Am I too late to get those sweet, sweet clicks? I love those things. I’m clearly not alone.
Lots of people are still chasing that hot, hot trend. A bunch of hounds that can’t ignore the ferric tang of blood in the air.
We all want one good story. Give us a dirty, gruesome saga.
Such a shame there is nothing good out there, though it isn’t for a lack of effort.
The one good story isn’t about Reddit bros chasing gains. It isn’t about hedge fund Gordon Gekko-aspiring homunculi that unironically say they “eat what they kill” but cry foul when they get bitten.
The real story is a decades-old one. Trace this charade backwards. Blink and you’ll miss it. It’s already being covered up.
You’ve probably found dozens of articles that link to embedded Twitter and Reddit posts, explanations of short squeezes, pieces on how options can push stock prices, and whatnot.
I’m not going to talk about that company. It has nothing to do with it at all, really. I see no need to even mention it by name outside of the shameless title up top.
It was about finding a chink in the armor. It was about finding one way to hit back. It was about the system being so contrived that the simplest of market realities could be exploited for profit. The braggarts just couldn’t help themselves once it worked.
Markets should be agnostic. Another way to put it is that when it comes to buying and selling, the market should never care about the source of capital.
That is hardly the case in reality. The real game these days is making sure others (us) can’t and won’t have access to the same trades.
Pay no attention to:
- How your buy and sell orders are processed last.
- How market access is now measured in milliseconds for some but days for you.
- How your trading and retirement accounts cost more but give less.
- How recapitalization and clearinghouse capital access was used as a profit-generating, or at least a loss-cutting, tool.
The only reason this happened is because the “man behind the curtain” forgot the curtain mattered.
The problem is that a whole lot of inequity is built into equity markets before you can even determine the price of a stock, let alone trade it.
There was a glimmer of hope that something would come from this, regarding retail traders being locked out of their trading platform, barred from buying or selling, while hedge funds and institutional sellers had contractually obligated “first dibs.”
That is the story and it is one that will not change from the look of it.
It’s a story about complacency. It’s about the removal of risk for some while excess risk is applied to others, a caste system of traders that has calcified, and a rigged system that prioritizes account size and devalues market access.
If brokerages and market makers dominate volume and collectively set rules that promote coordinated trading among themselves, how can they claim to be any different from a pool of Redditors that collectively acted in tandem?
It goes deeper still. How can market makers not be exposed to allegations of market manipulation if they choose to recapitalize and prioritize losing positions for some clients while jacking up deposit requirements for winning ones for others?
Citadel in particular needs to answer the last one. It bailed out short positions for hedge funds while delaying what, for it, was a relatively minor capital infusion to clear trades for Robinhood, of which it is a primary owner. It is hardly alone there, though. It just had to move quickly while people were watching, and thankfully there was plenty of noise to bury the signal.
Citadel and other seemingly unassailable, entrenched companies like it choose which side of these trades to favor, yet have a privileged position in the eyes of the SEC, the FTC, and probably a dozen other agencies.
It hardly mattered, since the MSM talking heads skipped right over it as just part of the market — a baked-in and guaranteed entitlement.
If the market regulators are fine with preferential treatment, what is a compelling reason for the charade of a free market to exist at all?
Why should we trust the staff of government agencies that are just working the revolving door between the public and private sectors to climb a well-trodden ladder?
We shouldn’t. But “we” aren’t part of “them,” and that cuts right to the source — that huge divide between “us” and “them” in the caste system that is American capitalism was never meant to be questioned. The reason this feels wrong and right and is so convoluted has nothing to do with the nature of the particular trades involved. It has everything to do with the nature of trading itself.
While we want to know “who, what, and why,” the real story, the trail of blood that could be easily traced, keeps growing colder and colder. The man behind the curtain took a glancing blow, and it won’t happen again.
There, but for the grace of God, go retail traders.
While we can’t do much here to combat it — nor can r/WallStreetBets — what we can do is make sure that we do not forget it ourselves.
As always. We are on the outside, but we are far from alone or helpless, and we can find our own advantages to drive our own profits.
