The Times Magazine 11Nike hoodies. When you speak to him on the
phone, he comes across as a decent, honest
young man, but what he’s doing may lose his
followers money.
Martin Bamford, a chartered financial
planner, looked at Little’s TikTok page and
was alarmed by what he saw. He suggested
Little’s “mentoring” is thinly disguised
financial advice, something that is illegal
unless you are regulated and have received
proper training. Little insists he doesn’t give
advice, but acknowledges doing so on his
early social media videos. “Now I know what
I can and can’t do. [When I look at the earlier
videos] I can see a lack of knowledge and
understanding.”
Instead he uses a WhatsApp chat group
to tell those he mentors what trades he is
placing and how risky they are; it’s up to them
if they do the same. While he is adamant he is
not posting “signals” – telling people what and
when to buy and sell, which is illegal – he is
clearly treading a very fine line.
Luke Appleton is another young TikTok
trading influencer. He holds more than
£100,000 in bitcoin and last year made
£30,000 in realised gains (ie, he transferred his
investment into cash), and he has a further
£70,000 invested. He is more confident, and
more sweary, than Little – on one video he
tells his followers, “Let’s put our f***ing money
where our mouths are, shall we?”
He tells me he won a scholarship to
Millfield, the sports-focused public school in
Somerset, and currently plays premier-division
hockey for the Old Georgians. He was tutored
in economics by a friend’s older brother, who
studied the subject at Cambridge and taught
him how to invest in and trade gold. He says
n early January, GameStop was looking
like a company about to go the way of
Blockbuster Video. A fixture in most
suburban shopping malls in the US, it is
a chain of 5,000 shops, headquartered
in Texas, selling games, consoles and
other electronics. The company was
in trouble as the shift of video-game
sales went online; in 2019, it made a loss
of $795 million (around £600 million).
Fast-forward to the end of January, when
a forum on the social media site Reddit
called WallStreetBets – a place where people
discussed investing and stocks and shares
and swore a lot (the 8.5 million members call
themselves “the degenerates”) – featured an
increasing number of posts about GameStop.
The degenerates hatched a plan to teach
the hedge fund managers, who were betting
that GameStop’s value would go down
and therefore adding to the likelihood
of it collapsing, a lesson.
The hedge fund managers’ bets were
in the form of “shorting” its stocks. This
is done by borrowing GameStop’s shares
and selling them with a promise to buy
them back later. If the company you are
shorting loses value, you make money when
you buy them back at a cheaper price.
The armchair investors took on Wall
Street by buying shares in GameStop and
encouraging everyone on the forum to do
the same, pushing up the value. At one
point last year GameStop’s shares cost just
$2.80; by January 27 this year, they had
rocketed to $347.51. One of the loudest
voices behind the campaign was Keith
Gill, 34, aka “DeepF***ingValue” on Reddit.
Until recently, Gill worked for an insurance
company in Massachusetts. At the peak of
the GameStop frenzy his investment
account was worth $48 million.
Elon Musk, whose own company, Tesla,
has been shorted many times by hedge fund
managers, made it clear which side he
was on. “Gamestonk!!” he tweeted on the
evening of January 26, with a link to the
WallStreetBets forum. This sent the stock up
more than 60 per cent in after-hours trading.
The so-called “dumb money” – Wall
Street’s name for nonprofessional investors- was humiliating some of the most
sophisticated and well-paid investors in
the US. And they loved it. “For all the big
f***ing hedge managers,” the most popular
thread on WallStreetBets for much of
January 27 read, “This is a message from
us, we f***ing own you now. F***. You.”
Members of the forum were posting
screenshots of their suddenly inflated account
balances; the CEO of GameStop, George
Sherman, saw his share in the company go
from $7 million to, at one point, $745 million.
It could not go on for ever, however, as
investors started selling the stock whose
value had increased out of proportion
to the traditional metrics of worth, and
worried about losing their money.
While plenty of users on WallStreetBets
were still exhorting fellow traders earlier
this month to “buy the dip”, “hold the
f***ing line” and never sell, other posts were
far less bullish. “Guys, the hype is dying,
market manipulation doesn’t pay long term,
follow the trend and leave before you lose all
your money!!!!!” one said. GameStop’s share
price at the time of going to press was $40.59.
It wasn’t only GameStop targeted by the
WallStreetBets investors: BlackBerry, AMC
Entertainment, a cinema chain in the US, and
Nokia – all shorted by hedge fund managers- also saw their share prices increase. In
the UK, shares in Pearson, a publishing and
education company, Cineworld, the cinema
chain, and Petrofac, a provider of oilfield
services, jumped as hedge funds dropped
their bets against these stocks.
AJ Bell, an investment platform, reported
that nine in ten people who bought GameStop
and AMC Entertainment were male and
mostly below the age of 30. There are
rumours that many City and Wall Street
workers, those burnt from jobs in both
financial capitals, were among the traders.
Some investors described the move as
“payback” – taking revenge on the companies
seen as the cause of the financial crash of
2008 – and threads included insults about
“boomer money”. Some people pledged to
give their earnings to charity afterwards.
Jaime Rogozinski, 39, who created the
WallStreetBets forum in 2012 while working
as an information technology consultant in
Washington DC and then left the community
in 2019 after taking some people to task over
what he described as hate speech, sees the
event as a big moment in the investment
industry. “A massive group of people have
organised where they collectively have a
seat at the poker table, which was previously
invite-only,” he told The Wall Street Journal.
“You can’t ignore them any more.” n
I
THE GAMESTOP GAMBLERS
HOW THE PEOPLE TOOK ON THE HEDGE FUNDERS