Imagine that you are going to lay down some big money on the Super Bowl. What should you consider? Well, you can go with Kansas City. After all, they are the defending champs and they have Patrick Mahomes, maybe the most spectacular playmaker in football. Then again, what about Tampa Bay? Hell, they have the GOAT – Tom Brady – The Greatest of All Time. How do you figure out who will win?
Now, imagine that none of that matters. Imagine that what really decides whose bets win and whose bets lose is not the performance of the teams, but the performance of the bettors. Imagine that the system of sports betting determined who the winners were not by the score, but by how much money was bet on each team. If you bet on the team that more people bet on, then you win and you can cash in on your bet.
Does that alternative way of betting sound ridiculous? Of course, it does, until you realize that that is exactly how the stock market works. The more people who buy a stock (i.e., bet on it), the higher the stock price goes and that allows those bettors to then later cash in on their bets. Some say that my analogy is wrong because people invest (bet) on a stock because they like the performance of the company. But, isn’t that also why people bet on teams? What’s the difference? Here’s the difference. Stock prices go up when more people invest (bet) on them even if the company is doing poorly. Sports bettors now only win when their team wins. However, my alternative sports scenario renders sports betting exactly like the stock market – teams could lose, but if more bettors (investors) bet on them, then they, too, could cash in.
If you still doubt my thesis, I offer Exhibit “A” – GameStop.
You’ve probably read about it. A bunch of big Wall Street funds decided that GameStop stock was a good bet to go down, so they sold it short. That way, they win if the price decreases. They lose, of course, if the price goes up. A bunch of other people, small fries compared to the big Wall Street tycoons, decided to teach those “Masters of the Universe” a lesson. They got together and started buying up the stock, sending its price higher and higher. As this is being written, the stock price has exploded and the tycoons are losing their monogrammed shirts.
Meanwhile, the focus of all of this hocus-pocus – GameStop itself – has had a 65% rise in share price while, at the same time, has had a 28% dip in sales.
Getting back to my Super Bowl analogy, it would be as if large professional bettors, the Big Guys, bet that Tampa Bay would lose. Seeing that, a group of amateurs, the Little Guys, aiming at screwing the big guys, dumped massive amounts on Tampa Bay to win. When the game is played, if the bets of the Little Guys exceed the bets of the Big Guys, the Little Guys would be victorious. And all of this would be regardless of what happened in the game itself.
The stock market is a fixed game. It has been that way for a very long time. If the market was regulated like a casino, the casino regulators would shut it down in a week. It’s time we all realized that. Ironically, it seems that it has taken a company that sells games to show that to us.
We were right 
As always, you present an interesting take. But in this case, not only do the big guys take a hit (only because they have to cover their short positions within a period of time), the little guys who banded together will also ultimately take a hit (because they will run out of vindictive suckers willing to pay overmarket prices and eventually that stock will tumble). I think the interesting aspect is that so many little guys were willing to go against their own best interests just to spite the big guys. Personally, it reminds me all too much of Trump supporters, willing to overlook how they were being conned just so they could stick it to the PC crowd. Sorry, that wound is still too raw for me to admire anyone involved.
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I love your analogy. It helps to make what seems very complicated, much easier to understand. However, I still don’t understand what is meant by “selling short”. If you could explain that to me, I’d be grateful.
The stock market has always been a mystery to me. When they announce the numbers for say, the Nasdaq or Dow Jones Industrials, they mean absolutely nothing to me. I’ve had it explained to me numerous times but my brain just can’t grasp it.
I do understand the David v Goliath aspect of it which pleases me to no end. I love that the big players are getting a taste of their own medicine. I remember when the banks got bailed out back in 2008 (I think that’s the year, correct me if I’m wrong) it was infuriating that none of the bastards that were responsible for the collapse of the economy and the years of recession, got off scot-free. It’s nice to see the little guys win for once.
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Don’t let the stock market be a mystery to you. That’s part of the intent. Hiding behind complication allows a variety of scams. I’ll send you a separate e-mail on short sales.
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