2020 was a year many of us will likely remember, but it’s also a year that many of us would rather forget. 2021 is already shaping up to be another memorable year and the first two months have been anything but dull. Most recently, a fairly unremarkable company, GameStop, became a household name overnight, kicking off the next wave of headlines and reaching a global audience.
Retail investors moved against Wall Street in what has been billed as a modern-day David versus Goliath. Reddit users piled into shares of GameStop, spurring it to greater heights as they punished hedge fund short sellers, costing them Billions. Amplified further by mainstream media coverage, amateur investors and mass interest brought even more cash to bear, adding fuel to the fire. Just over a month later the dust continues to settle. There are still numerous questions, however, one thing seems certain. Fortunes were made and fortunes were lost.
Feeling the Effects of the GameStop Surge
Congress is set to hold hearings on the events surrounding the meteoric rise of GameStop (and its subsequent fall). A fixture on the r/wallstreetbets subreddit, Keith Gill, is now the defendant in a proposed class action lawsuit alleging securities fraud, and around 90 lawsuits have been levied against online trading app, Robinhood. All this while GameStop sits at $40.69, having shed over $30 Billion from its all-time high of $483 on January 28th. Many of these fresh loses have been absorbed by the very retail investors that put the squeeze on Wall Street only a few short weeks earlier. More and more we hear of people facing a far bleaker financial outlook, having taken large loses. Rent checks gone. IRA balances slashed. Savings lost. Some have taken their experience to heart, a lesson to be remembered. Others still have trouble reconciling the events that led them down this path, leading some to have sworn off investing entirely.
Unfortunately, I don’t think we can call this investing. At least not investing responsibly. Speculating? Definitely. Fear of missing out? Sure. Gambling? Why not. For some, that’s part of the thrill. Willing to take the big risks and put it on the line for the big payday. The fast buck. For the rest of us? We’ll invest for our futures. For our retirement. For our long-term goals. We’ll invest with purpose and with a plan, controlling what we can and minimizing the risk of what we can’t. Letting evidence guide us, not emotion and irrational behavior.
Sometimes slow and steady really does win the race, or at the very least get us where we want to go without crashing and burning along the way. Contact Claris to see how our investment approach is designed to help you understand, invest and relax.