The new wolves on Wall Street
Stock Market Mania.
This past week, the stock market has been turned upside down following the stampede of Redditors and “amateur” market influencers. These influencers have changed the way the stock market has been run with social media transforming the market in a whole new way.
Has a new era begun following the rapid influx in the market? Let’s look at what has happened over the course of the week in the market world.
Before all the madness and spikes in different companies’ stocks, hedge funds and big stock owners bet against small and declining businesses, like GameStop for example, which is called a short. In other words, these hedge funds and stock “bosses” were betting on GameStop to go bankrupt and to continue to lose value. Let’s just say not everyone liked that idea.
Following these shorts, social media platforms such as Reddit promoted driving up the stock of companies like GameStop, using investing apps such as Robinhood and E-trade.
The idea caught like wildfire.
All of a sudden, GameStop, AMC and Nokia stocks increased exponentially as a new generation joined the market and continued to drive up the prices.
As a result, big investors began to lose money since these stocks were heading in the opposite direction they predicted, which creates a short squeeze. The big investors then had to pay money to cover their losses, which raises the value of these stocks and creates even more money for investors who put money in GameStop.
It quickly became a battle of David vs. Goliath, as social media-influenced buyers began to beat Wall Street at its own game. Following the surge in the market, it became a perfect opportunity for young, new investors to “ride the tide” and take advantage of the influx in the market.
Juniors Jason Gentile and Brandon Hulse are among several CBA students who pay close attention to the markets and have been monitoring it closely following the surge in declining stocks this past week.
Gentile believed these new stocks from websites such as Reddit have been a chance to participate in what seems to be “a once in a lifetime event.” He also explains that the influx in the market encourages financial literacy in people of all ages.
“I feel like as more and more people our age get involved and interested in the market, it will generally be on the forefront of more people’s minds which will increase its presence on social media,” Gentile added as he connects the market to social media influence.
Hulse reflected on how the influx in the market influenced him as someone relatively new to stocks.
“Perhaps the largest impact the market has had on me is the way it encourages me to do more research and to become more involved,” Hulse commented. “As a newcomer to the market, I am glad to see others also getting involved in the world of investing.”
Hulse also advised other newcomers who might be unfamiliar with stocks to invest “responsibly” since there are always risks involved.
As Gentile and Hulse explained, the influx in the market has given rise to stock newcomers all over the country.
Whether the sparked interest in the stock market continues still remains to be seen, it was certainly a historic and eventful week in the stock market.
(Graphic courtesy of the BBC.)
