Surgeon General’s Warning

Surgeon General’s Warning

It's been a decade (at least) since I purchased a pack of cigarettes, but as I recall, the warning on the side of the box didn't tell me not to buy them. Not explicitly anyway. Sure, the label alluded to the possibility that if I did buy them, and subsequently smoked them, I might die an excruciating death as a direct result at some unknowable future date. And as roundabout recommendations go, that's a pretty powerful message. But the warning didn't come from the company and it didn't literall
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9 thoughts on “Surgeon General’s Warning

  1. I remember when Elon Musk told investors his stock was overpriced at $500/ share……up-up-up….stock split…..still remains near $600…..5 times as many shares…….

    1. This was a meta joke by musk. He said the shares were over priced at 8:11 on 5/1. On 8/11, they announced a 5:1 stock split which, of course, reduced the price (temporarily)

  2. I am slightly aggravated because in April/May 2020 I studied the movie theater stocks and bought the one that had the financial strength to make it through to the other side, instead of the one that looked likely to go BK.

    All that old fashioned security selection, examining Ks and Qs, cash flow modeling, etc gone to waste. Nothing to show for it but a lousy double. Which used to seem like a decent return but now is an embarassment.

    I mean, go to a cocktail party and mention your 2X on [ticker], and the hot chicks disappear while a few old guys mumble consolingly before backing away lest they catch what you’ve got.

    Hey, who am I kidding, I haven’t been to a cocktail party in a year and there never were any hot chicks at the parties I got invited to. But parties are starting up again, so I hear, and I’m scared to go.

    What am I going to talk about? That I just bought [ticker] for low-double-digit price upside and mid-single-digit yield, for potentially +30% one year return? I can’t take any more pitying looks. You poor dear, can I get you anything? Is there someone we should call? You had a good run, after all. A warm cup of Bovril and a lie-down? I just can’t.

  3. What I still haven’t seen anywhere is a level headed examination, by someone who knows what they are doing, of the possibility that market makers have naked shorted millions of shares of AMC stock. Only the least sophisticated retail traders really believe in any sort of fundamental case for AMC. Anyone that knows how to read their balance sheet can see that AMC are in real trouble, but when Redditt reads a mainstream piece about how the fundamentals are horrible they collectively rally around the naked shorting conspiracy. Which isn’t easy for me to confirm or debunk.

    I wouldn’t be at all surprised if this run up was just another gamma squeeze, but if there are tens or hundreds of millions more shares of AMC in existence than there should be, then the price will go much higher in the short term. I would love to know whether it is possible to evaluate that argument. Maybe it isn’t. Maybe crazy Redditors buying hundreds of millions of shares is essentially the only way to “evaluate” it collectively.

    1. I don’t think any of the “apes” believe there is a fundamental case for investing in AMC. I think instead what they believe is that fundamentals don’t mean anything anymore. Not when debt is free, shares can be traded up or down naked, and a company that rightfully should be bankrupt can leverage the above mechanisms to generate massive amounts of cash out of thin air.

      What they are actually exposing is that fundamentals mean nothing. Getting your stock pumped will save you from any management failures and generate enough cash to get you through several years of negative returns. The market is now just another casino and the SEC sat by and let it happen.

      1. … but is the fact that Hertz managed to survive not relevant here?

        I’m all for fundamental analysis but it isn’t a crystal ball/a 100% thing either. As they say, predictions are hard, especially about the future. So AMC balance sheet may be atrocious but if there’s a rush to cinemas after this year of social distancing as people eagerly throw money at cinemas, desperate to eat overpriced popcorn and drink carbonated sugary beverages in close proximity to one another?

        1. The only people “eagerly throwing money at cinemas” are on Reddit. Sure, people will go back to the movies, but again, I’d ask the same question: Who cares? Who actually cares? Does anyone really believe that 50 years from now people are going to be packed into movie theaters to watch something that’s already streaming in ultra-ultra-ultra high-definition to what, by then, will probably by 200-inch flatscreens available for $400 at Walmart if you’re content to own the generic brand? Give me a break. That’s a joke of an investment thesis. I mean hell, the way it’s going, you’ll probably be able to buy some kind of screen that comes in an actual roll with a sticky backing that you’ll just put on your wall like a poster. For all we know, your whole living room wall will just be one giant screen by 2050. And folks are sitting here acting like anyone is going to want to go and pay $15 ($30 by then) for popcorn, put their children on a nasty seat sitting on a sticky floor and stare at an image from an actual projector? This is unbelievably ridiculous.

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