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The GameStop Hearing & Payment For Order Flow Opportunity
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The GameStop (GME - Free Report) short-squeeze was a market anomaly that will be the subject of business school case studies for years to come. What began as a meme-driven stock rally ended as a retail trading revolution. Unfortunately, the GME space shuttle ran out of fuel like any short-squeeze and ended in tears for many retail traders who got in at the tail end of the mania.
Robinhood halted the ability to buy GameStop shares (among various other securities) because of its clearinghouse's financial requirements. Robinhood raised $1 billion in investor capital the night of its share halts (but claimed it was unrelated to liquidity) and reopened limited purchasing of its halted stocks.
There are allegations that Robinhood was in a collusive relationship with Citadel, who allegedly had an interest in GME falling after becoming an investor in Melvin Capital (a hedge fund that had a short position prior to Citadel's investment).
From my perspective, it appears that these accusations were stemmed from Reddit traders' complaints who lost a lot on GameStop and are looking for a way to make some money back through a lawsuit.
Robinhood does have a relationship with Citadel and other market makers who buy retail order flows for profit. Payment for order flow is a legal and necessary transaction. It has allowed Robinhood to offer commission-free trading, which has catalyzed retail investing democratization that now stretches across all trading platforms.
This payment for order flow trend has been taking off in recent days because of zero-commission trading platforms needing to generate revenue combined with the swelling level of retail trading. You can to take advantage of this developing profit driver with Virtu Financial (VIRT) who takes in roughly 25% of the total US retail investors order flows.
20% of the total market volume is now made up of retail investors, which is up from 10% in 2019. I only expect this level of retail trading volume to grow in the coming years as the US financial system's democratization is taken advantage of at every income level.
Impact Of Hearing
The GameStop hearing felt reminiscent of the antitrust hearings, which didn't result in anything consequential but was more of a platform for lawmakers to push their own political agendas. I think Michigan representative Bill Huizenga put it best in the hearing, calling the entire charade "political theater."
This hearing was meant to propagate the idea that the market is rigged to the rich. It was a channel to illustrate the government isn't ignoring the market anomalies that have caused pain for many retail investors (aka voters). These lawmakers demonstrated their lack of knowledge of the financial system. Nothing consequential came of this hearing.
These Stocks Are Poised to Soar Past the Pandemic
The COVID-19 outbreak has shifted consumer behavior dramatically, and a handful of high-tech companies have stepped up to keep America running. Right now, investors in these companies have a shot at serious profits. For example, Zoom jumped 108.5% in less than 4 months while most other stocks were sinking.
Our research shows that 5 cutting-edge stocks could skyrocket from the exponential increase in demand for “stay at home” technologies. This could be one of the biggest buying opportunities of this decade, especially for those who get in early.
The GameStop Hearing & Payment For Order Flow Opportunity
The GameStop (GME - Free Report) short-squeeze was a market anomaly that will be the subject of business school case studies for years to come. What began as a meme-driven stock rally ended as a retail trading revolution. Unfortunately, the GME space shuttle ran out of fuel like any short-squeeze and ended in tears for many retail traders who got in at the tail end of the mania.
Robinhood halted the ability to buy GameStop shares (among various other securities) because of its clearinghouse's financial requirements. Robinhood raised $1 billion in investor capital the night of its share halts (but claimed it was unrelated to liquidity) and reopened limited purchasing of its halted stocks.
There are allegations that Robinhood was in a collusive relationship with Citadel, who allegedly had an interest in GME falling after becoming an investor in Melvin Capital (a hedge fund that had a short position prior to Citadel's investment).
From my perspective, it appears that these accusations were stemmed from Reddit traders' complaints who lost a lot on GameStop and are looking for a way to make some money back through a lawsuit.
Robinhood does have a relationship with Citadel and other market makers who buy retail order flows for profit. Payment for order flow is a legal and necessary transaction. It has allowed Robinhood to offer commission-free trading, which has catalyzed retail investing democratization that now stretches across all trading platforms.
This payment for order flow trend has been taking off in recent days because of zero-commission trading platforms needing to generate revenue combined with the swelling level of retail trading. You can to take advantage of this developing profit driver with Virtu Financial (VIRT) who takes in roughly 25% of the total US retail investors order flows.
20% of the total market volume is now made up of retail investors, which is up from 10% in 2019. I only expect this level of retail trading volume to grow in the coming years as the US financial system's democratization is taken advantage of at every income level.
Impact Of Hearing
The GameStop hearing felt reminiscent of the antitrust hearings, which didn't result in anything consequential but was more of a platform for lawmakers to push their own political agendas. I think Michigan representative Bill Huizenga put it best in the hearing, calling the entire charade "political theater."
This hearing was meant to propagate the idea that the market is rigged to the rich. It was a channel to illustrate the government isn't ignoring the market anomalies that have caused pain for many retail investors (aka voters). These lawmakers demonstrated their lack of knowledge of the financial system. Nothing consequential came of this hearing.
These Stocks Are Poised to Soar Past the Pandemic
The COVID-19 outbreak has shifted consumer behavior dramatically, and a handful of high-tech companies have stepped up to keep America running. Right now, investors in these companies have a shot at serious profits. For example, Zoom jumped 108.5% in less than 4 months while most other stocks were sinking.
Our research shows that 5 cutting-edge stocks could skyrocket from the exponential increase in demand for “stay at home” technologies. This could be one of the biggest buying opportunities of this decade, especially for those who get in early.
See the 5 high-tech stocks now>>