Every big bull market—before it ends—is characterized by an astonishing story or event that, in retrospect, beggars belief.
In 2008, for example, it was the housing bubble.
In this episode of What’s Ahead we examine the unbelievable story of this particular bull market: the eye-popping, unprecedented battle between sophisticated, multibillion-dollar hedge funds and literally hundreds of thousands, if not millions, of small investors who mobilize via bulletin boards at Reddit and other similar sites to send certain stocks to astronomical levels.
The most notable example is GameStop, a humdrum retailer that’s been decidedly unimpressive in adjusting to online shopping but has gone from $2.57 a share last year to over $300. That level is utterly unrelated to any kind of reality.
Powerful hedge funds have been short-selling these stocks, but the small investors—by sending up the prices of such stocks to ever higher levels—are delivering punishing losses to the big guys. Many individuals are borrowing money to buy these equities.
It’s madness, and it won’t end well.