1/ If you've felt like stock market has been disconnected from reality for the past few days, you're not alone
this is the story of the magic bubble created by amatuer traders that broke a multibillion dollar hedge fund
2/ To understand the market right now is to understand r/WallStreetBets
it's a 2.3 million person subreddit dedicated to memes and YOLO Tesla calls that relishes in the massive swings that come with risky trades
aka heaven for the hyperactive amateur trader
3/ The other main character in this saga is GameStop
it's a mall-based retailer that is saddled with debt ($450 million as of Q4 2020) and falling sales (down 40% in last 2 years)
essentially, it's the Blockbuster of video games waiting to be eaten by a Netflix
4/ So hedge funds have been shorting it
the pros on Wall Street saw a failing business and took positions where they would profit if the stock falls
in fact, it's the single most shorted stock in the entire Stock and S&P 500
5/ One hedge fund in particular called Melvin Capital held a $55 million short position against GameStop
Melvin also held large short positions against National Beverage, iRobot, and Bed Bath & Beyond
big mistake
