Despite the GameStop saga and Archegos implosion, banks and hedge funds had a blowout quarter. This is how they did it.

Despite the GameStop saga and Archegos implosion, banks and hedge funds had a blowout quarter. This is how they did it.

It's been a dramatic year for financial markets so far. Retail traders pumped up GameStop in January, captivating the financial world and whacking hedge funds who had been betting against the stock.

Then in March, the Archegos investment fund spectacularly imploded, wiping out a $20 billion fortune and sending banks scrambling to distance themselves from the collapse.

Yet, despite this turbulence, banks and hedge funds just had one of the best quarters in recent memory, smashing expectations and earning big bucks for their clients.

How did they do it? JPMorgan boss Jamie Dimon put it well himself when his bank's earnings came out: "Stimulus spending, potential infrastructure spending, continued quantitative easing, strong consumer and business balance sheets and euphoria around the potential end of the pandemic."

Hedge funds turn it around after rocky January

The year got off to a bad start for many hedge funds, when a band of online retail traders decided to pump up GameStop stock. A number of high-profile funds, who had been betting against the ailing company, were hit hard.

A narrative built up in the media and among the retail investors themselves that a day-trading army was laying siege to Wall Street. And in some places it was: Gabe Plotkin's