Jordan Belfort, the former stockbroker whose 2007 memories “The Wolf of Wall Street” became the basis of the 2013 hit film starring Leonardo DiCaprio, praised the “brilliant” revolt of retail investors last week in a Monday appearance on “Tucker Carlson Tonight”.
The stock price of video game retailer GameStop rose dramatically last week after a group of Reddit users came together to buy the distressed retailer’s call options – hurting short sellers.
“I believe this is a paradigm shift now,” said Belfort, who spent 22 months in prison after pleading guilty to charges of securities fraud and money laundering, to presenter Tucker Carlson.
“The little guy is finally equipped, the information travels instantly now, before it was just the big ones, they paid the analysts … so now the little guy finally has the ability to play that same game, at least a little bit,” Belfort explained. “And there will be a radical change, it will not be the same anymore.”
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Short sellers, added Belfort, are investors who speculate that the price of a stock or bond will fall in value. Their strategy involves borrowing shares to sell them in the hope of repurchasing them at a lower price in the future.
“I take my hat off to them … it’s brilliant what they did.”
“There are hedge funds that group together and will literally sell a stock almost to zero, outside the market. They try to spread negative news, investigations and that is what you see with GameStop,” said Belfort.
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“I think everyone knows that there is something wrong in the pit of the stomach. You can silence people, you can dismantle them … and get away with it. Everyone knows – Republican or Democrat – that there is something wrong. two sides of the corridor united in one thing “, he continued.
Belfort praised small investors “furious as hell” who were “tired of being trampled on by Wall Street, which they always have been”.
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“I take my hat off to them, by the way,” he said to Carlson. “What they did is brilliant. They found real market inefficiency and a gap where something had been drastically over-sold and they could really get enough buying power. They finally now have some ammunition to counterattack.
“The danger,” he warned, “is that it will end badly for these actions and I hope that people will not lose money on the process.”