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The real force driving the GameStop revolution
SEC, Congress probing GameStop chaos, online platforms’ trading freezes
Portfolio wealth advisor CIO Lee Munson and former congressional investigator Sam Dewey join ‘The Evening Edit’
This was the week when a bunch of amateur traders made Wall Street's finest look like idiots.
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From Jan. 25 through Jan. 29, a ragtag army of individuals sent shares in GameStop Corp. up 500%, and sent many others skyrocketing too. In three days, many of these stocks gained more than most do in a decade. The hedge funds on the other side of these bets lost billions.
This movement is the culmination of nearly five decades of the democratization of markets set off by none other than the late founder of Vanguard Group, Jack Bogle.
For all the hyperventilating over this week's financial revolution, though, investors should regard it as the latest phase in a long evolution — and unlikely to disrupt markets overall.
GAMESTOP ONLY COMES IN AS THIRD BIGGEST SHORTED STOCK
Still, this is a remarkable moment. It's as if a bunch of couch potatoes watching a Los Angeles Lakers basketball game on TV belted down their beer and nachos, barged onto the court — and proceeded to block LeBron James's shots and mercilessly dunk on Anthony Davis.
Amateur investors have always had advantages over professionals: They can invest for the long run and ignore the short term, since they can't get fired for underperformance and don't have clients who give them money (or take it away) at the worst time.
Now, however, amateur traders are asserting their advantages, too. They can communicate instantaneously, band together by the thousands — millions, perhaps — and buy or sell commission-free.
Thousands of members of WallStreetBets, a forum at the online community reddit.com, have been leading the swarm of amateur individual traders buying stocks that hedge funds and other institutional investors were betting against.
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