How has your day been?
I’m writing this daily post in the afternoon, instead of my usual morning, because this whole thing with GameStop’s stock is so fun to watch. I woke up at 6:00 AM as usual and didn’t get out of bed until an hour and a half later, because the twitter feed was so enthralling. My whole morning routine got ruined by a gang of Reddit investors hoping to take down a few hedge funds.
Long story short: some retail investors discovered GameStop’s stock has more short positions than there were total certificates in circulation. So they went for a short squeeze by buying up GameStop securities en masse. The stock skyrocketed into hundreds multiple, and some hedge funds - with the short calls - lost billions of dollars. A few paper millionaires got minted over the span of a few days, and the rest of us are enjoying the show.
Things came to a standoff today: popular brokerage firms such as Robinhood and TD Ameritrade put a stop to new positions on GameStop and other companies that are being stoked by r/wallstreetbets investors. My twitter feed was filled with outrage at this seemingly blatant market manipulation. It sure helps the hedge fund short sellers to close out their positions easier, doesn’t it, if most $GME holders can only sell.
The optics are bad: Wall Street seems to be protecting their own, after being caught on the wrong side of a trade from a band of retail investors. Big Wall Street firms are the house, and the house always win.
Personally, I don’t have skin in this game. My investment plan is to dollar-cost-average index funds all the way onto retirement age. I don’t do individual securities. Some of these r/wallstreetbets investors are literally gambling their entire liquidity onto a single stock, which is amazing and reckless at the same time. If a position causes you to lose sleep, that’s not investing, that’s gambling. As with any gambling, there’s going to be those that specularly win, and those that spectacularly lose.
The rest of us are just watching to see what happens when the music stops playing.
First moon of the semester.