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Everything you need to know about Gamestop vs Wall street and its consequences

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Avatar for ramsesuchiha01
Written by   9
7 months ago
Topics: People, Opinion, Economy, Finance, Facts, ...

I hope you are very well dear friends, today I come to explain in detail the case of Gamestop vs Wall Street a lot has been talked about but it is news that does not explain in detail the seriousness of what happened, many read and it is easy to understand that it was just another business where some lost and others won and believe me my friends this was much more than this, the people who understand a little and who are awake if they realized the seriousness of the matter and that is what I am going to explain to you next.

The first thing we must understand is the conflict itself, the most important fact is that Gamestop's shares were falling, Gamestop is a physical video game store and due to the pandemic people began to buy digital video games, so their sales they fell a lot in turn the price of the actions began to fall that is when hedge funds come into play.

Hedge funds manage millions of dollars in part because they manage the pensions of many public officials, it happens that in the United States, despite being the world's leading power, there is very little inflation but there is, so some body like the police in a city has their pensions So they accumulate their money for years and that money loses a bit of value due to inflation, it is not the same thousand dollars in 2005 than in 2015, obviously with the same thousand dollars more goods and services were bought in 2005. So our investment funds our hedge founds usually handle large amounts of money for this reason and their function is to invest that money, to generate profit, so they usually invest in very safe businesses, they usually make super safe investments, but an investment is always a risk and whoever says otherwise is lying. Our hedge fund friends made a short, they made an investment in the Gamestop company short and now I am going to explain to you what a short is.

If investing in a stock is betting that that stock goes up a short, it is betting that a stock goes down, if you invest in a short in a company it is because you need the shares of that company to fall to make money, this concept is explained in the movie The Big Short with Christian Bale, although big investors and people who know the stock market usually do this type of transaction are not very popular, now a short is complicated and has a series of requirements and rules. When you invest in a short it is like the owner of the share lending it to you, you do not become the owner of the share but you rent it, then you give a percentage of the value of the share to the owner and he rents it to you for a period of time that is usually a year, then if the stock goes down you do the following, you give 15 to the owner of the Gamestop share for the short, the share is worth 100, you sell it immediately upon receipt, if the share goes down to 50 when the term expires you buy it at 50 and return it to the owner then you received 100 and spent 65 so you earned 35 and you live happily ever after, the trick is to guess that the stock goes down there you win why you made a short with a stock that goes down, but if the stock goes up it becomes hell for you because you must pay the owner of the share the difference apart from that according to the contract at the time of the acquisition of the short there are clauses that if the share goes up you must pay dividends . I explain in a short your bets that the action goes down and the person who owns the action bets against you, it is a bet someone has to lose, the thing with Gamestop is that the millionaires lost, the powerful lost, those who They never lose and I'll explain why.

There is a social network known as Reddit, it is very particular it is the ninth used in the United States and the number 18 worldwide, this social network is characterized by the fact that people make a long post about a situation and from there other people try to help her or give their opinion, from there most conspiracy theories come out, usually someone makes a long post of a celebrity of some alien gives their evidence and others refute it, or cases of disappearances and mysteries, at least I know more that part, but Reddit users are famous for their engagement for their interaction.

A user on Reddit made a fairly long and explanatory post about gamestop explaining that it was a long-standing chain of stores and the purchase of a billion dollars in shorts by hedge funds condemned the store because if those people invested In short he wanted to say that the shares were going to fall, since they are the most intelligent in the world, so this anonymous man makes a call to save Gamestop by buying shares, claiming that it is time for the powerful to lose and that we must rescue the Little store where we grew up buying video games. Much has been said about this anonymous user who is believed to be one of the majority shareholders of Gamestop but it is not really known. What is known is that thousands of people paid attention to this publication, it is not well known why most analysts say that they were motivated by anti-millionaire sentiment and that they bought thousands of dollars in shares that became millions of dollars, just in the hope of seeing the powerful lose money and they did.

With thousands of people buying Gamestop shares, they soon turned into millions of dollars and the shares began to rise and this is when the story begins, as the millionaire Hedge funds had to start paying dividends to the owners of the shares, generating millions dollars in loss, but there is something important that I have to explain to you so that you understand the next chapter of this story and it is the RobinHood application.

Robinhood is an app that you can download on your cell phone, it is very revolutionary because it allows you to buy shares of the stock ball without any additional charge, generally financial advisors and exchange houses charge you a percentage for the purchase of shares but Robinhood does it totally free because their business is the information, they have the data of all the users who use the app so if they see that millions of users buy or sell a share, that information is worth gold for the companies on Wall Street and from there come the Robinhood profits, then Robinhood popularized the purchase of stock shares, made it accessible to the general public and it is through this application that most of Gamestop shares were bought, but since life takes so many turns it turns out that the owners of Robin Hood.

It turns out that the Citadel company owns 60% of robinhood and also owns Melvin capital is a hedge fund that invested a billion dollars in short, so citadel is losing money with the rise of gamestop shares, so the Insane, many users reported that robinhood sold their shares without consulting them and others reported that they could not buy gamestop shares, so users felt an abuse of power, so the whole rise of gamestop shares that was already 300% ever since the call started on Reddit, it has collapsed and hedge funds have won.

This upset the users a lot and they started a legal action because they felt that robinhood manipulated the market, to which citadel replied that it was the users on Reddit who manipulated the market, although the latter is true, it was not illegal but the robinhood thing It is a clear abuse of power and although for many it was illegal, for justice it was not and they dismissed the case, so my friends at gamestop will end up losing in the end, but what does this leave us for the future?

There is nothing more important in the world of Wall Street than trust and that has just been lost, many experienced it first hand and others like me have read and analyzed it, Elon Musk was asked the man of the moment for him Gamestop case and he made the reflection of not understanding Wall Street, because he saw that the shares of his company rose, however it was the same company, with the same number of employees and the same machinery, he even said that if he knew that The shares of his company were going to rise, he would invest in that but he does not know and does not understand the world of Wall Street. So that's the big problem here, Wall Street has been explaining for years that stocks go down and up according to the market, that demand and supply are what determine the price and that there is no manipulation in the market, but many people are agree that there was a manipulation by robinhood.

Robinhood was the intermediary, people through the Reddit forum wallstreetbets decided to massively buy the shares of gamestop, it was not legal, maybe it is not ethical, but they respected all the rules, they only used a social network to organize, instead robinhood with his abuse of power and the fact that it was unthinkable that the powerful of citadel lost money ended up angering many people, manipulation in the stock market has always been suspected of that there are many books there are many movies, but nothing has ever tainted the image like this, that a company manipulates the market in that way and that all the community of wallstreet defend it under the slogan that if it did not do something they would lose millions of dollars, it is an offense to the public that for years has invested already lost.

Many people have lost money on wall street and have accused the system itself, which has always remained neutral, but this shows that there is a black hand, citadel and Melvin capital along with wall Street claim that the Reddit community was already planning to buy shares of other companies with the same characteristics such as the AMC cinema chain and airlines such as United Airlines, these companies have in common that the pandemic affected them so they are not generating money, so investors on Wall Street made their bet on short against them, so the panic of a repeat of the gamestop case with these companies, united the wallstreet community of millionaires as they would lose billions of dollars if the situation continued.

Thus it was demonstrated that there is no free market, robinhodd took out of his list of shares to buy these companies and if people want to buy them they must go to exchange houses that charge interest of a minimum 10%, with this Wall Street is saved today but They have scared away thousands of investors and their image has been very damaged, many analysts provide that the public will understand that it is better to invest in cryptocurrencies, which is a market where there are not so many powerful traps or at least the public sees it that way.

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Avatar for ramsesuchiha01
Written by   9
7 months ago
Topics: People, Opinion, Economy, Finance, Facts, ...
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hello ramses, good to see you here, I hope it goes well my friend, I see a lot of potential in this, but you have to be patient like everything else while we learn.

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