all right no fun in games at the corner
wall and Broad as a lot of people look
at a big fallof today that puts us back
in negative territory that is some
wondering whether ironically some gaming
stocks and some other lesser known names
can all of a sudden gain tens of
billions of dollars in market value I'll
tell you what's behind this there are
those big institutions and hedge funds
that love to short stocks in other words
to bet on their price collapsing now
normally they have their run-of the
world this go round though there's been
a change there are number of social
media investment sites that have popped
up to challenge the guys who are
shorting the stocks and it's a battle
royale because some of the biggest hedge
funds in the world are taking it on the
chin there was talk suspicion that maybe
some of them needed rescuing because it
was getting that bad but if you're an
owner of a gamestock or if you're an
owner of an AMC or Blackberry or Express
or all these other names that have
benefited from this battle against those
betting on their prices going down it
was Heaven for you the frenzy buying the
likes of which we have never seen in
these size issues that all of a sudden
were dwarfing trading volume normally
awarded to the Amazon or the Apple some
of these guys at some points trading at
10 times the volume in other words
people buying selling getting in and out
10 times what they do in a name like
Amazon it's remarkable and so far it's
already got the attention of Elizabeth
Warner says we need need to look into
this first what are we looking at
Christina Parts Nevis on the surge in
some names that used to get no respect
Christina what's
happening Neil it is a rebellion of
sorts you've got the little retail
investors versus those hedge funds that
you mentioned who bet on stocks falling
and you have GameStop that is caught
right in the middle GameStop share price
has been declining since 2015 kind of
makes sense because a lot of people are
buying their video games online instead
of going into the stores hedge funds saw
this trend and said hey let's bet that
the stock will fall even further so they
short sold GameStop then you had a bunch
of retail investors that joined forces
on an online Forum on Reddit and noticed
what the hedge fund guys were doing and
said hey let's buy GameStop shares
pushing the price up and that means all
of those hedge fund guys that bet it
would fall lost billions of dollars and
that's exactly what happened just this
month alone you saw Gam stop the share
price climbed well over 1,200% the
market cap right now is well above $23
billion and two major hedge funds that
did bet it would fall that would be
Citron as well as Melvin Capital both
announced that they're closing their
positions on GameStop and now you have
these retail investors that have gained
so so much confidence right now in the
online forms too that they're now going
after some other companies that have
been hard hit by short sellers like AMC
ENT entertainment and like retailer
Express AMC today we saw that stock
price climb
280% and express almost up 200%
definitely a strong lot ride a lot of
momentum for these stocks but a lot of
Wall Street veterans do argue these
retail investors are new inexperienced
and lack diversification so when those
stock prices fall they'll lose big time
but so far if you look at those bank
accounts of the smaller retail investors
they seem to be doing well
Neil yeah very well that's a good
overview of that Christina thank you so
much Christin Parts Nevis a fox business
Network Fame which if you don't get you
you really got a demand especially on a
day like this man that was crazy now to
put this in perspective you might be
asking after Christina's report all
right those stocks are going off to the
races and just doing fine so why would
the General market tumble in response
well the fear is that some of the big
boys and the hedge funds and the large
institutions that make a living buying
and selling stock in the hope of really
tanking some of these issues shorting
them getting their money back on the
profit difference well that they're
going to need some help we're already
told that Citron and some of these
others are on the hook for billions of
dollars in losses and already we're
getting signs that some investors are
coming to their rescue the fear is
though um that it could feed on itself
and the big guys get stung while Little
Folks are buying into GameStop and AMC
and blackberry and all these others so
good for them but now here's the other
fear and I'm going to get into my
panelist that eventually there comes a
time when people want to take their
profits and leave now the experience of
the late 1990s the internet bull market
boom was that they all were going to the
door at the same time and the door was
only so big so that many people were
pushing through and not everyone got
through that was then could it be
happening right now let's get the read
from Charlie gasparino Daniel D Martino
boo here as well
Michelle Schneider uh as well Michelle
following these type of markets as you
have I'm just curious whether we do have
something to worry about normally when
you hear big hedge funds and the rest
could be in some trouble because of this
I automatically think uh oh is this like
a big Bank in trouble deal what do you
think well I think the only time that I
can say that really reckons to this one
is not just the dot bubble that you
mentioned but also what happened in the
com exchange back at its Heyday from
1971 excuse me from 1979 to 1982 you had
silver which seems like a joke now go
from 5 to 50 but at the time that was a
huge move relative to just the per
percentage of performance and eventually
The Hunt Brothers tried to Corner the
market there too and it took years for
the comx governance boards and for the
cftc to try to figure out how to control
it and they eventually did so we could
be looking at a situation like that now
of course everything on terms of time
frame is so much faster than it used to
be then but at this point I
think yeah right and so they're
scrambling to try to figure out the SEC
can look at Short Selling uh but there's
really no rules being broken at this
point other than the fact that the kids
are enraged because they feel like for
years the market was manipulated and now
it's their
turn yeah then they're trying it you
know Charlie gasino the the the the
issue here is that it it's a sign of
thiness and a lot of people have talking
to me today well that's a certainly sign
of the cap now you could look at that
from a variety of ways if those betting
on MAR on stocks collapsing are wrong
and they're paying for it that's one
thing um there generally this feeling
that it has that late 90s feel to it
because uh these are just rapid moves
multi-billion dollar exchanges of shares
that change the entire equation what do
you think right and and the stocks that
are trading I mean GameStop is is not
worth $300 a share I mean I think it's
that's a reasonable thing uh Blackberry
when was the last time you used your
blackberry is that worth the the runup
it had and by the way this is all these
as we've been reporting first on Fox
Business we're way ahead of the curve
all these stocks have been this B this
is known as a bull raid uh is it's been
going on for weeks now you know people
just now freaking out but we've been
talking about this for a while couple
points to make there's a more
contemporary example of uh issues um
involving stuff like this other than the
Hunt Brothers and that's long-term
Capital Management when that hedge fund
blew up now what was problematic about
that what made it systemic was that all
of Wall Street and other hedge funds
copied ltcm's trades right their their
bad their trades that were going bad so
there was a systemic risk that the
financial system could collapse I'm not
saying it's going to happen here but
there is this issue and that's why the
markets are off of a systemic risk that
other hedge funds could collapse and
they need bailouts or whatever that's
why the markets are off there's that
fear yeah we don't want to get ahead of
ourselves that is a risk but it it
raised by Elizabeth Warren who wants to
look into this she's concerned about it
and when I hear that sort of thing I
mean I begin to wonder then where does
this go because the fear is that the
little guy the little investor is going
to get stuck holding these gains hang on
to them try to sell normally and not be
able to and then it's kaboy and then you
have that concern coupled with these big
institutions that are apparently losing
a lot of dough and a lot of them tied to
these very hedge funds that are taking
on the chin are you worried
um Neil if you're asking me the question
uh I I will say that there is definitely
cause for concern uh the very first
question that Federal Reserve chairman
Jay poell was asked at the press
conference at 2:30 Eastern was what was
his view on GameStop and what was
happening a subsequent reporter asked
him the question are you considering
raising margin requirements Neil right
now we have margin debt at a record high
higher than it was when Allan Greenspan
said a rational exuberance and stocks
ended up bubbling into 2000 and we also
have hedge funds with with a net
leverage that is also at a record so to
Charlie's point the potential for
systemic risk the potential for there to
be interconnectivity between between one
investor to another that spillover risk
is definitely apparent in the markets
today we should just explain Mar those
who use the leverage leverage the the
the money they made on their stocks to
buy still more stock when it's going
your way you're in Clover when it's not
you're screwed but Charlie are you
worried about that yeah well isn't it
ironic that that Powell's app pining on
this one he's one of the reasons why
this is going on I mean it's listen you
can blame a Robin Hood you know lowcost
trading or zero zero commission trading
you can blame people being locked in
their Apartments because of the
lockdowns and they have nothing to do
but speculate in markets but the reason
why there's so much fra in the market
why it's so easy why fin why Leverage is
so so high why margin debt is so is up
there so much is because we have 0%
interest rates when you have 0% interest
rates people do risky things to make a
buck because they have to go out on the
RIS say Charlie we're going to see more
of this or this more risky stuff more
risky Behavior if by the way the only
way you change this is to change the
risk Dynamic and the only way you do
that is to raise interest rates which he
said he's not doing all right so
Michelle Snider let me ask you this a
lot of people are hearing this and
saying I want in because I'm I'm looking
at what's happening to AMC and it's
tripling and quadrupling and uh
Blackberry which I thought was dead and
gone doubling and tripling I want in I
want in what do you tell
them well first of all the fact is that
it is transparent what they're looking
at if you look at the Reddit site it's
right there so the fact that people want
in I think is is part of what the free
market is all about and so I would say
have some set of rules we look at using
certain types of ranges like we like to
see where the Market opens give it about
5 minutes let the dust settle and if it
breaks out from there we might get in at
that point it doesn't matter exactly
what rule you decide to use but you
should have some kind of risk adjustment
and some kind of place to take profits
along the way and then decide are you
doing it as a day trade to join the fund
get out and go home or do you want to
keep it overnight or do you just want to
keep rotating into the next thing and
the next thing as these names keep
popping
up all right very good guys thank you
very very much there is such a thing is
taking your profits or getting greedy
and waiting to get still more it's a
delicate Balancing Act and history shows
that often times investors poorly
execute that so we'll be following this
we're also getting some musings from K