If you’ve been following finance at all the past few days, you might have heard about the shenanigans happening over Gamestop’s stock. In a nutshell, a group of 2 million people belonging to a subreddit called WallStreetBets (it’s actually up to 6 million members now) got together and decided that if they all worked as one, they could manipulate individual stock prices, driving them up in a way that would hurt hedge funds who had shorted those stocks. (I’ll leave it to you and Google to get to know the ropes of shorting stocks, as it’s not my area of expertise.)
They were, in a word, successful. Gamestop’s stock went from around $20 a month ago to as high as $469 yesterday morning. It’s gotten to the point that some companies are losing billions of dollars, and a lot of money is on the line. It’s attracting attention from all sorts of people who don’t really know the ins and outs of stocks, and (naturally) the more people who keep piling on, buying the stock, the higher the stock goes. And there are plenty of people around ready and willing to reassure everyone that the stock will only go higher.
So have I plunked all my money into Gamestop? Nope. Here’s the thing: I know enough to know I don’t have any idea how what’s happening is happening. It’s arcane magic, as far as I’m concerned. If I’d gotten in back when the stock was $20, I might have bought some, because a $20 bet is much less than a $330 bet (which is where the stock is at the moment.) But now that it’s so high (and relatively stable right this instant), I tend to think it’s treading water by a combination of people piling on the bet, and an equal number of people running away from it. But I don’t really know, and I don’t feel like losing money at the moment based on a bet.
Could I be missing out on a chance to make money? Sure. And I’ve missed out on many of those over the course of my life. That Square stock that I was so proud of for selling at five times for what I paid is now selling at 18 times what I paid. If I’d have held on, I would have made a bundle. Likewise, if I’d invested heavily in stocks when they all tanked at the beginning of the pandemic, I would be sitting pretty right now. I didn’t, because I thought it was too risky, and . . . I paid the price? I suppose so, if “the price” means that I still have all my money and continue to live comfortably.
(Short aside. I’m a fan of looking at the bigger picture when it comes to big changes or risks like investing lots of of money, or moving, or changing jobs, etc. Thinking about what you’re risking with the change. How happy are you with the status quo, and what are the odds it’s better or worse? I could put all my money into stocks, but what exactly would be the benefit? If I lose it all, I’ll be much worse off. If I win, how much better off will I be? While I could always use some more money, I feel like I’m happy and provided for at the moment. I can do many of the things I want to do. Not all of them, but I don’t know that I really need to do all of them, you know? That swimming pool full of chocolate pudding would probably get pretty gross after the first dive . . .)
The thing is, with online communities like Reddit and others, it becomes easy to feel like you’re an expert on something, or that at least you know people who are. In many ways, this is a great thing. You can quickly solve problems, you can find people who can help you, and you can find a place where you really feel like you belong. On the other hand, it’s also easy to find a place where you trick yourself into thinking you know everything about a topic, or at least everything anyone would want to know. It’s easier to dismiss “experts” in favor of the connections you already have.
We’ve seen this with QAnon, and we’re seeing this with WallStreetBets, and we’ll see it in other areas as well. There’s a balance between skepticism and credulity you need to learn to walk to be successful in life, I think. And it’s always important to remember that just because it feels like everyone is doing something doesn’t mean that it’s something worth doing. Especially these days, where “everyone” can just be the people around you. I think of the mob that rushed the Capitol, and how secure they all looked walking through its halls on television, taking selfies and livestreaming their actions. How public they were about it, and how at the time it must have felt right and proper, because everyone they saw was doing the same thing.
That hasn’t worked out so well for them after the fact. I’ve got a feeling it’ll do the same with WallStreetBets. But what do I know? I’m the chump who kept saying Bitcoin was going to tank, and told people to sell sell sell when it was $20,000. Now it’s worth over $30,000.
Maybe I should go buy some Gamestop stalk after all . . .
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