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Wall Street Comeuppance

You (okay, I) pick up a book like The Antisocial Network for the yuks. What’s better than getting the dirt on a hedge fund that lost billions of dollars in a virtual flash to a bunch of self-described degenerates on Reddit who helped orchestrate the GameStop short squeeze? David vs. Goliath, Main Street vs. Wall Street, gamers vs. bros as reported by Ben Mezrich, who’s made quite the career writing about the shenanigans of precocious young adults then selling those story rights in Hollywood. And what a surprise to discover over its 285 pages just how far-reaching the impact is. That Melvin Capital – “a staid, respected, multi-billion dollar firm, run by men in suits looking to profit on the failings of a beloved, if mismanaged, company” – became the ogre targeted in a revolt, thereby getting its doors blown in by pitchforked retail traders hell-bent on parlaying stimmy checks during lockdown, is objectively hilarious. Yet we learn pensions got clobbered and many among the Joe Six Pack crowd were of the, um, repugnant sort. It’s ugly yet gripping in Mezrich’s hands. No, he’s not as skilled a writer as Michael Lewis, but the topic here isn’t labyrinthine credit default swaps; it’s basic short selling.

About that: short sellers borrow what they believe to be overvalued shares, sell them, then when (ha – if!) the stock drops they rebuy them at that lower price, return the shares, and pocket the difference. Simple, yes? What enraged so many everyday folks (we meet a nurse, a hairdresser, an undergrad & his dad, among others) was just how far the gambit had gone, to the tune of nearly 140 percent of GameStop shares having been shorted, or 20 million more than actually existed. Knowing this, largely thanks to Brockton’s own oft-unemployed Keith Gill and his deep analyses, fired up the Reddit discussion board focused on driving skyward those very shares, thus crippling the shorts. Writes Mezrich, “It was easy to think of WallStreetBets as a disjointed, chaotic gathering place for fools and gamblers, because that’s how they often portrayed themselves.” This common cause “was a powerful motivator, far stronger than greed” and the “spite, revenge, and anger” was badly underestimated by Melvin and other seasoned pros. (The shame is how despicably many on the subreddit behave, sullying what should have been a straight win for the little guy, but this does illuminate the underbelly of hate and anti-Semitism.)

The author’s style is perfect for a story that thrums with risk and regret and those seeking a basic education in trader machinations will appreciate his surface-level instruction. You may be among those who’d never heard of “payment for order flow” before this year (or until this very moment) and Mezrich handily dumbs such concepts down for the reader. Robinhood can claim it is “democratizing finance” by offering commission-free trades, but the slick app’s users aren’t customers, they’re the product (as said order flow), and gigantic market maker bedfellows like Citadel are enriched on their piece of the spreads between bids and asks on risky trades made by amateurs (median age: twentysomethings). Mezrich takes pleasure in his all-cap sarcastic commentary regarding the unholy alliance between these firms, the none-too-coincidental freeze on GameStop trades, and the subsequent rescue of Melvin. Even an historic uprising and seemingly successful sweep-the-leg/no-mercy mission falls kind of flat in the end. The fix, as ever and always, was in.