I was thinking this morning about Rocky and Bullwinkle. That part in every show where the moose says, "Hey Rocky, watch me pull a rabbit out of my hat." To which the squirrel replies, "Again? That trick never works." Except it does. After a fashion. Bullwinkle does not, in fact produce a rabbit, but he does prestidigitate a bear, a tiger, a rhino and a lion. Like the moose says I guess he doesn't know his own strength.
It is not, as it turns out, pulling rabbits out of hats. But when it comes to making something out of nothing, it turns out that he's pretty amazing. These images are the ones that came to my mind as I reflected on the GameStop peccadillo. By means of introduction, I have never been a big fan of the stock market. I refer to it as "pretend money." During the last four years as the former game show host would honk his joy horn every time the Dow closed at some new record or other, I tried to imagine how this translated to prosperity. Was this an indicator of our nation's wealth, or just a slice off the top? That thin slice that we refer to as "the one percent." These are the folks who are making the money when the market goes this way or that. These are the folks that seem to make money whether or not the market goes up or down. They make money when jobs are created. They make money when jobs are eliminated. When jobs are eliminated, the people who had those jobs no longer make money. But that one percent? Somehow they just keep making money.
Hedge fund manager. That's the job everyone wants. I looked it up on Investopedia. It says, "Managing a hedge fund can be an attractive career option because of its potential to be extremely lucrative." Which leads to the logical question, "What's a hedge fund?" Would you believe that it has nothing to do with gardening? It's got everything to do with making money. It's investing.
Making something out of nothing. It's magic. And until very recently, it was only a select few who got the something, and the nothing wasn't really that: nothing. The nothing was all about speculation. Will this company do better next year or worse? It makes sense to think that a company like GameStop, which deals in new and used video games would make less money this year because so many people have stopped going to the malls where their stores used to be. The ones that have closed because of the pandemic, and the ones that have closed because so many video game companies have stopped selling discs in boxes and gone to online digital sales. You might speculate that this company would experience a downturn. Which would make a good investment opportunity, if you wanted to pick up some stock cheap.
Which is what a bunch of folks out there on Al Gore's Internet decided to do. Kind of like a prank. Or maybe out of a sense of nostalgia for the way things used to be. These once and future gamers now have access to online trading apps that allow them to buy and sell stocks just like the big boys. That's how these apps were marketed to them, anyway. So all of a sudden, this GameStop prank turns into a real mess for the big boys. Hedge funds start getting affected. The truckloads of money headed to the mansions of the one percent are a little lighter.
Panic set in. And then those little rascals decided they wanted to rescue movie theaters, so they started snapping up stock for AMC. And way up high in those distant towers, money that should have been trucked into their vaults was finding its way into the pockets of these - well - nerds. Everybody knows nerds don't make that kind of money.
But they did. Which is why word came down that they needed to stop all that. It wasn't their place. Suddenly, there was no more GameStop stock to buy or sell. Or AMC. There would be no radical redistribution of wealth. There would be no magic. Not in the stock market.
But for just a moment there, they pulled a rabbit out of a hat. A pretty good trick.