Part 66

Hello and welcome back to Mortgage Advisor on F.I.R.E.  This week I discuss the bizarre situation with Gamestop shares, and some developments with my BTL property.  First, the Quote of the Week:

Quote of the Week

People are becoming too complacent about Covid, and it means many are dying unnecessarily.  The only time I step foot outside my home is to get food or medicine.  I try to get as much done in as few trips as possible.  Yes, it is frustrating, but I would rather stay safe and I would rather not take the risk of carrying the virus asymptomatically and passing it on.  

I was in the city centre yesterday picking up my prescriptions from Boots.  There were far too many people inside, and they had no concern over personal space.  I was constantly having to step away from other shoppers as I waited for my meds, as they tried to stand beside me.  

This situation is hard for everyone, especially when you have to go weeks or months without seeing friends or family, but dying is even harder.  Ultimately, the risk to the individual is low but much like the odds of winning the lottery, it will happen to someone and maybe someone you love. 

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Weekly Update

I am continuing my phased return to work and it has been difficult and tiring.  I should not be too surprised having had four months away from work.  I am ramping up my hours week on week and should be back full time by late February.  Being back at work has given my days some structure but honestly, I am not one of these people that needs work.  I would be perfectly happy being retired in financial comfort, which is the entire point of my financial plan.  

I have absolutely nothing to report from the week as my time has been taken up by work, reading and TV.  One source of amusement has been my involvement on a thread on Owlstalk, a Sheffield Wednesday message board.  I created a thread called SWFC Memes, and anyone who knows me will know I love memes.  For the past few days my fellow Wednesday fans and I have been roasting the club via memes.  I have posted two of the best efforts below.

The state of the club is just tragic.  I am not going to talk about it length here, as this is not a football blog, but the issues come down to money and the fact the club has none and is struggling to pay the players.  I think there is a real possibility that the club will cease trading in the next few months.  Covid has shone a spotlight on the fortunes of many businesses and highlighted just how precarious their finances are.  The finances involved in football are just insane, and although I would like to think this pandemic will act as a type of reset for the sport, the pessimist in me thinks it will just revert to normal once we are post-Covid.  

2021 Goals – to be achieved by 31/12/2021

1 – Reduce weight to 92.8kg.

2 – Finish 104 new books.

3 – Complete RO3 for my DipFA.

4 – Complete RO4 for my DipFA.

5 – Complete RO5 for my DipFA.

6 – Complete RO6 for my DipFA.

I am still heading in the right direction with my weight, but it is a long-term project.  It is easy to get discouraged when you think you have had a great week only to see your weight unchanged.  However, a person’s weight can fluctuate wildly from day to day, so it is important to look at trends over several weeks rather than focusing on daily changes.  

I have finished seven books in 2021 so far, with the last four books being quite disappointing.  You can see the list here.  The two books by Alex Boese described some truly disgusting science experiments.  I have a fairly strong stomach but some of the studies included were absolutely vile.  I also read two books on the concept of the “infinite game” which has a link back to gambling addiction.  Although the idea of the infinite game is interesting, I found both books quite dull.  In short, an infinite game is one that has no end.  In terms of gambling you can never win because any winnings will just be used to bet again.  A finite game, on the other hand, has clearly defined rules and time limits.  The game ends when exact conditions are met, be it a score or period of time elapsing.  The distinction between finite and infinite games helped me move away from my gambling addiction, as I realised there is no winning in the infinite game of gambling.  

Financial Update

Assets

Premium Bonds: £4,000.00 (up £850.00 from last update).

Stocks and Shares ISA: £15,510.23 (down £741.07 from last update).

Fuck It Fund: £550.00 (no change from last update).

Residential Property Value: £194,909.00 (no change from last update).

Buy-to-Let Property Value: £125,775.00 (no change from last update).

Total Assets: £340,744.23 (up £108.93 from last update).

Debts

Credit Card: £1,757.52 (down £707.05 from last update).

Residential Mortgage: £141,383.76 (no change from last update). 

Buy-to-Let Mortgage: £93,049.67 (no change from last update). 

Total Debts: £236,190.95 (down £707.05 from last update).

Total Wealth Figure: £104,553.28 (up £815.98 from last update). 

Investment Income in 2021: £0.00 (target £5,000).

I received the £1,700 I was owed and used half of it to pay down my credit card, whilst investing the other half in my Premium Bonds.  There have been a few expenses that have cropped up in recent weeks but I am confident that the card will be paid off in full within a few months.  I am thinking of closing down the card as I am getting increasingly frustrated with the service offered by the card provider.  They have ceased offering account servicing through a website and it all has to be done through the app, which works fine some of the time.  It is when it does not work that problems arise.  This is just part of what has annoyed me, as they have also lost documents we sent in to support a claim for chargeback after we were messed about by a retailer.  It was only for £30, so hardly a life changing amount but it is still annoying.  

The stock market has been the source of some fascinating news in the last week with Gamestop shares being the subject of a lot of interest.  I have not followed the story obsessively, but I have been keeping an eye on it.  The short version, if you pardon the pun, is that some massive hedge funds had shorted Gamestop shares.  This means that if Gamestop shares were to drop in value, the funds would make money.  However, should the shares go up in value the funds would lose money. 

This is how Gamestop shares have performed during the last month:

This was a story that had passed me by despite my being active on Reddit.  There is a community there which targets the big money investors who like to short stocks.  There is something unethical about shorting stocks, especially when you are also in a position to affect the perceived value of a company.  It would be a little bit, but not exactly like, a football manager putting a series of bets on his own team to lose.  It does not mean he will necessarily manipulate the situation to that end, but there is enough potential conflict of interest for it to be a concern.  Putting this another way, if you are a market commentator you can often have an impact on the perceived value of a stock just by talking it up or down on your blog, or newspaper column.  If you also have a holding or interest in that stock, you are using your position to influence that stock and make money.  

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Anyway, back to Gamestop.  Several Redditors saw that some hedge funds had large short positions against Gamestop shares and decided to buy as many units as possible.  This led to a surge in the stock, and the more it surged, the more people bought it.  It became a self-reinforcing cycle.  The hedge funds stand to lose billions of dollars.  

On the face of it, it is a funny story.  My concern is for the amateur investors who get caught up in the frenzy and buy the stock just as it is peaking.  Gamestop shares are not worth what they are currently trading at.  People buying the shares now could very easily lose most of their cash.  The hedge funds will, for the most part, be ok.  The sophisticated investors who bought these shares will have sold them before they peaked.  The people they sold the shares to are the ones who got caught up in the hype and will stand to lose a lot of money as the stock comes crashing down.  

As I have said many, many times, always do your research before investing or else you are simply gambling.  I have not personally completed due diligence on this stock, but the company is a physical business selling video games in shopping malls and city centres.  These types of businesses are only going to struggle as gaming moves online.  Even if Gamestop evolves into a successful business, I have not seen a single credible commentator argue that their shares are worth $400. 

BTL Update

We have an application going through for a tenant who has paid a holding deposit.  We are just waiting on the final checks and references, so hopefully we will have a tenancy signed by the next part of this blog.  In light of the strange situation we find ourselves in with Covid, we have had to reduce the rent we are asking for.  Initially we had marketed the property at £675.  We knew this was going to be an ask, and so we were not too surprised at having to drop it to £635.  However, we have now had to reduce it to £595.  The latest reduction was a difficult decision to come to, but we have had a few potential tenants fall through and whilst the property is empty it is costing us money.  

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If you like my content, please consider supporting my writing.  I spend several hours each week writing this blog and make it freely available to all readers.  I do not hide my content behind a paywall.  However, maintaining a website incurs costs.  If you can afford a small donation, it would be gratefully accepted.  Click on the Buy Me A Coffee image, or use the donate buttons on this site.

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My Instagram is @david_scothern and my Twitter is @advisoronfire. You can also email me at mortgageadvisoronfire@gmail.com.

Also, please check out my cat’s Instagram @sweep_the_kelham_island_cat

Finally, have a look at Darren Scothern’s blog at darrenscothern.com.

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