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The Wrong Lesson From GameStop

Newcomers rushed to open a brokerage account last month. Fuelled by the craziness of GameStop, folks jumped into the markets head first. A get-rich-quick scheme paired with a David Vs. Goliath story, this brought investing to the mainstream. Retail investors turned thousands into millions, all while hurting hedge funds in the process. Make money and tackle inequality? How could anyone resist?

Driven by emotions and momentum, this was a speculative bubble that was destined to snap back to reality (oh there goes gravity). A lot of people are now losing money and are screaming foul at the rich for rigging the game. 

A terrible first impression. Why invest when they can change the just rules? This is the wrong lesson.

Does the stock market favour the rich? Yes. They have faster computers and better information. But if you put down your broad brush you'll see the stock market is a great way for everyone to build wealth.

Pros might have advantages but they don't have complete control. If they did, they would perform better. Instead, they by and large underperform the market. 

We have one key advantage. We can play the long game. Hedge funds need to show results every quarter, we don't. They need to take outsized risks and trade excessively to prove their worth, not us. 

Despite the current narrative, investing has never been more democratized. It's practically free to get our fair share of market returns with index funds.

If you lost money it's not because investing is broken. You weren't investing. You were gambling. 

This wasn't rich vs poor, it was early vs. late. A game of musical chairs where there was a million players to each seat. Don't get fooled - not by the rich, not by folks on Reddit. None of them care about your financial goals. 

If you truly want to grow your wealth and not play into a losing game - keep your fees low, trade less and invest for the long term. Don't lose faith in the stock market because of this, it'll only cost you more.


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