Notes

GME day 3

Matt Levine continues to write very good copy on the unfathomable things that happen when a bunch of Redditors get involved in the stock market. Today, he lays out some scenarios of how this is likely to play out (one, albeit unlikely, being the collapse of capitalism), but it sounds like it’s not easy to predict, even for those that do this stuff for a living.

It is just the case, just inevitably the case, that if you are going to have financial markets that are optimized for those purposes—that are liquid and complete, that attract smart people, that are open to everyone—they are also going to have a certain amount of nonsense. It’s not like WallStreetBets invented financial nonsense! Financial-market nonsense is, like, 70% of what we talk about around here on a normal day. How many times have I have written about hedge funds tricking each other using credit default swaps? Financial markets exist to foster price discovery and capital formation, but the way they do that is mostly by letting smart people mess with each other all day. WallStreetBets is a new class of smart people messing, quite effectively, with the old ones.

Matt Levine / Bloomberg

I know nothing about the stock market, and I’m not making any judgement on whether all this is good or bad, but it is absolutely fascinating and at least a tiny bit funny.