What an interesting story… and rather scary.
Amateur investors are responding with outrage after trading platforms curbed buying of shares in the US games firm GameStop and other companies.
The moves by Robinhood and Interactive Brokers follow days of frenzied trading that led to massive gains for some stocks.
Shares in GameStop dived by as much as 55% after the restrictions.
It is the latest twist in a battle that has pitted amateur investors against Wall Street giants.
Major hedge funds had bet billions of dollars that GameStop’s shares would fall.
But they have faced major losses after amateurs, swapping tips on social media sites such as Reddit, drove up the share price by more than 700% in a week.
What we have is a bunch of basement day traders who are telling each other to buy a stock to drive up the value and then try to get out before it crashes. It’s risky, but as far as I can tell, there’s nothing illegal about it.
In the mean time, you have some large investment firms and hedge funds who are losing their shorts because they shorted the same stocks. Again, it’s risky, but nothing illegal about it.
But since those large investment firms and hedge funds are run by powerful people, they have managed to freeze trading, silence the boards, and intimidate them with threats of investigations and whatnot. We have the powerful people and insiders are manipulating the legal and market systems because the little guys found a way to make a few bucks.