GameStop is the Platonic ideal of a stock bubble.
A combination of easy money, a real improvement in the company’s prospects, technical support from a short squeeze and a mad rush to get rich or die trying pushed stock in the retailer up almost 70-fold from August to this morning’s premarket high. Anyone who held for 10 days made gains of more than 10 times their money.
It is tempting to see GameStop as merely clownish behavior in a chat room having some amusing effects on a stock few care about. That would be a mistake.
Sure, the wildly popular Reddit group Wall Street Bets—slogan: like 4chan found a Bloomberg terminal—is full of childish chat. Several users report that they have bet their parents’ pension fund on GameStop or that the boss’s daughter has bought in. There are plenty of calls for the stock to go to $1,000 or more (it started the year at $18.84).
But GameStop’s soaring stock—and similar moves in BlackBerry , Nokia and others—is a bubble in microcosm, with lessons for those of us worrying about froth elsewhere in the market.
This content was originally published here.