Victims of GameStock pump and dump--good article this morning in WSJ

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Mr. Vergara, a 25-year-old security guard in Virginia, started investing four years ago after deciding he wanted to retire young. To save money, he drives a 1998 Honda Civic, eats a lot of rice and lives with his dad. He stashed his savings mostly in diversified index funds, which are now valued at about $50,000. Then Mr. Vergara, a longtime reader of the WallStreetBets page on Reddit, saw others posting about buying GameStop shares and the stock’s colossal rise.

He didn’t want to touch his index-fund investments, so instead he got a personal loan with an 11.19% interest rate from a credit union and used it to fund most of his GameStop purchase. He bought shares at $234 each.

GameStop shares started the year around $19, zoomed to nearly $350 (and almost hit $500 in intraday trading) in late January, and then began to spiral back to earth. The shares closed Friday at $52.40, down 85% from the peak close.

“I thought it could go up to $1,000. I really believed in that hype, which was an awful thing to do,” Mr. Vergara said.

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He plans to hold on to the shares because he believes in the company’s turnaround, he said, and use his paycheck to cover the monthly payments on the personal loan. Once the pandemic is over, he hopes to move back to his native Philippines, live off savings and start a charity. The GameStop loss set those plans back about six months, he said.

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For many, GameStop represented more than just an investment. When Tony Moy bought about $1,200 of the shares, two at $379 and two more a few days later at $228, “I knew it was, intrinsically, the wrong move,” he said.

Mr. Moy wasn’t surprised when the stock quickly lost much of its value. A casual reader of WallStreetBets, he was mostly excited about the push to stick hedge funds with losses. Some hedge funds that shorted the stock—betting the price would fall—suffered big losses, though others managed to make money during the turmoil.

The trade was an outlet for Mr. Moy’s frustrations after an abysmal year, a “virtual protest” of sorts, he said. In 2020, after the pandemic shut down large gatherings, the Chicago-based artist lost most of his income from selling his work at comic conventions. He also came down with a bad case of Covid-19 that left him coughing for months. He said his more successful investing endeavors have helped him get by financially.

One of Mr. Moy’s most recent works of art is inspired by “diamond hands,” a phrase used on Reddit to describe hanging onto your position, no matter what. He is keeping his GameStop shares as a memento. “It’s going to be a little reminder to me,” he said, “of how 2020 was the year when hedge funds had a great year and everyone else was struggling.

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