by Houston

Please share your updates on things/situations you’ve mentioned on the Totebag. Did you ask the Hive Mind a question? Did you try a recipe that someone posted? Did you make a purchase based on a recommendation? We want to know how things worked out.

Here’s mine: I asked if anyone used the Costco Car Buying Service. Several people came back with mildly positive reviews. Well, we just purchased a Subaru Crosstrek using the program and I highly recommend it. The experience was very pleasant, and the discount was fairly substantial. Also, the program asks dealer to share their invoice prices, which took a lot of stress out of the purchase for me. Two thumbs up!

103 thoughts on “Updates

  1. Houston – We (most likely) will be looking for car for DD#2. Does Costco only work on new car sales or used car as well? Also, how do you like the crosstrek and did you consider the forester?

  2. Austin, they do used cars, too.

    We wanted a smaller and sportier car, so we chose the Crosstrek. The Outback was our second choice, but it was too big for what we wanted. This car is DH’s and he loves it. It’s quite sporty and zippy and looks great. It is higher up, which helps when our street floods (which seems to happen with heavy rains!)

    I prefer Hondas/Acuras because I like the interior better and they have side cameras.

  3. Someone mentioned auditing subscriptions and reoccurring charges. I went though the charges and found two hulu accounts, some credit cards that needed to be converted to no annual fee, an old bank account that was charging me $20/month and a few other things. A penny here and a penny there and it’s easily +$500/year.

  4. Thanks Houston – DD#2 is considering the amount of “cargo” space. This will be her primary vehicle and she will use it when she moves back to a college apartment in the fall and between apartments, etc. I think the Outback is a bit to stationwagony for her and even the Forester is pushing her price range. I agree with Honda in general, but dislike the CRV.

  5. Like Rhett, I took the advice to look at my subscriptions. I was able to get rid of a few as well. As they renew, I am moving them all to one card that only has those subscriptions and same cost autopay (like gym membership) on it to make them easier to see.

    My other update is the air fryer. We went with one that is an oven model. It was a Christmas present, so we are just getting used to it. I like the toast setting – I know which rack to put the bread on, the setting, and then reduce the default time by 1 minute to have what I consider perfect toast. We are still figuring out other things – the first go at tater tots was a fail, the second one was better, but then we read we should be using the rotating basket – maybe the third time will be the charm. Some things you still need to do two batches if you are trying to feed more than 2 people, but when it is back to just two of us, I think we will shift to using it more than using the oven.

  6. For all the new car owners – I didn’t think breaking in an engine was still a thing…but it sure is. https://www.freep.com/story/money/cars/mark-phelan/2021/01/27/chevy-corvette-new-engine-torque/4239195001/
    “Old-timers — and people who read owners’ manuals, a Venn diagram that’s probably a circle — will tell you to not to exceed 50-60 mph for the first few hundred miles. That allows oil to work its way into nooks and crannies, and parts to settle firmly into place.”

  7. LT,

    I checked something like an M3 and I like how the manual was likely translated from the original German.

    Up to 1,200 miles/2,000 km
    Drive at varying engine and road speeds, but do not exceed 5,500 rpm and 106 mph/170 km/h.
    Avoid full load or kickdown under all circum‐stances.

    The engine and road speed can gradually be increased to a constant speed of 137 mph/220 km/h.
    Use the maximum speed of 155 mph/250 km/h only briefly, e.g., when passing.

  8. LT,

    I checked to see if something like a Camry still needs a breakin period:

    Breaking in your new Toyota
    To extend the life of the vehicle, observing the following precautions is recommended:
    ●For the first 186 miles (300 km):
    Avoid sudden stops.
    ●For the first 621 miles (1000 km):
    • Do not drive at extremely high speeds.
    • Avoid sudden acceleration.
    • Do not drive continuously in low gears.
    • Do not drive at a constant speed for extended periods. Avoid full load or kickdown under all circum‐stances

    I add a step and get the oil changed at 2500 miles. It might not make a difference but I’ve read that it can help slightly as the engine generates more debris as it’s being broken in.

  9. We decided to skip the new car for DD for now. We do not know when DH will have to return to NYC. We are going to wait until DH has to commute to buy a third car. It will probably still be the Subaru Crosstrek, but it doesn’t make sense to have an extra car sitting around everyday.

    She will take my car to school if she passes tomorrow, and I will drive the MDX until I can find my new car. School is just two days a week in person so this should work for now. The replacement for my x1 is in July. We will replace the x1 with a larger SUV for DH. He is considering the Q7 or something similar. My plan is to test drive the Volvo xc 40, Mercedes GLA and Lincoln Corsair this week. I have to find something soon in case the MDX dies.

    DD did not drop AP Psych. The teacher didn’t get better because he is brand new, but the school finally gave him support via a mentor.

  10. Interesting Rhett. It sounds like for the Camry you should avoid getting on the freeway and setting the cruise control. :)

    For the MS – “Use the maximum speed of 155 mph/250 km/h only briefly, e.g., when passing.” I can’t imagine going 155 in any circumstances. That just seems so insane to me, but then again, I drive a minivan.

  11. Think it was Houston who recommended Breath by James Nestor. It was a fascinating read. Thanks!

  12. DS has decided to change his major yet again, this time to Environmental and Water Resource Economics. He likes that it’s the higher level environmental stuff that he is interested in plus some of the economics.

  13. The Totebag was where I first heard of the Instant Pot quite awhile back. We’ve become huge fans, and not only use ours all the time, but have probably given them as gifts to 5 relatives since.

    I’m also pregnant again, very early days, cautiously hopeful after dealing with repeated miscarriages.

  14. LT,

    Here is the turbo version of LfB’s car doing 200mph on the autobahn. Advance to the 1:00 minute mark and note how fast the scenery is moving past. Note: 200mph is 320kph. The speed is displayed below the tach on the lower left.

  15. OMG Rhett I want to get my car on the Autobahn — SO jealous!! I haven’t topped the low-100s, because the only place I have to go that fast is a racetrack with 17 turns. He also got my absolutely favorite sound: the little “blip” you get when you downshift in Sport Plus mode when the car rev-matches for you and the exhaust goes put-putt.

    Rio, fingers crossed for you!

  16. Rhett — I know, I know. But that requires buying new. And they’re all mini-turbos now.

    OMG this all just reminded me that I had a dream last night that I had been driving a four-door sedan for several years, and the sedan was nicely sporty (sort of like the Giulia, but better), and I was happy with it. But I suddenly remembered that I used to own the Porsche and had sold it for this other car instead, and all I could think was “wtf was I thinking to have gotten rid of that car?” and how would I ever find something like that again.* As soon as I remembered that dream, I just had a wave of relief wash over me that it wasn’t real and that the car is still sitting in my garage. It’s funny, even though I know the dream wasn’t real, I’m sitting here right now feeling like I dodged a bullet. ;-)

    *When my dad totaled his Porsche, he had to replace it with an automatic. Even with Porsche, it is hard to find a convertible with a stick.

  17. Rio, I’m really hoping things work out for you.

    I think is was NoB who said she wore ear plugs to minimize the sound of her DH’s snoring. I started wearing ear plugs and I’m sleeping so much better. When I’m wearing the ear plugs it’s almost as if I’m under water. I can still hear sounds, but they’re distant. It did take some time for my ears to get used to the plugs. Initially my ears got sore and I’d have to remove the plugs after a few hours but I’m at the point now where I can leave them in all night.

  18. Yes LfB – do it! That would be so fun…for you…not for me. That would scare me to death. This makes me miss Top Gear.

    Rio – sending positive vibes

  19. LfB – I’d do this one: https://www.porschedriving.com/travel-experience/northeast-fall-foliage

    Of course it’s $10k per person, but you’re not going to NZ anymore… so… :)

    Ginget – I wear earplugs to deal with DH’s snoring too! Amazing. You know what else also helps?? New pillows and new mattress. :) But I still keep them around in case I need them. The sound deprivation does wonders for my anxiety. Sometimes I wear them around the house too. :)

  20. LT – The original team has Grand Tour on Amazon Prime. Still very good. And if you subscribe to Motor Trend’s streaming service, they have every single Top Gear episode and special. I got a Father’s Day deal last year for ~$1 per month for a year. I’m only using it to watch Top Gear, then we’ll ditch it. :)

  21. Oh, we watch Grand Tour when there are new episode…along with all those Amazon James May specials. But the Top Gear format was great, both the American and BBC version (I loved the tri-wheel car episode).

  22. Rhode: But there are speed limits! And other people you have to socialize with! And you have to share a car! ;-) It is beautiful, though — I’d love to do something like that on my own.

  23. Grand Tour just doesn’t seem to have the magic chemistry that Top Gear did, despite the fact that it’s still Jeremy, James, and Richard. I can’t quite figure out why. It just seems droopier and more boring.

  24. Grand Tour just doesn’t seem to have the magic chemistry that Top Gear did,

    I bet Hammond and May loved being on TopGear and loved working for the BBC. And then Clarkson threw a tantrum ruined everything. So while they like the Amazon money, they are still mad at Clarkson for ruining everything.

    I also think some of the producers and staff stayed at the BBC and without there input it’s not like it used to be.

  25. My DS is agog with the GameStop. stock goings on…

    Someone is making real money. The hedge funds that were short GameStop got caught in a short squeeze and have taken heavy losses. That money ended up in someone’s pocket.

  26. I agree. The OG Top Gear was so much better. I never really liked the American version. Just not the same. And I think some of that happened in Grand Tour as well. It can’t be the same because of copyright, and while it comes close, it’s just not.

    Hammond needs the insurance. He keeps crashing cars.

    LfB – true… but pretty. One of my bucket list items this year is to drive a luxury car. I’m hoping that when the weather gets nice my friend who owns a Panamera will still let me take it for a spin. I’ll have to bring my passport… I may end up in Canada quickly… :)

  27. Stove update. The repair guy came today and the workings of the stove are fine. There is apparently a cord that brings in both 220 and 110 or splits off and steps down 5he 220 to 110 to run the displays, not the 220 for oven and cook top. Something shorted out and was only bringing in 110. So no waiting for parts from Europe. Just some connectors and wires. He will be back in a couple of weeks, next available house call.

  28. Ginger — I’m glad the ear plugs are working out for you. They really have been life-changing for me, once I got used to them. Although just the other night, DH was snoring so loudly that he woke me up — more than once — even with the ear plugs in! Luckily that doesn’t happen too often.

    “My DS is agog with the GameStop. stock goings on…”

    Other than his car, all DS talks about these days is Game Stop. He will interrupt me periodically throughout the day to inform me of what the stock price is. He has a couple of friends who have been playing the Game Stop put/call/whatever game, and have made some money doing so (we’re talking hundreds, not thousands, but these are high school kids, so it’s a lot to them). I think DS wants to start playing, too. He has some money in the bank, so I told him he could if he wanted to, as long as he understands that he could potentially lose big. I think he’s looking at jumping in with AMC or Blackberry.

  29. I asked for ideas on how my kid could get into day trading. Got finger-wagging. He’s currently up about 850% in the last 8 months—but that is changing fast, thanks to AMC and GameStop.

  30. I did point out to DS that the boring, plain-vanilla, index-fund-invested Roth IRA that I opened for him is also doing quite well, but he is unimpressed.

  31. RMS,

    How can we get the day traders to start in on Hertz? But as I say that I look at today’s closing price it’s up 20%.

  32. Houston, whatever you call it, do your research and don’t do it with money you can’t afford to lose. It sounds like some of the people here aren’t aware of how the whole GameStop thing started—danger, danger.

  33. I’ve been seeing the GameStop social media posts. Can someone quickly explain to me what is happening and why it is so AMAZING. I haven’t looked at anything, but I’m assuming GameStop when public and all the video game enthusiasts bought stock? What is AMC (the movie house?).

  34. Rhett, why don’t you call up the Merrill-Lynch guy who used to sleep at the tennis center where he was the pro, because he spent all his money on the ponies? Actually, he won’t be able to explain it either, because they are the same damn thing, whether it’s a Tesla earnings report or a horse that runs better in mud than most. But it is amusing to hear you be on the high and mighty side of the “right” kind of money, after preaching for years that the amount of $$$$$ a thing brought in was by far the best indicator of its worth.

  35. Here’s some more on Gamestop from the WSJ.

    GameStop Is a Bubble in Its Purest Form
    It is tempting to see GameStop’s soaring stock as merely the result of clownish behavior in a chat room. That would be a mistake.

    GameStop GME 134.84% is the platonic ideal of a stock bubble.

    A combination of easy money, a real improvement in the company’s prospects, technical support from a short squeeze and a mad rush to get rich or die trying pushed stock in the retailer up 64-fold from late August to Wednesday’s close. Anyone who has held on for 10 days made gains of more than 10 times their money.

    It is tempting to see GameStop as merely clownish behavior in a chat room having some amusing effects on a stock few care about. That would be a mistake.

    Sure, the wildly popular Reddit group Wall Street Bets—slogan: like 4chan found a Bloomberg terminal—is full of childish chat. Several users report that they have bet their parents’ pension fund on GameStop or that the boss’s daughter has bought in. There are plenty of calls for the stock to go to $1,000 or more (it started the year at $18.84).

    But GameStop’s soaring stock—and similar moves in BlackBerry, Nokia and others—is a bubble in microcosm, with lessons for those of us worrying about froth elsewhere in the market.

    GameStop’s rise started with some genuine good news, just as bubbles always do. Ryan Cohen, who built up and sold online pet-food retailer Chewy, started building what is now a 13% stake for his RC Ventures in GameStop last year. He pushed for the staid mall-based seller of videogames to improve its internet sales. This month he joined the board.

    Mr. Cohen’s arrival means GameStop at least has a chance of joining the 21st century. From the first disclosure of his stock purchases in August up to the end of November the shares tripled, helped too by the improved prospects for the vaccine-driven reopening of the economy.

    Along the way, some private investors latched on to the stock, helping its rise, and it became an item of discussion on Wall Street Bets, or r/WSB as it’s known.

    This month the stock moved into the pure speculative phase, producing several daily jumps of 50% or more, and fundamentals were abandoned. Many cheerleaders on r/WSB stopped even making the pretense of arguments about Mr. Cohen’s chances of turning the company around. Instead, there were two justifications for buying: wanting to get in on the price action to avoid being labeled, in the abusive parlance of the forum, a “retard” who missed gigantic profits, and the self-fulfilling prospect of hurting the large numbers of short sellers.

    As the late economist Charles Kindleberger put it: “There is nothing as disturbing to one’s well-being and judgment as to see a friend get rich. Unless it is to see a non-friend get rich.”

    The scale of trading in GameStop shares is as extraordinary as the daily gains in price, suggesting widespread disturbance to people’s judgment. On Tuesday, $22 billion of shares changed hands, more than in Apple, the world’s largest company, and double GameStop’s market value. Adam Smith, the founder of economics, called speculative manias “overtrading,” and this is what they look like.

    The hope of getting rich is only part of what’s inflating the bubble. Kindleberger argued that speculative manias needed innovative sources of financing, and the private traders on r/WSB have one: the shift last year to make trading in options free on Robinhood and several other platforms.

    Options, like other derivatives, allow traders to use implied leverage to boost their bets, similar to borrowing money. In the same way that Japan’s bubble in the 1980s was fueled by cheap mortgages, and low Federal Reserve rates combined with collateralized debt obligations to support the housing bubble of the 2000s, the bubble in GameStop is aided by an increase in the money supply of private stock traders. Stimulus checks from the government can’t hurt, either.

    In GameStop, there are plenty of short sellers, but they are making things even worse. The stock is caught in a vicious short squeeze. Short sellers had borrowed and sold more than 100% of the stock outstanding, as some was borrowed again. As the price rose, at least some of the hedge funds bought back shares to prevent further losses, so pushing the price up even further.

    The most obvious parallel here is to K-Tel, the TV retailer of compilation tapes and the Veg-o-matic food processor, among other things. It announced in 1998 that it was moving online, prompting a jump in the shares that turned into an extraordinary short squeeze. K-Tel’s appropriately named public relations representative, Coffin Communications, gave this wonderful justification to the Washington Post: “Which do you think has more likelihood of success, a pure start-up that has never sold a product, or one like K-Tel that has been in business for 35 years?”

    It turned out the answer was a pure startup, and K-Tel’s shares collapsed—but not before they had soared from $3.34 to more than $35 in under a month.

    The difference with GameStop is that the r/WSB mob is actively engineering a short squeeze, discussing the pain they hoped to inflict on the short sellers and encouraging buyers not to cash in their profits.

    Because there are so many shares that need to be repurchased by short sellers, this offers an exit route for those who sell. But not everyone can do this, and those who are left holding the stock when demand eventually evaporates will watch the price plummet as it reverts back to something closer to what is justified by the company’s profit potential, just as K-Tel did.

    Warren Buffett attributed to his mentor, Ben Graham, the line that “in the short run, the market is a voting machine—reflecting a voter-registration test that requires only money, not intelligence or emotional stability—but in the long run, the market is a weighing machine.”

    The absence of emotional stability on r/WSB is obvious, and has worked out beautifully for buyers of GameStop so far. But when the stock is weighed, many will be found wanting, as they always are in bubbles.

  36. S&M, the very reason behind the GameStop run up is specifically NOT related to the underlying economic value of the company. It’s a social media phenomena. Very interesting to watch if it’s entertainment you’re after.

  37. “Houston, whatever you call it, do your research and don’t do it with money you can’t afford to lose.”

    I don’t understand what you’re saying. I have a conservative, diversified portfolio and I can’t afford to lose it. My investments are being used to pay for my kids’ college and my future retirement. They helped me to pay off the mortgage on my home. What else am I to do, if I don’t invest?

  38. Oh good Lord, investing is NOT gambling. A share of stock buys you the right to receive a little bit of all of the company’s future earnings. Obviously, stuff can happen and the earnings might be more or less than projected. But basic investing is about buying a stream of future earnings at a reasonable price (the reason the P/E ratio is such a key metric).

    Gambling is throwing money at something without paying attention to any kind of intrinsic value, just hoping that you’re reading the tarot cards right and fortune smiles on you. So-called “momentum investing” is gambling, because you are buying a stock because other people are buying it and you believe the value is going to continue to rise and that you’ll be smart enough to bail out before it hits the top and comes crashing down. The actual value of the goods and services provided by the company is irrelevant.

    Day-trading is gambling: it is investing based on how the stock price is changing in the short-term. There is no consideration whatsoever for the future earnings from the little slice of the company you own, because you’re not going to own it long enough to collect. Sure, to many of the players it “feels” like investing, because they feel like they have some special insight into the numbers or the swings in the market that allows them to buy low and sell high. But (a) that’s mostly hubris, not reality, and (b) it’s still gambling, because it has nothing to do with the intrinsic value of the company, but rather is more like the skill involved in playing poker.

    I would be ok if my kids decided to day trade with a little bit of money, because sometimes the best lesson is watching everything crash and burn, and it’s good to learn that before you get real money. But so far my kids have been happy enough with boring old saving and investing.

  39. “I would be ok if my kids decided to day trade with a little bit of money, because sometimes the best lesson is watching everything crash and burn, and it’s good to learn that before you get real money.”

    I feel the same way. I’ll be curious to see if DS really does get into that game. He’s pretty conservative by nature, and when push comes to shove, he might decide to just stick with normal and boring investments.

    I also told him that if he gets into day trading, he’s going to be responsible for filing his own income tax return, and figuring out how to report capital gains/losses etc. Or he can pay on his own for an accountant to do his taxes for him. But I’m not paying for that kind of tax prep, and I’m certainly not going to spend my time doing it for him.

  40. Or he can pay on his own for an accountant to do his taxes for him.

    Or just use TurboTax. It would probably pull in his 1099s and W2 electronically.

  41. Here’s another article on the phenomenon. I sent it to Google Drive because it has graphs and stuff.

    “It’s shaking everybody up because everybody’s leveraged,” said Matt Maley, chief market strategist at Miller Tabak + Co.

    And yet, benchmark stock indexes tumbled Wednesday. The S&P 500 plunged almost 3%, its worst decline since October. How can that be? One theory is that the hedge funds are being forced to dump the companies they actually love in order to raise cash to buy the stocks they hate. Why? So they can end short bets before losses get too big as the rally goes against them.



  42. Some of these day traders are so sloppy that they bought AMC Networks instead of AMC Theaters since they are just following advice from reddit.

    I admit that I was young once, and I also fell for the free money idea when I was working in ’98/99. The rules were different back then and i was allowed to buy individual sticks as long as I got pre approval. I bought a couple of stocks that several of my coworkers were buying. There was no reddit so it was all about what everyone was talking about with their friends. I watched some of these stocks soar and then crash. Some of my coworkers sold, but I did not sell so I lost a chunk of change. I think day trading is like going to Vegas. If you have to know how much you have to lose and be comfortable with that outcome. If you “win”, that is great too as long as you are also willing to lose it all.

    The downside for DH was that I still owned a few of these clunkers when we got married because I didn’t sell since they were almost worthless. Several of the reports for his firm used to have a disclosure that “spouse owns XYZ”. He asked me to get rid of these shares because I generally owned about 40 or 50 shares of each, and they were only worth $50-250. I haven’t been able to buy an individual stock since 2006 and it makes life easier because I am never tempted.

  43. During the dot com boom, DH’s friends day traded. They had well paying jobs which allowed them to keep one screen up watching their stocks. They made a ton of paper profits. Unless you actually cash out, your profits are on paper/virtual. They made some extra spending money but stayed in the market too long when it crashed. By that time, they had gone from young single with little responsibility to married and can’t afford to lose the money. No one made tens of thousands or enough to retire early. DH and myself couldn’t afford to lose money plus our workplaces had compliance restrictions so no day trading for us. It’s a very social thing as well, discussing what you bought and sold, how much you made, stocks you are watching, very game like. DH and I felt left out of conversations like those.

  44. I see that Lauren is talking about essentially the same era when stocks could only go up, it was the time of irrational exuberance.

    “Irrational exuberance” is the phrase used by the then-Federal Reserve Board chairman, Alan Greenspan, in a speech given at the American Enterprise Institute during the dot-com bubble of the 1990s. The phrase was interpreted as a warning that the stock market might be overvalued.

  45. Lauren,

    Do you remember the collapse of Long Term Capital Management? This seems similar in that highly leveraged bets were made and the market moved in a way no one thought possible. In the case it was Reddit. In the LTCM case it was Russia defaulting on its domestic ruble denominated bonds.

  46. LTCM is a whole other story and that is not the same as day trading/reddit. I highly recommend the book, When Genius Failed if you want to learn more about LTCM. That mess involved so many financial institutions, derivative and currency contracts around the globe and the Fed had to get involved becasue some financial institutions might have collapsed. A better analogy is probably the mess at AIG in 2008 vs. what is going on today.

  47. Lauren,

    I mean it’s the same in that bets were made on the basis of certain things being impossible. When those short positions were entered into, the idea that GameStop could go to $300 driven by Reddit chatter wasn’t even on the horizon. In the case of LTCM, it was that a sovereign issuer would never default on bonds denominated in its own currency.

    On a larger scale I guess you could include the financial crisis which was rooted in the belief that home prices couldn’t fall nationwide.

  48. Although I guess this is different in that the question, “Would Russia default?” was asked and the answer came back, no. The question, “Would housing prices fall nationwide?” was asked and the answer came back, no. I doubt the hedge funds asked themselves, “Will Redit commenters put us in a ruinous short squeeze?” Ever came up.

  49. The big difference is still that I don’t think (to my knowledge) that large financial firms are driving this equity bubble today. Also, the large If you look at AIG in 2008 or LTCM in 1999 – they dragged almost every other major financial firm into their mess. Through derivatives, repos and many other financial instruments. The health of so many other firms were tied together through this web and that is the reason that the regulators/fed had to step in to help in both cases. There might be some Bobby Axelrods out there and I bet they are making a lot of money, but they usually crush the little guys.

  50. The big difference is still that I don’t think (to my knowledge) that large financial firms are driving this equity bubble today.

    I read that part of the increase was due to Robinhood letting users buy puta and calls with no fee. With that many users are buying GameStop calls and the writers of those calls are buying stock to hedge their exposure. That buying is also driving shares higher. Would those call writers be large financial firms?

  51. “ It’s a very social thing as well, discussing what you bought and sold, how much you made, stocks you are watching, very game like. DH and I felt left out of conversations like those.”

    Yes – for sure. In 1998-2000, this was a main lunch conversation & like others said some people had their accounts up on other screens. I had zero extra money at the time, so I invested in nothing except my 401(k). At the time I felt left out a bit, but most of those guys lost almost all of the paper profits if not the amounts they put in. We were young (early/mid 20’s), so it probably didn’t hurt people much in the long run. I managed to cash out some company shares I was given at the right time – and that funded my ability to quit that job and move. So I guess I still “won” a stock gamble in that era. But it was a blue chip stock, not one of the “fun” dot com ones.

  52. Don’t have anything to add just want to thank you all for your concern and kind wishes for my predicament yesterday. You are a kind people and i appreciate it!

  53. Ok, so Gamestop. Buy, sell short, whatever. That’s one level of risk. Then there’s…

    DS1 (26) called me on his drive home tonight telling me he’s going to buy some put contracts. Highly risky. I think it’s good for him to do it. If he makes some money, that’s a bonus. If he loses his bet, and that’s what it is because he’s not buying the puts to protect any gain he’s got on paper, probably more valuable. I’ll tell him it’s tuition in that case.

    I looked at the options pricing tonight. Not horrible, but there’s too much premium being extracted. It’s his money.

    I’ve played the options game for >35years, lost some, made some. I know how they work better than the average person, and enough to know how to use them to my advantage. They are appropriate hedges at times.

  54. “I haven’t been able to buy an individual stock since…”

    Lauren can you buy etfs or just mutual funds?

  55. My observation based on our friends day trading is 1. they came to believe a streak would last forever 2. they started to live off the gains they made, hoping one day to chuck their regular jobs and day trade. It’s easy to make money when stocks are on an upward streak, hard to do that if the market is flat or very unpredictable. Also, day trading becomes your job if you have to make a living from it. It’s no longer a fun pastime. I liken our friends to the same/overlapping set of MMM devotees types.

  56. Fred, yes…mutual funds and ETFs. Technically, I can buy an individual stock unless it is on a restricted list. We don’t know what is on the list until we go in for approval, but the purchase has to get approved. I may not be able to sell when I want to sell, so I just don’t bother with individual stocks.

  57. My understanding is that most of these traders are having fun sticking it to the man while making money. It could not have happened without Reddit, Robinhood free trading, and maybe Covid. Obviously some will lose most of their investment, but many have and will make out like bandits. One question is how or if this will affect many other stocks and the market at large.

    Here’s that interview.

  58. This could potentially affect many of us.

    No one knows how this ends. Some analysts say the intense activity could eventually prompt a wider sell-off in the market by forcing hedge funds on the losing side of these trades to sell parts of their portfolios to raise cash to cover their losses. While this speculative frenzy played out on the market’s sidelines, the S&P 500 fell more than 2.5 percent on Wednesday, its worst day since late October, as the Federal Reserve gave a glum assessment of the economy and before a number of big tech companies announced their earnings.

    “What happens in situations of stress is that people are forced to raise funds and that often means selling your winners,” said Steve Sosnick, chief strategist at Interactive Brokers in Greenwich, Conn. “How does it end? Badly. Eventually, the bigger the balloon, the louder the pop,” said Mr. Sosnick. “When does it end? I don’t know.”

  59. I am still mad at GameStop for buying ThinkGeek and then destroying it. ThinkGeek was my fave online store for weird things like Pokemon nightlights, StarTrek bedroom slippers, steampunk gear, and The Bag of Holding. Now you have to go to the stupid bricks and mortar GameStop stores and they only carry a small selection. You can find some of the stuff on Amazon but it isn’t the same as shopping on the charming and quicky ThinkGeek site. I hope the bubble bursts and GameStop goes totally under.

  60. DS used to get Game Stop gift cards when he was at the birthday party stage. We used to trek to the store to pick out games. It was next to the toy store and Legos, so I look back on that time with nostalgia now. The gamers know Game Stop from their younger days.

  61. Mooshi, I totally agree! I was so mad when I went to buy Thinkgeek t-shirts for DH’s birthday and they had been absorbed by Gamestop and all the good stuff was gone!

  62. “multilingual typo.”

    didn’t see it last night, but yeah, good one.

    (Ivy should chuckle, too)

  63. WSJ, just now.
    Shares of the videogame retailer moved wildly overnight, surging as much as 40% to nearly $500 a share, before retreating.

  64. ““How does it end? Badly.”

    Again, generalizations. It will end* VERY well for a few.

    Like the early covid (just after widespread shut downs / stay-at-home orders). The news folks interviewed all kinds of business owners, restaurants, bars, bakeries, specialty shops and universally they were worried about their livelihoods. Then they got to the liquor store owners. One I recall said “It’s like the weekend before Thanksgiving, Christmas, New Year’s eve, you pick. EVERY. SINGLE. DAY.”

    *and for the vast majority, those who are not playing directly, the market volatility will probably keep a lid on the march upward but he long-term trend will continue. Let’s check back in 10 years and see where the indicies are. Is a much-needed correction caused, maybe, but that’s ok.

  65. I’m all caught up on GameStop. It is all very interesting. It is a bubble, it will burst, in the end hedge funds will win out with government assistance of some sort (I saw a tweet that said capital over Capitol), and a lot of little people, already in a bad situation, will be left worse off.

    It certainty provides an interesting change to the normal newscycle. Unrelated to this event, this week we got our kids a GreenLight card (basically a debit card for tweens). There are investing options they can do with their savings. They make the request on their app, and I have to approve it. The kids seem very excited to see their money grow (or not).

  66. Interesting article in the WSJ about the founder of that subreddit, and how he’s watching his monster get out of control.

    The man who created Reddit’s WallStreetBets isn’t who you think he is.

    He’s 39 years old. He lives in Mexico City with his wife, a physician, and spends his weeks chasing after their 3-year-old twins and tending to his day job as a consultant—hardly the sort of character one might associate with the roiling investing forum.

    He never imagined the Reddit community he created in 2012 would morph into a force so powerful that it would send GameStop Corp. GME 134.84% shares into overdrive, nearly topple a hedge fund and leave professional money managers around the country staring at Twitter with their mouths agape.

    “It’s a little like watching one of those horror films where you can see the bad guy slowly going up the stairs,” Jaime Rogozinski said. “You see this train wreck happening in real time.”

    Several stocks talked up by Reddit’s WallStreetBets forum have surged this year.

    Mr. Rogozinski started WallStreetBets while working as an information technology consultant for the Inter-American Development Bank in Washington, D.C. Back then, he was single, making a decent living and looking for something to put some play money into. The only problem was the conventional wisdom of sticking with index-tracking funds bored him.

    “I’d go on different forums and ask them, ‘Hey, what do you think about XYZ?’ And most times the sentiment would be ‘It’s too risky, don’t try to pick stocks, you’re never going to win,’” he said.

    The sober advice doled out in online communities like Bogleheads wasn’t cutting it for him. Neither was the commentary of investment banking analysts on cable TV, fixated as they were on net present values, cash flows and price-to-earnings ratios. He decided to create a hub on message-board operator Reddit where like-minded people could gather to exclusively discuss the type of trades that would make a financial adviser’s skin crawl. Their approach would be more akin to gambling than spreadsheet analysis, and their motto something along the lines of “YOLO,” short for “you only live once.”

    The group counted only a few thousand subscribers in its first few years—among them, former pharmaceutical executive Martin Shkreli, who briefly served as a moderator before being convicted of securities fraud. (WallStreetBets’ Twitter account wished him good luck on his sentencing in March 2018.)

    ‘A massive group of people have organized where they collectively have a seat at the poker table, which was previously invite-only.’— WallStreetBets founder Jaime Rogozinski

    Everything changed in 2019. Brokerage giants Fidelity Investments and Charles Schwab Corp. eliminated trading commissions. Interest in retail trading exploded, and the number of WallStreetBets subscribers swiftly crossed 500,000—then one million during the market selloff of March 2020 and 2 million during the now-notorious campaign to drive GameStop shares higher.

    WallStreetBets users have driven headfirst into bets on everything from cruise-line operators hit by the pandemic to Lumber Liquidators Holdings Inc., the company embroiled in scandal following reports that it had installed flooring with excessive amounts of formaldehyde. And they have done so unabashedly, celebrating both their victories and their losses with gusto. (The community has dubbed posting screenshots of the latter, which frequently garners thousands of upvotes, as “loss porn.”)

    “A lot of other places that discuss trading are really pretentious. At WallStreetBets it’s both, ‘Look at my money!’ but also ‘Look at all this money I lost,’ and I think that’s what’s refreshing to people,” Mr. Rogozinski said.

    At its best, WallStreetBets showed trading didn’t have to exclusively be a Patagonia-vested man’s game. It was part of the nascent movement to democratize the investing world by breaking down the barriers to entry, even if some people would be stung by brutal losses along the way. Many years ago, Mr. Rogozinski recalls having to call Wachovia and shell out a $30 or so commission fee to buy Google Inc. shares. Now, anyone with a phone or an internet connection can get trading in minutes—and show off their prowess or lack thereof to thousands of other individuals.

    “A massive group of people have organized where they collectively have a seat at the poker table, which was previously invite-only,” Mr. Rogozinski said. “You can’t ignore them anymore.”

    Mr. Rogozinski found some other investing forums ‘pretentious,’ and the advice of many Wall Street insiders uninspiring, when he started WallStreetBets.

    Growing Pains
    Looking past the forum’s banter and Jerome Powell memes, it became clear to Mr. Rogozinski that the WallStreetBets community had a seedy underbelly—a side that he increasingly struggled to reckon with.

    First, there were the potential legal issues. As WallStreetBets grew, it faced accusations—often lodged by angry short sellers—of market manipulation. Moderators urged users not to make posts “for the purpose of instigating or coordinating a group effort to move the market for a security.” But that didn’t silence the community’s critics.

    Then there was the hate speech. Last year, Mr. Rogozinski decided to do some housekeeping and scrub some of the more distasteful content being shared in the community. In an off-Reddit chat room associated with WallStreetBets, he found language rife with obscenity, racism and antigay views that moderators let stand.

    “There were a handful of mods who were straight up white supremacists,” he said. As a Jewish man married to a Mexican woman, he found it impossible to stomach.

    “I have really thick skin and people can say whatever they want to me, but at some point there’s a moral standpoint—like with my kids, I don’t want them to think, ‘Well, they can say whatever they want about you,’” he said.

    Mr. Rogozinski wound up deleting the private chat room hosted on Discord where the offensive messages were exchanged. He also removed some of the moderators. The backlash was swift: Enough users chafed at his actions—along with his promoting a book based on WallStreetBets, as well as an esports-style trading competition under the WallStreetBets name—that he was booted out by other moderators. He hasn’t moderated the community since April.

    It has been impossible for him to escape his legacy, though. Just last week, he got a phone call from Citron Research founder Andrew Left. The short seller, who has been publicly betting against GameStop, begged Mr. Rogozinski for help. He said he had been attacked by hordes of angry investors online, some of whom had even targeted his children.

    A Reddit spokeswoman said the company prohibits users from posting or soliciting illegal transactions, doxing others and engaging in threats of violence. She added that the company would “cooperate with valid law enforcement investigations or actions as needed.”

    Mr. Rogozinski, unable to do much from the sidelines, was pained by Mr. Left’s call.

    When big investors like Carl Icahn and Bill Ackman get embroiled in a public spat, “it’s like watching a heavyweight boxing match,” he said. But when an online mob goes after an investor’s kids or spouse—that crosses the line, he said.

    “It’s no longer what it used to be,” he said.

    Write to Akane Otani at akane.otani@wsj.com

  67. Day trading was a big thing in the lead up to the 2009 crash. I guess it is a sign of the times.

  68. Day trading was a big thing in the lead up to the 2009 crash.

    House flipping was the day trading leading up to 2009. I’m not sure about day trading. What makes you think it was a significant factor?

  69. Or should I say, house flipping was to the finical crisis as day trading was to the dot com bubble.

    In the venn diagram of 1999 day traders and 2007/8 house flippers I bet there was a lot of overlap.

  70. Rocky – yes. You borrow 1000 shares from Merrill and then immediately sell them, let’s say at $100 each. You get $100k in your account as cash. But you owe Merrill 1,000 shares.

  71. I can’t quite nail down the tax consequences of shorting a stock that goes bankrupt. I thought the deal was that when the company went bankrupt the shares were worthless so you never had to pay back the loan. And since there was no transaction there is no taxable event. However, it looks like at some point your brokerage firm would forgive the loan. And of course forgiven loans are taxable income. But the loan was for the shares so the amount of the loan forgiven is zero….right?

  72. RMS,

    It sure seems like the big guys are getting fucked by the little guys and they are trying to stop it. But when the big guys are fucking the little guys that’s just Thursday.

  73. Oh, exactly, Rhett. People are bitching on FB about all the insider politicians who heard the news about COVID early last spring and started selling and exactly jack shit happened to them. But when ordinary investors start making completely legal moves, oh, that’s different.

  74. I wonder what sort of pressure was put on robinhood and TD Ameritrade, and by who (whom?), to get them to restrict buying shares of Gamestop and AMC.

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