Online brokerages love to talk about empowerment and “democratizing finance” while profiting from the mistakes and volatility created by novice investors. The surprising truth? What appeared to be a watershed moment-a revolution that stripped the ultra-powerful hedge funds of their market influence, placing power back in the hands of everyday investors-only tilted the odds further in the house’s favor. Drawing on his years as a stock analyst at a major bank, Jakab exposes technological and financial innovations such as Robinhood’s habit-forming smartphone app as ploys to get our dollars within the larger story of evolving social and economic pressures.
The Revolution That Wasn’t is the riveting story of how the meme stock squeeze unfolded, and of the real architects (and winners) of the GameStop rally. Their weapon was GameStop, a failing retailer whose shares briefly became the most-traded security on the planet and the subject of intense media coverage. Malkiel, author of A Random Walk Down Wall Streetįrom Wall Street Journal columnist Spencer Jakab, the real story of the GameStop squeeze-and the surprising winners of a rigged game.ĭuring one crazy week in January 2021, a motley crew of retail traders on Reddit’s r/wallstreetbets forum had seemingly done the impossible-they had brought some of the biggest, richest players on Wall Street to their knees. Jakab writes with an anti-Midas touch. If he touched gold, he would bring it to life." -Burton G. 09797821)."The saga of GameStop and other meme stocks is revealed with the skill of a thrilling whodunit. Freetrade is a trading name of Freetrade Limited, which is a member firm of the London Stock Exchange and is authorised and regulated by the Financial Conduct Authority. Eligibility to invest into an ISA and the value of tax savings depends on personal circumstances and all tax rules may change. Past performance is not a reliable indicator of future results. The value of your portfolio, and any income you receive, can go down as well as up and you may get back less than you invest. When you invest, your capital is at risk. Important Information This should not be read as personal investment advice and individual investors should make their own decisions or seek independent advice. We believe investing should be available for everyone, and we’ve built an app to do that. Remember our principles for good investing and keep focused on the long term - we don’t want to see anyone get hurt out there.įor more tips on managing market volatility, have a read here.ĭownload our award-winning commission-free trading platform and invest in US stocks, UK investment trusts, exchange-traded funds and more. We’re already seeing evidence of the dump on the other side of the pump, with a lot of investors signalling they plan to bow out of the story in after-hours trading.īe very careful not to use your savings to play a game of chicken or send a fleeting message to the hedge fund tycoons. The business fundamentals of the likes of AMC, BlackBerry, Nokia and GameStop have now left the building. The reality is that chasing stocks to the moon can leave you stranded somewhere in space or, even worse, hurtling back down to Earth. In hindsight, those enormous valuations scream sell.Ī lot of seasoned investors stayed away altogether then, just like today. It happened 20 years ago when anything with a ‘.com’ suddenly became a stock market hit. Stocks shooting the lights out regularly attract investors who want to jump in and get rich quick. What’s happening now might not have been seen before but the market mania within it definitely has. It’s all fun and games until the GameStops
So it may well be a short-lived lesson but, a sign of protest or not, GameStop shares continue to swing wildly.Īnd this is where investors could really get caught out if they let the hysteria take hold. Of course, that's a criminal offence with pretty hefty consequences. There is some suggestion that market manipulation is taking place within Reddit and other platforms, with some users potentially disseminating false or misleading information to influence share prices. The company fundamentals have gone out the window but that’s maybe not the focus now.Ī lot of the energy has gone into reminding the industry stalwarts that individual investors are still there and shouldn’t be underestimated.īut there is a less savoury side to the saga.
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