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Who Are the NEO Institutional Investors WallStreetBets?!
Who Are the NEO Institutional Investors WallStreetBets?!
Hello. This is Ryu from ONE X. Today I want to share my personal take on the phenomenon of the Robinhood extremists "WallStreetBets (r/wallstreetbets)" disrupting the markets, which became a huge topic yesterday. Some of you may have no idea what I'm talking about, so I want to explain the background as I go. Let's dive in!
First, let me briefly touch on Robinhood. Robinhood is currently a hugely popular "zero-commission" investment app in the United States. For details, please see the article here.
https://onexblog.onexxxx.com/entry/2021/01/22/042323
The people who use Robinhood are called Robinhooders. They are generally said to be millennial young people who haven't yet built up significant wealth. In the past they didn't have much influence, but as user numbers exceeded 10 million, they gradually gained influence. They exchange information through social communication apps like Reddit and Discord.
◉ Who Are WallStreetBets?!!
Actually Yesterday, a Group Called r/wallstreetbets
Actually yesterday, a group called "r/wallstreetbets" within the communication app Reddit drove the stock price of GameStop (ticker symbol GME) to its daily limit. What they did was the following:
❶ Target a company with low market cap and low trading volume (penny stock)
❷ Check the short interest ratio from hedge funds etc.
❹ Coordinate as a team to make large concentrated purchases, triggering a short squeeze
*A short squeeze refers to driving up the market price by making large buy orders when the market (market position) is tilted toward short selling. This refers to a short-term trading style where buyers buy up to force short sellers to cut their losses, and it is a technique aimed at deliberately hitting the market with buy orders to squeeze the short sellers and generate profit.
"Since the capital levels are completely different, you should never go against institutional investors."
This Had Been the Conventional Wisdom
This had been the conventional wisdom. Most people thought that Robinhooders with their limited capital didn't have the power to influence markets. I think there are still a large number of people who think this way. However, with $GME they managed to execute a short squeeze, at one point reaching a 70% gain to the daily limit. The institutional investors who held short positions presumably lost enormous amounts of capital. A movement almost at the level of a manipulative syndicate.
If you download the Reddit app and look at the conversations in this community, I think you'll understand — honestly, it's crazy. (Laughs) I'm too afraid to get involved because investing alongside them seems like it could lead to major losses someday. However, I think it's important to observe the movements of such communities as one piece of material for understanding market trends. Well, even the famous influencer Jim Cramer said he'd never seen a situation like GME, so you can get a good sense of how abnormal this phenomenon is.
https://twitter.com/jimcramer/status/1352683263001812992?s=20&t=MTUSddERQAtvPxQrwRQPrQ
A Similar Phenomenon Has Happened in the Past
A similar phenomenon has happened in the past. Politics. It's said that behind the birth of President Barack Obama, there was an SNS strategy. Until then, American politics had been dominated by partisan support organizations, and the most important factors were financial power and the base of supporters through political organizations. However, as SNS became popular, information exchange in online communities became more active, and those communities themselves gained tremendous influence. I think similar phenomena are happening recently in the field of product marketing as well.
As shown in the figure above, in the marketing field, marketing methods via online salons and YouTube have spread, and a method called "community marketing" — designing products together with customers — has taken shape. Innovation is happening in the field of stock investment in real time too. Since it didn't have a name yet, let's call it the "Robinhooder short squeeze phenomenon."
◉ Innovation in Local Governance Through Social Networks
I Think Innovation in Local Governance Will Also Happen Going Forward
I think innovation in local governance will also happen going forward. As online-based communication has become more common,
Being Japanese, yet also Korean, and also Chinese
Being a Tokyo resident, yet also a resident of Shiojiri, and also a resident of Okayama
I think a flow will emerge where people get involved a little bit with each country or region. Furthermore, I think the phenomenon of virtual nations (roughly, virtual countries) in virtual spaces will also occur in the near future. In the coming age, I think what matters is how well you can build up this virtual population. Well, Facebook has 5.6 billion people secured in groups, so they're overwhelming, but I believe more distributed communities will emerge. First, through my activities at ONE X, I want to contribute to redefining the population structure of local areas and expanding the "related population." Please see the article below for details.
https://onexblog.onexxxx.com/entry/2021/01/10/012135
The essence of the internet = flattening of all domains
Thinking About This, Going Forward the Flattening
Thinking about this, going forward, the flattening of domains that were once entrenched interests — politics, investment, local governance, etc. — will accelerate with the rise of the internet and social networking services (SNS). This is because young people have frustrations (pain) about politics, investment, and governance. I think there are various ways to look at the times, but I believe the opportunities to challenge things should be equal. Providing everyone with the opportunity to make things happen. This is the root of why I founded ONE X, and I want to increase the number of services in the world that can realize that. Thank you very much.
I've written summary articles on business and investment below, so I'd be happy if you'd take a look.
https://onexblog.onexxxx.com/entry/2021/01/20/202812
This AI column is produced by the online assistant service "TIMEWELL."
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