Should the GameStop frenzy be halted to protect investors - or allowed to run its course?

This is Money Podcast

This is Money

Business News, Business, Investing, News

4.1 • 650 Ratings

🗓️ 29 January 2021

⏱️ 44 minutes

🔗️ Recording | iTunes | RSS

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Summary

‘It’ll end in tears.’ How many times did you hear your parents sound that warning - and how often did you actually pay attention?

The army of traders playing with fire in the GameStop stock market frenzy this week have had their warning from a plenty of those who supposedly know best.

But it’s fun, they feel a common sense of purpose, they’re giving the big boys a bloody nose, and for now they’re winning. And so the game continues?

But should it have been allowed to get this far? Should the trading platforms have tried to nip this in the bud, should watchdogs have stepped in, or in a free market should we just let people get on with stuff – even if it’s punting call options on ramped up shares?

On this week’s podcast, Georgie Frost, Helen Crane and Simon Lambert discuss the Reddit-led rebellion, where small traders got together on the Wallstreetbets thread to take GameStop from a beaten-down and heavily-shorted stock to a cause celebre.

The bedroom traders piling in realised that by combining forces they could make the share price rise and beat the hedge funds at their own game, putting them in a short squeeze.

But is this really a rallying point for a financially disenfranchised generation still angry at the financial crisis and its after effects, or a get-rich-quick bandwagon that’s being jumped?

Will those who hold the line win out, or as with any bubble will it be the little guys and girls who lose big?

Also on this week’s show, the team discuss the property tech tricks that can help you get a hedgie-style edge when buying a home (or at least convince you that you know a little more than the next person) and whether a five-year fixed rate mortgage is a no-brainer.

The latest Grace on the Case investigation that won £13,500 for a widow given the runaround by VW Financial Services over her late husband’s car is explained.

And finally, just in case we are ever allowed to fly anywhere ever again, is it worth taking Nectar’s new Avios deal.

Transcript

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0:00.0	Welcome to This Is Money Podcast. I'm Georgie Frost and alongside me and editor Simon Lambert today is
0:05.1	assistant personal finance editor Helen Crane. And coming up from Bitcoin to GameStop is lockdown stress
0:11.3	causing us to make harmful investing decisions. Searching for a new property online, we tell you the
0:16.8	simple tech tricks to ensure you don't scroll past your dream home. Meanwhile, with rates on
0:22.5	two and five-year fixed mortgages, now just a fraction apart, should you lock in to a long-term deal?
0:28.5	Grace is back on the case. This week, VW are in the dock. And should you ever fly again, we look at the
0:35.2	best ways to earn miles from your everyday spending.
0:38.2	Don't forget, you start up to date with all the latest breaking money news, just to go to
0:41.2	this ismoney.com.uk.
0:43.4	We'll download the app.
0:44.7	But first, how has a struggling US computer game retailer hit hard by coronavirus and
0:51.0	lockdowns, which actually announced plans to close a large number of stores last
0:55.8	year, become the world's hottest stock. The story has got investors, the financial press,
1:01.8	and Elon Musk, all of a tizzy. Simon, explain to us, GameStop. What is this all about? Who are they? Why are we talking about them?
1:13.6	So I think probably before we start on what the real story is was GameStop, we probably
1:18.6	need to fill in on some of the backstory. But just to give a brief bit of the real story
1:24.6	for any listeners who haven't been paying attention, adds the news bandwagon
1:29.7	rolled on at an even more frenetic pace than usual this week. Literally, blink and you missed it.
1:36.8	GameStop is a US computer games company whose shares have been sent to stratospheric heights by a buying spree
1:49.0	triggered by small-time traders on the Reddit Wall Street bets thread, which then spread
1:57.0	out of the Reddit Wall Street bets thread into social media, back into the Reddit Wall Street
2:01.4	bets thread, which saw huge numbers of people flocking in. People have been rushing to buy
	...

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