25-Year-old Security Guard Took Out a 20K Loan to Buy GameStop and Got Burned
Vergara is a 25-year-old security guard in Virginia. He has been investing for four years with the goal of retiring young. He is a frugal individual, driving a 1998 Honda Civic, eating a lot of rice, and living with his dad to save money. Most of the money he has saved over the years has been invested in diversified index funds, amounting to about $50,000.
Vergara was a long-time follower of the WallStreetBets subreddit. He came across the massive hype around GameStop and saw the chart of the massive rally. Instead of liquidating his diversified index fund portfolio he went to a local credit union and secured a $20,000 personal loan at an 11.19 percent interest rate. He bought GameStop shares at an average price of $234 with the loan.
Since his purchase, the stock has fallen around 80 percent and is currently trading around $50 per share. Vergara is not the only retail investor to get burned in the massive rally of the heavily-shorted stock. Many inexperienced traders called GameStop their "you only live once" trade.
“I thought it could go up to $1,000. I really believed in that hype, which was an awful thing to do,” he said.
Despite the massive sell-off, he plans to hold onto the shares. He believes the company could remake itself and live up to the valuations it hit during the rally in the future. He will finance the monthly payments on the personal loan with his paycheck at his security-guard job.
When the pandemic subsides, he hopes to move back to his native Philippines where he will live off of his savings and start a charity. His experience with GameStop delayed his plans by about 6 months.