2021 Prediction #3: Get ready for more GameStops as hedge funds are no longer the only bullies in town
Today is my birthday. Thirty-five years ago today I was drinking coffee in my Palo Alto kitchen when the Space Shuttle Challenger exploded on TV. Thirty years ago today my father fell over, instantly dead of a heart attack while walking between gates in the American Airlines terminal at DFW. I was expecting a call, just not that one. Life is full of surprises and some of them aren’t good, as hedge funds are learning this week while their fortunes are determined by millennial traders in shares of GameStop, the venerable video game retailer. This is all part of the new normal.
Day Trading of stocks and options was a big deal during the dot-com era 25 years ago. "Traders" intent on closing-out their positions at the end of each day would hype this stock or that on Internet discussion boards, counting on artificial volatility and good timing to both buy and sell (or sell and buy) before the other guy -- one trader against the world. That’s NOT what is happening here with GameStop, AMC, Bed Bath & Beyond, Blackberry, etc. This is coordinated action of thousands of traders toward a specific and guaranteed profitable end.