archive.today • Truth Social investing is about faith in Trump, not business fundametals - The Washington Post

Jerry Dean McLain first bet on former president Donald Trump's Truth Social two years ago, buying into the Trump company's planned merger partner, Digital World Acquisition, at $90 a share. Over time, as the price changed, he kept buying, amassing hundreds of shares for $25,000 — pretty much his "whole nest egg," he said.

That nest egg has lost about half its value in the past two weeks as Trump Media & Technology Group's share price dropped from $66 after its public debut last month to $32 on Friday. But McLain, 71, who owns a tree-removal service outside Oklahoma City, said he's not worried. If anything, he wants to buy more. "I know good and well it's in Trump's hands, and he's got plans," he said. "I have no doubt it's going to explode sometime."

For shareholders like McLain, investing in Truth Social is less a business calculation than a statement of faith in the former president and the business traded under his initials, DJT.

[...]

McLain [said] he believes the stock could "go to $1,000 a share, easy," once the media stops writing so negatively about it and the company works through its growing pains. The company's leaders, he said, are being "too silent right now" amid questions about the falling share price, but he suspects it's because they're working on something amazing and new.

McLain is an amateur trader — he invested only once before and "lost [his] butt" — and said he hasn't talked to his family about his investment, saying, "You know how that is." But he believes the Trump Media deal is a sign he is "supposed to invest," he said. "This isn't just another stock to me. … I feel like it was God Almighty that put it in my lap," he said. "I've just got to hold on and let them do their job. If you go on emotion, you'll get out of this thing the first time it goes down."

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[–] anarchoilluminati@hexbear.net 3 points 1 year ago (4 children)

I don't understand stocks.

Could someone end up owing money if their stock purchase falls into negative value? Or would they only be out their purchase?

[–] NephewAlphaBravo@hexbear.net 8 points 1 year ago* (last edited 1 year ago)

If you own stock, the worst case scenario is it just becomes worthless. It's all the other stock market shit, the stuff that's basically gambling or taking out loans, that can result in actually owing money.

[–] assyrian@hexbear.net 4 points 1 year ago

no, if you buy a stock, the most you could lose is 100%.

you could only 'go negative' and owe money if you short a stock, or sell options, etc.

[–] InevitableSwing@hexbear.net 3 points 1 year ago (3 children)

negative value

You're thinking of shorting a stock. You sign a contract to sell a stock. And the most dangerous version of it is naked short selling where don't even own the stock.

Ninja edit

ELI5: Short selling : explainlikeimfive

Top comment

This one usually takes a while to grasp, so bear with me, and read it two or three times.

Normally, when you buy an investment (stocks, bonds, etc.; but stocks for this example), you buy now, and hold on to them until they become more valuable. Then you sell and make money. This is going "long". You want the price of the stock to increase.

Going "short" is the opposite. You want the price to fall so you can make money. So how does one do this?

First, you need an broker. You borrow stocks from the broker, let's say 1000 shares of a company, at $1 dollar each. Note that you're not spending any money here, you're borrowing them. This is important. Now, you go and sell those shares to someone else, and get $1000. You COULD us this $1000 to pay back your broker, but why do that? Instead, you wait until the stock price drops, let's say to $0.50 a share. Now, you can buy back 1000 shares for $500, and return those 1000 borrowed shares to your broker. You just made $500 by the stock of the company going down, and the broker (usually representing people who go "long") doesn't notice anything: you borrowed 1000 shares, and returned 1000 shares, but you made money on it.

The problem is, when going long, your maximum loss is fixed (the amount your originally paid), but your potential gains are unlimited (the stock could keep rising), and it takes a lot of time to get there. Shorting, on the other hand, is really quick, but this time it's your gains that are limited (a stock can only drop to $0 giving you 100% profit), but your losses are unlimited (the stock could go up and up, and you have to buy back those 1000 shares at a loss to return them to the broker).

Hope that helps!

[–] EmoThugInMyPhase@hexbear.net 3 points 1 year ago* (last edited 1 year ago) (1 children)

Capitalism is so rational that not only can you trade things that are intangible and nonexistent materially, but you can also trade things that are intangible and nonexistent even on paper

[–] bradorsomething@ttrpg.network 1 points 1 year ago

Don’t forget you can pay to rent these intangible things for a fixed period of time.

[–] HexReplyBot@hexbear.net 1 points 1 year ago

A Reddit link was detected in your comment. Here are links to the same location on alternative frontends that protect your privacy.

[–] anarchoilluminati@hexbear.net 1 points 1 year ago

Oh, that was actually very helpful. Thanks!