Keith Gill in one of his YouTube videos
Keith Gill was an unlikely revolutionary. His T-shirts featured cats in sunglasses, his red headband made him look like a cross between peak-era John McEnroe and Cousin Greg from Legacy, and his YouTube videos were long, dry analyzes of corporate stocks. But a revolutionary is precisely what he unwittingly became in early 2021, when his advice to buy shares of the video game store chain GameStop made fortunes for a ragtag army of small individual investors and helped send a handful of big hedge funds into ambush.< /p>
Dumb Money, a film based on the story starring Paul Dano as Gill, is out now. This speaks to many of our current concerns—rampant financial inequality, the lack of accountability for the rich, the role of social media in democratizing information. But at the heart of it all is Gill himself, a charming mixture of an ordinary Joe and a mysterious online avatar.
He grew up in Brockton, Massachusetts, a city of about 100,000 that was one of America's leading shoe manufacturers between the Civil War and the late 20th century. Brockton has its fair share of crime, economic and infrastructure problems, but it also has a vitality and energy that makes most of its residents proud to live there. In a town that likes to think of itself as punching above its weight, two of its most famous residents are boxers: Rocky Marciano and Marvin Hagler.
As a high school and college student, Gill was a star runner. Notably, his former coaches John Hidalgo and Karen Bohan talk about his mental strength as well as his physical abilities. “His character as a runner was to strike first, if you will, and never back down from the competition,” Hidalgo said. “Keith had the ability to immerse himself mentally and with such intense concentration in a situation that I have never experienced in other athletes,” added Bohan.
Gill still holds the 800m, 1000m and mile records at his former Stonehill College, and for a long time the number he was most obsessed with was four: it has nothing to do with stock prices but the legendary four-minute benchmark. miles. He came close — his personal best was 4:03 — but knee and Achilles injuries ended his running career. His last race was in March 2008, almost the same time Bear Stearns collapsed. When he graduated the following year, the job market was still recovering from the financial crisis.
“When running becomes your life and you can’t do it anymore, it’s like everything is taken away from you,” he said. «It kills.» The broader economic situation hasn't helped much either: Gill worked for various startups from 2010 to 2017, but also endured long periods of unemployment. He needed an outlet for his drive and energy, and by collecting shares, he found one. He loved the challenge, the challenge, the pleasure of digging deep into numbers, and the thrill of finding the golden nuggets that everyone else had missed.
Fast forward to 2020 and the pandemic. Gill was 34, and after two years of unemployment, he was working in marketing for the Massachusetts Mutual life insurance company and raising a young daughter with his wife, Caroline. He was an unremarkable financial services professional living in an unremarkable rental house in an unremarkable suburb of Boston, one of many millions of ordinary, decent Americans. But at night, he posted YouTube videos and tweeted and tweeted at Wall Street Bets (WSB) about which stocks were catching his eye. He mixed this advice with his thoughts on Belgian beer and celebrated big successes by dunking chicken minnows in one of these beers, or perhaps a glass of prosecco if he was feeling testy. Sometimes he consulted Uno cards or the Magic 8-Ball, a new billiard ball-shaped toy that offers 20 possible yes or no answers to any question.
Although Gill never hid his true identity, he, like many others, posted online under pseudonyms: “RoaringKitty” on YouTube and Twitter and “DeepF______Value” on WSB. The latter moniker refers to the term «deep value,» where investors look for shares of low-valued companies that they believe have hidden value: and that's exactly what attracted Gill to GameStop.
Brick-and-mortar video game stores have been hit hard by the double whammy of digital distribution and the pandemic, but Gill was convinced that will change as GameStop uses the latest consoles to attract new customers. «Everyone thinks I'm crazy, and I think everyone else is crazy,» he said at the time. “I have never experienced such severe bearish sentiment [falling prices]. I am a fundamental value investor by all accounts, and GameStop is an established player in a unique position.” He would later say that “a lot of people just didn’t dig deeper. This was a gross misclassification of the capabilities. When no one wants to buy it and it seems like it's gone bankrupt or dead, that's when you have to dig really deep.» Paul Dano as Keith Gill in Dumb Money Posted by Claire Folger
It was this combination of style and substance that was key to Gill's appeal: part showman with his deliberately cultivated casual image of headband and beer, part serious numbers cruncher who never shied away from the hard, painstaking work of financial analysis. And then there was his willingness to put his money where his mouth was. He posted screenshots of his personal investments in GameStop: just $53,000, the majority of his savings. GME YOLO, he wrote: «GME» for GameStop's New York Stock Exchange ticker, «YOLO» for «you only live once.»
Of course, $53,000 is a rounding error for large institutional investors on Wall Street such as merchant banks and hedge funds. But for most retail investors, people who play the market with varying degrees of interest and success, this is a lot. (The film's title, «Dumb Money,» comes from a disparaging term the first group used to describe the second.)
In January 2021, thanks to Gill's relentless support and unwavering faith, GameStop's price began to rise. Many institutional investors have sold shares short — borrowing shares and selling them with the plan of buying them back at a lower price, thereby making a profit. In fact, short selling in GameStop reached 140 percent of the total shares, as that many shares were sold more than once. When the price began to skyrocket, short sellers were forced to buy shares to cover those positions, which drove the price even higher, which meant they had to buy even more shares: a short squeeze, a cycle that is either vicious or virtuous, depending on the which side of the line were you on.
With Gill acting as the Pied Piper for his many online assistants, the share price and retail investor interest soared dizzyingly. The combination of pandemic-boosted wages and low interest rates meant people had extra cash, while smartphones and social media democratized the stock market like never before. With zero trading commissions and apps like Robinhood allowing investors to buy and sell as if it were just another game, anyone could beat the traditional gatekeepers.
It's funny how the rich advocate the free market until it negatively impacts them. But billionaires can strategize how to destroy companies and hurt people every day. Regulators are in bed with billionaires and want to make sure they don't lose more money on AMC, GameStop, etc.
— Frederic Joseph (@FredTJoseph) January 27, 2021
At the height of the frenzy on January 28, the stock price was nearly $500, nearly 30 times its price at the start of the month. This brings Gill's initial investment to nearly $48 million. Overnight, more than 1.5 million users joined WSB, increasing the membership base by 25 percent. This was the moment Joe and Jane America crashed into the party Wall Street insiders had been enjoying for years. Several hedge funds suffered huge losses: Melvin Capital was at one stage losing $1 billion a day, and both it and White Square, another hedge fund shorted on Gamestop, would close their doors within 18 months .
Government hearings were held immediately. In testimony before the Senate Financial Services Committee, Gill denied market manipulation and profit-seeking advice. “It was very clear to me that my channel was for educational purposes only and that my aggressive investing style was unlikely to suit most people. My posts did not cause billions of dollars to move into GameStop stock. It's tragic that some people lost money and I feel for them.» According to him, the motive for buying GameStop was the simplest. “I like stocks.”
«He's one of the rare populist leaders who isn't a crazy narcissist, who isn't just chasing fame and attention and money,» says co-writer Rebecca Angelo. However, Gill applied much more than simple corporate valuation. The anger of retail investors toward these institutions was very similar to the sentiment that led to the Occupy movement in 2011–2012: the rich not only got away with their role in the financial crisis, but actually got richer. There was great camaraderie and solidarity in the uprising, especially at a time when many were still staying at home due to Covid restrictions. “People feel small, they feel powerless, they feel like the system is rigged,” Angelo says. “And this was an opportunity to feel big and find strength in numbers.”
But the real picture is inevitably less clear-cut than a David and Goliath narrative where retail investors make the killings and Wall Street takes the hits. Plenty of hedge funds made serious money both from their own stakes and from lending shares to panicked short sellers: Mudrick made $200 million, Senvest $700 million, BlackRock more than $2 billion. The hedge funds that did fail did so because their competitors kicked them out when they fell. GameStop might have brought companies like Melvin to their knees, but it was Melvin's competitors that kept it from getting back on its feet.
And for every small investor who made a profit, there were many others who held on to their shares too long and never made a profit. GameStop is now trading at less than $18 per share, about the same level it was before the short squeeze began. WSB is full of young, aggressive traders who ignore fundamental principles of risk management and view abandoning stocks as a sign of weakness. «The guys who got into the stock because of a structural short position, it was a smart move and the right thing to do,» said analyst Michael Pachter. «The guys who stayed because they believe in [new GameStop executive chairman] Ryan Cohen: stupid.»
So GameStop wasn't a game changer. Wall Street is still winning overall, and most retail investors are doing what everyone else is doing: trying to survive in uncertain times. For many of them, the stock market may seem like a casino, and everyone knows the first rule of the casino: the casino always wins. Keith Gill's army may have won the battle, but Wall Street won the war. This is usually the case.
As for Gill himself: well, no one knows. He left MassMutual and walked away from the short Gamestop deal with about $20 million. He hasn't posted on YouTube, Twitter or WSB in over two years. He was not involved in the creation of Dumb Money. What he spent his money on remains a mystery. At the height of the short squeeze, he told The Wall Street Journal that he had «always wanted to build an indoor track facility or field house in Brockton, and now it seems like I can actually do it.» But so far there is no sign of this track.
For many at WSB, Jill remains a cult hero. “He truly cares about helping people and showing the resources available to individual investors so they can learn about the market,” Dancinrobot said. “A shining star in the darkness,” said the xyloxidants. “People tend to gather around light, and the light it emits cannot be ignored.” Some have compared him to Michael Burry, the investor who foresaw the 2007 subprime crash and was immortalized by Christian Bale in The Big Short.
But perhaps the most astute assessment comes from Zammai. “[Gill] created history books. Just fire the legend and leave the network.»
And it seems that's exactly what he did.
Dumb Money is now in theaters
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