Friday we witnessed an unprecedented short squeeze. The biggest short squeeze of any stock ever. So big in fact trading was halted for the session. This was in response to Citron Research. A famous short seller. Unfortunately for them, they barked up the wrong tree. And 2 Million motivated people rallied behind showing what they can do when they act as one. And they shocked the world. r/WallStreetBets members bought call options of GameStop in a targeted effort to pump the stock. Pump they did indeed.
GameStock stock skyrocketed +78%. At the closing bell, it was +50% up. And the media tough it is all over. Surely they all ran out of money. Oh, how wrong they were.
The Second GameStop Squeeze.
As I’m writing this GameStop stock is up pre-market. A cool 50% to nearly $100. Not to gloat, but I did predict the second squeeze in my article here. It was easy to see. Redditors only were encouraged more. Motivated, empowered, and feeling a million bucks. A plucky “little” group defeating the evil shorts. Plus of course the fact their portfolios are up massively.
Why I Am Cheering For r/WallStreetBets.
The reason is simple. Shorts are awful. And people are fed up. Shorting a stock is hoping for failure. Also when someone has a vested interest in something happening. They act on it. Spreading a negative narrative. Cherrypicking numbers from financial results to make the company look bad. We have seen this many times. With Amazon stock and Tesla. For years these stocks were suppressed. Manipulation and deception is the name of the game for a short. Jim Chanos, David Einhorn, Gordon “Genious” Johnson to name a few. And with Tesla, these basement-dwelling creatures actually tried to bankrupt the company. Leaking information to disrupt and suppress the facts. In the end, Elon Musk won. And TeslaQ lost all. The same is happening with Citron Research.
Plus let’s consider the upside. When you’re long on a stock the upside is infinite. Meaning the stock can go up forever. With shorting is a different story, The stock can only fall to 0. If it is at $10 and goes to 0. You have 10x your capital. But it cannot go negative. Unlike going long which can 10x, 100x or more your initial investment.
God Speed WallStreetBets. We Love You.
Do you want to Invest in Stocks or Crypto? But you don’t know what to invest in. Check out the real returns of 11 of the most popular assets here. Plus a free investment calculator.