The Weekly Eudemon

The Weekly Eudemon


Episode 81: Did We Just See a Red Swan?

January 31, 2021

Everything was obvious to Wall Street investors:Brick-and-mortar businesses are failing. GameStop sells a product that is cheaper and better to buy online. GameStop is going to fail. Let’s short the crap out of its stock so we make a killing when GameStop files bankruptcy.There were supposedly more short shares than actual shares.Enter r/Wallstreetbets (queue Seven Nation Army), armed with a lot of free time and stimulus checks.They decided they like GameStop . . . or wanted to stick it to the hedge fund managers . . . or wanted to make a ton of money by sending the stock soaring and forcing the hedge fund managers to cover, thereby sending the stock yet higher.Or maybe all three.Regardless, they won. A bunch of ordinary kids with small amounts of money beat the living hell out of the hedge funds.The carnage was great. Heck, the carnage is still taking place. No one knows what’s going to happen when the NASDAQ sounds the trading bell Monday morning.It’s been a fascinating and fun ride.It’s been an unprecedented ride.And I think it was a Black Swan event, as defined by Nassim Taleb in his 2007 bestsller.