Alex Gross - Economics Article

 Alex Gross

Mr. Roddy

IHSS
5 February 2021

Wall Street, Gamestop, and Classism

In the past few weeks there was one of the most peculiar phenomena in the stock market that I’ve seen in my lifetime. The price of Gamestop stock had a range of 10 dollars to 350 dollars per share in January alone. The article that I read from the New York Times discussed why this happened and what effect it had on the investors. Many Wall Street investors and companies had the Gamestop Stock shorted which means they were betting that it would go down. Millions of small investors, many of which had never invested in the stock market before, were encouraged to drive up the price of the Gamestop Stock on Reddit.

I believe that on both sides of this phenomena (Wall Street investors shorting the stock and Independent Investors from Reddit buying the stock) that what is going on right now is foolish. On the side of the Independent Investors, there are people trying to take advantage of a mere anomaly; an artificial market. Teenagers are getting the idea that they love the stock market and I know this because I’ve heard many of my friends and teens on social media saying how easy it is to make money on stocks. This is a situation that probably will not replicate itself again yet people who are new to the stock market are spreading the idea that what is happening right now with Gamestop is a constant. There is a quote from the article that I read that I believe does a good job at summarizing the way new people are getting involved in the stock market. “A real estate salesman in Valparaiso, Ind. A former line cook from the Bronx. An evangelical pastor and his wife in Huntington Beach, Calif. A high school student in the Milwaukee suburbs.” On the other side, the Wall Street investors are attempting to get companies to actually disable trading of stocks that they have shorted. This did happen with Gamestop in some trading companies such as Robinhood Stock Trading. There has been an uproar of pushback on this decision because Robinhood is a stock trading platform that is very accessible to people on mobile devices, and is not only usable by adults, but also by teens. People on Wall Street are basically cheating the system and using their power to prevent any more money loss. Another problem is that people are trying to take advantage of other stocks in this way. A great way to put the market fluctuation into perspective is by looking at some solid numbers. If you purchased 1000 dollarsGamestop stock on January 21st, which was the day that this entire ordeal really took off you would have 1400 dollars today, however if you purchased 1000 dollars worth of the stock just 6 days later on January 27th you would now only have around 180 dollars. Overall there is a lot of very unprofessional activity going on right now surrounding the Gamestop stock and these peculiar trading conditions. This event is very interesting and is being used by people of all ages, new and old to the market, to learn more. I think it highlights the ways social media can do things that we’ve never thought of before.









Works Cited

Phillips, Matt, and Taylor Lorenz. “‘Dumb Money’ Is on GameStop, and It’s Beating Wall Street

At Its Own Game.” The New York Times, The New York Times, 27 Jan. 2021,

https://www.nytimes.com/2021/01/27/business/gamestop-wall-street-bets.html

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