It’s highly likely the beginning of 2021 will be written about in future financial history books. The Rise of the Meme Stocks or David and Goliath: When Retail Investors Took Down Hedge Funds will be the best selling titles most likely written by Andrew Ross Sorkin.
But as fast as hot stocks come, they go even faster. If someone tells you that this time is different its time to become extremely cautious. The only thing that is different in every financial bubble is the players and the bagholders at the end. Every bubble ends the same - with a pig getting slaughtered.
GameStonk - The Next EV Car That Runs On Bitcoin And Cures COVID
GameStop closed up 92% today with an ending share price of $147. This equates to a market cap of $5.3 billion. The lunacy didn’t stop at the close though. A few minutes after the market closed, Elon Musk retweeted the following:
GameStop post-market subsequently rose to $230 per share. While Wall Street Bet degenerates were cheering, hedge funders are estimated to have lost $5.5 billion.
Eventually GameStop will come crashing down to a normalized valuation but the timing is uncertain. Don’t be on the wrong side of the trade and don’t change your investment strategy to make a few buck (or a million).
Bubbles are created when people see their neighbors (who they view as dumb) make more money than they are. The FOMO becomes real and can be devastating over the long-term if you are left holding the bag.
Other Hot Stocks
AMC Entertainment Holdings (“AMC”) ended the day up 12% to $4.96 per share. In post-market trading the stock is currently up 35% to $6.70 per share. The stock is up close to 90% over the past five days due to a successful capital raise of $917 million. AMC has been a hot meme stock and seems like it will have heavy volume going into the open tomorrow.
Will Meade tweeted about Tanger Factory Outlets (“SKT”) right before the close today shooting the stock up 17%. SKT is currently up 3% in post-market trading.
Degenerates on Wall Street Bets are trying to keep BlackBerry Limited (“BB”) in play. The stock has rocketed over 95% this month and is currently up 6.55% in post-market trading. There are a few degenerates trying to pump Nokia Corporation (“NOK”) as it fits the similar style of “dying” companies. But it seems as if the market cap is too large for a few thousand pumpers to move this stock.
CarParts.com (“PRTS”) isn’t on the Wall Street Bet radar screen (yet). But I think it could have a chance to get noticed. The stock was up 48% today on news that it was launching an EV-focused shopping hub. Given the markets liking for electric vehicles, this is definitely one to keep an eye on. In this market, you mention EV once and valuations suddenly don’t matter.
There is an insane asset bubble that continues to grow everyday before our eyes. The signs are abound - an invisible currency costs more than a sports car, bankrupt stocks hitting all time highs, dotcom like forward P/E ratios and amassing debt levels that are unsustainable in a non-zero interest rate environment.
I have been concerned about a hyperinflationary environment for some time now. The Fed has given investors (and governments) an incentive to borrow at basement level interest rates - lowering discount rates and increasing valuations. If and when rates start to move in the upward direction, valuations will come crumbling down, bond prices will fall and a massive amount of inflation will happen.
I currently have 1/3 of my portfolio in cash, 15% in hard currency (gold and silver) and the rest in value stocks that should largely benefit in a state of hyperinflation. There is no doubt in my mind we are in a giant asset bubble that is bound to crash. When degenerates are making more money than hedge funds, its usually the sign the market is at a top.