- Robert Plummer & Natalie Sherman
- BBC Business Report
Photo Source, Alex Patton
He suddenly became a rare type of’veteran’ in the financial world.
Before the outbreak of the novel coronavirus infection (Corona 19), Alex Patton, 28, never imagined that he would have stock.
When the stock market crashed in March of last year, Patton’s pension savings, a railroad cybersecurity engineer, was hit hard. Afterwards, he pledged to “manage money more actively.”
He created Robin Hood, an American free stock app, and quickly became a rare type of veteran in the financial world.
At the recommendation of his friends, he encountered the thread of Reddit’s’Wall Street Beats’ on social media.
“At first I thought,’You’re crazy.’ There are so many people losing money.”
Patton told the BBC “I didn’t think about it when my friends first asked me to check out GameStop.”
“But I realized that some of the Reddit users have really studied stocks a lot.”
Gamestop short selling
Some hedge funds expected a decline in the share price of GameStop from the end of last year, and started selling on a large scale. However, this has encountered an unexpected backlash of intensive purchases from individual investors.
He told Reddit’s atmosphere at the time that he encountered an analysis that hedge fund companies were increasing their game stop short selling bets.
“People who did market research on Reddit analyzed that’hedge fund companies are at stake’. I thought it was a situation where we could sufficiently intervene with counter buying. I saw an opportunity to flip the plate.”
Gamestop stocks jumped more than 700% in a week thanks to purchases by individual investors on the New York Stock Exchange.
Patton, who invested 1,000 dollars (11.2 million won) in GameStop stock, earned a profit of 2,000 dollars (2,220,000 won). He is one of the lucky ones to sell stock at the right time.
On the 28th (local time), stock trading sites’Robin Hood’ and’Interactive Brokers’ blocked the purchase of’GameStop’ stock, and in the end,’GameStop’ ended with a drop of 44% on that day.
Patton said, “The financial industry thinks that individual investors can’t manage their own risk. Conversely, hedge funds are always betting with ridiculous risks, but that’s normal.”
He argues that this structure and perception are unjust.
“There is a big gap between the average middle class, the working class and billions of dollars in hedge funds. There will be many individual investors who are suffering a huge loss from this incident.”
Unfair Financial market
On social media, voices continued to criticize Robin Hood’s action to restrict stock trading by some companies, such as GameStop. And individual investors comforted each other, saying not to sell stocks.
Photo Source, Melissa Holdren
Melissa Holdren recently invested in stocks for the first time.
Melissa Holdren, 43, who works as a nurse in Massachusetts, USA, was outraged that some stock apps prevented individual investors from buying shares in GameStop and AMC.
He recently invested 500 dollars (560,000 won) in shares of AMC Entertainment, a movie theater chain. AMC also showed a large increase rate as it became a target for the Wall Street Betz.
He explained that this is his first private equity investment, who has left asset management to a large company.
He said that it is not right for securities companies to suddenly stop individual investors from buying stocks. “If I made this decision because I was concerned about causing enormous market volatility, I don’t know why I would only block buying.”
Holdrun said he could lose money by investing in AMC stock, but he hoped that the company that was hit hard by Corona 19 could survive, he stressed that this is also a refutation against Wall Street.
“After the 2008 global financial crisis, the financial market seems to be very far from reality. I don’t think this kind of situation is healthy. We think we need to reorganize the financial market structure itself.”