At the beginning of February, the Santiago Center brought together market observers to discuss what had happened the previous week regarding GameStop – the brick-and-mortar video game retailer whose stock skyrocketed 1,625% in January – the amateur traders grouped in the social media platform Reddit, and Robinhood, the popular free-trading app.
The event, entitled “¿Qué Diablos Sucede en Wall Street?” (“What is Happening on Wall Street?”) was co-sponsored by the North American-Chilean Chamber of Commerce and AmCham Chile. It was presented by María Cristina Ruiz, Managing Director of GTS and member of Mujeres en Finanzas, and Evan Epstein, Executive Director of the Center for Business Law at UC Hastings. Gabriela Villalobos (JN’14), Producer and Financial Reporter for Radio Pauta, chaired the webinar.
“Nobody really knows what’s happening in the market right now, not even the regulators in the US,” Epstein said. “The feeling was that Wall Street had taken over the market, but the common people wanted to participate, and that was the fight – they saw that the hedge funds were involved, and they wanted to destroy them by increasing the price and cutting the positions that the hedge funds had.”
“The economic and political inequality that exists in the US is being transferred to the stock market, and that is what is causing tension… People are tired of Wall Street. They’re tired of the system favoring those that have more power and more data,” he added. “Silicon Valley has always fought against that. There’s a philosophical difference between Silicon Valley and Wall Street, and people no longer want these hedge funds from New York that are trading while having much more information and power.”
The situation has potential political and economic ramifications, he noted. “The whole issue of Game Stop is relatively small – it’s not so relevant. But the phenomenon that’s behind it – social media, the fight against power – is a reflection in the stock market that people don’t want to lose any more and they want to participate in having the possibility of earning money.”