I am following, amused, the story of Gamestop and the pathetic attempt of the Melvin fund which must avoid about 20 billion dollars in losses (at the quotation as I write) to block Robinhood (with a legal notice, it seems), as well as to … scream like of the obsessed.

I would like to talk about it from the point of view of technology, so the narrative part will be short & concise. Only absolute facts and truths.

The facts: let's make some summary premises to understand what we are talking about.

Hedge funds are shit. The shit of the shit of the financial world. In the sense that they have transformed the stock exchanges into real betting agencies.

Their game is to take the shares of your company (and who cares if it closes and leaves people at home during a pandemic) that cost, I know, 20 thalers, and they sign contracts with customers, to whom they promise "you I'm selling a gozzillione for 10 thalers ”. Now the problem is that pigs do NOT own these shares. But when they also sell them on the 10 thalers markets, and sell A LOT of them, the cost drops to 10. But not only that: competitors who own the shares, to get rid of them quickly, cannot compete with you (they are in a hurry) and then they sell at 9.5. As a result, the cost collapses to 9.5, the hedge fund buys at 9.5 and resells at 10.

Too bad your company's value eventually halved, and you shut down by firing thousands of people. It has already happened and it will happen again.

That good man of Soros did this to whole nations: England and Italy. The fact that a conspiracy theory could hide the REAL criminal crap done by a pig without conscience I will speak later.

This is to make you understand one thing: Hedge Funds are companies that are socially and economically criminal . Their ethics are criminal and those who participate have the psychological profile of the criminal . And the ugly ones. And don't worry, Saviano will NEVER tell you how many of these hedges launder mafia money or have mafia members among their members, for the simple reason that IT IS TRUE. Edge Funds are one of the typical activities of the mafia playing on the stock exchange.

And let's be clear, I'm not saying it , the mafia uses hedges as a money laundering method. FBI confirms

That said, here's what happened.

A hedge fund was doing its usual number with a company, when a guy on Reddit came up with an idea: suppose we push the stock price up while the Hedge Fund expects them to sink (and has already sold them) . What happens?

It happens that since he has signed a contract in the open where he undertakes to sell something cheaply, but he does not yet own it , then he will have to buy it at the market price to keep the promise. And if the market price were TEN times higher, it would be the same thing: in any case they will have to pay because they have a contract.

Then on Reddit a kind of DDOS was born on the speculative operation: thousands and thousands of people started buying the title under attack, (GameStop) until the price went up, against the will of the Hedge who wanted to make it collapse the value.

The result is that BOTH those who participated in the operation (the redditers) have gained a lot at the current value, but now other Hedge Funds have also joined the operation to slaughter Melvin.

Rumors spread about the fund's failure, but they weren't real. The fund has the money to pay and it MUST pay, the conditions for bankruptcy in the US are "quite" strict.

Now Melvin is screaming. They turned to the USCENTE congress promising a lot of money if, before leaving, they make a little legend that blocks the operation for "insider trading". (in short, they claim that among the redditors there are people who knew about the speculative attack. Which is ridiculous).

They again turned to congress to ban this type of operations by stock retailers (a platform called "RobinHood", which then blocked the purchases, it is said following a legal notice from the regulator , and is now reopening them ), screaming loud enough to wake the AOC:

And so far the story. On which the AOC is absolutely right: do the hedges, who wreak havoc on the market and respond “it's profit, darling” when criticized, now whine that these trades “treat the market like a mess”?

Well.

Let's go to the technological side, which is the most important.

First point: all this is possible because Paul Muad-Dib is the Qwisatz Haderaq because there is a platform of retailers, Robin Hood, which allows anyone to participate in this type of operation. In itself, the platform does nothing but allow fast trading to anyone. But… combined with Reddit, it allowed the creation of a very fast DDOS, that is to say, to raise widespread funds at incredible speeds.

But stopping to say “it's the internet” is not enough. Because the problem is another. It is called "fintech". There are a lot of fintech companies out there, and there are a lot of fintech startups that want to break through.

What does it has to do with it?

It has something to do with it because what happened is highly automatable . Try to think about it:

• an AI can understand that a short selling operation is in progress, quite simply, and identify the target.
• a retail platform can easily gather millions of investors (with small amounts) and make them a considerable firepower.
• a retail platform can handle it competently, and coordinate the attack better than a swarm of small investors.
• these operations make a lot of money.

understand now the problem. What happened to GameStop is fortuitous, but it's an idea. An idea that can be profitable. Grooming Hedge Funds. But especially:

it's a NEW idea.

I estimate that within a month the first platform will be born, dedicated to the retail of small investors, made to work exactly as we have seen today. And then dozens will be born.

The platform will have to act like this:

• raise money from retail investors who have small bucks. Accumulate them until reaching considerable amounts.
• using an AI, detect speculative attack actions by a hedge. No insider trading needed.
• wait for the right moment and play the joke of making the shares rise.
• pay the small shareholders the premium resulting from having torn the hedge to pieces.
• earn a fuckin 'of money.

This is not very strange, to be honest. And it is part of the rules of the game: only now there is Fintech, that is information technology applied to finance. While Hedge Funds are obsolete stuff, because they work in an old fashioned way. You cannot invest less than two million dollars per partner (barrier to entry), they are slow to act and have long decision-making processes.

Because that's what IT thinks about.

• First we ask ourselves if something is automatable , that is, if a software can do it instead of a person.
• Then one wonders if it is scalable , that is, if it can happen again and again, at will.
• Finally, one wonders if it can be marketed on the internet. If there is a business model

If all three answers are "yes", then the game begins.

In short, it is possible to build software capable of specializing in … tearing up Hedge Funds when they do short selling.

I repeat, I do not know how many weeks are left until the arrival of platforms designed to keep an eye on the hedges and play the same trick on them, aggregating capital from small savers. It's only a matter of time, even if I can't tell you when it will happen.

But I would bet that Covid has not yet passed, and there will already be a dozen.

If I were you, I would not be part of a Hedge Fund.

And they know it. And how do they know. And they are afraid of it:

The Hedge Fund is a creature that depopulated in the 90s. 30 years ago. In terms of information technology, they are dinosaurs. I am not saying that they will disappear: the sharks certainly did not disappear when the orca arrived to eat his liver.

Problem is, they weren't used to having predators, that's all. And they started to cry. And here is a meme there is everything.

Ah, right. Elon Musk.

But does Elon Musk have any idea what would happen if someone similarly targeted the actions of, what do I know, Tesla? LOL.