I had another post originally scheduled for today, but some crazy events have happened this week that have led me to write this instead.
I’m sure you’ve heard the words GameStop, Reddit, and Robinhood at some point in the last few days... if not, you may want to leave the rock you're living under.
On Tuesday night, my friend Dalton texted me and asked if I’d seen the GameStop stock ($GME) being manipulated by the subreddit r/WallStreetBets. This was the first I had heard about it.
It’s a very confusing situation, especially for people who don’t know much about the stock market. To put it simply...
Hedge funds have been betting on the GameStop stock to fail using a trading tactic called short selling. Day traders (retail investors) in the Reddit group wanted to stick it to the hedge funds, so they started buying and holding tons of shares of GameStop. The hedge funds now need to buy back the stock to cover the losses of the short-sell bet they made. Essentially, all of this chaos is driving up the price of the stock astronomically—to values that reflect way more than what the company is actually worth.
As a result, the retail investors of Reddit are making millions of dollars and the hedge funds are losing billions.
This is such a precedented event because never before has an internet group influenced the stock market like this, especially to the point where the rich are losing big and the poor are winning big.
As with everything else in life, I used this event as a learning lesson.
For the last few years, I've been adhering to the mindset of “you can’t win if you don’t play.” Meaning, if you don’t put yourself in the game, you have no chance of winning (or losing for that matter). This is something I’ve learned in business, sports, investing, and life in general.
It’s a very basic principle that anyone can learn, understand, and implement into their lives. If you follow this principle consciously, you can and will become richer, in all regards.
Who wants to live life as a mere passenger? Be the driver! Don’t sit in the stands because you’re afraid of losing. Put yourself dab smack in the middle of the field and give it your best effort.
As Robert Kiyosaki says, “You win some, you learn some.” Yes, losing sucks and it’s inevitable... but use the losses as a chance to learn, grow, and get better for the next time around. Learn to love winning more than you hate losing.
The next time you have the opportunity to take a chance on something, do it!
Don’t be afraid of losing—be afraid of not winning.
After getting a grasp of the scenario Wednesday morning, I figured this was a perfect chance for me to stick to my mindset of, “you can’t win if you don’t play.”Dalton and I decided we wanted in on the madness. We both bought shares of GameStop and buckled in for a wild ride.
I've watched $GME like a hawk for the last two days. One minute I was up thousands of dollars, the next minute I was down thousands. At one point the stock price dropped $200 (50%) in a matter of seconds.
I haven’t done any day trading before, so this was quite the introduction. I can tell you that day trading is a fun yet painful thing to experience.
On Thursday morning, shortly after the markets opened and volatility was sky-high, the popular millennial trading platform Robinhood prevented users from buying more shares of $GME. This (possibly illegal act) added fuel to the already-blazing fire and pushed the stock to an all-time high. Shortly after, the stock plummeted by nearly 75%.
After a day and a half of riding this rollercoaster, I figured I’d quit while I was ahead. I closed out most of my position on $GME and sold nearly all of my shares. I really couldn’t take any more of the ups and downs.
I started my position with $2,500 and I ended with around $3,300.
Although I didn’t hit it big like some traders who made over $15 million, I ended positive and I got to be a part of a truly historic event. I’ll consider it a win.
This thing is far from over, however. By the time you're reading this, more events have likely transpired and I'm sure it's only gotten crazier.
It's hard putting ourselves into uncomfortable positions where we have a lot on the line. I considered this before betting on $GME. I could have lost a lot of money. I also could have played it safe and just watched this crazy event unfold. But I trusted my guts and told myself that I had no chance of winning if I didn't at least try. Plus I was getting a real case of FOMO...
Don't let opportunities pass you by. Play the game.
As a disclaimer, I want to remind anyone reading this that I am not a financial advisor and I’m not making any investment or financial recommendations.
I encourage you to learn and understand finances and investing before putting your money at risk.
Just remember: you can’t win if you don’t play!
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