![]() ![]() The funny pronunciation is part of (if not essentially the entire) joke, and it lends brevity to the concept of stocks, and money, in general. You can't talk about "stonks" without talking about why it's funny in the first place: it's a ridiculous way to say "stocks." Similar dramatized mispronunciations have been around in meme culture for ages. ![]() Cindy and the Phantoms □ JanuFirst off, 'stonks' is just a funny way to say 'stocks' While the meme has witnessed its biggest explosion yet in 2021, it's been around since 2017 and has circulated in financial meme circles (and broader internet culture) for years. Read more: The 4 main reasons that GameStop stock became the target of a Reddit forum with more than 2 million members In the time since GameStop's stock began to meteorically rise, day traders have targeted other companies including AMC, Nokia, and Bed Bath & Beyond. Goliath narrative of Redditors banding together to skyrocket the value of GameStop stock at the expense of hedge funds who had bet on it falling. It's little surprise that the meme has become emblematic of the ongoing saga, which has been dominated by a David vs. As Slate's Jordan Weissmann wrote, "stonks" has become a popular word in the discussion around internet-fueled boosting of the unlikely stocks such as GameStop. In the midst of an ongoing, whirlwind saga involving video games retailer GameStop, a Reddit forum known as r/WallStreetBets, and multiple hedge funds, one word has been on the tip of everyone's tongue: "stonks."Īn intentional (and admittedly pretty funny) misspelling of the word "stocks," stonks started as a meme in the latter half of the 2010s and has become a fixture online since. From this example, we can see that when the number of people involved in the scenarios varies significantly, and the smaller group(with smaller people)might be included in the larger group, the smaller group is tend to not following the Nash Equilibrium and pursue for higher personal benefits.Account icon An icon in the shape of a person's head and shoulders. This phenomenon corresponds to the fact we learned in lecture - Nash Equilibrium in Game theory doesn’t always lead to the promising result for a specific party. While their intention is noble, economic theory shows that rational human beings are more prone to defect rather than cooperate. Individual investors started rebellion against Wall Street hedge funds courageously. In the short run, therefore, everyone has incentive to short the stock because if other investors short first, then he or she loses more. Individual investors have the incentives to cooperate by longing and not selling the stock, because this will drive up the price of the stock and hedge funds will not be able to cover their shorts, resulting in a huge loss (their loss is calculated by – If the stock price keeps going up, they will eventually go bust).However, they will not be able to cooperate if some individual investors defect by choosing to sell their stocks, giving other people more incentive to sell before the stock price drops further. All the individual investors reap benefit, but their benefit is less than it would have been if they had all held the stock for a long time for hedge funds to die out. all individual investors defect: All individual investors short the stock, and the hedge fund comfortably recovers their stocks. ![]() Those who shorted stock exits with some profits while those who hold will be punished by falling stock price as hedge funds recover. ![]() some individual investors defect but some cooperate: Some individual investors short the stock when the stock price is reasonably high, while other individual investors still buy and hold. The investors earn huge amount of money as hedge funds lose. the individual investors cooperate: All individual investors buy and hold the GameStop stock, and the hedge fund will lose huge amount of money as the stock price does not fall. The situation GameStop was facing is an example Prisoner’s Dilemma. A short squeeze occurs when a stock or other asset jumps sharply higher, forcing traders who had bet that its price would fall, to buy it in order to forestall even greater losses. Individual investors responded by longing GameStop stock, saying that if they buy and hold the line, these mega hedge funds have to cover their short sales, a phenomenon known as short squeeze. The problem was that the stock was too much shorted, and some investors thought it was excessive. Long story put short, GameStop stock attracted short selling by big hedge funds, because the game retail industry had been declining as everyone now buys games online and uses steam downloading. From reputable Wall Street bankers and hedge fund managers to the average Joe, everyone heard of GameStop. ![]()
0 Comments
Leave a Reply. |