Friday, 29 January 2021, 11:09 am
For
over a decade, the stock market in the US (and everywhere
else) has been utterly detached from the lives and the
wellbeing of ordinary people. During 2020 for instance, as
the Covid economic recession raged and jobs were lost a
rates unseen since the Great Depression, the Wall Street
speculators treated it as just another day at the races.
While Middle America burned, the tycoon sector partied on
regardless.
Well, a day of reckoning has now arrived
in the unlikely shape of GameStop, hitherto a fading video
store chain. In recent weeks this stock has surged in value
In what some have labelled an act of defiance against seasoned Wall Street veterans, these retail investors had essentially forced the hedge funds into a stark choice – continue buying shares at higher prices to cover their positions or abandon them altogether incurring potential billions in losses. This is known as a short-squeeze.
Gamestop s share price soared by 92 per cent during the January 26 trading session, and by 134 per cent on January 27, with a reported 178 million shares traded. To put this into perspective, the average volume of Gamestop shares traded daily prior to this saga was around 10 million shares per day.
While Melvin Capital, reportedly, tried to sustain its position, it later said that it had closed its position without detailing the scale of losses it had suffered. It is also worth noting that the hedge fund had accepted a $2.75 billion capital lifeline by other funds like Point72 Asset Management and Citadel Securities in order to stay afloat.
The GameStop Saga: The Retail Investors Strike Back americanthinker.com - get the latest breaking news, showbiz & celebrity photos, sport news & rumours, viral videos and top stories from americanthinker.com Daily Mail and Mail on Sunday newspapers.