Playing Craps

 Craps is a game played at casinos across the United States.  Players roll the dice and make bets based on the numbers that they expect to see on the dice.  The house (the casino) has a statistical edge in the game.  If a player bets the pass line, the house edge is about 1.4%.  I like playing craps.  I understand the risk, and I've made some good bets on craps tables.  I've both won and lost, and that is the how betting works. Every casino has house rules, and once you understand the rules you can make educated decisions about how to play the game.

In the financial markets there are also rules.  Those rules are available to everyone, and players in the finance markets can make educated decisions based on those rules.  There are winners and losers, and yesterday we saw a bunch of day-traders, (retail traders) make a bet against the hedge funds and win huge.

I used to work with explosives, and I know that once it detonates, you hear the boom, and it takes some time for the debris to fall out of the sky.  Rhetorically, the debris from the Robinhood/ Gamestop play hasn't fallen out of the sky yet, but this group of day traders has revealed a fundamental flaw in the way the big boys manipulate the markets.  In a stunning move, Robinhood (a broker), shut down trading during a huge play, to protect the hedge funds.

In a craps analogy, it would be like the casino suspending play because a particular player was hitting too many points.  The players at the table would be outraged, and rightfully so.  

A brokerage is not supposed to favor one trader over another.  Our free market is based on the idea that anyone can play.  We invest our money on a particular stock, believing that over time we will make money from assuming risk.  The potential always exists to lose money, but but overall, we expect to make a profit.  That idea blew up yesterday, and it will be interesting to see the debris fall from the sky.