Is Gamestop A “Gamechanger” ?

The stock market has pulled back in the past few days in part due to concerns over wild trading activity in several heavily shorted stocks (a couple of those being Gamestop and AMC Entertainment). These stocks have seen massive upside moves due to a short squeeze induced by retail traders on free trading platforms like Robinhood. This has forced hedge funds heavily short these stocks to cover their short positions further driving the stocks higher and causing a lot of financial pain for these hedge funds. Some investors are viewing this activity as a sign of a market top. I don’t believe that is necessarily the case. Why? Because this event is technical in nature and has nothing to do with underlying fundamentals of the market or economy. Is this a “gamechanger” for investors? In one sense I believe it is a gamechanger in that it will probably force hedge funds to be more cautious or circumspect in how they engage in short selling, which I believe is positive for the market. In another sense, it is not a gamechanger with respect to fundamental long-term investing or financial planning. It is really a “sideshow”. The long-term tested success of investing in quality, diversified portfolios will, in my opinion, continue to be the best way for people to achieve the goals of their financial plans with the highest probability for success.