GameStop And What A Billionaire Is Doing With His Money Show 36

The stock market was front and center in the news and on our social media feeds over the last week. Maybe you were confused by what was going on with GameStop, like some people who called me to ask for an explanation. I’ll break it down in simple terms. 

A hedge fund noticed that GameStop has been in decline for years and saw an opportunity to buy an option. The hedge fund was betting that GameStop would continue to struggle and they bought options accordingly.

Well, a website where people gather in an online community to discuss various topics has a forum where individuals share stock picking tips. They noticed what the hedge fund was doing and did not like it. 

The forum participants decided to buy GameStop stock. This was incredibly risky for these individual buyers. Buying individual stocks can be risky under normal circumstances, but what happened with GameStop came with even greater risk. The GameStop buyers wanted to drive the price up and cause the hedge fund to lose out. Somewhat miraculously these individual stock buyers were successful.

A hedge fund lost so much money they asked another hedge funding. Then many people were angered when several trading platforms began limiting trading of GameStop stock or not allowing it all. Congress began issuing statements on the issue. The political elite called for more regulations and even more taxes to remedy the situation.

Warren Buffett once said, “For investors as a whole, returns decrease as motion increases.” And that’s what we saw. The market experienced some minor gyrations that made some market participants nervous.

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If you have questions or would like to explore if tax reduction strategies are viable for your retirement accounts, please Click Here to schedule a quick call with me. Or if you have questions about anything I’ve covered here feel free to reach by calling 864.641.7955.
- David C. Treece

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