Episode 111: The Story Behind GameStop Stock

Today’s Prep:

Wondering what happened with GameStop and why it matters? David shares the details behind what happened and what made it into such a big deal.

(Click the featured times below to jump forward in the episode)

Equipping Points:

What just happened with GameStop, causing a wild week on Wall Street? Today on the podcast, David gives an explanation of what GameStop is, why its stocks soared, and what we can learn from the situation.

Do you know what GameStop is? The company essentially buys and sells video games in brick-and-mortar stores all over the country. At the beginning of January, its stock cost about $17. What happened from there?

Following a post on a Reddit board notifying others of a short stock on GameStop, masses of people bought up shares, driving up the price. By the end of January, the stocks were up to $514 a share! What happened to the hedge funds that sold the short? Who is responsible for the short squeeze? Who was hurt by the situation? How will government regulations be changed moving forward?

What other companies were shorted next? From Bed, Bath & Beyond to AMC, a number of other stocks were being shorted, but then platforms like Robinhood stopped allowing trades to happen. Why did that happen? Was it with malicious intent?

Remember, trading is not investing. You shouldn’t trade retirement money, only trade your fun money. Does David pick individual stocks? How does he approach the market? How does investing differ?

If you want to learn about true investing and saving for retirement, be sure to reach out to a financial advisor to create a financial plan and strategy.

Listen to the entire episode or click on the timestamps below to skip to a particular segment.

[0:29] – David shares what part of the country he’s visiting right now.

[2:29] – What lessons can be learned from GameStop?

[6:44] – What does Reddit and GameStop have to do with a short stock?

[10:18] – What made this become a big story in the news?

[14:54] – GameStop was only the beginning.

[18:47] – Were any of David’s clients impacted by that market volatility?

Today’s Takeaway:

You buy shares of stock all the time, but you almost never sell short because it’s speculative trading, it’s really not investing. And it can be super high risk.”

– David Dickens

Additional Resources:

PODCAST: Financial Resolutions – Answering Your Questions

PODCAST: SLY – Safety, Liquidity, and Yield

PODCAST: Millennials In Retirement

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The host: David Dickens

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