End of February, I received a trading restriction notice on Gamestop and other stocks.
At first I felt little concern as this speculative behavior on individual stocks is condemned by my long-term diversified investment philosophy. These limitations of freedom seemed to me to be superfluous in the context of open markets. On the other hand, it was disturbing to only have the possibility to sell, without being able to buy these securities, as if the platform wanted to protect the large hedge funds. Those who had chosen to bet against these stocks were paying for their speculative behavior, like Melvin Capital, and could only blame themselves. On the other hand, many retail investors will pay a heavy price in the form of price losses on stocks purchased at a high level.
Promoting a stock on the social media platform Reddit does not seem to come close to criminal behavior. However, if manipulation were to be found after the fact, the damage could hardly be compensated. Even if it was greed, rather than criminal intent, that drove thousands of individuals to buy these securities at ridiculously high prices, some of these activities could be considered market manipulation (in Swiss law: art. 143 of the Financial Market Infrastructure Act) and it remains to be seen how the US courts will rule in the ensuing disputes. By putting a little sand in the wheels of the markets, as J. Tobin would have said, we were able to avoid an additional runaway. These limitations, which were cancelled on Friday of the same week, immediately limited the unfortunate consequences of potentially illicit behavior. The investigations of the American market authorities will clarify the conformity of these speculative movements.