Game Stop Yourself before it's Too Late

Updated February 2, 2021

Shares of Game Stop (GME) soared over 40% on Friday Jan. 29, only to drop over 30% on Monday Feb. 1, and then another 58% on Tuesday Feb. 2 to close at $94.78 per share. At one point last week, GME shared traded over $450 per share.

 

Investing in the stock market is, by nature, a risky proposition. And until very recently it is generally a game rigged to benefit those with the guts and financial heft to control the market, beat the spreads and exploit the little guy. But some very clever amateur investors have beaten some of the Wall Street bigshots at their own game, but buying and holding shares in small publicly traded coming with heavy short position n the stock. The list of these companies includes the the movies theater company AMC, but the most eye popping example is Game Stop, the video game retailer that sell video games from their store in shopping malls across the country. Game Stop (GME).

What is a Short Squeeze

A short squeeze occurs when the price of a stock jumps sharply higher, forcing traders with short positions to buy it in order to mitigate their losses. Their scramble to buy share only adds to the upward pressure on the stock's price and forces it higher. In the case of GameStop, this squeeze worked because the investor who had bought the shares earlier held on to the stock, even as it soared in value these past few weeks.

 

“It’s extreme capitalism gone wild. We’re a nation of gamblers.”

- Andrew Left from Citron Research

 

How Did This Happen?

Over the past year or so, amateur day traders have plowed into the market. Some saw opportunity after stocks tumbled last spring, some may have been suffering gambling withdraw when sport leagues shut down last spring. All this has been made easier by the free trades available through platforms like Robinhood and E-Trade.

Some of these overzealous amateurs are buying shares of Game Stop, but many are placing their own options bets the opposite side of the shorts, essentially doubling down and creating exponential pressure, and exponential risk. These bets involve contracts that give them the option to buy a stock at a certain price in the future. If the price rises, the trader can buy the stock for cheap and sell it for a profit. (In practice, many traders sell the options contract itself for a profit or loss instead of actually buying the shares.

game_stop_WSB

Why Did this Happen?

There are a confluence of factors that many say contributed to this phenomena and allowed this to happen. First, the pandemic has kept people locked up up at home an they've been studying research and have become day traders. Second, tools and apps like Robin Hood have made trading easy and have even 'gamified' it, so that anyone with a cell phone and a few hundred dollars can get in. Robin Hood even offers fractional shares, so even someone who doesn't have enough money to buy a share of Tesla or Apple, can but fraction of a share. This is dangerous. Third - an in my opinion the biggest - factor is that the internet, specially Reddit threads, ave allowed people to come to one place online and exchanges ideas. The Reddit thread in question is called WallStreetBets, and it is there where it all started. Regular investors have grown tired of losing at the investment game that they feel is rigged, with the cars stack against them. Hedge funds and high speed traders have always won the bid and gotten the best price, and the little guys have little or no chance of winning by playing by the established rules. If you spend a few minutes perusing the posts comments on the WallStreetBets thread you will undoubtedly detect more than just a hint of rebellious tendencies. These people are not just out to make a few bucks, they want to take down the giants and make a statement. They get the first call, their order take priority in the queue, and the little guy gets the shaft. By identifying the one thing that they could turn against the big guys, short selling, they have managed to stick it to the man. And what isn't fun about getting one over on the big bad bully? But, this is a bubble and bubbles always burst.
 

Eventually the wall of solidarity will crack, and those who have made a bunch of money on this game will capitulate and sell their stock to the hedge funds who are trying to cover. Then the next guy will do it and the route will be on. But if you've f you've got a rebellious side to you and you're interested in joining the revolution, just be careful and prepare for a long, rough ride. As of this post shares of Game Stop had fallen over 50 in one trading day. Buckle up!

How I made $22 in 9 minutes Driving for Lyft

On a pretty uneventful morning the other day in Los Angels, something quite unusual happened: for a brief moment it was worthwhile driving for Lyft. I know, pretty much everyone reading this post has either taken a shared ride, driven a shared ride, thought about driving for a rideshare company, or have read about it. And, if you have ever wondered if it is worth driving, take my word for it, it isn't. You can't make much more than $15.00 an hour (and that is on a good day), and overall hourly yield, net of gas, insurance and maintenance expenses will be closer to $9.00 or $10.00 per hour. Maybe less. Over the years as they prepared for their respective IPOs last month, both Lyft and Uber have tinkered with their app, bonus payouts, incentives and other promotional messaging for drivers to get to profitability. They both have bled red ink since the beginning to fund growth, and in their first few days of trading investors have send a clear message buy selling the stock down off their initial public trading prices. So, this means that Lyft and Uber are both going to have to figure a way to avoid legal challenges from states over the status of their drivers (and what benefits they are owed), satisfy demand, maintain supply (drivers), and make each ride profitable. As Amazon does with the constant testing of prices of their basic goods available online, the ride share providers are constantly testing pricing tolerance thresholds for riders. Most agree that fares will increase overall, and rate surges at peak travel times will spike. Indeed, the young people that I drive around in Santa Monica take Uber and Lyft because it is cheaper and less expensive than owning, insuring, parking and maintaining a car. And as long as a combination of ride share, scooters, Waive Cars and public transit come in under say, $600 a month, it is the better deal. Plus you'll have to deal with a valet, a favorite Los Angeles institution.

lyft

 

And so, at about 7:30 in Brentwood a flipped on my Lyft app and saw the bonus fare window box open up. It is a new feature since Lyft went public in late April, and involves a pink square or rectangle, surrounded by a purple outer border with a lower bonus. Stay in the pink area and get a bonus, stay with the purple area and get a slightly lower bonus. I was in the pink area and the bonus was $19.09 (it is usually around $1.75). So, I pulled over, stared at my phone just to make sure I was seeing it correctly, and was pinged for a pick-up. I accepted, drove about 5 minutes to pick-up a very nice woman, and drove her to her office in Santa Monica. It was a 2.6 mile ride that took 8 minutes and 54 seconds, which usually earns the driver $3.23. But on this day, at this time, with a $19.09 bonus, I earned $22.32, which correlates to about $120/hour. Since drivers keep about 80% of the fare and the platform keeps 20%, that means the nice lady paid roughly $28.00 for her 9 minute ride. Obviously she needed to get to work so she paid the extra fee, but at what point will riders choose alternate ways of getting around?

In short, it is my opinion that in the the not too distant future, both Lyft and Uber will be forced to pay drivers a basic minimum hourly wage (in California that is $11.00 on it's way to $15.00 by 2022) and provide for some gas and maintenance. In exchange they'll ask their drivers to keep a predictable schedule so they can manage supply.

How to Use Facebook So It DoesnÂ’t Use You

Whether you call it a time-saver or a time-suck, Facebook has surpassed the almighty Google as the most trafficked website in the U.S. -- and the second most popular site in the world. Whatever you happen to think of it, if you’re not living in a cave in northern Pakistan (and maybe even if you are), you’re probably using it in some manner. Need someone’s contact info? Check. Birthday minders? Ditto. Photos and videos to share? Done and done. Random thoughts to send into the ether? Well, you know the drill.

But as quickly as Facebook has become an integral part of the way we communicate with friends (and “friends”), it has also raised concerns. How much sharing is too much sharing? What do Facebook and its marketing partners really know about you? And what are they doing with all of that juicy data? Men’s Life Today reached out to David Kirkpatrick, author of The Facebook Effect: The Inside Story of the Company That Is Connecting the World, for tips on getting the best out of Facebook while avoiding its potential dark side.

Don’t Be Daft
For starters, says Kirkpatrick, if there’s something with the potential to embarrass, don’t post it. Despite how secure you believe your privacy settings to be, modern society is littered with Internet roadkill, like jobs lost, scholarships rescinded and relationships shattered simply because a user didn’t think twice before posting. “This is a shockingly common-sense rule that many people disregard,” says Kirkpatrick. But don’t go too far in the opposite direction, he advises. “If you never post anything of interest, you’re less likely to have anything of interest come back to you.”

Friendly Fire
If your standards for accepting friends have been, shall we say, less than discerning, Kirkpatrick suggests it could be time to do some pruning. “One of the classic errors is to accept every friend request you receive,” he says. The problem with such loose standards? “You’re empowering these individuals over your information.”

It may also be time to shed people you do know, but who don’t reflect your sensibility or values (see “jobs lost,” above). “If you’re beginning to question their judgment, hide them from your news feed or unfriend them entirely.” If we were to discard all but those whom we consider true-blue buddies, says Kirkpatrick, many of us would wind up eliminating three-quarters of our so-called friends.

App Happy
Here’s a little heads-up: Third-party apps gain access to your personal information when you install them. (And yes, “Mafia Wars” and “Farmville” fans, that includes you.) So be picky. “Something that looks cool, but which I’ve never heard of and that only a couple of my friends are using? I’m not going to adopt it,” Kirkpatrick says flatly. If you already have an app installed but haven’t used it in a while, delete it. Why? Because even if you’re not doing anything with it, chances are its developers are still doing something with your data.

Fortunately, right before you install any app, Facebook will remind you that you’re about to hand over access to your info. The choice to “allow” is up to you. Pretty simple.

Privacy Protection
Although he concedes that navigating Facebook’s privacy settings can be like trying to solve a Chinese puzzle, Kirkpatrick says an investment of 45 minutes should be enough to establish settings you’re comfortable with. For advice on how to get started, he recommends the site AllFacebook.com. (Search for “privacy settings.”)

To be on the safe side, a good across-the-board option is “friends only.” If you have a burning desire to make your life an open book for exes, frenemies and strangers, go ahead and use “everyone.” If you’re particularly guarded about your information, there’s a custom setting called “only me” -- though if you choose this option, you might just want to delete your Facebook account altogether and go back to calling your friends on a landline. Tedious, yes, but no privacy worries!

Target: You
And what about those ads in the margin that seem to know a little too much about you? They don’t concern Kirkpatrick terribly. If Facebook is doing its job and serving ads that jibe with your interests, you might welcome seeing some of them. And if you don’t, “they’re easy to disregard,” Kirkpatrick points out, explaining that one of Facebook founder Mark Zuckerberg’s core tenets is that advertising should not disrupt the user experience.

Despite articles like this one, Kirkpatrick knows that many of you will continue to throw caution to the wind. “Facebook is loosening inhibitions about self-display,” he acknowledges, “and we’re becoming a more transparent people.” That’s not necessarily a bad thing, he adds, but if you’re going to share, just be sure you do it wisely -- or be ready for your loony-tunes ex, nosy co-worker and the rest of the world to know your business.

Getting Ahead in Hard Times

Woody Allen once said that 80 percent of success is showing up. But he’s old. And he doesn’t have to sit in a cubicle every day with the threat of layoffs hanging over his head like a dim fluorescent bulb.

Success during The Great Recession means you need to boost your performance, outshine your co-workers, and more important, let your bosses know what kind of butt you’re kicking without looking like you’re kissing theirs. Here’s some advice from real job experts -- not some crotchety moviemaker -- on how to get it done.

1. Jump ahead a few years
Our economy will never return to the good ol’ days -- and, most likely, neither will your company’s boom times. To survive long-term, you’ll need to think about how your industry is likely to evolve and the ways you can stay ahead of the curve as it does. “You should be setting yourself up now for what your job will be like a few years from now,” says Penelope Trunk, CEO of the employment advice Web site BrazenCareerist. “This doesn’t mean working harder; it means setting personal goals for growth and getting on the right projects for the right experience -- so the right people notice you.”

2. Don’t be a jerk
A startling number of folks at the office have been sent to the unemployment line recently, and your responsibilities seem like they’ve doubled. The urge to let your boss know exactly how hard you’re working -- to get a little credit and to just vent -- is almost too great to resist. Resist anyway and be an enthusiastic team player now more than ever. If you need to complain, do it to your girlfriend, not your co-workers. “You’d be hard-pressed to find an annoying person in the office who’s not getting laid off right now,” says Trunk. “Being kind and gracious, exchanging information and ideas, reaching out to people -- if you do these things, you’ll do better in your career.”

3. Know exactly what doing a good job means
These days, the corporate bean counters are quick to cut any worker who’s not operating at 100 percent efficiency -- and your opinion of what’s efficient may be completely different than your boss’s. Career coach Marie G. McIntyre, author of Secrets to Winning at Office Politics, uses the example of an old client: a quality assurance manager who was so obsessed with perfection on the assembly line that he disrupted production. “He thought he was a high performer,” she says. “Management thought he was an obstacle. You never want to be seen as an obstacle or hard to manage. That’s an absolute career killer.” Ask your boss for occasional feedback, whether you like it or not, and even set up a quick monthly meeting to ensure you’re both on the same page. You shouldn’t need an annual review -- or a pink slip -- to discover your flaws.

4. Self-promote without sucking up
You’re not just another anonymous entry on a “clean out your desk” list if the company bigwigs know you and what a great job you’re doing. The trick is standing out without sucking up. “People can tell if you’re insincere,” says McIntyre, “but you need to do something to get out of that cloak of invisibility.” Find ways to strike up conversations with the bigwigs under casual circumstances -- like maybe in the lunch line or the elevator, or at the company softball game. Over time, drop subtle information that modestly tells them what you’re working on and shows that you’re well-plugged into the job. Adds McIntyre: “You shouldn’t have an agenda with every conversation, but you do need to manage relationships to achieve your goals.”

How to Ace Your Performance Review

Which would you rather face: a sink full of dirty dishes, or your annual performance review? If it’s the former, you’re not alone. In a recent study conducted by Development Dimensions International, sitting through a performance review was ranked ahead of doing housework, paying taxes and having a hangover on a list of situations that employees loathe most. Jazmine Boatman, who has a doctorate in industrial/organizational psychology and is the manager of DDI’s Center for Applied Behavioral Research, understands why: “A lot of managers don’t know how to have these conversations. And people dread the unknown.” The fact remains, however, that your performance review is your opportunity to shine … and to be rewarded accordingly.

Prepare All Year Long
The key, says Ford R. Myers, president of Career Potential LLC, is preparation. The more backup you can bring into the meeting, the better. “Keep a success file throughout the year containing notes and information about all of the good things you’ve done for the company,” says Myers, who is also the author of Get the Job You Want Even When No One’s Hiring. He adds that the success file should not be filled with a list of everyday tasks (i.e., the things you’re expected to do) but rather “the things that go beyond, that produce measurable results.”

Typically, says Myers, “an employee gets a job, puts his head down, and his boss has no idea what he’s doing for the next 12 months.” This approach is especially damaging since the average boss is not in the most generous frame of mind at performance-review time. “He has budgets to meet -- and a boss who’s watching him too,” explains Myers. The upshot? “You need to prove you’re worth more money.”

Make Praise Pay
Whether your goal is a promotion or a raise -- or both -- you’ve got to be proactive. Ryan Kahn, a Los Angeles–based career coach and host of the show “MTV Hired,” says you need to “blow the boss away, demonstrating how you’re bringing extra revenue into the company.” Of course, not everyone can prove he’s generated sales leads or helped the firm’s bottom line. What about the poor chap who’s answering phones? “I would tuck away positive emails, compliments you’ve gotten from customers or others,” suggests Kahn. These testimonials, he explains, will do the bragging for you.

Meetings Can Equal Moola

As a means of showing your mettle and your monetary value, Myers recommends that anytime you take a new position, you get your boss to agree to a strategic meeting with you once a week for the first three months, and then once a month for the duration of your time on the job. “You want to be working on the projects that are most important to that boss,” says Myers, “and to be of as much assistance to him as you can possibly be.”

Go Above and Beyond (and Say So)
Another terrific way to stand out is to keep a bullet list of all of the things you achieve each month and send it to the boss as an attachment. “Send it on the 30th of every month, like clockwork,” says Myers. “When your boss sees you coming in for your year-end review, she’s going to say: “This is a strong person. We need to retain and reward him; we can’t afford to lose him.”

The best part of all? Once you get a raise -- not to mention your big, fat promotion -- you’ll be able to pay someone else to wash the dishes.