- Reddit versus Wall Street, the people versus corporations.
Why such a drama in the last few weeks?
And if you've heard the news,
you've watched the news, what is going on?
Is it smart for you to invest in GameStop stocks right now,
and what should you do?
On one side, you have Robinhood, a brokage with no fees,
and a lot of their investors are big time Wall Street guys.
Wall Street money.
On the other side, you have a Reddit forum
call WallStreetBets.
Basically is little guys will bet against Wall Street.
Robinhood previously had some PR issues
because one of their users committed suicide
because he thought he lost hundreds of thousands of dollars.
It's an unfortunate incident.
The fact is he actually didn't lose that much money
but Robin hood had some PR issues.
So WallStreetBets or WSB
sees Robinhood as the big guys, as the bullies.
- Enough! You are all of you are beneath me!
I am a god you dull creature.
- And GameStop stocks did poorly because of poor earnings
and of course because of the pandemic.
And I play video games
and I have bought games from GameStop.
So I could understand why the WSB is kind of frustrated
because it's part of kind of like their childhood memory.
And the Reddit users found out the short sellers' plan
on shorting the GameStop stocks
and of course, that kind of pissed them off.
- What happened to decency?
- You guys, I'm gonna to lose my house?
- Yeah.
- In case you don't know what short-selling means
it means that you make money
if the stock goes down in value.
You are betting the stock will go down in value.
Basically as an investor, you borrow a security
and you make that available and you sell that
to the open market and hopefully to buy it back
at a later date for less money.
So that's how you make money with short selling.
On January 14th because of this battle that's going on
between WSB and Robinhood, both are buying the stocks.
That cause the stock to surge by 27%.
Now remember how does short seller makes money?
They make money when the stock goes down in value.
WSB, Reddit users,
they are a betting against these guys.
They want the stock to go up in value
because the more the stock goes up,
the more money the Wall Street guys lose.
And the GameStop value went from $155 million to $29 billion
in the last nine months.
It is absolutely insane.
Wall Street loses,
the big guys lost their money.
That's what the Reddit users want.
The little guys win.
But this situation is far from over.
The government is getting involved.
They are investigating it.
Both sides are accusing of each other
manipulating the market.
- Damn it, move.
- That man is an imposter. - That man is the imposter.
- So what's my take on all this craziness?
If you are buying any stocks,
you have to treat it like you're buying a company.
That's what Warren Buffet says, right?
If you are not going to buy the company
then don't buy the stock .
Right now what's going on people are not investing.
You have people who have never invested in the stock market.
They're now hopping on, on this trend, right?
Think about it,
if you're getting stock tips from your cousin,
from your uncle, from your brothers,
who you know that they have no investing acumen
well that tells you something.
All these investors they try to hop on this trend
and hope to make a quick buck or get rich quick.
Well, usually it doesn't end up well.
Since you are my fan I want you to protect yourself.
Be very, very careful.
What are the fundamentals of the company?
What's the future for this company?
I like GameStop.
I've bought games from them,
I hope that they survive, but things are different.
Just imagine just like many years ago, blockbusters, right?
I like the popcorn,
I like to go in there.
And you rent a game or rent a DVD that's all good.
But then when consumers behavior change
and now everybody's on Netflix or on YouTube,
as much as you love blockbusters,
that company's not going to survive.
Unless there's some fundamental change,
a pretty drastic change in their business models,
how they deliver value and entertainment to the marketplace.
Otherwise that company's future is questionable.
And I'm not saying you buy, you don't buy,
I'm just giving you a way, a lens to look at the scenario.
Are they investing or they're just speculating?
Every single time you're looking to make money
with no effort.
Every single time from my experience,
when you look for an external source
some kind of vehicle, something that you don't control
something outside of yourself to make a quick buck,
usually it doesn't end up well.
Instead of looking at within,
what are the value that you can provide to the marketplace?
What are some of the things that you could do?
Can you build a business?
Can you offer a service?
What could you do?
Can you sell something?
Instead of trying to speculate.
Speculation is not investing and think about right now
what is driving the stock price.
Greed, emotions, and ego.
And those three things don't mix well with investing.
When you're investing it takes a logical rational mind
to make investments, sound investment decisions.
So my recommendation is very simple.
Don't invest in something you don't understand.
And don't invest something
that you don't really control, right?
That's my rule of thumb.
You want to invest in something you understand.
And don't try to aim for crazy, crazy return
when you're investing.
I believe when it comes to income,
you want to be a very aggressive.
Generating income with your skill set.
When you're growing your business,
when you are scaling up, be very aggressive.
Do your marketing do yourself.
But when it comes to investing
I'm actually very, very conservative, right?
I'm not looking to double or triple my money.
I'm looking to get a decent return.
That 10% return year in, year out,
I consider that that's a good investment.
It is not just Return on Investment,
it's return of investment, right?
Don't lose the initial capital.
Don't lose the money that you've worked hard to save.
That little bit of money that you have
be very, very selective.
No one knows how this is going to end.
I think for some investors, if they exit early
the early ones, they might make some good money
but for most people I think
would be a very very dangerous thing to do.
There are many, many good ways to make money.
Don't get sucked into the drama and hopped
on this trend and say,
"Hey, you want to make a quick buck?"
Don't do that.
Think live the long-term.
Be a sophisticated investor,
be very, very careful,
be very conservative, and just protect your money.
That's my recommendation.
Comment below, let me know what you've done so far.
If you have already invested in stocks
how's that working for you so far?