\u201cI think wherewithal from governmental stimulus ultimately is really the cause,\u201d\u00a0<\/strong><\/em>Jeffrey Gundlach, a billionaire bond-fund manager,\u00a0said during an appearance on Fox Business.<\/a><\/p><\/blockquote>\n Congress passed and then-President Donald Trump signed late last year a fresh CCP virus relief package that included $600 checks to most Americans. The checks began being sent out on Dec. 29.<\/p>\n GameStop stock began surging last month, spurred by retail investors urging each other to buy on a Reddit subforum. Gundlach asserted the rise was due mainly to the relief package.<\/p>\n \u201cIn this case,\u00a0thanks to primarily, I would say, governmental policy<\/strong>, there\u2019s wherewithal among investors, if you want to call them that, or speculators,\u00a0with government money being sprayed all over the place, with checks to people, that they have the wherewithal to put together into a real capital base.<\/strong>\u00a0And in this case, there were 2.1 million people that somehow got organized on Reddit and managed to get about $20 billion of buying power,\u201d he said.<\/p><\/blockquote>\n Large gains came, in part, because of short positions taken by hedge funds essentially betting on the downfall of GameStop, a video game seller.<\/p>\n A stimulus check issued by the IRS to help combat the adverse economic effects of the CCP virus outbreak, is seen in San Antonio, Texas, on April 23, 2020. (Eric Gay\/AP Photo File)<\/em><\/p>\n Some posts on the subforum, WallStreetBets, support Gundlach\u2019s position.\u00a0<\/strong>Users wrote that they used the stimulus money to invest. \u201cA lot of us turned that 1,200 into way more than 1,200,\u201d one wrote this week.<\/p>\n But others said they invested with funds unrelated to the stimulus.<\/p>\n Jeffrey Sherman, deputy chief investment officer at Gundlach\u2019s DoubleLine Funds, meanwhile, told CNBC that the retail investors could see big losses if momentum changes on GameStop, AMC, and other stocks they\u2019ve been buying.<\/p>\n \u201cI don\u2019t think it ends well,\u201d\u00a0<\/strong>Sherman said.<\/p>\n \u201cIt\u2019s very, very strange. This is the euphoria of market tops. I\u2019m not saying we\u2019re going to have an imminent crash, but it definitely reeks of bubblish-type corrections.\u201d<\/p><\/blockquote>\n \u201cThis is something where it builds hubris,\u201d\u00a0<\/strong>he said. \u201cIt builds confidence, and then people will get reckless with their positioning.\u201d he added. \u201cThese things just can\u2019t continue to persist. It is some form of collusion. But I don\u2019t know if it\u2019s prosecutable.\u201d<\/p>\n The Securities and Exchange Commission, the top financial regulator in the United States,\u00a0said Friday<\/a>\u00a0it was reviewing recent trading volatility with the\u00a0Financial Industry Regulatory Authority (FINRA).<\/p>\n \u201cWe will act to protect retail investors when the facts demonstrate abusive or manipulative trading activity that is prohibited by the federal securities laws,\u201d it said in a statement. \u201cThe commission is working closely with our regulatory partners, both across the government and at FINRA and other self-regulatory organizations, including the stock exchanges, to ensure that regulated entities uphold their obligations to protect investors and to identify and pursue potential wrongdoing.\u201d<\/p>\n![\"\"](\"https:\/\/zh-prod-1cc738ca-7d3b-4a72-b792-20bd8d8fa069.storage.googleapis.com\/s3fs-public\/styles\/inline_image_mobile\/public\/inline-images\/gundlach-700x420.jpg?itok=0w58kZIR\")
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