Robinhood made the grave mistake of cutting back trading yesterday. Why is this important? Because, for example, if someone places a market trade and the broker limits trading, your order might not be executed. You might even think you’re already out of the position but in reality you’re not because the platform limited trading.The next thing you know the stock has dropped by some crazy percentage and you’re still in it. If you’re going to play with the big boys then get aligned with a big boy platform like Fidelity Investments. This is not a game. And it’s why Fidelity remains #1 in my … [Read more...]
Archives for January 2021
Here’s Why Apple and Facebook Are Preparing for War
Tech giants Apple and Facebook are preparing for a war over access to customers. Facebook may sue Apple for daring to give its device users control over their privacy. Jon Swartz reports in MarketWatch: The conflagration centers on Apple’s AAPL, -2.91% new iOS 14 policy, due this spring. It includes new privacy features that will for the first time require apps to ask for users’ permission to track them around the web. Such a feature, Facebook FB, -1.76% claims, would severely limit online advertising and kill small businesses in the process. Tension between the companies has escalated for … [Read more...]
The Great Reset: Crush the General Population’s Resistance
You recently learned that lawmakers, mostly Democrats, in Rhode Island are furious about the lies they've been told by the bureaucrats serving under Gov. Gina Raimondo (soon to be America's Commerce Secretary, more about that later). As Raimondo was packing her bags to leave for Washington, lawmakers in Rhode Island (as blue as the deep blue sea) were getting angry. Democrat elected representatives are upset at state agency bureaucrats because as these agency reps testify before legislative committees, the elected officials receive text messages from constituents reading: “Everything they … [Read more...]
Retail Investors Go Unicorn Hunting
James Bianco explains the dramatically changing investing preferences of the public, writing: There is no one definitive measure to show this shift, but the signs are unmistakable. Trading in individual stock options has been booming to new records, according to data from the Options Clearing Corporation. This has been led by purchases of options to buy stocks in lots of 10 contracts or fewer. Nearly 15 per cent of all trades are for one contract. Penny stocks have recently caught the fancy of investors. In December 2020, they traded 1tn shares, according to data firm SentimenTrader. That … [Read more...]
Valuations Reminiscent of Dot-Com Crash in 2000: Part II
You read yesterday about the online forums where traders are encouraging each other to invest in stocks, and creating a tug of war between them and hedge fund managers that is driving some stocks to dot-com bubble level valuations. The trading storm created by these online rumor mills is taking a toll on online trading platforms, report Justin Baer and Peter Rudegeair in The Wall Street Journal. They write: “These outages generate annoyance among investors in the short term,” said William Trout, director of wealth management at Javelin Strategy & Research. “Longer-term, outages call … [Read more...]
The Bull Raids are Wreaking Havoc on Wall Street
This is a new dynamic. We’ve referenced GameStop (see here and here) and other stocks with high short interest being targets of message board traders before, but we haven’t seen coordinated action with this kind of an impact before. Instead of investing based on company fundamentals, traders in GameStop are trying to squeeze short investors. A short squeeze is when an investor who shorts a stock is forced to buy it back because the price has risen so much. In pre-market trading early this morning GameStop shares traded as high as $365. Ten days ago the stock was selling for $20. Short … [Read more...]
3M Happily Watching America Get Back to Work
Austen Hufford reports in The Wall Street Journal about 3M's growing success as America reopens. He writes: 3M Co. MMM +4.14% said it expects sales across its product lines to grow this year as vaccinations against Covid-19 allow people to start using more of its products at dental offices, workplaces and schools. Demand for the St. Paul, Minn.-based manufacturer’s products varied widely last year. The pandemic created enormous pressure on demand for the N95 face masks that medical workers wear to guard against the virus. But sales of other products such as Post-it Notes used by office … [Read more...]
Valuations Reminiscent of Dot-Com Crash in 2000
Are you paying attention to what’s happening here? I’m talking about the tug-of-war between hedge funds and day traders with shares of GameStop. "The rally has been fueled by investors encouraging each other on social media to pile into GameStop shares and options," reports the WSJ. "The buying pressure has led money managers to switch out of substantial bets that the stock would fall, investors and analysts said. This resulted in a short squeeze, in which rising prices prompt investors to buy back shares they had sold short to cut their losses, pushing the stock higher still.” From the … [Read more...]
Capital Is Too Cheap
The global capital markets are booming. The FT reports that companies have raised $400 billion in debt and equity over the first three weeks of the year. That exceeds the average for this time of year by $170 billion. And it’s not just a debt boom that's being fueled by the global central banks robbing savers and retirees with ultra-low interest rates. Equity markets are white-hot as well. Speculative activity in the stock market has reached levels not seen since the height of the dot-com bubble. Stocks don’t often double, triple, and quadruple over the course of a few days or weeks for … [Read more...]
The Parallels Between Today’s Stock Market and the Dot-Com Bubble
James Mackintosh comments on the parallels between the current market and the dot-com bubble. Exponential growth in the price of story stocks Anything connected to electric vehicles or clean energy has gone ballistic in the past few months. Electric-car maker Tesla TSLA +3.07% is the most obvious example, becoming the fifth-largest U.S. company by value after rising eightfold last year. This year so far, it has added $134 billion to its market capitalization, far more than the $78 billion it was worth at the start of 2020. A flood of early-stage IPOs tapping into the popular … [Read more...]
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