First Gamestop and now BlackBerry
And there are others too whose stock prices are being driven by "retail investor enthusiasm" , AKA redditors who have discovered stock market platform trading systems can be gamed simply by informally coordinating based purely on technicals.
Stock markets no longer represent any sort of economic reality. They are simply the world's largest casinos.
In the past 5 years there has been a lot of focus and awareness of how vulnerabilities of large social media silos and related algorithms have been exploited to manipulate politics and polarise society, but direct manipulation of the global economy has not been discussed nearly as much.
If we don't pay attention we could see the kind of social media driven turmoil in the stock market in 2021 that we saw politically starting in 2016.
@msh At the risk of inviting controversy (and I apologize if so 😅), I (respectfully) disagree with this take. I think the stock market has been responding quite well to the idea of e.g. index funds, which are commonly touted as the main source of grief when I see this argument regarding how the stock market means nothing anymore.
The greater problem of index funds and how the stock market currently structures itself is the problem of wealth re-distribution and wealth (...)
@msh inequality. But that said, the market is still generally behaving well and it is possible to regulate the stock market to prevent monopolies in the same way that we prevent monopolies for general businesses.
That said, more direct to the point of Gamestop, Matt Levine has a really great breakdown in Money Stuff (https://www.bloomberg.com/opinion/articles/2021-01-25/the-game-never-stops). I highly suggest subscribing to the mailing list, it is incredibly informative and (...)
@msh he's honestly the best reporter I've seen on anything to do with finance.
I think a lot of my disagreement about the stock market and its function comes from ideas in this column, however, and I find myself unable to fully articulate on the matter. Probably partially because I don't really know your full stance, and I think I'm having problems coming up with direct points to respond to. However, I hope you give the column a read! Matt Levine is truely a wonderful writer.
@thatgeoguy thanks for the link...Levine is indeed a highly entertaining and informative read, and I actually agree more than disagree. I don't think the stock market, strictly as a system, is broken. It is working as designed and these big moves are always easy to explain.
That said, I still contend that there is virtually no "meaning" behind the operation of this system now. Stocks have *always* been a gamble, but economics plays virtually no role any more...
@thatgeoguy ...Levine actually touched on my criticism/observation about markets being disconnected from economic reality by bringing up the inevitable end game in the firm of BTC. The unit price is what it is purely because someone is willing to pay that amount, and that someone has no reason at all to pay that amount except the belief yet another someone will some day soon offer just a bit more. There us no intrinsic or objective worth involved at all...
@thatgeoguy ...the markets are pretty close to that now. The most flimsy premise is enough for gamers to rally around. After that it's pretty much about technicals: short interstate, the greeks and so on (that itself could be all the premise they need).
That's not good nor bad...it just is...except when meaning is perceived about the worth where it doesn't exist and pensions and public policy are shaped by these market actions. Anyways, I'm not *really* judging but giving heads up...
@thatgeoguy ...and now in recent years we also have hype amplification in the form of social media funded by targeted ads and driven by engagement...gasoline to pour on the burning markets. This all combines in the potential for retail gamer/hobbyists playing with calls and puts to have an outsized impact on the markets relative to their investments.
As you said proper regulation can mitigate this...but I don't see it happening proactively and bad shit could go down.
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