Inelastic markets: how index funds fuelled the meme stock frenzy
Retail traders can dictate prices in markets dominated by passive investors
The power of retail investors to sway stock markets puzzled Philippe van der Beck even before GameStop’s shares rallied 2,000% in January.
Since late last year, van der Beck and fellow PhD student Coralie Jaunin have been trying to explain how amateur day traders have been able to move the price of stocks like Ford, General Electric and General Motors – a phenomenon that appears to have become more pronounced since the start of the Covid-19 pandemic.
They gave their answer in a paper
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