Can't stop. Won't Stop. Gamestop.

(So, good news is, most of this will play out in the next few days, so we'll know just how terribly wrong I am/was. To be perfectly clear, this is my opinion only, I am not a licensed investing professional, nor should anything I say be considered investing advice.)

Ok. Last time. Until the next time

The latest line from the smartest guys in the room is that GME "has" to come back down to earth, and that the retail investors (aka "dumb money" in industry parlance) need to be protected because "the business is fundamentally flawed and has no intrinsic value." (or some such punditry.)

While I agree that that the Gamestop business model is challenged at best, and an outright non-starter at worst, I still think they are missing the point.

GME stock no longer represents a piece of equity ownership in the firm Gamestop.

Months of levered borrowing, selling, reborrowing, and selling again, coupled with massive put option exposure have fundamentally (see what I did there?) changed the security from something that represents ownership into a synthetic, structured financial product.

A product whose value is defined by an intricate relationship between the underlying math, market sentiment, and - lately- the global human condition.

The flaw here was twofold:

One - there is only one endstate for the negative thesis. A company can't go "super-bankrupt." So by piling in multiple layers of levered and option-juiced short exposure, despite the ever increasing risk, there was no similar exponential increase to the return potential. You can still only hope to book the value between now and zero, but the "infinite loss" scenario for an upside swing gets worse and worse with every layer, copycat strategy, and reborrowed share.

Secondly, and more importantly, is the simmering and increasing resentment of the human condition.

Just twelve years ago, similar synthetic products nearly bankrupted the world. In the end, the banking industry promised to do better and took massive bailouts - all while regular people (importantly, the grandparents and parents of today's investors) lost their homes and/or livelihoods. This is not something easily forgotten.

Fast forward to the last four years of internal conflict, of which the underlying theme - for both sides, mind you - is largely "we have been continually ignored or unheard, and that ends TODAY."

Finally, the last nine months and the "K shaped recovery." In the face of the worst health crisis in a hundred years, widespread unemployment, and intense levels of individual financial insecurity, the stock market laughed in the face of global individual pain and soared to all time highs, to the benefit, glee and joy of a select few and the financial media that lionizes their genius - further driving a wedge between "us" and "them." All while Congress has spent months of precious time and millions of taxpayer dollars debating on whether to give truly struggling Americans enough money to buy a TV or a slightly larger TV.

To be clear - all sense of, or faith in, investing fundamentals are tossed out the window when global economies are shut down for months, going on years, and airline stocks as a group are up approximately 100% since the pandemic started. This is an industry that is capital intensive, with a huge commodities exposure, massive union liabilities, and whose players have a nasty habit of filing for bankruptcy every six years or so. Don't talk to me about intrinsic value and fundamentals, that cruise line has sailed, my friends. (Not to mention having given everyone coronavirus, abandoned them at sea, and nevertheless saw its stock rally 100% as well.)

So what does that mean? It means, yes, Wall Street - our beloved bastion of free market capitalism - is officially a casino. Fortunately, Americans love casinos. We LOVE them. Have you ever been in the blackjack pit at O'sheas at 5 in the morning? It's GLORIOUS.

But I digress, back to GME. Yes, everyone investing long in this thing is gambling. 100%. But they aren't gambling on Gamestop. They are taking the other side of a bet on the math of a synthetic structured product. But unlike betting the spread on the Super Bowl, collectively, their bet can actually influence the outcome of the game. And that there is the rub.

Add in the wrinkle that this game has "good" guys and "bad" guys. While everyone has the same amount of money at risk on both sides, individually, the "bad" guys have WAY more to lose than the good guys.

Some hedge funds blow up? A few formerly high-flying money managers have some seriously uncomfortable LP conversations to the tune of $20-30B. Huge chunks of LP money, gone for good. GME craters to zero? Your average GME shareholder loses a couple grand and goes right back to work where he or she was going tomorrow anyway. The risk/return tradeoff is out of balance for the two groups. That's why this insanity is playing out - it's not that the Wallstreetbets crowd has nothing to lose. It just that the average player (and there are millions of them) doesn't have nearly as much to lose, and by now, it literally doesn't. give. a. shit.

That's why this is different. It has morphed from a fun quarantine diversion, to a YOLO, to sending a message that "We are tired of there being different rules for different people and goddammit NEVER AGAIN."

A quick piece of advice for the entrenched powers that be: If you continue to circle your wagons, give preferential treatment to your people above theirs, go on CNBC and whine about "trying to make a living" and/or outright lie about the liquidity risk to your firm and the overall system, you are going to have a much larger problem on your hands.

You have to let the people eat. They found a flaw in the system and exploited it. It's no different than what you do - literally - on a daily basis. But if you don’t let them eat what they kill now, there is going to be hell to pay. And you’re not going to like what Wall Street looks like after it is all said and done.

There is a flaw in your thesis, my friends. I honestly don't believe these folks are going to scramble for the door anytime soon. Quite the opposite.

Ask yourself, why would the dumb money wisen up all of a sudden?