invested $ 20,000 on credit and the stock fell 80%

Salvador Vergara was so excited about GameStop at the end of January that he requested a personal loan of $ 20,000 to buy shares. Afterward, the spirited value plummeted nearly 80%.

GameStop’s volatile journey is affecting the portfolios of individual investors like Vergara, who bought the stock amid a frenzy fueled by social media. These occasional investors claim that GameStop has been their YOLO or “you only live once ‘business.” They bought near its peak in late January, betting it would continue its astronomical rise. While some took their money out before it fell, others who held onto their stocks are in the red.

Vergara, a 25-year-old security guard in Virginia, started investing four years ago after deciding he wanted to retire early. To save money, he drives a ’98 Honda Civic, eats a lot of rice, and lives with his father. He invested his savings mainly in diversified funds, and now worth about $ 50,000. So Vergara, a longtime reader of the WallStreetBets page on Reddit, saw that others were posting that they were buying GameStop stock and about the colossal rise in value. He did not want to touch his investments in index funds, so instead he took a personal loan from a financial institution with a interest rate of 11.19% and used it to finance the majority of his GameStop purchase. He bought shares at $ 234 each.

GameStop shares started the year at around $ 19, after skyrocketed to nearly $ 350 (and they almost hit $ 500 in intraday trading) at the end of January, and later they started landing back on Earth. The shares closed last Friday at $ 52.40, a drop of 85% from its highest close. “I thought they could go up to $ 1,000. I really believed in that expectation, which was a terrible mistake, ”says Vergara.

He plans to keep the shares because trust a change of course at the company, he says, and uses his salary to cover the monthly payments on the personal loan. Once the pandemic is over, he hopes to return to his native Philippines, live off his savings, and start a charity. The loss of GameStop has delayed those plans by about six months, he says.

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Easy-to-use free trade apps have made investing money in stocks like GameStop much easier for regular investors. In a world without international travel, Live entertainment and other common hobbies, brokerage ‘apps’ like Robinhood Markets are attracting hordes of new users looking for fun and the jackpot.

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Before the pandemic, Patrick Wesolowski he checked his wallet once a week. Later, clients of his Chicago-area dog-walking business stopped taking vacations and began working from home, reducing his income and leaving him with a lot of free time. With the business paralyzed, Wesolowski, 31, began to spend more time searching for values ​​to include in his wallet of $ 15,000. He ‘prowled’ on WallStreetBets, where he read about other investors’ wild bets, but didn’t post much. “It’s like reading ‘Florida Man’ headlines with a Wall Street twist,” he declares.

In recent months, Wesolowski has reached for his cell phone to check his Fidelity Investments brokerage account balance more often. The buzz around GameStop continued, and when the stock approached $ 300, decided to invest $ 3,000. After that, he would check his wallet on his mobile every 10 minutes. At first, seeing the value drop made him uneasy, but then he got used to it. “If I lose it, I lose it. I’m good. It’s like going to Las Vegas, ”Wesolowski declares. He says that if he still had that money, he may have invested it in a personal splurge like a vacation.

For many, GameStop represented more than an investment. When Tony Moy bought about $ 1,200 worth of stock, two at $ 379 and another two a few days later at $ 228, “I knew it was, inherently, a misstep,” he says. Moy was not surprised when the courage quickly lost much of its value. A rare WallStreetBets reader, he was most excited about the offensive to cause losses to hedge funds. Some of those funds, which were bearish on value – betting that the price would fall – suffered heavy losses, but others managed to make money during the turmoil.

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Photo: Sign of a GameStop store in New York (USA).  (Reuters)

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The operation was an outlet for Moy’s frustrations after a bad year, a “virtual protest” general, he declares. In 2020, after the pandemic canceled the mass gatherings, the Chicago-based artist lost almost all the income from the sales of his works in comic books. He also became seriously infected with Covid-19, which left him coughing for months. He says his more successful investment efforts have helped him survive financially.

One of Moy’s most recent artistic works is inspired by ‘diamond hands’, an expression used on Reddit to describe sticking to your position yes or yes. You are keeping your GameStop shares as a souvenir. “They’re going to be a little reminder to me,” he declares, “of how 2020 was the year that hedge funds had a great year and everyone else suffered.”

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Salvador Vergara was so excited about GameStop at the end of January that he requested a personal loan of $ 20,000 to buy shares. Afterward, the spirited value plummeted nearly 80%.

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