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From Reddit to Robinhood: Individual Investors Hunt for Shorted Stocks




This photo illustration shows the logos of video grame retail store GameStop and trading application Robinhood on a computer and on a mobile phone in Arlington, Virginia on January 28, 2021.
This photo illustration shows the logos of video grame retail store GameStop and trading application Robinhood on a computer and on a mobile phone in Arlington, Virginia on January 28, 2021.
OLIVIER DOULIERY/AFP via Getty Images

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The online followers of Reddit’s WallStreetBets forum joined forces last week to cause big losses for established hedge funds. Following the advice of Keith Gill, a former marketing employee of a life insurance company, forum members flocked to investment apps like Robinhood to buy shares of companies like GameStop and AMC whose stocks had been shorted by Wall Street.

Many first-time investors were empowered to participate because the scheme provided a reprieve from the isolating nature of the pandemic, as well as the easy access to buying and selling stocks made possible through smartphone apps. Because individual investors caused GameStop’s stock to surge, many Wall Street investors who had placed wagers that the stock would fall lost significant amounts of money.

We speak with Jim Angel, an associate professor of finance at Georgetown University, about how the recent influx of individual investors from Reddit could affect the future of the stock market. Questions? Call us at 866-893-5722.

Guests:

Katie Greifeld, markets reporter for Bloomberg who’s been following this; she tweets @kgreifeld

James ‘Jim’ Angel, associate professor of finance at Georgetown University; he tweets @GuFinProf