While WallStreetBets, the Reddit group, started in 2012 by Jamie Rogozinski it was really the GameStop short squeeze in the third quarter of 2020 that brought it to primetime. Tendies, diamond hands, degenerates, apes… These are some of the terms that are frequently used on the reddit group. I went into this book thinking it would be around the fiasco that was the GameStop short squeeze but I was wrong, and pleasantly surprised.
While other investing groups are very conservative, with a long-time horizon, WallStreetBets fills the void for many risk-taking hombres who want to make a short term, oftentimes highly risky play, in search for equally crazy high returns.
What I liked about Jaime’s approach with this book is that he paints a picture early on for what has cultivated such an environment of risk taking. I would summarize as the following: Many of the people in this group look at Wallstreet as an exclusive casino, which most of society is not invited to. Secondly, taxpayers had to bail out the banks in the great financial crisis in 2008. Lastly there are “safeguards” that have been put into place, like the classification of a “pattern day trader” which requires 25k in an account, which create an access issue while not really saying anything about the knowledge of the trader. And that’s not even with the trillions of dollars that are being printed as a macro backdrop, causing inflation and, once again, incentivizing excessive risk taking.
You want to make a bet? What better way to go all in than with options, the leverage instrument of choice it seems for the members of WallStreetBets. Options are instruments that derive their value from an underlying asset. The option to buy a 100 shares of Tesla in one week’s time at a price, referred to as the strike price, of $1400. That option there is what the industry calls a “Call” option. The option to sell is referred to as a “Put” option. These can be very safe or very risky depending on the type of option one is buying or selling, and many cool combinations can be put together for intricate payoff diagrams. Can you scream Iron Condor?
One thing about WallStreetBets is that people share a lot, many people would characterize as excessive. It’s not uncommon for members to share five and six figure losses, referred to as loss porn. While those people often get ragged on it creates a forum for members to seriously learn strategies and methods of investing, and dealing with the psychology of money, which I don’t think gets talked about enough.
I thoroughly enjoyed this book and I hope that you’ll listen to The Brothers on Books Podcast review of it:
I will also leave you with an epic compilation of YOLO bets performed and then shared on WallStreetBets:
