ARE GAMERS GAMING THE
It seemed innocent enough , at least
at f irst . There was a group of traders
eager to learn from each other
communicating in an online forum ,
sharing t ips , and offering insights .
The subreddit thread ,
r /WallStreetBets , was rapidly gaining
popularity and currently boasts
nearly 8 mill ion members . Fine , no
cause for alarm there .
Yes and no . Redditors defend their actions citing how hedge
funds “do this all the t ime ; ” shorting stocks , buying i t en bloc ,
then the investors collect their profits . The masses on the
subreddit thread are arguing that the shorts placed on
GameStop by hedge funds were “ inflated ” and “artif icial ly large . ”
Posing the question more narrowly , is i t i l legal to bankrupt a
hedge fund? No , i t ’s not ; well , not exactly . However , what i t has
done is put social media into the crosshairs of regulatory
agencies . More on that in a moment .
When analysts or hedge funds “short ” a stock , i t means that they
anticipate that the share prices will soon drop . Traders borrow
shares from brokers and sell them back into the market at the
price l isted at the t ime of the transaction . Once the shares drop ,
traders buy them back , return the stocks back to the brokers ,
and pocket the difference .
Then Steve Cohen , the bil l ionaire owner of the New York Mets
and lead investor behind the hedge fund , Point72 , shorted
GameStop on January 16 , 2021 .
A r e G a m e r s G a m i n g t h e M a r k e t s
https : / /www .shieldfc .com /
I s n ’t t h a t i l l e g a l ?
That ’s where things get more interesting . Social media and the
rise of influencers coupled with increased accessibil ity (where
low-dough investors can chip in and buy stocks together to gain
entry – even to exclusive markets ) have