When the stock market closed in observance of New Years’ Day, Gamestop (NYSE: GME) was trading at about $18 per share. A few weeks later, the stock was trading at an astonishing $350 per share. The sharp rise was mainly the work of those following the “Wall Street Bets” subreddit, an online group founded in 2012 for people interested in discussing the stock market. By coordinating the buying of certain stocks, these “Redditors” were able to raise the stocks’ prices. With the rising prevalence of investing apps that allow users to invest with a small amount of money, many young people are flocking to the stock market in swarms hoping to cash in themselves.
This trend has found its way into the hallways of LHS, as many students have started learning about the stock market and teaching themselves how to invest.
The Stock Club, led by senior James McLaughlin, has become a platform for students to discuss their portfolios and how to invest successfully. “There are many students in the club who have a portfolio,” explains McLaughlin. “They can share their screen in Zoom and we can see how they are doing.”
Students in the club regularly discuss what made them buy or sell certain stocks. McLaughlin and others in the club believe that the recent rise of young people investing could be a fad, one which they attribute in large part to social media.
Senior Aidan McGeary, who is a member of the club, states that, “During that time, if you checked any social media, it was all stocks. Everyone wants to make free money. When people are saying ‘I made so much money off of this,’ everyone just buys into it. But there is a lot more to it.” McLaughlin echoes similar sentiments. “You see in the news a lot that it is cool and trendy to be all over the stock market…I know there are a few social media personalities and celebrities that started day trading and became really public about their investing.”
Mr. Matthew Flanagan, the chair of the Business Department, believes that the rise in investing is the result of technological advancement. “When we look at shifters of demand and supply, change in technology is one.” He explains that the stock market has become more accessible to the general public with the presence of “internet rooms and a new company like Robinhood.” Robinhood, an app that has soared in popularity among students and millennials, is a brokerage firm founded in 2013 that allows users to invest free of commissions with as little as a penny.
One of the biggest concerns with the recent increase in investing in “Reddit stocks” is the risk that comes with it. McGeary, who bought shares of AMC Theaters (NYSE: AMC) during the sharp rise in the price, admits that “it was definitely a little risky…by the time you start reading about [the stocks] on social media, it is probably too late to start buying a lot of it.” The bet, however, seemed to pay off for McGeary, who made around $300 from his investments in AMC and the Naked Brand Group (NYSE: NAKD), another stock that Redditors decided to purchase. He also bought Dogecoin, a cryptocurrency that is similar to Bitcoin. This investment proved to be less successful, resulting in a loss for McGeary.
Despite the risk, Mr. Flanagan encourages students to get involved in the stock market. “I do not think it is a fad. If you are interested in it now, then it is probably going to stay with you,” says Flanagan. “Investing…is a lifelong pursuit.” His advice for students interested in getting into the stock market? “Investing is a long-term objective, it is not short-term. If it is short-term, then the success rate is much lower.”