In 2021, the Gamestop stock witnessed a sudden rally when a group of Subredditors on r/wallstreetbets decided to attack the hedge fund managers who were short on the stock, and thus aimed to shake the very foundation of Wall Street. The Subreddit influenced many ordinary people to buy the Gamestop stock via the Robinhood App leading to enormous losses for the hedge fund managers who had bet on the price to fall, as the price went up by whopping 1700% in a single week. Your friend exclaims: "I would never buy these trending stocks; their price is too volatile, as a single tweet or a comment thread may lead to the soaring or the plummeting of the prices in a jiffy; in other words, these stocks are too risky and useless for rational investors, they’re just good for regular social media followers and for those people who don’t know anything about finance but are just in to gamble!". How would you reply to such a line of reasoning?
In 2021, the Gamestop stock witnessed a sudden rally when a group of Subredditors on r/wallstreetbets decided to attack the hedge fund managers who were short on the stock, and thus aimed to shake the very foundation of Wall Street. The Subreddit influenced many ordinary people to buy the Gamestop stock via the Robinhood App leading to enormous losses for the hedge fund managers who had bet on the price to fall, as the price went up by whopping 1700% in a single week. Your friend exclaims: "I would never buy these trending stocks; their price is too volatile, as a single tweet or a comment thread may lead to the soaring or the plummeting of the prices in a jiffy; in other words, these stocks are too risky and useless for rational investors, they’re just good for regular social media followers and for those people who don’t know anything about finance but are just in to gamble!". How would you reply to such a line of reasoning?
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