A horde of small investors shocked the financial markets during a January 2021 investment spree, through the use of apps such as Robinhood and social media such as Reddit, to act as a mob investing in a failing company called GameStop. This action caused major losses against hedge funds, who had invested in a gamble that Gamestop shares would collapse; where simple market demand for the shares drove the share price up, and the hedge funds had to buy shares at hugely inflated prices at massive losses.
The result of stinging the hedge funds by a mob of individuals investing en mass at the same time was hailed as a success against the system and the elites; but there was no paradigm shift; the impact was temporary. GameStop shares became a bubble that quickly burst, and many of the crowd of gamblers suffered severe losses. The financial markets such as Wall Street are built around the paradigm of gambling, greed and short-term profits. The army of speculators became a mindless conformist group of slaves manipulated by a few people to act like lemmings making money for people such as Elon Musk, throwing money away they could not afford to lose. These gamblers supported the system they wanted to sting, motivated by the same greed, gambling and short-term goals as the hedge funds they despised.
These same speculators worship the rise of cryptocurrency such as Bitcoin, but fail to see the bigger picture that the currency has failed to meet the problem it was trying to resolve, as an alternative token of exchange to paper money for goods and services. Bitcoin has become a vehicle of speculation, where a few mystery players can manipulate the currency as they see fit; with people using the currency to speculate to make profit rather than use it as a medium of exchange. Bitcoin has become too unstable as a token of exchange, for due to the sudden rise and fall of Bitcoin, the price of a coffee in Bitcoin can rise in hours from three dollars to a hundred dollars. Criminals and terrorists love Bitcoin, as it is easy to move around and hide their activities; and the security of the internet makes it harder to defend against theft and fraud of Bitcoin, as opposed to standard paper currency.
The paradigm for investment has always been about creating a tangible product or service that people need, then using that as a trade in exchange for other goods and services. Example: I plant 100 apple trees, and get 1000 apples to trade with; I position 10 bee hives amongst the apple trees, the bees increase the yield of apples through pollination by 30%, giving me 1300 apples to trade with; each bee hive gives me a kilo of honey, so I have 10 kilos of honey to trade with. Whilst there is always an element of risk in any investement, the chances of getting success out of the apple-honey business is greater than following the crowd in mindless speculation.
Dealing with apple trees and bees is a lot of work, an ongoing process of trial and error, where the individual is working with something tangible to bring about something tangible. The hedge funds and the mob of gamblers have no interest in the investment paradigm of apples-honey, as they desire quick profits through little effort. It would take several years of hard work, with a lower yield to gain something from apple-honey ways of investing.
GameStop belongs to the paradigm of apples-honey, but it is no longer offering a product or service that people need, thus it is failing. GameStop provides a service of offering computer games in retail stores, a service people now obtain directly from internet downloads. The hedge funds and the Robinhood app horde were never interested in GameStop as a business, they invested in a gamble on shares, speculating on a rise or fall in those shares. Electronic currency such as Bitcoin, and finanical market shares, are vapid mental constructs, that have no tangible grounding in the real world, which is why people gamble on them. GameStop is a failing business, because nobody needs it’s product and service anymore, which is why it is dumb to invest in such a business.