A quick background: When the pandemic went bananas in early March last year, and every sport was shut down, I was looking for something that might scratch my degenerate sports gambling itch. Some place that I could get that rare combination of anxiety/exhilaration/heartbreak that betting on sports gives you. And someplace to burn the money that I would have been burning on gambling.
I had heard about the Robinhood app and had actually downloaded it to my phone at some point in 2018. I looked at it a few times but never did anything with it, until that itch needed to be scratched. So while I was bored at work one day working diligently one day, I decided to throw a little money in there. ‘I’m not an idiot,’ I told myself. ‘I’ve seen Wolf of Wall Street a few times, I even watched most of Boiler Room once, and I won a Pizza Hut personal pan pizza by winning a stock market game in 5th grade no big deal, how hard can this be??’
Honestly, it was not hard at all. At that point all of the airline stocks, cruise stocks, casino stocks, basically every stock associated with leisure or travel had tanked. So I snatched up a bunch of airlines (Spirit), cruise lines (Carnival), and casinos (PENN) at ridiculously low prices. I’m talked average cost between $3-$7 a share. I didn’t need to turn a profit immediately and I figured that *at some point* the pandemic will end and people will start to take advantage of flying/cruising/gambling again. It felt like a no brainer, and it truly has been. I’m up 104% since last March as most of those stocks are back in the $20’s, and PENN has skyrocketed to over $100.
So needless to say, since last March, I’ve been invested (literally and figuratively) in what has been going on in the stock market. Which leads us to the last two weeks of CHAOS.
I’m not going to bore you with an explanation of what ‘shorting a stock’ is because it would take too long and also because I don’t know what it is. What I do know: Massive hedge funds basically run the world/stock market. And they have operated with impunity for decades. They make billions of dollars and keep rich people rich.
Well, thanks to a revolution of commission free trading apps, more and more individuals have been investing and learning about the stock market. And those people have been spending more and more time on Twitter and Reddit looking to help each other out with stock tips.
Cut to last week, Gamestop, yes, the old video game store, had a stock price somewhere between $15-$20. One of the major hedge funds was about to short the stock to make money, when a giant group of Redditors caught wind of it, and decided to score one one for the common man. Literally millions of people in that chat bought Gamestop stock. Some people invested hundreds of thousands of dollars, some people bought a single stock, but all of that money combined turned into a huge deal. Gamestop stock skyrocketed. And if a hedge fund is trying to short a stock, if it goes up, they stand to lose a LOT of money.
And they did lose a LOT of money. Billions. Gamestop stock was trading at $450 early this morning (three times the value of Apple), and the Redditors started to target AMC (movies), NOK (Nokia, the brick phone company), and other nostalgic 90’s brick and mortar companies.
Fast forward to this morning, Robinhood, who helped make stocks accessible for a ton of investors (myself included) just up and stopped your ability to buy the stocks that people were pumping up. *ALLEGEDLY* one of the hedge funds that had to help bail out a hedge fund that was almost bankrupted by the Gamestop activity, also has a big role in Robinhood. So they literally just turned off stocks to regular people because regular people found a backdoor to make a ton of money in a short amount of time while simultaneously costing the 1% a chunk of their change.
Anyway, I’m in on a few of these stocks, and I’m holding like I’ve never held on to anything in my life. At some point these stocks will have to be made available again, and I’m expecting them to skyrocket whenever it is that that happens. And if it doesn’t happen, I always have my baseball card collection and Packer stock (priceless) to fall back on. I don’t know that it’s shocking or that it’s even new information, but the system appears rigged and an internet/app revolution is helping to expose it to the general public. Nuts!
PS: Me trying to learn about short-squeezes, shorting, etc. this week:
Double PS: There’s a very real chance I’m 65% wrong about most of this story. No regrets.
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