Gamestopped.

• Author: Rowland, Tim

The democratization of the stock market is a good thing--I guess. Just as discount airlines, in the words of Homer Simpson, opened air travel to a generation of hicks, no-fee stock trading apps like Robinhood have opened the world of securities to anyone with a smartphone and a mom willing to lend out 200 clams.

I confess that I got a bit goo-goo-eyed myself in the 1990s, amidst the madcap dot.com days, over the prospects of effortless wealth. But my mom was far too smart to stoke my oven of ignorance with her hard-earned cash. And executing a trade still had a fee of something like $15, so there was a cost associated with acting frivolously. It was much like the days of film cameras, when you had to think about the relative value of each frame.

Back then, we would-be Wall Street wizards were motivated by greed, it's true, but that's in line with traditional capitalism. Although we turned out to be wrong, we assumed the executives at companies like Flooz and Pets.com knew how to make money.

So what to make of "meme stocks"--buying shares of failing firms for no reason other than to mess with professional traders looking to profit from those firms' demise? Earlier this year, thousands of video gamers and their ilk conceived of a plan to strike against hedge fund managers by running up the price of GameStop. The hedge funds were shorting the game retailer because they knew its model is going the way of Blockbuster's. In a move intended not so much to save the chain as to "stick it to Wall Street," the gamers scarfed up GameStop shares at an amazing rate, sending the stock soaring. While the hedge funds were not ruined, they were stung, and the meme kids simply shrugged off their own losses.

That got me wondering: what to make of revenge as a market force? In trying ro sort out WWMD (What Would Milton Do?), I remembered that all sorts of seemingly sinister market behaviors--from high-volume trading to sketchy hedge fund bets--are justified because they "add liquidity to the market." Liquidity's a good thing, to be sure--lowering spreads and what not--though no one's ever stopped me on the street and thanked me for my own contributions to market liquidity. Besides, one of its benefits is supposed to be bringing information to the market, and GameStop shares soaring past $400 seems about as informative as scanning Arizona ballots with UV lights. On the other hand, the meme buyers have added some entertainment...