Why the WallStreetBets crowd are able to profit from predatory trading

“THERE ARE NOTV loyalties on Wall Street. When you smell blood in the water, you become a shark.” The sentiment—or lack of it—would not look out of place on r/wallstreetbets, the locus for a new breed of stockmarket hammerheads, which has helped push up the share prices of tech darlings and bombed-out companies to nosebleed levels, crippling professional short-sellers in the process. But the quote comes from a boomer, not a millennial: “Confessions of a Wall Street Addict”, by Jim Cramer, a trader-cum--star. He is describing the remorseless logic of predatory trading.It is something that is discovered anew by each generation of traders—the dark art of picking off investors who are in distress, for profit. Every big market meltdown is made worse by it. Every melt-up—including the current one—makes prey of those who are brave enough to sell it short. Those schooled in the idea of efficient capital markets will be puzzled by the latest goings-on. The textbooks say this sort of thing cannot happen. They assume there is abundant capital that can be put to work to correct prices that have got out of whack.