The GameStop Pop: What Really Happened?

By Michelle Connell, CFA

On Wednesday, January 27, Dallas Business Journal weighed in on the trading mania surrounding GameStop, a firm headquartered in Dallas.  Portia Capital Management’s opinion was one of those that was reflected in this article. (Thank you, Brian Womack for reaching out to us.)

Of course, everyone — professional and amateur investors alike — has an opinion. Some of the important topics up for discussion include: Did the retail investors make a smart investment or were they just gambling? Did the institutional investors and hedge funds deserve their losses? Should the government create regulation that prevents such exaggerated and potentially dangerous stock market bubbles?

Like all investment bubbles, there will be large winners and losers. This feels like past bubbles; it’s just a version updated by technology and low investment fees. Since there is nothing currently illegal involved, we should expect this to continue with other companies’ stock until the losses of retail investors force the government to step in with new rules and requirements. In the meantime, the trading platforms find themselves scrambling to becoming the responsible party by setting up restrictions, however these restrictions should be applied equally to institutional and retail investors.  

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