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Reddit Clones Attack or revolution events a in the stock market

Reddit Clones Attack - Revolutionizing Exchange? Johannes Röll Visitors: 39

 

 The sensation was the story of how retail investors from the social network Reddit punished financial tycoons for several billion dollars, and became fabulously rich. They managed to raise the share price of GameStop video game store chain from $ 4 to almost $ 350. Not only by attracting funds from thousands of participants, but also because large funds were previously playing a game to reduce these securities.

 

Let us explain what a fall game is

A trader borrows shares and sells them. After the price falls, having bought the securities from the market, he returns the debt and takes the difference in price for himself).

When activists from Reddit began actively buying up GameStop stocks, it was difficult for those who were shorting to find stocks in the market to close their positions. As a result, the price grew by leaps and bounds.

Many commentators were quick to call these events "a revolution in the stock market." A manifestation of how the Internet and social media are changing the balance of power. Are the fans of progress right, which even Elon Musk has joined?

To begin with, both the profits of the participants in this adventure and the losses of the funds are still virtual. The funds did not close positions, so if the share price falls, they will not have any losses.

Fund managers have simply raised several billion more dollars and are quietly waiting for the Robin Hoods on Reddit to lose their nerve. After all, they also use borrowed funds, and their creditworthiness is significantly less than that of "fat cats".

As soon as one of them starts selling GameStop, everyone else will also rush to sell, and the price will fall even faster than it has gone up before. As with any pyramid, most are disappointed. Actually, this story is that emotions are a bad investment advisor. Even as noble as the thirst for justice. 

Johannes Röll
Johannes Röll

Johannes Röll was born 1978 in Brilon,Germany. Graduated RWTH Aachen University. Over the past ten years he worked as Head of the plastic card team, where he was mainly responsible for the development of the distribution, Head of sales Department and Financial Analyst,where he got experience in planning and support sales figures for branches. For the present he works as freelancer

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