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Eh, frankly, I think that does a disservice to the people buying the stock. Were a bunch of people buying into the meme stock hype? Sure. Does that make them

Eh, frankly, I think that does a disservice to the people buying the stock. Were a bunch of people buying into the meme stock hype? Sure. Does that make them financially illiterate? Well, the folks who bought Hertz sure look pretty damn smart in hindsight even though at the time they were being described in similar ways, so... who's to say if they are illiterate or just have a different view of value and risk?

dragontamer 3y ago
You can be right for the wrong reasons. You can be wrong for the right reasons. You can be right for the right reasons, you can be wrong for the wrong reasons. The problem with being "right for the wrong reasons", is that your logic fails to apply to future situations. The "wrong reasons" in this case, is the obvious ego-tickling / ha ha the other people were wrong that's obviously intrinsic to the gambling / meme stonk trading culture. I'm sure it feels good when you're right for the wrong reasons, but I don't think it leads to long term success. ("Royal You", not you in particular, if you don't mind). But yes, it does feel good to be a contrarian and win due to dumb luck. But I'm not sure how many times "Hertz" situations will pop up in the future. I think this ego-tickling / contrarian mindset is at the root of this behavior, at least based on the discussions I have in my social circle / meme stock traders I'm aware of. ----------- There's also "wrong for the right reasons", which is my preference in general. You generally want to be wrong today, if it means that your logic holds for most future cases.
- jraby3 3y ago
  A simpler way to say this is you can have a correct bet and a bad outcome and an incorrect bet and a good outcome. If I were to offer you $1 for heads and $3 for tails and you chose heads and lost, I’d win the bet but it’s still a bad bet.
  - lcnPylGDnU4H9OF 3y ago
    Sounds like I was wrong for the wrong reasons too. (I lose the bet and it was a bad bet.)
jandrese 3y ago
Just because a risky behavior works out sometimes doesn't make it any less risky.
- BaseballPhysics 3y ago
  I never said it wasn't risky. I'm saying it's unfair to assume it's proof someone is "financially illiterate", i.e. uneducated or stupid. Educated people can have different assessments of risk.
  - itsoktocry 3y ago
    >I'm saying it's unfair to assume it's proof someone is "financially illiterate", i.e. uneducated or stupid. Assume, sure. But you could follow along on Twitter or StockTwits and see why many of these people were buying Hertz. That's the beauty of modern times. I certainly didn't see many doing risk analysis, it was mostly "Burn the shorts!". And, many people bought all the way down from $20 to get an $8 payout.
  - dragontamer 3y ago
    BBBY was publicly in default in December 2022 (and this was announced to the world in January 2023), and their plan to get out of it was to print hundreds-of-millions of shares and sell it to the APES to raise money a-la AMC. As much as the APEs want to compare this even to Hertz... Hertz wasn't printing hundreds-of-millions of shares in its troubled time in 2020. (They tried to, but unlike today, a judge shut that attempt down). ---------- So on the question of "what if the apes just pump the stock up and everyone makes money?". The "financially literate" counter to that question is rather simple: how can the stock price go up if the board of directors is printing 600,000,000 new shares? (Note: BBBY only had 117-million shares in December). If the stock price fails to go up, why would the apes keep investing? If the apes fail to invest, how does BBBY get out of its default with JP Morgan/Chase? And here we are today, with the formal bankruptcy being filed. It was an attempt (IMO, an immoral attempt) to get money, but it did raise ~$700 million from the apes. But that's not enough to rescue BBBY. --------- Now this is where Hertz did well by the way, after the bankruptcy. If you really want to gamble "like people did with Hertz", today is the day, post-bankruptcy filing, that you start sinking your money into this stock. I don't recommend it though.
steveBK123 3y ago
Yes it does. Just because someone does inevitably win the lottery does not make lottery ticket buying financially literate & savvy.
- BaseballPhysics 3y ago
  It's ironic that you make that comparison, as a lot of very very financially literate people buy lottery tickets because they know they're taking a risk, they know the probabilities, and they still do it because it's fun. For the same reason, some of the most brilliant minds out there gamble on games of chance, or engage in sports betting, or other high risk activities. Just because someone takes a risk that you would not take, doesn't mean they're financially illiterate, and certainly you are not in a place to judge one way or the other. Edit: And as an aside, I can speak to this with some personal experience, as on a lark I threw a bit of money at GME back in the day. Not a lot! Certainly no more than I could afford to lose (and I assumed going in that I would lose it). It was a rollicking good time as I followed the hype cycle on Reddit and whatnot. And in the end I 5x'd my bet. I don't for a second believe that was anything but dumb luck. And you won't find me running around finding new meme stocks to chuck money at. But I certainly enjoyed myself! So does that make me financially illiterate?
  - dragontamer 3y ago
    No. It makes you a gambler. And gamblers don't usually make money, because they're in it for entertainment rather than making money, saving money, or providing for their families. Believe it or not, investing is an activity that, under the correct circumstances, leads to the benefit of the investor, the company, and the economy in general. I personally seek this behavior that's beneficial to society in general (and its non-zero sum: I trade liquidity that I have today for the promise of modest future gains). Like 5%/year (aka, the current FFR / risk free rate) to 15%/year on the riskier bets on good years. People looking for returns much larger than 5% to 15%/year today are gambling. That's just not the speed at which companies grow, so you're betting that other people have undervalued a company, or you're betting on a "Greater fool" swooping in to rescue you. You're not betting on the underlying mechanisms that lead to economic growth.
deleted 3y ago
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rchaud 3y ago
> who's to say if they are illiterate or just have a different view of value and risk? When their opinions come exclusively from an echo chamber, there's effectively no difference. Visit r/BBBY and you'll find plenty who are ready to hold the stock all the way through BK.
deleted 3y ago
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0x457 3y ago
I mean...those people call themselves degenerate gamblers. It's precisely what it is - a gamble. Premium for calls is cheap, so dumping some cash into $1 calls was basically free. There are some examples that aren't gambles - Movie Pass, you have to be not just financially illiterate, you have to be illiterate to invest in it. BBBY is probably just Hertz FOMO though.

dragontamer 3y ago

You can be right for the wrong reasons. You can be wrong for the right reasons. You can be right for the right reasons, you can be wrong for the wrong reasons. The problem with being "right for the wrong reasons", is that your logic fails to apply to future situations. The "wrong reasons" in this case, is the obvious ego-tickling / ha ha the other people were wrong that's obviously intrinsic to the gambling / meme stonk trading culture. I'm sure it feels good when you're right for the wrong reasons, but I don't think it leads to long term success. ("Royal You", not you in particular, if you don't mind). But yes, it does feel good to be a contrarian and win due to dumb luck. But I'm not sure how many times "Hertz" situations will pop up in the future. I think this ego-tickling / contrarian mindset is at the root of this behavior, at least based on the discussions I have in my social circle / meme stock traders I'm aware of. ----------- There's also "wrong for the right reasons", which is my preference in general. You generally want to be wrong today, if it means that your logic holds for most future cases.

jraby3 3y ago
A simpler way to say this is you can have a correct bet and a bad outcome and an incorrect bet and a good outcome. If I were to offer you $1 for heads and $3 for tails and you chose heads and lost, I’d win the bet but it’s still a bad bet.
- lcnPylGDnU4H9OF 3y ago
  Sounds like I was wrong for the wrong reasons too. (I lose the bet and it was a bad bet.)

jandrese 3y ago

Just because a risky behavior works out sometimes doesn't make it any less risky.

BaseballPhysics 3y ago
I never said it wasn't risky. I'm saying it's unfair to assume it's proof someone is "financially illiterate", i.e. uneducated or stupid. Educated people can have different assessments of risk.
- itsoktocry 3y ago
  >I'm saying it's unfair to assume it's proof someone is "financially illiterate", i.e. uneducated or stupid. Assume, sure. But you could follow along on Twitter or StockTwits and see why many of these people were buying Hertz. That's the beauty of modern times. I certainly didn't see many doing risk analysis, it was mostly "Burn the shorts!". And, many people bought all the way down from $20 to get an $8 payout.
- dragontamer 3y ago
  BBBY was publicly in default in December 2022 (and this was announced to the world in January 2023), and their plan to get out of it was to print hundreds-of-millions of shares and sell it to the APES to raise money a-la AMC. As much as the APEs want to compare this even to Hertz... Hertz wasn't printing hundreds-of-millions of shares in its troubled time in 2020. (They tried to, but unlike today, a judge shut that attempt down). ---------- So on the question of "what if the apes just pump the stock up and everyone makes money?". The "financially literate" counter to that question is rather simple: how can the stock price go up if the board of directors is printing 600,000,000 new shares? (Note: BBBY only had 117-million shares in December). If the stock price fails to go up, why would the apes keep investing? If the apes fail to invest, how does BBBY get out of its default with JP Morgan/Chase? And here we are today, with the formal bankruptcy being filed. It was an attempt (IMO, an immoral attempt) to get money, but it did raise ~$700 million from the apes. But that's not enough to rescue BBBY. --------- Now this is where Hertz did well by the way, after the bankruptcy. If you really want to gamble "like people did with Hertz", today is the day, post-bankruptcy filing, that you start sinking your money into this stock. I don't recommend it though.

steveBK123 3y ago

Yes it does. Just because someone does inevitably win the lottery does not make lottery ticket buying financially literate & savvy.

BaseballPhysics 3y ago
It's ironic that you make that comparison, as a lot of very very financially literate people buy lottery tickets because they know they're taking a risk, they know the probabilities, and they still do it because it's fun. For the same reason, some of the most brilliant minds out there gamble on games of chance, or engage in sports betting, or other high risk activities. Just because someone takes a risk that you would not take, doesn't mean they're financially illiterate, and certainly you are not in a place to judge one way or the other. Edit: And as an aside, I can speak to this with some personal experience, as on a lark I threw a bit of money at GME back in the day. Not a lot! Certainly no more than I could afford to lose (and I assumed going in that I would lose it). It was a rollicking good time as I followed the hype cycle on Reddit and whatnot. And in the end I 5x'd my bet. I don't for a second believe that was anything but dumb luck. And you won't find me running around finding new meme stocks to chuck money at. But I certainly enjoyed myself! So does that make me financially illiterate?
- dragontamer 3y ago
  No. It makes you a gambler. And gamblers don't usually make money, because they're in it for entertainment rather than making money, saving money, or providing for their families. Believe it or not, investing is an activity that, under the correct circumstances, leads to the benefit of the investor, the company, and the economy in general. I personally seek this behavior that's beneficial to society in general (and its non-zero sum: I trade liquidity that I have today for the promise of modest future gains). Like 5%/year (aka, the current FFR / risk free rate) to 15%/year on the riskier bets on good years. People looking for returns much larger than 5% to 15%/year today are gambling. That's just not the speed at which companies grow, so you're betting that other people have undervalued a company, or you're betting on a "Greater fool" swooping in to rescue you. You're not betting on the underlying mechanisms that lead to economic growth.

deleted 3y ago

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rchaud 3y ago

> who's to say if they are illiterate or just have a different view of value and risk? When their opinions come exclusively from an echo chamber, there's effectively no difference. Visit r/BBBY and you'll find plenty who are ready to hold the stock all the way through BK.

deleted 3y ago

[deleted]

0x457 3y ago

I mean...those people call themselves degenerate gamblers. It's precisely what it is - a gamble. Premium for calls is cheap, so dumping some cash into $1 calls was basically free. There are some examples that aren't gambles - Movie Pass, you have to be not just financially illiterate, you have to be illiterate to invest in it. BBBY is probably just Hertz FOMO though.