GME, etc, Part 2 of ?
Man, a lot of people read something that I wrote mostly for me. I was freaking out some during the ride up on $GME last week, and so putting a few thoughts down helped me process the 6-figure swings that were happening. Haha. Enough about me for now (positions later, I promise).
It has been a wild, wild week. Gamestop peaked at nearly $500, then crashed down to $150, back up to $400, and then it’s been (mostly) down. Currently, Thursday morning, it’s sitting at about $94 premarket. Reminder that less than a year ago it was under $3. LOL.
There’s been a ton of digital ink spilled about all the insane events that happened, and you can find a thousand people giving you a blow-by-blow. I recommend David Sacks’ content if you’re looking for this.
What I want to focus on though briefly (I’ll always keep these short), it the increasing battle of the plebs vs. the powerful.
Immediately when GME started to run up, talking heads/observers/politicos immediately started realizing that this giant run-up wasn’t JUST going to put a hedge fund out of business. It was going to re-draw the map of retail trading (not investing — trading — that discussion is another post) in a serious way. Again, it’s well documented, but what happened was that RobinHood (the leading broker/platform that was servicing the buying/selling of the market used by the GME traders) and a BUNCH of others — — shut off the ability to buy GME. That ability hasn’t fully returned (as of today they are still limited total shares hold-able).
Robin Hood gets paid not by the people using it’s platform — they make money selling their orders to OTHER brokers, who make a very, very tiny spread many, many times a day on the retail investor’s orders. Sorry for all the explanations, which you may know, but it’s key to the point.
Simultaneously, massive news started leaking about Janet Yellen blowing a fuse (the new Dem Treasury Secretary), Discord eliminated the Wall Street Bets discord, and the media went full-on attack mode. It worked.
GME plummeted. A huge fake “silver” squeeze was pushed by the media as being “from Reddit” or “WSB’s new target”. It wasn’t. Silver’s market is …. a bazillion times bigger than GMEs? It was laughable, but all of these efforts worked hand in hand.
It’s still working. The SEC is now opening investing DFV (a.ka. Keith G), a YouTuber/Redditor who PUBLICALLY POSTED his opinions about GME for 18. WHAT?! They’re also investigating Reddit/WSB.
It’s completely unsurprising, and completely frustrating.
What’s more, it’s happening completely in the open. Here’s what NOT in the open. Short holdings — don’t have to be disclosed the same way long holdings do. Synthetic shorts — stocks can be shorted multiple times — — they can’t be OWNED multiple times.
So for a brief moment in time, the system protected it self. Sure, hedge funds lost billions, but a LOT of retail consumers bought at the top, and also are down billions. Unfairly.
What about me?
Well, full disclosure. I traded GME last summer. But in November, I opened up a simple 600 share position with a cost basis of ~$19. I sold at $303.
In a separate account, I’m still holding 1400 shares, 400 which have a March $110 strike. During the run up, I had covered calls against ALL the shares, which is why I didn’t sell more. Those 1400 shares have a cost basis of around ~$50. Since I’ve stared typing, GME is down 12%, so it might be a rough ride for that last batch of shares. But I’m holding for a while. I cashed out enough to be very, very happy. But I’m pissed. Had the rug not been pulled out, those remaining shares would have probably been called out at the high strikes I had ($400, $350, $200) and I would have cashed out a loootttt more.
Recommendation — I’ll do one each post — David Sacks — — voice of somewhat sanity in the tech crowd.
