Earlier in the month, some hedge funds released reports that they were planning on shorting a couple of stocks, GameStop being one of them, among others such as AMC and Blackberry. In case you missed the latest news taking over the financial headlines - here is a quick recap.
In layman's terms: A "short" is when you're betting that a stock price is going to fall. What's really happening is you're borrowing a stock from a broker at an agreed price, selling it, and then buying a new one (at the lower price) - returning it to the broker, and pocketing the difference. If the price were to go up, instead of down, like you had predicted, you would still have to return the borrowed shared - so the potential losses are exponential. When this happens, it's called a squeeze.
After the report from the hedge funds was released, a group of investors on a reddit thread took notice. Well, these investors joined forces and starting pumping money into GameStop, making the price rise and causing the hedge funds to lose billions in their positions, even more than the company as worth.
In response to this, some investment platforms such as Robinhood and TD Ameritrade halted trading for specific companies - GameStop being one of them. This has caused some public outrage with accusations of impeding a free market and market manipulation. Robinhood doing the opposite of its' namesake, stealing from the poor to give to the rich.
There has since been class action lawsuits filed against Robinhood by its' users. But truth be told, it's not them, it's the powers that be. The regulators and people in charge of the industry are forcing RobinHood and other platforms to block all trading by investors (but not hedge funds, imagine that).
It's fantastic for the investors who made some money off of this ordeal, great for them! But do you see how quick they were to change the rules once they weren't winning the game anymore?
That's the problem with playing in the stock market - you have no control! And the less control you have, the riskier it is. When the average joe's started to beat Wall Street at their own game, they changed the whole game. And they have the power, because it's their game.
"More Control = Less Risk."
Don't you think it's time to play a new game? One where the rules can't be suddenly changed on you - because they feel like it? One where the entire playing field isn't so volatile and based on the whims of hedge funds and internet warriors?
This is what we've been preaching here at Tardus for ages - to quit gambling and take control of your own finances. We teach our clients how to create risk averse, reliable, recurring income. 60% of Tardus clients came to us with history of stock market investing, and every one of them ditched it when they learned a better way.
Learn more by booking a strategy session with a Wealth Coach today.
