A Reddit trading community just gamed Wall Street

  • The power of the internet is bringing individual investors together to crush Wall Street hedge funds that are short GameStop, Bed Bath & Beyond and AMC Entertainment.
  • “It’s the ‘wallstreetbets’ people.′ And they have ganged up, arguably allowed by free speech purposes, to center on a few stocks,” CNBC’s Jim Cramer said Monday.
  • “This is the paradigm,” the “Mad Money” host declared.

The power of the internet is bringing individual investors together to crush Wall Street hedge funds and other investment bigwigs. It’s a new trend that’s only just getting started, CNBC’s Jim Cramer said Monday.

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“It’s the ‘wallstreetbets’ people.′ And they have ganged up, arguably allowed by free speech purposes, to center on a few stocks,” said Cramer, referring to the Reddit forum r/wallstreetbets. The few stocks the “Mad Money” host mentioned are GameStopBed Bath & Beyond and AMC Entertainment — all heavily shorted and all soaring in epic short squeezes.

Short selling is a bet against a stock, in which traders sell borrowed shares in hopes of buying them back lower in the future. They return the borrowed number of shares and pocket the price difference.

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A short squeeze happens when a stock with a large bloc of short sellers starts to increase in price, and shorts scramble to buy shares at the current higher prices to limit their losses. They return the number of borrowed shares and lose the price difference.

www.cnbc.com/2021/01/25/cramer-sees-wallstreetbets-investors-vs-hedge-funds-as-a-new-paradigm.html

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