Heisenberg Report

Morons Massacred As Short Vol. Double Down Goes Horribly Wrong

Earlier today, I noted the obvious, which is this:

Everyone knows you people are morons.

I know that for sure, because I personally guarantee you that it’s the same people who were wiped out in XIV on Monday that were reading “buy the dip” stories on Wednesday. Wednesday would be yesterday and yesterday would be the day when the number of news stories featuring the phrase “buy the dip” hit an all-time record:

And here’s what else I said in the piece linked above:

Now you could argue that this isn’t the fault of investors, but rather represents journalists’ propensity to write stories that amount to click bait. But see that’s the point. Click bait is click bait precisely because it is designed to capitalize on reader stupidity.

What is “click bait”? It’s “news” designed to attract the maximum possible number of morons by catering to what journalists know morons are likely to click on.

Well in case you needed any more evidence, note this:

That’s right, people were trading SVXY “like nothing happened.” Or, as Bloomberg’s Luke Kawa puts it, “once bitten, twice not shy.” Here’s the chart:

So how’s that working out? Well, not great. Because stocks are selling off again, the VIX is spiking, and SVXY is down a cool 15% on the day:

As we noted first thing Wednesday morning, Seth Golden doubled down after Monday’s mayhem, betting $600,000 that vol. would come back in.

Assuming these home gamers are panic-refreshing the CNBC home page, this is what they’re seeing:

We said it yesterday and we’ll say it again: “there’s always Target.