"This is for you, Dad": Interview with an Anonymous GameStop Investor
Raised in a family devastated by bubble economics, one Reddit investor saw
GameStop as a way to send a message to "cancerous rent-seekers"
Matt Taibbi
Feb 6
Thursday, January 21st was a critical day in the story of the video game
chain GameStop (ticker name: GME). Retail investors, including many
subscribers to a Reddit forum called wallstreetbets, pushed the company's
stock from $6 to $43.03, but experts said playtime was over. It was time for
the big shots to clean up.
According to Citron Research, one of many funds that had bet on the
brick-and-mortar store to fail, those investing in GME were "the suckers at
this poker game," and would soon be sorry when the stock went "back to $20
fast."
They were wrong. Instead of amateurs being shoved aside by hedge funds, it
was the pros who had their backs broken, as GME soared to $65.05, beginning
a steep ascent that would become an international news phenomenon.
It was the "We're gonna need a bigger boat" moment for Wall Street. The pros
had been sloppy. By late 2020, shares in GameStop were well over 100% short.
A sudden rise in value would force shorts to pay exorbitant prices just to
get out of the trade. By the afternoon of the 21st, all the "suckers" on
Reddit had to do to beat them was nothing, and they did just that, behind
the rallying cry "diamond hands," signifying a determination to hold at all
costs.
Why hold? One of the millions of subscribers to wallstreetbets posted a
note, explaining what the trade meant to him:
This is for you, Dad
I remember when the housing collapse sent a torpedo through my family. My
father's concrete company collapsed almost overnight. My father lost his
home. My uncle lost his home. I remember my brother helping my father count
pocket change on our kitchen table. That was all the money he had left in
the world. While this was happening in my home, I saw hedge funders
literally drinking champagne as they looked down on the Occupy Wall Street
protesters. I will never forget that.
My father never recovered from that blow. He fell deeper and deeper into
alcoholism and exists now as a shell of his former self, waiting for death.
This is all the money I have and I'd rather lose it all than give them what
they need to destroy me. Taking money from me won't hurt me, because I don't
value it at all. I'll burn it down just to spite them.
This is for you, Dad.
The post went viral, scoring over 70,000 upvotes the first day and ending up
on the front page of Reddit. The author, who had gone to lengths to keep his
identity private, saw his Reddit handle "Space-peanut" inundated with press
requests, from podcasts all the way up to the New York Times. Stuart Varney
of Fox Business News read his post out loud on live television.
Meanwhile, on wallstreetbets, Redditor after Redditor responded with similar
tales.
"My mother lost her house that spent 20 years saving for in 2008 while
raising me and my sister," wrote one. "I remember sitting on the curb,
trying to keep it together myself at 16 while watching her break down
uncontrollably."
"My dad is a carpenter and thirty years of work, retirement, and savings was
nearly wiped out," wrote another, adding: "This is for you, Dad."
A third letter described a man who, having lost his dairy business after the
crash, attempted suicide by shooting himself in the face in the woods. He
survived, leaving his son to "carry his blown-apart body to the house," only
to finish the job by throwing himself in front of a train soon after.
"Space-peanut" watched in awe as stories piled up. The thread soon read like
the untold history of America after the 2008 financial crisis:
The original poster, whom I'll call SP, was unaccustomed to attention. A
one-time military man and father of two, he had no other social media
presence and joined Reddit exclusively to comment about stock on
wallstreetbets. He was overwhelmed by what he calls "just an endless Rolodex
of sad stories," nearly all referencing the same period after the crash.
"I think that's why my post, however terse, hit such a nerve," he says. "So
many people were saying, 'I have deep pain from this point in time, too.'"
An acquaintance of a long-ago source of mine, the man reached out this week.
Across several conversations, he explained what GameStop meant to him, and
why. For a variety of reasons, mainly having to do with his professional
situation, he asked to remain anonymous.
SP is cautious, articulate, and well-read. In our first call, one of the
first things he told me was that even growing up, he'd "always wanted to
work on a trading desk." I asked why. The answer was a three-decade story
that ran all the way to GameStop. It's reproduced below, in Q&A form.
Since 2008, the tendency among mainstream commentators has been to shrug off
reverberations from the crash that force their way into news, usually on the
grounds that the millions who lost homes, careers, marriages, lifetimes of
savings, health, and in thousands of cases, their lives, are not truly poor
or "working class," or are only "relatively low-wealth," as New York
magazine recently put it. In the case of GameStop, there's been a parade of
stories describing investors as dupes, dummies, financial Trumpists,
irresponsible gamblers, even crooks, their trade pegged as almost everything
but what on some level it surely was and is, an echo of a suppressed
national disaster.
Was GameStop "recreational" investing gone haywire, or a climax to a story
building for a generation? Here's one person's answer:
________________________________________
SP: I grew up watching my parents struggle with money. Money was discussed
all the time. They fought all the time. The older I got, the more I felt I
had to do anything to keep my own kids from going through the same thing.
My parents worried in different ways. With my mother, I regularly knew how
much money was in her checking account because she would stress-yell the
amount whenever I asked for anything. It was really difficult for her.
My dad was the opposite. He wanted you to think he had money, but you were
looking around and thinking, "I'm pretty sure we don't." Because I don't
have a bed, and my brother is sleeping on a couch. So if you've got it,
maybe we should use it, I don't know. So they were different in that regard.
From the time I was eight and nine, I was spending summers working. When I
was with my father he thought it was important for us to do the hardest
manual labor possible.
TK: Was that supposed to be about character-building?
SP: So my dad thought it was a good idea, but at the same time, I think he
needed to go to work. And that was the best place for us to be, because I
don't think he could leave us alone all day. So he was like, "I know what
we'll do. I'll bring you to work. You can work and then we'll be together."
(Laughs) That was character-building, yes. I built a lot of character out
there. I'd say that much. I had way too much character.
To this day I know I can outwork people in physical labor simply because my
threshold for what is considered difficult is much higher, because I spent
summers as a child doing that. I'm not sure where that squares with labor
laws, but it happened.
TK: What kind of work?
SP: At that time, we were doing field work out where we were from. So you're
doing a lot of leaching, which just is basically watching a big field fill
up with water to prepare it for planting. One summer, we were doing that.
And then we tore down houses. We were working with other guys who were grown
men and didn't speak English.
Those guys would do anything to get here and take that job, especially the
day laborers. They wake up super early, go to a spot where they know a
contractor is going to drive by, and try to pick some of them up for the
day. I mean, not an easy existence. So it's difficult to hear people lambast
a specific group of migrant workers. I feel like saying, "Hey, I know I've
done work with migrant workers and I'll tell you what, that would be
difficult to say, 'This is what I'm going to do my whole life.' I'll tell
you that right now.
TK: What did your mother do?
SP: After the divorce was over, she moved to a new state, and she spent
years starting up a new business, a dining guide in a big city. Put her own
money in it. There was a lot of driving, over an hour every morning to get
to the city, then appointments all day. She was a single mom at the time, so
she had to get back, get the kids, take care of us. But she was doing well.
She had advertising contracts lined up and after years of work, was just
about ready to launch, when the dot-com bubble burst and she lost it all.
Almost overnight, the only thing really left of the business was a fax
machine in our apartment. Before, companies would be faxing her signed
agreements, letters of intent, and so on. All the marketing calls would come
back to that number hanging on the fax machine. So basically, anything
connected with her company was coming back there.
For a long time, she would just lay on the couch, locked in depression. The
fax would go off from time to time and she wouldn't react, she would lie
there in a daze. Looking back on it, it must have been painful every time
that fricking thing rang, a reminder of the thing you failed at. Just
imagine, you're so close to making it, and then an exogenous shock prevents
you from achieving the dream you'd set out for yourself.
She could've just let that beat her down forever. But she eventually got her
shit together and was like, "Hey, I need to retool myself." She went back to
school, got a master's degree, started teaching. My dad, on the other hand,
didn't do that. He never got over what happened.
TK: This was the concrete company?
SP: Right. In the 2000s, he was a superintendent at a concrete company that
was very successful for a time, employed hundreds of people. I worked there,
too, when I was 19. Again, there were a lot of migrant laborers doing this
work too, guys who were supporting families back in Mexico. And 2008 hit,
another financial collapse.
There was such explosive growth, and all of the sudden, it was gone. My
father lost his job, his house, and he just got worse and worse and worse.
He's got heart problems now, he's on a bunch of medication. I just expect to
get the call any day that he's going to be dead. He's just circling the
drain. He's been in and out of the hospital. He doesn't take care of
himself.
One of the people who answered my post on Reddit talked about how he felt
the crash basically robbed his father from him. That's how it was. We used
to talk five times a day, man. Talking to my dad was the most reliable thing
that I could do. I talked to him and my brother four or five times a day for
fifteen, twenty years. And then over the past probably four or five years,
it was less and less. I think I went a full year without talking to him. He
didn't know I got married. He hasn't seen my second daughter.
I'll tell you, when you look in the eyes of a grown man who has no options
to support his kids, that's devastating. I decided when I first saw that in
him, I would sweat blood to make sure that never happened to my family.
I put myself through school, going for the cheapest state tuition, and did
the same for the MBA program. I was able to take out a loan and I was able
to start the program a semester early, while I was still finishing
undergrad, so I could economize the cost. And then I went straight through
both summers and got it done really quickly, overloading my class schedule
because I didn't want to take out more loans. So I got it done for $25,000,
and I was working full-time too, while I was there. Later, I was able to
save up enough to get it completely discharged, though in order to do that,
I had to have five roommates for four years.
TK: Why business school, why finance?
SP: By the time I was getting ready to go to college, my brother had already
been in the Marine Corps for a few years and had already done two tours in
Iraq, and it was the worst time to be there. He saw a lot of carnage. And he
was saying, "You know, if you still want to be in the military, it's a much
better route if you go to college first, from what I've seen." And every
single person I'd ever done manual labor jobs with had said, if they could
do one thing differently, they would have gone to college. They'd be on the
job and put a hand on my shoulder and say, "You don't want to have to do
this when you're 50." Like I'm 50, I'm hanging drywall. It's my company, but
it would be nice to not have to do it.
Anyway, I got into being a Wall Street trader when I was an undergrad. I
liked the high energy. I also knew a bunch of people from my home city that
grew up to be traders. (Laughs). Some of them were really dumb and some of
them didn't even finish high school, but they knew a guy who was on the
floor like (mimics a Chicago accent) "And my boy Tony, he hooked me up with
a jawb on the exchange."
But they made a lot of money. I thought, "This is ridiculous. I'm more
intelligent than that guy." He could barely do math, but he's trading
options. Still, I liked hanging out with those people. Some of them were not
real class acts, but. I liked the idea that it was challenging. I just
wanted to study everything I could. I knew I was going to be competing with
people that had way better educational pedigrees than I did, and I needed
every single edge that I could get just to get myself in the door.
I got really interested in the question, "what were the things you look for
when a company starts going into financial dire straits?" That led me down
the path of finding good books that had been written in the past about major
bankruptcies and collapses, books like When Genius Failed, Predator's Ball,
and A Colossal Failure of Common Sense. I was studying companies like Long
Term Capital Management, which got bailed out in the late nineties.
At the time, it was just interesting to see how, when people did their
homework and took a big risk on some distressed debt, they could make a
gigantic payday in one day. And I was like, man, that would be exhilarating.
I even saw the original movie Wall Street and I was like, "That's badass.
Even though these guys are criminals, just the idea of being on a trading
floor seems really cool."
Now I look back at that and think, if I'd become that person, I'd be sitting
in the place of some of these hedge funds who do this all day. They go out
and find companies that are going to be struggling at a specific date and
time, and that's when they start buying massive put spreads, shorting the
piss out of the stock, putting it in the dirt, ensuring it will fail. I look
back on it now, and it's like, "Goddamn, that would have really sucked."
They're two very different paths I was going down. I'm glad I chose this
one.
TK: What was the other path?
SP: Look, I originally did all that reading because I was looking for
insights on how to make money. But studying firms like Drexel Burnham
Lambert, Long Term Capital Management, Lehman Brothers, I learned two other
things.
One is that these guys get bailed out. The second is that they never go to
jail, even when they're dead to rights. I think the two people that got
prosecuted first after the financial crisis were the two Bear Stearns hedge
fund managers. The implosion of those two hedge funds was the canary in the
coal mine, because that was the death knell for the coming crash.
These two guys had emails back and forth, talking about how fraudulent their
products were. Talking about how they're totally screwing over clients, in
writing! And not one of them went to jail. And who did they go after at that
time? Bernie Madoff. He was the one person who went to jail. Why did he get
prosecuted? Because he stole from the rich!
TK: They even made a movie about it, starring Robert DeNiro.
SP: Exactly! How come they didn't make any movies about these other horrible
people that profited off of the destruction of the economy? The people who
ran Countrywide, or the people who were working at the ratings agencies, who
knew the things they were rating were fraudulent? Even just down at the
mortgage origination level. They made tons of money, and not one of those
people went to jail.
Anyway, I didn't go that route. After I got my MBA, I joined the military.
TK: Why?
SP: My brother at the time had already been out of the Marines for a while.
He was working for a hedge fund out in California. And his boss was very,
very old, in his nineties. I thought, "Man, you can literally die at your
desk at 100 years old in finance, but there's only a short window that you
can serve the nation, and once that, once that door closes, it never opens
again." So I joined, went to Officer Candidate School, got in, went to other
countries, saw a lot of very, very poor places, which gave me some
perspective. Long story short, I ended up working as a software engineer.
TK: How did you get into online investing?
SP: I was still keeping up with all my financial periodicals, because I knew
one day I was going to step back into that world. I was able to start making
stock picks for myself. The first real investment I made was in Netflix when
it was still double digits. I made a brokerage account with my bank and
threw some money in there and started going at it.
The industry was really changing. Robinhood's slogan is "Democratizing
Finance," but really it's the computer science industry democratizing
finance, because all those tools that used to be proprietary are free now,
included in your trading app.
If you make a TD Ameritrade account, you can run, think or swim. It's like a
mini Bloomberg terminal. You're not going to get the same richness of data,
but you're going to get a significant amount that you normally wouldn't ten
years ago. And in places like wallstreetbets, I was meeting people who
clearly used to or still did work on Wall Street, who would teach you, for
free, how to do things like recognize distressed companies, research their
debt covenants, look up public data about who was invested in what, and so
on.
There's one guy, he goes by the name fuzzy blankeet - it's surreal on
wallstreetbets, you discuss such serious topics with such ridiculously named
people - who was teaching us how to be distressed debt buyers. These are
really intelligent people, just giving away knowledge.
A lot of the tools we have now, it used to be only people working at the top
hedge funds on Wall Street had access to that information. So a lot of the
barriers had collapsed. But the system is still skewed, which I started to
see more clearly when the pandemic hit.
TK: How so?
I remember last March, just as the pandemic was taking hold, I was watching
CNBC, and Bill Ackman, the big hedge fund guy, basically saying it's the end
of the American economy. He's saying, "Shutdown is inevitable," and calling
for everything to be closed except essential services:
At the time, I was wrapped up in the doom, on the side of, "I don't think
we're prepared for what's coming." Because I was watching the videos coming
out of China and thinking, "There are people just passing out. That's not
normal. I think that's bad." I saw a video of somebody being welded into his
apartment, and I again, I thought, that seems bad. Seeing Ackman on TV, I
was like, "I think he's right."
As time went on, though, that moment bothered me. I thought, "That fuck,
he's causing the panic."
I guarantee a lot of people were like, "Bill Ackman's a smart dude. He's a
lot more successful investor than I am, and he says shit's about to hit the
fan. I better start buying some protection. I don't know, short really
volatile, high flying stocks, and maybe buy a lot of put spreads." But then
we all know what happened after that.
TK: That broadcast was March 18th, so the $2 trillion bailout was announced
a week after. The market had been plummeting straight down, but it bounced
right back up and kept going.
SP: It's the COVID-19 sell-off and pump. It's what these guys do. It really
does feel as though CNBC is a participant in market manipulation for the
rich. These hedge fund guys go on air and it's like they're trying to spook
the herd in the direction of their trades. They tell everyone to get out
when they're short, and once all the meat is all off the bone, they go long,
just in time for the recovery. They get to call the top and the bottom of
the market. It's totally fucked.
The bailout and the pandemic just exposed how there are different sets of
rules, not just for different types of investors, but different types of
businesses. Your favorite sandwich shop? Closed. If you've got 200 of those
sandwich shops? Open.
If you had sufficient capital to lobby whatever your government is, you
could get an exemption, but if you were a small-time business owner, you
were out of luck, and that just made no sense to me. I was like, "We're just
making this up on the fly."
TK: When did you first pay attention to GameStop?
SP: I remember people posting about the GameStop potential short squeeze
last summer. I definitely didn't catch any of the attention earlier than
that, but I didn't get the trade. I'll be honest with you. I saw the
potential there. I really did, but I was like, there's just so much going
against you on that. And at the same time, the business needs to make money
and they're in debt and they're not making money.
But at some point, once this all started, I started to think about it. We're
in a pandemic, and there are all these people who couldn't work all year. Or
they're small businesses that don't have the political impact. They're going
to take the loss. And in the middle of all this misery, you have a group of
the most cancerous rent-seekers on earth, aligning to destroy this company
GameStop, because they decided it shouldn't exist anymore.
And it was GameStop! It's such a visceral symbol for people in my
generation. Even for me, in all those bad times growing up, it was always a
nice memory just to go to a strip mall, go in the store, check out a game or
two. I like GameStop. Everyone remembers going to GameStop. It's part of
what made it such an obvious rallying cry.
That was it for me. I found myself thinking, I didn't care if I lost every
last dollar doing it, I was going to put it on GameStop, just to see them
panic for once. Even if for just one moment they have to think about how
they're going to make their payments for their Manhattan apartments, that's
worth it. They're playing these games while there are people out there who
can't afford Christmas presents for their kids, can't afford food. What are
these families supposed to do?
Meanwhile those guys at the hedge funds, they're not sharing that fear. Why
should they? They're going to get bailed out anyway.
TK: One criticism of the GME traders is that while there are billion-dollar
shorts losing on the other side, there are also big money managers on the
long side, essentially using what some call "recreational" day-traders as
camouflage. What do you say to that?
There are definitely some high net worth individuals in wallstreetbets, and
they were probably making good money early on, incidentally getting some
good research done for free and getting in on some trades early. But there
are a lot of small-time investors in there, too. The forum is so big,
there's probably a healthy bell curve of every demographic in there now. To
say that the forum is made up of people who are just sitting in the
basement, and don't really have anything to lose, that's not right. A lot of
people may not care about the money not because they have too much, but too
little. It may be their stimulus check, and they're saying, "Well, I don't
have anything anyway. This was my only way to maybe make something, but I'd
rather send a message with it."
TK: What's Robinhood's role?
SP: Imagine that Wall Street is a big building, Robinhood is basically
letting you into the lobby. The barrier to entry to buying and trading and
stocks and options with apps like Robinhood really is very low. What we've
discovered in the last ten days, though, is that the pen they built for us
does not scale well. Big shocker!
It's ironic, for a brokerage that's primarily run by software engineers,
that they seem never to have thought about the edge case of millions of
people transferring in thousands of dollars in one day, and all buying the
same security. I don't think that they really thought about, "Hey, what if
this happens?"
TK: GameStop crested last Thursday, January 28th, when Robinhood and other
platforms began restricting trades in GME and other stocks. Robinhood
obviously makes its money selling its "order flow" to a major high-frequency
trader, Citadel, which was likely also the firm that made capital calls on
Robinhood during the GME frenzy.
A lot of Reddit investors believe Citadel and its billionaire CEO Ken
Griffin used those collateral calls to pressure Robinhood into restricting
trading in GME. Some press analysts think that explanation is
conspiratorial. What's your take?
SP: Whether or not they were pressured to kill the rally doesn't matter. The
effect was the same. Robinhood's restriction killed the rally, a hundred
percent. That was the only thing that gave all the firms that had short
interests a chance to try to recover. Now, the thing that is really
insidious is some retail brokerages that locked out their retail traders, if
you had an account with a certain minimum amount of money in it, you could
call the customer service line that was reserved for your level of account
and they would turn trading back on.
So two people using the same trading app could have different market access.
It's just like we were talking about before. When the GameStop thing
started, the shorts were like, "Hey, let's just kill this business because
it's a pandemic, they're going to close anyway, let's just destroy it." And
then, once we started kicking it in the balls, they changed the game and
killed the trade. It was like, "Okay, of course, of course."
As for the conspiracy charge, it makes me laugh. JP Morgan Chase last fall
settled for $920 million or whatever in a case involving spoofing in the
metals markets. Before that, they would have said, there's no such thing as
spoofing! Same with manipulation of LIBOR. Once upon a time, if you accused
the banks of manipulating LIBOR, they'd say, "That's a conspiracy theory."
Then there were settlements and now everyone knows it happened. With these
people, it's always a conspiracy until it isn't. Once they're found out,
it's like, "Oh, you caught us. You're right. It wasn't a conspiracy. But
this other thing, that's a conspiracy. That's not happening."
TK: What was your reaction to the press coverage of GameStop?
SP: The majority of the media that I've seen on WallStreetBets is just
incorrect. The stuff that came out really early was trying to label it as a
far right-ish type movement, and they got smacked down really hard on that
because that's the opposite of what happens in there. The forum is not
political at all. If you post any political bullshit, that is the fastest
way to get banned. There's literally a rule, "No political bullshit." Nobody
wants to hear it. It's strictly to talk about trades.
TK: What's the future of wallstreetbets?
SP: I'm fearful of what could happen. The forum is big now. It's never going
to be ignored again. There are two opposing forces. You have big businesses
that are going to try to channel this movement to benefit themselves. But at
the same time, you've got a lot of long-time people who've been on there who
can sniff out a fraud pretty quickly.
It's going to be a cat and mouse game. We already see it happening. The
biggest one was in silver. Silver is often used as a way for large owners of
silver, like in the SLVETF, to cover losses elsewhere. Last week I saw zero
advertisements to buy Gamestop stock. Over the weekend, I saw countless news
articles and advertisements all over to buy physical bullion. They're
saying, "Silver is going to get pumped. The Reddit crowd is turning to
silver."
TK: Yahoo! had "Silver Squeeze: How to join the Reddit Bandwagon." CNBC had,
"Is Silver the Next GameStop?" It was like wallstreetbets went Hollywood.
SP: I'm like, "I've got to call bullshit on this." Now, if a large
institutional owner of an asset was to, I don't know, take out a bunch of
ads and hire some people to post on wallstreetbets and maybe hire some
botnets through a cut-out, would that be legal? Sounds like a pump and dump
to me, but it also sounds difficult to prove. I'm not saying it's happened.
I'm saying it's odd, and it's very possible.
There's going to be a constant battle to direct the Sauron-like gaze of this
board now. It's going to be very difficult to get ahead of that, just like
it's difficult to know what the number one meme is for next month.
TK: Was a message sent in the GameStop story, and if so, what was it?
You had a leaderless group rise up and use whatever market power they had,
whether it was buying a hundred thousand shares, or one. Some very
established traders who trade for themselves frequent those boards. And then
you had people who saw the message, they saw the Batman symbol and they
rallied to that. You know how many messages I saw in the thread, of people
just lining up? It meant something to them. They got to buy a fractional
share of the hero's journey.
But the trade was destroyed. Whether or not that was intentional is not for
me to say. All I can say is what happened. Retail brokerages all of a sudden
stopped allowing their clients to trade, unless they were of a certain net
worth. Banks could do it. Hedge funds could keep doing it. They could still
be in the trade. But you and I could not. We could only sell. We could only
do the one thing that they would need us to do, to get themselves out of the
quagmire. And it wasn't about price at that point. It was about control of
physical shares that would allow you to cover.
So yeah, a message got sent. But one was also received. They basically said,
"We understand the message you're sending. And here's the message we're
sending back."
But it was worth it.
