(Image: Tom Red/Private Media)

Shock. Horror. Gasp. World markets reel from the news that Wall Street stocks are being manipulated. Excuse me for a minute while I pick myself up off the floor from laughing too hard.

That’s the first reaction to this week’s bizarre GameStop story, whereby an army of day-trading nerds used people power to drive up the share price of the ailing video game shop. They’ve done similar coordinated plays on Blackberry and retailer Macy’s.

In short (pardon the pun), they’ve taken on the Masters of the Universe and managed to beat them at their own game.

And it is a game to many. The main avenue of angst behind the GameStop coup was an online forum on platform Reddit known as r/WallStreetBets.

Of course, it’s not a game when their efforts forced a US$2.8 billion bailout for Melvin Capital. Boo hoo. Rapacious hedge fund gets its comeuppance.

Even harder to sympathise when the targets of these online traders have been the short sellers — a practice which has always been dubious.

“What’s wrong with betting on a stock price going down if you can bet on it going up?” they will argue to defend themselves.

Except we have seen the consequences this week of what happens when it goes wrong. Not to mention short selling can and has led to increasing market manipulation and extortion in recent years. Even the mafia has seen the merits of the practice, according to US reports.

It’s not called “short and distort” for nothing.

And if it’s such a fine thing, one should remember that at the height of the 2008 market crash, Macquarie Bank was one of those looking decidedly shaky until the government kindly helped with a quick ban on short selling.

Then there’s the whole crocodile tears of the broking fraternity that these young nobodies on social media might be colluding together which would never ever happen among professionals who will swear there is no such thing as insider trading.

Yes, plenty of things can still surprise me after four decades of financial journalism — but the fact that markets are often one big casino is not one of them.

Nor should it be a surprise that sometimes they can appear as poorly supervised as the casino regulator monitoring the Crown group.

Leaving aside the fact our corporate watchdog currently has no actual chief, it does actually try, and credit must be given for their prescience on this whole trend of young day traders piling into the market during 2020.

Back in September I wrote about two reports from ASIC on the retail trading trends since the beginning of the pandemic which showed that while real casinos were closed, plenty of new participants were piling into the stockmarket for the first time.

ASIC’s senior executive leader for markets Calissa Aldridge told me “we are seeing continued high volume, speculation and younger participants”. They were favouring high risk stocks like Afterpay and ZipCo, sending share prices soaring.

This week we’ve seen what that trend has meant for Wall Street.

In the end though, the new manipulators could actually be the ones being had. After all, they were being gleefully encouraged by none other than billionaire Elon Musk, who himself has been banned for manipulating his own share price.

He ain’t no Robin Hood.