5 Fast Facts for Wisconsin’s Paychecks
February 3, 2021
Average Joes vs. Wall Street Pros!
DISCLAIMER: Futures, stocks, and options trading involves substantial risk of loss and is not suitable for every investor. The valuation of futures, stocks, and options may fluctuate, and, as a result, clients may lose more than their original investment.
Last week the big ole’ Hedge Fund Investors (professional investors worth billions) got the smackdown by some regular folks like you and me: The average Joes made GameStop stocks go through the roof. Here’s what happened and why it matters to regular-sized Wisconsin Paychecks.
- What started it? The big ole’ Hedge Fund investors were betting that GameStop’s value would go down. Why? They play a game (called short-selling) where they have to buy back certain stocks they sell, no matter the asking price. If that stock goes up they get taken to the cleaners!
- GameStop went from being worth $2 billion to $24 billion almost overnight! Savvy small-time investors used day-trading apps and coordinated online to buy so much GameStop that the stock’s worth went up 1,700%, making some of them really rich! Just for perspective, on Jan. 1st GameStop shares were $19 and on Wednesday Jan. 27th they were $348! The investment firms ended up losing billions of dollars within just a couple days - all because they were short-selling that stock!
- That messed with the market… which caused stock trading platforms to use their right to restrict trading GameStop since it might cause problems with the big bad regulators who make sure those platforms have enough money in the bank to cover their commitments. Many traders were upset by the move because it took away their choice to buy the stocks. As a result, GameStop shares fell to around $240 but the damage was already done!
- Just like a car crash, all this craziness attracted a crowd of Republican, Democrat, and business onlookers - Everyone from Elon Musk, Sen. Ted Cruz, and Representative AOC chimed in to give their opinions on the situation, voice their support for certain investors, or call for regulators to figure out all the details about what happened.
- Why should I care? Yeah, some regular folks made a ton of money; however, the main lesson is this: no matter how exciting trading might be, long-term investing is the safer route for regular-sized paychecks. It’s a great opportunity for us all to learn about the benefits of patiently and wisely investing for our future!
This week’s Facts are sponsored by Freespoke.com! Be sure to check them out. It’s a news website that allows you to sift through the news based upon political categories. So, you can easily see things from the politically left, center, and right perspectives, side-by-side at Freespoke! It’s a straight forward, no-nonsense, news website!