Back To Normal
A sense of normalcy returned to markets Tuesday, assuming you accept that "normal" entails inexorably rising benchmarks, bolstered by the prospect of more stimulus for Americans who can't survive without it. While true bipartisanship may still be a pipe dream in D.C., a meeting between 10 GOP Senators and Joe Biden was described as "excellent" and "very productive," which, if nothing else, at least suggests that a handful of nominally sane people in Washington can still sit in a room together w
5 thoughts on “Back To Normal”
On the GME front, I remember a week ago I saw a guy who was posting about how his 10k some odd dollar investment had grown into 32M. I think to myself, “sell you fool, sell!” but I don’t think he did…
Looking at share stats for GME we see 27% of shares are held by insiders, 122% held by institutions, and 226% short of float. If you can can keep leveraging shares that don’t actually exist for seemingly ever, the whole notion that retail can somehow ever take on the big trading firms is a pipe dream. As far as the SEC being worried about collusion, obviously that concern only comes into play when regular Joe’s join a reddit thread and start buying. Not when multiple VC’s start shorting with their large cash positions which is where this whole thing started.
It’s difficult to argue that the system isn’t rigged in favor of the rich at this point.
And look, I mean… clearly, some people (maybe a lot of people) made a lot of money on this.
But you should be wary about the notion that thousands upon thousands of Americans on Reddit suddenly became millionaires.
I have serious reservations about the veracity of some of those claims.
And to the extent they’re true, I’m not sure why these people would brag, boast, and otherwise post actual screengrabs from their accounts.
They should be quiet as mice. And they should also be spending a day with an accountant and probably hiring a decent lawyer on retainer.
That’s not (not, not, not) to suggest that anyone did anything wrong. But if you really made $30 million in the space of a week trading what amount to penny stocks, you need to have all (and I mean all) of the “right” answers, when the IRS comes asking. Which they probably will.
So that’s my advice to anyone who really did become an overnight millionaire: Get an accountant. Today. Get off of Reddit and get an accountant. Then, tomorrow, get a lawyer. And a good one, too.
That way, when the questions start coming in, you’re prepared and all set to ride off into the sunset with your newfound fortune. (I can recommend an island, btw).
To clarify, this individual had been long GME for years, so it wasn’t an overnight millionaire situation. However, he was posting screengrabs of his account which, I agree, is just not smart at all. The same way that not selling when you have a small fortune sitting in front of you isn’t. But emotion is the enemy of every investor and greed definitely can make you do stupid things.
Back in the dark ages, the head of my employer’s FX trading told me: Traders only tell you about their wins. They never tell you about their losses.
Back in the mid-eighties, two of our top traders were in our Singapore office. Whenever I spoke with one of them he would regale me with tales of how he had gotten his face ripped off on a Swiss Franc trade or something. Based on what he told you, you’d think he was a bumbling fool!
Until you saw his monthly P&L.