Post by akbar on Jan 28, 2021 6:35:40 GMT -5
www.vox.com/the-goods/22249458/gamestop-stock-wallstreetbets-reddit-citron
Who knew the first big 2021 stock market story would be … GameStop? But here we are.
Day trading and individual investing have boomed over the past several months, with activity often taking place or being discussed on platforms such as Reddit and Robinhood instead of in more traditional arenas. And one big question amid the frenzy has been how much the little guys really matter. Sure, small-time investors trade a lot, sometimes to the annoyance of more traditional institutions, but are they really consequential?
In the GameStop saga, at least, the answer is yes. An army of traders on the Reddit forum r/WallStreetBets helped drive a meteoric rise in GameStop’s stock price in recent days, forcing it to halt trading multiple times and causing a major headache for the short sellers betting against it and banking on the stock falling. It’s a captivating David vs. Goliath story, where David — at least for now — appears to be winning.
Famed investor and CNBC personality Jim Cramer called the GameStop drama the “squeeze of a lifetime.” Bloomberg opinion columnist Matt Levine posited that one possible explanation for what happened could be “utter nihilism” on the part of the Reddit crowd, a story “perhaps best told with a series of rocket emojis.” Or maybe one of the WallStreetBets moderators put it best to Wired: “It was a meme stock that really blew up.”
There has been a lot of hand-wringing about the day-trading trend and this new crop of investors playing the markets, many of whom are treating stocks more like a spin at the roulette wheel than a long-term strategy to build wealth. It’s not clear how many of them are looking at the underlying fundamentals of companies, or whether they’re just “YOLO-ing” themselves across the market.
On GameStop, the answer is probably a mix. There’s a reasonable business case to make for (some of) the game retailer’s valuation; there’s also a case that this whole thing has just been quite fun for everyone — the possible trolls of Reddit, market watchers, commentators, and certainly GameStop — except for the short sellers, who have been in for a pretty miserable ride.
“It’s dramatic, and you don’t see this magnitude very often,” said Nick Colas, the co-founder of DataTrek Research. “But when it happens, it’s spectacular.”
More traditional investors (and those with a lot of money) have wagged fingers. But giant banks and hedge funds aren’t exactly a bastion of responsibility — take a look at the role they played in the 2008 financial crisis.
Who knew the first big 2021 stock market story would be … GameStop? But here we are.
Day trading and individual investing have boomed over the past several months, with activity often taking place or being discussed on platforms such as Reddit and Robinhood instead of in more traditional arenas. And one big question amid the frenzy has been how much the little guys really matter. Sure, small-time investors trade a lot, sometimes to the annoyance of more traditional institutions, but are they really consequential?
In the GameStop saga, at least, the answer is yes. An army of traders on the Reddit forum r/WallStreetBets helped drive a meteoric rise in GameStop’s stock price in recent days, forcing it to halt trading multiple times and causing a major headache for the short sellers betting against it and banking on the stock falling. It’s a captivating David vs. Goliath story, where David — at least for now — appears to be winning.
Famed investor and CNBC personality Jim Cramer called the GameStop drama the “squeeze of a lifetime.” Bloomberg opinion columnist Matt Levine posited that one possible explanation for what happened could be “utter nihilism” on the part of the Reddit crowd, a story “perhaps best told with a series of rocket emojis.” Or maybe one of the WallStreetBets moderators put it best to Wired: “It was a meme stock that really blew up.”
There has been a lot of hand-wringing about the day-trading trend and this new crop of investors playing the markets, many of whom are treating stocks more like a spin at the roulette wheel than a long-term strategy to build wealth. It’s not clear how many of them are looking at the underlying fundamentals of companies, or whether they’re just “YOLO-ing” themselves across the market.
On GameStop, the answer is probably a mix. There’s a reasonable business case to make for (some of) the game retailer’s valuation; there’s also a case that this whole thing has just been quite fun for everyone — the possible trolls of Reddit, market watchers, commentators, and certainly GameStop — except for the short sellers, who have been in for a pretty miserable ride.
“It’s dramatic, and you don’t see this magnitude very often,” said Nick Colas, the co-founder of DataTrek Research. “But when it happens, it’s spectacular.”
More traditional investors (and those with a lot of money) have wagged fingers. But giant banks and hedge funds aren’t exactly a bastion of responsibility — take a look at the role they played in the 2008 financial crisis.