WEBVTT

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

00:00:04.640 --> 00:00:11.920
stock price of the venerable gamestop gme in order to troll a bunch of hedge

00:00:09.599 --> 00:00:15.679
fund managers although this is techwiki and not cash quicky we are going to give

00:00:13.920 --> 00:00:20.400
you a brief synopsis of the situation for some context and then talk about the

00:00:18.000 --> 00:00:25.039
tech side of things to better understand how this happened so the reason gamestop

00:00:22.800 --> 00:00:30.560
was targeted was because it's a heavily shorted stock shorting a stock is a high

00:00:28.240 --> 00:00:34.559
risk but potentially high reward play that works like this you pay a fee to

00:00:32.880 --> 00:00:38.480
borrow a stock from the owner then immediately sell that stock like that

00:00:36.399 --> 00:00:42.079
day you do eventually have to return the stock to the owner so by shorting it

00:00:40.480 --> 00:00:46.399
you're betting that the stock will go down in value allowing you to buy it

00:00:44.239 --> 00:00:49.200
back later for cheaper than you just sold it for giving it back to the

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

00:00:52.399 --> 00:00:58.480
minus fees and interest gamestop is often shorted because with video game

00:00:56.960 --> 00:01:02.480
distribution becoming digital gamestop's more brick and mortar

00:01:00.800 --> 00:01:07.840
business model is seen as something that could fail in the near future you know

00:01:04.960 --> 00:01:13.600
kind of like blockbuster but as we said shorting is very risky since if the

00:01:10.159 --> 00:01:15.280
stock's price goes up instead of down

00:01:13.600 --> 00:01:20.240
you have to buy it back for more than you originally paid for it sometimes a

00:01:17.920 --> 00:01:23.600
lot more and as more and more people buy back a shorted stock because they're

00:01:22.080 --> 00:01:29.119
panicked about the price rising even more it just keeps driving the price up

00:01:26.479 --> 00:01:32.560
even more because of this risk stock shorting has become associated with

00:01:30.640 --> 00:01:36.320
hedge funds which typically make high risk but potentially lucrative

00:01:34.079 --> 00:01:40.560
investments for organizations or for wealthy individuals and some of the

00:01:38.240 --> 00:01:44.560
risky plays they've made have hurt the u.s economy

00:01:42.000 --> 00:01:49.040
meaning that they're not very well liked combine that sentiment with a feeling

00:01:46.320 --> 00:01:53.520
that gamestop might be undervalued and the rush was on to buy gamestop shares

00:01:51.280 --> 00:01:58.159
drive up the price and force short sellers to buy the stock back in a panic

00:01:56.079 --> 00:02:02.479
making gamestop and even more lucrative investment at least for the short term

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

00:02:04.719 --> 00:02:12.080
of individual investors on reddit able to beat these powerful hedge funds with

00:02:09.599 --> 00:02:16.400
millions of dollars even bankrupting one of them a huge part of it is how online

00:02:14.640 --> 00:02:20.000
services and apps have made investing far more accessible

00:02:18.160 --> 00:02:23.120
instead of calling up a broker and using traditional trading software that

00:02:21.360 --> 00:02:27.520
assumes the user is already familiar with investing newer financial tech or

00:02:25.440 --> 00:02:30.480
fintech firms such as robinhood which we'll talk about more in a little minute

00:02:28.959 --> 00:02:34.160
here have tried to make opening up investing to the masses with easy to

00:02:32.239 --> 00:02:37.840
understand interfaces a core part of their business models there are also

00:02:36.080 --> 00:02:42.160
companies that specialize in what's called robo advising an algorithm-based

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

00:02:45.120 --> 00:02:52.239
details themselves typically you tell a robo-advising service such as betterment

00:02:50.000 --> 00:02:56.959
or wealthfront what your investing goals are and how much risk you're willing to

00:02:54.080 --> 00:03:00.239
take on and then the algorithms invest your money for you rejiggering things on

00:02:58.800 --> 00:03:04.720
the fly depending on what the market's doing and oftentimes even making tweaks

00:03:02.720 --> 00:03:08.239
that can reduce your liability come tax time robo advisors also have cheaper

00:03:06.560 --> 00:03:12.080
fees than traditional brokerages due to lower overhead helping these services

00:03:10.239 --> 00:03:17.280
take off big time over the last few years with many managing tens of

00:03:14.560 --> 00:03:21.040
billions of dollars in combined assets and even though the aforementioned robin

00:03:18.800 --> 00:03:26.080
hood doesn't offer robo investing it's easy interface and no commission trades

00:03:22.720 --> 00:03:28.560
have made it very popular but you might

00:03:26.080 --> 00:03:32.640
also have heard that robin hood has had a lot of ire directed at it recently

00:03:30.799 --> 00:03:37.200
after the gamestop short squeeze we described robin hood made the decision

00:03:34.400 --> 00:03:40.560
to restrict trades involving game stop stonks

00:03:38.319 --> 00:03:44.560
as well as other stocks redditors were targeting robin hood reportedly did this

00:03:42.640 --> 00:03:48.879
to limit its own risk in the event gamestop's price collapsed but the move

00:03:47.200 --> 00:03:53.040
was extremely unpopular triggering lawsuits accusations from investors that

00:03:51.120 --> 00:03:57.439
they were colluding with hedge funds and even statements from both republican and

00:03:55.200 --> 00:04:00.720
democratic politicians wondering why hedge funds were able to trade

00:03:58.640 --> 00:04:05.200
securities that individual investors suddenly couldn't wow it looks like

00:04:03.120 --> 00:04:10.519
activist investing actually did something i wonder if we can rally tech

00:04:07.760 --> 00:04:14.480
quickies fanbase to pump up the value of ltteststore.com but first we need to go

00:04:13.599 --> 00:04:20.239
public big thanks to our sponsor private internet access vpn pie helps you mask

00:04:18.720 --> 00:04:24.160
your true ip address and encrypts your traffic with reliable service and no

00:04:22.240 --> 00:04:27.600
bandwidth caps it has configurable encryption and an internet kill switch

00:04:26.080 --> 00:04:31.120
which keeps you in control of your connection you can combine pia with

00:04:29.520 --> 00:04:34.800
private browsing and make websites think you're in a different country plus you

00:04:32.960 --> 00:04:39.680
can connect up to 10 devices at once with clients for Windows mac Android iOS

00:04:37.040 --> 00:04:43.600
and Linux pia has also recently launched its new and improved next gen network

00:04:41.600 --> 00:04:49.120
which offers even more security with over 25 000 servers in 77 countries so

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

00:04:51.759 --> 00:04:56.320
thanks for watching guys if you like this video hit like hit subscribe and

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