What a day! What a week! It’s been a thrilling ride and I would have paid double to be able to participate in all of this.

In fact as a side note I would have but Robinhood blocked my purchase… So I’ll definitely be leaving them as soon as this is all over.

Thank you to the amazing people at r/wallstreetbets for making it all possible.

Brass Tacks

I’ve spent the last 48 hours glued to my phone and laptop attempting to soak up as much knowledge as I can from every source possible to understand what the short squeeze is and how we can expect the next couple of weeks to go. With particular attention to exit strategies.

So far - and I’m far from done - I’ve come to these key points:

• Hold
• Buy
• Don’t sell
• Also, hold

What follows is just my raw, as-is notes. My hope is to eventually just share out sections of my Roam graph as is appropriate, but the share feature isn’t secure yet. So that’ll have to wait.

I’ll likely put together another post synthesizing this and what I continue to learn in order to try and explain what a gamma squeeze is, how this particular situation was made possible, and what else we might look for in the future as indicators of another possible short-squeeze. Although I don’t see Wall Street making this mistake again.

Notes

My notes on stock trading fundamentals. Nothing too exciting or even specific to the current GME situation yet.

Definitions

• bond
  • debt-based
  • investor lends money to a company or government which issues the bonds, and receives interest in return
  • does not indicate ownership of issuing entity, but you have more protection
  • is bought directly from issuer instead of traded on an exchange
• commodities
  • …
• common stock
  • most common kind
  • gives shareholders voting rights on certain decisions
    • e.g. attend annual general meetings, vote on issues like electing people to board, stock splits, or general strategy
  • as opposed to preferred stock
• derivatives
  • …
• dividends
  • …
• exchange
  • US exchanges
    • New York Stock Exchange (NYSE)
    • Nasdaq
    • Better Alternative Trading System (BATS)
    • Chicago Board Options Exchange (CBOE)
• futures
  • …
• investment
  • an asset bought with an expectation of future income or profit
• join-stock company
  • …
• options
  • …
• preferred stock
  • gives shareholders no voting rights but often guarantees fixed dividend payment in perpetuity
  • very similar to a bond
  • can be repurchased by the company at an agreed price
• stock
  • aka shares
  • a unit of ownership in a company
  • owning stock makes you a shareholder and therefore eligible to receive dividends and to vote on decisions
  • subtypes
    • common stock
    • preferred stock
• stock market
  • aka. “equity market”
  • umbrella term referring to the collection of exchanges where you can buy, sell, and issue stock in publicly held companies
  • despite the name you can also trade: bonds, commodities, currencies, andderivatives (e.g. options and futures)
• shareholder
  • someone who owns stock in a company
• shares
  • see stock
• < — unsorted —->
• free/public float
  • stock that has been released to the market and is traded publicly on an exchange
• stock splits
  • splitting each stock to reduce their individual value (make more accessible)
  • doesn’t reduce value of your stock, but increase share count
  • does not affect the market capitalization of the company
• market capitalization
  • …
• stockholders equity
  • (essentially) the assets the company has after they pay all liabilities
  • a metric used to better understand stock value
• short selling
  • speculating that a stock value will fall by borrowing it now, selling it, then buying it back to return it to the lender and pocketing/paying the difference
• stock purchase plan
  • when an employer offers discounted stock to an employee
• Blue-chip stocks
  • category for large, well-capitalized (what does this mean?) companies
  • usually traded on main exchanges like NYSE and Nasdaq
• Broker
  • someone who executes trades on behalf of an investor/trader and receives commission on the return
• Buying on margin
  • borrowing money to buy securities
• Pink sheet stocks
  • aka. “penny stocks”
  • small companies trading below $5
  • usually traded over the counter and higher risk
• over the counter
  • bought directly from the issuer/company
• market order
  • an order executed at the next available price
  • can be risky if stock is wide spread (the difference between buy and sell offers is wide)
• limit order
  • sets a maximum price to pay
  • sometimes doesn’t get filled if the market is moving fast (volatile?)
• stop order
  • a trigger so order only executes at that price

Relationships

• understanding investments
  • trading resources (e.g. money or credit) for assets (e.g. stock or real estate)
  • basic expectation that they’ll appreciate or you’ll collect a dividend
  • risk is it could depreciate
• what is a stock?
  • how they work
    • allow companies to raise money for operation
      • is that only at IPO?
    • shares are bought and sold on an exchange like the New York Stock Exchange (NYSE) or Nasdaq
    • in some cases they can be sold privately
      • why? how? should I care?
    • regulations on how they can be bought/sold/distributed are made by the SEC
    • can trade either common stock or preferred stock

      • example:
        If a company has 100 shares of stock outstanding, and you own 1 share, you own 1% of that company. The value of your shares will represent approximately that percentage (1%) of the company’s market capitalization, or the value of all outstanding shares.

      • why do we think it’s worth 1% of the market cap? Isn’t it only worth the dividends?

        • example: Imagine that you want to own a cupcake shop, but you only have $1,000 to start. In order to buy the necessary supplies (e.g., flour, icing, cupcake tins), you might raise money from friends and family. Let’s pretend that four of your friends each kick in $1,000, so you have $5,000 total and you’re able to get the business off the ground. In exchange for their investment, you might agree to give each of them 20% of the business and its profits. This is kind of how stocks work, except on a much larger level.

      • but do you as the cupcake business get anything when people trade your stock? seems like a great way to raise money once.
      • but do you as the cupcake business get anything when people trade your stock? seems like a great way to raise money once.
  • history of stock
    • romans created “lease holding” which was similar to stock and citizens could buy to fund public projects
    • in the 1600s the East India Company (EIC) was the first join-stock company and is the predecessor of modern LLCs
      • they made their money trading commodities
  • stocks vs. other instruments
    • bond differ in several ways but mainly in that they aren’t ownership shares
    • futures and options
      • both are derivatives * their value is based on another asset e.g. commodities, shares, currencies, etc.
      • are contracts based on fluctuation of underlying asset
  • stock, bonds, and other things are traded on the stock market
• understanding the stock market
  • operate similar to auctions where potential buyers name their highest price (the bid) and potential sellers name their lowest price (the ask)
    • trades are executed when these overlap

References

• https://learn.robinhood.com/
• https://www.investopedia.com/articles/basics/11/become-self-taught-finance-expert.asp

This is not financial advice.
I am not a financial advisor, I’m an unemployed data engineer.
I just like the stock. :diamond: :hands: