YOLOs aren’t about risking your livelihood: How WSB has changed and how you can avoid becoming a victim via /r/wallstreetbets #stocks #wallstreetbets #investing


YOLOs aren’t about risking your livelihood: How WSB has changed and how you can avoid becoming a victim

Look, I like loss porn as much as the next guy. It’s hard not to be be enamored by someone that had so much conviction and degeneracy that they gambled away years of earnings just for the chance to make it big and become a WSB legend. Reddit karma is great too. But WSB has changed over the years. It used to be that degenerates on here knew at least the basics of options, greeks, and what they were doing. In fact, it was funny because they were conscious of the decisions they were making. Someone YOLO’d $20k into Micron options 100% out of the money expiring in 1 month? I remember when it felt like every other yolo was MU 100 strike calls in 2018. Pure WSB idiocy, but you know what, they knew what they were doing. They were risking 20k and no more, and if some miracle happened, they could hit the jackpot. But over the past year after the Meme stocks put WSB on the map, this isn’t what I’ve seen.

Now, buying into Meme stocks or growth stocks is somehow a social movement. People think buying stocks is about sticking it to the hedge funds or Robinhood to punish their manipulation and corruptness. I see more and more people who don’t know anything about basic fundamental analysis or what even PE ratios are. All people see are prices and charts, and if something drops 5% from the all-time high, then it’s BUY THE DIP TIME Y’ALL! And even though a brick-and-mortar video game retailer surged from under $5 to over $400, from a market cap of under half a billion to over thirty, somehow people still think we haven’t seen the mother of all squeezes yet. But you know what, this isn’t what WSB is about. WSB is not a social movement, it’s not about averaging down on highly speculative assets, and it’s certainly not about risking your livelihood.

In my humble opinion, WSB was/is about making calculated bets with asymmetric risk/reward. If you risk 10k, you better be able to make at least 100k if your bet pays off. If GameStop or some overpriced tech stock drops 5% from your average cost and you think it’s time to buy the dip, take a step back and think: did you already put more money than you were willing to lose into memes? If so, DO NOT average down. Set a fun money budget that won’t ruin you if you lose it and stick to it! If you exceed it repeatedly, you have a gambling problem and you should get help. If you don’t know how much you can afford to lose, start budgeting. There are plenty of affordable options like YNAB (You Need a Budget). If you know if you can afford to lose $500 each month after expenses, paying down debt, etc, then go ahead and YOLO that away. Now, I am not saying averaging down isn’t a valid strategy, but if all you know is that the price dropped and have no knowledge of how to properly value a business, then don’t go further in the hole. Also, averaging down over time is not a bet. You don’t see people at the race track adding a few more dollars each time their horse stumbles. They just make another bet the next day, and it’s only a problem if they lose more than they can afford. Average down on ETFs over on Personal Finance if you want, but don’t mix this shit up. Random general investment advice like “time in the market beats timing the market” doesn’t apply when you’re speculating.

But if you think that striking it rich is easy and that this is your only option, then please reconsider. If you are depressed or know you have a gambling problem, then also reconsider. There’s a way to be a degenerate without ruining your life, and that starts with knowing your personal risk tolerance. There’s a difference between a 100k loss porn screenshot of someone who has a mortgage they’re behind on for their house or who has a spouse and kids who rely on them, as opposed to some young Wall Street finance bro or programmer who can earn it back in a year.

With the turmoil in the markets and all the new members that joined over the past year, I figured this was a good a time as any to remind people that at the end of the day, only you know what’s best for you. Don’t blindly follow price targets or stock recommendations from strangers on the internet without doing your own Due Diligence first. And above all, don’t be a victim! Despite the market turmoil, hope to see a lot more gain porn than loss ones this year! Hope y’all stay healthy, physically, emotionally, and financially, and YOLO ON! Cheers!

Submitted January 23, 2022 at 06:52AM by bruceNook
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