This has been a pretty crazy 2 weeks. I have never actually witnessed a short squeeze like this in my whole time investing so far. It has really been an emotional roller-coaster for me personally. I have been a member of r/wallstreetbets since before they had 1 million members and still wonder if I should have gotten into Gamestop(GME) in the early stages. I will be honest, its not even close to my style of investing though. At the time this didn’t seem like a movement, it seemed like a normal and typical pump and dump situation but boy was I wrong(at the time).
At first, I was all for the little guy and agreeing with the whole “bring down the big guy” mentality. This is typically not my style of thinking. I am always rooting for success and thinking to myself “how can I be like that guy? how can I get there?”. It was when the platforms started to manipulate the retail investor that I started to see it from the other side. How dare robinhood stop trading on these stocks(AMC, BB, NOK and GME) and prevent it from going up. That just didn’t seem right to me. All these people with basically zero investing knowledge getting into the market and trying to flood it with buy orders to drive it up. But they couldn’t because of the billion dollar hedge fund(Melvin Capital and Citadel) that supported robinhood didn’t want to lose any more then the $2.5 billion they had already lost. None of that sat right with me.
Being a part of the r/wallstreetbets community has always been a “grain of sand” type of community. There isn’t much due diligence you can get from there except maybe some rocket ships, diamond hands and the typical YOLOing. But who needs to do their own due diligence when every single post is about buying any GME stock they can on what ever platform will let them. Or the hordes of people saying they are doing their part by putting up billboards on busy highways and even renting planes with aerial advertising. Its really hard not to get caught up in the “mob mentality” and start rooting for the little guy. I myself will admit to creating a post in support of the people buying GME on r/wallstreetbets.
I will have to admit though that when this is all said and done, only a few people will walk away with money in their pocket(of the retail investors that is). There will be way more people left holding the bag and just as many of them that lost it all at a shot to bring down the big guy. Maybe i’m wrong, maybe the biggest part of the squeeze hasn’t happened yet like everyone keeps saying. I just feel like last week the market was flooded with red through out all sectors and its bringing investors away from focusing on this situation. Eventually though(and it saddens me to say this) GME will go back down and it will probably be it for them because i’m surprised they haven’t claimed bankruptcy yet.
This is not the first short squeeze to happen and it will not be the last. If you would like an excellent definition of what a short squeeze is please check out http://www.investopedia.com. You can look into what happened with Volkswagen in 2008 when it was up at one point over 93% in a day or the 2008-2009 housing market crash/financial crisis. Those are just 2 well known examples of this happening in the last 13 years. It happens more often then you hear about in the investing world but it just doesn’t get the media attention that GME has gotten. Again, this is not normally my style of investing but it does bring excitement to the market and even teaches you something new along the way. I know that I have learned something from this experience and I will never forget what has happened in these last 2 weeks.
That is all for today and remember everyone, invest in yourself first.
*Disclaimer, I currently hold a small position in NOK but no other stocks mentioned in this article.