Recent Selloffs Make the Average Investor Go Hmm.
The entire investing world is talking about GameStop Inc ($GME). If you visit the link to StockTwits during the regular trading day you’d see a massive stream of posts on it. Everyone is Bullish on it!
The demand to buy shares is so high that Robinhood and other brokerages have restricted how many shares you can buy. Is this the right thing to do? I don’t know, I’m not a lawyer nor do I know how Robinhood and other brokerages work. Still, it smells of market manipulation and it’s exactly what whips the r/WallStreetBets crowd into a froth.
I’ve made more money sitting on my hands…
The price of GME has undergone a steady decline since those restrictions. That makes a lot of sense, remove the demand and the price will drop. Of course, this only strengthens the r/WSB crowd’s resolve to ‘hold the line.’ They complain about short ladder attacks, how the volume is drying up because of it, and the markets being rigged.
They’re 100% right, the markets have always been rigged against the ‘little guy’ and after this GME pump, they will remain so.
GME Short Ladder Attack
As of this post, GME is trading at $92 per share in the pre-market. That is a huge drop over the past few days and the ‘retards’ (not my name for them, they call themselves that) shout loudly that they’re ‘holding the line!’
They’re buying billboards all over the country telling the world they’re not selling. As I wrote before, this is personal for them.
To the boomers, and/or people close to that age, just now paying attention to these “millennial blog posts”: you realize that, even if you weren’t adversely effected by the ’08 crash, your children and perhaps grandchildren most likely were? We’re not enemies, we’re on the same side. [via Reddit]
But I’m getting really worried here. I wonder if this Wall Street Rebellion, armed with memes, is about to get slaughtered.
Emotions Will Destroy You in the Markets
I know bold traders and I know old traders. I don’t know any bold old traders. — unknown
Years ago, when I used to actively trade and I spent a lot of time talking to actual long time traders. They liked talking to me because they considered me a contrarian indicator. If I got very Bullish on the market or a particular stock, they’d take the opposite side of the trade.
99% of the time, they were right. I, as a retail trader, was always behind the market. I bought at the peak and sold at the bottom. I churned my money away until I asked one day-trader friend what I was doing wrong. What’s my best path forward?
Besides my problems with risk management, my friend told me that I was too emotional for the market. I was showing the market my poker face and was getting taken for a ride. He said that ‘emotions will destroy you in the stock market’.
He’s right and after some deep soul searching I switched from active trading to passive trading. My skills were better suited for the long term and passive investing. I’ve made more money sitting on my hands a lot than buying and selling every day.
Just look at the parabolic price moves of GME, it’s up and down like a bad Falcon Space X rocket. Going up is great but the landing isn’t that good.
So, why am I worried?
I’m either a contrarian indicator again or I’m watching a rerun of MAGA Asshats storming the US Capitol while recording themselves on mobile phones. Only this time it’s with new actors and ‘new mission’ to make the markets great again.
Only time will tell where all this lands.