Basically, a lot of people seeing opportunities to make a lot of money. So i really didn’t understand what was going on here. I had to talk to my longtime friend jill schlesinger who’s, a cbs news business analyst to break it all down and really explain, what’s a short sale, and is this exactly the internet versus wall street here’s what she had to say: there’s, something called short selling short Selling is really weird it’s, like a bet against the company, so here’s. What you do i want to go. I want to sell the gamestop stock. I have to go. Borrow 100 shares from my my brokerage company. I borrow the stock and then i sell it so net net. It looks like i’m minus 100, okay that’s, my bet against the stock what’s important here, the borrowing part, because you know when you borrow something you owe it back in the future. What i’m hoping is? I sell gamestop when it’s ten dollars a share and i buy it back when it’s one dollar right, fantastic. Now, what happens when the stock goes up every day it looks like. I made a really bad bet because my the the stock i sold at 10 when it goes to 15 20 i’m, showing losses and losses and losses, and when you do that on a huge scale, when you sell a stock short what you really have to hope For is that you have enough collateral margin that you can cover losses that you incur okay.
What happened with gamestop is there? Were these big huge companies who thought this? Is a company that’s overvalued that’s? It it’s not it’s, not a bet against, like these specific people who are bad people, good people or anything. I bet there’s a bet. This company is overvalued and i sold it and that’s really how we entered into this current situation. So short sellers said we’re against it and then all of a sudden comes reddit it’s, not that short sellers are bad, but what’s. Fascinating about this. To me is that you have a group of people on reddit who are like hey let’s jam, these dudes up and here’s, how you do it. They now there’s nothing illegal about that unless the people who are saying hey, go out and do this have some sort of inside information which i don’t think they did but there’s going to be an investigation sure. So this really has nothing to do with gamestop, or at least video games right. That company just found itself in the perfect situation to be bet for and against meaning. A lot of financial institutions thought that gamestop’s business was going the way of the buffalo and eventually would go out of business and people on subreddits, like wall street bets, saw that this company was being so heavily shorted. They saw an opportunity to make money by driving the price up. I think what’s kind of interesting is that it brings to light a division in the investing world which we used to call retail versus institutional, and i think what makes this kind of a delicious story for small investors it’s like no screw.
You, mr or mrs running, your big hedge fund, like we can move markets too you’ve been moving markets for the last 100 years, it’s our turn. It is true that some short sellers basically agitate to get seats on boards to gut companies to do all those things same thing in private equity, they’re, good ones, they’re, bad ones and they’re the and at the end of the day, they’re all trying to do. One thing they’re trying to make money and if the smaller and retail investors out there are pushing them in different ways, i mean it’s sort of, like i said, it’s a delicious aspect to the story, but to me it’s, just old school it’s, like some people, think This thing is worth this: other people think it’s worth this, and you know a lot of shorts have gotten squeezed out of trades that are far more interesting than this one for everyone watching. If you are interested in doing things like this, it is dangerous, it’s, dangerous to short stock it’s dangerous to buy options when you don’t know what optional options work it’s dangerous! If you want to be like sort of participating in something – and you think it’s cool – and you want to learn something – take the amount of money that you feel like you can lose that’s what you should do so there you have, it jill, says: it’s, just business As usual on the stock market – and i kind of think she’s right, this kind of stuff has been going on forever, just much more in our faces because of where a lot of this buying power came from on the internet in that subreddit and from people like Elon musk and other big players who tweet and can sort of move markets with a single post, so that’s going to do it for me, i hope you learned something i’ve learned so much again.