Never Mind The Bullstocks

A story of Punk Rock, Meme Stocks and Legacy

Early seventies Britain was a bleak place. The country experienced economic turmoil, high inflation, political disillusionment, and widespread unemployment. Trash littered the streets, and strikes were commonplace.

Against this backdrop, punk rock emerged as a defiant response to the establishment. The music’s raw, aggressive sound and lyrics tackled social and political issues such as unemployment, poverty, and politics.

The epitome of this defiance was the Sex Pistols, who shocked the world with their confrontational behaviour and provocative lyrics. They weren’t the best musicians, but that wasn’t the point. They showed that armed with attitude and punk style you could start a movement, and it inspired a generation of young people to pick up a guitar and rebel against the status quo.

David(s) Vs Goliath

There are not too many examples of rock’ n roll behaviour in financial markets, other than the occasional white collar fraud. Most days are not particularly exciting. It is less ‘Wolf of Wall Street’, and more ‘Badger of Bishopsgate’. This is why the meme stock rally of 2021 was such a remarkable event in financial history, it wasn’t wealthy investors trading with other wealthy investors. It was retail investors trading against the establishment.

The meme stock rally was so called because certain out of favour companies like GameStop and AMC Entertainment saw their stock prices pushed up by social-media posts. Groups like ‘Wall Street Bets’ on Reddit, built a community of retail investors who would discuss certain stocks (shares) and encourage each other to invest in these companies. One of the central characters in the GameStop story is Keith Gill, known as Roaring Kitty on YouTube, or ‘DeepFuckingValue’ on Reddit. Gill had a background in finance but was not a known investor. He identified a ‘deep value’ opportunity in GameStop shares, and his posts and videos on social media detailed his conviction that the company was undervalued. And people begun to listen.

On the other side of this trade were the hedge funds, in particular Melvin Capital, who had a large bets against GameStop. Hedge funds will typically ‘short’ stocks they believe have poor prospects, or in financial trouble, and go ‘long’ companies where they expect the share price to go up. In 2021 GameStop was one of the most ‘shorted’ companies in the market.

There is an important distinction in potential outcomes between these two strategies. If you own shares in a company and that company goes bankrupt, your investment goes to zero, that is the maximum amount you can lose. However, if you are shorting a company and the shares go up, there is theoretically no limit how much the price can go up and therefore no limit on how much you can lose. Also, if you need to reduce your short position in a share that is rallying you have to buy it back, which, guess what, pushes up the price even further. This is known as a ‘short squeeze’ and the retail investors were hoping for the hedge funds to be squeezed.

In the same way punk was sticking two fingers up to the establishment, retail investors piled in to shares that not only could make them money but with the added bonus that it could also wipe out a hedge fund or two along the way.

It takes two to make a thing go right

It is often said ‘it takes two to make a market’. Markets are function of buyers and sellers which is how prices are established. Investors may take different views but generally these views are based around the perceived value in an asset. That’s what made the rally in GameStop and other meme stocks so different. Retails investors didn’t care what price they paid, as the price increased they just kept buying. The herd mentality of the online community took over and holding your nerve in the face of incredible share price increases became a badge of honour. It was a game of chicken with the hedge funds. So who won?

In 2019,  Keith Gill purchased $53,000 worth of GameStop shares. As he continued posting about the company, and the potential for a short squeeze, thousands of other retail investors others joined him, leading to a rapid rise in the share price. Rapid is probably putting it mildly, the share price absolutely rocketed, and when GameStop’s share price peaked in January 2021, Gill’s $53,000 investment was valued at nearly $48 million. The price continued to fluctuate wildly during 2021, at one point it was up 2,400%, and at the end of the year GameStop shares were up 687%.

Source: Yahoo Finance, adjusted share price ($)


As for Melvin Capital, their bet against GameStop lost them billions of dollars and the fund ended 2021 down 39%. After continued poor performance Melvin announced they were winding down their fund in May 2022.

These were two extreme examples, and the meme frenzy of 2021 also produced plenty of losers as well as winners, but in general it was a rare occurrence of the man on the street taking on the Wall Street big boys and beating them at their own game.

Source: Yahoo Finance, adjusted share price ($)

The meme stock rally was certainly helped by a number of factors happening at the same time. After being stuck at home for a year investors had extra cash from lockdown and launch of the Robinhood app made trading shares far simpler than traditional trading platforms. It also would have been impossible to achieve this kind of collective action without the rise of social media platforms. Also. we also can’t ignore good old fashioned greed, with investors wanting to make a fast buck as the shares rallied.

But at its core, this is a story of frustration and inequality. Since the financial crisis, there has been a growing gap between the top 1% and the rest. Many of these retail investors were young, without significant assets and were motivated by a desire to challenge the status quo and push back. Most of the ‘meme stock’ companies like GameStop, AMC (cinema chain) or Nokia, had a sentimental attachment and there was a perception that hedge funds were profiting off of their demise. If you feel you have nothing to lose then why not buy shares and hold them to thwart these financial raiders.

The punk scene in the 70’s didn’t actually last that long but Its legacy lived on influencing numerous bands down the years. Similarly, the meme stock rally has had a significant impact on the market, with the role of social media in investing, and the power dynamics between retail investors and Wall Street starting to change. It used to be that as soon as retail investors (dubbed ‘dumb money’) started piling in to a the market that was a time to get out, but institutions have now started tracking retail buying to harness the momentum and adjusting the size of their bets so they don’t get wiped out.

King of Pun

At Five Horizons we are not looking for individual companies who are on the brink of survival. Even if these shares do have ‘deep fucking value’ the stories of investors making 10 or 20 times their original investment are few and far between. Deep value can often be a value trap, and what appears to a bargain becomes a nightmare. But we do like value. We have recently increased our exposure to funds with a value approach and also to global small companies which are trading attractively compared to large companies.

When I write these articles I take inspiration from punk. Well, sort of. Punk rock music is characterized by a fast, simple, raw style of playing. A clichéd punk guitarist would know just a handful of chords, but play them fast. Although they originated from punk, the British band ‘The Police’ were talented musicians. Their guitarist Andy Summers had a background in Jazz guitar, and while he may have only played 3 chords, he knew 300. He kept it simple when he could have added complex chord progressions. Investment markets are complicated and our job is to try to understand them and identify opportunities to make money. But our job is also to try and remove the complexity and the jargon, think clearly, and speak in plain English.

If you are still reading this then I guess you like this approach, so please feel free to share with your favourite people.


Ps. If you like the meme stock story then check out “Eat The Rich” on Netflix, or the film “Dumb Money”


In memory of Douglas, 2014-24. Always by our side 💔



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