My shock to see a second meme-stock craze around Gamestop (GME) was equaled only by how predictably it is playing out. Yes, Roaring Kitty is back and, just like in 2021, inspiring thousands of retail investors to take risky positions on GME options. I think what’s shocking about this story is how so many people still licking their wounds from the first craze are willing to jump on the carousel for another ride.
At the same time, I should not be surprised. The first Gamestop craze was an exciting highlight in the drudgery of Covid-19. Even those who lost money won the pride and glory of participating in an unprecedented movement. Why not go for another round of fun?
Entrepreneurs and small business owners take risks daily and can appreciate risking profits for an exciting opportunity. In addition to re-reading our article on entrepreneurial lessons from $GME and r/Wallstreetbets, here are some new takeaways for 2024:
Influencers are not thought leaders.
I have never met a successful small business owner who follows social media influencers. Not a single one. Social media influencers are short-sighted, impulsive, and trendy (keys to Roaring Kitty’s success.) On the other hand, successful entrepreneurs are long-sighted, deliberative, and think outside the box.
Businesspeople instead follow “thought leaders” who publish books or speak at conferences.
So, ditch your Tiktok account, stop listening to every Elon Musk interview, and spend more time studying well-written thought leadership.
Schemes rarely pan out.
During the last digital currency craze, I was fractional CFO to several clients who asked if they should park money in Bitcoin. Back then, it was rising double digits daily, and parking $500k for a month could double annual profit goals! My response to them was always the same: “Are you willing to fold your business if that bet fails?”
Sure enough, the Bitcoin crash eventually came, and I’m proud to say that none of my clients were hurt by it.
There is no easy money in this world, only hidden risks. Entrepreneurs should stay focused on their core markets and related verticals, not jump into a field they know very little about. At best, it’s a distraction; at worst, it will cost you everything you’ve spent years building.
Have fun
There is one thing the r/Wallstreetbets crowd gets right – they have fun whether they win or lose. Life is too short to brood over every decision or blame yourself for every shortcoming. Unless your business is saving people’s lives, we can all afford to enjoy ourselves a bit more, celebrate our wins, and laugh at our mistakes.
