experts. He points out how an interest in retail investing began over the pandemic - boredom and a desire to earn some money - and how ideas spread among social media outlets such as Reddit, and the subreddit /r/wallstreetbets. <br /><br />At the time, there was a genuine desire among retail investors on Reddit and elsewhere to stick it to the big hedge funds and especially short-sellers; the fact that they were excited by the prospect of huge gains by users such as /u/DeepFuckingValue also got the crowd excited. But boosters and retail investors were not the only ones who benefited - while some hedge funds such as Melvin Capital had short-sold Gamestop, others had also bet on the stock rising shanking others for short selling is not new, and Jakab is sure to point this out. Business books, where they do any investigating at all, tend to refer to details about closed-door meetings, where this was all in view of the general public, or at least anyone who knew where to look. <br /><br />At the close of trading today, March 11th, Gamestop was down to $92.69. If you look at other subreddits such as /r/superstonk, you may find some more conspiratorial traders still looking to imprison their imagined opponents, or some hoping that Gamestop's price will have a comma or two in it someday. The book closes with some sensible advice for the new generation of retail investors - although the new set of investors are skeptical of anybody with credentials or a big name, it's still a valiant effort. Get a good mix of holdings in your portfolio so no one thing can bring you down, and have "diamond hands" - don't panic and sell everything at every downturn. And remember that winners tend not to keep quiet about their gains, those who lose a lot tend to be awful quiet about it.

<blockquote>“Journalists, as they say, write the first draft of history, and the first draft is the only one that most of the public remembers, not the more nuanced, better-informed one that comes after the dust has cleared.”</blockquote><br />This was one of the books that the library featured in Libby when I opened the app, and since I (and I suppose, almost everyone else) followed the GME squeeze as it happened, I was curious to read more about it. Especially since the subtitle says “Gamestop, Reddit, and the fleecing of small investors” – wasn’t this supposed to be the moment where small investors took on the hedge fun giants?<br /><br />As it turns out, Jakab is looking at it from a slightly different point of view. The Gamestop short wasn’t just about small investors ‘sticking it to the man’, but also about how investing apps like Robinhood encourage people to trade dangerously and frequently (thus making them money) in a way that closely resembles gambling. And in gambling, it’s always the house that wins.<br /><br />By using the months leading up to Gamestop as the focus of the book, Jakab manages to cover a fairly wide range of topics – how apps like Robinhood work and why they can offer free trades, investing “influencers” who may not actually know that much about investing, why people were angry, and why short-selling isn’t actually completely evil (it helped exposed Enron, so there’s that). Some things, like why people were angry and how Keith Gills became a legend are specific to Gamestop, but quite a lot of the topics covered are more general to this time period that we’re living in.<br /><br />Spoiler alert, but as the title puts it, the people who ultimately benefited from Gamestop stock rising were a few lucky individual investors, a few Gamestop insiders, big investment banks, and all the other mutual funds who had Gamestop stock or who stepped in after Melvin Capital, Andrew Left and a few other mutual funds made a loss. On the whole, it does seem like the establishment benefited more from this than the individual investors.<br /><br />Overall, I found this an interesting book that explained the events and factors behind the Gamestop stock rise and short squeeze in an easy-to-understand way. If you followed the events as it happened and you want to understand what was happening, I think this would be something that you’ll want to read.<br /><br />This review was first posted at <a href="https://eustaciatan.com/2022/03/book-review-the-revolution-that-wasnt-by-spencer-jakab.html" rel="nofollow noopener">Eustea Reads</a>

You know the old saying that if you don't know who the patsy is at the poker table, it's you!? Well, the financial services industry often works the same way and for those who swallowed the idea that a group of reddit commentators using meme "stonks" brought professional Wall Street to it's knees will probably find this book enlightening. Spencer Jakab, the Wall St. Journal columnist is known for his clear, erudite explanation of things financial and he carries that style into this book.<br /><br />So, how did the pros make money even as short sellers went down in flames? How did the current world of commission free trading come about if there is no free lunch? Ever heard of "payment for order flow", said orders permitting some large order matching firms to make fortunes slicing off a piece of the stock's bid-ask spread? Fortunately, Spencer explains it better than I can.<br /><br />Not in 40+years in the financial services business have I seen anyone pick, choose and trade individual stocks beat the index funds. A few money managers, yes, but it is a rare skill and even if they have it, the costs often change the outcome significantly. This book helps explain why so if you have an interest, you will probably find it well worth the read.

This author is out of touch with reality.

The whole Audre Lorde quote about the master's tools not destroying the master's house is in full effect here. Preachy and informative.

A moronic book, as every minute there goes by another ”revolution that wasn't”.<br /><br />Worse, this is written from the point of view of a scribe who has dedicated his life to the establishment, and the text is predictably deceitful when possible.

A good retelling of the events that happened but not much insight. Redditers did stick it to some hedge funds but many still made (and do make) a ton of money. <br /><br />Democratization of trading has been good but if it leads you to be a day trader or trend follower just know that you're speculating, not investing. Have fun with a portion of your portfolio but please don't YOLO. We already have a homeless problem.

Frenzy, frothy, fanatical. Inside the ape jungle of reddit's irreverent community WallStreetbets, or an outside observer, the Gamestop spectacle was a massive attention eater . In Spencer Jakab's "The Revolution That Wasn't", the conditions of a perfect storm came into effect. The pandemic, reduction of consumer spending, elimination of commission fees on trades by firms like Fidelity, Schwab and Robinhood, and a perceived war on Wall street Hedge Funds; the beginnings of a social movement appeared to form. <br /><br />Not unlike Michael Lewis's "Big Short", key players and the broader economic environment that lead to an unfathomable event occurred. While Lewis's book focused on the domino effects of things that went wrong: CDOs, dodgy watch dogs, irresponsible selling of homes to people who couldn't afford it; the forces at play here are the democratization of trading platforms and unchanging human psychology. In “The Revolution that Failed”, Jakab shifts the WallStreetBets (WSB) narrative from “david and Goliath” to ‘Goliath vs Goliath”. Through publicly visible social media, some in WSB crowd were able to profit against the initial short positions of hedge funds. Ultimately he concludes the influx of new investors are victims to their own hubris, and are playing into Wallstreet’s volatile hand.<br /><br />Robinhood, a platform that brought an influx of new investors to trading, contributed to gamifying the experience as well. Using a philosophy of radical simplification, designed off of ideas from betting platforms like Draft Kings, and even providing visual rewards like confetti, investing becomes more aligned to spectacle than valuation. Born of Silicon Valley, and capturing some 18million users after the GME surge in January 2021, Robinhood like other social media firms capitalized on their user base’s evolutionary wiring. As stated in the beginning of chapter three<br />“If you told people half a century ago, you would have streaming social media , instant access to news, sum of human knowledge, you would have investors salivating (p.21). The dark side of easy money and loose options trading was documented to crater peoples lives, and no small part of this was due impacted by Robinhood.<br /><br />Here we look at Robinhood’s role, it’s relationship to Citadel for order flow revenue, some of the large Hedge Funds like Melvin Capital Management, the Reddit heroes like Keith Gill who seemed to act on some mix of principal and vision for Gamestop. The memes and boy humor of WallStreetBets brought an emotional and ridiculous edge, and paradoxically a shared sense of purpose against a financial system with little interest in retail investors.<br /><br />Overall a really fascinating book, and enjoyable to read. Has all the elements of a great drama - personalities, risk taking, hopes and yearnings. I wonder if the birth of meme stocks and the coordinated invest retail online communities will bring new challenges to the financial establishment. Congressional panels are already in works to regulate and discourage the type of frenzy that occurred from the GME short sell (<a target="_blank" rel="noopener nofollow" href="https://www.reuters.com/legal/transactional/us-congressional-panel-calls-new-trading-rules-after-meme-stock-saga-2022-06-24/">https://www.reuters.com/legal/transac...</a>). Like many revolutions, it may be too early to know if has played its hand or simply coordinating for a larger overthrow.

This book was amazing, and extremely similar to "The Antisocial Network" by Ben Mezrich in case you wanted to read something similarly great.<br /><br />One of my favorite things about this book, and the author Spencer Jakab is that he is not afraid to play the middle and admits to his shortfalls, which is very rare (I really have no idea) for a Wall Street Journal writer.<br /><br />What I mean is that he blames every party for the stupidity that was the meme stock extravaganza by simply highlighting all of the idiots and bad actors involved in the black swan event.<br /><br />There are no heroes in this tale, and sadly, such is usually life. All parties had an agenda, and even the Wall Street Bets god like figure Keith Gill took some money off the table just to secure a little something in case the trade went south, which of course... it later did.<br /><br />I really like how Spencer pointed out the truth from all angles, and especially got a kick out of how the meme stock executives were soothsaying the Wall Street Bets crowd to buy more of their shit stock, while they were simultaneously dumping it as their army of retards pushed the price of it to the Moon.<br /><br />All in all, a great book for sure, and if I had to take one thing from it, it would be this:<br /><br />Myopic Loss Aversion - Occurs when investors take a view of their investments that is strongly focused on the short term, leading them to react too negatively to recent losses, which may be at the expense of long-term benefits.

In January 2021 Gamestop, a company many consider to be antiquated an on the verge of bankruptcy, experienced a rapid rise in its share price, enriching a few who had the perfect timing and causing losses to some funds who had been shorting the stock. <br /><br />Although the narrative quickly became retail investors sticking it to Wall Street, Spencer Jakab’s <a href="https://goodreads.com/book/show/58890949.The_Revolution_That_Wasn_t_Gamestop__Reddit__and_the_Fleecing_of_Small_Investors" title="The Revolution That Wasn't Gamestop, Reddit, and the Fleecing of Small Investors by Spencer Jakab" rel="noopener">The Revolution That Wasn't: Gamestop, Reddit, and the Fleecing of Small Investors</a> explains why, just as the house always wins at a casino, Wall Street always wins in the long-term. <br /><br />In essence, many retail investors invested in Gamestop thinking they were going to stick it to the hedge funds and get rich in the process when, in reality, they were sold a bill of goods and are likely to lose big time, in some cases much of their life or retirement savings. <br />Although I knew the basics, I still found this book to be an interesting read with useful insight into not just how this happened but why this fantasy of retail investors sticking to hedge funds is just that: a fantasy, and will always be a fantasy. <br />