Quote of the Day

"If they don't come back, we're sunk."

—Kenneth McClure, vice president of Hospitality Holdings, which owns restaurants in New York City whose customers were basically a lunch and after-dinner cocktails crowd, on the future of urban offices.

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Hockey sticks

A few years ago, hockey fans got together to vote a journeyman player into the All-Star Game—mainly, because it would be funny. They chose John Scott, then 33, playing for his sixth NHL team, the Phoenix Coyotes. The idea worked, Scott won the vote, and and he was set to be team captain.

The NHL hated this. Scott soon found himself traded from Phoenix to Montreal, which in turn immediately sent him down to the minors—the St. John’s IceCaps, in Newfound and Labrador. He was thus 4,000 miles away from his family.

Oh, and Scott’s wife was almost nine months pregnant at the time. With twins. Not kidding.

The happy ending is that Scott played in the All-Star Game in Nashville anyway. He scored two goals—two more than he’d scored in the regular season—and was named MVP. He retired from the game not long afterward. Rumors are there will be a movie.

This anecdote has been running in my head for close to a week now, but it really came back to me yesterday because of what’s been going on with GameStop.

How to summarize GameStop, and a few others, if this hasn’t been on your radar? Maybe we can start with a chart:

Talk about hockey sticks! On January 4, GameStop traded at $17.25 per share. Yesterday, it closed at $347.51. This means that the company is theoretically worth 20 times as much right now as it was on New Year’s Day.

What’s driving this? In a way, it’s the stock market equivalent of hockey fans.

Over the past month or so, day traders and God knows who else have been talking the stock up on Reddit and other sites (here’s the mothership)—along with a few other stocks like AMC and Blackberry.

These stocks are the equivalent of John Scott, just to keep the metaphor going—journeyman companies that many think could be at end of their careers.

GameStop’s main business is physical, retail video game software (as opposed to streaming), and AMC runs movie theaters, many of which have been closed for months due to Covid. Blackberry—well, you know, they were big in the early 2000s.

That led these stocks to be targets for Wall Street short-sellers—basically, traders who bet that the stock price will fall; thus rooting against their success. But now, the stocks are going way up.

At least three things have happened as a result:

• Some Wall Street investors lost billions. (To be more exact, $23.6 billion and counting.)

• Some Reddit-style traders made millions—and some of the insiders who owned a lot of GameStock made billions.

• The whole thing took on another dimension, to the point that retail traders see it not just as a way to make a lot of money by working together, but to stick it to the institutional types.

“Please tell the Wolf of Wall Street that the Pigeon of San Francisco is gonna eat your lunch,” one such trader, Sam Daftarian, told The Wall Street Journal, adding that he often makes his trades in the line at the grocery store, or at traffic lights.

On Reddit, traders are rallying each other, adding social pressure not to sell and end the rally, although one supposes that eventually some people will start taking profits and the dam will break.

But who knows for sure? Maybe this is just the latest example of where things gain value simply because a lot of people get together and say they have value—like tulips in 17th century Holland or perpetually pre-revenue Internet companies in 1999. (Of course, those bubbles ultimately popped.)

Or else, Would you be surprised to learn that some of the Reddit rally traders happen to be institutional traders who are every bit as “Wall Street” as the short-sellers who are getting killed?

Bottom line, it’s a force. It’s power. And I think one way or another it’s here to stay.

I suppose Wall Street is now trying to figure out the equivalent of sending John Scott to St. John’s—but so far, no luck.

7 other things worth your time

• The city of San Francisco voted to remove the names of President Washington, President Lincoln, and many other historical figures from schools. To be fair, some of the other name removals would be less controversial, but critics say the plan was just thrown together with no real thought; for example, Roosevelt Middle School will be renamed, but officials don’t even know if it was named after FDR or Theodore Roosevelt. (SF Chronicle)

• Fewer Americans are having sex than at any time since 1989 (when the group that compiles this data started compiling it). This actually isn’t a Covid-related decline; the most recent data, just reported, was from 2018. (The Washington Post)

• Democrats in the Senate basically seem to want to get the impeachment of former President Trump over with, since they need 17 Republicans to convict and it seems certain that won’t happen. Meanwhile, Senate Republicans are set to filibuster to prevent President Biden’s nominee for Homeland Security from taking office.

• The leader of the Proud Boys white nationalist group, according to reports, was revealed this week to have previously been a long-time undercover informant for police. In other seeing-the-light news, a Michigan militiamen leader has pleaded guilty in the conspiracy to overthrow the state government and kidnap the state’s governor, Gretchen Whitmer last year. He’ll cooperate and testify against his co-defendants. (Reuters, The Daily Beast)

• Facebook says 6% of the content its users see is political. But it hasn’t defined political, so take that with a grain of salt, I suppose. You should see the Facebook debate right now in my town over whether to reopen schools. Does that count as political? (Axios)

• The UK will stay on lockdown until at least March 8, Prime Minister Boris Johnson said, after the total British death toll passed 100,000. Separately, a source tells People that for Queen Elizabeth, the pandemic and associated lockdown has resulted in “the only slight rest she's ever had in her whole life,” according to a source. (Bloomberg, People)

• The Justice Department indicted a social media influencer who encouraged Black and Spanish-speaking people to vote by text—implying that there was some new legal way to do this, and thus tricking them into not really voting. About 4,900 people sent texts. The most interesting thing about this is that it’s a case from 2016, which left a lot of people wondering if we’re about to see a slew of cases that prosecutors held while Trump (and his acting attorney general) were still in office. (TechCrunch)

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