After losing his job as a line cook at a New York City restaurant, Pablo Batista took to the stock market and said he turned $ 4,000 into $ 65,000.
New York, United States – It was 8:30 a.m. (1:30 p.m. GMT) on a recent Monday in February and Pablo Batista was beginning his morning ritual. He lit a large cigar-shaped roll of sage and wrapped it around his computer screens. He said if he had any money on him he would also have waved the smoke under the bills for good luck.
“I don’t know how common it is for day traders to have rituals,” he told Al Jazeera. “You have to have faith if you’re on the stock market. I don’t think this is all just a skill.
Either way, it seems to be working for him. Since losing his job as a line cook in Manhattan at the start of the pandemic, Batista has turned to the stock market. His family’s humble apartment in the Bronx is, by all accounts, far from Wall Street, but he turned his initial $ 4,000 last year into what he says was “well over $ 65,000.”
The 25-year-old was among thousands of retail investors who joined the GameStop buying frenzy at the end of January. Inspired by the discussions on social media, mainly within the now infamous Reddit sub-group WallStreetBets, the struggling computer game seller’s share price rose from $ 19.95 on Jan.12 to $ 379 on January 28. It has since fallen back to $ 45.94 more land. as at the close of trade on Wednesday.
But as GameStop shares skyrocketed, some saw it not only as a hype but also a desire to ‘squeeze’ the big Wall Street hedge funds that were looking to profit from an expected drop in the GameStop share price. . But whether or not you buy the David vs. Goliath narrative, what history has proven is the power of social media to mobilize an army of traders – and a potentially disruptive force for the Wall Street establishment.
Another tech trend driving the hype has been the rise of new trading platforms, including Robinhood, but also others like E * trade and Webull. Robinhood, for example, offers free trading, removing a barrier for many non-professional traders. But they found the buy orders so overwhelming that Robinhood and others briefly stopped people from buying GameStop stock during the height of trading.
Robinhood said it was simply because they didn’t have enough money to cover all incoming orders and had no choice but to impose certain trading limits. They resumed trading the next day after an injection of liquidity by investors. But retailers like Batista smelled of a rat.
“I think this has turned off a lot of new traders, especially [and] has left a bitter taste in the mouths of a lot of people, ”Batista said. “Because I feel like they’ve gone beyond their limits in terms of what they’re doing with people’s actions.”
Heard on Capitol Hill
These new traders were not alone; their anger was heard by members of Congress. These include progressives such as New York Rep. Alexandria Ocasio-Cortez, Massachusetts Senator Elizabeth Warren, and even Republican Senator from Texas Ted Cruz, who saw him as Wall Street protecting his own. The U.S. House Financial Services Committee is due to interview some of the key players during a hearing on the GameStop saga on February 18.
Is regulation therefore the order of the day? Not according to Jeff Tomasulo, the CEO of Vespula Capital. Although he believes there are issues with the market, he supports Robinhood’s handling of the situation.
“I don’t think people really, really understand that Robinhood could have gone bankrupt,” he told Al Jazeera. “They didn’t have enough capital on their balance sheets to support the losses they were taking. They therefore had to take drastic measures.
One of the issues Tomasulo thinks should be looked at is the influx of investors into social media. Not out of a desire to keep the club-traded stocks exclusive, but rather because he thinks many don’t know what they’re getting into.
“The biggest problem I had with GameStop was that – especially when it went up to $ 200, $ 300 – was that we weren’t teaching any of these investors how to manage the risk because there was, as there was, The stock was starting to increase, more and more, you know, you create more and more risk for yourself.
For Batista, risk is something he seems very aware of. He said with a shrug that he lost $ 14,000 one day, but has since managed to get it back. It certainly didn’t deter him as a career.
“Throwing my money on the market was probably not the smartest thing to do. But that’s why I think I’m kind of where I am right now. Because I took this risk.