Investment Advice On GameStop And Day Traders

Summary

• Day training is a real behavioral pattern that is often pursued to feel action and manage boredom rather than to earn money.
• Recently GameStop’s stock price went up by 1,500% in just days pushed by the Reddit community, an online social media organization, who made concerted buy trades with the alleged enemy.
• Real investing is a very boring activity.

We were told to sit down many times as children. However, we do not hear that as often as we grow older. Did we become sedentary? Possibly. But more often, it is because, as we grow older, we discover alternative ways to occupy our minds. Such as looking at social media, watching cable TV shows & sports, fishing, video game etc.… We spend enormous amount of time and energy to manage boredom.

However, a certain portion of the population can get into destructive behaviors when these mind occupiers are not satisfying enough and do not have moral guidelines. Such activities include using addictive substances, gambling, sexual fantasy, and some segments of day trading.

You got it. Day training is a real behavioral pattern that is often pursued to feel action and manage boredom rather than to earn money. Zero-commission trading brokerages effectively brought gamblers into the stock market. Day trading is a digitalized sporting activity whereas social media is digitalized fellowship. Just as people pay their valuable time and resources to participate in social media, sporting events and fishing etc., Also most of day traders lose money in the long run (i.e., spend money) for the experience of feeling volatility and thrill.

Nothing is quite new at its core concept, except that the scale has gotten more serious. Recently GameStop’s stock price went up by 1,500% in just days pushed by the Reddit community, an online social media organization, who made concerted buy trades with the alleged enemy being a few hedge fund managers who were betting the stocks would go down. Basically, they turned day trading into fantasy online football where sides were drawn by united small investors vs hedge funds. I am sure it was the thrill of a lifetime to participate in it and the mission to manage boredom was accomplished for a few days or maybe a bit longer.

As a real investor, we wonder what to make of this. Real investing is a very boring activity. Many times, it can appear going through specs of cars and electronics by looking at the financial statements and company profiles. Or when using funds, we consider price to earnings ratio, review sector exposure grid, beta level, correlations etc.… It might be worse than reviewing cars or electronics. Unlike cars or electronics, stocks will not even give you the fun of touching or playing with it. Real investing is a lot of waiting game, which does not help in managing boredom. Real investing requires disciplined patience with decisiveness.

By the way, I would like to add how we manage our boredom. Since our 4th boy just started walking, we picked up golf, fishing, and skiing. We have not picked up these activities in the last 2 decades while going through graduate schools, getting professional certifications, and working long hours. Ujae used to think golf and fishing were the most boring activities in the world. But we started anyway, since our boys loved them, and he grew into them. So, if you ever spot us golfing, fishing, and skiing, you will notice we are always together. We found activities to manage boredom while having health benefits and nurturing family/friends to be worth spending money for. We hardly see such values in day trading.

Ujae & Sarah Kang

Founders of UAK Diversified Wealth Management