This morning’s Business Summit hosted by the Australian Financial Review certainly provided plenty of interesting commentary on the economy, financial markets, politics, and more.
Goldman Sachs CEO David Solomon joined the panel of speakers and spoke on a range of topical subjects. In particular, Solomon discussed the surge in retail participation in the stock market, which has led to occurrences such as the obscene fluctuations in the GameStop Corp (NYSE: GME) share price.
Digitisation catches regulators off guard
Soloman mentioned the prominence of retail traders thanks to the innovation in trading platforms. Low and no fee app-based brokers like Stake and Robinhood have aided in providing a cheap and easy means for transacting in the share market. However, Solomon stated that this is forcing legislators and regulators to catch up.
He admitted that a high involvement of retail investors has occurred numerous times over the years, although the velocity and scale were amplified drastically this time around. Solomon commented:
The pace of digitisation is outstripping the pace of… rule making and regulatory structure. There’ll be a lot of discussion about what aspects of this are good, and what aspects of this need some, some moderation I think that’ll be a healthy discussion.
The comments come at an interesting time, as the GameStop share price rockets ahead overnight. As a result, the Reddit-driven share has rallied 320% in roughly a week, with continuing short-selling pressure.
Solomon further stated, “Whether that participation is a good thing or a bad thing, whether people are going to make money on a sustainable basis and protect their wealth, we’ll see.”
GameStop share price flying high
GameStop’s recent rally comes after news that the Chewy.com founder Ryan Cohen will spearhead an e-commerce strategy. Ryan joined the GameStop board back in January, before the skyrocketing run in the company’s share price.
As reported by MarketWatch, the US Senate Banking Committee will hold another hearing tonight to discuss the GameStop theatrics. Specifically, Robinhood and other zero-commission brokers will be in focus.
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More reading
- Subreddit ASX Bets is gambling these 4 ASX shares will follow in GameStop’s footsteps
- The risky nature of Robinhood style day trading revealed
- Is Reddit’s GameStop (NYSE:GME) crowd targeting Asian shares?
- Why GameStop (NYSE:GME) stock soared another 18% today
- Robinhood fires back at Berkshire Hathaway’s Charlie Munger over criticism
Motley Fool contributor Mitchell Lawler has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
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