GameStop Episode, So Much For ‘Small Investors’

Feb. 3 , 2021 (EIRNS)—According to Investor’s Business Daily, nine large hedge funds gained $16 billion from speculation on GameStop. Thus, the narrative of David against Goliath is definitely rebuked.

“Nine investors, including large fund-running institutions like Fidelity’s FMR and BlackRock plus some well-positioned individuals like Chewy co-founder Ryan Cohen watched the value of their GameStop holdings soar more than $1 billion apiece just this year....

“All told, these nine investors made a total of roughly $16 billion on their GameStop stakes, just in January. That means they grabbed roughly three-quarters of the $20.4 billion gain in the company’s market value this year. GameStop is now worth $22.7 billion, up from just $1.3 billion a month ago.”

Meanwhile, GameStop shares have plunged 65% since Friday, Jan. 29. This means that gains by investors who bought real shares will be somehow cancelled—but not gains from derivative bets.

Platforms, such as Robinhood do not charge for trading shares, but the music changes when it comes to derivatives, on which they demand high fees. And derivatives, leverage and cryptocurrencies are the main business of those trading apps.

According to Federico Fubini, a journalist and editor at large with Corriere della Sera, who is very close to the ECB and the EU Commission: “Trading apps such as Robinhood or eToro are not the revenge of the small people against Wall Street titans or hedge funds, but the opposite: a well-concealed system to syphon money from the bottom of the social ladder to the top. From small savers to Wall Street. Why? Simple.

“Who, do you think is supplying Robinhood or eToro with their stock of options, derivatives and the money to invest in leverage, which money they lend you at 6% or 7% (after borrowing at 0%)? Hiding behind the apps, the suppliers are large Wall Street banks and hedge funds.”