The Revolution That Wasn't

Starred review from November 15, 2021
The narrative that Redditors forced Wall Street to its knees in early 2021 has its appeal, but accuracy isn’t among them, contends Wall Street Journal columnist Jakab (Heads I Win, Tails I Win) in this shrewd and energetic account. Month by month, Jakab tells the story of the attempts by users of the /wallstreetbets subreddit to use “brokerage accounts as a tool of class warfare” by short selling stocks. Fueled by fury at the wealthy, Reddit users who saw themselves as “exacting revenge on the architects of a rigged system” began buying up Gamestop stock, often using Robinhood, an app that allowed individual investors to buy in small amounts. Shares rose, then Robinhood “suspended the ability to buy more of the stocks that were on everybody’s lips.” In the end, Jakab points out, very little actually changed: retail traders may have had their moment, but there was no revolution, and the wealthy still hold all the cards. The colorful cast includes Keith Patrick Gill, who whipped the subreddit into a frenzy with tales of doubling his money on Gamestop in 2019 and ended up a witness at congressional hearings; Gabriel Plotkin, founder of Melvin Capital Management; and Steve Huffman, cofounder of Reddit. Jakab spins an original take, buoyed by zippy prose. It’s a certified page-turner.

January 12, 2022
In January 2021, GameStop became the most-traded stock, kicking off a media frenzy. The failing retailer created a buzz that helped make money for many and caused big hits for others, namely big investors. How did the tables turn? Jakab, an experienced stock analyst, details the events. Big investors expected to short-sale the fund because they thought GameStop would go out of business, and this would have increased their profits. However, the shares topped out in the hundreds, causing many hedge-fund managers to lose money, while everyday investors profited--an almost unprecedented scenario in the market's history. When more people take risks, Jakab notes, it creates volatility and prices change, which would not have been possible without smartphones and apps like Robinhood and Reddit. These tools, which appeal to the masses for their ease of use, along with the many Internet sources of financial advice, are leading to shakeups. Readers who are into the stock market, investing, and who are interested in newsworthy investment frenzies will find this book fascinating.

COPYRIGHT(2022) Booklist, ALL RIGHTS RESERVED.

February 15, 2022
There's a sucker born every minute--and, as the recent GameStop bubble showed, there's a Wall Street army waiting to take their money. Financial journalist Jakab, a former stock analyst at Credit Suisse, turns received wisdom on its head. Where the recent GameStop run from nearly worthless paper to vastly inflated stock has been touted as a win for the little guy, the author considers the situation a model of stock market insiders knowing how to play whatever game is on the table. Those who bargained that GameStop was a sure thing didn't understand the game of selling short, one that requires nerves of steel and, typically, deep pockets. "Wall Street likes volatility," Jakab writes, again against received wisdom, "and it absolutely loves it when millions of new, inexperienced investors rush in with their savings." Because those new investors trusted not the insiders but instead the knowledge of a crowd, they were ripe for the plucking, while big investors were also clamoring for a piece of the action. "Suddenly brokers like Robinhood suspended the ability to buy more of the stocks that were on everybody's lips," writes the author. "No such restrictions were placed on the fat cats, though. The game was rigged! But it always has been." Jakab's account of how Wall Street works requires financial common sense and some numeracy, though it's quite accessible. He's also a seasoned journalist who leavens money talk with human interest stories, including some that concern people who couldn't really afford the loss but who lost on GameStop anyway. This is the valuable part of the book for would-be investors. The author writes that he "has warned against the dangers of free trading and free advice on the internet, both of which spurred mainly young people to be hyperactive trend chasers." Good advice is available, but it costs--just as it costs time and money to be a conscious investor. A welcome book that blends financial investigation with useful investment strategies.

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