Anatomy of a Great Trade: Deep Value – GME

by | Apr 26, 2024

Before the insanity, before humans lost their gosh-darned minds, GameStop (GME) was a simple Deep Value stock.

That’s how it started.

Back in the day, Michael Burry (of Big Short fame) thought GME was undervalued and took a public position.

Was it undervalued?


On 6/5/19, GME gapped down big. That gap down to $1.37 took it down below its lower Band and took price far away from “fair value” up around $4.80 (using the 800 SMA).

If the company wasn’t going under, there was a monstrous amount of potential upside.

Did it get back to “fair value”?

Yes and no. And oh my.

On 9/23/20, GME hit its “fair value” moving average line, which is fine to use as an exit. At that point, the price was at $2.72.

By buying at deep value, we could’ve made 98.5%–even though it wasn’t at our original “fair value” target level (from the time we took the trade).

But doubling our money in a little over a year isn’t bad.

And if we held on even after reaching our target?


GME went all the way up to $120.

As it turns out, GameStop was a Deep Value trade on steroids.

Who knew?

Happy trading,

— Scott Welsh

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