April 03, 2021
Is the Stock Market Logical? | How Gamestop Stocks Blew Up!
A Reddit group blew up GameStop’s stock.
Costing big companies tens of thousands if not millions of dollars!
Attorney Chris Berry discusses how this happens and gives some tips on trading in this episode of Daily Wisdom.
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Episode Transcript
Reddit and Stock Market
Hey, this is Chris Berry with Castle Wealth Group, and today we’re going to look at the question, is the stock market logical, especially given everything that’s happened with the GameStop? So, if you like this information, please make sure to subscribe to our YouTube channel.
Christopher Berry is a leading estate attorney and advisor in the area of retirement and legacy planning. He has been featured in publications such as Forbes, Kiplinger, Crain’s Detroit, and more. He’s the host of the weekly radio show and podcast, The Chris Berry Show. He’s a national thought leader as it relates to retirement and legacy planning, and has authored the Amazon best-selling book, The Caregiver’s Legal Guide.
So, the last couple of days, it’s been interesting to follow. I don’t know if you’ve been following this, but there’s a company called GameStop. I’m familiar with it. I’ve been a video game player in my past. GameStop sells video games and they have in-person stores, brick and mortar stores, which with Amazon and digital games, the company’s kind of had a rough go of it recently.
And I’m not quite sure how it started, but there’s a sub-group on a social media platform called Reddit, which is interesting. I participate in Reddit. It has interesting conversations and information, but there was a group that kind of looked at stocks and it was more about creating funny jokes about stocks and stuff like that. But somehow, there became some traction around this idea that a lot of the big Wall Street hedge fund companies were shorting GameStop stock. So, almost as a joke, this internet group started buying up the stock, which raises the price, which really puts a hurt to all the big hedge fund companies that were shorting the stock.
So, this GameStop stock over the last 52 weeks at its lowest point, it was selling for $2.57, and as I’m recording this video right now, it’s about to open at $420 per share. So, it’s kind of interesting to see that this group of internet people, almost to use term internet trolls, making a joke cost these hedge funds and big companies tens of thousands, if not millions, of dollars as just kind of a joke. And they’ve done this with a couple of other stocks as well. So, it was interesting having conversations with clients over the last couple of days about where the markets are going, and with the pandemic and unemployment, what’s going to happen with the markets.
Focusing on the Things You Can Control
I think the proof is in the pudding that, especially individual stocks, it’s not always logical to understand where a particular stock is going. That’s why it’s important to focus on more of the things that you can control, putting together a well-diversified portfolio, understanding time horizons, taking advantage of the tax rules, because the market’s going to do what the market’s going to do. And sometimes you’re going to see a company that’s almost like a Blockbuster where it’s on its way out with a 52-week low of $2.57, and as basically an internet joke, all of a sudden it’s shooting up to $420 at the opening bell today.
So, the stock market is a crazy thing. If there’s anyone who’s telling you what a particular stock’s going to do or selling you on the hot stock tip of the day, understand that it might be a little bit of a coin flip. But when it comes to retirement planning and planning a legacy, that’s where we want to look at diversifying the risk. If you want to put some play money into something like that, that’s great, but understand that it’s fickle and you could have a group of internet jokesters running up or running down a stock at any given time. Or we could have a big falling out, a CEO says the wrong thing.
So, most of our clients, they’re a little bit more conservative. They’re more near retirement. They want to protect what they have saved. So, I just thought it was interesting what’s been going on, been watching it, talking to my wife and family about it as I’ve been enjoying it, eating my popcorn as I watch what happens with it. But anyway, if you like this information, this has been Chris Berry with Castle Wealth Group. Make sure to subscribe to our YouTube channel. Thank you.
Castle Wealth Group has clients across the nation and helps families plan, protect, and preserve what is important by creating a retirement and legacy blueprint.