Why Would Someone Want You to "HODL" a Stock They Also Hold?

Somehow, the meme stock thing is still going - or, at least, the GameStop (GME) thing is still going, albeit to much less media attention and with a much lower stock price. Many other meme stocks have failed their way out of being memes, including some which have gone all the way bankrupt, like Tupperware. Meanwhile, Wall Street long ago started accounting for these shenanigans in their evaluation of the stock’s value, diluting the ability of the Reddit crowd to move it significantly. But thirty seconds of Googling will reveal that there are still many congregants at the church of Roaring Kitty. And while I don’t find that mysterious, human psychology being what it is, I do find it odd that the news media continues to cover this stuff with a veneer of evenhandedness, given that the whole thing can’t work.

Investing in the stock market is similar to gambling, though in a different sense than most people would think: professionals in both fields rarely take big risks and almost never generate huge immediate financial gains. People who work the stock market professionally, where it’s notoriously hard for even massive institutional investors to consistently beat the market, aren’t out there throwing their entire bankroll into a single stock on a hunch. They tend to spread the wealth around to avoid the risks of any single deal going bad. They also have to bake into their budgets the understanding that they will eventually enter a fallow period where their returns are bad in general. That’s the variability of the market. Indeed, stock brokers of the traditional variety have always made their money primarily with the fees they charge the clients they advise, not from returns on their investments; the former is reliable income, the latter is not. Many or most of the people who consistently make a living trading stocks have a system that produces a minor edge and have to make up for the vagaries of minor market fluctuations by playing the long game. And, as you’d imagine, the ones who make the largest profits are the ones who have the largest stakes, that is, the ones who are already wealthy.

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