today is going to be the last post for a while, hopefully where I'm talking about sort of the state of the general stock market because it seems like almost every social media case, including those who are not interested in the stock market talked about GameStop Stock (GME Stock).
But I have been doing a lot of thought over the weekend and I have come to the conclusion that I am becoming more and more concerned about the typical new investor who has just gotten interested in the stock market, so I want to talk about what I've been thinking about in today's post.
When it comes to the similarities that can be made between the extreme momentum we've seen in the stock market and something that has probably happened to a lot of people in the past few years, I have to admit that I'm not a licensed financial planner, and that's not.
financial advice anything here in this video is just me giving my own opinions on the stock market and you need to do your own research for making any investment decisions so before people just go and automatically hit the dislike button because I’m saying oh you know these stocks are not going to be staying this high forever just hear me out.
The point of my making this article was to try to get people my age excited about investing in the stock market because the more you invest in the stock market with people who have been doing their research, I'm very pleased that people make a lot of money because they're kind of quote-unquote sticking it to the man I think it's all brilliant.
The more successful you are going to be because there will be compounded interest and time on your side and so I'm so happy when I log on to the app store and I see that it's so exciting right now that the Robinhood app is the top free app on the app store. The problem is what I've seen is that the GameStop Stock (GME Stock) AMC Stock has been handled by people (AMC Stock).
In a multi-level marketing scheme, a blackberry situation more like a pyramid structure where perhaps some girl you went to high school with will dm you instead of treating you like real investments and that kind of got me worried and then the idea of these pyramids games or multi-level marketing.
Schemes are where you're not buying into the real business you're buying in you're buying your own goods you're trying to sell to other people so that's how they get you to buy in, so you have things like essential oils when you look at these products they're pretty much useless.
I've seen some products like protein powder and caffeine, but the whole point is that it is Doesn't feel like you're buying a commodity into the system so that you can be your own boss that's sort of the concept of it and when I look at these stocks that are being purchased, It's just enterprises that are relatively useless when it comes to using the momentum plays.
They are pretty much worthless as compared to other big stocks in the stock market when they are, The stock price is now going down, and just kind of the difficulties the company has been having for the last year and a half and the stock has been declining for more than two years before this condition and the fair value have arisen.
I've seen GameStop Stock (GME Stock) sit about 18 to 20 dollars and being that we're sitting at $200 there's definitely a long way to go before we get to that point and it's important to worry about the company's fair valuation as we talk about the future floor of the situation after you buy into it, The way people make money off these goods is by getting other people interested with this method, so they have to purchase products from you or the business and they get a share on whatever they buy.
And it's sort of what we've noticed lately that when I made the article in another account back in December talking about why I thought GameStop Stock (GME Stock) was prepared for a short squeeze, you got the early on people who got in before the short squeeze occurred.
These are the persons who came in really early and it was when the business was Sitting about 15 to 20 bucks and then people who got in pretty early will make a lot of money and now the real short squeezes happen, it's all momentum-based dealing, because what it means is that people are going online and they're chatting about you to other people.
If's foolproof that you stick it to the guy they bring up buzzwords like short squeeze gamma things that they don't really understand, but they understand that people make money and the investment psychology has really taken over, and when I was in grade school this past summer I was taking a psychology class and I spoke a lot about it on this blog.
And in a few weeks or a few months, it's going to be really important to look back on this and see some of the telltale signals that people were exchanging based on feelings and the first one I see has to do with the FOMO's fear of losing out when people are posting online.
They kept thinking well you know like I said this can't go tits up implying that there's no chance this goes wrong and so people ended up buying it and then we have these individuals who are going on you to know Reddit Twitter dispute saying that this is a foolproof scheme that's sort of close to what we had with the high school kid.
That messages you on the DM's and says yeah you know you want to be your own boss here's how I made all this money it's a fantastic thing the challenge is that once the first domino falls it's all fun and games and that's when the whales end up leaving and so I used the word whale because the first instance we've seen so far of a momentum play that's kind of like that, a little bit backfired has to do with dogecoin.
Dogecoin is a cryptocurrency joke that deals quite cheaply, but has experienced rapid development in recent weeks with the traction of the online audience, The crypto grew in price exponentially and then sold off and because of that a lot of people get burned and while this is not you know a doomsday situation, there are definitely certain persons involved who invested at the top thinking that this is a foolproof game and for him it did not work. It's been bouncing back a bit.
And this is the first place where we've had this kind of bubble bursting, well, it didn't burst entirely, but inevitably the party will end for these businesses and although it seems like you know that these average people are in charge of the psychology and exchanging feelings will certainly take over for individuals who have made money at some point.
There's going to be the idea that either people are going to be extremely selfish and hold on for too long or they're going to sell and try to lock in gains and selling pressure is going to drive down the stock and because we have the caps on the amount of shares that these people will buy on websites such as the Robinhood app, it's going to make it really impossible for the price to remain too high for a while.
And now you have the economics of investors that are really new to the stock market and do not realize the psychological toll that you know may have a huge loss on you, so that's
About people moving forward, I'm very concerned and that's the entire reason I do homework on these firms all day long and try to help people care of the stock market differently.
Instead of just moving on to a video where some man is pumping up a penny stock that at that stage really has no excuse to be so big and so soon we're going to get a bubble coming up and it's going to be brutal because a lot of people are going to lose money and that's why I'm so concerned about these potential investors because before people start losing money, it's all fun and games.
And I'm concerned that if people lose money in a terrible way, they could lose 60 70 80 percent if they get near to the top, it's not going to make them want to invest In the future, in the stock market, when people got this thought in their heads Yeah, they should stick it to the guy.
When in fact this is an I'm not trying to tell once in a lifetime, they will have these amazing gains and once in a lifetime occurs far more than you really thought, but people think this is a chance you can't ignore because the entire premise of this essay is that I've been day trading I've lost a lot of cash.
And the first time you lose a lot of money, it really hurt, but I think losing is necessary, but I think losing in the right way is a good way to learn the lesson that I lost from day trading, I thought I was smarter than the general stock market, and I'm sure there are people out there right now who think they're smarter than Jim Cramer's big hedge funds.
And it spoke about how these hedge funds would take out their own kind when they smell blood in the water, and then there's all this online debate that the reason these hedge funds do so badly has to do with ordinary people like you and me, in fact, There are certainly some hedge funds in there who have learned that you know that citron or citadel are an insane rate of shorting game stop and they are seeking to make them go bankrupt, that's just part of the company's way.
Whenever they detect blood on the sea, they go after them and until these big shareholders or whales named in the world of cryptocurrencies step out of the business, they are set up, It would drastically drive down the stock or crypto, so check to check at this stage right now.
See what is in GameStop Stock (GME Stock) right now.
I saw it down a little bit this morning it's down 25% today so for any stock, besides a momentum based stock like a game stop this would be a huge move but for GameStop Stock (GME Stock) this is just kind of par for the course and so eventually this is going to pop.
That's for now thank you for Reading my article Love you all