GameStop is a Wakeup Call for Wall Street

I’ve often watched stocks get crushed by short selling and thought, “They can’t keep getting away with this.” Well, it seems someone has finally punched the short-selling parasites in the face.

Don’t get me wrong, short selling has its place.

If a company is involved in fraudulent behavior, then short sellers can actually protect long investors from losing too much money.

Imagine a stock is trading for $100.

You plan to buy 5 shares when you get your next paycheck.

Meanwhile, a short seller has uncovered what they believe to be rampant fraud at the company. Maybe they overstated their revenues, or faked some clinical data, or whatever.

A few days before you’re going to invest in the stock, the short seller releases their information, and the stock drops 25%. Shares now trade for $75.

You get your next paycheck and buy your 5 shares. But instead of paying $500, you only pay $375, saving you $125. Later if it’s determined that the short seller was wrong and the stock rebounds to $100/share, then you’ve made a great trade.

If it turns out the short seller was right and the company goes bankrupt, then you’ve only lost $375 instead of $500. In both scenarios the short seller acted in the interest of future long investors.

Now here’s the problem with short-selling. These days it’s being used to manipulate stocks lower for profit and hostile takeovers. Short-selling firms target troubled businesses and start a rampant campaign of destruction.

They don’t just dump shares at the market. They borrow shares. Or even dabble in naked shorting (which is how GameStop’s short-to-float percentage was over 100%).

They also engage in smear campaigns on message boards. They spend months/years convincing people that the stock is garbage. Then when the stock hits bottom, they load up on shares and options and reverse the momentum.

Everyone who sold on this false information on the way down has gotten fleeced. Everyone who read fake comments on message boards and sold their stock has gotten fleeced.

Amazon had a big problem with fake reviews on some products. Fake reviews and fake comments on a stock message board are the same thing. Fake comments are made to manipulate your decision-making process.

In this article, I showed how the same people that manipulated Celgene in 2018 were doing the same thing to Gilead in 2020. (And still are.)

They nuked Gilead from $85 all the way down to $56.56. (It’s since recovered to north of $66.)

But like the decimation of GameStop from $20 to $4, the drop was bullshit. It wasn’t based on fundamentals, but rather short-selling manipulation.

The people engaged in this manipulation are some of the worst types of human garbage. They’re thieves. They’re parasites. Their job is to extract wealth from society that others have worked hard to create.

If these manipulative short sellers were all ejected into space, then society would instantly become a better place.

Destroying a company’s share price can harm its future business prospects. It makes it harder for them to borrow money or raise money by issuing shares. So, the company loses, the investors lose, the employees lose, and parasites win. It’s a self-fulfilling prophecy.

Institutional short sellers are parasitic shitheels that will burn a company to the ground and then take a selfie next to the ashes and say, “See, we were right.”

In the past, there have been periods where short selling has been banned. Perhaps we should return to that for a while.

It would be an interesting experiment.