Our Weekly Market Overview from Quilter Cheviot
David & Goliath
By Alan McIntosh, Chief Investment Strategist
“After a strong start to 2021, global equities posted a small decline for January after experiencing a 3% fall over the last week. Headlines have been dominated by news of retail investors grouping together on social media platform Reddit to take on Wall Street hedge funds. In particular, struggling bricks and mortar video game retailer GameStop, a target of professional short-sellers, saw its share price soar by hundreds of percent as private investors poured into the stock, forcing some hedge funds to close their positions at a heavy loss. Such was the frenzy of activity, that Robinhood, the online brokerage firm facilitating much of the trading, had to restrict dealing. This in itself prompted criticism about potentially disadvantaging investors.
The impact of the heavy trading in GameStop and some other hedge fund “shorts” such as Blackberry and AMC Entertainment (owner of the Odeon cinema chain) spilled over into the broader market. US share prices fell by 2.5% on Wednesday, followed by a recovery on Thursday and a further 2% fall on Friday…”
Read more here… Quilter Weekly Comment – David and Goliath