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how about that gamestop guys numerous people in the comments section have asked me for more of my opinion on the events of the last week and i wanted to wait until the weekend to gather more information but the last week was unprecedented the last week will be extremely consequential going forward for all investors the reason why is because wall street bets essentially formed their own crowdfunded crowdsourced hedge fund and they've done something that no other hedge fund has done they exploited a glitch in the matrix and this glitch in the matrix was always there what they accomplished this week was always possible but it had never been done and let me explain it if you think the stock market is going up you have three tools available to you you can buy the stock which is what most ordinary retail investors do you can also buy a call option which gives you the right to buy the stock from somebody else if the price goes up you can also sell a put option but that's mostly just to collect the premium for the contract you want the contract to expire out of the money now if you're a contrarian and you think the stock will go down once again three tools you can short sell the stock where you borrow it from your broker you sell it on the new york stock exchange you wait for the price to go down you buy it back at a cheaper price return it to your broker keep the difference that's your profits you can also sell call options and this is what hedge funds have done to get themselves in trouble now if you own 100 shares of stock you can sell a covered call which is fine you'll just lose your stock if you were wrong about what the price will be in the future however they were selling call options without actually holding the stock and the reason why is because they were manipulating the stock price they were selling call options when the price looked reasonable to ordinary investors ordinary investors were looking at the price saying well it could go up gamestop's not doing that terrible we think this company is undervalued now these hedge funds were then short selling the stock to manipulate the price they were deliberately driving it down so these contracts would all expire worthless out of the money they didn't want to have to cover their calls by buying 100 shares on the new york stock exchange and then selling them at a loss to these other people and this is what is breaking the stock market right now where so many of these call contracts have been written that there isn't enough gamestop uh shares in existence to cover all of these calls the third tool i didn't mention is they would buy a put contract but once again they're hoping that the contract will expire uh worthless out of the money and they'll just collect the premium they're going to lose the premiums if they were buying any put contracts because the price of gamestop has gone way up now what has happened in the last week is the most epic short squeeze of all time a short squeeze of an entire hedge fund multi-billion dollar and this has never occurred before because there's always been a gentleman's agreement on wall street between these companies that this event would never occur so when these uh when these hedge funds take contrarian positions and they start manipulating the price and buying all these contracts they publish their books they make it public to the other companies what they're doing because they don't want another hedge fund to jump in and do exactly what wall street bets did so when you see a company that's failing or doing poorly you bail you basically lay claim to the carcass you say this this company gamestop is mine i am going to manipulate it i am going to defraud all the retail investors trying to jump in because they think this company is undervalued so the other hedge funds stay away this event doesn't occur however wall street bets doesn't play by the rules of wall street because they're not they're not on wall street so they saw what was happening and they decided to trigger the events of the last week and this is very bad if you work on wall street the people who work on wall street made sure this event never occurred because they don't want scrutiny they wear very fancy suits they go to elite universities they use very fancy language and they do this because they're exclusionary they don't want you to feel like you belong in the markets they don't want you to understand how it is they actually make their money and the reason why is because it's kind of a casino you know they're deliberately manipulating the market to participate in a hedge fund you have to be a millionaire it's millionaires banding together to have billions of dollars in assets so that they can manipulate the market cap of uh of small cap funds you know market caps of hundreds or or potentially up to a billion dollars so what what happened was is gamestop was supposed to fail and it didn't and i'm sure these individuals on wall street are very upset about this because it didn't they broke the rules the unspoken rules of wall street and a lot of these people who work on wall street are sociopaths they don't care about people they don't care about individuals it's only about making money if you've never seen the movie american psycho it might be more relevant now than ever it's a difficult film to watch but it's christian bale it came out in 2000 and he played he plays he plays one of these executives working at solomon brothers which went bankrupt like in 1990. bonus points if you know who this guy is but the two uh the two hedge funds that have gotten caught up in uh gamestop's issue is melvin capital and citron research and people who work uh for these hedge funds or uh private equity firms they're not innovators they don't have any good ideas they don't create jobs they're they're parasites on the system they they found a way to exploit the market to make money for themselves and they don't care who they hurt when they do it as long as they make money and they're just vultures uh between private equity firms and hedge funds they've destroyed a lot of well-known companies that i i've i've enjoyed my entire life i'm in my mid-30s i went to sears and toys r us and they tried to do to gamestop what they've already successfully have been doing for decades and let me explain to you the process so gamestop's share price on july 7th was 4 dollars per share and there's only about 70 million shares in existence so four dollars times 70 million equals 200 mil 280 million that's their market cap potentially what was planned uh by hedge funds and uh private equity firms was a leveraged buyout and and the reason why these private equity companies do this is it's a controlled demolition of the company they're trying to bring it down and what you do let's just talk about sears as an example the private equity company comes in and they they have a controlling interest in the company they either take it private or they control so many shares that they get to direct the they get to appoint the board of directors and they they put somebody in charge of the company who deliberately runs the company into the ground what they do is they don't innovate they don't adapt they don't they don't try to stay profitable but they take on massive debts and who do they take that debt from they borrow from the private equity company that just bought them out so this company owns uh sears or or whoever and then they're borrowing more money from them why would they do this it doesn't make any sense right well the reason why is because they're trying to bankrupt the company and when the company is bankrupted either they're sold again or they're liquidated and if they're liquidated everything that the company has the rights to or owns has to be sold off all the employees are fired and the debt holders when the company is liquidated are paid first so the company goes bankrupt the debt holders are paid who do they pay they pay the private equity firm uh and and the company going bankrupt has no impact on the books of the private equity funds that that bought a controlling interest in them and the the the hedge funds who were shorting it are happy because the stock price went to zero that's what they wanted if you uh shorted a million shares of uh of of uh gamestop at four dollars and the share price goes to zero because they went bankrupt you just made four million dollars you never have to buy back the shares you never have to return them so who are the losers in that scenario and the losers are retail investors it's employees of the company it's people who are paid in company stock it's people who have pensions with that company that that aren't going to be able to fulfill them so the hedge funds and the private equity firms don't care about the communities or the people that are completely devastated when a company that could have been saved when a company that could have remained profitable or turned around is just completely demolished and gamestop was supposed to be next gamestop was probably going to have a leveraged buyout it was going to go private or or somebody was gonna get a controlling interest once the shares have been depressed to under two dollars potentially but that's not what happens what happened was is because this stock was so shorted uh redditers started buying it up one it did look undervalued according to its book value so what happens when there's only 70 million shares in existence what happens when seven million people try and buy 10 shares each they basically just gained a controlling interest in the company and if they refuse to sell their shares uh when when these contracts expire and and the hedge funds have to buy on the open market to sell at a loss to whoever bought those call contracts once again it's happening it's happening every week as these contracts expire that they're losing uh tens hundreds potentially billions of dollars and this is the biggest short squeeze in history you see this on daily or weekly charts potentially you know the stock price will shoot up 10 20 30 50 percent as smaller dollar investors day traders get squeezed out but never on a scale of three thousand four thousand percent as uh gamestop's price went from four dollars to over four to almost 400 at one point so what is the fallout of all this and the fallout is is that uh wall street bets has exposed this flaw in the system and a lot of people are calling for regulation now is that regulation to stop the hedge funds the private equity firms from manipulating the markets and and destroying american institutions you know companies like sears or is the regulation going to be hey you're not allowed to go on social media and then collaborate buy stocks uh right now you know we're getting pushback from the industry but my argument is is you can't regulate people identifying inefficiencies in the market the share price of gamestop right now doesn't matter because it's the option contracts that's driving the price yes when you buy a stock you should be buying it based on the equity of the company what is the company worth or going to be worth in the future but why do you buy options contracts the only thing that matters with an options contract is the price it's a bet you don't buy option contracts because of the equity in the company you buy it because of the price and if people want to pile into the stock they're also buying up the contracts too if if people want to take the contrarian position to the contrarian position to identify that these hedge funds were wrong gamestop wasn't doing that terrible it's not doing great but it wasn't four dollars a share uh so the stock was overshorted and these hedge funds got caught and they're gonna pay but wall street is pushing back the insiders are pushing back the nasdaq ceo friedman says the exchange will halt trading on any stock if they link unusual activity to social media chatter which is a joke because market price manipulation occurs all the time on cnbc bill ackman a billionaire you know went on cnbc numerous times to say all the hotels are going to go bankrupt hotel stock prices are going to go to zero because of the pandemic everybody sell sell your hotel stocks he he then prior to making all these public announcements bet against the hotels saying they would all crash they then crashed he made a huge profit he then took his profit to invest in the hotel stocks while they were depreciated and has made a fortune since then so billionaires do this all the time using the original social media print television and for any elected representatives who come out saying we need regulation of wall street bets well the justice department is closing their insider trading investigation into senators and congress people who received briefings on the pandemic in february immediately went and sold all their stocks waited for the stock market to crash they then bought back in at the lows for a huge profit the joke is wall street wants to ban outsider trading insider trading should be illegal you know people on wall street bets don't have insider information they're not getting uh you know congressional briefs to know what's going to happen in the market in the near future they're taking the information that is publicly available to them and making the best financial decision for themselves and a casualty of the gamestop fiasco might be robin hood itself you look at this headline how robin hood went from hero to villain in 48 hours on thursday when they stopped people from buying stocks like amc and gamestop we'll never know what really happened they did a terrible job with messaging the day of but the conspiracy is that citadel securities which handles robin hood's order flow is also an investor in melvin capital which was getting destroyed by this short squeeze so potentially citadel securities got involved but it doesn't matter it doesn't matter what happens because they're going to get sued and they should because they they manipulated the market by allowing people to sell on their brokerage accounts but not being able to buy the stock price immediately started falling it could all it could only go one direction at that point but it's irrelevant because robin hood bought the hedge funds time this weekend i guarantee you nobody at these hedge funds are getting sleep because they're trying to figure out how to get out of this situation they have uh clients who who belong to their hedge fund who are millionaires who are going to be thoroughly upset that they lost all of their money in this gamestop squeeze now i have not been participating in the purchasing of any of these stocks because i i just don't see how it ends well you know it's it's funny in the short term but for all these companies that have been struggling or their share price has been depressed or aggressively shorted if retail investors want to pile into these stocks to mess with hedge funds that's fun and entertaining but you only make money when you sell your stock and ideally you want to sell it for higher than what you paid for it but what these companies can do if their share price starts recovering is issue new stock do a secondary public offering and this helps the hedge funds this helps the shorters it helps the company too you know amc wants to serve their management is trying to save the company they want to remain solvent until the pandemic is over and retail investors piling into their stock is actually helping them same thing with american airlines american airlines doesn't want to go bankrupt they don't want to have to fire employees or liquidate liquidate assets so with retail investors jumping into these stocks the companies are are issuing new shares and it's it's driving down their price but they're making money money that they can use to survive until the pandemic is over but in the short term this helps the hedge funds it keeps the price down so they're not losing as much on their contracts now is gamestop going to do this is gamestop going to issue new stock to pay off their debts and i honestly don't know what gamestop is planning will they issue new company stock if they do that will drive the price down and hurts the retail investors piling in to help them however that's that's how they raise money you know they've taken on a tremendous amount of debt if they want to raise capital to retool their business to remain solvent or pay down debt now is an excellent time to take advantage of their inflated share price and issue new stock but issuing new stock will hurt the wall street bets crowd in the short term so i i don't i don't feel comfortable participating in any of these shenanigans i i don't recommend you do as well if you are smart enough to buy gamestop stock under forty dollars you know closer to twenty dollars so if you jumped in this basically anytime before january 13th and you want to hold because you think this is hilarious then then then keep those diamond hands hold if the stock price fluctuates between 400 and 300 dollars your profits are already massive you're up huge if you bought down here i i i'm telling you to hold because it's hilarious and it's not that much money probably you know it'd be nice if you could sell it 400 but if it goes down to 200 or 100 you're still you're still 5xing your money but should you be buying at 300 or 400 no i i can't i can't recommend you guys do that will the share price shoot up to a thousand two thousand three 3000 i don't know it could or gamestop could issue new stock and it just craters okay guys those are my thoughts i do want to conclude this video by saying i am not a financial advisor i do not work on wall street this youtube channel is just me a complete amateur giving my opinion i could be wrong i i don't mean to take offense to anybody or or slander any company or industry free speech i'm just saying what i'm saying don't take me serious this video is for entertainment purposes only but give me a like if you enjoyed it and subscribe if you haven't already subscribed to my channel i talk about finance and investing topics leave me a comment down below if you want to help me out with the algorithm and until the next video take care