The recent effects of ‘amateur’ Reddit retail investors on Gamestop (GME) has had significant implications for Wall Street. A $13 billion dollar hedge fund reportedly incurred massive losses in an attempt to short sell GME after a loosely coordinated effort by investors on Reddit raised the price ten fold in just a few weeks. Not only does this phenomenon demonstrate the power of grassroot efforts by retail investors via social media (e.g. the subreddit r/wallstreetbets), it also has significant implications on nascent sectors, such as the psychedelic market.
Big Banks Go Bust on GME, But Retail Investors Get Reinvigorated
In the short term, these behemoth hedge funds that lost tremendous amounts of money trying to short sell GME may potentially fold their positions across various sectors, including psychedelics, to recoup their losses. However, there’s an even bigger and brighter picture at play here that’s worth noting: the way this story has invigorated a very lively public debate about retail investing in publicly traded companies, especially in novel industries, such as psychedelics. While it has long since been a commonly held view that institutional investors, such as big banks and hedge funds, dominate control over wall street, this story flips the narrative. Not only does it empower the average retail investor by showing their collective power over massive institutions, it has also inspired countless others to get involved in the stock market–something especially important to psychedelics right now.
Why Nascent Industries Need Retail Investors Out of the Gate
Much like cannabis in its early days, psychedelics are still illegal in most of the world. This means that huge institutional investors, such as big banks or insurance companies, are likely to avoid pouring money into the sector, especially since the industry is so new and given the legal status of psychedelic drugs around the world. Cannabis had a very difficult time getting institutional investments as these investors may be wary of putting capital behind a product that is still largely prohibited. Thus, the only way most companies in nascent industries are able to generate a significant amount of capital out of the gate is, in fact, through the interest and investment of retail investors. The Wall Street Reddit revolution, led by the subreddit r/wallstreetbets, has reinvigorated vital interest retail investors, both new and old.
Overall Positive News for the Emerging Psychedelic Space
For North American psychedelic companies included in the ETF, they must maintain at least a C$25 million market capitalization, C$0.10 stock price and C$125,000 average daily traded value, Hawkins said. Revive Therapeutics Ltd., Mind Cure Health Inc. and Mydecine Innovations Group Inc. are among companies saying they’ll be included into PSYK.
The times are changing and the world is ready for better mental health treatments. As rates of mental illness are skyrocketing during this age of COVID, there’s no better time to radically revamp our approach towards treating mental illness. As the revival of psychedelic medicine continues to expand, the world’s first psychedelic ETF is sure to be a powerful resource for retail and institutional investors alike.