What was in the weekend’s papers? (01/02/2021)

Category: News

Q&A: A basic guide to the GameStop squeeze

The madness of the GameStop drama caught the full attention of the investment world last week. This Financial Times article asks how did millions of retail investors put big financial institutions under pressure with GameStop last week?

This piece seeks to explain how the phenomenon, which began on a Reddit investors’ forum, spread around the world, and why it is putting pressure on hedge funds who bet the stock would fall.

He tells readers GameStop is a ‘short squeeze’, which occurs when a stock or asset jumps in value quickly. This forces traders who had bet the price would fall to buy more stock to forestall even greater losses.

Armstrong says the proportion of GameStop shares lent to short sellers has remained high. This means while some shorts have been forced to sell, others have been happy to step in.

As I speak attention seems to have moved onto Silver. This is a much larger market which should be harder to eliminate. Anyone who has been left standing with Gamestop shares may find the music has stopped.

Brexit fears cause 10,000 British pensioners to flee the EU

The number of retirees living abroad in the European Union has fallen since the Brexit vote, writes The Telegraph. Such data could see those dreaming of a European retirement rethinking their plans.

It quotes statistics from the Department for Work and Pensions, saying the number of pensioners residing in the Union peaked in 2017 at 475,000 and has declined since. The countries with the largest declines have been Ireland and Spain. That said, more than 103,000 Brits over the age of 65 still reside in the latter country.

Salisbury House Wealth’s Time Holmes says the trend reflected the fear Brits may not be treated equally to other EU citizens now Brexit has completed.

‘What happened to the £160m we put in “secure” investments?’

The Times has a story about how for communities in north Wales, the Orthios project was a chance to revitalise local businesses and create hundreds of jobs. The bold plan failed, leaving investors out of pocket.

Many were advised to put their money into bonds created to finance the scheme by rogue financial advisors who are no longer allowed to trade. It is the latest collapse in supposedly “secure” investments such as the London & Capital saga.

The reason money flowed into these bonds is that they offered high returns. One of the fundamental truths of investing is that rewards and risks are related. If an investment were completely safe, there would be no need to reward anyone for taking some risk. Even if an investment does not look risky on the surface it is important to consider what risks are hidden away.

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