stock market retirement investment

The past several months have been full of surprises, many less than pleasant. If stock market investments are part of your retirement portfolio, then the ongoing GameStop fiasco may be yet another cause for concern.

GameStop—perhaps more than anything else in recent times—has brought stock trading and Wall Street into the public eye. While many Americans have celebrated social media users’ apparent triumph over wealthy hedge funds, you’re likely less enthused if you’re hoping to ride the market all the way to retirement.

How a Bad Short Squeeze Shook Wall Street’s Richest 

To provide a brief recap: several large hedge funds tried to “short squeeze” videogame retailer GameStop’s shares. In other words, Wall Street traders borrowed GameStop shares from stockbrokers, expecting that GameStop stock would soon collapse.

The hedge fund managers then quickly sold the borrowed stocks, hoping they could buy them back at a much lower price—assuming, of course, that GameStop shares fell as rapidly as they hoped. Once the stocks were back in their control, they could return them to the original brokerage—essentially, pocketing the difference between the sale price and the newer, lower purchase price.

It’s an incredibly risky tactic, and it failed dramatically when young social media users spread the word, encouraging amateurs to use digital trading platforms to boost GameStop shares against anyone’s wildest expectations. While the situation has yet to resolve, it seems that some of Wall Street’s biggest hedge funds may lose billions of dollars before it’s all over.

What Hedge Fund Losses Mean for Your Wallet

If your retirement accounts are heavily invested in the stock market, you may well be concerned about what all this volatility means for you. You’re right to be worried, but the reality is that the hedge funds will be the biggest losers. Average investors—which include most people who hold stocks in their retirement accounts—aren’t likely to be affected by a single stock’s fluctuations, no matter how drastic. If you’ve been adhering to a common-sense strategy for wealth management, you’re likely maintaining a diversified stock portfolio. In other words, you’ve spread your cards thin and wide, putting money towards a variety of stocks, many of which retain small but reliable rates of growth.

An Attorney Can Help Appraise Your Unique Options

We understand that everyone looks at the stock market in different ways. You might have a higher tolerance for risk than your spouse or coworkers—or you may simply want to invest where you’re most likely to see steady gains, even if they’re not liable to be fantastically large.

A wealth planning attorney can help you consider your tolerance for risk while also evaluating which moves, trades, and portfolio spreads are best for your retirement goals. After all, there’s always money to be made in the stock market—but when it’s your retirement on the line, you don’t want to play fast and hard without an experienced professional in your corner.

You Can Short Squeeze, But Don’t Short-Change Your Retirement

Send us a message online, or give us a call today at 870-275-4304—whether you already have stocks or are looking to start investing, you’ll want to ensure you’re in the best position to avoid the next big squeeze.

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Carrie Russom Quraishi, JD, CAPP
Carrie provides personalized wealth management, tax and estate planning services to clients in AR, TX & TN.
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