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GameStop investors may teach us all something

In This Article:

On the latest episode of Opening Bid, Ritholtz Wealth Management Co-Founder, Chairman & CIO Barry Ritholtz gives his hot take on GameStop (GME).

For full episodes of Opening Bid, listen on your favorite podcast platform or watch on our website.

This post was written by Langston Sessoms, producer for Opening Bid.

00:00 Speaker A

Do you have a message to meme stock investors? And I bring this up because I’m still trying to dissect what GameStop reported. They horrible year, sales down 30%, operating profits down close to 100%, operate they are operating 3,300 retail stores, uh cash flow is going out the door, but now they want to do crypto. What do you tell to these people who are on YouTube, Reddit saying they love this company?

00:30 Speaker B

So what I tell those people is keep doing that. Stay at it, have at it. When I was a kid, I used to watch Mutual of Omaha's Wild Kingdom and the aerial shot of the herd of gazelles moving across the savanna, there was always one gazelle that kind of wandered away from the crowd and you knew what was going to happen. That was going to be lunch for a bunch of lions. Somebody has to be that gazelle that's going to be sacrificed for lunch. I love the GameStop investors. I love all these meme stock people because they are a cautionary tale for the rest of us. There’s no magic formula, there’s no sub stack that’s going to get you rich. You can use put deploy your money to get rich slowly over time. We know how returns average over decades, take advantage of it. If you think that you’re going to be that one outlier, the odds are that you’re not. None of us would say I can take LeBron James one-on-one in basketball. He’s an outlier. He’s a one-of-a-kind player, you can’t take him. Three of your friends can’t take him at once. But at the same time, we all imagine that we’re going to be roaring kitty and find that one random stock that’s going to turn $10,000 into $10 million. I’m sorry, but it’s a lottery ticket. You’re more likely to be hit by lightning than you are to do that. And we, the media, loves these stories because it’s all survivorship bias. You don’t see the other 10 million meme stock traders who made no money, or worse went broke. You just see the one or two people who made a ton of cash. And so everybody thinks I want some of that lottery ticket. And I’m sorry to be the fly in the ointment, um you’re not, you’re not going to beat Michael Jordan, you’re not going to find a bazillion dollar stock, and if you are for some reason fortunate enough to own Nvidia or Amazon, or Apple, or Google, or Microsoft or any of the great stocks of our era, if you own them cheaply, well, be sure to take care of the rest of your portfolio. Find a way to manage around that and don’t risk taking a large fortune and turning it into a small fortune.

04:00 Speaker A

All right. Uh so if you’re a meme stock investor and you’re out there playing around GameStop and you hear what Barry just said and what I just said, uh get get out of Sonics, because I could just see the messages coming already. Uh

04:15 Speaker B

No, keep it up. Keep buying that stuff. You have to, you need some of this cautionary tale for the rest.

04:24 Speaker A

I appreciate that. I can't wait for these messages.