My Thoughts on the Stock Market Craze

I don’t usually write about money matters here, but people are going crazy about the stock market right now, so I thought I’d give you my two cents (in case you live under a rock: it’s the Reddit Wallstreetbets GameStop thing, you can find a good summary here). It’s a weird mix of memes, excitement, outrage and a genuine air of uprising against the “suit-wearing Wallstreet assholes”

At times, it feels like this thing could break the internet, and I hope it can lead to some positive change in terms of regulations and systemic protection in favor of retail investors versus the institutional players.

Even if you don’t care for stocks and trading at all, it’s still a fascinating phenomenon to study from a psychological and sociological perspective, in my opinion.

Let me preface this by saying I have been casually browsing the Wallstreetbets Subreddit for a while, they have some of the funniest memes. The subreddit has gotten insane attention, they gained about 4 million new subscribers almost overnight (some speculate bots with bad intentions might be involved, too). But I don’t own any of these meme stocks and I don’t plan to.

Here’s what I’m most fascinated with: Why are people getting so riled up?

1. The “David vs. Goliath” narrative is powerful That “Us vs. Them” thing with outrage is self-reinforcing and perpetuated by the internet, especially if the enemy is a big guy or “the rich”. Plus, a big group univocally believing in one narrative overrides doubts and lets us shut off our own critical thinking, which history has taught us over and over. Browsing the subreddit now, it’s a never-ending stream of “I’m not selling”, “continue to buy” and “we’ll get them” messaging.

2. Money triggers our emotions It’s not only about hurting those hedge funds of course – it’s about making money, first and foremost, let’s not kid ourselves.

Reading testimonies of normal people who turned a few thousand into millions is very appealing (“I can do this too!”). It’s easy to become jealous and greedy, I’m guilty of this as well. Add to that the boredom, being locked up at home and the bleak economic outlook.

It’s not surprising: This thing has all the elements of a perfect sales pitch: We have social proof and endless stories of overnight riches, there’s only limited time to get in on it and you have thousands of like-minded people who encourage each other that they’re doing the right thing and that they won’t back down. 

The fact that some brokers didn’t allow these stocks to be sold exponentially increased the FOMO, and now there’s a big evil enemy, there’s a “bigger purpose” aside from just making money which can be used as a justification for making incredibly risky bets.

It’s the perfect storm that almost makes it impossible NOT to get sucked into this.

Here’s my point, though: If you like the memes and if you want to support the cause with some play money you’re willing to lose – sure, why not.

BUT: Be careful.
If you get in to get rich, you’re very likely to fail. It’s complicated, and you probably won’t get the timing right. The other players in the market are smart and ruthless.
If you never traded before and you don’t understand the risks, don’t do it.
I’ve seen 20-year olds invest all of their savings or college funds into this, and it makes me anxious.

Here’s what a user on Reddit wrote, euphorically:
Taking a $50,000 position on $GME (GameStop) is risking a year off your life to fight this good fight. The amount of years so many of you are willing to put on the line is an amazing testament to how dedicated this sub is to f*cking these bastards raw. The bastards who steal thousands of years off the regular man’s lives every single day. You’re fighting the good fight, and your sacrifices will not be forgotten. 💎🙌🏻🚀🌕

Yes, that’s the point: Many young people are investing REAL money here, and if they lose it, it might take years to recover from it.
The GameStop stock is now valued at around $325 (it was just around $20 a few weeks ago). Is the company the new Amazon? No, of course not, it’s probably going to go bankrupt sooner or later like Toys’R’Us, unless they manage to reinvent themselves.

Here’s what will most likely happen in the next days (I hope I’m wrong): Once the craze goes down, the stock price will drop as fast as it got up, and tens of thousands of young retail investors will lose a good chunk of their savings. Many will stop investing in the stock market. And, probably, the big players and hedge funds will still find a way to take their money.
Those young investors have a short attention span, it feels like they’re already moving to the next “meme stocks” or Crypto (DogeCoin is the new “thing” it seems, I don’t know if everything is a meme nowadays).

Is it a rigged game? Yeah, probably, to some extent. The establishment usually wins within its own systems. And I would welcome more regulations for big algo-traders and hedge funds who short sell (why is short selling allowed? And for that matter, why are billionaires a thing? But that’s another topic).

Here’s what I think everybody should do: Instead of gambling with options and wild stock picking, become financially literate, read good books on investing and stick to a boring, diversified investment strategy. That’s less exciting than gambling, but it’s the right way, the calm and intelligent way.

😴 What might help you find calm

Intentional ASMR Picks:

💎 Hidden Gem:
Here’s another haircut roleplay I enjoyed by KB Kid ASMR – pretty basic, but it worked well for me!

Unintentional ASMR Picks: