(WVVA)- It’s a situation like David verses Goliath. Traders in the social media world are outraged after technology changed the way to trade, throwing a curve ball for investors trading shares in the gaming retailer GameStop.
“Right now they are trying to figure out why the individuals couldn’t trade, but the hedge fund managers could continue to trade. Apart of that is there’s a lot more regulations on hedge funds verses the day traders. So we will have to find out why they stopped it for individuals, but didn’t stop it for the hedge fund manager,” Financial Advisor, Peter Romano said.
The legend from Robinhood is about a man who steals from the rich to give to the poor. But the Robinhood trading app made the little guy feel like he was ripped off by richer people.
“There are a lot of Robinhood investors who are starting to file lawsuits against Robinhood, because they’re saying: “Hey when we put our money with Robinhood we were told that we were going to be able to buy and sale. But yesterday the rules of the games changed,” Professor of Business, John Snead said.
“In this case it was hype of a market of people that appears who was buying all this stock at one time just to rise the price, and that wasn’t a true value of the company itself,” Romano said.
Snead says that ordinary investors harnessed the power of the internet to humiliate hedge fund investors who had bet against GameStop.
“What got people interested in Robinhood from the get go was the fact that all of the brokerage firms would charge commission. Robinhood introduces a platform where there are no commissions to buy the stocks, so now all of a sudden you have small time investors who have 5 shares here, and 10 shares here. I’m not sure that Robinhood truly had the capital that was required to deal with an issue that they are dealing with today. Ultimately it will become a political type football, and will be a lot of blame. But my option in the end there will be some small time investors who paid way too much money for stock and they are going to be holding the bag,” Snead said.
“I’m sure when it comes to technology there’s always going to be people whether it’s companies or individuals that look for ways of abusing the system, and I’m not saying either side abused the system here. But there’s always going to be a group that does that and tries to manipulate a system. Water sinks it’s level, and they will have regulations against it,” Romano said.