Reddit and Robinhood gamified the stock market, and it’s going to end badly
qz.com
qz.com
If the stock market is gamified, which could easily be argued, then it has been for a long time. One could even say that it's its essence. Claiming that something new happened in that regard is pure hypocrisy by the big guys who got duped by the little guys.
Technical Analysis is just a way of trying to play and win, with no relation to the real world. But with a sense of control. And, of course, the huge amount of data is hooking.
If you can halt trading whenever you want, you can't lose. Wall St big winners here.
[0] https://www.bloomberg.com/news/newsletters/2021-01-29/reddit...
However we need to acknowledge 1928. It was a sum of little carriers, newbies, who provoked a big crisis.
How can we also avoid falling into the 1928 situation?
Do you want technical or legalese barriers?
If we were to assume they're both very similar, there would have been a bailout of banks around 1916 leading to QE and the rise in tide after. There was even a pandemic + war around 1918, so a crash should have occurred around then. And the "fundamental" drivers seemed to have been people buying stocks on credit (now margin) and the easy availability of credit. I don't really see the easy availability of credit now, except for the stimulus checks, and they're a write-off, not a liability for the gov.
If anything, we're in for another roaring 20's. But we must all buy raincoats in these 20's as we know what came after.
I'm not a historian, nor am I right about many things, so please correct me if I'm wrong.
Also, MMT predicted that QE would not be inflationary but it also predict that it's not a proper way of stimulate the economy.
I don't know what that mean. Or a theory is better than the current one explaining facts or it's not. That's the scientific method.
>>"[..] US's reserve currency status [..]"
We know what the neo-keynesian predicted for Japan monetary policy of the last 25 years (high inflation, high interest rates), and we know that it's not what happened.
>>"And how does MMT solve for the various asset bubbles ongoing including the real estate bubble in Australia or perhaps the stock bubble in the U.S."
It totally does. Because the central banks are buying financial assets, they are crowding out institutional investors to other kind of assets up the chain and pushing prices up. Note, that MMT doesn't support QE. They just predicted what would happen.
Money ~= fun.
These securities aren't bitcoin. They have none of the properties of cryptocurrencies and can't be used as one. So we can't just expect GME, AMC etc stay at the levels they are. These are troubled companies, many of which losing money. When the music stops playing, the big guys in Wall Street will say goodbye to the little guys on their way down.
But more generally and long term there is a great argument to be made that the apps improving ease of access to investment will massively improve overall stock market investment efficiency in the long term. Especially as smaller and smaller companies can meaningfully seek investment by public listing. At the end of the day, there are millions of tiny ventures that could reliably provide 10x returns, yet the market cap is so small that the due diligence cost for a major investor is prohibitive. But as the sheer number of investors increases, the spread of investment to smaller companies will increase. Smaller investors also have far lower diversity of knowledge, which is likely a good thing, as the stock market is notorious for underfunding longshots in median, and if you have diversity in knowledge, you are more likely to have atleast one person with good knowledge of the common if wrong consensus regarding a prior for something.
We still need to improve regulation, especially with regards the amount of work to become publicly listed, and develop memes which protect against common scams and bubbles.
Now, real estate has been equally affected, leaving investors with the impression that the stock market is the only way to achieve reasonable returns. Be careful out there.
Some people on Reddit made some money off of it, the big boys have now taken over, but the media and online-people are trying to either say it's Reddit vs. Wall Street or some other eye catching battle.
There is obviously the question of Wall Street leaning on Robinhood and Discord etc. Etc., But I have seen convincing arguments both ways so we have to wait a bit longer to really work out what the chronology is there.
The people on Reddit started betting the opposite way, which means the big investors might start losing on their shorts. The price of GameStop stock went up dramatically.
Robinhood is the main app that the Redditors used because it doesn’t charge a fee to make trades. Robinhood has some legal obligations that it could no longer meet because of the amount of trading happening. They stopped people from buying GameStop, which means people could no longer bet against the big investors.
Some people think Robinhood and other companies stopped buys in collusion with the big investors. I doubt that is the case, but the situation is functionally the same as if Robinhood had engaged in a conspiracy to help the big investors.
What the Redditors did what is the exact opposite of uninformed. The author of the article appears to be, well, decidedly uninformed.
Who's the uninformed here? In this case reddit broke the information asymmetry. This (total transparency) is the default in crypto(currency), and judging by history, people are not losing their money there.
But moving past talking semantics .. let's just see what happens when a bunch of crypto currency bubbles burst. Then re-evaluate your statement that people are bot losing their money there. (To be fair, it will happen in the open, and not because of intransparency, which was likely your point.)
In addition, the fundamentals of Madoff were there too for very long while a greater fool existed. This "asset" doesn't produce anything, doesn't help produce anything, and can never pay a dividend. So IMO it's worth 0.
Euh, Tether and dropping from 20 k to 4 k is "not losing money"?