After a busy week … this is what threatens the New York Stock Exchange

After a busy week in the US financial markets, the most important headline was the “speculation” of a group of amateur investors which caused record levels of certain stocks and big losses for the hedge fund giants of “Wall Street” which for many years was the only player to make a profit by betting on stocks of reputable companies in difficult financial conditions.

In the past, these funds focused on the financial statements of companies to extract the hidden aspects, which could lead to manipulation, then bet against the actions of these companies and make huge profits, and among these models are shares of companies like the Chinese “Lookin Cafe” which falsified its financial statements and revealed “Maddy Waters on the matter and the funds made huge profits by betting on the collapse of their stocks.

Now the rules of the game have changed, with hedge funds seeking data related to discussions on the “Wall Street Bets” forums on the social networking platform “Reddit” in what appeared to be a change in the rules set by these funds many years ago.

Market compass

In the world of financial markets, the survival of the fittest and the gains made by hedge funds have always come from poor investment decisions made by amateurs, but it seemed different this time around as the union of millions of Amateur investors versus large, seasoned hedge fund investors have paid off.

With the large number of individual investors, commission-free trading apps such as “Robin Hood” and the chatter and discussions on the Reddit platform, especially in the “Wall Street Bets” forum, which includes around 4.5 million of active users, all the factors were enough to make the supreme word of these enthusiasts in the US money market. For a famous wisdom which is “in union is strength”.

The amateur conglomerate allowed a resounding victory against hedge funds which incurred billions of dollars in losses, prompting some to call for urgent bailouts to keep their business going, like Melvin Capital, which called for an urgent rescue after the losses suffered in the shares. from Gamestop, who bet, the fund is on the decline thanks to the short sale mechanism.

The power of information

What happened to the famous investment fund prompted other hedge funds to look to data companies for more information on the discussions in the “Wall Street Bets” forum and then to work on the decisions. future investment.

The chief executive of Quiver Quantitative, which specializes in providing alternative data, told the British newspaper “The Financial Times” that demand for data on amateur investor talks on “Wall Street” has seen a steady increase in hedge funds in recent times.

“Everyone is looking at what happened with Melvin and the other hedge funds which was a cautionary tale… you should know how heavily individual investors can weigh you down,” Cardzky continues.

One of the biggest hedge fund managers told the British newspaper that his fund is prioritizing discussions between individual investors in big forums like “Reddit” to avoid falling into negative bets which could ultimately result in losses for the bottom.

“This issue is at the top of our priorities for the coming period,” said the manager of the fund, whose identity was not disclosed by the newspaper.