Working the night shift in the early morning, I stumbled upon a movie - "Dumb Money (2023)", which will be released in the United States on September 22, 2023.
In the field of investment, there is a phenomenon called the "dumb money effect". The collective choice of "dumb money" is to chase investments that have long-term poor performance (such as GameStop), while abandoning high-quality investments. The opposite of "silly money" is "smart money", which refers to sticking to high-quality investments and ultimately obtaining excess returns without changing your original intention.
The film is adapted from the January 2021 stock surge of GameStop, an American offline game retailer. In the long-short battle, one side is WallStreetBets, the base camp of 2 million American retail investors, and the other side is Melvin Capital, Citron and other major short-selling institutions on Wall Street. The result is that retail investors successfully attacked the institutions.
I have never bought US stocks, but I have read this news. It has global influence and is very shocking. In January 2021, my impression was that Crypto entered a bull market, and Musk recommended $DOGE on Twitter, causing DOGE to surge 8 times in two days.
Incredibly, at that time DOGE was equivalent to points, and its function was for rewards and entertainment. No one thought that DOGE had speculative value. As a result, DOGE is much more popular on social media than $BTC because of Musk. The popularity of DOGE also paved the way for the subsequent $SHIB and LOWB coins (Loser Coin), because retail investors gave these coins unique spiritual connotations, making them believed by more people.
Whether it’s GameStop stock or MEME coins like DOGE, their surges are essentially the product of strong emotions triggered by social media. There is a clip in the movie "Dumb Money" where Gabe, the founder of Melvin Capital Management, said in a casual chat with his wife that no short squeeze has ever been successful in history. In 1923, a group wanted to short Piggy Store. The founder of the store borrowed US$150 million to buy back 99% of the company's stock, and the stock price rose by 50%. As a result, the exchange suspended stock trading to allow short orders to be covered, and finally the founder declared bankruptcy.
Gaib believes that GameStop, like Piggy Store, has experienced a sharp rise, but with his participation in short selling, the stock price will definitely plummet in the future. However, the reality is that GameStop is riding high and Melvin Capital has closed its short position in GameStop.
Participants in the GameStop incident and Crypto have several similarities:
1. Fight against the rebellious spirit of Wall Street and pursue freedom and fairness;
2. Believe in the power of retail investors and communities to create history, break prejudices, and refresh perceptions;
3. The influence of anything that has never happened in history depends on people’s imagination;
4. (Continued) Therefore, we often underestimate human greed and overestimate human fear. This is the reason for "taking the air" and "selling the air".
