History Has a Warning for GameStop Traders
The SEC can take steps right now to curb the day-trading frenzy and help safeguard the investing public.
Tragedy or farce?
Photographer: Johannes Eisele/AFP via Getty Images
They say history occurs first as tragedy, then as farce — I fear we’re about to see that in U.S. financial markets.
Two decades ago, U.S. financial markets were riding all-time records. Day traders were using chat rooms to swap what they thought were reliable tips about stocks that were about to pop. Stocks with negative earnings were trading at astronomical valuations by almost any measure. People without any experience in stock market trading — no less any understanding of how to read a financial statement or earnings report — were confidently pouring dollars saved for college tuition or rent into short-term bets on companies they knew little to nothing about.