Keith Gill was an unlikely revolutionary. His T-shirts featured cats in sunglasses, his red headband made him look like a cross between peak-era John McEnroe and Cousin Greg from Succession, and his YouTube videos were long, dry analyses of corporate stocks. But revolutionary is exactly what he unwittingly became at the start of 2021, when his advice to buy shares in the videogame store chain GameStop made fortunes for a ragtag army of small individual investors and helped send a handful of large hedge funds to the wall.
Dumb Money, the movie of that story starring Paul Dano as Gill, is out now. It speaks to many of our current preoccupations – rampant financial inequality, lack of accountability for the rich, the role of social media in democratising information. But at the heart of it is Gill himself, a beguiling mix of ordinary Joe and enigmatic online avatar.
He grew up in Brockton, Massachusetts, a city of around 100,000 people which between the Civil War and the end of the 20th century was one of America’s premier shoe producers. Brockton has its fair share of crime, economic and infrastructure problems, but it also has a vitality and energy which make most of its residents proud to live there. Appropriately for a city that likes to think of itself as punching above its weight, its two most famous citizens are boxers: Rocky Marciano and Marvin Hagler.
As a schoolboy and college student, Gill had been a star runner. Revealingly, his former coaches John Hidalgo and Karen Boen speak of his mental strength as well as his physical gifts. “His personality as a runner was to throw the first punch, if you will, and never back down from any competition,” said Hidalgo. “Keith had the ability to go into a place mentally and with such intense focus that I had never experienced in other athletes,” added Boen.
Gill still holds the 800m, 1000m and mile records at his former college, Stonehill, and for a long time the number he was most obsessed with was four: nothing to do with stock prices, but the fabled yardstick of the four-minute mile. He got close – his personal best is 4:03 – but knee and Achilles tendon injuries nixed his running career. His last race was in March 2008, almost exactly the time that Bear Stearns collapsed. When he graduated the following year, it was into an employment market still reeling from the financial crisis.
“When running becomes your life and you can’t do it any longer, it’s like everything is taken away from you,” he said. “It kills.” The wider economic situation didn’t help much either: from 2010-2017, Gill worked for various start-ups, but also experienced long periods of unemployment. He needed an outlet for his drive and energy, and in stock picking he found one. He loved the complexity, the challenge, the satisfaction of drilling deep into the numbers and the thrill of finding the nuggets of gold which everyone else had missed.
Fast forward to 2020 and the pandemic. Gill was 34, and after two years unemployed, he was working in marketing for the life insurance company Massachusetts Mutual and raising an infant daughter with his wife Caroline. He was an unremarkable financial services guy living in an unremarkable rented house in an unremarkable Boston suburb, one of many millions of ordinary decent Americans. But at night he would post YouTube videos and write posts on Twitter and Reddit’s Wall Street Bets (WSB) about which stocks were catching his eye. He mixed this advice with his thoughts on Belgian beers and would celebrate big gains by dunking chicken goujons in one of those beers, or perhaps in a glass of prosecco if he was feeling flash. Sometimes he would consult Uno cards or a Magic 8-Ball, a novelty toy shaped like a pool ball which offers 20 possible answers to any yes/no question.
Although Gill never hid his true identity, he – like many others – made his online postings under pseudonymous handles: “RoaringKitty” on YouTube and Twitter, and “DeepF______Value” on WSB. The latter moniker refers to the term “deep value”, when investors seek stocks of lowly-valued companies they believe to have hidden worth: and this was exactly what attracted Gill to GameStop.
Bricks and mortar video game stores had been hit hard by the double whammy of digital distribution and the pandemic, but Gill was convinced this would change when GameStop used the latest consoles to attract new customers. “Everyone thinks I’m crazy, and I think everyone else is crazy,” he said at the time. “I’ve never endured bearish [falling price] sentiment this heavy. I’m a fundamental value investor through and through, and GameStop is an established, uniquely positioned player.” Later, he would say that “many folks just weren’t digging in deeper. It was a gross misclassification of the opportunity. When no one wants to buy it and it looks like it’s going bankrupt or it’s dead, that’s when you really dig in deep.”
It was this combination of style and substance that was key to Gill’s appeal: part showman with his deliberately cultivated everyman image of headband and beer, part serious number-cruncher who never shirked the hard, painstaking work of financial analysis. And then there was his willingness to put his money where his mouth was. He would post screenshots of his personal investment in GameStop: $53,000 in all, most of his savings. GME YOLO, he’d write: “GME” for GameStop’s ticker symbol on the New York Stock Exchange, “YOLO” for “you only live once”.
$53,000, of course, is a rounding error to big Wall Street institutional investors such as merchant banks and hedge funds. But to most retail investors, individuals who play the market with varying degrees of commitment and success, it’s a lot. (The film’s title, Dumb Money, comes from the disparaging term used by the first group to describe the second.)
In January 2021, helped by Gill’s remorseless support and unwavering belief, GameStop’s price began to climb. Many institutional investors had short sold the stock – borrowing the stock and selling it, planning to buy it back for less, thus making a profit. In fact, shorting in GameStop had reached 140 per cent of the total shares, as so many shares had been shorted more than once. When the price began to skyrocket, the short sellers were forced to buy shares in order to cover those positions, which raised the price still further, which meant they had to buy yet more shares: a short squeeze, a circle either vicious or virtuous depending on which side of the line you were.
With Gill as the Pied Piper to his multitude of online acolytes, both stock price and retail investor interest rose vertiginously. A combination of pandemic stimulus paychecks and low interest rates meant that people had cash to spare, and smartphones and social media had democratised the stock market like never before. With trading fees at zero, and apps such as Robinhood allowing investors to buy and sell as though this were just another game, anyone could bypass the traditional gatekeepers.
It’s funny, the wealthy are all for free market until it negatively impacts them. But billionaires can strategize how to ruin companies and hurt every day people. Regulators are in bed with the billionaires and want to make sure they don’t lose more money on AMC, GameStop, etc.
— Frederick Joseph (@FredTJoseph) January 27, 2021
At the height of the frenzy on January 28 the share price was almost $500, nearly 30 times what it had been at the start of the month. Gill’s original investment was therefore worth nearly $48m. Overnight more than 1.5m users joined WSB, increasing its membership base by 25 per cent. This was the moment for Joe and Jane America to gatecrash the party Wall Street insiders had been enjoying for years. Several hedge funds took huge losses: Melvin Capital was at one stage losing a $1bn a day, and both it and White Square, another hedge fund caught in the Gamestop short squeeze, would close their doors within 18 months.
There was an immediate government hearing. Appearing before the Senate Financial Services Committee, Gill denied market manipulation and offering advice for profit. “I was abundantly clear that my channel was for educational purposes only, and that my aggressive style of investing was unlikely to be suitable for most folks. My posts did not cause the movement of billions of dollars into GameStop shares. It is tragic that some people lost money, and my heart goes out to them.” His motive for buying GameStop was, he said, the simplest of all. “I like the stock.”
“He’s one of the rare populist leaders who’s not a crazy narcissist, who isn’t just chasing fame and attention and money,” says the film’s co-writer Rebecca Angelo. Nonetheless, Gill tapped into something much bigger than a simple corporate valuation. Retail investors’ anger towards the institutions was very similar to the sentiments which had led to the Occupy movement of 2011-12: that the rich had not simply escaped punishment for their role in the financial crisis, but had actually become even richer. There was great camaraderie and solidarity in rebellion, especially at a time when many were still stuck at home under Covid restrictions. “People feel small, they feel powerless, they feel that the system is rigged,” says Angelo. “And this was an opportunity to feel big and find power in numbers.”
Inevitably, however, the real picture is not as clear-cut as the David and Goliath narrative where retail investors make a killing while Wall Street takes the hits. Plenty of hedge funds made serious money both from their own stakes and from lending out stocks to panicking short sellers: Mudrick made $200m, Senvest $700 million, BlackRock more than $2bn. The hedge funds which did go under did so because rivals kicked them when they were down. GameStop might have brought the likes of Melvin to its knees, but it was Melvin’s competitors who didn’t let it get back up.
And for every small-time investor who cashed in, there were many others who held onto their stock too long and never saw a profit. GameStop is now trading at less than $18 a share, around the same level it was before the short squeeze began. WSB is full of young, aggressive traders who ignore fundamental risk management principles and regard letting go of stock as weak. “The guys who got in because of the structural short, that was a smart move, and that was the right thing to do,” said analyst Michael Pachter. “The guys who stayed in because they believe in [GameStop’s new executive chairman] Ryan Cohen: dumbasses.”
So GameStop hasn’t turned out to be a game changer. Wall Street is still winning overall, and most retail investors are doing what everyone else is: trying to get by in uncertain times. For many of them the stock market can seem a casino, and everyone knows the first rule of casinos: the house always wins. Keith Gill’s army may have won a battle, but Wall Street won the war. It usually does.
As for Gill himself: well, no-one knows. He resigned from MassMutual and walked away from the Gamestop short squeeze with around $20m. He hasn’t posted on YouTube, Twitter or WSB for more than two years. He didn’t participate in the making of Dumb Money. What, if anything, he’s spent his money on remains a mystery. At the height of the short squeeze he told The Wall Street Journal that he had “always wanted to build an indoor track facility or a field house in Brockton, and now it looks like I actually could do that”. But as yet there’s no sign of that track.
Gill remains a cult hero to many on WSB. “He genuinely cares about helping people and showing the resources available to individual investors so they can study the market,” said Dancinrobot. “A shining star in the darkness,” said Xylosoxidans. “People tend to gather around the light, and the light he gives off can’t be ignored.” Several have compared him to Michael Burry, the investor who saw the subprime crash coming in 2007 and was immortalised by Christian Bale in The Big Short.
But maybe the most perspicacious assessment belongs to zammai. “[Gill] made the history books. Just retire a legend and go off grid.”
And that, it seems, is exactly what he’s done.
Dumb Money is in cinemas now