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May 2021
5 Lessons Investors Can Learn From the GameStop Stock Fiasco
That brings us to lesson No. 1: Be careful about the risks you take.
Who knew a small online community could drive a billion-dollar Wall Street hedge fund into bankruptcy? If you’ve been tuned in to stock news at all, you’ve surely heard about the GameStop stock market debacle. The story is especially popular with Generation Z, evidenced by thousands of trending tweets and TikTok videos. After all, anyone 18 or older can be an investor if they have an investment app like Robinhood. What lessons can you learn — and share with the eager young investors in your life — from GameStop? First, you have to understand what exactly happened with GameStop . Given the pandemic, hedge fund investors felt confident that a brick-and-mortar video game store like GameStop wouldn’t succeed. That’s why they felt comfortable gambling with GameStop stock. They borrowed GameStop stock from brokers that own a bunch of it, essentially agreeing: “I’ll sell these for you today and give them back to you later.” By selling them and then buying them back later at a lower cost (while the company is still on a downward trend), investors are able to make money. This is what’s known as shorting a stock. Of course, this didn’t go according to plan. Members of a Reddit community quickly bought up GameStop stock, increasing demand and causing share prices to skyrocket. Investors were forced to buy back stock at this higher price due to their agreement with brokers, which ended up costing hedge fund investors billions of dollars.
When shopping for stock, investors generally look for companies with positive trends. But when a company’s stock price soars within a matter of a few days, something unique is happening, and it’s not always promising. Because GameStop’s share price rose due to market manipulation, its stock became far more volatile and dangerous. It’s hard to predict what groups will do to manipulate a company’s share value once they’ve started. If you’re an investor, it’s not a great time to jump on the GameStop investment bandwagon now as the value can shift in an instant. This brings us to lesson No. 2: A soaring stock price isn’t always a good thing. Tell the young investors in your life this as well. GameStop stock is also volatile because the value of its stock shares doesn’t necessarily match the company’s overall financial situation. GameStop has been struggling for the past decade, and in recent months, company leaders announced that they planned to close 1,000 stores by the end of 2021. If you’re an investor, that should be a major red flag, and it brings us to lesson No. 3: Do your research before investing. Anger, fear, embarrassment, excitement, wonder, and curiosity are all emotions you’ll deal with and witness as an investor in the stock market. If a company is doing well financially but its leadership does something embarrassing or makes a bad move in the eyes of the public, investors may lose confidence in the company. If they choose to sell stock as a result, demand decreases. This reminds us of lesson No. 4: Emotions can rule the markets, but only short term. If you’re already an investor, you’ve probably experienced lesson No. 5: Investing can be super fun! The stock market can be full of drama and excitement, and if you’re hooked on investing, you’re not alone. Investing can be a dangerous game to play, but with a little patience, starting money, and strategy, you can definitely have a lot of fun and turn a profit. Be sure to learn as much as you can and don’t invest more than you can truly afford.
Thanks so much for reading! I hope you will have a profitable May!
-Jeffrey Campbell
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Winning the Bluetooth Wars
When Apple introduced their AirPod Bluetooth earbuds a few years ago, a major player emerged onto the burgeoning Bluetooth audio scene. But that scene wasn’t new: Earbuds, headphones, and speakers can all utilize Bluetooth tech, with every manufacturer jumping into the pool. But as anyone over 30 can tell you, Bluetooth was originally a wireless headset product, not a type of connectivity. And that’s raising questions about the viability of the Bluetooth market as well as the future of the current war for customer dollars in the market. Bluetooth audio tech was designed to wirelessly connect your phone with an in-ear speaker and tiny headset. But spoken-word audio isn’t the same thing as a vibrant musical experience with a range of high and low sounds, depth, and bass. You wouldn’t want to listen to a concert through your cellphone; in the same way, Bluetooth isn’t set up to transmit music to a speaker, headphone, or earbud. Manufacturers have developed workarounds, and the
quality of their work determines how good (or bad) the end result sounds. Bluetooth is obviously capable of a lot more than it was designed for, and its near universality makes it an attractive choice.
But it still wasn’t designed for music.
What does that mean for most listeners? Likely not very much — if a good manufacturer made your headphones or speakers, their clever workarounds to the “Bluetooth problem” will likely mean little decrease in quality compared to “wired” options. Most of us can’t tell the difference. But for true audio fidelity, we still have to hook up with a cable. And as manufacturers vie for market share, a smart company that designs a brand-new wireless tech based around music instead of talk could gain much — and leave Bluetooth behind in the process. And whoever does that will be the real winner of the Bluetooth wars.
The One Thing You’re Ignoring That Could Help You Save More Money
Successful saving comes down to just one thing: widening the gap between your income and expenses. Most individuals — and let’s face it, financial experts, too! — focus on frugality to achieve this. They cut back on spending by canceling streaming subscriptions, eating out less, and buying fewer fancy coffee drinks. It’s natural to turn to penny-pinching to meet your savings goals because it often feels like you have more control over decreasing your expenses than you do over increasing your earnings. However, that’s not always the case. If you feel like you’ve already cut your budget to the bone but still aren’t saving enough, it might be time to shift your focus to the second method of saving money: earning more. If you’re serious about boosting your savings, it’s probably going to take a combination of both strategies, so don’t ignore your potential opportunities to bank more bucks. A quick online search asking “How can I make more money?” will turn up a plethora of lists with dozens of great options. Here are two popular categories to consider: SIDE HUSTLES AND GIGS Home delivery services like Amazon Flex, DoorDash, and Instacart are growing exponentially right now. You can take advantage of this
trend by becoming a delivery driver. Gig work allows you to make your own schedule and do as much or as little work as you want for as long or as short a time as you’d like. Note that many services require drivers to undergo a background check, have a valid license, and have their own car. BABYSITTING, PET SITTING, OR HOUSE SITTING Apps like Wag! and Rover have turned on-demand dog walking into a viable side gig, but it’s also possible to arrange this and other sitter jobs the old-fashioned way. In fact, if you’re a reliable sitter, word-of-mouth advertising and referrals
will likely keep steady work coming your way
once you get established in your community. You can also up the ante by offering more: Get licensed in CPR and first aid if you’re a babysitter (or pet CPR and first aid if you’re a pet sitter). Classes can be found at RedCross.org.
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If you’re one of the 50% of Americans who would prefer a higher salary over paid vacation days, then the thought of relaxing by the pool probably makes your skin crawl. According to a 2019 Allianz Global Assistance survey, most Americans would only give up their vacation days for a 48% raise, but as Forbes reports, about 1 in 5 workers would only need a 24% raise to willingly fork over their vacation days. The rise of what experts are calling “performative workaholism” is evident in the hustle-and-grind culture of working long hours, skipping lunches, working throughout the weekend, and taking very few breaks. But medical and psychological experts caution that addiction to the hustle comes at a price. Recent evidence suggests that working long hours over extended periods of time actually makes you a worse employee. As exhaustion creeps in, your ability to complete even the most mundane or simple task decreases. In those moments, it’s important to take a short break, but it’s also vital to recognize when your body needs an extended refresher. This could make you better at your job. According to the Organisation for Economic Co-operation and Development, Luxembourg, Ireland, and Norway have some of the world’s most productive workers. Coincidentally, they also provide many vacation days. So, what’s great about taking a vacation? Experts at a Midwestern hospital system, Allina Health, report that stepping away from work for a short period of time can decrease your risk of heart disease, improve your quality of sleep, create a better mood, and boost your relationships. Researchers in the Netherlands even found that simply planning for and anticipating a vacation can improve your happiness level! If you can’t stand the thought of taking time off, you’re not alone. More than 40% of respondents in a 2016 survey said they felt they couldn’t take a vacation because there wasn’t anyone to cover them. Communicate your concerns with your employer to find a compromise. Start slow, too. Schedule a long weekend and pack your days with activities, like getting a massage, hiking, or traveling to a local destination. Look to travel sites like Expedia, Airbnb, and Travelocity for local deals and tips on the best vacation methods. Soon, you’ll be the biggest advocate for taking time off. IN DEFENSE OF RELAXATION Why You Need to Take Your Vacation Days
THE BET THAT SPAWNED THE FILET-O-FISH SANDWICH Inside the McDonald’s History Books If you’re one of the 68 million people who dine at McDonald’s each day, you’re probably familiar with the Filet-O-Fish Sandwich. This simple dish has a contentious history. Ray Kroc, the owner of McDonald’s, hated it. But it reached his menus anyway for one reason: Kroc lost a bet. In 1962, McDonald’s franchisee Lou Groen masterminded the Filet-O-Fish to appeal to his Catholic customers. But Kroc refused to add it to the menu. He didn’t want his stores to smell like fish! So, they made a bet. On Good Friday, select McDonald’s put both the Filet- O-Fish and the meatless Hula Burger on the menu. The entree that sold the best stuck around. As you might have guessed, Groen blew Kroc out of the water, selling 350 Filet-O-Fish sandwiches to his six Hula Burgers. Smelly or not, the filet was there to stay!
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INSIDE THIS ISSUE 6110 Mayfield Road Mayfield Heights, OH 44124 www.MayfieldHeightsCPA.com (440) 720-0959
5 Lessons From the GameStop Stock Fiasco
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Winning the Bluetooth Wars Focus on This One Thing to Save More Money
The Bet That Spawned the Filet-O-Fish Sandwich The Benefit of Using Your Vacation Days
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Australian Wombats Are Saving the Day!
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Australian Wombats in Charge Saving Lives One Hole at a Time
Remember the Australian wildfires of 2019–2020? These fires ravaged large areas of the country, displacing and leaving countless animals to fight for survival. To make matters worse, swaths of the country have been dealing with drought. It’s one challenge after another for humans and animals alike. But one species has taken matters into its own “hands.” Numerous wombats have been discovered digging holes in search of water — and they found it! According to Australia’s ABC News, one group of wombats was discovered on a farm in New South Wales, which was situated over a large underground reservoir. So, the wombats went to work. One farmer, Ted Finnie, reported that wombats dug a hole roughly 4 meters deep by 20 meters wide (or about 65 feet). Their incredible work made this source of water remarkably accessible.
At this particular watering hole, Finnie captured all sorts of creatures on camera — birds, emus, possums, echidnas, and monitor lizards — congregating
around the wombats’ creation. What isn’t known is how, exactly, the wombats discovered the water, but they surmise the animals likely picked up on environmental clues and dug until they found what they were looking for. Interestingly enough, wombats have been known to help other animals in the past. During the Australian fires, countless animals were left searching for refuge, and they found it in wombat burrows. While the wombats weren’t exactly welcoming other species into their homes with open arms, they seemed to “tolerate” the visitors, as one ecologist with the University of Adelaide noted. It was a case of accidental heroism, much like their search for water, but it was heroism nonetheless.
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