There’s a good chance you’ll come across a BFF or “soul sister” at some point in life, but you’ll have better luck finding good sweet tea in New Jersey than finding someone you NEVER disagree with. As humans, our thinking is the product of constant information input across 5 senses for years on end. Our perspectives, vantage points, experience and access to data all differ, creating an infinite number of possible opinion combinations.
If you take these differences, mix in a few powerful outside influences and ask people to predict the future with money on the line… needless to say you won’t get a bunch of the same answers. But what you will get is this delightful little thing we call investing.
Since there’s no cheat sheet for beating the market, turning available information into investing decisions ends up more like The Telephone Game than a relay of hard facts. Buying and selling stocks comes down to betting money on our future predictions. Interestingly, the number of dollars invested becomes a direct indicator of the confidence we have in our predictions.
Captain Obvious here, but people buy stock because they’re predicting it will be worth more in the future. And you guessed it – selling usually means they think it’s headed in the opposite direction. There’s nothing wrong with doing either of these, in fact they’re the definition of how the markets move. Theoretically, money moves towards companies that are providing the most value at the best price and away from those that aren’t.
So what about short selling? There’s nothing wrong with this either, it merely ups the ante. The short-seller borrows a stock and sells it at today’s price. They then buy the stock back in the future and return it (with a little interest) to the lender.
If the short seller buys the stock back at a lower price, they then pocket the difference. On the other hand, if the stock goes up, oh I don’t know – say 20X, instead of just losing the price you paid for the stock, you’d lose TWENTY TIMES more than the stock you borrowed.
So what’s the big deal? Higher risk, high reward right? Ain’t that just traders bein’ traders… making bets and backing them up with dollars? It is, unless there’s more to the story. In Gamestop’s case, you’re dealing with a large population that believes they are playing the game with a stacked deck. Yet, it’s not as simple as the people vs. Wall Street. As one analyst put it,
“The saga of GameStop is a story about the stock market. But it is also a story about politics. About power. About laws, memes, tech startups, wealth inequality, trolling, social media moderation, nostalgia, online organizing and mass psychology.”
On the other side of this complexity though, one thing is clear. This online community is fighting manipulation with manipulation.
But what if there was another way? What if we could put our hard earned dollars into something concrete. What if we focused on real business fundamentals?
We think what retail investors really want is direct access. Access with a level playing field and the opportunity to place money with purpose – or to borrow from the Reddit handle: Deep********Value. Vicinity aims to provide retail investors with another option for access. One that’s short on manipulation but long on community.