Gather Money Little By Little? The news about GameStop and AMC Entertainment

Posted In: COVID-19 Market Update

If you’ve been watching the news, you’ve probably heard about some extreme circumstances in the stock market.

Amongst these newsworthy stories, AMC Entertainment (AMC):

 

 

It is not normal to see a stock rising and falling like this on a weekly basis.

And then there’s GameStop (GME):

 

 

Same thing with GameStop.  It’s very unhealthy to see this vast amount of speculation.

 

These moves have come from a bit of a “standoff” pitting small investors against hedge funds that were betting on these companies going out of business. The surprising run-up comes from what is known as a “short squeeze.” This occurs when a stock jumps sharply higher, forcing traders who had bet that its price would fall to buy it in order to forestall even greater losses. Their scramble to buy only adds to the upward pressure on the stock’s price (Investopedia).

 

The standoff will soon end, and unfortunately the majority of investors will lose because greed will outweigh sound decision making.

We are committed to avoiding such speculative decision-making.

 

We believe the path to consistent gains is through investing in fundamentally superior stocks. Many of our stocks have posted positive earnings reports, catapulting their prices higher.

 

For instance, a stock we have held for several months is now seeing GameStop (GME)-like returns today.  Novavax, Inc. (NVAX) is up over 60% today, after it revealed the efficacy of their COVID-19 vaccine against transmissible and more resilient strains of the virus. During testing, the vaccine had 89.3% efficacy in its U.K. Phase 3 trials.

 

 

The bottom line is that focusing on earnings and companies with a promising future is still working.  Speculating and gambling are not the way to riches.  As the Bible says in Proverbs 13:11, “Dishonest money dwindles away, but whoever gathers money little by little makes it grow.”

 

Sources: Yahoo Finance, Reuters.com, and JP Morgan Market Insights

Any opinions expressed in this forum are not the opinion or view of American Portfolios Financial Services, Inc. (APFS) or American Portfolios Advisors, Inc.(APA) and have not been reviewed by the firm for completeness or accuracy. These opinions are subject to change at any time without notice. Any comments or postings are provided for informational purposes only and do not constitute an offer or a recommendation to buy or sell securities or other financial instruments. Readers should conduct their own review and exercise judgment prior to investing. Investments are not guaranteed, involve risk and may result in a loss of principal. Past performance does not guarantee future results. Investments are not suitable for all types of investors. To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purposes of avoiding penalties that may be imposed by law. Each tax payer should seek tax, legal or accounting advice from a tax professional based on his/her individual circumstances.
This material is for informational purposes only. Neither APFS nor its Representatives provide tax, legal or accounting advice. Please consult your own tax, legal or accounting professional before making any decisions. Information has been obtained from sources believed to be reliable and are subject to change without notification. The information presented is provided for informational purposes only and not to be construed as a recommendation or solicitation. Investors must make their own determination as to the appropriateness of an investment or strategy based on their specific investment objectives, financial status and risk tolerance. Past performance is not an indication of future results. Investments involve risk and the possible loss of principal.

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