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What does GameStop/ Wallstreetbets mean to the Broader Market ? Why WSB damage was greater than Biden’s stimulus package!!

Last updated on March 24, 2021

You might think that because you are not involved with the GameStop or any of the other Wallstreetbets darlings that you are not affected – BUT YOU ARE WRONG.

GME problems at funds forced broad market prices down

When Funds saw that their exposure on GameStop was serious, they have to reduce their exposure on long holdings – By long holdings that means ‘stocks that you buy on the hope that they will go up’

So for example they must sell some AAPL, GOOG, AMD, FB etc . They need to sell enough of their purchased shares to balance their risk. The risk is big so the sales must be big. This is normally a requirement in the fund or bank investment contract.

So after the risk on GM – there was significant technical selling of the famous names.

To put it in context,

The effect of WallStreetbets pressure on the Short sellers ( finds that bet on Gamestop going down) was

Equal to the Gross National Product of Germany at $3.7trillion

Greater than Biden’s new stimulus plan of $2.2trillion

Now, is it surprising that the market went down ?

Images under CCL – GameStop Enfield by Mike Mozart of TheToyChannel and JeepersMedia

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