Reference no: EM133109648

Share your opinion on the following scenario:

The functioning of today's equity markets hinges on two components:

1. Focus on fundamentals (fundamentalist)

2. Focus on the trend or more specifically, an Index (chartist)

Assuming the prospective investor focuses on the fundamentals like the prospects and market share or earnings of companies then you are wagering on how managers are seemingly able to add real value to the business.

Assuming an investor is focusing on the patterns and movements of the market that investor would wager on an investment fund that tracks an index such as the S&P 500 or Russell 2000. It was in the second component where an investor will use an online public access network platforms such as Robinhood sought to bid up equities the likes of Gamestop hyped on social media and bereft of fundamentals into an undeserving soaring market capitalization. Incidentally, "short selling" is a characteristic of the chartist (technical) component. Note that a few months back, HOOD went public, and apparently the expected hype did not favor the Robin Hood Company, As one could see the share price tumbled almost 50% since its IPO.