Opinion: What is WallStreetBets?
By Steve Coulter
WallStreetBets or WSB, is an online forum where participants discuss stock and option trading. It has become notable for its profane language, aggressive trading strategies, and role in the epic GameStop short squeeze.
WallStreetBets can be found on Reddit. It’s a popular discussion website/app with user-generated content. Reddit covers a variety of topics like news, politics, science, movies, books, cooking and more. Pretty much everything from sports to stocks. The name “Reddit” is a play-on-words with the phrase “read it”, i.e., “I read it on Reddit.”
WallStreetBets has more than 7 million users and its growing quickly. The investment discussion forum helped push GameStop and several other companies valuations through the roof.
Tesla chief executive Elon Musk caught wind of WallStreetBets effort to buy GameStop shares, tweeting his support: “Gamestonk!!”
Billionaire entrepreneur Mark Cuban says he is a fan of the Reddit-inspired short squeeze of GameStop but admits he has “hedged the heck” out of his own portfolio. The Shark Tank star told CNBC that the WallStreetBets group had simply used a tactic often deployed by investment professionals.
This WallStreetBets movement turned into a war on GameStop short-sellers. Mostly big hedge-funds looking to profit off the destruction of well-known brands like GameStop.
One WallStreetBets member posted, “This is about more than a profit now, this is a war on those same smug (expletive) who were drinking champagne while we were wondering where our next bag of ramen came from. This is about finally sticking it to those narcissistic (expletive) who always reply ‘just stick your money in a mutual fund, you can’t win’ – when asked about investing.
Individual retail traders lose money and go broke every day because they fall into the iron pincers of your market orders and manipulation games.”
What exactly is short selling stocks, covering and a short squeeze?
Short selling is when an investor borrows stock shares and immediately sells them, hoping to buy them back later at a lower price, return them to the lender and pocket the difference.
Covering is when a person with a short position buys the stock shares to return them to the lender, hopefully to profit if the shares have gone down in price since they were shorted, or to limit losses if they went up after being shorted.
A short squeeze is when a mass of investors looking to cover short positions start buying at the same time. The buying pushed the share price higher, making short investors accelerate their attempts to cover, which sends the shares spiraling higher in a feeding frenzy. The action in shares of GameStop have illustrated this phenomenon perfectly over the past week.
On the WallStreetBets site you’ll find a lot of slang words. Here’s what some of the lingo means according to MarketWatch.
Tendies is shorthand for gains, profits or money.
Diamond hands is about what a person can stomach. If you’ve got “Diamond Hands,” you’re ready to hold a stock for the end goal, despite the potential risk, headwinds and losses. If you’ve got paper hands, you exit a stock, or fold, early on because the heat of the situation might be too much.
A bagholder is someone who holds stock that’s fallen in value and keeps holding, thinking the shares will recover.
You will see YOLO a lot. This stands for “you only live once,” this acronym is already out there. But it’s got special meaning in WallStreetBets, where it’s sometimes used as a verb, to describe the act of gambling big, wagering on a stock like there’s no tomorrow.
WallStreetBets continues to be the story everyone is talking about. Who will win this epic battle? The millions of Reddit chatroom investors or the big Wall Street fat cats? Either way, the stock market may never be the same.
One WallStreetBets member posted that his biggest regret was selling some GameStop shares too early.
“It’s my biggest regret so far. Let this be a lesson to not have paper hands. I have learned my lesson and will continue holding what I have left. GameStop to the moon,” he said.