For a brief period at the beginning of 2021, Nigel Farage and Alexandria Ocasio-Cortez were in agreement: the people had been cheated. Thousands of small “retail” investors had staged an unprecedented assault on Wall Street by buying shares in GameStop, an ailing chain of video-game shops. This created a huge spike in GameStop’s stock price and exposed a group of predatory hedge funds – which had “shorted”, or bet against, the stock – to billions of dollars in losses. But trading was suddenly paused, the movement sputtered, and the populists wanted answers.
The Robespierre of this revolution was Keith Gill, an investment marketer from Massachusetts whose $53,000 bet on GameStop became worth tens of millions of dollars. Dumb Money is the dramatised retelling of what happened to Gill, who is played by Paul Dano in another softly spoken, low-affect performance as a bewildered hobbyist who becomes a folk hero in his battle against Wall Street. Gill’s GameStop trade is portrayed as a clever strategy that exposes the greed and cynicism of the hedge fund managers Gabe Plotkin (Seth Rogen), Steve Cohen (Vincent D’Onofrio) and Ken Griffin (an enjoyably frosty Nick Offerman) who chuckle, from their mansions, at the idiots gambling on meme stocks.
These cartoon villains underestimate the great American public, however, as an army of nurses, shop assistants, delivery drivers and college students educate themselves about financial markets on the internet and begin seeking not just profit but revenge. Directed by Craig Gillespie (I, Tonya) and based on Ben Mezrich’s book, The Antisocial Network, it’s one of a few comedy-money-dramas aiming to be this year’s The Big Short – see also BlackBerry and The Beanie Bubble. What sets Dumb Money apart is its whiff of justice: throughout the film, these renegade investors see GameStop as a means to stick it to the rich bastards who caused the 2008 financial crisis.
In real life, however, hedge funds had almost nothing to do with the 2008 crash, which happened when the great American public took advantage of very low introductory mortgage rates to gamble on the housing market. Wall Street enabled them to do so, by offering and securitising those loans, but the crash would not have arrived if swathes of greedy Americans hadn’t watched Flip This House and Property Ladder and decided they, too, deserved to become millionaires for almost no work.
And here they are again, the world’s wealthiest and most entitled consumers, plugging the free money from their stimulus cheques into the free Robinhood trading app, and agreeing that the invisible hand owes them a pat on the back.
In its efforts to reassure the speculating public, Dumb Money swerves around inconvenient facts. It dismisses the aggressive politics and anti-Semitism that came to dominate WallStreetBets, the Reddit forum on which the GameStop trading was mostly co-ordinated. It fails to mention the armies of fake social media accounts that reportedly promoted GameStop trading, and it studiously ignores the fact that in reality, the biggest winners from the trading frenzy were not nurses or shop assistants but other Wall Street firms.
The central plot point of Dumb Money is the magic “short squeeze”, a real but very rare market event in which short sellers are forced out of their positions, compounding their losses and sending the share price sharply upwards. This is the perfect movie device – all that is required is the quasi-religious self-belief that is the essential heroic trait in all Hollywood films – but it didn’t really happen. When the US Securities and Exchange Commission investigated GameStop trading for a report published in October 2021, it found that the huge rises in the company’s stock were the result of people buying the stock, not short sellers trying to escape. It was an example of what the great economist Robert Shiller calls “narrative economics”: the story of what people thought was happening was the most powerful force in the market.
Around the same time, a similar story (banks are bad, take control of your money and get rich) drove millions of people to gamble on cryptocurrencies. Coincidentally, two of the executive producers of Dumb Money are the brothers Tyler and Cameron Winklevoss, whose main business is persuading other people to gamble on crypto (Mezrich published a fawning biography of the Winklevii, as the twins are widely known, in 2019). This strikes me as being a bit like the CEO of Betfair financing a film about a regular Joe who takes down the big gambling firms by heroically betting his house on Limping Rodney in the 3.30 at Chepstow.
And of course, the film skirts around the fact that the thousands of people who piled in to GameStop when its share price was already in the hundreds of dollars lost almost everything (it is less than $20 at time of writing). The truth is that more than 80 per cent of people who invest in stock options or cryptocurrency lose money. Last year, retail investors lost $350bn in the US alone.
But Dumb Money’s biggest lie is that the GameStop episode was really a popular uprising. The retail traders had no coherent politics of their own, only an excited and inchoate froth of ignorance, resentment and greed. They did not seek to tame or destroy the over-powerful markets but to use them as a cash machine, exactly as Wall Street does. What this film tells us is that the great American public takes zero responsibility for 2008, and it never will. Given the chance, they’ll do it again.
“Dumb Money” is in cinemas from September 22
This article appears in the 20 Sep 2023 issue of the New Statesman, The Rise and Fall of the Great Powers