HOW ROBINHOOD & REDDIT IS ENABLING THE RETAIL INVESTOR TO FIGHT AGAINST HEDGE FUNDS .
The rise of the “ape retail investor” started during the pandemic in 2020 and early 2021. A result of mass furloughs due to small businesses being shut down all through out the United States. The “ape” retail investor is a metaphor used to describe an inexperienced investor who apes into a stock without doing their research or due diligence . It is a term used on major news networks to describe investment patterns of mostly millennial and generation Z retail investors and traders who were quarantined at home during the height of the coronavirus pandemic. Millennials have been the largest generation in the United States economies workforce and have also been the fastest generation of customers in the online marketplace . Millennials have also been setup by Baby boomers to be potentially the wealthiest generation in the US history. They are responsible for nearly up to 1.4 trillion in spending in the economy in 2020. Generation Z on the other hand is also known to have been projected to hit $33 trillion in income by the year 2030. These traders are consistently portrayed as dumb investors on popular media networks due to their meme based investment decisions.
Robinhood became one of the most used online trading platform during the pandemic. The process of opening a new account was easy and the app held very limited restrictions. The early quarantine saw a rise in retail investors using the Robinhood app. People were eager to learn about calls and puts and this lead to an increase in engagement in online conversations on platforms such as Reddit and Facebook. The Wallstreet bets group is now at more than 10 Million members . This created a new movement when retail traders realized the power of collective aping in saved their heavily shorted video game company “Gamestop” . This crashed Robinhood and drove hedge funds to reconsider trading strategies especially that of naked shorts . Articles online by news outlets called this “dumb money “ driving hedge funds to the ground.
Sentiment in the reddit community showed that many of the retail investors distaste for hedge funds stemmed from seeing how their parents were driven to poverty during the 2008 financial crises. The desire to win against big hedge funds on wall street is mostly driven by belief that wall street is rigged in support of big corporations. Although, Robinhood had a hand in driving down the stock market price for Gamestop. It is inevitable that redditors have banded together and realize the collective power when one acts as a group with the same purpose in mind. This is seen only too clearly with the new highs AMC is now seeing in price. The Wallstreet bets group on Reddit has also grown internationally with members aping in from all over the world to support the “ape” movement.
Personally i am following this group closely and i wish them all the luck and success.
