That’s the message of the chart below.
It’s of the share price of brick-and-mortar video game retailer GameStop (GME).
GameStop is the Blockbuster of the gaming world.
It’s lost money in five out of the last six quarters… as gamers switch to buying or streaming video games online.
But the surge in GameStop’s share price may be the craziest market action you ever witness.
GME roughly doubled in price yesterday – shooting to $347 from $145 a share.
The stock is now up 1,127% since the start of the year… after being up as much as 2,464% this morning.
This comes after a swarm of everyday investors… spurred by an online trading community on Reddit… took on Wall Street “short sellers” who were betting GME would fall.
This rebellion was so successful, the Reddit-inspired investors threatened to knock out several hedge funds that had shorted GME.
As you’ll see today, it’s a French Revolution moment for Wall Street. “Little guy” investors are tired of getting run over by big-money investors. And they’re fighting back.
I’m NOT recommending you rush out and by GameStop shares. It’s likely to come crashing down… almost as fast as it soared. Unfortunately, many of the folks buying in now will get burned.
But it’s worth paying attention to nevertheless, because it’s part of a wider trend that’s tilting the playing field in favor of the little guy… and away from Wall Street elites.
Here’s how it works…
First, you borrow shares from your broker. Then you sell them. Then you buy them back at a later date.
If the share price falls between when you sell and when you buy back, you make money. If it rises, you lose money.
GameStop was one of the most heavily shorted stocks in the market. The company’s string of losing quarters… plus its outdated business model… led a number of hedge funds to take short positions in the stock.
An army of regular investors plotted online to take the other side of the bet – many of them using the popular commission-free trading app Robinhood.
This pushed GME shares up. And it forced the shorts to “cover,” or buy back shares, to avoid even steeper losses. (Remember, the higher the share price goes, the worse it gets for short sellers.)
This caused a “short squeeze.”
So many big-money investors were scrambling to cover their shorts… and buy back shares… GME soared even higher.
One fund, Citron Research, says it lost 100% on its short position in GameStop. Another, Melvin Capital, needed a nearly $3 billion capital injection to cover its losses.
To put down the rebellion, the New York Stock Exchange (NYSE) halted trading – not once, not twice… but 18 times.
And Robinhood and brokerages including TD Ameritrade blocked further trading of GME.
This reaction doesn’t surprise me one bit… As I mentioned up top, there’s a “regime shift” underway in financial markets.
It’s wresting power from Wall Street and other moneyed elites and transferring it to folks like you. And the elites don’t like it one bit…
But it’s handing everyday investors like you returns that would have been inconceivable even as recently as 10 years ago.
The GameStop posse took down a bunch of hedge funds. But bitcoin threatens to disrupt the entire financial system.
With bitcoin and other crypto assets, you don’t need to go through Wall Street investment banks or brokers.
You can simply log on to an online exchange and swap your dollars for crypto. And you can store your crypto in a digital wallet on your phone without a bank or custodian.
That makes crypto the ultimate “little guy” asset.
My colleague Teeka Tiwari began recommending crypto to our paid-up Palm Beach Letter and Palm Beach Confidential readers in April 2016.
That was before the mainstream media… or folks on Wall Street… started paying attention to it.
Since then, his top picks are up 8,032%…13,835%… even 16,741%.
That last one is enough to have turned every $10,000 into more than $1.6 million.
But most big-money investors still haven’t bought a single crypto. They’re late to the party… while regular folks like Teeka’s readers have been scooping up life-changing returns.
There’s a rebellion underway here, too.
Rule changes in the IPO market are leveling the playing field between ordinary investors and Wall Street elites.
IPO stands for initial public offering. It’s when a private company “goes public” and makes its shares available on a stock exchange, such as the NYSE or the Nasdaq, for the first time.
And as I’ve been showing you in these pages, the IPO market has been on fire lately.
In 2020, more stocks doubled on their IPO days than in any other year since the tech boom of the late 1990s.
Doubling your money in a single day is nothing to sniff at. But pre-IPO investors have done even better… often by orders of magnitude.
On their IPO days, Forma Therapeutics (FMTX), Black Diamond Therapeutics (BDTX), and Inari Medical (NARI) returned 95%, 108%, and 124%.
But if you had bought those biotech firms when they were still private… your gains would’ve been 3,356%, 4,652%, and 4,342% respectively.
Here’s Teeka with more…
Buying a private company on IPO day is what I call “The Hype Hole” path. Even when this strategy delivers gains… they’re just table scraps Wall Street throws at you to make you feel like you’re a winner.
By contrast, there’s something I call “The Blueprint” path.” It’s when you buy a private company before it goes public. This is sometimes called a pre-IPO deal. And it often delivers returns in the thousands of percent.
But for years, most investors were shut out of Blueprint path deals.
I’m talking about gazillionaires such as early Facebook investor Peter Thiel of Founders Fund… Amazon.com founder Jeff Bezos and his VC firm Bezos Expeditions… or Steve Schwarzman of Blackstone.
The U.S. legal code explicitly said you couldn’t get in unless you were an “accredited investor.”
These are folks who’ve made more than $200,000 in annual salary for the past two years… or made $300,000 in joint annual salary over the past two years… or have $1 million in net worth excluding their primary residence.
But in 2015, in another massive win for the “little guy,” those laws were lifted. Now anyone can buy into certain pre-IPO deals.
For instance, shares in the pre-IPO tech opportunity Teeka shared last night at his Freedom 2021 event are priced at just 50 cents each.
With a $500 grubstake, you can buy 1,000 shares – before they go public.
Teeka’s event was a masterclass on how to even the playing field with the ultra-wealthy… and unlock quadruple-digit profits… with Blueprint IPOs.
So if you missed last night’s big event, make sure to catch the free replay here.
It’s online for a limited time only. And Teeka has gotten word that the deal he has his eye on is attracting serious interest from a handful of wealthy venture capitalists (VCs).
So this is your fleeting chance to potentially invest alongside these insiders.
Here’s that link again to catch Teeka’s event in full.
Regards,
Chris Lowe
January 28, 2021
Bray, Ireland