In early 2021 a retail chain of videogame stores called GameStop became a main financial news story
Question:
In early 2021 a retail chain of videogame stores called GameStop became a main financial news story when a group of retail-level day traders (many of whom were young videogamers), congregating on the subreddit discussion board (called "Wallstreetbets"), decided to start a movement to purchase the stock of GameStop, in addition to many other so-called "Meme" stocks (eg. AMC, Blackberry, Nokia, etc.) At the time, with over 3 million users on this discussion board, tens of thousands of amateur traders began purchasing this stock - driving price up from $5 to $347 in less than a month. Most of their purchases were made on the popular no-fee trading app called Robin Hood. The main reason for this action was based on a number of people wanting to"stick it" to Wall Street hedge funds who were trying to make a fortune by short-selling a beloved videogame store. One of these hedge funds, Melvin Capital, lost over $3 billion on this "short-squeeze" executed by these amateur stock day traders. The emergence of these "free" trading platforms (RobinHood, Wealth Simple) has opened up the markets to individuals, who until recently, had little exposure or access to the stock markets. Traditional financial analysis methods, largely categorized under the tools called Fundamental and technical analysis, seem to be either ignored or partially employed by most of these amateur day traders.
- Do you believe fundamental analysis tools are still useful in today's so-called "Meme" stock trading platforms and markets? Why? /Why not?
- Do you believe technical analysis tools are still useful in today's so-called "Meme" stock trading platforms and markets? Why? /Why not?
- The Robinhood trading platform eventually banned trading in GameStop. Was this a legitimate action on their part? Why/Why not?
- Do you believe the name Robin Hood ("stealing from the rich to give to the poor ") is an appropriate name for this free trading platform? Why? /Why not?
- Do you believe the public interest ( ie. amateur day traders) is being properly served by the US regulations (ie. The SEC) in this type of mass market stock trading? How? /How not?