What the media has got wrong about GameStop
From someone who invested (a small amount) themselves. Please note, this is not financial advice.
Anyone who knows me will state (pretty conclusively) that I am not a risk taker. I like to plan, I like to know what I’m getting myself in for.
If you need evidence, I am the sort of person who creates a holiday itinerary and pre-books the life out of it.
Even when investing money, I take the relatively low risk option of investing in passively managed index funds.
That’s not to say I don’t have an interest in old fashioned stocks and shares. Indeed, before the recent explosion of interest in the stock market, I had bought a few books on investing.
After all, I am a firm believe that the best way to learn is to read.
The danger of the ‘get quick rich’ scheme
I am currently about 100 pages through ‘A Random Walk on Wall Street’, by Burton G. Malkiel, Emeritus Economics Professor at Princeton University. This is not a promotion, but so far, the book’s pretty good.
I’ve certainly learnt a fair bit (including a lot about the price of tulips).
Anyway, one of Malkiel’s clearest messages so far (and one that repeats itself quite frequently) is nicely summarised on page 54:
It’s not hard to make money in the market. What is hard to avoid is the alluring temptation to throw your money away on short, get-rich-quick speculative binges
And you know what?
This is exactly what I saw when I was made aware of the happenings with GameStop. A bunch of foolish individuals wanting to make a ‘quick buck’.
Until I got reading.
After all, the best way to learn is to read.
A biased media view?
The battle over GameStop has, at best, been presented as a ‘David vs Goliath’ situation. As a battle between the ‘average Joe’ retail investors, banding together against the might of billion dollar hedge funds.
At worst, these same investors have been painted in less glowing terms. ‘Barbarians at the gates’ is one particular tag line that stands in my memory from the past week or so.
In my initial quest to learn more about investments, I stumbled quite early on across the WallStreetBets (WSB) Sub-Reddit. For the uninitiated, this has been the driving platform behind the GameStop ‘surge’.
My introduction to the forum was several months ago. I will admit that it didn’t leave a great initial impression.
Some of the language used can — putting it mildly — be a touch insensitive. I have seen some describe it as ‘locker room’ talk. This is an apt description. It is not for the faint of heart.
Despite this, I used to check in on the forum every now and then.
I watched with interest as more and more people started talking about GameStop. Crucially, as events have unfolded over the past few months, I have had a front row seat to both the mentality shift underpinning WSB and how the media have reported on them.
Behind the coarse language and memes
It is very easy to assume that those invested in GameStop are in it purely for the money.
Whilst that might be the case for some, it is certainly not the only motive.
It is similarly very easy to dismiss the decency and credibility of a group that frequently use coarse language and punctuate every paragraph with emoji’s.
Through the nature of their posts — thinly veiled insults (or ‘banter’) and tapping into ‘meme power’ — they are a group that make themselves easy targets for derision.
As Melvin Capital (a hedge fund doing battle with the retail investors) know only too well, though, you dismiss many of these people at your cost.
Unrecognised decency?
To put it simply, I have read stories of people doing fantastic, generous things with their GameStop windfalls.
People who have been able to pay off their student loans; who have been able to put their family members through hospital treatments; who have paid off their own, and/or family member’s mortgages.
Some have donated their winnings, such as this individual who spent his returns buying Nintendo Switch consoles and games to give to a children’s hospital.
This is just one story of tremendous generosity and kindness of spirit.
It is one story amongst many.
I am sure that there are many hedge fund managers who contribute to charitable causes. I am not in the business of generalising.
However, I think it’s reasonable to say that a lot of these funds will quite happily bet against companies; profiting from their loss of value and eventual destruction. Indeed, this is the principle behind short selling. The same situation that ended up with the situation we find ourselves in.
Let’s compare that stance with that of your ‘Everyday Joe’ investor.
Whilst Hedge Funds will profit from the demise of companies, the retail investor movement (for want of a better word) has sought to save them.
I do not think this is given enough credit.
Moving momentarily away from GameStop, take AMC as another example. The injection of capital from retail investors into this struggling business has almost certainly saved the company from liquidation. This could save the jobs, and livelihoods of nearly 40,000 full and part time workers.
It is at complete odds with the hedge funds who bet on its failure.
Call me cynical, but I have rarely seen this narrative pedalled in the media.
The wrong narrative being presented?
No, overall it has become apparent that — reading through the posts on WSB — there is an awful lot of misinformation flying around in mainstream media outlets.
Whether this is a deliberate attempt to muddy the water, or legitimate findings by reporters, it is not my place to judge.
What I do know is that, over the past few weeks, the messages presented through the media are often at odds with those on the social media platforms they are reporting about.
A quick look on the feeds of prominent news networks and papers and it’s very easy to sense the mood. ‘GameStop sinks as short squeeze bet fades’ reads a headline in yesterday’s New York Times.
Look on the WSB forum, however and the tone is far more optimistic. There are always those (rightly) advocating caution. There are also doubters. This range of opinions is healthy.
What is abundantly obvious, though, is that the fight is very much alive.
The result of this leaves me with two major gripes against these mainstream media headlines.
Firstly, most of them do not accurately represent the general feeling amongst those who have spearheaded the movement being reported on.
Secondly, the narrative is still pedalling the idea that this is some ‘bet’. As I have already said, it may well be for some.
For many others this is not a bet. It may be an alien notion to get your head around, but I don’t believe that gaining and losing money is the ultimate priority here.
This is about taking a moral stand against the financial injustices of the past and present.
The ‘average’ GameStop investor?
There’s no escaping the fact that the language to reduce the identity of those who have invested in GameStop has been damming.
Behind the ‘barbarian’ investors buying into GameStop, however, is a diverse pool of individuals. To reduce their identity like this; to paint them as being worse than many really are, is an insult.
In reading the posts of people who have invested their money into GameStop, there are some truly heart-breaking stories.
People who-quite literally in some cases- lost everything in the 2008 Financial Crash. Their homes, jobs, families. Gone.
Let’s not forget that the collapse of markets in 2008 was a situation created, in no insignificant part (although not entirely), by Hedge Fund managers injecting greater levels of risk into the market.
I think it unfair to say that these individuals are simply after a ‘quick buck’.
More likely, these are people who bear the scars of big traders playing with money. Individuals who just want to make these billion dollar fund managers experience just a tiny fraction of the sense of loss that they, and their families, experienced.
There are other motives, too. It is not my place to judge them as worthy or not. Neither, do I believe, is it anybody’s.
My GameStop pride
So, after putting in the reading, and scratching beneath the surface, I was convinced.
Going against all of my risk-averse instincts, I bought a couple of shares in GameStop.
I was tired of the misinformation pedalled through the media. The more I read, the more grotesque the division of wealth (and power) appeared to be. Here was an opportunity to do something about it.
I think it prudent to state that I have not put a lot of money in. It is certainly no more than I am prepared to lose. I am not entirely abandoning Malkiel’s teachings.
My legitimate concern is for those who have invested more than their means. Without sounding patronising, I do worry for those who have spent all their savings, or even borrowed money, to invest in GameStop. That is a dangerous game.
It stands to reason that amongst these there will be those who have got carried away. Those who have bitten off far more than they realise. I only hope that, when this ends, they will have escaped without too many burns.
But to brand every GameStop investor as uneducated? I don’t think so.
Including myself (a teacher), the friends I have who also hold shares in GameStop are: an air traffic controller, a government official and a finance worker.
We are not barbarians. We are not a mob of uneducated gamblers.
It’s a shame that the media narrative often ignores this.
My frame ambitions
Regardless of the outcome (and I think it’s a fair assumption to say that I won’t be riding away from this on a wave of money) and despite my anger of the media discourse, I feel a sense of optimism.
There is more than money that will come out of this wild ride. I think it’s not unreasonable to say that this could be a watershed moment in the power dynamics on Wall Street.
Then again, who knows? I am certainly not arrogant enough to try and predict the future.
Whatever happens, though, I do know one thing.
I plan on making my own ‘shares certificate’. It won’t be legitimate- the platform I invested in doesn’t issue them. It will be made on word and printed out at home.
I will buy a fancy frame.
I will hang it above my desk.
It will be a reminder.
I will tell my children and grandchildren about the time a few of us tried to take on the might of Wall Street. Of first time — and maybe only time — I bought a stock I liked.
That alone has got to be worth more than a couple of hundred pounds.
