I wanted to explain a bit of my recent thinking. Underneath the irrelevant posts, there is something relevant going on.
People dismiss the wallstreetbets people out of hand because of the clownish lingo and the perception of being dumb money.
But hidden within the memes and rocket emoticons, there is truth. It took me a while to understand and believe, but I think the short squeeze is real. The math and reasoning behind it is sound. It is working.
My recent posts have been leaning on the irrelevant side, but I wanted to let you guys know I’m not as stupid or speculative as I sound. I have a degree in Finance and Economics from a respectable school, know how to read a balance sheet, and I regard myself as a fairly sophisticated investor. I read just as much Financial Times and Bloomberg as I do wallstreetbets. It’s not a noob here throwing his lunch money for a lark.
My line of thinking of this. What’s happening with Gamestop is similar to what went on with Tesla. Hedge funds shorted the stock, media bashed Elon, and people thought putting money in Tesla was gambling. It was pretty relentless. But they were all completely wrong.
The majority of people are plain stupid when it comes to money. When they thrash something, I tend to take a closer look. And I think they are wrong again on Gamestop.
To be frank, the people on reddit have made me more money than all my relationship managers put together. By a wide margin. I trust them more than I trust the “professionals”.
What’s going on with Gamestop is not purely greed and speculation driven by mob mania. There is strategy behind the short squeeze. It is a simple strategy for all the world to see, but the simplest strategies are quite often the most effective.
Even more powerful, there is spite backing it up. People are angry with hedge funds, and rightfully so. They see eating a loss as glorious. It is dangerous to underestimate such determination, and to think they are driven by greed and stupidity.
Still, the outcome is uncertain. But I like being a contrarian and making audacious bets. I would rather die gloriously than live fearfully.
I’m resisting selling Gamestop and AMC for a quick buck. Tesla took a few years to play out to reach the levels it has today. The hedge funds have not let up on their shorting of Gamestop, and short interest has barely budged. My sense is that the short squeeze has not even started. It will take days and weeks to play out.
To be honest, not selling is difficult. Doing nothing is not easy. There will be huge volatility. My portfolio is seeing the wildest swings it has ever seen. There will be days that I regret holding, or tempted to sell to lock in the gains. I might not want to look at my portfolio at all.
It’s also a reputational risk of looking really stupid by writing this now. Perhaps I should be like most “investment experts”, and just post after I make money? Or at the end of the year and consolidate the gains and losses? But that doesn’t feel authentic to me. I guess I will only know with experience.
But I remind myself that there are sound reasons why I’m holding.
And money from the hedge funds will taste especially delicious.