If you drink ice for ten years, it is hard to cool your blood.

The reason why I think of Liang Yingbing's famous saying is that the story of American retail investors beating Wall Street bosses is rampant these days, which precisely confirms his saying that "a young man is wise, and a young man is strong." It's just that it needs to be changed a little bit--If the teenager is crazy, the country is crazy.

Crazy or warm-blooded. When this story spread to the other side of the ocean, it also excited countless onlookers in our country. what is it?. Because of the collective actions of a group of American youthInadvertently, the largest capitalist country on earth succeeded in achieving a victory of Bolshevism.How can it not be exhilarating?

A group of small scattered, still want to kill dragons?Believe it or not, the situation of US stocks has become "retail pricing and noodles for bookmakers". The dragon was really slaughtered by them.

It's fun, but behind this good play of ants devouring elephants, a more interesting historical thread looms. Let us have to ask: in 2021, will US stocks or Wall Street have the final say?

01 Wall Street: self-destruction

Let's first review what happened in the US stock market this week.To put it simply, a group of retail investors in American stocks unexpectedly let the Wall Street mogul with tens of billions of dollars in their hands lose money.

The main battlefield is GameStop, an American game retail giant. It is not what it used to be. The epidemic and the popularity of digital games have made the asset-heavy company lose money for years, even on the verge of bankruptcy, and can only keep laying off staff and selling assets to survive.Just looking at the fundamentals and operating conditions, I would never have thought that this stock would take off one day.

It is such a junk stock whose share price has fallen all the way below $3 and is on the verge of delisting that it has become a grave for short-sellers. Although this is weird,But in fact, it can also be defined as the suicide of arrogant Wall Street giants.

Why would you say that?The loss of shorting stocks is theoretically uncapped.But hedge funds on Wall Street have nothing to fear-they don't have to look at fundamentals and rely on huge amounts of money and financial instruments that ordinary retail investors cannot use, plus first-hand sources of private information. They can perfectly avoid investment risks while harvesting huge profits.

Some people have long been dissatisfied with this. Musk called for short selling to be regarded as "illegal" in December 2019, and he has been taking advantage of the war situation to keep pace these days.Short sellers who attack Wall Street are big liars.

How arrogant are Wall Street short sellers? In 2020, the short selling rate of GME outstanding shares once exceeded 90 per cent. So far, the GME has been shorted by 140%! This is crazy. GME is without a doubt the most shorted company in the U. S. stock market.

But the price of the stock did not go all the way south as the bears expected.Instead, it soared from the end of August 2020 to $40 this year.

Short sellers certainly don't want to see GME come back from the dead, which means a lot of loss to them. For example, GameStop rose 27% on January 14th.The total loss of short sellers on the day alone was more than $800 million.However, why the maximum profit of 100%, but unlimited losses, from the probability that it is not cost-effective to short the business they continue to do?

Very simply, one is to firmly believe that there is no possibility of a reversal of the GME stock; the other is that even if it rises, the short sellers are confident to buy the short stock back from the market: in one word, drag! Anyway, I have enough money, so I don't believe that retail investors will not be out after making a profit.

But what they didn't expect is that this model worked in the past, but this time it was an organized and disciplined stubble.800 million dollars, a prelude to a nightmare.

In this contest, it is not ordinary retail investors who have become the nightmare of all the short sellers of GME, but United groups with bases and beliefs. Their organization is a Reddit sub-forum called WSB, whose full name is WallStreetBets, which means "Wall Street Casino".

seeing the name of a thing one thinks of its function,Here gathered a group of cruel people who do not believe in rational and value investment and want to make a windfall in one step, or "gamblers".

02 retail investors: never die

Retail investors use cruel means to make Wall Street feel the pain.

GME is the star stock in WSB. On the one hand, GameStop, as a shrine in the hearts of the older generation of players, has feelings in it. On the other hand, excited retail investors believe that the stock is promising. Because once it rises, the stock price as low as the dust and the high short rate will certainly become the strongest engine in the world, carrying yourself all the way to Mars!

Indeed, as GME's share price soared, retail investors were so overjoyed that they posted hundreds of times their earnings on the forum.

The bears couldn't sit still right now, and Citron was the first to tweet that GME was worth only $20.This move immediately angered the retail investors who were in high spirits, and a vigorous war began.

Retail investors rushed into the stock market at an order, buying GME shares and call options, all with the same goal-to pull up violently and attack funds and institutions!

When it comes to call options, this is a favorite of retail investors in WSB. Many netizens don't like to buy genuine stocks.It is agreed that buying call options is the only way to get rich.This is because call options are more powerful, more exciting and can bring higher profits than regular stocks.

GME, for example, whose call options were priced at about $10 on Friday, are buying the most imaginary options (the biggest leverage). Based on the share price of $65 for the day.The same principal, through the purchase of call options, can pry 600 times the stock relative to the stock!

The collective actions of retail investors have dumbfounded institutions. On January 22nd, GME closed up more than 51% at $65. Due to excessive volatility, the stock once hit a circuit breaker. On that day, the trading volume of GameStop exceeded 197 million shares, eight times its 30-day average of 23.8 million shares!

On the other handAs GME shares rise instead of falling, market makers have to buy stocks all the time to hedge their short exposure to options.And beat the blood of retail investors to form a stronger force to push up the share price of GME. The bears finally couldn't hold up, and Citron declared a "truce" and said it would no longer comment on GameStop.

Melvin, a billionaire star hedge fund, was even more miserable because it was beaten so badly by retail investors that it had to turn to its peers, two top hedge funds, Citadel and Point72, for $2.75 billion to renew their lives. Although retail investors have the upper hand for the time being, they can tell from the actions of Melvin and Citadel.Wall Street is not ready to give up.

GME's short positions have increased rather than decreased, but retail investors are not weak at all. Look at the earnings posted by WSB netizen DeepFxxingValue: he bought a call option of $50, 000 at the lowest point of GME's share price. 17 months later, 50, 000 has become 11.17 million, a 210-fold increase!

In the face of huge interests, the enthusiasm of retail investors completely burst out and began a new round of frantic buying of call options. GME shares jumped three times this week, closing at less than $80 on Monday, nearly doubling to $150 on Tuesday and as high as $380 on Wednesday. In three days, GME rose by 430%.

As GME's share price soars, bears are ready to cry. S3 Partner data displayOn Wednesday alone, short sellers lost $14.3 billion on GME.

Melvin direct showdown:Here's the money. I'm done.. After Melvin closed its short position from last year to its current short position, it also lost 2.75 billion of Citadel and Point72.

In the first stage of the war, retail investors won a temporary victory. But Wall Street certainly won't sit back and wait, and their counterattacks come quickly and violently.

03 Wall Street: the Jedi fight back

On Wednesday, u.s. stocks experienced their worst performance since Oct. 28, with all three major indices falling more than 2%. The panic index, VIX, rose 61 per cent on the day.

Does the sharp fall in US stocks have anything to do with the long-short war between retail investors and Wall Street?It is likely that the market will have to create a large number of margin requirements for funds shorting these positions because of the addition of more fresh short blood, and such a "forced sell" will undoubtedly cause market volatility.

Here comes the first round of counterattack on Wall Street.

Nasdaq Stock Exchange said: "We will monitor comments on social media."If we find that the comments are related to the abnormal performance of the stock, we will suspend stock trading.If we do believe that there is stock manipulation, we will investigate with the US Financial Regulatory Authority and the SEC. "

The White House also spoke urgently: Treasury Secretary Yellen and Biden's economic team are also keeping a close eye on activities surrounding unusual transactions in GME.

At the same time, the WSB server, the stronghold of retail investors, was removed.

A set of combined punches.The rocket-like upsurge of stocks such as GME was brutally cut off.After trading on Wednesday, AMC theaters, which rose 300% overnight, fell more than 40%. GME fell more than 26%, GME Express fell more than 37%, and BlackBerry fell nearly 27%.

WSB concept stocks are wiped out, it seems that the madness of retail investors will come to an end for the time being?

No. The WSB server quickly became a private page and soon became accessible again. A small farewell is better than a newlywed. after the return, the enthusiasm of retail investors has broken through the sky.Last night, GME shares rose violently again, with as many as 17 circuit breakers. At one point, the stock price rose to more than $480 and was heading for $500.

However, a second round of counter-attacks on Wall Street followed.

On Thursday, online brokerage Robinhood, known as the "retail stronghold", announced restrictions on trading on several stocks, including GME and AMC.Only users are allowed to sell shares.It is worth mentioning that Citadel, the hedge fund that helped the fallen Melvin, is Robinhood's biggest client.

Not only Robinhood, but also Yituo Securities, one of the largest online brokerages in the United States, has restricted stock and option trading in hot stocks such as GME, and a number of local brokerages have banned open trading of some such stocks.

Ha ha, can't beat so what, pull your net cable directly, angry not angry?

It's really tough to get to the bottom of it.Hedge funds are unrestricted, but trading channels for retail investors are almost completely blocked.GME, which had risen to half, did dive. By the close, AMC and Express were down more than 50 per cent and BlackBerry more than 40 per cent. GME fell 44%, halving its share price from nearly $500 to close at less than $200.

This time, retail investors have been completely defeated?

Sorry, still no.

The immoral behavior of American securities firms is being criticized by the whole people.The score of Robinhood app hit rock bottom and even triggered a class action lawsuit. In addition, a group of Democratic and Republican lawmakers also agreed to criticize this unfair behavior: where do you put Washington, Madison, and the Statue of Liberty in New York Harbor?

Under pressure, Robinhood issued a statement announcing a limited resumption of trading in shares such as GME on Friday. As soon as the news came out, WBS concept stocks began to rise sharply after trading. At present, GME is up 109% before trading, and the share price is back above $400.

Wall Street has made two moves, which can be said to have yielded a lot. But the retail investors are determined not to relax, we just keep buying, but we don't give you a chance to close your short positions.

Now, the slogan shouted in the WSB forum has become "DO NOT SELL".

04 this has always been the case, isn't it?

Although the United States boasts democracy, in fact, it has always been a country ruled by a small number of elite groups. Wall Street is one of them: financial elites in suits suck away most of the wealth of the country and its people.

The subprime mortgage crisis in 2008 is a typical example. Wall Street has enough to eat and drink by inventing a variety of financial products, regardless of the giant bubble that has been created.After the outbreak of the financial crisis, the country was in shock and the people were living in poverty, and the fund managers who made a lot of money were still the fund managers who shorted the US economy.

Why did GME become the focus of the world in the retail VS Wall Street battle this time? There are many reasons.

First of all, the stock is not completely without a future. Although the operation is not good, the performance is poor, but GameStop's cash flow is very healthy, the new director Ryan Cohen proposed for the company to become a gaming industry Amazon.Com Inc transformation goal, with the company's qualifications and status in the hearts of players, this goal is not impossible.

Second, the short selling of GME is too high, 140%. How dare the short sellers? Have they forgotten that Porsche's acquisition of Volkswagen, known as the "case of the century", has become a nightmare in European financial circles?It makes Volkswagen the most valuable company in the world.

Third, the focus of the standoff between retail investors and Wall Street is actually on options. And GME is a stock with a small market capitalization, so relying solely on the strength of millions of retail investors, as long as they keep their pockets tight and do not sell their shares, there is nothing the bears can do.When their options expire, they must buy the corresponding shares to cover.

However, with a short selling rate as high as 140%, short sellers are not enough to close their positions even if they buy back all the outstanding shares on the market. What's more, retail investors don't sell at all?

So, the most critical point is, why are retail investors so United?It is the nature of investors to make a profit, why can they have such a firm belief and always hold on to the stocks and options in their hands?

The reasons are various: the younger generation is not afraid of heaven and earth, the fiery atmosphere formed within the community, and under the leadership of opinion leaders, it is easy to form a strong spiritual force. What's more, how many years will it take for retail investors to have the opportunity to fight against the giants?

The pastFrom the pricing of stocks to the issuance of dollars, from gold to oil to the price of pork in China, the operation of the entire financial market is firmly in the hands of Wall Street.Financial talents can cut flesh and suck blood when they lie down by creating a variety of financial instruments.

This rule of operation has dominated every stock, every investor and even the whole American society since the birth of Wall Street, but we have to ask: has it ever been right?

Of course not. Tesla, Inc. is a living example. All the bears on Wall Street are wrong and all retail investors are making a lot of money. Does this mean that institutions are not necessarily better than retail investors? Wall Street also has quantitative funds that don't look at fundamentals.The reason why they can make money is that they have mastered tools and information that retail investors cannot reach.

Admittedly, some retail investors in WSB have the same or even more professional financial knowledge as hedge funds on Wall Street, but they can't go short and they don't have TVs. The great success of WSB is a torture for the whole of Wall Street: the rules of the game laid down by Wall Street are not eternal truths-why can't the pricing power be in the hands of retail investors?

Ed Moya, senior market analyst at Oanda Corp, said: "the new group of traders are not focused on valuations, but on the momentum opportunities they see from Reddit's WSB, youtube users, TikTok or Robinhood. "

What does that mean? Maybe times really need to change.

In a televised discussion on CNBC yesterday, Chamath, the billionaire venture capitalist and chairman of Virgin Galactic, asked in a war of words with the host: why are hedge funds only open to big investors but not to retail investors? now retail investors are dissatisfied with making money, and they have to restrict retail investors.

A few words directly touch the underlying nerves of China Finance Online Co Ltd of the United States. Wall Street can make money willfully, but retail investors risk losing all their money--In a word, it's not fair!

Behind the violent fight against short positions by retail investors, there is a concentrated outbreak of deep-seated contradictions accumulated in American society for a long time. Wealth differentiation, mass unemployment and bankruptcy under the epidemic, ethnic issues, political conflicts, and so on.

Elitist America is facing a tear from top to bottom, and retail investors against Wall Street is just a projection of American society on the stock market.

05 conclusion

The mortal body is like a shoulder god.

WSB told us that small loose together, Wall Street bosses can also be cut off. The collapse of a thousand-mile dike in an ant nest is by no means alarmist. We cannot say for sure whether this will be an opportunity for the rules of the game to change henceforth. However, we can at least look forward to this wonderful war coming its third round.

Now, short sellers have been "choked by the throat" by United retail investors. In other words, the pricing power of GME is now in the hands of retail investors.

When the short options expire on Friday, they will have to close their positions even if the share price is as high as the sky. At that time, even if the bears want to blow up their positions after losing the margin, retail investors will have to agree to sell the shares to you. If not, we can only liquidate assets or go to prison. Don't forget that the Ding Crab family waited for the rooftop because they were pinched to death because of short stocks.

What kind of fate will the short sellers of Wall Street usher in, and whether retail investors can win a complete victory? please look forward to tonight's big drama-the decisive battle against the top of the purple ban!