> Is this the future of retail trading? An expensive game of chicken?
Isn’t this how stock markets work? Actual company performance is just a relatively minor signal for the chicken.
Isn’t this how stock markets work? Actual company performance is just a relatively minor signal for the chicken.
In my experience, actual company performance is a very huge signal. You just need to zoom out and look at longer timeframes. The stocks with the highest prices and gains over the long term are those with the highest profit and growth potential.
Tesla are putting their eggs into cars which are extremely hard, and batteries which will be a commodity long before Tesla can extract enough value.
The same thing happened with GME, just on a shorter time scale and with the completely out-of-context event of retail traders being shut out of the buy side of market trades for several days. We do not know what would have happened had GME continued to be freely traded on a day it had reached over $500 a share premarket.
Buying a weed stock for example can be speculating on Biden's likelihood of legalizing it and the subsequent boom, but there are stock that literally have no products, a single employee and the entirety of the volatility is based on random internet musings. Pump and dump is nothing new, of course, but the internet's ability to cascade this surely will have some implications for better or worse.
Partly the problem is that we're at the tail end of the business cycle, partly the Fed has been keeping interest rates low so anyone that needs yield (pensions, etc.) has to move out of bonds into stocks, and partly retail traders have been stuck at home spending their vacation money on the Robinhood casino. And stocks are up 30% on the year and 80% from the local minimum in March, so now everyone that is short on money says "I should play the market".
Give it a year or so.