Casino Capitalism: Is it time to Stop the Games and play for real?
The myriad shortcomings of global capitalism is a recurring theme these monthly epistles. I often say that I’m not anti-business – just anti-business-as-usual. However, the eyebrows of even the most vociferous supporters of the current economic system must have been raised this past week and with the GameStop investment fiasco.
For those of you who may have missed this (you’d have to have been in self isolation on the moon), then let me give you the briefest of summaries. A group of major hedge funds decided “to short” (or in layman’s terms, bet against) the stock of a fairly troubled old school US retailer of video games called GameStop. When an investor forum on the platform Reddit noticed how exposed these hedge fund managers were, they saw the opportunity to give the Wolves of Wall Street a very bloody nose. Through their collective and coordinated action, they were able to significantly move the share price of GameStop skywards and watch with glee as their Wall Street nemeses lost fortunes.
Doubtless, there were no shortage of crocodile tears as the rest of us watched from the side lines as the little guys appeared to get one over on the big guys. Beyond simply watching Wall Street get their comeuppance, there were a number of other takeaways from this experience:
Many commentators pointed to the need for an overhaul of the system that allows this so-called “casino capitalism”. It does seem absolutely ridiculous that the value of GameStop shares rose almost 20 fold, rising from less than $20 to almost $350 at one point. That’s without them selling any more video games, opening any more shops, cutting any more jobs or doing anything whatsoever to change their business fundamentals. This is not investing. This is pure speculation – another form of online gambling like digital poker. Personally, I don’t believe many of these sophisticated investment vehicles such as options or derivative trading serve any significant positive purpose to the real economy.
Others highlighted the risk that many of the small, inexperienced investors were facing if they got caught out badly by the volatility of these share prices. Whether we like it or not, these hedge funds have far deeper pockets than the average Joe and we need to make sure there are safeguards in place to protect innocent small investors losing their life savings in a day.
While there are certainly some serious lessons to be learned from last week’s experience, it was a very different aspect of the whole story that caught my imagination. Namely, the latent potential of mass, coordinated actioned by numerous small investors to influence markets and share prices significantly.
What if, rather than the objective being to teach Wall Street a lesson, instead it was to reward corporate behaviour around things we all care about, for example, their efforts to address climate change? What if rather than short selling stock, a green army of small retail investors decided to favour or “go long” on corporates deemed to be doing good things i.e. take out an option to buy the stock at a higher price in the future, thus putting upward pressure on its price? It could be coordinated through the Reddit investor forum or it might be something altogether new, a sort of “Bloomberg for good platform” that could provide real-time non-financial information on the corporate’s performance against, say, the 17. UN Sustainable Development Goals.
It’s still early days and the dust is far from settled from last week’s GameStop furore. But having written fairly often about the need to bring greater democracy into global corporations (see October’s Bullog for example), last week’s experience I believe, offers significant hope and some insight as to just what that might look like and the latent potential that mass, coordinated, “democratic” action can have on financial markets.
A new start for the new year
Hands up those of you who managed to join Craigberoch’s RESET2021 on the 9th of January? Be truthful now.
Well, I’m delighted to say that we had well over 200 registrations for our inaugural event of the new year and I’d like to thank every single one of you who attended. There had been lots of hard work put into the preparation of this event (by Patrick, Amelia and Sonja in particular) and then our great Craigberoch Cast members took over to perform their sessions. The feedback from participants all around the world was incredibly positive and what I was most pleased about was that the numbers stayed high throughout the day. Most online events I’ve been to last year usually tend to finish with about half the number of participants that they start with. RESET2021 managed to hold onto most people which means we must have been doing something right.
This format was something of an experiment, but one that we are likely to repeat in the future, so watch this space for more information or even better, register here for updates on future programmes.
In the news
January was quite a significant month in terms of media attention for both the Craigberoch Business Decelerator and yours truly. The RESET2021 event caught the imagination of UK Business Insider and The Scotsman which both featured very positive articles and I’m very grateful to Nick Freer for his PR support with the press release.
Also, the lead feature of the January Bullog was published as an Opinion editorial or “OpEd” in the Scotsman on the 9th of January. If you missed it you can read the article here Brake or break: A new pace for business in the new year.
Best of the rest……
I enjoyed hosting a session at the Innov8ors event “Careers, Personal Development and Wellbeing” at the beginning of January. As ever, this platform attracted a diverse group of people with, as you might expect, a common interest in innovation. With the help of Viki Lazar and Kaori Fujii from the Craigberoch Cast, we ran a session making important points around the links between deceleration, wellbeing and innovation.
While speaking of slowing down, I enjoyed participating in a Conscious Conversations event run by Reboot the Future where about 15 participants had a fascinating session leveraging the concepts of so called Open Space where the group decides on the agenda for the session.
I also was asked to speak briefly at the launch of a new intrapreneurship program called Unusual Pioneers. The program is the brainchild of Yunus Social Business but it’s going to involve a number of the different intrapreneurship networks such as The Schwab Foundation and The League of Intrapreneurs. It was a very well attended event with almost 400 people showing up – yet another indicator of the growing interest in the movement and a sign that there is an increasing amount of coordination too which cant be a bad thing.
On the personal front…….
It’s difficult to talk about lots of personal activity when most countries are locked down. I’ve been lucky enough to hang out at my place in the French Alps just outside of Geneva, where there has been a 6pm curfew but as of yet no full lockdown (I know I’m tempting fate just by saying that). There is real irony in the fact that this has probably been the best start to the ski season in the past 15 years with huge amounts of snow, yet all the ski resorts in Europe are closed (expect Switzerland). Clearly this is a catastrophe for the local economies and I’m very sympathetic to all the owners of bars and restaurants who have seen their livelihoods destroyed, like so many around the world. On a personal level however, I’ve discovered the joys of “randonnée skiing” where you put sticky skins on the bottom of your skis and walk uphill. I try to take an extended lunch hour most days to go out with Penny the Dog who simply loves the snow and running around on deserted pistes.
OK, that’s more than enough for now folks. If you enjoy this monthly ramble then do feel free to suggest others sign up here. Until next month,
* The Bullog = Bulloch + BlogMake sense? Not bulldog, nor is it bulls**t although I’ll let you be the judge of that! It’s a brief synopsis on recent articles, events and opinions from my world and the things that have caught my attention over the past few weeks.