Archives 02/2021

Wall Street Bets

The Greater Fool The extent to which the Reddit users discussing investments do good is proportional to their participation in the price-discovery mechanism. At its best, social media serves as a forum for retail investors to conduct and share research. Investors, acting on the profit motive, will attempt to discover discrepancies between the price and long-term value of a security. If, say, a given security’s long-term value is greater than its current market price, investors will buy, raising demand and driving the market price up toward the long-term value. Minimizing price discrepancies encourages efficient allocation of capital, and collaboration through social media allows retail investors to take advantage of research otherwise available only to large...