Get Premium
Dark mode theme is available exclusively for premium users. Learn more about the benefits of subscribing.
No fees, cancel anytime.
Dark Mode 
No fees, cancel anytime 
Person Explains The Millionaires Vs. $GME Redditors Story With A Nintendo Switch Example And People Finally Understand It
You’ve seen the news, you’ve heard there’s something really special going on in the financial market.
GameStop, an American video game retailer, had been struggling lately, especially during the pandemic, so its share price was low. Wall Street saw this as an opportunity—they bet on the decline of the company’s stock.
However, in an attempt to stick it to the man (and make some money in the process) small investors who belong to the subreddit r/WallStreetBets, got together and bought so much of GameStop shares, its price went through the roof.
Of course, the situation is far more complex, with plenty of social and economic factors in play. So a member of the subreddit, redditlurker2001, posted a brilliant analogy, explaining the whole situation in simple terms.
RELATED:
Just one day ago, a Reddit user posted a brilliant analogy so that everyone would have a way of explaining the messy situation to their friends and family
Image credits: Iain (not the actual photo)
Image credits: redditlurker2001
You’ve got to admire the imagination. And this stunt doesn’t sound illegal, too. “You would need to be able to show some kind of fraudulent activity — meaning [users] said something untrue in order to pump up the stock, or released some false or misleading information,” Gina-Gail Fletcher, a Duke law professor who specializes in market regulation, told CNN. Posting memes and saying that you love GameStop shares and adding a bunch of rocket emojis does not quality as an illegal scheme.
But some experts think we don’t see the full picture. “To me, it’s probable that people are pushing retail investors in one way or another when they have undisclosed positions that are being advantaged by those actions,” said Dennis Kelleher, CEO of financial reform group Better Markets. “That’s going to be classic market manipulation, and I don’t have any doubt that’s going on.”
The US Securities and Exchange Commission, which regulates stock trading, said in a statement Wednesday that it was “actively monitoring” the situation. On Friday, the organization added that “extreme stock price volatility” has the potential to cause “rapid and severe losses” for investors and “undermine market confidence.” The regulators made it clear that they are examining potential misconduct around the trading mania.
“The response of authorities is appropriate,” Sarah Nadav, a behavioral economist, senior strategist, and author of What the F*CK Should I Do Now?: How to Manage your Money when Money Stops Making Sense, told Bored Panda. “This is uncharted territory and while ‘insider trading’ is clearly illegal, ‘outsider trading’ which is based on legitimate market research has always been legal.”
The big problem, according to Nadav, is that the system itself is broken. “The cracks are now exposed and there is a real threat that this could cause a total collapse. In my opinion, this collapse is an inevitable result of a broken system in the same way the mortgage crisis was in 2008.”
Here’s what people have been saying after going through the post
What do you think ?
Solrac 3 years ago (edited)
Actually, it's a terrible explanation! A discount coupon is a sure thing, you know that if you go and buy the console and the coupon is valid, you'll get the rebate. Short selling profits are not guaranteed at all, a short sell is a bet the investor makes based on their beliefs about the future performance of the company. There are many cases when that belief was wrong and investors lost a lot of money. On other occasions short sellers have bet against fraudulent companies or have busted bubbles (which are never good). So they do serve a purpose. And stop using the analogy of short sellers=rich, Reddit=common people. Short sellers and not millionaires but market inermediates and short selling is part of other investments they might make. On the other hand, we don't know who's behind redditers' leaders, there's a strategy when someone buys a stock before telling everyone to buy and then the stock prices goes up and then the leader sells the stock and makes the profit without telling anyone. And there's no way GameStop stocks are worth their current price, it's a failing company with losses (it's not the falling stock price what caused the losses, it's the other way around) they need to come up with a plan that revert their current business results and so far there isn't one. In fact, this whole situation might scare off potential long term investors that are willing to believe in the company. If you do want to help them, go buy their products not their shares. And don't harass people (that part wasn't mentioned at all by Bored Panda, some investors have been targeted and threatened, including their families). Bored Panda, stop telling simplistic explanations or outright lies.
Solrac 3 years ago (edited)
Actually, it's a terrible explanation! A discount coupon is a sure thing, you know that if you go and buy the console and the coupon is valid, you'll get the rebate. Short selling profits are not guaranteed at all, a short sell is a bet the investor makes based on their beliefs about the future performance of the company. There are many cases when that belief was wrong and investors lost a lot of money. On other occasions short sellers have bet against fraudulent companies or have busted bubbles (which are never good). So they do serve a purpose. And stop using the analogy of short sellers=rich, Reddit=common people. Short sellers and not millionaires but market inermediates and short selling is part of other investments they might make. On the other hand, we don't know who's behind redditers' leaders, there's a strategy when someone buys a stock before telling everyone to buy and then the stock prices goes up and then the leader sells the stock and makes the profit without telling anyone. And there's no way GameStop stocks are worth their current price, it's a failing company with losses (it's not the falling stock price what caused the losses, it's the other way around) they need to come up with a plan that revert their current business results and so far there isn't one. In fact, this whole situation might scare off potential long term investors that are willing to believe in the company. If you do want to help them, go buy their products not their shares. And don't harass people (that part wasn't mentioned at all by Bored Panda, some investors have been targeted and threatened, including their families). Bored Panda, stop telling simplistic explanations or outright lies.
Related on Bored Panda
136
19