The leader of this band , a digital tribe whose shared values seems to center upon profane memes and a near-religious affinity for outsized risk , was one “ Deep F ** king Value ,” who went by “ Roaring Kitty ” on YouTube . In real life , DFV / Roaring Kitty was Keith Gill , a 35-year-old CFA ( Chartered Financial Analyst ) holder and former college track star who had become the de facto field marshal of a large , cohesive and geographically dispersed army of Reddit-based financial market operators . Obscure just one year ago , by spring 2021 WSB had become a force known in boardrooms all across America , feared on some professional trading desks .

By Peter C . Earle

In mid-January 2021 , a new administration was settling into the White House and the first hints of an end to lockdowns and other pandemic policies were becoming clear . While that was developing , media outlets began reporting an extraordinary price move in the stock of brick-and-mortar game retailer GameStop ( GME ). Long considered a company a decade past its prime , with a future likely to look more like that of Blockbuster than a hot tech stock , its stock had traded as low as $ 2.80 in the summer of 2020 , spending much of the year in single digits . But now , the price was vaulting : from closing at $ 17.69 per share on Friday , January 8 , 2021 , to $ 65.01 on Friday , January 22 .

And then , in the three days between Monday , January 25 , and Wednesday , January 27 , GME common stock closed at $ 76.79 , $ 147.98 and $ 347.51 , at one point trading as high as $ 483 per share .

As if that wasn ’ t spectacular enough , one by one — almost as if being ticked off of a list — other oddball stocks , across a variety of sectors , began rising disproportionately : first haltingly , then followed by a distinct “ pop ” upward in price . AMC Entertainment ( AMC ), Nokia ( NOK ), Blackberry ( BB ), Bed Bath & Beyond ( BBD ), NAKD ( Naked Brand Group ) and a handful of others saw significant , abnormal price spikes that bested 52-week ( and sometimes longer ) volume and price change records .

Before long , the thread of continuity between those issues was discovered . All of the stocks in question were on lists of publicly traded companies with the highest short interest ratios . And the responsibility for engineering the short squeezes — a term describing a rapid increase in the price of a stock arising from short sellers having to buy stock at progressively higher prices to avoid further losses — was a Reddit community known as r / WallStreetBets ( WSB ).

As the major short squeeze victim was identified — a hedge fund called Melvin Capital was estimated to have lost 53 % by the end of January — a narrative was quickly slapped onto the episode .

A group of retail investors , the story held , banded together to teach Wall Street a lesson . The source of the anger was variously attributed to isolation fatigue stemming from pandemic lockdowns , angst over rapidly increasing economic inequality and a general , time-honored hatred of Wall Street . Thus , the portrayal continued , a group of retail traders had engineered a financial market coup . Through a commission-free online retail brokerage , a Reddit-based crowd with risk appetites larger

Forging the WSB Narrative

It is difficult to recall the last time a single financial security occupied major headlines for several days ; one guess is May of 1901 , when E . H . Harriman and Jacob Schiff battled J . P . Morgan and James J . Hill for control of the Northern Pacific Railroad . Another is Enron during its 2001 collapse , although the dominant reporting at that time focused more upon the firm than its evaporating stock price .

Financial market journalists and media pundits quickly began to probe the GME / WSB story for deeper significance . Some fit it into a framework of increasing social unrest over growing levels of economic inequality . Some saw it as the Frankenstein-like outcome of lockdowns and stimulus checks . Others saw it as a strong indication that years of rockbottom interest rates and easy money had turbo-charged risk appetites in both the retail and institutional constituencies of securities markets .

Still others became fascinated with the organizational facet of the short squeeze campaign . Wall Street Journal podcast “ The Journal ” Producer Annie Minoff commented , upon seeing one particular WSB meme , “ What struck me … is that it was the first time I ’ d ever seen a bunch of individual investors working together thinking of themselves as a collective . The message of [ the ] meme is : ‘ stick together .’ Hold ; don ’ t sell .”

A prescient observation , but not an unprecedented event . The earliest

18 FINANCIAL HISTORY | Summer 2021 | www . MoAF . org