Gamestop: Economics of Wallstreet fiasco Explained | Reddit,Gamestop, Stock,Wallstreetbets,shorting

Описание: The Gamestop wallstreet fiasco occurred this week thanks to a bunch of reddit teenagers who screwed some Hedge fund managers from the Wallstreetbets subreddit through the process of shorting. I will explained the economics of this whole thing such as herd behvaiour and behavioural economics as well as the process of shorting. Gamestop is a company that was suffering financially thanks to the pandemic to the point that they were supposed to close 450 stores this year. So many investors on Wallstreet bet that Gamestop stocks would fall in value. These investors would hypothetically profit from this bet by a process called shorting where they borrow these stocks from someone else where they agree to return the stock as well as pay interest after a certain period. They would then sell the stock at a supposedly high price. Once the price of the stock falls as predicted, the investor buys the stock back at a lower price. So at the end, the investor gets a profit and returns back the stock with interest.

Sources:
Tab article:
https://thetab.com/uk/2021/01/28/game...
Guardian article:
https://www.theguardian.com/business/...
2nd Guardian article:
https://www.theguardian.com/business/...
This won’t hurt all stocks:
https://www.wcpo.com/financial-fitnes...
Private pension article:
https://www.theglobeandmail.com/busin...
Public pension article:
https://www.marketwatch.com/story/the...
Gamestop Chief Executive article:
https://www.independent.co.uk/life-st...
Regulation article:
https://www.bostonglobe.com/2021/01/2...

#Gamestop
#Reddit
#Wallstreet