EXPLAINED: A New Generation Of Investors Changing The Game On Wall Street
CHARLOTTE, NC. — A new generation of investors is changing the game on Wall Street, using social media. The shakeup started when a group of small day traders organized on Reddit came together, forcing shares of GameStop up 1700% this month.
“A lot of people, little money, but they’re forcing the big guys too, you know, they are forcing the hands of the big guys,” says the founder of WallStreetBets Jaime Rogozinski.
These mostly young traders are buying the stock in droves to raise its price because hedge fund managers have shorted it. That’s when an investor who thinks a stock is going to go down borrows shares today and promises to purchase it at a later date at whatever price it’s trading at then. Now professional investors have to buy back the stock at inflated prices.
Mark Vitner is a senior economist at Wells Fargo. He says the vast majority of people who invest will lose money.
“This whole episode seems more; it makes Wall Street look more like a casino than it actually is. Investing is not gambling. Investing is doing research, and typically it’s done over a long period of time,” Vitner says.
Justin Kelsey is the CEO of a social media agency in Charlotte. The hobbyist trader is capitalizing on the shakeup.
“I was a little bit more hesitant and a little more conservative getting into this. Rather than put in my 401(k) on some crazy meme stock from Reddit actually tried a couple of different ways to make some money on this,” Kelsey says.
Launching t-shirts on Amazon based on a Gamestop tweet from Elon Musk.
“Just running these interesting little meme related shirts that tie into game stop and some of the crazies happening without actually buying into the market.”