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The craze for memes has subsided – at least temporarily. Over the past week, both GameStop (GME) and AMC (AMC) preferred shares have fallen, drop of about 10% and 21% respectively.
The drop confirms the fears of observers who had warned that a pullback was likely for stocks raised by what some see as speculative trading.
In a new interview, Jenny Johnson, CEO of Franklin Templeton (BEN), whose investment firm manages more than $ 1.5 trillion in assets, criticized trading as a risky investment that could produce lucrative highs or devastating downs. However, she said she was “optimistic” about new trading technology that helps ordinary people enter the market, predicting that the trend will provide traders with opportunities otherwise exclusive to the wealthy.
“On stocks even, I never like to invest where there is no fundamentals behind it,” she says.
“I think the challenge with things like meme stocks is yes, if you do it right you’re doing great,” adds Johnson, who became CEO of Franklin Templeton last February. “On the other hand, you could lose everything.”
Granted, the shares of GameStop and AMC meme darlings remain well above where they were at the start of the year. GameStop has jumped over 900% during that time, and AMC has climbed over 1,750%.
AMC shareholders showed their strength last week when online opposition to the potential issuance of new shares urged CEO Adam Aron to cancel a vote on the proposal.
Overall, the stock market frenzy has fueled a record flow of money into the market from retail investors. Last month, traders bought nearly $ 28 billion in stocks and exchange-traded funds on a net basis, the highest amount in a single month since at least 2014, according to reported Vanda Research data. by The Wall Street Journal.
But wealthy investors continue to dominate the stock market. The richest 10% of American families own 84% of total shares and 92% of directly owned shares, according to a 2019 Federal Reserve survey analyzed by The New York Times.
Johnson, the granddaughter of Franklin Templeton founder Rupert Johnson, started working in the investment fund mailroom during the holidays at the age of 14. After a stint with Drexel Burnham, she joined Franklin Templeton in the late 1980s, holding various leadership roles before becoming CEO.
Johnson said the new trading technology will allow ordinary people to access trading tools and opportunities that were only available to the privileged.
“You will see that in fact what technology does is bring to the masses what was historically only available to the very wealthy,” she says.
“What makes me more optimistic is that there are going to be things that were traditionally not available to everyone and which, because of technology, will actually become available as investment opportunities,” she adds later.
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