Buying Shares of GameStop is gambling against the house. You don’t fix a broken system by playing by its rules
The GameStop ‘meme stock’ saga was celebrated as the little guy’s victory against the Wall Street elite—but in reality, those behind it are con artists bent on fleecing gullible retail investors.
When markets reach a frothy "bubble-top," desperate retail investors are hoodwinked into these, making a quick buck while 'sticking it to the man schemes.' This irrational phenomenon is known in the industry as Fear of Missing Out or FOMO; it is how con artists reel small investors into a pump-and-dump Ponzi scheme.
How to create the next financial crisis
The elements for creating the next 'great financial crisis' are now in place. Everything 'bubbles' have been inflated by decades of reckless government spending enabled by misguided’ Fed policies. Joe Biden's Treasury Secretary, Janet Yellen, spent two decades working at the US Federal Reserve ("The Fed"). After failing at the Fed, Joe Biden appointed Yellen as his administration’s Treasury Secretary, promoting continued failure.
The Central Bank policies implemented by the Fed's Alan Greenspan, Ben Bernanke, Janet Yellen, and Jerome Powell contributed to substantial inflation and led to the most enormous wealth inequality gap ever. Simultaneously, these policies inflated significant asset bubbles in the stock, bond, property, and credit markets.
In a recent MSDNC interview, Joe Biden made a false statement, claiming that "Inflation was 9% when I came into office." As you can see above, the actual rate was 1.4%. Due to the economic policies implemented by the Biden administration, including the Green New Deal and Biden’s ‘war on fossil fuel,’ inflation surged to 9.1%.
The common factors in disasters caused by big government, such as the Great Financial Crisis, are leadership failure and a total lack of accountability. History tends to repeat itself, and once again, the Fed will likely deny responsibility for creating the now unavoidable Great Financial Crisis 2.0, which has destroyed the primary pricing mechanisms of the markets. It's like an arsonist expecting to be rewarded for putting out the fire they started. Does this sound like Stockholm Syndrome?
Do banks and large corporations control Janet Yellen's policies? Did Obama-style pay-to-play ever leave Washington DC's swamp in 2017? Forbes recently published “Yellen Earned $7.2 Million In Speaking Fees Over Last Two Years.”–would anyone like to wager $7 million on whether Yellen will protect small investors?
A Perfect Storm
Federal Reserve policies have broken the markets' ability to function, and our regulatory bodies under 'Team Biden' have, once again, only selectively enforced existing regulations. Increased volatility and random, violent price movements in the garbage stocks of insolvent companies telegraph two critical messages: a blow-off top is before us, and a price collapse is coming.
Small-time gamblers have banded together on social media to purchase shares and options in the most shorted stocks on the exchanges. Their 'scheme' is to create "short squeezes" that force options and stock sellers to repurchase shares to offset their existing 'short positions.' This creates massive price swings known as "volatility" that may generate HUGE PROFITS for these gamblers, pushing valuations of worthless stocks into the stratosphere! Where are the regulators?
How ‘GameStock Events’ Happen
Redditors have been taking investment advice from the subreddit r/WallStreetBets, which has acted as a conduit to coordinate unlawful stock market price manipulation in the past. It is extraordinary how toothless stock market regulators allow fraudsters to anonymously use Reddit to collectively act to push the valuation of "meme stocks' into the stratosphere at a cost to retail investors who can not afford the losses they are about to incur.
An army of day traders support their brilliance by utilizing Reddit to convince legions of investing neophytes to stage a "brilliant attack" on market short sellers by buying shares that will create a vacuum, making money for some but leading most of these inexperienced traders to the slaughterhouse.
The bottom line: Shares such as GameStock are inappropriate investments for novice investors. The recent price increase in GameStock's shares resulted from coordinated price manipulation that benefits the manipulators while wiping out small investors.
SEC's Grade: F
The Securities and Exchange Commission's ("SEC") role is to protect investors against fraudulent and manipulative activities. The SEC regulates the US securities industry, stock exchanges, and options markets, all subject to federal securities laws. Unfortunately, the SEC's feckless regulators do not protect consumers, aka neophyte "investors."
The SEC is another "do nothing" government agency. Even the mighty Elon Musk has ignored several SEC rulings and taunted the SEC with comments such as, "I want to be clear. I do not respect the SEC. I do not respect them."
Do not expect Washington ever to help small investors. Corruption in Washington with impunity created these problems and broke the system. Case in point–Congress is exempt from insider trading regulations. Just look no further than Nancy Pelosi, who invested in NVIDIA. Pelosi was involved in passing legislation that would impact ‘chip makers’ and profited from her insider information (Here). Pelosi also invested in Tesla options that have already produced a hefty profit based upon her knowledge of Joe Biden’s phony “Green Agenda.” (Here) Was it wrong for the House of Representatives speaker to profit from “insider information” at the time? Nah. Nancy Pelosi did the same thing with the VISA IPO. (Here) The Pelosi family made hundreds of millions of dollars in trading on insider information with impunity.
My advice? If something seems too good to be true, it is, and trying to outsmart Wall Street by inflating the value of worthless companies like GameStock can only end in tears unless you can influence legislation or are Nancy Pelosi.