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To be honest, this is kind of the problem I have to stock investing as a whole. It sounds great to "invest on the fundamentals", but there doesn't appear to be

To be honest, this is kind of the problem I have to stock investing as a whole. It sounds great to "invest on the fundamentals", but there doesn't appear to be a way for the average person to even comprehend what "the fundamentals" even are. But there has to be at least one fundamental: If the company goes bankrupt, the stock is worth nothing. Gamestop is most certainly going to go bankrupt eventually. Their business model doesn't work for today's market. No one is going to convince me that GameStop has a way to avoid that eventuality.

Quekid5 6y ago
> "fundamentals" You're right to call this out. It means absolutely nothing. These massive hedge funds (etc.) throw around billions of dollars on a whim and suddenly they're worried about "fundamentals"? C'mon.
tootie 6y ago
You can literally just look at the P/E ratio and the yield on google finance. 50 years ago that was all you needed to know.
pishpash 6y ago
"Gamestop" is a string of letters. Unless it has a pile of unrestructurable liabilities, what's forcing it to become bankrupt vs. being a startup?
- adolph 6y ago
  Probably its directors, who would probably be part of a startup if it was in their nature. As a director of GameStop they likely have other fine competencies suitable for running a large reseller org.
- tartoran 6y ago
  It’s its management. Gamestop wasnt able to catch up with the times and a pile of money won’t help them. The model isn’t vaible anymore and if they pivot into something else they may as well change the name as it would be irrelevant. A start up experiences most progress when they’re small and nimble. I assume Gamestop as a corp has accumulated a lot of cruft and that would hold them back.
  - fma 6y ago
    Speaking of management...Ryan Cohen, founder of Chewy.com is a recent heavy investor in Gamestop. Pretty sure he knows a thing or two about startups and he wouldn't be pouring in money into it if he felt it's hopeless.
x3sphere 6y ago
That's why most people should just stick to index funds.
- erikbye 6y ago
  If they get out before crashes. Otherwise you could end up at zero again after being in for a decade. Maybe that was timed just with your retirement when you were about to make use of your now vanished gains.
  - joncrane 6y ago
    The value of a big index fund going to zero is so inconceivable as to be hardly worth considering. That would mean that ALL 500 of the US' largest companies by market cap all go completely bankrupt WITHIN ONE CALENDAR YEAR. I think if atomic bombs were to destroy the 50 largest cities in the USA, that this wouldn't happen. There would still be enough economic activity in enough of the 500 companies to justify some price above zero. So the scenario would literally be the apocalypse. The kind of apocalypse where the US dollar has zero value. The kind of apocalypse where the amount of money in a brokerage account would not even be on the top 100 list of things a human would be worried about. Even losing 90% of value would be an event so unprecedented in magnitude that it would make anthropomorphic climate change seem like a footnote in history.
    - erikbye 6y ago
      Sorry, to clarify: I meant end up at zero gain, not zero as in loss. So instead of losing money, it would just be not having gained anything in 10 years, which is not that unlikely, and has happened. Ask me, that is 10 years of potential profit loss, had you invested differently.
PeterisP 6y ago
A trivial (not necessarily smart or optimal, but possible) way for GameStop to avoid that eventuality is to liquidate; close down the business and sell off all the assets - that wouldn't be a bankruptcy, they have more than enough cash and assets to cover their debts, so they would have a nonzero amount of cash left over to distribute to the shareholders. In essence, you're correct that if the company goes bankrupt, the stock is worth nothing, but you make a mistaken assumption in that a company without a viable business model or future profit must go bankrupt - if they have an asset base, they can restructure or shut down long before their accumulated wealth is spent.
- PartiallyTyped 6y ago
  You think of what GameStop was, not what it is becoming. Chewy's Founders and now board members are obviously not in the business of losing money, they bought a sizeable portion of the stock and are now members of the board. GME has been transitioning to e-commerce (this is where Ryan Cohen and the new board comes in), where they tripled their sales (e-commerce) each year. In addition, one of the board members is owner of Cloud9, an e-sports company. I suspect that this could enable GME shops to organize events/tournaments, another idea is to play the same role sports pubs do, but adjusted for e-sports.
  - gnosis89 6y ago
    this is exactly what I've been thinking...Gamestop has over 5,000 physical locations across the country...this is an extremely valuable resource that if utilized correctly could turn them into a hugely successful empire again...Esports is still in its infancy but it's already a billion dollar market...even better...why not partner with AMC, another entity in this WSB movement that is failing and also has many locations with huge screens, sound systems, and seating...perfect for esports or some kind of AR/VR setups, IDK, if these CEO's can use their imaginations there's many paths they could try...
- mlrtime 6y ago
  In that case the stock price would simply be assets-liabilities.
chordalkeyboard 6y ago
To put it bluntly, this is because of the Federal Reserve. Fundamentals refers to the ability to generate a steady return of profit. This goes back to Graham and Dodd, “value investing” (“the intelligent investor” and “security analysis”) and the perspective of a long term investor where all investments are fungible according to their risk adjusted rate of return. But since the government can’t fund itself on revenue, but relies on the central bank printing money, all this new currency flows into the economy and into the stock portfolios of the upper classes, which inflates the price of the stock faster than the business can generate a profit. Which means all the old value investing stuff doesn’t tell you how to make the most money anymore. So the “fundamentals” have changed and no one knows exactly what they are.
- jjeaff 6y ago
  If the government was funding itself on printed money, we wouldn't see that massive debt clock ticking ever upward. In other words, the government is partly running on borrowed money. There is some level of money being printed to buy some of that debt, but that is in more severe cases like recently.
bumblelad 6y ago
At a certain price, fundamentals do actually matter. This is the price discovery phase of a company that's not really well known. The issue is that at current prices, speculation and forward thinking far outpace any value one could derive from analysis of fundamentals. A very successful strategy is momentum trading. Technical/Trend Analysis is all about understanding momentum trading, and at what entries and stops algorithms set up their strategies.
fma 6y ago
Fundamentals isn't everything and is really a way that wallstreet has brainwashed people to invest in companies that provide no returns on their investment. As an extreme case, a biotech company with no sales, no profits, no approved drugs and sinking money into R&D is still worth something, and can be worth a lot. On a more practical case, if you'd preferred to have invested in Intel on "fundamentals" instead of AMD because INTC has 10x more sales...then go ahead. But you should know, 1 stock went sideways for 3 years and another is up 750%. And Chamath Palihapitiya said it best when he was on CNBC...who got the TSLA investment wrong? Hedge funds. Who got it right? Retail investors.
jmalicki 6y ago
If the stock is worth a lot, they can sell more to raise cash, to pay off any debtors, and close all the stores. Then GameStop is just a corporation sitting on a large bank account.

Quekid5 6y ago

> "fundamentals" You're right to call this out. It means absolutely nothing. These massive hedge funds (etc.) throw around billions of dollars on a whim and suddenly they're worried about "fundamentals"? C'mon.

tootie 6y ago

You can literally just look at the P/E ratio and the yield on google finance. 50 years ago that was all you needed to know.

pishpash 6y ago

"Gamestop" is a string of letters. Unless it has a pile of unrestructurable liabilities, what's forcing it to become bankrupt vs. being a startup?

adolph 6y ago
Probably its directors, who would probably be part of a startup if it was in their nature. As a director of GameStop they likely have other fine competencies suitable for running a large reseller org.
tartoran 6y ago
It’s its management. Gamestop wasnt able to catch up with the times and a pile of money won’t help them. The model isn’t vaible anymore and if they pivot into something else they may as well change the name as it would be irrelevant. A start up experiences most progress when they’re small and nimble. I assume Gamestop as a corp has accumulated a lot of cruft and that would hold them back.
- fma 6y ago
  Speaking of management...Ryan Cohen, founder of Chewy.com is a recent heavy investor in Gamestop. Pretty sure he knows a thing or two about startups and he wouldn't be pouring in money into it if he felt it's hopeless.

x3sphere 6y ago

That's why most people should just stick to index funds.

erikbye 6y ago
If they get out before crashes. Otherwise you could end up at zero again after being in for a decade. Maybe that was timed just with your retirement when you were about to make use of your now vanished gains.
- joncrane 6y ago
  The value of a big index fund going to zero is so inconceivable as to be hardly worth considering. That would mean that ALL 500 of the US' largest companies by market cap all go completely bankrupt WITHIN ONE CALENDAR YEAR. I think if atomic bombs were to destroy the 50 largest cities in the USA, that this wouldn't happen. There would still be enough economic activity in enough of the 500 companies to justify some price above zero. So the scenario would literally be the apocalypse. The kind of apocalypse where the US dollar has zero value. The kind of apocalypse where the amount of money in a brokerage account would not even be on the top 100 list of things a human would be worried about. Even losing 90% of value would be an event so unprecedented in magnitude that it would make anthropomorphic climate change seem like a footnote in history.
  - erikbye 6y ago
    Sorry, to clarify: I meant end up at zero gain, not zero as in loss. So instead of losing money, it would just be not having gained anything in 10 years, which is not that unlikely, and has happened. Ask me, that is 10 years of potential profit loss, had you invested differently.

PeterisP 6y ago

A trivial (not necessarily smart or optimal, but possible) way for GameStop to avoid that eventuality is to liquidate; close down the business and sell off all the assets - that wouldn't be a bankruptcy, they have more than enough cash and assets to cover their debts, so they would have a nonzero amount of cash left over to distribute to the shareholders. In essence, you're correct that if the company goes bankrupt, the stock is worth nothing, but you make a mistaken assumption in that a company without a viable business model or future profit must go bankrupt - if they have an asset base, they can restructure or shut down long before their accumulated wealth is spent.

PartiallyTyped 6y ago
You think of what GameStop was, not what it is becoming. Chewy's Founders and now board members are obviously not in the business of losing money, they bought a sizeable portion of the stock and are now members of the board. GME has been transitioning to e-commerce (this is where Ryan Cohen and the new board comes in), where they tripled their sales (e-commerce) each year. In addition, one of the board members is owner of Cloud9, an e-sports company. I suspect that this could enable GME shops to organize events/tournaments, another idea is to play the same role sports pubs do, but adjusted for e-sports.
- gnosis89 6y ago
  this is exactly what I've been thinking...Gamestop has over 5,000 physical locations across the country...this is an extremely valuable resource that if utilized correctly could turn them into a hugely successful empire again...Esports is still in its infancy but it's already a billion dollar market...even better...why not partner with AMC, another entity in this WSB movement that is failing and also has many locations with huge screens, sound systems, and seating...perfect for esports or some kind of AR/VR setups, IDK, if these CEO's can use their imaginations there's many paths they could try...
mlrtime 6y ago
In that case the stock price would simply be assets-liabilities.

chordalkeyboard 6y ago

To put it bluntly, this is because of the Federal Reserve. Fundamentals refers to the ability to generate a steady return of profit. This goes back to Graham and Dodd, “value investing” (“the intelligent investor” and “security analysis”) and the perspective of a long term investor where all investments are fungible according to their risk adjusted rate of return. But since the government can’t fund itself on revenue, but relies on the central bank printing money, all this new currency flows into the economy and into the stock portfolios of the upper classes, which inflates the price of the stock faster than the business can generate a profit. Which means all the old value investing stuff doesn’t tell you how to make the most money anymore. So the “fundamentals” have changed and no one knows exactly what they are.

jjeaff 6y ago
If the government was funding itself on printed money, we wouldn't see that massive debt clock ticking ever upward. In other words, the government is partly running on borrowed money. There is some level of money being printed to buy some of that debt, but that is in more severe cases like recently.

bumblelad 6y ago

At a certain price, fundamentals do actually matter. This is the price discovery phase of a company that's not really well known. The issue is that at current prices, speculation and forward thinking far outpace any value one could derive from analysis of fundamentals. A very successful strategy is momentum trading. Technical/Trend Analysis is all about understanding momentum trading, and at what entries and stops algorithms set up their strategies.

fma 6y ago

Fundamentals isn't everything and is really a way that wallstreet has brainwashed people to invest in companies that provide no returns on their investment. As an extreme case, a biotech company with no sales, no profits, no approved drugs and sinking money into R&D is still worth something, and can be worth a lot. On a more practical case, if you'd preferred to have invested in Intel on "fundamentals" instead of AMD because INTC has 10x more sales...then go ahead. But you should know, 1 stock went sideways for 3 years and another is up 750%. And Chamath Palihapitiya said it best when he was on CNBC...who got the TSLA investment wrong? Hedge funds. Who got it right? Retail investors.

jmalicki 6y ago

If the stock is worth a lot, they can sell more to raise cash, to pay off any debtors, and close all the stores. Then GameStop is just a corporation sitting on a large bank account.