AND NOW THE HANGOVER…
In a Matter of Days, the Reddit gains are Gone
By Jon Aldrich
It sure was one heck of a party while it lasted, but like any big bash where you had the time of your life, you have to “Pay the Fiddler” in the morning. So it seems to be with the investors (if you can call them that) who jumped into the frenzy last week in GameStop AMC, Blackberry and other stocks that were in the throes of “Short Squeezes”.
GameStop is down 86% from its highs last week and several other stocks on the Wall Street Bets Reddit forum are being taken out to the woodshed as well. We knew it was going to end like this and was like watching a slow motion train wreck. Market bubbles always end in tears, and this appears to be no exception.
I was thumbing through the Wall Street Bets Subreddit and the tone has definitely changed. I saw stories of people who were proud to have emptied their 401k or put $200,000 or so into GameStop when they did this in the last couple of weeks. They are not feeling so hot right now and are really learning an expensive lesson. Maybe they should be bailed out like the big banks do when they make stupid bets?
Sure, there are a number of them that have probably done okay if they have sold their positions, and I know the Hedge Funds that they were out to get have exacted their revenge as I have seen stories of one Hedge Fund making $700 million on GameStop, and a number of others re-shorted in the $350 range and have made a killing on the ride back down to $66 or so, where it stands as I write this.
This saga may not yet be over, as it could possibly morph into other stocks that get driven up in price with future short squeezes. Will more people lose money when that happens? I guess we will see. The good thing is that this does not seem to have really affected the broad stock market and was just contained to this small pocket of troubled stocks.
I also heard that the fella that started Wall Street Bets sold the rights to his life story and we will likely be seeing a movie about this whole fiasco in the near future. Get your popcorn ready!