[Solved] Respond to these two discussion posts from peers, ex. I agree with... (2024)

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Respond to these two discussion posts from peers, ex. I agree with you, that point is interesting

1st discussion post:

1. Under what circ*mstances do you recognize market manipulation as acceptable?

Market manipulation may seem acceptable when it is a recommendation. It is a ploy to drive up the cost for profit. In the article, it is not considered fraud or insider trading as the information had been shared on a public forum. It was a group of investors making the same decision on a stock to drive up the demand and price. It is unfavorable for short selling, those that had bet on the pricing to go down, as it made them worthless, and the investors came out at a loss. It is viewed as unacceptable as it is unfair to those that lost. It is also unacceptable as some who invested had malice intent behind investing such as the statement made in the article, "stick it to the hedge funds." (Lawrence, 2021).

2. Do you think the Redditors' collective action is any different from hedge funds deciding to short GameStop?

The hedge funds deciding to short GameStop is different because they may have analyzed and evaluated the stock to determine the hedge fund going down in price. They are experienced investors who know how to manage finances. The collective action of Redditors was a group of people trying to make a fast profit.

3. What long-term impact do you think the GameStop fiasco will have on investment practices and the Wall Street power dynamic?

It could prevent small investors from trading. Investors will be more careful in assessing risk management and may even prevent them from shorting. Investors must now watch social media and its potential impact. It could lead to more stock market regulations being put in place for retail investors opposed to experienced money managers. It led trading apps to place restrictions on stocks.

4. Reflection - the students also should include a paragraph in the initial response in their own words, using finance terminology, reflecting on specifically what they learned from the assignment and how they think they could apply what they learned in the workplace or in everyday life.

I learned about market manipulation and how inexperienced people who may know nothing about financial planning and management can come together to make a quick profit. It reminds me of our investment article analysis. Classmate, Brent, had made some great points on how social media financially influences the Gen Z generation with it being the top source they would turn to opposed to financial professionals which were the last resort out of 9 sources (FINRA Foundation, 2023).

2nd discussion post:

1. Under what circ*mstances do you recognize market manipulation as acceptable?

Market manipulation is something that, in most cases, would be illegal. In the case of the GameStop stock and the subreddit traders, initially they truly believed that the company had true potential for a comeback in the video game world. According to Taylor Lorenz, a technology reporter who interviewed for the Daily with Michael Barbaro, "there were legitimate reasons to think that GameStop was being undervalued" since there were attempts to pivot to and e-commerce retailer and some recent major investment from the former ED of Chewy.com.

However, with such dramatic increases, the stock becomes very volatile and, in my opinion now, bound to drop dramatically with such unsubstantiated valuation of the company.

Manipulations like these would end up hurting mostly the new/inexperienced or individual investor who perhaps got in at a very high price and was faced with dramatic losses once the stock plummeted. While in this case, it seemed like the individual investor 'stuck-it' to the big hedge fund managers (and they did), it seems like a lot of individual investor would stand to loose potentially large sums.

I also understand that regulating or 'catching' a scheme like this is hard and it leaves the market open in the future for occurrences like the GameStop...... In my opinion, AMC is another example of market manipulation.

2. Do you think the Redditors' collective action is any different from hedge funds deciding to short GameStop?

While the whole subreddit effort on GameStop may have started because they believed in the company and its potential, it ended in the majority wanting to drive the price 'sky-high' to prove the hedge fund manager wrong and ultimately turn a profit....which is exactly what the hedge funds aim to do.

3. What long-term impact do you think the GameStop fiasco will have on investment practices and the Wall Street power dynamic?

It feels like this occurrence creates uncertainty in the Wall Street world because if a big enough group of individual investors want to, they can greatly influence the price of a stock.

4. Reflection - the students also should include a paragraphin the initial responsereflecting on specifically what they learned from the assignment and how they think they could apply what they learned in the workplace or in everyday life.

This was an interesting case study and one that I can relate to. After GameStop, AMC was the next stock that experienced such high fluctuation in prices. As an inexperienced investor, I thought I could turn a quick buck and bought a few shares, through Robinhood, of their stock. However, I bought the shares while they were nearing their peak price (around $50/share) because there was a lot of 'noise' online that this stock was going to be the next GameStop. Needless to say, AMC was not the next GameStop and it stands today at $4.64/share. Luckily for me I only purchased a hand-full of shares which I was willing to risk the loses on. What about the individual investors who sunk their rent money or large amount of money in this? This is a reason why I can't see when a market manipulation would be acceptable.

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