What Is The GameStop Short Squeeze?
What is happening right now with GameStop ($GME) is the dawn of a new paradigm in trading and investing in the stock market.
This Friday (1-29-21) and Monday (2-1-21) will be the greatest short squeeze of all time. A biblical squeeze for the ages. Finance students will study this happening for the rest of time.
For anyone who doesn’t know what a short squeeze is, here is what is happening:
Basically, a bunch of hedge funds have been shorting GameStop’s stock because they saw it as a failing mall retailer. And they’ve been getting fat, happy and very complacent. This will be some of their undoing.
When you short a stock, you are betting that the price will go down. Naked shorting is when you are betting a stock will go down without having the underlying security to cover your bet. This is important because if the price goes up enough beyond your short, you will be forced to cover you short position by buying the underlying security at whatever price you can get it at.
If you short a stock at 5 and the stock goes to 10, you then have to buy the stock at 10, in effect losing the 5 point spread between your short price and the actual price.
The really insane part: hedge funds are shorting 140% of $GME shares.
This means there is not enough outstanding shares to cover the shorts.
GameStop is the #1 most shorted
stock on the market right now.
As of today, GameStop was the most traded stock on the market. More $GME shares and options were bought today than Apple ($AAPL) or even Tesla ($TSLA).
And the price as of writing this is 220, a +143 point change, a +92% increase today!
And now that Jim Cramer, the Wall Street Journal and CNBC have been putting out stories on /r/wallstreetbets, I expect more ‘retail traders’ to pile into $GME, if not for the promise of huge gains then to stick it to the Wall Street hedge funds that have been sticking it to all of us for years.
Think about it, these billion dollar hedge funds short stock on struggling companies HOPING it will hurt them even more, while snickering and getting fabulously right in the process.
And that is why this is personal for a lot of people. It goes beyond just wanting to make a good trade. I’ve seen people going all in at all time highs just to finally get one over on a parasitic hedge fund, who are all feeding on the carcass of the middle class.
Well, I’m all for it, and only wish I had bought more shares to begin with.
The memes, gains and schadenfreude will be glorious!
Fellow investors: buy, hold and we will all win together.
And tell your friends too.
Will R Compton
Founder, Investing Alpha Inc.
P.S. Tell all your friends to buy and HOLD $GME shares until Monday (1-26-21)
P.P.S. I’m not a professional, do your own research, none of this is advice, just the opinion of some guy on the internet.
Due to the meteoric rise of Bitcoin in the last couple years, creating many “crypto millionaires” there has been a surge of interest in learning how to buy crypto coins.
Why Invest In Crypto?
Over the last few years of investing, watching the stock market almost everyday, with its ups and downs, I noticed something interest after I added crypto to my portfolio.
Here’s what I noticed: when the stock market goes down, crypto goes up.
This is an interesting discovery for a couple reasons.
People are using crypto as a hedge against stock market crashes and inflation. While waiting for surges in price (speculating), we can use our digital coins as a hedge against our other investments (mainly stock and real estate), giving us an immediate benefit.
Here’s how to invest in Crypto in less than 10 minutes:
- Make an account at Coinbase
- Buy some Bitcoin
- Buy some Ethereum
- Buy some Litecoin
- Buy some Chainlink
Congratulations, you’re now investied in crypto! Now you have a ticket to win the lottery and you have a hedge against stock/real estate losses.
Continue watching prices on you portfolio, and just as in stocks, buy on red days.
And research other coins that might take off. You never know what the next big thing will be unless you do your due diligence.
As crypto technology becomes more ubiquitous, and with companies like PayPal and other payment processors starting to accept Bitcoin for buying things on Amazon and everywhere else that accepts PayPal, the practicality will push crypto into the mainstream.
Most importantly, have fun with it.
And as always, happy investing.
In this video we are going to to discuss stop losses, why they are a bad idea and why they actually increase risk, despite what pretty much everyone says, they are a bad idea.
Small down movement lock in losses when the shares might rebound quickly.
When shares gap over a stop loss, you might not notice.
They create a false sense of security, especially with the threat of gapping, you might not pay attention as closely to news and your portfolio if you feel safe with your stops.
Use stop losses at your own peril, in most cases they increase risk, lock in losses and give you a false sense of security
When you new and excited to invest, you’re probably a little overwhelmed with everything like setting up a brokerage account, what all the symbols mean, how to put a buy/sell order in, how to find a good investment, which company at what price, what the hell are greeks, how do options work, etc…
But none of those things, though they are important have anything to do with the 3 big mistakes almost all new investors make.
When you are new to investing, be extremely careful who you listen to, the industry is absolutely filled with straight up fake people who don’t know what they are talking about (trying to fake it before they make it), straight up con artists, people blinded by their own bias, it’s an absolute minefield. You have to do your own reserach and carefully screen out sources of advice.
Money is a form of energy, more accurately a store of energy, but energy none the less, so if you think of it as a flow of energy like water or electricity, it’s going to take the path of least resistance.
Money is a store of energy and it is attracted to certain people, if you gave everyone $1 million dollars, it would end up in the same hands in 10 years.
Money wants to circulate, it doesn’t like being couped up.
Understanding the esoteric nature of money as energy should help you to develop the mindset and actions required to be the kind of person money is attracted to.
Here is my case for why you might want to think about not diversifying your portfolio.