Welcome to another weird week in 2021, where a group of Redditors turned the market upside down and forced everyone to learn wtf “short squeeze” means. We’ll get into it. But first, some other financial updates from this week.
Two VIPs break glass. On Tuesday, Janet Yellen was sworn in as the US’s first woman Treasury secretary. (But only the second to get a rap written about her rise up.) And Walgreens tapped Starbucks COO Rosalind Brewer to be their next CEO. She’ll be the third ever and only current Black woman to lead a Fortune 500 company.
President Joe Biden’s staying busy. This week’s executive orders focused on racial equity, justice reform, climate change, and access to healthcare. He’s also renewing the push to put Harriet Tubman on the $20 bill and to make the federal gov "Buy American." (PS: here’s how that affects your wallet.)
10M Americans are behind on rent. Enter: stimulus 2.0. Thanks to the pandemic relief package from December 2020, states have now received $25B to distribute to struggling renters and landlords. Apply here.
Stimulus 3.0: still TBD. Negotiations on the $1.9T proposal are still happening. And Biden says he’s open to change. As in, lowering the income max for direct payments, so only people who need the money most get it. Some A-listers think that should be moms.
The rich got richer in 2020. In December, the total wealth of the world’s billionaires hit $11.9T. That's $10T more than Biden's proposed stimulus package and enough to buy vaccines for everyone.
If you came here for a Skimm of the stock market drama...
Keep reading. In recent weeks, amateur investors have been using the "r/WallStreetBets" Reddit forum to coordinate buying more and more stock in companies that haven't performed well lately – think: GameStop, AMC, BlackBerry – sending prices through the roof. (GameStop soared almost 1,800% this month.) Why? To "squeeze" hedge funds who "shorted" these stocks to try and beat them at their own investing game.
Back up: short-selling = placing a risky bet that a stock price will drop. If it goes up, you lose. The higher it goes, the bigger the loss. And a short squeeze = forcing prices to go high so short-sellers lose.
Yesterday, investing app Robinhood and other brokers caught heat (and a class-action lawsuit) for calling a timeout. Read: they wouldn’t let people buy certain stocks, apparently to try and curb market volatility. That sent GameStop’s stock down more than 40%...before rallying when brokers agreed to resume limited trading.
Here’s our tip: if you’re going to play games with stocks, only do it with money you can afford to lose. Because Wall Streeters aren't the only ones who could lose a LOT. And know that "bandwagon bias" – aka doing what everyone else is – could be part of the problem. We Skimm’d how to avoid it and other mental biases that can cost you.
If you’re thiiiis close to bailing on your money resolutions...
Remember your "why." Set up some time to revisit your goals and what makes them worth the work. Then track any progress you've made. Science says making an already-done list can motivate you to keep going. You can also resize your goals to make them smaller – with an updated, reasonable timeline for achieving them – to help you stick with your resolutions all the way to 2022.
If you’re trying to save smarter...
Shop this list of items that can save you money later. The math: one pack of 25 makeup remover wipes could cost you around $5, or 20 cents a wipe. So using one a day runs about $73 per year. Swapping those disposable wipes for a $20 reusable cloth saves you $53 after the first year. Still with us? Your wallet says 'thanks.'
Marshall Plan for Moms: The stimulus plan for moms we mentioned up top. The OG Marshall Plan provided US aid to Western Europe after WWII. Now, Girls Who Code founder Reshma Saujani and celebs like Amy Schumer and Eva Longoria are asking Biden to give it a reboot. This time, to give aid – from affordable childcare to $2,400 monthly checks – to American mothers trying to survive the current crisis. Reminder: since the pandemic started, more than 2M women have left the workforce. While others have had to cut hours or work around the clock to handle everything on their plates.
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Skimm'd by: Ivana Pino, Stacy Rapacon, and Elyse Steinhaus