Gamestonks thoughts

What traders are doing with Gamestop and other stocks is different than shorting. But, at the same time similar.

The similarities lies in that both are riskier positions than long term investing. But, that is really where it ends.

Hedge funds taking out short positions aren't causing any direct harm to positions they are shorting. They are simply making a bet that a stock will drop in value.

On the other hand, the "stonks" traders trying to game the market against companies making shorts are trying to hurt the hedge funds. But, really, that means hurting those invested in the hedge funds. And, at the same time they are attempting to manipulate the markets the drive up the value of certain stocks they are interested in.

While one can perhaps debate over the virtues of attempting to gamble on a companies misfortune, it actually is much clearer that those attempting to manipulate the market are actively trying to do harm to someone.

One might ask "but, aren't they helping out those companies, like Gamestop?". In fact, my wife asked this very question. And the answer is "not inherently".

A stock having any given price has no direct impact on the company behind it. They are typically just fancy bargaining chips. Most companies retain enough shares that their board retains control over the company. And companies aren't, on a regular basis, buying back or releasing additional stock units.

In short, boosting Gamestop's stock value does nothing to their bottom line.

One could argue that it does some POTENTIAL good for them. But, at the same time, one might argue it does potential bad as well. I would say that the biggest positive for Gamestop is really just the free PR this has given them. But, that is just by virtue that they are the main beneficiary of what was a novel occurrence.

If Gamestop decided to release more shares, an elevated stock price might mean they can draw on more capital than they reasonably should have access too. But, unless their primary problem is that they don't have access to enough capital and the stocks remain high even after that announcement it doesn't benefit them.

And, it means that if Gamestop felt the best thing was to buy back stocks, then it is now MUCH harder for them to do so.

I don't really care about hedge fund managers. But, they aren't as affected by these actions as the peoples who retirement money is invested in them.