💎 👐 Are Forever: GameStop and The 🚀 Pathologics of Mobs - Misti Yang
#EatTheRich was trending on Twitter. Those who were “eating” the wealthy were funding their voracious appetites with devotion to GameStop. Yes. GameStop. The brick-and-mortar retail store where I purchased a used copy of Super Smash Bros. back in 2009. If you too had believed in GameStop from the beginning, you could have turned $4 into $400; $400 into $40,000; $4,000 into $400,000. A used copy of Super Smash Bros. into a GameCube or three.
Then, Ted Cruz retweeted AOC.1
The details of this narrative feel surreal, but this is a real story that unfolded in January of 2021. You may have experienced the same feeling as you watched another real story unfold in January of 2021, the story of the capitol insurrection. Each narrative features [heroic] mobs, [(mis)information,] and villainous [insiders] waging an argumentative standoff over whose numbers count and reality itself. As Cory Doctorow has argued, “[W]e’re not living through a crisis about what is true, we’re living through a crisis about how we know whether something is true. We’re not disagreeing about facts, we're disagreeing about epistemology.”2 While I am not suggesting an easy conflation between the Reddit Rebellion that squeezed the stock market and the Proud Patriots that stormed the U.S. Capitol, I do want to explore how similar logics of argumentation shaped both events, events that supported some billionaires and destroyed others—or at least tried to.
Much of the story of the GameStop Revolution and the storming of the capitol depends on nuanced digital affordances— the rapid circulation of (mis)information, the siloing of perspectives, and the affirmation of algorithmic biases— but important parts of the story do not depend on these new media attributes. The GameStop and January 6th events were as much about what counts as a good argument as they were about the speed of the internet, and disputes about what counted as a good argument were augmented not only by algorithmic misfires but also by the age-old soulmate of democracy— more information. As Stephen Toulmin once remarked, “[I]t may be surprising to find how little progress has been made in our understanding of the answers [to philosophical questions about the practical assessment of arguments] in all the centuries since the birth, with Aristotle, of the science of logic.”3 What events like the GameStop Revolution demonstrate is that the progress that Toulmin did not see was indicative of a progress that could not be because the science of logic is always contested. While our algorithmic condition presents new infrastructure to account for, questions about the relationship between information, argumentation, and democracy persist.
Thus, Bernard Reider is right to argue that with the growth of algorithmic knowing “we are witnessing the emergence of a new épistémè (Foucault, 2005), a far-reaching set of regularities that characterize how we understand and operationalize the very notion of order at a given time and place.”4 But, we must also understand how this “third understanding of order” is produced not only from the “fini-unlimited” potential of algorithms but also from a plentitude of evidentiary and affective justifications.5 The GameStop event offers a case study in what I term “pathologics” in order to draw attention to an inextricable fusion of feelings and logics that shape epistemes and that in their devotion generate authority. The issue of what data count has a seemingly odd way of vacillating between logic and emotion and authority, but this is not a glitch of our digital condition. Contestation, emotion, and epistemological gatekeeping are longstanding features of logic. Logic has always and will always feel like something. Gesturing toward this relationship, Mark Hagood asks, “How did we come to imagine media networks as linking our brains rather than our flesh, bones, and guts?”6 The GameStock Revolution helps us to reimagine the linkages of our epistemological flux to account for flesh and bones—pun intended.
“Hold with your immovable diamond hands for all that you hold dear and we will be breaking Wall Street TOGETHER while making gargantuan tendies in the end! WE LIKE THE STOCK.”7 -uwillmire
The GameStop event was hastened when contributors to the subreddit wallstreetbets discovered that 140% of GameStop’s stock was shorted. The ability to access the amount of short positions in “real-time’ is a relatively recent development supported by platforms provided by companies such as S3 and Ortex.8 140% meant that in the process of betting that GameStop’s stock price would go down investors had borrowed 40% more than the total number of GameStop stocks in existence. A rudimentary notion of supply and demand was all that was needed to appreciate this material impossibility. In the world of material objects it is hard to imagine a situation in which you could borrow something that was not there or give something you did not have. However, in the financial market that has been built, to borrow the invisible is not abnormal or illogical; it is simply synthetic. An unreal reality that has been accepted by the existing logics of Wall Street.
Wallstreetbets understood the logic of the market. They understood how they too could turn fluff into stuff.9 Entities that loan out stocks have contracts stipulating that when the underlying stock price gets too high the shorter must buy the stock to return it immediately. This protects against a situation in which the person who has borrowed the stock in order to short it might not have enough money to buy and return it. The wallstreetbets contributors knew that if the price of GameStop started to rise, the rising price coupled with the limited supply would create a synergy that would drive up the stock price exponentially. Buying the stock and creating a “short squeeze” was a logical strategy, and so wallstreetbets contributors began buying the stock. Indeed, the hard empiricism of market math that grounded their strategy was the stuff of formal logicians’ dreams, and they shared their strategy on a public forum, Reddit, that does not even require a profile to read. Their decision was both logical and democratic in its participatory nature.
The wallstreetbets contributors were motivated by logic, but some also had a desire to make wealthy investors who have benefited from the aggressive shorting strategies of hedge funds lose money. Contributors exhorted each other to “keep those diamond hands,” a phrase regularly used in the community to describe holding onto a stock, in order to extract more money from the billionaires. The calls chained across social media. A wallstreetbets user shared a screenshot of a tweet that reported: “112% short ratio still available. They think they can outlast you, the retail investor. Prove them wrong.”10 Wallstreetbets became symbolic of the common person of the stock market, the retail investor, waging a righteous war against the institutional investors, an institution run by insiders.
Wallstreetbets’ contributors mocked the tired tropes of accepted financial logic announcing “WE LIKE THE STOCK” and jesting “What’s an exit strategy?”11 Both phrases mimic the oft used language of financial advisors and research analysts who announce they “like” a stock and advise investors to have an “exit strategy,” or a plan for the price at which they will ultimately sell a stock. As GameStock’s stock price soared, contributors scoffed at the idea that they would ever exit their positions because they really liked the stock. Diamond hands forever.
“Thousands of people can amass small trades into giant pools of capital and whip each other into a collective frenzy.”12
On the Saturday following the newsworthy rise in GameStop’s stock price, Jason Zweig, author of “The Intelligent Investor” column for The Wall Street Journal, wrote that “this movement is the culmination of nearly five decades of the democratization of markets set off by none other than the late founder of Vanguard Group, Jack Bogle.”13 Bogle is known for introducing low-cost index funds and working to educate the public about how the average mutual fund typically both underperforms an index fund and eats up returns with costs. The “GameStop Revolution” could be seen as an extension of this “democratization” because today “[amateur traders] can communicate instantaneously” and “band together by the thousands -- millions, perhaps.”14 In short, technology breeds more democracy understood as an unbridled mob. An anxiety about emboldened masses as old as Plato’s Republic undewrote many of the dismissals of the retail investors who were participating in the “GameStop Revolution.” Zweig seemed to suggest that Bogle was to blame for a rowdy disruption of an expert-only affair. He analogized that it were as if “a bunch of couch potatoes watching a Los Angeles Lakers basketball game on TV belted down their beer and nachos, barged onto the court— and proceeded to block LeBron James’s shots and mercilessly dunk on Anthony Davis.”15 In Zweig’s estimation, these traders were lazy, unsophisticated, and lucky, and Wall Street was populated by GOAT-level talent.
Zweig made much ado about the fact that a digitally-enhanced mob mentality drove the rise in GameStop’s price calling these “fast-moving traders” a “swarm” that “moving in sync and en masse . . . can drive a stock way up or down.” Similar to the “swarm” theorized by Byung-Chul Han, these frenzied actors fomented a “shitstorm” in which “respect [was] lacking and indiscretion prevail[ed].”16 However, Zweig did not mention that the GameStop swarm was motivated by more than a frenzied group-think. There was a mathematical logic to their madness and a vigilante justice to their practice. They were pathological in their devotion and patho-logical in their reasoning.
“There is no there there.” -David Faber, CNBC commentator
As GameStop’s stock started its meteoric rise, CNBC, NBC’s business news television channel that covers the financial markets, began offering perspectives on the story. The litany of hosts and talking heads that regularly offer stock tips and trading insights offered judgments. Some expressed shock that the dark corners of the internet could see the light of trading days. Many recognized and respected the mathematical logic of the wallstreetbets’ trade, but David Faber, a regular morning host, remarked, “There is no there there.” He was suggesting that based on the metrics that traditional investors have in recent years used to claim that a stock is a “good” buy, there was not a good argument for buying GameStop stock. GameStop was mirage-like in its value. But, as the rise and fall of the stock came to demonstrate, the only there that was ever there was an agreed upon way of counting.
An article published on January 28th’s title summarized Faber’s argument: “What's $23-billion GameStop really worth? Maybe $2 billion: GameStop’s shares are no longer rooted in business reality after Reddit fans propelled them to stratospheric highs.”17 This reasoning represents the logic of value investing, a logic that suggests the value of a company’s stock should be related to the fundamentals of a company such as earnings, not the supply and demand of the stock. Even Saturday Night Live lampooned the GameStop investor as being a videogame-loving simpleton.18 The reasoning that celebrates value investing over the short-squeeze approach overlooks that the same logic that dismissed GameStop can justify Tesla trading at 1000x its current profits because of the potential of future growth. What was being contested was not a fundamental truth but the right to define what counted as an acceptable way to value a stock.
Exemplifying the perspective on the argumentation of valuation were Andrew Left and Leon Cooperman. Left did not personally appear on CNBC, but he was a target of wallstreetbets’ ire because he had published a research report explaining why GameStop was a bad stock to own all the while standing to profit off a drop in the stock price. Left’s proffered reasoning was based on traditional investing evidence, such as GameStop having a great deal of debt and declining sales, but he also stood to profit from a falling stock price because he had shorted the stock.19 Cooperman, an investor and hedge fund manager worth an estimated $3 billion dollars who in 2017 settled insider trading charges with the SEC, appeared on CNBC and explained that “GameStop is not worth $500, not worth $400, not worth $300, not worth $200, not even worth $100, not even worth $50.”20 Cooperman’s argument was also grounded in the logic of value investing.
As the price of GameStop started to rise, Left doubled down. Left’s Citron Research tweeted that they would “livestream the 5 reasons GameStop $GME buyers at these levels are suckers at this poker game.”21 Citron Research was ready to marshal a holy trinity of their brand of market rationality: a spontaneous livestream, some click-optimized enumerated reasons (think “5 ways to lose weight in a week”), and a hackneyed bro-rrific metaphor. Not to be outdone, and keeping with their trolling ways to “provide an implicit, and sometimes outright explicit, critique of existing media and cultural systems,” wallstreetbets users started calling Left and his company “Shitron.”22 Wallstreetbets’ contributor SmollPpMaster69 started a new thread: “Shitron Attacking begins.”23
The thread elicited a mix of rage at Citron, solidarity with each other, and counterarguments to the dominant Wall Street logic. The counterarguments questioned the reality that was being defended by Citron Research and like-minded investors. One user remarked, “Companies that have multi millions invested into the short probably reach out to shitron and be like ‘we will pay you $200k to host a session on why this stock is trash.’”24 This speculation rehearsed the justification that the long-practiced approach to short selling was rife with conflicts of interest and insider dealings. Another pointed out: “they don't want to admit the stock market is pretty much 100% speculation and only makes as much sense as the people purchasing. If people learn that anything can happen at any time with enough money, they won't believe all their advice. Technical Analysis only works when people purchasing follow technical analysis.”25 The post called bluff on the value investors’ version of reality. Wallstreetbets users were motivated to challenge the synthetic market logic because of who profited from that logic and how they profited.
The gatekeepers of Wall Street were similarly motivated. Cooperman offered this judgment of the practices of the newly devoted traders: “The reason the market is doing what it’s doing is, people are sitting at home, getting their checks from the government, basically trading for no commissions and no interest rates. I’m not saying they’re stupid. Show me a guy with a good record consistently, and I’ll show you a smart guy.” Cooperman merged the imagined “undeserving poor” with the now imagined at-home trader flush with COVID relief checks to marshall “dynamics of inclusion and exclusion.”26 He suggested that stock market largesse should be reserved for those who consistently pay commissions, have a “good record,” and who are not lazy. He made it clear that the argument over how to evaluate the market was also about who deserved to do the evaluation. Judged as deficient in logos and ethos, as those experiencing poverty have long been, the nouveau digitally enlightened were deemed undeserving, just as those experiencing poverty have long been.
“We want hedges too. [sniffle]” @avalonpenrose
As the #EattheRich sentiment seeped into the nightly news and across social media platforms, @avalonpenrose posted a video to Twitter in which she “explained” what was happening. Part satirical skit and part pure befuddlement, the video went “viral” earning over 95,000 retweets and 450,00 likes. As she appeared to be teetering on the edge of tears, she told the story of a market where rich people with hedges go, a market that is “not a real market; it’s metaphorical.” But, she asserted, “But, it’s real.” She half-explained and pleaded her way to the conclusion that: “We want hedges, too.”28 @avalonpenrose’s bewildered logic about the way richness works offers an ideal representative anecdote, and its virality evidences its pathological resonance.
Her nonsensical explanation is the argumentative ground being negotiated between a better informed mass of people participating in decision making and a long entrenched elite concerned about letting more people participate. Granted, this story does not fully tell the many motives of the many parties on both sides of the issue, and to be clear, it is also a risk to overstate the good intentions of those on Team Reddit. However, the story of what gets counted, who gets to count, and how to wage this epistemological battle matters. The logics of investment do not reflect a universal and unchanging truth. Unless a stock pays dividends (a portion of the company’s earnings), today’s stock investors mostly profit off changes in the underlying stock value, and the stock value is driven by whatever the predominant logic of the market happens to be. An investor could have faith that everyone will continue to use the same metrics to buy a stock, or an investor could look at an online forum where everyone agrees to an alternative way of knowing (and the added schadenfreude of watching billionaires hurt a little) and decide to take the same diamond-handed pledge. Which one is more real: faith in a reasoning relatively untethered from the material disbursements of a business or acceptance that you will never recover 140% of 100%?
On Friday, January 29th, Left’s Citron Research tweeted, “After 20 years of publishing Citron will no longer publish ‘short reports.’”29 The acquiescence of sh...Citron suggests that there is yet something to be learned from the pathological argumentation of the mob. Taking a cue from Toulmin, perhaps “[t]he proper task of epistemology” should not be “to overcome...imagined deficiencies, but to discover what actual merits the arguments of scientists, moralists, art critics” or mobs “can realistically hope to achieve.”30 Today, when we are confronted by an event that feels like it defies reasonable behavior, it is easy to attribute its manifestation to negligent digital platforms and willful ignorance, and in the event’s wake, work to fix the broken platform and the broken way of knowing. But, what if the broken way of knowing is really a new potential of reasoning? Plato argued that there was “one type of social living, democracy, which encourages the mob,” and thus, he saw in democracy “a fleeting episode in the life of a society, something which cannot last.”31 In remaining open to the merits of alternative logics we may avoid the judgment that “any form of popular politics [is] mob politics” and retain the always fleeting but always present potential of both reasoning and democracy.32
That reminds me, have you heard about the Buffalo Mafia?33
Shorting People can make money by betting against a company’s stock price. If you think a stock price will go down in the future, you can “borrow” the stock and immediately sell it. If all goes as planned, when the stock goes down, you buy it back and return it to its rightful owner. Your profit is the difference between the price you were initially able to sell the “borrowed” stock at and the price you had to pay to buy the stock back and return it to its rightful owner.
Hedge funds According to Investopedia, a hedge fund is “just a fancy name for an investment partnership that has freer rein to invest aggressively and in a wider variety of financial products than most mutual funds.”34 One of the ways in which hedge funds invest more “aggressively” is by taking larger short positions or making bigger bets against companies than the average investor because they have more capital enabling them to take risk.
Citron Andrew Left is an investor that operates a hedge fund, the Citron Capital fund, who has earned a reputation for primarily earning money through shorting, or betting against, stocks. He has also earned a reputation for publishing vitriolic research reports about the companies he bets against. For example, most recently, he shorted GameStop stock and also authored a report explaining why it was a bad idea to own or buy GameStop stock.
Wallstreetbets Wallstreetbets is a discussion board on Reddit, a website that hosts multiple discussions, known as subreddits, that are populated by user-generated content and largely moderated by volunteers. Wallstreetbets is a subreddit self-described as being “like 4chan found a bloomberg terminal illness.” This welcomed association with 4chan embodies the trollish spirit and lineage of the board.35
1. @tedcruz. “Fully agree.” Twitter, 28 Jan. 2021, 11:47 a.m. EST, twitter.com/tedcruz/status/1354833603943931905.
2. Cory Doctorow, “Three Kinds of Propaganda, and What to Do About Them,” Boing Boing, February 25, 2017, https://boingboing.net/2017/02/25/counternarratives-not-fact-che.html.
3. Stephen Edelston. Toulmin, The Uses of Argument, Updated ed. (Cambridge, U.K. ; Cambridge University Press, 2003), 2, https://doi.org/10.1017/CBO9780511840005.
4. Bernhard Rieder, Engines of Order: A Mechanology of Algorithmic Techniques (Amsterdam University Press, 2020), 19.
5. Rieder, 31.
6. Mark Hagood, “Emotional Rescue,” Real Life, accessed February 17, 2021, https://reallifemag.com/emotional-rescue/.
7. Uwillmire, “Like this post if you are holding!!💎 The real squeeze is yet to happen🚀,” Reddit, 28 Jan 2021, 11:30GMT, https://www.reddit.com/r/wallstreetbets/comments/l71fl1/like_this_post_if_you_are_holding_the_real.
8. “Is the Squeeze Squoze Yet?,” accessed February 17, 2021, https://isthesqueezesquoze.com/.
9. Richard A Lanham, The Economics of Attention: Style and Substance in the Age of Information (University of Chicago Press, 2006).
10. Zachp004, “You heard him, HOLD! We can take $11.2 BILLION more away from them. Keep those diamond hands and let's send this thing to Alpha Centauri 🚀🚀,” Reddit, 29 Jan 2021, 13:16GMT, comments/l7zqdy/you_heard_him_hold_we_can_take_112_billion_more/.
11. Culdnthinkofanything, “WE'RE NOT FUCKING SELLING. WE LIKE THE STOCK 🚀🚀🚀🚀🚀💎👐,” Reddit, 29 Jan 2021, 15:58GMT; Dispose_Paratroopers, “"What's an exit strategy?" -dfv,” https://www.reddit.com/r/wallstreetbets/comments/l8402n/were_not_fucking_selling_we_like_the_stock/; Reddit, 31 Jan 2021, 16:11 GMT, https://www.reddit.com/r/wallstreetbets/comments/l9m4q9/whats_an_exit_strategy_dfv/
12. Jason Zweig, “The Real Force Driving the GameStop Revolution,” The Wall Street Journal, January 30, 2021, https://www.wsj.com/articles/the-real-force-driving-the-gamestop-amc-blackberry-revolution-11611965586.
16. Byung-Chul Han, In the Swarm: Digital Prospects, trans. Erik Butler, vol. 3 (MIT Press, 2017), 3.
17. Olga Kharif, “What’s $23-Billion GameStop Really Worth? Maybe $2 Billion,” Financial Post, January 28, 2021, https://financialpost.com/investing/whats-23-billion-gamestop-really-worth-maybe-2-billion.
18. Anya van Wagtendonk, “SNL’s Cold Open Asks If Anything in America Still Works,” Vox, January 31, 2021, https://www.vox.com/2021/1/31/22258785/snl-cold-open-john-krasinski-kate-mckinnon-gamestop-marjorie-taylor-greene.
19. Joe Nocera, “Short Sellers Like Citron Aren’t the Enemy of Investors,” The Quint, January 30, 2021, https://www.bloombergquint.com/gadfly/gamestop-gme-trading-short-sellers-like-citron-aren-t-the-enemy.
20. Kevin Stankiewicz, “Leon Cooperman on GameStop Reddit Speculators: ‘I’m Not Damning Them’ but It Will ‘End in Tears,’” CNBC, January 28, 2021, https://www.cnbc.com/2021/01/28/leon-cooperman-on-gamestop-reddit-speculators-im-not-damning-them-but-it-will-end-in-tears.html.
21. @CitronResearch, “Tomorrow am at 11:30 EST Citron will livestream the 5 reasons,” Twitter, 19 Jan 2021, 9:58 a.m. EST, https://twitter.com/CitronResearch/status/1351544479547760642.
22. Whitney Phillips, This Is Why We Can’t Have Nice Things: Mapping the Relationship Between Online Trolling and Mainstream Culture (Mit Press, 2015), 7.
23. SmollPpMaster69,”Shitron Attacking begins.” Reddit, 19 Jan 2021, 9:58GMT, https://www.reddit.com/r/wallstreetbets/comments/l0lg6r/shitron_attacking_begins/.
24. Truthposter100, “Companies that have multi millions invested,” Reddit, 19 Jan 2021 13:23GMT, https://www.reddit.com/r/wallstreetbets/comments/l0lg6r/shitron_attacking_begins/gjutach?utm_source=share&utm_medium=web2x&context=3.
25. Gevis, “Because they don't want to admit the stock market,” Reddit, 19 Jan 2021, 11:55 GMT, https://www.reddit.com/r/wallstreetbets/comments/l0lg6r/shitron_attacking_begins/gjuhjvj/?utm_source=share&utm_medium=web2x&context=3
26. Robert Asen, “Imagining in the Public Sphere,” Philosophy & Rhetoric 35, no. 4 (2002): 347; Michael B. Katz, Undeserving Poor: America's Enduring Confrontation with Poverty: Fully Updated and Revised (Oxford University Press, USA, 2013).
28. @avalonpenrose, “a normal person explains what’s happening on the stock market,” Twitter, 27 Jan 2021, 1:29 p.m. EST, https://twitter.com/avalonpenrose/status/1354496683938201600?s=10.
29. @CitronResearch, “Citron Research discontinues short selling research,” Twitter, 29 Jan 2021, 8:556 a.m. EST, https://twitter.com/CitronResearch/status/1355152873487798274.
30. Toulmin, The Uses of Argument, 9.
31. J. S. McClelland, The Crowd and the Mob: From Homer to Canetti, 343 p. (London ; Boston: Unwin Hyman, 1989), 4, //catalog.hathitrust.org/Record/007106901.
32. McClelland, 7–8.
33. Ryan Mink, “Bills Mafia’s Donations Nearing Half a Million in Support of Lamar Jackson, Blessings in a Backpack,” BaltimoreRavens.com, January 20, 2021, https://www.baltimoreravens.com/news/bills-mafia-s-donations-nearing-half-a-million-in-support-of-lamar-jackson-bless.
34. Sham Gad, “What Are Hedge Funds?,” Investopedia, accessed February 17, 2021, https://www.investopedia.com/articles/investing/102113/what-are-hedge-funds.asp.
35. A Bloomberg terminal refers to a computer terminal linked to a special interface that prior to the internet provided investors on Wall Street greater access to information about the financial markets than the average investor. Inventing and selling this terminal is how Michael Bloomberg, the other notoriously rich man who ran for president, made most of his money.