CHANG | GameStonk Isn’t for College Investors

GameStop’s trip to the moon was a short-lived and dangerous path — especially for the average college student who’s just starting to invest. 

If you’ve been on the Reddit front page in the past few weeks (or as long as you haven’t been living under a rock), you’ve probably heard about the Wall Street Bets subreddit (r/wallstreetbets) and the unpredictable price drama of GameStop stock. At first, the interest in GameStop was loosely motivated by fundamentals. Ryan Cohen, the founder of the successful online pet food company Chewy, joined the board in early January and investors thought that he could perhaps turn around GameStop’s brick-and-mortar business model and transform it into an online machine. Then, Reddit caught on. Suddenly, buying GameStop became the newest trend and a variety of stock market mechanisms only interesting to business frat bros and finance Ph.D. students (if it wasn’t for this debacle, would anyone have heard of the gamma squeeze or the short squeeze?) came into play.

Congress Rejects Bailout Plan

With Congress’ refusal to pass the $700 billion financial bailout bill, the government has yet to come to the rescue of Wall Street.
The failed legislation aimed to help banks by buying up their bad mortgages so that the banks would be more inclined to lend. Many financial firms instructed their employees to lobby to their politicians to pass a solution that would improve their economic condition. As a result of Congress’ failure to pass legislation to alleviate the situation, the Dow Jones industrials had its worst day in two decades, dropping 777 points.
Leaders of the financial market were livid with the government’s decision. Since the immediate effect was drastic, long-term effects of the government’s inaction could be devastating.