Let me back up. I assume that you are not especially familiar with Reddit or the now notorious r/WallStreetBets forum. The participants do not present themselves as respectable sources of investing information. They proudly refer to themselves as “dumb apes” and resort to calling both their biggest winners and their worst losers names that you might overhear your teenager yelling while playing Call of Duty with friends. Understanding what people are saying on the message board requires a sort of modern-day Rosetta Stone to translate the various memes and emojis—diamond hands, rocket ships, moons—that have specific meanings and connotations. The “dumb apes” end nearly every post with an explicit caveat to the effect that “this is not financial advice.” One recent contributor noted that his price target for GameStop was $1,600 a share. The professional experience grounding this opinion? Twenty-five years of welding and fabrication.
If the forum is more passionate than professional, it’s also infectious. My wife, Riane, and I decided to take the risk of investing $35 in GameStop options at market open on Friday, January 22. A short two hours later, we sold those options for $1,250. Had we held on to them for just two more hours, they would have been worth $7,000. But we were far from disappointed. Our two hours of profits were worth my week’s salary as a pastor. At that point, we converted those gains into 10 shares of GameStop at a cost of $61 each, using the rest to buy a Caillou iPad game for our 3-year-old, to get a new bed for ourselves, and to tithe.
Did I feel good about turning a profit at Wall Street’s game? Absolutely. But I did not think to myself, We GameStop investors are like David, taking down Goliath.
Unlike in the Bible, David here is not a single and transparently well-motivated hero. Although a majority of the participants in the GameStop drama may be individual retail investors, no small amount of the money “betting” on the company has come from hedge funds and multimillionaires.
More important, the Goliath of the biblical account is a clear agent of evil, taunting both God and God’s people—a figure whose defeat is unambiguously good. We don’t have to worry about whether our opposition to Goliath has put us on the side of the angels or the demons. In our present story, the hedge funds that have taken up short positions against GameStop will have to be our Goliath. Although I am deeply concerned about the ability of Wall Street, as it presently operates, to contribute to the common good, that is some distance away from the view that hedge funds are an unambiguous evil that we can destroy without conscience.
Read: Don't invest in hedge funds
Further, the hedge fund is not just its manager. Many private individuals have their financial well-being tied up in these funds. They count on returns on their investments to send children to college, to support their retirement, and to contribute philanthropically. If the hedge funds that have shorted GameStop to the point of creating this bubble are defeated by Redditors and retail traders (a result that is looking more and more unlikely), then the people who have invested with firms such as Melvin Capital will pay the financial price. Perhaps no one should invest their life savings in complex derivative markets. Still, doing so surely doesn’t make one an agent of the kind of evil we can remorselessly destroy.