Lay investors buy the stock of really good companies and hold on to it. That is investing. GameStop is not such a company, and the people buying its stock have no intention of holding it and gifting it to their kids. This isn’t investing, it is trading, and there is a huge difference.
To the extent that what happened to Gamestop is a problem, it is all due to the fact that the SEC has allowed short sellers to run amuck for more than a decade now.
For what seems like years now, we have been talking about the market’s unhealthy skew toward large-growth companies. Some of our clients have even taken to making fun of me because of my insistence that this will pass. The season will change, value is coming.
We have a new ornament on our tree this year: a roll of toilet paper which simply says, “2020.” What a year it has been. It actually has been a positive year in the markets, although as we have said before, those gains are not equally distributed. However, even the unloved value stocks have made…
This advice is repeated so often probably because we are so bad at following it. Today’s motto is closer to “everything in hyperbole,” and perhaps that explains the election and aftermath. We have been living with extremes for so long that we just need some good old-fashioned moderation.
