WHO:Â Jaydyn Carr, a ten-year-old from San Antonio.
WHAT:Â A wacky week in the world of finance thatâfor at least one kidâended simply and triumphantly.
WHY ITâS SO GREAT:Â At this point, youâre probably aware that thereâs something going on with the stock price of Grapevine-based GameStop. If navigating the details of Wall Street leave you with a headache induced by concepts like âshort-sellingâ and âmargin calls,â weâll break it down simply: Hedge funds âshort-soldâ GameStop stock, which in practice looks like a bet that the price will go down. A semi-organized group, made up largely of amateur investors, came together on the social media site Reddit to drive up the price instead, leaving short-sellers on the hook for the bets they placed. The implications for this are potentially vast, but also speculative: Did this expose widespread inequities in the stock market in a way that will bring about actual change to a broken financial system? Does it create a people-powered movement that will act as a check on unsavory Wall Street practices, by imposing financial consequences? Will it lead to a new regulatory era, in which the price of stocks is tied more fundamentally to the actual value of the companies in which shareholders are investing? Who knows!
Hereâs what we do know: Jaydyn Carr received ten shares of GameStop stock as a Kwanzaa gift in December 2019, back when the now hottest stock on the market was trading for a mere $6 a share. According to the San Antonio Express-News, Carrâs mom, Nina, gave him the gift to celebrate the holidayâs principle of Ujamaa, which focuses on cooperative economics. In the year-and-change since Carrâs investment, GameStop stock value dipped and climbed a bitâbut then this month, as social media users began the process of the âshort squeeze,â the price went full-on bonkers. Shares of GameStop skyrocketed to a peak of more than $400.
Carr didnât get out at the absolute peak of the market, but he came pretty closeâand he followed a core principle of investing that would still make sense in a rational market built for ordinary human beings: he (well, his mom) bought low, and then they sold high, netting $3,200 in the process.
According to Madalyn Mendoza, who broke the story for the Express-News, Carrâs plans for the money are to place $2,200 of it in a less volatile placeâa savings accountâwhile the last $1,000 will go back into the market, where itâs anybodyâs guess what happens to it. Another GameStop-like skyrocket is unlikely, but weâll be rooting for him. The stock market saga of the past week has been complicated, with implications we wonât begin to fully understand for some time, as history is being written before our eyesâbut one uncomplicated piece of it is that a ten-year-old boy in San Antonio was able to cash out at just the right time.
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