Why the stock market fiasco is good for the people

With the stock market making headlines recently, you may have heard of the crazy things going on—specifically, the GameStop fiasco—so I’m here to explain why it’s good for common people.

The fiasco started with the GameStop stock shortage by hedge funds, a collaboration of investors using high risk methods. Shorting, the method they used for this move refers to hedge funds borrowing stocks and securities then selling them, with an obligation to buy them back later.

Shorting: a method hedge funds use to borrow stocks and securities then sell them, with an obligation to buy them back later.

This strategy, though usually beneficial to the hedge funds, did not pan out due to regular people collaborating on Reddit (an online forum site) and agreeing to drive GameStop’s stock “to the moon.” 

Due to their obligation to buy the GameStop stock back at the now higher price­—because it was borrowed—the hedge funds lost lots of money. According to CNBC, hedge fund, Melvin Capital “lost 53% in the month of January.” 

You may be thinking, “Wow, poor hedge funds,” but I’m here to tell you that you shouldn’t think that. Hedge funds have gone on too long unchecked on what they do. They are borderline committing market manipulation through shorting stocks, which is a big no-no in the legal world.

When Reddit users ramped up the stock, they showed that hedge funds can’t just go and do whatever they want. The market was made for people to invest in companies and boost the economy, but for a long time it has been dominated by the big players: Bridgewater Associates, Renaissance Technologies, Melvin Capital etc. These hedge funds have treated the stock market as their playground, manipulating at ease. The market is finally back in the hands of people, as it should be.

“I really don’t think it’s very cool what the hedge funds are doing,” Logan Langmeyer, 12, said, “the people should be running the show, not the hedge funds.”

Overall, the world of stocks is a better place when the big players aren’t ruining it, so get out in the stock market and rock some hedge fund’s world.