• Extremely American

WSB Market Mania: Following a stolen US election, the populist battle takes a path to Wall Street


Jan 30, 2021: As the subreddit WallStreetBets (WSB) story unfolds, it becomes increasingly clear that its origins come from a broader phenomenon called Populism. For those unfamiliar with the term, populism is a political philosophy based on the rights and interests of common people and their ongoing struggle against a diminutive, privileged and powerful ruling elite. In this sense, populism transcends traditional political boundaries and defines differences in terms of class (rather than left-right politics). Analysts and casual observers to this “David vs Goliath” battle on Wall Street have been drawing comparisons to Occupy Wall Street, the Tea Party movement, the MAGA movement, blatant 2020 election fraud and several other recent events underscoring a clear class struggle between “common people” and an increasingly exploitive and manipulative ruling elite.

The shared characteristics between these past populist events and today’s WSB equity market mania include:

- Grass root actions inspired by rage

- A movement powered by a nostalgia for better times from the past

- Unabated community willingness to embrace the risk associated with the movement

- Festering evidence of system rigging and exploitation by the elite class

- An elite class directly linked to the “baby boomer” generation (in the most negative of terms)

- Unfair and partial application of rules and regulations in favour of the most elite

- Pervasive and intense distrust of the media

- Technology applied as an equalizer and an effective way to level the playing field

- “meme-ification” and viral spread of the message and the movement

The entertainment value of this battle between a perennial underdog and unlikeable favourite beats anything that anyone could ever see in today’s fake news or predictably lame Hollywood productions. The WSP GameStop saga is truly a bigger-than-life class battle between eager students and praetorian stewards, between motivated amateurs and cagy professionals, and between enraged rebels and smug Wall Street insiders. For Wall Street investors, this development is a loud reminder of how social media can dominate our lives. In the same way Twitter changed the world of news and politics and Instagram changed fashion and entertainment, Reddit and the WSB community are now playing a transformational role in the evolution of equity markets. (Daily Investment – January 29)

Recent days have shown us that the usual suspects (Wall Street insiders, institutional traders, regulatory bodies, DC bureaucrats, pro-establishment politicians, social media, big technology and mainstream media) are rapidly conspiring to protect their “sacred turf” and quell the upstart WSP community. But WSP and its brand of populist enthusiasm should not be underestimated. To quote Nomura’s Charlie McElligott from remarks made on January 27: “The Reddit / WSB GameStop investment crusade has become an emboldened populist movement, garnering support from the disruptor/influencer spectrum including the likes of Elon Musk, Chamath Palihapitiya and Cameron Winklevoss — unironically all billionaires themselves”. From all of this, it should be concluded that the GameStop WSB story is only a fraction of a much bigger picture and certainly not a one-off event. This “Cinderella story” is fueled by a mixture of fun and moral cause and should remind all of us that strength of community, cause and conviction can prevail over anything, including an overly privileged and exploitive elite. By: Extremely American Colin Wright