In retrospect, stock memes were inevitable. Unfortunately, it seems that many brokerages were not ready.
Vanguard, Charles Schwab and Fidelity Investments, among others, are experiencing interruptions, Wall Street Newspaper reports. None of the brokers would tell the WSJ specifically why the outages were happening. In addition, Charles Schwab and TD Ameritrade are restricting trade around GameStop and AMC, as individual investors accumulate in these companies, Market Watch reports.
See, GameStop’s shares rose an impressive 1,600 percent only in january, Market Watch points. What happened is a bit complex, but it basically comes down to traders meeting on Reddit, Discord and elsewhere to encourage others to buy stock options. The Internet’s exuberance with GameStop has also affected AMC, Bed Bath and Beyond, BlackBerry, Tootsie Roll and other companies. The trade action further enriched some of the richest people in the world. It also caught the eye of Janet Yellen, the United States Treasury secretary.
In the past decade, most of us have seen the power that social media can exercise over politics, for example, and the media. Now, social media is affecting finances. The pandemic has more people on the trading day – 2020 was a record for individual trading volume, said Devin Ryan, an analyst at JMP Securities. Wall Street newspaper. And collectives from retailers can use platforms like Discord, Twitch and Reddit to coordinate their actions in real time.
Until recently, it was hard to imagine that making a switch would be as easy as posting on Instagram, but here we are. What’s more, trading is cheaper than ever – free at many brokerages – further reducing the amount of confidence an investor may need in a stock to buy options on it. At the moment, Robinhood, a broker that allows free stock and option trading, is the most popular free app on the Apple App Store.
The result of this frenzy is what looks like a big casino, but investors, beware: in a casino, the house always wins.