Today, especially, the “idiots at work” sign should be flying high over Capitol Hill.
We are referring to the boisterous congressional hearings about who is to blame for the crash of GameStop, the alleged nefarious machinations of the hedge funds and Robinhood and the purportedly innocent victims in mom’s basement who thought call options were the greatest new video game since Grand Theft Auto IV.
But among today’s silly foibles, the incessantly repeated idea that the Reddit Mob was a victim of a “pump and dump” scheme surely takes the cake. If these people were stupid enough to think that the value of a company dying in plain sight (i.e. GME) could go from $400 million to $23 billion in less than six months while its reported finances continued to deteriorate, they deserve to loose every dime of the stimmy money they threw into the Robinhood pot.
High Times Although the magnitude startled me the stock gained 2,500% in two weeks GameStop s (GME) surge was not otherwise remarkable. That individual investors have been in a mood since the COVID-19 shutdown has been evidenced by, among other items, the gains of Tesla s stock (TSLA) and Bitcoin. Enthusiasm reigns.
Broadly speaking, today s market climate resembles that of the late 1990s. Then, too, upcoming individual investors were aggressive, trading Internet stocks from accounts they had established within discount-brokerage firms. They also brandished their youth as a virtue, believing that they understood technology better than did their stodgy elders. (Likely true.)
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