Stephen Colbert weighs in on Wall Street vs Reddit

Billionaires are blaming the GameStop surge on Covid stimulus checks

One also lashed out against funds on the other side of the Redditors’ bets

Josh Marcus
San Francisco
Saturday 30 January 2021 21:44
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Billionaire “Bond King” Jeffrey Gundlach is the latest to blame government stimulus cheques for the massive surges in stocks like GameStop that’ve caused Wall Street firms huge losses.

“In this case thanks to primarily government policy there’s wherewithal among investors, if you want to call them that, with government money being sprayed all over the place, with checks to people, that they have the wherewithal to put it together into a real capital base,” told Fox Business on Friday. “In this case there were 2.1 million people that somehow got organized on Reddit and managed to get about $20bn in buying power, and they found an opportunity to pile drive these hedge funds.”

Mr Gundlach was equally critical of all sides in the dispute, where mainstreet investors organized on the social network and bet against big firms on stocks like GameStop, which Wall Street houses had bet would fail through a stock instrument called a “short.” The whipsawing share prices eventually led trading apps like Robinhood to temporarily limit stock-buying around the suddenly hot companies.

“I have no sympathy whatsoever for these hedge funds,” he said, while also chastising the Reddit warriors for their triumphant attitude. “There's a little bit of hubris that seems to be going on with this network that makes me less likely to view is as David vs Goliath. The hubris bothers me.”

Billionaire hedge fund manager Leon Cooperman has made similar comments about the stock surge. Mr Cooperman, who was convicted of insider trading in 2016, told CNBC on Thursday the $2,000 and $600 coronavirus aide checks were to blame for GameStop’s rocketing share price.

“The reason the market is doing what it's doing is, people are sitting at home, getting their checks from the government, basically trading for no commissions and no interest rates,” he said.

According to government survey data from the summer of 2020, the majority of Americans used or planned to use the first round of stimulus money on household expenses

While down from their peak in early 2020, over a million Americans have been filing unemployment claims each week throughout January. 

Not every mega-investor felt this way though. Billionaire and Shark Tank host Mark Cuban said he admired the hobby investors driving the stock saga.

“There are many hedge funds that have made a lot of money over the years targeting heavily shorted stocks. I don’t think this is anything different," he told CNBC. "It’s just the people who are making the push aren’t who we expect them to be and so that’s why I like it.”

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