GameStop mania explained: How the Reddit retail trading crowd ran over Wall Street pros

GameStop mania explained: How the Reddit retail trading crowd ran over Wall Street pros

Wall Street has been watching GameStop in awe as a band of Reddit-obsessed retail investors managed to push the stock up 1,500% in two weeks, squeezing out short-selling hedge funds.

“Retail investors with the help of technology acting as a union in attacking is a new phenomenon,” said Jim Paulsen, chief investment strategist at the Leuthold Group.

“You combine the power of technology, which allows you through Reddit postings to magnify your individual impact, with some use of leverage and very targeted bets, they can have a significant influence, particularly on areas of vulnerability because of the short positions,” Paulsen said.

Many enthusiastic Reddit users have been posting screenshots of their brokerage accounts, some of which touting astronomical returns north of 1,000% in a handful of days. These passionate investors often call out short sellers in the chat room in colorful language and unpleasant internet memes.

“It could potentially destabilize the overall market and the confidence in the market. Those who have not joined will be compelled to join,” Krosby added.

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