This came after Alexandria Ocasio-Cortez tweeted in her inimitable style: “Gotta admit it’s really something to see Wall Streeters with a long history of treating our economy as a casino complain about a message board of posters also treating the market as a casino.”
The mania revolves around the most shorted stocks, shorted by hedge funds that hoped to make a killing when those stocks collapse. Short sellers have to borrow the shares and sell them, hoping that their prices will collapse, and that they can buy them back for a song and close out their position with a huge profit.
Well, folks figured this out, and they were ganging up on these hedge funds, organizing their Wall Street revolt on the social media, particularly on the WallStreetBets subreddit. Most of these stocks have a relatively small float – that’s why the hedge funds shorted them in the first place because stocks with a small float are a lot easier to manipulate, and Wall Street has long gotten fat off manipulating stocks.
This mania, even as the overall markets are swooning, is a sign that something is seriously broken – that highly leveraged hedge funds took on way too much leverage and risks, that too many of them were shorting the most obvious shorts, thereby digging their own grave, and that people and other hedge funds have figured out how to gang up on them and run them over the cliff.As DOW, S&P 500 Sink into Red YTD, GameStop, AMC, 4 Other “Most Shorted Stocks” Jump 135% to 538%. Utter Mania. But Bloodletting in Late Trading | Wolf Street