Why I’m Okay with Losing $5000 in the GameStop Frenzy
My investment thesis: Reddit says free money? I’m in!
I generally consider my self to be a pretty smart, thoughtful, deliberate person. Yet when Reddit’s r/WallStreetBets blew up, I almost couldn’t throw my money at GameStop fast enough.
Going into it, I conceptually knew that I should frame my investment as “tuition” to learn more about how the stock market works. In reality, though, I really thought I was just going to make a lot of sweet, sweet tendies (aka $).
I trust Reddit for thoughtful reviews from people that are a lot like me (20-something nerdy white males). For years, my first stop for advice has been googling “[advice] Reddit.” Just this morning, I wanted to make tomato soup for lunch and googled “tomato soup recipe Reddit” and found How to you make your tomato soup amazing? on r/Cooking. My tomato soup was, indeed, amazing.
When I heard about the GameStop squeeze and discovered the now infamous r/WallStreetBets, I thought I could apply that same level of trust. These were my people!
I became obsessed. Over the next two weeks, I scheduled morning Zoom calls with my friends to watch the market openings, checked the stock price between meetings at work, and read nearly every post top post on r/WallStreetBets all the way until I was setting my alarm to wake up the next day to do it all again. I was ready to ride this rocket ship 🚀 with my diamond hands 💎🙌 all the way to the moon 🌙
Reading what other parts of Reddit were saying about GME changed everything. Every time the stock dropped lower, all I had to do was wait a few hours for another “this is why it’s okay, keep holding!” post on WSB. But on r/Investing, for instance, they said things like “the squeeze might not happen” with honest discussion about it. Similar comments on WSB were downvoted to oblivion, with no real discussion. I realized I’d happily joined a deluded, confirmation-biased, circle jerking cult.
I paid the price. I bought a total of 20 GameStop shares at $300. After a dramatic rise and whirlwind of a ride, the price has now dropped to $40. I’ve lost $5200 in value.
But it’s okay. The concept of “free money” is inherently emotional, exciting and downright appealing; the exact things that make humans act irrationally. Only a painful, personal experience loss like this could instill the necessary skepticism required to evaluate claims of free money in the future. I’d rather learn that lesson now than when I have much more to lose.
Lessons that are tough to learn require equally tough experiences.
Anyway, you don’t lose money on an investment until you sell. Diamonds hands on my crashed rocket forever.
This is #2 of my personal Ship 20 for 20 challenge. Where I write one article every day for 20 days.
You can follow my journey on Twitter.
