1
00:00:00,160 --> 00:00:07,120
even if you're not into investing chances are you've heard about how a group of redditors have driven up the

2
00:00:04,640 --> 00:00:11,920
stock price of the venerable gamestop gme in order to troll a bunch of hedge

3
00:00:09,599 --> 00:00:15,679
fund managers although this is techwiki and not cash quicky we are going to give

4
00:00:13,920 --> 00:00:20,400
you a brief synopsis of the situation for some context and then talk about the

5
00:00:18,000 --> 00:00:25,039
tech side of things to better understand how this happened so the reason gamestop

6
00:00:22,800 --> 00:00:30,560
was targeted was because it's a heavily shorted stock shorting a stock is a high

7
00:00:28,240 --> 00:00:34,559
risk but potentially high reward play that works like this you pay a fee to

8
00:00:32,880 --> 00:00:38,480
borrow a stock from the owner then immediately sell that stock like that

9
00:00:36,399 --> 00:00:42,079
day you do eventually have to return the stock to the owner so by shorting it

10
00:00:40,480 --> 00:00:46,399
you're betting that the stock will go down in value allowing you to buy it

11
00:00:44,239 --> 00:00:49,200
back later for cheaper than you just sold it for giving it back to the

12
00:00:47,840 --> 00:00:54,960
original owner and keeping the difference from the price you sold it for and the price you bought it back for

13
00:00:52,399 --> 00:00:58,480
minus fees and interest gamestop is often shorted because with video game

14
00:00:56,960 --> 00:01:02,480
distribution becoming digital gamestop's more brick and mortar

15
00:01:00,800 --> 00:01:07,840
business model is seen as something that could fail in the near future you know

16
00:01:04,960 --> 00:01:13,600
kind of like blockbuster but as we said shorting is very risky since if the

17
00:01:10,159 --> 00:01:15,280
stock's price goes up instead of down

18
00:01:13,600 --> 00:01:20,240
you have to buy it back for more than you originally paid for it sometimes a

19
00:01:17,920 --> 00:01:23,600
lot more and as more and more people buy back a shorted stock because they're

20
00:01:22,080 --> 00:01:29,119
panicked about the price rising even more it just keeps driving the price up

21
00:01:26,479 --> 00:01:32,560
even more because of this risk stock shorting has become associated with

22
00:01:30,640 --> 00:01:36,320
hedge funds which typically make high risk but potentially lucrative

23
00:01:34,079 --> 00:01:40,560
investments for organizations or for wealthy individuals and some of the

24
00:01:38,240 --> 00:01:44,560
risky plays they've made have hurt the u.s economy

25
00:01:42,000 --> 00:01:49,040
meaning that they're not very well liked combine that sentiment with a feeling

26
00:01:46,320 --> 00:01:53,520
that gamestop might be undervalued and the rush was on to buy gamestop shares

27
00:01:51,280 --> 00:01:58,159
drive up the price and force short sellers to buy the stock back in a panic

28
00:01:56,079 --> 00:02:02,479
making gamestop and even more lucrative investment at least for the short term

29
00:02:00,320 --> 00:02:07,119
okay so we've explained a bit about how short selling works but how were a bunch

30
00:02:04,719 --> 00:02:12,080
of individual investors on reddit able to beat these powerful hedge funds with

31
00:02:09,599 --> 00:02:16,400
millions of dollars even bankrupting one of them a huge part of it is how online

32
00:02:14,640 --> 00:02:20,000
services and apps have made investing far more accessible

33
00:02:18,160 --> 00:02:23,120
instead of calling up a broker and using traditional trading software that

34
00:02:21,360 --> 00:02:27,520
assumes the user is already familiar with investing newer financial tech or

35
00:02:25,440 --> 00:02:30,480
fintech firms such as robinhood which we'll talk about more in a little minute

36
00:02:28,959 --> 00:02:34,160
here have tried to make opening up investing to the masses with easy to

37
00:02:32,239 --> 00:02:37,840
understand interfaces a core part of their business models there are also

38
00:02:36,080 --> 00:02:42,160
companies that specialize in what's called robo advising an algorithm-based

39
00:02:40,720 --> 00:02:47,680
approach to investing for those who don't know much about investments or simply don't want to have to manage the

40
00:02:45,120 --> 00:02:52,239
details themselves typically you tell a robo-advising service such as betterment

41
00:02:50,000 --> 00:02:56,959
or wealthfront what your investing goals are and how much risk you're willing to

42
00:02:54,080 --> 00:03:00,239
take on and then the algorithms invest your money for you rejiggering things on

43
00:02:58,800 --> 00:03:04,720
the fly depending on what the market's doing and oftentimes even making tweaks

44
00:03:02,720 --> 00:03:08,239
that can reduce your liability come tax time robo advisors also have cheaper

45
00:03:06,560 --> 00:03:12,080
fees than traditional brokerages due to lower overhead helping these services

46
00:03:10,239 --> 00:03:17,280
take off big time over the last few years with many managing tens of

47
00:03:14,560 --> 00:03:21,040
billions of dollars in combined assets and even though the aforementioned robin

48
00:03:18,800 --> 00:03:26,080
hood doesn't offer robo investing it's easy interface and no commission trades

49
00:03:22,720 --> 00:03:28,560
have made it very popular but you might

50
00:03:26,080 --> 00:03:32,640
also have heard that robin hood has had a lot of ire directed at it recently

51
00:03:30,799 --> 00:03:37,200
after the gamestop short squeeze we described robin hood made the decision

52
00:03:34,400 --> 00:03:40,560
to restrict trades involving game stop stonks

53
00:03:38,319 --> 00:03:44,560
as well as other stocks redditors were targeting robin hood reportedly did this

54
00:03:42,640 --> 00:03:48,879
to limit its own risk in the event gamestop's price collapsed but the move

55
00:03:47,200 --> 00:03:53,040
was extremely unpopular triggering lawsuits accusations from investors that

56
00:03:51,120 --> 00:03:57,439
they were colluding with hedge funds and even statements from both republican and

57
00:03:55,200 --> 00:04:00,720
democratic politicians wondering why hedge funds were able to trade

58
00:03:58,640 --> 00:04:05,200
securities that individual investors suddenly couldn't wow it looks like

59
00:04:03,120 --> 00:04:10,519
activist investing actually did something i wonder if we can rally tech

60
00:04:07,760 --> 00:04:14,480
quickies fanbase to pump up the value of ltteststore.com but first we need to go

61
00:04:13,599 --> 00:04:20,239
public big thanks to our sponsor private internet access vpn pie helps you mask

62
00:04:18,720 --> 00:04:24,160
your true ip address and encrypts your traffic with reliable service and no

63
00:04:22,240 --> 00:04:27,600
bandwidth caps it has configurable encryption and an internet kill switch

64
00:04:26,080 --> 00:04:31,120
which keeps you in control of your connection you can combine pia with

65
00:04:29,520 --> 00:04:34,800
private browsing and make websites think you're in a different country plus you

66
00:04:32,960 --> 00:04:39,680
can connect up to 10 devices at once with clients for Windows mac Android iOS

67
00:04:37,040 --> 00:04:43,600
and Linux pia has also recently launched its new and improved next gen network

68
00:04:41,600 --> 00:04:49,120
which offers even more security with over 25 000 servers in 77 countries so

69
00:04:47,440 --> 00:04:52,720
what are you waiting for try pia risk fee for 30 days at the link below so

70
00:04:51,759 --> 00:04:56,320
thanks for watching guys if you like this video hit like hit subscribe and

71
00:04:54,960 --> 00:05:01,440
hit us up in the comments section with your suggestions for topics that we should cover in the future