You may have seen or even joined in what happened recently in the stock market, and that’s the GameStop saga. In this video I’ll explained what happened to Gamestock, what should you do and what we learnt, enjoy!
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0:00 – Intro
0:38 – What happened?
GameStop is an American retailer where you can buy and trade in your video games. But its brick and mortar strategy isn’t doing so well, and the company was slowly dying. This caught the attention of hedge fund managers like Melvin Capital and Citron Research. They started shorting GameStock, which was joined by other hedge funds. So much so that GameStop was the most shorted stock currently.
Some WallStreetBets users noticed this and told everyone about it. He theorized that if everyone bought the stock, it would cause a short squeeze. They did just that and the stock price shot up 1700% in just 1 month. Melvin Capital lost $2.75 billion from this.
Throughout this all, a few more things happened. WallStreetBets also started targeting stocks which had very high short interest, like AMC, Virgin Galactic, BBBY, causing short squeezes.
Many brokers started blocking people from trading these stocks. Some cited liquidity issues while others say it’s to protect the company and the customers
The mainstream media are questioning whether what WallStreetBets are illegal or not and the authorities should step in to check if it’s considered market manipulation.
8:41 – What should you do?
You can watch from the sidelines. Or you can join in, If you do join in, know that there’s a very good chance that you will lose money.
9:40 – What did we learn?
This will lead to a lot of changes, because for the first time, retail investors beat the smart investors at their own game. And US senators are starting to question whether what hedge funds are doing is legal or not.
It’s good to have a few brokerage accounts available, just in case 1 of them goes against you.
WallStreetBets has shown that they have the power to move markets, and we shouldn’t underestimate this new phenomenon.