When it comes to the Markets, predictability is rare. No one consistently knows what is next. But the rules that govern the Markets are relied upon and help create the level playing field we all must play on. Following the rules is paramount to having a Marketplace that can be considered fair and encourages good faith for all. When a trader or investor makes a decision to buy or sell a stock etc., he or she is depending on the known rules to protect their money. Not perfect, but the US Markets attract the world because we have good sensible rules and regulations and the SEC, FTC and even the FBI to monitor it all for transgressors.
If you at all watch the news, the Gamestop saga is no doubt on your radar. Yesterday the platform Robinhood changed the rules mid stream and stopped upside trading in Gamestop and a few others being pushed up by the Reddit trading group consisting of young smart traders. The Reddit group saw a big short on Gamestop and decided to bid up the price to force the shorts to cover which requires that they buy back the borrowed and sold stock. This buying back raise the stock price so the Reddits group would benefit if long. Shorting is allowed and these big Hedge fund guys short in the millions and billions of dollars. Their losses were immense and all at the hand of the Reddit group. This goes on almost daily in some degree but this time, the Wall St Hedge fund assholes called in friends like politicians and maybe even Janet Yellen to force Robinhood to help them out because they halted the upside trading and that locked out the Reddit group and let the Hedge funds reposition to get out at less or minimal losses. THIS IS SHAMEFUL and A HUGE DEAL.
As the expression goes, if it can happen to them it can happen to you. I got angry and closed my Robinhood account citing their betrayal of trust. I didn't lose money but the principle involved is that important. When trust wanes or is gone the marketplace suffers. Personally, I think Robinhood is toast after this betrayal.
A class action lawsuit has already been filed and I am hoping they win and get billions. The SEC must act to stomp on this mid game rule change which was arbitrary but criminal in favor of the big Hedge fund Wall St people. This sickens me and frankly, if the small guys are to be treated this way then maybe the market in general will lose favor. It's a big world and one can trade in other cities and countries. An exodus could and should happen if this is allowed to stand and no one goes to jail.
I advise closing Robinhood accounts if you see my point.
Best,
Donn Marier
DM-Your Own CFO