In “Wall Street,” Oliver Stone’s iconic representation of stock market manipulation in the 1980s, the audience would see a surreptitious call made to a Wall Street newspaper with the cryptic utterance, “Blue Horseshoe loves [XYZ],” usually prompted by illegal insider info. That phrase was then repeated in multiple phone calls as word spread about stock XYZ and its price went up and up. The result? Those who bought it early made out like bandits by selling when the stock got to new highs, while those who bought in later often weren’t so lucky.
What does this scene of misbehavior have to do with GameStop and our current situation of “meme investing” via crowdsourced bets on stocks and cryptocurrencies? A lot.
The tools have changed: Instead of surreptitious phone calls, stock names are posted on public social media sites like Reddit, and instead of stock transactions being made by full-service brokers, they’re done by investors using mobile apps and sites like Robinhood. The players have changed, too: Shadowy Wall Street insiders have been replaced by large groups of individuals spread out over the internet. Read more…..
Chart of the Day
Shares of the video-game retailer GameStop had skyrocketed, fuelled by individual investors on Reddit.