PHOENIX - On Tuesday, Jan. 27, GameStop stocks went soaring, reaching levels the company hasn’t seen in years.
"The business is an old model and the stock was declining and the business isn’t growing," says Nancy Tengler, Chief Investment Officer.
Yet the stocks have grown from just $18 a few weeks ago to now a high of $380. Tengler says this is because of a group of amateur investors on Reddit banded together to purchase calls on GameStop stock.
"What’s happened is, in buying the calls, the options is the sellers have to buy the stock to deliver for the calls and that drives the price up and squeezes out the short-sellers," she explained.
The move, Tengler says, has wreaked havoc on Wall Street causing a number of major investment firms to lose money and a couple to surrender.
Ameritrade has since put a block on stock transactions for GameStop and for AMC, whose stocks have also been up.
Tengler says for the average person, your best bet anyway is to invest in a company that is likely to have long term success.
"The average investor should be investing for the next three to five years in great companies," Tengler said.