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Look, it's great that you managed to be one of the people who came out ahead in all of this. But while you personally have seen some success so far, it's impor
by stouset 6y ago
Look, it's great that you managed to be one of the people who came out ahead in all of this.
But while you personally have seen some success so far, it's important to recognize that overall this is a transfer of wealth from people in your financial situation to the wealthy. The fact that this one situation is so incredibly newsworthy should be strong evidence of how unlikely such successes are in practice.
Further, a lot of the people holding on to $GME right now will be caught holding the bag once the selloff begins. Once the reversion happens, there won't be buyers willing to take this rapidly-pluging asset at every price point along the way. Certainly some people will get out at sky-high prices, but the overwhelming majority will be left holding a $10 asset they purchased at $400+.
> I made >40% of my network in the first 2 weeks of January alone...
Only if you've sold. And if you haven't, I do genuinely hope that you're one of those who manages to get out in time. But even if you are, it's important to realize that the eventual winners of this scenario aren't going to be the Redditors holding on to $GME shares, but the wealthy short-sellers who manage to either predict the pop or simply have enough assets to hold on long enough for it to happen.
> I have literally nothing to lose.
No, you had 4 digits of net worth to lose. And while that might not seem like "much", it's quite literally not nothing. And while you've been fortunate to win on this play, the statistics are pretty clear that plays like this keep more poor people poor than make the poor rich.
> Keeping track of my bets even before getting into this, I was right more often than not, and I am aware of survivorship bias and confirmation bias. In the limit, it makes more sense to spend 4-5 hours per day learning about market analysis, observing trends close to me and making decisions about sectors/fields that I know about.
First off, compare your plays to overall market returns, not to net-zero. Your benchmark over the past five years should be something around +90% (about 14% YoY returns). Actually, you need to be a little better due to trading expenses and (in the U.S. at least) short-term capital gains tax raets vs. long-term gains.
Second, it's astonishingly easy to be profitable when the overall market is having record returns. The trick is not losing your shirt when the market goes upside down, and everyone thinks that part is going to be much easier than it really is in practice.
In sum, I genuinely wish you luck, but I'm sadly all too aware that the statistical reality is that spending 4-5 hours per day learning about market analysis and making trades based on your findings is overwhelmingly more likely to leave you poorer than richer.
You can find people who've become rich betting it all on black at the casino, but that money didn't come from the house. It's just redistributing funds from all of the other suckers at the table, while the casino takes home the real winnings.
- Judgmentality 6y ago> But even if you are, it's important to realize that the eventual winners of this scenario aren't going to be the Redditors holding on to $GME shares, but the wealthy short-sellers who manage to either predict the pop or simply have enough assets to hold on long enough for it to happen. What the hell are you talking about? The short sellers are literally losing tens of billions of dollars, and I believe they are going to lose several times more within the next week. The short sellers are overleveraged right now, and unless they find some bullshit way to fuck everybody (people are switching away from RobinHood in droves) then they are going to not just lose more money, but go insolvent. I don't know what's going to happen, and rumors are Melvin is about to get a giant capital infusion, but it really seems like the short sellers are the ones that are fucked and believing otherwise is ignoring data and simply assuming nothing ever changes. The fact that they're doubling down is a sign of desperation, not strength. It's like saying Lehman Brothers can never lose money in 2008.
- stouset 6y ago> What the hell are you talking about? The short sellers are literally losing tens of billions of dollars, and I believe they are going to lose several times more within the next week. Yes, Melvin is losing their shirts. But if you accept that the price is going to go down, and sharply at that, then somebody is going to make an absolute killing here from a short position when the price inevitably craters. And that amount will utterly dwarf the gains from WSB redditors, mostly coming at their expense. There’s orders of magnitude more money to be made today shorting $GME at $400 than there was shorting it at $20.
- Judgmentality 6y ago> There’s orders of magnitude more money to be made today shorting $GME at $400 than there was shorting it at $20. There's also orders of magnitude more money to be lost, because there's just more money on the table. At the end of the day it's a bet based on assumptions. A month ago everybody that was investing in GME was told the same thing by people that wanted to short it. The market can remain irrational longer than you can remain solvent.