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GAMESTOP DRAMA, EXPLAINED (with Pok茅mon cards) - YouTube
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internet trading mob is driving gamestop
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chairs higher
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this game stock situation is the
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craziest i think i've ever seen
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what the hell is happening with gamestop
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users of reddit's wall street vets forum
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have helped bid that stock up
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massively this week some will make money
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some will lose money but that's just the
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way the markets
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always work my children are asleep and i
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am back here because i need to know what
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the hell is happening
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with gamestop and the stock market and
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short squeezes and all this weird stuff
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that is happening
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on the internet in the financial markets
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so i am going to figure that out right
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now
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and you are going to learn along with me
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i think the first thing i need to do
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is buy stock in gamestop what's the
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first thing i'm going to do because i
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don't fully understand this
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but i feel like i need to be a part of
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it so i'm gonna buy some shares
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and see what happens gamestop short
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sellers lost
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1.6 billion dollars in a single day as
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reddit traders reveled against them so
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they decided
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we're gonna [聽__聽] their whole system up
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just to boost games
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yes well just to see if they could i'm
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deep in it right now
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i've been on a call with my my buddy
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who's a finance guy
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he is walking me through every single
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thing
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i've also spent an insane amount of time
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on investopedia i'm getting this
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i am understanding what the hell is
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happening here and it is
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pretty cool okay here's what happened
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to understand this you have to
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understand
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pokemon cards you don't i mean let me
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explain
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there's this concept in finance that is
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painfully hard to understand for us
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laymen outside of the black box of
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trading you've heard it a million times
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there's a whole movie about it that i
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love it's one of my favorite movies of
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all time
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somebody shorted 200 mil in mortgage
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bonds that was just with deutsche
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where is he at half the town how much in
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total
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1.3 billion and yet it's painfully hard
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to get your head around but i think i've
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done it
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and i'm gonna break it down with an
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analogy so let's say
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it's 2001 and pokemon cards
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are a thing but they're not that
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valuable yet and you go to your little
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brother and you say
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let me borrow one of your cards let me
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borrow it
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i'll borrow it for one year and i
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promise i will give it back to you
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and your brother's like okay which one
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do you want and you're like i want
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charizard okay
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charizard like a dragon card okay so you
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get charizard
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i'm not a pokemon guy but i know
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charizard you're borrowing
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this card from your brother for a year
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it's not yours but even still
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you're able to go onto ebay and sell it
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you sell it for ten dollars
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okay so you just sold this charizard
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card for ten dollars you just
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made ten dollars even though you didn't
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spend any money buying that card
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but in the back of your mind you know
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that you have to give a charizard card
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back to your brother you promised you
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would
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a year goes by and you go back onto ebay
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and one of two things will have happened
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by then remember you sold it for ten
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dollars
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but now a year later the card could be
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worth two dollars
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if it's worth two dollars now because
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it's like not that cool anymore
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you're pretty excited you buy one off
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ebay you go back to your brother and
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you're like here here's your charizard
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card your brother doesn't care how much
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you bought it for
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you are making good on the deal by
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giving him back his card
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you on the other hand are stoked because
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you borrowed that card for free
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you went and sold it for ten dollars and
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then to replace it a year later
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it was only two dollars so that eight
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dollars is yours
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you got that out of nowhere now what
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would happen if it went the other way
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you go onto ebay a year later to replace
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your
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brother's charizard card and the price
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is now a hundred dollars it's
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ten times then you're like oh crap you
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had sold it for ten dollars now it's
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worth a hundred you have to cough up
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ninety dollars of
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your own money out of your own pocket to
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pay for that to make good on your
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promise
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to return the card this process
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happens every single day right up the
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road in new york city where hedge funds
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which
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are big giant aggregations of money that
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are managed by
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smart analysts who think about the
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economy all day take bets
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but instead of pokemon cards you can
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borrow someone's stock and go sell it
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with the promise that
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you will return that stock to them at
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some point in the future if you
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have a suspicion that charizard cards
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are gonna be worth
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less money in the future then you'll
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probably go to your little brother and
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do this deal
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it makes a lot of sense you can make
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eight bucks if you know that charizard
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cards
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are gonna be worth a lot less in the
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future and this is what hedge funds do
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every single day in new york city they
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look at companies that they think are
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gonna be worth less
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in the future and they go to the
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shareholders of that company they say
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hey let me borrow your stock for a
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second i'm gonna go sell it
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and i promise i'll give it back to you
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in the future let's talk about gamestop
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for a second
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gamestop is a video game store i
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actually went to one
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last week because we just got a nintendo
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switch like
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for the first time we have nintendo in
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our home i'm playing zelda with my
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children
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you ready to play zelda and i needed a
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controller so i went to gamestop
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the first time i've ever been inside of
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one of these places gamestop is a
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retailer that is usually in
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a mall a place you probably haven't been
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in a very long time and especially
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during
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covet 19. a lot of people up in new york
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city who spend their day thinking about
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the future of companies in our economy
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sort of saw gamestop as
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like oh they're doomed like these people
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are gonna be out of business
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in like no time or in other words oh the
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charizard card
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that's gonna be worth nothing in a year
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i'm gonna go to my little brother and
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see if i can
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borrow it from him so i can do a deal
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and make eight bucks off of this
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and if you look at the value of a share
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of gamestop
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stock during 2020 you would see the omen
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this place is doomed it was like down at
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four dollars a share sometimes it would
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bump up a little bit
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this was a cheap stock but again go back
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to our little scenario here
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it's a year after you borrowed and sold
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your brother's charizard pokemon card
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for ten dollars you pull up ebay you
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search for the card
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and now it's worth a hundred dollars or
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two hundred dollars
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or a thousand dollars and you start to
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panic
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you have to buy that card and give it to
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your brother you have to
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where the money comes from that's up to
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you this is exactly
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what happened a couple of weeks ago look
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at the stock it's up more than
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680 percent so far this year instead of
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this graph going down
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this graph went up so now we understand
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this concept of shorting a stock that's
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that's what it's called
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when you think a stock is going to go
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down you can take a short position on
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that stock
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and you can get a payout if it goes down
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you smell that what is that what what's
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that smell
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a cologne no
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opportunity no money
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but here's where it gets into
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unprecedented territory that
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gets at the heart of our financial
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system and what it even means
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the reason this stock went up is because
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of a subreddit this subreddit wall
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street bets
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is full of people who are sort of like
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stock bros that like didn't make it to
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wall street and decided to become
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trolls on the internet it's a bunch of
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dudes
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misogynistic as hell who are crude
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irreverent
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and like foul-mouthed but also
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incredibly good at trolling the hell out
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of hedge funds
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these guys caught wind of the fact that
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all of these hedge funds
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were shorting gamestop that were
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basically betting that it was going to
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go down
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they had borrowed and sold a lot of
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charizard cards hoping that it would be
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worth a dollar so they decided to rally
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around gamestop
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and they started buying stock tons of it
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all together and when you buy a lot of
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stock and there's a lot of demand
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the price goes up they realized that all
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the institutional investors were hedging
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on gamestop
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so they just bought a bunch of call
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options bought a bunch of stock i'm not
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saying they're working in concert i'm
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not saying they're doing anything
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illegal
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i am saying that they are in force soon
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this started to catch attention
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and people started to see this rally
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around gamestop this random like
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totally like mediocre retailer
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and yet it was rallying in the stock
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market and so
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more and more people started buying the
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stock and the price kept going up
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and the hedge funds started to panic
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tuesday the the data's a little lagged
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was the worst day for this community on
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record because here's the thing about
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the charizard card you borrowed it from
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your brother and you sold it for ten
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dollars
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if you come back a year later and it's
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worth a hundred dollars and you have to
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front that ninety dollars somehow to buy
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it and return it to your brother
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you're panicking if it's worth five
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hundred dollars
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you're panicking a lot more if it's
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worth a thousand dollars
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you're panicking a lot more and you can
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start to see where this goes
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there's no ceiling it can be worth a
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thousand
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two thousand five thousand a hundred
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thousand from ten to a hundred thousand
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then what there is no ceiling there is
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no end to the amount of losses that you
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can take
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when you short a position like this they
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are being
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very specific to break the shorts so
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these hedge funds are looking at this
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graph just
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tick up this stock that was worth
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four dollars a share for the majority of
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this year
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suddenly was worth 40 and then 60 and
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then 100 and then 200
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and then 300 and 400 and then
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it hit an all-time high of 469 dollars
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per share
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more than a hundred times what it was
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during most of 2020.
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these hedge funds are dying and
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meanwhile the stock bros
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on reddit are loving it it's just this
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crazy moment
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of reddit versus the hedge funds
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that i never thought i'd see in my
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lifetime and here we are
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good evening newly minted reddit
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millionaires i'm sure all of you are
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watching this from the marble bathtubs
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on your hovercraft
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so this is one hedge fund in new york in
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particular called
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melvin capital they are the most screwed
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out of everyone
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they had borrowed a ton of charizard
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cards
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and now i had to pay them back so just
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like
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recently like like last week melvin
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capital is in like
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deep crisis they're selling off all of
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their like
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long-term positions i think they've the
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things that they want to succeed in the
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long run
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to like cover this and then they're like
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going out and begging for money
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and luckily all these hedge fund people
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are really connected and they all know
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each other and they're all buds
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and three billion dollars worth of
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capital just comes down from the heavens
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like mana
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and keeps them afloat barely
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so melvin capital's freaking out they
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get their three billion dollar
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savior fund that comes in and then
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today the day i'm filming this it's
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friday you're probably watching this on
[657]
monday i don't know today
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robin hood which is the app that allows
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you to trade
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really easily and is what probably a lot
[665]
of these
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uh reddit bros are using to make all
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these trades
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robin hood freezes trading on gamestop
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and several other stocks that were
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following in this trend
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of like companies that were failing that
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a lot of
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hedge funds had shorted on and were now
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being rallied behind because of freaking
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reddit these are called meme stocks
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they aren't being rallied because the
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company's doing well they're being
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rallied
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as a sort of fu to hedge funds who have
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shorted their position
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on these stocks this is unprecedented
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for
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a trading platform to just halt trading
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in the name of what
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a lot of people are wondering why did
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robin hood stop this isn't this the free
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market
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well remember melvin capital the hedge
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fund that was
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most screwed over by this situation
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melvin was rescued in the end they
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didn't go under
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in part with a lot of money from another
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fund called
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citadel citadel is also a major customer
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of robin hood providing up to 35
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of their revenue in some years according
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to tax forms
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i want you to address the obvious this
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looks like a move by an outfit called
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robin hood which is supposed to be taken
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from the rich and giving to the poor
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and doing exactly the opposite that when
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the big guys including one of your main
[746]
investors in your company started to
[747]
lose
[748]
you shut down the game to starve the
[750]
little guy soon you have members of
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congress calling for an investigation
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this is why we need an sec
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that has clear rules about market
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manipulation
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and take a guess on what you think the
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guys on reddit
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are gonna do do you think they're gonna
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back down and be like oh yeah
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robin hood stopped us from trading we're
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probably gonna stop doing this
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no no no no oh you just poured fuel on
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the fire
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we don't have all the facts here this is
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like fresh and unfolding and
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soon we may know but the fact is that
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there is a very tight-knit web among all
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of these
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financial people in new york city that
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look out for one another and when a mob
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of angry
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reddit people show up to completely
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screw up their system and their bets
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it's not actually that surprising to
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think that they would band together
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and stop it there will probably be an
[802]
investigation into this
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and if you're watching this anytime in
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the future
[807]
beyond the next couple of weeks from
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when it was published there will
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probably be a lot more information and i
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can't wait to get my hands on it
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overall this is a crazy thing that is
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happening not only because it's like an
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amazing spectacle
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but because it helps reveal the
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craziness
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of our financial system i'm not saying
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it's bad
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i'm saying it's crazy meaning it's
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literally mental
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it is literally mass psychology how we
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value something
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and the price we put on it whether it is
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a pokemon card
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or a share in gamestop
[842]
is 100 a result of how
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a group of people decide to act towards
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it
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to think about it that is how our entire
[852]
financial system
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is modeled value is based on what a
[856]
bunch of people
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think value is just like a dollar bill
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a piece of paper is only valuable
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because
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we all sort of believe it's valuable we
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all take this for granted it's like the
[869]
air we breathe
[870]
it's become totally status quo to think
[872]
of value
[873]
and economics and financials in these
[876]
terms
[877]
and yet a moment like this when it gets
[879]
disrupted
[880]
when those forces disrupt the status quo
[884]
it starts to become a little bit crazy
[886]
to think of it in these terms it almost
[888]
takes the curtain away a little bit and
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shows us what our financial system
[892]
really is built off of
[894]
which is mass psychology so i bought
[898]
some shares of gamestop
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and whether it
[903]
wins or loses in the next few days
[906]
i'm just excited to be a part of this
[907]
ride this is
[909]
crazy all right that's it
[913]
there's no sponsor for today's video
[914]
because i just made it really quickly i
[916]
guess i'll just make a plug for my
[918]
patreon go follow me on patreon help
[919]
support my videos okay bye
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