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NEW YORK: It sounds like the start of a parable: Investors stuck inside during a pandemic begin to bid up an asset until its price becomes untethered to reality.
A tulip by another name? Gamestonk and the case for investor caution
Trading information for GameStop is displayed on the Robinhood App as another screen displays the Robinhood logo in this photo illustration
(Reuters)
. Updated: 30 Jan 2021, 08:40 PM IST Reuters The reality is that GameStop doesn t hurt Wall Street. It might hurt a couple of hedge fund managers out there, but no one is going to cry for them. The people who will be losing their life savings are small retail investors, says a fund manager
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New York: It sounds like the start of a parable: Investors stuck inside during a pandemic begin to bid up an asset until its price becomes untethered to reality. The value soars until one day the market runs out of buyers and freezes, causing prices to plummet and some unlucky few to lose fortunes more than ten times their annual incomes in the span of a few hours.
Now, almost exactly 385 years and another pandemic later, Wall Street waits to see how long it will take for history to repeat itself.
Shares of video game retailer GameStop Corp have soared 1,625% since the start of January. Driving the rally are individual investors who have been stuck at home for the last ten months. Many have turned to online forums like WallStreetBets on Reddit and are buying the stock, some as a form of protest against hedge fund managers who wagered that it would fall.
These amateur investors are buoyed by savings built up over the coronavirus pandemic, two rounds of stimulus payments and near zero interest rates. Some, such as billionaire entrepreneur Elon Musk, have referred to the phenomenon as ‘Gamestonk’, a play on the intentional misspelling of the word ‘stock’ on social media.
Shares of video game retailer GameStop Corp have soared 1,625% since the start of January. Driving the rally are individual investors who have been stuck at home for the last ten months. Many have turned to online forums like WallStreetBets on Reddit and are buying the stock, some as a form of protest against hedge fund managers who wagered that it would fall.
These amateur investors are buoyed by savings built up over the coronavirus pandemic, two rounds of stimulus payments and near zero interest rates. Some, such as billionaire entrepreneur Elon Musk, have referred to the phenomenon as ‘Gamestonk’, a play on the intentional misspelling of the word ‘stock’ on social media.