Xinhua news agency, Beijing, January 28 (reporter Bu Xiaoming) – on Wall Street in the United States, the funds of individual investors are often referred to as “silly money”. Institutional investors believe that retail investors are doomed to lose to professional institutions.
However, there is a group called “Wall Street bet” on the website of reddit, which leads retail investors to hold up the market and makes at least two hedge funds short of Gamestop “surrender”.
This is the wall street street street sign next to the New York Stock Exchange, which was photographed on October 30, 2020. As a number of major technology heavyweights fell significantly and market sentiment was low, the three major indexes of New York stock market fell significantly on the same day. (Photo by Wang Ying, Xinhua News Agency)
The crazy purchase of small investors such as retail investors has increased the market value of “game post” from $2 billion to more than $24 billion in a few days, and its share price has risen by more than 1700% since December last year.
In addition to the “game station”, several well-known stocks that were once popular were also sought after by retail investors. BlackBerry shares are up nearly 280% this year, and AMC cinema shares are up nearly 840%.
The New York Times reported on the 27th that retail investors who participated in the forced short market had complex emotions, including “greed, boredom, schadenfreude for being able to teach Wall Street a lesson”, and were also incited by comments on social media about fast becoming rich.
A woman wearing a mask walks past a wall street bull in New York on December 21, 2020. (Photo by Wang Ying, Xinhua News Agency)
Option as a weapon
A report in the New York Times said that compared with the rise of U.S. stocks in the 1990s, this time stock options played a role in fueling the flames.
Since the outbreak of covid-19, millions of Americans have lost their jobs or home office. These people have opened stock accounts, trading active, boosting the U.S. stock market. The selling point of the option trading is that it has little investment and high income.
Retail investors not only buy and sell stocks, but also buy call options. Trading volume of options accelerated this year after a record year in 2020, according to trading alert data. Four of the five largest call trading days since 1973 occurred in the first few weeks of this year, the Wall Street Journal reported. On January 27, more than 39 million call options changed hands, the most active trading day of call options in the history of U.S. stocks.
Pedestrians pass the New York Stock Exchange on November 9, 2020. (Photo by Wang Ying, Xinhua News Agency)
How does the retail Carnival end
The New York Times quoted some analysts as saying that call options are concentrated and active, which may force hedge funds losing money in related transactions to sell other portfolios in order to raise cash, eventually leading to a wider market sell-off.
“People are forced to raise cash under pressure, which usually means selling profitable investments,” said Steve sosnick, chief strategist at Yingtou securities group
“How does it end?” Sosnick said, “ultimately, the bigger the bubble, the bigger the burst. When will it explode? I don’t know. “
The U.S. Securities and Exchange Commission said on the 27th that it is actively monitoring the current market fluctuations.
On March 18, 2020, traders worked on the New York Stock Exchange. On the same day, the New York stock market broke for the fourth time in the month. (Xinhua news agency, photo by Guo Ke)
European retail investors ready to move
The success of American retail buying “game station” has inspired retail investors on both sides of the Atlantic.
On the 27th, the U.S. omnipotent bathroom bedding company, Finland’s Nokia company, German drugstore evotec company and Poland’s game developer CD Projekt company rose sharply. “It’s like wolves looking for the weakest sheep in the flock,” sosnick said
Ivan josovitch, founder of breakout point, a data provider for short selling and retail, said: “discussions about retail investors’ short selling are spilling over to Europe. We have recently noticed that some European stocks have been touted by retail investors as “the next Gamestop.”
According to the financial times, compared with the limited disclosure of short positions in the US stock market, the European Union and the UK require that investors in fields such as hedge funds, whose short positions exceed 0.5% of a company’s shares, must make it public. This will make it easier to snipe fund short positions.