they can talk with others, discuss about it, learn
in a group. If there is something like r/wsb
power - it is that!” The group has more than 9
million members, many sharing due diligence on
their ideas.
What could curtail the influence of of smaller
traders? A stiffer regulatory hand from
Washington, for one. The hearing before the
House Financial Services Committee will have
testimony from the CEOs of hedge funds, the
company behind the popular Robinhood
trading app and Reddit. It will also include a
prominent user on Reddit’s WallStreetBets who
was an early believer in GameStop’s stock.
Washington could choose the paternalistic route
and restrict trading for smaller investors, so
they can’t push a stock’s price up so easily and
get burned later if it drops, said the University
of Chicago’s Casey. But that would anger retail
investors who want to trade as freely as hedge
funds do.
Politicians could instead target short sellers, “but
Wall Street is not a powerless lobby either,” Casey
said. The industry says short selling helps make
markets more efficient.
Another deterrent may be the pain that
some retail investors are nursing after buying
GameStop for $450 and seeing it now closer to
$50. But even there, there’s skepticism.
“I’m hopeful that some of those speculators
learned their lesson,” said Rich Weiss, chief
investment officer of multi-asset strategies at
American Century Investments. “But it seems like
this is a lesson that people need to be reminded
of, over and over again.”