Getting rich with GameStop was simple. Blindingly simple:
GameStop sold games on disc or cartridge. If you wanted to play the game you came to the store, paid your money and walked out with a package. Here’s one of their boring stores:
One day they (the game makers) let you download their games over the Internet, pay for them over the Internet and
play over the Internet, effectively cutting GameStop out.
The end of GameStop.
Hence, GameStop stock will fall. Thus, short it.
Sell the stock at $10. But it back at $1. Bingo, you’ve made $9 a share.
Better yet, you can juice this “no brainer” trade with stock options and borrowing (called margin), i.e. make more on your “investment”.
the only thing wrong with this scenario was that somebody in management would figure out a way to turn the company’s fortunes around by closing stores and selling the new online games in a new way — maybe on line over the Internet.
If that worked, the stock would go up. That was the simple scenario and why shorting a stock can be dangerous. There are few businesses that can’t be “fixed.”
These days there’s a new wrinkle — the huge number of people who shorted the stock and will need to buy it if the stock starts to go up.
A lot of people started buying the stock, driving up the price. That’s called a short squeeze and it’s what basically happened. to GameStop. Here’s a chart of GameStop over the past ten days.
Not exactly for the faint of heart.
I don’t know how GameStop will play out. Nor do I care, since GameStop and other heavily shorted stocks (like AMC, BBBY, TR, BYND, PLCE, LMND, and MAC) are in my “too hard” basket.
The essence of investing, according to Harry’s Theory Of Investing, is you do what you know and you steer away from
things you know bubkas ( Yiddish for nothing) about — like cannabis, gold, cryptocurrencies, palladium, etc.
You gotta love Elon
Musk has been battling Tesla short sellers for eons.
“The stock market is a strange thing,” Mr. Musk said in an interview with Business Insider in December. “It’s like having a manic depressive who’s constantly telling you how much your company’s worth. Sometimes they have a good day, and sometimes they have a bad day, but the company is basically the same. The public markets are crazy.”
A month later, Mr. Musk has inserted himself into one of the most confounding stock market dramas in years — the multibillion-dollar battle over GameStop being waged between elite hedge funds and retail investors communicating on Reddit.
On Tuesday, as GameStop shares skyrocketed, Mr. Musk weighed in with a one-word tweet – “Gamestonk!!” – and a link to the Reddit forum where much of the discussion has unfolded. Mr. Musk’s message was seen as an endorsement of sorts from one of the most powerful figures on the web, and in the days that followed, investors bid up the price of GameStop to new highs.
How to bring joy to your (or your friends) long winter days
This is what we have in our living room today.
This is a picture of it from the White Flower Farms web site where we bought it. It’s called an Amaryllis ‘Caprice.”
It’s $44 and worth every penny. It makes you happy just looking at it. Click here.
Boring health tips
+ Don’t fall on the last step. Leave that pleasure to everyone else.
+ Ease up on your back by using your arms and shoulders to get out of chairs, and into and out of your car.
+ Don’t shovel snow or lift heavy things. Don’t lift your luggage onto the overhead bin.
+ The cheapest places to buy the larger size clothes you need now (’cause you’re newly fat) are Uniqlo and Lands End.
+ Ride an exercise bicycle for half an hour twice a day.
+ Nap at least once a day.
To read and to watch
+ Net Impact. One man’s cyber-crusade against Russian corruption. Click here.
+ Watch Bill Gates. He’s smart.
Favorite cartoons
That’s it for now. I braved the snow to play tennis this morning at 6:15 AM. Madness is not limited to GameStop. See you tomorrow — Harry Newton
