What can you learn about investing from Game Stop ?

What can you learn about investing from Game Stop ?

Game Over!

"...momentum works until it doesn’t. The people who make money in momentum are the people who can detect when momentum shifts.

So if you want to be a trader, be a trader, but be aware of the fact that you’ve got to sense when the momentum is shifting. That’s a very different game. If you’re good at it you can make a lot of money but if you’re not I mean you’re going to get slaughtered!"

Aswath Damodaran

Well the Gamestop saga is all but Game Over by now. But I was actually a little concerned during the episode that some very high profile investors / CEOs were egging retail investors on. I mean completely no disrepect to them because I admire what they have accomplished. But as investors, you really need to learn how to think for yourself.

I shared with my coaching students recently how important it is to look at the fundamentals of the company because at the end of the day, these are not just tickers on a screen. They are real businesses, with real people working in them.

Hint: Go take a look at how much cash GME has, how much they burn every year, and how many stores they are still operating, and whether you need to go to their store to buy a game these days.

Don't lose your head, even when everyone around you is losing theirs.

Joshua Fong, CFA

Article by Joshua Fong, CFA

Published 10 Feb 2021