January 2021. A struggling video game retailer is suddenly the most talked-about stock on Reddit. Short sellers are trapped. Celebrities are tweeting. Can you find your entry, take profits at the right time, and exit before the crash? Warning: most people who tried this lost money.

What This Scenario Teaches

Quiet day for this struggling brick-and-mortar video game retailer. Online gaming is eating its lunch. Stock has been falling for years.

WallStreetBets forum highlights: 140% short interest — the most shorted stock in the market. A few retail traders start a coordinated squeeze.

Volume 10x normal average. Retail investors piling in rapidly. Short sellers beginning to feel pain. Momentum building.

Famous activist investor joins the company board — gives the trade more 'legitimacy.' Or is it just another FOMO catalyst?

CNBC covers the story. Jim Cramer tweets about it. Now officially mainstream. Volume absolutely exploding.

Reddit users go viral. 'Short squeeze of the century' trending. Robinhood traders piling in. Up 300% in 2 weeks. FOMO intensifying.

Parabolic. Mania mode. Hedge funds losing hundreds of millions. Celebrities and politicians tweeting. Media says this only happens 'once in a lifetime.'

Elon Musk tweets 'Gamestonk!!' linking to the Reddit thread. Stock briefly hits $350 intraday before giving back gains. EUPHORIA at maximum.

SHORT SQUEEZE CLIMAX. Up 900% this month. Hedge funds covering at any cost. $20B+ in short losses. Volume: 175M shares. Is this the top?

ROBINHOOD AND OTHERS HALT BUYING. 'Restricted to position closing only.' Stock crashes -44% from yesterday's close. Political firestorm erupts.

Restrictions partially lifted. Extreme volatility: $250→$483 intraday. Impossible to value. Who is still holding and why?

Squeeze clearly over. -74% in 4 days from peak. Short sellers mostly covered. Retail holders left with losses. Reality setting in.

Continued sell-off. Analysts note: fundamental value is $10-20. The difference between price and value is now painfully clear.

Stabilization at $50. Still 150% above fundamental value. Some call it a 'dead cat bounce.' The community still hopes for squeeze 2.0.

Slow grind down. The story is over. Next stop: where it was 6 months ago. Final price: still 100% above fundamental value.

Trade rationally when the crowd goes completely irrational

The FOMO Trap