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There has been nothing like this GameStop GME, +78.69% saga in recent memory. It’s still early days. But already we can work out some of the groups who are likely to emerge as losers when the dust settles. At least if history is any guide — which, alas, it usually is.
You
OK, so you most likely don’t have money in any hedge funds. Not directly. But you’re probably a taxpayer. And so this could end up costing you a ton of money. Why? Because some of the big investors in hedge funds are those massive public sector pension funds around America that are already swimming in red ink. They love ‘allocating’ some of the pension money to ‘alternative strategies’ including ‘long-short equity,’ which is a fancy way of saying they take some of the money needed for the pensions of hacks, teachers, firefighters, hacks, police officers, garbage collectors and hacks and throw them at hedge funds of the type that just got hosed, but good. But these are ‘defined benefit’ or final salary pension plans, so if the money isn’t there for the hacks and others when they retire, it will have to be found, and we all know where.
You
Hedgeye, an investment company in Greenwich, Conn., says the economy, and hence the stock market, is always in one of four ‘quads’ — e.g., ‘slowing growth and falling inflation,’ and so on. Well, after 25 years in this business I can tell you the GameStop affair means we are now in ‘Quad Five’ — defined as the period when Things Get Seriously Weird. Like SPACs and bitcoin, this is bubble stuff, the kind of wacko event you see when the Starship Enterprise finds itself at the edge of the space-time continuum and everything goes nuts. And whatever comes after Quad Five is rarely good. Who will lose? Look in the mirror.
Mr. Angry
When I lived in England the late, great radio disc jockey Kenny Everett there did a character on Radio One called “Mr. Angry of Purley” (a London suburb), who was always really, really angry about everything that was going on in the country. Mr. Angry wasn’t always sure why he was angry, but oh boy was he mad. I realized Thursday night that Mr. Angry — or more accurately Nongendered Angry, Mr. Angry’s millennial offspring, is alive and well, and on Reddit. I got a lot of very, very angry emails from people who were very, very angry about the last article I wrote about GameStop. Their emails didn’t always make a lot of sense — or any, really. They hadn’t actually had a chance to read my article, unfortunately. They were too busy being angry about it. “@
