I'm going to tell you a little story in two graphs. The graphs are of the GameStop (GME) stock price. One is for the last 6 months and the other is for today.
Just like most of you, I now read Reddit. Back in January, there was a lot of buzz about the subReddit where they talk about stocks. Apparently, some guy, on the subReddit called r/wallstreetbets, had been talking up the company GameStop (symbol GME). GameStop is a company, with stores in the mall, where they sell all kinds of video gaming stuff.
As you might guess, a company with stores in the mall is already in trouble. That they sell something that you can usually download or order online, is even more problematic. You might say that GameStop is to video gaming as BlockBuster is to home movie watching. So the stock wasn't doing much and a bunch of hedge funds had bet that in the future it would do even less. In other words, they had shorted the stock.
So this guy, who appears to live in his parents basement playing video games all day, started talking up the stock. He claimed that he loved GamesStop, the store, and that we should punish those nasty hedge funds for betting against it. So if we bid up the stock, those nasty hedge funds will get caught in a short squeeze and lose their shorts. And, for once, the little guy can put it to "The Man". Of course, it's also true that this dude had accumulated a lot of GME at very low prices and that he would do well as we heaped it on the nasty hedge fund guys.
For me, two things are true. Sometime in late January (1), I started paying attention and, being a fan of the underdog, I'm all for putting it to "The Man". So on February 1, 2021 (2), I bought 2 shares of GME at $316 each. I caught it as the price was falling and it never looked back. By mid February (3), I was beginning to feel that maybe I had been had and that somebody had conned me out of $600. I even wondered if this guy in the basement was actually "The Man" or if I was "The Man" that they were putting it to.
I told my son about this and he thought it was funny, and foolish, but appreciated that I was pulling for the underdog.
So cut to yesterday (4) and I see the occasional mention on Reddit and I notice that the price is creeping up again. Well, I've had my fun. So I put in a limit sell order to sell my 2 shares of GME for $320.
Today, as the stock creeped up to $348.50, my trade executed (5) just before the stock plunged back to something like reality. So for my little adventure and for taking a stab at putting it to "The Man", I am now $8 richer.
Disclaimer: This blog does not in any way constitute investment advice.
