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Local financial experts explain GameStop stock market situation, best investment strategies

North Texas-based GameStop has seen its stock increase 400% this week.
Published: Jan. 29, 2021 at 5:57 PM CST
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COLLEGE STATION, Texas (KBTX) -People’s eyes are turning to the stock market this week as a ground movement continues to pump up some well known companies. GameStop saw a 400 percent gain in stock value this week.

The North Texas-based business is getting national attention as a ground movement of investors works to make the company more valuable. GameStop stock closed Friday at more than $328 a share. That’s up from $65 just one week ago.

”We’re looking at GameStop specifically but what we’re seeing is the narrative of a David versus Goliath. You have a small retail investor versus the big Wall Street hedge funds,” said Matthew McKay, an investment analyst with Briaud Financial Advisors.

“Anyone who is interested in maybe participating now based on what they’re seeing with GameStop or AMC or Blackberry, these small companies being shot up a lot over the last few days; recognize number one it’s not indicative of the broad market,” said McKay.

During this week Reddit users made GameStop more valuable than ever before.

”What I see or what we see is institutions, hedge funds that made a bad bet. Ultimately they went too short on GameStop and are being exposed for it which is what we’re calling a short squeeze,” said McKay.

McKay and other financial experts said jumping on the GameStop bandwagon is risky.

”It’s gambling at this point,” he said.

“There’s just a social justice movement to help these companies out because they’re fan favorites and although the valuations of the stocks may not have been quite the way they wanted them to be they didn’t’ want to see their stocks driven down,” said Christopher Moore, a Texas A&M Faculty Member in the Financial Planning Program and the Director of Financial Readiness.

He suggests more conventional investment methods.

”It’s extremely risky when it comes to your own personal assets so jumping on the bandwagon of something like that has no real need to be happening other than social justice. I mean it can be lucrative but it can also be extremely detrimental,” said Moore.

“People are looking at this as an opportunity to get rich quick and I think many of us know there is no easy way to get rich. And so it takes typically a longer-term, a systematic approach to investing,” said McKay.

Moore also suggested having an emergency fund of three to six months living expenses saved up before buying individual stocks. He anticipates the GameStop stock price will eventually return to a more normal level at some point.

But the big question is when?

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