I am not a stock broker. I do own shares of some companies mentioned in this article. This article is not intended as investment advice. It's intended to open your eyes.
What's the point of investing your money?
To make more money, right? To have more money, so that you can upgrade your lifestyle, prepare for the future, or set your family up for future success, right?
Now, let's look at r/wallstreetbets
Before the meme stock frenzy, it was a place to discuss the market--which stocks were a good buy, how long to hold, when to sell, how to place puts, calls, margins, resistance, whatever. It was a place for the novice, or lightly seasoned, main street investor to visit in order to gain some insight on how to invest money...in order to make money.
One day, someone who liked a stock, a company, GameStop, decided that they didn't like the fact that they had invested a bunch of money in a company that was essentially going out of business. Someone was upset that they had made a stupid move and invested in a failing company.
They did a little digging, and saw that GameStop was being shorted. Now, what they neglected to tell everyone was that shorting a stock can be good for a company because that company earns a commission from the short sale. It's bad for the main street investor because the value of the stock goes down.
Someone from WSB got all miffed and decided to claim that hedgies were evil, and that they manipulated the market. Sure, everyone manipulates the market when they buy, sell, or hold stock. This is why crypto is so volatile; crypto is only worth what people are willing to pay to own it...all stocks are only worth what people are willing to pay for them; that's exactly how the squeeze worked; people were willing to pay outrageous prices for GameStop.
But then what?
The squeeze worked. GameStop stock rocketed! A ton of people made millions. Some people, smart people who knew that investing is done to make money, sold their stock for an awesome gain--this drove the price back down, not the hedgies--they didn't drive the price down--they had already stopped shorting GameStop. Stupid people patted themselves on the back and claimed it was endgame, they had won the war.
As soon as hedge funds realized they were being squeezed, they cut their losses. Hedge funds have tons of resources. They can afford to cut their losses, and they probably find a way to create a tax write-off. Hedgies were also smart enough to join WSB. They learned which other stocks people were going to buy, and they cut back from shorting those stocks.
Hedge funds simply started shorting other companies, and it's so much easer for hedgies to find out which stocks are being squeezed than it is for you and I to find out which stocks are being shorted, and why would you invest in a stock being shorted?
Seriously?! Why would you invest in a stock that's being shorted?
To fight a faceless company? You think it's really that important? You'll stake your house on that? Your education? Your family? Your security?
Yeah, it's cool for the little guy to stand up to fat corporate America. Yeah, it's cool to show wall street that main street can band together and fight back, but the point of investing is to make money.
The point of investing is to make money.
The real issue for me wasn't fighting hedgies. The real issue was that brokerages stopped main street investors from investing. That was the real issue for me. Robinhood never seemed to mind that one day people were spending $8,000 on BitCoin and then 6 months later they were spending $50,000, but they seemed to think it was time to step in when people were buying GameStop at $400? AMC at $15? Nokia at $10?
Yeah, I think we can all agree that was BS, but that's not really the point of this article. That wasn't even the reason WSB tried to send GameStop to the moon. That was an entirely different can of worms.
The point that I want to make is that the apes rushing to WSB think it's cool to buy a stock high, hold it, and lose all their money. The point that I want to make is that since WSB and main street investors have the ability and power to manipulate the market, they shouldn't keep trying to selfishly and foolishly send AMC to the moon.
To what end? To fight the hedgies? Didn't Goldman Sachs just buy a ton of AMC? Won't hedgies just stop shorting AMC if WSB goes on the offensive?
The smart move, since the point of investing is to make money, is to band together and drive up the price of an income stock, something like Ford or Nokia, a company that pays decent dividends. WSB has the power to help revolutionize the way main street invests--make a movie out of that! If WSB weren't run by a bunch of stupid, greedy fools, the mods might choose successful companies with great dividends to send to the moon.
Because there's no point in selling those stocks when they hit the moon; they pay dividends! Instead of GameStop, WSB should have sent Ford to the moon. The people who then made millions would have kept their stock, not sold it, because they'd have abundant yearly income.
A million dollars worth of Ford paying dividends of 5% means the owner of those shares would earn $50,000 a year in dividends before tax.
The real reality behind WSB and all the morons on there is that a few greedy assholes manipulated the market because they got butthole hurt, made bad investments, and wanted to make their money back. They lied to people. They misled and misinformed, and they patted themselves on the back after winning a simple battle against hedge funds, a battle with no real founding.
Hedge funds are still shorting other companies, and those companies are receiving beneficial commissions they reinvest to make the company better.
Seriously, just ask yourself, what is the point of buying GameStop stock? Why would anyone do that? To make money? Sure, that's the point of investing, but you're literally lining someone else's pockets now.
I know, you still think some of those people are holding their GameStop stock in an effort to "fight the hedgies", but deep down we know that's not true. WSB buttholes don't want to sell at a loss. That's all. They want you to invest your money, so that when the stock goes back up, they can sell and recover their losses.
If you're going to invest, be smart, be educated, and above all else, learn to think for yourself. The point of investing is to make money.