Q1 2021 ends much like last year's Q1 ended in the middle of a pandemic. One full year of the corona pandemic; crazy to think a year ago, it all started. Now with the first quarter of 2021 finished, it's time to take another look at my portfolio and see how it faired during these challenging times. Did my portfolio continue to rocket to the moon, or did it orbit a bit and crash back down?
Last Updated on February 6, 2021 by Mr. FightToFIRE
We can stay retarded longer than you can remain solvent” – some autist on r/WallStreetBets
Yes, I confess, I too had shares in GameStop (Ticker: GME). To tackle the elephant in the room, I bought 25 GameStop shares at 40 USD.
On 27/01/2021 I sold 5 shares for 274.00 USD to cover my initial investment and a bit of profit. I sold the rest on 02/02/2021 at 92,32 USD. Why only there? Well, greed for one but also the genuine belief that we could squeeze out one more push to +500 USD. It didn’t happen. As a result, I earned 1,158.50 USD or 961,90 Euro(incl. commissions + taxes) on the first sale and 1028.13 USD or 853,66 EUR(incl. commissions + taxes) on the second, giving me a total profit of 1 815,56 EUR.
How I got into the GameStop adventure
I had no clue what would happen when I entered. I thought it could wither back down to the 20 USD it came from or it could actually move up a bit. Nobody knew, so I played it safe and entered with 25 shares.
Following WallStreetBets looking for a diamond in the rough
I got in before millions of new retail traders started swarming WallStreetBets and the media started covering the story.
WallStreetBets wasn’t unknown to me before all that. I lurked there from time to time, but as 2020 came to a close and some users shared their incredible success, I realized there were gems amongst the rough. It was clear I had to be careful given the plethora of loss posts you could see on there, but it was definitely possible to find good due diligence and get in some of the ten-bagger action.
My decision was made! I would use 2021 to invest 20% of my core-satellite portfolio into more specific stocks and aim for multiples instead of 2-digit gainers. Yes, my initial motivation when entering GME was nothing more than gaining more than 100% return.
To get into a stock that was so heavily shorted and in shambles wasn’t easy. I doubted a lot. Instead of getting in at ~15 USD with 125 shares, I waited till 40 USD to make the jump and “only” bought 25 shares. It prevented me from gaining even more but that wouldn’t matter because I still only sold at a much lower price than the top last week (~480 USD).
It shows once more that not only entry is important in these types of moves, but also exit. Especially FOMO and greed can have a big impact on your final profit.
The real hero of the GME squeeze: DeepFuckingValue aka Roaring Kitty
To close off I want to give credit where credit is due. He is the person that really started it all and that deserves mad respect for sticking to his thesis throughout 2019 (!) and 2020 and even now still holds millions worth of shares and options: u/DeepFuckingValue or Roaring Kitty on Youtube.
I am surprised how little people talked about the analysis that u/DeepFuckingValue shared on Reddit or as Roaring Kitty on Youtube. Even Scion (yes, that one company from ‘The Big Short’) was in it with a reasonably large position.
Of course, it’s grossly overvalued now from a fundamental point of view, but GameStop didn’t come into the spotlight at all purely because of the short squeeze. That was only part of the analysis. Just check out the streams of DF/RK:
GameStop was already rising strongly after Cohen from Chewy stepped in and recruited fresh blood. They made a deal with MSFT to get a commission on every Xbox sold. GME climbed from 4 USD relatively quickly to 14 USD. DFV shared this progress monthly on WSB and as his initial deposit of 50K grew, he got more attention.
9 months ago DFV gave some more attention to the Short Squeeze https://www.reddit.com/r/…ing_the_start_of_the_big/) but it was not really used then.
When the stock finally pushed through to 14 USD and then 20 USD he had millions in paper profits. Only then did others start to jump on it and the short squeeze got more attention.
What makes it even better is that WSB himself was laughing at DFV with his position in GME (https://www.reddit.com/r/…t_for_jacking_up_my_cost/).
A decent write-up of the history can also be found on Vice.
But there is way more to the story
While I didn’t cover the details of what short-selling is, or what the impact that WallStreetBets has in all of this, there are some good Youtube videos out there. The Plain Bagel just released his take on it but there are of course many more. Here is a small selection.