Edinburgh duo take on Wall Street
Two Edinburgh residents have made major gains after their investments reached over $30,000 by investing just over $2,000 in a “failing American video game shop business”.
Both men – who asked to remain anonymous – got involvedintheredditphenomenon to “teach hedge funds in Wall Street a lesson” by investing in the Gamestop bubble.
Gamestop is a collection of brick and mortar stores that was traditionally used for gamers to trade in hard copies for moneyorcreditfornewgames.
It became the focus of a group of populist left and right wingers on Reddit who decided to invest in a stock that several hedge funds had bet would collapse.
This act by hedge funds is called short selling or shorting – a high risk advanced trading strategyoftenusedbyinvestors willing to take on a potentially substantial risk of capital loss.
This practice had angered many Reddit users whosee hedge funds as playing games with people’s livelihoods.
As a result, individual daily investors have driven up the priceofgamestopstocksothat hedge funds would have to buy upstockatamuchhighervalue - losing them billions of dollars andforcingbankruptciesinthe process.
Although financial analysts arepredictingthatthoseinvesting will lose most of their money, the Capital duo insist that if they lose it all then it is all worth it to say to their grandkids “that I was there”.
One Edinburgh investor said: “Icouldn’ttakepartintheoccupy movement because I didn’t truly understand it until much later. I bought in at $50 a share and before the markets opened on Thursday they were going at $420-myfriendgotinataneven lower price.
“Formegamestopwastotally undervaluedastheyhaveanew
CEO who is looking to modernise the business. But I am under no illusion that I will probably lose my money, it is about the principle.
“I hope that this shines a light on how the stock market is no longer true capitalism but is instead an ugly mutation for therichtogetricherwhilstgambling on people’s lives.”
Some of those behind the bumping of prices have made millions,payingoffstudentdebt as a result.
There was such concern on Wall Street that, in an unprecedented turn of events on Thursday, 28 trading platforms curbed the buying of shares in the US games firm, as well as othercompaniessuchasblackberry which had been targeted byindividualtradersonreddit.
This angered individual tradersandhasevenunitedfactions of the US Congress.
And on Friday leading trading platform Robinhood announced that it would allow “limited buys” of Gamestop and other heavily shorted stocks to resume – prompting a 70% rise in early tradingthatmadeupformostof the previous days losses.
The second Edinburgh investor said: “Rules for thee but not for me seems to be their motto. The second we started to beat them at their own game they changed the rules. Rules they made in the first place to allow them to win big.
“We will be removing our portfolio’s from the platforms that punished us for making a buck. We are riding this to the grave though.”