An army of amateur traders loosely organizing on Reddit have shaken up all preconceived notions about the stock market as they fueled the meteoric rise of GameStop stock. Shares for GameStop, the electronics retailer that has largely struggled in recent years, have skyrocketed by nearly 2,000% since the beginning of the year.
Full Answer
Should we lose faith in the stock market?
It’s possible. Market integrity, as it’s known, is something regulators have to take seriously. If too many people lose faith in the market, they could stop investing, and that would prevent companies from selling shares to fund their growth. But we’re far from that.
Can Reddit rescue GameStop by buying its stock?
Essentially, it boils down to a group of small, independent investors on Reddit — who hang out on the r/WallStreetBets subreddit — deciding to rescue failing video game retailer GameStop by buying its stock at a low cost, as The Guardian explains. Why?
Are stocks overvalued?
Even big name stocks can be severely overvalued sometimes. An important thing to realize is a great stock can be overpriced and a bad company can be underpriced. Diversify and discipline, the two hardest things for personal investors. We all want to believe we are smarter and can achieve success faster than reality.
What would happen if Michael Jackson invested $1000 in stocks?
That's about all there is to it. If he was simply invested in a stock heavy mutual fund he'd be up 20% give or take over last year. I felt the same way after losing a total of maybe $1000 at roulette in my lifetime.
Who is the billionaire investor who called the Redditors a pushback against the establishment?
On CNBC, billionaire investor Chamath Palihapitiya described the Redditors' actions as "pushback against the establishment." And of course, "the establishment" is quite unhappy with what they consider to be irresponsible trading. Prominent investor Michael Burry called the move "unnatural, insane and dangerous," per CNET, and others have analogized the Redditors' actions to a "Ponzi scheme."
How much is GameStop stock worth in 2020?
In April 2020, GameStop's stock was valued at a mere $3.25, and it was intending to close 450 stores in 2021. And now? As of January 29, GameStop's price is fluctuating a bit, but hovering around $200 per share (Apple is worth about $140 per share, for comparison).
Is the Securities and Exchange Commission monitoring the Reddit market?
The Securities and Exchange Commission (SEC) stated that they are "aware of and actively monitoring" the Reddit-inspired "market volatility," per NowThisNews.
Why is short selling risky?
If it rises, they have to repurchase the shares they borrowed and then sold for a higher price, which will make them lose money. This squeeze happens often, which is why short-selling can be risky.
What is a stock investor?
Plain and simple, they are investors who bet against a stock, hoping the price will fall. To do this, they borrow shares from someone who plans to stay invested for a long time, and then they sell the shares. After the stock price falls, they repurchase the shares at a lower price and return them to the lender.
Who bought GameStop?
Last summer, Ryan Cohen, who grew and then sold online pet-food retailer Chewy, bought 13 per cent of GameStop and hoped to help management pivot into e-commerce. The stock quadrupled in four months, and that attracted short-sellers.
What is market integrity?
Market integrity, as it’s known, is something regulators have to take seriously. If too many people lose faith in the market, they could stop investing, and that would prevent companies from selling shares to fund their growth. But we’re far from that. So far, these are pockets of volatility.
Is the housing market going to boom and bust?
A senior Federal Reserve official has warned the US cannot afford a “boom and bust cycle” in the housing market that would threaten financial stability, in a sign of growing concern over rising property prices at the central bank.
Should I invest in an index fund or passively?
Generally in the long run you're very likely going to be better off just passively investing in an index fund. If you enjoy trading though, I don't think there is anything wrong setting a small amount of money aside to trade with. If you lose money consistently doing that then, sure, find a new hobby.
