The stock market gamble: For a fun and engaging couple of hours, we highly suggest Dumb Money. It covers the true tale of how day traders joined together on Reddit boards during the epidemic, transformed GameStop (among others) into a “memestock,” and beat hedge funds at their own game. The screenplay is clever, and the cast is excellent.
However, it fails to meet expectations as a commercial treatise. To make the David-and-Goliath storyline work, the writers play down the losses incurred by many retail investors during GameStop’s share price fluctuations. They also overestimate the suffering caused on hedge funds and the long-term impact the incident had on the markets.
Furthermore, it is already out of date. Professional fund managers are said to use the disparaging phrase “dumb money” to disparage regular investors. However, despite a short increase in so-called “day trading” when many Americans were rich with Covid benefit checks. And had excessive time on the clock during lockdowns. These market players are becoming less common.
According to Federal Reserve estimates, US families held more than 90% of US equities immediately following World War II, compared to only 33% now.
Nowadays, investment is predominantly institutionalized. In time, the GameStop saga may be viewed as the final hurrah before the end of an era. Which must imply that the markets have grown less stupid, right? Not so fast.
Anyone with a slight interest in the markets will tell you that things are becoming very frothy right now. The US stock market continues to set new records. And all of the action is focused on a small number of firms. Over half of the S&P 500’s gains this year can be attributed to just three stocks: Microsoft, Meta (formerly Facebook), and Nvidia.
Much of the excitement stems from the hype around technology advancements, namely artificial intelligence. The value of Nvidia shares, which have become a poster child for the AI boom, is expected to more than treble by 2023 and is already up over 50% this year.
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