Gamestop - Not Investing, But Not Irrelevant

Gamestop – Not Investing, But Not Irrelevant

January 29, 2021

Old Peak Finance - Gamestop: Not investing, but not irrelevant

Gamestop – Not Investing, But Not Irrelevant

January 29, 2021

As you probably know, a small corner of the stock market is dominating the news cycle: retail day traders betting on a few little-known stocks. The shiniest penny: Gamestop, a video game retailer whose shares climbed from $19 to $350 in January alone. For the past week, they were up 400%. And no, that's not a typo.

Plenty has been written about this. If you want to understand why this is happening -- the clash of social media with Wall Street, or how short selling works, or the impact of Robinhood and other free trading apps -- there is plenty to be found online. I won't bore you with a rehash.

But I do have one important observation.

Financial success is built over years. It requires a steady, long-term view. All too frequently, the world tries to distract us. This past week, it was Gamestop. Last fall, it was the election. Last spring, it was the initial onslaught of COVID. Over the past several years it's been various crypto-currencies. Later this year, it will be .. well, of course, I have no idea. But, as Rosanne Roseannadanna said, it's always something.
So our challenge is to ignore the loudest headlines of the day, and keep our eyes on the long-term.

If you step back and reflect, you actually know what will happen over the long-term. A diversified blend of stocks will almost certainly do well, allowing large and small investors to benefit from decades of economic growth. If you save diligently, you will have more to spend in later years. If you avoid risky decisions like buying a house you cannot really afford or putting too much money in an individual stock, you minimize the chances of severe economic hardship.

It's all so easy to see.

And, sometimes, so easy to forget.

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