Much has been made over the past two weeks of the wild swings in price seen in such originally ill-fated equities as AMC and GameStop, due to the bizarre phenomenon that is the Reddit investment forum r/WallStreetBets. While the theater of retail investors banding together to buy nearly valueless equities just to put short and gamma squeezes on big hedge funds is certainly entertaining (or horrifying, depending on your stance), the coverage of the event in major media has been nothing short of shallow.
What do I mean by this? Headlines this week have ranged from the mundane (CNET’s “What Does GameStop’s Skyrocketing Stock Have to Do with a Subreddit?”) to the sensational (CNN’s “Inside the Reddit Army That’s Crushing Wall Street”), but have failed to cover the most important aspect of why this kind of thing is happening.
Why is so much volatility, wherever it may come from, bouncing around in our markets?
While some might blame stimulus checks going out to America’s poor (who then all apparently become retail investors; there are more than a few things wrong with this idea, starting with the math), and others speculate wildly about who’s “really” backing the Reddit forum, the underlying point is much simpler, and much more unsettling.
