I have many fond childhood memories at my local GameStop, a tiny store in Somerset Collection Mall nestled between a candle shop and the public restrooms. Back in the days before Twitter and Instagram, when Amazon was just a bookseller who struggled to compete with Borders, I spent my time in a magnificent little nerdy paradise containing a catalog of video games dating back to the 1990s and extending up to the newest releases. 

While my sisters and parents went around the mall running their errands, I was sure to be in the shop chatting up the workers or playing the demo game set up near the entrance. Then, sadly, the Internet boomed, brick and mortar stores like this became increasingly obsolete, and this chain fell in stature alongside so many others. 

However, this is only half of this story. The other side begins in quite possibly the complete opposite of metro Detroit — Wall Street. 

Typically, when we think of Wall Street, we think of the big institutional investors like JPMorgan Chase, Morgan Stanley, Goldman Sachs and so on, but these organizations are just one piece of the financial world. Instead of these traditionally beneficial actors, this story focuses on the shadowy world of hedge funds.

Hedge funds are kind of like shadow banks for uber-wealthy consumers who are willing to take on more risks in exchange for potentially massive rewards, sometimes increasing their investments by 40 to 50%. While these funds began as somewhat isolated and extremely susceptible to market fundamentals — like a business’s quarterly earnings and the overall economic environment — they have steadily gained influence over the market, transforming into some of the most powerful market actors.

One of their many methods of exerting this influence is by shorting (betting against) struggling companies, spreading misinformation by manipulating financial media and other institutions to send these companies into a downward spiral while making a tidy profit off their bankruptcies. This practice — while not necessarily illegal — is deeply unethical market manipulation and a symptom of an increasingly out-of-control marketplace fueled by cynicism, greed and a lack of government regulation.

However, on Jan. 25, the people decided to fight back. 

On the subreddit r/WallStreetBets, users organized to conduct a mass purchase of GameStop (GME) — one of the most shorted stocks by hedge funds due to its declining stature, inflexible business model and poor pandemic response — to artificially drive the stock price up and deal a financial blow to hedge funds.

This plan, however seemingly unlikely, succeeded beyond just about anyone’s expectations, skyrocketing GME’s price over 1,000% over the last week and forcing many hedge funds to incur massive losses to the tune of billions of dollars. These hedge funds, in panic mode, accused these retail investors of market manipulation, which is not entirely unfounded. 

With that being said, their argument rings hollow as hedge funds are the original market manipulators. Regulators have shown them leniency. Therefore, regulators should show leniency to the everyday Americans who are fighting back.

Things were looking good for retail investors who were finally getting one over on the monied interests when, on Thursday morning, what can be generously described as the most collusive action against retail investors in the last decade was undertaken. Popular trading platforms like Robinhood, TD Ameritrade and Webull restricted the purchasing of GME and other Reddit-promoted companies. 

This, in turn, sent GME into a state of wild fluctuation rising as high as $483 per share and sinking as low as $112 per share within the day. It also sparked major controversy online, motivating thousands to sign onto a class-action lawsuit against Robinhood — whose slogan is “democratizing finance for all,” despite recently paying $65M to settle an investigation into their practice of selling users’ information to institutional investors. 

The issue united Sen. Ted Cruz, R-Texas, Rep. Alexandria Ocasio-Cortez, D-N.Y., Barstool Founder Dave Portnoy, Sen. Elizabeth Warren, D-Mass. and political commentator Ben Shapiro while bringing investor Leon Cooperman to the verge of tears in a truly hilarious video that I cannot recommend highly enough. 

So, where does that leave us?

Well, I hate to rain on Reddit’s parade, but this is probably not the day when we #EatTheRich. However, I do believe that this event has finally woken the American people — on both sides of the aisle — up to how corrupt the market can be. 

Between the Trump administration’s frenzied and mostly half-baked deregulation and the real world’s increasing disconnection from the stock market, something like this was bound to happen. Personally, I thank God that it wasn’t much worse, but that is not to say that this story is over. In fact, I think it is just beginning. 

I think we are headed for more market instability on the immediate horizon, and it will not stop until our politicians say that enough is enough and embolden government regulators. Until then, this was a good first shot where a down-on-our-luck Main Street struck back at a bloated and overconfident Wall Street. 

For the hedge funds, the party is likely winding down, but for the people, Mr. Brightside just began playing and you better be sure that they can hear the people sing.

Keith Johnstone can be reached at keithja@umich.edu

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