A Reddit trader explains why he’s attacking hedge funds
No time right now?
A Reddit trader wrote an open letter to hedge funds like Melvin Capital explaining his motives for confronting the established players. It has a lot to do with the financial crisis.
A dispute has broken out over the past few days about the Gamestop share, which some observers have already hyped up into the fight between David and Goliath. But what does it mean when a large group of small investors sway large hedge funds through trading apps like Robinhood? One of possibly many answers to this question is now an open letter that one of these traders published in the Reddit forum Wallstreetbets, which is particularly active in the hype around Gamestop.
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Fight for Gamestop: Personal Affair
The trader calls himself ssauronn on Reddit. He explains in his writingwhy he put his savings and the money he had actually made available for the monthly rent into buying Gamestop shares of all things. And why it wouldn’t bother him if this money could possibly be gone soon – for example, if the Gamestop course, as the shortsellers had hoped, would soon collapse. One of the most important sentences is probably: “This is a personal matter for me and millions of others”. In addition, ssauronn wanted to make it “as painful as possible” for the other side.
On the one hand, the letter is addressed to the Melvin Capital hedge fund, which is apparently an example of the established financial system. The US financial broadcaster CNBC and the so-called baby boomers are also specifically addressed. However, the latter are not attacked, but rather asked for understanding. Ssauronn writes that the elderly should keep their fingers crossed for their children and grandchildren and not support the other side. His generation, according to ssauron, now has the opportunity to punish the people who caused them so much pain during the 2008 financial crisis.
Hedge funds: learned nothing from the financial crisis?
The 2008 financial crisis plays the central role in the argument of the Reddit user. He still remembers the effects, such as the fact that his family was able to keep the house, but for a year they mostly got rid of pancake mixes, powdered milk, beans and rice. Melvin Capital, ssauronn accuses the hedge fund, has not learned from the crisis. “You and your kind have been rescued and rewarded for the horrific and illegal financial decisions that have negatively changed the lives of millions of people,” Ssauron told the hedge fund.
The extent to which the information in the open letter is genuine can be verified. But similar things are reported in many of the 8,000 or so comments that can be found under the entry in the Wallstreetbets forum. And the users continue to be combative. You will not give up and buy more Gamestop shares. One user wrote, for example, that he had put all his money into the shares and would now only eat cornflakes without milk – just to be there.
Short sellers vs. Reddit traders: hardened fronts
This also shows how heated the argument has become – and there seems to be no end in sight. In any case, the shortsellers are not thinking of giving up either, despite billions in losses. The battle over the share prices of Gamestop and other companies, meanwhile, has drawn politicians and regulators on the scene. The stock exchanges are reacting nervously, the decline in the major stock markets is partly attributed to the gamestop dispute. In addition, the trading apps had to suspend trading in the affected stocks in between.
