January 29, 2021.
2021… It’s been a crazy year so far and we haven’t even finished January. What a time to be alive!! Well, I am glad I am here, and you should be too. This week has been a special one for everyone and especially confusing for the average/regular trader. I haven’t seen price swings like this in my 3years of trading and my more seasoned investors/traders haven’t seen the market move like this in 20yrs. I am talking about GME, AMC, BB, BBBY… and to end the week dogecoin. The year of meme stocks and I believe investing has now been changed forever because of the event that transpired during the week of Jan 25, 2021.
I will dive briefly into this since you might be reading this in 2030 and were on mars during this week’s “revolution”, yes, I said it and it’s just the beginning. A group of Redditors decided to stick it to the man (hedge funds) who had overleveraged their short positions in $GME GameStop stock. This move was started by a Redditor named “deepfuckingvalue” on the subreddit called “WallStreetBets” in 2019. I have to say, he deserves every penny has he singlehandedly held positions that were losing value for almost a year until the group banded together and started the movement. Now he is up several million dollars from a $50,000 bet which takes a different kind of resilience. I initially thought this was a black swan event but after looking at it, short squeezes happen all the time and this although different in mechanics, is just one of them.
This short squeeze for the first time was initiated by the people because of new trading apps like Robinhood, Webull, and many others that have in the last few years introduced zero trading fees to buy, sell, short and go long on Stocks/securities. The word spread like a virus after taking a year to build a following on the group WallStreetBets and GME went from $4 to $400 shooting the stock up >8000% in a single year. It was wild and everyone loved this because for the first-time retail traders (regular people like me and you) were profiting off losses from hedge funds. This went left when Robinhood decided to block users from transacting (buying & selling) their positions in the aforementioned securities which in turn provided new information about the transparency of the market. The people went from loving Robinhood to hating Robinhood in one single instance because in a truly free market that shouldn’t happen. This showed that Robinhood truly isn’t free, the market is truly rigged and to the benefit of the already uber-rich. The world revolted, internet billionaires (new money) like Chamath, Elon Musk, Jack Dorsey spoke out, decentralization became the new topic and dogecoin followed suit with the message “let us trade and if you don’t, we will move our money to Crypto”. What is bad for the centralized world of banking/finance is good for the decentralized world of finance. Quickly by the end of Day, Robinhood was singing a different tune of allowing limited trades of the blocked securities.
My opinion on this, this has led to a new kind of thinking because of the internet. I am sure this might have happened before but never on this scale. Like it or not, a new set of investors/traders were created last week and who knows where this might go from here. As a trader, I would love my normalcy and continue to play the game I have always played as I just started to get good at it. But It’s time for a change and I am about the change. A couple of ideas I heard on a dogecoin clubhouse chat, yes “clubhouse” at 1 am last night were investing might be about trends now. Well, in the last year, it has been and maybe always been so welcome to the market. The trends have been Elon, green energy, fintech, cloud, etc. but this might be a new kind of trend. Celebrity investing which I am not sure how it would turn out but exciting times ahead. This has also exposed people to cryptocurrencies because more and more people are developing a distrust of the centralized system. I am all for it as I hate the govt/institution messing with my money, it's hard-earned. This whole movement has spiked a new following in bitcoin and as of writing, this bitcoin has moved 15% from $33k to $38k. To infinity and beyond and like I wrote earlier, what a time to be alive.
