PHOTO: The mobile app Robinhood allows users to trade, invest in and sell stocks from their phones.
By Jason Henkel,
In January, millions of social media users banded together and struck a blow to the Wall Street elite, causing them billions in losses.
At the start of 2021, many large hedge funds manipulated the stock market in their favor by shorting, or betting against, GameStop and other companies. Over a million members of the online sharing community Reddit decided to take matters into their own hands.
Grouped in a thread called wallstreetbets, the users invested to skyrocket GameStop’s stock ($GME), which caused the heavy losses to Wall Street’s hedge funds.
Davis High alumnus Adam Greenlee was among those who invested when GameStop’s stock began to explode early last week. “GameStop is not a safe investment at all,” Greenlee said. “Their price does not deserve to be this high and it will go down eventually.”
Despite this, Greenlee still decided to buy in “because [he knew] how strongly some people feel about bringing down billionaires.”
The movement has received national attention, gaining more investors looking to make a statement against Wall Street or some quick money. After GameStop’s share price increased by over 1,800 percent from the start of 2021 to its highest price, popular day trading investment company Robinhood froze GameStop’s stock, stopping users from buying or selling their $GME shares.
Robinhood’s decision sent waves of anger through the country, causing outrage to stretch across both sides of the national political aisle as well as in local investors.
Senator Alexandria Ocasio-Cortez described it as “unacceptable” and alleged that she would support a hearing in Congress. Senator Ted Cruz voiced his support of Cortez’s comments.
Linda Anh, a parent of a DHS student, held positions in GameStop and other companies that had been frozen by Robinhood. “I was very upset to learn on Thursday that Robinhood had halted trades,” Ahn said. “By doing so [Robinhood] ended up manipulating the stock price.”
DHS senior Braeden Schimmel also invested in GameStop. “From a free market perspective, it was not right to stop the trading of GameStop, AMC and other short interest securities,” Schimmel said.
One effect of the vast amount of attention the incident has garnered is the flooding of the market with millions of new investors. UC Davis Economics Professor Travis Lybbert recommended a safer alternative to GameStop and other highly volatile stocks to inexperienced investors entering the complex and overwhelming world of stocks.
“The very conservative advice that I think is sound is investing in index funds that have very low expenses. Low fee index funds are really hard to beat long term because they give small investors the benefit of diversification that they can never get with a single stock,” Lybbert said.
Although, Lybbert did admit that he does “understand that it’s not nearly as an exciting type of investing.”
After crashing almost 50 percent since Robinhood froze $GME, the share price rebounded back up 10 points in a single day. The fight seems from over.