Tag Archives: Stonks

Trading Stonks Sucks

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I find myself the Stock Guru at UPS now. It’s cool — I love that people are into investing now — but seeing a coworker with a two-week-old Robinhood account tossing money into some penny stock with a 2 BILLION DOLLAR MARKET CAP and 20 employees and making 175% returns on his $200 account makes me sort of want to die. This will not end well! Dude stumbles into the market, buys some ZOM and SNDL shares, doubles his money and instantly thinks he’s good at trading, attributing beginner’s luck to personal skill or something. Eventually he’ll YOLO his whole account on something stupid, his luck/”personal skill” will fail to materialize, and then he’ll be up at 8:30 a.m. after two restless hours of sleep realizing a whopping 90% loss on his account. I’ve lived that hell myself; that’s what stock trading is — getting cocky and blowing up your account — and realizing that, holy hell, it isn’t actually free money.

Andy will probably blow his account up if he ever gets the balls to invest more than a few hundred dollars. Dominic sold his Dogecoins for a hefty loss and recently bought some SNDL shares; today they’re down like 30%! James is still holding AMC for some reason and he’s probably down 50% on that play, but he said he “bought it for the meme” so I think he’s not expecting to actually get rich. Enrique, even if he doesn’t say a whole lot, still mumbles to Andy and Dominic about biotech penny stocks with names that you’ve never heard of and never will hear of. I’ll make up a few names now so you get the idea of what a biotech penny stock sounds like: Trevelex, ZambiTech, Velero Pharmaceuticals, and Xetezic Diagnostics. Caleb is still waiting for ANVX to drop below $10 to load up and warning the others to not invest in Bitcoin at $56,000 (wise moves from someone not trading at all) while my sister is asking me about call options and strike prices on General Motors of all things. If I want anyone to not blow their account up it’d be her. Allison continually says, “Jeremy! You need to teach me how to do stocks!” and my old coworker from years ago texted me asking, “Guess I’m curious what you use to buy stocks.”

This is all confusing to me because I don’t think I’m that good at trading. This year I’m up $5,000 on a $16,000 account — a whopping 30% return in a month — but I don’t think this is my doing. If anything I’ve been lucky and trading cautiously, trying to remember one of the holy rules of the stock market; don’t lose money! It’s hard to gain money if you keep losing it. Even though I’m doing great this year I vividly remember past years where I’ve made some very stupid moves. I blew up my account to the tune of $10,000 during which I call the XIVpocalypse. Seriously, go look up XIV and see what happened a few years ago. That was me riding it all the way down thinking I found a a way to print money for free or something. There’s been countless earnings plays where I also lost thousands of dollars, stupidly betting half my account on a stock either going up or down. It’s dangerous and it’s stupid and it will bite you. And now? I’m lucky and I’m cautious of pushing my luck too far. Maybe this is exactly what a good trader is?

I think that’s the appeal of the market to these blind novices; the stock market is as close to free money as you can get. These guys see 50-100% returns in a single day if they strike the right stock at the right time; how does this compare with slaving away at UPS for $15 per hour. The math isn’t hard to do: dump $5,000 into the market, hit a 50-100% return (or higher), and you’ll have $7,500-10,000 in a single day or week. Do this a few times and you’ve made your yearly pay doing absolutely nothing but clicking buttons on your phone. Very quickly you get to the point of asking yourself why you’re working at all. It’s easier to just trade. Take all your money, dump it into your brokerage account and trade. Roll profits into large plays and profits and before you know it you have two commas in your net worth and can retire. And easy it is when you’re lucking out with 50% gains everyday.

It’s hard to talk about the dark side of trading to these n00bs. They’re making gains all day, everyday, all week long. They’re excited, they’re energized, and they’ve found a new and interesting hobby. How can you possibly be like, “Yeah, that’s cool, but the market will move against you eventually, and it doesn’t feel good when you lose money, so don’t get cocky. Take gains when you can and stay humble. Above else: be lucky.” When Andy is making bank off penny stocks, do I really want to tell him about SPY and it’s tasty 2% dividend? Or JNK with its massive 5% dividend? Or the benefits of long-term investing? Hell no.

I guess I’m torn between these two extremes. On one hand I do feel like my trading is acting like a second job for me; whatever I’ve been doing the past couple of month is working, while on the other hand it doesn’t seem as easy or a rosy as I’m sure these newbz like to think it is. Investing is a great thing to get into that many people, especially poor people, are too scared or hesitant to get into. There’s a big rant here about the US’s population being especially financially illiterate (but I’ll hold off on that) so a bunch of new people being interested in STONKS is a great change. Yes, invest in your future. Make passive income. Be an owner of a company and not a customer. Use your money for you and not to blow on the newest and hottest electronic device.

Free money? Yes, but not really. There does seem to be some work, some price to pay for the cash. Regular jobs involve boredom, dealing with idiot coworkers, and actual labor. With trading to make MASSIVE GAINS I think what you give up is your psychological well-being. It’s checking your account every 10 minutes even though the markets are closed. It’s laying awake at 3 a.m. wondering if you’ll have more or less money in your account in five hours. It’s insomnia and stress. It’s pondering randomly throughout the day what your future plays will be. It’s a mental mess deciding to sell for a profit or to let it ride. Will it go up or down? Play it safe or risky? It’s being bored out of your mind on the weekend unable to enjoy yourself because you can’t trade at all! It’s being upset and restless during holidays for the same reason. It’s having an abstract idea of money as simple numbers on a screen and a detachment to the value of it. Maybe I’m taking this to the extreme, but trading the past few weeks — despite the free money of my gains — is a subtle form of hell. When I think about it it doesn’t seem like free money at all. There’s a cost to it, just a different sort of cost than time/boredom/hard labor that is typical work.

Which is good in a way. By trading and seeing your worth fluctuate wildly during market hours you become stoic in a way. GameStop is down like 70% from when you bought it? You’ve lost thousands of dollars? Oh well. You somehow have to put this to the back of your mind ignoring the money you’ve lost (which is really hard to do) and live your life the best you can. You still have to eat, sleep, have friends, go to work, and be happy all while having this massive dirty-feeling cloud over your head. With time you can get pretty good at it to.

Maybe that’s what I’m trying to say here. The stock market is free money and a good thing to invest in, but know exactly what you’re investing for or what your goals are. If you want to dump part of your paycheck into a wide-market ETF like SPY go right ahead: it’s a fucking smart choice long term and you’ll eventually turn your money into a big pile of cash. It’ll just take forever and it’ll be boring. You won’t get the excitement of seeing your account double or triple in a day or two (or the stress and anxiety of seeing it get cut in half either) but this is what investing is. If you’re trading — looking to make a quick buck or generate income equal to a second job — you’re in for a world of shit. You’ll be consistently checking your accounts, trying to find new plays, struggling with bagholding and deciding when to sell for profits. You’re sleep will be trash and lows are immense. One day you’ll feel like King Midas and the next you’ll feel like a fucking idiot not selling when you felt like King Midas. It’s not fun, it’s all consuming, and it takes some pretty hefty mental fortitude to pull it off properly. And as stated before it also takes a good amount of luck and the appreciation that luck can actually play in day to day life. This is what I don’t think the novices at work are prepared for.

Note: By the time I posted this Andy finally sold his SNDL shares for a $90 loss. Remember, he was up 175% last week. Think about how you’d feel not selling at the correct time and eventually taking a loss.

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The Great GameStop Short Squeeze of 2021

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Source.

I haven’t slept well in three days. My typical day consists of reading from midnight until 4 a.m., taking either a benadryl or melatonin (both?), and finally falling asleep at 5 a.m. I then wake a few hours later around 9 a.m. stressed and anxious and fall back asleep around 10. That lasts until noon or 1 and then it’s time to pound coffee and head to work.

What’s with the waking up at 9 a.m.? Stocks, that’s why. I’m sure you’ve heard about this little company called GameStop that has dominated the news and social media the past week. I’m sure you have a vague idea what “short selling” is, know how evil hedge funds are, know that small investors are using Rohinhood to finish the crusade that Occupy Wall Street failed so miserably at before, how millions are finally righting the wrongs of the Great Recession, and so on. There’s so much to cover that everyone has already covered that I’m not sure what to say about it. Any kinda “factual” reporting here seems boring and pointless. How about an insiders perspective? Someone who’s been on the WallStreetBets sub-Reddit for quite some time, someone who’s blown their account up a few times (long $ROPE), someone who finally figured out how options work, and from someone who saw the GameStop hype brewing about a month ago.

(Shameless plug here: I wrote a book about trading options. Check it out if you’re interested.)

Looking at my past orders I purchased 100 shares of GameStop on December 28th 2020. r/wallstreetbets, the now infamous subreddit, was my go-to source for hot stocks to consider. My strategy that has been working pretty well: find hot stocks that that my fellow idiots on WSB were buying options on and sell options to them. So I loaded up on 100 GameStop shares and sold a thing called a covered call. This gives you a few hundred dollars and is kinda like a “guaranteed sell” if the stock goes above the options strike price which inevitably caps any gains you can make. I’m a proud member of theta gang — people who sell options for modest profit over risky YOLO trades — so I did what any theta gang member naturally does: rake in that sweet options premium.

I want to point out that GameStop wasn’t very special at the beginning of year. It was turning into WSB’s darling, but that was all. Everyone knew it was heavily-shorted but no one at the time was trying to force a short squeeze or knew how culturally massive GameStop would be in a few weeks. I had 400 shares at one point and was gladly selling covered calls against them. Buy 100 shares at $18, sell a call for $20, and collect my free money. Repeat as often as you can. Once it popped past $30 I basically ignored it. That was the then-fabled short squeeze and I made a few thousand off it. Time to move onto the next hot meme stock. Hmm…maybe AMC? Blackberry was also talked about a lot too…

But GameStop kept going up! It went from $30 to $80, then up to $150, and then near $500. “Holy shit,” I thought, “I really messed up here.” Had I held the 400 shares I had I’d have $100,000 in my name, all in the course of a few days. One thing you learn to deal with in the market is to quickly banish those “what if?” thoughts that can kick your ass. Yes, I could’ve made $50,000 off Tesla last year. Yes, I missed a once in a lifetime $100,000 on GameStop. Oh well, at least I earned a few thousand and didn’t lose anything.

Everyone around me has taken notice and has been asking me about it. Last week my sister asked me about investing which she had no interest in before. Work is even crazier with everyone asking me about GameStop, AMC, Blackberry, and whatever other hot stock is in the news. I’ve went from the guy who sometimes trades, a person who happily mentions the hundreds of dollars I lose occasionally, to everyone’s stock market guru somehow. Even coworkers who aren’t interested in the market are asking me about it. A newer employee I haven’t talked to really was showing me Tik Toks about GameStop. People are constantly showing me memes on Reddit and Twitter. Two other coworkers opened up Robinhood accounts and are snagging up AMC and BB shares with the small amount of cash they chucked into it. One friend on vacation texted me a few days ago saying, “Please tell me you’re fucking rich off GameStop.” (Hint: I wasn’t. Thanks covered calls.) Best of all was Thursday when I found myself and a coworker on break trading Dogecoin of all things together. I made out with a cool $100 and he made $25. Hours later one of the new investor guys came up and asked us about Dogecoin. Three people trading dogecoin while on break at UPS? Come to find out later, he held and took some losses over the next few days. Better to learn the lesson sooner than later.

I left work Thursday totally destroyed. I’m not big on socializing and having people constantly asking me about GameStop, AMC, and how to buy and sell stocks was surprisingly exhausting. What are the tax implications? How much have you made in a single day? How much have you lost in a single day? What are limit orders and market orders? And so on. It was exhausting to talk about stocks as much as I did, being used to minor comments here and there about my trades. It’s cool though — I’ve always wanted people to be more financially literate and to invest — but this is insane and I’m not prepared for the hype and popularity of it all! 

I’m also worried for all the newbs who jumped into the market the past month or so thinking they can simply buy stocks and make a ton of money. GameStop can move higher I think — the shorts still haven’t covered — but these people buying in at $300 and $400 have a long way down if the stock decides to move that way. It’s great so many are interested in investing, but riding GameStop down to double digits and losing 60% of their cash isn’t going to be a good introductory investing experience for them.

What’s really blowing my mind with The GameStop Short Squeeze is how it’s taken on a life of its own. As stated, even two or three weeks ago the “investors” at WallStreetBets weren’t trying to fuck over hedge funds or make some grand statement about societal change; they just want to make some money. Once GameStop exploded the zeitgeist of the sub grew and morphed into something much greater than making money. It wasn’t about that anymore, it was about fixing the flawed financial system. Letting the little guy have his share, taking the power back from the 1%ers, giving back to your family and community. A bunch of recent posts detail Redditors buying Nintendo Switches for children’s hospitals. One person donated $5,000 to a charity. Another literally brought bags of peanuts into a local GameStop store with $100 bills attached to them. I plan on chucking $500 at the local food bank in the name and glory of GameStop. WallStreetBets is actually pretty generous with their earnings because they’re the little guys. They don’t care about their second yacht or a fifth vacation beach home. No, when you’re living off $30 or $40,000 per year, making $500,000 in a week means you can piss it all away by helping people. You’re well aware you don’t need it so large chunks can be given away. You damn well the hedge funds aren’t as generous with their gains.

Source.

The consensus on the sub now is one of millions of people on a mission: fuck over Wall Street. Everyone is snagging up GameStop shares wherever they can find them and they’re stubbornly holding. No one is giving into the temptation of cashing out for thousands or millions of dollars because it’s suddenly bigger than any one person. We’re all on a mission and that mission is HOLD, DO NOT SELL UNTIL GME IS $5,000 $10,000 PER SHARE! Nearly every comment consists of diamond and hand emojis and (having “diamond hands” mean you won’t sell when things seem iffy. Compare that to “paper hands” someone who sells at the first sign of risk or danger.) WSBers have taken out a few billboard and even airplane banner ads directing people to NEVER SELL!

Our hero u/DeepFuckingValue. Source.

I’m not sure how all of this is going to end, but damn is the journey a hell of a one. I bought back in with five shares at a price of $330 just to go along for the ride a bit more. I’m not trying to get rich or anything, I just want to say I was holding with diamond hands like everyone else. No one knows what the next few weeks will hold and it really feels like we’re living through a notable time, something that is literally making history as we witness it. I never expected this to happen with stocks or investing or fucking GameStop of all companies but here we are. HOLD HOLD HOLD and DO NOT SELL!!!!!!!!!!!!!

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