Should the GameStop frenzy be halted to protect investors - or allowed to run its course?

Jan 29, 2021, 05:36 PM

‘It’ll end in tears.’ How many times did you hear your parents sound that warning - and how often did you actually pay attention?

The army of traders playing with fire in the GameStop stock market frenzy this week have had their warning from a plenty of those who supposedly know best.

But it’s fun, they feel a common sense of purpose, they’re giving the big boys a bloody nose, and for now they’re winning. And so the game continues?

But should it have been allowed to get this far? Should the trading platforms have tried to nip this in the bud, should watchdogs have stepped in, or in a free market should we just let people get on with stuff – even if it’s punting call options on ramped up shares?

On this week’s podcast, Georgie Frost, Helen Crane and Simon Lambert discuss the Reddit-led rebellion, where small traders got together on the Wallstreetbets thread to take GameStop from a beaten-down and heavily-shorted stock to a cause celebre.

The bedroom traders piling in realised that by combining forces they could make the share price rise and beat the hedge funds at their own game, putting them in a short squeeze.

But is this really a rallying point for a financially disenfranchised generation still angry at the financial crisis and its after effects, or a get-rich-quick bandwagon that’s being jumped?

Will those who hold the line win out, or as with any bubble will it be the little guys and girls who lose big?

Also on this week’s show, the team discuss the property tech tricks that can help you get a hedgie-style edge when buying a home (or at least convince you that you know a little more than the next person) and whether a five-year fixed rate mortgage is a no-brainer.

The latest Grace on the Case investigation that won £13,500 for a widow given the runaround by VW Financial Services over her late husband’s car is explained.

And finally, just in case we are ever allowed to fly anywhere ever again, is it worth taking Nectar’s new Avios deal.