What Gamestop Teaches us About Markets, and the Power of the Collective

This past week, I’ve received more texts, calls, and emails about individual stocks than I have for a concentrated period in a very long time. As you probably already guessed, the stocks included GameStop, AMC, and Blackberry. I do not provide individual recommendations on stock choices, and you should always consult your financial advisor. That said, I do have a few observations about what’s happened since mulling things over the last few days.  

By now, you surely have heard about, and even may have participated in trading, these stocks. I’ll focus on GameStop, the brick-and-mortar video game retailer, which I’ve never set foot in but there’s one down the block from my house. In simple terms, GameStop’s shares went up significantly last week as many individual investors piled into the stock, investors (including big hedge fund players) who were betting that the stock would go down (e.g. short sellers) were forced to take action (e.g. short squeeze and margin call), and the trading app Robinhood halted its users from buying its shared during the week. The result is that GameStop, who’s shares traded below $20 per share earlier this month and closed at $325 per share on Friday following a very volatile ride. This CNBC article, “GameStop, Reddit and Robinhood: A full recap of the historic retail trading mania on Wall Street” gives a day-by-day occurrence of what happened last week, and it’s the most thorough account that I’ve read that details, and with nice charts, what happened. The GameStop (TICKER: GME) price chart below tells it all: 

First, we now know that Gamestop’s share price run-up was fist driven by a group of Reddit individual traders, led by Keith Gill, who has been invested in GameStop since 2019. Did you know Keith has his chartered financial analyst designation? This tells me that he took the time to understand basic tenets of investing as the CFA designation is the most widely recognized credentials in the field of investing. I have it too, as do many professional investors. When I worked on Wall Street, a lot of investors followed the trading activity of traditional portfolio managers and hedge fund managers that had a strong reputation. Talking about trades and picks happened ALL THE TIME, and people follow the herd. Point one: You must always do your own diligence to figure out if a stock is right for you. If you jump on the bandwagon just to ride the wave, you have to deal with both the upside and downside. In my mind, hedge fund managers got a bit duped at their own game because many actively sell stock short, and try to trade against investors who buy and own the stock for it to go up in the long-term.   

Second, Robinhood is in a bit of a pickle with its users, and yet reaped the benefit of a $1 billion cash infusion from its investors. That platform prides itself on being the platform of choice for the little guys, or individual investors that do not represent institutions. I’m not a Robinhood user myself as I trade through Schwab and Acorns, but clearly they have tons of users who value the platform. Many of my family, friends, and members of the Charisse Says community use Robinhood. When the company temporarily stopped people from buying GameStop last week, people were rightfully pissed off! They effectively put restrictions on individual trading activity, which surely flies in the face of free choice and markets, which are supposed to be free and clear of regulations. GameStop now claims it needed to stop trading given the real infrastructure nightmare that results from the delay that occurs between trading a stock and actually owning a stock once the cash is truly exchanged and when it settles in your account (see here on the difference between trading and settling, and this Wall Street Journal article on why Robinhood at the increase its deposit requirement). Point 2: Figure out what trading platform is going to be able to meet your needs, and that you want to trade on. Do their actions cause more concern or do you believe they are acting in the best interest of shareholders like you? Is the trading platform communicating with you transparently and actively? Interestingly enough, as I read more about historical stock trade restrictions, did you know that The U.S. Securities and Exchange Commission (SEC) restricted the short selling of financial stocks after the 2008 market crash, and again early in 2020 in the wake of COVID-19? Restrictions can cause more stock volatility, but the goal should be to prevent market manipulations and protect retail and institutional investors. 

Finally, Point 3: one of the biggest takeaways from the week should be that the power of the collective matters. Whether it’s trading a stock, pushing forward an idea, standing up for Black Lives Matter, or supporting a business, when a group of individual people decide that something is important enough for them to act upon, they have the ability to use their power to change the outcome. You have more agency and power when you act as a collective - online or offline! 

The power of the collective, applied as you see fit and to generate wealth, is one of the key principles in my new book, A Wealthy Girl: 7 Steps to Prosperity, Peace, and Personal Power. I state: 

“Being a girl for your purposes is a mind-state which harnesses the power of the collective. I want you to be that girl who has a community-centric mind to enable you to move forward and farther a bit faster in achieving your wealth goals. When you do this, you will allow those around us to benefit as well. Please recall that no one creates real wealth alone, but does so by working with the community around them.”

I used the power of the collective in getting the book out to market by forming a book launch team of 18 women, and here some of them are below as we prepared (check out the seriousness of those planning faces!): 

And, I want to invite you to my Virtual Book Launch Party on Thursday, February 11th at 7pm CST to hear all about this principle, and the book overall. You will hear about my journey and how you too can be wealthy as I read excerpts from the book. You will also hear the voices of other Wealthy Girls, coupled with what the men have to say about this life-changing book. You will also learn how you can support the book's launch and promotion, and how you can pass the wealth forward. And, there will be free gifts and music to keep us having fun. Remember, there is nothing as powerful as a “girl” with a mind for money making coupled with a purpose that lives way beyond the money. I learned that from y'all! Through A Wealthy Girl, you will learn that you don’t have to be male, rich, old, or white, to be wealthy.

You must register as it's a ZOOM webinar:

Once you register, your confirmation email will send all the details, code, and allow you to add the event to your calendar. 

Men are surely invited to the party, and clearly have their own collective power. If you identify as something other than a “girl,” I welcome you. Whether you are cisgender male, gender nonconforming, transgender, or choose to identify yourself differently, I know that there is something in this book for you. If you do not personally pick up anything from the stories and advice that I share on the following pages, I have no doubt that there is someone in your life who can benefit from my words. In this sense, you can adopt the Wealthy Girl mindset and share the principles of this book with the girls whom you love.

See you soon, and never forget the power of our voices.