This week we've seen one of the most incredible short squeezes in history as Wall Street Bets has bid up shares of Gamestop to $347 (it was $20 a mere fifteen days ago), bringing hedge fund Melvin Capital to its knees, which needed a $2.75 billion bailout on Monday.
We are seeing an inflection point in a shift of power away from institutions and towards networks.
Wall Street Bets is a force to be reckoned with, but they are disorganized and disinterested in investing in companies for the long term. They have neither the interest nor the attention span to keep stocks like Gamestop at its current levels for an extended period of time.
(Not an argument for a short, please don't read it like that. Just making the point that a year from now, you won't see Wall Street Bets continuing to focus their energy simply on keeping Gamestop's share price up)
Commonstock has the potential at wielding a similar network power while being much more analytical, focused, and sustainable.
Right now you can see the raw power of networks all around the internet. There is a surge of interest in financial topics arising in a plethora of platforms where you will find an abundance of the same conversation happening over and over again, where one disembodied name says to another disembodied name:
"I hear XYZ is supposed to go up tomorrow, what do you all think?"
...without any effort to understand why the stock may go up or down.
Here on Commonstock you have a reputation that sticks with you, and you are incentivized to be both more thoughtful and helpful to others.
Since your returns are tracked over time, what matters here is the sustainability of your strategies, not the shock value of your boldness.
Commonstock has chosen to channel the energy of the community in a very different direction than Wall Street Bets.
We're starting to see niche group chats take off on Commonstock. Group channels on topics such as 'Artificial Intelligence', 'Semiconductors', and 'Valuation' are becoming spaces where people dive deep into the weeds and attempt to suss out investing implications.
(The Valuation group held a hour and a half meet-up on Zoom where @chasinggreatness
taught us how to build financial models in Excel last week)
These small chats benefit the whole Commonstock network as people distill their learnings down to nuggets of gold in memos and explain them in an approachable way. (And are available for further follow up questions in the comments and direct messages!)
Instead of mob rule, Commonstock thrives because the purpose is for each node (individual investor) to educate and learn from the other investors. We succeed not by directing a swarm to pump and dump, but developing each individual community member to make better informed decisions, for the long haul.
And we've got an edge.
made a great point: "Research something that you have more fun thinking about than other investors. That gives you a natural advantage and removes the drudgery of having to keep up to date."
We will have more people, interested in more things than even the largest institution will be able to employ analysts for.
And we have different values and different goals than other networks.
So embrace that weird thing you want to learn more about. You don't have to be an expert to write a memo. In fact, you will probably explain things in a more approachable way than the experts if you publish your notes as you go down the learning rabbit-hole.
We have the makings of a really interesting ecosystem here.
If you had to bet on where the next amazing investment idea would surface, would you bet on a hedge fund? Would you bet on Wall Street Bets?
My money is on Commonstock.
I'm really looking forward to building this community with you all.