The stock market and GameStop stock (GME) have become world news this week, and since Katie and I have a tiny amount of shares in GameStop, we have been pulled into actual stock market history. I believe the event you're witnessing will be talked about alongside the 2008 Housing Market Crash (The Big Short), and Occupy Wall Street, so I thought I'd compile a long writeup of how we got into the situation, and provide some insight to those wondering what things look like from the inside.
None of what I say here is financial advice, I will provide no recommendations, and there is no call to action. Also, we're not planning on getting rich off these shares. If the stock goes up, we'll be happy if we can pay off all our debt and student loans. But if it goes to zero, we didn't spend more than we were willing to lose, so it's no worry to us.
WallStreetBets (WSB) is a place I have gone to for the past year and a half to laugh at people that make the dumbest financial decisions possible. There's a guy there that went bankrupt trading ornamental gourd futures. My favorite post was from someone who started trading in oil from his computer, and was suddenly, legally, on the hook to pick up and deliver 1000 barrels.
You can't make this stuff up, and for every gem (or incredibly stupid play that paid off), there were 10 people that lost a ton of money. That's what the place was to me.
I have broken up this post in a diary format so it's easier to follow or skip to the end, and it's all publicly available at jaimebarriga.com/gme. Feel free to share it if you find it interesting.
September ($7-$9 a share)
While surfing WSB for some jokes, a post about GameStop pops up as a good investment. I write GME off as another dumb joke and go about my life (which, that month, involved quitting my terrible job. I'm still not working yet but I am much healthier and happier).
December 31st ($18 a share)
It seemed like the time was right for me to jump into the GME discussion on WSB and make a joke about how GameStop was shorting themselves and their recent success was simply a trap to trick us all into losing money. This post may haunt me for the rest of my life, because it is a permanent reminder of a time when I wrote off a bunch of people off as stupid, and failed to actually listen to what they had to say. Some people in WallStreetBets were convinced GameStop was a good investment, and like Michael Burry in The Big Short, were laughed at, misunderstood, and unequivocally correct.
Jan 14th ($35-$38 a share)
As GameStop started to climb again, and WSB said a short squeeze was coming, I finally spent some time researching, and me and Katie took a small gamble to buy some GME. I still felt like the stock was an extreme risk, enough to not recommend it to anyone. But I thought WSB had a point - the stock was way overshorted, and if the short squeeze was coming, we'd hold on until March and see if we could sell at $105 a share before it crashed. GME was taken care of and we went on with our lives.
Friday Jan 22 (Low $42.32 High $76.76)
At lunch time, an old tab on my phone still had the GME information (I never close tabs), and I noticed that it had gone up to $50. I showed Katie and we were absolutely dumbstruck by how aggressively GME was climbing, to the point of laughter. I got a screenshot almost at the peak, and shared it here on Facebook not to brag (again, this money was a drop in the pond), but because I thought the short squeeze might be happening and it would be a funny thing to look back on and laugh at because WSB is never right. It dipped down massively moments later, and I had a feeling that the ride was over until it came back up and closed at $76.79. It's extremely important to note that at the same time I made that Facebook post, I joked with Katie that some people on WSB thought AMC was next in line, but they're always wrong so it's not worth putting any money on that. AMC closed at $3.51 a share.
Saturday Jan 23
Katie and I had a talk about what our plan was for our GME shares since we were already up almost 2x, and the stock was so volatile. If WSB was correct, I expected GME to slowly stepladder up to $105 in March, so we'd just hold and come back to it in a few months. Later that night, someone posted on WSB about how NOK (currently $4.20) was another heavily shorted stock, but they were substantially undervalued and there were plenty of reasons to invest (WSB calls this Due Diligence, or "DD"). Katie put a small percentage of her Roth IRA into Nokia back in March because I believed that the company was profitable but undervalued. NOK is a boring company that people laugh at, but, like AMD, people need its technology. Again, this is not financial advice or a recommendation.
Monday Jan 25 (Low $80.20 High $150)
Life goes on and I don't pay attention to what's going on.
Tuesday Jan 26 (Low 80.20 High 150)
Financial Guru Ramit Sethi has a class called "How to Find Your Dream Job" that he made back in 2012 and he just released an updated version after 9 years. It has so far been phenomenal and I spent most of the afternoon working on that. While checking Google News, GameStop shows up and I am shocked to find that it had passed the point we planned to sell. In a panic, I told Katie we should both sell GME, and she said "everything you've ever told me about the stock market was to stay in and be patient. Is there something you need the money for right now?" and the answer was no so we kept holding. GME closes at $147.98 a share. Elon Musk jumps in with his Gamestonk tweet. Stuff is crazy, and to take my mind off it all and refresh my memory, me and Katie watch The Big Short (it's free to watch on crackle.com) and remember how shorting works, and how so many people were screwed over by the big banks for making bad gambles, with no consequences. We talk about how the crisis impacted our lives and go to bed.
Wednesday Jan 27 (Low 249, High 380)
For the first time in my entire life, I check the pre-market and GME is up huge again. At 9:30 AM, GME opens around $350 a share, and it is at this moment I realize that we are seeing history unfold. The entire day is spent glued to the computer reading as much as I can on short squeezes, the market, GameStop, WallStreetBets, and every news article that is flooding in. While GameStop is in the news, literally, all of the WSB stocks people had made major jokes about are substantially up: NOK around $7, AMC around $15, BB above $20, etc...
Thursday Jan 28 (Low 112, High 483)
Jumping into the pre-market again, I can't believe what I'm seeing, and GME starts the day with a bang, but the internet is crippling under the weight of all this traffic. The stock rockets up, and I try to grab 3 more GME shares, but with Schwab breaking apart and their phone system collapsing, I can only snag 2 more.
Every stock mentioned above starts falling, and WSB breaks the news that Robinhood, a major stock trading platform has disabled the ability to buy these shares. This is a blatant (and I'm sure, illegal) manipulation of the free market - if you can only sell stocks, stocks go down, and each of these stocks shows the same depressed pattern throughout the day.
The rest of the day is absolute chaos with so many people weighing in. But what's insane about the situation is who is in agreement. Look at this list, because I can almost guarantee there's someone in here you don't like:
All 6 of these people are on the same side in this fight. They believe that a free market is essential for our country and its people. Every single one of them. But what's even more insane is how many financial news networks are taking the opposite position and using scare tactics to claim that people like me and Katie are out to destroy and crash the economy.
Sunday Jan 31 - Present time (GME at 325)
I'll make my opinion on this clear: Without going deep into the underlying mechanics, the only way for normal people buying shares of GameStop to "crash" the economy, is if the hedge funds and big banks continue to make bad bets against GameStop. And if this extreme case plays out, whatever happens will occur not because people bought a GME share, but because those hedge funds and other big players refused to get out of their bad gambles, burning their own ship down while they were still sailing in it. Unrelenting greed will be the cause, and I think it's better to take these bad players out of the game now than later, when they have more money and more power.
Yet, in this very same extreme case, the "crash" will do the opposite of what we expect. The money in GME will be leaving their hands and going into the hands of every single person with a GameStop share. Assuming GameStop shares continue to rise, there exists the very real potential of the greatest redistribution of wealth in history.
I have read so many heartbreaking stories this week about how people have suffered greatly in the 2008 housing crisis and my heart cries out to God for justice. How many lives did greed destroy or change in a hugely negative way?
If those brave few that were ridiculed on WallStreetBets were right, and a short squeeze does succeed, every single person with a GameStop share will finally have a bit of that justice. That wealth will be redistributed, and it will change this country's future for generations to come.
Katie and I had a long conversation last night about what to do. We are small fish in a big pond and we are financially under attack right now by the same forces that took down the housing market in 2008. We are not just a number on a page. We are real people with real money on the line here.
Collectively, alongside our fellow GameStop share holders, our position is incredibly strong. It costs us no further money to hold. But for everyone shorting GameStop, their dirty tactics, market manipulation, and negative ads are bleeding them out of money every day. They will continue to be in the weaker position as long as the wall holds. Every share held matters.
We have been, and will continue to be a part of that wall.
And if we lose all our money. If we go to zero and the hedge funds win. Or if the squeeze ends and we missed it. We will rest easy knowing that we were a part of history. These few shares started as a risky investment opportunity. But they now represent our front-row seat ticket to watching a group of people fight against an oppressive, evil force, in an effort to change history for the better. I think this is like, the plot of the movie A Bug's Life.
I'll wrap this up with a message to those of you with a GameStop share:
I am moved by your courage and bravery. Katie and I are here with you, and we are holding. Welcome to the endgame.