ST. LOUIS – For investors, the closing bell can be heaven or hell. Lately, it’s been the Wall Street elite feeling the heat.
“To see Wall Street get beat like that, I was excited,” said Tiffany, a retail investor from St. Louis. She is part of a growing army of individual and retail investors taking a stand against hedge funds.
“Overall, I do think it’s a great thing because the average, everyday person is taking their financial decisions into their own hands,” she said.
Millions of amateur traders organized online, sharing information on social media platforms like Reddit. They’ve championed stocks like GameStop to spurn hedge funds who’ve bet the stock would fall.
“It’s called selling short. And it’s when you borrow shares of a stock from somebody else, you promised to give them, you know, shares back in the future and you sold them now, and you figure you’re going to buy them back later to pocket the difference,” said Seth Sutel, the deputy financial markets editor Associated Press.
If Reddit is the virtual situation room for the new generation of traders, their weapons of hedge fund destruction are online commission-free trading platforms like Robinhood. Marvin Mitchell, president and CEO of St. Louis-based, Compass Retirement Solutions. He says the controversy is fueled by retail brokerages like Robinhood placing limits on trading stocks like GameStop.
“That was about taking from the rich and giving to the poor, and now Robinhood is saying wait a minute, we can’t have that,” Mitchell said. “We can’t have these big companies going out. We depend on those big companies.”
The Securities and Exchange Commission says it will review Robinhood’s actions, and the company’s CEO is expected to testify before a house committee later this month. Mitchell offers this advice to investors.
“Only take a small portion of your retirement and play around with this. The core of your retirement planning still needs to be smart, consistent, safer investments in which you can invest in the long-term,” he said.
Tiffany’s plan is far from boom or bust.
“I’m just taking my time and being smart with it. I can’t afford to lose hundreds or thousands of dollars, I don’t have that,” she said.
That might not be the rally cry for this Wall Street revolt, but for a single mother of two, including a daughter with special needs, it’s an opportunity to provide for her family in a way she never imagined.
“I can take some of this money and hopefully it becomes a day job for me. That’s my goal,” Tiffany said.
